The Pun Group LLP is recognized for its professionalism, integrity and for providing clients with practical solutions unique to their circumstances and issues. You will receive a superior level of service and a quality audit.
Thank You!
Thank you for allowing us to submit our qualifications to provide you with Professional Auditing Services.
The Pun Group LLP
Certified Public Accountants and Business Advisors
WHY CHOOSE
THE PUN GROUP LLP?
Big firm expertise, small firm values
Personal attention meets technical expertise
A unique firm culture
Innovation embraced
Achievable plans to move your organization forward
The Pun Groups most
valuable asset is our
people, they and their
deep experience drive our
every interaction with
clients.
Kenneth H. Pun, CPA, CGMA
Founder & Managing Partner
City of Hercules
Table of Contents
Transmittal Letter ........................................................................................... 1 Independence ................................................................................................ 3 License to Practice in California..................................................................... 3 Firm Qualifications and Experience ............................................................... 4 Partner, Supervisory, and Staff Qualifications and Experience ..................... 8 Similar Engagements with Other Government Entities ............................... 16 Specific Audit Approach ............................................................................... 28 Cost Proposal............................................................................................... 35 Lets Get to Work! ........................................................................................ 37 Appendix A Available Training ..................................................................... i Appendix B Certificate of Insurance ........................................................... ii
For the 4th consecutive year,
The Pun Group has been honored with the
"Best of Accounting" Award.
The Pun Group LLP is proud to have won 2024s Best of
Accounting® award from ClearlyRated for consistently
delivering exceptional service to its clients for the fourth consecutive year.
Winners of such awards have proven to be industry leaders in service quality based entirely on ratings provided by their clients. On average, clients of 2024 Best of Accounting winners are 70% more likely to be satisfied than those who work with non-winning firms.
I am pleased to introduce the 2024 Best of Accounting
winners alongside their validated service ratings on
ClearlyRated.com, said ClearlyRateds CEO, Eric Gregg. These firms have demonstrated a remarkable commitment
to delivering amazing experiences despite another year of upheaval and macroeconomic uncertainty. Hats off to these service leaders - its truly an honor to recognize and
celebrate their achievements.
The Pun Group LLP received satisfaction scores of 9 or 10 out of 10 from 94.1% of their clients, significantly higher than the industrys average of 50%.
Our firm excelled in five key areas: Responsiveness, Quality, Value, Needs Understanding, and Proactive Approach.
About ClearlyRated
Rooted in satisfaction research for professional service firms, ClearlyRated utilizes a Net Promoter® Score survey program to help professional service firms measure their service experience, build an online reputation, and
differentiate on service quality.
The Pun Group is recognized as one of
the Top 500 Firms listed by INSIDE
Public Accounting.
We started using Pun Group when the
pandemic first started two years ago so had
a little apprehension about doing
everything remotely with a new firm. But
the audit went very well and was
completed on time without problem.
Kevin W.
State and Local Government Client
The Firm has consistently exceeded our
expectations as client.
Clint O.
State and Local Government Client
An excellent partner and amazing service.
Jim T.
Private Sector Client
Excellent customer service and staff and
partners are expert in their fields.
Lani H.
State and Local Government Client
City of Hercules
Transmittal Letter
May 9, 2024
City of Hercules
Mr. Edwin Gato, Finance Director
111 Civic Drive
Hercules, California 94547
Re: RFP for Professional Auditing Services
Dear Mr. Gato:
On behalf of The Pun Group LLP, we are pleased to present our proposal to continue to provide Professional Auditing Services to the City of Hercules (the City) for three fiscal years ending June 30, 2025, June 30, 2026, and June 30, 2027, with the option of auditing its financial statements for each of the two subsequent fiscal years.
We sincerely appreciate the opportunity to have served as your auditor in the past, and we look forward to continuing to serve you well in the future.
Our Firm has developed an understanding of the Citys operations which has aided us in delivering quality audit services. With the knowledge we gathered since we started providing services to the City, we have been able to expand our audit efforts and offer observations that have assisted the Citys staff. We have also demonstrated our ability to respond to the Citys requests and our ability to deliver quality services. Its our further understanding that the City has been satisfied with our efforts.
This letter is an acknowledgment of the Firms understanding of the work to be performed. We are offering our commitment to deliver all of the required work, complete the audit, and issue the necessary auditors reports within the periods outlined by the City. No subcontractors will be utilized for this engagement.
The Pun Group continues to be the right choice for the City of Hercules because:
We Understand the Demographics and Your Needs. The Pun Group is reputable for its governmental practice. We are the principal auditors for cities in California such as Bell, Coachella, Corona, Fresno, Gardena, Gilroy, Lakewood, Montebello, National City, Palm Springs, Salinas, San Mateo, Santa Clarita, Stockton, Tracy, and several others. Accordingly, the proposed engagement team has a deep understanding of the current issues that municipalities are facing, such as varying demographics, economic environments, and the constantly changing landscape of laws and regulations.
Recognized Leader in the Governmental Industry. We are a small national Firm with licenses in the States of California, Arizona, and Nevada and a proven leader in professional services to the government sector. All key engagement team professionals are licensed to practice as Certified Public Accountants and meet the Continuing Professional Education requirements under US GAOs Government Auditing Standards to perform the proposed audits. The partners and all employees proposed to perform the requested services do not have a record of substandard audit work nor have any outstanding claim of substandard practice or unsatisfactory performance pending with the State Board of Accountancy or other professional organizations.
In addition, we are members of the national AICPA Audit Quality Center.
We strongly believe that part of our success is credited to our professionals participation in various industry-leading organizations. Such affiliations are critical to addressing emerging accounting and auditing issues within the industry environment.
City of Hercules
2 | PUNGROUP.CPA
Youll Work with a Team that Embraces Innovation and Continuous Improvement. Our Firm is committed to continuous improvement as it relates to service delivery. We embrace innovation and identify areas of technological enhancements in our audit and project management approaches. For example:
Secure Data File Transfer System. In order to improve audit efficiency, workflow management software plays an essential role between your organization and our engagement team. We employ a secure data file transfer system called Suralink.
Suralinks dynamic request list is integrated with our secure file hosting system for seamless document-request coordination, including the upload of large-size files. It means all our requests are in one place, updated in real-time, and accessible by everyone working on the engagement. Not only makes the operation more cost-efficient, but it also enables you and your team to spend your time getting the job done, not reconciling a messy list of outstanding items. In addition, Suralinks dashboard allows you to visualize the process of document-request fulfillment.
AI Auditor. The Pun Group leverages the technology and research tools required to provide excellent services to its clients. With the usage of Artificial Intelligence (AI) technology, the Firm is capable of issuing all reports requested faster than other audit firms without exposing the City to unnecessary risks.
Remote Auditing Capability. Remote working arrangements have suddenly become the new normal in these trying times. Our Firm has deployed top-notch technology and fully transitioned to remote auditing, offering our clients the quality services they deserve while being fully remote or operating in a hybrid schedule. On-site audits are still the Firms preferred method, and well continue to offer and promote those as well.
Knowledge is Shared with You. As part of our pledge to keep you updated on new technical accounting and financial issues, we implemented our 2023 Virtual Government Accounting Conference, which qualifies for up to 15 hours of CPE nearly double what other firms offer.
These online sessions are free of charge and part of the service package provided to you. More details and dates can be found on the Client Training Webinars topic under this proposal.
The Pun Group is proud of its inclusive values and is an avid promoter of equality and diversity. In addition, the Firm is an equal opportunity employer and complies with all federal and state hiring requirements.
Were proud of supporting affirmative-action philosophies and work hard to provide opportunities for self- enhancement to members of disadvantaged groups.
This proposal is a firm and irrevocable offer valid for 120 days following the closing date for the receipt of all proposals.
Finally, we would like to emphasize one additional point: We want to keep your trust and your business! We are confident that the energetic and experienced team we have assembled is the right one for the City.
Our commitment to serving the City of Hercules cannot be adequately conveyed in a letter, and I look forward to continuing the discussion with you. Im assigned as your primary contact for contract negotiations and stand steadfast to serve as your engagement/lead partner. Im also authorized to legally bind the Firm. Should you have any questions or wish to discuss this proposal, please do not hesitate to contact me at (949) 777-8809 or by email at [email protected].
Sincerely,
Sophia Kuo, CPA, M.B.A. | Partner | The Pun Group LLP
2121 North California Boulevard, Suite 290, Walnut Creek, CA 94596
City of Hercules
3 | PUNGROUP.CPA
Independence
Independence
The Pun Group LLP requires all employees to adhere to strict independence standards concerning the Firms clients.
These independence standards exceed, in many instances, the rules promulgated by the American Institute of Certified Public Accountants (AICPA).
The Pun Group LLP certifies that it is independent of the City of Hercules and its component units. The Firm meets independence requirements defined by the United States Government Accountability Offices (US GAOs) Government Auditing Standards and the American Institute of Certified Public Accountants (AICPA). Based on that, we have not identified an instance that constitutes a conflict of interest relative to performing the services requested by the City.
The Firm had no relationship with the City of Hercules or its component units during the past five (5) years.
The Firm will give the City of Hercules written notice of any professional relationships entered into during the period of the engagement.
Insurance
If selected, the Firm will obtain and maintain the minimum insurance requirements during the entire execution of the agreement with the City of Hercules. Within ten days from the implementation of the contract, we will furnish the City of Hercules with satisfactory evidence of the insurance requirements and proof that each carrier is required to give at least 30 days prior written notice of the cancellation of any policy during the entire period of the agreement.
The City of Hercules will be named as an additional named insured under the Firms policies.
A copy of our current certificate of insurance is presented in the Appendices section of this proposal.
License to Practice in California
License to Practice in California
The Firm and all key professional staff are licensed by the State of California to practice as Certified Public Accountants and meet the Continuing Professional Education requirements under US GAOs Government Auditing Standards to perform the proposed audits.
Firm Registration:
California State Board of Accountancy Number PAR 7601 Federal Identification Number 46-4016990
City of Hercules
4 | PUNGROUP.CPA
Firm Qualifications and Experience
Established in 2012, The Pun Group, LLP stands as a limited liability partnership comprising a team of sixty dedicated professionals who specialize in providing auditing, accounting, and advisory services. Our firm, which includes Certified Public Accountants and Business Advisors, has garnered recognition as one of the foremost accounting entities in Orange County, as acknowledged by the Orange County Business Journal.
Additionally, we proudly secure a place among the CalCPA Top 150 firms.
Our distinction within the industry lies in the fusion of hands-on experience and pragmatic knowledge demonstrated by our audit professionals. This combination sets our firm apart. We possess a profound grasp of prevailing regulations and issues bolstered by our technical acumen. Furthermore, our commitment to diligence, integrity, and collaborative teamwork is evident in every engagement we undertake, thus contributing to our clients' success.
