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HomeMy WebLinkAboutLSL CPAProposal Presented to CITY OF SAN LUIS OBISPO REQUEST FOR PROPOSALS FOR PROFESSIONAL AUDITING SERVICES CONTACT PERSON: Kenneth A. Macias, D.P.A., M.B.A, CPA, Partner Ken.Macias@lslcpas.com (916) 503-9691 Ext. 310 2151 River Plaza, Suite 150 Sacramento, CA 95833 April 12, 2019 www.lslcpas.com TABLE OF CONTENTS TRANSMITTAL LETTER .......................................................................................................................................... 2 LICENSE TO PRACTICE IN CALIFORNIA .............................................................................................................. 3 INDEPENDENCE ...................................................................................................................................................... 3 FIRM QUALIFICATIONS AND EXPERIENCE ......................................................................................................... 3 Size of the Firm ...................................................................................................................................................... 3 Location of Offices .................................................................................................................................................. 3 Similar Engagements with Other Government Entities .......................................................................................... 3 GFOA Award Program ........................................................................................................................................... 4 Number of Professional Staff to be Employed on the Engagement ....................................................................... 4 External Quality Control Reviews ........................................................................................................................... 4 Desk Reviews/Disciplinary Action .......................................................................................................................... 4 Statement of Past Removal or Disqualification of Projects .................................................................................... 4 PARTNER, SUPERVISORY AND STAFF QUALIFICATIONS AND EXPERIENCE ............................................... 5 Key Personnel and Respective Responsibilities .................................................................................................... 5 Continuing Education ............................................................................................................................................. 5 Resumes ................................................................................................................................................................ 6 WORK PROGRAM .................................................................................................................................................. 12 Proposed Segmentation of the Engagement ....................................................................................................... 12 Propose Audit Schedule ....................................................................................................................................... 15 Level of Staff and Number of Hours to be Assigned ............................................................................................ 16 Schedule of Professional Fees & Expenses ........................................................................................................ 17 Auditor’s Standard Billing Rates ........................................................................................................................... 17 Provided by Client (PBC) List ............................................................................................................................... 18 SUBMITTAL FORMS .............................................................................................................................................. 20 1 www.lslcpas.com TRANSMITTAL LETTER April 12, 2019 City of San Luis Obispo Attention: Rico Pardo, Accounting Manager/Controller 990 Palm Street San Luis Obispo, CA 93401 LANCE, SOLL & LUNGHARD, LLP (LSL) is pleased to respond to your request for proposal for audit services. As a leader in the field of governmental accounting and auditing, we appreciate this opportunity to present our professional qualifications. Because of our extensive California city government experience, dedication to excellence and determination to retain the brightest talent, we hope you find that LSL is the most qualified accounting firm to provide professional audit services to the City of San Luis Obispo (City). Members of our team have extensive experience providing auditing services for cities, counties, and special- purpose government agencies. In addition, we have provided seminars on GASB statement No.75, “Accounting and Financial Reporting” for post-employment benefits other than pensions (OPEB)”, and GASB statement No. 87, “Leases” and we are knowledgeable and ready to assist the authorities in implementing upcoming GASBs. Throughout the year and during the period of this engagement, we will be available for consultation on accounting and reporting matters related to new government accounting standards. We will also communicate periodically new state and national developments affecting municipal finance and reporting, standards and trends including changes in federal/state grant program accounting, and other reporting requirements. The City of San Luis Obispo (City) will receive each of the services required under section B of the RFP for five (5) years beginning with the fiscal year ending June 30, 2019, with the option to renew for three subsequent fiscal years. We are committed to providing the required services within the time requirements specified in section C of the RFP. Please know this is the Northern California LSL Office’s specialty, auditing and consulting small to medium size California cities. Our proposal is a firm and irrevocable offer for 60 days. As mentioned in the submittal forms attached to the end of this RFP, for purposes of this proposal, Kenneth A. Macias, Partner, is authorized to make representations for our firm. He can be reached at the address below or by phone at (916) 503-9691, or through email at ken.macias@lslcpas.com. Very Truly Yours, Kenneth A. Macias, D.P.A., M.B.A, CPA, Engagement Partner Lance, Soll & Lunghard, LLP 2151 River Plaza Dr., Suite 150, Sacramento, California 95833 2 www.lslcpas.com LICENSE TO PRACTICE IN CALIFORNIA LSL is a limited liability partnership and is not a wholly owned subsidiary of a parent company. LSL is a public accounting firm licensed by the State of California, Department of Consumer Affairs, as a Public