Agenda Item No. 13
CITY OF YUCAIPA
AGENDA REPORT
TO: Honorable Mayor and City Council
FROM: 311 Andrew Hamilton, Director of Finance
FOR: City Council Meeting of September 26, 2022
SUBJECT: Financial Statement Auditor Services Selection RECOMMENDATION:
That the City Council authorizes the City Manager to enter into a contract for financial statement audit services with Van Lant & Fankhanel, LLP for three fiscal years from Fiscal Year 21-22 through Fiscal Year 23-24 for an amount not -to -exceed $103,550 with two (2) optional one (1) year renewals (based on the Finance Committee's recommendation).
BACKGROUND:
On July 11, 2022, the City of Yucaipa issued a Request for Proposal (RFP), with a scope of work consistent with those issued by other public agencies related to conducting an annual financial statement audit. The RFP contained provisions to conduct the next three years of audits with one-year renewal options for two subsequent fiscal years.
The scope of work contained the requisite audit activities including:
• Auditing the basic financial statements;
• Expressing an opinion on the fair presentation of the basic financial statements in conformity with generally accepted accounting principles;
• Following generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants;
• Issuance of standard reports; and
• Audit of the Schedule of Expenditures of Federal Awards.
Proposal Evaluation
The City received 5 proposals which were reviewed and evaluated by a selection panel comprised of three individuals: a neighboring City's Finance Director, and Yucaipa's Accounting Manager and Sr.
Accountant.
-169-
City Council Agenda
Meeting of September 26, 2022
Financial Statement Auditor Selection
All proposals from these firms indicated extensive backgrounds and experience in government audits, accounting and consulting; therefore, the selection panel decided to conduct interviews with four firms.
The interviews were conducted on August 15, 2022.
The selection panel determined that Van Lant & Fankhanel, LLP demonstrated a track record of experience in performing quality services, particularly their commitment to cities in Southern California.
During the interview, Van Lant & Fankhanel, LLP, described their understanding of the City and scope of work, committing to provide the City with an effective and efficient audit that will meet the timing of proposed audit completion. Van Lant & Fankhanel, LLP also highlighted their extensive staff experience and substantial partner involvement that will be utilized during the audit. In addition, their overall fee is the lowest among the proposed fees submitted by other firms.
On August 22, 2022, staff recommended for City Council consideration the selection of Van Lant & Fankhanel, LLP, to conduct audit services for the next three years from Fiscal Year (FY) 21-22 through FY 23-24 with two (2) option one (1) fiscal year renewals, based on the interview score, overall cost and above discussion. Following Council discussion, the Council voted to refer this agenda item to the Finance Committee (Committee) and to continue this item to a future City Council meeting.
DISCUSSION:
On September 20, 2022, the Committee met with staff to discuss the Auditor selection process based on the direction received on August 22, 2022. Staff presented a summary of the scope of work, interview process, interview panel participants, and the basis of staff s prior recommendation. Based on the information presented and further discussion, the Committee is recommending Van Lant & Fankhanel, LLP be selected for financial statement auditor services.
FISCAL IMPACT:
The proposed fees from Van Lant & Fankhanel, LLP are $103,550 over the next 3 fiscal years (with two (2) optional one (1) year renewals) as compensation for financial statement auditor services. The funding for these services is included in the approved and adopted General Fund Budget for FY 22-23 and will be included in future budgets.
Attachments:
Audit Proposal - Van Lant & Fankhanel, LLP
Approved by:
-170-
0 Proposal to Perform Professional
Audit Services
City of Yucaipa
Van Lant & Fankhanel, LLP
Greg Fankhanel, CPA, CFE
Managing Partner
29970 Technology Drive,
Suite 105 A
Murrieta, CA 92563
Phone: (909) 756-2589
Fax: (909) 912-8378
Email: [email protected]
California License No.: 7535
K
Proposal to Perform Audit Services for the:
CITY OF
Submitted by:
Van Lant&
Fankhanel, LLP
VA:-1 F-
California License No. PAR 7535
Contact Information:
Greg Fankhanel, CPA, CFE
Brett Van Lant, CPA
29970 Technology Drive, Suite 105 A
Murrieta, CA 92563
Telephone: (909) 856-6879
E-mail: [email protected]
[email protected]
August 1, 2022
-172-
-173-
CITY OF YUCAIPA
PROPOSAL TO PERFORM ANNUAL AUDIT SERVICES
TABLE OF CONTENTS
Page Number
Letter of Transmittal
1 License and Independence
3 Firm Qualifications and Experience:
3 Current Municipal Audit Clients
4 Participation in External Quality Control Review Program 4 Disciplinary Action
4 Partner and Staff Qualifications and Experience:
5 Engagement Partner Resume — Greg Fankhanel, CPA, CFE
7 Quality Control Reviewer Resume — Brett Van Lant, CPA 8 Engagement Supervisor Resume — Enrico Tobing, CPA
9 Similar Engagements with Other Governmental Agencies
10 Specific Audit Approach
12 Anticipated Potential Audit Problems
16 Appendix A — Peer Review Report
17 Appendix B — Proposed Fees
19 Appendix C — Business License
25 Appendix D — W-9
26 Exhibit A — Acknowledgment Form
27 Exhibit B — Minimum Company Qualifications
28 -174-
-175-
,.. Van Lant&
s Fankhanel LLP
Certified Public Accountants 1
August 1, 2022
Andrew Hamilton, CPA, Director of Finance
City of Yucaipa
34272 Yucaipa Blvd.
Yucaipa, CA 92399
Van Lant & Fankhanel, LLP (VLF) is pleased to submit our proposal to perform professional audit services for the City of Yucaipa (City). We hope this proposal conveys our strong desire and qualifications to fulfill your requirements. We understand this proposal is to audit the City's financial statements for the three fiscal years beginning with the fiscal year ended June 30, 2022, with the option to extend for an additional two years.
