HomeMy WebLinkAbout03/03/1992, C-5 - INDEPENDENT AUDIT SERVICES 1111131111 1111 Cl O San LUIS 061S ATE ��
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COUNCIL AGEINMA REPORT
FROM: William C. Statler, Director of Finance
Prepared by: Carolyn Dominguez, Accounting Manager Co
SUBJECT: INDEPENDENT AUDIT SERVICES -
CAO RECOMMENDATION
Approve and authorize the Mayor to execute an agreement with KPMG Peat Marwick,
Certified Public Accountants, to provide annual financial statement audit services for City
operations for the fiscal year ended June 30, 1992 at a cost not to exceed $36,000, with
an option to extend services for one additional year.
DISCUSSION
Background
Section 810 of the City Charter requires an annual audit of the City's financial statements
by an independent certified public accountant. In 1987 the City entered into a five year
contract for auditing services with Peat Marwick which expired with the issuance of
audited financial statements for the fiscal year ended June 30, 1991. Upon completion
of the audit, Peat Marwick took the initiative to present to the City a proposed contract
for auditing services for subsequent fiscal periods (Attachment A). During the past five
years, the City has benefited from a positive professional relationship with Peat Marwick.
They have proved knowledgeable about the City's accounting system, as well as changes
in regulatory guidelines and technical issues related to municipal accounting and financial
reporting.
Why Continue to Contract with the Current Auditor?
As summarized below, retaining the current auditing firm will result in efficient utilization
of staff time and City fiscal resources while assuring that the City continues to receive
quality services and a competitive price:
■ Competitive Pricing. The proposed fees received from Peat Marwick are very
competitive. They have taken into consideration the City's economic and fiscal
situation and held the line on fee increases to very modest levels. It is our belief
that if the City did go out to bid with an RFP, it is very likely that Peat
Marwick's proposal would be the one accepted because it is priced so
competitively. Additionally, approving the contract with Peat Marwick will save
the City considerable time and resources in preparing an audit services RFP and
evaluating proposals.
■ Quality Service. Peat Marwick is one of the "Big Six" accounting firms with an
international reputation for excellence. Further they are recognized leaders in the
field of governmental accounting and financial reporting. With their assistance the
City has received national recognition for excellence in financial reporting. There
have been many significant changes in generally accepted accounting principles
over the past five years, and the City has been able to maintain its leadership in
4101ilgop city of san Lai s oBi spo
aiis COUNCIL AGENOA REPORT
this field by implementing these changes on a timely basis.
■ Effective Use of Resources. The Department of Finance has recently hired a new
Accounting Manager whose responsibilities include preparation of the
Comprehensive Annual Financial Report and coordination of the audit effort.
Contracting with a new auditing firm would require substantial staff time training
the new auditors on the City's accounting and internal control systems by an
individual who is still learning the complexities of the City's system.
What is the City's Policy Regarding Auditor Changes?
City policy does not require a minimum or maximum number of years for a contract
with an independent auditor. Although we believe it is desirable to periodically seek
proposals in order to ensure competitive pricing and services, we believe it is in the best
interests of the City to retain the current auditors for the coming year.
Is There Any Impact on Local Auditing Firms?
A government audit is one of the most difficult industry-specific audits undertaken by
public accounting firms. The requirements for proficiency in the field have become so
extensive that few qualified firms remain in the practice of offering governmental auditing
services. Not only must audit firms be knowledgeable of the private sector accounting
principles set forth by the Financial Accounting Standards Board (FASB), they must also
be knowledgeable about the principles established by the Government Accounting
Standards Board (GASB), which set additional accounting standards for state and local
governments. Although there are several firms in San Luis Obispo that could be
potentially capable of providing audit services to the City, currently they do not have a
municipal government practice. As such there are no qualified local auditing firms that
are sufficiently staffed to provide the requisite level of auditing services required by the
City of San Luis Obispo.
FISCAL IMPACT
The City has budgeted $36,800 for Fiscal Year 1992-93 in the 1991-93 Financial Plan.
As such, sufficient funds are available to fund the proposed services and fees.
ALTERNATIVES
■ Do not approved the contract with Peat Marwick and proceed with a Request for
Proposal (RFP) for auditing services. As noted above staff does not recommend
this alternative due to several key factors: quality of services provided by Peat
Marwick, competitive pricing, the cost of processing an RFP, and the inefficient
use of staff resources if the City engages new auditors as this time.
