CITY OF SIMI VALLEY
MEMORANDUM
J
uly 25, 2022
TO
: City Council
Board of Directors, Ventura County Waterworks District No. 8 Board of Directors, Simi Valley Public Facilities Financing Authority Board of Directors, Successor Agency to the Simi Valley Community Development Agency
Board of Trustees, Simi Valley Public Library
F
ROM: Department of Administrative Services
S
UBJECT: AWARD CONTRACT FOR PROFESSIONAL AUDITING SERVICES
STAFF RECOMMENDATION
I
t is recommended that the City Council, Boards of Directors/Trustees , hereinafter City Council:
1. Award the attached contract for audit services (page 6) to Vasquez & Company, LLP for a three -year period beginning with fiscal year ending June 30, 2022, with an option to renew for one additional two year term.
BACKGROUND AND OVERVIEW
A
n independent audit of the Annual Comprehensive Financial Report ( ACFR) is a basic requirement of the Government Finance Officers Association (GFOA) for its annual certification program. The City has been awarded the GFOA Certificate of Achievement for Excellence in Financial Reporting for 41 consecutive years. In addition to this national certification program, audited financial statements are required whenever a public agency wishes to issue bonds or obtain other debt financing, or when the agency is a recipient of Federal grant funds. Based on a previous competitive bid process, t he City has used the Certified Public Accountant (CPA) firm, Vasquez & Company, LLP, for the past eight years.
Following a recent competitive selection process, staff is recommending that the City Council award a contract for audit services t o Vasquez & Company, LLP, for a three-year period beginning with fiscal year ending June 30, 2022, with an option to renew for one additional two-year term.
T
he function of the independent audit is to provide an annual review of all City funds and financial transactions in accordance with generally accepted auditing standards , as established by the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA); Government Auditing Standards established by the Comptroller General of the United States; the Single Audit Act of 1984 and the Single Audit Act Amendments of 1996 ; and the U.S. Office of Management and Budget 2 CFR Part 200 Subpart F (Audit Requirements). Following the audit, the independent auditor issues an “opinion letter” and other reports to the City’s management, addressing the fair presentation AGENDA ITEM NO.
Consent (4)
2 of financial position of the financial statements, matters involving internal controls over financial reporting, and compliance with applicable laws, regulations, contracts, and grants.
Independent auditors perform a review of internal controls of all significant accounting procedures, report their observations concerning any significant deficiencies , and make recommendations to correct the identified weaknesses in a “management letter” issued to the City Council.
Additionally, the independent auditors remain available throughout the term of the contract to provide financial advice and counsel on matters that would affect the City’s financial statements.
FINDINGS AND ALTERNATIVES
With the current professional auditing contract expiring, City staff determined it would be most appropriate to issue a Request for Proposal (RFP), a full -scale competitive process, to contract for professional auditing services. While serving as the City’s current auditor, Vasquez and Company, LLP (Vasquez) has delivered high quality audits for the past eight years. Going through the RFP process, however, will ensure that the City is receiving both competitive pricing and high audit quality, while also maintaining transparency about this process, i.e., the facto rs considered when selecting an auditor, and the rationale behind staff’s recommendation.
A Request for Proposals (RFP) was posted to the City website on April 22, 2022, with a submission deadline of May 25, 2022. In addition, the RFP was posted on two professional association web pages, the California Society of Municipal Finance Officers (CSMFO) and the California Association of Public Procurement Officials, Inc. (CAPPO).
CSMFO is a widely known association including members from most, if not all, CPA firms that audit local governments . By posting the RFP to CSMFO, staff ensured maximum visibility to the various CPA firms that may be able to provide audit services within the scope of the RFP. CAPPO is the oldest public procurement association in the United States, and provides procurement resources to assist governments with improving the procurement process. While CAPPO is not strictly an accounting association, it was determined that posting the RFP to this website would only increase potential visibility of the RFP.
Subsequently, two CPA firms submitted proposals by the deadline of May 25, 2022.
The proposals were evaluated by an Audit Services Proposal Review Committee (Review Committee) comprised of the Deputy Administrative Services Director (Fiscal Services) and the Senior Accountant. The City used an audit proposal evaluation matrix published by the AICPA, which includes the following five categories:
1. Approach to audit quality
2. Team knowledge and experience
3. Unique qualifications
4. Value added services
5. Scope and pricing of the engagement
3 The Review Committee members independently evaluated each of the two proposals. The members then convened, compared their ratings, and ranked the firms based on these elements. The table below lists the average points rating and audit costs quoted by the two firms.