Accounting Partnership. As a firm, we are members of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants. All key staff to be assigned to this engagement are or will be licensed by the State of California to practice as Certified Public Accountants. INDEPENDENCE We meet the independence requirements as defined by Government Auditing Standards for the City of San Luis Obispo. Our partners do not own any other business organization that has in the past, or will in the future, be providing services, supplies, materials or equipment to City of San Luis Obispo. We haven’t had any professional relationship with City of San Luis Obispo, any of its agencies or component units within the past five years. LSL will provide written notice of any reportable professional relationship entered into during the period of the proposed agreement. FIRM QUALIFICATIONS AND EXPERIENCE SIZE OF THE FIRM Our firm has approximately 115 employees including 17 partners and professional staff. Governmental staff consists of four partners, two senior managers, four managers, five supervisors, and ten seniors. All professional staff assigned to the proposed engagement work on a full-time basis. LOCATION OF OFFICES The audit for the City of San Luis Obispo will be staffed from our Sacramento office which is open during regular business hours. LSL has two other offices in Brea (Headquarters) and Santa Ana, California. LSL is a full-service accounting firm that provides audit, tax, accounting/bookkeeping and consulting services to a wide array of clients in the government and commercial industries. SIMILAR ENGAGEMENTS WITH OTHER GOVERNMENT ENTITIES Our activities overall cover auditing and attestation, business advisory, taxes and planning, and accounting and financial services. Approximately 30% of our practice deals with the government sector and related services. Generally, our government sector services break down into the following major classifications: compliance, performance, strategic planning and tax services. A listing of our references and the services provided for each is included in the attached submittal forms. 3 www.lslcpas.com FIRM QUALIFICATIONS AND EXPERIENCE (Continued) GFOA AWARD PROGRAM We prepare the financial statements and footnote disclosures in GASB 34 format for most of our clients that have received the GFOA award. All of our governmental partners, managers and seniors have been closely involved in the preparation of these reports. NUMBER OF PROFESSIONAL STAFF TO BE EMPLOYED ON THE ENGAGEMENT The personnel assigned to this engagement will include an engagement partner (field partner), a concurring partner (quality control), audit senior manager (technical manager), audit manager (field manager), and a senior in-charge and two to three additional staff. All professional staff assigned to the proposed engagement work on a full-time basis. EXTERNAL QUALITY CONTROL REVIEWS We have participated in the peer review program since its inception. The most recent peer reviews were conducted by Sikich. All peer reviews covered governmental engagements. Our most recent peer review is dated October 26, 2016 and received a rating of Pass. DESK REVIEWS/DISCIPLINARY ACTION There have been no disciplinary actions against our organization since its inception. Our Single Audit reports are desk reviewed either by the Federal cognizant agency or the State Controller’s Office acting as the Oversight Agency. We have never had a report rejected by any of these agencies. In fact, we are highly regarded and recognized by the staff of the State Controller’s Office for top quality reports. STATEMENT OF PAST REMOVAL OR DISQUALIFICATION OF PROJECTS There have been no instances where LSL or any of our officers or employees ever been disqualified, removed, or otherwise prevented from bidding on, or completing a federal, state, or local government project because of the violation of law, a safety regulation, or for any other reason including, but not limited to financial difficulties, project delays, or disputes regarding work or product quality, and if so to explain the circumstances. 4 www.lslcpas.com PARTNER, MANAGER/SUPERVISOR AND STAFF QUALIFICATIONS AND EXPERIENCE KEY PERSONNEL AND RESPECTIVE RESPONSIBILITIES The individuals assigned have experience in performing the tasks for which they are responsible, as well as familiarity with all municipal accounting operations. In addition, each has developed extensive skills in a variety of other complementary subjects through their work with clients in other industries. Thus, the experience gained on previous assignments can be applied and tailored to the unique needs of your organization. LSL will not be subcontracting any portion of the audits of the City of San Luis Obispo. The partners at LSL are routinely an integral part of the audit process and will be overseeing and supervising staff personnel in the field. Resumes of the key personnel assigned are included on the following pages and list their governmental auditing experience, applicable continuing professional education for the past three years, and memberships in professional organizations relevant to the performance of the audit of the City of San Luis Obispo. Any changes in personnel at the in-charge level or above will be approved by the City of San Luis Obispo. LSL’s philosophy is to provide quality audit services with minimal disruption to City staff. Our focused efforts to obtain and retain quality staff have further enabled us to provide high level of services to our clients. CONTINUING EDUCATION As a firm policy, all professional government staff meet the requirement of 40 hours of continuing education every year, with at least 24 hours in governmental accounting and auditing in a two-year period. Our educational programs include training from CalCPA, AICPA, Government Audit Quality Center, and GFOA. Kenneth A. Macias, D.P.A, M.B.A, CPA Engagement Partner Deborah A. Harper, CPA Quality Assurance Partner Brandon T. Young, CPA Assurance Senior Manager Jocelyn Esparza, CPA Assurance Manager (Field Manager) 5 www.lslcpas.com ACHIEVEMENTS Ken Macias has over 38 years of extensive experience, including, all phases of external and internal auditing, accounting, evaluating internal controls, and providing performance audits for large, complex organizations. He founded and managed another large statewide government audit and consulting firm—Macias Gini & O’Connell, LLP (MGO). After leaving MGO’s partnership, he joined LSL to continue to serve government organizations and mentor staff. Ken is a well-respected member of the accounting profession who has earned national recognition. He has been appointed to several national and state accounting and auditing related positions including the prestigious AICPA Auditing Standards Board (ASB) and the AICPA Governance Council. Due to his involvement on