HomeMy WebLinkAbout04 - CC-4 - Extend One Year Contract for Annual Inde - 4/5/2016CITY COUNCIL AGENDA REPORT
MEETING DATE: APRIL 5, 2016 ITEM NUMBER: CC -4
SUBJECT: EXTEND ONE YEAR CONTRACT FOR ANNUAL INDEPENDENT FINANCIAL AUDIT
SERVICES
DATE: MARCH 8, 2016
FROM: FINANCE DEPARTMENT
PRESENTATION BY: COLLEEN O'DONOGHUE, CPA, ASSISTANT FINANCE DIRECTOR
FOR FURTHER INFORMATION CONTACT: COLLEEN O'DONOGHUE (714) 754-5219
RECOMMENDATION
1. Extend one (1) year term of the Professional Services Agreement (PSA) with White
Nelson Diehl Evans LLP, for annual independent financial audit services, for fiscal year
2016, and to provide a three percent (3%) increase in Consultant's compensation in the
amount of $67,370.
2. Authorize City Chief Executive Officer to execute the Second Amendment to the
Professional Services Agreement with White Nelson Diehl Evans LLP.
BACKGROUND
On May 1, 2013, the City entered into a Professional Services Agreement with White
Nelson Diehl Evens LLP to provide auditing services for fiscal years 2013 and 2014, with
an option to extend the contract in one-year periods, for a minimum of two fiscal years.
On February 17, 2015, the City exercised the option to extend the first one-year period to
fiscal year ending June 30, 2016. Staff recommends an extension of the second one-
year period to fiscal year ending June 30, 2017.
ANALYSIS
White Nelson Diehl Evans LLP has served as the City's auditors over the past four years,
beginning with the 2011-12 fiscal year audit. Staff are pleased with their work. The
audits had been very thorough in evaluation of internal controls and met all the
benchmarks and timelines on issuing reports. The firm also provides the City exceptional
guidance on implementation of new governmental accounting standards, most recently,
with the implementation of Governmental Accounting Standards Board (GASB)
Statement No. 68 on pension accounting and reporting.
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ALTERNATIVES CONSIDERED
At this time, there are no alternatives proposed. To change auditors, the City would need
to issue a Request for Proposal (RFP) for audit services. However, given the timeline on
issuing an RFP, evaluating the proposals and bringing a professional service contract to
City Council for approval, staff does not believe there would be enough time before the
audit fieldwork would need to commence.
FISCAL REVIEW
An amount of $67,370 is currently included as part of the FY 16-17 proposed budget for
financial audit services.
LEGAL REVIEW
The Second Amendment to the 2013 Professional Services Agreement has been
reviewed and approved as to form.
RECOMMENDATION
Staff is recommending the execution of this Second Amendment to the Professional
Services Agreement with White Nelson Diehl Evans, extending the existing PSA for one
more fiscal year with the three percent (3%) compensation increase. The firm has
excellent qualifications, reputation and experience. In addition, the firm has a solid
understanding of the scope of the project; and has extensive auditing experience in
municipal governments.
STEPHEN DUNIVENT
Interim Finance Director
Attachment:
THOMAS DUARTE
City Attorney
1. Professional Services Agreement, (May 2013)
2. First Amendment to the Professional Services Agreement with White Nelson
Diehl Evans (February 2015)
3. Second Amendment to the Professional Services Agreement with White
Nelson Diehl Evans (July 1. 2016)
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ATTACHMENT 1
PROFESSIONAL SERVICES AGREEMENT
CITY OF COSTA MESA
THIS AGREEMENT is made and entered into this Ist day of May, 2013 ("Effective
Date"), by and between the CITY OF COSTA MESA, a municipal corporation ("City"), and
White Nelson Diehl Evans LLP ("Consultant").
WITNESSETH:
A. WHEREAS, City proposes to have Consultant perform the services described herein
below; and
B. WHEREAS, Consultant represents that it has that degree of specialized expertise
contemplated within California Government Code, Section 37103, and holds all necessary
licenses to practice and perform the services herein contemplated; and
C. WHEREAS, City and Consultant desire to contract for the specific services described in
Exhibit "A" (the "Project") and desire to set forth their rights, duties and liabilities in connection
with the services to be performed; and - -
D. WHEREAS, no official or employee of City has a financial interest, within the provisions
of California Government Code, Sections 1090-1092, in the subject matter of this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and conditions
contained herein, the parties hereby agree as follows:
L0. SERVICES PROVIDED BY CONSULTANT
1 1. Scone of Services. Consultant shall provide the professional services described in
Consultant's Proposal, a copy of which is attached hereto as Exhibit "A" and incorporated herein
by this reference.
1.2, Professional Practices. All professional services to be provided by Consultant
pursuant to this Agreement shall be provided by personnel experienced in their respective fields
and in a manner consistent with the standards of care, diligence and skill ordinarily exercised by
professional consultants in similar fields and circumstances in accordance with sound
professional practices. It is understood that in the exercise of every aspect of its role, within the
scope of work, consultant will be representing the City of Costa Mesa, and all of its actions,
communications, or other work, during its employment, under this contract is Linder the direction
of the department. Consultant also warrants that it is familiar with all laws that may affect its
performance of this Agreement and shall advise City of any changes in any laws that may affect
Consultant's performance of this Agreement.
1.3. Performance to Satisfaction of Citv. Consultant agrees to perform all the work to
the complete satisfaction of the City and within the hereinafter specified. Evaluations of the
work will be done by the City Clerk or her designee. If the quality of work is not satisfactory ,
City in its discretion has the right to:
(a) Meet with Consultant to review the quality of the work and resolve the
matters of concern;
(b) Require Consultant to repeat the work at no additional fee until it is
satisfactory; and/or
(c) Terminate the Agreement as hereinafter set forth.
1.4. Warranty. Consultant warrants that it shall perform the services required by this
Agreement in compliance with all applicable Federal and California employment laws including,
but not limited to, those laws related to minimum hours and wages; occupational health and
safety; fair employment and employment practices; workers' compensation insurance and safety
in employment; and all other Federal, State and local laws and ordinances applicable to the
services required under this Agreement. Consultant shall indemnify and hold harmless City from
and against all claims, demands, payments, suits, actions, proceedings, and judgments of every
nature and description including attorneys' fees and costs, presented, brought, or recovered
against City for, or on account of any liability under any of the above-mentioned laws, which
may be incurred by reason of Consultant's performance under this Agreement.
1.5. Non-discrimination. In performing this Agreement, Consultant shall not engage
in; nor permit its agents to engage in, discrimination in employment of persons because of their
race, religion, color, national origin, ancestry age, physical handicap,medical_cor clition, marital____ _
status, sexual gender or sexual orientation, except as permitted pursuant to Section 12940 of the
Government Code.
1.6. Non -Exclusive Agreement. Consultant acknowledges that City may entcr into
agreements with other consultants for services similar to the services that are subject to this
Agreement or may have its own employees perform services similar to those services
contemplated by this Agreement.
1.7. Delegation and Assignment. This is a personal service contract, and the duties set
forth herein shall not be delegated or assigned to any person or entity without the prior written
consent of City. Consultant may engage a subcontractor(s) as permitted by law and may employ
other personnel to perform services contemplated by this Agreement at Consultant's sole cost
and expense.
1.8. Confidentiality. Employees of Consultant in the course of their duties may have
access to financial, accounting, statistical, and personnel data of private individuals and
employees of City. Consultant covenants that all data, doctunents, discussion, or other
information developed or received by Consultant or provided for performance of this Agreement
are deemed confidential and shall not be disclosed by Consultant without written authorization
by City. City shall grant such authorization if disclosure is required by law. All City data shall
be returned to City upon the termination of this Agreement. Consultant's covenant under this
Section shall survive the termination of this Agreement.
2,0. COMPENSATION AND BILLING
2.1. Compensation. As compensation for the scope of services outlined in Exhibit A
and in accordance with this agreement, Consultant shall be paid in accordance with the fees set
forth in Exhibit "B". Consultant's total compensation shall not exceed One Hundred Twenty -
Five Thousand, Two -Hundred Ninety -Nine Thousand ($125,299.00).
2.2. Additional Services. Consultant shall not receive compensation for any services
provided outside the scope of services specified by the Response unless the City or the Project
Manager for this Project, prior to Consultant performing the additional services, approves such
additional services in writing. It is specifically understood that oral requests and/or approvals of
such additional services or additional compensation shall be barred and are unenforceable.
2.3. Method of Billing. Consultant may submit invoices to City's Project Manager for
approval on a progress basis, but no more often than monthly. Said invoice shall be based on the
total of all Consultant's services which have been completed to City's sole satisfaction as of the
date the invoice is created. City shall pay Consultant's invoice within forty-five (45) days from
the date City receives said invoice. Each invoice shall describe in detail, the services performed,
the date of performance, and the associated time for completion. Any additional services
approved and performed pursuant to this Agreement shall be designated as "Additional Services"
and shall identify the number of the authorized change order, where applicable, on all invoices.
2.4. Records and Audits. Records of Consultant's services relating to this Agreement
shall be maintained in accordance with generally recognized accounting principles and shall be
made available to City or its Project Manager for inspection and/or audit at mutually convenient
times for a period of three (3) years from the Effective Date.
3.0. TIME OF PERFORMANCE
3.1. Commencement and Completion of Work. The professional services to be
Performed pursuant to this Agreement shall commence within five (5) days from the Effective
Date of this Agreement. The Project Schedule may be amended by mutual agreement of the
parties. Failure to commence work in a timely manner and/or diligently pursue work to
completion may be grounds for termination of this Agreement.
