PROFESSIONAL SERVICES AGREEMENT
WITH DAVIS FARR LLP FOR
PROFESSIONAL AUDIT SERVICES
THIS PROFESSIONAL SERVICES AGREEMENT ("Agreement") is made and enteredintoas ofthis23rdday ofJune,2026 ("EffectiveDate"),by and between the CITY OF NEWPORT BEACH, a Californiamunicipalcorporationand chartercity("City"),and DAVIS FARR LLP,a Californialimitedliabilitypartnership("Consultant"),whose address is 18201 Von Karman Ave, Suite 1100, Irvine,CA 92612, and is made with reference to the following:
RECITALS
A. City is a municipal corporation duly organized and validlyexistingunder the laws of the State of Californiawith the power to carryon itsbusiness as itisnow being conducted under the statutes of the State of California and the Charter of City.
B. City desires to engage Consultant to provide professional audit services ("Project").
C. Consultant possesses the skill,experience, ability,background, certificationand knowledge to provide the professionalservices described inthisAgreement.
D. City has solicitedand received a proposal from Consultant,has reviewedthe previous experience and evaluated the expertise of Consultant, and desires to retainConsultantto renderprofessionalservicesunder the terms and conditions set forthinthisAgreement.
NOW, THEREFORE, itismutuallyagreed by and between the undersigned parties as follows:
1. TERM
Unless terminated earlier as set forth herein, the term of thisAgreement shall commence on the EffectiveDate and shallexpire May 26, 2029, and thereafter,shall automaticallyrenew forup to two (2)additionalone (1)year terms, unless the Citygives priorwrittennoticeto Consultant,priortoany renewalterm, thatthe Agreement willnot renew.
2. SERVICES TO BE PERFORMED
Consultant shall diligentlyperform allthe services described in the Scope of Services attached hereto as ExhibitA and incorporated hereinby reference("Services" or "Work"). City may electto delete certainServices withinthe Scope of Servicesat its sole discretion.
ATTACHMENT A
3. TIME OF PERFORMANCE
3.1 Time isofthe essence inthe performance of Services under thisAgreement and Consultant shallperform the Services in accordance with the schedule included in ExhibitA. In the absence of a specificschedule, the Services shall be performed to completion ina diligentand timelymanner. The failureby Consultant to strictlyadhere to the schedule set forthinExhibitA, ifany, or perform the Services ina diligentand timely manner may resultinterminationof thisAgreement by City.
3.2 Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant'sreasonable control. However, in the case of any such delay in the Services to be provided forthe Project,each party hereby agrees to provide noticewithintwo (2)calendar days of the occurrence causing the delay to the other party so thatalldelays can be addressed.
3.3 Consultant shallsubmit allrequests forextensions of time forperformance in writingto the ProjectAdministratoras defined herein not laterthan ten (10) calendar days after the startof the condition that purportedly causes a delay. The Project Administratorshallreview allsuch requests and may grant reasonable time extensions forunforeseeable delays thatare beyond Consultant'scontrol.
3.4 For all time periods not speciifcallyset forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by hand-deliveryor mail.
4. COMPENSATION TO CONSULTANT
4.1 City shallpay Consultant for the Services on a time and expense not-to- exceed basis inaccordance with the provisionsof thisSection and the Schedule of Billing Rates attached hereto as ExhibitB and incorporated herein by reference. Consultant's compensation for allWork performed in accordance with thisAgreement, including all reimbursable items and subconsultant fees, shall not exceed Four Hundred One Thousand Six Hundred Seventy Four Dollars and 00/100 ($401,674.00),withoutprior writtenauthorizationfrom City. No billingratechanges shallbe made during the term of thisAgreement without the priorwrittenapproval of City.
4.2 Consultant shall submit monthly invoices to City describing the Work performed the preceding month. Consultant'sbillsshallincludethe name of the person who performed the Work, a briefdescriptionofthe Services performed and/or the specific task inthe Scope of Services to which itrelates,the date the Services were performed, the number of hours spent on allWork billedon an hourly basis,and a descriptionof any reimbursableexpenditures.Cityshallpay Consultantno laterthan thirty(30) calendar days afterapproval of the monthly invoiceby Citystaff.
4.3 Cityshallreimburse Consultant only forthose costsor expenses specifically identifiedin ExhibitB to thisAgreement or specificallyapproved inwritinginadvance by City.
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4.4 Consultant shallnot receiveany compensation forExtra Work performed withoutthe priorwrittenauthorizationof City.As used herein,"ExtraWork" means any Work thatisdetermined by Cityto be necessary forthe propercompletionofthe Project, but which is not includedwithinthe Scope of Services and which the parties did not reasonably anticipatewould be necessary at the execution of this Agreement.
Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of BillingRates as set forthin ExhibitB.
5. PROJECT MANAGER
5.1 Consultant shalldesignate a ProjectManager, who shall coordinate all phases ofthe Project.This ProjectManager shallbe availableto City at allreasonable times duringthe Agreement term. Consultanthas designatedJonathan Foster to be its ProjectManager. Consultant shallnot remove or reassignthe ProjectManager or any personnel listedin ExhibitA or assign any new or replacement personnel to the Project withoutthe priorwrittenconsent of City. City'sapproval shall not be unreasonably withheldwithrespectto the removal or assignment of non-key personnel.
5.2 Consultant,atthe sole discretionof City,shallremove from the Projectany of itspersonnel assigned to the performance of Services upon writtenrequest of City.
Consultantwarrantsthatitwillcontinuouslyfurnishthe necessary personnel to complete the Projecton a timelybasis as contemplated by thisAgreement.
5.3 IfConsultant isperforming inspectionservicesforCity,the ProjectManager and any other assigned staffshallbe equipped with a cellularphone to communicate with Citystaff.The ProjectManager's cellularphone number shallbe provided to City.
6. ADMINISTRATION
This Agreement willbe administered by the AdministrativeServices Department.
City'sAccounting Manager or designee shallbe the ProjectAdministratorand shallhave the authorityto act for City under this Agreement. The Project Administrator shall represent City in allmatters pertainingto the Services to be rendered pursuant to this Agreement.
7. CITY'S RESPONSIBILITIES
To assistConsultant inthe execution of itsresponsibilitiesunder thisAgreement, City agrees to provide access to and upon request of Consultant, one copy of allexisting relevantinformationon fileat City. Citywillprovide allsuch materialsin a timely manner so as nottocause delaysinConsultant'sWork schedule.
8. STANDARD OF CARE
8.1 Allof the Services shallbe performed by Consultant or under Consultant's supervision. Consultant represents that itpossesses the professionaland technical personnel required to perform the Services required by thisAgreement, and that itwill perform allServices ina manner commensurate with community professionalstandards Davis Farr LLP Page 3
and with the ordinarydegree of skilland care thatwould be used by other reasonably competent practitionersof the same disciplineunder similarcircumstances. AllServices shallbe performed by qualifiedand experienced personnelwho are not employed by City.
By delivery of completed Work, Consultant certifiesthat the Work conforms to the requirements of thisAgreement, allapplicablefederal,stateand locallaws, and legally recognized professional standards.
8.2 Consultantrepresentsand warrantstoCitythatithas, shallobtain,and shall keep in fullforce and effectduring the term hereof, at itssole cost and expense, all licenses,permits,qualifications,insurance and approvals of whatsoever nature that is legallyrequiredof Consultant to practiceitsprofession.Consultant shallmaintain a City of Newport Beach business licenseduringthe term ofthisAgreement.
8.3 Consultant shallnot be responsiblefor delay, nor shall Consultant be responsiblefordamages or be indefaultor deemed to be indefaultby reason of strikes, lockouts, accidents, acts of God, or the failureof City to furnishtimely informationor to approve or disapprove Consultant'sWork promptly,or delay or faultyperformance by City,contractors,or governmentalagencies.
9. HOLD HARMLESS
9.1 To the fullestextent permitted by law, Consultant shallindemnify, defend and hold harmless City,itsCityCouncil,boards and commissions, officers,agents, volunteersand employees (collectively,the "IndemnifiedParties")from and against any and allclaims (including,without limitation,claims for bodilyinjury,death or damage to property),demands, obligations,damages, actions,causes of action, suits, losses, judgments, fines,penalties,liabilities,costs and expenses (including,without limitation, attorneys'fees, disbursements and court costs)of every kind and nature whatsoever (individually,a Claim; collectively,"Claims"),which may arisefrom or inany manner relate (directlyor indirectly)to any breach of the terms and conditionsof thisAgreement, any Work performed or Services provided under thisAgreement including,without limitation, defects inworkmanship or materialsor Consultant'spresence or activitiesconducted on theProject(includingthenegligent,reckless,and/orwillfulacts,errorsand/or omissions of Consultant,itsprincipals,ofifcers,agents,employees, vendors, suppliers,consultants, subcontractors,anyone employed directlyor indirectlyby any of them or forwhose acts they may be liable,or any or allof them).
9.2 Notwithstanding the foregoing,nothing herein shallbe construed to require Consultant to indemnify the Indemnified Parties from any Claim arisingfrom the sole negligence or willfulmisconduct ofthe Indemnified Parties.Nothing inthisindemnity shall be construed as authorizingany award of attorneys'fees in any actionon or to enforce the terms of this Agreement. This indemnity shall apply to allclaims and liability regardless of whether any insurance policiesare applicable. The policylimitsdo not act as a limitationupon the amount of indemnificationto be provided by Consultant.
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10. INDEPENDENT CONTRACTOR
Itis understood that City retainsConsultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the Work are under the controlof Consultant, except to the extent they are limitedby statute,ruleor regulationand the expressed terms of thisAgreement. No civil service status or other rightof employment shallaccrue to Consultant or itsemployees.
Nothing in thisAgreement shallbe deemed to constituteapproval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibilityfor and control over the means of performing the Work, provided that Consultant isin compliance with the terms of thisAgreement. Anything in thisAgreement thatmay appear togiveCitythe rightto directConsultant as to the details of the performance of the Work or to exercise a measure of controlover Consultant shall mean only thatConsultant shallfollowthe desires of Citywith respect to the resultsof the Services.
11. COOPERATION
Consultant agrees to work closely and cooperate fullywith City'sdesignated ProjectAdministrator and any other agencies that may have jurisdictionor interestinthe Work to be performed. City agrees to cooperate with the Consultant on the Project.
12. CITY POLICY
Consultant shall discuss and review all matters relatingto policy and Project directionwith City'sProjectAdministratorinadvance of allcriticaldecision pointsinorder toensuretheProjectproceedsina manner consistentwith Citygoals and policies.
13. PROGRESS
Consultant is responsible for keeping the Project Administrator informed on a regular basis regarding the status and progress of the Project,activitiesperformed and planned, and any meetings that have been scheduled or are desired.
14. INSURANCE
Without limitingConsultant'sindemnificationof City,and priorto commencement of Work, Consultant shallobtain,provide and maintain at itsown expense during the term ofthisAgreement or forother periods as specifiedinthisAgreement, policiesof insurance of the type, amounts, terms and conditionsdescribed in the Insurance Requirements attached hereto as ExhibitC, and incorporated herein by reference.