In the event that the Council decides to pursue an RFP process, it is
recommended that the Department of Finance be authorized to issue RFP's at this
time, and that the CAO be authorized to award a contract if the cost is equal to
or less than the fees proposed by Peat Marwick in their proposal letter of
January 21, 1992. — —�
1114JQWI§p city Of San L.Ais OBISPO
COUNCIL AGENDA REPORT
SUMMARY
In today's economic environment, the City is pursuing all avenues of the most efficient
use of our limited fiscal resources. By approving the contract with Peat Marwick, the City
will be utilizing budgeted funds in the most cost effective manner.
ATTACHMENTS
A. Proposal for Audit Services
B. Contract for Auditing Services
a:\audit92.car
C-S-
Peat Marwick
/00, Certified Public Accountants
725 South Figueroa Street Telephone 213 972 4000 Telefax 213 622 1217
Los Angeles, CA 90017 Telex 6831572 PMMLA
Cable Address VERITATEM
January 21,1992
Mr.William Statler
Director of Finance
City of San Luis Obispo
990 Palm Street
Post Office Box 8100
San Luis Obispo, California 93403
Dear Mr.Statler.
It was a pleasure to meet with you today to discuss KPMG Peat Marwick's continuation as
auditors for the San Luis Obispo. As you are well aware, we would very much like to
continue, what we believe to be, a most productive professional relationship from both the
standpoint of the City and that of Peat Marwick. We believe that there are several very sound
management reasons why we believe that the City should extend our professional services
contract.
Briefly stated, we believe that we have built up a very positive professional relationship with
. the City and its personnel during our term as auditors. During our appointment as your
auditors, the City has continued to progress in its financial reporting practices to the point that it
now routinely wins awards for financial reporting excellence, despite the implementation of
several very technical GASB pronouncements in recent years. Peat Marwick is very proud to
have contributed to this effort.
In addition, the City's participation, indeed lead role, in the Central Cities Joint Powers
Insurance Authority (JPA) has brought about even more complex accounting and auditing
issues for the City's finance staff to address in a timely fashion. The City has responded to this
challenge and has adopted the new GASB pronouncement concerning self insurance pools even
before the mandatory implementation date. Peat Marwick has been of assistance to the JPA,
almost from its inception. The City's officials can be assured that as new and more complex
financial issues confront the City, Peat Marwick will be there to assist in whatever way we can.
Since our initial appointment as the City's auditors,our own practice has expanded significantly
from serving approximately ten (10) governmental entities to serving almost fifty (50) cities,
counties and other units of local government. This growth has enabled us to provide our staff
with expanded technical training to serve our clients better. Further, despite our growth, we
have been able to continue to provide San Luis Obispo with highly qualified individuals who
can provide continuity in serving San Luis Obispo, as well as bring to the engagement valuable
specific experience with other governmental units. In addition, those new individuals.that we
have assigned to the engagement have provided us with the unique ability to develop a "fresh
look" to the City audit. This balance of experience, and "fresh look" should assure San Luis
Obispo's management that we can be both knowledgeable about the City's systems, while at
the same time providing new objective auditor input. We pledge to continue to provide San
Luis Obispo with this blend of individuals.
l
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'. .si'7...1:�.1�_ nymeld Peet Mack Gwdele,
APPIG-Peat Marwick
Mr.William Statler
City of San Luis Obispo
January 21, 1992
Page 2
There are several very real reasons why we believe that Peat Marwick is still the best firm to
suit San Luis Obispo's needs both now and in the future. A brief summary of these reasons is
as follows:
• Knowledge of the City's Financial Operations - As stated previously, we are the
single firm most familiar with the City's ongoing financial operations. Our audit
approach contemplates the continuation of our staff to assist in the City's own new
employee transition issues; accordingly,our audit programs and our personnel have
already been adapted to deal with the complexities of the City's accounting
operations. In short. the City will not have to train our Rmle; rather, we can
perhaps assist in the transition of the City's new accounting personnel to their
duties.
