Vernon City Council
May 16, 2023

SERVICES AGREEMENT BETWEEN THE CITY OF VERNON AND THE PUN GROUP

LLP FOR PROFESSIONAL AUDITING SERVICES

COVER PAGE
Contractor: The Pun Group LLP
Responsible Principal of Contractor: Kenneth H. Pun, CPA, CGMA, Managing Partner
Notice Information - Contractor: The Pun Group LLP
200 E. Sandpoint Ave., Suite 600
Santa Ana, CA 92707
Attention: Kenneth H. Pun, CPA, CGMA,
Managing Partner
Telephone: (949) 777-8801
Notice Information - City: City of Vernon
4305 Santa Fe Avenue
Vernon, CA 90058
Attention: Scott Williams,
Director of Finance/City Treasurer
Telephone: (323) 583-8811 ext. 849
Commencement Date: May 16, 2023
Termination Date: May 15, 2026
Consideration: Total not to exceed $384,999.00 (includes all applicable sales tax); and more
particularly described in Exhibit B
Records Retention Period Three (3) years, pursuant to Section 11.20

SERVICES AGREEMENT BETWEEN THE CITY OF VERNON AND THE PUN GROUP

LLP FOR PROFESSIONAL AUDITING SERVICES
This Agreement is made between the City of Vernon, a California charter City and California municipal corporation (“City”), and The Pun Group LLP, a limited liability partnership (“Contractor”).

The City and Contractor agree as follows:

1.0 EMPLOYMENT OF CONTRACTOR. City agrees to engage Contractor to perform the services as hereinafter set forth as authorized by the City Council on May 16, 2023.

2.0 SCOPE OF SERVICES.

2.1 Contractor shall perform all work necessary to complete the services set forth in the City’s Request for Proposals issued on or about March 20, 2023, and titled Request for Proposals for Professional Auditing Services, and Contractor's proposal to the City ("Proposal") dated April 3, 2023, Exhibit “A”, a copy which is attached to and incorporated into this Agreement by reference.

2.2 All services shall be performed to the satisfaction of City.

2.3 All services shall be performed in a competent, professional, and satisfactory manner in accordance with the prevailing industry standards for such services.

3.0 PERSONNEL.

3.1 Contractor represents that it employs, or will employ, at its own expense, all personnel required to perform the services under this Agreement.

3.2 Contractor shall not subcontract any services to be performed by it under this Agreement without prior written approval of City.

3.3 All of the services required hereunder will be performed by Contractor or by City approved subcontractors. Contractor, and all personnel engaged in the work, shall be fully qualified and authorized or permitted under State and local law to perform such services and shall be subject to approval by the City.

4.0 TERM.

The term of this Agreement shall commence on May 16, 2023, and it shall continue until May 15, 2026, unless terminated at an earlier date pursuant to the provisions thereof.

5.0 COMPENSATION AND FEES.

5.1 Contractor has established rates for the City of Vernon which are comparable to and do not exceed the best rates offered to other governmental entities in and around Los Angeles County for the same services. For satisfactory and timely performance of

the services, the City will pay Contractor in accordance with the payment schedule set forth in Exhibit “B” attached hereto and incorporated herein by reference.

5.2 Contractor's grand total compensation for the entire term of this Agreement, shall not exceed [state amount] without the prior authorization of the City, as appropriate, and written amendment of this Agreement.

5.3 Contractor shall, at its sole cost and expense, furnish all necessary and incidental labor, material, supplies, facilities, equipment, and transportation which may be required for furnishing services pursuant to this Agreement. Materials shall be of the highest quality. The above Agreement fee shall include all staff time and all clerical, administrative, overhead, insurance, reproduction, telephone, air travel, auto rental, subsistence, and all related costs and expenses.

5.4 City shall reimburse Contractor only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City.

Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Contractor:

5.4.1 The actual costs of subcontractors for performance of any of the services that Contractor agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement.

5.4.2 Approved reproduction charges.

5.4.3 Actual costs and/or other costs and/or payments specifically authorized in advance in writing and incurred by Contractor in the performance of this Agreement.

5.5 Contractor shall not receive any compensation for extra work performed without the prior written authorization of City. As used herein, “extra work” means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the time of execution of this Agreement. Compensation for any authorized extra work shall be paid in accordance with the payment schedule as set forth in Exhibit “B,” if the extra work has been approved by the City.

5.6 Licenses, Permits, Fees, and Assessments. Contractor shall obtain, at Contractor’s sole cost and expense, such licenses, permits, and approvals as may be required by law for the performance of the services required by this Agreement. Contractor shall have the sole obligation to pay for any fees, assessments, and taxes, plus applicable penalties and

interest, which may be imposed by law and which arise from or are necessary for the performance of the Services by this Agreement.

6.0 PAYMENT.

6.1 As scheduled services are completed, Contractor shall submit to the City an invoice for the services completed, authorized expenses, and authorized extra work actually performed or incurred according to said schedule.

6.2 Each such invoice shall state the basis for the amount invoiced, including a detailed description of the services completed, the number of hours spent, reimbursable expenses incurred and any extra work performed.

6.3 Contractor shall also submit a progress report with each invoice that describes in reasonable detail the services and the extra work, if any, performed in the immediately preceding calendar month.

6.4 Contractor understands and agrees that invoices which lack sufficient detail to measure performance will be returned and not processed for payment.

6.5 City will pay Contractor the amount invoiced within thirty (30) days after the City approves the invoice.

6.6 Payment of such invoices shall be payment in full for all services, authorized costs, and authorized extra work covered by that invoice.

7.0 CITY'S RESPONSIBILITY. City shall cooperate with Contractor as may be reasonably necessary for Contractor to perform its services; and will give any required decisions as promptly as practicable so as to avoid unreasonable delay in the progress of Contractor's services.

8.0 COORDINATION OF SERVICES. Contractor agrees to work closely with City staff in the performance of Services and shall be available to City’s staff, consultants, and other staff at all reasonable times.

9.0 INDEMNITY. Contractor agrees to indemnify City, its officers, elected officials, employees and agents against, and will hold and save each of them harmless from, any and all actions, suits, claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or liabilities (herein “claims or liabilities”), including but not limited to professional negligence, that may be asserted or claimed by any person, firm or entity arising out of or in connection with the work, operations or activities of Contractor, its agents, employees, subcontractors, or invitees, provided for herein, or arising from the acts or omissions of Contractor hereunder, or arising from Contractor’s performance of or failure to perform any term, provision, covenant or condition of this Agreement, except to the extent such

claims or liabilities arise from the gross negligence or willful misconduct of City, its officers, elected officials, agents or employees.

10.0 INSURANCE. Contractor shall, at its own expense, procure and maintain policies of insurance of the types and in the amounts set forth below, for the duration of the Agreement, including any extensions thereto. The policies shall state that they afford primary coverage.
i. Automobile Liability with minimum limits of at least $1,000,000 combined single limit, including owned, hired, and non-owned liability coverage. ii. Contractor agrees to subrogate automobile liability resulting from performance under this agreement by agreeing to defend, indemnify and hold harmless, the City, and its respective employees, agents, and City Council from and against all claims, liabilities, suits, losses, damages, injuries and expenses, including all costs and reasonable attorney’s fees (“Claims”), which are attributable to any act or omission by the City under the performance of the services.
iii. General Liability with minimum limits of at least $1,000,000 per occurrence and $2,000,000 aggregate written on an Insurance Services Office (ISO) Comprehensive General Liability "occurrence" form or its equivalent for coverage on an occurrence basis. Premises/Operations and Personal Injury coverage is required. The City of Vernon, its directors, commissioners, officers, employees, agents, and volunteers must be endorsed on the policy as additional insureds as respects liability arising out of the Contractor's performance of this Agreement.
(1) If Contractor employs other contractors as part of the services rendered, Contractor's Protective Coverage is required. Contractor may include all subcontractors as insureds under its own policy or shall furnish separate insurance for each subcontractor, meeting the requirements set forth herein.
(2) Contractor agrees to subrogate General Liability resulting from performance under this agreement by agreeing to defend, indemnify and hold harmless, the City, and its respective employees, agents, and City Council from and against all claims, liabilities, suits, losses, damages, injuries and expenses, including all costs and reasonable attorney’s fees (“Claims”), which are attributable to any act or omission by the City under the performance of the services.
iv. Professional Errors and Omissions coverage in a sum of at least $1,000,000,

where such risk is applicable. Applicable aggregates must be identified and claims history provided to determine amounts remaining under the aggregate. Contractor shall maintain such coverage for at least one (1) year after the termination of this Agreement. v. Contractor shall comply with the applicable sections of the California Labor Code concerning workers' compensation for injuries on the job. In addition, Contractor shall require each subcontractor to similarly maintain workers’ compensation insurance in accordance with the laws for California for all of the subcontractor’s employees. Compliance is accomplished in one of the following manners:
(1) Provide copy of permissive self-insurance certificate approved by the State of California; or
(2) Secure and maintain in force a policy of workers' compensation insurance with statutory limits and Employer's Liability Insurance with a minimal limit of $1,000,000 per accident. The policy shall be endorsed to waive all rights of subrogation against City, its directors, commissioners, officers, employees, and volunteers for losses arising from performance of this Agreement; or
(3) Provide a "waiver" form certifying that no employees subject to the Labor Code's Workers' Compensation provision will be used in performance of this Agreement.
vi. Each insurance policy included in this clause shall be endorsed to state that coverage shall not be cancelled except after thirty (30) days' prior written notice to City. vii. Insurance shall be placed with insurers with a Best's rating of no less than A-VIII. viii. Prior to commencement of performance, Contractor shall furnish City with a certificate of insurance for each policy. Each certificate is to be signed by a person authorized by that insurer to bind coverage on its behalf. The certificate(s) must be in a form approved by City. City may require complete, certified copies of any or all policies at any time. ix. Failure to maintain required insurance at all times shall constitute a default and material breach. In such event, Contractor shall immediately notify City and cease all performance under this Agreement until further directed by the City. In the absence of satisfactory insurance coverage, City may, at its option: (a) procure insurance with collection rights for premiums, attorney's fees and costs against Contractor by way of set-off or recoupment from sums due to Contractor, at City's option; (b) immediately terminate this Agreement and seek damages from the Agreement resulting from said breach; or (c) self-insure the risk, with all damages and costs incurred, by judgment, settlement or otherwise, including

attorney's fees and costs, being collectible from Contractor, by way of set-off or recoupment from any sums due to Contractor.

11.0 GENERAL TERMS AND CONDITIONS.

11.1 INDEPENDENT CONTRACTOR.

11.1.1 It is understood that in the performance of the services herein provided for, Contractor shall be, and is, an independent contractor, and is not an agent, officer or employee of City and shall furnish such services in its own manner and method except as required by this Agreement, or any applicable statute, rule, or regulation. Further, Contractor has and shall retain the right to exercise full control over the employment, direction, compensation and discharge of all persons employed by Contractor in the performance of the services hereunder. City assumes no liability for Contractor’s actions and performance, nor assumes responsibility for taxes, bonds, payments, or other commitments, implied or explicit, by or for Contractor. Contractor shall be solely responsible for, and shall indemnify, defend and save City harmless from all matters relating to the payment of its employees, subcontractors and independent contractors, including compliance with social security, withholding and all other wages, salaries, benefits, taxes, exactions, and regulations of any nature whatsoever.

11.1.2 Contractor acknowledges that Contractor and any subcontractors, agents or employees employed by Contractor shall not, under any circumstances, be considered employees of the City, and that they shall not be entitled to any of the benefits or rights afforded employees of City, including, but not limited to, sick leave, vacation leave, holiday pay, Public Employees Retirement System benefits, or health, life, dental, long-term disability or workers' compensation insurance benefits.

11.2 CONTRACTOR NOT AGENT. Except as the City may authorize in writing, Contractor and its subcontractors shall have no authority, express or implied, to act on behalf of or bind the City in any capacity whatsoever as agents or otherwise.

11.3 OWNERSHIP OF WORK. All documents and materials furnished by the City to Contractor shall remain the property of the City and shall be returned to the City upon termination of this Agreement. All reports, drawings, plans, specifications, computer tapes, floppy disks and printouts, studies, memoranda, computation sheets, and other documents prepared by Contractor in furtherance of the work shall be the sole property of City and shall be delivered to City whenever requested at no additional cost to the City. Contractor shall keep such documents and materials on file and available for audit by the City for at least three (3) years after completion or earlier termination of this Agreement. Contractor may make duplicate

copies of such materials and documents for its own files or for such other purposes as may be authorized in writing by the City.

11.4 CORRECTION OF WORK. Contractor shall promptly correct any defective, inaccurate or incomplete tasks, deliverables, goods, services and other work, without additional cost to the City. The performance or acceptance of services furnished by Contractor shall not relieve the Contractor from the obligation to correct subsequently discovered defects, inaccuracy, or incompleteness.

11.5 RESPONSIBILITY FOR ERRORS. Contractor shall be responsible for its work and results under this Agreement. Contractor, when requested, shall furnish clarification and/or explanation as may be required by the City, regarding any services rendered under this Agreement at no additional cost to City. In the event that an error or omission attributable to Contractor occurs, then Contractor shall, at no cost to City, provide all necessary design drawings, estimates and other Contractor professional services necessary to rectify and correct the matter to the sole satisfaction of City and to participate in any meeting required with regard to the correction.

11.6 WAIVER. The City's waiver of any term, condition, breach, or default of this Agreement shall not be considered to be a waiver of any other term, condition, default or breach, nor of a subsequent breach of the one waived. The delay or failure of either party at any time to require performance or compliance by the other of any of its obligations or agreements shall in no way be deemed a waiver of those rights to require such performance or compliance.

No waiver of any provision of this Agreement shall be effective unless in writing and executed by a duly authorized representative of the party against whom enforcement of a waiver is sought.

11.7 SUCCESSORS. This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective heirs, successors, and/or assigns.

11.8 NO ASSIGNMENT. Contractor shall not assign or transfer this Agreement or any rights hereunder without the prior written consent of the City and approval by the City Attorney, which may be withheld in the City's sole discretion. Any unauthorized assignment or transfer shall be null and void and shall constitute a material breach by the Contractor of its obligations under this Agreement. No assignment shall release the original parties from their obligations or otherwise constitute a novation.

