HomeMy WebLinkAboutContracts & Agreements_88-2005_CCv0001.pdf AGREEMENT TO FURNISH CONSULTING SERVICES
FOR PROFESSIONAL AUDITING SERVICES
This Agreement is made and entered into this 17'h day of May, 2005 by and between the City of
Redlands, a municipal corporation (hereinafter "City") and Conrad and Associates, L.L.P. hereinafter
("Auditor").
In consideration of the mutual promises contained herein, City and Auditor agree as follows:
ARTICLE I - ENGAGEMENT OF AUDITOR
1.1 City hereby engages Auditor to provide professional auditing services which services are more
particularly described in Exhibit "A" attached hereto and incorporated herein by this reference (the
"Services").
1.2 The Services shall be performed by Auditor in a professional manner, and Auditor 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 Auditors in the industry
providing similar types of services.
ARTICLE 2 - SERVICES OF AUDITOR
2.1 The specific Services which Auditor shall perform are more particularly described in Exhibit "A,"
which is attached hereto and incorporated herein by this reference.
2.2 Auditor shall comply with all applicable Federal, State and local laws and regulations in the
performance of this Agreement including, but not limited to, all applicable Labor Code and
prevailing wage laws commencing at California Labor Code section 1770 et seq. and non-
discrimination laws including the Americans with Disabilities Act and the Fair Employment and
Housing Act.
ARTICLE 3 - RESPONSIBILITIES OF CITY
3.1 City shall make available to Auditor information in City's possession that is relevant to the
performance of Auditor's Services.
3.2 City designates Tina T. Kundig and/or Tom Steele to act as its representative with respect to the
Services to be performed under this Agreement.
ARTICLE 4 -PERIOD OF SERVICE
4.1 Auditor shall perform the Services in a prompt and diligent manner. The Services may commence
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on May 18, 2005 and shall end upon City's written notification to Auditor that the Services have
been completed.
ARTICLE 5 - PAYMENTS TO AUDITOR
5.1 The total compensation for Auditor's performance of the Services shall not exceed the amount of
$133,375 (over three years) in accordance with the schedule as set forth in Exhibit "C," which is
attached hereto and incorporated herein by reference.
5.2 Within ten days following the end of each month, Auditor shall submit an invoice to City indicating
the portion of the Services performed, who performed the Services, indirect costs, and the detailed
cost of all Services including backup documentation. Payments by City to Auditor shall be made
within thirty (30) days after receipt and approval of Auditor's invoice, by warrant payable to
Auditor.
5.3 All notices, bills and payments shall be made in writing and may be given by personal delivery or by
mail. Notices, bills and payments sent by mail shall be addressed as follows:
City Auditor
Tina T. Kundig Michael A. Harrison
Tom Steele Partner
City of Redlands Conrad and Associates, L.L.P.
Finance Department 2301 Dupont Drive, Suite 200
PO Box 3005 Irvine, California 92612
Redlands, CA 92373
When so addressed, such notices shall be deemed given upon deposit in the United States
mail. Changes may be made in the names and addresses of the person to whom notices and
payments are to be given by giving notice pursuant to this section.
ARTICLE 6 - INSURANCE AND INDEMNIFICATION
6.1 Auditor's Insurance to be Primary
All insurance required by this Agreement shall be maintained by Auditor during its performance
of the Services and shall be primary with respect to City and non-contributing to any insurance
or self-insurance maintained by City. Auditor shall not commence the Services unless and until
all required insurance listed below is obtained by Auditor and Certificates of Insurance and
endorsements evidencing such insurance are presented to City. All insurance policies shall
include a provision prohibiting cancellation, except upon thirty (30) days prior written notice to
City.
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6.2 Workers' Compensation and Emplovefs Liability
A.Auditor shall secure and maintain Workers' Compensation and Employer's Liability
insurance throughout its performance of the Services in amounts which meet statutory
requirements with an insurance carrier acceptable to City.
B. Auditor expressly waives all rights to subrogation against City, its elected officials and
employees for losses arising from work performed by Auditor for City by expressly waiving
Auditor's immunity for injuries to Auditor's employees. Auditor agrees that its obligation to
indemnify, defend and hold harmless provided for in this Agreement extends to any claim
brought by or in behalf of any employee of Auditor. This waiver is mutually negotiated by
the parties. This section shall not apply to any damage resulting from the sole negligence of
City, its agents or employees, the obligations provided herein to indemnify, defend and hold
harmless are valid and enforceable only to the extent of the negligence of Auditor, its
officers, agents and employees.
6.3 Comprehensive General Liability Insurance. Auditor shall secure and maintain in force
throughout its performance of the Services 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. Auditor shall obtain an endorsement that City shall
be named as an additional insured.
