RESOLUTION NO. R-2022-052
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PISMO BEACH,
CALIFORNIA AUTHORIZING THE CITY MANAGER TO ENTER INTO AN
AGREEMENT WITH BADAWI & ASSOCIATES TO PROVIDE PROFESSIONAL FINANCIAL AUDITING SERVICES IN THE AMOUNT OF $123,568 FOR FISCAL YEARS 2022 THROUGH 2024
WHEREAS, the City of Pismo Beach hires a professional financial auditing firm to audit and prepare the City's financial statements and assist staff with various accounting issues throughout the year; and
WHEREAS, Government Code 12410.6(b) requires municipalities to rotate auditors every six years to maintain independence of the auditor and the client; and WHEREAS, staff released a Request for Proposal (RFP) for professional financial auditing services on March 3, 2022; and
WHEREAS, staff received and a committee reviewed and evaluated the proposal in accordance with the evaluation criteria outlined in the RFP, including interviewing the firm and checking references; and
WHEREAS, staff selected Badawi & Associates as the City's new professional auditing firm based on the firm's extensive experience in the field and feedback received from its municipal client references; and
WHEREAS, the new contract is effective from July 1, 2022 through June 30, 2025, and has options to renew for two additional one-year terms; and WHEREAS, the FY 2023 City budget has sufficient funds in the various funds to support the first year of the contract for these services.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Pismo Beach hereby authorizes the City Manager to enter into an agreement with Badawi & Associates, to provide professional auditing services for the total contract amount of $123,568 from July 1, 2022 to June 30, 2025, with options to renew for two additional one-year terms, in accordance with the proposal attached as Exhibit A.
UPON MOTION OF Mayor Pro Tem Reiss, seconded by Council Member Blake, the foregoing resolution was adopted by the City Council of the City of Pismo Beach this 7th day of June 2022, by the following vote:
PAGE 1 OF 19
R-2022-052
AYES: 5 Reiss, Blake, Guthrie, Newton, Waage
NOES: 0
ABSENT: 0
ABSTAIN: 0
RECUSED: 0
Approved:
Atte
Erica Inderlied, City Clerk
400/ lie. c:3
PAGE 2 OF 19
R-2022-052
Exhibit A
City of Pismo Beach Technical Proposal
Understanding
of Services to be
Provided
The City desires an audit of the financial records for the City and an expression of an opinion in accordance with generally accepted accounting principles on the fairness of presentation of financial statements for the fiscal years ending June 30, 2022 through 2024, with the option of extending the contract for each of the two (2) subsequent fiscal years.
The Firm will:
•Express an opinion on the fair presentation of its basic financial statements which includes but is not limited to the financial statements of governmental activities, the business -type activities, each major fund and all aggregate remaining fund information in conformity with generally accepted accounting principles in the United States of America.
• Express an "in -relation -to" opinion on the fair presentation of its combining and individual non -major and fiduciary fund financial statements and schedules in conformity with generally accepted accounting principles. The Firm will provide an "in -relation -to" report on the supporting schedules contained in the Annual Comprehensive Financial Report based on the auditing procedures applied during the audit of the basic financial statements and schedules.
• Provide an "in -relation -to" report on the schedule of expenditures of federal awards based on the auditing procedures applied during the audit of the financial statements. • Perform the audit in accordance with generally accepted auditing standards accepted in the United States of America, applicable to the financial audit contained in the Government Auditing Standards issued by the Comptroller General of the United States and the provisions of the Uniform Guidance, Audits of States, Local Governments and Non -Profit Organizations.
• Perform limited procedures on supplementary information required by the Government Accounting Standards Board.
• Issue the following reports, following the completion of the audit of the fiscal year's financial statements:
Independent Auditor's Report on Financial Statements and Schedule of Expenditure of Federal Awards
• Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
Independent Auditor's Report on Compliance with Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with the Uniform Guidance
Schedule of Findings and Questioned Costs
Auditor's Communication with Those Charged with Governance Annual Comprehensive Financial Report following the requirements and guidelines of the GFOA award program
GANN Limit Agreed -upon Procedures
Transportation Development Act (TDA) Compliance Report
• Provide special assistance to the City as needed.