various AICPA Board and Councils, he was named to the AICPA Board of Directors. As a former member of the AICPA State and Local Government Expert Panel, Ken was one of the contributors to the revised Audits of State and Local Government Units (The Audit Guide). He has also been an active member of an AICPA task force on performance auditing and program specific audits. He continues to serve on GASB Task Force projects. He served on the task force that ultimately issued GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. He also served on GASB’s Asset Impairment Advisory Committee. As a member of the ASB he was responsible for drafting and finalizing pronouncements, reports, studies, practice aids, etc., for all auditing standards. His active participation allows him to be at the forefront in understanding and establishing quality standards of reporting and auditing governmental entities and to be an effective liaison with the GASB, the GAO, the OMB, the State Controller’s Office, the AICPA, the CSCPAs, and other significant federal, state and local agencies. LICENSES Certified Public Accountant - California 1981 Certified Government Financial Manager -1996 Certified Global Management Accountant - 2014 KENNETH A. MACIAS, D.P.A, M.B.A., CPA ENGAGEMENT PARTNER 6 www.lslcpas.com Cities & Counties Served El Dorado County Orange County Placer County Sacramento County San Bernardino County San Mateo County Santa Clara County City of Los Angeles City of Oakland City of Sacramento City of San Diego City of San Jose City of Chino Hills City of Corona City of Bell City of Cypress City of Downey City of Fullerton Kenneth A. Macias, D.P.A., M.B.A., CPA, Engagement Partner (Continued) EDUCATION Doctorate in Public Administration (D.P.A.) - University of Southern California (USC) M.B.A. in Finance Golden Gate University, San Francisco Master of Public Administration (M.P.A.) in Management (USC) M.S. in Accountancy and Taxation from California State University, Sacramento (CSUS) B.S. Business Administration CONTINUING EDUCATION Total hours were 149 in last three years of which 78 were in governmental accounting and auditing subjects. Kenneth has met the Governmental Auditing Standards requirement for governmental CPE. MEMBERSHIPS Certified Public Accountant Certified Government Financial Manager (CGFM) by the AICPA Board of Directors AICPA Board of Directors (2011-2014) American Society for Public Administration American Institute of Certified Public Accountants Association of Government Accountants California Society of Certified Public Accountants Government Finance Officers’ Association Board Member, California Utilities Diversity Council, an advisory board to the California Public Utilities Commission Chair Emeritus California Hispanic Chambers of Commerce, a network of 65 local chambers with over 700,000 Hispanic businesses Ken has provided all professional services to government organizations during his long, distinguished career. Enterprise Governments California Public Employers’ Retirement System (CalPERS) California State Teachers’ Retirement System (CalSTRS) Oakland International Airport Golden Gate Bridge Los Angeles International Airport Los Angeles County Metropolitan Transportation Authority Port of Oakland Central Valley Water District Golden State Water (Private Company) Del Oro Water Company (Private) Georgetown Divide Utilities District 7 www.lslcpas.com ACHIEVEMENTS Deborah was accepted as a 2015 and 2016 executive committee member of the AICPA Government Audit Quality Center, which is a national division for governments. As an executive board member, Deborah participates in the development, review, and first-hand discussion of new standards and guidance published in the AICPA Audit Guides which is provided to audit firms across the country. In 2017, Deborah also accepted participation in the GASB Research Note Disclosure Reexamination Roundtable. Deborah leads the Lance, Soll & Lunghard, LLP training program and serves as the firm Learning Director. LICENSE Certified Public Accountant - California 2005 CONTINUING EDUCATION Total hours were 132 in last three years of which 68 were in governmental accounting and auditing subjects. Deborah has met the Governmental Auditing Standards requirement for governmental CPE. MEMBERSHIPS California Society of Certified Public Accountants (CalCPA) American Institute of Certified Public Accountants (AICPA) California Society of Municipal Finance Officers, Associate Member (CSMFO) Government Finance Officers Association, Associate Member (GFOA) Governmental Accounting and Auditing Committee AICPA Government Audit Quality Center DEBORAH A. HARPER, CPA QUALITY ASSURANCE PARTNER 8 www.lslcpas.com Deborah A. Harper, CPA, Partner (Continued) EXPERIENCE Over eighteen years of experience in governmental audits. During her time with the firm, Deborah has performed all phases of our government audits and made numerous presentations to Boards of Directors and Audit Committees. She has been involved on the following similar engagements: This work entailed:  The preparation of the Comprehensive Annual Financial Report for those entities involved in the award programs of the California Society of Municipal Finance Officers and the Government Finance Officers Association of the United States and Canada.  Review the audit of these entities and provide technical assistance throughout the year to deliver the most up to date information with current GASB pronouncement.  Present the overall audit results to audit committees or other Board Members. EDUCATION Bachelor of Arts Degree in Business Administration with an emphasis in Accounting – California State University, Fullerton 2000 Cucamonga Valley Water District Coachella Valley Water District Inland Empire Utilities Agency City of Irvine City of Aliso Viejo City of Laguna Niguel City of Monrovia City of Orange City of Seal Beach City of Chino Hills City of Glendora City of Simi Valley City of Thousand Oaks City of Corona City of Diamond Bar City of Banning City of Claremont City of Brea City of Fullerton 9 www.lslcpas.com LICENSE Certified Public Accountant - California 2014 CONTINUING EDUCATION Total hours were 125 in last three years of which 74 were in governmental accounting and auditing subjects. Brandon has met the Governmental Auditing Standards requirement for governmental CPE. MEMBERSHIPS California Society of Certified Public Accountants (CalCPA) American Institute of Certified Public Accountants (AICPA) CalCPA State Governmental Accounting & Auditing Committee (GAA) California Society of Municipal Finance Officers (CSMFO) EXPERIENCE Brandon has quickly become a leader in our government department in his 7+ years with the firm. Brandon has performed and managed all phases of our government audits, including cities, special districts, CAFR audits, successor agency audits and Single