11.9 COMPLIANCE WITH LAWS. Contractor shall comply with all Federal, State, County and City laws, ordinances, rules and regulations, which are, as amended from time to time, incorporated herein and applicable to the performance hereof. Violation of any law

material to performance of this Agreement shall entitle the City to terminate the Agreement and otherwise pursue its remedies. Further, if the Contractor performs any work knowing it to be contrary to such laws, rules, and regulations Contractor shall be solely responsible for all costs arising therefrom.

11.10 ATTORNEY'S FEES. If any action at law or in equity is brought to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled.

11.11 INTERPRETATION.

11.11.1 Applicable Law. This Agreement shall be deemed an agreement and shall be governed by and construed in accordance with the laws of the State of California. Contractor agrees that the State and Federal courts which sit in the State of California shall have exclusive jurisdiction over all controversies and disputes arising hereunder, and submits to the jurisdiction thereof.

11.11.2 Entire Agreement. This Agreement, including any exhibits attached hereto, constitutes the entire agreement and understanding between the parties regarding its subject matter and supersedes all prior or contemporaneous negotiations, representations, understandings, correspondence, documentation, and agreements (written or oral).

11.11.3 Written Amendment. This Agreement may only be changed by written amendment executed by Contractor and the City Administrator or other authorized representative of the City, subject to any requisite authorization by the City Council. Any oral representations or modifications concerning this Agreement shall be of no force or effect.

11.11.4 Severability. If any provision in this Agreement is held by any court of competent jurisdiction to be invalid, illegal, void, or unenforceable, such portion shall be deemed severed from this Agreement, and the remaining provisions shall nevertheless continue in full force and effect as fully as though such invalid, illegal, or unenforceable portion had never been part of this Agreement.

11.11.5 Order of Precedence. In case of conflict between the terms of this Agreement and the terms contained in any document attached as an Exhibit or otherwise incorporated by reference, the terms of this Agreement shall strictly prevail. The terms of the City’s Request for Proposals shall control over the Contractor’s Proposal.

11.11.6 Construction. In the event an ambiguity or question of intent or interpretation arises with respect to this Agreement, this Agreement shall be construed as if

drafted jointly by the parties and in accordance with its fair meaning. There shall be no presumption or burden of proof favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

11.12 TIME OF ESSENCE. Time is strictly of the essence of this agreement and each and every covenant, term, and provision hereof.

11.13 AUTHORITY OF CONTRACTOR. The Contractor hereby represents and warrants to the City that the Contractor has the right, power, legal capacity, and authority to enter into and perform its obligations under this Agreement, and its execution of this Agreement has been duly authorized.

11.14 ARBITRATION OF DISPUTES. Any dispute for under $25,000 arising out of or relating to the negotiation, construction, performance, non-performance, breach, or any other aspect of this Agreement, shall be settled by binding arbitration in accordance with the Commercial Rules of the American Arbitration Association at Los Angeles, California and judgment upon the award rendered by the Arbitrators may be entered in any court having jurisdiction thereof. The City does not waive its right to object to the timeliness or sufficiency of any claim filed or required to be filed against the City and reserves the right to conduct full discovery.

11.15 NOTICES. Any notice or demand to be given by one party to the other must be given in writing and by personal delivery or prepaid first-class, registered or certified mail, addressed as follows. Notice simply to the City of Vernon or any other City department is not adequate notice.

If to the City:

City of Vernon
Attention: Scott Williams, Director of Finance/City Treasurer 4305 Santa Fe Avenue
Vernon, CA 90058
If to the Contractor:

The Pun Group LLP
Attention: Kenneth H. Pun, CPA, CGMA, Managing Partner
200 E. Sandpointe Ave., Suite 600
Santa Ana, CA 92707
Any such notice shall be deemed to have been given upon delivery, if personally delivered, or, if mailed, upon receipt, or upon expiration of three (3) business days from the date of posting, whichever is earlier. Either party may change the address at which it desires to receive notice upon giving written notice of such request to the other party.

11.16 NO THIRD PARTY RIGHTS. This Agreement is entered into for the sole benefit of City and Contractor and no other parties are intended to be direct or incidental beneficiaries of this Agreement and no third party shall have any right or remedy in, under, or to this Agreement.

11.17 TERMINATION FOR CONVENIENCE (Without Cause). City may terminate this Agreement in whole or in part at any time, for any cause or without cause, upon fifteen (15) calendar days' written notice to Contractor. If the Agreement is thus terminated by City for reasons other than Contractor's failure to perform its obligations, City shall pay Contractor a prorated amount based on the services satisfactorily completed and accepted prior to the effective date of termination. Such payment shall be Contractor's exclusive remedy for termination without cause.

11.18 DEFAULT. In the event either party materially defaults in its obligations hereunder, the other party may declare a default and terminate this Agreement by written notice to the defaulting party. The notice shall specify the basis for the default. The Agreement shall terminate unless such default is cured before the effective date of termination stated in such notice, which date shall be no sooner than ten (10) days after the date of the notice. In case of default by Contractor, the City reserves the right to procure the goods or services from other sources and to hold the Contractor responsible for any excess costs occasioned to the City thereby. Contractor shall not be held accountable for additional costs incurred due to delay or default as a result of Force Majeure. Contractor must notify the City immediately upon knowing that non-performance or delay will apply to this Agreement as a result of Force Majeure. At that time Contractor is to submit in writing a Recovery Plan for this Agreement. If the Recovery Plan is not acceptable to the City or not received within 10 days of the necessary notification of Force Majeure default, then the City may cancel this order in its entirety at no cost to the City, owing only for goods and services completed to that point.

11.19 TERMINATION FOR CAUSE. Termination for cause shall relieve the terminating party of further liability or responsibility under this Agreement, including the payment of money, except for payment for services satisfactorily and timely performed prior to the service of the notice of termination, and except for reimbursement of (1) any payments made by the City for service not subsequently performed in a timely and satisfactory manner, and (2) costs incurred by the City in obtaining substitute performance. If this Agreement is terminated as provided herein, City may require, at no additional cost to City, that Contractor provide all finished or unfinished documents, data, and other information of any kind prepared by Contractor in connection with the performance of Services under this Agreement. Contractor

shall be required to provide such document and other information within fifteen (15) days of the request.

11.19.1 Additional Services. In the event this Agreement is terminated in whole or in part as provided herein, City may procure, upon such terms and in such manner as it may determine appropriate, services similar to those terminated.

11.20 MAINTENANCE AND INSPECTION OF RECORDS.

The City, or its authorized auditors or representatives, shall have access to and the right to audit and reproduce any of the Contractor's records to the extent the City deems necessary to insure it is receiving all money to which it is entitled under the Agreement and/or is paying only the amounts to which Contractor is properly entitled under the Agreement or for other purposes relating to the Agreement.

The Contractor shall maintain and preserve all such records for a period of at least three (3) years after termination of the Agreement.

The Contractor shall maintain all such records in the City of Vernon. If not, the Contractor shall, upon request, promptly deliver the records to the City of Vernon or reimburse the City for all reasonable and extra costs incurred in conducting the audit at a location other than the City of Vernon, including, but not limited to, such additional (out of the City) expenses for personnel, salaries, private auditors, travel, lodging, meals, and overhead.

11.21 CONFLICT. Contractor hereby represents, warrants, and certifies that no member, officer, or employee of the Contractor is a director, officer, or employee of the City of Vernon, or a member of any of its boards, commissions, or committees, except to the extent permitted by law.

11.22 HEADINGS. Paragraphs and subparagraph headings contained in this Agreement are included solely for convenience and are not intended to modify, explain or to be a full or accurate description of the content thereof and shall not in any way affect the meaning or interpretation of this Agreement.

11.23 ENFORCEMENT OF WAGE AND HOUR LAWS. Eight hours labor constitutes a legal day's work. The Contractor, or subcontractor, if any, shall forfeit twenty-five dollars ($25) for each worker employed in the execution of this Agreement by the respective Contractor or subcontractor for each calendar day during which the worker is required or permitted to work more than 8 hours in any one calendar day and 40 hours in any one calendar week in violation of the provisions of Sections 1810 through 1815 of the California Labor Code as a penalty paid to the City; provided, however, work performed by employees of contractors in excess of 8 hours per day, and 40 hours during any one week, shall be permitted upon

compensation for all hours worked in excess of 8 hours per day at not less than 1½ times the basic rate of pay.

11.24 EQUAL EMPLOYMENT OPPORTUNITY PRACTICES. Contractor certifies and represents that, during the performance of this Agreement, it and any other parties with whom it may subcontract shall adhere to equal employment opportunity practices to assure that applicants, employees and recipients of service are treated equally and are not discriminated against because of their race, religion, color, national origin, ancestry, disability, sex, age, medical condition, sexual orientation or marital status. Contractor further certifies that it will not maintain any segregated facilities. Contractor further agrees to comply with The Equal Employment Opportunity Practices provisions as set forth in Exhibit “C”. [Signatures Begin on Next Page].

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Commencement Date stated on the cover page.

City of Vernon, a California charter City
and California municipal corporation
By: ____________________________
Carlos Fandino, City Administrator

The Pun Group LLP, a limited liability
partnership
By:

Name:

Title:

ATTEST:
_______________________________
Lisa Pope, City Clerk
By:

Name:

Title:

APPROVED AS TO FORM:
_______________________________
Zaynah N. Moussa, City Attorney

EXHIBIT A

CONTRACTOR'S PROPOSAL
ImageCredit:Shutterstock(Royalty-Free)
ManagingPartner
200E.SandpointeAve.,Suite600,SantaAna,CA92707
(949)777-8801|[email protected]
KennethH.Pun,CPA,CGMA
The Pun Group LLP is recognized for its professionalism, integrity and for providing clients with practical solutions unique to their circumstances and issues. You will receive a superior level of service and a quality audit.

Thank You!
Thank you for allowing us to submit our qualifications to provide you with Professional Audit Services.

The Pun Group LLP
Certified Public Accountants and Business Advisors

WHY CHOOSE
THE PUN GROUP LLP?
 Big firm expertise, small firm values
 Personal attention meets technical expertise
 A unique firm culture
 Innovation embraced
 Achievable plans to move your organization forward
The Pun Group’s most
valuable asset is our
people, they and their
deep experience drive our
every interaction with
clients.
“
”
Kenneth H. Pun, CPA, CGMA
Founder & Managing Partner
City of Vernon
Table of Contents
Cover Letter .................................................................................................. A Introduction .................................................................................................... 1 General Scope of Work .................................................................................. 3 Work Plan ....................................................................................................... 4 Fees and Costs ............................................................................................ 11 Ability of the Proposer to Perform ................................................................ 14 Affidavit of Non-Collusion ............................................................................. 18 Let’s Get to Work! ........................................................................................ 19 Appendix A – Engagement Team Resumes ................................................... i Appendix B – Firm’s Experience with Government .................................... viii Appendix C – Complimentary Client Training ............................................. xvi Appendix D – Sample of Certificate of Insurance ...................................... xvii Appendix E – Peer Review ........................................................................xviii Appendix F – Other Important Information .................................................. xix The Pun Group Wins
2023 “Best of Accounting” Award
The Pun Group LLP is proud to have won 2023’s Best of
Accounting® award from ClearlyRated for providing superior service to its clients.

Winners of such awards have proven to be industry leaders in service quality based entirely on ratings provided by their clients. On average, clients of 2023 Best of Accounting winners are 70% more likely to be satisfied than those who work with non-winning firms.
“I am pleased to introduce the 2023 Best of Accounting
winners alongside their validated service ratings on
ClearlyRated.com,” said ClearlyRated’s CEO, Eric Gregg. “These firms have demonstrated a remarkable commitment to delivering amazing experiences, despite another year of upheaval and macroeconomic uncertainty. Hats off to these service leaders - it’s truly an honor to recognize and celebrate their achievements.”
The Pun Group LLP received satisfaction scores of 9 or 10 out of 10 from 94.1% of their clients, significantly higher than the industry’s average of 50%.

Our firm excelled in five key areas: Responsiveness, Quality, Value, Needs Understanding, and Proactive Approach.

About ClearlyRated
Rooted in satisfaction research for professional service firms, ClearlyRated utilizes a Net Promoter® Score survey program to help professional service firms measure their service experience, build an online reputation, and
differentiate on service quality.
“Excellent customer service and staff and
partners are expert in their fields.”
Lani H.

State and Local Government Client
“We started using Pun Group when the
pandemic first started two years ago so
had a little apprehension about doing
everything remotely with a new firm. But
the audit went very well and was
completed on time without problem.”
Kevin W.

State and Local Government Client
“The Firm has consistently exceeded our
expectations as client.”
Clint O.

State and Local Government Client
“An excellent partner and amazing service.”
Jim T.

Private Sector Client
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
City of Vernon
Cover Letter
April 3, 2023
City of Vernon
Scott Williams, Director of Finance/City Treasurer
4305 Santa Fe Avenue
Vernon, California 90058
Re: RFP for Professional Audit Services
Dear Scott Williams:

Please allow us to introduce our Firm and share our qualifications and proposed services plan for the City of Vernon (the “City”) according to your Request for Proposals for Professional Audit Services for the fiscal years June 30, 2023, 2024 and 2025.

The Pun Group LLP (the “Firm”) has the knowledge and experience necessary to become the City’s next public accounting firm and the work plan to ensure a smooth process.

The City of Vernon is requesting the Firm to perform Professional Audit Services and issue opinions on the City’s financial statements. This letter is an acknowledgment of the Firm’s understanding of the work to be performed. We are offering our commitment to deliver all of the required work, complete the audit, and issue the necessary auditor’s reports within the periods outlined by the City. No subcontractors will be utilized for this engagement.

The Pun Group is the right choice for the City of Vernon because:

We Understand the Demographics and Your Needs. The Pun Group is reputable for its governmental practice. We are the principal auditors for cities in California such as Bell, Fresno, Gilroy, Hercules, Lakewood, Madera, Montebello, Monterey, Napa, National City, Palm Springs, Salinas, San Mateo, Santa Clarita, Stockton, Tracy, and several others. Accordingly, the proposed engagement team has a deep understanding of the current issues that municipalities are facing, such as varying demographics, economic environments, and the constantly changing landscape of laws and regulations.