VLF is a local firm of Certified Public Accountants with offices located in Redlands and Murrieta, California. The principals of the firm (Mr. Brett Van Lant and Mr. Greg Fankhanel) have been providing governmental accounting and auditing services to California cities and special districts for 40 years combined. VLF is dedicated to providing the highest level of experience and expertise in governmental accounting knowledge to ensure a smooth audit process that causes minimal disruption to the City's ongoing daily administrative operations.
VLF is the best choice to provide annual audit services to the City of Yucaipa for the following significant reasons:
■ We have extensive experience auditing similar California cities and special districts. ■ Significant Partner involvement throughout the audit engagement. Audit Partners will be performing fieldwork and preparing reports with the assistance of senior level auditors. Having the Audit Partners involved in all aspects of the audit assures continuity of the audit team each year.
■ A complete understanding of the City's reporting requirements and deadlines. In addition, we assist a number of cities and special districts each year in obtaining the GFOA award for excellence in financial reporting.
■ Mr. Fankhanel is also a Certified Fraud Examiner which adds another level of expertise to the audit process. We have assisted many California cities in strengthening internal controls, and establishing effective policies and procedures. i
r
Van Lant & Fankhanel, LLP
29970 Technology Drive. Suite 105 A
rJurrieta. CA 92563
909.856.6879
-176-
What sets us apart from other audit firms? You are not just a number to us — every audit client is unique and important to us. As a smaller firm, we believe the personal service and attention we will provide cannot be duplicated at larger firms. While many firms have knowledgeable and experienced individuals on staff, the quality of each audit ultimately depends on the audit personnel involved in the daily audit process, including fieldwork and report preparation. With VLF, you will be dealing with Partner level personnel throughout the audit process, including fieldwork.
We are passionate about providing the highest level of service. We believe one the best services we can provide is to be available throughout the year to assist our clients with questions and keep them apprised of new accounting and financial reporting requirements. We encourage our clients to communicate questions or concerns, not only during the audit process, but as they arise at any time during the year. You will have access to the audit partners on a daily basis, throughout each audit and each fiscal year.
We certify that VLF and the audit partners are properly licensed to practice in California. Greg Fankhanel is authorized to represent VLF, empowered to submit this proposal, and authorized to sign a contract with the City. This proposal is a firm and irrevocable offer for a period of 90 days from the submitted date. Should you have any questions regarding our proposal or desire additional information, please call Greg Fankhanel, CPA, at (909) 856-6879, or email to [email protected].
Respectfully submitted,
Greg Fankhanel, CPA, CFE
Managing Partner
2 -177-
City of Yucaipa
License and Independence
VLF and all assigned key professional staff are properly licensed by the California State Board of Accountancy to practice in the State of California (License No. PAR 7535).
We are independent of the City of Yucaipa and its component units in accordance with generally accepted auditing standards as promulgated by Rule 101 of the American Institute of Certified Public Accountants Code of Professional Ethics, generally accepted government auditing standards promulgated by the U.S. General Accounting Office (GAO), and the rules of the California State Board of Accountancy and Accounting Oversight Board.
We will provide the City with written notice of any professional relationships entered into during the period of our engagement that may impair our independence, if necessary.
Firm Qualifications and Experience
Van Lant & Fankhanel, LLP (VLF) is a local firm of Certified Public Accountants specializing in local government audits, accounting and financial reporting. VLF currently serves a number of local governments throughout the State. Our Firm's mission is to provide our clients with the highest level of experience and expertise, throughout each year of our engagement. Because VLF is a smaller firm dedicated to governmental accounting and auditing services, we provide our clients with Partner level individuals in the field each year of the audit engagement. This has proven to be a valuable service to our clients and helps to significantly reduce the amount of client staff time consumed by the audit process.
The proposed audit team will include 2 full-time Audit Partners and 1 full-time Senior Accountant.
One of the Audit Partners will be assigned to perform quality control reviews and assist with audit fieldwork as necessary.
Our Murrieta office will be the engagement office assigned to the City. VLF currently provides audit and accounting services to a number of cities and special districts throughout California.
Information regarding several of our current audit clients has been included in this proposal. Please contact these organizations to learn more about our firm's ability to provide excellent audit services.
Greg Fankhanel was a reviewer for the GFOA ACFR award program for many years. 3 -178-
City of Yucaipa
Our Firm focuses on providing audit and assurance services to local governments in California.
The Partners have also provided TOT and Franchise Fee audit services.
The engagement team members proposed to serve the City are highly -trained government auditors.
One of our goals is to avoid putting our clients in a position of having to "train" the auditors. We avoid this by ensuring that all fieldwork is properly staffed and supervised by Partner level personnel. We are required to complete at least 80 hours of continuing education every 2 years, with a majority of these hours relating specifically to government accounting and auditing subjects.
Continuing education requirements are met through classes developed by professional organizations, such as the CSCPA, GFOA, and the AICPA. Both Mr. Fankhanel and Mr. Van Lant have been instructors for an in-house continuing education program for several years.
Current Municipal Audit Clients
Below is a list of current municipal audit clients for which we currently provide audit services.
Current Municipal
City of Delano*
Clients
City of Ukiah`
City of Hidden Hills
City of Upland*
City of Highland*
Town of Windsor
City of La Puente*
City of West Covina*
City of Buena Park
City of Yucaipa*
City of Montclair
Apple Valley Fire Protection District
City of Clearlake
Lake Arrowhead Community Services District*
City of Hemet*
Riverside County Flood Control District*
City of Susanville
Running Springs Water District
City of Tehachapi*
Tehachapi Cummings County Water District*
* = ACFR submitted to the GFOA award program
Participation in External Quality Control Review Program As required by Government Auditing Standards, our firm must have a peer review once every three years. We received a "clean" opinion with no deficiencies in our most recent peer review report, which included a review of specific government engagements. A copy of the report is included at Appendix A.