(option) (option) (w/option)
Firm Name Rating Year 1 Year 2 Year 3 Year 4 Year 5 Total Vasquez and Co. LLP
(Vasquez)
92 $69,470 $71,554 $73,700 $75,912 $78,189 $368,825
CliftonLarsenAllen LLP
(CLA)
89 $66,840 $70,180 $73,690 $77,375 $81,240 $369,325
As summarized above, both audit firms scored similarly and had competitive pricing. The firms both have extensive experience auditing local governments, have an internal control based audit approach (more efficient) providing basis to limit substantive testing, utilize technology to streamline the audit process, and are members of the AICPA Governmental Audit Quality Center. In addition, both lead engagement partners are reviewers for the GFOA award program, evidencing their technical accounting and repor ting knowledge.
Overall, the proposals were professional, concise, and contained the requested information per the RFP. Vasquez did score higher by including more specific information about the City’s engagement, such as compliance with budgetary requirem ents, investments, bond covenants, and grant agreements, all items relevant to the City’s operation.
The primary difference between Vasquez and CLA, is that Vasquez has been the City’s auditor for the last eight years, while CLA does not have any experience with the City.
During this time, Vasquez has established extensive knowledge about the City, which facilitates a more efficient and effective audit each year. This level of efficiency will allow Vasquez to better use their time to focus in on the audit issues that hold more importance, rather than spending time during the audit building a basic understanding of City operations.
In addition, Vasquez has performed well during their time with the City, and staff has had positive experiences working with Vasquez through each year’s financial audit.
During the review process, staff considered potential downsides of retaining an existing auditor. Specifically, there is perception that rotating auditors creates increased audit independence (objectivity) and enables a “fresh look” into the auditee, which results in higher audit quality. However, independence concerns are mitigated by applicable laws and regulations. For example, California Government Code section 12410.6(b) requires that CPA firms rotate the lead engagement audit partner every six years. Additionally, each year the audit undergoes a quality control (QC) review, which is performed by a separate audit partner from the firm that was not involved in the engagement, beyond performing his or her QC review. The various staff members of the engagement team also rotate, as existing staff members get promoted, reassigned, or leave the firm. These components, collectively, result in auditor independence. Throughout the last eight years, the City’s audit engagement team has seen two different lead engagement partners, three different QC partners, three different lead managers, four different in charge seniors, and four different lead IT auditors.
4 In addition to considering auditor independence, staff also assess ed the impact of audit quality while retaining Vasquez. As mentioned above, Vasquez has a deep understanding of our organization, including the City’s organizational structu re, financial process knowledge, internal control framework, and ERP knowledge and use. This existing extensive knowledge will provide the foundation for the audit team to provide a higher quality audit, as audit resources and City staff will be able to focus on high audit risk areas, rather than focusing efforts towards building this foundational understanding of the City.
V
asquez has also demonstrated positive prior performance. For example, the firm has provided perpetual support to the City. We receive timely and accurate guidance from them about technical accounting issues both during and outside of the audit period. They have accommodated delays when City staff has been unable provide deliverables per the audit schedule. The firm has obtained knowledge about how to use our financial system, which allows them to independently research and obtain transaction backup with very little assistance from staff. Lastly, they host training events that City employees can attend and provide continuing professional education (CPE credits) for those trainings. Overall, Vasquez has been a valuable partner to the City during the time they have provided service, and we expect their audit quality and value to the City to continue to increase as additional years go by.
T
he following alternatives are available to the City Council/Boards:
1. A
ward the attached contract for audit services (page 6) to Vasquez & Company LLP for a three -year period beginning with fiscal year ending June 30, 2022, with an option to renew for one additional two-year term.
2. D
o not award the attached contract, and provide staff with further direction regarding the selection of audit services.
S
taff recommends Alternative No. 1.
SUGGESTED CITY COUNCIL MOTION
I move to award the attached contract for audit servic es to Vasquez & Company, LLP for a three-year period beginning with fiscal y ear ending June 30, 2022, with an option to renew for one additional two-year term.
