February 22, 2023
Yulia Carter
Financial Sustainability Officer
City of Pacifica
170 Santa Maria Avenue
Pacifica, CA 94044
Dear Yulia:
Pursuant to your request, we are pleased to offer to extend our audit contract for the City of Pacifica as of and for the years ended June 30, 2023, 2024 and 2025, with the option to extend an additional two fiscal years.
The services we are expected to provide are outlined below, but we are also available to provide additional services at your request:
1. Audit of the basic financial statements, and assistance in the preparation of the Annual Comprehensive Financial Report.
2. Management Letter (Memorandum on Internal Control).
3. Testing for compliance with the Single Audit Act and applicable laws and regulations and issuance of our reports thereon (1 program).
4. Testing of compliance for the Transportation Development Act Programs and preparation of required reports.
5. Perform procedures and issue agreed upon procedures report to comply with GANN (Proposition 111 Appropriation) Limit increment requirements.
6. Audit of the City of Pacifica Child Development Programs and issuance of our report thereon.
7. Testing of compliance with the Agreement for Distribution of Measure A Funds.
8. Testing of compliance with the Agreement for Distribution of Measure W Funds
9. ACFR Production (5 Bound copies)
10. GASB 87, Leases – continuing increase in audit scope.
11. GASB 96, Subscription‐Based Information Technology Arrangements – increase in audit scope For all State Controller’s Office and Street Report engagement, please See Compilation Attachment for Our Responsibilities and Your Responsibilities related to the compilation reports:
12. Preparation of Annual Report of Financial Transactions for the City (State Controller’s Report).
13. Preparation of the Street Report.
14. Preparation of the Annual Report of Financial Transactions for the Authority (State Controller’s Report).
Our fees for the work described above will be as follows. (A) Our fees for 2023 have been adjusted by 6% over the 2022 fees, which were based on our extension letter with the City dated February 5, 2020 and the Measure W Addendum to the Engagement dated December 5, 2020. Our policy is to attempt to keep our clients’ fees constant after inflation. The current CPI for San Francisco Bay Area Services Sector of the U.S. Department of Labor, Bureau of Labor Statistics for the San Francisco-Oakland Area is
4.4%. Therefore, fees for years subsequent to 2023 will be adjusted by the actual CPI, up to a maximum of 6.0%.
(B) Additional major programs will cost $4,200 each in fiscal year 2023. (C) Our fees include 5 bound copies of the ACFR and up to 10 bound copies each of all other reports. If you require additional bound copies of the ACFR or any of the other reports, we will provide a cost estimate before proceeding.
(D) The City did not have any leases subject to GASB Statement No. 87, Leases, during the year ended June 30, 2022. If the City does enter into such leases in fiscal year 2023 or subsequent, we will not know the extent of the potential increase in audit scope, if any, until we have additional conversations with City staff. Therefore, once that information is known for the fiscal year, we will provide a cost estimate and addendum to this engagement letter that will be based upon our standard hourly rates. Our initial estimate of the fee for the increase in audit scope if the City has 10 or fewer leases in place (as lessor or as lessee), regardless of whether they’ve been recorded as an asset or liability is $1,500. (E) Implementation of GASB Pronouncement 96, Subscription‐Based Information Technology Arrangements (SBITAs) – We will not know the extent of the potential increase in audit scope, if any, until we have additional conversations with City staff. Therefore, once that information is known for the fiscal year, we will provide a cost estimate and addendum to this engagement letter that will be based upon our standard hourly rates. Similar to the increase in audit scope for GASB 87, Leases, our initial estimate of the fee for the increase in audit scope if the City has 10 or fewer SBITA agreements in place, regardless of whether they’ve been recorded as a liability is $1,500
For the Year Ended June 30,
(A) (A) (A) (A) (A)
Service 2023 2024 2025 2026 2027
1 Annual Comprehensive Financial Report $46,235 $49,010 $51,950 $55,065 $58,370 2 Memorandum on Internal Control 1,095 1,160 1,230 1,305 1,385 3 Single Audit Act Report (1 program) (B) 4,460 4,730 5,015 5,315 5,635 4 Transportation Act Audit Report 2,390 2,535 2,685 2,845 3,015 5 Gann Limit Agreed Upon Procedures Report 595 630 670 710 755 6 Child Development Programs Report 7,985 8,465 8,975 9,515 10,085 7 Measure A 2,395 2,540 2,690 2,850 3,020
8 Measure W 2,120 2,245 2,380 2,525 2,675
9 ACFR Production (5 Bound) (C) 710 755 800 850 900
10 GASB 87, Leases – increase in audit scope (D) TBD TBD TBD TBD TBD 11 GASB 96, SBITAs – increase in audit scope (E) TBD TBD TBD TBD TBD 12 Annual Report of Financial Transactions Compilation – City 6,620 7,015 7,435 7,880 8,355 13 Annual Street Report Compilation 3,835 4,065 4,310 4,570 4,845 14 Annual Report of Financial Transactions Compilation – Authority 780 825 875 930 985 Total $79,220 $83,975 $89,015 $94,360 $100,025
*****
We look forward to continuing to improve our services to you.
Yours very truly,
Maze & Associates
RESPONSE:
This letter correctly sets forth the understanding of the City.
By: _______________________________________
Title: _______________________________________
Date: _______________________________________