Audits, as well as REAC Submissions and Reporting. He is also very involved in the firm trainning and mentorship program. He has been involved in the following governmental engagements: EDUCATION Bachelor of Arts Degree in Accounting – Magna Cum Laude – Vanguard University, 2012 BRANDON T. YOUNG, CPA ASSURANCE SENIOR MANAGER City of Galt City of Dixon City of Chula Vista City of Emeryville City of Coronado City of Rancho Cucamonga City of Santa Monica City of Santa Fe Springs City of Irvine City of Pasadena City of Laguna Niguel City of Indian Wells City of Brea City of Santa Barbara City of Yorba Linda City of Manhattan Beach City of Orange Union Sanitary District Cucamonga Valley Water District Orange County Water District San Diego County Water Authority Coachella Valley Water District Inland Empire Utilities Agency Three Valleys Municipal Water District Orange County Fire Authority Covered California 10 www.lslcpas.com LICENSE Certified Public Accountant – California 2017 CONTINUING EDUCATION Total hours were 132 in last three years of which 82 were in governmental accounting and auditing subjects. Jocelyn has met the Governmental Auditing Standards requirement for governmental CPE. MEMBERSHIPS California Society of Certified Public Accountants (CalCPA) California Society of Municipal Finance Officers (CSMFO) EXPERIENCE Jocelyn has progressed in an outstanding manner. During her time with the firm, Jocelyn has performed all phases of our government audits, including water districts, other special districts, CAFR audits, successor agency audits and Single Audits. She has been involved in the following municipal engagements: EDUCATION Bachelor of Arts Degree in Business Administration, Concentrations in Accounting & Information Systems – California State University, Fullerton, 2013 JOCELYN ESPARZA, CPA ASSURANCE MANAGER (Field Manager) City of Galt City of Dixon City of Pomona City of Thousand Oaks City of Downey City of Cathedral City City of Live Oak City of Santa Fe Springs City of Pasadena City of Bell City of Malibu City of Brea City of Rolling Hills City of Duarte City of Inglewood City of San Dimas City of Diamond Bar City of Manhattan Beach City of Emeryville Union Sanitary District Cucamonga Valley Water District Monterey Regional Water Pollution Control Agency Coachella Valley Water District San Juan Water District Three Valleys Municipal Water District Covered California 11 www.lslcpas.com WORK PROGRAM PROPOSED SEGMENTATION OF THE ENGAGEMENT The services will be divided into three segments: Segment 1 - Planning and Obtaining an Understanding: LSL will provide an annual audit communication letter, engagement letter, and Government Audit Quality Center Information letter. The audit communication letter is to be provided to the Governing Board. In addition, this can be communicated orally to the Governing Board or sub-committee, if requested. This communication will discuss the planning stages, the responsibilities of the Governing Board, Auditors, and Management, and provide an opportunity for communication with us as the auditors. LSL’s audit team will meet prior to our initial on-site visit to brainstorm and discuss economic conditions, industry elements, and new standards that will affect the City of San Luis Obispo. A trial balance is requested for our planning meeting to assist the LSL team in obtaining knowledge and preparing expectations for the audit year. We will compile a list of “Prepared by Client” (“PBC”) items based on our review of prior year financial statements and information gathered. This will be provided to the City of San Luis Obispo one month prior to our visit or earlier if requested. We operate on a paperless software system and provide a secured cloud-based portal for all clients. The City of San Luis Obispo will have its own folder which can be customized to organize, and upload requested schedules, support documents, etc. Segment 2 - Financial Audit Testing: Based on the information gathered each year thus far, we will utilize a customized audit program based on the risk assessment developed during our assessment of the City’s internal controls and government auditing standards. The primary benefit of a tailored program is a focused set of procedures to address relevant areas. We believe that this approach will be the most effective and efficient by linking financial statement assertions, audit objectives, and procedures that are basic to most governmental audit engagements and critical to the compliance with other material laws and regulations. We will annually compile another customized “Prepared by Client” (PBC) list for the year-end on- site visit provide at least one month prior or earlier if requested. We will request a trial balance for our analytical review to be provided one week prior to our arrival. Year-end fieldwork will include testing of the balance sheet, revenue and expenditures accounts, confirmation of selected balances, analytical procedures, evaluation of the internal controls and preparation of reports and letters. Segment 3 - Conclusion: Based on our year-end exit meeting we will schedule a plan to finalize the CAFR in the timetable of the City. We will schedule dates for the initial and final drafts including time for the City review and approval of the financial statements. In addition, this will account for the review of the engagement partner and quality assurance partner. After the review and receipt of the signed Representation Letter from the City, we will provide the final Reports by December 1st each year. 12 www.lslcpas.com SAMPLE SIZE Our approach may be to utilize statistical sampling in the areas of receipts, disbursements, utility billing and payroll. Here we develop a statistical conclusion based upon an initial computer selected random sample which is based on the population and other risk factors identified. If errors are noted in the sample, the sample size will be expanded. We believe that a random selection can be efficient, while providing each item in the population an equal chance of being selected. Additionally, we may select a stratified sample of all transactions over a specified dollar limit for review. This allows us to cover all high dollar value transactions not otherwise selected in the random sample. Our samples are selected randomly utilizing IDEA data analysis software. ANALYTICAL PROCEDURES For the audits of the financial statements, we will use analytical procedures as an overall review of the financial information in the preliminary and final stages of the audits. These procedures are designed to assist us in planning our audits and in assessing the propriety of the conclusions reached, and in the evaluation of the overall financial statement presentation. The procedures to be utilized consist of determining expectations for changes to significant revenue, expenditure