HomeMy WebLinkAboutVTD Proposal 1
Proposal to Provide
Professional Auditing Services
For the fiscal years ended
June 30, 2019 through June 30, 2023.
CITY OF S AN L UIS
O BISPO , CALIFORNIA
April 12, 2019
2
Submitted by:
Ahmad Gharaibeh, Partner
ag@vtdcpa.com
Vavrinek, Trine, Day & Co., LLP
260 Sheridan Ave, Suite 440
Palo Alto, CA 94306
P 650.462.0400
F 650.462.0500
W www.vtdcpa.com
Table of Contents
Transmittal Letter a
Section 1 – Independence, License to Practice, and Insurance
1. Independence 1
2. License to practice in California 1
3. Insurance 2
Section 2 – Firm Qualifications and Experience
1. General requirements 3
2. Qualifications and experience 5
Section 3 – Par tner, Supervisory and Staff Qualifications
1. Organizational Chart 6
2. Engagement Team 6
3. Organizational Resumes 7
4. Commitment to Consistent and Quality Staff and Backup Plan 13
Section 4 – Similar Engagements
1. Our Experience 14
2. Similar Services/References 15
Section 5 – Specific Audit Approach
1. Project Management 18
2. Complete Work Plan/Project Description 18
3. Proposed Audit Plan 19
4. Use of Computer Assisted Auditing Techniques Software in the Engagement 23
5. Engagement Timeline 23
Section 6 – Identification of Anticipated Potential Audit Problems
1. Relevant accounting issues 24
Section 7 – Appendix
1. Peer Review Report 25
2. District Required Forms 26
260 Sheridan Ave, Suite 440, Palo Alto, CA 94306 P 650.462.0400 F 650.462.0500 W vtdcpa.com a
April 12, 2019
Rico Pardo
Accounting Manager/ Controller
City of San Luis Obispo, CA
Dear Mr. Pardo,
We are pleased to respond to the Request for Proposal to provide professional auditing services for the City
of San Luis Obispo (City). Vavrinek, Trine, Day & Co., LLP (VTD) is a leading provider of auditing
services to cities, counties and special districts. We feel that VTD is the best selection for the City. This
proposal demonstrates our capability and commitment to serve.
As a leader in our industry, VTD ranks in the top 100 CPA firms in the nation. VTD is a member of the
American Institute of Certified Public Accountants (AICPA); participates in the AICPA's Major Firms
Group; is a member of the AICPA's Governmental Audit Quality Center (GAQC) and is registered with the
Public Companies Accounting Oversight Board. We are also active members in the Government Finance
Officers Association (GFOA) and several of our partners serve on the GFOA CAFR Special Review
Committee.
We are pleased to present our proposal to provide our services to the City:
• The audit team assigned to perform the audit are experienced CPA's who have provided audit
services to similar agencies. Our practice is dedicated to serving governmental agencies year round.
• Our team has extensive and specific continuing professional education (CPE) that is specific to
governmental audits.
• Our team has attended national training sessions led by the AICPA, OMB, GAO, and OIG relating
to all areas of governmental auditing.
• Our team has provided significant hours of "one on one" assistance relating to the implementation
of various GASB standards. In addition to the individualized services provided to our clients VTD
has provided several training sessions to industry groups regarding current GASB pronouncements
and single audit reporting requirements.
b
Our success has been driven by utilizing staff that is experienced and well trained in governmental
operations. We recognize that communication, expertise and audit approach are important factors to deliver
an effective audit. We have addressed each factor within our response.
As noted above, VTD is a specialist in providing governmental auditing services. Our experience includes
providing auditing services to over 300 governmental agencies; including but not limited to cities, counties,
transportation agencies, hospitals, water and sanitation districts and a variety of other governmental
agencies. We also rank among the top providers in the nation when auditing federal grants for the single
audit.
Other important aspects of our proposal include:
• The Partner and Manager will be proactive in working with the implementation of new accounting
and auditing standards.
• The Partner will ensure that all inquiries are responded to promptly.
• The use of portal technology to securely share documents.
VTD invests significant resources in our quality control program. This is evidenced by a fully staffed
quality control department; our QC Partner, Manager, and Supervisor have no client responsibilities and do
not have charge hour requirements. Important highlights of our QC process include:
• Conducting our annual (internal) peer review process: we require that outside (external) reviewers
participate as part of our annual peer review inspections.
• Coordinating the external peer review every 3 years.
• Overseeing the firm's risk assessment and client acceptance process.
• Ensuring adherence to independence requirements.
We hope that as you read through this proposal, you recognize the philosophy of our firm, which is to
provide each of our clients with exceptional service and experienced staff. Our dedication to quality,
professional standards, and service are unmatched in the industry.
Thank you for providing us the opportunity to present our proposal. Should you have any questions, please
feel free to contact Ahmad Gharaibeh, CPA, who is authorized to make representations and has contractual
responsibility on behalf of VTD. Mr. Gharaibeh may be reached at (650) 462-0400, or via email at
ag@vtdcpa.com. The mailing address which is detailed on the cover page can also be used for
correspondence. The offer is a firm, irrevocable offer for 120 days from the date of this proposal and all of
the information submitted is true and correct.
Very truly yours,
Ahmad Gharaibeh, Partner
of Vavrinek, Trine, Day & Co., LLP
2
S ECTION 1
Independence, License to Practice, and Insurance
1
Independence, and License to Practice
1. Independence
a. Independent Standards of the GAO Affirmation
The firm will not enter into any relationships that would impair our independence during the term of the contract if
awarded. VTD will not be using subcontractors to serve the City.
VTD maintains a separate Quality Control Department who oversees the independence of the firm’s professionals. We
have client acceptance procedures and annual independence verification procedures to ensure compliance with
professional standards.
b. Affirmative Statement
VTD is independent of the City, as defined by auditing standards generally accepted in the United States of America and
the U.S. General Accounting Office’s Governmental Auditing Standards.
VTD will have no conflict of interest with regard to any work performed for the aforementioned entities throughout the
duration of the audit work to be performed.