SUMMARY
The City’s contract for audit services has expired. Proposals for audit services have been solicited and evaluated. Vasquez & Company LLP has been recommended by staff from a pool of two CPA firms that submitted proposals as the firm best suited to meet the City's auditing and accounting needs. It is recommended that the City Council award a contract for audit services to Vasquez & Company LLP for fiscal years ending June 30, 2022 through 2024.
______
_____________________________
Carolyn Johnson
Administrative Services Director
5 Prepared by: Marvin Lopez, Deputy Administrative Services Director/(Fiscal Services)
INDEX Page
Contract ............................................................................................ 6
CONTRACT FOR PROFESSIONAL AUDITING SERVICES
BETWEEN THE CITY OF SIMI VALLEY , VENTURA COUNTY
WATERWORKS DISTRICT NO. 8, SIMI VALLEY PUBLIC
FACILITIES FINANCING AUTHORITY, SUCCESSOR AGENCY
TO THE SIMI VALLEY COMMUNITY DEVELOPMENT
AGENCY, THE SIMI VALLEY PUBLIC LIBRARY, AND
VASQUEZ & COMPANY LLP
T
HIS CONTRACT is made and entered into in the CITY of Simi Valley on this 26th day of July 2022, by and between the CITY OF SIMI VALLEY, VENTURA COUNTY WATERWORKS DISTRICT NO. 8, SIMI VALLEY PUBLIC FACILITIES FINANCING
AUTHORITY, SUCCESSOR AGENCY TO THE SIMI VALLEY COMMUNITY DEVELOPMENT AGENCY, and THE SIMI VALLEY PUBLIC LIBRARY , municipal corporations, hereinafter referred to as CITY, and VASQUEZ & COMPANY LLP, a certified public accounting firm, hereinafter referred to as CONSULTANT.
RECITALS
W
HEREAS, on April 22, 2022, CITY requested proposals to provide professional audit services; and
W
HEREAS, pursuant to such request, CONSULTANT submitted a proposal, which was accepted by CITY for the services.
N
OW, THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained, the parties hereto agree as follows:
AGREEMENT
1. R
ecitals. The foregoing recitals are true and correct and are a part of this CONTRACT.
2. Te
rm. The term of this CONTRACT shall be from July 25, 2022 through June 30, 2025, and authorize the City Manager to renew for one (1) additional two (2) year term upon mutual written consent of the City Manager and CONSULTANT.
3. D
escription of Services. The services to be performed by CONSULTANT during the Term, are professional auditing services (Fiscal years 2022 through 2024). CONSULTANT agrees to perform the services more specifically set forth in the “Scope of Work” attached hereto and incorporated herein as Exhibit “A”.
4. C
ompensation and Payment.
A. T
he total compensation payable to CONSULTANT by CITY for services under this CONTRACT shall not exceed the sum of $214,724 (the “Not-To-Exceed Amount”), and shall be earned as the work progresses. Payment will be made based on the rates contained in the “Schedule of Fees” as set forth in Exhibit “B” attached hereto and incorporated herein. CONSULTANT acknowledges that CONSULTANT is not guaranteed to receive the Not-To-Exceed Amount or any particular or minimum amount of compensation or work under this CONTRACT.
6 B. A
fter CONSULTANT has performed the services as specified in this CONTRACT, CITY shall be obligated to pay CONSULTANT based upon the actual CITY-authorized services received by CITY at the rates established as a part of this CONTRACT. In no event shall the total amount paid exceed the CONTRACT Not-to-Exceed Amount unless otherwise agreed to by the parties in writing.
C. P
ayments to the CONSULTANT shall be made within 30
days after receipt of an original invoice from the CONSULTANT and acceptance of the services by CITY.
D. CO
NSULTANT shall provide CITY with written verification of the actual compensation earned, which written verification will be in a form satisfactory to CITY. Invoices shall include the work performed including a list of hours worked by personnel.
5. C
ONSULTANT’s Representations and Obligations.
A. C
ONSULTANT shall perform as required by this CONTRACT.
CONSULTANT also warrants on behalf of itself and all subcontractors engaged for the performance of this CONTRACT that only persons authorized to work in the United States pursuant to the Immigration Reform and Control Act of 1986 and other applicable laws shall be employed in the performance of the work hereunder.
B. C
ONSULTANT shall obey all Federal, State, local, and special district laws, ordinances, and regulations.
C. C
ONSULTANT agrees to abide by CITY ’s Business Tax
Ordinance, of which proof of payment must be obtained prior to performance of this CONTRACT.
