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HomeMy WebLinkAboutDavis Farr LLP - 2016-11-07Dept. ID FN 16-013 Page 1 of 2 Meeting Date: 11/7/2016 ��• jovc� 6-0-1 ll CITY OF HUNTINGTON BEACH REQUEST FOR. CITY COUNCIL ACTION MEETING DATE: 11/7/2016 SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A. Wilson, City Manager PREPARED BY: Lori Ann Farrell Harrison, Chief Financial Officer SUBJECT: Approve and authorize execution of a Professional Services Contract with Davis Farr LLP in an amount not to exceed $144,900 over a 3 year period for financial audit services Statement of Issue: City Council approval is requested to authorize a three year professional services contract with Davis Farr LLP in the amount of $144,900 to perform financial audit services. Financial Impact: Sufficient appropriation is available in the Finance Department ($42,500 in business unit 10035205) and West Orange County Water Board Fund ($5,000 in business unit 50885101) for year one (Fiscal Year 2016/17) of the contract. Fiscal Years 2017/18 ($48,300) and 2018/19 ($49,100) will be budgeted accordingly to cover the cost of years two and three of the contract. The total three- year contract equals $144,900. Recommended Action: Approve and authorize the Mayor and City Clerk to execute the "Professional Services Contract Between the City of Huntington Beach and Davis Farr LLP for Financial Audit Services." Alternative Action(s): Do not approve the recommended action and direct staff accordingly. Analysis: The City of Huntington Beach is required by the City Charter to arrange for an independent audit of its financial statements each year. The City's current auditors are Vavrinek, Trine, Day & Co., LLC. This firm has audited the City for the past three fiscal years ending September 30, 2013, 2014, and 2015. The City generally seeks to rotate its auditing firm every three years to ensure proper checks and balances and a fresh review of the City's financial policies to promote continuous improvement and compliance with ever changing accounting rules. The current auditors, Vavrinek, Trine, Day & Co., LLC., were selected based on an open competitive Request for Proposals (RFP) process conducted three years ago in July 2013. The new recommended contract with Davis Farr LLP is for a financial audit of all funds of the City's reporting entity, a Single Audit Report of the City's federal grant programs, an AB 2766 Audit relating to the City's Air Quality Fund, and an audit of the West Orange County Water Board (WOCWB), a fiduciary fund of the City of Huntington Beach. The City Council will also receive a Item 10. - 1 HB -252- Dept. ID FN 16-013 Page 2 of 2 Meeting Date: 11/7/2016 Management Letter that will detail recommendations to improve the City's control and financial management. The audit is to be performed utilizing auditing standards generally accepted in the United States and Government Auditing Standards issued by the Comptroller of the United States. Staff sent out an RFP for financial audit services to prospective independent auditors who had requested to be on a bidders' list or were listed on the California Society of Municipal Finance Officers' website. In addition, the RFP was posted on the City's website. Eight proposals were received from Certified Public Accountant (CPA) firms. The auditing firms were asked to submit cost proposals for the fiscal years ending September 30, 2016, 2017, and 2018. Below is a summary of the total base fee proposed by the eight vendors for a three year contract: Audit Firms Year 1 Year 2 Year 3 Total* Patel & Associates, LLP 36,385 36,385 36,385 109,155 Badawi and Associates, CPAs 40,645 41,860 43,120 125,625 Eadie and Payne, LLP 45,000 45,000 45,000 135,000 The Pun Group, LLP 47,000 48,230 49,497 144,727 Davis Farr, LLP 47,500 48,300 49,100 144,900 Lance, Soll, & Lunghard, CPAs LLP 48,710 49,990 51,310 150,010 White Nelson Diehl Evans, LLP 61,490 63,215 64,990 189,695 Vavrinek, Trine, Day & Co., LLP 69,5751 69,5751 71,4521 210,602 " Cost proposals include the audit of four major federal grant programs. Staff analyzed and reviewed all eight proposals based on a variety of factors including, but not limited to the following: 1) The firm's references; 2) Responsiveness to the RFP; 3) Qualifications in performing audits for governmental entities of similar size and scope; 4) Experience with the implementation of complicated new accounting rules for public pensions including GASB 68; 5) The resumes and auditing expertise of key staff. As a result of this comprehensive review, staff is recommending the CPA firm of Davis Farr LLP as the most qualified firm to perform auditing services for the City of Huntington Beach given the size and complexity of the City's finances including its enterprise funds and operations, fiduciary funds, federal grants and programs, outstanding bond debt, unique plans to reduce unfunded liabilities (including the accounting treatment of the new Section 115 Trust) and overall financial structure. The following is a summary of Davis Farr LLP's cost proposal and the accounts in which the amounts are proposed to be charged: Account Year 1 Year 2 Year 3 Total* Finance Department (10035205.69300) 42,500 43,200 43,900 129,600 West Orange County Water Board (50885101.69345) 5,000 5,100 5,200 15,300 Total 47,500 48,300 49,100 144,900 Environmental Status: Not Applicable. Strategic Plan Goal: Strengthen Economic and Financial Sustainability. Attachment(s): 1. Professional Services Agreement with Davis Farr LLP to perform an audit of all funds of the City's reporting entity. 2. Certificate of Insurance. 3. Rating Sheets. IJB -253- Item 10. - 2 ATTACHMENT #1 PROFESSIONAL SERVICES CONTRACT BETWEEN THE CITY OF HUNTINGTON BEACH AND DAVIS FARR LLP FOR FINANCIAL AUDIT SERVICES THIS AGREEMENT ("Agreement") is made and entered into by and between the City of Huntington Beach, a municipal corporation of the State of California, hereinafter referred to as "CITY," and Davis Farr LLP, a California Limited Liability Partnership, hereinafter referred to as "CONSULTANT." WHEREAS, CITY desires to engage the services of a consultant to provide financial audit services; and Pursuant to documentation on file in the office of the City Clerk, the provisions of the Huntington Beach Municipal Code, Chapter 3.03, relating to procurement of professional service contracts have been complied with; and CONSULTANT has been selected to perform these services, NOW, THEREFORE, it is agreed by CITY and CONSULTANT as follows: SCOPE OF SERVICES CONSULTANT shall provide all services as described in Exhibit "A," which is attached hereto and incorporated into this Agreement by this reference. These services shall sometimes hereinafter be referred to as the "PROJECT." CONSULTANT hereby designates Jennifer Farr who shall represent it and be its sole contact and agent in all consultations with CITY during the performance of this Agreement. 2. CITY STAFF ASSISTANCE CITY shall assign a staff coordinator to work directly with CONSULTANT in the performance of this Agreement. agree/ surfnedprofessional svcs mayor I Of 11 10/12 16-5478/145288/DO 3. TERM; TIME OF PERFORMANCE Time is of the essence of this Agreement. The services of CONSULTANT are to commence on � 2016 (the "Commencement Date"). This Agreement shall automatically terminate three (3) years from the Commencement Date, unless extended or sooner terminated as provided herein. All tasks specified in Exhibit "A" shall be completed no later than three (3) years from the Commencement Date. The time for performance of the tasks identified in Exhibit "A" are generally to be shown in Exhibit "A." This schedule may be amended to benefit the PROJECT if mutually agreed to in writing by CITY and CONSULTANT. In the event the Commencement Date precedes the Effective Date, CONSULTANT shall be bound by all terms and conditions as provided herein. 