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HomeMy WebLinkAboutContracts & Agreements_74-2017 AGREEMENT TO FURNISH PROFESSIONAL AUDITING SERVICES This agreement for professional auditing services ("Agreement") is made and entered into this 2nd day of May, 2017 ("Effective Date"), by and between the City of Redlands, a municipal corporation, the Successor Agency to the former Redevelopment Agency of the City of Redlands (together, "City"), and Vavrmek, Trine, Day & Company, LLP ("Consultant") City and Consultant are sometimes individually referred to herein as a "Party" and, together, as the "Parties " In consideration of the mutual promises contained herein, City and Consultant agree as follows ARTICLE 1 —ENGAGEMENT OF CONSULTANT 1 1 City hereby engages Consultant to provide professional auditing services for the audit of City's fiscal years ending 2017, 2018, and 2019, with City having the option to extend Consultant's provision of such auditing services for two additional fiscal years,as provided in section 4 1, below 12 The Services shall be performed by Consultant in a professional manner, and Consultant represents that it has the skill and the professional expertise necessary to provide the Services to City at a level of competency presently maintained by other practicing professional consultants in the industry providing like and similar types of Services 13 This Agreement shall commence on the Effective Date of this Agreement (the "Initial Term") and shall terminate upon Consultant's completion, and City's acceptance, of the Services for City's fiscal year ending June 30, 2019 City shall have the option to extend the Initial Term of this Agreement, on the same terms and conditions hereof, for the provision of the Services for two additional City fiscal years (each, a"Renewal Term")by providing Consultant thn-ry (30) days prior written notice of such extension prior to the Initial Term or any Renewal Term, at which time this Agreement shall terminate upon Consultant's completion, and City's acceptance, of the Services for any such Renewal Term The Initial Term and the Renewal Terms are collectively referred to herein as the "Term" of this Agreement ARTICLE 2—SERVICES OF CONSULTANT 21 The Services that Consultant shall perform are more particularly described in Exhibit"A," entitled "Approach and Methodology," which is attached hereto and incorporated herein by reference 22 Consultant shall comply with applicable federal, state and local laws and regulations in the performance of this Agreement including, but not limited to, State prevailing wage laws ARTICLE 3 —RESPONSIBILITIES OF CITY 3 1 City shall make available to Consultant information in its possession that may assist Consultant in performing the Services 11ca\djm\Aoreements\Vavrmek Trine Day Auditing 5 2 17 doex 1 32 City designates Danielle Garcia, Management Services/Finance Director, to act as its representative with respect to performance of the Services, and such person shall have the authority to transmit instructions, receive information, interpret and define City's policies and decisions with respect to performance of the Services ARTICLE 4—PERFORMANCE OF SERVICES 41 This Agreement shall commence on the Effective Date of this Agreement (the "Initial Term") and shall terminate upon Consultant's completion, and City's acceptance, of the Services for City's fiscal year ending June 30, 2019 City shall have the option to extend the Initial Term of this Agreement, on the same terms and conditions hereof, for the provision of the Services for two additional City fiscal years (each, a"Renewal Term") by providing Consultant thirty (30) days prior written notice of such extension prior to the Initial Term or any Renewal Term, at which time this Agreement shall terminate upon Consultant's completion, and City's acceptance, of the Services for any such Renewal Term The Initial Term and the Renewal Terms are collectively referred to herein as the "Term" of this Agreement 42 If Consultant's Services include deliverable electronic visual presentation materials, such materials shall be delivered in a form, and made available to the City, consistent with City Council adopted policy for the same It shall be the obligation of Consultant to obtain a copy of such policy from City Staff ARTICLE 5 —PAYMENTS TO CONSULTANT 5 1 The total compensation for Consultant's performance of the Services for the audit of the fiscal years ending June 30, 2017 and 2018 shall be Forty Eight Thousand Dollars ($48,000), and Forty Eight Thousand Nine Hundred Sixty Dollars ($48,950) for the fiscal year ending June 30, 2019 Should City choose to exercise its option(s) for additional auditing services for audit years, the fiscal years ending June 30, 2020 and 2021, the compensation shall be Forty Nine Thousand Nine Hundred Thirty-Nine Dollars ($49,939) and Fifty Thousand Nine Hundred Thirty-Eight Dollars ($50,938), respectively Compensation shall be paid in accordance with the schedule set forth in Exhibit"B,"which is attached hereto and incorporated herein by reference 52 Consultant shall submit invoices to City including a brief description of the Services performed, the dates the Services were performed, and the number of hours spent and by whom City shall pay Consultant no later than thirty (3 0) days after receipt and approval by City of Consultant's invoice 5 3 Any notice or other communication required, or which may be given, pursuant to this Agreement, shall be in writing Any such notice shall be deemed