PROFESSIONAL SERVICES AGREEMENT
This Professional Services Agreement ("Agreement") is dated March 20, 2019, (Elective Date ) and is between the City of Manhattan Beach, a California municipal corporation ("City") and Lance, Soll & Lunghard, LLP, a California limited partnership ("Consultant"). City and Consultant are sometimes referred to herein as the "Parties", and individually as a "Party".
RECITALS
A. City issued Request for Proposals No. 1195-19 on November 8, 2018, titled "Professional Audit Services". Consultant submitted a proposal dated December 10, 2018 in response to the RFP.
A. Consultant represents that it is fully qualified to perform such services by virtue of its experience and the training, education and expertise of its principals and employees.
B. City desires to retain Consultant as an independent contractor and Consultant desires to serve City to perform these services in accordance with the terms and conditions of this Agreement.
The Parties therefore agree as follows:
1. Consultant's Services.
A. Scope of Services. Consultant shall perform the services described in the Scope of Services (the "Services") for financial auditing services for fiscal years ending June 30, 2019, 2020, and 2021, with a two year renewal option for fiscal years ending June 30, 2022 and 2023 attached as Exhibit A. Attached as Exhibit C is the scope of service in RFP No. 1195-19. City may request, in writing, changes in the Scope of Services to be pertormed. Any changes mutually agreed upon by the Parties, and any increase or decrease in compensation, shall be incorporated by written amendments to this Agreement.
B. Party Representatives. For the purposes of this Agreement, the City Representative shall be the City Manager, or such other person designated in writing by the City Manager (the "City Representative"). For the purposes of this Agreement, the Consultant Representative shall be Richard Kikuchi, Partner (the "Consultant Representative"). The Consultant Representative shall directly manage Consultant's Services under this Agreement. Consultant shall not change the Consultant Representative without City's prior written consent.
C. Time for Performance. Consultant shall commence the Services on the Effective Date and shall perform all Services by the deadline established by the City Representative or, if no deadline is established, with reasonable diligence.
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professionals under similar circumstances and in a manner reasonably satisfactory to City.
E. Personnel. Consultant has, or will secure at its own expense, all personnel required to pertorm the Services required under this Agreement. All of the Services required under this Agreement shall be performed by Consultant or under its supervision, and all personnel engaged in the work shall be qualified to perform such Services.
F. Compliance with Laws. Consultant shall comply with all applicable federal, state and local laws, ordinances, codes, regulations and requirements.
G. Permits and Licenses. Consultant shall obtain and maintain during the Agreement term all necessary licenses, permits and certificates required by law for the provision of Services under this Agreement, including a business license.
2. Term of Agreement. The term of this Agreement shall be from the Effective Date through March 20, 2022 unless sooner terminated as provided in Section 12 of this Agreement or extended. At City's sole discretion, the term of this Agreement may be extended for up to two additional years.
3. Compensation.
A. Compensation. As full compensation for Services satisfactorily rendered, City shall pay Consultant at the hourly rates set forth in the Approved Fee Schedule attached hereto as Exhibit B. In no event shall Consultant be paid more than $170,070.00 (the "Maximum Compensation") for such Services.
B. Expenses. City shall only reimburse Consultant for those actual and necessary expenses expressly set forth in Exhibit B.
C. Unauthorized Services and Expenses. City will not pay for any services not specified in the Scope of Services, unless the City Council or the City Representative, if applicable, and the Consultant Representative authorize such services in writing prior to Consultant's performance of those services or incurrence of additional expenses. Any additional services or expenses authorized by the City Council, or (where authorized) the City Manager shall be compensated at the rates set forth in Exhibit B, or, if not specified, • at a rate mutually agreed to by the Parties. City shall make payment for additional services and expenses in accordance with Section 4 of this Agreement.
4. Method of Payment.
A. Invoices. Consultant shall submit to City an invoice, on a monthly basis, for the Services performed pursuant to this Agreement. Each invoice shall itemize the Services rendered during the billing period, hourly rates charged, if applicable, and the amount due. City shall review each invoice and notify Consultant in writing within ten Business days of receipt of any disputed invoice amounts. -2- Approved for Use 11/30/18
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amount due. City shall review each invoice and notify Consultant in writing within ten Business days of receipt of any disputed invoice amounts.
B. Payment. City shall pay all undisputed invoice amounts within 30 calendar days after receipt up to the Maximum Compensation set forth in Section 3 of this Agreement. City does not pay interest on past due amounts. City shall not withhold federal payroll, state payroll or other taxes, or other similar deductions, from payments nade to Consultant. Notwithstanding the preceding sentence, if Consultant is a nonresident of California, City will withhold the amount required by the Franchise Tax Board pursuant to Revenue and Taxation Code Section 18662 and applicable regulations.
C. Audit of Records. Consultant shall make all records, invoices, time cards, cost control sheets and other records maintained by Consultant in connection with this Agreement available during Consultant's regular working hours to City for review and audit by City.
5. Independent contractor. Consultant is, and shall at all times remain as to City, a wholly independent contractor. Consultant shall have no power to incur any debt, obligation, or liability on behalf of City. Neither City nor any of its agents shall have control over the conduct of Consultant or any of Consultant's employees, except as set forth in this Agreement. Consultant shall not, at any time, or in any manner, represent that it or any of its officers, agents or employees are in any manner employees of City.
Information and Documents.
A. Consultant covenants that all data, reports, documents, discussion, or other information (collectively "Data") developed or received by Consultant or provided for performance of this Agreement are deemed confidential and shall not be disclosed or released by Consultant without prior written authorization by City. City shall grant such authorization if applicable law requires disclosure. Consultant, its officers, employees, agents, or subcontractors shall not without written authorization from the City Manager or unless requested in writing by the City Attorney, voluntarily provide declarations, letters of support, testimony at depositions, response to interrogatories or other information concerning the work performed under this Agreement or relating to any project or property located within the City. Response to a subpoena or court order shall not be considered "voluntary," provided Consultant gives City notice of such court order or subpoena.
Consultant shall promptly notify City should Consultant, its officers, employees, agents or subcontractors be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions or other discovery request, court order or subpoena from any party regarding this Agreement and the work performed thereunder or with respect to any project or property located within the City. City may, but has no obligation to, represent Consultant or be present at any deposition, hearing or similar proceeding. Consultant agrees to cooperate fully with -3- Approved for Use 11/30/18
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City and to provide City with the opportunity to review any response to discovery requests provided by Consultant. However, City's right to review any such response does not imply or mean the right by City to control, direct or rewrite the response.
C. All Data required to be furnished to City in connection with this Agreement shall become City's property, and City may use all or any portion of the Data submitted by Consultant as City deems appropriate. Upon completion of, or in the event of termination or suspension of this Agreement, all original documents, designs, drawings, maps, models, computer files containing data generated for the Services, surveys, notes, and other documents prepared in the course of providing the Services shall become City's sole property and may be used, reused or otherwise disposed of by City without Consultant's permission. Consultant may take and retain copies of the written products as desired, but the written products shall not be the subject of a copyright application by Consultant.
Consultant's covenants under this Section shall survive the expiration or termination of this Agreement.
7. Conflicts of Interest. Consultant and its officers, employees, associates and subcontractors, if any, shall comply with all conflict of interest statutes of the State of California applicable to Consultant's Services under this Agreement, including the Political Reform Act (Gov. Code § 81000, et seq.) and Government Code Section 1090.
During the term of this Agreement, Consultant may perform similar Services for other clients, but Consultant and its officers, employees, associates and subcontractors shall not, without the City Representative's prior written approval, perform work for another person or entity for whom Consultant is not currently performing work that would require Consultant or one of its officers, employees, associates or subcontractors to abstain from a decision under this Agreement pursuant to a conflict of interest statute. Consultant shall incorporate a clause substantially similar to this Section into any subcontract that Consultant executes in connection with the performance of this Agreement.
8. Indemnification, Hold Harmless, and Duty to Defend.
A. Indemnities.
To the fullest extent permitted by law, Consultant shall, at its sole cost and expense, defend, hold harmless and indemnify City and its elected officials, officers, attorneys, agents, employees, designated volunteers, successors, assigns and those City agents serving as independent contractors in the role of City officials (collectively "Indemnitees"), from and against any and all damages, costs, expenses, liabilities, claims, demands, causes of action, proceedings, expenses, judgments, penalties, liens, and losses of any nature whatsoever, including fees of accountants, attorneys, or other professionals and all costs associated therewith and the payment of all consequential damages (collectively "Liabilities"), in law or equity, whether actual, alleged or threatened, which arise out of, are claimed to arise out of, pertain to, or relate -4- Approved for Use 11/30/18
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to the acts or omissions of Consultant, its officers, agents, servants, employees, subcontractors, materialmen, consultants or their officers, agents, servants or employees (or any entity or individual that Consultant shall bear the legal liability thereof) in the performance of this Agreement, including the Indemnitees' active or passive negligence, except for Liabilities arising from the sole negligence or willful misconduct of the Indemnitees as determined by court decision or by the agreement of the Parties.