3.2. Excusable Delays. Neither party shall be responsible for delays or lack of
performance resulting from acts beyond the reasonable control of the party or parties. Such acts
shall include, but not be limited to, acts of God, fire, strikes, material shortages, compliance with
laws or regulations; riots, acts of war, or any other conditions beyond the reasonable control of a
party.
4.0. TERtVI AND TERMINATION
4.1. Term. This Agreement shall commence on the Effective Date and continue for a
period of two (2) years ending on June 30, 2015 with an option to extend the contract in one-year
periods, for a minimum of two fiscal years, unless previously terminated as provided herein or as
otherwise agreed to in writing by the parties.
4.2. Notice of Termination. The City reserves and has the right and privilege of
canceling, suspending or abandoning the execution of all or any part of the work contemplated
by this Agreement, with or without cause, at any time, by providing written notice to Consultant.
The termination of this Agreement shall be deemed effective upon receipt of the notice of
termination. In the event of such termination, Consultant shall immediately stop rendering
services under this Agreement unless directed otherwise by the City.
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4. J. Compensation. In the event of termination, City shall pay Consultant for
reasonable costs incurred and professional services satisfactorily performed up to and including
the date of City's written notice of termination. Compensation for work in progress shall be
prorated as to the percentage of work completed as of the effective date of termination in
accordance with the fees set forth herein. In ascertaining the professional services actually
rendered hereunder up to the effective date of termination of this Agreement, consideration shall
be given to both completed work and work in progress, to complete and incomplete drawings,
and to other documents pertaining to the services contemplated herein whether delivered to the
City or in the possession of the Consultant.
4.4. Documents. In the event of termination of this Agreement, all documents
prepared by Consultant in its performance of this Agreement including, but not Iimited to,
finished or unfinished design, development and construction documents, data studies, drawings,
maps and reports, shall be delivered to the City within ten (10) days of delivery of termination
notice to Consultant, at no cost to City. Any use of uncompleted documents without specific
written authorization from Consultant shall be at City's sole risk and without liability or legal
expense to Consultant.
5.0. INSURANCE
5.1. Minimum Scone and Limits of Insurance. Consultant shall obtain, maintain, and
keep in full force and effect during the life of this Agreement all of the following minimum
scope of insurance coverages with an insurance company admitted to do business in California,
rated "A," Class X, or better in the most recent Best's Key Insurance Rating Guide, and
approved by City:
(a) Commercial general liability, including premises -operations,
Products/completed operations, broad form property damage, blanket
contractual liability, independent contractors, personal injury or bodily
injury with a policy limit of not less than One Million Dollars
($1,000,000.00), combined single limits, per occurrence. If such insurance
contains a general aggregate limit, it shall apply separately to this
Agreement or shall be twice the required occurrence limit.
(b) Business automobile liability for owned vehicles, hired, and non -owned
vehicles, with a policy limit of not less than One Million Dollars
(Sl ,000,000.00), combined single limits, per occurrence for bodily injury
and property damage.
(c) Workers' compensation insurance as required by the State of California.
Consultant agrees to waive, and to obtain endorsements from its workers'
compensation insurer waiving subrogation rights under its workers'
compensation insurance policy against the City, its officers, agents,
employees, and volunteers arising from work performed by Consultant for
the City and to require each of its subcontractors, if any, to do likewise
under their workers' compensation insurance policies.
(d) Professional errors and omissions ("E&O") liability insurance with policy
limits of not less than One Million Dollars ($1,000,000.00) combined
single limits, per occurrence and aggregate, Architects' and engineers'
coverage shall be endorsed to include contractual liability. If the policy is
written as a "claims made" policy, the retro date shall be prior to the start
of the contract work. Consultant shall obtain and maintain, said E&0
liability insurance during the life of this Agreement and for three years
after completion of the work hereunder.
5.2. Endorsements. The commercial general liability insurance policy and business
automobile liability policy shall contain or be endorsed to contain the following provisions:
(a) Additional insureds: "The City of Costa Mesa and its elected and
appointed boards, officers, officials, agents, employees, and volunteers are
additional insureds with respect to: liability arising out of activities
performed by or on behalf of the Consultant pursuant to its contract with
the City; products and completed operations of the Consultant; premises
owned, occupied or used by the Consultant; automobiles owned, leased,
hired, or borrowed by the Consultant.."
(b) - Notice:- "Said policy shall not terminate, be suspended, or voided, nor
shall it be cancelled, nor the coverage or limits reduced, until thirty (30)
days after written notice is given to City.
(c) Other insurance: "The Consultant's insurance coverage shall be primary
insurance as respects the City of Costa Mesa, its officers, officials, agents,
employees, and volunteers. Any other insurance maintained by the City of
Costa Mesa shall be excess and not contributing with the insurance
provided by this policy,,,
(d) Any failure to comply with the reporting provisions of the policies shall
not affect coverage provided to the City of Costa Mesa, its officers,
officials, agents, employees, and volunteers.
(e) The Consultant's insurance shall apply separately to each insured against
whom claim is made or suit is brought, except with respect to the limits of
the insurer's liability.
5.3. Deductible or Self Insured Retention. If any of such policies provide for a
deductible or self-insured retention to provide such coverage, the amount of such deductible or
self-insured retention shall be approved in advance by City. No policy of insurance issued as to
which the City is an additional insured shall contain a provision. which requires that no insured
except the named insured can satisfy any such deductible or self-insured retention.
5A. Certificates of Insurance: Consultant shall provide to City certificates of
insurance showing the insurance coverages and required endorsements described above, in a
form and content approved by City, prior to performing any services under this Agreement.
5.5, Nonlimiting: Nothing in this Section shall be construed as limiting in any way,
the indemnification provision contained in this Agreement, or the extent to which Consultant
may be held responsible for payments of damages to persons or property.
6.0. GENERAL PROVISIONS
6.1. Entire Agreement: This Agreement constitutes the entire Agreement between the
parties with respect to any matter referenced herein and supersedes any and all other prior
writings and oral negotiations. This Agreement may be modified only in writing, and signed by
the parties in interest at the time of such modification. The terms of this Agreement shall prevail
over any inconsistent provision in any other contract document appurtenant hereto, including
exhibits to this Agreement.
6,2. Representatives. The Chief Executive Officer or his or her designee shall be the
representative of City for purposes of this Agreement and may issue all consents, approvals,
directives and agreements on behalf of the City, called for by this Agreement, except as
otherwise expressly provided in this Agreement.
Consultant shall designate a representative for purposes of this Agreement who
shall be authorized to issue all consents, approvals, directives and agreements on behalf of
Consultant called for by this Agreement, except as othenvise expressly provided in this
Agreement.
6.3. Project Managers. City shall designate a Project Manager to work directly with
Consultant in the performance of this Agreement.
Consultant shall designate a Project Manager who shall represent it and be its
agent in all consultations with City during the term of this Agreement. Consultant or its Project
Manager shall attend and assist in all coordination meetings called by City.
6.4. Notices: Any notices, documents, correspondence or other communications
concerning this Agreement or the work hereunder may be provided by personal delivery,
facsimile or mail and shall be addressed as set forth below. Such communication shall be
deemed served or delivered: a) at the time of delivery if such communication is sent by personal
delivery; b) at the time of transmission if such communication is sent by facsimile; and c) 48
hours after deposit in the U.S. Mail as reflected by the official U.S. postmark if such
communication is sent through regular United States mail.
IF TO CONSULTANT:
White Nelson Diehl Evans LLP
2875 Michelle Drive, Suite 300
Irvine, CA 92606
Tel: 714-978-13 00
Fax: 714-978-7893
Attn: Nitin P. Patel, CPA
IF TO CITY:
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Tel: 714-754-5243
Fax: 714-754-5040
Attn: Bobby Young
6.5. Drug-free Workplace Policy. Consultant shall provide a drug-free workplace by
complying with all provisions set forth in City's Council Policy 100-5, attached hereto as Exhibit
"C" and incorporated herein by reference, Consultant's failure to conform to the requirements
set forth in Council Policy 100-5 shall constitute a material breach of this Agreement and shall
be cause for immediate termination of this Agreement by City.
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6.6. Attorneys' Fees: In the event that litigation is brought by any party in connection
with this Agreement, the prevailing party shall be entitled to recover from the opposing party all
costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in the
exercise of any of its rights or remedies hereunder or the enforcement of any of the terms,
conditions, or provisions hereof.
6.7. Governing Law: This Agreement shall be governed by and construed under the
laws of the State of California without giving effect to that body of laws pertaining to conflict of
laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto
agree that the sole and exclusive venue shall be a court of competent jurisdiction located in
Orange County, California.
U. Assignment: Consultant shall not voluntarily or by operation of law assign,
transfer, sublet or encumber all or any part of Consultant's interest in this Agreement with
City's prior written consent. out
Any attempted assignment, transfer, subletting or encumbrance
shall be void and shall constitute a breach of this Agreement and cause for termination of this
Agreement. Regardless of City's consent, no subletting or assignment shall release Consultant of
Consultant's obligation to perform all other obligations to be performed by Consultant hereunder
for the term of this Agreement: _ - - -
6.9. Indemnification and Hold Harmless Consultant agrees to defend, indemnify, hold
free and harmless the City, its elected officials, officers, agents and employees, at Consultant's
sole expense, from and against any and all claims, actions, suits or other legal proceedings
brought against the City, its elected officials, officers, agents and employees arising out of the
performance of the Consultant, its employees, and/or authorized subcontractors, of the work
undertaken pursuant to this Agreement. The defense obligation provided for hereunder shall
apply without any advance showing of negligence or v;,Tongdoing by the Consultant, its
employees, and/or authorized subcontractors, but shall be required whenever any claim, action,
complaint, or suit asserts as its basis the negligence, errors, omissions or misconduct of the
Consultant, its employees, and/or authorized subcontractors, and/or whenever any claim, action,
complaint or suit asserts liability against the City, its elected officials, officers, agents and
employees based upon the work performed by the Consultant, its employees, and/or authorized
subcontractors under this Agreement, whether or not the Consultant, its employees, and/or
authorized subcontractors are specifically named or otherwise asserted to be liable.
