Lance, Soll and Lunghard, LLP - Amendments 1-5 and Agreement — Redondo Beach City Council, April 18, 2023 (part 1 of 2)

FIFTH AMENDMENT TO THE

AGREEMENT FOR CONSULTING SERVICES

BETWEEN THE CITY OF REDONDO BEACH

AND LANCE, SOLL & LUNGHARD, LLP

THIS FIFTH AMENDMENT TO THE AGREEMENT FOR CONSULTING SERVICES Fifth Amendment") is made between the City of Redondo Beach, a chartered municipal corporation (" City") and Lance, Soil & Lunghard, LLP, a California limited liability partnership ("Consultant").

WHEREAS, on April 18, 2017, the parties hereto originally entered into the Agreement for Consulting Services between the City and Consultant (the "Agreement"); and WHEREAS, on August 14, 2018, the parties hereto entered into the First Amendment to the Agreement for Consulting Services between the City and Consultant (the "First Amendment") to incorporate the Engagement Letter for the fiscal year 2017-2018 audit and increase compensation to $ 66,415 for each fiscal year audit for the periods of 2017 to 2018 and 2018 to 2019, and increase the compensation to $ 68, 347. 45 for each fiscal year audit for the periods of 2019 to 2020 and 2020 to 2021.

WHEREAS, on September 3, 2019, the parties hereto entered into the Second Amendment to the Agreement for Consulting Services between the City and Consultant the " Second Amendment") to incorporate the Engagement Letter dated May 21, 2019 2019 Engagement Letter') and authorize the City Manager or designee to sign prospective engagement letters provided the letters are in the same substantive form as Exhibit" A-2- 1" of the Second Amendment and do not increase Consultant' s not to exceed compensation, require invoices to include additional detail, and change the City' s designee for notice; and
WHEREAS, the Second Amendment erroneously provided the compensation as described in the Agreement and should have provided the increased compensation as approved in the First Amendment; and
WHEREAS, on October 15, 2019, the parties hereto entered into the Third Amendment to the Agreement for Consulting Services between the City and Consultant (the "Third Amendment") to incorporate the August 2019 Engagement Letter (as defined in the Third Amendment) to provide additional services and increase the Consultant' s compensation; and
WHEREAS, on March 3, 2020, the parties hereto entered into the Fourth Amendment to the Agreement for Consulting Services between the City and Consultant (the " Fourth Amendment") to extend the term of the Agreement to April 17, 2022 and clarify the compensation for each year.
1 NOW THEREFORE, in consideration of the promises and mutual covenants contained herein, and intending to be legally bound, the parties hereby agree to make the following amendments to the Agreement:

1. Scope of Services. The Agreement is hereby amended to add Exhibit" A- 4" to perform the services described in the attached Engagement Letter dated February 4, 2022. Exhibit" A-4" is attached hereto and incorporated by reference.

2. Term. The Agreement is hereby amended to add Exhibit " B- 4", which extends the Agreement to April 30, 2023. Exhibit" B- 4" is attached hereto and incorporated by reference. Consultant shall commence and complete all services described in the Agreement and any amendments thereto in accordance with the schedule set forth in Exhibit" B- 4".

Compensation. The Agreement is hereby amended to add Exhibit" C- 5" to increase Consultant' s total limit on compensation by $ 68, 336 for a total limit of 405,275.90 for the services described in the Agreement and any amendments thereto. Exhibit" C- 5" is attached hereto and incorporated by reference.

3. No Other Amendments. Except as expressly stated herein, the Agreement shall remain unchanged and in full force and effect. The Agreement, First Amendment, Second Amendment, Third Amendment, Fourth Amendment and this Fifth Amendment constitute the entire agreement between the parties and supersede any previous oral or written agreement with respect to the subject matter hereof. In the event of any inconsistency between the terms of the Agreement, First Amendment, Second Amendment, Third Amendment, Fourth Amendment, and the terms of this Fifth Amendment shall govern. 2 IN WITNESS WHEREOF, the parties have executed this Fifth Amendment in Redondo Beach, California, as of this 15th day of March, 2022.

CITY OF REDONDO BEACH, LANCE, SOLL & LUNGHARD, LLP,
a chartered municipal corporation a California limited liability partnership By:
illiam C. Brandayor Name: rjKyhv 2wee
Title: MAA/ k QNG NT-O Ef2
ATTEST: APPRO D:
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Eleanor Manzan , Clerk
r/p{
DiIn W"trickfaden, Risk Manager
APPROVED AS TO FORM:

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Michael W. Webb, City Attorney
3 IN WITNESS WHEREOF, the parties have executed this Fifth Amendment in Redondo Beach, California, as of this 15th day of March, 2022.

CITY OF REDONDO BEACH, LANCE, SOLL& LUNGHARD. LLP,
a chartered municipal corporation a California limited liability partnership W'/
J K:' 7 // By:
illiam C. Brand. Mayor Name: rie P.,Pe-e
Title: MANMtp pkat(L
AATTTTEST: APPRO D!
II P ,• i 4g'
Eleanor Manzano, erk Di- fly' trickfaden, Risk Manager
APPROVED AS TO FORM:
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Michael W. Webb, City Attorney
3 EXHIBIT " A- 4"

PROJECT DESCRIPTION AND/OR SCOPE OF SERVICES
Consultant shall perform the services as described in the attached Engagement Letter dated February 4, 2022.
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February 4, 2022
City of Redondo Beach
415 Diamond Street
Redondo Beach, CA 90277
Lance, Soil 8 Lunghard, LLP(" LSL CPAs") is pleased to confirm our understanding of the services we are to provide the City of Redondo Beach for the fiscal year ended June 30, 2022.

Audit Scope and Objectives
We will audit the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information, and the disclosures, which collectively comprise the basic financial statements of the City of Redondo Beach as of and for the fiscal year ended June 30, 2022. We will also audit the financial statements of the enterprise funds, internal service funds, and inmate trust fund. Accounting standards generally accepted in the United States of America( GAAS) provide for certain required supplementary information ( RSI), such as management's discussion and analysis( MD&A), to supplement the City of Redondo Beach' s basic financial statements. Such information. although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. As part of our engagement, we will apply certain limited procedures to the City of Redondo Beach' s RSI in accordance with GAAS. These limited procedures will consist of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management' s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We will not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The following RSI is required by U. S. generally accepted accounting principles( GAAP) and will be subjected to certain limited procedures, but will not be audited:

1. Management' s Discussion and Analysis

2. Budgetary Comparison Schedules for General Fund and Major Special Revenue Funds

3. Pension required supplementary schedules

4. OPEB required supplementary schedules

5. Infrastructure information under modified reporting
We have also been engaged to report on supplementary information other than RSI that accompanies the City of Redondo Beach' s financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the financial statements and certain additional procedures, including comparing and reconciling such information directlyto the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other PrimeGlobal
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additional procedures in accordance with GAAS, and we will provide an opinion on it in relation to the financial statements as a whole in a report combined with our auditor's report on the financial statements:

1. Combining individual nonmajor fund statements

2. Combining individual nonmajor budgetary schedules
We will also provide an opinion on the following supplementary information in relation to the single audit as a whole in a report combined with our auditor' s report on the single audit:

1. Corrective Action Plan ( if applicable)

2. Schedule of expenditures of federal awards
The objectives of our audit are to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatement, whether due to fraud or error; issue an auditor's report that includes our opinion about whether your financial statements are fairly presented, in all material respects, in conformity with GMP; and report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists.

Misstatements, including omissions, can arise from fraud or error and are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment of a reasonable user made based on the financial statements. The objective also includes reporting on— Internal control over financial reporting and compliance with provisions of laws, regulations, contracts, and award agreements, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards.

Internal control over compliance related to major programs and an opinion( or disclaimer of opinion) on compliance with federal statutes, regulations, and the terms and conditions of federal awards that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and Title 2 U. S. Code of Federal Regulations ( CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards( Uniform Guidance).

The Government Auditing Standards report on internal control over financial reporting and on compliance and other matters will include a paragraph that states that( 1) the purpose of the report is solely to describe the scope of testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity' s internal control or on compliance, and( 2) the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity' s internal control and compliance. The Uniform Guidance report on internal control over compliance will include a paragraph that states that the purpose of the report on internal control over compliance is solely to describe the scope of testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Both reports will state that the report is not suitable for any other purpose.

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We cannot provide assurance that an unmodified opinion will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion or add an emphasis-of-matter or other- matter paragraph.

If our opinion is other than unmodified, we will discuss the reasons with you in advance. If circumstances occur related to the condition of your records, the availability of sufficient, appropriate audit evidence, or the existence of a significant risk of material misstatement of the financial statements caused by error, fraudulent financial reporting, or misappropriation of assets, which in our professional judgment prevent us from completing the auditor forming an opinion on the financial statements, we retain the right to take any course of action permitted by professional standards, including declining to express an opinion or issue a report, or withdrawing from the engagement.

Auditor' s Responsibilities for the Audit of the Financial Statements We will conduct our audit in accordance with GAAS and Governmental Auditing Standards and will include tests of your accounting records and other procedures we consider necessary to enable us to express such opinions. As part of an audit in accordance with GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit.

We will evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management. We will also evaluate the overall presentation of the financial statements, including the disclosures, and determine whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether from( 1) errors, ( 2) fraudulent financial reporting, ( 3) misappropriation of assets, or 4) violations of laws or governmental regulations that are attributable to the government or to acts by management or employees acting on behalf of the government. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse.

Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, and because we will not perform a detailed examination of all transactions, there is an unavoidable risk that some material misstatements may not be detected by us, even though the audit is properly planned and performed in accordance with GAAS and Government Auditing Standards. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements or major programs. However, we will inform the appropriate level of management of any material errors, fraudulent financial reporting, or misappropriation of assets that comes to our attention. If there is evidence that fraud may exist, the auditor is required to bring it to the attention of the appropriate level of management, even if the matter is considered inconsequential. If the fraud involves management( regardless of materiality) or is material to the financial statements, the auditor is required to report it directly to the audit committee or those charged with governance. We will include such matters in the reports required for a Singe Audit. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors.

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We will also conclude, based on the audit evidence obtained, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the government' s ability to continue as a going concern for a reasonable period of time.

Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, tests of the physical existence of inventories, and direct confirmation of receivables and certain assets and liabilities by correspondence with selected customers, creditors, and financial institutions. If there is evidence that fraud may exist, the auditor is required to bring it to the attention of the appropriate level of management, even if the matter is considered inconsequential. If the fraud involves management regardless of materiality) or is material to the financial statements, we will report it directly to the audit committee or those charged with governance. At the conclusion of our audit, we will require certain written representations from you about your responsibilities for the financial statements; schedule of expenditures of federal awards; federal award programs; compliance with laws, regulations, contracts, and grant agreements; and other responsibilities required by generally accepted auditing standards.

Audit Procedures—Internal Control
We will obtain an understanding of the government and its environment, including internal control relevant to the audit, sufficient to identify and assess the risks of material misstatement of the financial statements, whether due to error or fraud, and to design and perform audit procedures responsive to those risks and obtain evidence that is sufficient and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal control.

As required by the Uniform Guidance, we will perform tests of controls over compliance to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements applicable to each major federal award program.

However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to the Uniform Guidance.

An audit is not designed to provide assurance on intemal control or to identify all deficiencies in internal control. Accordingly, we will express no such opinion. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under AICPA professional standards, Government Auditing Standards, and the Uniform Guidance.

Audit Procedures— Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of the City of Redondo Beach' s compliance with the provisions of applicable laws, regulations, contracts, and agreements, including grant agreements. However, the objective of our audit will not be to provide an opinion on overall compliance, and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards.

The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with federal statutes, regulations, and the terms and conditions of federal awards applicable to major programs. Our procedures will consist of tests of transactions and other applicable procedures described in the OMB Compliance Supplement for the types of compliance requirements that could have a direct and material effect on each of the City of Redondo Beach' s major programs. The purpose of these procedures will be to express an opinion on the City of Redondo Beach' s compliance with requirements applicable to each of its major programs in our report on compliance issued LSL::

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pursuant to the Uniform Guidance.

Other Services
Preparation of financial statements and single audit report We will also assist in preparing the financial statements, schedule of expenditures of federal awards, and related notes of the City of Redondo Beach in conformity with U. S. generally accepted accounting principles and the Uniform Guidance based on information provided by you. These nonaudit services do not constitute an audit under Government Auditing Standards and such services will not be conducted in accordance with Government Auditing Standards. We will perform the services in accordance with applicable professional standards. The other services are limited to the financial statements, schedule of expenditures of federal awards, and related notes services previously defined. We, in our sole professional judgment, reserve the right to refuse to perform any procedure or take any action that could be construed as assuming management responsibilities.

AGREED UPON PROCEDURES
We will perform agreed upon procedures for the City of Redondo Beach' s Appropriations Limit, and the electronic submission and related hard copy documents specified by the U. S. Department of Housing and Urban Development and Real Estate Assessment Center( REAC).

We will perform the procedure provide by and agreed to my management. These written procedures are attached in Exhibit A.

Responsibilities of Management for the Financial Statements and Single Audit Our audit will be conducted on the basis that you acknowledge and understand your responsibility for designing, implementing, and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, including internal controls over federal awards and monitoring ongoing activities; for the selection and application of accounting principles; and for the preparation and fair presentation of the financial statements in conformity with accounting principles generally accepted in the United States of America. Management is also responsible for implementing systems designed to achieve compliance with applicable laws, regulations, contracts, and grant agreements. You are also responsible for the selection and application of accounting principles; for the preparation and fair presentation of the financial statements, schedule of expenditures of federal awards, and all accompanying information in conformity with U. S. generally accepted accounting principles; and for compliance with applicable laws and regulations ( including federal statutes) and the provisions of contracts and grant agreements ( including award agreements). Your responsibilities also include identifying significant contractor relationships in which the contractor has responsibility for program compliance and for the accuracy and completeness of that information.

Management is responsible for reviewing and approving drafts of financial statements, all financial records, and related information available to us and for the accuracy and completeness of that information( including information from outside of the general and subsidiary ledgers). You are also responsible for providing us with ( 1) access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, identification of all related parties and all related- party relationships and transactions( 2) additional information that we may request for the purpose of the audit; and ( 3) unrestricted access to persons within the govemment from whom we determine it necessary to obtain audit evidence, (4) and other information as needed for the purpose of the audit under Uniform Guidance. At the conclusion of our audit, we will require certain written representations from you about the financial statements, Single Audit and related matters.

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Your responsibilities include adjusting the financial statements to correct material misstatements and confirming to us in the management representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements of each opinion unit taken as a whole.

You are responsible forthe design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud affecting the government involving( 1) management, 2) employees who have significant roles in internal control, and ( 3) others where the fraud could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the government received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for identifying and ensuring that the government complies with applicable laws and regulations, contracts, agreements, and grants. With regard to including the auditor' s report in an exempt offering document, you agree that the aforementioned auditor' s report, will not be included in any such offering document without our prior permission or consent. Any agreement to perform work in connection with an exempt offering document, including an agreement to provide permission or consent, will be a separate engagement and you agree to clearly indicate in the exempt offering document that we are not involved with the contents of such offering document. Management is also responsible for taking timely and appropriate steps to remedy fraud and noncompliance with provisions of laws, regulations, contracts, and grant agreements, or abuse that we report. Additionally, as required by the Uniform Guidance, it is management' s responsibility to evaluate and monitor noncompliance with federal statutes, regulations, and the terms and conditions of federal awards; take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings; promptly follow up and take corrective action on reported audit findings; and prepare a summary schedule of prior audit findings and a separate corrective action plan on the City of Redondo Beach' s letterhead. The summary schedule of prior audit findings should be available for our review on the first day of our schedule visit for the Single Audit.

You are responsible for identifying all federal awards received and understanding and complying with the compliance requirements and for the preparation of the schedule of expenditures of federal awards including notes and noncash assistance received) in conformity with the Uniform Guidance. You agree to include our report on the schedule of expenditures of federal awards in any document that contains and indicates that we have reported on the schedule of expenditures of federal awards. You also agree to make the audited financial statements readily available to intended users of the schedule of expenditures of federal awards no later than the date the schedule of expenditures of federal awards is issued with our report thereon. Your responsibilities include acknowledging to us in the written representation letter that 1) you are responsible for presentation of the schedule of expenditures of federal awards in accordance with the Uniform Guidance; ( 2) you believe the schedule of expenditures of federal awards, including its form and content, is stated fairly in accordance with the Uniform Guidance; ( 3) the methods of measurement or presentation have not changed from those used in the prior period ( or, if they have changed, the reasons for such changes); and ( 4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the schedule of expenditures of federal awards.

You are responsible for the preparation of the supplementary information in conformity with accounting principles generally accepted in the United States of America. You agree to include our report on the supplementary information in any document that contains, and indicates that we have reported on, the supplementary information. You also agree to include the audited financial statements with any presentation of the supplementary information that includes our report thereon. Your responsibilities include acknowledging to us in the representation letter that ( 1) you are responsible for presentation of the supplementary information in accordance with GAAP; ( 2) you believe the supplementary information, including its form and content, is fairly presented in accordance with GAAP; ( 3) the LS
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methods of measurement or presentation have not changed from those used in the prior period ( or, if they have changed, the reasons for such changes); and ( 4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the supplementary information.

Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying and providing report copies of previous financial audits, attestation engagements, performance audits, or other studies related to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or studies. You are also responsible for providing managements views on our current findings, conclusions, and recommendations, as well as your planned corrective actions, for the report, and for the timing and format for providing that information. With regard to the electronic dissemination of audited financial statements, including financial statements published electronically on your website, you understand that electronic sites are a means to distribute information and, therefore, we are not required to read the information contained in these sites or to consider the consistency of other information in the electronic site with the original document.