4. COMPENSATION In consideration of the performance of the services described herein, CITY agrees to pay CONSULTANT on a time and materials basis at the rates specified in Exhibit "B," which is attached hereto and incorporated by reference into this Agreement, a fee, including all costs and expenses, not to exceed One Hundred Forty Four Thousand Nine Hundred Dollars ($144,900). 5. EXTRA WORK In the event CITY requires additional services not included in Exhibit "A" or changes in the scope of services described in Exhibit "A," CONSULTANT will undertake such work only after receiving written authorization from CITY. Additional compensation for such extra work shall be allowed only if the prior written approval of CITY is obtained. 6. METHOD OF PAYMENT CONSULTANT shall be paid pursuant to the terms of Exhibit "B." agree/ surfnet/professional Svcs mayor 2 of 11 10/ 12 16-5478/ 145288/DO 7. DISPOSITION OF PLANS, ESTIMATES AND OTHER DOCUMENTS CONSULTANT agrees that title to all materials prepared hereunder, including, without limitation, all original drawings, designs, reports, both field and office notices, calculations, computer code, language, data or programs, maps, memoranda, letters and other documents, shall belong to CITY, and CONSULTANT shall turn these materials over to CITY upon expiration or termination of this Agreement or upon PROJECT completion, whichever shall occur first. These materials may be used by CITY as it sees fit. 8. HOLD HARMLESS CONSULTANT hereby agrees to protect, defend, indemnify and hold harmless CITY, its officers, elected or appointed officials, employees, agents and volunteers from and against any and all claims, damages, losses, expenses, judgments, demands and defense costs (including, without limitation, costs and fees of litigation of every nature or liability of any kind or nature) arising out of or in connection with CONSULTANT's (or CONSULTANT's subcontractors, if any) negligent (or alleged negligent) performance of this Agreement or its failure to comply with any of its obligations contained in this Agreement by CONSULTANT, its officers, agents or employees except such loss or damage which was caused by the sole negligence or willful misconduct of CITY. CONSULTANT will conduct all defense at its sole cost and expense and CITY shall approve selection of CONSULTANT's counsel. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be provided by CONSULTANT. 9. PROFESSIONAL LIABILITY INSURANCE CONSULTANT shall obtain and furnish to CITY a professional liability insurance policy covering the work performed by it hereunder. This policy shall provide coverage for CONSULTANT's professional liability in an amount not less than One Million Dollars agree/ surfnedprofessional Svcs mayor 3 of 11 10/12 16-5478/145288/DO ($1,000,000.00) per occurrence and in the aggregate. The above -mentioned insurance shall not contain a self -insured retention without the express written consent of CITY; however an insurance policy "deductible" of Ten Thousand Dollars ($10,000.00) or less is permitted. A claims -made policy shall be acceptable if the policy further provides that: A. The policy retroactive date coincides with or precedes the initiation of the scope of work (including subsequent policies purchased as renewals or replacements). B. CONSULTANT shall notify CITY of circumstances or incidents that might give rise to future claims. CONSULTANT will make every effort to maintain similar insurance during the required extended period of coverage following PROJECT completion. If insurance is terminated for any reason, CONSULTANT agrees to purchase an extended reporting provision of at least two (2) years to report claims arising from work performed in connection with this Agreement. If CONSULTANT fails or refuses to produce or maintain the insurance required by this section or fails or refuses to furnish the CITY with required proof that insurance has been procured and is in force and paid for, the CITY shall have the right, at the CITY's election, to forthwith terminate this Agreement. Such termination shall not effect Consultant's right to be paid for its time and materials expended prior to notification of termination. CONSULTANT waives the right to receive compensation and agrees to indemnify the CITY for any work performed prior to approval of insurance by the CITY. 10. CERTIFICATE OF INSURANCE Prior to commencing performance of the work hereunder, CONSULTANT shall furnish to CITY a certificate of insurance subject to approval of the City Attorney evidencing the foregoing insurance coverage as required by this Agreement; the certificate shall: asree/ surfnet/professional svcs mayor 4 of 11 10/12 16-5478/145288/DO A. provide the name and policy number of each carrier and policy; B. state that the policy is currently in force; and C. shall promise that such policy shall not be suspended, voided or canceled by either party, reduced in coverage or in limits except after thirty (30) days' prior written notice; however, ten (10) days' prior written notice in the event of cancellation for nonpayment of premium. CONSULTANT shall maintain the foregoing insurance coverage in force until the work under this Agreement is fully completed and accepted by CITY. The requirement for carrying the foregoing insurance coverage shall not derogate from CONSULTANT's defense, hold harmless and indemnification obligations as set forth in this Agreement. CITY or its representative shall at all times have the right to demand the original or a copy of the policy of insurance. CONSULTANT shall pay, in a prompt and timely manner, the premiums on the insurance hereinabove required. 11. INDEPENDENT CONTRACTOR CONSULTANT is, and shall be, acting at all times in the performance of this Agreement as an independent contractor herein and not as an employee of CITY. CONSULTANT shall secure at its own cost and expense, and be responsible for any and all payment of all taxes, social security, state disability insurance compensation, unemployment compensation and other payroll deductions for CONSULTANT and its officers, agents and employees and all business licenses, if any, in connection with the PROJECT and/or the services to be performed hereunder. 12. TERMINATION OF AGREEMENT All work required hereunder shall be performed in a good and workmanlike manner. CITY may terminate CONSULTANT's services hereunder at any time with or without cause, and whether or not the PROJECT is fully complete. Any termination of this Agreement by CITY shall agree/ surfnet/professional Svcs mayor J of 11 10/12 16-5478/145288/DO be made in writing, notice of which shall be delivered to CONSULTANT as provided herein. In the event of termination, all finished and unfinished documents, exhibits, report, and evidence shall, at the option of CITY, become its property and shall be promptly delivered to it by CONSULTANT. 13. ASSIGNMENT AND DELEGATION This Agreement is a personal service contract and the work hereunder shall not be assigned, delegated or subcontracted by CONSULTANT to any other person or entity without the prior express written consent of CITY. If an assignment, delegation or subcontract is approved, all approved assignees, delegates and subconsultants must satisfy the insurance requirements as set forth in Sections 9 and 10 hereinabove. 14. COPYRIGHTS/PATENTS CITY shall own all rights to any patent or copyright on any work, item or material produced as a result of this Agreement. 