The Partners Group is a distinguished assembly comprising notable professionals such as Kenneth Pun, Frances Kuo, Coley Delaney, Andrew Roth, John Georger Jr., Jim Fritzsche, and Sophia Kuo. We specialize in providing auditing, accounting, and advisory services to numerous governmental entities across the United States. With a collective experience of over two centuries, we have established ourselves as a trusted business ally and have gained recognition as industry leaders in a rapidly expanding market. Our dedication to the field is evident through our work with nearly 100 government and not-for-profit audit clients, demonstrating our unwavering passion and unparalleled municipal experience.
Moreover, our practices adhere to professional standards embraced nationwide within the United States of America, including the rigorous criteria outlined in the Government Auditing Standards issued by the Comptroller General of the United States.
The Firms headquarters are located in Orange County,
California, with five branches in San Diego, Walnut Creek, Sacramento (California), Las Vegas (Nevada), and Phoenix (Arizona).
Our Walnut Creek office, located at 2121 North California Boulevard, Suite 290, Walnut Creek, CA 94596, will perform the requested services for the City. However, we may assign additional staff from our other offices to the engagement at no extra cost to the City. No subcontractors will be used in this engagement.
Global Capabilities
The Pun Group LLP is an independent member of Allinial Global, an association of over 100 independent accounting and
consulting firms. Based in North America, Allinial Global offers international support by connecting its member firms to providers and global networks of accounting firms worldwide.
OUR
AFFILIATIONS
OUR FIRM
AT A GLANCE
60 full-time auditing,
accounting, tax and
advisory professionals
One of the fastest growing
firms serving California,
Nevada and Arizona
6 offices across
3 states
Client retention rate:
90 95%
City of Hercules
5 | PUNGROUP.CPA
Full-Time Government Auditors
As full-time government auditors, we understand that governmental entities do not operate independently but in an increasingly complex web of local, state, and federal relationships. We know how these relationships work, what they mean at the local level, and how every public organizations focus on resource management is critical to success.
Also, while many accounting Firms can provide services, not all can build excellent working relationships with their clients. The Pun Group LLP prides itself on developing lasting, personal relationships with our clients. Our hands-on partner involvement and low personnel turnover are crucial tools to our success and are highly beneficial to the City.
Local Offices Information Technology (IT) Audit Capabilities
The Pun Group LLP continues our efforts to invest in our IT system to enhance our security further and promote audit efficiency.
Top security for your data is the key to our success. When we have your data virtualized, our Firm takes all the preventive steps to avoid putting your information at risk. Our In-House IT administrator maintains our server to ensure our IT environment is continuously updated with the latest security fixes. Through VPN and Microsoft Remote Desktop, our In-House network administrator can lock down files and system access from a single point, limiting the ability of remote sites to take data from our server.
Access to systems from anywhere and anytime. With more mobility being the norm rather than the exception, our engagement team needs robust access to the engagement files when they are working in your office. Accounting and Auditing Software applications are installed in our Private server and can be securely accessed through VPN and Microsoft Remote Desktop. The Firm uses CCH ProSystem fx® Engagement for audit documentation, which allows real-time synchronization of the work papers and instant collaboration quality control review.
Secure Data File Transfer System. In order to improve audit efficiency, workflow management software plays an essential role between your organization and our engagement team. We employ a secure data file transfer system called Suralink.
Suralinks dynamic request list is integrated with our secure file-hosting system for seamless document-request coordination. It means all our requests are in one place, updated in real-time, and accessible by everyone working on the engagement. As a client, you no longer have to manually maintain a spreadsheet amongst several people, only to repeat the process in a day or two. Not only makes the operation more cost-efficient, but it also enables you and your team to spend your time getting the job done, not reconciling a messy list of outstanding items. The Suralink dashboard, as shown below, allows you to visualize the process of document-request fulfillment.
BIG FIRM EXPERTISE.
SMALL FIRM VALUES.
Our professional backgrounds at major national
firms showed us how to solve complicated
business and accounting challenges, but the
sense of personal connection was missing.
We launched The Pun Group because we believe
every client deserves to work with experienced
business advisors and CPAs who have the time
and take the time to create an authentic
connection. Every client is our top priority!
A UNIQUE CULTURE.
Personalization is not just a buzzword its part
of our firms culture. We take a personal approach
to everything we do. We collaborate with our
clients, so theyre always part of the process. We
listen to our staff to make sure they have the right
support and resources to do a great job. Getting to
know others and discovering how we can serve
them better is not just a sign of good business
practices; its a sign of good people.
INNOVATION EMBRACED.
New ideas keep you ahead of the game. From
leveraging the value of emerging technologies to
further refining trusted processes, we adopt proven
solutions to meet your needs.
WHERE YOU GO, WE GO.
WHERE YOU GROW, WE GROW.
Our success is defined by how you achieve yours.
Partner with accomplished accounting and
financial professionals who are laser-focused on
taking your business to the next level.
City of Hercules
6 | PUNGROUP.CPA
Our Services
Our partners and seasoned professionals are always available, guiding clients through their periods of rapid growth as well as difficult times. We are able to do that by offering a portfolio of accounting services that are as diverse as the jurisdictions and entities themselves. The Pun Group LLP has successfully provided professional auditing, accounting, financial reporting, and management advisory/consulting services to a broad spectrum of governmental entities.
ASSURANCE ADVISORY OTHER SERVICES
Financial statements audits
Compliance audits
Performance audits
Internal audits
Service organization
controls audits
Operational reviews/risk
advisory services
Forensic investigation
Financial condition
analysis
Organizational structure
review
Cash flow analysis
Debt restructuring
consultation
Litigation restructuring
consultation
Assistance with the
preparation and review of the
Annual Comprehensive
Financial Report
Government property lease
excise tax compliance review
Sub-recipient monitoring
Implementation of new GASB
pronouncements
Audit readiness services
Contract Finance
Director/Accountant services
Cannabis Compliance Services
Many cities have authorized commercial cannabis to operate within their local jurisdiction.
Compliance issues are common in Californias newly regulated cannabis industry, which is no surprise given the complexity of the states regulatory landscape.
The Pun Group LLP has developed a platform to guide government agencies and commercial enterprises through the new and challenging steps in this emerging market. We have partnered with Simplifya, which has developed a cloud-based government agency/licensee compliance solution. Simplifya, headquartered in Denver, Colorado, and at the forefront since legalization in Colorado, has been an industry leader in commercial cannabis compliance since 2016. This new software allows government agencies to monitor their licensees at every stage of the approval process, from initial licensing to renewal and continuing disclosure requirements. Your communities demand that these new cannabis businesses operate based on the ordinances that you have passed. We can help ensure businesses are working in compliance, and when they are not, your team receives an immediate notification.
The Pun Group LLP has proven itself as a leader in the assurance and advisory field in the government arena. With the addition of Simplifya to our service offering, we have strengthened our position as a leading firm to help with your compliance needs and in unconventional areas as they emerge.
Joint Venture or Consortium
This project will not be accomplished by a Joint Venture or consortium. No subcontractors will be hired and/or utilized to provide the requested services to the City.
City of Hercules
7 | PUNGROUP.CPA
Peer Review
Being a member of the American Institute of Certified Public Accountants (AICPA), The Pun Group LLP is required to obtain an independent peer review of our audit and accounting practice every three (3) years. The peer reviewer assessed the Firms quality-control policies, reviewed administrative records, interviewed professional personnel, and inspected the Firms working papers and reports from a representative sample of accounting and auditing engagements, including governmental audits. The reviewer concluded that the Firm fully complied with the AICPAs stringent standards for quality control and issued a peer review rating of Pass. A copy of our most recent peer review is presented on the following page.
Federal or State Desk Review
No federal or state desk reviews or field reviews have been undertaken of any audits performed by the Firm or any of its partners, managers, or professionals during the past three (3) years.
Disciplinary Action
State regulatory bodies or professional organizations have taken no disciplinary action against the Firm or any of its partners, managers, or professionals during the past three (3) years.
The Firm has no conditions such as bankruptcy, pending litigations, planned office closures, mergers, or any organizational conflict of interest that may affect the ability of the Firm to perform the required duties requested by the City of Hercules.
City of Hercules
8 | PUNGROUP.CPA
Partner, Supervisory, and Staff Qualifications and Experience Who We Are
The engagement team was carefully selected to provide the City with all the services needed to successfully complete the audit. Your assigned Engagement and Technical Partners will be personally involved in the project, leading a team that has significant experience in governmental auditing. You can be confident that our broad experience and technical capabilities will allow us to provide technical support, interpret findings, and offer practical solutions to any issues that may arise.
About Your Engagement Team
The personnel assigned to this engagement are fully qualified to perform an effective audit of the City, and their extensive experience will be critical to the audit process. Our professionals are familiar with the complexities of governmental accounting, auditing, and financial reporting, including but not limited to all GASB pronouncements, the Single Audit Act, Uniform Guidance (formerly known as OMB Circular A-133), and fund operations. They have held positions as professional certified public accountants, as well as significant roles within and outside of government agencies. Such qualities will bring to an entity like the City of Hercules the thought leadership, quality, and level of experience it requires.
As full-time government auditors, we understand that governmental entities do not operate independently but in an increasingly complex web of local, state, and federal relationships. We know how these relationships work, what they mean at the local level, and how every public organizations focus on resource management is critical to success.
Also, while many accounting Firms can provide services, not all can build excellent working relationships with their clients. The Pun Group LLP prides itself on developing lasting, personal relationships with our clients. Our hands-on partner involvement and low personnel turnover are crucial tools to our success and are highly beneficial to the City.
Because of the familiarity threat under the professional audit and independence standards that may exist in long- term relationships with audit firms, the Firm is committed and has sufficient resources to rotate engagement partners, managers, and or supervisors assigned to the Citys audit with personnel with similar or higher qualifications and experience in order to overcome this threat.
If the Firm changes key personnel, we will provide the City with a written notification. Engagement partners, managers, and specialists will only be changed with the express prior written permission from the City.
Audit personnel may be replaced only by those with similar or better qualifications and experience.
Sophia Kuo, CPA, M.B.A. Engagement/Lead Partner
Sophia Kuo is an Assurance Services Partner in the Firm who holds an Advanced Certification in Single Audits through the AICPA. She possesses extensive auditing experience, including cities, counties, special districts, and not-for-profit entities. She will work closely with the engagement partners directing and supervising the audit team in its daily activities and tasks. She is a Certified Public Accountant and possesses a MAcc in Accounting and an M.B.A. in Business Administration.
Ms. Kuo will actively serve as the Engagement/Lead Partner, overseeing the Engagement Team, developing the audit plan, reviewing fieldwork for quality, approving final reports, and communicating with the Finance Department. She will also be responsible for the timely delivery of all services for the City.
City of Hercules
9 | PUNGROUP.CPA
Kenneth H. Pun, CPA, CGMA | Relationship Partner
Kenneth Pun is the Managing Partner and an Assurance Partner at the Firm. With over twenty-one years of public accounting experience in the state and local government sector, he specializes in audits, management, and consulting for governmental organizations. Mr.