In addition, we have established a quality control program to adhere to the stringent quality control standards established by the AICPA. We have also developed policies and procedures to ensure our engagements are properly supervised and staff receives necessary training to handle the responsibilities afforded them.
Disciplinary Action
There have been no disciplinary or regulatory actions taken against our CPA firm, or the partners. The firm has had no negative federal or state reviews.
4 -179-
City of Yucaipa
Partner, Supervisory, and Staff Qualifications and Experience The proposed Engagement Team selected to serve the City have extensive experience and a proven record of providing excellent audit services to Cities of similar size and operations.
We will provide continuity of audit staff from year to year, which is in the best interest of the City and is most efficient from our firm's perspective. Additionally, the audit partners assigned to this engagement are working partners and therefore will be involved throughout the entire engagement each year, including fieldwork.
We affirm that engagement partners, managers, and other supervisory staff may be changed if those personnel leave the firm, are promoted or are assigned to another office. These personnel may also be changed for other reasons only with the express prior written permission of the City.
We agree the City retains the right to approve or reject replacements. 5 -180-
City of Yucaipa
Greg W. Fankhanel, CPA, CFE
Engagement Partner
Mr. Fankhanel is the managing Partner of VLF and has over 30 years of experience auditing local governments and non -profits, including cities and special districts throughout the State of California.
Mr. Fankhanel will be extensively involved throughout the audit process. He has served as a special reviewer for the GFOA certificate of achievement program for many years. His duties will include supervising the engagement team during fieldwork, reviewing all reports, and performing the review and approval of the audit engagement. In addition, he will be the point of contact for the City throughout the engagement.
Brett Van Lant, CPA
Quality Control Reviewer
Mr. Van Lant is an Audit Partner for VLF and has over 14 years of experience auditing local governments and non -profits, including cities and special districts throughout the State of California.
His duties will include performing quality control reviews of the engagement and serve as the concurring partner for the audit, in addition to assisting with audit fieldwork, as necessary.
Enrico Tobing, CPA
Supervisor
Mr. Tobing is a licensed Supervisor with VLF with over 6 years of experience. He will work closely with the Partners during the audit fieldwork and report preparation for the City. Mr. Tobing has extensive experience auditing local governments, including cities and special districts throughout the State of California.
Resumes of the proposed engagement team are provided below:
GREG W. FANKHANEL,
CPA, CFE
Engagement Partner
PROFESSIONAL MEMBERSHIPS
Greg W. Fankhanel is the • Member, American Institute of Certified Public Accountants (AICPA) Managing Partner of Van Lant & • Member, California Society of Certified Public Accountants (CaICPA) Fankhanel, LLP. Prior to co- • Member, California Society of Municipal Finance Officers (CSMFO) founding our firm, Mr. Fankhanel
• Member, Government Finance Officers Association GFOA
spent 22 years with Teaman, • Member, Association of Certified Fraud Examiners (ACFE) Ramirez, & Smith where he served • GFOA Certificate reviewer as an Audit Partner for over 12 PROFESSIONAL EXPERIENCE (PARTIAL LIST) years.
•
Town of Apple Valley
Mr. Fankhanel has extensive
•
City of Corona
experience in leading and
•
City of Hidden Hills
performing financial statement
•
City of Highland
audit engagements for
•
City of La Puente
government agencies. In addition,
•
City of Montclair
as a Certified Fraud Examiner
•
City of Murrieta
(CFE), he takes a proactive
•
City of San Fernando
approach in providing information
•
•
City of San Clemente
City of St. Helena
and assistance in fraud prevention
•
City of Tehachapi
and detection, which provides an
•
City of Ukiah
excellent resource for audit clients.
•
City of Upland
•
City of Yucaipa
•
City of Winters
•
East Valley Water District
•
Running Springs Water District
•
Lake Arrowhead Community Services District
•
Temescal Valley Water District
•
Tehachapi -Cummings County Water District
•
Valley Sanitary District
CONTINUING PROFESSIONAL EDUCATION
Over 120 hours of continuing education over the past three years with a focus on governmental accounting and auditing topics, along with fraud prevention and detection.
EDUCATION
University of Hawaii
BS Degree in Business Administration, Emphasis in Accounting 7 -182-
BRETT VAN LANT, CPA
Engagement QC Reviewer
PROFESSIONAL MEMBERSHIPS
Brett Van Lant is an audit Partner of
•
Member, American Institute of Certified Public Accountants (AICPA) Van Lant & Fankhanel, LLP. Prior to
•
Member, California Society of Certified Public Accountants (CaICPA) co-founding our firm, Mr. Van Lant
•
Member, California Society of Municipal Finance Officers (CSMFO) spent 6 years with Teaman,
•
Member, Government Finance Officers Association (GFOA)
Ramirez, & Smith where he served
as an Audit Manager for over 4
PROFESSIONAL EXPERIENCE (PARTIAL LIST)
years.
.
Town of Apple Valley
•
City of Corona
Mr. Van Lant has extensive
•
City of Delano
experience in leading and
•
City of Healdsburg
performing financial statement
.
City of Hemet
audit engagements for
•
City of Highland
government agencies. He has
•
City of Hidden Hills
worked closely with many local
•
City of King City
governments over the year
•
City of La Puente
assisting with the implementation
•
City of Montclair. City of Murrieta
of significant accounting
.
City of San Fernando
pronouncements including GASB
.
City of San Clemente
67/68 and GASB 75.
•
City of Santee
•
City of South El Monte
•
City of Tehachapi
•
City of Ukiah
•
City of Upland
•
City of Yucaipa
•
City of Winters
•
East Valley Water District
•
Running Springs Water District
•
Lake Arrowhead Community Services District
•
Temescal Valley Water District
•
Tehachapi -Cummings County Water District
•
Valley Sanitary District
CONTINUING PROFESSIONAL EDUCATION
Over 120 hours of continuing education over the past three years with a focus on governmental accounting and auditing topics, along with topics related to audits performed under the Uniform Guidance.