D. C
ONSULTANT acknowledges CITY may contract with other
parties for the performance of services or supplemental services as they relate to the work during the term of this CONTRACT.
6. A
udit.
A. A
t any time during normal business hours and as often as the CITY may deem necessary, CONSULT ANT shall make available to CITY for inspection its records pertaining to this CONTRACT. CONSULTANT shall permit CITY to audit, examine and/or reproduce such records. CONSULTANT will retain such financial records, time sheets, work progress reports, invoices, bills and project records for at least (2) years after termination or final payment under this CONTRACT. This paragraph shall survive for two (2) years after termination of this CONTRACT.
B. CI
TY shall have the option of inspecting and/or auditing all records and other written materials used by CONSULTANT in preparing its statements to CITY as a condition precedent to any payment to CONSULTANT. 7 7. Hold Harmless and Indemnification . CONSULTANT shall defend, indemnify, and hold harmless CITY , its a gents, officials, officers, representatives, and employees, from and against all claims, lawsuits, liabilities or damages of whatever nature arising out of or in connection with, or relating in any manner to any act or omission of CONSULTANT, its agents, e mployees, and subcontractors, and employees thereof, pursuant to the performance or non- performance of this CONTRACT. The CONSULTANT shall thoroughly investigate any and all claims and indemnify the CITY and do whatever is necessary to protect the CITY, its agents, officials, officers, representatives, and employees as to any such claims, lawsuits, liabilities, expenses, or damages arising out of this CONTRACT. The CITY shall be included as an Additional Insured in the automobile/ liability insurance polici es and endorsements of the CONSULTANT. The CONSULTANT must select an attorney acceptable to the CITY who will defend such proceeding and the CITY will control any litigation thereof. Such approval by the CITY will not be unreasonably withheld. This paragraph shall survive the termination of this CONTRACT.
8. Amendments. Any amendment, modification, or variations from the provisions of this CONTRACT shall be in writing and shall be effective only upon mutual written approval by the Administrative Services Director and CONSULTANT, except that any changes in the CONTRACT amount and term of the CONTRACT shall be effective only upon mutual written approval by the City Manager or designee, and CONSULTANT.
9. Anti-Discrimination. In the performance of the terms of this CONTRACT, CONSULTANT shall not engage in, nor permit subcontractors to engage in, discrimination in employment of persons because of the age, race, color, religious creed, sex, sexual orientation, national origin, ancestry, physical disability, mental disability, medical condition, or marital status of such persons. Violation of this provision may result in the imposition of penalties referred to in Labor Code Section 1735.
10. Personal Services. This Agreement is for professional services, which are personal to CITY . Cristy Canieda is deemed to be specially experienced and is a key member of CONSULTANT’S firm, and shall be directly involved in performing, supervising, or assisting in the performance of this work. This key person shall communicate with, and periodically report to, CITY on the progress of the work. Should any such individual be removed from assisting in this contracted work for any reason, CITY may terminate this CONTRACT.
11. Termination.
A. Either party may terminate this CONTRACT upon a minimum of thirty (30) days written notice of such termination, pursuant to the notice procedures outline in paragraph 27 of this CONTRACT.
B. If, during the term of this CONTRACT, CITY determines that CONSULTANT is not faithfully abiding by any term or condition contained herein, CITY may notify CONSULTANT in writing of such defect or failure to perform. The notice must give to the CONSULTANT a ten (10) day period of time thereafter in which to perform the work or cure the deficiency. If CONSULTANT has not performed the work or cured the deficiency within the ten (10) days specified in the notice, such failure shall constitute a breach of this CONTRACT, and CITY may terminate this CONTRACT immediately by written notice to CONSULTANT. In addition, CITY, if it terminates this CONTRACT for cause, may withhold as an offset from payments due CONSULTANT damages occasioned by such breach, including liquidated damages, if so provided herein. The CITY shall be liable to the CONSULTANT only for those fees accrued by the CONSULTANT to the date CONSULTANT receives the notice of termination. In no event, however, shall CONSULTANT be entitled to receive in excess of the CONTRACT amount.
8 12. Delivery of Reports in Cases of Termination . If this CONTRACT is terminated pursuant to any of the provisions contained hereinabove, and if requested to do so in writing by the CITY, the CONSULTANT shall, within fourteen (14) calendar days after receipt of such written request, deliver and turn over to the CITY all of its preparation and work on the project which were done to the date of the receipt of the notice of termination.