You agree to assume all management responsibilities relating to the financial statements, schedule of expenditures of federal awards, and related notes, and any other nonaudit services we provide. You will be required to acknowledge in the management representation letter our assistance with preparation of the financial statements, schedule of expenditures of federal awards, and related notes and that you have reviewed and approved the financial statements, schedule of expenditures of federal awards, and related notes prior to their issuance and have accepted responsibility for them. Further, you agree to oversee the nonaudit services by designating an individual, preferably from senior management, with suitable skill, knowledge, or experience; evaluate the adequacy and results of those services; and accept responsibility for them.

Timing, Engagement Administration, and other
We expect to begin our audit as previously agreed to by management. Bryan Gruber is the engagement partner and is responsible for supervising the engagement and signing the reports or authorizing another individual to sign them. To ensure that Lance, Soli, and Lunghard LLP' s independence is not impaired under the AICPA Code of Professional Conduct, you agree to inform the engagement partner before entering into any substantive employment discussions with any of our personnel.

We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any documents selected by us for testing. We will schedule the engagement based in part on deadlines, working conditions, and the availability of your key personnel. We will plan the engagement based on the assumption that your personnel will cooperate and provide assistance by performing tasks such as preparing requested schedules, retrieving supporting documents, and preparing confirmations.

At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection Form that summarizes our audit findings. It is managements responsibility to electronically submit the reporting package ( including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings, auditors' reports, and corrective action plan) along with the Data Collection Form to the federal audit clearinghouse. We will coordinate with you the electronic submission and certification. The Data Collection Form and the reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditors' reports or nine months after the end of the audit period.

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We will provide copies of our reports; however, management is responsible for distribution of the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information, copies of our reports are to be made available for public inspection.

Our fees for these services are outlined in our contract with you. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit.

The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs.

Government Auditing Standards require audit organizations to provide a copy of their most recent external peer review report and any subsequent review reports during the period of the contract. Our 2016 peer review accompanies this letter. Our audit engagement ends on delivery of our audit report. Any follow-up services that might be required will be a separate, new engagement. The terms and conditions of that new engagement will be governed by a new, specific engagement letter for that service.

If any portion of this Agreement is deemed invalid or unenforceable, said findings shall not operate to invalidate the remainder of the terms set forth in this Agreement.

Billing and Payment Terms-- We will bill you for our professional fees and out-of-pocket costs each month as work progresses. Payment is due within 30 days of receipt of the invoice.

We reserve the right to suspend or terminate our work for non- payment of fees. In accordance with our firm policies, work may be suspended if your account becomes 90 days or more overdue and will not be resumed until your account is paid in full. If our work is suspended or terminated, you agree that we will not be responsible for your failure to meet governmental and other deadlines, for any penalties or interest that may be assessed against you resulting from your failure to meet such deadlines, and for any other damages( including but not limited to consequential, indirect, lost profits, or punitive damages) incurred as a result of the suspension or termination of our services.

Electronic Data Communication and Storage -- In the interest of facilitating our services to you, we may send data over the Internet, or store electronic data via computer software applications hosted remotely on the Internet or utilize cloud- based storage. Your confidential electronic data may be transmitted or stored using these methods. In using these data communication and storage methods, our firm employs measures designed to maintain data security. We use best efforts to keep such communications and electronic data secure in accordance with our obligations under applicable laws, regulations, and professional standards.

You recognize and accept that we have no control over the unauthorized interception or breach of any communications or electronic data once it has been transmitted or if it has been subject to unauthorized access while stored, notwithstanding all reasonable security measures employed by us. You consent to our use of these electronic devices and applications.

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professional services, our firm remains responsible for exercising reasonable care in providing such services, and our work product will be subjected to our firm' s customary quality control procedures. By accepting the terms and conditions of our engagement, you are providing your consent and allow us to disclose your confidential information to a third-party service provider, if such disclosure is necessary to deliver professional service or provide support services to our firm.

Independent Contractor -- When providing services to your company, we will be functioning as an independent contractor and in no event will we or any of our employees be an officer of you, nor will our relationship be that of joint ventures, partners, employer and employee, principal and agent, or any similar relationship giving rise to a fiduciary duty to you.

Any obligations under this agreement are solely obligations of the firm, and no partner, principal, employee or agent of the firm shall be subjected to any personal liability whatsoever to you or any person or entity.

Firm Associations— The firm is a member of PrimeGlobal, a global association of independent accounting firms. No PrimeGlobal member firm is an agent or partner of the association or of any other member firm.

No PrimeGlobal member firm has the authority to enter into any legal obligations on behalf of the association or any other member firm. If the firm introduces you to another PrimeGlobal member firm, this firm specifically denies any liability for any work performed by that firm. You should make your own contractual arrangements with that firm for work that they perform. The fact that you may have been introduced to us by another PrimeGlobal member firm does not make that firm, its partners or its employees responsible for any of our acts or omissions.

You agree that this firm has the sole liability for any work performed under this engagement and you undertake not to make any claim or bring any proceedings against either PrimeGlobal or any other member of PrimeGlobal in relation to work covered by this engagement.

Records ManagementRecord Retention and Ownership
We will return all of your original records and documents provided to us at the conclusion of the engagement. Your records are the primary records for your operations and comprise the backup and support for your work product. Our copies of your records and documents are not a substitute for your own records and do not mitigate your record retention obligations under any applicable laws or regulations.

Workpapers and other documents created by us are our property and will remain in our control. Copies are not to be distributed without your written request and our prior written consent. Our workpapers will be maintained by us in accordance with our firm' s record retention policy and any applicable legal and regulatory requirements. A copy of our record retention policy is available upon request.

Our firm destroys workpaper files after a period of seven( 7) years from the completion of the engagement as long as you remain a client with us. Catastrophic events or physical deterioration may result in damage to or destruction of our firm' s records, causing the records to be unavailable before the expiration of the retention period as stated in our record retention policy.

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provided under the supervision of firm personnel. Regulators may request copies of selected workpapers to distribute the copies or information contained therein to others, including other governmental agencies.

If we are not a party to the proceeding in which the information is sought, you agree to reimburse us for our professional time and expenses, as well as the fees and expenses of our legal counsel, incurred in responding to such requests.

Summons or Subpoenas
All information you provide to us in connection with this engagement will be maintained by us on a strictly confidential basis.

Disclaimer of Legal and Investment Advice -- Our services under this letter do not constitute legal or investment advice unless specifically agreed to in this Letter. We recommend that you retain legal counsel and investment advisors to provide such advice.

Brokerage or Investment Advisory Statements -- If you provide our firm with copies of brokerage or investment advisory) statements and/ or read- only access to your accounts, we will use the information solely for the purpose described in this engagement letter. We will rely on the accuracy of the information provided in the statements and will not undertake any action to verify this information. We will not monitor transactions, investment activity, provide investment advice, or supervise the actions of the entity or individuals entering into transactions or investment activities on your behalf. We recommend you receive and carefully review all statements upon receipt and direct any questions regarding account activity to your banker, broker or investment advisor.

Federally Authorized Practitioner —Client Privilege -- Internal Revenue Code § 7525, Confidentiality Privileges Related to Taxpayer Communication, provides a limited confidentiality privilege applying to tax advice embodied in taxpayer communications with federally authorized tax practitioners in certain limited situations.

This privilege is limited in several important respects. For example, this privilege does not apply to your records, state tax issues, state tax proceedings, private civil litigation proceedings, or criminal proceedings.

While we will cooperate with you with respect to the privilege, asserting the privilege is your responsibility.

Inadvertent disclosure of otherwise privileged information may result in a waiver of the privilege. Please contact us immediately if you have any questions or need further information about this federally authorized practitioner-client privilege.

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Limitations on Oral and Email Communications -- We may discuss with you our views regarding the treatment of certain items or decisions you may face. We may also provide you with information in an email. Any advice or information delivered orally or in an email ( rather than through a memorandum delivered as an email attachment) will be based upon limited research and a limited discussion and analysis of the underlying facts. Additional research or a more complete review of the facts may affect our analysis and conclusions.

Due to these limitations and the related risks, it mayor may not be appropriate to proceed with any decision solely on the basis of any oral or email communication. You accept all responsibility, except to the extent caused by the gross negligence or willful misconduct of LSL CPAs and Advisors, for any loss, cost or expense resulting from your decision ( i) not to have us perform the research and analysis necessary to reach a more definitive conclusion and( ii) to instead rely on an oral or email communication. The limitation in this paragraph will not apply to an item of written advice that is a deliverable of a separate engagement.

If you wish to engage us to provide formal advice on a matter on which we have communicated orally or by email, we will confirm this in a separate engagement letter.

Management Responsibilities -- While we can provide assistance and recommendations, you are responsible for management decisions and functions, and for designating an individual with suitable skill, knowledge or experience to oversee any services that we provide. You are responsible for evaluating the adequacy and results of the services performed and accepting responsibility for such services. You are ultimately responsible for establishing and maintaining internal controls, including monitoring ongoing activities.

Conflicts of Interest— If we, in our sole discretion, believe a conflict has arisen affecting our ability to deliver services to you in accordance with either the ethical standards of our firm or the ethical standards of our profession, we may be required to suspend or terminate our services without issuing our work product Limitation of Liability-- LSL CPAs and Advisors liability for all claims, damages, and costs arising from this engagement is limited to three ( 3) times the total amount of fees paid by you to us for services rendered under this letter.

Indemnification-- You agree to hold LSL CPAs and Advisors harmless from any and all claims which arise from knowing misrepresentations to us by your management, or the intentional withholding or concealment of information from us by your management. You also agree to indemnify us for any claims made against us by third parties, which arise from any of these actions by your management. The provisions of this paragraph shall apply regardless of the nature of the claim.

Designation of Venue and Jurisdiction-- In the event of a dispute, you and we agree that the courts of the state of California shall have jurisdiction, and we agree to submit all disputes to the Superior Court of Orange, California, which is the proper and most convenient venue for resolution. We also agree that the law of the state of California shall govern all such disputes.

Proprietary Information -- You acknowledge that proprietary information, documents, materials, management techniques and other intellectual property we use are a material source of the services we perform and were developed prior to our association with you. Any new forms, software, documents or intellectual property we develop during this engagement for your use shall belong to us, and you shall have the limited right to use them solely within your business. All reports, templates, manuals, forms, checklists, questionnaires, letters, letters and other documents which we make available to you are confidential and proprietary to us. Neither you, nor any of your agents, will copy, electronically store, reproduce or make available to anyone other than your personnel, any such documents. This provision will apply to all materials whether in digital, " hard copy" format or other medium.

LS
City of Redondo Beach

Page 12 ends

Termination and Withdrawal-- We reserve the right to withdraw from the engagement without completing services for any reason, including, but not limited to, your failure to comply with the terms of this letter or as we determine professional standards require. If our work is suspended or terminated, you agree that we will not be responsible for your failure to meet governmental and other deadlines, or for any liability, including but not limited to, penalties or interest that may be assessed against your resulting from your failure to meet such deadlines.

If this letter is terminated before services are completed, you agree to compensate us for the services performed and expenses incurred through the effective date of termination.

Assignment -- All parties acknowledge and agree that the terms and conditions of this Letter shall be binding upon and inure to the parties' successors and assigns, subject to applicable laws and regulations.

Severability-- If any portion of this Letter is deemed invalid or unenforceable, said finding shall not operate to invalidate the remainder of the terms set forth in this Letter.

Code of Professional Conduct-- To ensure that our independence is not impaired under the AICPA Code of Professional Conduct, you agree to inform the engagement partner before entering in any substantive employment discussions with any of our personnel. In accordance with Section 50 of the Board of Accountancy Regulations for the State of California, this shall provide notice that Lance, Soli & Lunghard CPAs, Certified Public Accountants, is licensed by the California Board of Accountancy.

Reporting
We will issue a written report upon completion of our audit of the City of Redondo Beach' s financial statements and Single Audit. Our report will be addressed to those charged with governance of the City of Redondo Beach. If circumstances occur related to the condition of your records, the availability of sufficient, appropriate audit evidence, or the existence of a significant risk of material misstatement of the financial statements caused by error, fraudulent financial reporting, or misappropriation of assets, which in our professional judgment prevent us from completing the auditorforming an opinion on the financial statements, we retain the right to take any course of action permitted by professional standards, including declining to express an opinion or issue a report, or withdrawing from the engagement.

We appreciate the opportunity to be of service to the City of Redondo Beach and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the attached copy and return it to us.

Very truly yours,

LANCE, SOLL& LUNGHARD, LLP
ACCEPTED:

This letter correctly sets forth the understanding of the City of Redondo Beach Signature:

Title:

Date:

LSL :

City of Redondo Beach

Page 13 ends

EXHIBIT A

APPROPRIATION' S LIMIT PROCEDURES

1. We obtained the completed Worksheets No. 1 through No. 7 ( or other alternative computations) and compared the limit and annual adjustment factors included in those worksheets to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote of the City Council.

2. For the accompanying Appropriations Limit Worksheet No. 6, we multiplied line A, last year's limit, by line D, ratio of change, and agreed the resulting amount to line E, this year's limit.

3. We compared the current year information presented in the accompanying Appropriations Limit Worksheet No. 6 to the other worksheets described in No. 1 above.

4. We compared the prior year appropriations limit presented in the accompanying Appropriations Limit Worksheet No. 6 to the prior year appropriations limit adopted by the City Council for the prior year.

U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, PUBLIC INDIAN HOUSING— REAL

ESTATE ASSESSMENT CENTER( REAC) PROCEDURES
We compared the electronic submission of the items listed in the" UFRS Rule Information" column with the corresponding printed documents listed in the" Hard Copy Documents" column.

Full
Procedure UFRS Rule Information Hard Copy Document(s)
1 Balance Sheet and Revenue Expense Financial Data Schedule, all CFDAs, if data line items 111 to 13901) I applicable 2 Footnotes( data element G5000- 010) Footnotes to audited basic financial statements
3 Type of opinion on FDS ( data element Auditor's Supplemental report on FDS G3100-040)
4 Audit findings narrative ( data element Schedule of findings and Questioned G5200-010) Costs
5 General information( data element series OMB Data Collection Form G2000, G2100, G2200, G9000, G9100)
6 Financial statement report information Schedule of Findings and Questioned data element G3000- 010 to G3000- 050) Costs , Part 1 of OMB Data Collection Form
7 Federal program report information (dataa SSchedule of Findings and Questioned element G4000-020 to 64000-040) Costs , Part 1 of OMB Data Collection Form
8 Type of Compliance Requirement OMB Data Collection Form G4200-020& G4000- 030)
9 Basic financial statements and auditor Basic Financial Statements ( inclusive reports required to be submitted of auditor reports)
electronically
EXHIBIT " B- 4"

SCHEDULE FOR COMPLETION
TERM. The term of the Agreement shall be extended to April 30, 2023, unless otherwise terminated as herein provided.
5 EXHIBIT " C- 5"

COMPENSATION
Provided Consultant is not in default under this Agreement, Consultant shall be compensated as provided below.

AMOUNT. For the FY2021- 22 City audit, Consultant shall be compensated as set forth below.

Description Amount
FY 2021- 22 City Audit including component units, Housing Successor, standalone reports for Internal Service and 60,820 Enterprise Funds, and GANN Limit calculation
Single Audit Report 5, 467
Inmate Trust Fund 2, 049
Total 68,336
II. NOT TO EXCEED AMOUNT. In no event shall Consultant' s total compensation exceed $ 405,275.90 for all services performed under the Agreement and any amendments thereto.

III. METHOD OF PAYMENT. Consultant shall provide invoices to City for approval and payment. Invoices shall include a description of services performed, title of staff, amount billed, and fiscal year audited Invoices must be itemized, adequately detailed, based on accurate records, and in a form reasonably satisfactory to City.

Consultant may be required to provide back- up material upon request.

IV. SCHEDULE FOR PAYMENT. City agrees to pay Consultant within thirty( 30) days of receipt of monthly invoices, provided, services are completed to City' s full satisfaction.

V. CONSULTANT'S ADDRESS FOR NOTICE. Written notices to Consultant shall be given by registered or certified mail, postage prepaid and addressed to or personally served on:

Consultant: Lance, Soli & Lunghard, LLP
203 N. Brea Blvd, Suite 203
Brea, CA 92821
Attention: Bryan Gruber, CPA, Partner
City: City of Redondo Beach
Financial Services Department
415 Diamond St., Door 1
6 Redondo Beach, CA 90277
Attention: Jennifer Paul, Finance Director
All notices, including notices of address changes, provided under this Agreement are deemed received on the third day after mailing if sent by registered or certified mail.

Changes in the respective address set forth above may be made from time to time by any party upon written notice to the other party.
7 FOURTH AMENDMENT TO THE

AGREEMENT FOR CONSULTING SERVICES

BETWEEN THE CITY OF REDONDO BEACH

AND LANCE, SOLL & LUNGHARD, LLP

THIS FOURTH AMENDMENT TO THE AGREEMENT FOR CONSULTING SERVICES Fourth Amendment") is made between the City of Redondo Beach, a chartered municipal corporation ("City") and Lance, Soll & Lunghard, LLP, a California limited liability partnership (" Consultant").

WHEREAS, on April 18, 2017, the parties hereto originally entered into the Agreement for Consulting Services between the City and Consultant (the "Agreement"); and WHEREAS, on August 14, 2018, the parties hereto entered into the First Amendment to the Agreement for Consulting Services between the City and Consultant (the " First Amendment") to incorporate the Engagement Letter for the fiscal year 2017-2018 audit and increase compensation to $ 66,415 for each fiscal year audit for the periods of 2017 to 2018 and 2018 to 2019, and increase the compensation to $ 68, 347.45 for each fiscal year audit for the periods of 2019 to 2020 and 2020 to 2021.

WHEREAS, on September 3, 2019, the parties hereto entered into the Second Amendment to the Agreement for Consulting Services between the City and Consultant the "Second Amendment") to incorporate the Engagement Letter dated May 21, 2019 2019 Engagement Letter") and authorize the City Manager or designee to sign prospective engagement letters provided the letters are in the same substantive form as Exhibit "A-2- 1" of the Second Amendment and do not increase Consultant's not to exceed compensation in the Agreement, require invoices to include additional detail, and change the City's designee for notice; and
WHEREAS, the Second Amendment erroneously provided the compensation as described in the Agreement and should have provided the increased compensation as approved in the First Amendment; and
WHEREAS, on October 15, 2019, the parties hereto entered into the Third Amendment to the Agreement for Consulting Services between the City and Consultant (the "Third Amendment") to incorporate the August 2019 Engagement Letter (as defined in the Third Amendment) to provide additional services and increase the Consultant's compensation.