EDUCATION
California State University, San Bernardino
BS Degree in Business Administration, Emphasis in Accounting 8 -183-
Enrico Tobing is an audit Supervisor
at Van Lant & Fankhanel, LLP.
Enrico joined VLF upon graduating
from California State University, San
Bernardino.
Mr. Tobing has over 6 years'
experience performing financial
statement audit engagements for
government agencies. He has
been involved in numerous audit
engagements throughout the
years participating in the planning
process, developing the detailed
audit approach, performing single
audit compliance testing,
supervising staff, and the
preparation of financial and other
required reports. He earned his
CPA license in California in 2020.
ENRICO TOBING, CPA
Engagement Supervisor
PROFESSIONAL MEMBERSHIPS
• Member, American Institute of Certified Public Accountants (AICPA) • Member, California Society of Municipal Finance Officers (CSMFO)
PROFESSIONAL EXPERIENCE
• Town of Apple Valley
• City of Delano
• City of Healdsburg
• City of Hidden Hills
• City of Highland
• City of La Puente
• City of Lemon Grove
• City of Maywood
• City of Montclair
• City of Murrieta
• City of San Fernando
• City of San Clemente
• City of Santa Paula
• City of Susanville
• City of Tehachapi
• City of Ukiah
• City of Upland
• City of Yucaipa
• Town of Windsor
• City of Winters
• East Valley Water District
• Running Springs Water District
• Riverside County Flood Control and Water Conservation District • Lake Arrowhead Community Services District
• Temescal Valley Water District
• Tehachapi -Cummings County Water District
CONTINUING PROFESSIONAL EDUCATION
Over 120 hours of continuing education over the past three years with a focus on governmental accounting and auditing topics, along with topics related to audits performed under the Uniform Guidance.
EDUCATION
California State University, San Bernardino
BS Degree in Business Administration, Emphasis in Accounting W.-
City of Yucaipa
Similar Engagements with Other Governmental Entities
The following are audit client references for which similar services have been provided in the last three years. The audit clients listed below are all current audit clients of our firm. We do not have any clients to list for which services were provided in the last two years but are no longer provided. 1) City of Tehachapi
Client Contact: Hamed Jones, CPA,
Finance Director
City of Tehachapi
115 S Robinson Street
Tehachapi, CA 93561
(661) 822-2200
Engagement Partner: Brett Van Lant
Total Hours: 300
The City of Tehachapi was incorporated in 1909 as a General Law City and provides the following services: public safety, streets, planning, water, wastewater, refuse, airport, and general administrative services. We conducted the annual audit of the City for the years ended June 30, 2011 through 2021 (including single audit). We also prepared the State Controller's Reports and provided assistance in obtaining the GFOA financial statement award. 2) City of Hemet
Client Contact: Lorena Rocha,
Finance Director
City of Hemet
445 E Florida Avenue
Hemet, CA 92543
(951)765-2331
Engagement Partner: Brett Fankhanel
Total Hours: 350
The City of Hemet is a full service City and provides the following services: public safety, streets, planning, wastewater, and general administrative services. We conducted the annual audit of the City for the years ended June 30, 2013 and 2014 and were recently hired to perform the audits beginning for Fiscal year 2021 (including single audit) and provided assistance with the implementation of various GASB accounting pronouncements. We also prepared the State Controller's Reports,
3) City of Montclair
Client Contact: Janet Kulbeck, f
Finance Manager
City of Montclair
5111 Benito Street
Montclair, CA 91763
Engagement Partner: Brett Van Lant
Total Hours: 285
10 -185-
City of Yucaipa
(909) 626-8571
The City of Montclair was incorporated in 1956 as a General Law City and provides the following services: public safety, streets, planning, and general administrative services. We conducted the annual audit of the City for the years ended June 30, 2013 through 2021 (including single audit) and provided assistance with the implementation of GASB 68 and other accounting pronouncements.
4) City of La Puente
Client Contact: Troy Grunklee,
Administrative Services Director
City of La Puente
15900 Main St.
La Puente, CA 91744
(626) 855-1509
Engagement Partner: Brett Van Lant
Total Hours: 235
The City of La Puente is a General Law City that provides the following services: public safety, streets, planning, and general administrative services. We conducted the annual audit of the City for the years ended June 30, 2015 through June 30, 2021 (including single audit) and provided assistance with the implementation of new GASB Pronouncements. We also provided assistance in submitting for and obtaining the GFOA financial statement award. 5) City of Upland
Client Contact: Londa Helms, Admin. Svcs. Dir
City of Upland
460 N. Euclid Ave.
Upland, CA 91786
(909) 931-4100
Engagement Partner: Greg Fankhanel
Total Hours: 325
The City of Upland is a General Law City that provides the following services: public safety, streets, planning, water utility, sewer utility, solid waste, and general administrative services.
We conducted the annual audit of the City for the years ended June 30, 2018 through June 30, 2021 and provided assistance with the implementation of new GASB Pronouncements. We also provided assistance in submitting for and obtaining the GFOA financial statement award.
City of Yucaipa
Specific Audit Approach
We believe that timely and adequate audit planning, along with proper communication throughout the audit process, helps to achieve highly efficient and effective audits. We also believe that one of the most important services that can be rendered to clients is to be available at all times during the year. This approach allows the clients the opportunity to consult with the auditors about technical problems and alternative approaches to accounting issues that arise during the year. We emphasize audit partner availability throughout each fiscal year.
Proposed Segmentation
The following is a proposed segmentation of the engagement, including the level of staff and estimated hours:
DescriptionEstimated
Preaudit planning, detailed request list provided
Partner
Dates
June
Estimated
2 Preliminary audit fieldwork (risk assessment,
evaluating internal controls, etc.)