The terms "preparation" and "work" as used in this paragraph, shall refer to and include all data and materials of whatever type that have been gathered by the CONSULTANT, and contemplated to be used or actually used, in the provision of the services as specified in this CONTRACT.
13. Complete CONTRACT . This CONTRACT and its accompanying exhibits shall constitute the complete CONTRACT between the parties hereto. No verbal agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be of any force or effect, nor shall any such verbal agreement, understanding, or representation be binding upon the parties hereto.
14. Independent Contractor . It is expressly understood between the parties to this CONTRACT that no employee/employer relationship is intended.
CONSULTANT is not an agent or employee of the CITY and it is not entitled to participate in any pension plan, insurance or other benefits CITY provides for its employees.
CONSULTANT is an independent contractor in performing the Services required under this CONTRACT and will have control of all work and the manner in which it is performed. Any provision of this CONTRACT that may appear to give CITY the right to direct CONSULTANT as to the details of doing the work required herein or to exercise a measure of control over the work means that the CONSULTANT will follow the direction of the CITY as to the results of the work only.
15. Time of Performance. Time is of the essence in this CONTRACT.
16. Insurance. CONSULTANT shall, at CONSULTANT’S sole cost and expense, provide insurance as contained in Exhibit “C”, incorporated herein. CONSULTANT shall not commence work on the Services to be performed, until it submits proof of all insurance coverage as required.
17. Ownership of Reports and Data. It is understood and agreed that the CITY shall own the CITY’s financial statements and Annual Comprehensive Financial Report. The auditor’s opinions and audit working papers prepared in accordance with Generally Accepted Auditing Standards (GAAS), Generally Accepted Government Auditing Standards (GAGAS), or the Code of Federal Regulations: Part 200, Uniform Guidance are the property of the CONSULTANT.
18. Conflict of Interest . Neither CONSULTANT nor any employees, agents, or subcontractors of CONSULTANT who will be assigned to this project, to the best of CONSULTANT'S knowledge, own any property or interest in properties, business relationships, or sources of income which may be affected by the performance of this CONTRACT. Should one party hereto learn of any such interest, income source, or business relationship, such fact shall immediately be brought to the attention of the other party hereto.
If the parties thereupon cannot mutually agree upon a means to eliminate the conflict, CITY may terminate the CONTRACT immediately for non- performance pursuant to Section 11 herein.
9 In accordance with California Government Code Section 87306, CONSULTANT shall provide, if requested by CITY , a Conflict of Interest Statement, Form 700 no later than 30 days after execution of this CONTRACT, and annually thereafter prior to April 1st of each year for the duration of the CONTRACT. Failure to file any of the required statements will result in withholding payment for services rendered.
19. Successors and Assigns
. The terms hereof shall be binding upon and
inure to the benefit of the successors and assigns of the parties hereto; provided, however, that no party hereto shall assign any of the benefits and burdens hereunder, whether voluntarily or by operation of law, without the prior written consent of the other party, and any such assignment without said consent shall be void.
20. Authority to Execute CONTRACT. Both CITY and CONSULTANT do covenant that each individual executing this CONTRACT on behalf of each party is a person duly authorized and empowered to execute contracts for such party.
21. Jurisdiction and Venue . Jurisdiction is in an appropriate court in the State of California and venue lies in Ventura County, and the parties do not consent to arbitration. In the event of any dispute, each party shall bear its own fees and costs (including attorneys’ fees). This CONTRACT shall be governed by California law, without regard to conflict of law principles.
22. Non-Appropriation of Funds . Payments due and payable to CONSULTANT for current services are within the current budget and within an available, unexhausted and unencumbered appropriation of CITY . In the event CITY has not appropriated sufficient funds for payment of CONSULTANT services beyond the current fiscal year, this CONTRACT shall cover only those costs incurred up to the conclusion of the current fiscal year.
23. Taxpayer Identification Number . CONSULTANT shall provide CITY with a complete Request for Taxpayer Identification Number and Certification, form W -9 (latest revision), as issued by the Internal Revenue Service.
24. Permits and Licenses . CONSULTANT, at its sole cost and expense, shall obtain and maintain during the term of this CONTRACT, all appropriate permits, licenses, and certificates that may be required in connection with the performance o f this CONTRACT.
25. Waivers. The waiver by one party of any term or condition of this CONTRACT, or any breach thereof, shall not be construed to be a general waiver by the party or as a waiver of any other term or breach.
