HomeMy WebLinkAboutContracts & Agreements_37-2022AGREEMENT TO PERFORM PROFESSIONAL SERVICES
This agreement for the provision of professional auditing services ("Agreement") is made
and entered in this 15th day of March, 2022 ("Effective Date"), by and between the City of
Redlands, a municipal corporation ("City") and The Pun Group, LLP, a California limited
liability partnership ("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 City (the
"Services")
1.2 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.
ARTICLE 2 — SERVICES OF CONSULTANT
2 1 The Services that Consultant shall perform are more particularly described in Exhibit
"A," titled "Scope of Services," which is attached hereto and incorporated herein by this
reference. Consultant shall perform and complete the Services in a prompt and diligent
manner
2.2 Consultant shall comply with applicable federal, state and local laws and regulations in
the performance of this Agreement including, but not limited to, any applicable State
prevailing wage laws.
ARTICLE 3 — RESPONSIBILITIES OF CITY
3 1 City designates Danielle Garcia, Management Services/Finance Director, as City's
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
4 1 The initial term of this Agreement shall be for a period of three (3) years from the
Effective Date of this Agreement (the "Initial Term"). The City shall have the option to
extend the Initial Term of this Agreement by two (2), additional, one-year terms (each, an
"Extended Term"), on the same terms and conditions hereof, by providing written notice
to Consultant at least thirty (30) days prior to the expiration of the Initial Term or any
Extended Term. The Initial Term and any Extended Terms are collectively defined to
herein as the "Term" of this Agreement.
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4.2 If Consultant's Services include deliverable electronic visual presentation materials, such
materials shall be delivered in a form, and made available to 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 compensation for Consultant's performance of the Services shall not exceed the
amount of one hundred eighty five thousand four hundred fifty four dollars ($185,454)
for the Services provided during the Initial Term. Should this Agreement be extended, the
compensation for Consultant's performance for the Services shall not exceed the amount
of sixty five thousand five hundred sixty four dollars ($65,564) for the first Extended
Term, and sixty seven thousand five hundred thirty one dollars ($67,531) for the second
Extended Term, bringing the total possible amount of compensation to a not -to -exceed
amount of three hundred thousand five hundred forty nine dollars ($318,549) For the
Initial Term and each Extended Term, City shall pay Consultant on a time and materials
basis up to the not to not -to -exceed amount in accordance with the rates specified in
Exhibit "B," titled "Cost Proposal," which is attached hereto and incorporated herein by
this reference.
5.2 Consultant shall submit monthly invoices to City describing the Services performed
during the preceding month. Consultant's invoices shall include a brief description of the
Services performed, the dates the Services were performed, the number of hours spent
and by whom, and a description of reimbursable expenses related to the Services. City
shall pay Consultant no later than thirty (30) 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 (iv) on the date sent by facsimile or electronic mail transmission (including
PDF), 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.
CITY.
City Clerk
City of Redlands
35 Cajon Street
P 0 Box 3005 (mailing)
Redlands, CA 92373
jdonaldson@cityofredlands org
Phone (909) 798-7531
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CONSULTANT.
Kenneth H. Pun
The Pun Group
200 E. Sandpointe Avenue, Suite 600
Santa Ana, CA 92707
ken.pun@pungroup.com
949-777-8801
949-777-8850
ARTICLE 6 — INSURANCE AND INDEMNIFICATION
6 1 The following insurance coverage 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
A. 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 execute and provide City with Exhibit "C,"
titled "Workers' Compensation Insurance Certification," which is attached hereto and
incorporated herein by this reference, prior to performance of the Services.
B Comprehensive General Liability insurance with carriers acceptable to City in the
minimum amount 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
C 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
D 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
E Consultant is expressly prohibited from assigning or subcontracting any of the
Services without the prior written consent of City In the event of mutual agreement
by the Parties to assign or subcontract a portion of the Services, Consultant shall add
such assignee or subcontractor as an additional insured to the insurance policies
required hereby and provide City with the insurance endorsements prior to any
Services being performed by the assignee or subcontractor
6.2 Consultant shall defend, indemnify and hold harmless City and its elected and appointed
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
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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.
7.2 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;
(ii) issue, deny, suspend or revoke any City permit, license, application,
certification, approval, order or similar authorization or entitlement;
(iii) authorize 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.