Recognized Leader in the Governmental Industry. We are a small national Firm with licenses in the States of California, Arizona, and Nevada and a proven leader in professional services to the government sector. All key engagement team professionals are licensed to practice as Certified Public Accountants and meet the Continuing Professional Education requirements under US GAO’s Government Auditing Standards to perform the proposed audits. The partners and all employees proposed to perform the requested services do not have a record of substandard audit work nor have any outstanding claim of substandard practice or unsatisfactory performance pending with the State Board of Accountancy or other professional organizations. In addition, we are members of the national AICPA Audit Quality Center.

We strongly believe that part of our success is credited to our professionals’ participation in various industry-leading organizations. Such affiliations are critical to addressing emerging accounting and auditing issues within the industry environment.

City of Vernon
B | PUNGROUP.CPA
You’ll Work with a Team that Embraces Innovation and Continuous Improvement.

Our Firm is committed to continuous improvement as it relates to service delivery. We embrace innovation and identify areas of technological enhancements in our audit and project management approaches. For example:

Secure Data File Transfer System. In order to improve audit efficiency, workflow management software plays an essential role between your organization and our engagement team. We employ a secure data file transfer system called Suralink.

Suralink’s dynamic request list is integrated with our secure file hosting system for seamless document-request coordination, including the upload of large-size files. It means all our requests are in one place, updated in real-time, and accessible by everyone working on the engagement. Not only makes the operation more costefficient, but it also enables you and your team to spend your time getting the job done, not reconciling a messy list of outstanding items. In addition, Suralink’s dashboard allows you to visualize the process of document-request fulfillment.

AI Auditor. The Pun Group leverages the technology and research tools required to provide excellent services to its clients. With the usage of Artificial Intelligence (AI) technology, the Firm is capable of issuing all reports requested faster than other audit firms without exposing the City to unnecessary risks.

Remote Auditing Capability. Remote working arrangements have suddenly become the “new normal” in these trying times. Our Firm has deployed top-notch technology and fully transitioned to “remote auditing,” offering our clients the quality services they deserve while being fully “remote” or operating in a “hybrid” schedule. “On-site” audits are still the Firm’s preferred method, and we’ll continue to offer and promote those as well.

Knowledge is Shared with You. As part of our pledge to keep you updated on new technical accounting and financial issues, we implemented our 2023 Virtual Government Accounting Conference, which qualifies for up to 15 hours of CPE – nearly double what other firms offer. These online sessions are free of charge and part of the service package provided to you. More details and dates can be found on the “Client Training Webinars” topic under this proposal.

The Pun Group is proud of its inclusive values and is an avid promoter of equality and diversity. In addition, the Firm is an equal-opportunity employer and complies with all federal and state hiring requirements. We’re proud of supporting affirmative-action philosophies and work hard to provide opportunities for self-enhancement to members of disadvantaged groups.

This proposal is a firm and irrevocable offer valid for ninety (90) days following the closing date for the receipt of all proposals.

Finally, we would like to emphasize one additional point: We want to earn your trust and your business! We are confident that the energetic and experienced team we have assembled is the right one for the City.

Our commitment to serving the City of Vernon cannot be adequately conveyed in a letter, and I look forward to continuing the discussion with you. I’m assigned as your primary contact for contract negotiations and stand steadfast to serve as your engagement/lead partner. I’m also authorized to legally bind the Firm.

Should you have any questions or wish to discuss this proposal, please do not hesitate to contact me at (949) 777-8801 or by email at [email protected].

Sincerely,
Kenneth H. Pun, CPA, CGMA | Managing Partner | The Pun Group LLP City of Vernon
1 | PUNGROUP.CPA
Introduction
About the Firm
The Pun Group LLP, Certified Public Accountants, and
Business Advisors, founded in 2012, is a limited liability partnership. We are a full-service small national firm
comprised of forty-eight professionals providing
auditing, accounting, and advisory services to our
clients.

The Firm has become one of the “Top Accounting
Firms” in Orange County according to the Orange
County Business Journal and is also on the list of
CalCPA Top 150 firms.

The combination of our hands-on experience and
practical knowledge exercised by our audit
professionals makes the Firm unique in our field. Our
technical expertise and thorough understanding of
current regulations and issues—along with the Firm’s
commitment to hard work, integrity, and teamwork in
every engagement—enable us to help our clients
succeed.

Our Partners’ Group—which includes Kenneth Pun,
Frances Kuo, Andrew Roth, Coley Delaney, Vanessa
Burke, John Georger Jr., Gary Caporicci, and Jim
Fritzsche — provides auditing, accounting, and advisory services to numerous governmental entities throughout
the United States. With more than two hundred years of
combined experience in the industry, we have become
a trusted business partner and are well-respected as
leaders in the industry in one of the fastest-growing
firms. With nearly 100 government and not-for-profit
audit clients, our Partners have a real passion for the industry and believe we are unmatched in our municipal
experience. The firm also meets professional standards
generally accepted in the United States of America and
the standards applicable to financial audits contained in ‘Government Auditing Standards’ issued by the
Comptroller General of the United States.

The Firm’s headquarters are located in Orange County,
California, with five branches in San Diego, Walnut
Creek, Sacramento (California), Las Vegas (Nevada),
and Phoenix (Arizona).

The Orange County Office located at 200 E. Sandpointe
Ave., Suite 600, Santa Ana, CA 92707, will perform the
requested services for the City. However, we may
assign additional staff from our other offices to the
engagement at no extra cost to the City. No
subcontractors will be used in this engagement.

OUR FIRM

AT A GLANCE
48 full-time auditing,
accounting, tax and
advisory professionals
One of the fastest growing
firms serving California,
Nevada and Arizona
6 offices across
3 states
Client retention rate:
90 – 95%
OUR

AFFILIATIONS
City of Vernon
2 | PUNGROUP.CPA
Full-Time Government Auditors
As full-time government auditors, we understand that governmental entities do not operate independently but in an increasingly complex web of local, state, and federal relationships. We know how these relationships work, what they mean at the local level, and how every public organization’s focus on resource management is critical to success.

Also, while many accounting Firms can provide services, not all can build excellent working relationships with their clients. The Pun Group LLP prides itself on developing lasting, personal relationships with our clients.

Our hands-on partner involvement and low personnel turnover are crucial tools to our success and are highly beneficial to the City.

Local Office’s Information Technology (IT) Audit Capabilities The Pun Group LLP continues our efforts to invest in our IT system to enhance our security further and promote audit efficiency.

Top security for your data is the key to our success. When we have your data virtualized, our Firm takes all the preventive steps to avoid putting your information at risk. Our In-House IT administrator maintains our server to ensure our IT environment is continuously updated with the latest security fixes. Through VPN and Microsoft Remote Desktop, our In-House network administrator can lock down files and system access from a single point, limiting the ability of remote sites to take data from our server.

Access to systems from anywhere and anytime. With more mobility being the norm rather than the exception, our engagement team needs robust access to the engagement files when they are working in your office. Accounting and Auditing Software applications are installed in our “Private” server and can be securely accessed through VPN and Microsoft Remote Desktop. The Firm uses CCH ProSystem fx® Engagement for audit documentation, which allows real-time synchronization of the work papers and instant collaboration quality control review.

Secure Data File Transfer System. In order to improve audit efficiency, workflow management software plays an essential role between your organization and our engagement team. We employ a secure data file transfer system called Suralink. Suralink’s dynamic request list is integrated with our secure file-hosting system for seamless documentrequest coordination. It means all our requests are in one place, updated in real-time, and accessible by everyone working on the engagement. As a client, you no longer have to manually maintain a spreadsheet amongst several people, only to repeat the process in a day or two. Not only makes the operation more cost-efficient, but it also enables you and your team to spend your time getting the job done, not reconciling a messy list of outstanding items. The Suralink dashboard, as shown below, allows you to visualize the process of document-request fulfillment.

BIG FIRM EXPERTISE.

SMALL FIRM VALUES.

Our professional backgrounds at major national
firms showed us how to solve complicated
business and accounting challenges, but the
sense of personal connection was missing.

We launched The Pun Group because we believe
every client deserves to work with experienced
business advisors and CPAs who have the time –
and take the time – to create an authentic
connection. Every client is our top priority!
A UNIQUE CULTURE.
“Personalization” is not just a buzzword – it’s part
of our firm’s culture. We take a personal approach
to everything we do. We collaborate with our
clients, so they’re always part of the process. We
listen to our staff to make sure they have the right
support and resources to do a great job. Getting to
know others and discovering how we can serve
them better is not just a sign of good business
practices; it’s a sign of good people.

INNOVATION EMBRACED.

New ideas keep you ahead of the game. From
leveraging the value of emerging technologies to
further refining trusted processes, we adopt proven
solutions to meet your needs.

WHERE YOU GO, WE GO.

WHERE YOU GROW, WE GROW.

Our success is defined by how you achieve yours.

Partner with accomplished accounting and
financial professionals who are laser-focused on
taking your business to the next level.

City of Vernon
3 | PUNGROUP.CPA
General Scope of Work
Overview of the Proposal
The Firm acknowledges the understanding of the work to be performed. We are offering our commitment to deliver all of the required work, complete the agreed-upon procedures, and issue the necessary reports within the periods outlined by the City.

The following tasks will be performed:
 Perform the audit of the Annual Comprehensive Financial Report for the City.  Perform the audit for the City’s component units and provide a separate opinion on the Vernon Public Utilities, Electric Utility, and Water Utility stand-alone annual financial reports.  Provide assistance obtaining GFOA’s “Certificate of Achievement for Excellence in Financial Reporting.”
 If necessary, prepare a Single Audit Report.
 Appropriation Limit Calculations (GANN).
 Issue an Auditor’s Communication Letter (SAS No. 112).  Issue a separate "Management Letter” (SAS No. 114).
 Prepare Annual Financial Transaction Report (AFTR).
 Prepare the Annual Streets Report.
 Provide assistance in implementing applicable GASB pronouncements not yet in effect.

The audits are to be completed in accordance with all applicable and generally accepted auditing standards, including, but not limited to, the following:
 Generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants (AICPA).
 US General Accounting Office’s (GAO) Standard for Audit of Governmental Organizations, Programs, Activities, and Functions.
 Local Governments and Governmental Accounting Standards Board (GASB) Pronouncements.  The standards applicable to financial audits are contained in the most current version of the Generally Accepted Government Auditing Standards (Yellow Book), issued by the Comptroller General of the United States.
 The provisions of the Single Audit Act as amended in 1996.  The provisions of the US Office of Management and Budget (OMB) Uniform Guidance (formerly known as Circular A-133), Audits of State and Local Governments and Non-profit Organizations, and the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.

City of Vernon
4 | PUNGROUP.CPA
Work Plan
In the previous section, “General Scope of Work,” we provided a summary of the services requested by the City. In this section, we will discuss in length the services we will provide, in addition to our work plan, and methodology.

As summarized on page 3, the Firm will perform the following services:
 Financial Statement Audits and issuance of an opinion statement on the Annual Comprehensive Financial Report of the City of Vernon. The audit will be conducted in accordance with Generally Accepted Government Auditing Standards. The report will be in full compliance with all current GASB pronouncements.
 Perform the audit for the City’s component units and provide a separate opinion on the Vernon Public Utilities, Electric Utility, and Water Utility stand-alone annual financial reports.  In addition, the Firm will assist in meeting the requirements for the Government Finance Officers Association (GFOA) “Certificate of Achievement for Excellence in Financial Reporting.”  Prepare a Single Audit Report which will include the following:
o Report on compliance and on internal control over financial reporting based on an audit of financial statements performed in accordance with Government Auditing Standards. o Report on compliance with requirements applicable to each major program, internal control over compliance, and on the schedule of expenditures of federal awards in accordance with Uniform Guidance, “Audits of State and Local Governments,” and the Single Audit Act of 1984 (Public Law 98-502).
o Schedule of Expenditures of Federal Awards.
o Notes to Schedule of Expenditures of Federal Awards.
o Schedule of Findings and Questioned Costs.
o Any other required schedules or reports.
o Prepare the Data Collection Form for Reporting on Audits of States, Local Governments, and Non-Profit Organizations.
o Commission single audit of federal grants allocable to HCVP in accordance with Uniform Guidance.
 Test compliance with Proposition 111, Article XIII.B – Review of Appropriation Limit Calculations (GANN).
 Issue an Auditor’s Communication Letter (SAS No. 112).  Issue a separate SAS No. 114 Letter.
 Prepare the Annual Financial Transaction Report (AFTR) report, also referred to as the State Controller’s Report for the City.
 Prepare the Annual Streets Report to the State Controller’s Office for the City.

Provided By Client (PBC) Lists: They will be provided for both interim and final audits according to an agreed-upon timeline between the engagement team and the City in order to be reasonably prepared for a field audit. The engagement team will meet with the City’s management during the initial planning stage to discuss audit schedules and review the prior year's audit findings (if any). We will deliver a list of all documents to be provided by the City’s staff. Once such materials are agreed upon by the engagement team and City’s finance personnel, no other schedules will be requested unless new information comes to light in the course of test work.

City of Vernon
5 | PUNGROUP.CPA
Attendance at Meetings and Hearings: The engagement team will participate in as many meetings with staff as needed to perform the work scope tasks, present the audit plan prior to beginning fieldwork, and discuss the draft audit reports. The team will attend public meetings to present and discuss its findings and recommendations. Once all issues of discussion are resolved, the completed Financial Reports, Single Audit report (if applicable), and other reports will be delivered to the City according to the agreedupon schedule.

Proposed Audit Adjustments: All proposed adjusting journal entries by the Firm will be discussed and explained in a timely manner with the designated Finance Department personnel. Such proposed adjustments will be in a format that shows the lowest level of posting detail needed for data entry in the general ledger systems.

Supplemental Reports, Audits, or Agreed-Upon Procedures: Other services, such as agreed-upon procedures, may be deemed necessary. These services will be performed at agreed-upon rates and will be added to a written agreement before commencing audit work. The Firm and the City will discuss and approve the scope and associated costs of these tasks.

Advice and Consultation: Will be provided throughout the year on matters relating to accounting and financial reporting. Such services do not include any task that entails significant research or a formal report.