• Financing Matters - The City will, no doubt, be issuing new debt instruments to
finance future projects in the foreseeable future. The impact that association with a
national firm can have in both the planning and marketing of such instruments is
very pronounced. Underwriters, for example, would much rather have their clients '
be associated with an accounting firm with continuity on the engagement and a
national reputation rather than with a newly appointed firm because it makes their
job much easier. Rating agencies are also more comfortable with the known
quantities that a national firm can bring to the table.
• Financial Reporting Expertise rtise - As the firm with the single largest governmental
auditing practice in the Western United States, we can and do offer our clients more
in the way of financial reporting expertise than any of the competitors. (Our Los
Angeles office alone has the single largest municipal auditing practice in California-
-- more than twice as many municipal clients as the next two largest "Big 6" firms
have on a statewide basis). Most of our municipal clients have achieved recognition
for financial reporting excellence. Though size of a practice is not a judging criteria
in and of itself, it is certainly indicative of the high level of professional service that
we give our clients.
• Commitment to The City - Throughout our relationship, we have strived to deliver
the best possible professional service to the City, often performing more than our
contract called.for. We have been on hand to help out and pitch in to evaluate
matters of concern to the City that were beyond the scope of our audit and contract.
It would be our intention to continue to deliver the kind of special service this City
has come to expect.
Throughout our relationship with the City, we have strived to maintain our fee levels at
competitive levels. We believe that we have fulfilled this commitment. Our fees have remained
particularly constant throughout our relationship; we intend to continue this experience,despite
the rapidly changing economic conditions that our Firm and the City now face.
C-S-S
Peat Marwick
Mr.William Statler
City of San Luis Obispo
January 21, 1992
Page 3
Accordingly, we are prepared to commit to the following fee schedule for the next three years:
Central Transportation
Whale Rock Coast Cities Development
Year Qy Commission Insurance Fund Funds Total
1992 $32,000 2,000 8,000 2,000 44,000
1993 34,000 2,000 8,500 2,000 46,500
1994 34,000 23000 9,000 22000 47,000
In addition, the City may be the recipient of eligible Federal Funds during our tenure as
auditors. If the City is required to undergo a "Single Audit",we shall undertake the necessary
audit procedures and will prepare our mandated audit reports for a fee not to exceed$4,000.
. The fees we propose represent a slight increase over our prior rates. Such increase has been
occasioned by the following factors:
• Increased GASB financial reporting disclosures and Single Audit requirements.
Since our initial contract was entered into, GASB has promulgated over nine key
pronouncements. One of these pronouncements significantly altered the manner in
which the Central Coast Cities Insurance Fund presented its financial statements. In
addition, these pronouncements and enhancements have added several pages to the
City's CAFR and have simply required more audit time.
• Increased standard billing rates. As you are aware, our services are performed at a
substantial discount from our standard hourly rates. In some cases, these standard
rates have increased over 60% in the last six years. It should be noted that our fees
quoted above were calculated at rates that approximate the compounded general
inflation rate since our initial contract year.
• Increased scope of City activities. The City of San Luis Obispo is simply not a
static environment. Changes in the complexity of the City's transactions and
increases in transaction volume, all have a bearing on our audit work. While we
have been able to keep our fees constant, we can no longer continue to do so
without endangering the quality of the work the City has come to expect from Peat
Marwick.
Despite the increase, we believe these revised fees are very competitive. A quick survey of
comparable southern California Cities will quickly demonstrate that San Luis Obispo is still the
beneficiary of a very favorable audit costs.
AWNUPeat Marwick
Mr.William Statler
City of San Luis Obispo
January 21, 1992
Page 4
We greatly value the City's business. I hope that you give the foregoing qualitative elements of
our relationship your consideration. We very much appreciate our relationship with the City of
San Luis Obispo and we hope to continue such relationship into future years. We look forward
to discussing this letter in detail at your earliest convenience. Should you have any questions,
please do not hesitate to contact me.
Very truly yours,
KPMG M�
'6
Thomas W. Snow, Partner
TWS:lyh
C-s- 7
r AUDIT SERVICES AGREEMENT
This agreement, made this 3rd day of March, 1992, by and between the CITY
OF SAN LUIS OBISPO, California (hereinafter referred to as "City"), and KPMG PEAT
MARWICK, (hereinafter referred to as "Auditor").
WITNESSETH:
WHEREAS, City desires to retain certain services in conjunction with its annual
independent audit.