• Retain all working papers and reports at the audit firm's expense for a minimum of 7 years. In addition, make working papers available to the City and/or any government agency as appropriate.
Should any conditions be discovered requiring corrective action, the Firm will provide a detailed description of the findings and recommended actions as to their resolution.
BADAW 1 &ASSOCIATES
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R-2022-052
Exhibit A
City of Pismo Beach Technical Proposal
Specific Audit
Approach
The Firm will submit a report to the City's Council and management detailing auditor's responsibility under generally accepted auditing standards, significant accounting policies, management judgments and accounting statements, significant audit adjustments, other information in documents containing audited financial statements, disagreements with management, management consultations with other accountants, major issues discussed with management prior to retention, difficulties encountered during the audit, and any significant deficiencies or material weaknesses found during the audit. Non -material instances of noncompliance will be reported in a separate management letter, if appropriate, along with any other observations or recommendations determined to be informative to City Management.
The Firm will be available to provide advice and counsel regarding significant matters during the year.
The Firm's Partner and Staff welcome the opportunity to make presentations to the City Council and will be ready to respond to questions from the Council and citizens of the City.
Objectives of Our Services
The basic objective of our audit of the City is to conduct an examination of the financial statements in accordance with generally accepted auditing standards and to express our opinion on the fairness of presentation of such financial statements in conformity with generally accepted accounting principles.
Additionally, we believe that another real value of our audit lies in meeting other objectives at no additional cost. The following are other objectives of our services that have important benefits to the City:
• To offer substantive observations and recommendations relating to accounting and operating control policies and procedures.
• To identify opportunities for operating efficiencies and isolate candidate activities for cost reduction opportunities.
• To perform a professional audit in an efficient and effective way to minimize disruption to the office operations.
• To offer ongoing advisory services to assist in the running of the operation and implementation of improved operating procedures.
The engagement will be conducted within the framework of the Firm's quality control program which includes the use of audit programs, careful planning, use of computerized audit software and internal control evaluation and documentation software, and objective review procedures.
On -site staff will use Firm supplied portable computers and printers.
Audit Approach
The specific audit approach has been designed to efficiently and effectively address the audit requirements of the City, to perform the audit of the City's financial records in a timely manner with minimal disruptions to office operations, and to meet the City's timeline.
The audit will be conducted in accordance with:
1) Generally accepted auditing standards established by the AICPA. 2) The standards contained in Government Auditing Standards issued by the GAO. 3) Provisions of the Single Audit Act and the Uniform Guidance. 4) Requirements issued by the California State Controller's office. 5) Other requirements as required.
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' BADAWI &ASSOCIATES
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R-2022-052
Exhibit A
City of Pismo Beach Technical Proposal
We will conduct the necessary audit steps to perform:
• Planning of the engagement
• Evaluation of the existing internal control environment to determine degree of risk of material misstatement
• Determination of degree of compliance with laws, regulations, grant provisions, and City approved policies
• Assessment of potential fraudulent issues
• Validation of account balances
• Verification of reasonableness of management estimates Technical Approach
We use an industry specific audit approach tailored to governmental entities. Our governmental audit approach addresses the special risks and circumstances of local governments. As a result, the audit is conducted efficiently and effectively with minimal disruption to your staff.
The core of our governmental technical audit approach can be summarized as follows:
1. Planning, Understanding and Communication:
Based on our previous audit experience, using the budget, organizational charts, manuals and other financial information systems and our knowledge of how governments work, we will obtain an insight to the specific concerns and sensitivities of the City. Our understanding is updated continuously through our year-round contact and communication efforts. We will agree on common audit objectives and expectations with management before audit work begins and, throughout the audit, will meet regularly with management to discuss audit issues and to gather feedback.
2. In -Depth Review of Systems and Controls:
We have developed diagnostic reviews which enable us to evaluate your systems and controls, and to provide management with constructive feedback. Combined with our knowledge of the City and understanding and experience with the City's accounting software, our control review will form the basis of our audit risk assessment. We will utilize the COSO approach in our evaluation of the City's internal processes to identify potential control deficiencies. In future years, we will update our understanding through similar procedures.