NOW THEREFORE, in consideration of the promises and mutual covenants contained herein, and intending to be legally bound, the parties hereby agree to make the following amendments to the Agreement:

1. Term. Exhibits " B" to "B- 2" of the Agreement are hereby amended to add Exhibit 13- 3", which extends the Agreement to April 17, 2022. Exhibit "B- 3" is attached hereto and incorporated by reference. Consultant shall commence and complete all services described in Exhibits "A" to "A-3" in accordance with the schedule set forth in Exhibit " 13- Y.

2. Compensation. Exhibits " C" to "C-3" of the Agreement are hereby amended to add Exhibit "C-4" to restate Consultant's increased compensation as provided in the First Amendment and restate the compensation as provided in the Third Amendment for the services described in Exhibits "A" to "A-3".

In the event of any inconsistency between the terms of the Agreement, First Amendment, Second Amendment, Third Amendment, and this Fourth Amendment, the terms of this Fourth Amendment shall govern. 2 O
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IN WITNESS WHEREOF, the parties h0ve executed this Fourth Amendment in Redondo Beach, California, as of this 3rd day of M . arch, 2020, CITY OF. REDQNDO BEACH,
a chartered municipal corporation p
L G y
William C. Brand, Mayor
ATTEST:

EM
511-M-11191
APPROVED AS TO FORM: M
Michael W. Webb, City Attorney

LANCE, SOLL & LUNGHARD, LLP,
a California limited liability partnership
By:

Name, 62yktJ 6 r -k
Title:

APPROVED -
1 -?17.. -
Ji[113= 4LI2. M. qn-ager
EXHIBIT " B-3"

SCHEDULE FOR COMPLETION
TERM. The term of the Agreement shall be extended to April 17, 2022, unless otherwise terminated as herein provided.
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EXHIBIT " C-4"

COMPENSATION
Provided Consultant is not in default under this Agreement, Consultant shall be compensated as provided below.

I. AMOUNT. For the first three years (Years 1 to 3) audited by Consultant, Consultant shall be compensated as follows for each fiscal year audit.

A. Year 1 ( FY 2016-2017): $ 64,415.00
B. Year 2 ( FY 2017-2018): $ 66,415.00
C. Year 3 ( FY 2018-2019): $ 66,415.00
For the optional two additional years to audit (Years 4 and 5), Consultant shall be compensated as follows for each fiscal year audit:

D. Year 4 ( FY 2019-2020): $68,347.45
E. Year 5 ( FY 2020-2021): $ 68,347.45
August 2019 Engagement Letter. Consultant shall be paid for the services described in Exhibit "A-3" of the Third Amendment in the amount of $3, 000 for the audit of fiscal year 2018 to 2019.

II. METHOD OF PAYMENT. Consultant shall provide invoices to City for approval and payment. Invoices shall include services performed, amount billed, and fiscal year audited Invoices must be itemized, adequately detailed, based on accurate records, and in a form reasonably satisfactory to City. Consultant may be required to provide back-up material upon request.

III. SCHEDULE FOR PAYMENT. City agrees to pay Consultant within thirty (30) days of receipt of monthly invoices, provided, services are completed to City's full satisfaction.

IV. CONSULTANT' S ADDRESS FOR NOTICE. Written notices to Consultant shall be given by registered or certified mail, postage prepaid and addressed to or personally served on:

Consultant: Lance, Soll & Lunghard, LLP
203 N. Brea Blvd, Suite 203
Brea, CA 92821
o PEDDNOp9e>
b r rgR sx
c•
Attention: Bryan Gruber, CPA, Partner
Com: City of Redondo Beach
Financial Services Department
415 Diamond St., Door 1
Redondo Beach, CA 90277
Attention: Marni Ruhland, Finance Director
All notices, including notices of address changes, provided under this Agreement are deemed received on the third day after mailing if sent by registered or certified mail. Changes in the respective address set forth above may be made from time to time by any party upon written notice to the other party. 6 oF PEDONOp9F
C+

THIRD AMENDMENT TO THE

AGREEMENT FOR CONSULTING SERVICES

BETWEEN THE CITY OF REDONDO BEACH

AND LANCE, SOLL & LUNGHARD, LLP

THIS THIRD AMENDMENT TO THE AGREEMENT FOR CONSULTING SERVICES Third Amendment") is made between the City of Redondo Beach, a chartered municipal corporation ("City") and Lance, Sol[ & Lunghard, LLP, a California limited liability partnership (" Consultant").

WHEREAS, on April 18, 2017, the parties hereto originally entered into the Agreement for Consulting Services between the City and Consultant (the "Agreement"); and WHEREAS, on August 14, 2018, the parties hereto entered into the First Amendment to the Agreement for Consulting Services between the City and Consultant (the " First Amendment") to incorporate the Engagement Letter for the fiscal year 2017-2018 audit and increase compensation to $ 66,415 for each fiscal year audit for the periods of 2017 to 2018 and 2018 to 2019, and increase the compensation to $ 68,347.45 for each fiscal year audit for the .periods of 2019 to 2020 and 2020 to 2021.

NOW THEREFORE, in consideration of the promises and mutual covenants contained herein, and intending to be legally bound, the parties hereby agree to make the following amendments to the Agreement:

1. Scope of Services. Exhibits "A" to "A-2- 1" are hereby amended to add Exhibit A-3" to perform the services described in the August 2019 Engagement Letter, which is incorporated herein.

2. Compensation. Exhibits " C" to "C- 2" of the Agreement are hereby amended to add Exhibit "C- 3" to increase Consultant' s compensation by $ 3, 000 for the services described in Exhibit "A-3".
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3. No Other Amendments. Except as expressly stated herein, the Agreement shall remain unchanged and in full force and effect. The Agreement, First Amendment, Second Amendment, and this Third Amendment constitute the entire agreement between the parties and supersede any previous oral or written agreement with respect to the subject matter hereof. In the event of any inconsistency between the terms of the Agreement, First Amendment, Second Amendment, and this Third Amendment, the terms of this Third Amendment shall govern.
2 of
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IN WITNESS WHEREOF; the parties have executed this Third Amendment in Redondo Beach, California, as of this 15th day of October, 2019.

CITY OF REDONPO BEACH,
a chartered municipal corporation
William C. Brand, Mayor
AT -TEST:

Eleanor Manzan'o, lerk
APPROVED AS TO FORM:
0,
Michael W. Webb, City Attorney
LANCE, SOL.L &. LUNGHARD, LLP,
a California limited liability partnership
By:

Name, BgiltN ( Zuage:

Title:

APPROVED.
isk Manager
3 IT
EXHIBIT "A-3"

PROJECT DESCRIPTION AND/OR SCOPE OF SERVICES
Consultant shall perform the services as described in the attached August 2019 Engagement Letter.
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LSL• 09
CPAs AND ADVISORS
August 22, 2019
Marni Ruhland
Finance Director
City of Redondo Beach
415 Diamond Street
Redondo Beach, CA 90277
We are pleased to confirm our understanding of the terms of our engagement and the nature and limitations of the services we are to provide for the City of Redondo Beach, California (the.City).

We will apply the agreed- upon procedures listed in the attached schedule that were specified and agreed to by the management of the -City ( specified party) on the application' of the requirements of the Federal Transit Administration ( FTA) as set forth in its applicable National Transit Database ( NTD) Uniform System of Accounts (USOA) by the City for -the fiscal year ended June 30, 2019. Our engagement to apply agreed-upon procedures will. be conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures performed or to be performed is solely the responsibility of the specified party and we will require an acknowledgment in writing of that responsibility. Consequently, we make no representation regarding the sufficiency of the procedures described in the attached schedule eitherforthe purpose forwhich the agreed- upon procedures report has been requested or for any other -purpose.

Because the agreed- upon procedures listed in the attached schedule do not constitute an examination or review, we will not express an opinion or conclusion on the application.of the requirements of the FTA as set forth in its applicable NTD USDA. In addition; we have no obligation to perform:any procedures beyond those listed in the attached schedule.

We plan to begin our procedures on approximately September 1, 2019 and, unless unforeseeable problems are encountered, the engagement.should be.completed by December 31, 2019.

We will issue a written report upon completion of our engagement that lists the procedures performed and our findings. Our report will be addressed to the City Council of the City of Redondo Beach and the Federal Transit Administration. If, for any reason, we are unable to complete any of.the procedures, we will describe in our report any restrictions on the performance of the procedures, or not issue a report and withdraw from this engagement. You understand that the report is intended solely for the information and use of the management of the City and the FTA and should not be used by anyone other than these specified parties. Our report will contain a paragraph indicating that had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

An agreed- upon procedures engagement is not designed to detect instances of fraud or noncompliance with laws or regulations; however, we will communicate to you any known and suspected fraud and noncompliance with laws or regulations affecting the application of the requirements of the FTA as set forth in its applicable NTD USOA that come to our attention. In addition, if, in connection with this engagement, matters come to our attention that contradict the application of the requirements of the FTA as set_forth in its applicable NTD USOA, we will disclose those matters in our report.

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CPAs AND ADVISORS
City of Redondo Beach, California
You are responsible for the application of the requirements of the FTA as set forth in its applicable NTD USOA and that it is in accordance with the National Transit Database' s 2019 Policy Manual for Reduced Reporters; and for selecting the criteria and procedures and determining that such criteria and procedures are appropriate for your purposes. You are also responsible for, and agree to provide us with, a written assertion about the application of the requirements of the FTA as set forth in its applicable NTD USOA. In addition, you are responsible for providing us with ( 1) access to all information of which you are aware that is relevant to the performance of the agreed- upon procedures on the subject matter, 2) additional information that we may request for the purpose of performing the agreed- upon procedures, and ( 3) unrestricted access to persons within the entity from whom we determine it necessary to obtain evidence relating to performing those procedures.

At the conclusion of our engagement, we will require certain written representations in the form of a representation letter from management that, among other things, will confirm management's responsibility for the application of the requirements of the FTA as set forth in its applicable NTD USOA in accordance with the National Transit Database' s 2019 Policy Manual for Reduced Reporters.

Bryan S. Gruber, CPA, is the engagement partner and is responsible for supervising the engagement and signing the report or authorizing another individual to sign it.

We estimate that our fee for these services will be $ 3, 000. The fee estimate is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the engagement. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 90 or more overdue and will not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination even if we have not completed our report. You will be obligated to compensate us for all time expended and to reimburse us for all out -or -pocket expenditures through the date of termination.

We appreciate the opportunity to assist you and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. If the need for additional procedures arises, or the procedures need. to be modified, our agreement with you will need to be revised. It is customary for us to enumerate these revisions in an addendum to this letter. If additional specified parties of the report are added, we will require that they acknowledge in writing their agreement with the procedures performed or to be performed and their responsibility for the sufficiency of procedures.

Very truly yours,
RESPONSE:

This letter correctly sets forth the understanding of the City of Redondo Beach.

By: C''
V ' c
Title:

Date: I _ i l J / 11
a
eto 114
L7LL'ALT!_1II AR. A.I i A-Ai 1.' P'L llLi R-YC

APPROVED A TO AOR
ca tt

CITY ATTORNEY

SCHEDULE OF PROCEDURES

1. Procedure: NTD Crosswalk
a. Obtain the Reduced Reporter Form RR -20 prepared by management for the fiscal year ended June 30, 2019.
b. Obtain the reconciliation documentation management prepares ( referred to as the crosswalk" throughout this report) to reconcile the chart of accounts, general ledger, and/ or trial balance and other supporting documents such as Excel spreadsheets collectively referred to as the accounting system) to Form RR -20. c. Inquire of management as to whether the crosswalk obtained in procedure 1. b is supported by the accounting system.
d. For a transit agency that is part of a larger reporting entity, inquire of management as to whether the crosswalk includes the full cost of providing transit service, including costs incurred by the larger reporting entity to specifically support the agency' s transit service. e. Inspect the crosswalk to determine that it incorporates NTD reporting using the applicable mode(s) and types of service identified in Form RR -20.

2. Procedure: Accrual Accounting
a. Obtain the most recent audited financial statements that include the transit agency and inspect the notes to the financial statements to determine whether the accrual basis of accounting was used.
b. Inquire of management as to whether the accrual basis of accounting has continued to be used since the last audited reporting period and that it is used for NTD reporting in the current period.
c. If the notes to the financial statements indicate that an accrual basis of accounting is not being used, or the results of the inquiry to management in procedure 2. b indicate the accrual basis of accounting is not being used in the current period, inspect the crosswalk to determine that the transit agency made adjustments to convert to an accrual basis for NTD reporting.

3. Procedure: Sources of Revenue Expended
a. Trace and agree the two largest directly generated fund passenger fare revenue modes all service types) from Form RR -20 to the accounting system. b. Trace and agree the largest source of funds expended ( other than passenger fares) in the following major categories of funds from Form RR -20 to the accounting system:
1) Other Directly Generated Funds; ( 2) Revenue Accrued Through a PT Agreement; 3) Non -Federal Funds; and (4) Federal Funds.
c. For each of the largest source of funds expended in 3b, inspect the crosswalk to determine that it identifies, evaluates, and classifies financial transactions into categories of funds expended on operations and funds expended on capital ( USDA Section 2) for the reporting year.

4. Procedure: Funds Expended
a. Trace and agree the aggregate of total funds expended for operations and total funds expended for capital from Form RR -20 to the accounting system using the crosswalk or other written expense documentation.
b. For the two largest modes/type of services, trace and agree funds expended on operations and funds expended on capital from Form RR -20 to the crosswalk or other written documentation of functional expenses.

EXHIBIT " C- 3"

COMPENSATION
Provided Consultant is not in default under this Agreement, Consultant shall be compensated as provided below.

AMOUNT. Consultant shall be paid for the services described in Exhibit "A-3" in the amount of $3, 000 for the audit of fiscal year 2018 to 2019.

II. METHOD OF PAYMENT. Consultant shall provide invoices to City for approval and payment. Invoices shall include services performed, amount billed, and fiscal year audited. Invoices must be itemized, adequately detailed, based on accurate records, and in a form reasonably satisfactory to City. Consultant may be required to provide back-up material upon request.

III. SCHEDULE FOR PAYMENT. City agrees to pay Consultant within thirty (30) days of receipt of monthly invoices, provided, services are completed to City's full satisfaction.

IV. CONSULTANT' S ADDRESS FOR NOTICE. Written notices to Consultant shall be given by registered or certified mail, postage prepaid and addressed to or personally served on the following parties.

Consultant: Lance, Soll & Lunghard, LLP
203 N. Brea Blvd, Suite 203
Brea, CA 92821
Attention: Bryan Gruber, CPA, Partner
Com: City of Redondo Beach
Financial Services Department
415 Diamond St., Door 1
Redondo Beach, CA 90277
Attention: Marni Ruhland, Finance Director
All notices, including notices of address changes, provided under this Agreement are deemed received on the third day after mailing if sent by registered or certified mail. Changes in the respective address set forth above may be made from time to time by any party upon written notice to the other party.

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SECOND AMENDMENT TO THE

AGREEMENT FOR CONSULTING SERVICES

BETWEEN THE CITY OF REDONDO BEACH

AND LANCE, SOLL & LUNGHARD, LLP

THIS SECOND AMENDMENT TO THE AGREEMENT FOR CONSULTING SERVICES Second Amendment") is made between the City of Redondo Beach, a chartered municipal corporation ("City") and Lance, Soil & Lunghard, LLP, a California Limited Liability Partnership (" Consultant").

WHEREAS, on April 18, 2017, the parties hereto originally entered into the Agreement for Consulting Services between the City and Consultant (the "Agreement"); and.

WHEREAS, on August 14, 2018, the parties hereto entered into the First Amendment to the Agreement for Consulting Services between the City and Consultant (the " First Amendment") to incorporate the Engagement Letter for the fiscal year 2017-2018 audit and increase compensation to $ 66,415 for each fiscal year audit for the periods of 2017 to 2018 and 2018 to 2019, and increase the compensation to $ 68, 347.45 for each fiscal year audit for the periods of 2019 to 2020 and 2020 to 2021.

WHEREAS, the parties desire to execute the attached engagement letter dated May 21, 2019 ("2019 Engagement Letter"), which is attached hereto as Exhibit "A" and incorporated by reference herein, to clarify Consultant's duties and obligations; and WHEREAS, the parties desire that any engagement letters dated under the term of the Agreement are incorporated and shall act as clarification of Consultant' s scope of services and obligations; and
WHEREAS, the parties agree that the City Manager or designee is authorized to sign prospective engagement letters provided the letters are in the same substantive form as Exhibit "A" and do not increase Consultant's not to exceed compensation in the Agreement; and
WHEREAS, the parties hereto wish to amend the Agreement.

NOW THEREFORE, in consideration of the promises and mutual covenants contained herein, and intending to be legally bound, the parties hereby agree to make the following amendments to the Agreement:

Scope of Services. Exhibit "A" of the Agreement is hereby amended to add Exhibit "A-2- 1", which incorporates the 2019 Engagement Letter and all prospective engagement letters dated under the term of the Agreement into the Agreement and act to clarify Consultant's scope of services and obligations. The City Manager or designee shall be authorized to sign prospective engagement letters under the term of the Agreement; provided, however, the engagement

O PEDDNO
letters do not increase Consultant's compensation in the Agreement and have been approved by the City Attorney.

2. Term. Exhibit "B" of the Agreement is hereby amended to add Exhibit "B- 2", which deletes the provision authorizing the Mayor to sign all engagement letters.

Exhibit "B- 2" is attached hereto and incorporated by reference. Consultant shall commence and complete all services described in Exhibit "A" in accordance with the schedule set forth in Exhibit "B- 2".