Partners, Supervisor, Senior
June
125
Auditors mail confirmation letters provided by
the City, as applicable
Seniors
July
3 Year-end audit procedures performed
Partners, Supervisor, Senior
October
135
Exit/progress meetings with management
Partners
October
2 Auditors provide draft financial statements and
related reports for review
Partners, Supervisor, Senior
December
25 Final reviews, completion of audit reports
Partners, Supervisor, Senior
December
25 Preparation of Financial Transactions Report
Partners, Senior
January
15 Our proposed segmentation of the engagement is further expanded below:
Planning Phase
Shortly after our appointment as auditors, we will schedule a pre -audit planning meeting during which we will discuss any special concerns, needs and the timing of the audit with appropriate members of the City's staff. We will provide a customized request list or "PBC list" to City staff in advance of our arrival for interim fieldwork.
12 -187-
City of Yucaipa
All members of the proposed engagement team are highly trained municipal auditors with extensive experience auditing similar Cities in California. Therefore, we tailor our approach with the focus of being the least disruptive as possible to the City's staff. To achieve this, as part of the planning phase, the engagement team will review City budgets, organizational charts, year-to-date accounting records, applicable accounting policies and procedures, prior year financial statements, the City's website, and minutes of Council meetings to gain a thorough understanding of the City's operations and activities.
Interim Fieldwork
We take a customized approach to each and every audit. We will apply the "Risk Assessment" audit standards to your audits. An overriding objective throughout the planning process is the identification of risks that should be assessed as to whether they could result in material misstatement of the financial statements whether due to error or fraud. Due to the complex nature of the risk assessment process, it is performed at the Partner level for all of our audit engagements.
The main focus of the interim audit fieldwork is to obtain an understanding and evaluate the City's specific internal accounting control systems. Our review and evaluation of your internal control systems will be completed by reviewing supporting documentation for transactions, walk-throughs, and interviews of City staff. Each of these approaches requires inquiry and observation of City personnel and operations. We will also utilize the City's budget, organizational charts, financial reports, policies and procedures, and other applicable documents.
Interim financial reports will be reviewed and limited analytical procedures will be applied to significant account balances in order to identify potential misstatements early on in the audit process.
As required by our audit standards, we will also perform procedures to identify the risk of fraud within the organization. In addition to reviewing pertinent accounting records and policies and procedures, we will conduct "fraud inquiries" with various selected City staff. Given the sensitive nature of these procedures, these inquiries will be conducted by the Audit Partners.
We will conclude the interim audit period with an exit conference with the appropriate City staff to discuss any findings or control risks we encountered during this interim phase, along with practical recommendations to mitigate these risks. Our recommendations will be directed at safeguarding City assets, improving the effectiveness of City procedures, and improving the reporting of financial information, as applicable.
Year-end Fieldwork
This phase of the audit will focus on verifying account balances in the City's general ledger. Balance sheet accounts, along with certain revenue and expenditure/expense will be reviewed for reasonableness and verified with supporting documentation, including third -party confirmations, loan and debt agreements, and other supporting schedules. Analytical and substantive procedures will be performed based on our judgment and the results of our risk assessment.
We will conclude the year-end audit fieldwork with an exit conference with the appropriate City staff to discuss the results of our audit procedures, as well as disclose any proposed journal entries we may have discovered. We will also discuss the preparation of the CAFR and various other reports to be issued for the audit period.
13 -188-
City of Yucaipa
Report Preparation
Partners and senior staff will be solely responsible for preparing the reports.
Our draft reports go through an extensive review process before they are sent to City staff for review. Our goal is to provide "print ready" reports when City staff receives the first draft. This ensures City staff will not have to spend time correcting our mistakes. We have a proven track record of meeting deadlines and being flexible to meet the City's needs as they may change throughout the engagement.
Sampling
Our sampling methods are designed to provide the most coverage possible without expending excess time where impractical. We also concentrate efforts towards those areas known to be susceptible to error. Sample sizes will depend upon our preliminary assessment of control risk and the extent of our planned substantive tests and analytical procedures. We use models based on statistical sampling theories to help determine the sample size of a given population of transactions.
In addition, we may select transactions above a certain dollar threshold, based on materiality, to review. We use sampling in the areas of cash receipts, cash disbursements, payroll, and utility billing.
The audit team will have laptop computers onsite during the audit fieldwork utilizing state-of-the-art software. We utilize programs such as Microsoft Excel to assist in our audit procedures and provide for greater efficiency and effectiveness, including data extraction procedures and analysis. We have significant experience working with many various accounting systems in our government audits.
Analytical Procedures
Analytical procedures will be performed in the planning stage of the audit (risk assessment process) and in our substantive testing, based on the results of our risk assessment. These procedures will include comparing account balances to prior years and to the current period's budget, and consideration of expected relationships among the accounts and periods. To be effective, the analytical procedures can only be performed once we have determined our expectations based on our understanding of the City's activities and changes from one year to the next. For results that do not meet our expectations, we perform additional substantive procedures to understand and verify the causes for the fluctuations. We make every effort to investigate the fluctuations before obtaining explanations from City staff and consuming staff time unnecessarily.
Approach to Understanding the City's Internal Controls
We will obtain an understanding of the design and implementation of the City's internal controls by performing the procedures as required by SAS 109. This involves documenting our understanding of the internal controls over the areas of cash, investments, revenues and receivables, utility revenues and receivables, expenditures and accounts payable, capital assets, debt, payroll and related liabilities, self-insurance and claims liabilities and grant compliance. We will then evaluate 14 -189-
City of Yucaipa
the design of controls and determine whether they have been properly implemented. Evaluating the design of controls involves considering whether the control, individually or in combination with other controls, is capable of effectively preventing or detecting and correcting material misstatements.