Consultant shall defend the Indemnitees in any action or actions filed in connection with any Liabilities with counsel of the Indemnitees' choice, and shall pay all costs and expenses, including all attorneys' fees and experts' costs actually incurred in connection with such defense. Consultant shall reimburse the Indemnitees for any and all legal expenses and costs incurred by Indemnitees in connection therewith. 2) Consultant shall pay all required taxes on amounts paid to Consultant under this Agreement, and indemnify and hold City harmless from any and all taxes, assessments, penalties, and interest asserted against City by reason of the independent contractor relationship created by this Agreement. Consultant shall fully comply with the workers' compensation law regarding Consultant and Consultant's employees. Consultant shall indemnify and hold City harmless from any failure of shal indemnity and horo en Consultant to comply with applicable workers' compensation laws. City may offset against the amount of any fees due to Consultant under this Agreement any amount due to City from Consultant as a result of Consultant's failure to promptly pay to City any reimbursement or indemnification arising under this subparagraph A.2). 3) Consultant shall obtain executed indemnity agreements with provisions identical to those in this Section from each and every subcontractor or any other person or entity involved by, for, with or on behalf of Consultant in the performance of this Agreement. If Consultant fails to obtain such indemnity obligations, Consultant shall be fully responsible and indemnify, hold harmless and defend the Indemnitees from and against any and all Liabilities at law or in equity, whether actual, alleged or threatened, which arise out of, are claimed to arise out of, pertain to, or relate to the acts or omissions of Consultant's subcontractor, its officers, agents, servants, employees, subcontractors, materialmen, consultants or their officers, agents, servants or employees (or any entity or individual that Consultant's subcontractor shall bear the legal liability thereof in the performance of this Agreement, including the Indemnitees' active or passive negligence, except for Liabilities arising from the sole negligence or willful misconduct of the Indemnitees as determined by court decision or by the agreement of the Parties.
B. Workers' Compensation Acts not Limiting. Consultant's indemnifications and obligations under this Section, or any other provision of this Agreement, shall not be limited by the provisions of any workers' compensation act or similar act. Consultan expressly waives its statutory immunity under such statutes or laws as to City, its officers, agents, employees and volunteers.
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C. Insurance Requirements not Limiting. City does not, and shall not, waive any rights that it may possess against Consultant because of the acceptance by City, or the deposit with City, of any insurance policy or certificate required pursuant to this Agreement. The indemnities in this Section shall apply regardless of whether or not any insurance policies are determined to be applicable to the Liabilities, tax, assessment, penalty or interest asserted against City.
Survival of Terms. Consultant's indemnifications and obligations under this Section shall survive the expiration or termination of this Agreement.
9. Insurance.
A. Minimum Scope and Limits of Insurance. Consultant shall procure and at all times during the term of this Agreement carry, maintain, and keep in full force and effect, insurance as follows:
Commercial General Liability Insurance with a minimum limit of $2,000,000.00 per occurrence for bodily injury, personal injury and property damage and a general aggregate limit of $2,000,000.00 per project or location. If Consultant is a limited liability company, the commercial general liability coverage shall be amended so that Consultant and its managers, affiliates, employees, agents and other persons necessary or incidental to its operation are insureds.
2) Automobile Liability Insurance for any owned, non-owned or hired vehicle used in connection with the performance of this Agreement with a combined single limit of $2,000,000.00 per accident for bodily injury and property damage. If Consultant does not use any owned, non-owned or hired vehicles in the performance of Services under this Agreement, Consultant shall obtain a non-owned auto endorsement to the Commercial General Liability policy required under subparagraph A. 1) of this Section. 3) Workers' Compensation Insurance as required by the State of California and Employer's Liability Insurance with a minimum limit of $1,000,000.00 per accident for bodily injury or disease. If Consultant has no employees while performing Services under this Agreement, workers' compensation policy is not required, but Consultant shall execute a declaration that it has no employees.
Professional Liability/Errors and Omissions Insurance with minimum limits of $2,000,000.00 per claim and in aggregate.
B. Acceptability of Insurers. The insurance policies required under this Section shall be issued by an insurer admitted to write insurance in the State of California with a rating of A:VIl or better in the latest edition of the A.M. Best Insurance Rating Guide. Self insurance shall not be considered to comply with the insurance requirements under this Section.
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C. Additional Insured. The commercial general and automobile liability policies shall contain an endorsement naming City and its elected and appointed officials, officers, employees, agents and volunteers as additional insureds. This provision shall also apply to any excess/umbrella liability policies.
Primary and Non-Contributing. The insurance policies required under this Section shall apply on a primary non-contributing basis in relation to any other insurance or self-insurance available to City. Any insurance or self-insurance maintained by City, its elected and appointed officials, officers, employees, agents or volunteers, shall be in excess of Consultant's insurance and shall not contribute with it.
E. Consultant's Waiver of Subrogation. The insurance policies required under this Section shall not prohibit Consultant and Consultant's employees, agents or subcontractors from waiving the right of subrogation prior to a loss. Consultant hereby waives all rights of subrogation against City.
F. Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by City. At City's option, Consultant shall either reduce or eliminate the deductibles or self-insured retentions with respect to City, or Consultant shall procure a bond guaranteeing payment of losses and expenses.
G. Cancellations or Modifications to Coverage. Consultant shall not cancel, reduce or otherwise modify the insurance policies required by this Section during the term of this Agreement. The commercial general and automobile liability policies required under this Agreement shall be endorsed to state that should the issuing insurer cancel the policy before the expiration date, the issuing insurer will endeavor to mail 30 days' prior written notice to City. If any insurance policy required under this Section is canceled or reduced in coverage or limits, Consultant shall, within two Business Days of notice from the insurer, phone, fax or notify City via certified mail, return receipt requested, of the cancellation of or changes to the policy.
H. City Remedy for Noncompliance. If Consultant does not maintain the policies of insurance required under this Section in full force and effect during the term of this Agreement, or in the event any of Consultant's policies do not comply with the requirements under this Section, City may either immediately terminate this Agreement or, if insurance is available at a reasonable cost, City may, but has no duty to, take out the necessary insurance and pay, at Consultant's expense, the premium thereon.
Consultant shall promptly reimburse City for any premium paid by City or City may withhold amounts sufficient to pay the premiums from payments due to Consultant.
1. Evidence of Insurance. Prior to the performance of Services under this Agreement, Consultant shall furnish City's Risk Manager with a certificate or certificates of insurance and all original endorsements evidencing and effecting the coverages required under this Section. The endorsements are subject to City's approval. Consultant may provide complete, certified copies of all required insurance policies to City. -7- Approved for Use 11/30/18
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Consultant shall maintain current endorsements on file with City's Risk Manager.
Consultant shall provide proof to City's Risk Manager that insurance policies expiring during the term of this Agreement have been renewed or replaced with other policies providing at least the same coverage. Consultant shall furnish such proof at least two weeks prior to the expiration of the coverages.
J.u Indemnity Requirements not Limiting. Procurement of insurance by Consultant shall not be construed as a limitation of Consultant's liability or as full performance of Consultant's duty to indemnify City under Section 8 of this Agreement.
K. Subcontractor Insurance Requirements. Consultant shall require each of its subcontractors that perform Services under this Agreement to maintain insurance coverage that meets all of the requirements of this Section.
10. Mutual Cooperation.
A. City's Cooperation. City shall provide Consultant with all pertinent Data, documents and other requested information as is reasonably available for Consultant's proper performance of the Services required under this Agreement.
B. Consultant's Cooperation. In the event any claim or action is brought against City relating to Consultant's performance of Services rendered under this Agreement, Consultant shall render any reasonable assistance that City requires.
11. Records and Inspections. Consultant shall maintain complete and accurate records with respect to time, costs, expenses, receipts, correspondence, and other such information required by City that relate to the performance of the Services. All such records shall be maintained in accordance with generally accepted accounting principles and shall be clearly identified and readily accessible. Consultant shall provide free access to City, its designees and representatives at reasonable times, and shall allow City to examine and audit the books and records, to make transcripts therefrom as necessary, and to inspect all work, data, documents, proceedings and activities related to this Agreement. Such records, together with supporting documents, shall be maintained for a period of three years after receipt of final payment.
12. Termination of Agreement.
A. Right to Terminate. City may terminate this Agreement at any time, at will, for any reason or no reason, after giving written notice to Consultant at least five calendar days before the termination is to be effective. Consultant may terminate this Agreement at any time, at will, for any reason or no reason, after giving written notice to City at least 60 calendar days before the termination is to be effective.
B. Obligations upon Termination. Consultant shall cease all work under this Agreement on or before the effective date of termination specified in the notice of termination. In the event of City's termination of this Agreement due to no fault or failure -8- Approved for Use 11/30/18
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of performance by Consultant, City shall pay Consultant based on the percentage of work satisfactorily performed up to the effective date of termination. In no event shall Consultant be entitled to receive more than the amount that would be paid to Consultant for the full performance of the Services required by this Agreement. Consultant shall have no other claim against City by reason of such termination, including any claim for compensation.