Pun served as the Contract Deputy Finance Director for the City of San Marino in 2017. He has served as the Chair of the California Society of CPAs Governmental Auditing Accounting Committee. He is a Certified Public Accountant and a Chartered Global Management Accountant.
Mr. Pun, in his role as a relationship partner, assumes the critical responsibility of conducting a secondary review of significant high-risk areas and audit reports and resolving noteworthy accounting, auditing, and reporting matters. This pivotal role ensures a comprehensive and meticulous approach to our services.
John (Jack) F. Georger, CPA, CIA, CGMA | GASB Implementation Specialist Throughout his forty years of experience, Mr. Georger has spent many years in the Big 4 and national firms. He worked diligently alongside numerous governmental municipalities, including cities, counties, and transportation agencies, as well as not-for-profit entities, providing clients with financial and compliance auditing as well as consultation services. Mr.
Georger annually instructs over 300 hours in accounting and auditing subjects and has authored training material in governmental accounting and auditing for the AICPA. Mr.
Georger is also the technical reviewer of the CCH Knowledge-Based Audits of State and Local Governments with Single Audits, GAAP Guide (FASB), and Governmental GAAP Guide (GASB), the gold standard for audit firms throughout the United States. He is a Certified Public Accountant, a Certified Internal Auditor, and a Chartered Global Management Accountant.
Mr. Georger is responsible for reviewing all reports issued by the Firm to ensure the utmost quality and compliance with professional standards and the final quality-control assessment within the engagement.
Ross Gotthoffer, CPA | Quality Control Reviewer
Over his two decades of experience, Mr. Gotthoffer has dedicated a significant portion of his career to working with local firms in Florida and California. He has collaborated extensively with various governmental bodies, including cities, special districts, charter schools, and not-for-profit organizations. In these roles, he has provided clients with comprehensive financial and compliance audits, as well as valuable consultation services. Additionally, Mr.
Gotthoffer serves as the technical reviewer for esteemed resources like the CCH Knowledge-Based Audits of State and Local Governments with Single Audits, GAAP Guide (FASB), and Governmental GAAP Guide (GASB). These resources are considered the industry standard for audit firms across the United States.
In his capacity as our firm's Quality Officer, Mr. Gotthoffer offers guidance to clients facing intricate accounting inquiries and lends support to the engagement team in addressing audit-related challenges. He holds the title of a Certified Public Accountant registered in the State of Florida and is actively pursuing registration in California.
Mr. Gotthoffer assumes the responsibility of meticulously reviewing all reports issued by our firm. His role ensures the highest level of quality and adherence to professional standards, culminating in the final assessment for quality control within each engagement.
Suzette Reyes, CPA | Engagement Manager
Suzette is an Assurance Services Manager within the Firm. She will secure the effective implementation of the services approach while assisting in the timely delivery of the requested services. She is a Certified Public Accountant.
Ms. Reyes will serve as the primary point of contact for your team and will provide updates on our teams progress to the engagement leaders and you.
City of Hercules
10 | PUNGROUP.CPA
Seniors and Professional Staff
Every member of the assurance team possesses the qualifications necessary to conduct financial and compliance audits. This guarantees a consistent level of staff quality throughout the entire engagement period. In our commitment to both staff growth and the continuity of engagements, we actively promote senior and staff accountants to assume greater responsibilities in their ongoing engagements as part of their professional advancement.
Continuing Education and Professional Development
Because of our commitment to providing the highest quality of services to the City, we provide our professionals with technical training to ensure our people stay current on topics within the industry sectors and better equip themselves to serve our clients.
All professionals are required to obtain continuing education that exceeds the requirements of the American Institute of Certified Public Accountants (AICPA) and, where applicable, Government Auditing Standards. Our professionals participate in continuing education programs through the following means:
Governmental Accounting and Auditing Conference sponsored by AICPA.
Webinar sponsored by AICPA Government Audit Quality Center.
Annual Conference sponsored by California Society Municipal Finance Officers.
Governmental Accounting and Auditing Conference sponsored by CalCPA.
The Pun Group in-house training on government-specific topics, including but not limited to GASB updates, Government Auditing Standards Revision, Fraud in State and Local Governments, COSO Internal Control- Integrated Framework, Audit of State and Local Governments, Single Audit, and Mindbridge AI Auditors.
In 2023, our government professionals received an average of 52 hours of continuing professional education, compared with the 40 hours of accounting industry requirement.
By expanding our knowledge through these seminars/conferences, we can provide the right solutions to our clients.
Staff Continuity
The Pun Group LLP is committed to maintaining staff continuity throughout audit engagements, and we can assure you that the partners assigned to this audit will be involved throughout the entire contract term.
While we cannot guarantee that our staff-level members will stay with the Firm, we encourage loyalty by paying competitive wages, offering opportunities for promotion, using state-of-the-art equipment, and providing excellent working conditions. Also, we offer benefits, including retirement plans, medical plans, profit-sharing programs, and continuing education.
Quality-Control System
Our Firm meticulously monitors the quality and contents of our reports. The Pun Group LLP is 100% committed to providing only the highest grade of work possible for our clients and for those who rely on our audits. The Firm strives to exceed professional industry standards because of the continuing respect for our clients and our emphasis on creating long-lasting relationships. The Pun Group LLP works exclusively with those who share the same moral integrity and values. Our quality-control system has been crafted with excellence in mind. It not only meets AICPA standards but also matches our own elevated standards, which include following various professional development activities.
Engagement Team Resumes
The City of Hercules deserves experienced professionals who work as a team. The Pun Group LLP will provide qualified professionals to perform the audit. No subcontractors and/or consultants will be utilized to perform the requested services. Resumes for key engagement team members are presented as follows:
City of Hercules
11 | PUNGROUP.CPA
EXPERIENCE
Sophia Kuo is a Director within The Pun Group, LLPs Assurance division. In her ten years of accounting and auditing experience, Sophia has worked with governmental agencies, not-for- profit entities, and private for-profit entities. She possesses governmental expertise that ranges from GASB audit/reporting, Internal Controls/COSO Framework, Single Audit, Corporate Financial Reporting, Data Analysis, and Taxation.
Ms. Kuo has performed audits and other attestation services for several governmental agencies throughout California. Her portfolio includes cities, counties, redevelopment agencies, public financing authorities, housing authorities, transportation agencies, and special districts. Also, she has helped them publish their Annual Comprehensive Financial Reports in compliance with GASB Statement No. 34.
EDUCATION
Fu Jen Catholic University
B.A. Degree International Trading and Finance, Emphasis in Finance
Idaho State University
Master of Accounting (MAcc)
Master of Business Administration (M.B.A.)
LEADERSHIP & AFFILIATIONS
Member, American Institute of Certified Public Accountants (AICPA) Member, California Society of Certified Public Accountants (CalCPA)
RELEVANT EXPERIENCE
City of Coachella City of Culver City
City of Desert Hot Springs City of Gardena
City of Laguna Niguel City of Lakewood
City of Monterey City of Monterey Park
City of Perris
City of Stockton
City of Visalia
City of Pomona
City of Hercules
City of Glendora
CONTINUING PROFESSIONAL EDUCATION
Various courses are offered by the Firm online through Thompson Reuters, AICPA, and CalCPA Education Foundation, including:
Governmental and Non-profit Annual Update
Government Auditing Standards
GASB Basic Financial Statements for State and Local Governments Single Audits: Uniform Guidance (formerly OMB Circular A-133) Financial Accounting Standards Board Annual Updates
Statement on Standards for Accounting and Review Services Updates
Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies.
S o p h i a K u o C P A , M . B . A . E n g a g e m e n t / P r o j e c t D i r e c t o r EMAIL
[email protected]
WEBSITE
www.pungroup.cpa
E x p e r t i s e : C I T I E S C O U N T I E S T R A N S P O R T A T I O N A G E N C I E S E N T E R P R I S E O P E R A T I O N S H I G H E R E D U C A T I O N N O T - F O R - P R O F I T L i c e n s e d t o P r a c t i c e i n : C a l i f o r n i a
City of Hercules
12 | PUNGROUP.CPA
EXPERIENCE
Kenneth H. Pun is the Managing Partner and an Assurance Partner at The Pun Group, LLP, which he founded in 2012 after serving in senior-level positions for well-established national and regional firms.
Under his leadership, The Pun Group has become one of the Top Accounting Firms in Orange County, according to the Orange County Business Journal. The Pun Group is also on the list of CalCPA's Top 150 firms.
Prior to founding The Pun Group, Ken served clients in a variety of industries, including small to very large state and local governmental agencies, insurance companies, not-for-profits, healthcare, technology, and manufacturing and distribution clients. His career in public accounting was spent primarily with Regional firms and National firms.
Leveraging more than 21 years of public accounting experience, Ken has earned a reputation of being a trusted advisor to governmental and Healthcare organizations throughout California and neighboring states. Municipalities and public agencies engage him because of his premier level of client service, commitment, and innovative methods of increasing operational efficiencies and reducing costs.
Ken maintains his deep commitment to professional education through his work as an instructor for the California Education Foundation. He has authored training materials in governmental accounting and auditing, such as Financial Reporting for State and Local Governments, 2018 Government Auditing Standards, and Single Audit Fundamentals for California Education Foundation. He is also the technical reviewer of the CCH Knowledge-Based Audits of State and Local Governments with Single Audits. He advises clients on those topics at influential industry forums. Internally, Ken mentors audit teams by providing direction and technical guidance to ensure adherence to the firms quality controls.
EDUCATION
University of California, Riverside
B.S. Degree Business Administration, Emphasis in Accounting
LEADERSHIP & AFFILIATIONS
Member, American Institute of Certified Public Accountants (AICPA) Member, California Society of Certified Public Accountants (CalCPA) Past Chair, CalCPA Governmental Accounting and Auditing Committee Member, CalCPA California Committee on Municipal Accounting Member, CalCPA Governmental Accounting and Auditing Conference Planning Committee Member Government Finance Officers Association (GFOA)
Member, California Society of Municipal Finance Officers (CSMFO) Member, CSMFO Professional Standards Committee
Speaker, CSMFO Conference (2014 and 2018)
Instructor, CalCPA Education Foundation
Technical Reviewer, CCH Knowledge-Based Audits of State and Local Governments with Single Audits
RELEVANT EXPERIENCE
City of National City City of San Bernardino
City of Palm Springs City of Desert Hot Springs
City of Lakewood City of Stockton
City of Pomona City of Redding
City of Clovis City of Shafter
CONTINUING PROFESSIONAL EDUCATION
Various courses are offered by the Firm online through Thompson Reuters, AICPA, and CalCPA Education Foundation, including:
Governmental and Nonprofit Annual Update
Government Auditing Standards
GASB Basic Financial Statements for State and Local Governments Single Audits: Uniform Guidance (formerly OMB Circular A-133) Financial Accounting Standards Board Annual Updates
Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies.