3. Risk -Based Customized Testing Program:
Our audit approach is tailored to governmental applications. We will use audit programs specifically designed to address the operational environment of governmental entities. Our approach will identify potential control risks and the opportunities for risk of material misstatements and fraud. We will evaluate the various risk assessments and identify the potential risks relating to the:
• Balance Sheets / Statement of Net Position
• Statement of Revenues and Expenditures 1 Statement of Activities • Presentation
• Disclosure
Our audit procedures will then be developed to address these risk areas.
4. Expanded Interim Fieldwork:
Timeliness and audit efficiency is enhanced by performing extensive interim work.
Partners, managers and senior staff work with City staff to identify and resolve potential audit issues early. Accordingly, the amount of audit work to perform at year end is minimized. Because our audit staff is familiar with the operations before year-end fieldwork begins, disruption of accounting staff is minimized.
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R-2022-052
Exhibit A
City of Pismo Beach Technical Proposal
5. Smooth Transition:
Our testing program focuses on audit risks identified by our understanding of the City's operations. We will work with the accounting staff to identify the most effective ways to address our objectives. Communication between the members of the audit engagement team and City staff will be fluid and continuous.
6. Sample Size and Sampling Techniques:
Our audit approach will include sampling activities. Population size and the level of assurance to be derived from a particular test will dictate the sample size. We use sampling in our audit approach to compliment skilled judgment and knowledge of the particular situation. Our sample size will range normally from 25 to fit) items.
7. Automated Systems:
We will evaluate controls over the IT functions to assess control risk. We intend to test controls for purposes of reliance. Our review procedures will evaluate controls over:
• Security Management
• Logical and Physical Access
• Configuration Management
• Segregation of Duties
• Contingency Planning
In addition, we will review controls over:
• Input, processing, output, master data
• Application interface
• Data management system interface
8. Analytical Procedures:
We use analytical procedures in several aspects of our audit. Extensive knowledge and industry background are required for effective analytics, and our staff possesses the appropriate experience and knowledge for the City to benefit from these procedures.
9. Approach to be Taken in Determining Laws and Regulations Subject to Audit Test Work:
We continuously refer to specific regulations, compliance supplements, state guidelines and contracts currently in force. We perform the procedures required related to laws and regulations, using inquiries, observations and sampling techniques. Some of the laws and regulations that we believe may be applicable to the City are the requirements of the California Public Utilities Commission, Single Audit Act and other applicable laws and regulations, including the California Government Code, provisions of applicable Grant guidelines, California Constitution GANN Limit requirements, requirements of local measures, Child Care Program compliance requirements, etc.
10. Report Format:
We will meet with City Management to review report formats. Any report format changes will be made in conjunction with approval from City Management.
11. Work Plans:
The detailed work plans will be designed to efficiently and effectively address the audit requirements of the City in accordance with generally accepted auditing standards, to perform the audit of the City's financial records in a timely manner with minimal disruptions to office operations, and to meet the City's timeline.
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1 BADAWI&ASSOCIATES
24 PAGE 6 OF 19
R-2022-052
Exhibit A
City of Pismo Beach Technical Proposal
12. Adiustinq Journal Entries:
We will discuss and explain proposed audit adjusting entries with the City's designated Finance Department personnel prior to recording. Audit adjusting entries will be provided in a format showing the lowest level of posting detail needed for data entry on the City's general ledger system.
13. Listing of Schedules and Tables (anticipated to be prepared by the City):
Based on preliminary inquiries made with management and City staff and review of documents, we will tailor a list of schedules, tables, and other reconciliations required for the audit. We will take into account as much as possible reconciliations already prepared by the City for day to day operations and reporting, as well as any reports that are system generated to limit the need for additional City staff hours.