GASB Implementation: The Firm will provide technical assistance and training in the implementation of applicable GASB pronouncements not yet in effect. We have a dedicated partner, Mr. Gary Caporicci, who will be responsible for providing advice and consultation for the implementation of these new standards. The Firm will advise the City on the applicability of accounting and reporting standards and other accounting issues and provide guidance on new note disclosures, GASB implementations, and other reporting requirements. We will also provide training, resources, and information on topics relevant to the City’s financial reporting and operations. (Based on the scope, additional charges may apply.) Report of all Irregularities and Illegal Acts: The Firm will make an immediate written report of all irregularities and illegal acts or indications of illegal actions of which we may become aware. The engagement team will also make all communications to the City required by the audit standards under which the engagement is performed.

Working Paper Retention and Access to Working Papers: The Firm will retain, at its own expense, all working papers and reports for a minimum of seven (7) years unless the City notifies the Firm in writing of the need to extend the retention period. The Firm will make working papers available upon request by the City or its designees.

Also, we will comply with reasonable requests from successor auditors and allow them to review working papers that relate to matters of continuing accounting significance.

City of Vernon
6 | PUNGROUP.CPA
Methodology and Segmentation of Engagement
The Firm’s audit approach consists of six phases: Engagement Acceptance and General Planning, Planning and Internal Control Evaluation, Fieldwork, Post Fieldwork, Report Preparation and Review, and Final Production.

1. Engagement Acceptance and General Planning: The engagement partner and manager will meet with City’s management to obtain an update on current City policies and procedures, help identify risk areas and new operations, and establish any specific requirements they may have.

Our team will work on the identification of unique transactions, implementation of new GASB pronouncements, and develop the audit work plan for the engagement. Proposed Timeline: May of each fiscal year.

2. Planning and Internal Control Evaluation: The engagement team, including the engagement partner, will assess accounting policies adopted by the City in order to obtain an understanding of its structure and its operating environment. Also, our team will review internal controls on all significant transaction classes, perform walkthroughs and/or tests of internal controls, perform preliminary analytical procedures, develop an initial risk assessment, evaluate Single Audit compliance, identify any audit issues, and prepare confirmation correspondence. The engagement team and City’s Management will establish expectations, including responsibilities and assignments for the year-end fieldwork, and will hold a progress status meeting at the end of the interim phase. Proposed Timeline: June of each fiscal year.

3. Fieldwork: The engagement team, including the engagement partner, will conduct audit procedures on account balances in the general ledger, finish confirmation procedures, perform data analysis using our AI tools, search for unrecorded liabilities, perform substantial analytical review procedures, complete work on compliance with Federal Assistance, and conclude fieldwork. The engagement team and City’s Management will hold an exit conference at year-end.

Periodic update meetings will be held to communicate audit progress to management. Proposed Timeline: September of each fiscal year.

4. Post Fieldwork: During the phase, the engagement team, including the engagement partner, will review all documents and evaluate commitments and contingencies. The team will perform an assessment of the going concern and jointly plan for the next steps. Proposed Timeline:

Immediately after completion of the fieldwork.

5. Report Preparation and Review: The Firm will review and prepare audit reports and perform quality control procedures following the Quality Control Standards issued by the AICPA. We will also examine reports for compliance with GFOA reporting guidelines at no additional cost. Any comments will be recorded in a letter to management. At the City’s request, the engagement partner and manager will present the audit to City’s Management and other governing bodies.

Proposed Timeline: Draft reports by the 3rd week of November of each fiscal year.

City of Vernon
7 | PUNGROUP.CPA

6. Final Production: The final phase of our approach entails obtaining the management representation letter and final financial statement report, which may include a final presentation to the City’s Management and other governing bodies (if applicable). Proposed Timeline: Final reports by December 15th of each fiscal year.

The Firm will complete the audit fieldwork and issue all reports within the established timeframe, assuming no internal circumstances within the City causes delays in the audit.

Level of Staff and Number of Hours to be Assigned to Each Segment of the Engagement The Pun Group LLP understands that the City is not only looking to employ our auditing services but is also seeking to receive value within that professional relationship. We believe that our value derives from the indepth knowledge, experience, and commitment that our auditing firm employs. We stress and emphasize “employ” because all of the knowledge and expertise listed on paper will not benefit you unless it is applied.

That is why we have developed a plan that we feel will accomplish the objectives of the City and your particular needs. Our Firm will utilize the information that you have shared with us and our experience from our previous audits of this nature from various government entities and cities to develop a practical plan for all major areas.

Estimated Total Hours*:

Partner(s)
Director/
Manager
Supervisory
Staff Staff Clerical Total
Engagement Acceptance & General Planning 4 6 10 14 1 35 Planning & Internal Control Evaluation 6 10 14 22 1 53
Fieldwork 29 48 72 108 6 263
Post Fieldwork 19 32 48 72 4 175
Report Preparation & Review 29 48 72 108 6 263
Final Production 10 16 24 36 2 88
Total* 96 160 240 360 20 876
*Does not include CPE hours related to Governmental Webinars and/or optional services.

Sample Size and the Extent to Which Statistical Sampling is to be Used in this Engagement In our audit approach, random and statistical sampling is used in conjunction with our skilled judgment and knowledge of each situation. When designing an audit sample, our auditors consider the purpose of the audit procedure and the characteristics of the population from which the sample will be drawn. We determine a sample size sufficient to reduce sampling risk to an acceptably low level and select items for such a task in a way that we can reasonably expect it to be representative of the relevant sample and likely to provide the auditor with a reasonable basis for conclusions about the population.

Enhancing Auditing Quality with Artificial Intelligence There are plenty of challenges with established audit practices.

Outdated CAAT tools, sampling practices, and the explosive growth of big data are some of the examples, and they all present significant barriers to detecting anomalies, intentional or otherwise, in financial data. The Pun Group deploys a comprehensive, risk-based approach, complemented by using MindBridge™'s Artificial Intelligence Platform, to conduct our audit. Through this tool, we can seamlessly analyze thousands and thousands of financial and operating data and records, identifying and cataloging significant risks in mere seconds.

City of Vernon
8 | PUNGROUP.CPA
The AI Auditor platform works by our side, augmenting our capacity to detect errors or fraud in the collected data not only by analyzing the entire set but by cross-correlating dozens of testing criteria against preestablished data points and presenting us with a view of every user, vendor, and transaction, by risk. All are happening within moments of ingesting analyzed data, which is something standard audit procedures simply cannot accomplish.

We utilize these tools to allow our audit team to increase efficiency in the audit process, enhance the existing quality of our work, provide directed testing in areas subject to the highest risk, and quickly assimilate large amounts of data your staff would typically be asked to gather. The tools also help us to meet our professional requirements regarding fraud and internal control, allowing us to:
 Run Benford’s analysis to check for fraud in transactions.  Increase the value of audit findings with complete, 100% data coverage.  Isolate risk and control issues before they impact your operations.  Improve productivity by automating procedures and eliminating manual tasks.  Conduct more direct, efficient, and effective audits to improve overall service quality.

Our engagement team easily imports data in a secure environment from the City’s financial software and extracts useful data for testing and analytical procedures particular to the following areas:
 Successful Fraud Test  Kickback or Conflict-of-Interest Schemes  Questionable Invoices  Dormant Account Schemes
 Phantom Vendor Schemes  Money Laundering Schemes
Type and Extent of Analytical Procedures to be used in the Engagement Analytical procedures are one of many financial audit processes that help an auditor understand the client’s operation and changes in the environment and identify potential risk areas to plan other audit procedures.

Such procedures include a comparison of financial information on prior periods, budgets, forecasts, and industry benchmarks. We use trend and ratio analysis to identify any uncertain or unusual events. To perform these analyses, our Firm surveys cities and counties and develops benchmarks on specific vital financial indicators, such as the cost of services to tax revenues ratios, average general fund balance, capital assets, debt-to-capital, and general fund unassigned fund balance to total general fund expenditures, etc. Our engagement members have extensive experience in successfully implanting analytical procedures to the City’s benefit.

Our analytical procedures process is performed during three stages of the audit: (a) at the start, (b) in the middle, and (c) at the end. These three stages are risk assessment procedures, substantive analytical procedures, and final analytical procedures:
 Risk assessment procedures are used to assist the auditor in understanding the business better and in planning the nature, timing, and extent of audit procedures.  Substantive analytical procedures are used to obtain evidential matters about particular assertions related to the account balances or classes of transactions. During the interim phase, our engagement team will set up expectations for the year-to-date results and balances and compare them with budgeted and prior-year amounts. This process allows us to forecast year-end amounts, reducing the workload during the year-end phase and allowing us to focus on areas of concern.  Final analytical procedures are used as an overall review of the financial information in the last review stage of the audit. The Engagement Partner(s) and Manager(s) will perform a high-level analytical analysis of the financial information, comparing its data both quantitatively and qualitatively to ensure the amounts are fairly presented in all material respect in the financial statements.

City of Vernon
9 | PUNGROUP.CPA
Approach to be Taken to Gain and Document an Understanding of the Internal Control Structure Audit risk assessment is established by an internal control review, combined with the engagement team’s understanding of the City’s operations and accounting software. Using the Committee of Sponsoring Organizations (COSO) Framework, staff members will evaluate the City’s processes and identify any control deficiencies. These diagnostic review procedures allow the engagement team to assess the City’s systems and controls and to provide constructive feedback to management.

During our initial planning phase of the audit, our engagement team, including the engagement Partner and Manager, will obtain an understanding of the entity and its environment. It is an essential aspect of performing an audit under generally accepted auditing standards. That understanding establishes a frame of reference within which the auditor plans the procedures and exercises professional judgment about assessing risks of material misstatement of the financial statements and responding to those risks throughout the examination.

During the interim phase of the audit, our engagement team will perform a walkthrough of all significant accounting systems, including processes for financial reporting, revenue recognition and cash receipts, purchasing/contract management and cash disbursements, payroll and related liabilities, and others. Our auditors will obtain the written policies and procedures, inquiring accounting personnel, and document the process in either a flowchart or narrative summary format. After gaining an understanding of the accounting and internal control systems, our auditor will make a preliminary assessment of control risk, at the assertion level, for each material account balance or class of transactions.

The form and extent of this documentation are influenced by the size and complexity of the entity and the nature of its accounting and internal control systems. Generally, the more complex the entity’s accounting and internal control systems and the more extensive the auditor’s procedures, the broader our documentation will need to be.

Approach to be Taken in Determining Laws and Regulations that Will be Subject to Audit Test Work The Firm stays continually up to date with audit requirements—including new regulations, compliance supplements, state guidelines, and related contracts—to ensure that we conduct audits under applicable laws and regulations. We test transactions for compliance with the Single Audit Act, California Government Code, GANN Appropriations Limit, provisions of applicable grant guidelines, requirements of local measures, and others.

For example, the Single Audit Act requires that we determine which grants to include in our audit and select transactions from those grants for detailed testing. While most items will be tested as part of the Interim phase, we cannot determine which grants will be selected for the Single Audit until the year-end/fieldwork stage of the audit.

Our compliance audits of cash, investments, debt covenants, and other areas will be performed following the California Government Code, which has many provisions and regulations covering investments.

Approach to be Taken in Drawing Audit Samples for Purposes of Tests of Compliance To test compliance, we will follow the AICPA’s Audit Sampling Considerations of Uniform Guidance Compliance Audits. We will select an appropriate sample size based on our professional judgment and knowledge. Any deviations from control and compliance requirements will be documented.

City of Vernon
10 | PUNGROUP.CPA
Objectives of Our Services
Our primary objective for the proposed audit is to examine the City’s financial statements and express our opinion on the fairness of the presentation, following generally accepted accounting principles. Other objectives that will benefit the City include the following:
 To offer beneficial observations and recommendations about policies and procedures for accounting and operating controls
 To identify opportunities to make City operations more efficient and reduce costs  To perform the audit efficiently and effectively. Disruptions to office operations are kept to a minimum
 To provide continuing advisory services so the City can implement recommendations  To meet these objectives at no additional cost to the City The Engagement Team will perform the audit abiding by the Firm’s quality-control procedures, which include following standard audit programs, careful planning, using industry-standardized software for auditing and internal control documentation, and welcoming an objective review of audit work. In other words, our client-tailored approach emphasizes careful planning, open communication, and proper assignment of responsibilities.

The Firm will supply portable computers to the on-site staff members.

Identification of Anticipated Potential Audit Problems
While we do not expect any problems with the audit, we will carefully investigate and monitor the following relevant accounting issues:

Investments:
 Compliance with GASB 31 and GASB 34
 Authorization and approval process for City investments  Controls to assure the City’s compliance with investment limitations and types of specific investments
 Monitoring by the City of its investments
Financial Reporting:
 Compliance with current reporting and disclosure requirements issued by GASB  Compliance with the various GASBs in effect
 Perform valuations of OPEB benefits to determine the liability for all benefits promised to active, retired, and inactive plan members as of each valuation date  Compliance with Governmental Accounting Standards Board (GASB) Statements 74 and 75  Compliance with infrastructure obligations and regulatory provisions Internal Control Structure:
 City’s internal control functions and compliance with proper internal control philosophies  Computer-system processes and controls and adequacy of the control environment City of Vernon
11 | PUNGROUP.CPA
Fees and Costs
We are committed to the performance of a high-quality audit at the most reasonable fee level possible, both initially and throughout the engagement. Also, our partners will provide advice and consultation as needed at no additional cost to the City of Vernon.

Name of Firm: The Pun Group LLP – Certified Public Accountants and Business Advisors
Contact Name: Kenneth H. Pun, CPA, CGMA
Contact Email Address: [email protected]
Authorization to Represent the Firm
I, the undersigned, certify I am duly authorized to represent The Pun Group LLP and am empowered to submit this bid. In addition, I certify I am authorized to contract with the City of Vernon on behalf of the Firm.