13. Force Majeure. Consultant shall not be liable for any failure to perform its obligations under this Agreement if Consultant presents acceptable evidence, in City's sole judgment, that such failure was due to acts of God, embargoes, inability to obtain labor or materials or reasonable substitutes for labor or materials, governmental restrictions, governmental regulations, governmental controls, judicial orders, enemy or hostile governmental action, civil commotion, fire or other casualty, or other causes beyond Consultant's reasonable control and not due to any act by Consultant.
14. Default.
A. Consultant's failure to comply with the provisions of this Agreement shall constitute a default. In the event that Consultant is in default for cause under the terms of this Agreement, City shall have no obligation or duty to continue compensating Consultant for any work performed after the date of default.
In addition to the right to terminate pursuant to Section 12, if the City Manager determines that Consultant is in default in the performance of any of the terms or conditions of this Agreement, City shall serve Consultant with written notice of the default. Consultant shall have ten calendar days after service upon it of the notice in which to cure the default by rendering a satisfactory performance. In the event that Consultant fails to cure its default within such period of time, City may, notwithstanding any other provision of this Agreement, terminate this Agreement without further notice and without prejudice to any other remedy to which it may be entitled at law, in equity or under this Agreement.
15. Notices. Any notice, consent, request, demand, bill, invoice, report or other communication required or permitted under this Agreement shall be in writing and conclusively deemed effective: (a) on personal delivery, (b) on confirmed delivery by courier service during Consultant's and City's regular business hours, or (c) three Business Days after deposit in the United States mail, by first class mail, postage prepaid, and addressed to the Party to be notified as set forth below:
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If to City: If to Consultant:
Attn: Bruce Moe Richard K. Kikuchi
City of Manhattan Beach Lance, Soll & Lunghard, LLP
1400 Highland Avenue 203 N. Brea Blvd., Suite 203
Manhattan Beach, California 90266 Brea, California 92821 Telephone: 310-802-5053 Telephone: 714-672-0022
Email: [email protected] Email: [email protected] With a courtesy copy to:
Quinn M. Barrow, City Attorney
1400 Highland Avenue
Manhattan Beach, California 90266
Telephone: (310) 802-5061
Email: [email protected]
Non-Discrimination and Equal Employment Opportunity. In the performance of this Agreement, Consultant shall not discriminate against any employee, subcontractor or applicant for employment because of race, color, religious creed, sex, gender, gender identity, gender expression, marital status, national origin, ancestry, age, physical disability, mental disability, medical condition, genetic information, sexual orientation or other basis prohibited by law. Consultant will take affirmative action to ensure that subcontractors and applicants are employed, and that employees are treated during employment, without regard to their race, color, religious creed, sex, gender, gender identity, gender expression, marital status, national origin, ancestry, age, physical disability, mental disability, medical condition, genetic information or sexual orientation.
17. Prohibition of Assignment and Delegation. Consultant shall not assign any of its rights or delegate any of its duties under this Agreement, either in whole or in part, without City's prior written consent. City's consent to an assignment of rights under this Agreement shall not release Consultant from any of its obligations or alter any of its primary obligations to be performed under this Agreement. Any attempted assignment or delegation in violation of this Section shall be void and of no effect and shall entitle City to terminate this Agreement. As used in this Section, "assignment" and "delegation" means any sale, gift, pledge, hypothecation, encumbrance or other transfer of all or any portion of the rights, obligations, or liabilities in or arising from this Agreement to any person or entity, whether by operation of law or otherwise, and regardless of the legal form of the transaction in which the attempted transfer occurs.
18. No Third Party Beneficiaries Intended. This Agreement is made solely for the benefit of the Parties to this Agreement and their respective successors and assigns, and no other person or entity may have or acquire a right by virtue of this Agreement.
19. Waiver. No delay or omission to exercise any right, power or remedy accruing to City under this Agreement shall impair any right, power or remedy of City, nor shall it be -10- Approved for Use 11/30/18
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construed as a waiver of, or consent to, any breach or default. No waiver of any breach, any failure of a condition, or any right or remedy under this Agreement shall be (1) effective unless it is in writing and signed by the Party making the waiver, (2) deemed to be a waiver of, or consent to, any other breach, failure of a condition, or right or remedy, or (3) deemed to constitute a continuing waiver unless the writing expressly so states.
20. Final Payment Acceptance Constitutes Release. The acceptance by Consultant of the final payment made under this Agreement shall operate as and be a release of City from all claims and liabilities for compensation to Consultant for anything done, furnished or relating to Consultant's work or services. Acceptance of payment shall be any negotiation of City's check or the failure to make a written extra compensation claim within ten calendar days of the receipt of that check. However, approval or payment by City shall not constitute, nor be deemed, a release of the responsibility and liability of Consultant, its employees, subcontractors and agents for the accuracy and competency of the information provided and/or work performed; nor shall such approval or payment be deemed to be an assumption of such responsibility or liability by City for any defect or error in the work prepared by Consultant, its employees, subcontractors and agents.
21. Corrections. In addition to the above indemnification obligations, Consultant shall correct, at its expense, all errors in the work which may be disclosed during City's review of Consultant's report or plans. Should Consultant fail to make such correction in a reasonably timely manner, such correction may be made by City, and the cost thereof shall be charged to Consultant. In addition to all other available remedies, City may deduct the cost of such correction from any retention amount held by City or may withhold payment otherwise owed Consultant under this Agreement up to the amount of the cost of correction.
22. Non-Appropriation of Funds. Payments to be made to Consultant by City for services performed within the current fiscal year are within the current fiscal budget and within an available, unexhausted fund. In the event that City does not appropriate sufficient funds for payment of Consultant's services beyond the current fiscal year, this Agreement shall cover payment for Consultant's services only to the conclusion of the last fiscal year in which City appropriates sufficient funds and shall automatically terminate at the conclusion of such fiscal year.
23. Exhibits. Exhibits A and B constitute a part of this Agreement and are incorporated into this Agreement by this reference. If any inconsistency exists or arises between a provision of this Agreement and a provision of any exhibit, or between a provision of this Agreement and a provision of Consultant's proposal, the provisions of this Agreement shall control.
24. Entire Agreement and Modification of Agreement. This Agreement and all exhibits referred to in this Agreement constitute the final, complete and exclusive statement of the terms of the agreement between the Parties pertaining to the subject matter of this Agreement and supersede all other prior or contemporaneous oral or written -11- Approved for Use 11/30/18
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understandings and agreements of the Parties. No Party has been induced to enter into this Agreement by, nor is any Party relying on, any representation or warranty except those expressly set forth in this Agreement. This Agreement may not be amended, nor any provision or breach hereof waived, except in a writing signed by both Parties.
Headings. The headings in this Agreement are included solely for convenience of reference and shall not affect the interpretation of any provision of this Agreement or any of the rights or obligations of the Parties to this Agreement.
Word Usage. Unless the context clearly requires otherwise, (a) the words "shall," "will" and "agrees" are mandatory and "may" is permissive; (b) "or" is not exclusive; and (c) "includes" or "including" are not limiting.
27. Time of the Essence. Time is of the essence in respect to all provisions of this Agreement that specify a time for performance; provided, however, that the foregoing shall not be construed to limit or deprive a Party of the benefits of any grace or use period allowed in this Agreement.
28. Business Days. "Business days" means days Manhattan Beach City Hall is open for business.
29. Governing Law and Choice of Forum. This Agreement, and any dispute arising from the relationship between the Parties to this Agreement, shall be governed by and construed in accordance with the laws of the State of California, except that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in interpreting this Agreement. Any dispute that arises under or relates to this Agreement (whether contract, tort or both) shall be resolved in a superior court with geographic jurisdiction over the City of Manhattan Beach. 30- Attorneys' Fees. In any litigation or other proceeding by which a Party seeks to enforce its rights under this Agreement (whether in contract, tort or both) or seeks a declaration of any rights or obligations under this Agreement, the prevailing Party shall be entitled to recover all attorneys' fees, experts' fees, and other costs actually incurred in connection with such litigation or other proceeding, in addition to all other relief to which that Party may be entitled.
31. Severability. If a court of competent jurisdiction holds any provision of this Agreement to be illegal, invalid or unenforceable for any reason, the validity of and enforceability of the remaining provisions of this Agreement shall not be affected and continue in full force and effect.
32. Counterparts. This Agreement may be executed in multiple counterparts, all of which shall be deemed an original, and all of which will constitute one and the same instrument.
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33. Corporate Authority. Each person executing this Agreement on behalf of his or her Party warrants that he or she is duly authorized to execute this Agreement on behalf of that Party and that by such execution, that Party is formally bound to the provisions of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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The Parties, through their duly authorized representatives are signing this Agreement on the date stated in the introductory clause.