K e n n e t h H . P u nC P A , C G M A R e l a t i o n s h i pP a r t n e r EMAIL
[email protected]
WEBSITE www.pungroup.cpa
E x p e r t i s e :C I T I E SC O U N T I E ST R A N S P O R T A T I O NA G E N C I E S E N T E R P R I S E O P E R A T I O N SH I G H E RE D U C A T I O NN O T - F O R - P R O F I TL i c e n s e d t o P r a c t i c e i n :C a l i f o r n i a
City of Hercules
13 | PUNGROUP.CPA
EXPERIENCE
Jack Georger is the Chief GASB Implementation Specialist within The Pun Group LLPs Assurance division. By leveraging more than forty years of public accounting and auditing experience in the government, agribusiness, financial services, manufacturing, and nonprofit sectors, Mr. Georger brings in-depth knowledge and practical expertise to each engagement.
Jack coordinates, plans, and manages financial audit activities, consulting activities, federal and state compliance audit activities, performance audits, and numerous quality control and internal control reviews for a broad mix of governmental agencies and programs throughout the United States.
Mr. Georger leads our Peer Review department providing peer review services to other firms under the practice monitoring program of the AICPA.
Mr. Georger is a continuing professional education course instructor for the AICPA. Annually, he instructs over 300 hours in accounting and auditing subjects. Jack has authored training material in governmental accounting and auditing for the AICPA. He is the technical reviewer of the CCH Knowledge-Based Audits of State and Local Governments with Single Audits, GAAP Guide (FASB), and Governmental GAAP Guide (GASB).
Mr. Georger is licensed to practice as a certified public accountant in the states of California, New York, Virginia, Maryland, the District of Columbia, Missouri (inactive), Connecticut (inactive), and Wyoming (inactive). He is a Certified Internal Auditor (CIA).
EDUCATION
George Mason University Fairfax, Virginia
B.S. Degree Accounting
LEADERSHIP & AFFILIATIONS
Member and Instructor, American Institute of Certified Public Accountants (AICPA) Member, Institute of Internal Auditors
Member, California Society of Certified Public Accountants (CalCPA) Member, New York Society of Certified Public Accountants (NYSSCPA) Chairman, NYSSCPA Government Accounting and Auditing Committee Member, NYSSCPA Auditing Standards Committee
Member, NYSSCPA Sustainability Committee
Member, NYSSCPA Not-for-Profit Committee
Nevada Society of Certified Public Accountants (NSCPA)
Member, Government Finance Officers Association (GFOA) Reviewer Member, Institute of Internal Auditors
CONTINUING PROFESSIONAL EDUCATION
He has instructed over 300 hours of municipal accounting courses offered by the AICPA.
Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies.
J o h n F . G e o r g e r , J r. C P A , C I A , C G M A G A S B I m p l e m e n t a t i o n S p e c i a l i s t EMAIL
[email protected]
WEBSITE
www.pungroup.cpa
E x p e r t i s e : C I T I E S C O U N T I E S T R A N S P O R T A T I O N A G E N C I E S E N T E R P R I S E O P E R A T I O N S H I G H E R E D U C A T I O N N O T - F O R - P R O F I T L i c e n s e d t o P r a c t i c e i n : C a l i f o r n i a A r i z o n a N e v a d a
City of Hercules
14 | PUNGROUP.CPA
EXPERIENCE
Ross Gotthoffer, a Director in The Pun Group LLP's Assurance division, boasts over two decades of public accounting and auditing experience across diverse sectors such as government, agribusiness, financial services, manufacturing, and nonprofits. His wealth of knowledge and practical expertise enhances every engagement.
As a seasoned Quality Control Reviewer at the CPA firm, Mr. Gotthoffer ensures the highest standards of accuracy and compliance. His meticulous approach encompasses the evaluation of financial statements, auditing processes, and regulatory adherence. With a proven track record, he actively contributes to enhancing overall quality control protocols, providing valuable insights, and fostering a culture of excellence within the organization.
Mr. Gotthoffer's responsibilities include conducting comprehensive quality reviews of all reports, ensuring that audits align with both firm and professional standards. He serves as a key resource for technical and operational issues, bringing a depth of expertise to the role.
Additionally, Mr. Gotthoffer holds the position of technical reviewer for significant publications like CCH Knowledge-Based Audits of State and Local Governments with Single Audits, GAAP Guide (FASB), and Governmental GAAP Guide (GASB). He is a licensed certified public accountant in the state of Florida.
EDUCATION
University of South Florida, Tampa, Florida
Master of Accountancy
LEADERSHIP & AFFILIATIONS
Member, American Institute of Certified Public Accountants (AICPA) Member, Florida Institute of Certified Public Accountants (AICPA) Member, Government Finance Officers Association (GFOA) Reviewer
CONTINUING PROFESSIONAL EDUCATION
Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies.
R o s s G o t t h o f f e rC P AQ u a l i t y C o n t r o lR e v i e w e r EMAIL
[email protected]
WEBSITE www.pungroup.cpa
E x p e r t i s e :C I T I E SC O U N T I E ST R A N S P O R T A T I O NA G E N C I E S E N T E R P R I S E O P E R A T I O N SH I G H E RE D U C A T I O NN O T - F O R - P R O F I TL i c e n s e d t o P r a c t i c e i n :F l o r i d a
City of Hercules
15 | PUNGROUP.CPA
EXPERIENCE
Suzette Reyes is an Assurance Services Manager within The Pun Group LLP, with nine years of accounting and auditing experience.
Ms. Reyes has successfully performed audits and other attestation services for several governmental and nonprofit agencies.
Suzette will perform a significant amount of fieldwork, supervise all staff accountants, participate in the planning phase of the engagement, including the development of the overall audit plan and programs, and be heavily involved in the review and preparation of all reports.
EDUCATION
University of the East - Philippines
B.S. Degree Accounting
LEADERSHIP & AFFILIATIONS
Member, California Society of Certified Public Accountants (CalCPA) Member, Association of Certified Fraud Examiner (ACFE)
RELEVANT EXPERIENCE
City of Gardena City of Arvin
City of Palm Springs City of Dessert Hot Springs
City of Seal Beach City of Bell
City of Monterey
City of Montebello
Orange County Business Council
Los Angeles Law Library
CONTINUING PROFESSIONAL EDUCATION
Various courses offered by the Firm, online through Thompson Reuters, AICPA, CalCPA Education Foundation, including:
Governmental and Nonprofit Annual Update
Government Auditing Standards
GASB Basic Financial Statements for State and Local Governments Single Audits: Uniform Guidance (formerly OMB Circular A-133) Financial Accounting Standards Board Annual Updates
Statement on Standards for Accounting and Review Services Updates
Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies.
S u z e t t e R e y e s C P A E n g a g e m e n t M a n a g e r EMAIL
[email protected]
WEBSITE
www.pungroup.cpa
E x p e r t i s e : C I T I E S T R A N S P O R T A T I O N A G E N C I E S E N T E R P R I S E O P E R A T I O N S N O T - F O R - P R O F I T L i c e n s e d t o P r a c t i c e i n : C a l i f o r n i a
City of Hercules
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Similar Engagements with Other Government Entities
References
The following are examples of some of the engagements with similar requirements as the City of Herculess proposal. Please feel free to contact these agencies to learn more about their experiences working with us.
Name of Public Agency San Diego Metropolitan Transit System Contact Info Ms. Erin Dunn, Controller
[email protected] | (619) 557-4536
Total Hours Approximately 1,850 hours
Contract Price $225,000/year
Date of Services 2015 Present
Scope of Work/
Reports Prepared
Financial Audit and Compliance Services: Annual Comprehensive Financial Report Audit, GFOA Award, San Diego Transit Corporation Employees Retirement Plan, AUP/National Transit Database (NTD): MTS, San Diego Transit Corp., San Diego Trolley, Inc., AUP/Transportation Development Act (TDA): MTS, San Diego Transit Corp., San Diego Trolley, Inc., AUP/Indirect Costs, and Public Transportation Modernization Improvement Service Enhancement Account (PTMISEA).
Name of Public Agency City of Stockton
Contact Info Mr. Jay Kapoor, Deputy City Manager
[email protected] | (209) 937-5435
Total Hours 3,000 hours
Contract Price $272,000/year
Date of Services 2012 Present
Scope of Work/
Reports Prepared
Financial Audit and Compliance Services: Annual Comprehensive Financial Report, GFOA Award, Single Audit, GANN Limit, Measure A, Measure W, Measure M, Entertainment Venues, Revenue and Expenditures related to Downtown Marina, Cannabis License Audits, Review of Major Revenues required by the Bankruptcy Agreement with Assured Guarantee.
Name of Public Agency City of Tracy
Contact Info Ms. Sara Cowell, Director of Finance
[email protected] | (209) 831-6862
Total Hours 960 hours
Contract Price $96,500/year
Date of Services 2021 Present
Scope of Work/
Reports Prepared
Financial Audit and Compliance Services: Annual Comprehensive Financial Report, GFOA Award, Single Audit, GANN Limit, National Transit Database (NTD), State Controllers Reports (City, PFA, Operating Partnership JPA, Citys Transit Operators General Services, and Specialized Services)
Name of Public Agency City of Desert Hot Springs
Contact Info Mr. Geoffrey Buchheim, Finance Director
[email protected] | (760) 329-6411
Total Hours 700 hours
Contract Price $75,000/year
Date of Services 2013 Present
Scope of Work/
Reports Prepared
Financial Audit and Compliance Services: Annual Comprehensive Financial Report Audit, GFOA Award, Single Audit, GANN Limit, Desert Hot Springs Successor Agency, Desert Hot Springs Financing Authority, Desert Hot Springs Health and Wellness Foundation, New Market Tax Credit Audit (Desert Hot Springs Health and Wellness Foundation), Annual State Controllers Reports, AUP/Transient Occupancy Tax, Utility User Tax, DHS Housing Audits.
Name of Public Agency City of National City
Contact Info Mr. Phillip Davis, Financial Analyst
[email protected] | (619) 336-4246
Total Hours 600 hours
Contract Price $70,000/year
Date of Services 2013 Present
Scope of Work/
Reports Prepared
Financial Audit and Compliance Services: Annual Comprehensive Audit, GFOA Award, Single Audit, GANN Limit, HUD Single Audit/Morgan Towers, Financial and Compliance Reports Kimball Towers, Annual State Controllers Report.
City of Hercules
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List of Current Municipal Clients
The Pun Group LLP has performed numerous audits of organizations subject to financial and compliance audits.
These audits were performed under auditing standards generally accepted in the United States, Government Auditing Standards, Uniform Guidance (formerly known as OMB Circular A-133), and its Compliance Supplement (when applicable), Office of the State Controllers Minimum Audit Requirements and Reporting Guidelines.