April 3, 2023
_________________________________________ _______________________________ Kenneth H. Pun, CPA, CGMA | Managing Partner Date
The Pun Group LLP
Total All-Inclusive Maximum Price
Our proposed fees for Professional Audit Services for the fiscal years June 30, 2023, 2024 and 2025 are as follows (1) (2):

Work to be performed: 2022/23 2023/24 2024/25
City of Vernon ACFR Audit $ 49,500 $ 50,985 $ 52,515
ACFR Preparation 4,000 4,120 4,244
Single Audit Report - up to 1 major program 4,250 4,378 4,509 Appropriations Limit AUP (GANN Limit Review) 500 515 530 Vernon Public Utilities Funds Audit 27,250 28,068 28,910 Electric Fund Audit 11,500 11,845 12,200
Water Fund Audit 8,250 8,498 8,752
State Controller's Report - City and Streets 4,750 4,893 5,039 Total All-Inclusive Maximum Price $ 110,000 $ 113,300 $ 116,699 (1) Single Audit fees based on one (1) major program. The fee for auditing additional major programs will be $5,000 each. The number of programs determined to be “major” will be based on OMB Uniform Guidance. The Engagement Team will discuss this with the City of Vernon Management before starting Single Audit work.
(2) The percentage modification for the fourth and fifth years is 3% per year.

City of Vernon
12 | PUNGROUP.CPA
Breakdown of Total-All Inclusive Price by Classification Hours
Standard
Hourly
Rates
Quoted
Hourly
Rates Total
Partners 96 300 $ 300 $ 28,800 $
Director 160 250 $ 250 $ 40,000 $
Supervisory Staff 240 175 $ 175 $ 42,000 $
Staff 360 150 $ 150 $ 54,000 $
Clerical: 20 100 $ 100 $ 2,000 $
Out-of-Pocket Expenses: Included
Professional Discount: $ (56,800)
Total all-inclusive maximum price for FY 2023 $ 110,000 Hours
Standard
Hourly
Rates
Quoted
Hourly
Rates Total
Partners 96 300 $ 300 $ 28,800 $
Director 160 250 $ 250 $ 40,000 $
Supervisory Staff 240 175 $ 175 $ 42,000 $
Staff 360 150 $ 150 $ 54,000 $
Clerical: 20 100 $ 100 $ 2,000 $
Out-of-Pocket Expenses: Included
Professional Discount: $ (53,500)
Total all-inclusive maximum price for FY 2024 $ 113,300 Hours
Standard
Hourly
Rates
Quoted
Hourly
Rates Total
Partners 96 300 $ 300 $ 28,800 $
Director 160 250 $ 250 $ 40,000 $
Supervisory Staff 240 175 $ 175 $ 42,000 $
Staff 360 150 $ 150 $ 54,000 $
Clerical: 20 100 $ 100 $ 2,000 $
Out-of-Pocket Expenses: Included
Professional Discount: $ (50,101)
Total all-inclusive maximum price for FY 2025 $ 116,699 City of Vernon
13| PUNGROUP.CPA
Out of Pocket Expenses are Included in the Total All-Inclusive Maximum Price and Reimbursement Rates
The Firm’s policy is to maintain flexible billing rates to meet the needs of clients and help them control costs.

In the interest of starting our long-term relationship, we will absorb expenses such as travel and printing costs. Additionally, our Partners will be available to provide advice and consultation as necessary to the City of Vernon. The Firm will also absorb these costs.

Rates for Additional Professional Services
Below are the Firm’s hourly billing rates, delineated by staffing levels:

Any supplemental reports, audits, or agreed-upon procedures not covered by this proposal may be added to a written agreement prior to commencing audit work. The Firm and the City will discuss and approve the scope and associated costs of these tasks. Any additional work will be performed at the above-quoted hourly rates.

Manner of Payment
Engagement Team members are required to maintain timesheets detailing the date, number of hours, and work performed for every audit task. The Firm will collect these timesheets and bill the City of Vernon at the rates outlined in the Total All-Inclusive Maximum Price section in four stages: (1) at the conclusion of the planning phase, (2) at the conclusion of the interim phase, (3) at the conclusion of the Year-End phase, (4) and after presentation and acceptance of the final audit reports. Interim billings will cover a period not less than a calendar month. The billing amounts generally break down as follows:

Partner(s) 300 $
Director(s) 250 $
Senior Manager(s) 225 $
Manager(s) 200 $
Supervisor(s) 175 $
Senior Accountant(s) 150 $
Staff Accountant(s) 125 $
Clerical 100 $
Hourly Billing Rates
Work Performed % of Proposal Amount
Planning 10%
Interim 40%
Fieldwork 40%
Presentation and Acceptance of Reports 10%
City of Vernon
14 | PUNGROUP.CPA
Ability of the Proposer to Perform
About Your Engagement Team
The personnel assigned to this engagement are fully qualified to perform an effective audit of the City, and their extensive experience will be critical to the audit process. Our professionals are familiar with the complexities of governmental accounting, auditing, and financial reporting, including but not limited to all GASB pronouncements, the Single Audit Act, Uniform Guidance (formerly known as OMB Circular A-133), and fund operations. They have held positions as professional certified public accountants, as well as significant roles within and outside of government agencies. Such qualities will bring to an entity like the City of Vernon the thought leadership, quality, and level of experience it requires.

Because of the “familiarity threat” under the professional audit and independence standards that may exist in long-term relationships with audit firms, the Firm is committed and has sufficient resources to rotate engagement partners, managers, and or supervisors assigned to the City’s audit with personnel with similar or higher qualifications and experience in order to overcome this threat.

If the Firm changes key personnel, we will provide the City with a written notification. Engagement partners, managers, and specialists will only be changed with the express prior written permission from the City. Audit personnel may be replaced only by those with similar or better qualifications and experience.

Full resumes of the following key engagement team members are presented in the Appendices section of this proposal.

Kenneth H. Pun, CPA, CGMA | Engagement/Lead Partner
Kenneth Pun is the Managing Partner and an Assurance Partner at the Firm. With over twenty-one years of public accounting experience in the state and local government sector, he specializes in audits, management, and consulting for governmental organizations. Mr. Pun served as the Contract Deputy Finance Director for the City of San Marino in 2017. He has served as the Chair of the California Society of CPAs Governmental Auditing Accounting Committee. He is a Certified Public Accountant and a Chartered Global Management Accountant.

Mr. Pun will actively serve as the Engagement/Lead Partner overseeing the Engagement Team, developing the audit plan, reviewing fieldwork for quality, approving final reports, and communicating with the Finance Department. He will also be responsible for the timely delivery of all services for the City.

Frances J. Kuo, CPA, CGMA | Technical/Concurring Partner Frances Kuo is a Partner at the Firm. She has extensive experience in providing audit and advisory services to local government agencies, including public pension plans, cities, counties, special districts, community colleges, and joint powers authorities, as well as not-for-profit organizations. Ms. Kuo brings a wealth of experience from her background in audits and advisory services in areas such as internal controls, policy development, and accounting system implementation. She is a Certified Public Accountant and a Chartered Global Management Accountant.

Ms. Kuo will act as the Technical/Concurring Partner and provide a second partner review of significant high-risk areas, audit reports, and resolution of significant accounting, auditing, and reporting matters.

City of Vernon
15 | PUNGROUP.CPA
Andrew Roth, CPA | Compliance Partner
Andrew Roth is a Partner within the Firm and will serve as the primary point of contact for your team. He holds an Advanced Certification in Single Audits through the AICPA. Andrew draws more than a decade of governmental and not-for-profit experience in the areas of financial audit and reporting under governmental and financial accounting standards, evaluation of internal controls under the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Integrated Framework, the performance of Single Audits under the Uniform Guidance, subrecipient monitoring of Federal Grants, corporate financial reporting, data analytics, and exempt taxation. He is a Certified Public Accountant.

Mr. Roth will lead the audit team in all compliance-related matters, including the Uniform Guidance and Single Audit, and reports issued under specific laws and regulations.

John (“Jack”) F. Georger, CPA, CIA, CGMA | Quality Control Reviewer Throughout his forty years of experience, Mr. Georger has spent many years in the “Big 4” and national firms. He worked diligently alongside numerous governmental municipalities, including cities, counties, and transportation agencies, as well as not-for-profit entities, providing clients with financial and compliance auditing as well as consultation services. Mr. Georger is also the technical reviewer of the CCH Knowledge-Based Audits™ of State and Local Governments with Single Audits, GAAP Guide (FASB), and Governmental GAAP Guide (GASB), the gold standard for audit firms throughout the United States. As the Chief Quality Officer in our Firm, he advises clients with their complex accounting questions and supports the engagement team with audit issues. He is a Certified Public Accountant, a Certified Internal Auditor, and a Chartered Global Management Accountant.

Mr. Georger is responsible for reviewing all reports issued by the Firm to ensure the utmost quality and compliance with professional standards and the final qualitycontrol assessment within the engagement.

Gary M. Caporicci, CPA, CGFM, CFF | GASB Implementation Specialist Gary Caporicci is an appointed member of the State Controller’s Retirement Advisory Committee. Mr. Caporicci is a leading expert and has authored and taught several courses for CalCPA and AICPA on GASB 68, Accounting and Financial Reporting for Pensions, and GASB 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. As an assurance partner with over forty years of experience, Mr. Caporicci has performed financial, compliance audit, and consultation services to government clients, including cities, counties, transportation agencies, and school districts, as well as various not-for-profit entities. He is a Certified Public Accountant, a Certified Government Financial Manager, and Certified in Financial Forensics.

Mr. Caporicci will utilize his expertise in providing advice and consultation during the implementation of the new GASB standards.

Sophia Kuo, CPA, M.B.A. │Engagement/Project Director
Sophia Kuo is an Assurance Services Director in the Firm who holds an Advanced Certification in Single Audits through the AICPA. She possesses extensive auditing experience, including cities, counties, special districts, and not-for-profit entities.

She will work closely with the engagement partners directing and supervising the audit team in its daily activities and tasks. She is a Certified Public Accountant and possesses a MAcc in Accounting and an M.B.A. in Business Administration.

Ms. Kuo will serve as the primary point of contact for your team and will work to ensure the services are conducted within the deadlines and will provide updates on our team’s progress to the partners and you.

City of Vernon
16 | PUNGROUP.CPA
Continuing Education and Professional Development
Because of our commitment to providing the highest quality of services to the City, we provide our professionals with technical training to ensure our people stay current on topics within the industry sectors and better equip themselves to serve our clients.

All professionals are required to obtain continuing education that exceeds the requirements of the American Institute of Certified Public Accountants (AICPA) and, where applicable, Government Auditing Standards.

Our professionals participate in continuing education programs through the following means:
 Governmental Accounting and Auditing Conference sponsored by AICPA.  Webinar sponsored by AICPA Government Audit Quality Center.  Annual Conference sponsored by California Society Municipal Finance Officers.  Governmental Accounting and Auditing Conference sponsored by CalCPA.  The Pun Group in-house training on government-specific topics, including but not limited to GASB updates, Government Auditing Standards Revision, Fraud in State and Local Governments, COSO Internal Control-Integrated Framework, Audit of State and Local Governments, Single Audit, and Mindbridge AI Auditors™.

In 2022, our government professionals received an average of 52 hours of continuing professional education, compared with the 40 hours of accounting industry requirement.

By expanding our knowledge through these seminars/conferences, we can provide the right solutions to our clients.

Staff Continuity
The Pun Group LLP is committed to maintaining staff continuity throughout audit engagements, and we can assure you that the partners assigned to this audit will be involved throughout the entire contract term.

While we cannot guarantee that our staff-level members will stay with the Firm, we encourage loyalty by paying competitive wages, offering opportunities for promotion, using state-of-the-art equipment, and providing excellent working conditions. Also, we offer benefits, including retirement plans, medical plans, profit-sharing programs, and continuing education.

Quality-Control System
Our Firm meticulously monitors the quality and contents of our reports. The Pun Group LLP is 100% committed to providing only the highest grade of work possible for our clients and for those who rely on our audits. The Firm strives to exceed professional industry standards because of the continuing respect for our clients and our emphasis on creating long-lasting relationships. The Pun Group LLP works exclusively with those who share the same moral integrity and values. Our quality-control system has been crafted with excellence in mind. It not only meets AICPA standards but also matches our own elevated standards, which include following various professional development activities.

Federal or State Desk Review
No federal or state desk reviews or field reviews have been undertaken of any audits performed by the Firm or any of its partners, managers, or professionals during the past three (3) years.

Disciplinary Action
State regulatory bodies or professional organizations have taken no disciplinary action against the Firm or any of its partners, managers, or professionals during the past three (3) years.

The Firm has no conditions such as bankruptcy, pending litigations, planned office closures, mergers, or any organizational conflict of interest that may affect the ability of the Firm to perform the required duties requested by the City of Vernon.

City of Vernon
17 | PUNGROUP.CPA
References
The following are examples of some of the engagements with similar requirements as the City of Vernon’s proposal. Please feel free to contact these agencies to learn more about their experiences working with us.

Name of Public Agency City of Stockton
Contact Info Mr. Jay Kapoor
(209) 937-5435
[email protected]
Total Hours 3,000
Contract Price $272,000/year
Date of Services 2012 – Present
Scope of Work/Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Financial Report, GFOA Award, Single Audit, GANN Limit, Measure A, Measure W, Measure M, Entertainment Venues, Revenue and Expenditures related to Downtown Marina, Cannabis License Audits, Review of Major Revenues required by the Bankruptcy Agreement with Assured Guarantee.

Name of Public Agency San Diego Metropolitan Transit System Contact Info Ms. Erin Dunn, Controller
(619) 557-4536
[email protected]
Total Hours Approximately 1,850 hours
Date of Services 2005 – Present
Contract Price $225,000/year
Scope of Work/Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Financial Report Audit, GFOA Award, San Diego Transit Corporation Employee’s Retirement Plan, AUP/National Transit Database (NTD): MTS, San Diego Transit Corp., San Diego Trolley, Inc., AUP/Transportation Development Act (TDA): MTS, San Diego Transit Corp., San Diego Trolley, Inc., AUP/Indirect Costs, and Public Transportation Modernization Improvement Service Enhancement Account (PTMISEA).

Name of Public Agency City of Tracy
Contact Info Ms. Sara Cowell
(209) 831-6862 | [email protected]
Total Hours 960
Contract Price $96,500/year
Date of Services 2021 – Present
Scope of Work/
Reports Prepared
Financial Audit and Compliance Services: Annual Comprehensive Financial Report, GFOA Award, Single Audit, GANN Limit, National Transit Database (NTD), State Controller’s Reports (City, PFA, Operating Partnership JPA, City’s Transit Operator’s General Services, and Specialized Services)
Name of Public Agency City of Desert Hot Springs
Contact Info Mr. Geoffrey Buchheim, Finance Director
[email protected]
(760) 329-6411
Total Hours 700
Contract Price $75,000/year
Date of Services 2013 – Present
Scope of Work/Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Financial Report Audit, GFOA Award, Single Audit, GANN Limit, Desert Hot Springs Successor Agency, Desert Hot Springs Financing Authority, Desert Hot Springs Health and Wellness Foundation, New Market Tax Credit Audit (Desert Hot Springs Health and Wellness Foundation), Annual State Controller’s Reports, AUP/Transient Occupancy Tax, Utility User Tax, DHS Housing Audits.