City: Consultant:
City of Manhattan Beach, Lance, Soll & Lunghard, LLP,
a California municipal corporation a California Limited Liability Partnership By:
Name:/Bruce Moe Name: Richard K. Kikuchi
Title: City Manager Title: Partner
ATTEST: By: _
Name: _
Title:
By: 4-2-19
Name: Liza Tamura
Title: City Clerk
APPROVED AS TO FORM:
By: _
Name: Quinn M. Barrow
Title: City Attorney
APPROVED AS TO CONTENT:
By: _ Shanl
Name: Steve S. Charelian
Title: Finance Director
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PREPARED BY:
LSL" Lance, Soll & Lunghard, LLP
Certified Public Accountants
203 N. Brea Bivd., Suite 203
CPAS AND ADVISORS
Brea, CA 92821
(714) 672-0022
Proposal Presented to
CITY OF MANHATTAN BEACH
PROPOSAL FOR
PROFESSIONAL AUDIT SERVICES
RFP #1195-19 Auditing Services
CONTACT PERSON:
Richard K. Kikuchi, CPA, Partner Focused
[email protected]
(714) 672-0022
on YOU
December 10, 2018
LSL'
CPAS AND ADVISORS
TABLE OF CONTENTS
TRANSMITTAL LETTER... ..2
ADDITIONAL BENEFITS TO WORKING WITH LSL .4
TECHNICAL PROPOSAL
1. License to Practice in California .... 5
2. Independence
3. Firm Qualification and Experience
Size of Firm and Size of Firm's Government Audit Staff. 5 Location of Offices. 5
Range of Activities 5
GFOA Award Program 5
Number and Nature of Professional Staff to be Employed on the Engagement.
Local Experience..
External Quality Control Reviews. 6
Desk Reviews/Disciplinary Action.. 6
Computer Capabilities.
Listing of Current Government Audit Clients. 7
Peer Review Report
4. Partner, Supervisory and Staff Qualification and Experience Key Personnel and Respective Responsibilities..
Continuing Education 9
5. Similar Engagement With Other Government Entities 17
6. Specific audit approach. .. 19
Proposed Approach to the Engagement. . 19
Level of Staff and Number of Hours to be assigned to each segment. .. 20 Sample size ...21
Aanlytical Procedures.. ..21
Understanding the City's Internal Control Structure over Financial Reporting ..21 Determining Laws and Regulations Subject to Audit Test Work. ...22 Drawing Audit Sample. ...22
Use of Computer Software in the Engagement... 22
Quality Insurance Policy and Procedures .. 22
7. Identification of Anticipated Potential Audit Problems. .. 22
8. Proposed audit Schedule.. .. 23
COST PROPOSAL .. 24
www.lslcpas.com
LSL:
CPAs AND ADVISORS
TRANSMITTAL LETTER
December 10, 2018
City of Manhattan Beach
City Clerk's Office
1400 Highland Avenue
Manhattan Beach, California 90266
LANCE, SOLL & LUNGHARD, LLP (LSL) is pleased to respond to your request for proposal for audit services. As a leader in the field of governmental accounting and auditing, we appreciate this opportunity to present our professional qualifications. Because of our extensive city government experience, dedication to excellence, and determination to retain the brightest talent, we hope you find that LSL is the most qualified accounting firm to provide professional audit services to the City of Manhattan Beach.
ANNUAL SERVICES
The City of Manhattan Beach (City) will receive the following services for three (3) fiscal years beginning with fiscal year ending June 30, 2019, with the option to extend two (2) additional years:
Perform an audit of all funds of the City and its component unit, in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller of the United States, and express an opinion on the fair presentation of the basic financial statements. We will prepare the Comprehensive Annual Financial Report (CAFR) in full compliance with all current GASB pronouncements and in accordance with the guideline from the Government Finance Officers Association (GFOA) in order to obtain the Certificate of Achievement for Excellence in Financial Reporting.
Preparation of the CAFR will include all schedules, footnotes and required supplementary information, and will respond to all GOA comments. We will also apply limited audit procedures to the Management's Discussion and Analysis and required supplementary information.
Perform a Single Audit on the expenditures of federal grants when required in accordance with the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards (Uniform Guidance and render the appropriate audit reports on Internal Control over Financial Reporting based upon the audit of the City's financial statements in accordance with Government Auditing Standards and the appropriate reports on compliance with Requirements Applicable to each Major Program, Internal Control over Compliance and on the Schedule of Expenditures of Federal Awards.
Prepare a management letter, including appropriate recommendations regarding the City's systems of internal control, accounting procedures, and other significant observations.
Attend three (3) public meetings to present and discuss findings and recommendations. 2 www.Islcpas.com
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All working papers and reports will be retained (at our expense) for a minimum of seven (7) years, unless we are notified in writing by the City of the need to extend that retention period. Upon written request, we will make working papers available to parties designated by the City. In addition, we will respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance
Upon identification or indication of irregularities or illegal acts, we will make an immediate written report to the City Manager, City Attorney and the Finance Director.
We are committed to provide the services discussed above in accordance with your timetable. This proposal is a firm and irrevocable offer valid for 120 days for the fiscal years ending June 30, 2019 through June 30, 2021, with the option to renew the contract for two additional fiscal years. For purposes of this proposal, Richard K. Kikuchi, Partner is authorized to make representations for our firm. I can be reached at the address below or by phone at (714) 672-0022 or through email at [email protected].
Richard K. Kikuchi, CPA
Engagement Partner
203 N. Brea Blvd., Suite 203
Brea, California 92821
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ADDITIONAL BENEFITS TO WORKING WITH LSL
In today's environment, keeping up with the numerous accounting and regulatory changes can seem unmanageable. Finance departments are facing more complexity, risk, and change than ever before, and with less resources. As the industry continues to evolve, a strategic relationship with LSL can help you better manage these changes and be more equipped for the future. Training and communication is the bridge that connects us. We offer to our clients:
1) Annual Governmental Accounting Update
Annually, we hold a half-day seminar providing an update to new accounting and regulatory standards impacting local governments. The goal is to provide useful relevant information that impacts your organization.
2) Annual Onsite Client Specific Training
This is tailored training for your organization on topics that are most relevant and needed for you and your team. Topics may include fraud risk management, internal controls, accounting pronouncements, governmental accounting, and CAFR preparation.
3) Focused Topic Specific Webinars and Ongoing News & Alerts These discuss important topics effecting local governments sometimes need more attention and explanation. In addition to our annual update, our webinars and news offer a short-focused approach to these critical areas.
4) Meetings with Council & Committees
We believe communication is the key to a successful relationship and offer two annual meetings with your City Council or Committees. Both meetings encourage dialogue between LSL and City Council during the preliminary and concluding segments of the audit.
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TECHNICAL PROPOSAL
1. LICENSE TO PRACTICE Our clients have grown to understand that an audit from LSL provides them with a wealth of knowledge,
IN CALIFORNIA confidence and value-added services. For this and many other reasons, our firm has consistently been
LSL is a limited liability partnership and is not a wholly named one of the "Top Accounting Firms" in Orange owned subsidiary of a parent company. LSL is a County by the Orange County Business Journal, "Top public accounting firm licensed by the State of Workplaces- 2016 and 2017" in Orange County by California, Department of Consumer Affairs, as a the Orange County Register. We were also on the list Public Accounting Partnership. As a firm, we are of CalCPA Top 150 firms in 2016 members of the American Institute of Certified Public
Accountants and the California Society of SIZE OF THE FIRM AND SIZE OF THE FIRM'S Certified Public Accountants. All key staff to be
GOVERNMENT AUDIT STAFF
assigned to this engagement are or will be licensed
by the State of California to practice as Our firm has approximately 115 employees including Certified Public Accountants. 17 partners and professional staff of approximately
70. Governmental staff consists of four partners, one
2. INDEPENDENCE senior manager, four managers, five supervisors and ten seniors. All professional staff assigned to the
proposed engagement work on a full-time basis.
We meet the independence requirements as defined
by Government Auditing Standards for the City of
LOCATION OF OFFICES
Manhattan Beach and its component unit. Our
LSL is a regional firm with offices in Brea, Santa Ana
partners do not own any other business organization
and Sacramento, California. The audit for the City of
that has in the past, or will in the future, be providing Manhattan Beach will be staffed from our Brea
services, supplies, materials or equipment to the City
location.
of Manhattan Beach. LSL is the current
independent auditor for the City of Manhattan
RANGE OF ACTIVITIES
Beach and is assisting the City with the
preparation of its Comprehensive Annual Our Brea office's activities overall cover auditing and Financial Report for fiscal year 2017-18. We have attestation, business advisory, taxes and planning, and accounting and financial services. Our
no conflicts of interest relative to performing the audit.
LSL will provide written notice of any reportable government attestation activities represent professional relationship entered into during the approximately 30% of the overall firm activities. period of the proposed agreement.
GOA AWARD PROGRAM
We prepare the financial statements and footnote
3. FIRM QUALIFICATIONS AND
disclosures for most of our clients that have received
EXPERIENCE the GOA award. All of our governmental partners, managers, and seniors have been closely involved in
LSL is a regional public accounting firm that currently the preparation of these reports. meets the auditing needs of governmental entities
throughout California. Services to local governmental
entities have been provided since 1929. This
experience has led to the development of efficient
procedures that provide numerous client benefits.