and balance sheet accounts, reading the financial statements and related notes, reviewing the budget and related material, and focusing on overall relationships within the financial statements. Once determined, these are reviewed to evaluate if the changes appear reasonable or require further analysis. For all significant differences, explanations are obtained as to why the situation occurred and additional substantive procedures may be applied and related evidence gathered to resolve concerns and questions. If the City of San Luis Obispo can provide a check register electronically for July 1st forward (period after the audit year), then we can pre-select our sample for accounts payable cut-off test work and provide that information ahead of time. Our PBC list will detail out schedules we would like provided, which is directed straight from the audit report. Support requested and sampling for these schedules will be assessed each year based on the strengths and weaknesses of the internal control processes of the City, and the materiality level of the account. We will discuss our analytical variances with the City and obtain documentation that provides support for the accounts. UNDERSTANDING OF THE CITY’S INTERNAL CONTROL STRUCTURE OVER FINANCIAL REPORTING To gain an understanding of the internal control structure over the financial statements, we will perform procedures as required by SAS 122-125. This will include review of internal controls in the areas of financial reporting; cash; revenues and receivables; expenditures and accounts payable; payroll; capital assets; long-term debt; or grant reporting, as applicable. Based on the result of our review, we will issue a management letter (SAS 115 Letter) that will identify any significant deficiencies and/or material weaknesses noted. This report is required by the Government Auditing Standards issued by the Comptroller General of the United States. Auditing Standards require auditors to obtain an understanding of the Entity and its Environment along with Assessing the Risks of Material Misstatements. LSL obtains an understanding through a variety of ways all throughout the year, but the most pertinent time each year is during our interim on-site visit. 13 www.lslcpas.com We will conduct interviews with management of finance along with each audit section responsible party (e.g. cashier, accounts payable clerk, payroll clerk, etc.) to review the processes and controls through observation and discussions. Based on our observations, we will sample as we observe a “walk- through” to verify the system of control is working in accordance with policies and procedures. We will provide a list each year of randomly selected employees of the City of San Luis Obispo to interview for fraud interviews (SAS 99), which will consist of all levels of the City across all departments. After our interim on-site visit, we will have an exit meeting to discuss potential weaknesses, if any, and provide any feedback for improvements or valuable information we have gathered from our outside clientele that would benefit the City of San Luis Obispo. DETERMINING LAWS AND REGULATIONS SUBJECT TO AUDIT TEST WORK The Laws and Regulations that will be subject to audit test work are determined from the applicable laws, regulations, contracts, and grant agreements which we identify through the understanding we obtain of the City of San Luis Obispo and our extensive experience with governmental entities. USE OF COMPUTER SOFTWARE IN THE ENGAGEMENT We use specialized auditing software to perform our audit in addition to Data Analysis Software to perform audit testing. We also use secure web portals to communicate information. DRAWING AUDIT SAMPLES For tests of controls, we use audit sampling. Tests of controls are procedures directed towards determining the effectiveness of the design or operation of an internal structure policy or procedures. Normally, audit sampling is used for tests of controls and tests of compliance that involve inspection of documents and reports indicating performance of the applicable policy or procedures and compliance with the applicable laws and regulations. These sampling procedures test the operating effectiveness of an internal control structure policy or procedures by determining how the policy or procedure was applied, the consistency with which it was applied during the audit period, and by whom it was applied. To achieve this goal, we will draw samples for disbursements, receipts and payroll when applicable. Each document selected will be tested for various attributes that are designed to verify compliance with different aspects of internal controls and applicable laws and regulations. Additionally, each sample item will be tested for coding to the proper accounts and posting to the general ledger. Sample sizes vary based on the population and risk-based calculations. QUALITY ASSURANCE POLICY AND PROCEDURES LSL has established strict review procedures to ensure quality reporting in accordance with the standards. These procedures are designed to maximize adherence to quality. 14 www.lslcpas.com Audit Planning – Entrance Conference followed by Interim Audit Visit (Schedule to be determined) Drafts of financial statements and all audit reports and recommendations to City management available for review no later than November 25th Final CAFR issued and provided to the City by mid-December Single Audit, Whale Rock Commission Report, and Management Letter final reports due by mid-December Year-end Fieldwork – The auditor shall schedule fieldwork to occur by the end of October The Exit Conference will be held on the last day of field work PROPOSED AUDIT SCHEDULE Note: In addition to the schedule listed above, LSL will meet with City staff on a quarterly basis to discuss analytics over quarter-end transaction balances and/or to discuss any changes that may impact the financial statements. Our proposed schedule for the annual audit is as follows: April / May May / June November December October / November 15 www.lslcpas.com LEVEL OF STAFF AND NUMBER OF HOURS TO BE ASSIGNED The level of staff assigned and the number of hours estimated to be spent on each proposed segment is as follows: Segment/Task Partners Manager Senior Staff Total City Audit & Related Reports Planning and Internal Control Evaluation 6 8 24 16 54 Financial Audit Testing 6 20 98 175 299 Conclusion 8 8 16 - 32 Subtotal 20 36 138 191 385 Transportation Development Act Report (If Required) Planning and Internal Control Evaluation - 1 4 1 6 Testwork - - 6 16 22 Report Preparation/Review/Supervision 1 1 3 - 5 Subtotal 1 2 13 17 33 Single Audit & Related Reports (If Required) Planning - 2 2 2 6 Compliance Testwork - - 12 32 44 Report Preparation/Review/Supervision 2 2 6 - 10 Subtotal 2 4 20 34 60 Whale Rock Commission Report Testwork - - 4 24 28 Report Preparation/Review/Supervision 