7.3 In the event City determines that Consultant must disclose its financial interests,
Consultant shall complete and file a Fair 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.
ARTICLE 8 — GENERAL CONSIDERATIONS
8 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, including fees for the
use of in-house counsel by a Party
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8.2 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. Any
assignment or attempted assignment without such prior written consent may, in the sole
discretion of City, result in City's immediate termination of this Agreement.
8.3 Consultant is for all purposes under this Agreement an independent contractor and shall
perform the Services as an independent contractor Neither City nor any 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 4 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 project related 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.
8 5 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 pursuant to this Agreement. Such books shall be available at reasonable times
for examination by City at the office of Consultant.
8 6 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 for herein, any
amendment to this Agreement shall be in writing, approved by City and signed by City
and Consultant.
8 7 This Agreement shall be governed by and construed in accordance with the laws of the
State of California, without regard to its conflicts of laws provisions The Parties agree
that all actions or proceedings arising in connection with this Agreement shall be tried
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and litigated only in the state courts located in San Bernardino County, California, and
the federal courts located in Riverside County, California
8 8 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
junsdiction, the same shall be deemed severable from the remainder of this Agreement
and shall not affect, impair or mvandate the remaining sentences, clauses, paragraphs or
sections contained herein, unless to do so would deprive a Party of a matenal benefit of
its bargain under this Agreement
IN WITNESS WHEREOF, duly authorized representatives of City and Consultant have
signed in confirmation of this Agreement
CITE OF REDLh NDS THE PUN GROUP, LLP
By
Paul T Banch, Mayor Kenneth H Pun, Managing Partner
ATTEST
ne Donaldson, City Clerk
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EXHIBIT "A"
SCOPE OF SERVICES
Provided By Client (PBC) Lists They will be provided for both interim and final audits
according to an agreed -upon timeline between the engagement team and the City in order to be
reasonably prepared for a field audit. The engagement team will meet with the City's
management during the initial planning stage to discuss audit schedules and review prior year
audit findings (if any) We will deliver a list of all documents to be provided by the City's staff.
Once such materials are agreed upon by the engagement team and City's finance personnel, no
other schedules will be requested unless new information comes to light in the course of test
work.
Attendance at Meetings and Hearings The engagement team will participate in as many
meetings with staff as needed to perform the work scope tasks, present the audit plan prior to
beginning fieldwork, and discuss the draft audit reports. The team will attend public meetings to
present and discuss its findings and recommendations. Once all issues of discussion are resolved,
the completed Financial Reports, Single Audit report (if applicable), and other reports will be
delivered to the City according to the agreed -upon schedule
Proposed Audit Adjustments. All proposed adjusting journal entries by the Firm will be
discussed and explained in a timely manner with the designated Finance Department personnel.
Such proposed adjustments will be in a format that shows the lowest level of posting detail
needed for data entry in the general ledger systems.
Supplemental Reports, Audits, or Agreed -Upon Procedures Other services, such as agreed -
upon procedures, may be deemed necessary These services will be performed at agreed -upon
rates and will be added in a written agreement before commencing audit work. The Firm and the
City of Redlands will discuss and approve the scope and associated costs of these tasks.
Advice and Consultation Will be provided throughout the year on matters relating to
accounting and financial reporting. Such services do not include any task that entails significant
research or a formal report.
GASB Implementation The Firm will provide technical assistance and training in the
implementation of applicable GASB pronouncements not yet in effect. We have a dedicated
partner, Mr Gary Caporicci, who will be responsible for providing advice and consultation for
the implementation of these new standards. The Firm will advise the City on the applicability of
accounting and reporting standards and other accounting issues and provide guidance on new
note disclosures, GASB implementations, and other reporting requirements. We will also provide
training, resources, and information on topics relevant to the City's financial reporting and
operations. (Based on the scope, additional charges may apply)
Report of all Irregularities and Illegal Acts The Firm will make an immediate written report
of all irregularities and illegal acts or indications of illegal actions of which we may become
aware to the City Manager, Director of Management Services/Finance, and City Attorney
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The engagement team will also make all communications to the City required by the audit
standards under which the engagement is performed. Those communications include, but are not
limited to
A. The auditor's responsibility under generally accepted auditing standards
B Significant accounting policies.