3. Compensation. Exhibit "C" of the Agreement are hereby amended to add Exhibit C- 2" to clarify that Consultant is paid for each fiscal year audit, provide that invoices shall include additional detail, and change the City's designee for notice.

Exhibit "C- 2" is attached hereto and incorporated by reference. Consultant shall be compensated for the services described in Exhibits "A" and "A-2- 1".

4. No Other Amendments. Except as expressly stated herein, the Agreement shall remain unchanged and in full force and effect. The Agreement, First Amendment, and this Second Amendment constitute the entire agreement between the parties and supersede any previous oral or written agreement with respect to the subject matter hereof. In the event of any inconsistency between the terms of the Agreement, First Amendment, and this Second Amendment, the terms of this Second Amendment shall govern.
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IN WITNESS WHEREOF, the parties have executed this .Second Amendment in Redondo Beach, California,. as o . f this 31d day of September, 2019.

CITY OF REDONDO BEACH,
a chartered municipal corobratidn
William C. Brand, Mayor
AT -TEST:

Eleanor MaRz . ano, City" Ik
APPROVED AS TO FORM:

Michael W. W6bb; City Attorney

LANCE, SOLL & LLINGHARD, LLP,
a California limited liability partnership
BY:

Name.:.

Title:

APPROVED:

Jill *& thhOI7,)Risk Manager
3 EXHIBIT " A-2- 1"

PROJECT DESCRIPTION AND/OR SCOPE OF SERVICES
See attached 2019 Engagement Letter.

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Lance, Soil & Lunghard, LLP (" LSL CPAs and Advisors") is pleased to confirm our understanding of the services we are to provide the City of Redondo Beach (the City) for the fiscal year ended June 30, 2019.

We will audit the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information, including the related notes to the financial statements, which collectively comprise the basic financial. statements, of the City of Redondo Beach as of and for the fiscal year ended June 30, 2019. In addition, we will audit the enterprise fund financial statements, the internal service fund financial statements, -and the inmate trust fund financial statements. Accounting standards generally accepted in the United States of America provide for certain required supplementary information ( RSI), such as- management' s discussion and analysis ( MD&A), to supplement City of Redondo Beach' s basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. As part of our engagement, we will apply certain limited procedures to City of Redondo Beach' s RSI in accordance with auditing standards generally accepted in the United States of America. These limited procedures will consist of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We will not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The following RSI is required by generally accepted accounting principles and will be subjected to certain limited procedures, but will not be audited:

FINANCIAL STATEMENT:
1) Management's Discussion and Analysis.
2) Budgetary Comparison Schedules for General Fund and Major Special Revenue Funds 3) Pension required supplementary schedules
4) OPEB required supplementary schedules
5) Infrastructure information under modified reporting
We have also been engaged to report on supplementary information other than RSI that accompanies City of Redondo Beach' s financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America, and we will provide an opinion on it in relation to the financial statements as a whole, in a report PEU
combined with our auditor's report on the financial statements:
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FINANCIAL STATEMENT:
1) Combining individual nonmajor fund statements
2) Combining individual nonmajor budgetary schedules
SINGLE AUDIT:
1) Schedule of expenditures of federal awards.

The following other information accompanying the financial statements will not be subjected to the auditing procedures applied in our audit of the financial statements, and our auditor's report will not provide an opinion or any assurance on that other information.

FINANCIAL STATEMENT:
1) Introductory Section
2) Statistical Section
SINGLE AUDIT:
1) Corrective Action Plan ( if applicable)

AUDIT OBJECTIVE
The objective of our audit is the expression of opinions as to whether your financial statements are fairly presented, in all material respects, in conformity with U. S. generally accepted accounting principles and to report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. The objective also includes reporting on— Internal control over financial reporting and compliance with provisions of laws, regulations, contracts, and award agreements, noncompliance with which could have a material effect on the financial statements in accordance with GouernmentAuditing Standards.

Internal control over compliance related to major programs and an opinion (or disclaimer of opinion) on compliance with federal statutes, regulations, and the terms and conditions of.federal awards that could. have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and Title 2 U. S. Code of Federal Regulations _(CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Uniform Guidance).

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City of Redondo Beach

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Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America; the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and the provisions of the Uniform Guidance, and will include tests of accounting records, a determination of major program( s) in accordance with the Uniform Guidance,, and other procedures we consider necessaryto enable us to express such opinions. We will issue written reports upon completion of our Single Audit. Our reports will be addressed to governing board of City of Redondo Beach. We cannot provide assurance that an unmodified opinion will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion or add an emphasis -of -matter or other -matter paragraph. If our opinion is other than unmodified, we will discuss the reasons withyouin advance. If circumstances occur related to the condition of your records, the availability of sufficient, appropriate audit evidence, or the existence of a significant risk of material misstatement of the financial statements caused by error, fraudulent financial reporting, or misappropriation of assets, which in our professional judgment prevent us from completing the audit or forming an opinion on the financial statements, we retain the right to take any course of action permitted by professional standards, including declining to express an opinion or issue a report, or withdrawing from the engagement.

AUDIT PROCEDURES - GENERAL
Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts and may .include tests of the physical existence of inventories, if material on a rotational basis, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will require certain written representations from you about your responsibilities for the financial statements; schedule of expenditures of federal awards; federal award programs; compliance with laws, regulations, contracts, and grant agreements; and other responsibilities required by generally accepted auditing standards.

An audit includes examining, on a test basis, evidence supporting the- amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. An audit also includes evaluating the appropriateness of accounting policies used and the, reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether from ( 1) errors, ( 2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the government or to acts by management or employees acting on behalf of the government. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse.

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AUDIT PROCEDURES—INTERNAL CONTROL
Our audit will include obtaining an understanding of the government and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements.

Our tests, if performed, will be less in scope than would be necessary to .render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards.

As required by the Uniform Guidance, we will perform tests of controls over compliance to. evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements applicable to each major federal award program.

An audit is not designed to provide assurance on internal control or to identify significant deficiencies or material weaknesses. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under AICPA professional standards, Government Auditing Standards, and the Uniform Guidance.

AUDIT PROCEDURES— COMPLIANCE
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of City of Redondo Beach' s compliance with provisions of applicable laws, regulations, contracts, and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance, and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards.

The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with federal statutes, regulations, and the terms and conditions of federal awards applicable to major programs. Our procedures will consist of tests of transactions and other applicable procedures described in the OMB Compliance Supplement for the types of compliance requirements that could have a direct and material effect on each of City of Redondo Beach' s major programs. The purpose of these procedures will be to express an opinion on City of Redondo Beach' s compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to the Uniform Guidance.

OTHER SERVICES
We will also assist in preparing the financial statements, schedule of expenditures of federal awards, and related notes of City of Redondo Beach in conformity with U. S. generally accepted accounting principles and the Uniform Guidance based on information provided by you. These nonaudit services do not constitute an audit under Government Auditing Standards and such services will not be conducted in accordance with Government Auditing Standards. We will perform the services in accordance with applicable professional standards. The other services are limited to the financial statements, schedule of expenditures of federal awards, and related notes services previously defined. We, in our sole professional judgment, reserve the right to refuse to perform any procedure or take any action that could be construed as assuming management responsibilities.

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City of Redondo Beach

Page 5 ends

AGREED UPON PROCEDURES
We will perform agreed upon procedures for the City of Redondo Beach' s Appropriations Limit and the electronic submission and related hard copy documents specified by the U. S. Department of Housing and Urban Development and Real Estate Assessment Center (REAC).

We will perform the procedure provide by and agreed to my management. These written procedures are attached in Exhibit A.

MANAGEMENT RESPONSIBILITIES
Management is responsible for (1) establishing and maintaining effective internal controls, including internal controls over federal awards, and for evaluating and monitoring ongoing activities, to help ensure that appropriate goals and objectives are met; ( 2) following laws and regulations; -(3) ensuring that there is reasonable assurance that government programs are administered in compliance with compliance requirements; and (4) ensuring that management and financial information is reliable and properly reported.

Management is also responsible for implementing systems designed to achieve compliance withapplicable laws, regulations, contracts, and grant agreements. You are also responsible for the selection and application of accounting principles; for the preparation and fair presentation of .the financial statements, schedule of expenditures of federal awards, and all accompanying information in conformity with U. S. generally accepted accounting principles; and for compliance with applicable laws and regulations including federal statutes) and the provisions of contracts and grant agreements ( including award agreements). Your responsibilities also include identifying significant contractor relationships in which the contractor has responsibility for program compliance and for the accuracy and completeness of that information.

Management is also responsible for making all financial records and related information available to us and for the accuracy and completeness of that information. You are also responsible for providing us with 1) access to all information of which you are aware that is relevant to the preparation and. fair presentation of the financial statements, (2) access to personnel, accounts, books, records, supporting documentation, and other information as needed to perform an audit under the Uniform Guidance, (3) additional information that we may request for the purpose of the audit, and ( 4) unrestricted access to persons within the government from whom we determine it necessary to obtain audit evidence..

Your responsibilities include adjusting the financial statements to correct material misstatements and confirming to us in the management representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to. the latest period . presented are immaterial, both individually and in the aggregate, to the financial statements as a whole.

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C' A, AND ADV18ClAfi
City of Redondo Beach

Page 6 ends

You are responsible for the design and implementation -of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud affecting the government involving 1) management, ( 2) employees who have significant roles in internal control, and ( 3) others where the fraud could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the government received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for identifying and ensuring that the government complies with applicable laws, regulations, contracts, agreements, and grants. Management is also responsible for taking timely and appropriate steps to remedy fraud and noncompliance with provisions of -laws, regulations, contracts, and grant agreements, or abuse that we report. Additionally, as required by the Uniform Guidance, it is management's responsibility to evaluate and monitor noncompliance with federal statutes, regulations, and the terms and conditions of federal awards; take prompt action when instances of noncompliance. are identified including noncompliance identified in audit findings; promptly follow up and take corrective. action on reported audit findings; and prepare a summary schedule of prior audit findings and a separate corrective action plan on the City of Redondo Beach' s letterhead. The summary schedule of prior audit findings should be available for our review on the first day of our schedule visit for the Single Audit.

You are responsible for identifying all federal awards received and understanding and complying with the compliance requirements and for the preparation of the schedule .of expenditures of federal awards including notes and noncash assistance received) in conformity with the Uniform Guidance: You agree to include our report on the schedule of expenditures of federal awards inany document that contains and indicates that we have reported on the schedule of expenditures of federal awards. You also agree to make the audited financial statements readily available to intended users of the schedule of expenditures of federal awards no later than the date the schedule of expenditures of federal awards is issued with our report thereon. Your responsibilities include acknowledging to us -in the written representation letter that 1) you are responsible for presentation of the schedule of expenditures of federal awards in accordance with the Uniform Guidance; ( 2) you believe the schedule of expenditures of federal awards, including its form and content, is stated fairly in accordance with the Uniform Guidance; (3) the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reasons for such changes); and ( 4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the schedule of expenditures of federal awards.

You are also responsible for the preparation of the other supplementary information, which we have been engaged to report on, in conformity with U. S. generally accepted accounting principles. You agree to include our report on the supplementary information in any document that contains, and indicates that we have reported on, the supplementary information. You also agree to include the audited financial statements with any presentation of the supplementary information that includes our report thereon. Your responsibilities include acknowledging to us in the written representation letter that ( 1) you are responsible for presentation of the supplementary information in accordance with GAAP; (2) you believe the supplementary information, including its form and content, is fairly presented in accordance with GAAP; 3) the methods of measurement or presentation have not changed from those used in .the prior period (or, if they have changed, the reasons for such changes); and ( 4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the . supplementary information.

Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying and providing report copies of previous financial audits, attestation engagements, performance audits, or other studies related to the objectives discussed in the.Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or studies. You are also responsible for providing management's views on our current findings, conclusions, and recommendations, as well as your planned corrective actions, for the report, and for the timing and format for providing that information. w0
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With regard to the electronic dissemination of audited financial statements, including financial statements published electronically on your website, you understand that electronicsites are a means to distribute information and, therefore, we are not required to read the information contained in these sites or to consider the consistency of other information in the electronic site with the original document.

You agree to assume all management responsibilities relating to the financial statements, schedule of expenditures of federal awards, and related notes, and any other nonaudit services we provide. You will be required to acknowledge in the management representation letter our assistance with preparation of the financial statements, schedule of expenditures of federal awards, and related notes and that you have. reviewed and approved the financial statements, schedule of expenditures of federal awards, and related notes prior to their issuance and have accepted responsibility for them: Further, you agree to oversee the nonaudit services by designating an individual, preferably from senior management, with suitable skill, knowledge, or experience; evaluate the adequacy -and results of those services_; and accept responsibility for them.

The City of Redondo Beach may wish to include or incorporate by reference our audit report on the financial statements in a private offering or SEC filing by another party. You agree not to include our audit report or make any reference to our firm without obtaining our prior written consent. Additional services may be required prior to providing such consent related to a private or public offering of securities; or inclusion in an SEC filing. Such services will be undertaken as a separate engagement at an additionalfee.

TIMING OF THE ENGAGEMENT
We expect to begin our audit as previously agreed to by management. Mr. Bryan S. Gruber, CPA is the engagement partner and is responsible for .supervising the engagement and signing the reports or authorizing another individual to sign them. To ensure that Lance, Soll, and Lunghard LLP's independence is not impaired under the AICPA Code of Professional Conduct, you agree to inform the engagement partner before entering into any substantive employment discussions with any of our personnel.

We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any documents selected by us for testing.

At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection Form that summarizes our audit findings. It is management's responsibility to electronically submit the reporting package (including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings, auditors' reports, and corrective action plan) along with the Data Collection Form to the federal audit clearinghouse. We will coordinate with you the electronic submission and certification. The Data Collection Form and the reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditors' reports or nine months after the end of the audit period.

We will provide copies of our reports; however, management is. responsible -for distribution of.the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information, copies of our reports are to be made available.for public inspection.

ENGAGEMENT ADMINISTRATION, FEES, AND OTHER
Our fees for these services are outlined in our contract with you. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit.

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You will be obligated to compensate us for all time expended and to reimburse us for all -out-of-pocket costs. through the date of termination. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate. before we incur the additional costs.

GASB 68
If at any time during the testing, variances are noted, Government Auditing Standards require us to assess the need for a specialist, such as. an actuary. A specialist will need to be used to value the variance noted for the financial statements. This value will be required for us to provide an opinion on the financial statements. Any cost for an actuary will be passed to your local -government and we will discuss this additional cost ahead of time.

GASB 75
If at any time during the testing, variances are noted, Government Auditing Standards require us to assess the need for a specialist, such as an actuary. A specialist will need to be used to value the variance noted for the financial statements. This value will be required for us to provide an opinion on the financial statements. Any cost for an actuary will be passed to your local government and we will discuss this additional cost ahead of time.

Our audit engagement ends on delivery of our audit report. Any follow-up services that might be required will be a separate, new engagement. The terms and conditions of that new engagement will be governed by a new, specific engagement letter for that service.

If any portion of this Agreement is deemed invalid or unenforceable, said findings shall not operate to invalidate theremainderof the terms set forth .in this Agreement.

Billing and Payment Terms -- We will bill you for our professional fees and out-of-pocket costs each month as work progresses. Payment is due within 30 days of the invoice date.

We reserve the right to suspend or terminate our work for non- payment of fees. In accordance with our firm policies, work may be suspended if your account becomes 90 days or more overdue and will not be - resumed until your account is paid in full. If our work is suspended or terminated, you agree that we will not be responsible for your failure to meet governmental and other deadlines, for any penalties or interest that may be assessed against you resulting from your failure to meet such deadlines, and for any other damages including but not limited to consequential, indirect, lost profits, or punitive damages) incurred as a result of the suspension or termination of our services.

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Electronic Data. Communication and Storage -- In the interest of facilitatingour services to you, we may send data over the Internet, or store electronic data via computer software applications hosted remotely on the Internet or utilize cloud -based storage. Your confidential. electronic data maybe transmitted or stored using these methods. In using these data communication and storage methods, our firm employs measures designed to maintain data security. We use best efforts to keep such communications and. electronic data secure in accordance with our obligations under applicable laws, regulations, and professional standards.

You recognize and accept that we have no control over the unauthorized interception or breach of any communications or electronic data once it has been transmitted or if it hasbeen subject to unauthorized access while stored, notwithstanding all reasonable security measures employed by us. You consent to our use of these electronic devices and applications.

Third Party Service Providers or Subcontractors -- In the interest of enhancing our availability to meet your professional service needs while maintaining service quality and timeliness, we may use a third -party service provider to assist us. We require our third -party service providers have established procedures and controls designed to protect client confidentiality and maintain data security. As the paid provider of professional services, our firm remains responsible for exercising reasonable care in providing such services, and our work product will be subjected to our firm's customary quality control procedures. By accepting the terms and conditions of our engagement, you are providing your consent and allow us to disclose your confidential information to a third -party service provider, if such disclosure is necessary to deliver professional service or provide support services to our firm.

Independent Contractor. -- When. providing. services to your company, we will be functioning as an independent contractor -and in no event will we or any of our employees be an officer of you, nor will our relationship be.that of joint ventures, partners, employer and employee, principal and agent, or any similar relationship giving rise to a fiduciary duty to you.

Any obligations under this agreement are solely obligations of the firm,. and no partner, principal, employee or agent of the firm shall be subjected to any personal liability whatsoever to you or any person orentity.

Firm Associations -- The firm is a member of PrimeGlobal, a global association of independent accounting firms. No PrimeGlobal member firm is an agent or partner of the association or of any other member firm.

No PrimeGlobal member firm has the authority to enter into any legal obligations on behalf of the association or any other member firm. If the firm introduces you to another PrimeGlobal member firm, .this firm specifically denies any liability for any work performed by that firm. You should make your own contractual arrangements with that firm for work that they perform. The fact that you may have been introduced to us by another PrimeGlobal member firm does not make that firm, its partners or its employees responsible for any of our acts or omissions.