Notwithstanding the foregoing, the Consultant shall not be liable for the defense or
indemnification of the City for claims, actions, complaints or suits arising out of the sole active
negligence or willful misconduct of the City. This provision shall supersede and replace all other
indemnity provisions contained either in the City's specifications or Consultant's Proposal,
which shall be of no force and effect.
6.10. Independent Contractor, Consultant is and shall be acting at all times as an
independent contractor and not as an employee of City. Consultant shall have no power to incur
any debt, obligation, or liability on behalf of City or otherwise act on behalf of City as an agent.
Neither City nor any of its agents shall have control over the conduct of Consultant or any of
Consultant's employees, except as set forth in this Agreement. Consultant shall not, at any time;
or in any man -Tier, represent that it or any of its or employees are in any manner agents or
employees of City. Consultant shall secure, at its sole expense, and be responsible for any and all
payrnent of Income Tax, Social Security, State Disability Insurance Compensation,
Unemployment Compensation, and other payroll deductions for Consultant and its officers,
agents, and emplovees, and all business licenses, if any are required, in connection with the
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services to be performed hereunder. Consultant shall indemnify and hold City harmless from any
and all taxes, assessments, penalties, and interest asserted against City by reason of the
independent contractor relationship created by this Agreement. Consultant further agrees to
indemnify and hold City harmless from any failure of Consultant to comply with the applicable
worker's compensation laws. City shall have the right to offset against the amount of any fees
due to Consultant tinder this Agreement any amount due to City from Consultant as a result of
Consultant's failure to promptly pay to City any reimbursement or indemnification arising under
this paragraph.
6.11. PERS Eligibility Indemnification. In the event that Consultant or any employee,
agent, or subcontractor of Consultant providing services under this Agreement claims or is
determined by a court of competent jurisdiction or the California Public Employees Retirement
System (PERS) to be eligible for enrollment in PERS as an employee of the City, Consultant
shall indemnify, defend, and hold harmless City for the payment of any employee and/or
employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or
subcontractors, as well as for the payment of any penalties and interest on such contributions,
which would otherwise be the responsibility of City.
otwithstanding any other agency, state or federal policy, rule, regulation, law or
ordinance to the contrary, Consultant and any of its employees, agents, and subcontractors
providing service under this Agreement shall not qualify for or become entitled to. and herebv
agree to waive any claims to, any compensation, benefit, or any incident of employment by City,
including but not limited to eligibility to enroll. in PERS as an employee of City and entitlement
to any contribution to be paid by City for employer contribution and/or employee contributions
for PERS benefits.
6.12. Cooperation. In the event any claim or action is brought against City relating to
Consultant's performance or services rendered under this Agreement, Consultant shall render
any reasonable assistance and cooperation which City might require.
6.13. Ownershio of Documents. All findings, reports, documents, information and data
including, but not limited to, computer tapes or discs, files and tapes furnished or prepared by
Consultant or any of its subcontractors in the course of performance of this Agreement, shall be
and remain the sole property of City. Consultant agrees that any such documents or information
shall not be made available to any individual or organization without the prior consent cf City.
Any use of such documents for other projects not contemplated by this Agreement, and any use
of incomplete documents, shall be at the sole risk of City and without liability or legal exposure
to Consultant. City shall indemnify and hold harmless Consultant from all claims, damages,
losses, and expenses, including attorneys' fees, arising out of or resulting from City's use of such
documents for other projects not contemplated by this Agreement or use of incomplete
docurnents furnished by Consultant. Consultant shall deliver to City any findings, reports,
documents, information, data, in any form, including but not limited to, computer tapes, discs,
files audio tapes or any other Project related items as requested by City or its authorized
representative, at no additional cost to the City.
6.14. Public Records Act Disclosure: Consultant has been advised and is aware that all
reports, documents, information and data including, but not limited to, computer tapes, discs or
files furnished or prepared by Consultant, or any of its subcontractors, and provided to City may
be subject to public disclosure as required by the California Public Records Act (California
Goverunent Code Section 6250 et. seq.). Exceptions to public disclosure may be those
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documents or information that qualify as trade secrets, as that term is defined in the California
Government Code Section 6254.7, and of which Consultant informs City of such trade secret,
The City will endeavor to maintain as confidential all information obtained by it that is
designated as a trade secret. The City shall not, in any way, be liable or responsible for the
disclosure of any trade secret including, without limitation, those records so marked if disclosure
is deemed to be required by law or by order of the Court.
6.15. Conflict of Interest. Consultant and its officers, employees, associates and
subconsultants, if any, will comply with all conflict of interest statutes of the State of California
applicable to Consultant's services under this agreement, including, but not limited to, the
Political Reform Act (Government Code Sections 81000, et sect.) and Government Code Section
1090. During the term of this Agreement, Consultant and its officers, employees, associates and
subconsultants shall not, without the prior written approval of the City Representative, perform
work for another person or entity for whom Consultant is not currently performing work that
would require Consultant or one of its officers, employees, associates or subconsultants to
abstain from a decision under this Agreement pursuant to a conflict of interest statute.
6.16. Responsibility for Errors, Consultant shall be responsible for its work and results
under this Agreement. Consultant, when requested, shall furnish clarification and/or explanation
as may be required by the City's representative, regarding any services rendered under this
Agreement at no additional cost to City. In the event that an error or omission attributable to
Consultant occurs, then Consultant shall, at no cost to City, provide all necessary design
drawings, estimates and other Consultant professional services necessary to rectify and correct
the matter to the sole satisfaction of City and to participate in any meeting required with regard
to the correction.
6.17. Prohibited Employment. Consultant will not employ any regular employee of
City while this Agreement is in effect.
6.18. Order of Precedence. In the event of an inconsistency in this Agreement and any
of the attached Exhibits, the terms set forth in this Agreement shall prevail. If, and to the extent
this Agreement incorporates by reference any provision of any document, such provision shall be
deemed a part of this Agreement. Nevertheless, if there is any conflict among the terms and
conditions of this Agreement and those of any such provision or provisions so incorporated by
reference, this Agreement shall govern over the document referenced.
6.19. Costs. Each party shall bear its own costs and fees incurred in the preparation and
negotiation of this Agreement and in the performance of its obligations hereunder except as
expressly provided herein.
6.20. No Third Party Beneficiary Rights. This Agreement is entered into for the sole
benefit of City and Consultant and no other parties are intended to be direct or incidental
beneficiaries of this Agreement and no third party shall have any right in, under or to this
Agreement.
6.21. Headings. Paragraphs and subparagraph headings contained in this Agreement
are included solely for convenience and are not intended to modify, explain or to be a full or
accurate description of the content thereof and shall not in any way affect the meaning or
interpretation of this Agreement. `
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6.22. Construction. The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or interpretation arises with
respect to this Agreement, this Agreement shall be construed as if drafted jointly by the parties
and in accordance with its fair meaning. There shall be no presumption or burden of proof
favoring or disfavoring any party by virtue of the authorship of any of the provisions of this
Agreement.
6.23. Amendments. Only writing executed by the parties hereto or their respective
successors and assigns may amend this Agreement.
6.24. Waiver. The delay or failure of either party at any time to require performance or
compliance by the other of any of its obligations or agreements shall in no way be deemed a
waiver of those rights to require such performance or compliance. No waiver of any provision of
this Agreement shall be effective unless in writing and signed by a duly authorized representative
of the party against whom enforcement of a waiver is sought. The waiver of any right or remedy
in respect to any occurrence or event shall not be deemed a waiver of any right or remedy in
respect to any other occurrence or event, nor shall any waiver constitute a continuing waiver.
25. Severability: If -any provtsiori of thrs Agreement is determined by a court of
competent jurisdiction to be unenforceable in any circumstance, such determination shall not
affect the validity or enforceability of the remaining terms and provisions hereof or of the
offending provision in any other circumstance. Notwithstanding the foregoing, if the value of
this Agreement, based upon the substantial benefit of the bargain for any party, is materially
impaired, which determination made by the presiding court or arbitrator of competent
jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good
faith negotiations.
6.26. Counterparts . This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original. All counterparts shall be construed together and shall
constitute one agreement.
6.27. Corporate Authority. The persons executing this Agreement on behalf of the
parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said
parties and that by doing so the parties hereto are formally bound to the provisions of this
Agreement.
IN `VITNESS WHEREOF, the patties hereto have caused this Agreement to be executed by
and through their respective authorized officers; as of the date first above written,
CITY OF COSTA MESA,
A municipal corporation
ciYv r Date: �L '�_J
Chief Executive Officer
City of Costa Mesa
10
ATTEST:
City Clerk and ex -offs Clerk of
CONSULTANT
Signature
rv1 1-1 -v P PATE-
Name and Title
CD
Social Security or Taxpayer ID Number
APPRO S TC7lFORM:
City A#tome,
APPROVED AS TO NSURANCE:
Risk ;anaaement
APPROVED AS TO CONTENT:
v�
Finance R I. ., jrectoYoj ect Manager
I
e Date:
Costa Mesa
Date:
MOM
Date:
l
Date: 13
Dater f
11
ATTACHMENT 2
FIRST AMENDMENT TO
PROFESSIONAL SERVICES AGREEMENT WITH
WHITE NELSON DIEHL EVANS LLP
THIS FIRST AMENDMENT is made and entered into this February 17, 2015, by
and between the CITY OF COSTA MESA, a California municipal corporation ("City") and
WHITE NELSON DIEHL EVANS LLP, a limited liability partnership ("Consultant"). The
abovementioned parties being hereinafter collectively referred to as the "Parties".