The following is a listing of some of the significant reconciliations and schedules that we would normally expect the City to provide to us in assisting us in conducting our fieldwork. • Trial Balance
• Annual Comprehensive Financial
Report Account Roll Up
Schedules
• Budget to Actual Reports
• Bank Reconciliations
• Listing of manually prepared
journal entries posted
• Summary of Investments held by
the City
• Capital Asset Schedules
• Long Term Debt Schedules
• Debt amortization schedules &
Calculations of deferred amounts
• Calculations of any debt
covenants amounts or
percentages
• Schedule of Leases
• Schedule of Expenditures of
Federal Awards
• Analysis of Deferred Inflows of
Resources an Deferred Outflows
of Resources
• Reconciliation of Receivables to
subsidiary ledgers
• Calculations for estimate of
allowance for uncollectible
accounts
• Loans Receivable Schedules
• Reconciliation of Significant
Revenue Accounts
• Utility billing Registers and Fee
schedules
• Compensated Absences
Schedules and Copies of Related
Policies
• Claims Payable Schedules
• Pension and OPEB Roll Forward &
Supporting Schedules
• GASB 54 Fund Balance Roll
Forward Schedule
• Interfund Transaction Schedules
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R-2022-O52
Exhibit A
City of Pismo Beach Technical Proposal
Use of
Technology in
the Audit
The Firm maintains a variety of specialized software packages during the audit that enable us to perform an efficient, thorough, and timely audit and keeping time demands on City staff to a minimum.
Trial Balance Management and Financial Statement Preparation ProSystem Fx Engagement allows us to import and manage multiple years of trial balance data including budgetary information, create multiple account groupings, generate reports, post journal entries proposed during the audit (including GASB 34 conversion entries), and Zink information directly to the financial statements. This gives us the ability to:
Generate immediate trend and other comparative analysis of trial balance and budget data prior to the start of the audit. This allows us to identify potential issues and make inquiries early in the audit
▪ Link the financial statements and footnotes prior to the start of the audit allowing us to have majority of the financial statements (including budgetary comparison schedules and other supplementary information) prepared at the time the trial balance is uploaded
Audit adjustments or City adjustments provided during the audit are automatically reflected in the financial statements
Audit Request Management and Document Exchange
CCH Engagement Organizer ("Organizer") is a virtual "Prepared by Client (PBC) List" that streamlines the process of requesting, receiving, and keeping track of documents. The Organizer is an integrated cloud -based request list that helps to facilitate the engagement through more seamless collaboration between the Firm and our clients. By utilizing the Organizer, the City can do all of the following in one secure virtual environment:
Attach files of any type to document requests
Easily track the status of document requests that are either pending, completed by the City, accepted by us, or rejected by us
Access templates and documents from us that require completion Have multiple City staff get involved and assist in the audit process Participate in a dialog with us for questions and notes Especially with having to perform a large part of the audit remotely in 2020, and anticipated for the upcoming year, we have found that the use of the Organizer has helped our clients be always informed as to the status of their audit, and not be surprised with new requests or follow up on outstanding requests previously provided.
Computer Aided Audit Tools (CAATs)
The Firm's data analytics software enables our Engagement Team to perform more than 150 Computer Aided Audit Tools (or "CAATs"). CCH Teammate Analytics gives us the ability to perform advanced data analysis and increase efficiency. By utilizing this software, we can:
Immediately visualize and analyze 100% of account populations with graphs, charts and statistics to identify anomalies
Make fewer sample selections that are targeted to problematic areas Quickly analyze transactional data for:
o Duplicate records
o Missing transactions
o Transaction sequence
o Unusual items
Compare excel worksheets for changes or differences
Generate immediate testing samples
:- Perform regression analysis
Filter and extract data from City reports
BADAWI &ASSOCIATES
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R-2022-052
Exhibit A
City of Pismo Beach Technical Proposal
Audit Planning, Risk Assessment, and Audit Programs
Our firm utilizes CCH Knowledge Coach, which is an expert system that adapts and customizes our audit approach specifically based on the City's structure, operating environment, specific transactions, and identified risks or matters to be addressed in the audit.
The software is frequently updated for new industry trends and audit requirements. Included in the software is a continuous diagnosis of audit forms that identifies missing information, procedures, or any conflicts that need to be addressed prior to issuance of the audit report.
We have found that this audit tool greatly benefits our audit clients in the following ways:
• Removal of standardized audit steps and procedures that do not add value to the audit Targeted audit procedures focusing on risks and accounts specific to the City's operations
▪ Audit is always performed in accordance with audit standards especially the risk assessment standards
▪ Maximizing audit efficiency having less City staff time dedicated to gathering information or responding to inquiries by focusing on material issues • Automatic self -diagnostics ensure no audit steps are missed, guaranteeing a quality audit
Research Tools
We maintain multiple research software packages that are always kept up to date to ensure compliance with accounting and auditing standards, and are also a resources for us to provide guidance to our clients. In addition to accounting and audit literature, we have access to interactive disclosure checklists that include sample footnote disclosures and financial statements.