Name of Public Agency City of National City
Contact Info Mr. Phillip Davis, Financial Analyst
[email protected]
(619) 336-4246
Total Hours 600
Contract Price $70,000/year
Date of Services 2013 – Present
Scope of Work/Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Audit, GFOA Award, Single Audit, GANN Limit, HUD Single Audit/Morgan Towers, Financial and Compliance Reports – Kimball Towers, Annual State Controller’s Report.

City of Vernon
18 | PUNGROUP.CPA
Affidavit of Non-Collusion
City of Vernon
19 | PUNGROUP.CPA
Let’s Get to Work!
Benefits of Choosing The Pun Group LLP
We understand that changing audit firms after a long-term relationship is not without its challenges, but we believe we are best suited to perform the services to City because:
 The proposed engagement team draws years of experience focused on governmental accounting in California.
 As full-time government auditors, our schedule allows us to offer our commitment to deliver all of the required work, complete the audit, and issue the necessary auditor’s reports within the periods outlined by the City of Vernon.
 The partner-in-charge and all professionals assigned to the engagement will dedicate sufficient time to perform the audit and financial statement preparation in an effective manner.  As previously discussed, we will deploy state-of-the-art information technology tools to enhance our audit and project management approach.
 In addition, our team will provide advice and consultation throughout the year on matters relating to accounting and financial reporting.

The Pun Group LLP is recognized for its professionalism, integrity and for providing clients with practical solutions unique to their circumstances and issues. Our Firm prides itself on being able to provide personalized client services, and with that sentiment in mind, we have carefully chosen our engagement teams. The Pun Group’s primary objective is to offer the City of Vernon solutions and directions led by highly experienced and capable partners who can successfully implement the work and produce the results you expect. This philosophy and mindset allow us to provide a superior level of service and a quality audit.

We trust that this proposal has given you the information needed about the Firm, the engagement team members, the overall audit approach, cost-saving measures, and audit fees. We are committed to exceeding your expectations, and we look forward to bringing our experience and expertise to the City of Vernon while providing you with the excellent level of service that you expect and deserve.

Thank You
Thank you for allowing us to submit our qualifications to provide you with Professional Audit Services.

Please direct inquiries to:

Kenneth H. Pun, CPA, CGMA
Managing Partner
Email: [email protected]
Phone: (949) 777-8801 | Fax: (949) 777-8850
Sincerely,
The Pun Group LLP
Certified Public Accountants and Business Advisors
City of Vernon
i | PUNGROUP.CPA
Appendix A – Engagement Team Resumes
The City of Vernon deserves experienced professionals who work as a team. The Pun Group LLP will provide qualified professionals to perform the audit. No subcontractors will be utilized to perform the requested services. Resumes for key engagement team members are as follows:

City of Vernon
ii | PUNGROUP.CPA

EXPERIENCE
Kenneth H. Pun is the Managing Partner and an Assurance Partner at The Pun Group LLP, which he founded in 2012 after serving in senior-level positions for well-established national and regional firms. Under his leadership, The Pun Group has become one of the “Top Accounting Firms” in Orange County, according to the Orange County Business Journal. The Pun Group is also on the list of CalCPA's Top 150 firms.

Prior to founding The Pun Group, Ken served clients in a variety of industries, including small to very large state and local governmental agencies, insurance companies, not-for-profits, healthcare, technology, and manufacturing and distribution clients. His career in public accounting was spent primarily with Regional firms and National firms.

Leveraging more than 21 years of public accounting experience, Ken has earned a reputation of being a trusted advisor to governmental and Healthcare organizations throughout California and neighboring states.

Municipalities and public agencies engage him because of his premier level of client service, commitment, and innovative methods of increasing operational efficiencies and reducing costs.

Ken maintains his deep commitment to professional education through his work as an instructor for the California Education Foundation. He has authored training materials in governmental accounting and auditing, such as Financial Reporting for State and Local Governments, 2018 Government Auditing Standards, and Single Audit Fundamentals for California Education Foundation. He is also the technical reviewer of the CCH Knowledge-Based Audits™ of State and Local Governments with Single Audits. He advises clients on those topics at influential industry forums. Internally, Ken mentors audit teams by providing direction and technical guidance to ensure adherence to the firm’s quality controls.

EDUCATION
University of California, Riverside
B.S. Degree – Business Administration, Emphasis in Accounting

LEADERSHIP & AFFILIATIONS
 Member, American Institute of Certified Public Accountants (AICPA)  Member, California Society of Certified Public Accountants (CalCPA)  Past Chair, CalCPA Governmental Accounting and Auditing Committee  Member, CalCPA California Committee on Municipal Accounting  Member, CalCPA Governmental Accounting and Auditing Conference Planning Committee  Member Government Finance Officers Association (GFOA)  Member, California Society of Municipal Finance Officers (CSMFO)  Member, CSMFO Professional Standards Committee
 Speaker, CSMFO Conference (2014 and 2018)
 Instructor, CalCPA Education Foundation
 Technical Reviewer, CCH Knowledge-Based Audits™ of State and Local Governments with Single Audits

RELEVANT EXPERIENCE
 City of Stockton  City of San Bernardino
 City of Palm Springs  City of Desert Hot Springs
 City of Lakewood  City of National City
 City of Pomona  City of Redding
 City of Clovis  City of Shafter

CONTINUING PROFESSIONAL EDUCATION
Various courses are offered by the Firm online through Thompson Reuters, AICPA, and CalCPA Education Foundation, including:
 Governmental and Nonprofit Annual Update
 Government Auditing Standards
 GASB Basic Financial Statements for State and Local Governments  Single Audits: Uniform Guidance (formerly OMB Circular A-133)  Financial Accounting Standards Board Annual Updates
 Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies.

Kenneth H. Pun

CPA, CGMA
Engagement/
Lead Partner
EMAIL
[email protected]
WEBSITE www.pungroup.cpa
Expertise:

CITIES

COUNTIES

TRANSPORTATION

AGENCIES

ENTERPRISE

OPERATIONS
HIGHER

EDUCATION

NOT-FOR-PROFIT
Licensed to Practice in:

California
City of Vernon
iii | PUNGROUP.CPA

EXPERIENCE
Frances Kuo is a Partner in The Pun Group, LLP’s Assurance division. Frances has over sixteen (16) years of accounting and auditing experience working with governmental agencies, not-forprofit entities, and employee benefit plans. Frances also has particular expertise in conducting financial audits under GAO Yellow Book standards and compliance audits in accordance with Uniform Guidance, formerly known as OMB Circular A-133 standards.

Frances has performed audits and other attestation services for several municipalities throughout California, including cities, counties, successor agencies to former redevelopment agencies, public financing authorities, housing authorities, transportation agencies, and special districts. She has assisted these clients in publishing their Annual Comprehensive Financial Reports in compliance with GASB Statement No. 34.

Frances is the in-house instructor who provides training, both theoretical and on-the-job training, to lower-level staff. She has developed training materials on the risk-based audit approach, GASB Statement No. 34 reporting, Single Audits, and employee benefit plan audits.

EDUCATION
University of California, Riverside
B.S. Degree – Business Administration, Emphasis in Accounting University of California, Riverside
B.A. Degree – Economics

LEADERSHIP & AFFILIATIONS
 Member, American Institute of Certified Public Accountants (AICPA)  Member, California Society of Certified Public Accountants (CalCPA)  Member, California Society of Municipal Finance Officers (CSMFO)

RELEVANT EXPERIENCE
 City of Perris  City of Coachella
 City of Desert Hot Springs  City of Gardena
 City of Glendora  City of Industry
 City of Pomona  City of Lakewood
 City of Culver City  City of Monterey

CONTINUING PROFESSIONAL EDUCATION
Various courses are offered by the Firm online through Thompson Reuters, AICPA, and CalCPA Education Foundation, including:
 Governmental and Nonprofit Annual Update
 Government Auditing Standards
 GASB Basic Financial Statements for State and Local Governments  Single Audits: Uniform Guidance (formerly OMB Circular A-133)  Financial Accounting Standards Board Annual Updates
 Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies.

Frances J. Kuo

CPA, CGMA
Technical/
Concurring Partner
EMAIL
[email protected]
WEBSITE www.pungroup.cpa
Expertise:

CITIES

COUNTIES

TRANSPORTATION

AGENCIES

ENTERPRISE

OPERATIONS
HIGHER

EDUCATION

NOT-FOR-PROFIT
Licensed to Practice in:

California
Arizona
City of Vernon
iv | PUNGROUP.CPA

EXPERIENCE
Andrew Roth is a Partner within The Pun Group LLP. He has more than twelve (12) years of governmental and not-for-profit experience in the areas of financial audit and reporting under governmental and financial accounting standards, evaluation of internal controls under the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Integrated Framework, the performance of Single Audits under the Uniform Guidance, subrecipient monitoring of Federal Grants, corporate financial reporting, data analytics, and exempt taxation.

His client portfolio consists of moderate to large municipalities (cities and counties), municipal transportation districts, water districts, municipal electric utilities, and not-for-profit organizations whose missions involve building communities. His governmental agency clients have federal grant expenditures that range from $100 million to $750 million annually.

In various engagements, Andrew has been responsible for leading the service delivery where he has actively contributed and managed the planning process, implementation of the audit work plan, supervision of multiple audit teams, and provided yearly team updates on the changes in compliance testing requirements for the Single Audits, and preparation of all deliverables including the Annual Comprehensive Financial Reports, the Single Audit, Compliance Reports, Data Collection Forms, and City Council/Board presentations. He has also been a guest speaker on topics involving Federal grants, such as updates to Yellow Book Standards, Compliance Auditing, and Updates to the Uniform Guidance Procurement Requirements.

EDUCATION
San Diego State University
B.A. Degree – Accounting

LEADERSHIP & AFFILIATIONS
 Member, American Institute of Certified Public Accountants (AICPA)  Member, California Society of Certified Public Accountants (CalCPA)

RELEVANT EXPERIENCE
 City of San Bernardino  City of National City
 City of Placerville  City of Shafter
 City of Beaumont
 City of Lodi
 Imperial County Local Transportation
Authority
 City of Clovis  San Diego Metropolitan Transit System

CONTINUING PROFESSIONAL EDUCATION
Various courses offered by the Firm online through Thompson Reuters, AICPA, and CalCPA Education Foundation, including:
 Governmental and Nonprofit Annual Update
 Government Auditing Standards
 GASB Basic Financial Statements for State and Local Governments  Single Audits: Uniform Guidance (formerly OMB Circular A-133)  Financial Accounting Standards Board Annual Updates
 Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies.

Andrew Roth
CPA
Compliance
Partner
EMAIL
[email protected]
WEBSITE www.pungroup.cpa
Expertise:

CITIES

COUNTIES

TRANSPORTATION

AGENCIES

ENTERPRISE

OPERATIONS
HIGHER

EDUCATION

NOT-FOR-PROFIT
Licensed to Practice in:

California
Arizona
City of Vernon
v | PUNGROUP.CPA

EXPERIENCE
Jack Georger is the Chief Quality Officer within The Pun Group LLP’s Assurance division. By leveraging more than forty (40) years of public accounting and auditing experience in the government, agribusiness, financial services, manufacturing, and nonprofit sectors, Mr. Georger brings in-depth knowledge and practical expertise to each engagement.

Jack coordinates, plans, and manages financial audit activities, consulting activities, federal and state compliance audit activities, performance audits, and numerous quality control and internal control reviews for a broad mix of governmental agencies and programs throughout the United States.

Mr. Georger leads our Peer Review department providing peer review services to other firms under the practice monitoring program of the AICPA.

Mr. Georger is a continuing professional education course instructor for the AICPA. Annually, he instructs over 300 hours in accounting and auditing subjects. Jack has authored training material in governmental accounting and auditing for the AICPA. He is the technical reviewer of the CCH Knowledge-Based Audits™ of State and Local Governments with Single Audits, GAAP Guide (FASB), and Governmental GAAP Guide (GASB).

Mr. Georger is licensed to practice as a certified public accountant in the states of California, New York, Virginia, Maryland, the District of Columbia, Missouri (inactive), Connecticut (inactive), and Wyoming (inactive). He is a Certified Internal Auditor (CIA).

EDUCATION
George Mason University Fairfax, Virginia
B.S. Degree – Accounting

LEADERSHIP & AFFILIATIONS
 Member and Instructor, American Institute of Certified Public Accountants (AICPA)  Member, Institute of Internal Auditors
 Member, California Society of Certified Public Accountants (CalCPA)  Member, New York Society of Certified Public Accountants (NYSSCPA)  Chairman, NYSSCPA Government Accounting and Auditing Committee  Member, NYSSCPA Auditing Standards Committee
 Member, NYSSCPA Sustainability Committee
 Member, NYSSCPA Not-for-Profit Committee
 Nevada Society of Certified Public Accountants (NSCPA)  Member, Government Finance Officers Association (GFOA) – Reviewer  Member, Institute of Internal Auditors

CONTINUING PROFESSIONAL EDUCATION
He has instructed over 300 hours of municipal accounting courses offered by the AICPA.

Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies.

John F. Georger, Jr .

CPA, CIA, CGMA
Quality Control
Reviewer
EMAIL
[email protected]
WEBSITE www.pungroup.cpa
Expertise:

CITIES

COUNTIES

TRANSPORTATION

AGENCIES

ENTERPRISE

OPERATIONS
HIGHER

EDUCATION

NOT-FOR-PROFIT
Licensed to Practice in:

California
Arizona
Nevada
City of Vernon
vi | PUNGROUP.CPA

EXPERIENCE
Gary M. Caporicci has more than forty years of diversified business experience, including a specialization in audit and management consulting for government organizations. Gary’s clients include public and private universities and colleges, city and county governments, state agencies, joint power authorities, healthcare agencies, transportation agencies, and special districts. Known for his expertise in the areas of construction and government, Gary wrote the AICPA audit guides on these topics, and he has authored many audit and accounting courses for professional groups, as well as academic institutions. He frequently speaks and lectures at many professional organizations, governmental seminars, and conferences held by industry associations, other accounting firms, and universities. Also, he authors white papers for the California Committee on Municipal Accounting.