A representative list of our current clients is as follows:
Municipalities Dates Financial
Audit
Single
Audit
GFOA
Certificate
Total
Hours
City of Adelanto 2021 Present Yes Yes Yes 700
City of Anderson 2023 Present Yes Yes N/A 530
City of Arvin 2013 Present Yes Yes N/A 400
City of Baldwin Park 2022 Present Yes Yes Yes 700
City of Bell 2018 Present Yes Yes Yes 520
City of Bradbury 2012 Present Yes N/A N/A 150
City of Calexico 2007 Present Yes Yes N/A 750
City of Clovis 2006 Present Yes Yes Yes 500
City of Coachella 2017 Present Yes Yes Yes 410
City of Commerce 2023 Present Yes Yes Yes 570
City of Cottonwood, AZ 2007 Present Yes Yes Yes 400
City of Corona 2021 Present Yes Yes Yes 640
City of Cudahy 2023 Present Yes Yes Yes 500
Town of Corte Madera 2022 Present Yes Yes N/A 400
Town of Danville 1999 Present Yes Yes Yes 400
City of Douglas, AZ 2020 Present Yes Yes Yes 300
City of Desert Hot Springs 2013 Present Yes N/A N/A 700 City of Encinitas 2024 Present Yes Yes Yes 600
City of Fresno 2022 Present Yes Yes Yes 1,450
City of Gardena 2007 Present Yes Yes Yes 700
City of Gilroy 2020 Present Yes Yes Yes 640
City of Hercules 2020 Present Yes Yes Yes 450
City of Indio 2024 Present Yes Yes Yes 708
City of Lake Elsinore 2023 Present Yes Yes Yes 460
City of Lakewood 2013 Present Yes Yes Yes 380
City of Lynwood 2016 Present Yes Yes Yes 585
City of Madera 2019 Present Yes Yes Yes 470
City of Menlo Park 2023 Present Yes Yes Yes 550
City of Hercules
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Municipalities Dates Financial
Audit
Single
Audit
GFOA
Certificate
Total
Hours
City of Montebello 2022 Present Yes Yes Yes 600
County of Monterey 2023 Present Part of the audit & consulting services pool TBD City of Monterey Park 2023 Present Yes Yes Yes 612
City of Napa 2019 Present Yes Yes Yes 750
City of National City 2013 Present Yes Yes Yes 600
City of Palm Springs 2020 Present Yes Yes Yes 1,000
City of Paramount 2023 Present Yes Yes Yes 460
City of Patterson 2017 Present Yes Yes Yes 450
City of Placerville 2008 Present Yes Yes N/A 400
City of Pleasanton 2024 Present Yes Yes Yes 700
City of Pinole 2023 Present Yes Yes Yes 400
City of Redlands 2022 Present Yes Yes Yes 650
City of Ridgecrest 2009 Present Yes Yes Yes 300
City of Rohnert Park 2020 Present Yes Yes Yes 700
City of Salinas 2022 Present Yes Yes Yes 800
City of San Mateo 2021 Present Yes Yes Yes 900
City of Santa Clarita 2022 Present Yes Yes Yes 1,200
City of Santa Cruz 2023 Present Yes Yes Yes 800
City of Seal Beach 2017 Present Yes Yes Yes 410
City of Stockton 2012 Present Yes Yes N/A 3,000
City of Tracy 2021 Present Yes Yes Yes 960
Town of Tiburon 2022 Present Yes Yes Yes 452
City of Vernon 2023 Present Yes Yes Yes 1000
City of Ventura 2024 Present Yes Yes Yes 960
City of Visalia 2021 Present Yes Yes Yes 650
Imperial County Transportation
Commission 2020 Present Yes Yes Yes 600
Nevada County Transportation
Commission 2021 Present Compliance
Services N/A N/A 450
San Diego Metropolitan Transit System 2005 Present Yes Yes Yes 1,850 Shasta Regional Transportation Agency 2015 Present Yes N/A N/A 400 Carmel Area Wastewater District 2022 Present Yes Yes N/A 150 CAWD/PBSCD Wastewater Reclamation
Project 2022 Present Yes N/A N/A 150
Central Basin Water District 2018 Present Yes Yes N/A 400 City of Hercules
19 | PUNGROUP.CPA
Municipalities Dates Financial
Audit
Single
Audit
GFOA
Certificate
Total
Hours
Helix Water District 2024 Present Yes Yes Yes 320
Los Angeles County Law Library 2020 Present Yes N/A N/A 180 Marina Coast Water District 2012 Present Yes N/A Yes 240 Menlo Park Fire Protection District 2015 Present Yes Yes Yes 240 NALEO Educational Fund and NALEO 2020 Present Yes N/A N/A 300 Olivenhain Municipal Water District 2019 Present Yes Yes Yes 200 Padre Dam Municipal Water District 2020 Present Yes Yes Yes 250 Rancho Santa Fe Fire Protection District 2015 Present Yes N/A N/A 120 San Bernardino County Preschool
Services Department 2020 Present Yes Yes N/A 150
San Bernardino County Fire Protection
District 2016 Present Yes N/A N/A 200
San Elijo Joint Powers Authority 2016 Present Yes N/A N/A 146 Santa Fe Irrigation District 2019 Present Yes N/A N/A 250 Sweetwater Authority 2022 Present Yes Yes Yes 270
South Bay Cities Council of Governments 2020 Present Yes N/A N/A 100 South Orange County Water Authority 2017 Present Yes Yes Yes 240 South Bay Regional Public
Communications Authority 2015 Present Yes N/A N/A 100 Southwestern Community College District 2009 Present Yes Yes N/A 720 Valley Sanitary District 2015 Present Yes N/A Yes 140 West Valley Mosquito and Vector Control
District 2016 Present Yes N/A N/A 100
Zone 7 Water Agency 2020 Present Yes Yes Yes 400
GFOA Award Program
The Pun Group LLP realizes the importance of maintaining the Certificate for Excellence in Financial Reporting from the GFOA. Our professionals are exceptionally well qualified to assist governments in obtaining and maintaining their certificates.
Our dedication and active engagement in shaping auditing and accounting standards are evident through our enthusiastic participation in the GFOA's financial statements certificate programs. Remarkably, all of our present clients who have submitted their Annual Comprehensive Financial Reports to the GFOA have been honored with these prestigious awards.
Also, our senior partner, Mr. John F. Georger, is a member of the Government Finance Officers Association and participates in the GFOA Special Review Committee.
City of Hercules
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Firms Experience with Single Audit and Grants
The Pun Group LLP works with numerous organizations that receive extensive governmental funding and are subject to auditing under Uniform Grant Guidance. This Firms specialization helps our audit team understand the procedures nuances and execute the engagement accordingly. We also assist in preparing the data collection form and preparing the reporting package for submission to the federal audit clearinghouse.
The Firm is a member of the AICPA Governmental Audit Quality Center and has demonstrated its commitment to audit quality, including those performed under Government Auditing Standards and Uniform Guidance. Also, we are a recipient of the Single Audit Resource Centers Award for Excellence. This award is based on the positive feedback result from our clients in an independent survey, demonstrating our Firms highest commitment to quality and client satisfaction.
We utilize standardized audit programs from the federal governments Compliance Supplement to ensure that our procedures meet federal standards. Our audit programs are continually updated to reflect the revisions of OMB.
Our Uniform Guidance risk-based approach focuses on areas of higher risk of non-compliance. Such an approach truly reflects the federal government's intent by concentrating on the following four steps:
1. Planning & Internal control assessment: The engagement team will obtain an understanding of the City and its operating environment and its internal control over the Schedule of Expenditures of Federal Awards.
The engagement team will perform the major program determination and communicate with the Citys management before conducting major program testing.
2. Testing & compliance assessment: The engagement team will obtain an understanding of internal control over compliance on the direct and material compliance requirements for each major program. The engagement will perform testing on internal controls over compliance to ensure the controls are in place working effectively and properly and that the City is in compliance with the applicable regulations in administering major programs.
3. Reporting & Review: The engagement team will review and prepare the single audit reports and perform quality control procedures following the Quality Control Standards issued by the AICPA. Any comments will be issued to the management or the Charge with Governance, depending on the magnitude of the issues.
Upon obtaining the final approvals from management, the Single Audit report will be issued.
4. Issuance to Clearing House: The engagement team will assist the City in drafting the data collection form and completing the final submission, including uploading the audit package to the Federal Clearing House.