Recitals
A. City entered into an Agreement with Consultant on May 11t, 2013, to provide auditing
services (the "Agreement"); and
B. The term of the Agreement expires on June 30, 2015; and
C. The Agreement contains an option to extend the term up to 2 additional 1 year periods;
and
D. City desires to exercise the first of the extensions by entering into this First
Amendment extending the term of the Agreement to June 30, 2016; and
E. In consideration, Consultant desires to increase their fees by 3% and requests an
additional fee of $3,370.00 calculated upon the existing discounted rates for the
implementation of GASB 68 imposing certain pension reporting standards requiring
additional hours.
NOW, THEREFORE, in consideration of the mutual terms and conditions set forth in the
Agreement, the Parties hereby amend the Agreement as follows:
1. Section 1.1 of the Agreement is amended to increase the scope of work as more
specifically set forth in the Engagement Letter from Consultant dated January 13,
2015, which is attached to this First Amendment as Exhibit "A", attached hereto and
incorporated herein.
2. Section 2.1 of the Agreement is amended to add the following:
"As compensation for the scope of services outlined in Exhibit A to this First
Amendment, commencing on July 1, 2015 and extending through June 30, 2015,
Consultant shall be shall be paid in accordance with the fees set forth in Exhibit "A"
Consultants total compensation for this extended one year period shall not exceed
Sixty Five Thousand Four Hundred Ten Dollars ($65;410.00)."
3. Section 4.1 of the Agreement is amended to extend the term of the Agreement
currently set to expire on June 30, 2015 so that the new termination date shall be June
30, 2016.
4. All other provisions of the Agreement shall remain in full force and effect. This
Amendment with the Agreement shall be construed together and shall constitute one
Agreement.
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be
executed by and through their respective authorized officers, as of the date first above
written.
Customer:
CITY OF COSTA MESA,
A Municipal Corporation
17
Ch Executiveve
icer
Date
ATTEST:
Consultant:
WHITE NELSON DIEHL EVANS LLP
z e rc-tee..
Signature
,t;jv P. IPA f4 I p�,e ttrg�
Name and Title
a3-0684301
Social Security or Taxpayer ID Number
ayA&
Date
City Clerk and -officio Clerk of the
City of Costa Mesa
Approved as to Content:
Pro
—*k/'�
Approved as to Insurance:
Risk Wanagement
2 - Zo'/S
nate
Interim' Finance Director
a�l� 15
Date
January 13, 2015
Mr. Stephen Dunivent
Interim Finance Director
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Dear Mr. Dunivent:
Our original proposal dated March 27, 2012 and our professional services agreement dated
May 1, 2013 to provide audit services to the City of Costa Mesa and related entities (City) allows the
City to extend our contract in one-year periods for a minimum of two fiscal years. We are pleased to
present our proposal to continue to provide audit services to the City for the first option year ending
June 30, 2015. The proposed fees listed in the attached engagement letter for the fiscal year 2015 audit
are increased by 3% compared to audit fees for the fiscal year 2014 audit. We are also requesting an
additional fee of $3,370 as detailed in the engagement letter for the implementation of GASB 68, the
pension reporting standards which will require additional hours to audit and implement the proper
reporting in the City's Comprehensive Annual Financial Report. The hourly rates used in the
calculation of the additional fee for the implementation of GASB 68 is based on our discounted rates
listed in our proposal dated March 27, 2012.
We have enclosed an engagement letter which lists the scope of the work and the timing of completion
of the audit.
If you have questions on the proposed fees or engagement letter, please contact me at (714) 979-1300
or by email at npatel@wndecpa.com
Very truly yours,
WHITE NELSON DIEHL EVANS, LLP
Nitin P. Patel, CPA
Engagement Partner
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
OffEces located in Orange and San Diego Counties
January 13, 2015
Mr. Stephen Dunivent
Interim Finance Director
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Dear Mr. Dunivent:
We are pleased to confirm our understanding of the services we are to provide the City of Costa Mesa,
the Costa Mesa Public Financing Authority, and the Costa Mesa Housing Authority (collectively, the
City) for the year ending June 30, 2015. We will audit the financial statements of the governmental
activities, each major fund, and the aggregate remaining fund information, including the related notes
to the financial statements, which collectively comprise the basic financial statements, of the City as of
and for the year ending June 30, 2015. Accounting standards generally accepted in the United States
of America provide for certain required supplementary information (RSI), such as management's
discussion and analysis (MD&A), to supplement the City's basic financial statements. Such
information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board who considers it to be an essential part of financial reporting for placing
the basic financial statements in an appropriate operational, economic or historical context. As part of
our engagement, we will apply certain limited procedures to the City's RSI in accordance with auditing
standards generally accepted in the United States of America. These limited procedures will consist of
inquiries of management regarding the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We
will not express an opinion or provide any assurance on the information because the limited procedures
do not provide us with sufficient evidence to express an opinion or provide any assurance. The
following RSI is required by generally accepted accounting principles and will be subjected to certain
limited procedures, but will not be audited:
1) Management's Discussion and Analysis.
2) Budgetary Comparison Schedules - General and Major Special Revenue Funds.
3) Schedules of Funding Progress for CalPERS Miscellaneous Pension Plan, CalPERS Safety Pension
Plan, Police 1 % Supplemental Retirement Plan and Other Post -Employment Benefit Plan.
1
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offlas located in Orange and San Diego Coanties
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
January 13, 2015
Page 2
We have also been engaged to report on supplementary information other than RSI that accompanies
the City's financial statements. We will subject the following supplementary information to the
auditing procedures applied in our audit of the financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the financial statements or to the financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America, and we will provide an opinion on it in relation to the financial statements as a whole:
1) Combining and individual fund financial statements.
2) Schedule of expenditures of federal awards.
The following other information accompanying the financial statements will not be subjected to the
auditing procedures applied in our audit of the financial statements, and our auditors' report will not
provide an opinion or any assurance on that other information:
1) Introductory Section.
2) Statistical Section.
Audit Objectives:
The objective of our audit is the expression of opinions as to whether your financial statements are
fairly presented, in all material respects, in conformity with accounting principles generally accepted in
the United States of America and to report on the fairness of the supplementary information referred to
in the second paragraph when considered in relation to the financial statements as a whole. The
objective also includes reporting on:
• Internal control related to the financial statements and compliance with the provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a material
effect on the financial statements in accordance with Government Auditing Standards.
• Internal control related to major programs and an opinion (or disclaimer of opinion) on
compliance with laws, regulations, and the provisions of contracts or grant agreements that
could have a direct and material effect on each major program in accordance with the Single
Audit Act Amendments of 1996 and OMB Circular A-133, Audits of States, Local
Governments, and Non -Profit Organizations.
The Government Auditing Standards report on internal control over financial reporting and on
compliance and other matters will include a paragraph that states (1) that the purpose of the report is
solely to describe the scope of testing of internal control and compliance and the results of that testing,
and not to provide an opinion on the effectiveness of the City's internal control or on compliance, and
(2) that the report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the City's internal control and compliance. The OMB Circular A-133 report
on internal control over compliance will include a paragraph that states that the purpose of the report
on internal control over compliance is solely to describe the scope of testing of internal control over
compliance and the results of that testing based on the requirements of OMB Circular A-133. Both
reports will state that the report is not suitable for any other purpose.
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
January 13, 2015
Page 3
Audit Objectives (Continued):
Our audit will be conducted in accordance with auditing standards generally accepted in the United
States of America; the standards for financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996;
and the provisions of OMB Circular A-133, and will include tests of accounting records, a
determination of major program(s) in accordance with OMB Circular A-133, and other procedures we
consider necessary to enable us to express such opinions. We will issue written reports upon the
completion of our Single Audit. Our reports will be addressed to the City Council. We cannot provide
assurance that unmodified opinions will be expressed. Circumstances may arise in which it is
necessary for us to modify our opinions or add emphasis -of -matter or other -matter paragraphs. If our
opinions on the financial statements or the Single Audit compliance opinions are other than
unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to
complete the audit or are unable to form or have not formed opinions, we may decline to express
opinions or issue reports, or may withdraw from this engagement.
Management Responsibilities:
Management is responsible for the financial statements, schedule of expenditures of federal awards,
and all accompanying information as well as all representations contained therein. Management is also
responsible for identifying all federal awards received and understanding and complying with the
compliance requirements, and for preparation of the schedule of expenditures of federal awards
(including notes and noncash assistance received) in accordance with the requirements of
OMB Circular A-133. As part of the audit, we will assist with preparation of your financial statements,
schedule of expenditures of federal awards, and related notes. These nonaudit services do not
constitute an audit under Government Auditing Standards and such services will not be conducted in
accordance with Government Auditing Standards. You agree to assume all management
responsibilities relating to the financial statements, schedule of expenditures of federal awards, related
notes, and any other nonaudit services we provide. You will be required to acknowledge in the
management representation letter our assistance with preparation of the financial statements, schedule
of expenditures of federal awards, and related notes and that you have reviewed and approved the
financial statements, schedule of expenditures of federal awards, and related notes prior to their
issuance and have accepted responsibility for them. Further, you agree to oversee the nonaudit
services by designating an individual, preferably from senior management, who possesses suitable
skill, knowledge, or experience; evaluate the adequacy and results of those services; and accept
responsibility for them.