15. CITY EMPLOYEES AND OFFICIALS CONSULTANT shall employ no CITY official nor any regular CITY employee in the work performed pursuant to this Agreement. No officer or employee of CITY shall have any financial interest in this Agreement in violation of the applicable provisions of the California Government Code. 16. NOTICES Any notices, certificates, or other communications hereunder shall be given either by personal delivery to CONSULTANT's agent (as designated in Section 1 hereinabove) or to CITY as the situation shall warrant, or by enclosing the same in a sealed envelope, postage prepaid, and depositing the same in the United States Postal Service, to the addresses specified below. CITY and CONSULTANT may designate different addresses to which subsequent notices, certificates or aggree/ suffnet/professional svcs mayor 6 of 11 10/12 16-5478/145288/DO other communications will be sent by notifying the other party via personal delivery, a reputable overnight carrier or U. S. certified mail -return receipt requested: TO CITY: City of Huntington Beach ATTN: Dahle Bulosan 2000 Main Street Huntington Beach, CA 92648 17. CONSENT TO CONSULTANT: Davis Farr LLP Jennifer Farr 2301 Dupont Drive, Suite 200 Irvine, CA 92612 When CITY's consent/approval is required under this Agreement, its consent/approval for one transaction or event shall not be deemed to be a consent/approval to any subsequent occurrence of the same or any other transaction or event. 18. MODIFICATION No waiver or modification of any language in this Agreement shall be valid unless in writing and duly executed by both parties. 19. SECTION HEADINGS The titles, captions, section, paragraph and subject headings, and descriptive phrases at the beginning of the various sections in this Agreement are merely descriptive and are included solely for convenience of reference only and are not representative of matters included or excluded from such provisions, and do not interpret, define, limit or describe, or construe the intent of the parties or affect the construction or interpretation of any provision of this Agreement. 20. INTERPRETATION OF THIS AGREEMENT The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties. If any provision of this Agreement is held by an arbitrator or court of competent jurisdiction to be unenforceable, void, illegal or invalid, such holding shall not invalidate or affect the remaining agree/ surfneUprofessional svcs mayor 7 of I I 10/12 16-5478/145288/DO covenants and provisions of this Agreement. No covenant or provision shall be deemed dependent upon any other unless so expressly provided here. As used in this Agreement, the masculine or neuter gender and singular or plural number shall be deemed to include the other whenever the context so indicates or requires. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no right to contract, then the latter shall prevail, and the provision of this Agreement which is hereby affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 21. DUPLICATE ORIGINAL The original of this Agreement and one or more copies hereto have been prepared and signed in counterparts as duplicate originals, each of which so executed shall, irrespective of the date of its execution and delivery, be deemed an original. Each duplicate original shall be deemed an original instrument as against any party who has signed it. 22. IMMIGRATION CONSULTANT shall be responsible for full compliance with the immigration and naturalization laws of the United States and shall, in particular, comply with the provisions of the United States Code regarding employment verification. 23. LEGAL SERVICES SUBCONTRACTING PROHIBITED CONSULTANT and CITY agree that CITY is not liable for payment of any subcontractor work involving legal services, and that such legal services are expressly outside the scope of services contemplated hereunder. CONSULTANT understands that pursuant to Huntington Beach City Charter Section 309, the City Attorney is the exclusive legal counsel for agree/ surfnet/professional svcs mayor 8 Of 11 10/12 16-5478/145288/DO CITY; and CITY shall not be liable for payment of any legal services expenses incurred by CONSULTANT. 24. ATTORNEY'S FEES In the event suit is brought by either party to construe, interpret and/or enforce the terrns and/or provisions of this Agreement or to secure the performance hereof, each party shall bear its own attorney's fees, such that the prevailing party shall not be entitled to recover its attorney's fees from the nonprevailing party. 25. SURVIVAL Terms and conditions of this Agreement, which by their sense and context survive the expiration or termination of this Agreement, shall so survive. 26. GOVERNING LAW This Agreement shall be governed and construed in accordance with the laws of the State of California. 27. SIGNATORIES Each undersigned represents and warrants that its signature hereinbelow has the power, authority and right to bind their respective parties to each of the terms of this Agreement, and shall indemnify CITY fully for any injuries or damages to CITY in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. 28. ENTIRETY The parties acknowledge and agree that they are entering into this Agreement freely and voluntarily following extensive arm's length negotiation, and that each has had the opportunity to consult with legal counsel prior to executing this Agreement. The parties also acknowledge and agree that no representations, inducements, promises, agreements or warranties, oral or otherwise, have been made by that party or anyone acting on that party's behalf, which are not embodied in this aeree/ surfna/professional Svcs mayor 9 of 11 10/12 16-5478/145288/D0 Agreement, and that that party has not executed this Agreement in reliance on any representation, inducement, promise, agreement, warranty, fact or circumstance not expressly set forth in this Agreement. This Agreement, and the attached exhibits, contain the entire agreement between the parties respecting the subject matter of this Agreement, and supersede all prior understandings and agreements whether oral or in writing between the parties respecting the subject matter hereof. 29. EFFECTIVE DATE This Agreement shall be effective on the date of its approval by the City Council. This Agreement shall expire when terminated as provided herein. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized officers. agoree/ surfnet/professional svcs mayor 10 Of I I 10/t2 16-5478/145288/DO CONSULTANT, Davis Fan' LLP COMPANY NAME By: ��q print name ITS: (circle ore) Chairman/President/ �' - t F��-Meg AND By: fib"oL�es print name ITS: (circle one) Secretary/Chief FmAngjaj Officer/Asst. Secretan - Treasurer cpq (a p�. CITY OF HUNTINGTON BEACII, a municipal corporation of the State of California Mayor City Cleric INITIATED AND APPROVED: Chief Financial Officer REVIEWED AND APPROVED: City Manager APPROVED AS TO FORM: City Attorney Y1')ktj� a� f4v agreelsurfnet/professionalsves mayor I I of 11 10/12 1 6-5478/145288/DO CONSULTANT. Davis Farr LLP COMPANY NAME By: print name ITS: (circle one) Chairman/President/Vice President AND print name ITS: (circle one) Secretary/Chief Financial Officer/Asst. Secretary - Treasurer COUNTERPART CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California City Clerk WOO INITIAT D AND APPROVED: JZ�t& (4 Chief Financial Officer REVeiE D APPROVED: City'Manager APPROVED A RM: City Attorney bVo kta\ o� ITV agree/ surfnet/professional svcs mayor 11 of 11 10/12 16-5478/145288/DO EXHIBIT "A" A. STATEMENT OF WORK: (Narrative of work to be performed) • Consultant will perform an audit examination of the financial statements of the City of Huntington Beach for the fiscal years ending September 30, 2016 through 2018. Our examination will be conducted in accordance with generally accepted auditing standards, the AICPA Audit and Accounting Guide, Audits of State and Local Government Units, and the Government Auditing Standards issued by the Comptroller General of the United States. The City will prepare the Comprehensive Annual Financial Report (CAFR). Consultant will ensure that the report is prepared in conformity with the most recent edition of the GAAFR, the GAAFR Update, and subsequent GASB pronouncements. • Consultant will perform a compliance audit of federal expenditures in accordance with the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards in any year the City has federal expenditures of more than $750,000. • Consultant will perform agreed -upon -procedures over the City's Gann Appropriations Limit. • Consultant will perform a compliance audit of the Air Quality Improvement Fund. Consultant will prepare an audit opinion on compliance with the requirements of AQMD. • Consultant will perform a financial statement audit of the West Orange County Water Board. Consultant will prepare the financial statements for the entity. • Consultant will prepare a letter to the City Council reporting matters dealing with internal control that meet the threshold of being a significant deficiency or material weakness, as defined by SAS No. 115. Consultant will immediately report any irregularities or illegal acts that come to our attention to management and/or those charged with governance. • Consultant will meet with the City Council to discuss the results of the audit as requested. • Finally, Consultant perceives the scope of our work as being advisors to the City regarding generally accepted accounting principles. Throughout the year, the management and other finance personnel of the City will have access to Davis Farr LLP to seek advice in the application of generally accepted accounting principles, advice regarding debt issuance, financial statement preparation and content, and any other matters relating to the City. B. CONSULTANT'S DUTIES AND RESPONSIBILITIES: Consultant plans and conducts engagements in the most efficient manner possible, and consultant's audit approach is unique with regard to the following: EXHIBIT A • Consultant firm is sensitive to the priorities and work requirements of our clients. Consultant will work around the schedules of clients when scheduling segments of the audit or requesting documentation in order to minimize disruption of City staff and to complete the audit in a timely manner. • Whenever possible, Consultant will use accounting support already prepared by the City staff in order to avoid duplication or unnecessary requests for audit supporting schedules. • Consultant firm's expertise is in governmental auditing. Consultant's auditors are GASB experts and skilled at addressing audit issues that are specific to local governments. You will not spend time training our personnel. • When formulating internal control recommendations, Consultant will obtain a thorough understanding of the specific circumstances at your City in order to provide a tailored, practical recommendation. • Throughout the year Consultant is a resource to our clients in providing accounting advice, researching technical questions, dealing with tax problems, and helping with other problems as they arise. Audit Software - Consultant utilizes Caseware audit software as the electronic copy of workpapers for the City. Consultant has the ability to accept audit documentation in either hard copy or electronic format. Caseware allows Consultant the ability to import trial balances that can be provided in either excel or a text document. Transition from Prior Auditors Following Consultant's appointment as auditors, key audit personnel from Consultant's firm will meet with City staff for the purpose of planning the audit. Consultant will also perform the following in order to ensure an effortless transition from the prior auditing firm: • Consultant will input the prior year trial balance into our audit software and regenerate the prior year financial statement schedules to ensure our coding is accurate. • When reviewing prior auditor workpapers, Consultant will request copies of permanent file documents from the prior auditor so the City doesn't have to spend time copying these documents for the Consultant. • Consultant will review the confirmations provided to your auditor last year and simply mark up last year's confirmations instead of providing you with templates. • Consultant will review the prior year CAFR during interim and suggest changes, if necessary, at that time instead of waiting until final to discuss potential changes. Internal Control Evaluation Consultant's approach to evaluating internal controls involves observation and inquiry. Consultant will spend time with the personnel responsible for the accounting cycles to gain an understanding of the processes. Consultant will also carefully evaluate your policies and procedures. After our initial evaluation, Consultant will identify key controls in City processes and design tests to evaluate the effectiveness of those processes. In the initial year of the audit, Consultant will focus on the following accounting cycles: • Billing and cash receipting • Capital assets • Purchase and disbursements • Payroll • Investment and cash controls EXHIBIT A • Information systems In future years, Consultant will review the accounting cycles noted above, but also look at other processes such as credit card transactions, petty cash, inventory controls, offsite cash receipting, employee reimbursements, contract compliance, and other areas. Consultant's goal is to modify our audit approach every year to further evaluate the City's internal controls. Planning and Inquiry During the planning phase of the audit, Consultant plans to perform the following procedures: • Meet with finance personnel to obtain an understanding of significant transactions during the year. • Communicate with the City Council in regards to fraud, compliance with laws, and any concerns they have regarding the finances of the City. • Perform internal control evaluations as noted on the previous page. • Determine materiality levels that will be used in selecting audit transactions. • Perform a risk assessment to develop the audit plan for the year. • Review minutes of City Council meetings. • Review important new contracts, bond documents, and agreements. • Evaluate compliance with investments. • Test purchase orders and contract management. • Test a sample of cash disbursements to determine adherence to policies and internal controls. • Perform a review of the organizations' information systems and controls. • Perform compliance testing of federal grants, as necessary. • Update the prior audited financial statements and provide feedback to City staff regarding best practices for financial reporting. Year -End Testing After the books are closed and ready for audit, Consultant will perform year-end procedures which include the following: • Confirm 100% of all cash and investment balances and test market values provided by your investment custodians. • Test for proper cutoffs of accounts receivable and grants receivable. • Confirm and test material notes and loans receivable. • Test additions and deletions to capital assets. We will review depreciation expense for reasonableness. • Test inter -fund transactions including due to/due from other funds, advances, and transfers. We will review legal documents supporting loans and test the allowability of transfers out of restricted funds. • Test current liabilities and perform a search for unrecorded liabilities. • Review deferred revenue balances for proper cutoffs. • Test the balances of accrued payroll and employee related liabilities. • Confirm long-term debt with independent parties. • External verification of bond compliance through the Electronic Municipal Market Access (EMMA) database. • Testing of actuarial valuations and calculations related to OPEB obligations. EXHIBIT A • Testing of actuarial valuations and calculations related to pension obligations and new disclosures under