delivered (i) on the date of delivery in person, (ii)five(5)days after deposit in first class registered mail,with return receipt requested, (iii) on the actual delivery date if deposited with an overnight courier, or I Icaldjm\Agreements\Vavrmek Trine Day Auditing 5 2 17 doex 2 (iv)on the date sent by facsimile, if confirmed with a copy sent contemporaneously by first class, certified, registered or express mail, in each case properly posted and fully prepaid to the appropriate address set forth below, or such other address as a Party may provide notice in accordance with this section f-Lty- Consultant Danielle Garcia Phil White, Partner City of Redlands Vavrinek,Trine, Day & Company, LLP 35 Capon Street, Suite 222 10681 Foothill Blvd , Suite 300 Redlands, CA 92373 Rancho Cucamonga, CA 91730 ARTICLE 6—INSURANCE AND INDEMNIFICATION 6 1 Insurance required by this Agreement shall be maintained by Consultant for the duration of its performance of the Services Consultant shall not perform any Services unless and until the required insurance listed below is obtained by Consultant Consultant shall provide City with certificates of insurance and endorsements evidencing such insurance prior to commencement of the Services Insurance policies shall include a provision prohibiting cancellation or modification of the policy except upon thirty (30) days prior written notice to City 62 Workers' Compensation and Employer's Liability insurance in the amount that meets statutory requirements with an insurance carrier acceptable to City, or certification to City that Consultant is self-insured or exempt from the workers' compensation laws of the State of California Consultant shall provide City with Exhibit "C," entitled "Workers' Compensation Insurance Certification," which is attached hereto and incorporated herein by this reference prior to commencement of the Services 63 Consultant shall secure and maintain comprehensive general liability insurance with carriers acceptable to City Minimum coverage of One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) aggregate for public liability, property damage and personal injury is required City shall be named as an additional insured and such insurance shall be primary and non-contributing to any insurance or self-insurance maintained by City 64 Consultant shall secure and maintain professional liability insurance throughout the Term of this Agreement in the amount of One Million Dollars ($1,000,000)per claim made 65 Consultant shall have business auto liability coverage,with minimum limits of One Million Dollars ($1,000,000) per occurrence, combined single limit bodily injury liability and property damage liability. This coverage shall include all Consultant owned vehicles used in connection with Consultant's provision of the Services, hired and non-owned vehicles, and employee non-ownership vehicles City shall be named as an additional insured and such insurance shall be primary and non-contributing to any insurance or self-insurance maintained by City I%ca%djm\Agreements%Vavrinek Trine Day Auditing 5 2 17 doex 3 66 Consultant shall defend, indemnify and hold harmless City and its elected officials, employees and agents from and against any and all claims, losses or liability, including attorneys' fees, arising from injury or death to persons or damage to property occasioned by any negligent act or omission by,or the willful misconduct of,Consultant,or its officers, employees and agents in performing the Services ARTICLE 7—CONFLICTS OF INTEREST 7 1 Consultant covenants and represents that it does not have any investment or interest in any real property that may be the subject of this Agreement or any other source of income, interest in real property or investment that would be affected in any manner or degree by the performance of Consultant's Services Consultant further covenants and represents that in the performance of its duties hereunder,no person having any such interest shall perform any Services under this Agreement 72 Consultant agrees it is not a designated employee within the meaning of the Political Reform Act because Consultant A Does not make a governmental decision whether to (i) approve a rate, rule or regulation, or adopt or enforce a City law, (a) issue, deny, suspend or revoke any City permit, license, application, certification, approval, order or similar authorization or entitlement, (iii) authorize the City to enter into, modify or renew a contract, (iv) grant City approval to a contract that requires City approval and to which City is a party, or to the specifications for such a contract, (v) grant City approval to a plan, design, report, study or similar item, (vi) adopt or grant City approval of,policies, standards or guidelines for City or for any subdivision thereof B Does not serve in a staff capacity with City and in that capacity, participate in making a governmental decision or otherwise perform the same or substantially the same duties for City that would otherwise be performed by an individual holding a position specified in City's Conflict of Interest Code under Government Code section 87302 73 In the event City determines that Consultant must disclose its financial interests,Consultant shall complete and file a Fan Political Practices Commission Form 700, Statement of Economic Interests, with the City Clerk's office pursuant to the written instructions provided by the City Clerk 1 1ca\di nlAgreements\VavrineL Trine Day Auditing 5 2 17 docx 4 ARTICLE 8 —GENERAL CONSIDERATIONS 8 