In addition, as part of the audit, we will issue an internal control report as required by Government Auditing Standards that will identify significant deficiencies and material weaknesses, if any.
Approach to Understanding Laws and Regulations Subject to Audit Test Work Our audit approach recognizes the importance of laws and regulations in planning the audit of a local governmental entity. As part of the audit, we obtain an understanding of those laws and regulations that have a direct and material effect on the determination of financial statement amounts. We then design the audit to provide reasonable assurance of detecting material instances of noncompliance. We obtain our understanding of applicable laws and regulations by becoming familiar with the following:
1) The terms and provisions of grant agreements and contracts. 2) State and federal restrictions affecting funding received by the City; 3) The Municipal Code of the City.
4) State laws regarding authorized investments, spending limits, debt limits, etc. 5) City policies regarding investments, purchasing, budgets, and the establishment of funds. 6) Bond covenants of outstanding issues.
7) Personnel Policies adopted by the City.
8) Other Federal and State laws and regulations, as appropriate.
Approach to Drawing Samples for Purposes of Tests of Compliance The objective of tests of compliance is to determine whether an organization has complied with laws and regulations that may have a material effect on each major program. Therefore, we select samples that will provide sufficient evidence for that purpose. After defining the population, we determine sample sizes and select samples from each major program. Factors that may affect the sample sizes include the following:
a) The amount of expenditures for the program and the individual awards; b) The newness of the program or changes in its conditions; c) Prior experience with the program, particularly as revealed in audits and other evaluations; d) The extent to which the program is carried out through subreceipients; e) The level to which the program is already subject to program reviews or other forms of independent oversight;
f) The adequacy of controls for ensuring compliance;
g) The expectation of adherence or lack of adherence to the applicable laws and regulations; a h) The potential impact of adverse findings.
In the event that any irregularity in records indicates the City may have suffered or will suffer a monetary loss, we will report such loss to the appropriate City personnel immediately upon discovery in the form of a written report. Responses to City notifications will be prompt and all reports will be remitted in a timely manner to meet your needs. We make it a practice to be proactive 15 -190-
City of Yucaipa
in providing guidance and assistance to our audit clients throughout each fiscal year to ensure proper and timely implementation of new and significant accounting pronouncements, and also with laws and regulations.
Assistance expected from City staff will include providing us with documents and information included in our comprehensive request list provided at the start of the audit process, answering operational and procedural type questions, and preparing confirmation letters.
Why hire VLF?
Based on our experience, our approach to the City's audit is unlike other audit firms. The significant involvement of the Audit Partners throughout the audit process helps to achieve highly efficient and effective audits. We customize each audit, each year, and believe our approach will help the City in its efforts to achieve excellence in financial reporting and provide excellent service to the citizens of Highland.
Your City will be top priority for our firm, and you will have access to the Audit Partners on a daily basis. While we are a growing audit firm, we only take on audits when we feel that we can continue to provide this high level of service. In addition, the Audit Partner in charge of the City's audit is a Certified Fraud Examiner, providing a level of service unlike most audit firms.
Anticipated Potential Audit Problems
We do not anticipate any unusual, significant problems in conducting the audit. The Partners and all professional staff have significant training and experience in assisting our clients with the implementation of new GASB pronouncements. We will provide a pro -active approach to ensure the City has taken the necessary steps to effectively implement new standards. We are committed to being available throughout the year to provide assistance, answer questions, and offer technical advice and examples.
�`TJJ ITI 7 "A"
TA
SPA F FOR. DANt) LA N DRYCI'A�
HERE 1-0 NIAKE THE ("C'MAPLEN SIMPLL
Report on the Firm's System of Quality Control
To Van Lant & 1--ankilanel. LLP
and the Peer Review Committee of the California Societv of CPAs Patr;lck D, S,raffod CPA
T o d G11 C . L a n d C- P A
We have reviewed the system of quality control for the accounting and auditing practice of Van Lant & Fanklianel. LLP (the Finn} in effect for the year ended February 29. 2020. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review .Board of the American Institute of Certified Public Accountants (Standards).
A summary of the nature. objectives. scope. limitations of, and the procedures performed in a System Review as described in the Standards inav be found at The summary also includes an explanation of how engagements identified as not performed or reported in conformity with applicable professional standards, if anv. are evaluated by a peer reviewer to determine a peer review ratill(Q.
Firm's Responsibility
The firm is responsible for designing a system of quality control and complying with it to provide the firm with reasonable assurance of performing and reporting in conformity .N'itli _ applicable professional standards in all material respects. *File Linn is also responsible for evaluating actions to promptly rernediatc, engagements deemed as not perfornied or reported in confionnity with professional standards.
Mien appropriate. and for reniediating weaknesses in its system of quality control. if any, Peer Reviewer's Responsibility
Our responsibility is to express an opinion (in the design of tile system or quality control and the finn's compliance therewith based oil our review.
Required Selections and Considerations
Lngagernents selected for review included engagements performed Under Governmeni .4ittlifing Stan darils. including compliance audits under the Single Audit Act.
As a part of our peer review. we considered reviews by regulatory entities as communicated by the firm. it'applicable. in detennining, the nature an(] extent ofour procedures.
T "f
Red!&- cis
17 -193-
Opinion
In our opinion, the system of quality control for the accounting and auditing practice of Van Lant & Fankhanel, LLP in effect for the year ended February 29, 2020, has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass, pass with deficiency (ies) or fail. Van Lant & Fankhanel, LLP has received a peer review rating of pass.