WHEREAS, City desires to engage Auditor to provide services by reason of its
qualifications and experience for performing such services, and Auditor has offered to
provide the required services on the terms and in the manner set forth herein.
NOW, THEREFORE, in consideration of their mutual covenants, the parties
hereto agree as follows:
1. PROJECT COORDINATION
a. j2iV. The Director of Finance shall be the representative of the City for
all purposes under this agreement. The Director, or the Director's
. designated representative, hereby is designated as the Project Manager for
the City. The Director or the Director's designated representative shall
supervise the progress and execution of this agreement.
b. Auditor. Auditor shall assign a single Project Manager to have overall
responsibility for the progress and execution of this agreement for
Consultant. Tom Snow is hereby designated as the Project Manager for
Auditor.
2. DUTIES OF AUDITOR
a. Services to be furnished. Auditor shall provide all specified services as
set forth in Exhibit "i" (Scope of Work) attached hereto and incorporated
herein by this reference. Auditor may not amend the Scope of Work,
either to modify provisions or to add or delete provisions, without prior
written consent of the City's Project Manager.
b. Ouality Control. All instruments of service shall reflect high standards of
professional research, analysis, and written and graphic communication.
The Director of Finance shall be responsible for evaluating the quality of
Auditor's work and for the issuance of payments upon satisfactory
completion, delivery, and City acceptance of work.
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C. Laws to be observed. Auditor shall: 1
(1) Keep itself fully informed of all existing and proposed federal, state
and local laws, ordinances, regulations, orders, and decrees which
may affect those engaged or employed under this agreement, any
materials used in Auditor's performance under this agreement or
the conduct of the services under this agreement; and the services
to be provided under this agreement.
(2) At all times observe and comply with, and cause all of its employees
to observe and comply with all of said laws, ordinances, regulations,
orders, and decrees mentioned above.
(3) Immediately report to the City's Project Manager in writing any
discrepancy or inconsistency it discovers in said laws, ordinances,
regulations, orders, and decrees mentioned above in relation to any
provisions of this agreement.
d. Release of reports and information. Any reports, information, data, or
other material given to, or prepared or assembled by, Auditor under this
agreement shall be the property of City and shall not be made available
to any individual or organization by Auditor without the prior written
approval of the City's Project Manager.
e. Copies of reRorts and information. If City requests additional copies of '
reports, or any other material in addition to what the Auditor is required
to furnish in limited quantities as part of the services under this agreement,
Auditor shall provide such additional copies as are requested, and City
shall compensate Auditor for the costs of duplicating of such copies at
Auditor's direct expense.
3. DUTTES OF CITY
City agrees to cooperate with Auditor in the completion of the work described in Exhibit
4. COMPENSATION
a. Compensation shall be provided consultant as shown on Exhibit 'T' --
Compensation Schedule.
b. Auditor will bill City as work progresses, but not more than once a month.
City will pay this invoice within 30 days of receipt provided there is no
dispute regarding successful completion of work. r
C. The Auditor may not charge more than the amount shown in Exhibit "1"
without prior written approval of the City's Project Manager.
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5. TIME OF COMPLETION OF THE WORK
a. Program scheduling shall follow that shown on Exhibit 'T' unless revisions
are approved by the City's Project Manager and the Auditor in writing.
b. Time extensions may be allowed for delays caused by City, other
governmental agencies, or factors not directly brought about by the
negligence or lack of due care on the part of the Auditor.
6. TEMPORARY SUSPENSION
The Director of Finance shall have the authority to suspend this agreement wholly or in
part, for such period as the Director deems necessary due to unfavorable conditions or
to the failure on the part of the Auditor to perform any provision of this agreement.
Auditor will be paid the compensation due and payable to the date of temporary
suspension.
7. SUSPENSION: TERMINATION
a. Right to suspend or terminate. The City retains the right to terminate this
agreement for any reason by notifying Auditor in writing seven days prior
to termination and by paying the compensation due and payable to the date
of termination; provided, however, if this agreement is terminated for fault
of Auditor, City shall be obligated to compensate Auditor only for that
portion of its services which are of benefit to City. Said compensation is
to be arrived at by mutual agreement of the City and Auditor and should
they fail to agree, then an independent arbitrator is to be appointed. and
the arbitrator's decision shall be binding upon the parties.
b. Return of materials. Upon such termination, Auditor shall turn over to .
the City immediately any and all copies of studies, computations, and other
data, whether or not completed, prepared by Auditor, and for which
Auditor has received reasonable compensation, or given to Auditor in
connection with this agreement. Such materials. shall become the
permanent property of City. Auditor, however, shall not be liable for City's
use of incomplete materials or for City's use of complete documents if used
for other than the services contemplated by this agreement.