The firm is not the agent or partner of PrimeGlobal or any other member firm and does not have the authority to enter into legal obligations on behalf of either the association or any other member firm thereof. You agree that this firm has the sole liability for any work performed under this engagement and you undertake not to make any claim or bring any proceedings against either PrimeGlobal or any other member of PrimeGlobal in relation to work covered by this engagement.

Records Management —
Record Retention and Ownership
We will return all of your original records and documents provided to us at the conclusion of the engagement.

Your records are the primary records for your operations and comprise the backup and support for your work product. Our copies of your records and documents are not a substitute for your own records and do not mitigate your record retention obligations under any applicable laws or regulations.

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Workpapers and other documents created by us are our property and will remain in our control. Copies are not to be distributed without your written request and our prior written consent. Our workpapers will be maintained by us in accordance with our firm's record retention policy and any applicable legal and regulatory requirements. A copy of our record retention policy is available upon request.

Our firm destroys workpaper files after a period of seven ( 7) years from the completion of the engagement as long as you remain a client with us. Catastrophic events or physical deterioration:may result in damage to or destruction of our firm' s records, causing the records to be unavailable before the expiration of the retention period as stated in our record retention policy..

Working Paper Access Requests by Regulators and Others
State, federal and foreign regulators may request access to or copies of certain workpapers pursuant to applicable legal or regulatory requirements. Requests also may arise with respect to peer review, an ethics investigation, or the sale of our accounting practice. If requested, access to such workpapers will be provided under the supervision of firm personnel. Regulators may request copies of selected workpapers to distribute the copies or information contained therein to others, includingother governmental agencies.

Summons.or Subpoenas
All information you provide to us in connection with this engagement will be maintained by us on a strictly confidential basis.

If we are not a party to the proceeding in which the information is sought, you agree to reimburse us for our professional time and expenses, .as well as the fees. and expenses of our legal. counsel, incurred in responding to such requests.

Disclaimer of Legal and Investment Advice -- Our services under this letter do not constitute legal or investment. advice unless. specifically agreed to in this Letter. We recommend that you retain legal counsel and investment advisors to provide such advice.
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City of Redondo Beach

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Brokerage or Investment Advisory Statements -- If you provide our firm with copiesof brokerage ( or investment advisory) statements and/ or read- only access to your accounts, we will use the information solely for the purpose described in this engagement letter. We will rely on the accuracy of the information provided in the statements and will not undertake any action to verify this information. We will not monitor transactions, investment activity, provide investment advice, or supervise the actions of the entity or individuals entering into transactions or investment activities on your behalf. We recommend you receive and carefully review all statements upon receipt and direct any questions regarding account activity to your banker, broker or investment advisor.

This privilege is limited in several .important respects. For example, this privilege does not apply to your records, state tax issues, state tax proceedings, private civil litigation proceedings, or criminal proceedings.

While we will cooperate with you with respect to the privilege, asserting the privilege is your responsibility.

Any advice or information delivered orally or in. an email ( rather than through a memorandum delivered as an email attachment) will be based upon limited research and a limited discussion and analysis of the underlying facts. Additional research or a more complete review of the facts may affect our analysis and conclusions. Due to these limitations and the related risks, it may or may not be appropriate to proceed with any decision solely on the basis of any.oral or email communication. You accept all responsibility, except to the extent caused by the gross negligence or willful misconduct of LSL CPAs and Advisors, for any loss, cost or expense resulting from your decision (i) not to have us perform the research and analysis necessary to reach a more definitive conclusion and ( ii) to instead rely on an oral or email communication. The limitation in this paragraph will not apply to an item of written advice that is. a deliverable of a separate engagement. If you wish to engage us to provide formal advice on a matter on which we have communicated orally or by email, we will confirm this in a separate engagement letter.

Management Responsibilities -- While we can provide assistance and recommendations, you are responsible for management decisions and functions, and for designating an individual with suitable skill, knowledge or experience to oversee any services that we provide. You are responsible for evaluating the adequacy and results of the services performed and accepting responsibility for such services. You are ultimately responsible for establishing and .maintaining internal .controls, including .monitoring ongoing activities.

Conflicts of Interest -- If we, in our sole discretion, believe a conflict has arisen affecting our ability to deliver services to you in accordance with either the ethical standards of our firm or the ethical standards of our profession, we may be required to suspend or terminate our services without issuing our work product Mediation -- If a dispute arises out of or relates to the letter including the scope of services contained herein, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties agree first to try to settle the dispute by mediation administered by the American Arbitration Association ("AAA") under the AAA Professional Accounting and Related Services Dispute Resolution Rules before resorting to arbitration, litigation, or some other dispute resolution procedure. The mediator will be selected by letter of the parties. 4 aE00rypOp
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C - A. AND ADVN; ;DRS
City of Redondo Beach

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If the parties cannot agree on a mediator, a mediator shall be designated -by the AAA. Any mediator so designated must be acceptable to all parties. The mediation will be conducted in California.

The mediation will be treated as a settlement discussion and, therefore, will be confidential. The mediator may not testify for either party in any later proceeding related to the dispute. No recording or transcript shall be made of the mediation proceedings. The costs of any mediation proceedings shall be shared equally by all parties. Any costs for legal representation shall be borne by the hiring party.

Limitation of Liability -- LSL CPAs and Advisors liability for all claims, damages, and costs arising from this engagement is limited to three ( 3) times the total amount of fees paid by you to us for services rendered under this letter.

Indemnification -- You agree to hold LSL CPAs and Advisors harmless from any and all claims which arise from knowing misrepresentations to us by your management, or the intentional withholding or concealment of information from us by your management. You also agree to indemnify us for any claims made against us by third parties, which arise from any of these actions by your management. The provisions of this paragraph shall apply regardless of the nature of the claim.

Designation of Venue and Jurisdiction -- In the event of a dispute, you and we agree that the courts of the state of California shall have jurisdiction, and we agree to submit all disputes to the Superior Court of Orange, California, which is the proper, and most convenient venue for resolution. We also agree that.the law of the state of California shall govern all such disputes.

Proprietary Information -- You acknowledge that proprietary information, documents, materials, management techniques and other intellectual property we use are a material source of the services we perform and were developed prior to our association with you. Any new forms, software, documents or intellectual property we develop during this engagement for your use shall belong to us, and you shall have the limited right to use them solely within your business. All reports, templates, manuals, forms, checklists, questionnaires, letters, letters and other documents which we make available to you are confidential and proprietary to us. Neither you, nor any of your agents, will- copy, electronically store, reproduce or make available to anyone other than your personnel, any such documents. This provision will applyto all materials whether in digital, " hard copy" format or other medium.

Termination and Withdrawal -- We reserve the right to withdraw from the engagement without completing services for any reason, including, but not limited to, your failure to comply with the terms of this letter or as we determine professional standards require. If our work is suspended or terminated, you agree that we will not be responsible for your failure to meet governmental and other deadlines, or for any liability, including but not limited to, penalties or interest that may be assessed against your resulting from your failure to meet such deadlines.

If this letter is terminated before services are completed, you agree to compensate us for the services performed and expenses incurred through the effective date of termination.

Severability -- If any portion of this Letter is deemed invalid or unenforceable, said finding shall not operate to invalidate the remainder of the terms set forth in this Letter.

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CIAnn}U A0V!S;*,)AS
City of Redondo Beach

Page 13 ends

Code of Professional Conduct -- To ensure that our independence is not impaired under the AICPA Code of Professional Conduct, you agree to inform the engagement partner before entering in any substantive employment discussions with any of our personnel. In accordance. with Section 50 of the Board of Accountancy Regulations for the State of California, this shall provide notice that Lance, Soll & Lunghard CPAs, Certified Public Accountants, is licensed by the California Board of Accountancy.

We appreciate the opportunity to be of service to City of Redondo Beach and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please -sign the enclosed copy and return it to us.

Very truly yours,

LANCE, SOLL & LUNGHARD, LLP
ACCEPTED:

This letter correctly sets forth the understanding of City of Redondo Beach:

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Title: i o'lpp,
Date: l4a .

ATTEST:

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Page 14 ends

EXHIBIT A

APPROPRIATION' S LIMIT PROCEDURES

2. For the accompanying Appropriations Limit Worksheet No. 6, we multiplied line A, last year's limit, by line D, ratio of change, and agreed the resulting amount to line E, this year's limit.

3. We compared the current year information presented in the accompanying Appropriations Limit Worksheet No. 6 to the other worksheets described in No. 1 above.

4. We compared the prior year appropriations limit presented in the accompanying. Appropriations Limit Worksheet No. 6 to the prior year appropriations limit adopted by the City Council for the prioryear.

U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, PUBLIC INDIAN HOUSING — REAL

ESTATE ASSESSMENT CENTER (REAL) PROCEDURES
We compared the electronic submission of the items listed in the "LIFRS Rule Information" column with the corresponding printed documents 'listed in the " Hard Copy Documents" column.

Procedure UFRS Rule Information Hard Copy Document(s)
1 Balance Sheet and Revenue Expense Financial Data Schedule, all CFDAs, if data line items 111 to 13901 applicable
2 Footnotes ( data element G5000- 010) Footnotes to audited basic financial statements
3- Type of opinion on FDS ( data element Auditor's Supplemental report on FDS G3100-040
4 Audit findings narrative ( data element Schedule of findings and Questioned G5200-010) Costs
5 General information ( data element series OMB Data Collection Form G2000, G2100, G2200,G9000, G9100
6 Financial statement report information Schedule of Findings and Questioned data element G3000-010 to G3000-050) Costs , Part 1 of OMB Data Collection Form
7 Federal program report information ( data Schedule of Findings and Questioned element G4000-020 to G4000-040) Costs , Part 1 of OMB Data Collection Form
8 Type of Compliance Requirement OMB Data Collection Form G4200-020 & G4000-030
9 Basic financial statements and auditor Basic Financial Statements (inclusive reports required to be submitted of auditor reports)
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15 Si kich.
1735 Merriman Road
Akron, OH 44313
October 26, 2016
330.864.6661 H www.sikich.com
Certified Public Accountants & Advisors
Members of American Institute of Certifled Public Accountants

SYSTEM REVIEW REPORT
To the Partners of
Lance; Soil & Lunghard,; LLP
and the Peer Review Committee ofthe California Society of CPA' s:

We have reviewed -the system of quality control for the accounting and auditing, practice of Lance, Soil & Lunghard,. LLP ( the Firm) in effect for the year ended May 31; 2016 -..Our peer review was. conducted in accordance with the Standards -for Performing and Reporting on Peer -Reviews established by the Peer Review Board: of the American Institute of Certified Public Accountants. As a part of our peer.review, we considered reviews by regulatory entities,. if applicable; in determining the nature and extent of our procedures. The Firm is responsible_ for designing a=system of quality control and complying with it to provide the Firm with reasonable assurance of performing and reporting in with applicable professional standards in all material respects. Our responsibility is to -express an opinion on the design of the system of quality control and the firm' s compliance therewith based on our review. The nature, objectives,. scope,.limitations of, and the. procedures performed in a: System Review are described in the standards at www.aicpa.org/ prsummary.

As -required by the standards, engagements selected for review included engagements performed under Government Auditing Standards and audits of employee benefit plans.

In our opinion, the: system :of quality :control for. the accounting and auditing: practice of Lance, Soil & Lunghard,- LLP in effect for the year ended May 31, 2016 has been suitably designed and complied with to provide the firm with reasonable assurance -of performing and-reporting:in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass, - pass with deficiency(ies) orfail. Lance, Soil: &.Lunghard, LLP has received:a peer review rating of pass.

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EXHIBIT " B- 2"

SCHEDULE FOR COMPLETION
TERM. The term of the Agreement commenced on April 18, 2017 and shall expire April 17, 2020, unless otherwise terminated as herein provided.

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EXHIBIT " C- 2"

COMPENSATION
Provided Consultant is not in default under this Agreement, Consultant shall be compensated as provided below.

I. AMOUNT.

For the first three years (Years 1 to 3) audited by Consultant, Consultant shall be compensated as follows for each fiscal year audit.

A. Year 1 ( FY 2016-2017): $64,415.00
B. Year 2 ( FY 2017-2018): $ 64,415.00
C. Year 3 ( FY 2018-2019): $64,415.00
For the optional two additional years to audit (Years 4 and 5), Consultant shall be compensated as follows for each fiscal year audit:

D. Year 4 ( FY 2019-2020): $66, 347.45
E. Year 5 ( FY 2020-2021): $ 66,347.45
II. METHOD OF PAYMENT. Consultant shall provide invoices to City for approval and payment. Invoices shall include services performed, amount billed, and fiscal year audited Invoices must be itemized, adequately detailed, based on accurate records, and in a form reasonably satisfactory to City. Consultant may be required to provide back- up material upon request.

III. SCHEDULE FOR PAYMENT. City agrees to pay Consultant within thirty (30) days of receipt of monthly invoices, provided, services are completed to City' s full satisfaction.

IV. CONSULTANT' S ADDRESS FOR NOTICE. Written notices to Consultant shall be given by registered or certified mail, postage prepaid and addressed to or personally served on:

Consultant: Lance, Soil & Lunghard, LLP
203 N. Brea Blvd, Suite 203
Brea, CA 92821
Attention: Bryan Gruber, CPA, Partner
6 O PEDONOpys%
Com: City of Redondo Beach
Financial Services Department
415 Diamond St., Door 1
Redondo Beach, CA 90277
Attention: Marni Ruhland, Finance Director
All notices, including notices of address changes, provided under this Agreement are deemed received on the third day after mailing if sent by registered or certified mail. Changes in the respective address set forth above may be made from time to time by any party upon written notice to the other party. 7 FIRST AMENDMENT TO THE

AGREEMENT FOR CONSULTING SERVICES

BETWEEN THE CITY OF REDONDO BEACH

AND LANCE, SOLL & LUNGHARD, LLP

THIS FIRST AMENDMENT TO THE AGREEMENT FOR PROJECT SERVICES First Amendment") is made between the City of Redondo Beach, a Chartered Municipal Corporation ("City") and Lance Soll & Lunghard, a Certified Public Accounting Firm (" Contractor").

WHEREAS, on April 18, 2017, the parties originally entered into the Agreement for Consulting Services between the City and Contractor (the "Agreement"); WHEREAS, the parties wish to further amend the Agreement.

NOW THEREFORE, in consideration of the promises and mutual covenants contained herein, and intending to be legally bound, the parties hereby agree to make the following amendments to the Agreement:

1. Scope of Services. For the 2017-2018 FY audit, Consultant shall perform the services in accordance with those described in the attached Engagement Letter attached hereto as Exhibit "A-2." Any language from the attached Engagement Letter shall not change or supersede the terms of the Agreement.

2. Compensation. The Agreement is hereby amended to increase compensation by $2, 000 each audit year to implement GASB 75.for a total not to exceed amount of $66,415.00 for FY 2017-2018 and $ 66,415.00 for FY 2018-2019; and for each of the two optional additional years encompassing FY 2019-2020 and FY 2020-2021, the total not to exceed amount is $ 68,347.45.

3. No Other Amendments. Except as expressly stated herein, the Agreement shall remain unchanged and in full force and effect. The Agreement and this First Amendment constitute the entire agreement between the parties and supersede any previous oral or written agreement with respect to the subject matter hereof. In the event of any inconsistency between the terms of the Agreement and this First Amendment, the terms of this First Amendment shall govern.
1-
IN WITNESS WHEREOF, the parties have executed this First Amendment in Redondo Beach, California, as of this 14th day of August, 2018.

CITY OF REDONDO BEACH
William C. Brand, Mayor
ATTEST:

W* - C. >
Eleanor Manzano, C Clerk
APPROVED AS TO FORM:

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Michael W. Webb, City Attorney

LANCE, SOLL & LUNGHARD, LLP
By: '
Name: f ( 4-026"' f
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Title: TN
APPROVED:
2-
EXHIBIT "A-2"
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0000
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April 2, 2018
City of Redondo Beach
Attn: Marni Ruhland
415 Diamond Street
Redondo Beach, CA 90277
We are pleased to confirm our understanding of the services we are to provide the City of Redondo Beach the City) for the fiscal year ended June 30, 2018. This letter, the attached Terms and Conditions Addendum and any other attachments incorporated herein ( collectively, " Agreement"), confirms our understanding of the terms and objectives of our engagement and the nature and limitations of the services we will provide. The engagement between you and our firm will be governed by the terms of the Agreement.

Accounting standards generally accepted in the United States of America provide for certain required supplementary information ( RSI), such as management7s discussion and analysis ( MD&A), to supplement City of Redondo Beach' s basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. As part of our engagement, we will apply certain limited procedures to City of Redondo Beach' s RSI in accordance with auditing standards generally accepted in the United States of America. These limited procedures will consist of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We will not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The following RSI is required by generally accepted accounting principles and will be subjected to certain limited procedures, but will not be audited:

FINANCIAL STATEMENT:
1) Management's Discussion and Analysis.
2) Budgetary Comparison Schedules for General Fund and Major Special Revenue Funds 3) Pension required supplementary schedules
4) OPEB required supplementary schedules
5) Infrastructure information under modified reporting
We have also been engaged to report on supplementary information other than RSI that accompanies City of Redondo Beach' s financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America, and we will provide an opinion on it in relation to the financial statements as a whole, in a report combined with our auditor's report on the financial statements:

O PrimeGlobal
City of Redondo Beach

Page 2 ends

FINANCIAL STATEMENT:
1) Combining individual nonmajor fund statements
2) Combining individual nonmajor budgetary schedules
SINGLE AUDIT:
1) Schedule of expenditures of federal awards.

FINANCIAL STATEMENT:
1) Introductory Section
2) Statistical Section
SINGLE AUDIT:
1) Corrective Action Plan ( if applicable)
Audit Objectives
The objective of our audit is the expression of opinions as to whether your financial statements are fairly presented, in all material respects, in conformity with U. S. generally accepted accounting principles and to report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. The objective also includes reporting on Internal control over financial reporting and compliance with provisions of laws, regulations, contracts, and award agreements, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards.