1 4 4 - 9 Subtotal 1 4 8 24 37 GANN Limit Review Report Compliance Testwork - - - 2 2 Report Preparation/Review/Supervision 1 1 - 2 Subtotal - 1 1 2 4 Total Proposed Hours 24 47 180 268 519 Total Proposed Hours 16 www.lslcpas.com SCHEDULE OF PROFESSIONAL FEES AND EXPENSES AUDITOR’S STANDARD BILLING RATES LSL’s standard billing rates for any additional services throughout the contract are as follows: 48,070$ 49,031$ 50,012$ 51,012$ 52,032$ 53,073$ 54,134$ 55,217$ 3,945$ 4,024$ 4,104$ 4,186$ 4,270$ 4,355$ 4,442$ 4,531$ 7,140$ 7,283$ 7,429$ 7,578$ 7,730$ 7,885$ 8,043$ 8,204$ 4,360$ 4,447$ 4,536$ 4,627$ 4,720$ 4,814$ 4,910$ 5,008$ 495$ 505$ 515$ 525$ 536$ 547$ 558$ 569$ 64,010$ 65,290$ 66,596$ 67,928$ 69,288$ 70,674$ 72,087$ 73,529$ SERVICE TO BE PROVIDED 2018/19 2019/20 2020/21 2021/2022 2022/23 Option Year 2023/2024 Option Year 2024/25 Option Year 2025/26 City of San Luis Obispo Audit and Comprehensive Annual Financial Report TDA financial audit and compliance report Whale Rock Commission Report GANN Limit Review Report Total for Fiscal Year (Not to Exceed) Single Audit and Related Reports (if applicable) Partner 280$ 280$ 280$ 280$ 280$ 286$ 292$ 298$ Manager 170$ 170$ 170$ 170$ 170$ 173$ 176$ 180$ Supervisor 150$ 150$ 150$ 150$ 150$ 153$ 156$ 159$ Senior Accountant 125$ 125$ 125$ 125$ 125$ 128$ 131$ 134$ Staff Accountant 100$ 100$ 100$ 100$ 100$ 102$ 104$ 106$ Clerical 60$ 60$ 60$ 60$ 60$ 61$ 62$ 63$ POSITION 2018/19 2019/20 2020/21 2021/2022 2022/23 Option Year 2025/26 Option Year 2023/2024 Option Year 2024/25 17 www.lslcpas.com PROVIDED BY CLIENT LIST – YEAR-END FIELDWORK Item # Audit Area Description 1 General Final Trial Balance, Revenue & Expenditure Summary Reports in excel 2 General GL Detail from 7/1/18‐6/30/19 3 General Final amended budget in excel 4 General Please return signed Confirmations on the City's letterhead once received 5 Cash Copy of your latest investment policy, if a new one has been adopted since our interim fieldwork. 6Cash Bank, investment and fiscal agent account reconciliations and statements for June of the current audit year and July of the  following fiscal year.  7 Cash Copy of your GASB 31 adjustment (i.e., investments booked to fair value) and supporting schedules, if applicable. 8Cash Provide support for the classes of the investments in accordance with GASB 72 (Levels 1, 2, 3). For footnote purposes, we will   need to disclose the Inputs used to determine what Level the investment should be categorized in. You may need to inquire  with your custodian(s).  9A Revenue & Receivables Accounts receivable reconciliation/schedule for all funds. 9B Revenue & Receivables Accrued interest receivable reconciliation/schedule for all funds. 9C Revenue & Receivables Taxes receivable reconciliation/schedule for all funds. 9D Revenue & Receivables Grants receivable reconciliation/schedule for all funds (if one is prepared separate from accounts receivable) 9E Revenue & Receivables Notes and Loans receivable reconciliation/schedule for all funds 9F Revenue & Receivables Unavailable Revenue reconciliation/schedule 9G Revenue & Receivables Property tax analysis/reconciliation that ties to GL. 9H Revenue & Receivables Sales tax analysis/reconciliation that ties to GL. 10 Revenue & Receivables Number of business licenses issued for the current audit year. 11 Revenue & Receivables Number of building permits issued for the current audit year. 12 Revenue & Receivables Copy of Gas Tax Annual Confirmation from State used in preparing the Street Report 13 Utility Billing Adjustment report for the current audit year (reflects all manual adjustments made to customer accounts for the current  year) 14 Utility Billing Reconciliation of Utility Billing Accounts Receivable to the General Ledger for the month of June. 15 Utility Billing Unbilled receivable analysis/reconciliation: If done by the system automatically, provide a detail description of the  methodology used to calculate this accrual. If manually prepared, provide schedule with supporting documentation of  accrual, such as billing registers and journal entry. 16 Utility Billing Utility Deposits reconciliation from the utility billing software 17 Utility Billing # of Total Utility Billing Customers 18 Utility Billing AR aging report as of June 30 19 Prepaid Expenses Prepaid reconciliation/schedule for all funds. 20 Inventory Provide us with access to an inventory listing as of fiscal year end showing quantity on hand, unit costs and total inventory  valuation. If the listing does not agree to the general ledger, please provide us with an explanation of the variances. 21 Capital Assets Capital asset listing for year end.  (Similar to the footnote; The listing should be sub‐totaled by asset type and by  governmental and proprietary funds.) 22 Capital Assets Listing of capital asset additions and access to supporting documentation (e.g., invoices, calculations, etc.), subtotaled same  as above. 23 Capital Assets Listing of capital asset deletions and any adjustments; and access to supporting documentation (e.g., listing of surplus  equipment, Council minutes, information regarding sales proceeds, costs, accumulated depreciation, any gain or loss, etc.),  subtotaled same as above. (If CIP deletions include transfers out to capitalized assets, please identify total transfer amounts) 24 Capital Assets Depreciation reports showing depreciation expense for the year (by function) and the accumulated depreciation at year end  (by asset type), subtotaled same as above. 25 Capital Assets Listing of fully depreciated assets, with original cost of asset, as of 7/1/18 (or 6/30/18) 26 Capital Assets Listing of construction in progress additions and deletions. Please include date purchased and fund recorded in. 27 Payroll Payroll registers: last pay period in FY17/18 & first pay period in FY18/19 28 Payroll Leave benefits registers that support your compensated absences accrual calculations. Provide short and long term allocation  for compensated absences. Identify which functions (e.g., general government, public safety, etc.) the change in  compensated absences should be recorded to on the government‐wide statements. 29 Payroll PERS ‐ # of covered employees for PERS, by plan (safety, misc., etc), if City has different plans.  This is per City’s  payroll/benefits records NOT the actuarial. 30 Payroll Total pension expense by employee portion AND employer portion paid as of June 30th. 31 Payroll List of terminated employees for the current audit year and date of termination. 32 Payroll 941(Federal) and DE‐9(State) quarterly reports, and any applicable reconciliation to the G/L. 33 GASB 68 Pension expense by plan (employee vs. employer) & # of  employeees by plan 34 GASB 68 Covered/Pensionable Payroll for FY16/17, FY17/18, FY 18/19 35 GASB 68 GASB 68 Accounting Valuation Report with a measurement date of 6/30/18 YEAR‐END AUDIT PBC LIST YEAR ENDED JUNE 30, 2019 CITY OF SAN LUIS OBISPO 18 www.lslcpas.com PROVIDED BY CLIENT LIST – YEAR-END FIELDWORK (Continued) 36 GASB 68 Does the City intend to terminate any of the pension plans? 