8. INSPECTION
Auditor shall furnish City with every reasonable opportunity for City to ascertain that
the services of Auditor are being performed in accordance with the requirements and
intentions of this agreement. All work done and all materials furnished, if any, shall be
subject to the City's Project Manager's inspection and approval. The inspection of such
work shall not relieve Auditor of any of its obligations to fulfill its agreement as
prescribed.
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9. OWNERSHIP OF MATERIALS
All original documents and other materials prepared by or in possession of Auditor
pursuant to this agreement shall become the permanent property of the City, and shall
be delivered to the City upon demand.
10. INDEPENDENT JUDGMENT
Failure of City to agree with Auditor's independent findings, conclusions, or
recommendations, if -the same are called for under this agreement, on the basis of
differences in matters of judgment shall not be construed as a failure on the part of
Auditor to meet the requirements of this agreement.
11. ASSIGNMENT• SUBCONTRACTORS: EMPLOYEES
This agreement is for the performance of professional services to provide for the audit
of the City financial statements and is not assignable by the Auditor without prior
consent of the City in writing. The Auditor may employ other specialists to perform
special services as required with prior written approval by the City.
12. NOTICES
All notices hereinunder shall be given in writing and mailed, postage prepaid, by S
Certified Mail, addresses as follows:
To City: Pam Voges, City Clerk
City of San Luis Obispo
P.O. Box 8100
San Luis Obispo, CA 93403-8100
To Auditor: KPMG Peat Marwick
625 South Figuerora Street
Los Angeles, California 90017
Attention: Tom Snow
13. INTEREST OF AUDITOR
Auditor covenants that it presently has no interest, and shall not acquire any interest,
direct or indirect, financial or otherwise, which would conflict in any manner or degree
with the performance of the services hereunder. Auditor further covenants that, in the
performance of this agreement, no subcontractor or person having such an interest shall
be employed. Auditor certifies that no one who has or will have any financial interest
under this agreement is an officer or employee of City.
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•l.—r� II
14. AUDITOR AS INDEPENDENT CONTRACTOR
Auditor and City agree that Auditor is an independent contractor with respect to the
services provided pursuant to this agreement. Nothing in this agreement shall be
considered to create the relationship of employer and employee between parties.
15. INDEMNITY
Auditor hereby agrees to indemnify and hold harmless City, its officers, agents and
employees of and from:
a. Any and all claims and demands which may be made against City, its
officers, agents, or employees by reason of any injury to or death of any
person or corporation caused by any negligent act or omission of Auditor
under this agreement or of Auditor's employees or agents;
b. Any and all damage to or destruction of the property of City, its officers,
agents, or employees occupied or used by or in the care, custody, or control
of Auditor, or in proximity to the site of Auditor's work, caused by any
negligent act or omission of Auditor under this agreement or of Auditor's
employees or agents;
C. Any and all claims and demands which may be made against City, its
. officers, agents, or employees by reason of any injury to or death of or
damage suffered or sustained by any employee or agent of Auditor under
this agreement, however caused, excepting, however, any such claims and
demands which are the result of the negligence or willful misconduct of
City, its officers, agents, or employees;
d. Any and all claims and demands which may be made against City, its
officers, agents, or employees by reason of any infringement or alleged
infringement of any patent rights or claims caused by the use of any
apparatus, appliance, or materials furnished by Auditor under this
agreement; and
e. Any and all penalties imposed or damages sought on account of the
violation of any law or regulation or of any term or condition of any
permit, when said violation of any law or regulation or of any term or
condition of any permit is due to negligence on the part of the Auditor.
Auditor, at its own costs, expense, and risks, shall defend any and all suits, actions, or
other legal proceedings that may be brought against or for employees on any such claim
or demand of such third persons, or to enforce any such penalty, and pay and satisfy any
judgment or decree that may be rendered against City, its officers, agents, or employees
in any such suit, action or other legal proceeding, when same were due to negligence of
the Auditor.