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R-2022-052
Exhibit A
City of Pismo Beach Technical Proposal
Firm's
Capability to
Work
Remotely
Due to the COVID-19 pandemic, we have had to adapt to a new environment that had brought on challenges for both our clients and our firm, which we were able to overcome successfully and continue to discuss with our clients on improvements we can make for addressing any concerns. Remote auditing has not been new to our firm, as we had already implemented remote auditing procedures for a few of our distant clients. Below are the policies and methods we used to address limitations created by the pandemic, which we plan to continue to incorporate partially or completely in future contract periods, if these are preferred to the traditional audit process:
• Staff Interviews and Meetings are conducted via video conferencing software (either Zoom or other software used by the City).
Earlier transmission of documents needed for the audit — We have always provided our request list for the audit timely, however we have found that additional time may be needed by City staff in gathering documents necessary for the audit; so we plan on providing the City with a complete list of documents for all phases of the audit no later than one month prior to the start of the interim fieldwork.
More frequent and timelier communication — We have found that due to not having on - site presence, communication for the audit needs to be more intentional:
o We request that certain documents that will be used to make samples (expenditure reports, census data, revenue detail, journal entry listings, other) be provided one week prior to our fieldwork start date. This allows more time for testing selections that we will need to be provided to us during our fieldwork time. o The CCH Organizer that we use for exchanging files described in detail on page 26, is updated frequently and displays the status of all requests during the audit.
Documents will either be classified as pending, completed, accepted, or rejected. o As needed status meetings by video conference
o Phone calls and/or emails can be made anytime to the audit team o After the end of interim and year end fieldwork, we will conduct an exit meeting to discuss the status of the audit, audit findings, new accounting pronouncements and any other topic significant to the audit to keep you informed as to what was accomplished and what are the pending matters.
We understand that every agency operates differently and being flexible is important.
With regard to reviewing documents for testing, we can review documents electronically if they can be scanned and uploaded, alternatively we can schedule a day visit to review them on -site provided there are mandates restricting a site visit and safety precautions are followed. If a site visit is needed, we would request documents be gathered for our review in advance to minimize our time needed to mitigate transmission risk.
If possible, we have found that being provided read-only access to the financial system and any other financial system used to store information relevant to the audit reducing City staff time needs, as the audit team is able to run reports and obtain information independently.
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R-2022-052
Exhibit A
err
City of Pismo Beach Technical Proposal
Audit 2022
Schedule Period Audit Tasks
June Planning and Administration
► Review and obtain copies of key work papers of prior audit firm. ► The entrance conference shall be held with City staff. The purpose of this meeting will be to discuss prior audits and the interim work to be performed. This meeting will also be used to establish overall liaison for the audits and to make arrangements for work space and other needs
► Review and evaluate the City's accounting and financial reporting.