15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS
Except as specificallyauthorized under this Agreement, the Services to be provided under this Agreement shall not be assigned, transferredcontracted or subcontractedout withoutthe priorwrittenapprovalofCity.Any ofthefollowingshallbe construed as an assignment: The sale,assignment, transferorotherdispositionofany Davis Farr LLP Page 5
ofthe issued and outstandingcapitalstockofConsultant,or ofthe interestofany general partneror jointventureror syndicate member or cotenant ifConsultant isa partnershipor joint-ventureor syndicate or co-tenancy, which shallresultin changing the controlof Consultant.Controlmeans fiftypercent(50%) or more ofthe votingpower or twenty-five percent (25%) or more of the assets of the corporation,partnershipor joint-venture.
16. SUBCONTRACTING
The subcontractorsauthorizedby City,ifany, to perform Work on thisProjectare identifiedin ExhibitA. Consultant shallbe fullyresponsible to City for allacts and omissions of any subcontractor.Nothing inthisAgreement shallcreate any contractual relationshipbetween Cityand any subcontractornor shallitcreate any obligationon the partof Cityto pay or to see to the payment of any monies due to any such subcontractor other than as otherwise requiredby law. City isan intended beneficiaryof any Work performed by the subcontractorforpurposes of establishinga duty of care between the subcontractor and City. Except as specificallyauthorized herein, the Services to be provided under thisAgreement shallnot be otherwise assigned, transferred,contracted or subcontractedout withoutthe priorwrittenapprovalof City.
17. OWNERSHIP OF DOCUMENTS
17.1 Each and every report,draft,map, record,plan,document and otherwriting produced, includingbut not limitedto, websites, blogs, social media accounts and applications(hereinafter"Documents"), prepared or caused tobe preparedby Consultant, itsofifcers,employees, agents and subcontractors,in the course of implementing this Agreement, shallbecome the exclusivepropertyofCity,and Cityshallhave the sole right to use such materials in itsdiscretion without further compensation to Consultant or any other party. Additionally,allmaterialposted in cyberspace by Consultant, itsofficers, employees, agents and subcontractors,in the course of implementing thisAgreement, shallbecome the exclusivepropertyof City,and Cityshallhave the sole rightto use such materialsinitsdiscretionwithoutfurthercompensation to Consultant or any other party.
Consultant shall,at Consultant'sexpense, provide such Documents, includingalllogins and password informationto Cityupon priorwrittenrequest.
17.2 Documents, includingdrawings and specifications,prepared by Consultant pursuant to thisAgreement are not intended or represented to be suitablefor reuse by Cityor others on any other project.Any use of completed Documents forother projects and any use of incomplete Documents without specificwrittenauthorizationfrom Consultant willbe at City'ssole riskand without liabilityto Consultant. Further,any and allliabilityarisingout of changes made to Consultant'sdeliverablesunderthisAgreement by Cityor persons other than Consultant iswaived against Consultant,and Cityassumes fullresponsibilityforsuch changes unless Cityhas given Consultant priornoticeand has received from Consultant writtenconsent forsuch changes.
17.3 All written documents shall be transmitted to Cityinformats compatible with Microsoft Office and/or viewable with Adobe Acrobat.
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18. CONFIDENTIALITY
All Documents, including drafts,preliminary drawings or plans, notes and communications that result from the Services in this Agreement, shallbe kept confidential unless Cityexpressly authorizes inwritingthe release of information.
19. INTELLECTUAL PROPERTY INDEMNITY
Consultant shalldefend and indemnify City,itsagents, officers,representatives and employees againstany and allliability,includingcosts,forinfringementor alleged infringementof any United States'letterspatent,trademark, or copyright,includingcosts, containedinConsultant'sDocuments providedunder thisAgreement.
20. RECORDS
Consultant shallkeep records and invoices in connection with the Services to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any Services, expendituresand disbursements charged to City,fora minimum periodofthree (3)years, or for any longer period required by law, from the date of finalpayment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable.
Consultant shallallow a representativeof Cityto examine, auditand make transcriptsor copies of such records and invoicesduring regularbusiness hours. Consultant shallallow inspection of all Work, data, Documents, proceedings and activitiesrelated to the Agreement for a period of three (3) years from the date of finalpayment to Consultant under thisAgreement.
21. WITHHOLDINGS
Citymay withholdpayment to Consultant of any disputed sums untilsatisfactionof the dispute with respect to such payment. Such withholding shall not be deemed to constitutea failuretopay accordingtothetermsof thisAgreement. Consultant shallnot discontinue Work as a resultof such withholding. Consultant shallhave an immediate rightto appeal to the City Manager or designee with respect to such disputed sums.
Consultant shall be entitled to receive interest on any withheld sums at the rateof return that City earned on itsinvestments during the time period,from thedateofwithholdingof any amounts found to have been improperly withheld.
22. ERRORS AND OMISSIONS
In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which resultinexpense to Citygreaterthan what would have resulted ifthere were not errors or omissions in the Work accomplished by Consultant, the additional design, construction and/or restoration expense shall be borne by Consultant. Nothing inthisSection isintended to limitCity'srightsunder the law or any other sectionsof thisAgreement.
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23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS
City reserves the rightto employ other Consultants in connection with the Project.
24. CONFLICTS OF INTEREST
24.1 Consultant or its employees may be subject to the provisions of the CaliforniaPoliticalReform Act of 1974 (the "Act")and/or Government Code §§ 1090 et seq., which (1) require such persons to disclose any financialinterestthat may foreseeablybe materiallyaffectedby theWork performedunder thisAgreement, and (2) prohibitsuch persons from making, or participatingin making, decisions that will foreseeably financiallyaffectsuch interest.
24.2 Ifsubjectto the Act and/or Government Code §§ 1090 et seq., Consultant shallconform to allrequirements therein. Failureto do so constitutesa material breach and is grounds for immediate termination of thisAgreement by City.Consultant shall indemnify and hold harmless City for any and allclaims for damages resultingfrom Consultant's violation of this Section.
25. NOTICES
25.1 All notices, demands, requests or approvals, including any change in mailing address, to be given under the terms of thisAgreement shallbe given inwriting, and conclusively shall be deemed served when delivered personally,or on the third business day afterthe deposit thereof in the United States mail,postage prepaid,first- class mail,addressed as hereinafterprovided.
25.2 All notices,demands, requests or approvals from Consultant to City shall be addressed to City at:
Attn:Accounting Manager
AdministrativeServices Department
Cityof Newport Beach
1.00 Civic Center Drive
Newport Beach, CA 92660
25.3 All notices,demands, requests or approvals from City to Consultant shall be addressed to Consultant at:
Attn: Jonathan Foster
Davis Farr LLP
18201 Von Karman Ave, Suite 1100
Irvine,CA 92612
26. CLAIMS
Unless a shortertime isspecifiedelsewhere inthisAgreement, before making its finalrequestforpayment under thisAgreement, Consultant shallsubmit to City,inwriting, Davis Farr LLP Page 8
all claims for compensation under or arisingout of this Agreement. Consultant's acceptance of the finalpayment shallconstitutea waiver of allclaims for compensation under or arisingout of thisAgreement except those previouslymade inwritingand identifiedby Consultant inwritingas unsettledat the time of itsfinalrequest forpayment.
Consultant and City expressly agree thatinadditionto any claims filingrequirements set forthinthe Agreement, Consultant shallbe requiredto fileany claim Consultant may have against City in strictconformance with the Government Claims Act (Government Code sections 900 et seq.).
27. TERMINATION
27.1 Inthe event thateitherpartyfailsor refusesto perform any of the provisions of thisAgreement at the time and inthe manner required,that party shallbe deemed in defaultinthe performance of thisAgreement. Ifsuch defaultisnot cured withina period of two (2)calendar days, or ifmore than two (2)calendar days are reasonably required to cure the defaultand the defaultingparty failsto give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifyingthe nature of such defaultand the steps necessary to cure such default,and thereafterdiligentlytake steps to cure the default,the non-defaultingparty may terminate the Agreement forthwithby givingto the defaultingpartywrittennoticethereof.
27.2 Notwithstanding the above provisions,City shallhave the right,at itssole and absolute discretionand without cause, of terminatingthisAgreement at any time by giving no less than seven (7) calendar days' priorwrittennotice to Consultant. In the event of termination under this Section, City shall pay Consultant for Services satisfactorilyperformed and costsincurredup tothe effectivedate ofterminationforwhich Consultant has not been previouslypaid. On the effectivedate of termination,Consultant shall deliver to City all reports, Documents and other information developed or accumulated inthe performance of thisAgreement, whether indraftor finalform.
28. STANDARD PROVISIONS
28.1 Recitals.Cityand Consultant acknowledge thatthe above Recitalsare true and correctand are hereby incorporatedby referenceintothisAgreement.
28.2 Compliance with allLaws. Consultant shall,at itsown cost and expense, comply with allstatutes,ordinances, regulationsand requirements of allgovernmental entities,includingfederal,state,county or municipal,whether now inforceor hereinafter enacted. In addition,allWork prepared by Consultant shallconform to applicableCity, county,stateand federallaws,rules,regulationsand permitrequirementsand be subject to approval of the ProjectAdministratorand City.
28.3 Waiver. A waiver by eitherparty of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or conditioncontained herein,whether of the same or a different character.
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28.4 IntegratedContract. This Agreement represents the fulland complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminarynegotiationsand agreements ofwhatsoever kindor nature are merged herein.
No verbal agreement or impliedcovenant shallbe held to vary the provisions herein.
28.5 Conflicts or Inconsistencies. In the event there are any conflictsor inconsistenciesbetween this Agreement and the Scope of Services or any other attachments attached hereto,the terms of thisAgreement shallgovern.
28.6 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against eitherparty by reason of the authorship of the Agreement or any other rule of constructionwhich might otherwiseapply.
28.7 Amendments. This Agreement may be modified or amended only by a writtendocument executed by both Consultant and Cityand approved as to form by the CityAttorney.
28.8 Severability.Ifany term or portionof thisAgreement is held to be invalid, illegal,or otherwise unenforceable by a court of competent jurisdiction,the remaining provisionsof thisAgreement shallcontinue infullforce and effect.
28.9 ControllingLaw and Venue. The laws ofthe State of Californiashallgovern thisAgreement and allmatters relatingto itand any action brought relatingto this Agreement shall be adjudicated in a court of competent jurisdictionin the County of Orange, State of California.
28.10 Equal Opportunity Employment. Consultant represents that itis an equal opportunity employer and itshallnot discriminateagainst any subcontractor,employee or applicant for employment because race, religiouscreed, color, national origin, ancestry,physicalhandicap, medical condition,maritalstatus,sex, sexual orientation, age or any other impermissible basis under law.
28.11 No Attorneys'Fees. Inthe event of any disputeor legalactionarisingunder thisAgreement, the prevailingpartyshallnot be entitledto attorneys'fees.
28.12 Counterparts. This Agreement may be executed in two (2) or more counterparts,each of which shallbe deemed an originaland allof which together shall constituteone (1)and the same instrument.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the partieshave caused thisAgreement to be executed on the dates written below.