GASB 68. • Evaluation of claims and judgments payable. • Testing of restrictions and classifications of net position. • Analyze grant revenues and expenses to ensure proper matching within the fiscal year. • Test the reasonableness of interest income, realized, and unrealized gains/losses on investments. • Analytically and substantively test revenues and expenses reported in the financial statements. • Incorporate an element of unpredictability every year that will focus on an audit area that is not typically considered a high or significant risk area such as petty cash, credit card purchases, new vendors, travel expenses, etc. The aforementioned tests are only a few of the tests performed during the, examination and by no means is it meant to be all inclusive. During the final stage of the audit Consultant will meet with Finance staff to review any audit findings and adjusting journal entries. Single Audit Approach As part of the Consultant's Single Audit for the years in which the City expends granter than $750,000, Consultant will perform the following procedures in accordance with the Uniform Guidance: • Perform an evaluation of the major programs required to be tested. • Review OMB guidance and the OMB Compliance Supplement for the grant program audited. • Review internal controls for each of the applicable 14 compliance areas for each program audited. • Using AICPA sampling guidance, Consultant will select a sample for each of the applicable 14 compliance areas for each program audited. Consultant will test the sample for compliance with those 14 areas. • Test the indirect cost rate, if applicable. • Review monitoring reports for noncompliance and follow up on the resolution of past noncompliance, if applicable. • Issue a single audit report of federal expenditures. • File the data collection form within the specified deadline. Completion of the Audit and Preparation of Financial Statements The nature and extent of the work required is dependent on Consultant's assessment of the likelihood of misstatements in the financial statements together with our conclusions from the planning and testing stages of the audit. All of the audit information is then used to reach a conclusion on whether the financial statements taken as a whole conform with generally accepted accounting principles. • Consultant will review significant events after year end. • Consultant will review attorney letters for significant legal matters. • Consultant will prepare the financial statements and other reports. • Consultant will ensure accurate and complete disclosures in the notes to the financial statements. EXHIBIT A • Consultant reports will undergo five levels of review before a draft is given to the City. • Consultant will provide a draft of the reports to the City within two weeks of leaving the field. • Unless prepared by the City, Consultant will print and bind all reports for the City as well as providing Color PDF's of the final reports. • Consultant will meet with the City Council to present the results of the audit. C. CITY'S DUTIES AND RESPONSIBILITIES: Communicate with Consultant on an as -needed basis and provide requested documentation to consultant in a timely manner. D. WORK PROGRAM/PROJECT SCHEDULE: To be determined. EXHIBIT A EXHIBIT "B" Payment Schedule (Fixed Fee Payment) Audit Period Service FY 2015/16 FY 2016/17 FY 2017-18 Total City Audit and Related Reports 31,000 31,600 32,200 94,800 Single Audit (first 2 major programs)* 6,000 6,100 6,200 18,300 Single Audit (additional 2 major programs if necessary)* 4,000 4,000 4,000 12,000 Appropriations Limit Review 500 500 500 1,500 AQMD Audit 1,000 1,000 1,000 3,000 West Orange County Water Board 5,000 5,100 5,200 15,300 Total 47,500 48,300 49,100 144,900 * The single audit fee includes up to two major programs. Additional major programs, if necessary, can be audited for $2,000 each. I. CONSULTANT shall be entitled to monthly progress payments toward the fixed fee set forth herein in accordance with the following progress and payment schedules. 2. Delivery of work product: A copy of every memorandum, letter, report, calculation and other documentation prepared by CONSULTANT shall be submitted to CITY to demonstrate progress toward completion of tasks. In the event CITY rejects or has comments on any such product, CITY shall identify specific requirements for satisfactory completion. 3. CONSULTANT shall submit to CITY an invoice for each monthly progress payment due. Such invoice shall: A) Reference this Agreement; B) Describe the services performed; C) Show the total amount of the payment due; D) Include a certification by a principal member of CONSULTANT's firm that the work has been performed in accordance with the provisions of this Agreement; and E) For all payments include an estimate of the percentage of work completed. Upon submission of any such invoice, if CITY is satisfied that CONSULTANT is making satisfactory progress toward completion of tasks in accordance with this Agreement, CITY shall approve the invoice, in which event payment shall be made within thirty (30) days of receipt of the invoice by CITY. Such approval shall not be unreasonably withheld. If CITY does not approve an invoice, CITY shall notify CONSULTANT in writing of the reasons for non -approval and the schedule of performance set forth in Exhibit "A" may at the option of CITY be suspended until the parties agree that past performance by CONSULTANT is in, or has been brought into compliance, or until this Agreement has expired or is terminated as provided herein. 4. Any billings for extra work or additional services authorized in advance and in writing by CITY shall be invoiced separately to CITY. Such invoice shall contain all of the information Exhibit B required above, and in addition shall list the hours expended and hourly rate charged for such time. Such invoices shall be approved by CITY if the work performed is in accordance with the extra work or additional services requested, and if CITY is satisfied that the statement of hours worked and costs incurred is accurate. Such approval shall not be unreasonably withheld. Any dispute between the parties concerning payment of such an invoice shall be treated as separate and apart from the ongoing performance of the remainder of this Agreement. Exhibit B 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 PROFESSIONAL SERVICES CONTRACT BETWEEN THE CITY OF HUNTINGTON BEACH AND DAVIS FARR LLP FOR FINANCIAL AUDIT SERVICES Table of Contents Scopeof Services.....................................................................................................I CityStaff Assistance................................................................................................I Term; Time of Performance.....................................................................................2 Compensation..........................................................................................................2 ExtraWork...............................................................................................................2 Methodof Payment..................................................................................................2 Disposition of Plans, Estimates and Other Documents...........................................3 HoldHarmless.........................................................................................................3 Professional Liability Insurance.............................................................................3 Certificate of Insurance............................................................................................4 IndependentContractor............................................................................................5 Termination of