6.4 Professional Liability Insurance. Auditor shall secure and maintain professional liability
insurance throughout its performance of the Services in the amount of one million dollars
($1,000,000)per occurrence and two million dollars ($2,000,000) annual aggregate.
6.5 Business Auto Liability Insurance. Auditor shall have business auto liability coverage, with
minimum limits of Five Hundred Thousand dollars ($500,000), combined single limit for
bodily injury liability and property damage liability. This coverage shall include all Auditor-
owned vehicles used in connection with its performance of the Services, hired and non-
owned vehicles, and employee non-ownership vehicles. Auditor shall obtain an endorsement
that City shall be named as an additional insured.
6.6 Assignment and InsurancLRequirements. Auditor is expressly prohibited from assigning any
of the Services without the prior written consent of City. In the event of mutual agreement
between the parties to sublet or assign a portion of the Services, Auditor shall add the
assignee as an additional insured to Auditor's insurance policies and provide City with
insurance endorsements prior to any Services being performed by the assignee. Assignment
does not include printing or other customary reimbursable expenses that may be provided in
this Agreement.
6.7 Hold Harmless and Indemnification. Auditor shall defend, indemnify and hold harmless
City, its elected officials, officers, employees and agents from and against any and all
actions, claims, demands, lawsuits, losses and liabilivy for damages to persons or property,
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including costs and attorney fees, that may be asserted or claimed by any person, firm, entity,
corporation, political subdivision or other organization arising out of or in connection with
Auditor's negligent and/or intentionally wrongful acts or omissions in performing the
Services; but excluding such actions, claims, demands, lawsuits and liability for damages to
persons or property arising from the sole negligence or intentionally wrongful acts of City, its
officers, employees or agents.
ARTICLE 7 - GENERAL CONSIDERATIONS
7.1 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.
7.2 All documents, records, drawings, designs, cost estimates, electronic data files, databases and
other documents developed by Auditor pursuant to this Agreement 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 will be at City's sole risk.
7.3 Auditor is for all purposes an independent contractor. Auditor shall supply all tools and
instrumentalities required to perform the Services described in this Agreement. All
personnel employed by Auditor are for its account only, and in no event shall Auditor or any
personnel retained by it be deemed to have been employed by City or engaged by City for the
account of or in behalf of City.
7.4 Unless earlier terminated, as provided for below, this Agreement shall terminate upon
completion and acceptance of the Services by City.
7.5 This Agreement may be terminated by City, without cause, by providing five (5) days prior
written notice to Auditor (delivered by certified mail, return receipt requested) of intent to
terminate.
7.6 If this Agreement is terminated by City, an adjustment to Auditor's compensation shall be
made, but no amount shall be allowed for anticipated profit or unperformed Services, and any
payment due Auditor at the time of termination may be adjusted to the extent of any
additional costs to City occasioned by any default by Auditor.
7.7 Upon receipt of a termination notice, Auditor shall immediately discontinue all Services, and
deliver or otherwise make available to City, copies (in both hard copy and electronic form,
where applicable) of any data, design calculations, drawings, specifications, reports,
estimates, summaries and such other information and materials as may have been
accumulated by Auditor in performing the Services. Auditor shall be compensated on a pro-
rata basis for work completed up until notice of termination.
7.8 Auditor shall maintain books and accounts of all payroll costs and expenses incurred in
performing the Services. Such books shall be available at all reasonable times for
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examination by City at the office of Auditor.
7.9 This Agreement, including the attachments 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 agreements with regard to the subject matter
hereof between City and Auditor are superseded by this Agreement. Any amendment to this
Agreement shall be in writing, approved by City Council of City and signed by City and
Auditor.
7.10 This Agreement shall be governed by and construed in accordance with the laws of the State
of California.
IN WITNESS WHEREOF, duly authorized representatives of City and Auditor have signed in
confirmation of this Agreement.
CITY OF REDLANDS
By: A '� % By.
:J'
SV AN PEPPLER
Mayor
Attest: �1
Urrie Poyzer, City Clerk By
Beatrice Sanchez, Deputy City Clerk
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EXHIBIT A
SCOPE OF SERVICES
Our understanding of the objectives and scope of the work to be performed is based upon your
request for proposal.
Based upon the foregoing we understand the objectives and scope of work to be as follows:
1. We will perform an audit examination of the governmental activities, business type
activities, each major fund and the aggregate remaining fund information of the City of
Redlands for the years ended June 30, 2005 through 2007 and subject to the City's
approval, for option years 2008 and 2009. Our examinations will be conducted in
accordance with auditing standards generally accepted in the United States of America and
Government Auditing Standards. The Auditors will draft and word process the CAM of
the City of Redlands. City staff will prepare the MD&A, statistical data and the
transmittal letter.