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date:
CITY OF NEWPORT BEACH,
a Californiamunicipalcorporation
Date:
By: 41 By:________iron C.HarpS-2 'ij,j LaurenKleimanCityAttorney Mayor ATTEST:
Date:
CONSULTANT: DAVIS FARR LLP,
a Californialimitedliabilitypartnership
Date:
By:
Marc Davis
General Partner
Lena Shumway
CityClerk
Date:
Jennifer Farr
General Partner
[END OF SIGNATURES]
Attachments: ExhibitA - Scope of Services
ExhibitB - Schedule of BillingRates
ExhibitC - Insurance Requirements
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EXHIBIT
SCOPE OF SERVICES
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SCOPE OF SERVICES
Objective:
Consultant shallprovide annual financialstatement auditservicesand professionalaccounting guidance to the Cityof Newport Beach ("City")as set forthherein.The Cityintendsto submit an Annual Comprehensive FinancialReport (ACFR) tothe Government Finance OfficersAssociation (GFOA) for review in theirCertificateof Achievement for Excellencein FinancialReporting Program. Consultant shallperform annual auditsof the City'sfinancialstatements and prepare theCity'sACFR inaccordancewithGenerallyAcceptedAuditingStandards (GARS), issued by the Comptroller General of the Unites States and the U.S. Office of Management and Budget (OMB) Uniform Guidance Audits of State and Local Governments and Non-ProfitOrganizations, Governmental Accounting Standards Board (GASB) requirements,prepare and issue allrequired audit reports, provide ongoing accounting guidance related to governmental accounting standards and best practices,and presentationsto City management and Council. Consultant shall be licensed to practicein the State of Californiaand demonstrate extensive experience auditingmunicipalgovernments of comparable sizeand complexity.
Description:
Consultant shallperform an examination of the City'sbasic financialstatements of governmental activities,business-typeactivities,each majorfund,budgetary comparison of major governmental funds, aggregate remaining fund information,and relatednotes which collectivelycomprise the basicfinancialstatementsofthe City.Consultantshallalso examine the requiredsupplementary information(RSI) and supplementary information(SI)inaccordance with the auditingstandards set forth herein.
Consultant shallprovide an opinion on the fairpresentationof basic financialstatements, and an "in-relation-to"opinionon the combining and individualnon-major fund financialstatements, including budgetary comparison schedules in conformity with auditing standards generally accepted inthe UnitedStatesofAmerica (UnitedStates)and Governmental AuditingStandards issuedby theComptrolleroftheUnitedStates.
Consultant shallperform the followingtasks:
1. Review allof the City'sfinancialrecords and various funds in accordance with auditing standards set forth herein,with the objectiveof expressing an opinion on the basic financialstatementsand supplementary information.
2. Perform a singleauditon the expenditures of federalawards inaccordance with auditing standards set forthherein. City willprepare the Schedule of Expenditures of Federal Awards.
3. Perform agreed-upon procedures to testthe GANN appropriationlimitcalculation.
A. Auditing Standards to be Followed
The auditshallbe performed inaccordance with generallyaccepting auditingstandards including, but not limitedto,the following:
1. Generally accepted auditingstandards as set forthby the American Instituteof Certified Public Accountants;
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2. The standards applicableto financialauditscontained in the most current version of the Generally Accepted Government Auditing Standards (Yellow Book), issued by the Comptroller General of the United States;
3. The provisionsof the Single Audit Act as amended in 1996; and,
4. The provisions of U.S. Office of Management and Budget (OMB) Uniform Grant Guidance/Super Circular Audits of State and Local Governments and Non-Profit Organizations.Note - City does not contemplate using a cost allocationplan for the purpose of charging indirectcosts to Federal programs.
B. Reports to be Issued
Following the completion of the audit of the fiscalyear'sfinancialstatements, Consultant shall issue the followingreportsin accordance with auditingstandards outlined herein in a form conforming to currentgenerallyaccepted standards includingthe currentequivalentreportsor as amended by standard settingauthorities:
A reportwith an opinion on the fairpresentationof the basic financialstatements, and an "in-relation-to"opinion on the combining and individualnon-major fund financial statements,includingbudgetary comparison schedules in conformity with auditing standards generally accepted in the United States and the standards applicable to financialauditscontained inGenerallyAccepted Governmental AuditingStandards issued by theComptrolleroftheUnitedStates.Consultantshallprovide an electroniccopy ofthe independent opinion letterin PDF format and one hard copy.
2. Consultant shallprepare the singleauditreportand render an opinion on the schedule of expenditures of federal awards in relationto the basic financialstatements taken as a whole. The singleauditreportshould includean appropriateschedule of expenditures of federal awards, footnotes, findings and questioned costs, including any deficiencies identifiedduring the audit and a followup on prioraudit findings,where required.
Consultantshallcomplete the data collectionform and required filingwith the Federal Audit Clearing House and provide the Citywith one electroniccopy inPDF format and five bound copies.
3. A reporton compliance and internalcontrolover financialreportingand on compliance and other matters based on an audit of the financial statements. The report should be addressed to the City Council and provided to the City in an electronicform in a PDF format.
A reporton compliance foreach major program and on internalcontrolover compliance.
The report should be addressed to the City Council and provided to the City in an electronicform in a PDF format. In the required reports on compliance and internal controls,Consultant shallcommunicate any deifcienciesin internalcontrolfound during the audit to the Finance Committee and the City Council. Deficiencies of lesser significance discovered by Consultant shall be reported in a separate letterto management.
4. When applicable,the auditfirm shallissue a separate "management letter"thatincludes recommendations forimprovements ininternalcontrol.The management lettershould be
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addressed to the CityCouncil.Consultant shallprovideone electroniccopy inPDF format and one hard copy.
5. Consultant shallissue a separate letter,AU-C 260, "communication tothose charged with governance" at the conclusion of the audit" that include significantfindings and other matters.This should also be addressed to the CityCouncil.
6. ArticleXIIIBAppropriationsLimitprocedures letter.Consultant shallprovide the City an electroniccopy inPDF format and one hard copy.
7. The ACFR willbe prepared and word processed by the auditfirm.
Irregularitiesand illegalacts:
Consultant shallbe requiredto make an immediate, writtenreportof allirregularitiesand illegal acts or indicationsof illegalacts ofwhich they become aware to the followingparties:
CityManager, Seimone Jurjis
CityAttorney,Aaron Harp
Administrative Services and Finance Director/Treasurer,Jason AI-Imam C. Working Paper Retention and Access to Working Papers Allworking papers and reportsmust be retained,at Consultant'sexpense, fora minimum ofthree (3)years,unless the firmisnotifiedinwritingby the Cityofthe need to extend the retentionperiod.
Consultant shallbe required to make working papers available,upon request,to the City or its designees.
D. Time Requirements
Cityacknowledges thatthe City'spreparedness can have a profound impact on the successful execution of an auditplan. The levelof City'spreparedness isoften a factorof stafifnglevels, new accounting standards and competing projectswhich can change from year to year. The City'sabsolute deadlines are driven based on the GFOA award submission deadline for the financialreportsand the Single Audit Submission deadline forallother compliance reports.
Interim Work
The City is generally flexiblewith the timing of Consultant's complete interim work; however, Consultant should be prepared to review and mail bank-related audit confirmationson or about June 30 of each year.
2. Audit Plan
In preparationforfinalfieldwork,Consultantshallmeet and discuss the ifnalaudit plan and provide the City schedules to be prepared by the City by July 31 of each year, particularlyifthey willrequirea significantamount of stafftime to prepare.
3. Fieldwork
Generally, the City is not ready for finalfieldwork untilSeptember 30 of each year.
Consultant shall plan to complete allfieldwork during the month of October or early November at the latest.
SCOPE OF SERVICES
4. Reports
Consultantshallhave the ifnalopinionletterdeliveredby December 1 of each year.Final Management Letters,SingleAudit and other compliance reportsshallbe deliveredby March 1 and filed(ifapplicable)withappropriateauthoritiesby March 31 of each year.
5. Finance Committee/CityCouncil Review
The Finance Committee and/orCityCouncilwillreview the auditresultsat theirJanuary meeting each year.
E. Assistance to be Provided to Consultant and Report Preparation
1. Administrative Assistance
City'saccountingstaffand management personnelwillbe availableduring the audit to assistConsultant by providinginformation,documentation, explanationsand supporting schedules as requested by Consultant. Consultantiswelcome to retrieverecords on its own and Citystaffcan assistinretrievingrecordsifnecessary.
2. Electronic Records Retrieval
Most records are availableto review electronicallyand can be retrieved from a combination of web-enabled applicationsor directaccess to the City'sfinancialand accounting systems. Most supportingdocumentation, includingpurchase orders,invoices and journalentries,have been imaged and are linkedto ifnancialtransaction within the City'sfinancialand accounting system. Consultantshallbe provided with limitedaccess to the City'saccounting system via a City personal computer to query account general ledgeraccounts forthe purpose of downloading ledgerbalances forlead schedules and reviewingtransactiondetailand supportingimages withthe optionto printtoa localprinter.
3. Work Area, Telephones, Photocopying, Faxing and InternetAccess The CitywillprovideConsultanta reasonable workspace, desks and chairs.Citywillalso provideaccesstotelephonelines,photocopyingand fax machines. Public WiFi Internet access isavailable;however, directEthernet access to the City'snetwork by Consultant's computer may be limitedor prohibited.
In addition,Consultant shallrespond to the reasonable inquiriesof successor auditorsand allow successor auditors to review working papers relatingto matters of continuing accounting significance.
Consultant shallkeep City staffinformed of new developments affectinglocal government accounting and reportingas well as any other relevantissues. Such advice should not be construed as consultingservices,nor willcompensation forsuch advice be contemplated unless explicitlyapproved by the City.
• IDavisFarrCERTIFIED PUBLIC ACCOUNTANTS
TECHNICAL PROPOSAL FOR Prepared By:
Davis Farr LLP
18201 Von Karman Ave I Suite 1100
Irvine,CA 92612PROFESSIONAL AUDIT
SERVICES
Contact Person:
Jonathan Foster, CPA Partner
Office: 949.474.2020 Direct: 949.783.1744
Email: [email protected]
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Table of Contents
Section A - Independence .1
Section B - License to Practice in California ...................................................................1 Section C - Firm Qualifications and Experience ..............................................................2 Professional Affiliations ...................................................................................................... ......................................3 Section D - Proposed StaffQualificationsand Experience .............................................4 Section E - Engagements with Other Government Entities............................................5 Client References .............................................................................................................. ........................................6 Section F - Audit Approach ............................................................................................7 Our Understanding of the Work .................................................................................................. .............................7 Work Plan ...................................................................................................................... ............................................7 Implementation of New GASB Pronouncements ...................................................................................... .............10 Audit Timeline ................................................................................................................. ........................................11 Section G - Available Trainings.....................................................................................11 Appendix A - Peer Review ............................................. .............................12 Appendix B - Resumes ................................................................................,.....15 f
+1DavisFarrCERTIFIED PUBLIC ACCOUNTANTS
Davis Farr LLP
18201Von Karman Avenue ISuite1100 IIrvine,CA 92612
Main: 949.474.2020 Fax: 949.263.5520
April10, 2026
Mr. Shaun Tormey
Senior Buyer
Cityof Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
Re: Request for Proposals No. 26-40
We are pleasedto provideour proposalto provide professionalaudit servicesto the Cityof Newport Beach (the"City")forthe fiscalyears ending June 30, 2026, through 2028 with optionsto extend fortwo additionalone year renewals.