It is understood that the work to be performed by VTD is in the capacity of independen t contractors and not as an officer,
agent, or employee of the City.
2. License to practice in California
a. Licensed Certified Public Accountant Affirmation
Vavrinek, Trine, Day & Co., LLP is licensed to practice public accounting in the State of California and has complied
with all applicable California State Board of Accountancy requirements. In addition, all of the key professional staff that
will be assigned to the audit are also licensed to practice in the State of California and have complied with all applicable
State Board of Accountancy standards.
2
Insurance
3. Insurance
Vavrinek, Trine, Day & Co., LLP maintains professional, general liability, worker’s compensation and automobile
insurance at limits which minimally will meet those required by the City. All insurance will remain in effect through our
entire term as the City’s auditors.
2
S ECTION 2
Firm Qualifications and Experience
3
Firm Qualifications and Experience
1. General requirements
a. Firm’s Background
VAVRINEK, TRINE, DAY & CO., LLP – VTD
VTD was established in 1948. Our firm offers a full range of services for several different lines of
businesses throughout California. Proudly, our governmental practice is key to our firm's success. VTD
has experienced a solid 71 years of growth and commitment to client service. Now with over 40 partners
and over 300 professional staff, VTD is one of the top CPA firms in the western region.
VTD is ranked within the "top 100" CPA firms in the United States with a significant percentage of our
practice devoted to the governmental audit and consulting practice. VTD is a leader in providing audit,
consulting, and tax services to various industries including, but not limited to, large municipal and
regional governments, financial institutions, manufacturing, retail enterprises, and not-for-profit
corporations. As governmental auditing is our primary practice, we do not use governmental clients to fill
our down time. Our governmental audit and governmental consulting practices provide a year -round
client base for VTD.
VTD is organized into industry practice groups. In today's regulatory environment, it is necessary to
specialize in specific industry practice areas so that our clients are provided with the highest quality
service. In order to accomplish this, we have structured our firm with the following industry practice
groups:
State and Local Government
K-12 School Districts
Higher Education
Healthcare
Not-for-Profit
SEC/PCAOB
Tax Compliance
Manufacturing, Retail, and Distribution
Financial Services
4
Firm Qualifications and Experience
PROFESSIONAL ASSOCIA TIONS
We are members of the American Institute of Certified Public Accountants (AICPA), and we have
registered with the Public Companies Accounting Oversight Board (PCAOB). In addition, our firm is a
member of the AICPA's Governmental Audit Quality Center. Several of the fi rm's partners serve on
several audit and accounting subcommittees for CalCPA.
We are active members in the Governmental Finance Officers Association (GFOA) and attend training
seminars provided by GFOA. Several of our partners serve on the GFOA CAFR Special Review
Committee. We are also active members of the California Society of Municipal Finance Officers
(CSMFO).
b. Firm's Qualifications
QUALITY CONTROL
Our firm has a program of quality control to ensure that our engagements meet the standards of the
AICPA and Yellow Book, including qualifications, independence, due professional care, and quality
control. VTD has a full-time Quality Control Partner delegating the responsibility of implementing and
monitoring the firm's quality control policies and procedures. VTD also has a quality control committee
that meets regularly to discuss emerging issues and new professional pronouncements, which are then
communicated to our professional staff to ensure the firm has a working knowledge of professional
standards.
We have undergone voluntary, independent, external quality reviews (peer reviews). We received our
most recent peer review in 2018 for the 2017 year, at which time we received an unmodified opinion
regarding our audit and accounting practice. A copy is included as an Appendix Section. This peer
review included a review of specific government engagements. We also undergo periodic inspections by
the PCAOB.
5
Firm Qualifications and Experience
c. Assisting Local Governmental Units in Obtaining the Government Finance Officers
Association (GFOA) "Certificate of Achievement for Excellence in Financial
Reporting"
Many of our clients participate in the Government Finance Officers Association (GFOA) "Certificate of
Achievement for Excellence in Financial Reporting" program. VTD has demonstrated that we can meet
our client's expectations in regards to a quality product within GFOA requirements, and we have also
proven that we can meet or exceed all timelines established by our clients. We have prepared GFOA
award winning CAFRs for numerous clients.
d. Commitment to Diversity
VTD is an equal opportunity employer. Our staff represents a range of cultural and ethnic backgrounds
that provide for a world-view. The diversity of our workforce helps to improve our employee
satisfaction, productivity, and the retention of our staff. Our firm provides opportunities for advancement
to all staff demonstrating the skill, ability, and desire to succeed and advance their professional career
with us.
e. VTD Does Not Have a Record of Substandard Audit Work
VTD does not have a record of substandard audit work as a result of State or Federal Desk Reviews.
There have been no disciplinary actions from regulatory agencies or professional organizations nor do we
have any outstanding claim of substandard work or unsatisfactory performance pending with the State
Board of Accountancy or other professional organizations within the past five years.
2. Qualifications and experience
The state and local government practice group has over 150 professional staff that are devoted to audits
similar to the City on a full-time basis. Our Palo Alto office will have the primary responsibility of
servicing the City. Our Palo Alto office will employ no less than five full-time basis staff in performance
of this engagement. This will enable us to meet all of the requirements within a timely and professional
manner.
The engagement will be performed only by our staff, without the usage of subcontractors. See the
Appendix for our firm’s most recent external quality control review statement. Any additional
information needed can be furnished upon request.
6
S ECTION 3
Partner, Supervisory and Staf f Qualifications
6
Partner, Supervisory, and Staff
Qualifications
1. Organizational Chart
Ahmad Gharaibeh,
CPA,
Engagement Partner
Nathan Edelman, CPA,
Technical Review
Partner
Tomohito Oku,
CPA,
Manager
Joe Escobar,
CPA,
Supervisor
Other Seniors and
Staff
Roger Alfaro, CPA,
CITP
Quality Assurance
Partner
7
Partner, Supervisory, and Staff
Qualifications
2. Engagement Team
The engagement team for the proposed audit services will include:
Ahmad Gharaibeh, CPA, Partner – Mr. Gharaibeh will have the overall responsibility for the
audit and coordinate the execution of the audit plan as well as assisting in technical issues. Mr.