Agreement.......................................................................................5 Assignmentand Delegation......................................................................................6 Copyrights/Patents...................................................................................................6 City Employees and Officials..................................................................................6 Notices.........................................................................................6 Consent....................................................................................................................7 Modification.............................................................................................................7 SectionHeadings.....................................................................................................7 Interpretation of this Agreement..............................................................................7 DuplicateOriginal....................................................................................................8 Immigration............................................................................................................... 8 Legal Services Subcontracting Prohibited................................................................8 Attorney's Fees..........................................................................................................9 Survival..................................................................................................................... 9 GoverningLaw.........................................................................................................9 Signatories.................................................................................................................9 Entirety...................................................................................................................... 9 EffectiveDate.................................................................................10 ATTACHMENT #2 Client#: 131038 DAVIFAR ACORD. CERTIFICATE OF LIABILITY INSU NCE ATE(M5/26/201616210YYY) r 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). PRODUCER CBIZ Insurance Svcs. Inc. (LA) Lic. # OB17100 10474 Santa Monica Blvd, #2OO Angeles, CA 90025 NAME: C Lani Stanbery PHONaEL Ext :310 268-2123 FA/c, No M ADDRESS: I sta bery@cb iz. com INSURER(S) AFFORDING COVERAGE NAIC IfLos INSURER A: Travelers Casualty Ins. Co. of 19046 INSURED INSURER B: Travelers Property Casualty Co 25674 Davis Farr LLP 2301 Dupont Drive Suite 200 Irvine, CA 92612 INSURER C : INSURERD: 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 CONTRACTOR 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. TRR TYPE OF INSURANCE ADDL INSR SUBR WVD POLICY NUMBER POLICY EFF MM/DD/YYYY POLICY EXP MM/DD/YYYY LIMITS A X COMMERCIAL GENERAL LIABILITY CLAIMS -MADE � OCCUR 680OH933685 APPROVED AS TO FOR Y' MICHAEL E. GATES CITY ATTORNEY CITY OF HUNTINGTON BEACH 5/21 /2016 05/21/2017 EACH $_ 1000 000 �OCCURRENCE PREMISES Ea oceu ence s300,000 GEN'L X MED FXP (Any one person) $5 000 PERSONAL & ADV INJURY $1,000,000 AGGREGATE LIMIT APPLIES PER: j� PRO- POLICY I JECT ❑ Loc OTHER: GENERAL AGGREGATE $ 2,000,000 PRODUCTS - COMP/OPAGG $2,000,000 $ A AUTOMOBILE IxANY LIABILITY AUTO ALL OWNED SCHEDULED AUTOS AUTOS HIRED AUTOS X NON -OWNED AUTOS BA2H007452 5/21/2016 05/21/201 Ee aBc,deolSINGLELIMIT $1,000,000 BODILY INJURY (Per person) $ BODILY INJURY (Per accident) $ PROPERTY DAMAGE$ Per accident B X UMBRELLA LIAB EXCESS LIAB )( OCCUR CLAIMS -MADE CUP1H416250 5/21/2016 05/21/2017 EACH OCCURRENCE $1 000000 AGGREGATE $1,000,000 DED I X REfENTION$10000 $ B WORKERS COMPENSATION AND EMPLOYERS' LIABILITY YIN ANY PRO PRIETOR/PARTNER/EXECUTIVE OFFICER/MEMBER EXCLUDED? (Mandatory in NH) If yes, describe under DESCRIPTION OF OPERATIONS below N I A IJUB1H41646A 5/21/2016 05/21/201 X PER EOTH- ' R E.L. EACH ACCIDENT $1,000,000 E.L. DISEASE - EA EMPLOYEE $1,000,000 E.L. DISEASE - POLICY LIMIT $1,000,000 DESCRIPTION OF OPERATIONS I LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached If more space is required) City of Huntington Beach, its officers, elected or appointed officials, employees, agents and volunteers are additional insured as required by written agreement under the commercial general liability coverage. City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 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 ICBIZ Insurance Services, Inc. ©1988-2014 ACORD CORPORATION. All rights reserved. ACORD 25 (2014/01) 1 of 1 #S1305974/M1305542 The ACORD name and logo are registered marks of ACORD OPJS COMMERCIAL GENERAL LIABILITY THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY, is-��'� � �'�'•�, This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART GENERAL DESCRIPTION OF COVERAGE — This endorsement broadens coverage, The following listing is a general coverage description only. Limitations and exclusions may apply to these coverages. Read all the PRO- VISIONS of this endorsement carefully to determine rights, duties, and what is and is not covered. A. Broadened Named Insured B. Damage To Premises Rented To You Extension • Perils of fire, explosion, lightning, smoke, water • Limit increased to $300,000 C. Blanket Waiver of Subrogation D. Blanket Additional Insured— Managers or Lessors of Premises E. Blanket Additional Insured — Lessor of leased Equipment F. Incidental Medical Malpractice G. Personal Injury — Assumed by Contract H. Extension of Coverage — Bodily Injury PROVISIONS A. BROADENED NAMED INSURED 1. The Named Insured in Item 1. of the Declara- tions is as follows: The person or organization named in Item 1. of the Declarations and any organization, other than a partnership or joint venture, over which you maintain ownership or majority in- terest on the effective date of the policy. However, coverage for any such organization will cease as of the date during the policy pe- riod that you no longer maintain ownership of, or majority interest in, such organization. 2. WHO IS AN INSURED (Section II) Item 4.a. is deleted and replaced by the following: a. Coverage under this provision is afforded only until the 180th day after you acquire or form the organization or the end of the policy period, whichever is earlier, unless reported in writing to us within 180 days. 3. This Provision A. does not apply to any per- son or organization for which coverage is ex- cluded by endorsement I. Injury to Co -Employees and Co -Volunteer Workers J. Aircraft Chartered with Crew K. Non -Owned Watercraft — Increased from 25 feet to 50 feet L. Increased Supplementary Payments • Cost for bail bonds increased to $2,500 • Loss of earnings increased to $500 per day M. Knowledge and Notice of Occurrence or Offense N. Unintentional Omission O. Reasonable Force — Bodily Injury or Property Damage B. DAMAGE TO PREMISES RENTED TO YOU EXTENSION 1. The last paragraph of COVERAGE A. BOD- ILY INJURY AND PROPERTY DAMAGE LI- ABILITY (Section I — Coverages) is deleted and replaced by the following: Exclusions c. through n. do not apply to dam- age to premises while rented to you, or tem- porarily occupied by you with permission of the owner, caused by: a. Fire; b. Explosion; c. Lightning; d. Smoke resulting from such fire, explosion, or lightning; or e. Water. A separate limit of insurance applies to this coverage as described in LIMITS OF INSUR- ANCE (Section III), 2. This insurance does not apply to damage to premises while rented to you, or temporarily CG D1 86 1103 Copyright, The Travelers indemnity Company, 2003 Page 1 of 5 COMMERCIAL GENERAL LIABILITY occupied by you with permission of the owner, caused by: a. Rupture, bursting, or operation of pres- sure relief devices; b. Rupture or bursting due to expansion or swelling of the contents of any building or structure, caused by or resulting from wa- ter; c. Explosion of steam boilers, steam pipes, steam engines, or steam turbines. 