26. Statement of Experience. CONSULTANT warrants that it will perform its Services with at least the due care, diligence and expertise generally accepted in its industry. CONSULTANT also understands and agrees that it is being employed to perform the Services provided for by this CONTRACT because of CONSULTANT’S professed expertise and experience in performing such Services. In addition, CONSULTANT understands and agrees that while CITY or CITY’S officers, employees, agents or volunteers may elect to do so, they have no duty to review, inspect, monitor, or supervise the work performed by CONSULTANT pursuant to this CONTRACT. As a consequence, CONSULTANT waives any right of contribution against CITY or any of CITY ’S officers, employees, agents, or volunteers arising out of such failure to inspect, review, monitor, or supervise the work performed by CONSULTANT pursuant to this CONTRACT.
10 27. Notices. All written notices required by, or related to this CONTRACT shall be sent by Certified Mail, Return Receipt Requested, postage prepaid and addressed as listed below. Neither party to this CONTRACT shall refuse to accept such mail; the parties to this CONTRACT shall promptly inform the other party of any change of address. All notices required by this CONTRACT are effective on the day of receipt, unless otherwise indicated herein. The mailing address of each party to this CONTRACT is as follows:
CITY Administrative Services Department
City of Simi Valley
2929 Tapo Canyon Road
Simi Valley, CA 93063
Staff Contact: Marvin Lopez, Dep. Dir. AS/(FS)
(805) 583-6803
CONSULTANT Vasquez & Company LLP
655 N. Central Avenue
Glendale, CA 91203
Attn: Cristy Canieda
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year first above written.
Attest: CITY of Simi Valley, A Municipal Corporation
By:
Lucy Blanco, City Clerk Keith L. Mashburn, Mayor of the CITY of Simi Valley, California
Approved as to Form: VASQUEZ AND COMPANY, LLP
By:
David L. Caceres, City Attorney
Print Name: Cristy A. Canieda
Approved as to Content: Title:
Partner, Government Practice Leader
By:
Brian Paul Gabler, City Manager
Print Name: Gilbert R. Vasquez
Title:
Managing Partner
Carolyn Johnson,
Administrative Services Director
11 EXHIBIT “A” SCOPE OF WORK
CONTRACT FOR PROFESSIONAL AUDITING SERVICES
BETWEEN THE CITY OF SIMI VALLEY , VENTURA COUNTY
WATERWORKS DISTRICT NO. 8, SIMI VALLEY PUBLIC
FACILITIES FINANCING AUTHORITY, SUCCESSOR AGENCY
TO THE SIMI VALLEY COMMUNITY DEVELOPMENT
AGENCY, THE SIMI VALLEY PUBLIC LIBRARY, AND
VASQUEZ & COMPANY LLP
The audit engagement shall include, but not necessarily be limited to, the tasks set forth below.
1. The CITY desires the auditor to express an opinion on the fair presentation, in the ACFR, of its governmental activities, its business-type activities, each of its major funds, and its aggregate remaining fund information in conformity with generally accepted accounting principles.
2. The CITY also desires the auditor to express an opinion on the fair presentation of its combining and individual fund financial statements and schedules in conformity with generally accepted accounting principles. The auditor is not required to audit the supporting schedules contained in the annual comprehensive financial report. However, the auditor is to provide an "in- relation-to" opinion on the supporting schedules based on the auditing procedures applied during the audit of the basic financial statements and the combining and individual fund financial statements and schedules. The auditor is not required to audit the introductory section of the report or the statistical section of the report.
3. The auditor shall also be responsible for performing certain limited procedures involving required supplementary information required by the Governmental Accounting Standards Board as mandated by generally accepted auditing standards.
4. Single Audit: The auditor is to provide an "in- relation-to" report on the Federal Single Audit schedule based on the auditing procedures applied during the audit of the financial statements. However, the auditor is not required to audit the schedule of expenditures of federal awards. The auditor shall assist the CITY in responding to inquiries from the Federal agencies on issues related to the audit.
5. The Single Audit Schedule of Expenditures of Federal Awards and related auditor's report, as well as the reports on compliance and internal controls are not to be included in the annual comprehensive financial report, but are to be issued separately.
6. GANN Limit: The auditor shall perform certain agreed upon procedures relating to the CITY ’s calculation of its appropriation limit in accordance with Article XIIIB of the California Constitution.