Our servicephilosophy isone of open and constantcommunication, a proactiveapproach and responsive, value-added services.We willlistento your ideasand concernsand willbringcreativesolutionsto you in both financialand other operationalareas. We are aware that while the Cityhas solicitednumerous proposals,Davis FarrLLP would be your best selectionfor the followingreasons which are set forth in greaterdetailinour proposal:
We take a proactiveleadershiprolein localgovernment accounting and auditingissues. Jonathan Foster,Partner at Davis Farr LLP,isthe current Chair ofthe CalCPA Government Auditand Accounting Committee. Our Partners are frequent speakers on technicaltopics at conferences and training events throughout California,includingthe recent CSMFO Annual Conference.
We currently provide audit services to numerous cities in Southern California. Our deep understanding of the issuesfacingCaliforniagovernments enables us to provide high qualityaudit servicesto the City.
We extensivelyutilizedata mining software to evaluateanomalies inyour accountingdata.Thishelps focusour auditors'attentionon potentialerrorsinthe accounting recordsand transactionsthatcould be more susceptibleto fraud.
We appreciatethe opportunityto share our credentialsand look forward to developing our professional relationship.Our proposal remains a firm and irrevocableofferfor 90 days. I look forward to you contacting me so that Imay answer furtherany questions which you may have. You may contact me at (949)783-1744, or by email [email protected].
Sincerely,
Jonathan Foster,CPA
Partner
r
Davis Farr LLP ("DavisFarr")isindependent with respectto the Cityof Newport Beach (the"City")or any of its component unitsas defined by the U.S.Government AccountabilityOffice'sGovernment Auditing Standards and GenerallyAccepted AuditingStandards. Neither Davis Farrnor the key personnel have any realor potentialconflicts of interest.
Section B - license to Practice in California
Davis Farr and allkey personnel are licensed with the CaliforniaState Board of Accountancy to practiceas independent certifiedpublicaccountants.
DavisFarr 1
CityofNewport Beach I ProposalforAuditServices
Section C - Firm Qualificationsand Experience
Background Information - Davis FarrLLP ("DavisFarr")isa full-serviceregionalaccounting firm that specializesin providingattestand advisoryservicesto federal,state,and localgovernments out of our Californiaand Washington offices.Thisengagement would be servicedby our Irvineoffice.Our personnel have served governmental entities forover 40 years.A breakdown of our government auditpersonnel by classificationisprovided below. The firm's financialconditionisstrongand we are not subjectto any pending litigation,bankruptcy, officeclosures,or mergers.
Insurance - Davis Farr has sufficientinsurance coverage to meet or exceed the City'srequirements and willprovide insurancecertificatesto the Citypriorto enteringinto a contract.
Quality Control - Davis Farr and itsPartners are members of the American Instituteof Certified Public Accountants (AICPA) and the Firm is a member of the AIPCA's Government Audit Quality Center. Our Firm isa voluntary participantin the AICPA Peer Review Program. Included in the appendix isour most recent Peer Review report where our firm received a Pass. A Pass demonstrates the highest levelof qualitycontrol ina Peer Review. The Peer Review includeda review of government engagements.
Training- Every professionalof the firm participatesin continuing professionaleducation courses. Each person is required to take at least80 hours of trainingover a two-year period, including24 hours per year specificto government accounting and audit topics. Courses cover a wide spectrum of professionaland technicalsubjects, and include Fraud, Professional Ethics and Governmental Accounting and Auditing topics to help the practitioner maintainhis/herprofessionalexpertise.
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Classification
Partners
Managers
Supervisors
Seniors
Staff
Administrative
Total personnel
Number of Employees
7 8
9 16
10 3
53 Government Audit Quality Center - Davis Farr isa member of the Government Audit QualityCenter (GAQC). The GAQC promotes the importance of quality governmental audits and the value of such audits to purchasers of governmental auditservices.GAQC isa voluntarymembership centerfor CPA firms and state auditorganizationsthatperform governmental audits.
CPESPONSORS
`AICPA
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National Registry of CPE Sponsors - Davis Farr is registeredto provide continuing professionaleducation through the National Association of State Board of Accountancy (NASBA). NASBA recognizesCPE program sponsors who provide continuing professionaleducation programs in accordance with nationallyrecognizedstandards. We provide CPE to our clientsat our annual GASB Update.
CaICPA- Many of the CPAs employed by Davis Farrare members of CaICPA and regularlyparticipatein chapter meetings, education,and events. Davis Farr partners are also members of the Governmental Accounting and Auditing Committee of the CalCPA and Jonathan Foster is the current Chair of the Committee.
American Institute of CPAs - Davis Farr and the Firm's Partners are members of the American InstituteofCPAs (AICPA).The AICPA developsstandards for audits, provides educational guidance materials to itsmembers, and monitors and enforcescompliance with the profession'stechnicaland ethicalstandards.
CSMFO - The Partners of Davis Farr are members of the CaliforniaSociety of Municipal Finance Officers(CSMFO), the statewide organizationserving all Californiamunicipalfinanceprofessionals.Firm personnelregularlyattend CSMFO Chapter Meetings and Conferences. The Partners of Davis Farr are frequent presenterson accounting and auditingtechnicaltopics at Chapter Meetings and Conferences. Davis Farr presented at the annual CSMFO conference inFebruary2021.
GFOA - The Government Finance Officers Association (GFOA) enhances and promotes the professionalmanagement of governmental financialresources by identifying,developing,and advancingfiscalstrategies,policies,and practicesfor the publicbenefit.The Partners of Davis Farr are members of the Certificateof Achievement Program's Special Review Committee. The Committee reviews Comprehensive Annual FinancialReports submitted to GFOA forthe CAFR Award Program.
Cityof Newport Beach ProposalforAuditServices
Section D - Proposed StaffQualificationsand Experience
The successfuloutcome of any audit requirespersonnel with the managerial and technicalskillsto perform the work required. The engagement team who willserve the Cityhave served together as a team of professionalson numerous financialauditexaminations of localgovernment entities.Key personnel includethe Partner,Manager, and Senior Auditor. Key personnel willnot be removed or replaced without the priorwritten concurrence of the City.
We believethat efficientadministrativemanagement and supervision of the audits isan extremely criticalfactor in achieving the desired resultsforCity.Inthat regard,our proposal organizationalstructurefor providing professional audit services is as follows:
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Jonathan Foster,CPA I
STAFF
AU©ITOR
Resumes of our proposed key personnel can be found inAppendix B to thisproposal.
DavisFarr 4
Cityof Newport Beach ProposalforAuditServices
Section E - Engagements with Other Government Entities
DavisFarrisa leaderinthe localgovernment sectorthroughout the Southern CaliforniaArea. Currently,we service approximately 60 local,state,and federalgovernment entities.Davis Farrservicesroutinelyprovided to our clients include, but are not limited to:
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Reviews and
Compilations ,
HanceInternal'
Attests dits
Our government expertise includes Cities,Special Districts,and other Governmental entities. Among the government agencies that the professionalsof Davis Farr have served recentlyare the following:
• Beach Cities Health District
• Bellflower-Somerset Water
• Cityof Avalon
• Cityof Carlsbad
• Cityof Commerce
• Cityof Coronado
• Cityof Costa Mesa
• Cityof Dana Point
• Cityof Encinitas
• Cityof Fontana
• Cityof Garden Grove
• Cityof Huntington Beach
• Cityof Laguna Niguel
• Cityof Mission Viejo
• Cityof Poway
• Cityof Rancho Santa Margarita
• Cityof Santee
• Cityof Vista
• Cucamonga ValleyWater District
• East Orange County Water District
• Eastern Municipal Water District
• Palm Springs Convention and VisitorsBureau
• Irvine Ranch Water District
• LA IMPACT
• Leucadia Wastewater District
• Los Angeles County LAFCO
• Orange County LAFCO
• Rancho California Water District
• RiversideCounty LAFCO
• Salton Sea Authority
• San Diego County Water Authority
• San Diego Association of Governments
• San Diego LAFCO
• Sweetwater Authority
• Trabuco Canyon Water District
• Vallecitos Water District
• Yucaipa Water District
City of Newport Beach ProposalforAuditServices
Client References
For your convenience, we have listedbelow references for audit work currentlybeing performed by Davis Farr personnel for several Citiesthroughout Southern California.For each of the references,we currentlyserve as independent auditors and have served these clientsfor a number of years.
N __________
I CityofGarden Grove
11222AcaciaPkwy GardenGrove,CA FinancialStatementAuditofCity,Housing Authority,SingleAudit PatriciaSong, Finance Director StateController'sReports, Agreed 714.741.5062 UponProceduresengagements/[email protected] , City of Huntington Beach
2000 Main Street I Huntington Beach, CA
FinancialStatement Audit of City,
JPA Audit SingleAudit Agreed-
Upon Procedures for Transient
Occupancy Tax and Concessionaire
compliance
V,
Zack Zithisakthanakul, CFO
714.536.5925
zack.zith@s urfcity-hb.org
Cityof Rancho Santa Margarita
22112 ElPaseo I Rancho Santa Margarita
N
FinancialStatement Audit of City,
StefanieTurner,FinanceDirectorSingleAudit, >"'.1!.klt949.635.1805 / [email protected] i
i Cityof Vista
200 CivicCenter Drive Vista,CA FinancialStatementAudit of City, MattMcDonal,Asst.FinanceDirector MeasureHHAuditSingleAudit, 760.643.5363 Agreed-UponProcedures
mmcdonal [email protected]
CityofIndianWells 'N"
44-950 EldoradoDr. IndianWells,CA FinancialStatementAuditofthe City,Preparation of State Controller
ErikaFlores,AssistantFinanceDirector Report,andAgreed-upon 760.776.0235 ProceduresforHotels
[email protected]
DavisFarr 6
CityofNewport Beach I ProposalforAuditServices
Section F - Audit Approach
Our Understanding of the Work
Our understandingof the objectivesand scope of the work to be performed isas follows:
• We willperform an audit of the financialstatements of the Cityforthe fiscalyears ending June 30, 2026 through 2028 with options to renew. Our examination willbe conducted in accordance with generally accepted auditingstandards,the AICPA Audit and Accounting Guide, Audits of State and Local Government Units,and Government Auditing Standards issued by the Comptroller General of the United States. We understand the Citywillprepare the Comprehensive Annual FinancialReport. We willensure that the report is prepared in conformity with the most recent edition of the GAAFR, the GAAFR Update, and subsequent GASB pronouncements.
• When necessary,we willperform a compliance audit of federal expenditures in accordance with the Uniform AdministrativeRequirements,Cost Principlesand Audit Requirements for FederalAwards in any year the Cityhas federalexpenditures of more than $1,000,000. • We willperform agreed-upon-procedures over the City'sGann Appropriations Limit. • We willprepare a lettertothe CityCouncilsummarizing the audit resultsinaccordance with the Codification of Auditing Standards (AU-C) Section 260.