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NUMBER AND NATURE EXTERNAL QUALITY CONTROL REVIEWS
OF PROFESSIONAL STAFF TO BE We have participated in the peer review program EMPLOYED ON THE ENGAGEMENT since its inception. The most recent peer reviews was The most critical component in the successful conducted by Sikich. All peer reviews covered completion of an audit is the personnel assigned to governmental engagements. Our most recent peer carry out the responsibilities. We have assembled a review is included on page 8. team composed of individuals with the optimum mix
of talents. The individuals assigned have experience DESK REVIEWS/DISCIPLINARY ACTION in performing the tasks for which There have been no disciplinary actions against responsible, as well as familiarity with all municipal our organization since its inception. All our accounting operations. In addition, each has Single Audit reports are desk reviewed either by the developed extensive skills in a variety of other Federal cognizant agency or the State Controller's complementary subjects through their work with Office acting as the Oversight Agency. We have clients in other industries. Thus, the experience never had a report rejected by any of these agencies. gained on previous assignments can be applied and In fact, we are highly regarded and recognized by the tailored to the unique needs of your organization. For staff of the State Controller's Office for top quality the audit of the City of Manhattan Beach, the reports.
personnel assigned and their number of years of
experience auditing governmental entities in COMPUTER CAPABILITIES California is as follow: One of our firm's core values is innovation, including technological innovation. We utilize some of the most
Richard K Kikuchi, CPA - Engagement Partner current technological solutions including cloud-based 29 years audit software, advanced data analysis software, and Bryan S. Gruber, CPA - Concurring Partner secure file sharing. This enables the City's data to be 15 years provided to us securely and analyzed efficiently and Frank C. North, CPA - Senior Manager effectively.
21 years
Amira Khodari - Senior In-Charge
4 years
The audit team will also include an additional two to
three staff for audit fieldwork. All staff assigned to the City of Manhattan Beach will work on a full-time basis.
LOCAL EXPERIENCE
We currently provide professional auditing services to
nearly 60 governmental entities throughout
California. A complete listing of our current
government audit clients, along with phone numbers
of contact personnel and reference as to services
provided, is listed on the next page. You are
welcomed to contact any or all of them to get their
opinion on the services we provide.
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LSL LISTING OF CURRENT GOVERNMENT AUDIT CLIENTS
Client Contact Person Service Code Year Telephone
Agoura Hills Ms. C. Pinuelas, Finance Director F 818-597-7319 American Water Works Association Ms. S. Ramakrishnan, Asst. Exec. Director F 909-291-2114 Banning Ms. M. Green, Accounting Manager 951-922-3118
• Bell Ms. Shally Lin, interim Finance Director 4 323-588-6211 Big Bear Lake Ms. K. Ent, Director of Admin. Services F. S 18 909-866-5831 Burbank Ms. C. L Giraldo, Financial Services Dir 818-238-5487 * Camarillo Ms. G. Wilson, Finance Director F. S 1 805-388-5320 Canyon Lake Mr. T. Shea, Finance Director F 20 909-244-2955 Cathedral City Mr. K Biersack, Fiscal Officer F,S 6 760-770-0378 * Chino Hills Ms. C. Buhagiar, Finance Director F, S 18 909-364-2600 * Chula Vista Mr. D. Bilby, Director of Finance F.S 619-691-5250 Coachella Valley Association of Govemments Mr. G. Leong, Director of Administrative Services F 760-346-1127 * Coachella Valley Water District Ms. K. Godbey, Finance Director F. S, U 760-398-2661 Community Development Commission of the County Mr. M. Fortini, Acting Director, Finance and F, S 626-586-1890 of Los Angeles Budget Division
• Corona Ms. K. Eden, Finance Director F. S. U 951-736-2315 Covered Califomnia Ms. D. Mejia, CFO F. S 916-228-8223
* Cypress Ms. D. Mullally, Asst. Finance Director F. S 714-229-6700 - Diamond Bar Ms. D. Honeywell, Finance Director F. S 909-839-7051 Dixon Ms. J. Michaels-Aguilar, Finance Director F, S 707-678-7000 x108 * Downey Mr. A. Gandhy, Finance Director F.S 3 562-904-7265 * Emeryville Ms. S. Hsieh, Finance Director F. S 12 510-596-4352 * Fullerton Ms. K. Saldana, Fiscal Services Manager F. 5 714-738-3133 Grand Terrace Ms. C. Fortune, Finance Director 3 909-824-6621 Greater Los Angeles Vector Control Mr. T. Dever, District Manager F 6 562-758-6501 Indio Mr. Rob Rockwell, Assistant City F. S 760-391-4029 Manager/Director of Finance
• inland Empire Utilities Agency Ms. Christina Valencia, Chief Financial Officer F. S. U 909-993-1600 Imperial Beach Mr. D. Bradley, Finance Director 12 619-628-1361 Inglewood Ms. S. Koike, Assistant Finance Director F. S 310-412-8724 Irwindale Ms. E. Carreon, Finance Director F 20 626-430-2221 Lake Elsinore Ms. Shannon Buckley, Finance Manager F. S 1 951-674-3124 Lawndale Mr. W. Schaller, Accounting Manager F 310-973-3245 • Live Oak Mr. J. Aguilar, Finance Director F. S 530-695-2112 Los Alamitos Ms. ML Valdez, Administrative Director/Treasurer F 2 562-431-3538 x222 Malibu Ms. R. Feldman, Finance Director F 12 310-456-2489 Manhattan Beach Mr. S. Charelian, Finance Director 14 310-802-5553 Monrovia Mr. B. Bullis, Director of Admin. Services F. 15 626-932-5510 Monterey One Water Ms. T. Hannah, Chief Financial Officer F. U 831-645-4623 Oceanside Ms. J. McPherson, Finance Director F. S 760-435-3839 Ontario Ms. D. Nunes, Director of Fiscal Services F. S 21 909-395-2352 * Palm Desert Mr. J. Espinoza, Asst. Finance Director F 1 760-346-0611 - Palm Springs Ms. M. Pendleton, Acting Finance Director F. S 760-323-8229 Pasadena Mr. R. Ridley, Controller F. S. U 626-744-7497 Rancho Cucamonga Ms. T. Layne, Finance Officer F. S, U 909-989-1851 * Redondo Beach Ms. M. Ruhland, Assistant Finance Director F. S 310-318-0683 Rolling Hills Mr. T. Shea, Finance Director F 310-377-1521 San Diego County Water Authority Ms. G. Herbon, Water Manager 1. U 858-522-6679 San Dimas Mr. M. O'Brien, Finance Director F, S 909-394-6200 San Marino Mr. Josh Betta, Finance Director F 626-300-0700 * Santa Barbara Mr. B. Samario, Finance Director F.S 805-897-1978 Santa Fe Springs Mr. J Gomez, Director of Finance and F.S 562-868-0511 Administrative Services
Santa Monica Ms. G. Decavalles-Hughes, Finance Director F. S 310-458-8281 Seal Beach Ms. V. Beatley, Finance Director F. S 562-431-2527 Six Basins Watermaster Mr. L. Stahlhoefer, Controller 949-420-3030 • Three Valleys Water District Mr. R. Hansen, General Manager F. U 909-626-4631 * Union Sanitary District Ms. L. Brenner, FS Coach F. U 510-477-7647 Service Codes:
F - Financial Audit
S - Single Audit
I - Interal Audit
U - Utility Agency
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-Sikich.
1735 Merriman Road 330.864-6661// www.sikich.com
Akron, OH 44313 Certified Public Accountants & Advisors Members of American Institute of Certified Public Accountants
SYSTEM REVIEW REPORT
October 26, 2016
To the Partners of Lance, Soll & Lunghard, LLP
and the Peer Review Committee of the California Society of CPA's:
We have reviewed the system of quality control for the accounting and auditing practice of Lance, Soll & Lunghard, LLP (the Firm) in effect for the year ended May 31, 2016. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants. As a part of our peer review, we considered reviews by regulatory entities, if applicable, in determining the nature and extent of our procedures. The Firm is responsible for designing a system of quality control and complying with it to provide the Firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Our responsibility is to express an opinion on the design of the system of quality control and the firm's compliance therewith based on our review. The nature, objectives, scope, limitations of, and the procedures performed in a System Review are described in the standards at www.aicpa.org/prsummary.
As required by the standards, engagements selected for review included engagements performed under Government Auditing Standards and audits of employee benefit plans.
In our opinion, the system of quality control for the accounting and auditing practice of Lance, Soll & Lunghard, LLP in effect for the year ended May 31, 2016 has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass, pass with deficiency(ies) or fail. Lance, Soll & Lunghard, LLP has received a peer review rating of pass.
Silich LLP
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4. PARTNER, SUPERVISORY,
AND STAFF QUALIFICATIONS
AND EXPERIENCE
KEY PERSONNEL AND
RESPECTIVE RESPONSIBILITIES
The individuals assigned have experience in
performing the tasks for which they are responsible,
as well as familiarity with all municipal accounting
Richard K. Kikuchi, CPA operations. • In addition, each has developed Engagement Partner extensive skills in a variety of other complementary subjects through their work with clients in other
industries. Thus, the experience gained on previous
assignments can be applied and tailored to the
unique needs of your organization. LSL will not be
subcontracting any portion of the audits of the
City of Manhattan Beach.
The partners at LSL are routinely an integral part of
the audit process and will be overseeing and
supervising staff personnel in the field.