City of Hercules
21 | PUNGROUP.CPA
Our Firm has audited hundreds of millions of dollars in federal expenditures, making our engagement team uniquely experienced in single audits. We are familiar with grantors, such as:
Following are a few examples of the types of federal programs our engagement team has experience auditing:
Corporation for National and Community Services
Department of Agriculture
Department of Education
Department of Health and Human Services
Department of Housing and Urban Development
Department of Transportation
Environmental Protection Agency
Department of Commerce
Department of Labor
Department of Homeland Security
Department of Justice
Department of Treasury
Executive Office of the President
City of Hercules
22 | PUNGROUP.CPA
Firms Experience with Finance and Community Development Institutions Our Firm has provided professional services to several Finance Authorities, as well as Community Development Agencies. Some examples are:
Finance Authorities:
City of Bell Public Finance Authority
City of Desert Hot Springs Financing Authority
City of Hercules Public Financing Authority
City of Lakewood Public Financing Authority
City of Madera Financing Authority
City of Palm Springs Public Financing Authority
City of Patterson Financing Authority
West Patterson Financing Authority
City of Perris Public Financing Authority
City of Pomona Public Financing Authority
Town of Danville Financing Authority
Community Development Agencies:
City of Lodi (Special Purpose Audits Community Development Block Grant/Home Funds) Morgan Towers (Multi-Family Program), National City Community Development Commission National City Community Development Commission
Perris Community Economic Development Corporation
Firms Experience with Housing Authorities and Subsidized HUD Programs The assigned engagement team will count on their experience with numerous financial and compliance audits as well as agreed-upon procedures to deliver the requested services. Our team has extensive experience with the following subsidized HUD programs:
Housing Choice Voucher (HCV)
Family Self Sufficiency (FSS)
Shelter Plus Care (SPC)
Housing Opportunities for Persons with AIDS (HOPWA)
Veterans Affairs Supportive Housing (VASH)
Community Development Block Grant (CDBG) City of Lynwood HOME Investment Partnership Grant (HOME) City of Lynwood In addition, our Firm has provided professional services to several Housing Authorities. Some examples are:
Calexico Housing Authority
Culver City Housing Authority
Douglas Housing Authority, AZ
Encinitas Housing Authority
Glendora Housing Authority
Lakewood Successor Housing Authority
National City Community Development Commission
Napa Housing Authority
Morgan Towers (Multi-Family Program), National City Community Development Commission Monterey Park Housing Authority
Perris Housing Authority
Pomona Housing Authority
Port Hueneme Housing Authority
Poway Housing Authority
Housing Authority of the Redding
South Gate Housing Authority
City of Hercules
23 | PUNGROUP.CPA
Firms Experience Performing Compliance Audits and Agreed-upon Procedures (Measures) Our Firm has performed several audits with requirements similar to the ones requested by the City. Some examples follow:
Measure A
City of Coachella
City of Hemet
City of Perris
City of Stockton
Measure B
City of Hercules
City of Stockton
Measure BB
City of Seal Beach
Measure C
City of Hercules
Measure D
City of Palm Springs
Imperial County Local Transportation Authority
Measure G
City of Gardena
Measure J
City of Palm Springs
Measure L
City of Huntington Park
Measure M
City of Culver City
City of Stockton
Measure O
City of Hercules
Measure R
City of Culver City
City of Gardena
City of Lynwood
Measure T
City of Madera
Measure U
City of Port Hueneme
Measure W
City of Stockton
Measure X
City of Monterey
Measure Z
Southwestern Community College District
City of Hercules
24 | PUNGROUP.CPA
Firms Experience with State Controllers Reports
The Pun Group LLP has assisted numerous clients with the preparation of the required reports by the California State Controllers Office. Some of these experiences are as follows:
Cities Financial Transactions Report:
City of Arvin
City of Bell
City of Coachella
City of Culver City
City of Desert Hot Springs
City of Hercules
City of Placentia
City of Laguna Niguel
City of Lakewood
City of Lynwood
City of Monterey
City of Morro Bay
City of Napa
City of National City
City of Palm Springs
City of Perris
City of Rohnert Park
City of South Gate
City of Stockton
Annual Street Report:
City of Desert Hot Springs
City of Laguna Niguel
City of Napa
City of Palm Springs
City of Perris
City of Stockton
Special Districts Financial Transactions Report:
Special District of West End Water Development Treatment and Conservation Joint Powers Authority Special District of West Valley Water District
Special District of Coachella Financing Authority
Special District of Coachella Sanitary District (Riverside) Special District of Coachella Water Authority
Special District of Desert Hot Springs Public Financing Authority Special District of Desert Hot Springs Successor Agency Special District of Perris Public Utility Authority
Special District of Perris Public Financing Authority
Special District of Perris Joint Powers Authority
Special District of Central Basin Municipal Water District Special District of Marina Coast Water District
Special District of Menlo Park Fire Protection District Special District of San Bernardino County Fire Protection District Transit Operators Financial Transactions Report:
City of Arvin
City of Culver City
City of Hercules
25 | PUNGROUP.CPA
Our Professionals Experience with Pensions and Other Post-Employment Benefits Members of our team have experience in providing professional services to the following employee retirement systems:
California Public Employees' Retirement System (CALPERS) Culver City Other Postemployment Benefit Plan
Nevada Public Employees Retirement Systems
Sacramento County Employees Retirement System
San Francisco Community College District
San Diego County Employees Retirement Association
San Diego City Employees Retirement System
San Diego Transit Corporation Employees Retirement Plan San Jose Employee Retirement System
University of California Pension Plans
In addition, our team draws years of expertise reviewing budget documents as well as various pension and other post-employment benefits (OPEB) plan documents, including but not limited to trust agreements, pension, and OPEB actuarial reports, GASB 68 and 75 reports, as well as GASB 75 reports prepared under Alternative Measurement Methods. A relevant list of plans includes:
California Public Employees' Retirement System GASB 68 reports Public Agency Retirement System (PARS) GASB 68 reports San Bernardino County Employees Retirement Association (SBCERA) GASB 68 reports PARS GASB 75 reports
Experience in Performing Program-Specific Audits
The assigned engagement team will count on their experience with numerous financial and compliance audits as well as agreed-upon procedures to deliver the requested services to the City. Our team is extremely experienced with the following:
National Transit Database (NTD)
Federal Transit Administration (FTA)
Local Transportation Fund (LTF)
State Transit Assistance Fund (STAF)
State of Good Repair (SGR)
Low Carbon Transit Operations Program Accounts (LCTOP) Public Transportation Modernization Improvement and Service Enhancement Account (PTMISEA) Proposition 1B
State of California Transportation Development Act (TDA), including the requirements of the Southern California Association of Governments Transportation Development Act Conformance Auditing Guide Special District, Transit District Reporting, and Transportation Reporting Requirements, as specified by the California State Controller
Sales Tax Measures
Debt Compliance/Bond Debt
We have conducted financial, and compliance audits for transportation clients, such as:
Big Bear City Airport District Culver City Bus Lines
GTrans (Gardena Municipal Bus Lines) Gold Coast Transit Imperial County Local Transportation AuthorityNorth County Transit District San Diego Metropolitan Transit System Shasta Regional Transportation Authority SunLine Transit Agency Ventura County Transportation Commission Imperial County Transportation Commission Nevada County Transportation Commission City of Hercules
26 | PUNGROUP.CPA
Firms Expertise and Experience in Governmental Accounting Rules and Regulations, Including Implementation of new GASB Pronouncements
The evolving landscape of federal laws, statutes, ordinances, and compliance provisions has introduced unparalleled complexity into the realm of public accounting. Our GASB Implementation Specialist, Mr. Jack Georger, has been instrumental in guiding our clients through the implementation of new standards while navigating changes within existing ones. Additionally, our partners play key roles in committees that contribute to the formulation of new standards, and they actively engage with industry associations focused on state and local governments.
Through our active participation in industry associations and related activities, we ensure that we stay abreast of the latest developments in the field and their implications for your operations. Rest assured, we are committed to keeping both you and our colleagues within the Firm fully informed about these developments.
Also, our professionals are familiar with the complexities of governmental accounting, auditing, and financial reporting, including but not limited to all GASB pronouncements, the Single Audit Act, and Uniform Guidance (formerly known as OMB Circular A-133) and fund operations. They have held positions as professional certified public accountants and taken on significant roles within and outside government agencies. Such experience brings to our clients the thought leadership, quality, and level of expertise they require.
The Firm is well versed and experienced in assisting our clients with the implementation of the applicable GASB pronouncements every year, such as:
GASB 34
GASB 54
GASB 65
GASB 68
GASB 75
GASB 84
GASB 87
GASB 91
GASB 94
GASB 96
Throughout the engagement, several new GASB pronouncements will become effective. The Engagement Team will pay specific attention to upcoming statements that will become effective and work with the City to create a plan to address new standards before the implementation period. This step will allow the finance department staff the needed time to be prepared.
Special Attention: GASB Pronouncements Effective for Reporting Year 2024 GASB Statement No. 100, Accounting Changes and Error Corrections an Amendment of GASB Statement No. 62 The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. Application of this statement is effective for the Citys fiscal year ending June 30, 2024.
GASB Statement No. 101, Compensated Absences
The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. Application of this statement is effective for the Citys fiscal year ending June 30, 2025.
GASB Statement No. 102, Certain Risk Disclosures
The objective of this Statement is to provide users of government financial statements with essential information about risks related to a governments vulnerabilities due to certain concentrations or constraints. That objective is achieved by requiring governments to assess whether a concentration or constraint makes the primary government reporting unit or other reporting units that report a liability for revenue debt vulnerable to the risk of a substantial impact. The statement also requires a government to assess whether an event or events associated with a concentration or constraint that could cause the substantial impact have occurred, have begun to occur, or are more likely than not to begin to occur within 12 months of the date the financial statements are issued. Application of this statement is effective for the Citys fiscal year ending June 30, 2025. Earlier application is encouraged.
City of Hercules
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Firm's Experience with Tyler Technologies and Their Solutions Our professionals are extremely familiar with Tyler Technologies and their software solutions. Our team will deploy such experience to hit the ground running with no downtime. Some examples of our clients who utilize Tyler Technologies are:
Client Name Office Industry
Madera, City of Santa Ana Local Government
Encinitas, City of San Diego Local Government
Rohnert Park, City of Walnut Creek Local Government
San Elijo JPA San Diego Special District
Shafter, City of Santa Ana Local Government
Lodi, City of Walnut Creek Local Government
Lakewood, City of Orange County Local Government
Culver City, City of Orange County Local Government
Perris, City of Orange County Local Government
Lynwood, City of Orange County Local Government
Gardena, City of Orange County Local Government
Monterey, City of Orange County Local Government
South Gate, City of Orange County Local Government
South Bay Regional Communications Orange County Local Government
City of Hercules
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Specific Audit Approach
Scope of Work, Audit Approach, and Methodology
The City of Hercules is requesting the Firm to perform Professional Auditing Services and issue opinions on the Citys financial statements. The audits are to be completed in accordance with all applicable and generally accepted auditing standards, including, but not limited to, the following:
Generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants (AICPA).
US General Accounting Offices (GAO) Standard for Audit of Governmental Organizations, Programs, Activities, and Functions.
Local Governments and Governmental Accounting Standards Board (GASB) Pronouncements.
The standards applicable to financial audits contained in the most current version of the Generally Accepted Government Auditing Standards (Yellow Book), issued by the Comptroller General of the United States.
The provisions of the Single Audit Act as amended in 1996.
The provisions of the US Office of Management and Budget (OMB) Uniform Guidance (formerly known as Circular A-133), Audits of State and Local Governments and Non-profit Organizations, and the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.
The Firm will perform the following services:
Financial Statement Audits and issuance of an opinion statement on the Annual Comprehensive Financial Report of the City of Hercules and the financial statements of its component units. The audit will be conducted in accordance with Generally Accepted Government Auditing Standards. The report will be in full compliance with all current GASB pronouncements.
The following component units will be audited as part of the audit of the Citys financial statements:
Component Unit Financial Statements for The Hercules Redevelopment Agency; Component Unit Financial Statements for The Hercules Public Financing Authority; Basic Financial Statements for the Hercules Municipal Utility; and Financial Statements for the Measure Funds (transportation moneys).
In addition, the Firm will assist in meeting the requirements for the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting. Prepare a Single Audit Report which will include the following:
o Report on compliance and internal control over financial reporting based on an audit of financial statements performed in accordance with Government Auditing Standards. o Report on compliance with requirements applicable to each major program, internal control over compliance, and on the schedule of expenditures of federal awards in accordance with Uniform Guidance, Audits of State and Local Governments, and the Single Audit Act of 1984 (Public Law 98-502).
o Schedule of Expenditures of Federal Awards.
o Notes to Schedule of Expenditures of Federal Awards.
o Schedule of Findings and Questioned Costs.
o Any other required schedules or reports.
o Prepare the Data Collection Form for Reporting on Audits of States, Local Governments, and Non- Profit Organizations.
State Controllers Report (Cities Financial Transaction).
A report based on the auditors understanding of the internal control structure and assessment of control risk. In this report, the auditor will also communicate any reportable conditions found during the audit and indicate whether they are material weaknesses.
A separate report on the auditors analysis of the internal control structure used in the administration of federal financial assistance programs.
A report on the Citys compliance with laws and regulations related to major federal awards including an opinion on compliance with specific requirements applicable to major federal awards programs. The report on compliance will include all instances of non-compliance.
City of Hercules
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A report on the Redevelopment Agencys compliance with the laws and regulations identified in the Guidelines for Compliance Audits of California Redevelopment Agencies as issued by the State Controller and a report on the Agencys internal controls.
A Management Letter addressed to the City Council of the City of Hercules setting forth recommendations (as applicable) for improvements in the Citys accounting systems.