Gharaibeh has over 20 years of experience and is the managing partner of the Palo Alto Office.
Mr. Gharaibeh is also the lead partner on many of bay area cities.
Roger Alfaro, CPA, CITP, Partner – Mr. Alfaro has 20 years of experience serving local
governments and serves as Chair of the Firm's General Government Practice Group. Mr. Alfaro
will serve as quality assurance partner for the City's audit engagement. He will work with the
team to review the progress of the audit, assist in resolving technical issues and serve as an
additional resource to the City.
Nathan Edelman, CPA, Field Partner – With over 10 years of experience serving local
governments, Mr. Edelman will participate as a technical review partner. He will work with the
team assisting in technical issues including, but not limited to, upcoming GASB standards,
pension/OPEB matters and the Uniform Guidance.
Tomohito Oku, CPA, Audit Manager – Mr. Oku will serve as an audit project manager and
will participate in the day-to-day management and delivery of services to the City. The audit
project manager is responsible for planning the audit and assuring that the design of the audit plan
dictates the audit procedures we believe are necessary to accomplish our objectives. The audit
project manager will work closely with the City to ensure issues are identified and addressed and
that the delivery of services to the City is timely.
Joe Escobar, CPA, Audit Supervisor – Mr. Escobar will also serve as an additional experienced
resource and assist as needed in the supervision of staff and execution of the audit plan.
Other Seniors and Audit Associates – Additional seniors and audit associates to be assigned.
Firm's Management Support Personnel – Client technical questions are fielded by the
engagement team. In addition to the resources listed above, VTD has a dedicated quality control
division which assists the audit team in technical research on an as needed basis.
3. Organizational Resumes
While VTD has a team of over 150 auditors specializing in governmental audits, we have selected the
following team that we believe is best suited to provide timely, consistent and quality services to the City:
8
EXPERIENCE
Ahmad has been conducting audits of various governmental agencies
for over 20 years. His experience includes auditing Counties, Cities,
Transit, Health, Fire Protection, K-12, Community Colleges, Water,
Parks and Recreation and other municipalities. Many of those are
recipient of federal funding requiring a single audit.
Ahmad also acts as the quality control partner or concurring review
partner for many of the firm's largest governmental clients. Each of
these reviews includes the reporting requirements to obtain the
GFOA Certificate. He serves on the GFOA special review committee
reviewing CAFR’s for transit agencies from other states.
Ahmad’s experience includes auditing federal programs in excess of
a billion dollars including the federally funded projects of the
extension of BART to San Jose and the construction of the Transbay
Terminal Center. Ahmad is the managing partner of the Palo Alto
Office and is bay area’s lead partner on many of the governmental
audits including the following:
Ahmad Gharaibeh
CPA – Partner
AREAS OF SPECIALIZATION
Governmental Audits of Cities, Counties,
Redevelopment Agencies/Successor
Agencies, Public Utilities, Transportation
Agencies, Special Districts, Non-profits
PROFESSIONAL AFFILIATIONS
American Institute of Certifies Public
Accountants (AICPA)
California Society of Certifies Public
Accountants
GFOA Certification Program Special Review
Committee
EDUCATION
Masters of Accountancy
East Tennessee State University
CONTINUING EDUCATION
OMB Uniform Guidance Updates
Subrecipient monitoring and risk
assessment.
Fraud Training related to federal programs
Designing effective controls over federal
programs
LOCAL GOVERNMENTS
COUNTIES OTHER LOCAL GOVERNMENTS (cont.)
County of Solano Midpeninsula Open Space District
County of Sonoma Montara Sanitation District
County of San Joaquin Monterey Salinas Transit
CITIES Moraga Fire District
City of Concord Orange County Transportation Authority
City of Santa Cruz Peninsula Healthcare District
City of Capitola San Mateo County Transit District
City of Fairfield San Joaquin Regional Rail Commission
City of Temecula Santa Clara Open Space Authority
City of Whittier Santa Clara Valley Transportation Authority
City of Walnut Creek Santa Clara Valley Water District
Town of Hillsborough Sequoia Healthcare District
City of Monte Sereno Solano Transportation Authority
City of San Bruno Transbay Joint Powers Authority
OTHER LOCAL GOVERNMENTS Ventura County Transportation Commission
Golden Gate Bridge Highway District Victor Valley Transit Authority
Los Altos Hills Fire District Ventura County Transportation Commission
Marin Transportation Authority Yucaipa Valley Water District
9
EXPERIENCE
Roger has been conducting audits of governmental entities for nearly 20
years. He serves as the Chair of the Firm’s General Government Practice
Group and is a member of the Firm’s Quality Control Committee. He also
participates as a CAFR reviewer for the GFOA Certificate Program.
His extensive experience includes counties, cities, redevelopment
agencies/successor agencies, financing authorities, public utilities, transit
authorities and the single audit. He is a licensed CPA and Certified
Information Technology Professional (CITP). He has served as the lead
partner or concurring review partner for single audits and the audits of basic
financial statements for numerous local governments including:
Roger
Alfaro
CPA, CITP – Partner
AREAS OF SPECIALIZATION
Governmental Audits of Cities, Counties,
Redevelopment Agencies/Successor
Agencies, Public Utilities, Transportation
Agencies, Special Districts, Non-profits
PROFESSIONAL AFFILIATIONS
American Institute of Certifies Public
Accountants (AICPA)
California Society of Certifies Public
Accountants
Information Systems Audit and Control
Association (ISACA)
GFOA Certification Program Special Review
Committee
EDUCATION
Bachelor of Science – Business
Administration
California State University, San Bernardino
CONTINUING EDUCATION
Information Security Essentials for IT
Auditors
Cybersecurity Risks
Data Analytics and Computer Assisted
Audit Techniques (CAATs)
Audit Risk Assessment
GASB 74 and 75, and other GASB updates
Fraud Risk Assessment
Professional Conduct and Ethics
Revised Yellow Book Standards
Single Audits under Uniform Guidance
Internal control documentation and testing
Accounting and Auditing Updates
LOCAL GOVERNMENTS
Roger has advised and assisted many clients with disclosure and financial
reporting requirements pursuant to the GFOA certificate program. Many of
his clients served have reports prepared in compliance with the requirements
of this program, including the County of Sonoma, City of Temecula, City of
Whittier, Western Riverside Council of Governments, and Orange County
Transportation Authority (OCTA).