• WE willword process the financialAnnual Comprehensive FinancialReport. • We willprepare a letterto the CityCouncil reportingmatters dealing with internalcontrol that meet the threshold of being a significantdeficiencyor material weakness, as defined by AU-C Section 265. We will immediately reportany irregularitiesor illegalactsthat come to our attentionto management and/or those charged with governance.
• As requested, we willmeet with the CityCouncil or Committees to discuss the resultsof the audit.
Finally,we perceivethe scope of our work as being advisorsto the Cityregardinggenerallyaccepted accounting principles.Throughout the year,the management and other finance personnel of the Citywillhave access to us to seek advice inthe applicationof generallyaccepted accounting principles,advice regarding debt issuance,financial statement preparation and content, tax and any other matters relatingto the City. Each year, we willgo over upcoming accounting standards in a meeting with Citystaff.
Work Plan
Davis Farr plans and conducts our engagements in the most efficientmanner possible,and our audit approach is unique with regard to the following:
• Our firm issensitiveto the prioritiesand work requirements of our clients.We work around the schedules of our clientswhen scheduling segments of the audit or requesting documentation in order to minimize disruptionof Citystaffand to complete the audit in a timely manner. • Whenever possible,we use accounting support already prepared by the City staffto avoid duplication or unnecessary requests for audit supporting schedules. Typically,we request support for balance sheet items, the year ending trialbalance and cash and long-term debt confirmations. • Our firm'sexpertise isin governmental auditing. Our auditors are GASB experts and skilledat addressing audit issuesthat are specificto localgovernments. You willnot spend time trainingour personnel. • When formulating internalcontrol recommendations, we obtain a thorough understanding of the specific circumstances at your Cityto provide a tailored,practicalrecommendation. • Throughout the year we are a resource to our clientsin providing accounting advice, researching technical questions,dealingwith tax problems, and helpingwith other problems as they arise.
DavisFarr
CityofNewport Beach I ProposalforAuditServices
Audit Software - We utilizeCaseWare audit software forthe electronicdocumentation of workpapers. We have the abilityto accept audit documentation in eitherhard copy or electronicformat. CaseWare allows us the ability to import trialbalances that can be provided in eitherExcelor a textdocument. Some of the benefitsof using CaseWare trialbalance software are as follows:
We create our own lead sheets (i.e.,analyticalreview comparison schedules). This limitsthe amount of time financestaffspends creatingauditschedules.Our software automaticallygenerates analyticalreview reportsby account number forease of analyzingsignificantfluctuationsbetween fiscalyears.
We can linkthe financialstatement schedules directlyto the CaseWare trialbalances. As a result,we can provide the Citywith financialstatements almost immediately after receivingthe trialbalance from the City.Additionally,journalentriesare easy to post to the financialstatement schedules and the riskof data entry error isminimized.
We can providethe Citywith reportsshowing the coding of the financialstatement schedules for ease of review by Citystaff.These reportsshow each account coded to a specificfinancialstatement lineitem as well as journalentriesthat are posted duringthe audit.
Data Mining Software - We have a dedicated team of personnel trainedto use specialdata mining software,IDEA.
Our software uses source data from your accounting system to search for anomalies, such as duplicateor voided checks,cross-referencingvendor addresseswith employee addresses, detecting accounting transactions recorded on the weekend, reviewingjournalentry postingsforunauthorized individuals.The IDEA software identifiesspecific transactionsforthe auditorsto review for potentialfraud or error.
InternalControl Evaluation- Our approach to evaluatinginternalcontrolsinvolvesobservationand inquiry.We spend time with the personnel responsibleforthe accounting cyclesto gainan understanding of the processes.We also carefullyevaluate your policiesand procedures. After our initialevaluation,we identifykey controlsin your processes and design testto evaluate the effectivenessof those processes. Inthe initialyear of the audit,we will focus on the followingaccounting cycles:
• Billingand cash receipting
• Capital assets
• Purchase and disbursements
• Payroll
• Investment and cash controls
• Information systems
In futureyears,we willreview the accounting cyclesnoted above but also look at other processes such as credit card transactions, petty cash, inventory controls, offsitecash receipting,employee reimbursements, contract compliance, and other areas. Our goal isto modify our auditapproach every year to furtherevaluate your internal controls.
Planning During the planning phase of the audit,we plan to perform the following procedures:
and inquiry ✓ Meet withfinancepersonneltoobtainan understanding of significanttransactionsduring the year. ✓ Communicate with the CityCouncilregardingfraud,compliance with laws, and any concerns they have regarding the finances of the City.
✓ Perform internal control evaluations as noted on the previous page. ✓ Determine materialitylevelsthatwillbe used inselectingaudit transactions. ✓ Perform a riskassessment to develop the auditplanfor the year. ✓ Review minutes of CityCouncilmeetings.
✓ Review important new contracts,bond documents, and agreements. ✓ Evaluatecompliancewith investments.
✓ Testpurchaseordersand contractmanagement.
✓ Test a sample of cash disbursements to determine adherence to policiesand internalcontrols. ✓ Perform a reviewofthe organization'sinformationsystems and controls.
DavisFarr 8
City of Newport Beach ProposalforAuditServices
✓ Perform compliancetestingoffederalgrants,as necessary. ✓ Review the prioraudited financialstatements and provide feedback to City staffregarding best practicesforfinancialreporting.
✓ Providea GASB Update and templatesforimplementingnew accounting standards includingthe upcoming leaseaccounting standard.
Year-End After the books are closed and ready for audit,we will perform our year-end procedures which Testing include the following:
✓ We willconfirm 100% of allcash and investment balances and test market values provided by your investment custodians.
✓ We willtestforproper cutoffsof accountsreceivableand grants receivable. ✓ We willconfirm and test material notes and loans receivable. ✓ We willtestadditionsand deletionsto capitalassets.We willreview depreciation expense for reasonableness.
✓ We willtestinterfundtransactionsincludingdue to/due from other funds,advances, and transfers.
We willreview legaldocuments supporting loans and test the allowabilityof transfersout of restricted funds.
✓ We willtestcurrentliabilitiesand perform a searchfor unrecorded liabilities. ✓ We willreviewunearned revenue balancesforpropercutoffs. ✓ We willtestthe balancesofaccruedpayrolland employee related liabilities. ✓ We willconfirmlong-termdebt with independent parties. ✓ In years of new debt issuances,we willreview the journalentry to record the debt to ensure the accuracy of the accounting.
✓ Testingof actuarialvaluationsand calculationsrelatedto OPEB obligationsand disclosuresunder GASB 75.
✓ Testing of actuarialvaluationsand calculationsrelated to pension obligationsand disclosures under GASB 68.
✓ Testingof leasesand SBITA'sinaccordancewith GASB 87 and GASB 96. ✓ Evaluationof Compensated Absences inaccordance with GASB 101. ✓ Evaluationof claimsand judgments payable.
✓ Testingof restrictionsand classificationsof net position. ✓ Analyzegrantrevenuesand expenses to ensure proper matching within the fiscalyear. ✓ Test the reasonableness of interestincome, realized,and unrealizedgains/losseson investments. ✓ Analyticallyand substantivelytestrevenues and expenses reported in the financialstatements. ✓ We willincorporatean element of unpredictabilityevery year that willfocus on an audit area that isnot typicallyconsidered a high or significantriskarea such as petty cash, creditcard purchases, new vendors, travelexpenses, etc.
The aforementioned tests are only a few of the tests performed during the examination and by no means isitmeant to be allinclusive.During the finalstage of the audit,we willmeet with Finance staffto review our audit findingsand any adjustingjournal entries.
SingleAudit As part of our SingleAudit for the years inwhich the Cityexpends granterthan $1,000,000,we will Approach perform the following procedures in accordance with the Uniform Guidance:
✓ Perform an evaluationofthe major programs requiredto be tested ✓ Review OMB guidance and the OMB Compliance Supplement for the grant program audited. ✓ Review internalcontrolsforeach of the applicable14 compliance areas for each program audited. ✓ Using AICPA sampling guidance,we willselecta sample for each of the applicable14 compliance areas foreach program audited. We willtestthe sample forcompliance with those 14 areas. ✓ Testthe indirectcostrate,ifapplicable
✓ Review monitoring reports for noncompliance and follow up on the resolution of past noncompliance, ifapplicable.
✓ Issuea singleauditreportof federalexpenditures.
✓ Filethe data collectionform withinthe specifieddeadline.
Completion The nature and extent of the work required isdependent on our assessment of the likelihoodof of the Audit misstatements in the financialstatements together with our conclusions from the planning and and testing stages of the audit. All of the audit information is then used to reach a conclusion on DavisFarr 9
Cityof Newport Beach ProposalforAuditServices
Preparation whether the financialstatements taken as a whole conform with generallyaccepted accounting of Financial principles.
Statements ✓ We willreviewsignificanteventsafteryear end ✓ We willreviewattorneylettersforsignificantlegalmatters ✓ We willensuretheACFR qualifiesfortheGFOA award over excellenceinfinancialreporting ✓ We willensureaccurateand completedisclosuresin the notes to the financialstatements. ✓ We willmeet withCityCommitteesorCityCouncilto presenttheauditresults,asrequested_ implementation of New GASB Pronouncements
The Citywillbe requiredto implement the followingaccountingstandards duringthe upcoming fiscalyears. Part of our serviceto you includesconsultingon these new auditingstandards.A sampling of significantnew GASB pronouncements planned or proposed forlocalgovernments thatwillimpact the Cityare listedbelow:
GASB 103: Financial Reporting Model Improvements
The objectiveof thisStatement isto improve key components of the financialreporting model to enhance its effectivenessin providinginformationthat is essentialfor decisionmaking and assessinga government's accountability.This Statement also addresses certainapplicationissues.
GASB 104: Disclosure of Certain Capital Assets
Stateand localgovernments are requiredto providedetailedinformationabout capitalassetsinnotes to financial statements. Statement No. 34, Basic FinancialStatements-and Management's Discussionand Analysisfor State and LocalGovernments, requirescertaininformationregardingcapitalassetsto be presented by major class.The objectiveof thisStatement isto provide usersof government financialstatements with essentialinformation about certaintypes of capitalassets.
GASB 105: Subsequent Events
Stateand localgovernments are requiredto providedetailedinformationabout capitalassetsinnotes to financial statements. Statement No. 34, Basic FinancialStatements-and Management's Discussionand Analysisfor State and LocalGovernments, requirescertaininformationregardingcapitalassetsto be presented by major class.The objectiveof thisStatement isto provideusersof government financialstatements with essentialinformation about certaintypes of capitalassets.
CityofNewport Beach I ProposalforAuditServices
Audit Timeline
The followingproposed timingissubjectto the City'srevisionand approval:
Submit initialrequest listto City
.