Management is responsible for (a) establishing and maintaining effective internal controls, including
internal controls over compliance, and for evaluating and monitoring ongoing activities, to help ensure
that appropriate goals and objectives are met; (b) following laws and regulations; (c) ensuring that
there is reasonable assurance that government programs are administered in compliance with
compliance requirements; and (d) ensuring that management is reliable and that financial information
is reliable and properly reported. Management is also responsible for implementing systems designed
to achieve compliance with applicable laws, regulations, contracts, and grant agreements. You are also
responsible for the selection and application of accounting principles; for the preparation and fair
presentation of the financial statements in conformity with U.S. generally accepted accounting
principles; and for compliance with applicable laws and regulations and the provisions of contracts and
grant agreements.
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
January 13, 2015
Page 4
Management Responsibilities (Continued):
Management is also responsible for making all financial records and related information available to us
and for the accuracy and completeness of that information. You are also responsible for providing us
with (1) access to all information of which you are aware that is relevant to the preparation and fair
presentation of the financial statements, (2) additional information that we may request for the purpose
of the audit, and (3) unrestricted access to persons within the government from whom we determine it
necessary to obtain audit evidence.
Your responsibilities also include identifying significant vendor relationships in which the vendor has
responsibility for program compliance and for the accuracy and completeness of that information.
Your responsibilities include adjusting the financial statements to correct material misstatements and
confirming to us in the management representation letter that the effects of any uncorrected
misstatements aggregated by us during the current engagement and pertaining to the latest period
presented are immaterial, both individually and in the aggregate, to the financial statements taken as a
whole.
You are responsible for the design and implementation of programs and controls to prevent and detect
fraud, and for informing us about all known or suspected fraud affecting the government involving
(1) management, (2) employees who have significant roles in internal control, and (3) others where the
fraud could have a material effect on the financial statements. Your responsibilities include informing
Lis of your knowledge of any allegations of fraud or suspected fraud affecting the government received
in communications from employees, former employees, grantors, regulators, or others. In addition,
you are responsible for identifying and ensuring that the City complies with applicable laws,
regulations, contracts, agreements, and grants. Management is also responsible for taking timely and
appropriate steps to remedy fraud and noncompliance with provisions of laws, regulations, contracts,
and grant agreements, or abuse that we report. Additionally, as required by OMB Circular A-133, it is
management's responsibility to follow up and take corrective action on reported audit findings and to
prepare a summary schedule of prior audit findings and a corrective action plan. The summary
schedule of prior audit findings should be available for our review.
You are responsible for preparation of the schedule of expenditures of federal awards (including notes
and noncash assistance received) in conformity with OMB Circular A-133. You agree to include our
report on the schedule of expenditures of federal awards in any document that contains and indicates
that we have reported on the schedule of expenditures of federal awards. You also agree to make the
audited financial statements readily available to intended users of the schedule of expenditures of
federal awards no later than the date the schedule of expenditures of federal awards is issued with our
report thereon. Your responsibilities include acknowledging to us in the written representation letter
that (1) you are responsible for presentation of the schedule of expenditures of federal awards in
accordance with OMB Circular A-133; (2) you believe the schedule of expenditures of federal awards,
including its form and content, is fairly presented in accordance with OMB Circular A-133; (3) the
methods of measurement or presentation have not changed from those used in the prior period (or, if
they have changed, the reasons for such changes); and (4) you have disclosed to us any significant
assumptions or interpretations underlying the measurement or presentation of the schedule of
expenditures of federal awards.
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
January 13, 2015
Page 5
Management Responsibilities (Continued):
You are also responsible for the preparation of the other supplementary information, which we have
been engaged to report on, in conformity with U.S. generally accepted accounting principles (GAAP).
You agree to include our report on the supplementary information in any document that contains and
indicates that we have reported on the supplementary information. You also agree to make the audited
financial statements readily available to users of the supplementary information no later than the date
the supplementary information is issued with our report thereon. Your responsibilities include
acknowledging to us in the written representation letter that (1) you are responsible for presentation of
the supplementary information in accordance with GAAP; (2) you believe the supplementary
information, including its form and content, is fairly presented in accordance with GAAP; (3) the
methods of measurement or presentation have not changed from those used in the prior period (or, if
they have changed, the reasons for such changes); and (4) you have disclosed to us any significant
assumptions or interpretations underlying the measurement or presentation of the supplementary
information.
Management is responsible for establishing and maintaining a process for tracking the status of audit
findings and recommendations. Management is also responsible for identifying for us previous
financial audits, attestation engagements, performance audits, or other studies related to the objectives
discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us
corrective actions taken to address significant findings and recommendations resulting from those
audits, attestation engagements, performance audits, or studies. You are also responsible for providing
management's views on our current findings, conclusions, and recommendations, as well as your
planned corrective actions, for the report, and for the timing and format for providing that information.
With regard to the electronic dissemination of audited financial statements, including financial
statements published electronically on your website, you understand that electronic sites are a means to
distribute information and, therefore, we are not required to read the information contained in these
sites or to consider the consistency of other information in the electronic site with the original
document.
Audit Procedures - General:
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; therefore, our audit will involve judgment about the number of transactions to be
examined and the areas to be tested. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements. We will plan
and perform the audit to obtain reasonable rather than absolute assurance about whether the financial
statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial
reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are
attributable to the City or to acts by management or employees acting on behalf of the City. Because
the determination of abuse is subjective, Government Auditing Standards do not expect auditors to
provide reasonable assurance of detecting abuse.
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
January 13, 2015
Page 6
Audit Procedures - General (Continued):
Because of the inherent limitations of an audit, combined with the inherent limitations of internal
control, and because we will not perform a detailed examination of all transactions, there is a risk that
material misstatements or noncompliance may exist and not be detected by us, even though the audit is
properly planned and performed in accordance with U.S. generally accepted auditing standards and
Government Auditing Standards. In addition, an audit is not designed to detect immaterial
misstatements or violations of laws or governmental regulations that do not have a direct and material
effect on the financial statements or major programs. However, we will inform the appropriate level of
management of any material errors, any fraudulent financial reporting or misappropriation of assets
that come to our attention. We will also inform the appropriate level of management of any violations
of laws or governmental regulations that come to our attention, unless clearly inconsequential, and of
any material abuse that comes to our attention. We will include such matters in the reports required for
a Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not
extend to any later periods for which we are not engaged as auditors.
Our procedures will include tests of documentary evidence supporting the transactions recorded in the
accounts, and direct confirmation of receivables and certain other assets and liabilities by
correspondence with selected individuals, funding sources, creditors, and financial institutions. We
will request written representations from your attorneys as part of the engagement, and they may bill
you for responding to this inquiry. At the conclusion of our audit, we will require certain written
representations from you about your responsibilities for the financial statements; schedule of
expenditures of federal awards; federal award programs; compliance with laws, regulations, contracts,
and grant agreements; and other responsibilities required by generally accepted auditing standards.
Audit Procedures - Internal Controls:
Our audit will include obtaining an understanding of the City and its environment, including internal
control, sufficient to assess the risks of material misstatement of the financial statements and to design
the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test
the effectiveness of certain controls that we consider relevant to preventing and detecting errors and
fraud that are material to the financial statements and to preventing and detecting misstatements
resulting from illegal acts and other noncompliance matters that have a direct and material effect on the
financial statements. Our tests, if performed, will be less in scope than would be necessary to render an
opinion on internal control and, accordingly, no opinion will be expressed in our report on internal
control issued pursuant to Government Auditing Standards.
As required by OMB Circular A-133, we will perform tests of controls over compliance to evaluate the
effectiveness of the design and operation of controls that we consider relevant to preventing or
detecting material noncompliance with compliance requirements applicable to each major federal
award program. However, our tests will be less in scope than would be necessary to render an opinion
on those controls and, accordingly, no opinion will be expressed in our report on internal control issued
pursuant to OMB Circular A-133.
An audit is not designed to provide assurance on internal control or to identify significant deficiencies
or material weaknesses. However, during the audit, we will communicate to management and those
charged with governance internal control related matters that are required to be communicated under
AICPA professional standards, Government Auditing Standards, and OMB Circular A-133.
Mr. Stephen Dunivent, Inter, ;; inance Director
City of Costa Mesa
January 13, 2015
Page 7
Audit Procedures - Compliance:
As part of obtaining reasonable assurance about whether the financial statements are free of material
misstatement, we will perform tests of the City's compliance with provisions of applicable laws,
regulations, contracts, and agreements, including grant agreements. However, the objective of those
procedures will not be to provide an opinion on overall compliance and we will not express such an
opinion in our report on compliance issued pursuant to Government Auditing Standards.
OMB Circular A-133 requires that we also plan and perform the audit to obtain reasonable assurance
about whether the auditee has complied with applicable laws and regulations and the provisions of
contracts and grant agreements applicable to major programs. Our procedures will consist of tests of
transactions and other applicable procedures described in the OMB Circular A-133 Compliance
Supplement for the types of compliance requirements that could have a direct and material effect on
each of the City's major programs. The purpose of these procedures will be to express an opinion on
the City's compliance with requirements applicable to each of its major programs in our report on
compliance issued pursuant to OMB Circular A-133.
Audit Administration, Fees and Other:
Noted below is a listing of work required by City staff to assist in the audits.