CITIES UTILITIES/JPA/SPECIAL DISTRICTS
City of Burbank Alameda County Transportation District
City of Camarillo Alameda County Transportation Improvement District
City of Foster City Arrowhead Regional Medical Center
City of Glendale Chino Valley Independent Fire District
City of Gonzales Glendale Water and Power
City of Indian Wells John Wayne Airport
City of Laguna Beach Moulton Niguel Water District
City of Laguna Niguel Omnitrans
City of Modesto Orange County Transportation Authority
City of Napa Riverside County Waste Management
City of Paramount Sacramento International Airport
City of Pleasanton San Bernardino County Transportation Authority
City of Rancho Mirage San Mateo County Transit District
City of Rancho Palos Verdes Santa Clara Valley Transportation Authority
City of Sacramento Southern California Associated Governments
City of Santa Clara Tri-City Mental Health
City of Santa Cruz Ventura County Air Pollution Control District
City of Temecula Ventura County Transportation Commission
City of Temple City Western Riverside Conservation Authority
City of Walnut Western Riverside Council of Governments
City of Walnut Creek Yucaipa Valley Water District
City of Whittier
FIRST 5 COMMISSIONS
COUNTIES First 5 Contra Costa
County of Orange First 5 Los Angeles
County of Placer First 5 Orange County
County of Riverside First 5 Placer
County of Sacramento First 5 Riverside
County of San Bernardino First 5 Sacramento
County of San Diego First 5 San Bernardino
County of Sonoma
County of Ventura
County of Yolo
10
Nathan Edelman
EXPERIENCE
Nathan is a California Certified Public Accountant and audit
partner in the Palo Alto office of Vavrinek, Trine, Day, & Co., LLP
(VTD) specializing in audits of local governments. Over the last
ten years, he has provided audit and accounting services to a
range of organizations focusing primarily on transportation
agencies, municipalities, school districts, and special districts in
the San Francisco Bay Area and throughout Northern California.
As a partner responsible for audits of governmental agencies,
Nathan has performed federal single audits of entities receiving
over one-hundred million dollars in federal grants. His single
audit experience includes audits of programs from the United
States Department of Transportation, the United States
Department of Education, and a variety of other federal agencies.
CPA – Partner
AREAS OF SPECIALIZATION
Governmental Audits of Cities, Counties,
Redevelopment Agencies/Successor Agencies,
Public Utilities, Transportation Agencies,
Special Districts, Non-profits
PROFESSIONAL AFFILIATIONS
American Institute of Certifies Public
Accountants (AICPA)
California Society of Certifies Public
Accountants
Advanced Single Audit Certificate from the
AICPA's Governmental Audit Quality Center
Association of Government Accountants,
Silicon Valley Chapter
GFOA Certification Program Special Review
Committee
EDUCATION
B.A. Business Management Economics
University of California, Santa Cruz
CONTINUING EDUCATION
Data Analytics and Computer Assisted Audit
Techniques (CAATs)
Audit Risk Assessment
GASB 74 and 75, and other GASB updates
Fraud Risk Assessment
Professional Conduct and Ethics
Revised Yellow Book Standards
Single Audits under Uniform Guidance
Internal control documentation and testing
Accounting and Auditing Updates
LOCAL GOVERNMENTS
Nathan has advised and assisted his clients with disclosures,
financial reporting, and compliance requirements according to
the Government Finance Officers Association Certificate Program.
Nathan participates in the American Institute of Certified Public
Accountants (AICPA), Government Finance Officers Association
(GFOA), California Society of Municipal Finance Officers
(CSMFO), and California Association of School Business Officials
(CASBO) annual conferences.
CITIES
City of San Bruno
City of Santa Cruz
City of Capitola
UTILITIES/JPA/SPECIAL DISTRICTS
Alameda County Transportation Commission
East Palo Alto Sanitary Districts
First 5 Marin Children and Families
Golden Gate Bridge Highway and Transportation Districts
Monterey Regional Waste Management District
Monterey Regional Water Pollution Control Agency
San Francisco County Transportation Authority
South Santa Clara County Fire District
Transbay Joint Powers Authority
SCHOOL DISTRICTS
Oakland Unified School District
Palo Alto Unified School District
Redwood City School District
San Francisco Unified School District
San Jose Unified School District
11
Tomo Oku
CPA – Audit Manager
AREAS OF SPECIALIZATION
Governmental Audits of Cities, Transportation
Agencies, K-12 School Districts, Water District,
Other Special Districts, Non-profits
PROFESSIONAL AFFILIATIONS
American Institute of Certifies Public
Accountants (AICPA)
California Society of Certifies Public
Accountants
EXPERIENCE
Tomo has experience in corporate finance for 3 years. Tomohito has been
conducting audits of various governmental agencies for over 5 years. His
experience includes auditing Cities, Special Districts, Water Districts, K-12
School Districts and other municipalities and Non-profit Organizations. Many
of those are recipient of federal funding requiring a single audit.
Tomo has also participated on several training sessions for governmental
audits of financial statements as well as single audits ensuring to retain the
knowledge of new audit and accounting updates.
Tomohito specializes in governmental audits of cities, special districts, school
districts and Single Audits under the Uniform Guidance for numerous local
governments including:
EDUCATION
Bachelor of Science – Accounting
San Jose State University, San Jose, California
CONTINUING EDUCATION
GASB 87 – Leasing, GASB 84 – Fiduciary
Activities and GASB 75/68 related to
pension and OPEB
OMB Uniform Guidance Updates
Subrecipient monitoring and risk assessment.