3. Part 6. of LIMITS OF INSURANCE (Section 111) is deleted and replaced by the following: Subject to 5. above, the Damage To Prem- ises Rented To You Limit is the most we will pay under COVERAGE A. for damages be- cause of "property damage" to any one prem- ises while rented to you, or temporarily occu- pied by you with permission of the owner, caused by fire, explosion, lightning, smoke resulting from such fire, explosion, or light- ning, or water. The Damage To Premises Rented To You Limit will apply to all damage proximately caused by the same "occur- rence", whether such damage results from fire, explosion, lightning, smoke resulting from such fire, explosion, or lightning, or water, or any combination of any of these. The Damage To Premises Rented To You Limit will be the higher of: a. $300,000; or b. The amount shown on the Declarations for Damage To Premises Rented To You Limit. 4. Under DEFINITIONS (Section V), Paragraph a. of the definition of "insured contract" is amended so that it does not include that por- tion of the contract for a lease of premises that indemnifies any person or organization for damage to premises while rented to you, or temporarily occupied by you with permis- sion of the owner, caused by: a. Fire; b. Explosion; c. Lightning; d. Smoke resulting from such fire, explosion, or lightning; or e. Water. 5. This Provision B. does not apply if coverage for Damage To Premises Rented To You of COVERAGE A_ BODILY INJURY AND PROPERTY DAMAGE LIABILITY (Section I — Coverages) is excluded by endorsement. C. BLANKET WAIVER OFSUBROGATION We waive any right of recovery we may have against any person or organization because of payments we make for injury or damage arising out of premises owned or occupied by or rented or loaned to you; ongoing operations performed by you or on your behalf, done under a contract with that person or organization; "your work"; or "your products". We waive this right where you have agreed to do so as part of a written contract, executed by you prior to loss. D. BLANKET ADDITIONAL INSURED — MANAG- ERS OR LESSORS OF PREMISES WHO IS AN INSURED (Section II) is amended to include as an insured any person or organization (referred to below as "additional insured") with whom you have agreed in a written contract, exe- cuted prior to loss, to name as an additional in- sured, but only with respect to liability arising out of the ownership, maintenance or use of that part of any premises leased to you, subject to the fol- lowing provisions: 1. Limits of Insurance. The limits of insurance afforded to the additional insured shall be the limits which you agreed to provide, or the lim- its shown on the Declarations, whichever is less. 2. The insurance afforded to the additional in- sured does not apply to: a. Any 'occurrence" that takes place after you cease to be a tenant in that premises; b. Any premises for which coverage is ex- cluded by endorsement; or c. Structural alterations, new construction or demolition operations performed by or on behalf of such additional insured. 3. The insurance afforded to the additional in- sured is excess over any valid and collectible insurance available to such additional in- sured, unless you have agreed in a written contract for this insurance to apply on a pri- mary or contributory basis- E. BLANKET ADDITIONAL_ INSURED — LESSOR OF LEASED EQUIPMENT WHO IS AN INSURED (Section II) is amended to include as an insured any person or organization (referred to below as "additional insured") with Page 2 of 5 Copyright, The Travelers Indemnity Company, 2003 CG D1 8611 03 whom you have agreed in a written contract, exe- cuted prior to loss, to name as an additional in- sured, but only with respect to their liability arising out of the maintenance, operation or use by you of equipment leased to you by such additional in- sured, subject to the following provisions: 1. Limits of Insurance. The limits of insurance afforded to the additional insured shall be the limits which you agreed to provide, or the lim- its shown on the Declarations, whichever is less. 2. The insurance afforded to the additional in- sured does not apply to: a. Any "occurrence" that takes place after the equipment lease expires; or b. "Bodily injury" or "property damage" aris- ing out of the sole negligence of such ad- ditional insured. COMMERCIAL GENERAL LIABILITY for which no remuneration is demanded or received. 3. Paragraph 2.a.(1)(d) of WHO IS AN IN- SURED (Section II) does not apply to any registered nurse, licensed practical nurse, emergency medical technician or paramedic employed by you, but only while performing the services described in paragraph 2. above and while acting within the scope of their em- ployment by you. Any "employees" rendering "Good Samaritan services" will be deemed to be acting within the scope of their employ- ment by you. 4. 3. The insurance afforded to the additional in- sured is excess over any valid and collectible insurance available to such additional in- sured, unless you have agreed in a written 5 contract for this insurance to apply on a pri- mary or contributory basis. F. INCIDENTAL MEDICAL MALPRACTICE 1. The definition of "bodily injury" in DEFINI- TIONS (Section V) is amended to include "In- cidental Medical Malpractice Injury". 2. The following definition is added to DEFINI- TIONS (Section V): "Incidental medical malpractice injury" means bodily injury, mental anguish, sickness or dis- ease sustained by a person, including death resulting from any of these at any time, aris- ing out of the rendering of, or failure to ren- der, the following services: a. Medical, surgical, dental, laboratory, x-ray or nursing service or treatment, advice or instruction, or the related furnishing of food or beverages; b. The furnishing or dispensing of drugs or medical, dental, or surgical supplies or appliances; or c. First aid. The following exclusion is added to paragraph 2. Exclusions of COVERAGE A. — BODILY INJURY AND PROPERTY DAMAGE LIABIL- ITY (Section I — Coverages): (This insurance does not apply to:) Liability arising out of the willful violation of a penal statute or ordinance relating to the sale of pharmaceuticals by or with the knowledge or consent of the insured. For the purposes of determining the applica- ble limits of insurance, any act or omission, together with all related acts or omissions in the furnishing of the services described in paragraph 2. above to any one person, will be considered one "occurrence". 6. This Provision F. does not apply if you are in the business or occupation of providing any of the services described in paragraph 2. above. 7. The insurance provided by this Provision F. shall be excess over any other valid and col- lectible insurance available to the insured, whether primary, excess, contingent or on any other basis, except for insurance pur- chased specifically by you to be excess of this policy. G. PERSONAL INJURY — ASSUMED BY CON- TRACT 1. The Contractual Liability Exclusion in Part 2., Exclusions of COVERAGE B. PER- SONAL AND ADVERTISING INJURY LIABIL- ITY (Section 1 — Coverages) is deleted and replaced by the following: (This insurance does not apply to:) d. "Good Samaritan services". As used in Contractual Liability this Provision F., "Good Samaritan ser- vices" are those medical services ren- "Advertising injury" for which the insured has dered or provided in an emergency and assumed liability in a contract or agreement. This exclusion does not apply to liability for CG D1 86 1103 Copyright, The Travelers Indemnity Company, 2003 Page 3 of 5 COMMERCIAL GENERAL LIABILITY damages that the insured would have in the absence of the contract of agreement. 