37 GASB 68 Please provide any recent pension plan amendments 38 GASB 68 Does the City have a Replacement Benefit Plan (IRC 415 (b))? (Meaning, the employee’s salary exceeds the maximum  allowance of the plan, and the Entity is just paying a check for the benefits separately in addition to the normal plan costs) 39 GASB 68 Do you have any assets that are being held specifically for pension benefit payments that are NOT in an irrevocable trust  fund?  If so, where are they held? (i.e. special revenue funds, City fund, etc.) 40 Purchasing/AP Check registers processed after 7/1/19 broken out by fund (if electronic payments are included on a separate register, please  provide this as well) 41A Purchasing/AP A/P reconciliation/schedule 41B Purchasing/AP Retentions Payable reconciliation/schedule (if applicable) 41C Purchasing/AP Deposit Payable reconciliation/schedule 41D Purchasing/AP Other Accrued Liabilities reconciliation/schedule 42 Purchasing/AP Please provide us with your “cut‐off” date used for recording your payables. 43 Encumbrances Listing of open purchase orders at year end. 44 Debt Schedule that identifies all long‐term debt items with the account numbers that are used for the principal and interest  payments for each debt item. Subtotaled by Governmental debt and Proprietary Funds. 45 Debt Listing of new bond issuances, and any bond defeasances (Please also include Official Statements) 46 Debt Lease agreements and amortization schedules for any new capital leases. 47 Debt Agreements and amortization schedules  for any new notes payable . 48 Debt A schedule that identifies any debt for which the City is not obligated (e.g., special assessment debt, CFD debt, mortgage  revenue bonds, etc.). Also provide us with the outstanding principal balances as of year end (for footnote disclosure). 49 Debt A schedule that identifies any defeased bond debt and the outstanding principal balances as of year end (for footnote  disclosure). 50 Debt For GASB #34 purposes, for any new debt that is issued, provide  us with a calculation that computes and amortizes issuance  costs, premiums/discounts and gains/losses on defeasances during the current year. 51 Debt Interest payable calculation 52 Fund Equity Supporting documentation for any adjustments to opening fund balance, if applicable 53 Fund Equity Fund balance schedule detailing unavailable, restricted, committed and assigned amounts  54 Fund Equity For the Committed amounts, please provide the appropriate Resolutions from the Council 55 Fund Equity For the assigned amounts, please have responsible official designated by Council sign the document indicating their  approval. 56 Insurance Footnote information specific to the City. 57 Grants/Single Audit Completed SEFA (Federal and Non‐Federal) 58 Grants/Single Audit For all Federal grants received during the fiscal year, provide us with copies of the applicable sections of the grant agreeme nt  and/or award letter that identifies the grantor name, grant name, award amount and period covered. 59 Grants/Single Audit Access to reimbursement requests, drawdowns and grant reconciliations. 60 Other Reconciliations and Analysis Provide a reconciliation of all transfers for the fiscal year (With a description of purpose for all transfers that involve a major  fund) 61 Other Reconciliations and Analysis Provide a reconciliation of due to/due from other funds (With a description of purpose for all due to/from's that involve a  major fund) 62 Other Reconciliations and Analysis Provide a reconciliation of advances to/from other funds and their purpose. Provide agreements/resolutions for any new  advances between component units and advances between funds. 63 Other Reconciliations and Analysis Explanations for any significant changes in revenues and expenditures from budget and prior year. 64 Other Reconciliations and Analysis Agency Funds ‐ Schedule of Additions and Deletions 65 GASB #34 Related Information If you prepare any GASB #34 related journal entries, provide us with copies of these entries and any supporting  documentation. 66 GASB #34 Related Information Provide us with an allocation of the internal service fund(s) e xcess surplus or deficit to governmental functions (e.g., general  government, public safety, etc.) and business activities, as applicable. 67 Financial Statement Disclosures Prior year GFOA comments, if applicable 68 Financial Statement Disclosures Listing of all related party transactions (please indicate any new related parties this fiscal year) 69A Financial Statement Disclosures  Please provide information on related party transactions that may include: Sale, purchase, exchange, or leasing of property. 69B Financial Statement Disclosures Please provide information on related party transactions that may include: Receiving or furnishing of goods, services, or  facilities 69C Financial Statement Disclosures Please provide information on  related party transactions that may include: Transfer or receipt of income or assets 69D Financial Statement Disclosures Please provide information on related party transactions that may include: Maintenance of bank balances as compensating  balances for the benefit of another 70 Financial Statement Disclosures Have any related parties been indebted to the City or had receivables from the City (not including advances with component  units)? 71 Commitments Please provide information on commitments that may include: Future purchases at specified prices or specified quantities,  Contracts for construction projects, Please provide a list of construction contracts over $150,000, including the contract  amount and total expenditures as of June 30, for governmental funds and a list of construction contracts for Enterprise Funds  that are over $300,000. (Please include original purchase orders as well as any change orders) 72 Commitments Commitments under operating leases 73 Commitments Contracts entered into with other governmental entities that require annual payments (eg. Metropolitain water, sewer,  similar projects) 74 Contingencies Please provide information on contingencies that may include: Significant claims that the governmental entity is responsible  for Termination benefits 75 Subsequent Events Please provide information on any redevelopment plan amendments 76A Subsequent Events Please provide information on subsequent events that may include: Long term debt issuance 76B Subsequent Events Please provide information on subsequent events that may include: Land purchases and sales 76C Subsequent Events Please provide information on subsequent events that may include: Settlement of litigation 76D Subsequent