Fraud Training related to federal programs
Designing effective controls over federal
programs
CERTIFICATES
Certified Public Accountant (CPA)
AICPA Single Audit Certificate
LOCAL GOVERNMENTS
CITIES/TOWNS
SPECIAL DISTRICTS
City of Santa Cruz
Santa Clara Valley Water District
City of San Bruno
Moraga-Orinda Fire District
City of Capitola
Peninsula Healthcare District
Town of Hillsborough
Monterey Regional Waste Management
TRANSIT AGENCIES
K-12 SCHOOL DISTRICTS
Santa Clara Valley Transportation Authority (VTA)
San Francisco Unified School District
Golden Gate Bridge Highway District
San Jose Unified School District
San Mateo County Transit District (SamTrans)
Oakland Unified School District
Peninsula Corridor Joint Power Board (Caltrain)
Fremont Union High School District
San Mateo County Transportation Authority
Sunnyvale School District
Alameda County Transportation Commission
Transportation Authority of Marin
Solano Transportation Authority
Tomo provides valuable inputs to clients about various aspects of
accounting and reporting. Tomo is in charge of providing training to
staff within VTD including pensions, OPEB and other recent GASB
pronouncements. Tomo develops various templates including C alPERS
pension templates that are used by the entire firm. He is acquainted
with the application of various GASBs including OPEB, Leases and
Fiduciary reporting requirements.
12
Joe Escobar
CPA – Supervisor
EXPERIENCE
Joe is a California Certified Public Accountant and audit supervisor in
the Palo Alto office of Vavrinek, Trine, Day, & Co., LLP (VTD) specializing
in audits of local governments. Mr. Escobar has been conducting audits
and other assurance services for various governments and
governmental authorities over the last four years. His experience
includes transportation agencies, municipalities, school districts, and
special districts.
Mr. Escobar has assisted in the major steps of the audit process such as
planning, execution, review, and reporting. He has scheduled and led
entrance conferences, other audit conferences and developed Client
Participating Schedules. Mr. Escobar also has experience preparing
detailed internal control narratives and other auditing memorandums.
He has experience in reporting audit findings and offering
recommendations for the correction and improvement of operations.
Mr. Escobar has provided audit services to various municipalities
conducting single audits and audits of financial statements as listed
below
AREAS OF SPECIALIZATION
Governmental Audits of Cities, Counties,
Redevelopment Agencies/Successor Agencies,
Transportation Agencies, Special Districts,
PROFESSIONAL AFFILIATIONS
American Institute of Certifies Public
Accountants (AICPA)
California Society of Certifies Public
Accountants
EDUCATION
Masters of Accounting and Financial Mgmt.
Keller Graduate School of Mgmt., Fremont
Bachelor of Science – Business Administration
University of California, Riverside
CONTINUING EDUCATION
Audit Risk Assessment
GASB 67, 68, 74, and 75
COSO
LOCAL GOVERNMENTS
CITIES & TOWNS
City of Capitola
City of Monte Sereno
City of Santa Cruz
Town of Hillsborough
Town of Ross
TRANSIT AGENCIES
Marin Transportation Authority
San Francisco County Transportation Authority
San Mateo County Transit District
Solano Transportation Authority
UTILITIES/JPA/SPECIAL DISTRICTS
East Palo Alto Sanitary District
First 5 Marin Children and Families
Monterey Regional Waste Management District
Moraga-Orinda Fire District
Peninsula Healthcare District
Santa Clara Valley Water District
Sequoia Healthcare District
South Santa Clara County Fire District
13
4. Commitment to Consistent and Quality Staff and Backup Plan
We understand the City desires an audit firm that provides consistency with staff. VTD's philosophy is to
staff each of our audits with consistent staff in order to provide the most effective and efficient audit for
our clients. Engagement personnel may be changed if those personnel leave the firm, are promoted or are
assigned to a different office. Personnel may also be changed for other reasons with prior permission of
the City. In addition, VTD maintains a depth of resources to allow for transition of the partner, manager
and supervisor levels should the need arise.
VTD staff has also attended national training sessions, such as the annual AICPA National Governmental
Accounting and Auditing Update, so that all of the key staff assigned to the City's audit understand both
local as well as national trends and issues.
14
S ECTION 4
Similar Engagements
14
Similar Engagements
1. Our Experience
VTD's Government Practice Group has professionals that are fully devoted to audits similar to the City.
VTD provides services to over 300 governmental agencies. A summary of clients served includes, but is
not limited to:
CITIES COUNTY GOVERNMENTS WATER AGENCIES
City of Foster City County of Orange Monterey Regional Water Pollution Control Agency
City of Santa Cruz County of Placer Santa Clara Water District
City of Alameda County of Riverside Beaumont Cherry Valley Water District
City of Brentwood County of Sacramento Elsinore Valley Municipal Water District
City of Chico County of San Bernardino Helix Water District
City of Concord County of San Diego Montara Water and Sanitary District
City of Dana Point County of San Joaquin Municipal Water District of Orange County
City of Davis County of Sonoma Reclamation District #2035
City of Fairfield County of Ventura Sacramento County Water Agency
City of San Bruno County of Yolo Sacramento Groundwater Authority
City of Los Altos FIRST 5 COMMISSIONS Suisun-Solano Water Authority
City of Monte Sereno Contra Costa First 5 Commission Yolo-Davis Clean Water JPA
City of Napa First 5 Sacramento Yucaipa Valley Water District
City of Pleasanton Fresno First 5 Commission POWER AGENCIES
City of Roseville Los Angeles First 5 Commission Alameda Municipal Power
City of Sacramento Orange County Childrens & Families Commission Glendale Water and Power
City of San Leandro Riverside First 5 Commission Marin Energy Authority
City of San Ramon San Bernardino First 5 Commission Roseville Electric Utility
City of Santa Clara Sonoma First 5 Commission Silicon Valley Power
City of Saratoga Yolo First 5 Commission SEWER, SANITATION & FLOOD AGENCIES
City of Walnut Creek TRANSIT AGENCIES Alameda County Waste Management Authority
City of Folsom Santa Clara Valley Transportation Authority Bayshore Sanitary District
City of Glendale Solano County Transportation Authority Central Contra Costa Sanitary District
City of Gonzales Capital Southeast Connector JPA Central Marin Sanitation Agency
City of Greenfield High Desert Connector JPA Cupertino Sanitary District
City of Huntington Park Imperial County Local Transportation Authority Delta Diablo Sanitation District
City of Huntington Beach Imperial County Transportation Commission East Bay Discharge Authority
City of Indian Wells Omnitrans Fairfield-Suisun Sanitary District
City of Laguna Beach Orange County Transportation Authority Knights Landing Community Services District
City of Laguna Niguel Sacramento Area Council of Governments Madison Community Services District
City of Palmdale San Bernardino County Transportation Authority Orange County Waste & Recycling
City of Paramount San Joaquin Regional Rail Commission Oro Loma Sanitary District
City of Rancho Mirage SR 91 Express Lanes Riverside County Waste Management
City of Rancho Palos Verdes Ventura County Transportation Commission Ross Valley Sanitation District
City of Rohnert Park OTHER AGENCIES Sacramento Area Sewer District
City of San Jacinto Chino Valley Fire District Sacramento Regional County Sanitation District
City of Santa Clarita John Wayne Airport San Bernardino County Flood Control District
City of South Gate Riverside County Regional Conservation Authority Union Sanitary District
City of South Lake Tahoe Sacramento County Airport System Vallejo Sanitation and Flood Control District
City of Suisun City Sacramento Solid Waste Fund West Bay Sanitary District
City of Temecula Western Riverside Council of Governments West Valley Sanitation District
City of Temple City Yolo County Habitat JPA
City of Walnut Yolo Solano Air Quality District
City of Whittier East Bay Regional Park District
15
Similar Engagements
As we have noted, VTD has significant experience auditing municipal and special purpose governments.