Bryan S. Gruber, CPA Resumes of the key personnel assigned are included Quality Assurance Partner
in following pages and list their governmental auditing experience, applicable continuing professional
education for the past three years, and memberships
in professional organizations relevant to the
performance of the audit of the City of Manhattan
Beach.
Any changes in personnel at the in-charge level or
above will be approved by the City of Manhattan
Beach. LSL's philosophy is to provide quality audit
services with minimal disruption to City staff. Our
Frank C. North, CPA focused efforts to obtain and retain quality staff have Senior Assurance Manager
further enabled us to provide high level of services to our clients.
CONTINUING EDUCATION
As a firm policy, all professional government staff
meet the requirement of 40 hours of continuing
education every year, with at least 24 hours in
governmental accounting and auditing in a two-year
period. Our educational programs include training
from CalCPA, AICPA, Government Audit Quality
Amira Khodari Center, and GFOA.
Assurance Senior
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RICHARD K. KIKUCHI, CPA
ENGAGEMENT PARTNER
ACHIEVEMENTS
Richard currently serves as a technical reviewer for the Government Finance Officers Association (GFOA) and the California Society of Municipal Finance Officers (CSMFO). He sat on the CSMFO Special Districts Technical Committee and has taught an Introductory Governmental Accounting course through the CSMFO Career Development Committee. Richard recently sat on the California State Board of Accountancy's Qualifications Committee, which is an advisory committee established to examine and to make recommendations for all applicants for the license of Certified Public Accountant.
LICENSE
Certified Public Accountant - California 1991
CONTINUING EDUCATION
Total hours were 142 in last three years of which 64 were in governmental accounting and auditing subjects.
Richard has met the Governmental Auditing Standards requirement for governmental CPE.
MEMBERSHIPS
California Society of Certified Public Accountants (CaICPA) American Institute of Certified Public Accountants (AICPA) California Society of Municipal Finance Officers, Associate Member (SMFO) Government Finance Officers Association, Associate Member (GFOA)
EXPERIENCE
Richard has over 29 years' experience in governmental audits. He is currently involved on the following major municipal engagements:
City of Pasadena City of Coronado
City of Santa Monica City of Santa Barbara
City of Big Bear Lake City of Chula Vista
City of Irwindale City of Monrovia
City of Santa Fe Springs City of La Quinta
City of Indio
City of Ontario Focused
City of Rancho Cucamonga
City of Imperial Beach
Of the County of Los Angeles on YOU
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Richard K. Kikuchi, CPA, Partner (Continued)
This work entailed the preparation of the Comprehensive Annual Financial Report for those entities involved in the award programs of the California Society of Municipal Finance Officers and the Government Finance Officers Association of the United States and Canada. Richard has the responsibility for overseeing federal single audits for these clients. These audits have met the requirements of the OMB and have been desk reviewed by the State Controller's Office.
EDUCATION
B.A in Business Administration with an emphasis in Accounting - California State University, Fullerton 1985 11 www.lsicpas.com
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BRYAN S. GRUBER, CPA
ENGAGEMENT PARTNER
ACHIEVEMENTS
Bryan has made numerous presentations for CSMFO on current accounting and auditing material. He also currently serves as a technical reviewer for the Government Finance Officers Association (GFOA). Bryan has been involved with teaching current audit and accounting related material at Lance, Soll & Lunghard, LLP's in house training seminars. He serves as firm IT Specialist for his involvement in IT related controls, data mining and analysis, and auditing software.
LICENSE
Certified Public Accountant - California 2008
CONTINUING EDUCATION
Total hours were 132 in last three years of which 74 were in governmental accounting and auditing subjects.
Bryan has met the Governmental Auditing Standards requirement for governmental CPE.
MEMBERSHIPS
California Society of Certified Public Accountants (CalCPA) American Institute of Certified Public Accountants (AICPA) California Society of Municipal Finance Officers, Associate Member (CSMFO) Government Finance Officers Association, Associate Member (GFOA) Association of Local Government Auditors
EXPERIENCE
Over fourteen years of experience in governmental audits including CAFR audits, component-unit audits and Single Audits. Bryan has also made numerous presentations to City Councils, Boards of Directors and Audil Committees. He has been involved in the following municipal engagements:
Bryan has also been involved in the following engagements:
City of Agoura Hills Orange County Water District
City of Cathedral City Three Valleys Municipal Water District City of Burbank City of Oceanside
City of Duarte City of Palm Springs
City of Emeryville City of San Dimas Focused
City of Hidden Hills City of Solana Beach
City of La Quinta City of Vista on YOU
Monterey One Water City of Rolling Hills
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Bryan S. Gruber, CPA, Partner (Continued)
This work entailed:
• The preparation of the Comprehensive Annual Financial Report for those entities involved in the award programs of the Government Finance Officers Association of the United States and Canada. • Review the audit of these entities provide and technical assistance throughout the year to provide the most up to date information with current GASB pronouncement. • Present the overall audit results to audit committees or other Board Members.
EDUCATION
Bachelor of Arts Degree in Business Administration with an emphasis in Accounting - California State University, Fullerton 2004
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FRANK C. NORTH, CPA
SENIOR ASSURANCE MANAGER
ACHIEVEMENTS
Frank currently serves as a technical reviewer for the Government Finance Officers Association (GOA).
LICENSE
Certified Public Accountant - California 1996
CONTINUING EDUCATION
Total hours were 142 in last three years of which 86 were in governmental accounting and auditing subjects.
Frank has met the Governmental Auditing Standards requirement for governmental CPE.
MEMBERSHIPS
California Society of Certified Public Accountants (CaICPA) American Institute of Certified Public Accountants (AICPA)
EXPERIENCE
Over twenty-two years of experience in governmental audits. Frank has established himself as an outstanding asset and resource at LSL. He has demonstrated his talent in the area of municipal accounting and auditing.
During his time with the firm, Frank has performed all phases of our municipal audits, including CAFR audits, redevelopment agency audits and Single Audits. He has been involved in the following municipal engagements:
City of Ontario
The City of Ontario is a large city consisting of a variety of governmental and business-type funds including internal service funds. As the Senior Audit Manager, it has been Frank's responsibility to oversee the fieldwork for all areas of the financial audit, including assisting the City with the preparation of the Comprehensive Annual Financial Report, and the Single Audit in accordance with the Uniform Guidance. The City of Ontario receives the GOA Award for Excellence in Financial Reporting each year.
Focused
on YOU
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Frank C. North, CPA, Senior Manager (Continued)
Community Development Commission of the County of Los Angeles The Community Development Commission of the County of Los Angeles is a local government agency consisting of a variety of governmental and business-type funds including internal service funds. As the Senior Audit Manager, Frank's responsibility has been to oversee the fieldwork for all areas of the financial audit, including reviewing the draft of the Comprehensive Annual Financial Report for submission to the GOA Award for Excellence in Financial Reporting program, and reviewing the Single Audit in accordance with the Uniform Guidance.
City of Manhattan Beach
As Senior Audit Manager, Frank's responsibility has been to oversee the fieldwork for all areas of the financial audit, including assisting the City of Manhattan Beach with the preparation of the Comprehensive Annual Financial Report, and the Single Audit in accordance with the Uniform Guidance. The City of Manhattan Beach receives the GOA Award for Excellence in Financial Reporting each year.
Frank has also been involved in the following engagements:
City of Irwindale Community Development Commission
City of Chino Hills of the County of Los Angeles
City of Malibu City of Manhattan Beach
City of Santa Barbara City of Lawndale
City of Ontario City of Grand Terrace
City of Palm Springs
City of Big Bear Lake
City of Rancho Cucamonga
EDUCATION
Bachelor of Arts Degree in Business Administration with an emphasis in Accounting - California State University, Fullerton 1990
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AMIRA KHODARI
ASSURANCE SENIOR
LICENSE
Certified Public Accountant - In Progress
CONTINUING EDUCATION
Total hours were 164 in last three years of which 112 were in governmental accounting and auditing subjects. Amira has met the Governmental Auditing Standards requirement for governmental CPE.