C Management judgment and accounting estimates.
D Significant audit adjustments.
E Other information in documents containing audited financial statements.
F Disagreements with management.
G Management consultation with other accountants.
H. Major issues discussed with management prior to retention.
I. Difficulties encountered in performing the audit.
Working Paper Retention and Access to Working Papers The Firm will retain, at its own
expense, all working papers and reports for a minimum of seven (7) years, unless the City of
Redlands notifies the Firm in writing of the need to extend the retention period. The Firm will
make working papers available to the City or any government agencies included in the audit of
federal grants
Also, we will comply with reasonable requests from successor auditors and allow them to review
working papers that relate to matters of continuing accounting significance
Methodology and Segmentation of Engagement
The Firm's audit approach consists of six phases Engagement Acceptance and General
Planning, Planning and Internal Control Evaluation, Fieldwork, Post Fieldwork, Report
Preparation and Review, and Final Production.
1 Engagement Acceptance and General Planning: The engagement partner and manager will
meet with City's management to obtain an update on current City policies and procedures, help
identify risk areas and new operations, and establish any specific requirements they may have
Our team will work on the identification of unique transactions, implementation of new GASB
pronouncements, and develop the audit work plan for the engagement. (Proposed Timeline
around April/May)
2. Planning and Internal Control Evaluation. The engagement team, including the engagement
partner, will assess accounting policies adopted by the City in order to obtain an understanding
of its structure and its operating environment. Also, our team will review internal controls on all
significant transaction classes, perform walkthroughs and/or tests of internal controls, perform
preliminary analytical procedures, develop initial risk assessment, evaluate Single Audit
compliance, identify any audit issues, and prepare confirmation correspondence The
engagement team and City's Management will establish expectations, including responsibilities
and assignments for the year-end fieldwork, and will hold a progress status meeting at the end of
the interim phase. (Proposed Timeline by June)
3 Fieldwork: The engagement team, including the engagement partner, will conduct audit
procedures on account balances in the general ledger, finish confirmation procedures, perform
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data analysis using our AI tools, search for unrecorded liabilities, perform substantial analytical
review procedures, complete work on compliance with Federal Assistance, and conclude
fieldwork. The engagement team and City's Management will hold an exit conference at year-
end. Periodic update meetings will be held to communicate audit progress to management.
(Proposed Timeline September)
4 Post Fieldwork: During the phase, the engagement team, including the engagement partner,
will review all documents and evaluate commitments and contingencies. The team will perform
an assessment of the going concern and jointly plan for the next steps. (Proposed Timeline
September — October)
5 Report Preparation and Review. The Firm will review and prepare audit reports and perform
quality control procedures following the Quality Control Standards issued by the AICPA. We
will also examine reports for compliance with GFOA reporting guidelines at no additional cost.
Any comments will be recorded in a letter to management. At the City's request, the engagement
partner and manager will present the audit to City's Management and other governing bodies.
(Proposed Timeline mid to late November)
6 Final Production. The final phase of our approach entails obtaining the management
representation letter and final financial statement report, which may include a final presentation
to the City's Management and other governing bodies (if applicable). (Proposed Timeline mid -
December, prior to City close for holidays))
The Firm will complete the audit fieldwork and issue all reports within the established
tilneframe, assuming no internal circumstances within the City causes delays in the audit.
Sample Size and the Extent to Which Statistical Sampling is to be Used in this Engagement
In our audit approach, random and statistical sampling is used in conjunction with our skilled
judgment and knowledge of each situation. When designing an audit sample, our auditors
consider the purpose of the audit procedure and the characteristics of the population from which
the sample will be drawn. We determine a sample size sufficient to reduce sampling risk to an
acceptably low level and select items for such a task in a way that we can reasonably expect it to
be representative of the relevant sample and likely to provide the auditor with a reasonable basis
for conclusions about the population.