The key components to our success include consistency of properly trained staff, assignment of staff with
experience, timely communication in all aspects of the audit, planning, and understanding how to
structure each audit to ensure efficiencies are achieved.
VTD's success in retaining our clients is due to our commitment to outstanding quality, timely completion
of work and our ability to retain key staff.
VTD is properly staffed and trained to perform the required services. Each of the key auditors
chosen to participate with the City audit have worked with similar entities. The City will not have to train
our audit team. Each of the auditors also have a detailed understanding of the interaction of different
internal control systems and the strict timelines that are required to complete each aspect of the audit.
VTD staff also attends national training sessions, such as the annual AICPA National Governmental
Accounting and Auditing Update, so that all of the key staff assigned to the City's audit understand both
local as well as national trends and issues.
VTD has a demonstrated capacity to perform the required services. We have managed our growth to
ensure that new clients receive experienced staff and quality audits. We also ensure that existing clients
do not experience a decline in service when new clients are added. To accomplish this VTD will only
propose on clients when key staff have been trained, possess on the job experience to act as the in charge
auditor, and when staffing levels allow for the addition of the new work. We are extremely confident that
all of our references will note that their service level has not diminished over the life of the contract.
VTD has reviewed the requirements of the City and determined that you will be properly serviced with
experienced and well trained staff. We have also determined that our staffing schedule allows for VTD to
meet and/or exceed all timelines as established in the request for proposal.
2. Description of work performed for other agencies with similar services/references
VTD has provided similar audit services for several other jurisdictions similar to that which is requested
by the City. We have provided a listing of governmental entities with various types of services performed
for each as follows:
City of Capitola
City of Santa Cruz
City of Fairfield
16
Similar Engagements
CITY OF CAPITOLA
Mr. Jim Malberg, Finance Director
420 Capitola Avenue
Capitola, CA 95010
(831) 475 -7300 x224
Email: jmalberg@ci.capitola.ca.us
Total Hours: 400 hours
Scope of Work
Comprehensive Annual Financial Report – GFOA Award
Single Audit
Measure D Sales Tax Audit
GANN Limit AUP
CITY OF SANTA CRUZ
Mr. Marcus Pimentel , Finance Director
809 Center Street
Santa Cruz, CA 95060
831.420.5055
Email: MPimentel@cityofsantacruz.com
Total Hours: 500
Scope of Work
Comprehensive Annual Financial Report – GFOA Award
Single Audit
Library Financial Statements
GANN Limit AUP
17
CITY OF FAIRFIELD
Mr. Mike Less, Accounting Manager
1000 Webster Street
Fairfield, CA 94533
(707) 428-7515
Email: mless@fairfield.ca.gov
Total Hours: 700 hours
Scope of Work
Comprehensive Annual Financial Report – GFOA Award
Single Audit Report
Fairfield and Suisun Transit Enterprise Fund
Solano County Animal Control Authority
Golf Course Agreed Upon Procedures
Sports Restaurants, Inc. Agreed Upon Procedures
GANN Limit Agreed Upon Procedures
HUD REAC
18
S ECTION 5
Specific Audit Approach
18
Specific Audit Approach
1. Project Management
The audits will be conducted in accordance with generally accepted auditing standards issued by the
American Institute of Certified Public Accountants (AICPA), Governmental Auditing Standards
published by the Comptroller General of the United States, and the requirements described in the 2 CFR
200 Uniform Grant Guidance.
VTD provides auditing services to over 300 governmental agencies. The key to our success is structuring
our audit teams with skillfully trained professionals who are dedicated to serving local government.
During the planning phase of the audit, VTD will work with the City to complete a matrix in order to map
out all of the significant dates for the provision of service including key contacts, fieldwork entrance and
exit dates, deliverable dates, report review dates, final due dates, and board presentation dates. By
preparing a comprehensive matrix for each report, all the information regarding the timing of the audits
and various projects is documented in one central location and is agreed upon between the auditor and the
City. The timeline will then only be modified through communication between VTD and the City.
2. Complete Work Plan/Project Description
OVERVIEW OF THE AUDI TS
As required by the Request for Proposal our audit plan covers the engagements for the City:
The audits will be conducted in accordance with generally accepted auditing standards issued by the
American Institute of Certified Public Accountants (AICPA), Government Auditing Standards published
by the Comptroller General of the United States, and the requirements described in the U.S. Office of
Management and Budget (OMB) Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance).