1. Preparation of trial balances for all funds, after posting of all year-end journal entries.
2. Preparation of supporting schedules for all material balance sheet accounts, and selected
revenue and expenditure accounts.
3. Typing of all confirmation requests.
4. Pulling and refiling of all supporting documents required for audit verification.
We will comply with all other provisions of our technical and cost proposals dated March 27, 2012 and
the City's request for proposal and any additional agreements for professional services, which are
incorporated herein by reference.
Our maximum annual fees for the year ending June 30, 2015 are as follows:
City of Costa Mesa
Audit
GASB 68 Implementation (a)
CAFR Preparation
Costa Mesa Public Financing Authority:
Audit and Financial Report
Costa Mesa Housing Authority:
.,.-_Audit and Financial Report
Singldit
e Auof Federal Grants
GANN Appropriation Limit
AB 2766 Audit
0-*
30695.011+
3,370-00+
5,445 00+
I+., 960 -00+
540, 00+
58,89U,00%
C.MVIA 6,520.00+
-I-o+� I 1 _65 1 41 (T_ _00 _r
$ 34,6951
3,370
5,445
i
4,960
6,520 011 Hl>
7,945?
540
1.935
$_6_541 0
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
January 13, 2015
Page 8
Audit Administration, Fees and Other (Continued):
a) The GASB 68 Implementation fee is computed as follows:
3 370
The maximum annual fees stipulated herein contemplate that conditions satisfactory to the normal
progress and completion of the examination will be encountered and the City accounting personnel
will furnish the agreed upon assistance in connection with the audit. However, if unusual
circumstances are encountered which make it necessary for us to do additional work; we shall report
such conditions to the responsible City officials and provide the City with an estimate of the additional
accounting fees involved.
At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection
Form that summarizes our audit findings. It is management's responsibility to submit the reporting
package (including financial statements, schedule of expenditures of federal awards, summary
schedule of prior audit findings, auditors' reports, and corrective action plan) along with the Data
Collection Form to the federal audit clearinghouse. We will coordinate with you the electronic
submission and certification. If applicable, we will provide copies of our report for you to include with
the reporting package you will submit to pass-through entities. The Data Collection Form and the
reporting package must be submitted within the earlier of 30 days after receipt of the auditors' reports
or nine months after the end of the audit period, unless a longer period is agreed to in advance by the
cognizant or oversight agency for audits.
The audit documentation for this engagement is the property of White Nelson Diehl Evans LLP and
constitutes confidential information. However, subject to applicable laws and regulations, audit
documentation and appropriate individuals will be made available upon request and in a timely manner
to grantor agencies or their designees, a federal agency providing direct or indirect funding, or the
U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit
findings, or to carry out oversight responsibilities. We will notify you of any such request. If
requested, access to such audit documentation will be provided under the supervision of White Nelson
Diehl Evans LLP personnel. Furthermore, upon request, we may provide copies of selected audit
documentation to the aforementioned parties. These parties may intend, or decide, to distribute the
copies or information contained therein to others, including other governmental agencies.
In accordance with our firm's current record retention policy, all of your original records will be
returned to you at the conclusion of this engagement. Our audit documentation files will be kept for a
period of seven years after the issuance of the audit report. All other files will be kept for as long as
you retain us as your accountants. However, upon termination of our service, all records will be
destroyed after a period of seven years. Physical deterioration or catastrophic events may further
shorten the life of these records. The audit documentation files of our firm are not a substitute for your
original records.
Discounted
Hours
Rate
Total
Partner
6.00
$ 219
$ 1,314
Manager
8.00
164
1,312
Senior
8.00
93
744
3 370
The maximum annual fees stipulated herein contemplate that conditions satisfactory to the normal
progress and completion of the examination will be encountered and the City accounting personnel
will furnish the agreed upon assistance in connection with the audit. However, if unusual
circumstances are encountered which make it necessary for us to do additional work; we shall report
such conditions to the responsible City officials and provide the City with an estimate of the additional
accounting fees involved.
At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection
Form that summarizes our audit findings. It is management's responsibility to submit the reporting
package (including financial statements, schedule of expenditures of federal awards, summary
schedule of prior audit findings, auditors' reports, and corrective action plan) along with the Data
Collection Form to the federal audit clearinghouse. We will coordinate with you the electronic
submission and certification. If applicable, we will provide copies of our report for you to include with
the reporting package you will submit to pass-through entities. The Data Collection Form and the
reporting package must be submitted within the earlier of 30 days after receipt of the auditors' reports
or nine months after the end of the audit period, unless a longer period is agreed to in advance by the
cognizant or oversight agency for audits.
The audit documentation for this engagement is the property of White Nelson Diehl Evans LLP and
constitutes confidential information. However, subject to applicable laws and regulations, audit
documentation and appropriate individuals will be made available upon request and in a timely manner
to grantor agencies or their designees, a federal agency providing direct or indirect funding, or the
U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit
findings, or to carry out oversight responsibilities. We will notify you of any such request. If
requested, access to such audit documentation will be provided under the supervision of White Nelson
Diehl Evans LLP personnel. Furthermore, upon request, we may provide copies of selected audit
documentation to the aforementioned parties. These parties may intend, or decide, to distribute the
copies or information contained therein to others, including other governmental agencies.
In accordance with our firm's current record retention policy, all of your original records will be
returned to you at the conclusion of this engagement. Our audit documentation files will be kept for a
period of seven years after the issuance of the audit report. All other files will be kept for as long as
you retain us as your accountants. However, upon termination of our service, all records will be
destroyed after a period of seven years. Physical deterioration or catastrophic events may further
shorten the life of these records. The audit documentation files of our firm are not a substitute for your
original records.
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
January 13, 2015
Page 9
Audit Administration, Fees and Other (Continued):
Government Auditing Standards require that we provide you with a copy of our most recent external
peer review report and any letter of comment, and any subsequent peer review reports and letters of
comment received during the period of the contract. Our most recent peer review report accompanies
this letter.
We appreciate the opportunity to be of service to the City of Costa Mesa and believe this letter
accurately summarizes the significant terms of our engagement. If you have any questions, please let
us know. If you agree with the terms of our engagement as described in this letter, please sign the
enclosed copy and return it to us.
Very truly yours,
WHITE NELSON DIEHL EVANS, LLP
) i,'ti-L
Nitin P. Patel, CPA
Engagement Partner
RESPONSE:
This letter correctly sets forth the understanding
of the City of Costa Mesa.
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Title -1a tki Fll0,rts 1%-e,-g>Y'
Date 02.027' 2015
ATTACHMENT 3
SECOND AMENDMENT TO
PROFESSIONAL SERVICES AGREEMENT WITH
WHITE NELSON DIEHL EVANS LLP
THIS SECOND AMENDMENT ("Amendment") is made and entered into this 1St day of July,
2016 ("Effective Date"), by and between the CITY OF COSTA MESA, a California municipal
corporation ("City"), and WHITE NELSON DIEHL EVANS LLP, a limited liability partnership
("Consultant") (together, the "Parties").
RECITALS
WHEREAS, the Parties entered into a Professional Services Agreement on May 1, 2013
("Agreement") for Consultant to provide City with financial reporting services, auditing services, and
annual reports; and
WHEREAS, Section 4.1 of the Agreement provides for a two-year initial term with an option
to extend the term in one-year periods; and;
WHEREAS, the Parties previously entered into the First Amendment to the Agreement to
extend the term through June 30, 2016, amend the scope of work, and increase the compensation
accordingly; and
WHEREAS, the Parties now desire to extend the term for a one-year period through June 30,
2017, and to provide a three percent (3%) increase in Consultant's compensation.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:
1. Section 1.1 of the Agreement is amended to include the scope of work set forth in the
Engagement Letter from Consultant dated February 1, 2016, attached hereto as Exhibit "A" and
incorporated herein by this reference.
2. Section 2.1 of the Agreement is amended to increase Consultant's total compensation
by Sixty -Seven Thousand Three Hundred Seventy Dollars ($67,370.00) as compensation for
Consultant's services during the period commencing July 1, 2016 and extending through June 30,
2017.
3. Section 4.1 of the Agreement is amended to extend the term of the Agreement through
June 30, 2017.
4. All other terms, conditions, and provisions of the Agreement shall remain valid and in
full force and effect.
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be executed
by and through their respective authorized officers as of the date first written above.
[Signatures appear on the following page.]
1 I Second Amendment - White Nelson Diehl Evans
CITY OF COSTA MESA
Date:
Chief Executive Officer
Date:
Interim Finance Director
I1.K/],GYIJN M- 011"
Date:
Signature
Name and Title
33-0686301
Taxpayer ID Number
ATTEST:
Date:
City Clerk
APPROVED AS TO FORM:
City Attorney
APPROVED AS TO INSURANCE:
Risk Management
APPROVED AS TO CONTENT:
Project Manager
Date:
Date:
Date:
21 Second Amendment - White Nelson Diehl Evans
EXHIBIT A
CONSULTANT'S PROPOSAL
February 1, 2016
Mr. Stephen Dunivent
Interim Finance Director
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Dear Mr. Dunivent:
Our original proposal dated March 27, 2012 and our professional services agreement dated
May 1, 2013 to provide audit services to the City of Costa Mesa and related entities (City) allows the
City to extend our contract in one-year periods for a minimum of two fiscal years. We are pleased to
present our proposal to continue to provide audit services to the City for the second option year ending
June 30, 2016. The proposed fees listed in the attached engagement letter for the fiscal year 2016 audit
are increased by 3% compared to audit fees for the fiscal year 2015 audit
We have enclosed an engagement letter which lists the scope of the work and the timing of completion
of the audit.