Enhancing Auditing Quality with Artificial Intelligence
There are plenty of challenges with established audit practices Outdated CAAT tools, sampling
practices, and the explosive growth of big data are some of the examples, and they all present
significant barriers to detecting anomalies, intentional or otherwise, in financial data. The Pun
Group deploys a comprehensive, risk -based approach, complemented by using MindBridgeTM's
Artificial Intelligence Platform, to conduct our audit. Through this tool, we can seamlessly
analyze thousands and thousands of financial and operating data and records, identifying and
cataloging significant risks in mere seconds
The AI Auditor platform works by our side, augmenting our capacity to detect errors or fraud in
the collected data not only by analyzing the entire set but by cross -correlating dozens of testing
criteria against pre -established data points, and presenting us with a view of every user, vendor,
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and transaction, by risk. All are happening within moments of ingesting analyzed data, which is
something standard audit procedures simply cannot accomplish.
We utilize these tools to allow our audit team to increase efficiency in the audit process, to
enhance the existing quality of our work, to provide directed testing in areas subject to the
highest risk, and to quickly assimilate large amounts of data your staff would typically be asked
to gather The tools also help us to meet our professional requirements regarding fraud and
internal control, allowing us to
• Run Benford's analysis to check for fraud in transactions.
• Increase the value of audit findings with complete, 100% data coverage
• Isolate risk and control issues before they impact your operations
• Improve productivity by automating procedures and eliminating manual tasks.
• Conduct more direct, efficient, and effective audits to improve overall service quality
Our engagement team easily imports data in a secure environment from the City's financial
software and extracts useful data for testing and analytical procedures particular to the following
areas.
• Successful Fraud Test
• Questionable Invoices
• Phantom Vendor Schemes
• Kickback or Conflict -of -Interest Schemes
• Dormant Account Schemes
• Money Laundering Schemes
Type and Extent of Analytical Procedures to be used in the Engagement
Analytical procedures are one of many financial audit processes that help an auditor understand
the client's operation and changes in the environment and identify potential risk areas to plan
other audit procedures. Such procedures include a comparison of financial information on prior
periods, budget, forecast, and industry benchmark. We use trend and ratio analysis to identify
any uncertain or unusual events. To perform these analyses, our Firm surveys cities and counties
and develops benchmarks on specific vital financial indicators, such as the cost of services to tax
revenues ratios, average general fund balance, capital assets, debt -to -capital, general fund
unassigned fund balance to total general fund expenditures, etc Our engagement members have
extensive experience in successfully implanting analytical procedures to the City's benefit.
Our analytical procedures process is performed during three stages of audit. (a) at the start, (b) in
the middle, and
(c) at the end. These three stages are risk assessment procedures, substantive analytical
procedures, and final analytical procedures
• Risk assessment procedures are used to assist the auditor in understanding the business better
and to plan the nature, timing, and extent of audit procedures.
• Substantive analytical procedures are used to obtain evidential matters about particular
assertions related to the account balances or classes of transactions. During the interim phase, our
engagement team will set up expectations for the year-to-date results and balances and compare
them with budgeted and prior -year amounts This process allows us to forecast year-end
amounts, reducing the workload during the year-end phase and allowing us to focus on areas of
concern.
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• Final analytical procedures are used as an overall review of the financial information in the last
review stage of the audit. The Engagement Partner(s) and Manager(s) will perform a high-level
analytical analysis of the financial information, comparing its data both quantitatively and
qualitatively to ensure the amounts are fairly presented in all material respect in the financial
statements.
Approach to be Taken to Gain and Document an Understanding of the Internal Control Structure
Audit risk assessment is established by an internal control review, combined with the
engagement team's understanding of the City's operations and accounting software Using the
Committee of Sponsoring Organizations (COSO) Framework, staff members will evaluate the
City's processes and identify any control deficiencies. These diagnostic review procedures allow
the engagement team to assess the City's systems and controls and to provide constructive
feedback to management.
During our initial planning phase of the audit, our engagement team, including the engagement
Partner and Manager, will obtain an understanding of the entity and its environment. It is an
essential aspect of performing an audit under generally accepted auditing standards That
understanding establishes a frame of reference within which the auditor plans the procedures and
exercises professional judgment about assessing risks of material misstatement of the financial
statements and responding to those risks throughout the examination.
During the interim phase of the audit, our engagement team will perform a walkthrough of all
significant accounting systems, including processes for financial reporting, revenue recognition
and cash receipts, purchasing/contract management and cash disbursements, payroll, and related
liabilities, and others Our auditors will obtain the written policies and procedures, inquiring
accounting personnel, and document the process in either a flowchart or narrative summary
format. After gaining an understanding of the accounting and internal control systems, our
auditor will make a preliminary assessment of control risk, at the assertion level, for each
material account balance or class of transactions.