19
Listed below is the segmentation by stage and staff level :
Partner Manager
Supervisor/
Senior Staff Clerical Total
CAFR Prep, City Audit and GANN 48 113 73 125 26 385
Whale Rock Commission 8 10 10 10 5 43
Single Audit 8 10 10 10 5 43
Transportation Development Act 6 7 7 5 5 30
Totals 70 140 100 150 41 501
Pre-Audit
Planning Interim Audit Final Audit Total
CAFR Prep, City Audit and GANN 25 160 200 385
Whale Rock Commission 3 10 30 43
Single Audit 3 30 10 43
Transportation Development Act 2 18 10 30
Totals 33 218 250 501
3. Our Proposed Audit Plan
Our engagement approach for the City audit has detailed goals by which the engagement partner can
measure progress. Our audit plan includes frequent contact between the partners and the engagement
team to assure that objectives are attained according to the audit schedules and any problems are
communicated and dealt with on a timely basis. Our engagement approach benefits from our vast
experience working with governmental entities; we understand the key areas of risk over the financial and
accounting process. More importantly, the approach provides for a complete reassessment of the
management and control environment in each year's audit and thus is capable of responding to changes
and will ensure that deadlines are met in issuing the annual financial statements.
The key characteristics of our engagement approach are:
Knowledge of the City and similar entities. We have extensive experience auditing governmental
entities similar to the City. This experience enables us to perform a more efficient audit and
identify key audit risks.
Cost-effectiveness. Our experienced auditors' low percentage of turnover reduce your cost.
Timeliness. We take deadlines, both yours and ours, seriously.
Partner-manager involvement. Deciding on audit strategies requires seasoned judgment. Our
partners and managers have been heavily and continuously involved in governmental audits.
Furthermore, you will be able to consult with senior team members whenever needed throughout
the year. We are available during the year for any additional consultation that may arise and
specified in the request for proposal.
20
PROJECT MANAGEMENT – OVERALL AUDIT
Our audit plan for the scope for each of the fiscal years involves six (6) stages for each audit. These
stages are:
Stage 1, Planning
Stage 2, Risk Assessment
Stage 3, Preparation of the Overall Audit Plan
Stage 4, Conducting the Interim Audit
Stage 5, Conducting the Final Audit
Stage 6, Reporting
These stages will be applied to the City's CAFR audit as well as the other audits. The audit approach will
be tailored to the risk of each individual entity and the scale will also be adjusted as necessary to ensure
that each entity's financial statements are fairly stated.
Stage 1, Planning
VTD will meet with key staff to plan the audit services for the year. These meetings will discuss all audit
issues and the proposed interim work plan. During this phase, we will accomplish:
Identifying the key personnel and contacts in the Finance Department and other departments.
Identify the City's significant classes of transactions and business processes.
Obtain an understanding of audit risk areas.
Developing an understanding of unusual transactions or events that have occurred during the
fiscal year.
Formalizing logistics.
Finalizing the timeframes for interim fieldwork.
Stage 2, Risk Assessment
Based upon the information obtained in the planning meetings VTD will perform a risk assessment as
required by Statements on Auditing Standards (SAS) to be used in the preparation of the overall audit
plan. As part of this risk assessment we will perform the following:
Obtain an understanding of the City, its environment and its risks and material compliance
requirements. VTD will refer to the City's prior year Annual Financial Report, annual budget
document, municipal code/charter and other relevant documentation to assist with our
understanding of the City's business environment and risks. VTD will also conduct inquiries with
key individuals within the City who are responsible for executing the City's strategic plan.
21
Obtain an understanding of the City's internal controls. VTD will refer to the City's
organizational charts, budget, written policies and procedures, financial accounting systems to
assist with our understanding of internal controls. VTD will also perform inquiry, observation,
inspection, and walk-throughs of key internal controls to ensure these key controls are properly
designed and implemented. Key internal control cycles include:
Revenue
Collection/Billing
Procurement/Cash
Disbursements
Investment
Management
Debt Management
Financial Reporting
Year-end Closing
Budgeting
Risk Management
Human Resources/
Payroll/Pensions
IT Controls, related to
all aspects of the audit
User Access
Security
Backup and Recovery
Systems Interfaces
Fraud Prevention
Programs
Grants Management
Preliminary analytical review, determination of preliminary materiality levels.
Analysis of known misstatements, if any.
Consideration of risk of material misstatement at the individual account balance, class of
transactions and disclosure level.
Assessing the risks of material misstatement at both the financial statement and relevant assertion
levels.
Assess the risk of material noncompliance with laws and regulations that have a direct and
material effect on the financial statements.
Evaluation of the City's information technology and general information technology controls.
Stage 3, Preparation of the Overall Audit Plan
Once the planning and risk assessment processes are complete an overall audit plan will be prepared. The
plan will specify each audit task, staffing assignments, timelines, and due dates. The plan will also break
down the work assignments between interim and final audit timelines. The audit plan will include the
transaction cycles which have been selected for internal control testing and those for which only the
detailed walk through will be performed. We will also prepare the preliminary materiality guidelines, the
audit programs, including consideration of:
Identification of areas where special audit considerations are necessary.
Design of further audit procedures to reduce risk if considered necessary.
The development of expectations for analytical procedures, timelines, and assignment of all audit
responsibilities.
22
Stage 4, the Interim Audit
Our interim fieldwork dates will normally occur during the April - June timeframe. The specific weeks
will be determined during the planning meeting and preparation of the audit plan process. We will obtain
an understanding of the design and implementation of the financial reporting system to understand the
flow of information for:
Each class of transactions that is significant to the financial statements.
The procedures within both automated and manual systems, by which those transactions are
initiated, authorized, recorded, processed, and reported in the financial statements.
The related accounting records, whether in electronic or manual supporting information, and
specific accounts in the financial statements involved in initiating, authorizing, recording,
processing and reporting transactions.
How the information systems capture events and conditions other than classes of transactions that
are significant to the financial statements.
The financial reporting process used to prepare the City's financial statements, including
significant accounting estimates and disclosures.