12 7. Auditing Standards: The audit shall be performed in accordance with generally accepting auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in t he U.S.
Government Accountability Office's Government Auditing Standards (1994), the provisions of the Single Audit Act of 1984 (as amended in 1996) and the provisions of U.S. Office of Management and Budget (OMB) Circular A -133, Audits of States, Local Governments, and Non-Profit Organizations.
8. Reports to be Issued: Following the completion of the audit of the fiscal year's financial statements, the auditor shall issue the following reports for the CITY and the Single Audit:
a. A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles, including an opinion on the fair presentation of the supplementary schedule of expenditures of federal awards in relation to the audited financial statements. b. A report on compliance and internal control over financial reporting based on an audit of the financial statements.
c. A report on compliance and internal control over compliance applicable to each major federal program.
9. In the required reports on compliance and internal controls, the auditor shall communicate any significant deficiency or material weakness found during the audit. A significant deficiency shall be defined as a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected.
A material weakness shall be defined as a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected. Significant deficiencies that are also material weaknesses shall be identified as such in the report.
10. Control deficiencies discovered by the auditors that are neither significant deficiencies nor material weaknesses shall be reported in a separate letter to management, which shall be referred to in the reports on compliance and internal controls. A control deficiency shall be deemed to have occurred whenever the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.
11. The reports on compliance and internal controls shall include all instances of noncompliance, Irregularities and illegal acts. Auditors shall be required to make an immediate, written report of all irregularities and illegal acts of which they become aware to the following parties:
• CITY Manager
• Director of Administrative Services
• Deputy Administrative Services Director/Fiscal Services
13 12. Reporting to top government officials. Auditors shall assure themselves that the CITY's top government officials are informed of each of the following:
a. The auditor's responsibility under generally accepted auditing standards b. Significant accounting policies
c. Management judgments and accounting estimates
d. Significant audit adjustments
e. Auditors’ judgments about the quality of the entity’s accounting principles
f. Disagreements with management
g. Difficulties encountered in performing the audit
13. Special Considerations
Award Program
The CITY will send its annual comprehensive financial report to the Government Finance Officers Association of the United States and Canada for review in their Certificate of Achievement for Excellence in Financial Reporting program. It is anticipated that the auditor may be required to provide special assistance to the CITY to meet the requirements of that program.
GASB Pronouncements
During the period of the audit contract, the CITY will implement all required GASB pronouncements. The auditor shall provide assistance in reviewing policy and financial reporting issues related to all new GASB pronouncements to ensure the CITY implements the statements timely and accurately.
14. Access to Working Papers
The auditor will be required to make working papers available, upon request, to the following parties or their designees:
• CITY of Simi Valley
• U.S. Government Accountability Office (GAO)
• Parties designated by the federal or state governments or by the CITY as part of an audit quality review process
• Auditors of entities of which the CITY is a sub-recipient of grant funds
In addition, the firm shall respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance.
15. Roles and Responsibilities
City management shall assume the roles and responsibilities as required per government auditing standards.
14 EXHIBIT “B” SCHEDULE OF FEES
CONTRACT FOR PROFESSIONAL AUDITING SERVICES
BETWEEN THE CITY OF SIMI VALLEY , VENTURA COUNTY
WATERWORKS DISTRICT NO. 8, SIMI VALLEY PUBLIC
FACILITIES FINANCING AUTHORITY, SUCCESSOR AGENCY
TO THE SIMI VALLEY COMMUNITY DEVELOPMENT
AGENCY, THE SIMI VALLEY PUBLIC LIBRARY, AND
VASQUEZ & COMPANY LLP
Option Years
Nature of Service
To Be Provided FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
City Audit & GANN $ 55,509 $ 57,174 $ 58,889 $ 60,656 $ 62,476 Single Audit 13,961 14,380 14,811 15,256 15,713 Subtotal $ 69,470 $ 71,554 $ 73,700 $ 75,912 $ 78,189
TOTAL ALL INCLUSIVE MAXIMUM PRICE
FOR FY 2022 THROUGH FY 2024 $ 214,724
15 EXHIBIT “C” INSURANCE REQUIREMENTS
CONTRACT FOR PROFESSIONAL AUDITING SERVICES
BETWEEN THE CITY OF SIMI VALLEY , VENTURA COUNTY
WATERWORKS DISTRICT NO. 8, SIMI VALLEY PUBLIC
FACILITIES FINANCING AUTHORITY, SUCCESSOR AGENCY
TO THE SIMI VALLEY COMMUNITY DEVELOPMENT
AGENCY, THE SIMI VALLEY PUBLIC LIBRARY, AND
VASQUEZ & COMPANY LLP
Consultant shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by the Consultant, its agents, representatives, or employees. Consultant shall procure and maintain for the duration of the contrac t insurance claims arising out of their services and including, but not limited to loss, damage, theft or other misuse of data, infringement of intellectual property, invasion of privacy and breach of data.