July 14, 2020
-2-
i
18 -194-
I_1;J: IZII]K4=3
-195-
APPENDIX B
Total Maximum Price
Contract Period
Optional Period
2021-2022
2022-2023
2023-2024
2024-2025
2025-2026
City
$ 28,350
$ 28,550
$ 28,850
$ 29,150
$ 29,450
Single Audit
3,250
3,350
3,500
3,650
3,700
Gann Limit
450
500
550
600
625
SCO's Report
1,975
2,075
2,150
2,225
2,250
Grand Total
$ 34,025
$ 34,475
$ 35,050
1 $ 35,625
$ 36,025
Contract Authorization:
The undersigned bidder acknowledges that he has thoroughly reviewed all pages for this request for Bidder further acknowledges that he is aware of all the requirements of these documents and agrees The bidder shall be bound to furnish the services specified according to requirements herein, upon ac by City of Yucaipa.
Van Lant & Fankhanel, LLP 29970 Technology Drive, Suite 105 A Murrieta Company Name Address City
""R, Partner
Signature of Authorized Representative Title
Greg Fankhanel, CPA (909) 856-6879
Printed Name of Authorized Representative Phone #
46-1814856
Federal Tax ID Number
19 -196-
APPENDIX B
Schedule of Professional Fees and Expenses
For the Audit of Fiscal Year 2021/22 Financial Statements Rate
Hours
Cost
rate x hours
Partners
$ 195
175
$ 34,125
Managers
155
-
-
Supervisory Staff
135
95 12,825
Staff
95 -
-
Other (Specify)
-
-
-
Subtotal Staff
$ 580
270
$ 46,950
Billable Expenses:
Meals & Lodging
$ -
Transportation
-
Other (Specify)
-
Subtotal Billable Expenses
$ -
Discount (12,925)'
Total Maximum Cost $ 34,025
20 -197-
Schedule of Professional Fees and Expenses
For the Audit of Fiscal Year 2022/23 Financial Statements Rate
Hours
Cost
rate x hours
Partners
$ 195
175
$ 34,125
Managers
155
-
-
Supervisory Staff
135
95 12,825
Staff
95 -
-
Other (Specify)
-
-
-
Subtotal Staff
$ 580
270
$ 46,950
Billable Expenses:
Meals & Lodging
$
Transportation
-
Other (Specify)
-
Subtotal Billable Expenses
$ -
Discount (12,475)
Total Maximum Cost $ 34,475
21 -198-
APPENDIX B
Schedule of Professional Fees and Expenses
For the Audit of Fiscal Year 2023/24 Financial Statements Rate
Hours
Cost
rate x hours
Partners
$ 210
175
$ 36,750
Managers
165
-
-
Supervisory Staff
155
95 14,725
Staff
110
-
Other (Specify)
-
-
-
Subtotal Staff
$ 640
270
$ 51,475
Billable Expenses:
Meals & Lodging
$ -
Transportation
-
Other (Specify)
-
Subtotal Billable Expenses
$ -
Discount (16,425)
Total Maximum Cost $ 35,050
22 -199-
APPENDIX B
Schedule of Professional Fees and Expenses
For the Audit of Fiscal Year 2024126 Financial Statements Rate
Hours
Cost
rate x hours
Partners
$ 210
175
$ 36,750
Managers
165
-
-
Supervisory Staff
155
95 14,725
Staff
110
-
-
Other (Specify)
-
-
-
Subtotal Staff
$ 640
270
$ 51,475
Billable Expenses:
Meals & Lodging
$ -
Transportation
-
Other (Specify)
-
Subtotal Billable Expenses
$ -
Discount 15,850)
Total Maximum Cost $ 35,625
23 -200-
APPENDIX B
Schedule of Professional Fees and Expenses
For the Audit of Fiscal Year 2026/26 Financial Statements Rate
Hours
Cost
rate x hours
Partners
$ 210
175
$ 36,750
Managers
165
-
-
Supervisory Staff
155
95 14,725
Staff
110
-
-
Other (Specify)
-
-
-
Subtotal Staff
$ 640
270
$ 51,475
Billable Expenses:
Meals & Lodging
$
Transportation
-
Other (Specify)
-
Subtotal Billable Expenses
$ -
Discount (Estimated)
15,450)
Total Maximum Cost
$ 36,025
24 -201-
-202-
BUSINESS LICENSE #009705 TOWN OF WINDSOR
The person, firm or corporation named below is granted this certificate pursuant to the provisions of the Town Registration Ordinance to engage in, carry on or conduct the :business, trade, calling, profession, exhibition or occupation described below. Issuance of certificate is not an endorsement, nor certification of compliance with other ordinances or laws, nor an assurance that the proposed use is in conformance with the town zoning regulations. This certificate is issued without verification that the business is subject to or exempt from licensing by the State of California.
BUSINESS NAME: Van Lant & Fankhanel, Lip
BUSINESS LOCATION: 29970 Technology Dr Ste 105A
Murrieta, Ca 92563-2646
BUSINESS OWNER: Greg W. Fankhanel
DESCRIPTION: Professional and Technical
BUSINESS CLASS/TYPE: 54 Professional and
Technical Services
VAN LANT & FANKHANEL, LLP NO. OF EMPLOYEES: 2
29970 TECHNOLOGY DR STE 105A
MURRIETA, CA 92563-2646 EFFECTIVE DATE: October 27, 2021 EXPIRATION DATE December 31. 2022
Starting January 1, 2021, Assembly Bill 1607 requires the prevention of gender -based discrimination of business establishments. A full notice is available in English or other languages by going to: https://www.dca.ca.gov/publications/
TO BE POSTED IN A CONSPICUOUS PLACE NOT TRANSFERABLE
25 -203-
-204-
Form
(Rev.
Departs
Interna
ai
(D
0)
co
n.
c
0 ai c
ao
4 U
o 2
C. 0
W-9
Request for Taxpayer
Give Form to the
)ctober2018)
Identification Number and Certification
requester. Do not
rent of the Treasury
send to the IRS.
Revenue Service
► Go to wwwJrs.gov/FormW9 for instructions and the latest information. 1 Name (as shown on your income tax return). Name is required on this line; do not leave this line blank.