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16. WORKERS COMPENSATION
Auditor certifies.that it is aware of the provisions of the Labor Code of the State of
California, which require every employer to be insured against liability for workers
compensation or to undertake self-insurance in accordance with the provisions of that
code, and it certifies that it will comply with such provisions before commencing the
performance of the work of this agreement.
17. INSURANCE
The Auditor shall provide proof of insurance and maintain insurance consistent with
Exhibit 2.
18. AGREEMENT BINDING
The terms, covenants, and conditions of this agreement shall apply to, and shall bind, the
heirs, successors, executors, administrators, assigns, and subcontractors of both parties.
19. WAIVERS
The waiver by either party of any breach or violation of any term, covenant, or condition
of this agreement or of any provision, ordinance, or law shall not be deemed to be a
waiver of any subsequent breach of violation of the same or of any other term, covenant,
condition, ordinance, or law. The subsequent acceptance by either parry of any fee or '
other money which may become due hereunder shall not be deemed to be a waiver of
any preceding breach or violation by the other party of any term, covenant, or condition
of this agreement or of any applicable law or ordinance.
20. COSTS AND ATTORNEY'S FEES
The prevailing party in any action between the parties to this agreement brought to
enforce the terms of this agreement or arising out of this agreement may recover its
reasonable costs and attorney's fees expended in connection with such an action from the
other parry.
21. DISCRIMINATION
No discrimination shall be made in the employment of persons under this agreement
because of the race, color, national origin, ancestry, religion or sex of such person. If
Auditor is found in violation of the nondiscrimination provisions of the State of
California Fair Employment Practices' Act or similar provisions of federal law or
executive order in the performance of this agreement, it shall thereby be found in
material breach of this agreement. Thereupon, City shall have the power to cancel or
suspend this agreement, in whole or in part, or to deduct from the amount payable to
Auditor the sum of Twenty-five Dollars ($25) for each person for each calendar day
during which such person was discriminated against, as damages for said breach of
contract, or both. Only a finding of the State of California Fair Employment Practices
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Commission or the equivalent federal agency or officer shall constitute evidence of a
violation of contract under this paragraph.
If Auditor is found in violation of the nondiscrimination provisions of this agreement
or the applicable affirmative action guidelines pertaining to this agreement, Auditor shall
be found in material breach of the agreement. Thereupon, City shall have the power
to cancel or suspend .this agreement, in whole or in part, or to deduct from the amount
payable to Auditor the sum of Two Hundred Fifty Dollars ($250) for each calendar day
during which Auditor is found to have been in such noncompliance as damages for said
breach of contract, or both.
22. AGREEMENT CONTAINS ALL UNDERSTANDINGS
This document represents the entire and integrated agreement between City and Auditor
and supersedes all prior negotiations, representations, or agreements, either written or
oral. This document may be amended only by written instrument, signed by both City
and Auditor. All provisions of this agreement are expressly made conditions. This
agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, City and Auditor have executed this agreement the day and
year first above written.
. CITY OF SAN LUIS OBISPO KP Mg PEAT �p�RWICK
By, v
Ron Dunin, Mayor Tom Snow, Partner
ATTEST
Pam Voges, City Clerk
OVED FORM
'tyAtt ey
APP AS CONTENT
Ci dministr Officer
Director of Finance
7
EXHIBIT 1
COMPENSATION AND WORK SCHEDULE
Maximum Completion
Scope of Work Compensation Schedule
Audit Report on General
Purpose Financial Statements.
for the Fiscal Year ended
June 30, 1992 Not to exceed $32,000 November 1, 1992
Single Audit Reports,
if required Not to exceed $4,000 November 1, 1992
Additional Audit Reports on:
Whale Rock Commission Not to exceed $2,000 December 1, 1992
Central Coast Cities
Insurance Fund Not to exceed $8,000 November 1, 1992
Transportation '
Development Act Funds Not to exceed $2,000 December 1, 1992
The maximum fee stipulated above contemplates that conditions satisfactory to . the
normal progress and completion of the examination will be encountered. The
Department of Finance staff and responsible management personnel will be available
during the audit to assist the Auditor by providing information, documentation and
explanations. The preparation of the confirmations, trial balances, and reconciling
schedules are the responsibility of the City. The Auditor is responsible for preparing
"camera-ready" Notes to the Financial Statement, preparation and presentation of a
management recommendation letter, and the independent auditor's opinion on the
general purpose financial statements with an "in-relation-to" opinion on the supplemental
schedules.