I In the event any action is commenced to enforce or interpret any of the terms or conditions of this Agreement the prevailing Party shall, in addition to any costs and other relief, be entitled to the recovery of its reasonable attorneys' fees, including fees for the use of in- house counsel by a Party 82 Consultant shall not assign any of the Services, except with the prior written approval of City and in strict compliance with the terms and conditions of this Agreement 83 Records, drawings, designs, cost estimates, electronic data files, databases and any other documents developed by Consultant in connection with its performance of the Services, and any copyright interest in such documents, shall become the property of City and shall be delivered to City upon completion of the Services, or upon the request of City Any reuse of such documents, and any use of incomplete documents, shall be at City's sole risk 84 Consultant is for all purposes under this Agreement an independent contractor and shall perform the Services as an independent contractor Neither City nor its agents shall have control over the conduct of Consultant or Consultant's employees, except as herein set forth Consultant shall supply all necessary tools and instrumentalities required to perform the Services Assigned personnel employed by Consultant are for its account only, and in no event shall Consultant or personnel retained by it be deemed to have been employed by City or engaged by City for the account of, or on behalf of City Consultant shall have no authority, express or implied, to act on behalf of City in any capacity whatsoever as an agent, nor shall Consultant have any authority, express or implied, to bind City to any obligation 8 5 Unless earlier terminated as provided for below, this Agreement shall terminate as specified in Section 4 1 of this Agreement This Agreement may be terminated by City, in its sole discretion,by providing not less than five(5)days prior written notice to Consultant of City's intent to terminate If this Agreement is terminated by City, an adjustment to Consultant's compensation shall be made, but (1) no amount shall be allowed for anticipated profit or unperformed Services,and(2)any payment due Consultant at the time of termination may be adjusted to the extent of any additional costs to City occasioned by any default by Consultant Upon receipt of a termination notice, Consultant shall immediately discontinue its provision of the Services and, within five (5) days of the date of the termination notice, deliver or otherwise make available to City, copies (in both hard copy and electronic form, where applicable) of data, design calculations, drawings, specifications, reports, estimates, summaries and such other information and materials as may have been accumulated by Consultant in performing the Services Consultant shall be compensated on a pro-rata basis for Services completed up to the date of termination 86 Consultant shall maintain books, ledgers, invoices, accounts and other records and documents evidencing costs and expenses related to the Services for a period of three (3) years,or for any longer period required by law,from the date of final payment to Consultant I 1ca1djmlAgreements\Vavnnek Trate Day Auditing 5.2 17 docx 5 pursuant to this Agreement Such books shall be available at reasonable times for examination by City at the office of Consultant 87 This Agreement, including the Exhibits incorporated herein by reference, represents the entire agreement and understanding between the Parties as to the matters contained herein, and any prior negotiations, written proposals or verbal agreements relating to such matters are superseded by this Agreement Except as otherwise provided foi herein, any amendment to this Agreement shall be in writing,approved by City and signed by City and Consultant 88 This Agreement shall be governed by and construed in accordance with the laws of the State of California 89 If one or more of the sentences,clauses,paragraphs or sections contained in this Agreement is declared invalid, void or unenforceable by a court of competent jurisdiction, the same shall be deemed severable from the remainder of this Agreement and shall not affect, impair or invalidate the remaining sentences, clauses, paragraphs or sections contained herein 11ca\dim\Agreements\Vavrinek Trine Bay Auditing 5 2 17 doex 6 IN WITNESS WHEREOF, duly authorized representatives of City and Consultant have signed in confirmation of this Agreement CITY OF REDLANDS VAVRINEK, TRINE, DAY & CO , LLP By ] t By au W Foster, Mayor Phil White, CPA, Partner Attest J e Donaldson, City Clerk SUCCESSOR AGENCY TO THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF REDLANDS u�IW Foster, C(h]a Attest e Donaldson, Agency Secretary PkaldjmlA.greements\Vavrinek Trine Day.Auditmg 5.2 17 doex 7 EXHIBIT "All Section C — approach & Methodology 1. Project Management VTD provides auditing services to a variety of governmental agencies throughout the State of California The key to our success is to structuring our audit teams with a designated project audit manager and project audit partner to maintain ultimate responsibility for timely completion of the audits During the plannizig phase of the audit,VTD will work with the City to complete a matrix in order to map out all of the significant dates for the provision of service including key contacts, fieldworlr entrance and exit dates, deliverable dates, report review dates, finial due dates, and board presentation