A letter to the City Manager and Finance Director communicating any reportable conditions found during the audit. A reportable condition is defined as a significant deficiency in the design or operation of the internal control structure, which could adversely affect the organizations ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Non-reportable conditions discovered by the auditor will be communicated in the Management Letter.
A report on the Citys compliance with Proposition 111, Article XIII.B of the California State Constitution and Government Code 7900 (et seq.) in its calculation of the Gann Limit.
Issue an Auditors Communication Letter with any reportable conditions found during the audit. A reportable condition will be defined as a material weakness or significant deficiency.
Provided By Client (PBC) Lists: They will be provided for both interim and final audits according to an agreed- upon timeline between the engagement team and the City in order to be reasonably prepared for a field audit. The engagement team will meet with the Citys management during the initial planning stage to discuss audit schedules and review the prior year's audit findings (if any). We will deliver a list of all documents to be provided by the Citys staff. Once such materials are agreed upon by the engagement team and Citys finance personnel, no other schedules will be requested unless new information comes to light in the course of test work.
Attendance at Meetings and Hearings: The engagement team will participate in as many meetings with staff as needed to perform the work scope tasks, present the audit plan prior to beginning fieldwork, and discuss the draft audit reports. The team will attend public meetings to present and discuss its findings and recommendations.
Once all issues of discussion are resolved, the completed Financial Reports, Single Audit report (if applicable), and other reports will be delivered to the City according to the agreed-upon schedule.
Proposed Audit Adjustments: All proposed adjusting journal entries by the Firm will be discussed and explained in a timely manner with the designated Finance Department personnel. Such proposed adjustments will be in a format that shows the lowest level of posting detail needed for data entry in the general ledger systems.
Supplemental Reports, Audits, or Agreed-Upon Procedures: Other services, such as agreed-upon procedures, may be deemed necessary. These services will be performed at agreed-upon rates and will be added to a written agreement before commencing audit work. The Firm and the City of Hercules will discuss and approve the scope and associated costs of these tasks.
Advice and Consultation: Will be provided throughout the year on matters relating to accounting and financial reporting. Such services do not include any task that entails significant research or a formal report.
GASB Implementation: The Firm will provide technical assistance and training in the implementation of applicable GASB pronouncements not yet in effect. We have a dedicated partner, Mr. Jack Georger, who will be responsible for providing advice and consultation for the implementation of these new standards. The Firm will advise the City on the applicability of accounting and reporting standards and other accounting issues and provide guidance on new note disclosures, GASB implementations, and other reporting requirements. We will also provide training, resources, and information on topics relevant to the Citys financial reporting and operations. (Based on the scope, additional charges may apply.)
Report of all Irregularities and Illegal Acts: The Firm will make an immediate written report of all irregularities and illegal acts or indications of illegal actions, which we may become aware of to the City Manager and the Finance Director. The engagement team will also make all communications to the City required by the audit standards under which the engagement is performed.
Working Paper Retention and Access to Working Papers: The Firm will retain, at its own expense, all working papers and reports for a minimum of seven (7) years unless the City of Hercules notifies the Firm in writing of the need to extend the retention period. The Firm will make working papers available upon request by the City of Hercules or its designees.
Also, we will comply with reasonable requests from successor auditors and allow them to review working papers that relate to matters of continuing accounting significance.
City of Hercules
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Methodology and Segmentation of Engagement
The Firms audit approach consists of six phases: Engagement Acceptance and General Planning, Planning and Internal Control Evaluation, Fieldwork, Post Fieldwork, Report Preparation and Review, and Final Production.
1. Engagement Acceptance and General Planning: The engagement partner and manager will meet with Citys management to obtain an update on current City policies and procedures, help identify risk areas and new operations, and establish any specific requirements they may have. Our team will work on the identification of unique transactions, implementation of new GASB pronouncements, and develop the audit work plan for the engagement. Proposed timeline: May of each year.
2. Planning and Internal Control Evaluation: The engagement team, including the engagement partner, will assess accounting policies adopted by the City in order to obtain an understanding of its structure and its operating environment. Also, our team will review internal controls on all significant transaction classes, perform walkthroughs and/or tests of internal controls, perform preliminary analytical procedures, develop an initial risk assessment, evaluate Single Audit compliance, identify any audit issues, and prepare confirmation correspondence. The engagement team and Citys Management will establish expectations, including responsibilities and assignments for the year-end fieldwork, and will hold a progress status meeting at the end of the interim phase. Proposed timeline: June of each year.
3. Fieldwork: The engagement team, including the engagement partner, will conduct audit procedures on account balances in the general ledger, finish confirmation procedures, perform data analysis using our AI tools, search for unrecorded liabilities, perform substantial analytical review procedures, complete work on compliance with Federal Assistance, and conclude fieldwork. The engagement team and Citys Management will hold an exit conference at year-end. Periodic update meetings will be held to communicate audit progress to management. Proposed timeline: October of each year.
4. Post Fieldwork: During the phase, the engagement team, including the engagement partner, will review all documents and evaluate commitments and contingencies. The team will perform an assessment of the going concern and jointly plan for the next steps. Proposed timeline: immediately after fieldwork completion.
5. Report Preparation and Review: The Firm will review and prepare audit reports and perform quality control procedures following the Quality Control Standards issued by the AICPA. We will also examine reports for compliance with GFOA reporting guidelines at no additional cost. Any comments will be recorded in a letter to management. At the Citys request, the engagement partner and manager will present the audit to Citys Management and other governing bodies. Proposed timeline: by the end of the first week in November.
6. Final Production: The final phase of our approach entails obtaining the management representation letter and final financial statement report, which may include a final presentation to the Citys Management and other governing bodies (if applicable). Proposed timeline: final reports will be delivered no later than November 30th of each year.
The Firm will complete the audit fieldwork and issue all reports within the established timeframe, assuming no internal circumstances within the City causes delays in the audit.
City of Hercules
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Level of Staff and Number of Hours to be Assigned to Each Segment of the Engagement
The Pun Group LLP understands that the City is not only looking to employ our auditing services but is also seeking to receive value within that professional relationship. We believe that our value derives from the in-depth knowledge, experience, and commitment that our auditing firm employs. We stress and emphasize employ because all of the knowledge and expertise listed on paper will not benefit you unless it is applied. That is why we have developed a plan that we feel will accomplish the objectives of the City and your particular needs. Our Firm will utilize the information that you have shared with us and our experience from our previous audits of this nature from various government entities and cities to develop a practical plan for all major areas.
Estimated Total Hours*:
*Does not include CPE hours related to Governmental Webinars and/or optional services.
Sample Size and the Extent to Which Statistical Sampling is to be Used in this Engagement In our audit approach, random and statistical sampling is used in conjunction with our skilled judgment and knowledge of each situation. When designing an audit sample, our auditors consider the purpose of the audit procedure and the characteristics of the population from which the sample will be drawn. We determine a sample size sufficient to reduce sampling risk to an acceptably low level and select items for such a task in a way that we can reasonably expect it to be representative of the relevant sample and likely to provide the auditor with a reasonable basis for conclusions about the population.
Enhancing Auditing Quality with Artificial Intelligence There are plenty of challenges with established audit practices. Outdated CAAT tools, sampling practices, and the explosive growth of big data are some of the examples, and they all present significant barriers to detecting anomalies, intentional or otherwise, in financial data. The Pun Group deploys a comprehensive, risk-based approach, complemented by using MindBridge's Artificial Intelligence Platform, to conduct our audit. Through this tool, we can seamlessly analyze thousands and thousands of financial and operating data and records, identifying and cataloging significant risks in mere seconds.
The AI Auditor platform works by our side, augmenting our capacity to detect errors or fraud in the collected data not only by analyzing the entire set but by cross-correlating dozens of testing criteria against pre-established data points and presenting us with a view of every user, vendor, and transaction, by risk. All are happening within moments of ingesting analyzed data, which is something standard audit procedures simply cannot accomplish.
We utilize these tools to allow our audit team to increase efficiency in the audit process, enhance the existing quality of our work, provide directed testing in areas subject to the highest risk, and quickly assimilate large amounts of data your staff would typically be asked to gather. The tools also help us to meet our professional requirements regarding fraud and internal control, allowing us to:
Run Benfords analysis to check for fraud in transactions.
Increase the value of audit findings with complete, 100% data coverage.
Isolate risk and control issues before they impact your operations.
Improve productivity by automating procedures and eliminating manual tasks.
Conduct more direct, efficient, and effective audits to improve overall service quality.
Partner(s)
Director/
Manager
Supervisory
Staff Staff Clerical Total
Engagement Acceptance & General Planning 2 3 7 9 1 21
Planning & Internal Control Evaluation 2 5 11 13 1 32
Fieldwork 12 24 54 64 5 159
Post Fieldwork 8 16 36 43 3 106
Report Preparation & Review 12 24 54 64 5 159
Final Production 4 8 18 21 2 53
Total* 40 80 180 214 16 530
City of Hercules
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Our engagement team easily imports data in a secure environment from the Citys financial software and extracts useful data for testing and analytical procedures particular to the following areas:
Successful Fraud Test Kickback or Conflict-of-Interest Schemes Questionable Invoices Dormant Account Schemes
Phantom Vendor Schemes Money Laundering Schemes
Type and Extent of Analytical Procedures to be Used in the Engagement Analytical procedures are one of many financial audit processes that help an auditor understand the clients operation and changes in the environment and identify potential risk areas to plan other audit procedures. Such procedures include a comparison of financial information on prior periods, budgets, forecasts, and industry benchmarks. We use trend and ratio analysis to identify any uncertain or unusual events. To perform these analyses, our Firm surveys cities and counties and develops benchmarks on specific vital financial indicators, such as the cost of services to tax revenues ratios, average general fund balance, capital assets, debt-to-capital, and general fund unassigned fund balance to total general fund expenditures, etc. Our engagement members have extensive experience in successfully implanting analytical procedures to the Citys benefit.
Our analytical procedures process is performed during three stages of the audit: (a) at the start, (b) in the middle, and (c) at the end. These three stages are risk assessment procedures, substantive analytical procedures, and final analytical procedures:
Risk assessment procedures are used to assist the auditor in understanding the business better and in planning the nature, timing, and extent of audit procedures.
Substantive analytical procedures are used to obtain evidential matters about particular assertions related to the account balances or classes of transactions. During the interim phase, our engagement team will set up expectations for the year-to-date results and balances and compare them with budgeted and prior-year amounts. This process allows us to forecast year-end amounts, reducing the workload during the year-end phase and allowing us to focus on areas of concern.
Final analytical procedures are used as an overall review of the financial information in the last review stage of the audit. The Engagement Partner(s) and Manager(s) will perform a high-level analytical analysis of the financial information, comparing its data both quantitatively and qualitatively to ensure the amounts are fairly presented in all material respect in the financial statements.
Approach to be Taken to Gain and Document an Understanding of the Internal Control Structure Audit risk assessment is established by an internal control review, combined with the engagement teams understanding of the Citys operations and accounting software. Using the Committee of Sponsoring Organizations (COSO) Framework, staff members will evaluate the Citys processes and identify any control deficiencies. These diagnostic review procedures allow the engagement team to assess the Citys systems and controls and to provide constructive feedback to management.