Before working with the Firm, Gary founded his accounting practice. He also spent eleven years with a “Big Eight” professional services firm, where he was an Audit Manager and gained broad experience in a wide range of industries such as government, construction, manufacturing, mutual funds, and insurance. Gary has held a consultant position with a “Big Four” practice and was Vice President of a national insurance and financial services company.

In 2015 Gary Caporicci was appointed to the State Retirement Advisory Committee by the State Controller.

EDUCATION
Armstrong University
B.S. Degree – Accounting and Finance

LEADERSHIP & AFFILIATIONS
 Member and Instructor, American Institute of Certified Public Accountants (AICPA)  Member, Author, and Instructor, California Society of Certified Public Accountants (CalCPA)  Past Chair, CalCPA Governmental Accounting and Auditing Committee  Chair and Speaker, CalCPA Governmental Accounting and Auditing State Conferences  Member, CalCPA Council
 Chair, California Committee on Municipal Accounting (CCMA)  Member, Government Finance Officers Association (GFOA)  Member, California Society of Municipal Finance Officers (CSMFO)  Member, Governmental Accounting Standards Board (GASB)  Member, Deposit and Investment Risks Disclosure Task Force (GASB No. 40)  National Reviewer and Speaker, Government Finance Officers Association  Adjunct Professor, National University
 Past Member, Texas Governmental Accounting and Auditing Committee  GFOA Certificate for Excellence in Financial Reporting – Reviewer

CONTINUING PROFESSIONAL EDUCATION
Author and instructor of various municipal accounting courses offered by the AICPA, CalCPA Education Foundation, and local universities, including:
 Governmental and Non-profit Annual Update
 Government Auditing Standards
 GASB Basic Financial Statements for State and Local Governments  Single Audits: Uniform Guidance (formerly OMB Circular A-133)  Financial Accounting Standards Board Annual Updates
 Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies.

Gary M. Caporicci

CPA, CGFM, CFF
GASB
Implementation
Specialist
EMAIL
[email protected]
WEBSITE www.pungroup.cpa
Expertise:

CITIES

COUNTIES

TRANSPORTATION

AGENCIES

ENTERPRISE

OPERATIONS
HIGHER

EDUCATION

NOT-FOR-PROFIT
Licensed to Practice in:

California
City of Vernon
vii | PUNGROUP.CPA

EXPERIENCE
Sophia Kuo is a Director within The Pun Group, LLP’s Assurance division. In her seven years of accounting and auditing experience, Sophia has worked with governmental agencies, not-forprofit entities, and private for-profit entities. She possesses governmental expertise that ranges from GASB audit/reporting, Internal Controls/COSO Framework, Single Audit, Corporate Financial Reporting, Data Analysis, and Taxation.

Ms. Kuo has performed audits and other attestation services for several governmental agencies throughout California. Her portfolio includes cities, counties, redevelopment agencies, public financing authorities, housing authorities, transportation agencies, and special districts. Also, she has helped them publish their Annual Comprehensive Financial Reports in compliance with GASB Statement No. 34.

EDUCATION
Fu Jen Catholic University
B.A. Degree – International Trading and Finance, Emphasis in Finance Idaho State University
Master of Accounting (MAcc)
Master of Business Administration (M.B.A.)

LEADERSHIP & AFFILIATIONS
 Member, American Institute of Certified Public Accountants (AICPA)  Member, California Society of Certified Public Accountants (CalCPA)

RELEVANT EXPERIENCE
 City of Coachella  City of Culver City
 City of Desert Hot Springs  City of Gardena
 City of Laguna Niguel  City of Lakewood
 City of Monterey  City of Monterey Park
 City of Perris  City of Pomona

CONTINUING PROFESSIONAL EDUCATION
Various courses are offered by the Firm online through Thompson Reuters, AICPA, and CalCPA Education Foundation, including:
 Governmental and Non-profit Annual Update
 Government Auditing Standards
 GASB Basic Financial Statements for State and Local Governments  Single Audits: Uniform Guidance (formerly OMB Circular A-133)  Financial Accounting Standards Board Annual Updates
 Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies.

Sophia Kuo
CPA, M.B.A.

Engagement/
Project Director
EMAIL
[email protected]
WEBSITE www.pungroup.cpa
Expertise:

CITIES

COUNTIES

TRANSPORTATION

AGENCIES

ENTERPRISE

OPERATIONS
HIGHER

EDUCATION

NOT-FOR-PROFIT
Licensed to Practice in:

California
City of Vernon
viii | PUNGROUP.CPA
Appendix B – Firm’s Experience with Government
Firm’s Experience Providing Similar Services
The Pun Group LLP has performed numerous audits of organizations subject to financial and compliance audits. These audits were performed under auditing standards generally accepted in the United States, Government Auditing Standards, Uniform Guidance (formerly known as OMB Circular A-133), and its Compliance Supplement (when applicable), Office of the State Controller’s Minimum Audit Requirements and Reporting Guidelines.

A representative list of our current clients is as follows:

Municipalities Dates Financial
Audit
Single
Audit
GFOA
Certificate
Total
Hours
City of Adelanto 2021 – Present Yes Yes Yes 700
City of Alameda 2019 – Present Accounting and Consulting Services 150 City of Arvin 2013 – Present Yes Yes N/A 400
City of Baldwin Park 2022 – Present Yes Yes Yes 700
City of Bell 2018 – Present Yes Yes Yes 520
City of Bradbury 2012 – Present Yes N/A N/A 150
City of Calexico 2007 – Present Yes Yes N/A 750
City of Clovis 2006 – Present Yes Yes Yes 500
City of Coachella 2017 – Present Yes Yes Yes 410
City of Cottonwood, AZ 2007 – Present Yes Yes Yes 400
City of Corona 2021 – Present Yes Yes Yes 640
Town of Corte Madera 2022 – Present Yes Yes N/A 400
Town of Danville 1999 – Present Yes Yes Yes 400
City of Douglas, AZ 2020 – Present Yes Yes Yes 300
City of Desert Hot Springs 2013 – Present Yes N/A N/A 700 City of Fresno 2022 – Present Yes Yes Yes 1,450
City of Gardena 2007 – Present Yes Yes Yes 700
City of Gilroy 2020 – Present Yes Yes Yes 640
City of Glendora 2017 – Present Yes Yes Yes 430
City of Gustine 2017 – Present Yes N/A N/A 400
City of Hemet 2015 – Present Yes Yes N/A 380
City of Vernon
ix | PUNGROUP.CPA
Municipalities Dates Financial
Audit
Single
Audit
GFOA
Certificate
Total
Hours
City of Hercules 2020 – Present Yes Yes Yes 450
City of Lakewood
2013 – Present
Yes Yes Yes 380
City of Lomita 2020 – Present Accounting and Consulting Services 150 City of Lynwood 2016 – Present Yes Yes Yes 585
City of Madera 2019 – Present Yes Yes Yes 470
City of Montebello 2022 – Present Yes Yes Yes 600
County of Monterey 2023 – Present Yes Yes Yes TBD
City of Napa 2019 – Present Yes Yes Yes 750
City of National City 2013 – Present Yes Yes Yes 600
City of Palm Springs 2020 – Present Yes Yes Yes 1,000
City of Paramount 2023 – Present Yes Yes Yes 460
City of Patterson 2017 – Present Yes Yes Yes 450
City of Placerville 2008 – Present Yes Yes N/A 400
City of Redlands 2022 – Present Yes Yes Yes 650
City of Ridgecrest 2009 – Present Yes Yes Yes 300
City of Rohnert Park 2020 – Present Yes Yes Yes 700
City of Salinas 2022 – Present Yes Yes Yes 800
City of San Mateo 2021 – Present Yes Yes Yes 900
City of Santa Clarita 2022 – Present Yes Yes Yes 1,200
City of Seal Beach 2017 – Present Yes Yes Yes 410
City of Stockton 2012 – Present Yes Yes N/A 3,000
City of Tracy 2021 – Present Yes Yes Yes 960
Town of Tiburon 2022 – Present Yes Yes Yes 452
City of Visalia 2021 – Present Yes Yes Yes 650
Imperial County Transportation
Commission 2020 – Present Yes Yes Yes 600
Nevada County Transportation
Commission 2021 – Present Compliance Services N/A N/A 450 San Diego Metropolitan Transit System 2005 – Present Yes Yes Yes 1,850 Shasta Regional Transportation Agency 2015 – Present Yes N/A N/A 400 City of Vernon
x | PUNGROUP.CPA
Municipalities Dates Financial
Audit
Single
Audit
GFOA
Certificate
Total
Hours
Alameda County Water District 2018 – Present Yes Yes N/A 550 Camrosa Water District 2020 – Present Investment
Pool 120
Carmel Area Wastewater District 2022 – Present Yes Yes N/A 150 CAWD/PBSCD Wastewater Reclamation
Project 2022 – Present Yes N/A N/A 150
Central Basin Water District 2018 – Present Yes Yes N/A 400 Las Virgenes Municipal Water District 2014 – Present Yes N/A N/A 400 Los Angeles County Law Library 2020 – Present Yes N/A N/A 180 Marina Coast Water District 2012 – Present Yes N/A Yes 240 Menlo Park Fire Protection District 2015 – Present Yes Yes Yes 240 NALEO Educational Fund and NALEO 2020 – Present Yes N/A N/A 300 Olivenhain Municipal Water District 2019 – Present Yes Yes Yes 200 Padre Dam Municipal Water District 2020 – Present Yes Yes Yes 250 Rancho Murieta Community Services
District 2019 – Present Accounting and Consulting Services 800 Rancho Santa Fe Fire Protection District 2015 – Present Yes N/A N/A 120 San Bernardino County Emergency
Training Center 2020 – Present Yes N/A N/A 50
San Bernardino County Preschool
Services Department 2020 – Present Yes Yes N/A 150
San Bernardino County Fire Protection
District 2016 – Present Yes N/A N/A 200
San Elijo Joint Powers Authority 2016 – Present Yes N/A N/A 146 Santa Fe Irrigation District 2019 – Present Yes N/A N/A 250 Sweetwater Authority 2022 – Present Yes Yes Yes 270
South Bay Cities Council of
Governments 2020 – Present Yes N/A N/A 100
South Coast AQMD 2023 – Present Yes Yes N/A 410
South Orange County Water Authority 2017 – Present Yes Yes Yes 240 South Bay Regional Public
Communications Authority 2015 – Present Yes N/A N/A 100 Southwestern Community College
District 2009 – Present Yes Yes N/A 720
Valley Sanitary District 2015 – Present Yes N/A Yes 140 West Valley Mosquito and Vector Control
District 2016 – Present Yes N/A N/A 100
Zone 7 Water Agency 2020 – Present Yes Yes Yes 400
City of Vernon
xi | PUNGROUP.CPA
GFOA Award Program
The Pun Group LLP realizes the importance of maintaining the Certificate for Excellence in Financial Reporting from the GFOA. Our professionals are exceptionally well qualified to assist governments in obtaining and maintaining their certificates.

The Firm’s commitment and involvement in the development of auditing and accounting standards can be shown in our active participation in the GFOA’s financial statements certificate programs. 100% of our current clients who submitted their Annual Comprehensive Financial Report to the GFOA received these awards.

Also, two of our senior partners, Mr. Gary Caporicci and Mr. John F. Georger, are members of the Government Finance Officers Association and participate in the GFOA Special Review Committee.

Firm’s Experience with Single Audit and Grants
The Pun Group LLP works with numerous organizations that receive extensive governmental funding and are subject to auditing under Uniform Grant Guidance. This Firm’s specialization helps our audit team understand the procedures’ nuances and execute the engagement accordingly. We also assist in preparing the data collection form and preparing the reporting package for submission to the federal audit clearinghouse.

The Firm is a member of the AICPA Governmental Audit Quality Center and has demonstrated its commitment to audit quality, including those performed under Government Auditing Standards and Uniform Guidance. Also, we are a recipient of the Single Audit Resource Center’s Award for Excellence. This award is based on the positive feedback result from our clients in an independent survey, demonstrating our Firm’s highest commitment to quality and client satisfaction.

We utilize standardized audit programs from the federal government’s Compliance Supplement to ensure that our procedures meet federal standards. Our audit programs are continually updated to reflect the revisions of OMB.

Our Uniform Guidance risk-based approach focuses on areas of higher risk of non-compliance. Such an approach truly reflects the federal government's intent by concentrating on the following four steps:

City of Vernon
xii | PUNGROUP.CPA

1. Planning & Internal control assessment: The engagement team will obtain an understanding of the City and its operating environment and its internal control over the Schedule of Expenditures of Federal Awards. The engagement team will perform the major program determination and communicate with the City’s management before conducting major program testing.

2. Testing & compliance assessment: The engagement team will obtain an understanding of internal control over compliance on the direct and material compliance requirements for each major program.

The engagement will perform testing on internal controls over compliance to ensure the controls are in place working effectively and properly and that the City is in compliance with the applicable regulations in administering major programs.

3. Reporting & Review: The engagement team will review and prepare the single audit reports and perform quality control procedures following the Quality Control Standards issued by the AICPA. Any comments will be issued to the management or the Charge with Governance, depending on the magnitude of the issues. Upon obtaining the final approvals from management, the Single Audit report will be issued.

4. Issuance to Clearing House: The engagement team will assist the City in drafting the data collection form and completing the final submission, including uploading the audit package to the Federal Clearing House.