Prepare an overall memo of recommendations, potential issues, and suggestions for improvements
► Prepare overall memo to the City confirming audit procedures, timing, and assistance
► Prepare detailed audit work plan and audit programs, audit budget and staffing schedule, and list of schedules to be prepared by the City staff
► Send the Organizer to the City that will include all request items considered to be necessary for the audit
July - Internal Control Evaluation
► Meeting with City Manager and Department Heads of other departments with large operating budgets or which have significant federal grant expenditures
► Attending City Council meetings
► Meeting with off -site locations
► Meeting with key Finance Department personnel
► Obtain and document understanding of key internal control systems through walk-throughs, interviews of staff, and review of supporting documentation
o General ledger system
o Budgeting system
o Revenue, utility billing, accounts receivable, and cash collections
o Purchasing, expenditures, accounts payable, and cash
disbursements
o Payroll
o Federal Financial Assistance
o Other systems
► Identify control risks
► Evaluate IT control environment
► Perform testing of the internal control system and evaluate the effectiveness of the City's systems. Select large dollar and random samples of transactions in key operating systems. Sample size to meet required level for determined degree of risk. Review supporting documentation of selected transactions, evaluate adequacy of support and approvals, and conclude on degree of adherence to accuracy and compliance with City policies ► Conduct fraud assessment procedures
► Assess degree of risk for material misstatement
► Provide to the City's management a memo concerning
management letter points and identify issues, if any
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R-2022-052
Exhibit A
City of Pismo Beach Technical Proposal
2022
Period Audit Tasks
July Other Tasks
► Review minutes of City Council meetings and other key committees ► Perform preliminary substantive procedures, which would include tests of:
o Vendor and contractor payments
o Payroll expense
o Utility billing
o Pension and OPEB testing
o Capital asset acquisitions
o Journal entries
o Retrospective review of accounting estimates
► Financial statement database management and other setup, in addition to drafting of all necessary report templates
► Preliminary Single Audit and other compliance testing ► Coordinate with City staff and prepare of all appropriate confirmation requests including:
o Bank accounts
o Investment pool accounts
o Accounts receivable
o Federal grants
o Revenue from governmental agencies
o Bond and other debts
o Pension plan
o Attorney letters
o Others, as required
> Update the Organizer with any additional requests that will be needed for the City's audit
• Provide the City with audit plan and list of year-end audit schedules > Hold progress conference with City Management
• Hold exit conference with City Management
October Final Fieldwork
> Entrance conference with City Management
► Follow-up on all outstanding confirmations
► Verify and validate account balances by reviewing supporting documentation including invoices, vouchers, council resolutions, minutes, and other documents, as required
► Perform analytical review of revenue and expenditures. Determine reason for material differences between budget and actual >• Perform a search for unrecorded liabilities by reviewing disbursements subsequent to June 30, testing terms of contractual obligations, and interviewing City staff
► Perform review of subsequent events by discussions with City Management and update all minutes of City Council and key committees
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R-2022-052
Exhibit A
City of Pismo Beach Technical Proposal
2022
Period Audit Tasks
Single Audit Compliance
► Entrance conference with City Management
► Obtain Federal Financial Assistance Schedule
P. Determine grants to be considered as major programs including clusters
► Perform audit tests of major grant programs and compliance with Federal Law and Regulations
► Review grant documents, select sufficient number of transactions to test for compliance of Federal Requirements
► Coordinate Single Audit efforts with the Financial Audit efforts ► Communicate findings to City Management
► Other Compliance
November Audit Reports
► Complete drafts of City's Annual Comprehensive Financial Report ► Prepare draft of Single Audit Reports concerning internal control structure, compliance with laws and regulations, and administering of federal financial assistance programs
► Prepare other reports as required
► Provide revised final drafts of all required reports to the City for approval no later than November 18, 2022
December - Final City Audit Reports, Financial Statements, and other reports delivered by no later than December 9, 2022
Final Single Audit Reports delivered
- Audit Presentation to Council
January 2023 - Single Audit Report package submitted to Federal Audit Clearinghouse
Estimated Hours by Audit Phase
Position
Planning
Interim
Fieldwork
Year End
Fieldwork
Reporting
Total
Partner
7 17
12 3
39 Audit Manager
6 28
30 4
68 Audit Senior
12 45
48 6
111
Professional Audit Staff
-
75 69
8 152
Administrative Assistant
4 7
-
8 19
Total
29 172
159
29 389
BADAWI&ASSOCIATES
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R-2022-052
Exhibit A
City of Pismo Beach Technical Proposal
Discussion of
Relevant
Accounting
Issues
Identification of Anticipated Potential Audit Problems
We do not anticipate that there will be any audit problems at the City. However, the following are some areas that we will carefully investigate and monitor during our audit procedures:
• Financial Reporting:
Review and evaluate that the City's Annual Comprehensive Financial Report are in compliance with current reporting and disclosures requirements issued by the GASB and GFOA.
Review Annual Comprehensive Financial Report for financial reporting conformance awards issued by CSMFO and GFOA.
Review and evaluate degree of compliance with the various GASBs in effect.
Review degree of compliance with infrastructure obligations and regulatory provisions,
• Internal Control Structure:
Review and evaluate the City's internal control functions and ascertain compliance with proper internal control philosophies.
• Review computer system processes and controls and evaluate adequacy of the control environment.