dates By preparing a comprehensive matrix for each report, all the information regarding the timing of the audits and various projects is documented in one central location and is agreed upon between the auditor and the City The timeline will then only be modified through communication between VTD and the City x Complete Work Plan/Project Description Overview o,f the Audits As required by the Request for Proposal our audit plan covers the engagements for • Audit and preparation of the City's CAFR • Single Audit and preparation of the Single Audit Report Perform agreed upon procedures on the City's GANN Limit Calculation s Communication with those charged with governance letter O Examination of other reports and performance of other services as required The audits will be conducted in accordance with generally accepted auditing standards issued by the American Institute of Certified Public Accountants(AICPA), Governmental Auditing Standards published by the Comptroller General of the United Stated,and the requirements of the Uniform Guidance Level of staff and number of hours assigned to each segment Comprehensive Annual Financial Report 40 80 60 80 80 4 344 Single Audit Report(assumes 2 major programs) 4 4 8 16 32 1 65 GANN Appropriation Limit AUP 1 1 3 5 Totals 45 85 68 46 115 5 4141 Audit Hours by Area Comprehensive Annual Financml Report 17 138 189 344 Single Audit Report(assumes 2 major programs) 3 26 36 65 GANN Appropriation Lima AU 2 3 5 Totals 20 166 228 414 4 tt EXHIBIT rt A Section C — Approach & Methodology 3. Identification of Potential Audit Issues We do not anticipate problems within the audit However, if audit issues are encountered, our process would include meeting with the City's management to develop the appropriate response, and identify any special assistance that will be requested from the City We have however identified the following areas that we believe that we can be of assistance 1 • GASB Standard Implementations -- Several new GASBs will be required to be implemented during the contract term • Single Audits -- Uniform Grant Guidance has been issued and is effective for the City for grants awarded after December 26,2014 Approach in Addressing New GASBs The City will be required to implement various GASB statements during the term of the contract These accounting pronouncements impact the reporting of several areas including Fair Value for Investments, Pensions,Other Postemployment Benefits(OPEB),Tax Abatement Disclosures and Leases We understand that GASB implementations can be difficult and challenging Therefore we believe in taking a team approach and performing proactive planning to ensure that new GASB Standards are implemented timely and correctly, This starts during the planning and interim phase of the audit and sitting down with management and discussing the potential impacts of the GASB standard and the documentation and information needed to implement We will assist throughout the process as needed in providing technical guidance regarding the impacts of the change in standards to ensure new standards are successfully captured in the financial statements 4. Our Proposed Audit Plan Our engagement approach for the City of Redlands audit has well-detailed goals by which the engagement partner can measure progress Our audit plan includes frequent contact between the partner and the engagement team to assure that objectives are attained according to the audit schedules and that problems are communicated and dealt with on a timely basis Our engagement approach benefits from our long accumulated experience during which our firm has identified key areas of financial and accounting concern in the audit process More importantly, the approach provides for a complete reassessment of the management and control environment in each year's audit and thus is capable of responding to changes and will ensure that deadlines are met in issuing the annual financial statements The key characteristics of our engagement approach are • Knowledge of the City of Redlands and similar entities We have extensive experience auditing governmental entities similar to the City This experience enables us to perform a more efficient audit and identify key audit risks • Cost-effectiveness Our experienced auditors' low percentage of turnover reduce your cost • Timeliness We take deadlines,both yours and ours,seriously, • Partner-manager involvement Deciding on audit strategies requires seasoned judgment, Our partners and managers have been heavily and continuously involved in governmental audits Furthermore, you will be able to consult with senior team members whenever needed throughout the year We are available during the year for any additional consultation that may arise and specified in the request for proposal 5 EXHIBIT "A" Section C — Approach & Methodology 4. Our Proposed Audit plan (Continued) Proiect Manaeement-- Overall Audit Our audit plan for each of the fiscal years involves six(6)stages for each audit These stages are Stage 1,Planning Stage 2,Risk Assessment Stage 3, Preparation of the Overall Audit Plan Stage 4,Conducting the Interim Audit Stage 5,Conducting the Final Audit Stage 5, Reporting These stages will be applied to the City's CAFR audit as well as the other audits The audit approach will be tailored to the risk of each individual entity and the scale will also be adjusted as necessary to ensure that each entity's financial statements are fairly stated ` Stave 1 Planning VTD will meet with key staff to plan the audit services