During our initial planning phase of the audit, our engagement team, including the engagement Partner and Manager, will obtain an understanding of the entity and its environment. It is an essential aspect of performing an audit under generally accepted auditing standards. That understanding establishes a frame of reference within which the auditor plans the procedures and exercises professional judgment about assessing risks of material misstatement of the financial statements and responding to those risks throughout the examination.
During the interim phase of the audit, our engagement team will perform a walkthrough of all significant accounting systems, including processes for financial reporting, revenue recognition and cash receipts, purchasing/contract management and cash disbursements, payroll and related liabilities, and others. Our auditors will obtain the written policies and procedures, inquiring accounting personnel, and document the process in either a flowchart or narrative summary format. After gaining an understanding of the accounting and internal control systems, our auditor will make a preliminary assessment of control risk, at the assertion level, for each material account balance or class of transactions.
City of Hercules
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The form and extent of this documentation are influenced by the size and complexity of the entity and the nature of its accounting and internal control systems. Generally, the more complex the entitys accounting and internal control systems and the more extensive the auditors procedures, the broader our documentation will need to be.
Approach to be Taken in Determining Laws and Regulations that Will be Subject to Audit Test Work The Firm stays continually up to date with audit requirementsincluding new regulations, compliance supplements, state guidelines, and related contractsto ensure that we conduct audits under applicable laws and regulations.
We test transactions for compliance with the Single Audit Act, California Government Code, GANN Appropriations Limit, provisions of applicable grant guidelines, requirements of local measures, and others.
For example, the Single Audit Act requires that we determine which grants to include in our audit and select transactions from those grants for detailed testing. While most items will be tested as part of the Interim phase, we cannot determine which grants will be selected for the Single Audit until the year-end/fieldwork stage of the audit.
Our compliance audits of cash, investments, debt covenants, and other areas will be performed following the California Government Code, which has many provisions and regulations covering investments.
Approach to be Taken in Drawing Audit Samples for Purposes of Tests of Compliance To test compliance, we will follow the AICPAs Audit Sampling Considerations of Uniform Guidance Compliance Audits. We will select an appropriate sample size based on our professional judgment and knowledge. Any deviations from control and compliance requirements will be documented.
Audit Firms Expectations of the Role and Participation of Citys Staff in the Audit Process The engagement team will meet with the Citys management during the initial planning stage to discuss audit schedules and review the prior year's audit findings (if any). We will deliver a list of all documents to be provided by the Citys staff. Once such materials are agreed upon by the engagement team and Citys finance personnel, no other schedules will be requested unless new information comes to light in the course of test work.
Our goal is to cause the least amount of interruptions to the Citys daily operations; therefore, to the extent possible, we will use information in the form available from the Citys records.
We believe client/engagement team communication is vital to perform results satisfactorily. With that sentiment in mind, we will hold regular meetings with the Citys management to determine the status of the audit as well as any items which will require special attention. Open and frequent communication is critical.
Objectives of Our Services
Our primary objective for the proposed audit is to examine the Citys financial statements and express our opinion on the fairness of the presentation, following generally accepted accounting principles. Other objectives that will benefit the City include the following:
To offer beneficial observations and recommendations about policies and procedures for accounting and operating controls
To identify opportunities to make City operations more efficient and reduce costs To perform the audit efficiently and effectively. Disruptions to office operations are kept to a minimum To provide continuing advisory services so the City can implement recommendations To meet these objectives at no additional cost to the City
The Engagement Team will perform the audit abiding by the Firms quality-control procedures, which include following standard audit programs, careful planning, using industry-standardized software for auditing and internal control documentation, and welcoming an objective review of audit work. In other words, our client-tailored approach emphasizes careful planning, open communication, and proper assignment of responsibilities.
The Firm will supply portable computers to the on-site staff members.
City of Hercules
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Identification of Anticipated Potential Audit Problems
While we do not expect any problems with the audit, we will carefully investigate and monitor the following relevant accounting issues:
Investments:
Compliance with GASB 31 and GASB 34
Authorization and approval process for City investments Controls to assure the Citys compliance with investment limitations and types of specific investments Monitoring by the City of its investments
Financial Reporting:
Compliance with current reporting and disclosure requirements issued by GASB Compliance with the various GASBs in effect
Perform valuations of OPEB benefits to determine the liability for all benefits promised to active, retired, and inactive plan members as of each valuation date
Compliance with Governmental Accounting Standards Board (GASB) Statements 74 and 75 Compliance with infrastructure obligations and regulatory provisions Internal Control Structure:
Citys internal control functions and compliance with proper internal control philosophies Computer-system processes and controls and adequacy of the control environment City of Hercules
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Cost Proposal
Certification
We are committed to the performance of a high-quality audit at the most reasonable fee level possible, both initially and throughout the engagement. Also, our partners will provide advice and consultation as needed at no additional cost to the City of Hercules.
Name of Firm: The Pun Group LLP Certified Public Accountants and Business Advisors Contact Name: Sophia Kuo, CPA, M.B.A.
Contact Email Address: [email protected]
Authorization to Represent the Firm
I, the undersigned, certify I am duly authorized to represent The Pun Group LLP and am empowered to submit this bid. In addition, I certify I am authorized to contract with the City of Hercules on behalf of the Firm.
May 9, 2024
_________________________________________ ____________________________ Sophia Kuo, CPA, M.B.A.| Partner Date
The Pun Group LLP
Total All-Inclusive Maximum Price
Our proposed fees for Professional Auditing Services for the three fiscal years ending June 30, 2025, June 30, 2026, and June 30, 2027, with the option of auditing its financial statements for each of the two subsequent fiscal years, are as follows:
(1) Single Audit fees based on one (1) major program. The fee for auditing additional major programs will be $5,000 each. The number of programs determined to be major will be based on OMB Uniform Guidance.
The Engagement Team will discuss this with the City of Herculess Management before starting Single Audit work.
Service: FY2024/25 FY2025/26 FY2026/27
FY2027/28
(Optional)
FY2028/29
(Optional)
City's Financial Audit 40,000 $ 42,000 $ 44,100 $ 46,305 $ 48,620 $ ACFR Preparation Included Included Included Included Included Management Letter Included Included Included Included Included GASB 87 and 96 3,500 $ 3,675 $ 3,859 $ 4,052 $ 4,254 $ Audit of Hercules' Wastewater Fund 4,000$ 4,200 $ 4,410 $ 4,631 $ 4,862 $ Agreed Upon Procedures (AUP) Measure B -
Transactions and Use Tax Revenues 2,000$ 2,100 $ 2,205 $ 2,315 $ 2,431 $ Agreed Upon Procedures (AUP) Measure -
Utility User's Tax Revenues 2,000 $ 2,100 $ 2,205 $ 2,315 $ 2,431 $ Agreed Upon Procedures (AUP) GANN Calculation 500$ 525 $ 551 $ 579 $ 608 $ State Controller's Report (SCO) 4,000 $ 4,200 $ 4,410 $ 4,631 $ 4,862 $ Single Audit - 1 Major Program 5,000 $ 5,250 $ 5,513 $ 5,788 $ 6,078 $ Total for Fiscal Year (not-to-exceed) 61,000$ 64,050 $ 67,253 $ 70,615 $ 74,146 $ City of Hercules
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Out of Pocket Expenses are Included in the Total All-Inclusive Maximum Price and Reimbursement Rates The Firms policy is to maintain flexible billing rates to meet the needs of clients and help them control costs. In the interest of continuing our long-term relationship, we will absorb expenses such as travel and printing costs.
Additionally, our Partners will be available to provide advice and consultation as necessary to the City of Hercules.
The Firm will also absorb these costs.
Rates for Additional Professional Services
Below are the Firms hourly billing rates, delineated by staffing levels:
Any supplemental reports, audits, or agreed-upon procedures not covered by this proposal may be added to a written agreement prior to commencing audit work. The Firm and the City will discuss and approve the scope and associated costs of these tasks. Any additional work will be performed at the above-quoted hourly rates.
Manner of Payment
Engagement Team members are required to maintain timesheets detailing the date, number of hours, and work performed for every audit task. The Firm will collect these timesheets and bill the City of Hercules at the rates outlined in the Total All-Inclusive Maximum Price section in four stages: (1) at the conclusion of the planning phase, (2) at the conclusion of the interim phase, (3) at the conclusion of the Year-End phase, (4) and after presentation and acceptance of the final audit reports. Interim billings will cover a period not less than a calendar month. The billing amounts generally break down as follows:
Partner(s) 300 $
Director(s) 250 $
Senior Manager(s) 225$
Manager(s) 200 $
Supervisor(s) 175 $
Senior Accountant(s) 150$
Staff Accountant(s) 125$
Clerical 100 $
Hourly Billing Rates
Work Performed % of Proposal Amount
Planning 10%
Interim 40%
Fieldwork 40%
Presentation and Acceptance of Reports 10%
City of Hercules
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Lets Get to Work!
Benefits of Choosing The Pun Group LLP
The Pun Group LLP is recognized for its professionalism, integrity and for providing clients with practical solutions unique to their circumstances and issues. Our Firm prides itself on being able to provide personalized client services, and with that sentiment in mind, we have carefully chosen our engagement teams. The Pun Groups primary objective is to offer the City of Hercules solutions and directions led by highly experienced and capable partners who can successfully implement the work and produce the results you expect. This philosophy and mindset allow us to provide a superior level of service and a quality audit.
We trust that this proposal has given you the information needed about the Firm, the engagement team members, the overall audit approach, cost-saving measures, and audit fees. We are committed to exceeding your expectations, and we look forward to bringing our experience and expertise to the City of Hercules while providing you with the excellent level of service that you expect and deserve.
Thank You
Thank you for allowing us to submit our qualifications to continue to provide you with Professional Auditing Services. Please direct inquiries to:
Sophia Kuo, CPA, M.B.A.
Partner
Email: [email protected]
Phone: (949) 777-8809 | Fax: (949) 777-8850
Sincerely,
The Pun Group LLP
Certified Public Accountants and Business Advisors
City of Hercules
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Appendix A Available Training
Strengthen Your Accounting Knowledge: TPG Client Training Webinars We pride ourselves in leading the governmental auditing profession nationwide and statewide. Members of our team have been assigned to the AICPA and State Government Accounting and Audit committees. Our membership with these two levels of government keeps us current, and such involvement helps our Firm with the constant changes in accounting and auditing standards, laws and regulations, and compliance provisions, which have created an unprecedented complexity in public accounting for state and local governments.
Every year, the Firm hosts a conference to update governmental clients on new technical accounting and financial issues. Since last year, by implementing Webinars, weve been expanding our horizons and offering our clients 15 hours of Continuing Professional Education (CPE). These sessions are free of charge and part of the service package provided to our clients.
CPE courses we offer:
City of Hercules
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Appendix B Certificate of Insurance