Van Lant & Fankhanel, LLP
2 Business name/disregarded entity name, if different from above 3 Check appropriate box for federal tax classification of the person whose name is entered on line 1. Check only one of the 4 Exemptions (codes apply only to
following seven boxes.
certain entities, not individuals; see
ElIndividual/sole proprietor or ❑ C Corporation ElS Corporation Partnership ElTrust/estate instructions on page 3):
single -member LLC
Exempt payee code (if any)
❑✓ Limited liability company. Enter the tax classification (C=C corporation, S=S corporation, P=Partnership) ► P Note: Check the appropriate box in the line above for the tax classification of the single -member owner. Do not check Exemption from FATCA reporting
LLC if the LLC is classified as a single -member LLC that is disregarded from the owner unless the owner of the LLC is code (if any)
another LLC that is not disregarded from the owner for U.S. federal tax purposes, Otherwise, a single -member LLC that is disregarded from the owner should check the appropriate box for the tax classification of its owner. ❑ Other (see instructions) ►
(Applies to accounts maintained outside the U.S)
5 Address (number, street, and apt. or suite no.) See instructions.
Requester's name and address (optional)
29970 Technology Drive, Suite 105 A
Riverside County Flood Control
1995 Market Street 92501
6 City, state, and ZIP code
Murrieta, CA 92563
7 List account number(s) here (optional)
Taxnaver Identification Number (TIN)
Enter your TIN in the appropriate box. The TIN provided must match the name given on line 1 to avoid Social security number
backup withholding. For individuals, this is generally your social security number . However, for a resident alien, sole proprietor, or disregarded entity, see the instructions for Part I,, later. For other entities, it is your employer identification number (EIN). If you do not have a number, see How to get a TIN, later.
or
Note: If the account is in more than one name, see the instructions for line 1. Also see What Name and I Employer identification number
Number To Give the Requester for guidelines on whose number to enter.
F41-
j_(6
I
1 18
11 14
18 15
6 Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me); and
2. 1 am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and
3. 1 am a U.S. citizen or other U.S. person (defined below); and
4. The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.
Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the certification, but you must provide your correct TIN. See the instructions for Part II, later.
Sign Signature of , ,yam_
Here U.S. person ► 'G ` t11A_
General Instructions
Section references are to the Internal Revenue Code unless otherwise noted.
Future developments. For the latest information about developments related to Form W-9 and its instructions, such as legislation enacted after they were published, go to wwwJrs.gov/F6rmW9.
Purpose of Form
An individual or entity (Form W-9 requester) who is required to file an information return with the IRS must obtain your correct taxpayer identification number (TIN) which maybe your social security number (SSN), individual taxpayer identification number (ITIN), adoption taxpayer identification number (ATIN), or employer identification number (EIN), to report on an information return the amount paid to you, or other amount reportable on an information return. Examples of information returns include, but are not limited to, the following. • Form 1099-INT (interest earned or paid)
Date► 8-16-21
• Form 1099-DIV (dividends, including those from stocks or mutual funds)
• Form 1099-MISC (various types of income, prizes, awards, or gross proceeds)
• Form 1099-B (stock or mutual fund sales and certain other transactions by brokers)
• Form 1099-S (proceeds from real estate transactions)
• Form 1099-K (merchant card and third party network transactions) • Form 1098 (home mortgage interest), 1098-E (student loan interest), 1098-T (tuition)
• Form 1099-C (canceled debt)
• Form 1099-A (acquisition or abandonment of secured property) Use Form W-9 only if you are a U.S. person (including a resident alien), to provide your correct TIN.
If you do not return Form W-9 to the requester with a TIN, you might be subject to backup withholding. See What is backup withholding, later.
Cat. No. 10231X 26 Form W-9 (Rev. 10-2018)
-205-
-206-
EXHIBIT "A" ACKNOWLEDGMENT FORM
RFP for Auditing Services
PART A
The proposing company warrants the following:
1) That it will not delegate or subcontract its responsibilities under contract without the expressed, prior written permission from the City.
2) That all information provided in connection with this proposal is true and correct. 3) That it will acknowledge and agree with all terms and conditions stated in this request for proposal.
Company Name (Respondent to Auditing Services RFP)
Van Lant & Fankhanel, LLP
29970 Technology Drive,
Address: Ste. 105 A City: Murrieta State: CA Zip: 92563 Contact Name: Greg Fankhanel Title: Partner
Telephone No: (909) 856-6879
Signature
Email: [email protected]
PART B
The above listed company is responding to a Request for Proposals for a qualified and experienced company to provide Auditing Services.
THIS COMPLETED FORM MUST BE RETURNED TO CITY OF YUCAIPA BY THE RESPONDENT WITH THEIR PROPOSAL.
RETURN ON OR BEFORE 4:00 P.M., MONDAY, AUGUST 1, 2022
City of Yucaipa
34272 Yucaipa Blvd
Yucaipa, California 92399
Attn: Andrew
Hamilton, CPA
Director of Finance
*End of Exhibit A
27 -207-
-208-
City of Yucaipa
EXHIBIT B
Minimum Company Qualifications
1) The company must have been in business for a minimum of 5 years:
VLF has been in business since 2013.
2) The company must have at least five years' experience of providing Auditing Services.
VLF has provided audit services since 2013. In addition, the personnel at VLF have a combing 50+ years of providing municipal audit services.
3) The City prefers to maintain an office in Southern California that is open during regular business hours.
VLF's office is located in Murrieta, California and is open during regular business hours. 4) The Company must possess the certifications and professional licenses required to provide Auditing Services. All personnel required to be licensed or certified to perform tasks will be required to keep all licenses or certifications valid and up to date.
VLF and all assigned personnel are properly licensed and will remain licensed throughout the engagement terms.
28 -209-