In the event that the City decides to extend the term of this agreement for one
additional year, the Compensation and Work Schedule will be as follows:
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• C-5- 15
Maximum Completion
Scope of Work Compensation Schedule
Audit Report on General
Purpose Financial Statements
for the Fiscal Year ended
June 30, 1993 Not to exceed $34,000 November 1, 1993
Single Audit Reports,
if required Not to exceed $4,000 November 1, 1993
Additional Audit Reports on:
Whale Rock Commission Not to exceed $2,000 December 1, 1993
Central Coast Cities
Insurance Fund Not to exceed $8,500 November 1, 1993
Transportation
Development Act Funds Not to exceed $2,000 December 1, 1993
a
• 9
EXHIBIT 2
INSURANCE REQUIREMENTS FOR CONSULTANTS
Consultant shall procure and maintain for the duration of the contract insurance against
claims for injuries to persons or damages to property which may arise from or in
connection with the performance of the work hereunder by the Consultant, his agents,
representatives, employees.
Minimum Scope of Insurance
Coverage shall be at least as broad as:
1. Insurance Services Office Commercial General Liability coverage (occurrence form
CG 0001).
2. Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile
Liability, code 1 (any auto).
3. Workers' Compensation insurance as required by the State of California and
Employers Liability Insurance.
4. Errors and Omissions Liability insurance as appropriate to the consultant's
profession.
Minimum Limits of Insurance
Consultant shall maintain limits no less than: '
1. General Liability: $1,000,000 per occurrence for bodily injury, personal injury, and
property damage. If Commercial General Liability or other form with a general
aggregate limit is used, either the general aggregate limit shall apply separately to
this project/location or the general aggregate limit shall be twice the required
occurrence limit.
2. Automobile Liability: $1,000,000 per accident for bodily injury and property damage.
3. Employer's Liability: $1,000,000 per accident for bodily injury or disease.
4. Errors and Omissions Liability: $1,000,000 per occurrence.
Deductibles and Self-Insured Retentions
Any deductibles or self-insured retentions must be declared to and approved by the City.
At the option of the City, either: the insurer shall reduce or eliminate such deductibles
or self-insured retentions as respects the City, its officers, officials, employees, and
volunteers; or the Consultant shall procure a bond guaranteeing payment of losses and
related investigations, claim administration and defense expenses.
Other Insurance Provisions
The general liability and automobile liability policies are to contain, or be endorsed to
contain, the following provisions:
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C-5-17
1. The City, its officers, officials, employees, agents, and volunteers are to be covered
as insureds as respects: liability arising out of activities performed by or on behalf
of the Consultant; products and completed operations of the Consultant; premises
owned, occupied, or used by the Consultant; or automobiles owned, leased , hired,
or borrowed by the Consultant. The coverage shall contain no special limitations on
the scope of protection afforded to the City, its officers, official, employees, agents
or volunteers.
2. For any claims related to this project, the Consultant's insurance coverage shall be
primary insurance as respects the City, its officers, officials, employees, agents, and
volunteers. Any insurance or self-insurance maintained by the City, its officers,
officials, employees, agents, or volunteers shall be excess of the Consultant's
insurance and shall not contribute with it.
3. Any failure to comply with reporting or other provisions of the policies including
breaches of warranties shall not affect coverage provided to the City, its officers,
officials, employees, agents, or volunteers.
4. The Consultants insurance shall apply separately to each insured against whom claim
is made or suit is brought, except with respect to the limits of the insurer's liability.
5. Each insurance policy required by this clause shall be endorsed. to state that
coverage shall not be suspended, voided, cancelled by either party, reduced in
coverage or in limits except after thirty (30). days' prior written notice by certified
mail, return receipt requested, has been given to the City.
Acceptability of Insurers
Insurance is to be place with insurers with a current A.M. Best's rating of no less than
A:VII.
Verification of Coverage
Consultant shall furnish the City with original endorsements effecting coverage required
by this clause. The endorsements are to be signed by a person authorized by that insurer
to bind coverage on its behalf. All endorsements are to be received and approved by the
City before work commences.
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