Shortlyaftercontractapproval
Planning meeting with City Firstday of interim
Submit initialrequest listto City May 22, 2026
Interim fieldwork June 8, 2026 to June 12, 2026
Submit finalrequest listto the City Finalday of interim Receive confirmationsfrom Cityand mail July6, 2026
Receivetrialbalance& supportingschedulesfrom City October 5, 2026 Final fieldwork October 12, 2026 to October 23, 2026
Exit conference with Finance staff October 23, 2026
Provide allfinaladjustments, ifany,to City October 30, 2026 Submit draft financialstatements, Gann Limit,AU-C
260 and AU-C 265 lettersto City November 13, 2026
Receive comments from Cityon draftreport November 30, 2026 Submit finalopinion lettersand financialstatements
to City
No laterthan December 11, 2026
Perform SingleAudit procedures February 1, 2027
Submit SingleAudit draftto City February 19, 2027
Receive comments from Cityon draftreport February 26, 2027 Submit finalopinion letter,and SingleAudit report,
and submit with the Federal Audit Clearing House
(FAC) March 5, 2027
We anticipatethat the Citywillprovide the draftComprehensive Annual FinancialReport to our team for review sometime during the finalfieldwork. We willprovide the Citywith any comments on the draftreport,along with our proposed adjustments one week followingthe completion of finalfieldwork.
Section G -Available Trainings
Over the years,Davis Farr has provided a varietyof trainingcourses for our clients.These trainingcourses have included the traditionalhalfday or allday annual GASB updates, to the focused trainingsconducted for individual clients.Davis Farrisregisteredto provide continuingprofessionaleducation through the National Associationof State Board of Accountancy (NASBA). NASBA recognizes CPE program sponsors who provide continuing professionaleducation programs in accordance with nationallyrecognizedstandards. For those trainingsprovided through out GASB update or individually,they can be administered so that members of the City are eligibleto receive continuing professionaleducation, ifneeded.
Each year as partof the interimportionof the audit,we willprovide Finance personnel with a tailoredGASB update that focuses on upcoming pronouncements and how best the Citycan prepare for implementation.
DavisFarr 11
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DavisFarr 12
Report on theFirm's System of QualityControl
To the Partners of
DAVIS FARR LLP
and thePeer Review Committee of theCaliforniaSocietyof CPAs We have reviewedthe system of qualitycontrolfortheaccountingand auditingpracticeof Davis FarrLLP (the firm)ineffectfortheyearended May 31,2025. Our peerreview was conducted inaccordancewith theStandards forPerformingand Reportingon Peer Reviews establishedby the Peer Review Board of the American Institute of CertifiedPublicAccountants (Standards).
A summary of thenature,objectives,scope,limitationsof,and the proceduresperformed in a system review as describedin the Standardsmay be found at www.aicpa.org/prsummary. The summary also includesan explanationof how engagements identifiedas not performed or reportedon in conformity with applicable professionalstandards,ifany,areevaluatedby a peerreviewertodeterminea peerreview rating.
Firm's Responsibility
The firm isresponsiblefordesigningand complying with a system of qualitycontrolto providethe firmwith reasonableassuranceof performingand reportinginconformitywith therequirementsof applicableprofessional standardsin allmaterialrespects.The firm isalsoresponsibleforevaluatingactionsto promptlyremediate engagements deemed as not performed or reported on in conformity with the requirementsof applicable professionalstandards,when appropriate,and forremediatingweaknessesinitssystemof qualitycontrol,ifany.
Peer Reviewer's Responsibility
Our responsibilityisto expressan opinionon the designof and compliance with the firm'ssystem of quality control based on our review.
Required Selectionsand Considerations
Engagements selectedfor review includedengagements performed under Government AuditingStandards, includingcompliance auditsunder the SingleAudit Act and examinationof a serviceorganization(SOC 1 engagement).
CPAs ■ Advisors
Q 4120Concours,Suite100,Ontario,CA91764
t 909.948.9990 / 800.644.0696 / FAX 909.948.9633
I [email protected]
@ www.gylcpa.com
CPAmerica
Member// CroweGlobal
13 Peer Review Report
As partof our peer review,we consideredreviews by regulatoryentitiesas communicated by the firm,if applicable,indeterminingthenatureand extentofour procedures.
Opinion
In our opinion,thesystem of qualitycontrolfortheaccountingand auditingpracticeof Davis FarrLLP ineffect fortheyearended May 31,2025, has been suitablydesignedand complied withtoprovidethefirmwith reasonable assurance of performing and reportingin conformity with applicableprofessionalstandardsin allmaterial respects.Firms can receivea ratingofpass,pass withdeifciency(ies)orfail.Davis FarrLLP has receiveda peer review ratingofpass.
QYL LLP
Ontario,California
September 19,2025
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Jonathan Foster, CPA
Jonathan Fosterwillserve as the Partneron thisengagement. Mr. Foster isa CertifiedPublic Accountant and has 19 years of audit experience with government agencies. The types of audits Mr. Foster is involved in includes financial audits of citiesand special districtsand Single Audits in accordance with the Uniform Guidance. Mr. Foster isthe current Chair of the CalCPA Governmental Audit and Accounting Committee and regularlypresents at the annual conference forthe CaliforniaSocietyof Municipal Finance Officers.In addition,Mr. Foster is an instructorfor Accounting for CapitalAssets for CSMFO.
Employment History
• Davis Farr LLP - Since 2015
• National CPA Firm -8 years
Education
• Bachelor of Accountancy (Universityof San Diego)
Licenses / Registrations
• California CPA Certificate No. 117853
Professional Affiliations & Awards
• American Institute of Certified Public Accountants
• CaliforniaSociety of CertifiedPublicAccountants
• Cal CPA Government Audit & Accounting Committee
• CaliforniaSociety of Municipal Finance Officers
AUDITS OF CITIES
✓ CityofAvalon
✓ Cityof Commerce
✓ Cityof Carlsbad
✓ Cityof Costa Mesa
✓ Cityof Dana Point
✓ Cityof Delano
✓ Cityof Fontana
✓ Cityof Huntington Beach
✓ Cityof Indian Wells
✓ Cityof Laguna Niguel
✓ Cityof Rancho Santa Margarita
✓ Cityof Santee
AUDITS OF SPECIAL DISTRICTS
✓ BigBearArea RegionalWastewater ✓ San DiegoAssociationof Governments ✓ BigBear Community FacilitiesDistrict ✓ SantiagoAqueduct Commission ✓ Cucamonga ValleyWater District ✓ SaticoySanitaryDistrict ✓ Orange County Water District ✓ Soquel Creek Water District 16 Jonathan Foster,CPA (continued)Partner
Mr. Fosterhas significantexperience working with federalgrant programs typicallyawarded to localgovernments.
ThesefederalawardingagenciesincludeDepartmentof Housing and Urban Development, Department of Homeland Security,Department of Energy,Department of Justice,Department of the Interior,Environmental Protection Agency, and the Executive Officeof the President Mr. Fosterhas alsoworked on variousfinancialstatement, compliance and inSOC1 Type IIaudits(formerlySAS 70) auditsforvariouscommercial companies and Federalagencies.
AUDITS OF COMMERCIAL ENTITIES
✓ CalDomesticWater Company ✓ DHS Consulting
Cahaba Government Benefit ✓ Montebello Land and Water Company CGS AdministratorsLLC ✓ 'MutualInsuranceCompany of Arizona DeltaDentalofArizona ✓ 'SunnyslopeWaterCompany
AUDITS OF FEDERAL GOVERNMENT
✓ CentersforMedicareand Medicaid ✓ 'SpecialInspectorGeneral forAfghanistan Services Reconstruction
17 •p DavisFarr
Marc Davis, CPA
Marc Davis is a Partner with the Firm and will serve as the Quality Control Reviewer on the audit. He has over 40 years of experience ingovernment auditing,accounting and consulting. Mr. Davis will provide technical assistance to the audit team and review the final reports before they are released. He is also a co-author with Thomson-Reuters on PPC's Practice Aids for Reporting on Controls of Service Organizations - SOC 1 Engagements, and PPC's PracticeAidsfor Reporting on Controls of ServiceOrganizations- SOC 2 Engagements.
Employment History
• Davis Farr LLP - Founding Partner
• Partner-National CPA Firm
Licenses / Registrations
• California CPA Certificate No. 46491
Professional Affiliations & Awards
• American Institute of Certified Public Accountants
• CaliforniaSociety of CertifiedPublicAccountants
• CaliforniaSociety of Municipal Finance Officers
• Association of Government Accountants
Education
• Bachelor of Arts - Business Administration /
Accounting (CaliforniaState University,Fullerton)
AUDITS OF CALIFORNIA CITIES
✓ Cityof Avalon ✓ Cityof Garden Grove
✓ Cityof Azusa ✓ Cityof Los Alamitos
✓ Cityof Beaumont ✓ Cityof Mission Viejo
✓ Cityof Buena Park ✓ Cityof Newport Beach
✓ Cityof Costa Mesa ✓ Cityof Rialto
✓ Cityof Downey ✓ Cityof San Gabriel
✓ Cityof ElSegundo ✓ Cityof Stanton
✓ Cityof Escondido ✓ Cityof Westminster
AUDITS OF SPECIAL DISTRICTS AND HOUSING AUTHORITIES
✓ Antelope ValleyTransitAuthority
✓ Beach Cities Health District
✓ HousingAuthorityofthe Cityof Fresno
✓ HousingAuthorityof FresnoCounty
✓ LosAngelesHomeless ServicesAuthority
✓ Orange CountyTransportationAuthority
✓ Omnitrans
✓ Oxnard HousingAuthority
✓ SouthernCaliforniaRegionalRailAuthority
✓ SunLineTransitAgency
✓ Tahoe RegionalPlanningAgency
✓ Tahoe TransportationDistrict
✓ Ventura County TransportationCommission
✓ VenturaHousingAuthority
✓ Washington Economic Development Finance
Authority
18 AUDITS OF HIGHER EDUCATION
✓ CascadiaCollege ✓ OlympicCollege'
✓ Community CollegesofSpokane ✓ PeninsulaCollege
✓ ColumbiaBasinCollege ✓ Wenatchee ValleyCollege
19 •p•DavisFarr
Nicholas R. Baldelli,CPAlam` Senior Manager
Mr. Baldellihas over 13 years of experienceboth auditinglocalgovernments and working in advanced accounting and financialreportingas a municipal government employee.
Most of his audit background is in non-profits,counties, and municipal government engagements. The types of audits Mr. Baldellihas been involved in are financialaudits of non-profits,municipalities,counties,and other governmental organizations;agreed upon procedures; and SingleAudits in accordance with Uniform Guidance.