Internal control over compliance related to major programs and an opinion (or disclaimer of opinion) on compliance with federal statutes, regulations, and the terms and conditions of federal awards that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and Title 2 U. S. Code of Federal Regulations ( CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

The Government Auditing Standards report on internal control over financial reporting and on compliance and other matters will include a paragraph that states that ( 1) the purpose of the report is solely to describe the scope of testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance, and (2) the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity' s internal control and compliance. The Uniform Guidance report on internal control over compliance will include a paragraph that states that the purpose of the report on internal control over compliance is solely to describe the scope of testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Both reports will state that the report is not suitable for any other purpose.

LSL
s r•
City of Redondo Beach

Page 3 ends

Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America; the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and the provisions of the Uniform Guidance, and will include tests of accounting records, a determination of major program(s) in accordance with the Uniform Guidance, and other procedures we consider necessary to enable us to express such opinions. We will issue written reports upon completion of our Single Audit. Our reports will be addressed to governing board of City of Redondo Beach. We cannot provide assurance that unmodified opinions will be expressed. Circumstances may arise in which it is necessary for us to modify our opinions or add emphasis -of -matter or other -matter paragraphs. If our opinions are other than unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or issue reports, or we may withdraw from this engagement.

Audit Procedures—General
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether from ( 1) errors, (2) fraudulent financial reporting, ( 3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the government or to acts by management or employees acting on behalf of the government. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse.

Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, if material on a rotational basis, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will require certain written representations from you about your responsibilities for the financial statements; schedule of expenditures of federal awards; federal award programs; compliance with laws, regulations, contracts, and grant agreements; and other responsibilities required by generally accepted auditing standards.

LSL
City of Redondo Beach

Page 4 ends

Audit Procedures Internal Control
Our audit will include obtaining an understanding of the government and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements.

Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. As required by the Uniform Guidance, we will perform tests of controls over compliance to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements applicable to each major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to the Uniform Guidance.

Audit Procedures—Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of City of Redondo Beach' s compliance with provisions of applicable laws, regulations, contracts, and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards.

The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with federal statutes, regulations, and the terms and conditions of federal awards applicable to major programs. Our procedures will consist of tests of transactions and other applicable procedures described in the OMB Compliance Supplement for the types of compliance requirements that could have a direct and material effect on each of City of Redondo Beach' s major programs. The purpose of these procedures will be to express an opinion on City of Redondo Beach' s compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to the Uniform Guidance.

Other Services
Preparation of financial statements and single audit report We will also assist in preparing the financial statements, schedule of expenditures of federal awards, and related notes of City of Redondo Beach in conformity with U. S. generally accepted accounting principles and the Uniform Guidance based on information provided by you. These nonaudit services do not constitute an audit under Government Auditing Standards and such services will not be conducted in accordance with Government Auditing Standards. We will perform the services in accordance with applicable professional standards. The other services are limited to the financial statements, schedule of expenditures of federal awards, and related notes services previously defined. We, in our sole professional judgment, reserve the right to refuse to perform any procedure or take any action that could be construed as assuming management responsibilities.

City of Redondo Beach

Page 5 ends

Client Responsibilities
Management is responsible for (1) establishing and maintaining effective internal controls, including internal controls over federal awards, and for evaluating and monitoring ongoing activities, to help ensure that appropriate goals and objectives are met; ( 2) following laws and regulations; ( 3) ensuring that there is reasonable assurance that government programs are administered in compliance with compliance requirements; and (4) ensuring that management and financial information is reliable and properly reported.

Management is also responsible for implementing systems designed to achieve compliance with applicable laws, regulations, contracts, and grant agreements. You are also responsible for the selection and application of accounting principles; for the preparation and fair presentation of the financial statements, schedule of expenditures of federal awards, and all accompanying information in conformity with U. S. generally accepted accounting principles; and for compliance with applicable laws and regulations including federal statutes) and the provisions of contracts and grant agreements ( including award agreements). Your responsibilities also include identifying significant contractor relationships in which the contractor has responsibility for program compliance and for the accuracy and completeness of that information.

Management is also responsible for making all financial records and related information available to us and for the accuracy and completeness of that information. You are also responsible for providing us with 1) access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, (2) access to personnel, accounts, books, records, supporting documentation, and other information as needed to perform an audit under the Uniform Guidance, (3) additional information that we may request for the purpose of the audit, and ( 4) unrestricted access to persons within the government from whom we determine it necessary to obtain audit evidence.

You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud affecting the government involving 1) management, (2) employees who have significant roles in internal control, and ( 3) others where the fraud could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the government received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for identifying and ensuring that the government complies with applicable laws, regulations, contracts, agreements, and grants. Management is also responsible for taking timely and appropriate steps to remedy fraud and noncompliance with provisions of laws, regulations, contracts, and grant agreements, or abuse that we report. Additionally, as required by the Uniform Guidance, it is management' s responsibility to evaluate and monitor noncompliance with federal statutes, regulations, and the terms and conditions of federal awards; take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings; promptly follow up and take corrective action on reported audit findings; and prepare a summary schedule of prior audit findings and a separate corrective action plan on the City of Redondo Beach' s letterhead. The summary schedule of prior audit findings should be available for our review on the first day of our schedule visit for the Single Audit.

LSLiss•
00 City of Redondo Beach

Page 6 ends

You also agree to make the audited financial statements readily available to intended users of the schedule of expenditures of federal awards no later than the date the schedule of expenditures of federal awards is issued with our report thereon. Your responsibilities include acknowledging to us in the written representation letter that (1) you are responsible for presentation of the schedule of expenditures of federal awards in accordance with the Uniform Guidance; (2) you believe the schedule of expenditures of federal awards, including its form and content, is stated fairly in accordance with the Uniform Guidance; ( 3) the methods of measurement or presentation have not changed from those used in the prior period ( or, if they have changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the schedule of expenditures of federal awards.

You are also responsible for the preparation of the other supplementary information, which we have been engaged to report on, in conformity with U. S. generally accepted accounting principles. You agree to include our report on the supplementary information in any document that contains, and indicates that we have reported on, the supplementary information. You also agree to include the audited financial statements with any presentation of the supplementary information that includes our report thereon. Your responsibilities include acknowledging to us in the written representation letter that ( 1) you are responsible for presentation of the supplementary information in accordance with GAAP; ( 2) you believe the supplementary information, including its form and content, is fairly presented in accordance with GAAP; 3) the methods of measurement or presentation have not changed from those used in the prior period ( or, if they have changed, the reasons for such changes); and ( 4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the supplementary information.

Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying and providing report copies of previous financial audits, attestation engagements, performance audits, or other studies related to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or studies. You are also responsible for providing management' s views on our current findings, conclusions, and recommendations, as well as your planned corrective actions, for the report, and for the timing and format for providing that information. With regard to the electronic dissemination of audited financial statements, including financial statements published electronically on your website, you understand that electronic sites are a means to distribute information and, therefore, we are not required to read the information contained in these sites or to consider the consistency of other information in the electronic site with the original document.

City of Redondo Beach may wish to include or incorporate by reference our audit report on the financial statements in a private offering or SEC filing by another party. You agree not to include our audit report or make any reference to our firm without obtaining our prior written consent. Additional services may be LSL
City of Redondo Beach

Page 7 ends

required prior to providing such consent related to a private or public offering of securities, or inclusion in an SEC filing. Such services will be undertaken as a separate engagement at an additional fee.

Timing of the Engagement
We expect to begin our audit as previously agreed to by management. Bryan S. Gruber is the engagement partner and is responsible for supervising the engagement and signing the reports or authorizing another individual to sign them. To ensure that Lance, Soll, and Lunghard LLP' s independence is not impaired under the AICPA Code of Professional Conduct, you agree to inform the engagement partner before entering into any substantive employment discussions with any of our personnel.

We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any documents selected by us for testing.

Engagement Administration, Fees, and Other
Our fees for these services are outlined in our contract with you. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit.

Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 90 days or more overdue and may not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report(s). You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through the date of termination. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs.

City of Redondo Beach

Page 8 ends

GASB 75 Implementation
Pricing for these additional procedures was implemented in 2017-2018 and will continue until a new contract is entered into that includes these new audit procedures. The change was guided by the additional hours required for testing your local government's OPEB plans. The additional hours are directly related to the sampling of the population ( the number of employees within your local government) and the number of plans. Our fee for the increase in the audit scope related to the implementation of GASB 75 is $2, 000.

If at any time during the testing, variances are noted, Government Auditing Standards require us to assess the need for a specialist, such as an actuary. A specialist will need to be used to value the variance noted for the financial statements. This value will be required for us to provide an opinion on the financial statements. Any cost for an actuary will be passed to your local government and we will discuss this additional cost ahead of time.

Lance, Soil, & Lunghard LLP is a member of PrimeGlobal, a global association of independent accounting firms. No PrimeGlobal member firm is an agent or partner of the association or of any other member firm.

No PrimeGlobal member firm has the authority to enter into any legal obligations on behalf of the association or any other member firm. If Lance, Soil, & Lunghard LLP introduces you to another PrimeGlobal member firm, Lance, Soil, & Lunghard LLP specifically denies any liability for any work performed by that firm. You should make your own contractual arrangements with that firm for work that they perform. The fact that you may have been introduced to us by another PrimeGlobal member firm does not make that firm, its partners or its employees responsible for any of our acts or omissions. Lance, Soil, & Lunghard LLP is not the agent or partner of PrimeGlobal or any other member firm, and does not have the authority to enter into legal obligations on behalf of either the association or any other member firm thereof. You agree that Lance, Soil, & Lunghard LLP has the sole liability for any work performed under this engagement and you undertake not to make any claim or bring any proceedings against either PrimeGlobal or any other member of PrimeGlobal in relation to work covered by this engagement.

You agree that any claim arising out of this Agreement shall be commenced within one ( 1) year of the delivery of the work product to you, regardless of any longer period of time for commencing such claim as may be set by law. A claim is understood to be a demand for money or services, the service of a suit, or the institution of arbitration proceedings against Lance, Soil, & Lunghard LLP.

If any portion of this Agreement is deemed invalid or unenforceable, said findings shall not operate to invalidate the remainder of the terms set forth in this Agreement.

LSL
City of Redondo Beach

Page 9 ends

Very truly yours,
ACCEPTED:

This letter correctly sets forth the understanding of the City oLEedondo Beach.

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LSL CPAs LLP' s Terms and Conditions Addendum
Overview
This addendum to the engagement letter describes our standard terms and conditions (" Terms and Conditions") related to our provision of services to you. This addendum and the accompanying engagement letter comprise your agreement with us (" Agreement"). If there is any inconsistency between the engagement letter and this Terms and Conditions Addendum, the engagement letter will prevail to the extent of the inconsistency.

For the purposes of this Terms and Conditions Addendum, any reference to "firm," "we," "us," or "our" is a reference to Lance, Soll, and Lunghard CPAs LLP, and any reference to "you," or "your" is a reference to the party or parties that have engaged us to provide services. References to " Agreement" mean the engagement letter or other written document describing the scope of services, any other attachments incorporated therein, and this Terms and Conditions Addendum.

Billing and Payment Terms
We will bill you for our professional fees and out-of-pocket costs in accordance with Contract. Payment is due within 30 days of the date on the billing statement. If payment is not received by the due date, you will be assessed interest charges per month on the unpaid balance.

We reserve the right to suspend or terminate our work for non- payment of fees. If our work is suspended or terminated, you agree that we will not be responsible for your failure to meet governmental and other deadlines, for any penalties or interest that may be assessed against you resulting from your failure to meet such deadlines, and for any other damages (including but not limited to consequential, indirect, lost profits, or punitive damages) incurred as a result of the suspension or termination of our services.

Electronic Data Communication and Storage
In the interest of facilitating our services to you, we may send data over the Internet, or store electronic data via computer software applications hosted remotely on the Internet or utilize cloud -based storage. Your confidential electronic data may be transmitted or stored using these methods. We may use third party service providers to store or transmit this data, such as providers of tax return preparation software. In using these data communication and storage methods, our firm employs measures designed to maintain data security. We use reasonable efforts to keep such communications and electronic data secure in accordance with our obligations under applicable laws, regulations, and professional standards. We require our third party vendors to do the same.

You recognize and accept that we have no control over the unauthorized interception or breach of any communications or electronic data once it has been transmitted or if it has been subject to unauthorized access while stored, notwithstanding all reasonable security measures employed by us or our third party vendors. You consent to our use of these electronic devices and applications and submission of confidential client information to third party service providers during this engagement.

Client Portals
To enhance our services to you, we will utilize ShareFile, a collaborative, virtual workspace in a protected, online environment. ShareFile permits real-time collaboration across geographic boundaries and time zones and allows Lance, Soll, and Lunghard CPAs LLP and you to share data, engagement information, knowledge, and deliverables in a protected environment. In order to use ShareFile, you will be required to execute a client portal agreement and agree to be bound by the terms, conditions and limitations of such agreement.

You agree that we have no responsibility for the activities of Sharefile and agree to indemnify and hold us harmless with respect to any and all claims arising from or related to the operation of Sharefile. While Sharefile backs up your files to a third party server, we recommend that you also maintain your own backup files of these records.

LSLLSL CPAs LLP' s Terms and Conditions Addendum (Continued) If you decide to transmit your confidential information to us in a manner other than a secure portal, you accept responsibility for any and all unauthorized access to your confidential information. If you request that we transmit confidential information to you in a manner other than a secure portal, you agree that we are not responsible for (a) any loss or damage of any nature, whether direct or indirect, that may arise as a result of our sending confidential information in a manner other than a secure portal, and (b) any damages arising as a result of any virus being passed on or with, or arising from any alteration of, any email message Third Party Service Providers or Subcontractors
In the interest of enhancing our availability to meet your professional service needs while maintaining service quality and timeliness, we may use a third party service provider to assist us in the provision of services to you, which may include receipt of your confidential information. This provider has established procedures and controls designed to protect client confidentiality and maintain data security. As the paid provider of professional services, our firm remains responsible for exercising reasonable care in providing such services, and our work product will be subjected to our firm's customary quality control procedures.

By accepting the terms and conditions of our engagement, you are providing your consent and authorization to disclose your confidential information to a third party service provider, if such disclosure is necessary to deliver professional service or provide support services to our firm.

Independent Contractor
When providing services to your company, we will be functioning as an independent contractor and in no event will we or any of our employees be an officer of you, nor will our relationship be that of joint ventures, partners, employer and employee, principal and agent, or any similar relationship giving rise to a fiduciary duty to you.

Records Management
Record Retention and Ownership
We will return all of your original records and documents provided to us at the conclusion of the engagement. Your records are the primary records for your operations and comprise the backup and support for your work product. Our copies of your records and documents are not a substitute for your own records and do not mitigate your record retention obligations under any applicable laws or regulations.

Our firm destroys workpaper files after a period of 7 years. Catastrophic events or physical deterioration may result in damage to or destruction of our firm' s records, causing the records to be unavailable before the expiration of the retention period as stated in our record retention policy.

If we receive a request for copies of selected workpapers, provided that we are not prohibited from doing so by applicable laws or regulations, we agree to inform you of such request as soon as practicable. You may, within the time permitted for our firm to respond to any request, initiate such legal action as you deem appropriate, at your sole expense, to attempt to limit the disclosure of information. If you take no action within the time permitted for us to respond, or if your action does not result in a judicial order protecting us from supplying requested information, we may construe your inaction or failure as consent to comply with the request.
irr• LSLLSL CPAs LLP' s Terms and Conditions Addendum (Continued) If we are not a party to the proceeding in which the information is sought, you agree to reimburse us for our professional time and expenses, as well as the fees and expenses of our legal counsel, incurred in responding to such requests. This paragraph will survive termination of this Agreement.

Summons or Subpoenas
All information you provide to us in connection with this engagement will be maintained by us on a strictly confidential basis.

If we receive a summons or subpoena which our legal counsel determines requires us to produce documents from this engagement or testify about this engagement, provided that we are not prohibited from doing so by applicable laws or regulations, we agree to inform you of such summons or subpoena as soon as practicable. You may, within the time permitted for our firm to respond to any request, initiate such legal action as you deem appropriate, at your sole expense, to attempt to limit discovery. If you take no action within the time permitted for us to respond, or if your action does not result in a judicial order protecting us from supplying requested information, we may construe your inaction or failure as consent to comply with the request.

Newsletters and Similar Communications
We may send newsletters, emails, explanations of technical developments or similar communications to you. These communications are of a general nature and should not be construed as professional advice.

We may not send all such communications to you. These communications do not continue a client relationship with you, nor do they constitute advice or an undertaking on our part to monitor issues for you.

Disclaimer of Legal and Investment Advice
Our services under this Agreement do not constitute legal or investment advice unless specifically agreed to in the Engagement Objective and Scope section of this Agreement. We recommend that you retain legal counsel and investment advisors to provide such advice.

Referrals
In the course of providing services to you, you may request referrals to attorneys, brokers, investment advisors or other professionals. We may identify a professional or professionals for your consideration.

However, you are responsible for evaluating, selecting, and retaining any professional and determining if the professional can meet your needs. You agree that we have no responsibility for and will not oversee the activities of any professional to whom we refer you.

Brokerage or Investment Advisory Statements
If you provide our firm with copies of brokerage ( or investment advisory) statements and/or read-only access to your accounts, we will use the information solely for the purpose described in the Engagement Objective and Scope section of the engagement letter. We will rely on the accuracy of the information provided in the statements and will not undertake any action to verify this information. We will not monitor transactions, investment activity, provide investment advice, or supervise the actions of the entity or individuals entering into transactions or investment activities on your behalf. We recommend that you receive and carefully review all statements upon receipt, and direct any questions regarding account activity to your banker, broker or investment advisor.

Other Income, Losses and Expenses
If you realized income, loss or expense from a business or supplemental income or loss, the reporting requirements of federal and state income tax authorities apply to such income, loss or expense. You are LS LSL CPAs LLP' s Terms and Conditions Addendum (Continued) i
responsible for complying with all applicable laws and regulations pertaining to such operations, including the classification of workers as employees or independent contractors and related payroll tax and withholding requirements.