Minimum Scope and Limit of Insurance
Coverage shall be at least as broad as:
1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $2,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.
2. Automobile Liability: Insurance Services Office Form Number CA 0001 covering, Code 1 (any auto), or if Consultant has no owned autos, Code 8 (hired) and 9 (non- owned), with limit no less than $1,000,000 per accident for bodily injury and property damage.
3. Workers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease. Consultant hereby certifies that it is aware of the provisions of Section 3700 et seq., of the Labor Code which require every employer to be insured against liability for Workers' Compensation.
4. Professional Liability (Errors and Omissions) Insurance appropriate to the Consultant’s profession, with limits no less than $2,000,000 per occurrence or claim, and $2,000,000 policy aggregate.
5. Cyber Liability Insurance, with limits not less than $2,000,000 per occurrence or claim, $2,000,000 aggregate. Coverage shall be sufficiently broad to respond to the duties and obligations as is undertaken by Vendor in this agreement and shall include, but not be limited to, claims involving infringement of intellectual property, including but not limited to infringement of copyright, trademark, trade dress, invasion of privacy violations, information theft, damage to or destruction of electronic information, release of private information, alteration of electronic information, extortion and network security. The policy shall provide coverage for breach response costs as well as regulatory fines and penalties as well as credit monitoring expenses with limits sufficient to respond to these obligations.
16 If the Consultant maintains broader coverage and/or higher limits than the minimums shown above, the City requires and shall be entitled to the broader coverage and/or the higher limits maintained by the Consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.
Other Insurance Provisions - The insurance policies are to contain, or be endorsed to contain, the following provisions:
Additional Insured Status
The City, it’s Boards, Officers, Agents, Officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Consultant including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Consultant’s insurance (at least as broad as ISO Form CG 20 10 11 85 or both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 forms if later revisions used).
Primary Coverage
For any claims related to this project/contract, the Consultant’s insurance coverage shall be primary insurance coverage at least as broad as ISO CG 20 01 04 13 as respects the City , its Boards, Officers, Agents, Officials, employees, and volunteers. Any insurance or self - insurance maintained by the City , its Boards, Officers, Agents, Officials, employees, and volunteers shall be excess of the Consultant’s insurance and shall not contribute with it.
Notice of Cancellation
Each insurance policy required above shall state that coverage shall not be canceled, except with notice to the City.
Waiver of Subrogation
Consultant hereby grants to City a waiver of any right to subrogation, which any insurer of said Consultant, except for professional liability insurance, may acquire against City by virtue of the payment of any loss under such insurance. Consultant agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer. The Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the City for all work performed by the Consultant, its employees, agents and subcontractors.
Self-Insured Retentions
Self-insured retentions must be declared to and approved by the City. The City may require the Consultant to provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the self -insured retention may be satisfied by either the named insured or City.
17 Acceptability of Insurers
Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to the City.
Claims Made Policies
If any of the required policies provide coverage on a claims-made basis:
1. The Retroactive Date must be shown, and this date must be before the execution date of the contract or the beginning of contract work.
2. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the contract of work.
3. If coverage is canceled or non-renewed, and not replaced with another claims -made policy form with a Retroactive Date prior to the contract effective, or start of work date, the Consultant must purchase extended reporting period coverage for a minimum of five (5) years after completion of contract work.
4. A copy of the claims reporting requirements must be submitted to the City for review.
Verification of Coverage
Consultant shall furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to City before work begins. However, failure to obtain the required documents prior to the work beginning shall not waive the Consultant’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.
Subcontractors
Consultant shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein, and Consultant shall ensure that the City is an additional insured on insurance required from subcontractors. For CGL coverage, subcontractors shall provide coverage with a form at least as broad as CG 20 38 04 13.
Special Risks or Circumstances
City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances. 18