2. We will perform a "Single Audit" of the City of Redlands in accordance with the Single
Audit Act Amendments of 1996 (Public Law 104-156) and OMB Circular A-133 entitled
Audits of States, Local Governments, and Non-Profits Organizations. Our single audit
will cover all federal grants received by the City and its component units either as a
primary or secondary recipient for fiscal years ended June 30, 2005 through 2007 and
subject to the City's approval, for option years 2008 and 2009. The City will provide to
the auditors the Schedule of Federal Financial Assistance encompassing all direct and
pass-through federal funds received by the City and component units. We will render our
reports on the single audit in accordance with the single audit requirements as described in
Section F of this proposal.
3. We will perform a financial and compliance audit of the governmental activities, business
type activities, each major fund and the aggregate remaining fund information of the
Redlands Redevelopment Agency for the years ended June 30, 2005 through 2007 and
subject to the City's approval, for option years 2008 and 2009. Our audit will be
conducted in accordance with auditing standards generally accepted in the United States,
Government Auditing Standards and the Guidelines for Compliance Audits of California
Redevelopment Agencies. The Auditors will draft and word process the RDA Component
Unit GASB #34 financial statements. City staff will prepare the MD&A.
4. We will perform agreed-upon audit procedures to test and report on the City's Gann Limit
for the years ended June 30, 2005 through 2007 and subject to the City's approval, for
option years 2008 and 2009.
5. We will prepare a management letter. This letter will include nonreportable conditions
(those constructive comments not required to be included in the single audit report). We
will discuss those comments with the Finance Director, Assistant Finance Director and
Treasurer as appropriate prior to its finalization.
6. Conrad and Associates, L.L.P. desires to keep its clients abreast of new developments
affecting local government finance. We would plan to advise City staff of new accounting
developments during the interim/planning stage of each year's audit and through an annual
training classes which will be offered through our Irvine office.
EXHIBIT A, (CONTINUED)
7. Finally, we perceive the scope of our work as being advisers to the City of Redlands.
Throughout the year, City personnel will have access to the Engagement Partner, Michael
Harrison, Technical Review Partner, Ken Al-Imam, and Engagement Managers, Steven
Dobrenen and Fabian Chiu, to seek advice in the application of accounting principles,
financial statement preparation and: content and other matters relating to the City,
including matters of taxation and policy relating to City fringe benefits.
With respect to the City of Redlands, Conrad and Associates, L.L.P. meets the independence
requirements of generally accepted accounting standards and the Government Auditing,Standards
(2003 revision) published by the U.S. General Accounting Office. Our firm has never had a record
of substandard audit work. Conrad and Associates, L.L.P. does not intend to use subcontractors
for this engagement. We are independent with respect to the City of Redlands. No conflicts of
interest exist relative to our firm performing the audit.
EXHIBIT B
PROJECT SCHEDULE
Our project schedule and time commitments are as follows:
Planning/ Final Total %
Classification Interim Audit Hours Total
Partner 16 34 50 10%
Manager(Dobrenen and Chiu) 66 204 270 54%
Professional Staff 40 140 180 36%
122 378 500 .1000/0
EXHIBIT C
PROJECT COST AND .FEE SCHEDULE
The following is a summary or our fixed fee (including out-of-pocket expense) for performing the
audit engagement for the City of Redlands:
Estimated Fiscal Year Ended June 30
Description Hours 2005 2046 2007"
1. Audit of City, including ongoing
GASB 34 procedures, Gann limit
review, management letter, CAFR
preparation and;A-133 Single Audit
of Federal Grant Programs(one
major program). 420 $36,520 37,625 38.755
2. Financial and Compliance Audit of
Redlands Redevelopment Agency 80 6,620 _6,820 7,025
5{} 1.50 44.44545,7 0
For the year ended June 30, 2005 and 2009, we would agree to a 3%fl increase over the prior
year's fee (subject to approval by the City for each of the option years).
The above maximum fees contemplate that the books will be closed and ready for audit, that
substantially all adjusting entries will be made by City staff prior to the start of final fieldwork,
that City staff will provide supporting schedules including the Schedule of Expenditures of
Federal Awards and reconciliations for all significant asset and liability balances. Our estimated
hours contemplate that the Auditors will prepare and word process the CAFR and Redevelopment
Agency Financial Statements and that City staff will classify revenues for the Statement of
Activities and provide depreciation calculations for fixed assets and infrastructure.
Hourly rates in effect for services which may be requested outside the scope of the fixed fee
engagement are as follows:
Hourly Rates
Fiscal Year Ended June 30
Classification 2005 2006 2007
Partners $200 200 200
Managers 125 125 125
Senior Auditors 95 95 95
Staff Accountants 85 85 85