Accountant — Client Privilege
Internal Revenue Code §7525, Confidentiality Privileges Related to Taxpayer Communication, provides a limited confidentiality privilege applying to tax advice embodied in taxpayer communications with federally authorized tax practitioners in certain limited situations.

This privilege is limited in several important respects. For example, this privilege does not apply to your records, which you are required to retain in support of your tax return. In addition, the privilege does not apply to state tax issues, state tax proceedings, private civil litigation proceedings, or criminal proceedings.

While we will cooperate with you with respect to the privilege, asserting the privilege is your responsibility.

Limitations on Oral and Email Communications
We may discuss with you our views regarding the treatment of certain items or decisions you may encounter. We may also provide you with information in an email. Any advice or information delivered orally or in an email (rather than through a memorandum delivered as an email attachment) will be based upon limited research and a limited discussion and analysis of the underlying facts. Additional research or a more complete review of the facts may affect our analysis and conclusions.

Due to these limitations and the related risks, it may or may not be appropriate to proceed with any decision solely on the basis of any oral or email communication. You accept all responsibility, except to the extent caused by our gross negligence or willful misconduct, for any loss, cost or expense resulting from your decision ( i) not to have us perform the research and analysis necessary to reach a more definitive conclusion and ( ii) to instead rely on an oral or email communication. The limitation in this paragraph will not apply to an item of written advice that is a deliverable of a separate engagement. If you wish to engage us to provide formal advice on a matter on which we have communicated orally or by email, we will confirm this service in a separate engagement letter.

Management Responsibilities
While Lance, Soil, and Lunghard CPAs LLP can provide assistance and recommendations, you are responsible for management decisions and functions, and for designating an individual with suitable skill, knowledge and experience to oversee any services that Lance, Soil, and Lunghard CPAs LLP provides.

You are responsible for evaluating the adequacy and results of the services performed and accepting responsibility for such services. You are ultimately responsible for establishing and maintaining internal controls, including monitoring ongoing activities.

Conflicts of Interest
If we, in our sole discretion, believe a conflict has arisen affecting our ability to deliver services to you in accordance with either the ethical standards of our firm or the ethical standards of our profession, we may be required to suspend or terminate our services without issuing our work product. You agree that we will not be responsible for your failure to meet governmental and other deadlines, for any penalties or interest that may be assessed against you resulting from your failure to meet such deadlines, and for any other damages (including but not limited to consequential, indirect, lost profits, or punitive damages) incurred as a result of the suspension or termination of our services.

Alternative Dispute Resolution
If a dispute arises out of or relates to the Agreement including the scope of services contained herein, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties agree first to try to settle the dispute by mediation administered by the American Arbitration Association (" AAA") under the AAA Professional Accounting and Related Services Dispute Resolution Rules before resorting to sig
LSLLSLCPAs LLP' s Terms and Conditions Addendum (Continued) i•
arbitration, litigation, or some other dispute resolution procedure. The mediator will be selected by the mutual agreement of the parties. If the parties cannot agree on a mediator, a mediator shall be designated by the AAA. The mediation will be conducted in California.

The mediation will be treated as a settlement discussion and, therefore, all conversations during the mediation will be confidential. The mediator may not testify for either party in any later proceeding related to the dispute. No recording or transcript shall be made of the mediation proceedings. The costs of any mediation proceedings shall be shared equally by all parties. Any costs for legal representation shall be borne by the hiring party.
kI.0ho
1735 Merriman Road
Akron, OH 44313
October 26, 2016
To the Partners of
330.864.6661 // www.sikich.com
Certified Public Accountants & Advisors
Members ofAmerican Institute of Certified Public Accountants

SYSTEM REVIEW REPORT
Lance, Soil & Lunghard, LLP
and the Peer Review Committee of the California Society of CPA' s:

We have reviewed the system of quality control for the accounting and auditing practice of Lance, Soil & Lunghard, LLP ( the Firm) in effect for the year ended May 31, 2016. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants. As a part of our peer review, we considered reviews by regulatory entities, if applicable, in determining the nature and extent of our procedures. The Firm is responsible for designing a system of quality control and complying with it to provide the Firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Our responsibility is to express an opinion on the design of the system of quality control and the firm' s compliance therewith based on our review. The nature, objectives, scope, limitations of, and the procedures performed in a System Review are described in the standards at www.aicpa.org/ prsummary.

As required by the standards, engagements selected for review included engagements performed under Government Auditing Standards and audits of employee benefit plans.

In our opinion, the system of quality control for the accounting and auditing practice of Lance, Sall & Lunghard, LLP in effect for the year ended May 31, 2016 has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass, pass with deficiencyfies) orfail. Lance, Soil & Lunghard, LLP has received a peer review rating of pass.

AGREEMENT FOR CONSULTING SERVICES

BETWEEN THE CITY OF REDONDO BEACH
AND LANCE, SOLL & LUNGHARD, LLP.

THIS AGREEMENT FOR CONSULTING SERVICES (this "Agreement") is made between the City of Redondo Beach, a Chartered Municipal Corporation (" City") and Lance, Soil & Lunghard, LLP, a Certified Public Accounting Firm, Consultant").

The parties hereby agree as follows:

1. Description of Project or Scope of Services. The project description or scope of services to be provided by Consultant, and any corresponding responsibilities of City, or services required to be performed by City are set forth in Exhibit "A".

2. Term and Time of Completion. Consultant shall commence and complete the project or services described in Exhibit "A" in accordance with the schedule set forth in Exhibit "B".

3. Compensation. City agrees to pay Consultant for work performed in accordance with Exhibit "C".

GENERAL PROVISIONS

1. Independent Contractor. Consultant acknowledges, represents and warrants that Consultant is not a regular or temporary employee, officer, agent, joint venturer or partner of the City, but rather an independent contractor. This Agreement shall not be construed as a contract of employment. Consultant shall have no rights to any benefits which accrue to City employees unless otherwise expressly provided in this Agreement. Due to the independent contractor relationship created by this Agreement, the City shall not withhold state or federal income taxes, the reporting of which shall be Consultant's sole responsibility.

Brokers. Consultant acknowledges, represents and warrants that Consultant has not hired, retained or agreed to pay any entity or person any fee, commission, percentage, gift, or any other consideration, contingent upon or resulting from the award or making of this Agreement.

3. City Property. All plans, drawings, reports, calculations, data, specifications, videos, graphics or other materials prepared for or obtained pursuant to this Agreement shall upon request be delivered to the City within a reasonable time, and the rights thereto shall be deemed assigned to the City. If applicable, Consultant shall prepare check prints upon request. Said plans, drawings, reports, calculations, data, specifications, videos, graphics or other materials, shall be specific for the project herein and shall not be used by the City for any other project without Consultant' s consent. Notwithstanding the foregoing, Consultant shall not be obligated to assign any proprietary software or data developed by or at the direction of Consultant for Consultant's own use; provided, however, that Consultant shall, pursuant to Paragraph 14 below, indemnify, defend and hold the City harmless from and against any discovery or Public Records Act request seeking the disclosure of any such proprietary software or data.

4. Inspection. If the services set forth in Exhibit "A" shall be performed on City or other public property, the City shall have the right to inspect such work without notice. If such services shall not be performed on City or other public property, the City shall have the right to inspect such work upon reasonable notice.

Inspections by the City shall not relieve or minimize the responsibility of Consultant to conduct any inspections Consultant has agreed to perform pursuant to the terms of this Agreement. Consultant shall be solely liable for said inspections performed by Consultant. Consultant shall certify in writing to the City as to the completeness and accuracy of each inspection required to be conducted by Consultant hereunder.

5. Services. The project or services set forth in Exhibit "A" shall be performed to the full satisfaction and approval of the City. In the event that the project or services set forth in Exhibit "A" are itemized by price in Exhibit "C", the City in its sole discretion may, upon notice to Consultant, delete certain items or services set forth in Exhibit "A", in which case there shall be a corresponding reduction in the amount of compensation paid to Consultant. City shall furnish Consultant to the extent available, with any City standards, details, specifications and regulations applicable to the Project and necessary for the performance of Consultant's services hereunder. Notwithstanding the foregoing, any and all additional data necessary for design shall be the responsibility of Consultant.

6. Records. Consultant, including any of its subcontractors shall maintain full and complete documents and records, including accounting records, employee time sheets, work papers, and correspondence pertaining to the project or services set forth in Exhibit "A". Consultant, including any of its subcontractors shall make such documents and records available for City review or audit upon request and reasonable notice, and shall keep such documents and records, for at least four 4) years after Consultant's completion of performance of this Agreement.

Copies of all pertinent reports and correspondence shall be furnished to the City for its files.

Changes and Extra Work. All changes and/ or extra work under this Agreement shall be provided for by a subsequent written amendment executed by City and Consultant.

8. Additional Assistance. If this Agreement requires Consultant to prepare plans and specifications, Consultant shall provide assistance as necessary to resolve any questions regarding such plans and specifications that may arise during the period of advertising for bids, and Consultant shall issue any necessary addenda to the plans and specifications as requested. In the event Consultant is of the opinion that City' s requests for addenda and assistance is outside the scope of normal services, the parties shall proceed in accordance with the changes and extra work provisions of this Agreement.

9. Professional Ability. Consultant acknowledges, represents and warrants that Consultant is skilled and able to competently provide the services hereunder, and possesses all professional licenses, certifications, and approvals necessary to engage in its occupation. City has relied upon the professional ability and training of Consultant as a material inducement to enter into this Agreement.

Consultant shall perform in accordance with generally accepted professional practices and standards of Consultant's profession.

10. Business License. Consultant shall obtain a Redondo Beach Business License before performing any services required under this Agreement. The failure to so obtain such license shall be a material breach of this Agreement and grounds for immediate termination by City; provided, however, that City may waive the business license requirement in writing under unusual circumstances without necessitating any modification of this Agreement to reflect such waiver.

11. Termination Without Default. Notwithstanding any provision herein to the contrary, the City may, in its sole and absolute discretion and without cause, terminate this Agreement at any time prior to completion by Consultant of the project or services hereunder, immediately upon written notice to Consultant. In the event of any such termination, Consultant shall be compensated for: (1) all authorized work satisfactorily performed prior to the effective date of termination; and ( 2) necessary materials or services of others ordered by Consultant for this Agreement, prior to Consultant's receipt of notice of termination, irrespective of whether such materials or services of others have actually been delivered, and further provided that Consultant is not able to cancel such orders. Compensation for Consultant in such event shall be determined by the City in accordance with the percentage of the project or services completed by Consultant; and all of Consultant's finished or unfinished work product through the time of the City's last payment shall be transferred and assigned to the City. In conjunction with any termination of this Agreement, the City may, at its own expense, make copies or extract information from any notes, sketches, computations, drawings, and specifications or other data, whether complete or not.

12. Termination in the Event of Default. Should Consultant fail to perform any of its obligations hereunder, within the time and in the manner provided or otherwise violate any of the terms of this Agreement, the City may immediately terminate this Agreement by giving written notice of such termination, stating the reasons for such termination. Consultant shall be compensated as provided immediately above, provided, however, there shall be deducted from such amount the amount of damages if any, sustained by the City by virtue of Consultant's breach of this Agreement.

13. Conflict of Interest. Consultant acknowledges, represents and warrants that Consultant shall avoid all conflicts of interest (as defined under any federal, state or local statute, rule or regulation, or at common law) with respect to this Agreement. Consultant further acknowledges, represents and warrants that Consultant has no business relationship or arrangement of any kind with any City official or employee with respect to this Agreement. Consultant acknowledges that in the event that Consultant shall be found by any judicial or administrative body to have any conflict of interest ( as defined above) with respect to this Agreement, all consideration received under this Agreement shall be forfeited and returned to City forthwith. This provision shall survive the termination of this Agreement for one ( 1) year.

14. Indemnity. To the maximum extent permitted by law, Consultant hereby agrees, at its sole cost and expense, to defend protect, indemnify, and hold harmless the City, its elected and appointed officials, officers, employees, volunteers, attorneys, and agents ( collectively " Indemnitees") from and against any and all claims, including, without limitation, claims for bodily injury, death or damage to property, demands, charges, obligations, damages, causes of action, proceedings, suits, losses, stop payment notices, judgments, fines, liens, penalties, liabilities, costs and expenses of every kind and nature whatsoever, in any manner arising out of, incident to, related to, in connection with or arising from any act, failure to act, error or omission of Consultant' s performance or work hereunder (including any of its officers, agents, employees, Subcontractors) or its failure to comply with any of its obligations contained in the Agreement, or its failure to comply with any current or prospective law, except for such loss or damage which was caused by the sole negligence or willful misconduct of the City. Consultant' s obligation to indemnify shall not be restricted to insurance proceeds, if any, received by Consultant or Indemnitees. This indemnification obligation shall survive this Agreement and shall not be limited by any term of any insurance policy required under this Agreement.
a. Nonwaiver of Rights. Indemnitees do not and shall not waive any rights that they may possess against Consultant because the acceptance by City, or the deposit with City, of any insurance policy or certificate required pursuant to this Agreement.
b. Waiver of Right of Subrogation. Consultant, on behalf of itself and all parties claiming under or through it, hereby waives all rights of subrogation and contribution against the Indemnitees.

15. Insurance. Consultant shall comply with the requirements set forth in Exhibit U." Insurance requirements that are waived by the City's Risk Manager do not require amendments or revisions to this Agreement.

16. Non -Liability of Officials and Employees of the City. No official or employee of the City shall be personally liable for any default or liability under this Agreement.

17. Compliance with Laws. Consultant shall comply with all federal, state and local Taws, statutes, ordinances, rules and regulations, and the orders and decrees of any courts or administrative bodies or tribunals, with respect to this Agreement, including without limitation all environmental laws, employment laws, and nondiscrimination laws.

18. Limitations upon Subcontracting and Assignment. Consultant acknowledges that the services which Consultant shall provide under this Agreement are unique, personal services which, except as otherwise provided herein, Consultant shall not assign or sublet to any other party without the prior written approval of City, which approval may be withheld in the City's sole and absolute discretion. In the event that the City, in writing, approves any assignment or subletting of this Agreement or the retention of subcontractors by Consultant, Consultant shall provide to the City upon request copies of each and every subcontract prior to the execution thereof by Consultant and subcontractor. Any attempt by Consultant to assign any or all of its rights under this Agreement without first obtaining the City's prior written consent shall constitute a material default under this Agreement.

The sale, assignment, transfer or other disposition, on a cumulative basis, of twenty-five percent (25%) or more of the ownership interest in Consultant or twenty-five percent (25%) or more the voting control of Consultant (whether Consultant is a corporation, limited liability company, partnership, joint venture or otherwise) shall constitute an assignment for purposes of this Agreement.

Further, the involvement of Consultant or its assets in any transaction or series of transactions ( by way of merger, sale, acquisition, financing, transfer, leveraged buyout or otherwise), whether or not a formal assignment or hypothecation of this Agreement or Consultant's assets occurs, which reduces Consultant's assets or net worth by twenty-five percent (25%) or more shall also constitute an assignment for purposes of this Agreement.

19. Subcontractors. Consultant shall provide properly skilled professional and technical personnel to perform any approved subcontracting duties. Consultant shall not engage the services of any person or persons now employed by the City without the prior written approval of City, which approval may be withheld in the City's sole and absolute discretion.

20. Integration. This Agreement constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes any previous oral or written agreement; provided, however, that correspondence or documents exchanged between Consultant and City may be used to assist in the interpretation of the exhibits to this Agreement.

21. Amendment. This Agreement may be amended or modified only by a subsequent written amendment executed by both parties.

22. Conflicting Provisions. In the event of a conflict between the terms and conditions of this Agreement and those of any exhibit or attachment hereto, this Agreement proper shall prevail. In the event of a conflict between the terms and conditions of any two or more exhibits or attachments hereto, those prepared by the City shall prevail over those prepared by Consultant.

23. Non -Exclusivity. Notwithstanding any provision herein to the contrary, the services provided by Consultant hereunder shall be non- exclusive, and City reserves the right to employ other contractors in connection with the project.

24. Exhibits. All exhibits hereto are made a part hereof and incorporated herein by reference. provided, however, that any language in Exhibit "A" which does not pertain to the project description, proposal, or scope of services (as applicable) to be provided by Consultant, or any corresponding responsibilities of City, shall be deemed extraneous to, and not a part of, this Agreement.

25. Time of Essence. Time is of the essence of this Agreement.

26. Confidentiality. To the extent permissible under law, Consultant shall keep confidential its obligations hereunder and the information acquired during the performance of the project or services hereunder.

27. Third Parties. Nothing herein shall be interpreted as creating any rights or benefits in any third parties. For purposes hereof, transferees or assignees as permitted under this Agreement shall not be considered " third parties."

28. Governing Law and Venue. This Agreement shall be construed in accordance with the laws of the State of California without regard to principles of conflicts of law. Venue for any litigation or other action arising hereunder shall reside exclusively in the Superior Court of the County of Los Angeles, Southwest Judicial District.

29. Attorneys' Fees. In the event either party to this Agreement brings any action to enforce or interpret this Agreement, the prevailing party in such action shall be entitled to reasonable attorneys' fees ( including expert witness fees) and costs.

This provision shall survive the termination of this Agreement.

30. Claims. Any claim by Consultant against City hereunder shall be subject to Government Code §§ 800 et seq. The claims presentation provisions of said Act are hereby modified such that the presentation of all claims hereunder to the City shall be waived if not made within six (6) months after accrual of the cause of action.

31. Interpretation. Consultant acknowledges that it has had ample opportunity to seek legal advice with respect to the negotiation of this Agreement. This Agreement shall be interpreted as if drafted by both parties.

32. Warranty. In the event that any product shall be provided to the City as part of this Agreement, Consultant warrants as follows: Consultant possesses good title to the product and the right to transfer the product to City; the product shall be delivered to the City free from any security interest or other lien; the product meets all specifications contained herein; the product shall be free from material defects in materials and workmanship under normal use for a period of one ( 1) year from the date of delivery, and the product shall be fit for its intended purpose( s). Notwithstanding the foregoing, consumable and maintenance items such as light bulbs and batteries) shall be warranted for a period of thirty (30) days from the date of delivery. All repairs during the warranty period shall be promptly performed by Consultant, at Consultant's expense, including shipping.