Stage 5, the Final Audit
We will commence our final fieldwork as soon as City has sufficiently closed their accounting records.
We expect final fieldwork to take place during September.
During this phase, we will perform substantive audit procedures on the year -end statement of net position,
revenue and expense accounts. We will use a variety of audit procedures which may include outside
confirmations, statistical sampling, detailed testing of schedules, analytical review, inquiry, and
observation. During this phase we will draft the financial statements.
Stage 6, the Reporting Phase
At the end of the audit process we will meet with key staff to cover the following:
Discuss improvements for subsequent years audit plan.
Meet with the City Council to present the results of the audit.
We will prepare Draft Audit Reports with management letter comments to management prior to
the agreed upon issuance date.
We will prepare Final Draft Audit Reports and management letter comments for presentation to
the City prior to the agreed upon issuance date.
Significant deficiencies and material weaknesses (if any) identified during the course of the audit.
AU-C 265 requires written communication to management and those charged with governance,
of significant deficiencies or material weaknesses, identified during the audit.
Other matters that we believe to be of potential benefit to management of the City, such as
recommendations for operational or administrative efficiency, or for improving existing internal
controls.
23
COMMUNICATION
We do not believe in surprises. Although the reporting phase involves a recap of the process we will be
in constant communication regarding each aspect of the audit throughout the entire process. You will not
have any surprises at the end of the audit.
4. Use of Computer Assisted Auditing Techniques Software in the Engagement
The key members assigned to the City's engagement team are experienced in working with municipal
information systems such as SunGard, Oracle, PeopleSoft, IFAS, SAP, Great Plains, EDEN, Tyler
Technologies and HARRIS Utility Billing systems. Therefore, minimal time would be necessary to train
our team in how to most efficiently access the City's transactions and documents for the audit.
VTD will also be using electronic data processing software such as IDEA during the engagement.
5. Engagement Timeline
Audit Milestones CAFR Prep, City Audit and
GANNWhale Rock CommissionSingle AuditTransportation Development ActPlanning Meeting (Stage 1)May May May May
Audit Planning (Stage 2 and 3)June June June June
Interim Fieldwork (Stage 4)June June June June
Fiscal Year-End Work (End) (Stage 5)September September September September
Deliver Draft Auditor's Report (Stage 6)October October October October
24
S ECTION 6
Identification of Anticipated Potential Audit Problems
24
Identification of Anticipated Potential Audit Problems
1. Relevant accounting issues
We have however identified the following areas that we believe that we can be of assistance.
GASB Standard Implementations – Several new GASBs will be required to be implemented
during the contract term which includes the following:
GASB Statement No. 84 – Fiduciary Activities
GASB Statement No. 87 – Leases
APPROACH IN ADDRESSI NG NEW GASBS
The City will be required to implement various GASB statements during the term of the contract.
We understand that GASB implementations can be difficult and challenging. Therefore, we believe in
taking a team approach and performing proactive planning to ensure that new GASB Standards are
implemented timely and correctly. This starts during the planning and interim phase of the audit and
sitting down with management and discussing the potential impacts of the GASB standard and the
documentation and information needed to implement. We will assist throughout the process as needed in
providing technical guidance regarding the impacts of the change in standards to ensure new standards are
successfully captured in the financial statement.
24
S ECTION 7
Appendix
25
Peer Review Report
26
City Required Forms
Please see page 15 for a list of references.
Insurance Information
Firm Name Address Contact Phone A.M. Rating
Federal Insurance Company 3620 Birch Street, Newport
Beach, CA 92660
Integro USA Inc., dba: Integro
Insurance Brokers
Suzanne Posada
(949) 419-1644 A
EVEREST NATIONAL INSURANCE COMPANY 3620 Birch Street, Newport
Beach, CA 92660
Integro USA Inc., dba: Integro
Insurance Brokers
Suzanne Posada
(949) 419-1644 A
Navigators Insurance Company 3620 Birch Street, Newport
Beach, CA 92660
Integro USA Inc., dba: Integro
Insurance Brokers
Suzanne Posada
(949) 419-1644 A
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 FY2018-2019 FY2019-2020 FY2020-2021 FY2021-2022 FY2022-2023
General purpose financial statements $ 37,080 $ 37,822 $ 38,578 $ 39,350 $ 40,137
Compilation of CAFR 8,000 8,160 8,323 8,490 8,659
TDA financial audit and compliance report 3,470 3,539 3,610 3,682 3,756
Single Audit Act report 5,050 5,151 5,254 5,359 5,466
Whale Rock Commission report 5,050 5,151 5,254 5,359 5,466
Gann Limit report 500 510 520 531 541
TOTAL COSTS 59,150$ 60,333$ 61,540$ 62,770$ 64,026$
Name: Ahmad Gharaibeh Signature:
See next page for further details provided for rates by position, total hours and hours by
period.
27
Segmentation of the Hours
Partner Manager
Supervisor/
Senior Staff Clerical Total
CAFR Prep, City Audit and GANN 48 113 73 125 26 385
Whale Rock Commission 8 10 10 10 5 43
Single Audit 8 10 10 10 5 43
Transportation Development Act 6 7 7 5 5 30
Totals 70 140 100 150 41 501
Hours by Phase
Pre-Audit
Planning Interim Audit Final Audit Total
CAFR Prep, City Audit and GANN 25 160 200 385
Whale Rock Commission 3 10 30 43
Single Audit 3 30 10 43
Transportation Development Act 2 18 10 30
Totals 33 218 250 501
Hourly Rates
Standard Quoted
Hours Hourly Rates Hourly Rates Total
Partner 70.0 250$ 150$ 10,500$
Manager 140.0 180 140 19,600
Supervisory Staff 100.0 140 120 12,000
Staff 150.0 120 100 15,000
Other (Clerical)41.0 50 50 2,050
Sub-Total 501.0 59,150$
Out-of-Pocket Expenses Included in above rates -
Total All-Inclusive Maximum Price 59,150$
Rates by Partner, Specialist, Supervisory, and Staff Level Times Hours Anticipated
for Each
Entire Contract
28