EXPERIENCE
Amira has progressed in an outstanding manner. During her time with the firm, Amira has performed all phases of our government audits, including water districts, other special districts, CAFR audits, successor agency audits and Single Audits. She has been involved in the following municipal engagements:
City of Agoura Hills City of Big Bear Lake
City of Corona City of La Quinta
City of San Marino City of Pasadena
City of Downey
City of Cathedral City
EDUCATION
Bachelor of Science Degree in Accounting and Finance, (Magna Cum Laude) - La Sierra University, Riverside 2014
Focused
on YOU
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5. SIMILAR ENGAGEMENTS WITH
OTHER GOVERNMENT ENTITIES
Approximately 30% of our practice deals with the City of Santa Barbara - Audit and preparation of a government sector and related services. Generally, Comprehensive Annual Financial Report (CAFR) which our government sector services break down into the receives the GOA award in addition to a various following major classifications: attestation, compliance and single audits. These services have compliance, performance, strategic planning and tax been provided for over 6 years. Total hours for fiscal year services. As a firm, we have extensive experience 2016-17 were 766 hrs. Last audit performed was for with audits of municipalities compliance with OMB June 30, 2018. Engagement partner is Mr. Richard Circular A-133 and the Uniform Guidance. We are Kikuchi familiar with nearly all federal and state grant Contact person: Mr. Robert Samario, programs typically participated in by municipalities. Finance Director We have also performed engagements related to Phone: (805) 897-1978 bond reporting, including issuing letters of comfort Email: [email protected] and other services. Following is five similar
City of Ontario - Audit and preparation of a
engagements that have been performed within the
Comprehensive Annual Financial Report (CAFR)
last three years:
which receives the GOA award. Audit and
City of Pasadena - Audit and preparation of a preparation of component unit financial statements, Comprehensive Annual Financial Report (CAFR) which Air Quality Improvement Trust Fund and a Single receives the GOA award in addition to various Audit in accordance with OMB A-133 and the Uniform component unit financial statements, compliance and Guidance. Review and issue a report on the single audits. These services have been provided for calculation of the City's Appropriations Limit (GANN). over 3 years. Total hours for fiscal year 2016-17 were Preparation of the annual State Controller's Report. 1,946 hrs. Last audit performed was for June 30, 2018. These services have been provided to the City for the last 20 years. Total hours for fiscal year 2016-17 were Engagement partner is Mr. Richard Kikuchi
663 hrs. Last audit performed was for
Contact person: Mr. Matthew Hawkesworth,
Director of Finance June 30, 2018. The engagement partner is currently Mr. Richard Kikuchi.
Phone: (626) 396-7654
Email: [email protected] Contact person: Ms. Doreen Nunes, Director of Fiscal Services
Phone: (909) 395-2352
Email: [email protected]
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City of Rancho Cucamonga - Audit and City of Oceanside - Audit and preparation of a preparation of a Comprehensive Annual Financial Comprehensive Annual Financial Report (CAFR) Report (CAFR) which receives the GOA award. which receives the GOA award in addition to a single Audit and preparation of financial statements for the audit in accordance with OMB A-133 and the Uniform Rancho Cucamonga Fire Protection District, the Air Guidance. These services have been provided for Quality Improvement Trust Fund and a Single Audit the last 8 years. Total hours for fiscal year 2016-17 in accordance with OMB A-133 and the Uniform were 582 hrs. Last audit performed was for Guidance. Review and issue a report on the June 30, 2018. Engagement partner is: Mr. Bryan calculation of the City's Appropriations Limit (GANN).
Preparation of the annual State Controller's Report. Contact person: Ms. Jane McPherson, These services have been provided to the City for the Finance Director Phone: (760) 435-3855
last 38 years. Total hours for fiscal year 2016-17 were Email: [email protected]
681 hrs. Last audit performed was for June 30, 2018.
The engagement partner is currently Mr. Richard
Kikuchi.
Contact person: Ms. Tamara Layne,
Finance Director
Phone: (909) 477-2700
Email: Tamara. [email protected]
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6. SPECIFIC AUDIT APPROACH Segment 2 - Financial Audit Testing:
PROPOSED SEGMENTATION OF THE Based on the information gathered each year thus far, ENGAGEMENT we will utilize a customized audit program based on the risk assessment developed during our
The services will be divided into three segments. assessment of the City's internal controls and government auditing standards. The primary benefit
Segment 1 - Planning and Obtaining an of a tailored program is a focused set of procedures Understanding: to address relevant areas. We believe that this approach will be the most effective and efficient by
LSL will provide an annual audit communication linking financial statement assertions, audit letter, engagement letter, and Government Audit objectives, and procedures that are basic to most Quality Center information letter. The audit governmental audit engagements and critical to the communication letter is to be provided to the compliance with other material laws and regulations.
Governing Board. In addition, this can be We will annually compile another customized communicated orally to the Governing Board or "Prepared by Client" (PBC) list for the year-end sub-committee, if requested. This communication will on-site visit and provide it at least one month prior or discuss the planning stages, the responsibilities of the earlier if requested.
Governing Board, Auditors, and Management, and
provide an opportunity for communication with us as We will request a trial balance for our analytical the auditors. review to be provided one week prior to our arrival.
LSL's audit team will meet prior to our initial on-site Year-end fieldwork will include testing of the balance visit to brainstorm and discuss economic conditions, sheet, revenue and expenditures accounts, industry elements, and new standards that will affect confirmation of selected balances, analytical the City of Manhattan Beach. A trial balance is procedures, evaluation of the internal controls and requested for our planning meeting to assist the LSL preparation of reports and letters. in obtaining knowledge and preparing
expectations for the audit year. We will compile a list Segment 3 - Conclusion:
of "Prepared by Client" ("PBC") items based on our
review of prior year financial statements and Based on our year-end exit meeting we will schedule information gathered. This will be provided to the City a plan to finalize the CAFR in the timetable of the City. of Manhattan Beach one month prior to our visit or We will schedule dates for the initial and final drafts earlier if requested. We operate on a paperless including time for the City review and approval of the software system and provide a secured cloud-based financial statements. In addition, this will account for portal for all clients. The City of Manhattan Beach will the review of the engagement partner and quality have its own folder which can be customized to assurance partner. After the review and receipt of the organize, and upload requested schedules, support signed representation letter from City, we will provide documents, etc. the final reports by November 30th each year. 19 www.lslcoas.com
LSL:
CPAS AND ADVISORS
LEVEL OF STAFF AND NUMBER OF HOURS TO BE ASSIGNED TO EACH SEGMENT The level of staff and the number of hours to be assigned to each proposed segment will be as follows:
Total Proposed Hours Segment
Segment/Task Partners Manager In-Charge Staff Total 1 2 3 C Planning and Internal Control Evaluation 4.0
6.0 16.0 24.0 50.0 42.0 8.0
Cash and investments 12.0 12.0 2.0 8.0 2.0
Receivables and Revenues 32.0 32.0 2.0 28.0 2.0
Inventory 4.0 4.0
Prepaid Items and Deposits 4.0 4.0 4.0
Capital Assets 16.0 16.0 14.0 2 .0
Accounts Payable and Disbursement 32.0 32.0 2.0 28.0
Payroll and Other Liabilities 16.0 16.0 14.0 2.0
GASB 68 Testwork and Journal Entries 10.0 24.0 34.0 8.0 24.0 2.0 GASB 75 Testwork and Journal Entries 10.0 12.0 22.0 8.0 12.0 2.0 Long-Term Debt & Debt Compliance 12.0 12.0 10.0 2.0
Insurance & Claims Liability 3.0 3. 0 3.0
Grants 16.0 16.0 14.0 2.0
Net Position and Fund Balance 6.0 6.0 1.0 4.0 1.0
Other Compliance requirements - 2.0 4. 8. 14.0 8.0 6.0
Gann Limit 1.0 3.0 4.0 4.0
Audit letters 2.0| 6.0 8.0 2.0 6.0
Supervision and Review 8.0| 14.0 18.0 40.0 8.0 16.0 16.0 Subtotal 14.0 49.0 72.0 190.0 325.0 85.0 199.0 41.0
CAFR preparation 4.0 24.0 24.0 52.0 16.0 36.0
Single Audit (1 Major Programs)
Planning 1.0 2. .0 3.0 3.0
Compliance Testwork (Uniform Guidance) 8. 8.0 16.0 4.0 12.0 Report Preparation and Supervision 2.01 8.0 6.0 16.0 16.0 Subtotal 2.0 9.0 16.0 8.0 35.0 31.0
Total Proposed Hours 20.0 82.01 112.0 198.0 412.0 85.0219.0 108.0 20 www.lslcpas.com
LSL*
CPAS AND ADVISORS
SAMPLE SIZE
Our approach may be to utilize statistical sampling in schedules we would like provided, which is directed the areas of receipts, disbursements, utility billing and straight from the audit report. Support requested and payroll. Here we develop a statistical conclusion sampling for these schedules will be assessed each based upon an initial computer selected random year based on the strengths and weaknesses of the sample which is based on the population and other internal control processes of the City, and the risk factors identified. If errors are noted in the materiality level of the account. We will discuss our sample, the sample size will be expanded. We analytical variances with the City and obtain believe that a random selection can be efficient, while documentation that provides support for the providing each item in the population an equal chance accounts. of being selected. Additionally, we may select a
stratified sample of all transactions over a specified UNDERSTANDING OF THE CITY'S dollar limit for review. This allows us to cover all high INTERNAL CONTROL STRUCTURE dollar value transactions not otherwise selected in the OVER FINANCIAL REPORTING random sample. Our samples are selected randomly To gain an understanding of the internal control utilizing IDEA data analysis software. structure over the financial statements, we will perform procedures as required by SAS 122-125.