If you have questions on the proposed fees or engagement letter, please contact me at (714) 979-1300
or by email at npatel@wndeepa.com
Very truly yours,
WHITE NELSON DIEHL EVANS, LLP
Nitin P. Patel, CPA
Engagement Partner
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
February 1, 2016
Mr. Stephen Dunivent
Interim Finance Director
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Dear Mr. Dunivent:
We are pleased to confirm our understanding of the services we are to provide the City of Costa Mesa,
the Costa Mesa Public Financing Authority, and the Costa Mesa Housing Authority (collectively, the
City) for the year ending June 30, 2016. We will audit the financial statements of the governmental
activities, each major fund, and the aggregate remaining fund information, including the related notes
to the financial statements, which collectively comprise the basic financial statements, of the City as of
and for the year ending June 30, 2016. Accounting standards generally accepted in the United States
of America provide for certain required supplementary information (RSI), such as management's
discussion and analysis (MD&A), to supplement the City's basic financial statements. Such
information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board who considers it to be an essential part of financial reporting for placing
the basic financial statements in an appropriate operational, economic or historical context. As part of
our engagement, we will apply certain limited procedures to the City's RSI in accordance with auditing
standards generally accepted in the United States of America. These limited procedures will consist of
inquiries of management regarding the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We
will not express an opinion or provide any assurance on the information because the limited procedures
do not provide us with sufficient evidence to express an opinion or provide any assurance. The
following RSI is required by generally accepted accounting principles and will be subjected to certain
limited procedures, but will not be audited:
1) Management's Discussion and Analysis.
2) Budgetary Comparison Schedules - General and Major Special Revenue Funds.
3) Schedule of Proportionate Share of the Net Pension Liability and Schedule of Contributions for the
Fire Safety Plan, the Schedules of Changes in Net Pension Liability and Related Ratios and the
Schedules of Contributions for the Miscellaneous and Police Safety Plans.
4) Schedules of Funding Progress for Police 1% Supplemental Retirement Plan and Other
Post -Employment Benefit Plan.
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices doeated in Orange and San Diego Counties
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
February 1, 2016
Page 2
We have also been engaged to report on supplementary information other than RSI that accompanies
the City's financial statements. We will subject the following supplementary information to the
auditing procedures applied in our audit of the financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the financial statements or to the financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America, and we will provide an opinion on it in relation to the financial statements as a whole:
1) Combining and individual fund financial statements.
2) Schedule of expenditures of federal awards.
The following other information accompanying the financial statements will not be subjected to the
auditing procedures applied in our audit of the financial statements, and our auditors' report will not
provide an opinion or any assurance on that other information:
1) Introductory Section.
2) Statistical Section.
Audit Objectives
The objective of our audit is the expression of opinions as to whether your financial statements are
fairly presented, in all material respects, in conformity with accounting principles generally accepted in
the United States of America and to report on the fairness of the supplementary information referred to
in the second paragraph when considered in relation to the financial statements as a whole. The
objective also includes reporting on:
• Internal control related to the financial statements and compliance with the provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a material
effect on the financial statements in accordance with Government Auditing Standards.
• Internal control related to major programs and an opinion (or disclaimer of opinion) on
compliance with laws, regulations, and the provisions of contracts or grant agreements that
could have a direct and material effect on each major program in accordance with the Single
Audit Act Amendments of 1996 and Title 2 U.S. Code of Federal Regulations Part 200,
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Award (Uniform Guidance or OMB Circular A-133).
The Government Auditing Standards report on internal control over financial reporting and on
compliance and other matters will include a paragraph that states (1) that the purpose of the report is
solely to describe the scope of testing of internal control and compliance and the results of that testing,
and not to provide an opinion on the effectiveness of the City's internal control or on compliance, and
(2) that the report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the City's internal control and compliance. The OMB Circular A-133 report
on internal control over compliance will include a paragraph that states that the purpose of the report
on internal control over compliance is solely to describe the scope of testing of internal control over
compliance and the results of that testing based on the requirements of OMB Circular A-133. Both
reports will state that the report is not suitable for any other purpose.
i
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
February 1, 2016
Page 3
Audit Objectives (Continued)
Our audit will be conducted in accordance with auditing standards generally accepted in the United
States of America; the standards for financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the Single Audit Act Amendments of 1996;
and the provisions of OMB Circular A-133, and will include tests of accounting records, a
determination of major program(s) in accordance with OMB Circular A-133, and other procedures we
consider necessary to enable us to express such opinions. We will issue written reports upon the
completion of our Single Audit. Our reports will be addressed to the City Council. We cannot provide
assurance that unmodified opinions will be expressed. Circumstances may arise in which it is
necessary for us to modify our opinions or add emphasis -of -matter or other -matter paragraphs. If our
opinions on the financial statements or the Single Audit compliance opinions are other than
unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to
complete the audit or are unable to form or have not formed opinions, we may decline to express
opinions or issue reports, or may withdraw from this engagement.
Audit Procedures - General
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; therefore, our audit will involve judgment about the number of transactions to be
examined and the areas to be tested. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements. We will plan
and perform the audit to obtain reasonable rather than absolute assurance about whether the financial
statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial
reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are
attributable to the City or to acts by management or employees acting on behalf of the City. Because
the determination of abuse is subjective, Government Auditing Standards do not expect auditors to
provide reasonable assurance of detecting abuse.
Because of the inherent limitations of an audit, combined with the inherent limitations of internal
control, and because we will not perform a detailed examination of all transactions, there is a risk that
material misstatements or noncompliance may exist and not be detected by us, even though the audit is
properly planned and performed in accordance with U.S. generally accepted auditing standards and
Government Auditing Standards. In addition, an audit is not designed to detect immaterial
misstatements or violations of laws or governmental regulations that do not have a direct and material
effect on the financial statements or major programs. However, we will inform the appropriate level of
management of any material errors, any fraudulent financial reporting or misappropriation of assets
that come to our attention. We will also inform the appropriate level of management of any violations
of laws or governmental regulations that come to our attention, unless clearly inconsequential, and of
any material abuse that comes to our attention. We will include such matters in the reports required for
a Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not
extend to any later periods for which we are not engaged as auditors.
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
February 1, 2016
Page 4
Audit Procedures - General (Continued)
Our procedures will include tests of documentary evidence supporting the transactions recorded in the
accounts, and direct confirmation of receivables and certain other assets and liabilities by
correspondence with selected individuals, funding sources, creditors, and financial institutions. We
will request written representations from your attorneys as part of the engagement, and they may bill
you for responding to this inquiry. At the conclusion of our audit, we will require certain written
representations from you about your responsibilities for the financial statements; schedule of
expenditures of federal awards; federal award programs; compliance with laws, regulations, contracts,
and grant agreements; and other responsibilities required by generally accepted auditing standards.
Audit Procedures - Internal Controls
Our audit will include obtaining an understanding of the City and its environment, including internal
control, sufficient to assess the risks of material misstatement of the financial statements and to design
the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test
the effectiveness of certain controls that we consider relevant to preventing and detecting errors and
fraud that are material to the financial statements and to preventing and detecting misstatements
resulting from illegal acts and other noncompliance matters that have a direct and material effect on the
financial statements. Our tests, if performed, will be less in scope than would be necessary to render an
opinion on internal control and, accordingly, no opinion will be expressed in our report on internal
control issued pursuant to Government Auditing Standards.
As required by OMB Circular A-133, we will perform tests of controls over compliance to evaluate the
effectiveness of the design and operation of controls that we consider relevant to preventing or
detecting material noncompliance with compliance requirements applicable to each major federal
award program, However, our tests will be less in scope than would be necessary to render an opinion
on those controls and, accordingly, no opinion will be expressed in our report on internal control issued
pursuant to OMB Circular A-133.
An audit is not designed to provide assurance on internal control or to identify significant deficiencies
or material weaknesses. However, during the audit, we will communicate to management and those
charged with governance internal control related matters that are required to be communicated under
AICPA professional standards, Government Auditing Standards, and OMB Circular A-133.
Audit Procedures - Compliance:
As part of obtaining reasonable assurance about whether the financial statements are free of material
misstatement, we will perform tests of the City's compliance with provisions of applicable laws,
regulations, contracts, and agreements, including grant agreements. However, the objective of those
procedures will not be to provide an opinion on overall compliance and we will not express such an
opinion in our report on compliance issued pursuant to Government Auditing Standards.
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
February 1, 2016
Page 5
Audit Procedures - Compliance (Continued)
OMB Circular A-133 requires that we also plan and perform the audit to obtain reasonable assurance
about whether the auditee has complied with applicable laws and regulations and the provisions of
contracts and grant agreements applicable to major programs. Our procedures will consist of tests of
transactions and other applicable procedures described in the OMB Circular A-133 Compliance
Supplement for the types of compliance requirements that could have a direct and material effect on
each of the City's major programs. The purpose of these procedures will be to express an opinion on
the City's compliance with requirements applicable to each of its major programs in our report on
compliance issued pursuant to OMB Circular A-133.
Other Services
We will also assist in preparing the financial statements, schedule of expenditures of federal awards,
and related notes of the City in conformity with U.S. generally accepted accounting principles and
OMB Circular A-133 based on information provided by you. Theses nonaudit services do not
constitute an audit under Government Auditing Standards and such services will not be conducted in
accordance with Government Auditing Standards.