Our Firm has audited hundreds of millions of dollars in federal expenditures, making our engagement team uniquely experienced in single audits. We are familiar with grantors, such as:
 Corporation for National and Community Services
 Department of Agriculture
 Department of Education
 Department of Health and Human Services
 Department of Housing and Urban Development
 Department of Transportation
 Environmental Protection Agency
 Department of Commerce
 Department of Labor
 Department of Homeland Security
 Department of Justice
 Department of Treasury
 Executive Office of the President
City of Vernon
xiii | PUNGROUP.CPA
Firm’s Current and Past Experience with Joint Powers Authorities and Public Utilities Our Firm has provided professional services to several JPAs and Public Utilities. Below is a representative listing of such engagements:
 Adelanto Public Utility Authority
 Arbuckle Public Utility District
 Casitas Municipal Water District
 Central Basin Municipal Water District
 City of Monterey Joint Powers Financing Authority
 Coachella Valley Resource Conservation District
 Diablo Water District
 East Orange County Water District
 El Toro Water District
 Farm Mutual Water Company
 Las Virgenes Municipal Water District
 Las Virgenes – Triunfo Joint Powers Authority
 Los Angeles Waterkeeper
 Marina Coast Water District
 North County Dispatch Joint Powers Authority
 Olivenhain Municipal Water District
 Orange County Coastkeeper
 Palmdale Water District
 Perris Joint Powers Authority
 Riverside County Flood Control and Water Conservation District  San Diego Coastkeeper
 San Bernardino County Fire District
 San Elijo Joint Powers Authority
 Santa Fe Irrigation District
 Sativa Los Angeles County Water District
 South Orange County Wastewater Authority
 Valley Sanitary District
 Water Replenishment District of Southern California
 West County Wastewater District
City of Vernon
xiv | PUNGROUP.CPA
Firm’s Experience with State Controller’s Reports
The Pun Group LLP has assisted numerous clients with the preparation of the required reports by the California State Controller’s Office. Some of these experiences are as follows:

Cities Financial Transactions Report:
 City of Arvin
 City of Bell
 City of Coachella
 City of Culver City
 City of Desert Hot Springs
 City of Hercules
 City of Placentia
 City of Laguna Niguel
 City of Lakewood
 City of Lynwood
 City of Monterey
 City of Morro Bay
 City of Napa
 City of National City
 City of Palm Springs
 City of Perris
 City of Rohnert Park
 City of South Gate
 City of Stockton
Annual Street Report:
 City of Desert Hot Springs
 City of Laguna Niguel
 City of Napa
 City of Palm Springs
 City of Perris
 City of Stockton
Special Districts Financial Transactions Report:
 Special District of West End Water Development Treatment and Conservation Joint Powers Authority
 Special District of West Valley Water District
 Special District of Coachella Financing Authority
 Special District of Coachella Sanitary District (Riverside)  Special District of Coachella Water Authority
 Special District of Desert Hot Springs Public Financing Authority  Special District of Desert Hot Springs Successor Agency  Special District of Perris Public Utility Authority
 Special District of Perris Public Financing Authority  Special District of Perris Joint Powers Authority
 Special District of Central Basin Municipal Water District  Special District of Marina Coast Water District
 Special District of Menlo Park Fire Protection District  Special District of San Bernardino County Fire Protection District Transit Operators Financial Transactions Report:
 City of Arvin
 City of Culver City
City of Vernon
xv | PUNGROUP.CPA
Firm’s Expertise and Experience in Governmental Accounting Rules and Regulations, Including Implementation of new GASB Pronouncements
Changing federal laws, statutes, ordinances, and compliance provisions have created unprecedented complexity in public accounting today. Our GASB Implementation Specialist, Mr. Gary Caporicci, has helped our clients implement new standards while adapting to changes within the existing standards. Our partners serve on committees that have input into how new standards are written. They actively participate in industry associations focused on state and local governments. By participating in industry associations and activities, we are always up to date on the latest industry changes and their impact on your operations.

We will keep you and our colleagues in the Firm fully informed of these developments.

Also, our professionals are familiar with the complexities of governmental accounting, auditing, and financial reporting, including but not limited to all GASB pronouncements, the Single Audit Act, and Uniform Guidance (formerly known as OMB Circular A-133) and fund operations. They have held positions as professional certified public accountants and taken on significant roles within and outside government agencies. Such experience brings to our clients the thought leadership, quality, and level of expertise they require.

The Firm is well versed and experienced in assisting our clients with the implementation of the applicable GASB pronouncements every year, such as GASB 34, GASB 54, GASB 65, GASB 68, GASB 75, and GASB 84. Mr. Gary Caporicci, as a chair of the California Committee on Municipal Accounting “CCMA,” wrote “white papers” on each of these pronouncements.

Throughout the engagement, several new GASB pronouncements will become effective. The Engagement Team will pay specific attention to upcoming statements that will become effective and work with the City to create a plan to address new standards before the implementation period. This step will allow the finance department staff the needed time to be prepared.

Special Attention: GASB Pronouncements Effective for Reporting Year 2023 GASB Statement No. 87, Leases
The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments.

Effective Date: The requirements of this Statement are effective for fiscal years beginning after June 15, 2021, and all reporting periods thereafter.

GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements
The primary objective of this Statement is to improve financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs).

Effective Date: for fiscal years beginning after June 15, 2022, and all reporting periods thereafter.

GASB Statement No. 96, Subscription-Based Information Technology Arrangements This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments).

Effective Date: for fiscal years beginning after June 15, 2022, and all reporting periods thereafter.

City of Vernon
xvi | PUNGROUP.CPA
Appendix C – Complimentary Client Training
Strengthen Your Accounting Knowledge: TPG Client Training Webinars We pride ourselves in leading the governmental auditing profession nationwide and statewide. Members of our team have been assigned to the AICPA and State Government Accounting and Audit committees.

Our membership with these two levels of government keeps us current, and such involvement helps our Firm with the constant changes in accounting and auditing standards, laws and regulations, and compliance provisions, which have created an unprecedented complexity in public accounting for state and local governments.

Every year, the Firm hosts a conference to update governmental clients on new technical accounting and financial issues. Since last year, by implementing “Webinars,” we’ve been expanding our horizons and offering our clients 15 hours of Continuing Professional Education (CPE). These sessions are free of charge and part of the service package provided to our clients.

CPE courses we offer:

City of Vernon
xvii | PUNGROUP.CPA
Appendix D – Sample of Certificate of Insurance
City of Vernon
xviii | PUNGROUP.CPA
Appendix E – Peer Review
Being a member of the American Institute of Certified Public Accountants (AICPA), The Pun Group LLP is required to obtain an independent peer review of our audit and accounting practice every three (3) years.

The peer reviewer assessed the Firm’s quality-control policies, reviewed administrative records, interviewed professional personnel, and inspected the Firm’s working papers and reports from a representative sample of accounting and auditing engagements, including governmental audits. The reviewer concluded that the Firm fully complied with the AICPA’s stringent standards for quality control and issued a peer review rating of “Pass.”
A copy of our most recent peer review is presented.

City of Vernon
xix | PUNGROUP.CPA
Appendix F – Other Important Information
Independence
The Pun Group LLP requires all employees to adhere to strict independence standards concerning the Firm’s clients. These independence standards exceed, in many instances, the rules promulgated by the American Institute of Certified Public Accountants (AICPA).

The Pun Group LLP certifies that it is independent of the City of Vernon and its component units. The Firm meets independence requirements defined by the United States Government Accountability Office’s (US GAO’s) Government Auditing Standards and the American Institute of Certified Public Accountants (AICPA). Based on that, we have not identified an instance that constitutes a conflict of interest relative to performing the services requested by the City.

The Firm will give the City of Vernon written notice of any professional relationships entered into during the period of the engagement.

License to Practice in California
The Firm and all key professional staff are licensed by the State of California to practice as Certified Public Accountants and meet the Continuing Professional Education requirements under US GAO’s Government Auditing Standards to perform the proposed audits.

Firm Registration:

California State Board of Accountancy Number – PAR 7601 Federal Identification Number – 46-4016990
Business License
If selected, the Firm will obtain and maintain a valid City of Vernon Business License while conducting any work under the contract.

ORANGE COUNTY SAN DIEGO BAY AREA LAS VEGAS PHOENIX
www.pungroup.cpa

EXHIBIT B

SCHEDULE
City of Vernon
11 | PUNGROUP.CPA
Fees and Costs
We are committed to the performance of a high-quality audit at the most reasonable fee level possible, both initially and throughout the engagement. Also, our partners will provide advice and consultation as needed at no additional cost to the City of Vernon.

Name of Firm: The Pun Group LLP – Certified Public Accountants and Business Advisors
Contact Name: Kenneth H. Pun, CPA, CGMA
Contact Email Address: [email protected]
Authorization to Represent the Firm
I, the undersigned, certify I am duly authorized to represent The Pun Group LLP and am empowered to submit this bid. In addition, I certify I am authorized to contract with the City of Vernon on behalf of the Firm.

April 3, 2023
_________________________________________ _______________________________ Kenneth H. Pun, CPA, CGMA | Managing Partner Date
The Pun Group LLP
Total All-Inclusive Maximum Price
Our proposed fees for Professional Audit Services for the fiscal years June 30, 2023, 2024 and 2025 are as follows (1) (2):

Work to be performed: 2022/23 2023/24 2024/25
City of Vernon ACFR Audit $ 49,500 $ 50,985 $ 52,515
ACFR Preparation 4,000 4,120 4,244
Single Audit Report - up to 1 major program 4,250 4,378 4,509 Appropriations Limit AUP (GANN Limit Review) 500 515 530 Vernon Public Utilities Funds Audit 27,250 28,068 28,910 Electric Fund Audit 11,500 11,845 12,200
Water Fund Audit 8,250 8,498 8,752
State Controller's Report - City and Streets 4,750 4,893 5,039 Total All-Inclusive Maximum Price $ 110,000 $ 113,300 $ 116,699 (1) Single Audit fees based on one (1) major program. The fee for auditing additional major programs will be $5,000 each. The number of programs determined to be “major” will be based on OMB Uniform Guidance. The Engagement Team will discuss this with the City of Vernon Management before starting Single Audit work.
(2) The percentage modification for the fourth and fifth years is 3% per year.

City of Vernon
12 | PUNGROUP.CPA
Breakdown of Total-All Inclusive Price by Classification Hours
Standard
Hourly
Rates
Quoted
Hourly
Rates Total
Partners 96 300 $ 300 $ 28,800 $
Director 160 250 $ 250 $ 40,000 $
Supervisory Staff 240 175 $ 175 $ 42,000 $
Staff 360 150 $ 150 $ 54,000 $
Clerical: 20 100 $ 100 $ 2,000 $
Out-of-Pocket Expenses: Included
Professional Discount: $ (56,800)
Total all-inclusive maximum price for FY 2023 $ 110,000 Hours
Standard
Hourly
Rates
Quoted
Hourly
Rates Total
Partners 96 300 $ 300 $ 28,800 $
Director 160 250 $ 250 $ 40,000 $
Supervisory Staff 240 175 $ 175 $ 42,000 $
Staff 360 150 $ 150 $ 54,000 $
Clerical: 20 100 $ 100 $ 2,000 $
Out-of-Pocket Expenses: Included
Professional Discount: $ (53,500)
Total all-inclusive maximum price for FY 2024 $ 113,300 Hours
Standard
Hourly
Rates
Quoted
Hourly
Rates Total
Partners 96 300 $ 300 $ 28,800 $
Director 160 250 $ 250 $ 40,000 $
Supervisory Staff 240 175 $ 175 $ 42,000 $
Staff 360 150 $ 150 $ 54,000 $
Clerical: 20 100 $ 100 $ 2,000 $
Out-of-Pocket Expenses: Included
Professional Discount: $ (50,101)
Total all-inclusive maximum price for FY 2025 $ 116,699 City of Vernon
13| PUNGROUP.CPA
Out of Pocket Expenses are Included in the Total All-Inclusive Maximum Price and Reimbursement Rates
The Firm’s policy is to maintain flexible billing rates to meet the needs of clients and help them control costs.

In the interest of starting our long-term relationship, we will absorb expenses such as travel and printing costs. Additionally, our Partners will be available to provide advice and consultation as necessary to the City of Vernon. The Firm will also absorb these costs.

Rates for Additional Professional Services
Below are the Firm’s hourly billing rates, delineated by staffing levels:

Any supplemental reports, audits, or agreed-upon procedures not covered by this proposal may be added to a written agreement prior to commencing audit work. The Firm and the City will discuss and approve the scope and associated costs of these tasks. Any additional work will be performed at the above-quoted hourly rates.

Manner of Payment
Engagement Team members are required to maintain timesheets detailing the date, number of hours, and work performed for every audit task. The Firm will collect these timesheets and bill the City of Vernon at the rates outlined in the Total All-Inclusive Maximum Price section in four stages: (1) at the conclusion of the planning phase, (2) at the conclusion of the interim phase, (3) at the conclusion of the Year-End phase, (4) and after presentation and acceptance of the final audit reports. Interim billings will cover a period not less than a calendar month. The billing amounts generally break down as follows:

Partner(s) 300 $
Director(s) 250 $
Senior Manager(s) 225 $
Manager(s) 200 $
Supervisor(s) 175 $
Senior Accountant(s) 150 $
Staff Accountant(s) 125 $
Clerical 100 $
Hourly Billing Rates
Work Performed % of Proposal Amount
Planning 10%
Interim 40%
Fieldwork 40%
Presentation and Acceptance of Reports 10%

EXHIBIT C

EQUAL EMPLOYMENT OPPORTUNITY

PRACTICES PROVISIONS
A. Contractor certifies and represents that, during the performance of this Agreement, the contractor and each subcontractor shall adhere to equal opportunity employment practices to assure that applicants and employees are treated equally and are not discriminated against because of their race, religious creed, color, national origin, ancestry, handicap, sex, or age. Contractor further certifies that it will not maintain any segregated facilities.

B. Contractor agrees that it shall, in all solicitations or advertisements for applicants for employment placed by or on behalf of Contractor, state that it is an "Equal Opportunity Employer" or that all qualified applicants will receive consideration for employment without regard to their race, religious creed, color, national origin, ancestry, handicap, sex or age.

C. Contractor agrees that it shall, if requested to do so by the City, certify that it has not, in the performance of this Agreement, discriminated against applicants or employees because of their membership in a protected class.

D. Contractor agrees to provide the City with access to, and, if requested to do so by City, through its awarding authority, provide copies of all of its records pertaining or relating to its employment practices, except to the extent such records or portions of such records are confidential or privileged under state or federal law.

E. Nothing contained in this Agreement shall be construed in any manner as to require or permit any act which is prohibited by law.