Events Please provide information on subsequent events that may include: Loans given out 19 City of San Luis Obispo Auditing Services SECTION I: PROPOSAL SUBMITTAL FORMS Consultants The undersigned declares that she or he has carefully examined this RFP, is thoroughly familiar with its contents; is authorized to represent the proposing firm; and agrees to perform the specified work for the following cost quoted in full: Description Cost General purpose financial statements TDA financial audit and compliance report Single Audit Act report Whale Rock Commission report Gann Limit report TOTAL COSTS $ ❑Certificate of insurance attached; insurance company’s A.M. Best rating: __________________. Firm Name and Address Contact Phone Signature of Authorized Representative Date Lance, Soll & Lunghard, LLP 2151 River Plaza Drive, Suite 150 Sacramento, CA 95833 Kenneth A. Macias (916) 503-9691 04/12/2019 $48,070.00* $3,945.00* $7,140.00* $4,360.00* $495.00* $64,010.00* *Cost is adjusted each year following fiscal year 2018-19 by 2% each year due inflation and other market conditions. 20 A (Excellent) DATE (MM/DD/YYYY)CERTIFICATE OF LIABILITY INSURANCE THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). CONTACTPRODUCERNAME: FAXPHONE (A/C, No):(A/C, No, Ext): E-MAIL ADDRESS: INSURER(S) AFFORDING COVERAGE NAIC # INSURER A : INSURED INSURER B : INSURER C : INSURER D : INSURER E : INSURER F : COVERAGES CERTIFICATE NUMBER:REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. ADDL SUBRINSR POLICY EFF POLICY EXPTYPE OF INSURANCE LIMITSPOLICY NUMBERLTR (MM/DD/YYYY) (MM/DD/YYYY)INSD WVD COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE $ DAMAGE TO RENTEDCLAIMS-MADE OCCUR $PREMISES (Ea occurrence) MED EXP (Any one person) $ PERSONAL & ADV INJURY $ GEN'L AGGREGATE LIMIT APPLIES PER:GENERAL AGGREGATE $ PRO-POLICY LOC PRODUCTS - COMP/OP AGG $JECT $OTHER: COMBINED SINGLE LIMITAUTOMOBILE LIABILITY $(Ea accident) BODILY INJURY (Per person) $ANY AUTO ALL OWNED SCHEDULED BODILY INJURY (Per accident) $AUTOS AUTOS NON-OWNED PROPERTY DAMAGE $HIRED AUTOS (Per accident)AUTOS $ UMBRELLA LIAB EACH OCCURRENCE $OCCUR EXCESS LIAB CLAIMS-MADE AGGREGATE $ $DED RETENTION $ PER OTH-WORKERS COMPENSATION STATUTE ERAND EMPLOYERS' LIABILITY Y / N ANY PROPRIETOR/PARTNER/EXECUTIVE E.L. EACH ACCIDENT $N / AOFFICER/MEMBER EXCLUDED? (Mandatory in NH)E.L. DISEASE - EA EMPLOYEE $ If yes, describe under E.L. DISEASE - POLICY LIMIT $DESCRIPTION OF OPERATIONS below DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required) CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. AUTHORIZED REPRESENTATIVE © 1988-2014 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORDACORD 25 (2014/01) LANCSO1 OP ID: JT 10/09/2018 Jose Tapia Liberty Mitchell & Mitchell 250 Bel Marin Keys E1 Novato, CA 94949 Gustavo Ruano 415-883-2525 415-883-7752 JTapia@MitchellAndMitchell.com Sentinel Insurance Company 11000 Continental Casualty CompanyLance, Soll & Lunghard, LLP 203 N Brea Blvd Ste 203 Brea, CA 92821-4056 A X 2,000,000 X X X 10/12/2018 10/12/2019 PER CLAIM 3,000,000 LIABILITY (E&O)AGGREGATE 3,000,000 INSURED 21 City of San Luis Obispo Specification No. 9xxxx REFERENCES Number of years engaged in providing the services included within the scope of the specifications under the present business name: . Describe fully the last three contracts performed by your firm that demonstrate your ability to provide the services included with the scope of the specifications. Attach additional pages if required. The City reserves the right to contact each of the references listed for additional information regarding your firm's qualifications. Reference No. 1: Agency Name Contact Name Telephone & Email Street Address City, State, Zip Code Description of services provided including contract amount, when provided and project outcome Reference No. 2: Agency Name Contact Name Telephone & Email Street Address City, State, Zip Code Description of services provided including contract amount, when provided and project outcome 90 years City of Camarillo Ms. Genie Rocha, Finance Director Ms. Susan Hsieh, Finance Director (805) 388-5320 601 Carmen Drive Camarillo, CA 93010 Audit and preparation of a Comprehensive Annual Financial Report (CAFR) which receives the GFOA award in addition to various compliance and single audits. These services have been provided for 2 years. Last audit performed was for June 30, 2018. Total hours were approximately 519. Engagement partner is Mrs. Deborah A. Harper and Engagement Manager is Mr. Brandon Young. City of Emeryville (510) 596-4352 1333 Park Avenue Emeryville, CA 94608 Audit and preparation of a Comprehensive Annual Financial Report (CAFR) which receives the GFOA award. In addition, we perform single audits, issue a report on the City’s appropriation limit, and perform compliance procedures over the City’s use and proper disposition of Measure B, BB and VRF funds. These services have been provided for over 10 years. Last audit performed was for June 30, 2018. Total hours were approximately 1,000. Quality Assurance partner is Mrs. Deborah A. Harper and Engagement Manager is Mr. Brandon Young. 22 City of San Luis Obispo Specification No. 9xxxx Reference No. 3 Agency Name Contact Name Telephone & Email Street Address City, State, Zip Code Description of services provided including contract amount, when provided and project outcome City of Galt Ms. Claire Tyson, Finance Director (209) 366-7145 380 Civic Drive Galt, CA 95632 Audit and preparation of a Comprehensive Annual Financial Report (CAFR) which receives the GFOA award in addition to various compliance and single audits. These services have been provided for 1 year. First year audit was performed for the year ended June 30, 2018, with a seamless transition as new auditors. Total hours were approximately 565. Engagement partner is Mr. Kenneth A. Macias and Engagement Manager is Mr. Brandon Young. 23 City of San Luis Obispo Specification No. 9xxxx STATEMENT OF PAST CONTRACT DISQUALIFICATIONS The proposer shall state whether it or any of its officers or employees who have a proprietary interest in it, has ever been disqualified, removed, or otherwise prevented from bidding on, or completing a federal, state, or local government project because of the violation of law, a safety regulation, or for any other reason, including but not limited to financial difficulties, project delays, or disputes regarding work or product quality, and if so to explain the circumstances. ◼Do you have any disqualification as described in the above paragraph to declare? Yes ❑ No ❑ ◼If yes, explain the circumstances. Executed on at _______________________________________ under penalty of perjury of the laws of the State of California, that the foregoing is true and correct. ______________________________________ Signature of Authorized Proposer Representative 04/12/2019 9:00 a.m. 24