Employment History
• Davis Farr LLP - Since 2023
• Cityof Gilbert,Arizona - 3 years
• Local PublicAccounting Firm (NC & AZ) -7 years
Licenses / Registrations
• Arizona CPA Certificate No. 19531
• North Carolina CPA Certificate No. 39577
Education ProfessionalAffiliations& Awards
• American Institute of Certified Public Accountants
• Bachelorof ScienceinAccounting & FinancialReporting • ArizonaSocietyofCertifiedPublicAccountant (UniversityofNorthCarolina,Asheville) • KyreneSchool DistrictBudget Committee Member
AUDITS OF GOVERNMENT AGENCIES
✓ Cityof Newport Beach,CA
✓ Cityof Huntington Beach, CA
✓ Cityof Garden Grove, CA
✓ West Orange County Water Board,CA
✓ Cityof Tustin,CA
✓ Cityof AlisoViejo,CA
✓ Serrano Water District,CA
✓ Cityof MissionViejo,CA
✓ Cucamonga ValleyWater District,CA
✓ CityofAlisoViejo,CA
✓ March JointPowers Authority,CA
✓ VisitGreaterPalm Springs,CA
✓ Cityof Casa Grande, AZ
✓ Town of Chino Valley,AZ
✓ Bullhead City,AZ
✓ Cityof Kingman, AZ
✓ Cityof Prescott,AZ
✓ Cityof Brevard,NC
✓ Buncombe County, NC
✓ Yancey County, NC
✓ Polk County, NC
✓ RutherfordCounty, NC
✓ Haywood County, NC
✓ AshevilleRegionalAirportAuthority,NC
INTERNAL MUNICIPAL GOVERNMENT
Mr. Baldellisupervised multiple areas inthe Finance Department for Gilbert,AZ including:
Accounts Payable- $330M inannual spend, revamped controlsand processes,implemented new banking contract services.
CapitalAssets - $3.1B inassets,establishedinternalcontrols and corrected a significantcontrol deficiency.
Grant Reporting and Compliance - Created and implemented grant assessment and subrecipient monitoring tools for compliance with complex federal awards.
Cash Receipts,Revenue and Receivables- $400M in annual receipts,implemented timely billingcontrols Preparation of the ACFR - Along with several other annual external financialreports.
Mr. Baldellicreated financialreporting tools to implement both GASB Statement No. 87 & 96; developed and implemented Town policiesfor travel expenditures and Town recoupment. 20 + DavisFarrCERt!i1EO PUBLIC ACCOt1FCTANTS
Diego F.Vanegas, CPA, CISA
Partner
Mr. Diego Vanegas, CPA, CISA, CITP, isa Partner with the Firm and has 20+ years of progressivegovernmental audit experience. Throughout hiscareer Mr. Vanegas has performed a multitude of financialand compliance audits, internalcontrolaudits and assessments, operational and performance audits, agreed-upon procedures engagements, cost proposal analysis/pricereviews and System and Organization Controls (SOC) examinations for various governmental agencies and commercial entities.Further,Mr. Vanegas has Information Technology (IT)expertiseand has completed IT projects for variousentities.These engagements have often combined both financialand compliance aspectsof the auditwith ITcomponents.
Employment History
• Davis Farr LLP - Since 2015
Licenses / Registrations
• California CPA Certificate No.113040
• MHM PC 2006 - 2015 • CISA 15121835
• Conrad and Associates 2005 - 2006
Parke Guptill& Company 2003 - 2005
Education
• Bachelor of Science in Business Administration in Accounting (CaliforniaState University,Los Angeles)
• Bachelor of Science inComputer InformationSystems
(CaliforniaState University,Los Angeles)
SYSTEM AND ORGANIZATION CONTROLS (SOC) 1 TYPE 2 EXAMINATIONS Mr. Vanegas has served as the Engagement Partner,Quality Control Reviewer, Project Manager or In-charge Auditor on the followingSOC 1 Type 2 examinations.
❖ Center for Medicare and Medicaid Services(CMS)
Mr. Vanegas has performed, managed and led SOC examinations of various Medicare Administrative Contractors(MAC) which consistedof expressingan opinion on the fairnessof the presentationof third- party administrators'descriptionof theirsystems and on the suitabilityof the design and operating effectiveness of controls to achieve related control objectivesspecifiedby CMS. Duties included audit scheduling, communicating with CMS and MACS. audit program preparation,executionof fieldwork, monitoring of staff,preparationof work papers,reportdrafting,and presentationof findings.
Mr. Vanegas has served as the Engagement Partner, Quality Control Reviewer, Project Manager or In-charge Auditor on the followingSOC 1 Type 2 examinations of government and commercial organizations. • A Street Partners
• Calance
• California Statewide Automated Welfare
• Cox Automotive, Inc.
• JT2Integrated Resources
• MasterTax Services
• National Government Services,LLCSystem (CaISAWS)
21 • CGS Administrators, LLC • Palmetto GBA
• Colorado's Governor's Office of Information • Partners Consulting Technology (OIT) • Presilient,LLC
• Commonwealth of Kentucky -OOC • U.S.Department of Agriculture(USDA) • CompPartners • U.S.Department ofVeterans Affairs
AUDITS OF LOCAL GOVERNMENTS
❖ County Los Angeles,Auditor-Controller(A-C)
Mr. Vanegas has performed variousfinancialand compliance auditsas well as agreed-upon procedure engagements for multiple County departments, such as the Department of Economic Opportunity, Department of Parks and Recreation,Department of PublicSocialServices,Department of Probation, Department of.Public Works, DistrictAttorney's Office,Los Angeles County Capital Asset Leasing Corporation, Los Angeles Superior Court, and the Sheriff'sDepartment.
Specifically,Mr. Vanegas has overseen the AUP engagement of ARPA funds received by the Department of Economic Opportunity and disseminated to 25 subrecipients.Additionally,Mr. Vanegas has overseen thefinancialcomplianceauditsfortheDepartmentof PublicSocialServicesinwhich 30 serviceproviders who receiveCDBG funds are audited to ensure compliance with theirDPSS contractand CFR. ❖ Cityof LosAngeles,Mayor's Officeof Homeland Securityand PublicSafety Mr. Vanegas served as the engagement Manager on the monitoring of federalfunds awarded to 76 sub- recipientsunder the Recovery and Reinvestment Act JusticeAssistance Grant ("ARRA JAG") and the Edward Byrne Memorial JusticeAssistanceGrant (JAG).
❖ Cityof Los Angeles Economic and Workforce Development Department (EWDD) Mr. Vanegas iscurrentlythe engagement qualitycontrolpartnerof the fiscalreview contractawarded by the City'sEWDD to conduct fiscalreviews on over 20 subrecipientsof WIOA and CDBG grants,and other stateand localgrants and contracts.
❖ Orange County Community Resources (OCCR)
Mr. Vanegas iscurrentlythe engagement qualitycontrol partner of monitoring servicesperformed on behalfof OCCR fordifferentagenciesreceivingWIOA and ARPA funds. ❖ Orange County SocialServiceAgency (OCSSA)
Mr. Vanegas served on program specific/complianceauditservicesperformed on behalf of OCSSA. Mr.
Vanegas participated in these engagements in the capacity of fieldIn-charge and manager. Each monitoring entailed a program specific audit of cost incurred and compliance with contractual requirements.
❖ San Diego Workforce Partnership Inc.(SDWP)
Mr. Vanegas performed financialand compliance monitoring serviceson behalfof SDWP on different non-for-profitagencies receivingWorkforce Investment Act funds and other federaland localfunds through SDWP.
22 AUDITS OF FEDERAL GOVERNMENT
❖ Center forMedicare and Medicaid Services(CMS)
Mr. Vanegas has performed, managed and led SOC examinations of various Medicare Administrative Contractors(MAC) which consistedof expressingan opinionon the fairnessof the presentationof third- party administrators'descriptionof theirsystems and on the suitabilityof the design and operating effectiveness of controls to achieve related control objectivesspecifiedby CMS. Duties included audit scheduling,communicating with CMS and MACS. audit program preparation,execution of fieldwork, monitoringof staff,preparationofwork papers,reportdrafting,and presentationof findings. ❖ CorporationforNationaland Community Services(CNCS)
Mr. Vanegas served invariousauditsof grant programs under the CNCS. These auditswere fullscope auditsaddressingfinancialand complianceadherenceto grant agreements. Audited agencies included YouthBuild USA and Volunteer Florida,as well as various State Commission from Tennessee, Minnesota and Oklahoma.
❖ Department ofJustice(DOJ)
Mr. Vanegas served as an In-chargeauditoron Chapter 7 bankruptcy audits.These auditsinvolvea review of internal controls, tests of asset administration procedures, tests of financialtransactions and verificationof compliance with the reportingrequirements and certainother provisionscontained inthe Program's Handbook for Chapter 7 Trustees.
❖ NationalScience Foundation (NSF)
Mr. Vanegas served on audit teams for NSF audits of William Marsh Rice University,the Academy of Natural Sciences,Exploratorium,NEES Consortium, Inc.,the Universityof Maryland Baltimore County, WGBH Education Foundation, Universityof Puerto Ricoand WestEd. Duties includedocumenting internal controlsystems of grantees and performing internalcontroland substantivetesting.The work performed includedthe applicationof 2 CFR 215 - Uniform AdministrativeRequirements forGrants and Agreements with Institutionsof Higher Education,Hospitals,and Other Non-ProfitOrganizations. 23 •p•DavisFarr
Youssef Ahmed, CPA
Audit Supervisor
Mr. Ahmed willserve as the in-chargeon thisengagement. He willbe responsible for performing the work and supervisingstaff.Mr. Ahmed isin his fourth year of local government auditing. Since startingwith Davis Farr,he has focused on audits for local and federalgovernment engagements, includingfinancialaudits of citiesand special districts;grant specificaudits of funds awarded by Federal, state, and county governments; Single Audits in accordance with OMB Circular A-133; and Federal compliance audits.
Employment History
• Davis Farr LLP - Since March 2022
Licenses
• California CPA Certificate No. 160725
Education
• Bachelor of Science in Mathematics & Economics
(Universityof California,Los Angeles)
AUDITS OF LOCAL GOVERNMENTS
✓ Cityof Avalon ✓ Cityof HuntingtonBeach
✓ Cityof Commerce ✓ Cityof Laguna Niguel
✓ Cityof Fontana ✓ Cityof Newport Beach
AUDITS OF SPECIAL DISTRICTS AND COLLEGES
✓ BigBear CityCommunity ServicesDistrict
✓ Community Collegesof Spokane
✓ Cucamonga ValleyWater District
✓ Housing Authorityof the County of Riverside
✓ Irvine Ranch Water District
✓ Oxnard Housing Authority
✓ Palm SpringsConvention and VisitorsBureau
✓ PeninsulaCollege
✓ PlacerCounty Water Agency
✓ Soquel Creek Water District
✓ Santa Cruz Mid-County Groundwater Agency
✓ Santa MargaritaWater District
✓ San Diego Associationof Governments
✓ Ventura Area Housing Authority
AUDITS OF FEDERAL GOVERNMENTS
✓ Centers for Medicare and Medicaid Services
✓ CGS Administrators,LLC - SOC 1 Type 2 Examination
24 EXHIBIT B
SCHEDULE OF BILLING RATES
Davis Farr LLP Page B-1
COST FILE
PROPOSED PRICING
Fiscal Year Ended
Item June 30, June 30, June30,_ June 30, June X30,
2026 2027 2028 u 2029 . ' `.2030 . 'TOTAL
Financial Statement
Audit $ 58,250 $ 58,250 $ 58,250 $ 59,998 $ 61,798 $ 296,546 ACFR Preparation $12,500 $12,500 $12,500 $12,875 $13,261 $63,636 Single Audit $7,500 I$7,500 I$7,500 $7,725 $7,957 $38,182 Gann LimitReport $650 $650 $650 $670 $690 $3,310
Out-of-pocketexpenses
(ifnot included above) $- $- $- $- $-
GrandTotal$78,900I$78,900$78,900I$81,268I$83,706401,674 In order to justifythe proposed pricingin the tableabove, please include the number of hours estimated to be spent on the audit,broken down by partner,manager, staff,etc. Below is an example of the format the Cityisrequesting.Note: The ratequoted should not be presented as a general percentage ofthe standard hourlyrateor as a gross deduction from the totalall-inclusive maximum price. (USE THE SAME FORMAT FOR EACH SUBSEQUENT YEAR OF THE PROPOSAL).