ANALYTICAL PROCEDURES This will include review of internal controls in the For the audits of the financial statements, we will use areas of financial reporting; cash; revenues and analytical procedures as an overall review of the receivables; expenditures and accounts payable; financial information in the preliminary and final payroll; capital assets; long-term debt; or grant stages of the audits. These procedures are designed reporting, as applicable. to assist us in planning our audits and in assessing
the propriety of the conclusions reached, and in the Based on the result of our review, we will issue a evaluation of the overall financial statement management letter (SAS 115 Letter) that will identify presentation. The procedures to be utilized consist of any significant deficiencies and/or material determining expectations for changes to significant weaknesses noted. This report is required by the revenue, expenditure and balance sheet accounts, Government Auditing Standards issued by the reading the financial statements and related notes, Comptroller General of the United States. Auditing reviewing the budget and related material, and Standards require auditors to obtain an focusing on overall relationships within the financial understanding of the entity and its environment along statements. Once determined, these are reviewed to with assessing the risks of material misstatements. evaluate if the changes appear reasonable or require LSL obtains an understanding through a variety of further analysis. For all significant differences, ways all throughout the year, but the most pertinent explanations are obtained as to why the situation time each year is during our interim on-site visit. We occurred and additional substantive procedures may will conduct interviews with management of finance be applied, and related evidence gathered to resolve along with each audit section responsible party concerns and questions. (e.g. cashier, accounts payable clerk, payroll clerk, etc.) to review the processes and controls through
If the City of Manhattan Beach can provide a check observation and discussions. Based on our register electronically for July 1st forward (period after observations, we will sample as we observe a the audit year), then we can pre-select our sample for "walk-through" to verify the system of control is accounts payable cut-off test work and provide that working in accordance with policies and procedures. information ahead of time. Our PBC list will detail out 21 www.lsicpas.com
CPAS AND ADVISORS -
We will provide a list each year of randomly selected to the general ledger. Sample sizes vary based on employees of the City of Manhattan Beach to perform the population and risk-based calculations. fraud interviews (SAS 99), which will include all levels of the City across all departments. USE OF COMPUTER SOFTWARE IN THE
ENGAGEMENT
After our interim on-site visit, we will have an exit We use specialized auditing software to perform our meeting to discuss potential weaknesses, if any, and audit in addition to Data Analysis Software to perform provide any feedback for improvements or valuable audit testing. We also use secure web portals to information we have gathered from our outside communicate information. clientele that would benefit the City of Manhattan
Beach. QUALITY ASSURANCE POLICY AND
PROCEDURES
DETERMINING LAWS AND REGULATIONS
LSL has established strict review procedures to
SUBJECT TO AUDIT TEST WORK ensure quality reporting in accordance with the Laws and regulations subject to audit test work are standards. These procedures are designed to determined from the applicable laws, regulations, maximize adherence to quality. contracts, and grant agreements which we identify
through the understanding we obtain of the City of
Manhattan Beach and our extensive experience with
7. IDENTIFICATION OF ANTICIPATED
governmental entities.
POTENTIAL AUDIT PROBLEMS
DRAWING AUDIT SAMPLES
For tests of controls, we use audit sampling. Tests of With our familiarity with similar local governments, we controls are procedures directed towards determining do not anticipate unusual audit problems. With the effectiveness of the design or operation of an changes in single audit and GASB pronouncements, internal structure policy or procedures. Normally, we always anticipate a certain degree of problems. audit sampling is used for tests of controls and tests To address these, we offer different training of compliance that involve inspection of documents opportunities, first-hand experience with similar local and reports indicating performance of the applicable governments, and implementation experts on our policy or procedures and compliance with the in-house team. applicable laws and regulations. These sampling
procedures test the operating effectiveness of an
internal control structure policy or procedures by
determining how the policy or procedure was applied,
the consistency with which it was applied during the
audit period, and by whom it was applied. To achieve
this goal, we will draw samples for disbursements,
receipts and payroll when applicable. Each document
selected will be tested for various attributes that are designed to verify compliance with different aspects
of internal controls and applicable laws and
regulations. Additionally, each sample item will be
tested for coding to the proper accounts and posting
22 www.lsicpas.com
LSL
CPAS AND ADVISORS
8. PROPOSED AUDIT SCHEDULE
Our proposed schedule for the annual audit is as follows:
March/April October November
Year Audit Fieldwork-
Completed by October 15th
Audit Planning - Final Drafts of all audit reports
Interim Audit shall be sent to the City by
Visit Mid-November
Completed by the
end of April Final Reports:
shall be sent to the City by no
later than November 30th
23 www.slcpas.com
LSL" :
CPAS AND ADVISORS
COST PROPOSAL
CITY OF MANHATTAN BEACH
AUDIT WORK COST PROPOSAL FORM
AND ESTIMATE OF COST
SECTION A: AUDIT WORK COST OPTION YEARS
SERVICE FY 2019/2020 FY 2020-2021 FY 2021/2022 FY 2022/2023 FY 2023/2024 Audit and Related Reports $ 44,530 $ 45,870 47,250 48,670 $ 48,670 Preparation of Financial Statements 8,470 8,720 8,980 9,250 9,250 Single Audit and Related Reports * 5,190 5,350 5,510 5,680 5,680 Total for Fiscal Year (not to exceed) $ 58,190 $ 59,940 $ 61,740 $ 63,600 $ 63,600 * Quoted price includes the testing of one major program. Additional program will be $1,950 SECTION B: HOURLY BILLING RATES FOR ENGAGEMENT OPTION YEARS POSITION FY 2019/2020 FY 2020-2021 FY 2021/2022 FY 2022/2023 FY 2023/2024 Partner $ 266 $ 274 $ 282 $ 291 291
Manager 176 181 187 193 193
Senior Accountant 133 137 141 144 144
Staff Accountant 119 123 126 130 130
Clerical Inluded Inluded Inluded Inluded Inluded
Other Inluded Inluded Inluded Inluded Inluded
If it should become necessary for the City to request additional services, such additional work will be performed in an addendem to the contract between the City and LSL using the schedule of hourly rates above.
Name of Firm: Lance, Soll & Lunghard LLP
Authorized Signature:
Name of Authorized Person: Richard K. Kikuchi, CPA
Title: Managing Partner
Address: 203 N. Brea Bivd, Suite 203
City/State/Zip: Brea, CA 92870
Telephone: 714-672-0022
Email: Richard. [email protected]
24 www.isicpas.com
LSL'
CPAS AND ADVISORS
February 11, 2019
Mr. Steve Charelian
Finance Director
City of Manhattan Beach
1400 Highland Avenue
Manhattan Beach, California 90266
Re: Best and Final Offer for Professional Audit Services (RFP #1195-19) Attached is LSL's Best and Final Offer for audit services for the fiscal year ending June 30, 2019, 2020, and 2021 with options to renew the fiscal years ending June 30, 2022 and 2023. We have reduced our original proposed pricing and are now maintaining our fee constant for the first three fiscal years and adding a 3% increase for year 4 ($1,750) and year 5 ($1.800) For the purpose of this best and final offer, Richard K. Kikuchi, Partner is authorized to make representations for our firm, empowered to submit this best and final offer and authorized to sign a contract with the City of Manhattan Beach. I can be reached by phone at (714) 672-0022. or through email at [email protected].
Very truly yours,
Richard K. Kikuchi, Partner
LANCE, SOLL & LUNGHARD, LLP
- PrimeGlobal
Ipendent Accounting Fir
203.N. Brea Blvd., Suite 203 | Brea, CA 92821 | Phone: 714.672.0022
LSL
CPAS AND ADVISORS
BEST AND FINAL OFFER COST PROPOSAL
CITY OF MANHATTAN BEACH
AUDIT WORK COST PROPOSAL FORM
AND ESTIMATE OF COST
SECTION A: AUDIT WORK COST OPTION YEARS
(SERVICE FY 2019/2020 FY 2020-2021 FY 2021/2022 FY 2022/2023 FY 2023/2024 Audit and Related Reports $ 44,530 $ 44,530 $ 44,530 $ 45,870 $ 47,250 Preparation of Financial Statements 8,470 8,470 8,470 8,720 8,980 Single Audit and Related Reports * 3,690 3,690 3,690 3,850 4,010 Total for Fiscal Year (not to exceed) $ 56,690 $ 56,690 $ 56,690 $ 58,440 $ 60,240 Annual Increase $ $ $ 1,750 $ 1,800
*Quoted price includes the testing of one major program. Additional program will be $1,950 SECTION B: HOURLY BILLING RATES FOR ENGAGEMENT OPTION YEARS POSITION FY 2019/2020 FY 2020-2021 FY 2021/2022 FY 2022/2023 FY 2023/2024 Partner $ 266 266 $ 266 $ 274 $ 282
Manager 176 176 176 81 187
Senior Accountant 133 133 133 137 141
Staff Accountant 119 119 119 123 126
Clerical Inluded Inluded Inluded Inluded Inluded
Other Inluded Inluded Inluded Inluded Inluded
If it should become necessary for the City to request additional services, such additional work will be performed in an addendem to the contract between the City and LSL using the schedule of hourly rates above.
Name of Firm: Lance, Soll & Lunghard LLP
Authorized Signature: Dal Kle
Name of Authorized Person: Richard K. Kikuchi, CPA
Title: Managing Partne
Address: 203 N. Brea Bivd. Suite 203
City/State/Zip: Brea, CA 92870
Telephone: 714-672-0022
Email: Richard. [email protected]
www.1s1cpas.com