The form and extent of this documentation are influenced by the size and complexity of the
entity and the nature of its accounting and internal control systems. Generally, the more complex
the entity's accounting and internal control systems and the more extensive the auditor's
procedures, the broader our documentation will need to be.
Approach to be Taken in Determining Laws and Regulations that Will be Subject to Audit Test
Work
The Firm stays continually up to date with audit requirements —including new regulations,
compliance supplements, state guidelines, and related contracts —to ensure that we conduct
audits under applicable laws and regulations. We test transactions for compliance with the Single
Audit Act, California Government Code, GANN Appropriations Limit, provisions of applicable
grant guidelines, requirements of local measures, and others.
For example, the Single Audit Act requires that we determine which grants to include in our
audit and select transactions from those grants for detailed testing. While most items will be
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tested as part of the Interim phase, we cannot determine which grants will be selected for the
Single Audit until the year-end/fieldwork stage of the audit.
Our compliance audits of cash, investments, debt covenants, and other areas will be performed
following the California Government Code, which has many provisions and regulations covering
investments.
Approach to be Taken in Drawing Audit Samples for Purposes of Tests of Compliance
To test compliance, we will follow the AICPA's Audit Sampling Considerations of Uniform
Guidance Compliance Audits. We will select an appropriate sample size based on our
professional judgment and knowledge Any deviations from control and compliance
requirements will be documented.
Identification of Anticipated Potential Audit Problems
While we do not expect any problems with the audit, we will carefully investigate and monitor
the following relevant accounting issues
Investments
• Compliance with GASB 31 and GASB 34
• Authorization and approval process for City investments
• Controls to assure City's compliance with investment limitations and types of specific
investments
• Monitoring by the City of its investments
Financial Reporting:
• Compliance with current reporting and disclosure requirements issued by GASB
• Compliance with the various GASBs in effect
• Perform valuations of OPEB benefits to determine the liability for all benefits promised to
active, retired, and inactive plan members as of each valuation date
• Compliance with Governmental Accounting Standards Board (GASB) Statements 74 and 75
• Compliance with infrastructure obligations and regulatory provisions
Internal Control Structure
• City's internal control functions and compliance with proper internal control philosophies
• Computer -system processes and controls, and adequacy of the control environment
We cannot speculate at this time on the contents of the auditor's reports. However, we expect to
be able to discuss the tentative content of the auditor's reports well in advance of the issuance of
such reports
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EXHIBIT "B"
COST PROPOSAL
Total AIl-Inclusive Maximum Price
Our proposed fees (1) (2) for Professional Auditing Services for the fiscal
years ending June 30, 2022 through June 30, 2024 with an option to extend for
two (2) subsequent fiscal years, are as follows
FY2021-22 FY2022-23 FY2023-24 FY2024-25 FY2025-26
Requested Services
City Audit and Related Reports $51,500 $53,045 $54,636 $56,275 $57,964
Single Audit - 1 Major Program 5,000 5,150 5,305 5,464 5,628
GANN 500 515 530 546 563
State Controller's Reports (City) 3,000 3,090 3,183 3,278 3,377
Total $60,000 $61,800 $63,654 $65,564 $67,531
(1) Single Audit fees based on one (1) major program The fee to audit
additional major programs will be $5,000 each The number of
programs determined to be "major" will be based on OMB Uniform
Guidance The Engagement Team will discuss this with the City of
Redlands's Management before starting Single Audit work
(2) Services related to the implementation of GASB 87, Leases, and
Implementation of Guide No 2019-3, Leases may require additional
charges The Engagement Team will discuss details with the City of
Redlands's Management before starting GASB 87 implementation
work
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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 commencing the performance of the work and activities required or permitted under this
Agreement. (Labor Code § 1861)
I affirm that at all times, in performing 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.
THE PUN GROUP, LLP
By• Date
Kenneth H. Pun, Managing Partner
14
L.\ca\djm\Agreements \The Pun Group Agreement.PS-1 1.FY21-0081.doc.jn