for the year These meetings will discuss all audit issues and the proposed interum work plan During this phase, we will accomplish • Identifying the key personnel and contacts in the Finance Department and other departments • Identify the City of Redlands significant classes of transactions and business processes 0 Obtain an understanding of audit risk areas. • Developing an understanding of unusual transactions or events that have occurred during the fiscal year • Formalizing logistics 0 Finalizing the timeframes for interim fieldwork E Stage 2 Risk Assessment Based upon the information obtained in the planning meetings VTD will perform a risk assessment as required by Statements on Auditing Standards (SAS) to be used in the preparation of the overall audit plan As part of this risk assessment we will perform the following- 1. Obtain an understanding of the entity and its environment and its risks and material compliance requirements VTD will refer to the City of Redlands' prior year Comprehensive Annual Financial Report, annual budget document, municipal code and other relevant documentation to assist with our understanding of the City of Redlands' business environment and risks. VTD will also conduct inquiry with key individuals within the City of Redlands who are responsible for executing the City of Redlands' strategic plan i 6 EXHIBIT "A" Section C — Approach & Methodology 4 Our Proposed Audit Plan (Continued) Stage 2 Risk Assessment Xontrnrred� 2 Obtain an understanding of the entity's internal controls. VTD will refer to the City of Redlands' organizational charts, budget, wntten policies and procedures, financial accounting systems to assist with our understanding of internal controls VTD will also perform inquiry, observation, inspection,and walk- throughs of key internal controls to ensure these key controls are properly designed and implemented Key internal control cycles include— • Revenue Collectron/Billing • Human Resources/Payroll • Procurement/Cash Disbursements • IT Controls,relating to all aspects of the audit • Investment management • User access • Debt management A Security • Financial reporting • Backup and recovery • Year end closing - System interfaces • Budgeting • Fraud Prevention Proms • Risk management • Grants Management 3 Preliminary analytical review,determination.of preliminary materiality levels 4 Analysis of known misstatements,if any. 5 Consideration of nsk of material misstatement at the individual account balance, class of transactions and disclosure level 6 Assessing the risks of material misstatement at both the financial statement and relevant assertion levels 7 Assess the risk of material noncompI2ance with laws and regulations that have a direct and material effect on the financial statements 8 Evaluation of the City's information technology and general information technology controls Stage 3 Prevaralron ofthe Overall Audit Plan Once the planning and risk assessment process are complete an overall audit plan will be prepared The plan will specify each audit task, staffing assignments,timelines,and due dates The plan will also break down the work asswiments between interim and final audit tunel€nes. The audit plan will include the transaction cycles which have been selected for internal control testing and those for which only the detailed walk through will be performed We will also prepare. The preliminary materiality guidelines, the audit programs, including consideration of i • Identification of areas where special audit considerations are necessary • Design of further audit procedures to reduce risk if considered necessary • The development of expectations for analytical procedures, timelines, and assignment of all audit responsibilities I i 7 EXHIBIT "C" WORKERS' COMPENSATION INSURANCE CERTIFICATION Every employer, except the State, shall secure the payment of compensation in one or more of the following ways (a) By being insured against liability to pay compensation by one or more insurers duly authorized to write compensation insurance in this State (b) By securing from the Director of Industrial Relations, a certificate of consent to self-insure, either as an individual employer, or as one employer in a group of employers, which may be given upon furnishing proof satisfactory to the Director of Industrial Relations of ability to self-insure and to pay any compensation that may become due to his or her employees CHECK ONE I am aware of the provisions of Section 3700 of the Labor Code which requires every employer to be insured against liability for Workers' Compensation or to undertake self-insurance in accordance with the provisions of that Code, and I will comply with, such provisions before com inencing the performance of the work and activities required or pennitted under this Agreement (Labor Code §1861) /I affirm that at all times, in perfonnmg the work and activities required or permitted under this Agreement, I shall not employ any person in any manner such that I become subject to the workers' compensation laws of California However, at any time, if I employ any person such that I become subject to the workers' compensation laws of California, immediately I shall provide the City with a certificate of consent to self-insure, or a certification of workers' compensation insurance I certify under penalty of perjury under the laws of the State of California that the information and representations made in this certificate are true and correct Vavrmek, Trine, Day & Co , LLP Date S10111-7 B Y Name