Management Responsibilities
Management is responsible for (1) establishing and maintaining effective internal controls, including
internal controls over compliance, and for evaluating and monitoring ongoing activities, to help ensure
that appropriate goals and objectives are met; (2) following laws and regulations; (3) ensuring that
there is reasonable assurance that government programs are administered in compliance with
compliance requirements; and (4) ensuring that management and financial information is reliable and
properly reported. Management is also responsible for implementing systems designed to achieve
compliance with applicable laws, regulations, contracts, and grant agreements. You are also
responsible for the selection and application of accounting principles; for the preparation and fair
presentation of the financial statements, schedule of expenditures of federal awards, and all accompany
information in conformity with U.S. generally accepted accounting principles; and for compliance with
applicable laws and regulations and the provisions of contracts and grant agreements.
Management is also responsible for malting all financial records and related information available to us
and for the accuracy and completeness of that information. You are also responsible for providing us
with (1) access to all information of which you are aware that is relevant to the preparation and fair
presentation of the financial statements, (2) additional information that we may request for the purpose
of the audit, and (3) unrestricted access to persons within the government from whom we determine it
necessary to obtain audit evidence.
Your responsibilities also include identifying significant vendor relationships in which the vendor has
responsibility for program compliance and for the accuracy and completeness of that information.
Your responsibilities include adjusting the financial statements to correct material misstatements and
confirming to us in the management representation letter that the effects of any uncorrected
misstatements aggregated by us during the current engagement and pertaining to the latest period
presented are immaterial, both individually and in the aggregate, to the financial statements taken as a
whole.
C. I
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
February 1, 2016
Page 6
Management Responsibilities (Continued)
You are responsible for the design and implementation of programs and controls to prevent and detect
fraud, and for informing us about all known or suspected fraud affecting the government involving
(1) management, (2) employees who have significant roles in internal control, and (3) others where the
fraud could have a material effect on the financial statements. Your responsibilities include informing
us of your knowledge of any allegations of fraud or suspected fraud affecting the government received
in communications from employees, former employees, grantors, regulators, or others. In addition,
you are responsible for identifying and ensuring that the City complies with applicable laws,
regulations, contracts, agreements, and grants. Management is also responsible for taking timely and
appropriate steps to remedy fraud and noncompliance with provisions of laws, regulations, contracts,
and grant agreements, or abuse that we report. Additionally, as required by OMB Circular A-133, it is
management's responsibility to follow up and take corrective action on reported audit findings and to
prepare a summary schedule of prior audit findings and a corrective action plan. The summary
schedule of prior audit findings should be available for our review.
You are responsible for identifying all federal awards received and understanding and complying with
the compliance requirements and for the preparation of the schedule of expenditures of federal awards
(including notes and noncash assistance received) in conformity with OMB Circular A-133. You
agree to include our report on the schedule of expenditures of federal awards in any document that
contains and indicates that we have reported on the schedule of expenditures of federal awards. You
also agree to make the audited financial statements readily available to intended users of the schedule
of expenditures of federal awards no later than the date the schedule of expenditures of federal awards
is issued with our report thereon. Your responsibilities include acknowledging to us in the written
representation letter that (1) you are responsible for presentation of the schedule of expenditures of
federal awards in accordance with OMB Circular A-133; (2) you believe the schedule of expenditures
of federal awards, including its form and content, is fairly presented in accordance with
OMB Circular A-133; (3) the methods of measurement or presentation have not changed from those
used in the prior period (or, if they have changed, the reasons for such changes); and (4) you have
disclosed to us any significant assumptions or interpretations underlying the measurement or
presentation of the schedule of expenditures of federal awards.
You are also responsible for the preparation of the other supplementary information, which we have
been engaged to report on, in conformity with U.S. generally accepted accounting principles (GAAP).
You agree to include our report on the supplementary information in any document that contains and
indicates that we have reported on the supplementary information. You also agree to make the audited
financial statements readily available to users of the supplementary information no later than the date
the supplementary information is issued with our report thereon. Your responsibilities include
acknowledging to us in the written representation letter that (1) you are responsible for presentation of
the supplementary information in accordance with GAAP; (2) you believe the supplementary
information, including its form and content, is fairly presented in accordance with GAAP; (3) the
methods of measurement or presentation have not changed from those used in the prior period (or, if
they have changed, the reasons for such changes); and (4) you have disclosed to us any significant
assumptions or interpretations underlying the measurement or presentation of the supplementary
information.
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
February 1, 2016
Page 7
Management Responsibilities (Continued)
Management is responsible for establishing and maintaining a process for tracking the status of audit
findings and recommendations. Management is also responsible for identifying and providing report
copies of previous financial audits, attestation engagements, performance audits, or other studies
related to the objectives discussed in the Audit Objectives section of this letter. This responsibility
includes relaying to us corrective actions taken to address significant findings and recommendations
resulting from those audits, attestation engagements, performance audits, or studies. You are also
responsible for providing management's views on our current findings, conclusions, and
recommendations, as well as your planned corrective actions, for the report, and for the timing and
format for providing that information.
You agree to assume all management responsibilities relating to the financial statements, schedule of
expenditures of federal awards, related notes, and any other nonaudit services we provide. You will be
required to acknowledge in the management representation letter our assistance with preparation of the
financial statements, schedule of expenditures of federal awards, and related notes prior to their
issuance and have accepted responsibility for them. Further, you agree to oversee the nonaudit
services by designating an individual, preferably from senior management, with suitable skill,
knowledge, or experience; evaluate the adequacy and results of those services; and accept
responsibility for them.
With regard to the electronic dissemination of audited financial statements, including financial
statements published electronically on your website, you understand that electronic sites are a means to
distribute information and, therefore, we are not required to read the information contained in these
sites or to consider the consistency of other information in the electronic site with the original
document.
Audit Administration, Fees and Other
Noted below is a listing of work required by City staff to assist in the audits.
1. Preparation of trial balances for all funds, after posting of all year-end journal entries.
2. Preparation of supporting schedules for all material balance sheet accounts, and selected
revenue and expenditure accounts.
3. Typing of all confirmation requests.
4. Pulling and refiling of all supporting documents required for audit verification.
We will comply with all other provisions of our technical and cost proposals dated March 27, 2012 and
the City's request for proposal and any additional agreements for professional services, which are
incorporated herein by reference.
i I Y
Mr. Stephen Dunivent, Interum Finance Director
City of Costa Mesa
February 1, 2016
Page 8
Audit Administration, Fees and Other (Continued)
Our maximum annual fees for the year ending June 30, 2016 are as follows:
City of Costa Mesa
Audit
$ 35,735
GASB 68
3,470
CAFR Preparation
5,610
Costa Mesa Public Financing Authority:
Audit and Financial Report
5,110
Costa Mesa Housing Authority:
Audit and Financial Report
6,715
Single Audit of Federal Grants
8,180
GANN Appropriation Limit
555
AB 2766 Audit
1,995
The maximum annual fees stipulated herein contemplate that conditions satisfactory to the normal
progress and completion of the examination will be encountered and the City accounting personnel
will furnish the agreed upon assistance in connection with the audit. However, if unusual
circumstances are encountered which male it necessary for us to do additional work; we shall report
such conditions to the responsible City officials and provide the City with an estimate of the additional
accounting fees involved.
At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection
Form that summarizes our audit findings. It is management's responsibility to submit the reporting
package (including financial statements, schedule of expenditures of federal awards, summary
schedule of prior audit findings, auditors' reports, and corrective action plan) along with the Data
Collection Form to the federal audit clearinghouse. We will coordinate with you the electronic
submission and certification. If applicable, we will provide copies of our report for you to include with
the reporting package you will submit to pass-through entities. The Data Collection Form and the
reporting package must be submitted within the earlier of 30 days after receipt of the auditors' reports
or nine months after the end of the audit period, unless a longer period is agreed to in advance by the
cognizant or oversight agency for audits.
The audit documentation for this engagement is the property of White Nelson Diehl Evans LLP and
constitutes confidential information. However, subject to applicable laws and regulations, audit
documentation and appropriate individuals will be made available upon request and in a timely manner
to grantor agencies or their designees, a federal agency providing direct or indirect funding, or the
U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit
findings, or to carry out oversight responsibilities. We will notify you of any such request. If
requested, access to such audit documentation will be provided under the supervision of White Nelson
Diehl Evans LLP personnel. Furthermore, upon request, we may provide copies of selected audit
documentation to the aforementioned parties. These parties may intend, or decide, to distribute the
copies or information contained therein to others, including other governmental agencies.
Mr. Stephen Dunivent, Interim Finance Director
City of Costa Mesa
February 1, 2016
Page 9
Audit Administration, Fees and Other (Continued)
In accordance with our firm's current record retention policy, all of your original records will be
returned to you at the conclusion of this engagement. Our audit documentation files will be kept for a
period of seven years after the issuance of the audit report. All other files will be kept for as long as
you retain us as your accountants. However, upon termination of our service, all records will be
destroyed after a period of seven years. Physical deterioration or catastrophic events may further
shorten the life of these records. The audit documentation files of our firm are not a substitute for your
original records.
Government Auditing Standards require that we provide you with a copy of our most recent external
peer review report and any letter of comment, and any subsequent peer review reports and letters of
comment received during the period of the contract. Our most recent peer review report accompanies
this letter.
We appreciate the opportunity to be of service to the City of Costa Mesa and believe this letter
accurately summarizes the significant terms of our engagement. If you have any questions, please let
us know. If you agree with the terms of our engagement as described in this letter, please sign the
enclosed copy and return it to us.
Very truly yours,
WHITE NELSON DIED. EVANS, LLP
✓\-) o 101'ti�
Nitin P. Patel, CPA
Engagement Partner
RESPONSE:
This letter correctly sets forth the understanding
of the City of Costa Mesa.
By
Title
Date