Several new GASB pronouncements will become effective over the time period of this proposal. As such, specific attention will be provided to determine the proper implementation of these new pronouncements. A list of known new pronouncements with implementation dates that fall within this proposal period are as follows:
2022
• Statement 87
• Statement 89
• Statement 92
• Statement 93
• Statement 97
— Leases
— Construction -period Interest
— Omnibus (multiple effective date)
— LIBOR Removal and Lease Modifications
— Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans
2023
• Statement 91 — Conduit Debt
• Statement 94 — Public -private Partnerships
• Statement 96 — Subscription -Based Information Technology Arrangements ba
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R-2022-052
Exhibit A
City of Pismo Beach Technical Proposal
Conclusion
A client relationship with the City will be of great value to our Firm and we welcome the opportunity to develop a Tong -term relationship with the City. We are committed to:
• Rendering the highest standard of service
• Developing a long-term working relationship dedicated to meeting the needs of the City • Assisting the City in operational issues
• Producing a quality end -product
We have the technical qualifications and experience to provide the level of service desired and expected by the City and stand ready to provide our knowledge and experience for the benefit of your organization.
We would like to express our appreciation to the City and to its Staff for allowing us the opportunity to submit a proposal to perform professional auditing services. We are available, at your convenience, to discuss any aspects of our proposal.
Thank you for allowing us to present our Firm to you.
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BADAWI &ASSOCIATES 33
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R-2022-052
Exhibit B
City of Pismo Beach
Cost Proposal
SUMMARY SCHEDULE OF PROFESSIONAL FEES AND EXPENSES
Service
2021-22
2022-23
2023-24
Optional Years
2024-25
2025-26
Financial Statements Audit
$ 27,135
$ 27,890
$ 28,465
$ 28,465
$ 28,465
Single Audit
3,620
3,690
3,910
3,910
3,910
GANN Limit Agreed -upon Procedures
665
735
780
780
780
TDA Financial Statements
4,565
4,735
5,015
5,015
5,015
Total
$ 35,985
$ 37,050
$ 38,170
$ 38,170
$ 38,170
DETAIL SCHEDULE OF PROFESSIONAL FEES AND EXPENSES
FOR FISCAL YEAR 2021-22 ONLY
City's Financial Statements Audit
Hourly Rates
Total Hours
Total
Partner
$ 150
29 $ 4,350
Audit Manager
120
51 6,120
Audit Senior
85 84
7,140
Professional Audit Staff
75 115
8,625
Administrative Assistant
60 15
900
Subtotal
294
$ 27,135
Meals and Lodging
-
Transportation
-
Report Preparation, Word Processing, and Printing
(if requested by the City)
-
Total
$ 27,135
Single Audit
Quoted
Hourly
Rates
Hours
Quoted
Fee
Partner
$ 150
4 $ 600'
Audit Manager
120
7 840
Audit Senior
85 11
935
Professional Audit Staff
75 15
1,125
Administrative Assistant
60 2
120
Total all inclusive maximum price for 2022 audit
39 $ 3,620
Meals and Lodging
-
Transportation
-
Report Preparation, Word Processing, and Printing
(if requested by the City)
-
Total
$ 3,620
BADAWI &ASSOCIATES
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R-2022-052
Exhibit B
City of Pismo Beach
Cost Proposal
DETAIL SCHEDULE OF PROFESSIONAL FEES AND EXPENSES
FOR FISCAL YEAR 2021-22 ONLY (Continued)
GANN Limit Agreed -upon Procedures
Quoted
Hourly
Rates
Hours
Quoted
Fee
Partner
$
150
1 $
150
Audit Manager
120
1 120
Audit Senior
85 2
170
Professional Audit Staff
75 3
225
Administrative Assistant
60 -
-
Total all inclusive maximum price for 2022 audit
7 $
665
Meals and Lodging
-
Transportation
-
Report Preparation, Word Processing, and Printing
(if requested by the City)
-
Total
$
665
TDA Financial Statements
Quoted
Hourly
Rates
Hours
Quoted
Fee
Partner
$ 150
5 $ 750
Audit. Manager
120
9 1,080
Audit Senior
85 14
1,190
Professional Audit Staff
75 19
1,425
Administrative Assistant
60 2
120
Total all inclusive maximum price for 2022 audit
49 $ 4,565
Meals and Lodging
-
Transportation
-
Report Preparation, Word Processing, and Printing
(if requested by the City)
-
Total
$ 4,565
Grand Total
$ 35,985
ba
BADAW I &ASSOCIATES
3 PAGE 17 OF 19
R-2022-052
Exhibit B
City of Pismo Beach Cost Proposal
Manner of Payment:
Each Engagement Team member maintains detailed time sheets describing work performed, date of work, and amount of time spent on each task for the Engagement. The Firm will bill the City after completion of each phase of the audit and bill the City up to a maximum of 90%. The remaining 10% of the proposal amount will not be due until all final reports are delivered and accepted by the City. The City can anticipate three billings as follows:
Work Performed
% of Proposal
Amount
For interim work 45%
For year-end work 45%
At presentation and acceptance of final reports 10%
Total 100%
Rates for Additional Professional Services:
Any services outside the scope of our engagement will be promptly identified before the services are rendered.