Consultant shall not be liable under this warranty for an amount greater than the amount set forth in Exhibit "C" hereto.

33. Severance. Any provision of this Agreement that is found invalid or unenforceable shall be deemed severed, and all remaining provisions of this Agreement shall remain enforceable to the fullest extent permitted by law.

34. Authority. City warrants and represents that upon City Council approval, the Mayor of the City of Redondo Beach is duly authorized to enter into and execute this Agreement on behalf of City. The party signing on behalf of Consultant warrants and represents that he or she is duly authorized to enter into and execute this Agreement on behalf of Consultant, and shall be personally liable to City if he or she is not duly authorized to enter into and execute this Agreement on behalf of Consultant.

35. Waiver. The waiver by the City of any breach of any term or provision of this Agreement shall not be construed as a waiver of any subsequent breach.

SIGNATURES FOLLOW ON NEXT PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement in Redondo Beach, California, as of this 18th day of April, 2017.

CITY OF REDONDO BEACH
Mayor William C. Brand
Title:

ATTEST: APPROVED:

City Clerk
APPROVED AS TO FORM:

CityAttorney' s Office
Risk Manager
IN WITNESS WHEREOF, the parties have executed this Agreement in Redondo Beach, California, as of this 18th day of April, 2017.

CITY OF REDONDO BEACH
Mayor William C. Brand
ATTEST:

APPROVED AS TO FORM:

City Attorney's Office
a
w -
By:

Name: RCYA-A) Uor322
Title: PkiQ--r?J£ P.

APPROVED:

EXHIBIT " A"

SCOPE OF SERVICES

CONSULTANT'S DUTIES
A. Engagement Letters

1. For Fiscal Year 2016-2017 audit, services performed shall be in accordance to the services described in the Engagement Letter attached hereto for informational purposes as Exhibit "A- 1". Any language from the Engagement Letter may not change or supersede the terms of this agreement.

2. For subsequent Fiscal Year audits, services performed shall be in accordance to the services described in prospective Engagement Letters provided to the City by Consultant each year.

B. Scope of Work

1. Audit the Basic Financial Statements of the City to obtain reasonable assurance about whether the financial statements are free of material misstatement. To express an opinion on the fair presentation of the City' s governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information in conformity with generally accepted accounting principles. The result of these tasks will be the development of the final comprehensive annual financial report CAFR). The auditor will prepare and provide the City with thirty (30) printed versions and one ( 1) portable document format ( PDF) file of the audited CAFR. The auditors are not required to audit the supporting schedules contained in the CAFR. However, the auditors must provide an " in -relation -to" report on the supporting schedules based on the auditing procedures applied during the audit of the basic financial statements and schedules. The auditors are not required to audit the statistical section of the report.

2. Prepare separate financial statements for the City's Internal Service Funds.

3. Prepare separate financial statements for the City' s Enterprise Funds.

4. Prepare financial statements for the City' s Housing Successor Fund Low -Mod Income Housing Asset Fund).

5. Prepare Addendum to Annual Progress Report required by Senate Bill 341 ( SB 341).

6. Test compliance with the Single Audit Act as amended in 1996 and U. S.

Office of Management and Budget (OMB) Circular A- 133, Audits of States. Local Governments, and Non -Profit Organizations and applicable laws and regulations. It is expected that the auditor will prepare and publish an audit report.

7. Perform tests of compliance and prepare and publish audit reports related to State funding, if any. The City has not received funding subject to this requirement for several years. However, past funding that the City has received included:
a. Spousal Abuser Prosecution Program - $ 20, 000
b. State Transportation Improvement Program - $ 333,000

8. Audit the City' s Inmate Benefit Trust Fund. It is expected that the auditor will prepare and publish an audit report.

9. Test compliance with Proposition 111, Article XIII -B — Review of Appropriation Limit Calculations. It is expected that the auditor will prepare and publish an Independent Accountants' Report on Agreed - Upon Procedures Applied to Appropriations Limit Worksheets.

10. Prepare and publish a letter of recommendations to management on the City's internal controls.

11. Assist in implementation of new GASB Pronouncements and examine other reports or perform other services as required.

B. Auditing Standards to be Followed
The audit shall be performed in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants and the provisions of the U. S. Office of Management and Budget OMB) Circular A- 133, Audits of States, Local Governments, and Non -Profit Organizations.

C. Reports to be Issued
Following the completion of the audit of the fiscal year's financial statements, the auditors shall issue the following:
10 1. City Comprehensive Annual Financial Report (CAFR).

2. City Internal Service Funds Report.

3. City Enterprise Funds Report.

4. City Housing Successor Fund ( Low -Mod Income Housing Asset Fund) Report.

5. Addendum to Annual Progress Report as required by Senate Bill 341.

6. Single Audit Report.

7. Report on the Inmate Benefit Trust Fund.

8. Report on the City's calculation of the Appropriations Limit.

9. Recommendations to Management Letter.

10. Oral and written report of audit findings at the meetings of the Audit Committee, City Council, and Budget and Finance Commission and Consultant shall provide response and commentary to any inquiries received at said meetings.

D. Special Considerations

1. The City will continue to submit its CAFR to the Government Finance Officers Association of the United States and Canada for consideration in its Certificate of Achievement for Excellence in Financial Reporting program, and to the California Society of Municipal Finance Officers for consideration in its Award for Outstanding Financial Reporting program.

The auditors will be required to provide assistance to the City to meet the requirements of those programs.

2. The City desires an additional 40 hours of executive time for research and assistance concerning accounting and other technical matters each year.

These hours are above and beyond the professional time associated with the audit. ( Based on prior audits, the 40 hours desired have not been fully used.)

3. Each year the City will ask the auditors to focus on a particular area regarding internal controls, e.g., petty cash, cash receipts on business licenses, leases relating to the enterprise funds.

E. Working Papers Retention and Access to Working Papers All working papers and reports must be retained, at the auditors' expense, for a minimum of three ( 3) years, unless the firm is notified in writing by the City of the need to extend the retention period. The auditors will be required to make working papers available, upon request, to the City.

In addition, the firm shall respond to reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance.

CITY'S DUTIES
A. Financial Services Department
The Financial Services Department staff and other responsible City personnel will be available during the audit to assist the firm by providing information, documentation and explanation. The City will prepare the confirmation letters.

B. Schedules and Working Papers
The City's Financial Services staff will prepare most of the schedules or working papers, as has been done in prior audits. The list of schedules required by the auditors shall be provided to the City no later than one ( 1) month prior to the interim audit.

The City encourages questions from the audit staff; however, audit staff should be sensitive to City staffs working schedules and timelines in obtaining required information.

C. Work Area, Telephones, Photocopying and WI -FI Connection.

The City will provide the auditors with reasonable workspace. The auditors will also be provided access to telephones, photocopying and WI -FI connection.

D. Report Preparation
Report preparation, editing and typing of all reports shall be the responsibility of the auditors. The auditor will also be responsible for printing 30 copies of the CAM and all other reports.
12 EXHIBIT " A- 7"

ENGAGEMENT LETTER
13 LSLo:

March 27. 2017
City of Redondo Beach
415 Diamond Street
Redondo Beach, CA 90277
We are pleased to confirm our understanding of the services we are to provide the City of Redondo Beach for the fiscal year ended June 30, 2017. We will audit the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information, including the related notes to the financial statements, which collectively comprise the basic financial statements, of the City of Redondo Beach as of and for the fiscal year ended June 30, 2017. In addition, we will conduct an audit of the City' s internal service funds, enterprise funds, housing successor fund, addendum to annual progress report, single audit, inmate benefit trust fund, and report on appropriation limit ( as described in your RFP ( January 2017). Accounting standards generally accepted in the United States of America provide for certain required supplementary information ( RSI), such as management' s discussion and analysis (MDBA), to supplement the City of Redondo Beach' s basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. As part of our engagement, we will apply certain limited procedures to the City of Redondo Beach' s RSI in accordance with auditing standards generally accepted in the United States of America. These limited procedures will consist of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management' s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We will not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The following RSI is required by generally accepted accounting principles and will be subjected to certain limited procedures, but will not be audited:
1) Management' s Discussion and Analysis.
2) Budgetary Comparison Schedules for General Fund and Major Special Revenue Funds 3) GASB 68 required supplementary schedules
4) OPEB required supplementary schedules
5) Infrastructure information under modified reporting
We have also been engaged to report on supplementary information other than RSI that accompanies the City of Redondo Beach' s financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the financial statements and certain additional procetlures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America, and we will provide an opinion on it in relation to the financial statements as a whole, in a report combined with our auditor' s report on the financial statements:
1) Schedule of expenditures of federal awards.
1) Combining individual nonmajor fund statements
2) Combining individual nonmajor budgetary schedules
The following other information accompanying the financial statements will not be subjected to the auditing procedures applied in our audit of the financial statements, and our auditor' s report will not pp—Poe, an opinion or any assurance on that other information - dnmeGlobal LSL-:::

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1) Introductory Section
2) Statistical Section
Audit Objectives
The objective of our audit is the expression of opinions as to whether your financial statements are fairly presented, in all material respects, in conformity with U. S. generally accepted accounting principles and to report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. The objective also includes reporting on— Internal control over financial reporting and compliance with provisions of laws, regulations, contracts, and award agreements, noncompliance with which could have a material effect on the financial statements in accordance with Gouemment Auditing Standards.

Internal control overcompliance related to major programs and an opinion (or disclaimerof opinion) on compliance with federal statutes, regulations, and the terms and conditions of federal awards that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and Title 2 U. S. Code of Federal Regulations ( CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

The GouernmentAuditing Standards report on internal control overfinancial reporting and on compliance and other matters will include a paragraph that states that ( 1) the purpose of the report is solely to describe the scope of testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity' s internal control or on compliance, and ( 2) the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity' s internal control and compliance. The Uniform Guidance report on internal control over compliance will include a paragraph that states that the purpose of the report on internal control over compliance is solely to describe the scope of testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Both reports will state that the report is not suitable for any other purpose
Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America; the standards for financial audits contained in Gouemment Auditing Standards, issued by the Comptroller General of the United States, the Single Audit Act Amendments of 1996; and the provisions of the Uniform Guidance, and will include tests of accounting records, a determination of major programs) in accordance with the Uniform Guidance, and other procedures we consider necessary to enable us to express such opinions. We will issue written reports upon completion of our Single Audit. Our reports will be addressed to governing board of the City of Redondo Beach. We cannot provide assurance that unmodified opinions will be expressed. Circumstances may arise in which it is necessary for us to modify our opinions or add emphasis -of -matter or other -matter paragraphs. If our opinions are other than unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or issue reports, or we may withdraw from this engagement.

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obtain reasonable assurance about whether the financial statements are free of material misstatement, whether from ( 1) errors, ( 2) fraudulent financial reporting, ( 3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the government or to acts by management or employees acting on behalf of the government. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse.

Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, if material on a rotational basis, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will require certain written representations from you about your responsibilities for the financial statements; schedule of expenditures of federal awards; federal award programs; compliance with laws, regulations, contracts, and grant agreements, and other responsibilities required by generally accepted auditing standards.

Audit Procedures— Internal Control
Our audit will include obtaining an understanding of the government and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements.

LSL'
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Audit Procedures—Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests ofthe City of Redondo Beach' s compliance with provisions of applicable laws, regulations, contracts, and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards.

Other Services
We will also assist in preparing the financial statements, schedule of expenditures of federal awards, and related notes of the City of Redondo Beach in conformity with U. S. generally accepted accounting principles and the Uniform Guidance based on information provided by you. These nonaudit services do not constitute an audit under Government Auditing Standards and such services will not be conducted in accordance with Government Auditing Standards. We will perform the services in accordance with applicable professional standards. The other services are limited to the financial statements, schedule of expenditures of federal awards, and related notes services previously defined. We, in our sole professional judgment, reserve the right to refuse to perform any procedure ortake any action that could be construed as assuming management responsibilities.

Management Responsibilities
Management is responsible for ( 1) establishing and maintaining effective internal controls, including internal controls over federal awards, and for evaluating and monitoring ongoing activities, to help ensure that appropriate goals and objectives are met; ( 2) following laws and regulations, ( 3) ensuring that there is reasonable assurance that government programs are administered in compliance with compliance requirements; and (4) ensuring that management and financial information is reliable and properly reported.

Management is also responsible for implementing systems designed to achieve compliance with applicable laws, regulations, contracts, and grant agreements. You are also responsible for the selection and application of accounting principles; for the preparation and fair presentation of the financial statements, schedule of expenditures of federal awards, and all accompanying information in conformity with U. S. generally accepted accounting principles; and for compliance with applicable laws and regulations including federal statutes) and the provisions of contracts and grant agreements ( including award agreements). Your responsibilities also include identifying significant contractor relationships in which the contractor has responsibility for program compliance and for the accuracy and completeness of that information.

Management is also responsible for making all financial records and related information available to us and for the accuracy and completeness of that information. You are also responsible for providing us with 1) access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, ( 2) access to personnel, accounts, books, records, supporting documentation, and other information as needed to perform an audit under the Uniform Guidance, (3) additional information LSL'":

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that we may request for the purpose of the audit, and ( 4) unrestricted access to persons within the government from whom we determine it necessary to obtain audit evidence.

You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud affecting the government involving 1) management, ( 2) employees who have significant roles in internal control, and ( 3) others where the fraud could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the government received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for identifying and ensuring that the government complies with applicable laws, regulations, contracts, agreements, and grants- Management is also responsible for taking timely and appropriate steps to remedy fraud and noncompliance with provisions of laws, regulations, contracts, and grant agreements, or abuse that we report. Additionally, as required by the Uniform Guidance, it is management' s responsibility to evaluate and monitor noncompliance with federal statutes, regulations, and the terms and conditions of federal awards; take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings; promptly follow up and take corrective action on reported audit findings, and prepare a summary schedule of prior audit findings and a separate corrective action plan on the City of Redondo Beach' s letterhead. The summary schedule of prior audit findings should be available for our review on the first day of our schedule visit for the Single Audit.

You are responsible for identifying all federal awards received and understanding and complying with the compliance requirements and for the preparation of the schedule of expenditures of federal awards including notes and noncash assistance received) in conformity with the Uniform Guidance. You agree to include our report on the schedule of expenditures of federal awards in any document that contains and indicates that we have reported on the schedule of expenditures of federal awards. You also agree to make the audited financial statements readily available to intended users of the schedule of expenditures of federal awards no later than the date the schedule of expenditures of federal awards is issued with our report thereon. Your responsibilities include acknowledging to us in the written representation letter that 1) you are responsible for presentation of the schedule of expenditures of federal awards in accordance with the Uniform Guidance, ( 2) you believe the schedule of expenditures of federal awards, including its form and content, is stated fairly in accordance with the Uniform Guidance; (3) the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reasons for such changes); and ( 4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the schedule of expenditures of federal awards.

You are also responsible for the preparation of the other supplementary information, which we have been engaged to report on, in conformity with U. 5generally accepted accounting principles. You agree to include our report on the supplementary information in any document that contains, and indicates that we have reported on, the supplementary information. You also agree to include the audited financial statements with any presentation of the supplementary information that includes our report thereon. Your responsibilities include acknowledging to us in the written representation letter that ( 1) you are responsible for presentation of the supplementary information in accordance with GAAP, ( 2) you believe the supplementary information, including its form and content, is fairly presented in accordance with GAAP; 3) the methods of measurement or presentation have not changed from those used in the prior period ( or, if they have changed, the reasons for such changes); and ( 4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the supplementary information.

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Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying and providing report copies of previous financial audits, attestation engagements, performance audits, or other studies related to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or studies. You are also responsible for providing management' s views on our current findings, conclusions, and recommendations, as well as your planned corrective actions, for the report, and for the timing and format for providing that information. With regard to the electronic dissemination of audited financial statements, including financial statements published electronically on your website, you understand that electronic sites are a means to distribute information and, therefore, we are not required to read the information contained in these sites or to consider the consistency of other information in the electronic site with the original document.

Engagement Administration, Fees, and Other
We may from time to time, and depending on the circumstances, use third -party service providers in serving your account. We may share confidential information about you with these service providers, but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures, and safeguards to protect the confidentiality of your personal information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third -party service provider.

Furthermore, we will remain responsible for the work provided by any such third -party service providers.

We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any documents selected by us for testing.

LSU"=
City of Redondo Beach

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The audit documentation for this engagement is the property of Lance, Soil, & Lunghard LLP and constitutes confidential information. However, subject to applicable laws and regulations, audit documentation and appropriate individuals will be made available upon request and in a timely manner to California Society of Certified Public Accountants or the American Institute of Certified Public Accountants or its designee, a federal agency providing direct or indirect funding, or the U. S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities.

We will notify you of any such request. If requested, access to such audit documentation will be provided under the supervision of Lance, Soll, & Lunghard LLP' s personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to others, including other governmental agencies.

The audit documentation for this engagement will be retained for a minimum of seven years after the report release date or for any additional period requested by the California Society of Certified Public Accountants or the American Institute of Certified Public Accountants, or Pass- through Entity. If we are aware that a federal awarding agency, pass-through entity, or auditee is contesting an audit finding, we will contact the party( ies) contesting the audit finding for guidance prior to destroying the audit documentation.

We expect to begin our audit as previously agreed to by management. Bryan S. Gruber is the engagement partner and is responsible for supervising the engagement and signing the reports or authorizing another individual to sign them. To ensure that Lance, Soll, and Lunghard LLP' s independence is not impaired under the AICPA Code of Professional Conduct, you agree to inform the engagement partner before entering into any substantive employment discussions with any of our personnel.

Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 90 days or more overdue and may not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report( s). You will be obligated to compensate us for all time expended and to reimburse us for all out-of- pocket costs through the date of termination. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs.

LSU,:::

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Redondo Beach City CouncilApril 18, 2023

Redondo Beach City Council
April 18, 2023