Hours Standard Quoted Hourly Total
Hourly Rates Rates
44 $ 250 $225 $ 9,900
80- 175 14,000
ZII- $ 175. $150 30,000
200 $ 150 25,000
524 $78,900
n/a
Partners
Managers
SupervisoryStaff
Staff
Other:
Subtotal
Out ofpocket expenses:
Meals and Lodging
Transportation
Othe.r
n/a
Total all-inclusive
maximum price $78,900
RFP No. 26-40 31
EXHIBIT C
INSURANCE REQUIREMENTS - PROFESSIONAL SERVICES
Provisionof Insurance. Without limitingConsultant'sindemnificationof City,and priorto commencement ofWork, Consultantshallobtain,provide and maintain at itsown expense during the term of thisAgreement, policiesof insurance of the type and amounts described below and ina form satisfactoryto City. Consultant agrees to provideinsurancein accordance with requirementsset forth here. If Consultant uses existingcoverage to comply and that coverage does not meet these requirements,Consultant agrees to amend, supplement or endorse the existingcoverage.
2. Acceptable Insurers.All insurance policiesshall be issued by an insurance company currentlyauthorized by the Insurance Commissioner to transact business of insurance in the State of California,with an assigned policyholders' Rating of A- (or higher)and FinancialSize Category Class VII (or larger)in accordance with the latesteditionof Best'sKey Rating Guide, unless otherwise approved by the City'sRisk Manager.
3. Coveraqe Requirements.
A. Workers' Compensation Insurance. Consultant shall maintain Workers' Compensation Insurance, statutory limits,and Employer's Liability Insurance with limits of at least one million dollars ($1,000,000) each accidentforbodilyinjuryby accidentand each employee forbodilyinjuryby disease in accordance with the laws of the State of California.
Consultant shallsubmit to City,along with the certificateof insurance, a Waiver of Subrogation endorsement infavor of Cityof Newport Beach, its City Council, boards and commissions, ofifcers,agents, volunteers, employees.
B. General LiabilityInsurance. Consultant shall maintain commercial general liabilityinsurance,and ifnecessary excess/umbrella liabilityinsurance, with coverage at leastas broad as provided by Insurance Services Officeform CG 00 01, in an amount not less than two milliondollars ($2,000,000) per occurrence,fourmilliondollars($4,000,000)general aggregate. The policy shallcover liabilityarisingfrom bodilyinjury,propertydamage, completed operations,personal and advertisinginjury,and liabilityassumed under an insured contract(includingthe tortliabilityof another assumed ina business contract).
Consultant shall submit to City, along with a certificateof insurance, additionalcoverage as stated in Section 4. Other Insurance Requirements.
C. Automobile Liability Insurance. Consultant shall maintain automobile insurance at least as broad as Insurance Services Office form CA 00 01 covering bodilyinjuryand propertydamage forallactivitiesof Consultant Davis Farr LLP Page C-1
arisingout of or in connection with Work to be performed under this Agreement, includingcoverage forany owned, hired,non-owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined singlelimiteach accident.
Consultant shall submit to City, along with a certificateof insurance, additionalcoverage as statedinSection4.Other InsuranceRequirements.
D. Professional Liability(Errors & Omissions) Insurance. Consultant shall maintain professional liabilityinsurance that covers the Services to be performed in connection with thisAgreement, in the minimum amount of two milliondollars ($2,000,000) per claim and four million dollars ($4,000,000)inthe aggregate. Any policyinceptiondate, continuitydate, or retroactive date must be before the Effective Date of thisAgreement and Consultantagrees to maintain continuous coverage through a period no less than three years aftercompletion of the Services required by this Agreement.
E. Excess/Umbrella LiabilityInsurance. Ifany Excess or Umbrella Liability policiesare used to meet the limitsof liabilityrequiredby thiscontract,then said policiesshallbe "followingform" of the underlyingpolicy coverage, terms, conditions,and provisions and shall meet all of the insurance requirements stated in this contract,including,but not limited to, the additionalinsuredand primary & non-contributoryinsurance requirements stated herein. No insurance policiesmaintained by the City, whether primary or excess, and which also apply to a losscovered hereunder, shall be called upon to contributeto a loss untilthe Consultant's primary and excess/umbrella liabilitypoliciesare exhausted.
Consultant shall submit to City, along with a certificateof insurance, additionalcoverage as stated inSection 4. Other Insurance Requirements.
4. Other Insurance Requirements. The policiesare to contain, or be endorsed to contain,the followingprovisions:
A. Waiver of Subrogation. All insurance coverage maintained or procured pursuant to thisAgreement shallbe endorsed to waive subrogation against Cityof Newport Beach, itsCity Council,boards and commissions, officers, agents, volunteers and employees or shallspecificallyallow Consultant or others providinginsurance evidence incompliance withthese requirements to waive theirrightof recovery priorto a loss.Consultant hereby waives its own rightof recovery against City,and shallrequiresimilarwrittenexpress waivers from each of its subconsultants.
B. Additional Insured Status. All liabilitypoliciesincluding general liability, excess/umbrella liability,pollutionliability,and automobile liability,if required,but not includingprofessionalliability,shallprovide or be endorsed to providethat Cityof Newport Beach, itsCity Council,boards and Davis Farr LLP Page C-2
commissions, officers,agents,volunteersand employees shallbe included as insureds under such policies.
C. Primaryand Non Contributory.Allliabilitycoverage shallapply on a primary basisand shallnotrequirecontributionfrom any insuranceor self-insurance maintained by City.
D. NoticeofCancellation.AllpoliciesshallprovideCitywiththirty(30)calendar days' notice of cancellation(except for nonpayment for which ten (10) calendar days' notice is required)or nonrenewal of coverage for each requiredcoverage.
E. Subcontractors.Consultantshallbe responsibleforcausing subcontractors to purchase the same types and limitsof insurance in compliance with the terms ofthisAgreement, includingadding the Cityas an additionalinsured, providingprimaryand non-contributorycoverage and waiver of subrogation to the subcontractor'spolicies.Limitsof liabilityfor General Liabilityin an amount not lessthan one milliondollars($1,000,000.)per occurrence, two milliondollars($2,000,000)aggregate and ProfessionalLiability(Errors& Omissions) inan amount not lessthan one milliondollars($1,000,000)per claim,two milliondollars($2,000,000)aggregate.
5. AdditionalAgreements Between the Parties.The partieshereby agree to the following:
A. Evidence of Insurance.Consultant shallprovide certificatesof insurance to Cityas evidence of the insurance coverage requiredherein, along with a waiver of subrogation endorsement forworkers' compensation and other endorsements as specifiedhereinforeach coverage. Insurance certificates and endorsement must be approved by City'sRisk Manager prior to commencement of performance. Current certificationof insurance shallbe kept on filewith City at alltimes during the term of thisAgreement. The certificatesand endorsements foreach insurance policyshallbe signed by a person authorizedby thatinsurerto bind coverage on itsbehalf. At least fifteen(15) days priorto the expirationof any such policy,evidence of insurance showing that such insurance coverage has been renewed or extended shallbe filedwith the City. Ifsuch coverage is cancelled or reduced, Consultant shall,withinten (10) days afterreceiptof writtennotice of such cancellationor reductionof coverage, filewith the City evidence of insurance showing that the required insurance has been reinstated or has been provided through another insurance company or companies. City reserves the rightto require complete, certifiedcopies of all required insurance policies,at any time.
B. City'sRight to Revise Requirements. City reserves the rightat any time during the term of the Agreement to change the amounts and types of insurance required by givingConsultant sixty(60) calendar days' advance written notice of such change. If such change results in substantial Davis Farr LLP Page C-3
additionalcost to Consultant, City and Consultant may renegotiate Consultant'scompensation.
C. Right to Review Subcontracts.Consultant agrees that upon request, all agreements withsubcontractorsorotherswithwhom Consultant enters into contractswith on behalfof Citywillbe submitted to Cityforreview. Failure ofCitytorequestcopiesofsuchagreementswillnotimpose any liabilityon City,or itsemployees.
D. Enforcement of Agreement Provisions. Consultant acknowledges and agrees thatany actualor allegedfailureon the partof City to inform Consultantofnon-compliancewithany requirementimposesno additional obligationsonCitynordoesitwaiveanyrightshereunder.
E. Requirements not Limiting.Requirements of specificcoverage features or limitscontained inthisSection are not intended as a limitationon coverage, limitsorotherrequirements,ora waiverofany coveragenormally provided by any insurance. Specificreferenceto a given coverage feature is for purposes of clarificationonly as itpertainsto a given issue and is not intendedbyanypartyorinsuredtobe allinclusive,or to the exclusion of othercoverage,orawaiverofanytype.IftheConsultantmaintains higher limitsthantheminimumsshownabove,theCityrequiresand shall be entitledtocoverageforhigherlimitsmaintainedby the Consultant. Any availableinsuranceproceedsinexcessofthespecifiedminimum limitsof insuranceand coverageshallbe availabletotheCity.
F. Self-insuredRetentions.Anyself-insuredretentionsmust be declared to and approved by City.Cityreservesthe rightto requirethat self-insured retentionsbe eliminated,lowered,or replaced by a deductible. Self- insurance willnot be considered to comply with these requirements unless approved by City.
G. City Remedies for Non-Compliance. IfConsultant or any subconsultant fails to provideand maintaininsuranceas requiredherein,then City shallhave therightbutnottheobligation,topurchasesuch insurance, to terminate this Agreement, or to suspend Consultant'srightto proceed untilproper evidenceofinsuranceisprovided.Any amounts paidby Cityshall,at City's sole option,be deducted from amounts payable to Consultantor reimbursed by(Consultantupondemand.
H. TimelyNoticeofClaims.ConsultantshallgiveCityprompt and timelynotice of claims made or suitsinstitutedthat arise out of or result from Consultant's performanceunderthisAgreement,and thatinvolveor may involve coverage under any of the requiredliabilitypolicies.Cityassumes no obligationor liabilityby such notice,but has the right(but not the duty) to monitorthehandlingofanysuchclaimorclaimsiftheyarelikelytoinvolve City.
DavisFarrLLP I Page C-4
Consultant'sInsurance.Consultant shallalso procure and maintain, at its own cost and expense, any additionalkinds of insurance,which in itsown judgment may be necessary foritsproper protectionand prosecution of the Work.
Davis FarrLLP Page C-5