Upon mutual agreement, the out -of -scope services will be separately billed at our standard hourly rates. While it can be difficult to simply state hourly rates, as often times the needs of the client and the specific tasks directly impact the billing rates for our services, we want to provide the following information regarding our published billing rates:
Position
Partner
EQR
Manager
Senior
Staff
Admin.
Hourly Rate
$ 200
200
150
125
100
75 Our Standard Hourly Rates are adjusted annually by 3% for Cost of Living and Inflation Adjustments Conclusion:
A client relationship with the City will be of great value to our Firm and we welcome the opportunity to develop a long-term relationship with the City. We are committed to:
* Rendering the highest standard of service.
* Developing a long-term working relationship dedicated to meeting the needs of the City. * Assisting the City in operational issues.
* Producing a quality end -product.
We have the technical qualifications and experience to provide the level of service desired and expected by the City and stand ready to provide our knowledge and experience for the benefit of your organization.
We would like to express our appreciation to the City and to its Staff for allowing us the opportunity to submit a proposal to perform professional auditing services. We are available, at your convenience, to discuss any aspects of our proposal.
Thank you for allowing us to present our Firm to you.
* * * * * * * * * * * * * * Mir *
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BADAWI &ASSOCIATES
4 PAGE 18 OF 19
R-2022-052
Exhibit B
c
L
1 COD
► BADAWI&ASSOCIATES
CERTIFIED PUBLIC ACCOUNTA1
May 24, 2022
Ms. Nadia Feeser, Administrative Services Director
City of Pismo Beach
760 Mattie Road
Pismo Beach, CA 93449
We are pleased to present this proposal to prepare the financial statements of the City of Pismo Beach (City) and its street related activities, respectively, to be included in the prescribed forms developed by the State of California State Controller's Office (prescribed forms) for the fiscal years ending June 30, 2022 through 2024, with the option of extending the contract for each of the subsequent two (2) fiscal years.
The objective of our engagements is to compile financial statements in accordance with the prescribed forms' basis of accounting based on information provided by you, and to apply accounting and financial reporting expertise to assist you in the preparation of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements in order for them to be in accordance with the prescribed forms' basis of accounting.
We will conduct our compilation engagements in accordance with Statements on Standards for Accounting and Review Services (SSARs) promulgated by the Accounting and Review Services Committee of the AICPA and comply with the AICPA's Code of Professional Conduct.
Our fees will be as follow:
Audit Year
Optional Years
2021-2022 2022-2023 2023-2024 2024-2025 2025-2026
City SCO Report $2,500 $2,575 $2,652 52,652
Street Report 1,500 1,5.5 1,591 1,591
Total $4,000 $4,120 $4,243 $4,243
If you have any questions, please feel free to call me at (510) 768-8244.
Sincerely,
Ahmed Badawi, President
Badawi & Associates, CPAs
Berkeley, California
RESPONSE:
This letter correctly sets forth the understanding of the City.
By:
Title:
Date:
$$2,652
1,591
$4,243
Address: 2855 TeFegraun Avenue, Suite 312 Berkeley CA 94705 - Phone: ' 0.768,825 •Fax: 510.768.8249 PAGE 19 OF 19
R-2022-052