2. Subparagraph f. of the definition of "insured contract" (DEFINITIONS — Section V) is de- leted and replaced by the following: f. That part of any other contract or agree- ment pertaining to your business (includ- ing an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury," "property damage" or "per- sonal injury" to a third party or organiza- tion. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement. 3. This Provision G. does not apply if COVER- AGE B. PERSONAL AND ADVERTISING IN- JURY LIABILITY is excluded by endorse- ment. H. EXTENSION OF COVERAGE — BODILY IN- JURY The definition of "bodily injury" (DEFINITIONS — Section V) is deleted and replaced by the follow- ing: "Bodily injury" means bodily injury, mental an- guish, mental injury, shock, fright, disability, hu- miliation, sickness or disease sustained by a per- son, including death resulting from any of these at any time. 1. INJURY TO CO -EMPLOYEES AND CO. VOLUNTEER WORKERS Your "employees" are insureds with respect to "bodily injury" to a co -"employee" in the course of the co -"employee's" employment by you, or to your "volunteer workers" while per- forming duties related to the conduct of your business, provided that this coverage for your "employees" does not apply to acts outside the scope of their employment by you or while performing duties unrelated to the conduct of your business. 2. Your "volunteer workers" are insureds with respect to "bodily injury" to a co -"volunteer worker" while performing duties related to the conduct of your business, or to your "employ- ees" in the course of the "employee's" em- ployment by you, provided that this coverage for your "volunteer workers" does not apply while performing duties unrelated to the con- duct of your business. 3. Subparagraphs 2.a.(1)(a), (b) and (c) and 3.a. of WHO IS AN INSURED (Section II) do not apply to "bodily injury" for which insurance is provided by paragraph 1. or 2. above. J. AIRCRAFT CHARTERED WITH CREW 1. The following is added to the exceptions con- tained in the Aircraft, Auto Or Watercraft Exclusion in Part 2., Exclusions of COVER- AGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY (Section I — Coverages): (This exclusion does not apply to:) Aircraft chartered with crew to any insured. 2. This Provision J. does not apply if the char- tered aircraft is owned by any insured. 3. The insurance provided by this Provision J. shall be excess over any other valid and col- lectible insurance available to the insured, whether primary, excess, contingent or on any other basis, except for insurance pur- chased specifically by you to be excess of this policy. K. NON -OWNED WATERCRAFT 1. The exception contained in Subparagraph (2) of the Aircraft, Auto Or Watercraft Exclu- sion in Part 2., Exclusions of COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY (Section I — Coverages) is deleted and replaced by the following: (2) A watercraft you do not own that is: (a) Fifty feet long or less; and (b) Not being used to carry persons or property for a charge; 2. This Provision K. applies to any person who, with your expressed or implied consent, either uses or is responsible for the use of a water- craft. 3. The insurance provided by this Provision K. shall be excess over any other valid and col- lectible insurance available to the insured, whether primary, excess, contingent or on any other basis, except for insurance pur- chased specifically by you to be excess of this policy. L. INCREASED SUPPLEMENTARY PAYMENTS Parts b. and d. of SUPPLEMENTARY PAY- MENTS — COVERAGES A AND B (Section I — Coverages) are amended as follows: 1. In Part b. the amount we will pay for the cost of bail bonds is increased to $2500. Page 4 of 5 Copyright, The Travelers Indemnity Company, 2003 CG D1 86 1103 2. In Part d. the amount we will pay for loss of earnings is increased to $500 a day, M. KNOWLEDGE AND NOTICE OF OCCUR- RENCE OR OFFENSE 1. The following is added to COMMERCIAL GENERAL LIABILITY CONDITIONS (Section IV), paragraph 2. (Duties In The Event of Oc- currence, Offense, Claim or Suit): Notice of an "occurrence" or of an offense which may result in a claim under this insur- ance shall be given as soon as practicable af- ter knowledge of the "occurrence" or offense has been reported to any insured listed under Paragraph 1. of Section It — Who Is An In- sured or an "employee" (such as an insur- ance, loss control or risk manager or adminis- trator) designated by you to give such notice. Knowledge by other "employee(s)" of an "oc- currence" or of an offense does not imply that you also have such knowledge. 2. Notice shall be deemed prompt if given in good faith as soon as practicable to your workers' compensation insurer. This applies only if you subsequently give notice to us as soon as practicable after any insured listed under Paragraph 1. of Section II — Who Is An Insured or an "employee" (such as an insur- ance, loss control or risk manager or adminis- trator) designated by you to give such notice discovers that the "occurrence", offense or claim may involve this policy. 3. However, this Provision M. does not apply as respects the specific number of days within COMMERCIAL GENERAL LIABILITY which you are required to notify us in writing of the abrupt commencement of a discharge, release or escape of "pollutants" which causes "bodily injury" or "property damage" which may otherwise be covered under this policy. N. UNINTENTIONAL OMISSION The following is added to COMMERCIAL GEN- ERAL LIABILITY CONDITIONS (Section IV), paragraph 6. (Representations): The unintentional omission of, or unintentional error in, any information provided by you shall not prejudice your rights under this insurance. How- ever, this Provision N. does not affect our right to collect additional premium or to exercise our right of cancellation or nonrenewal in accordance with applicable state insurance laws, codes or regula- tions. 0. REASONABLE FORCE — BODILY INJURY OR PROPERTY DAMAGE The Expected Or Intended Injury Exclusion in Part 2., Exclusions of COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY (Section I — Coverages) is deleted and replaced by the following: (This insurance does not apply to:) Expected or Intended Injury or Damage "Bodily injury" or "property damage" expected or intended from the standpoint of the insured. This exclusion does not apply to "bodily injury" or "property damage" resulting from the use of rea- sonable force to protect persons or property. CG D1 86 1103 Copyright, The Travelers Indemnity Company, 2003 Page 5 of 5 ACC?Rb® CERTIFICATE OF LIABILITY INSURANCE 16..� DATE(MM/DDIYYYY) r 05/15/2016 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 endomement(s). PRODUCER (847) 385-6800 (847) 385-6801 Integro USA Inc. 111 West Campbell Street 4th Floor Arlington Heights, IL 60005 NAO MEACT Inte ro USA Inc. PHOIAIC.NNo,E 847 385-6800 A/c No): 847 385-6801 AbDRess:john.hecht@integrogroup.com INSURERS AFFORDING COVERAGE NAIC # INSURER A: Navigators Insurance Company 42307 INSURED Davis Farr LLP 2301 Dupont Drive, Suite 200 Irvine, CA 92612 INSURER B INSURER C : INSURER D: INSURER E: INSURER F : COVERAGES CERTIFICATE NUMBER: REVISION NUMRFR- 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. INSR LTR - TYPE OF INSURANCE ADDL INSR SUBR WVD PDLICY NUMBER POLICY EFF M/DD/YYYY) POLICY FRCP IMMIDDfYYYYi LIMITS GENERAL LIABILITY EACH OCCURRENCE $ COMMERCIAL GENERAL LIABILITY CLAIMS -MADE OCCUR APPROVED AS TO IFO 42 M DAME A RENTED PR MIS a occurrence $ MED EXP (Any one person) $ PERSONAL & ADV INJURY $ Bxx L�MICHAEL E. GATES GENERAL AGGREGATE $ GEN'L AGGREGATE LIMIT APPLIES PER: PRODUCTS - COMP/OP AGG $ CITY ATTORNEY POLICY PRO-JECT F-1 LOC CITY OF HUNTINGTON E EACH $ AUTOMOBILE LIABILITY SINGLE LIMIT (Ea accident) $ BODILY INJURY (Per person) $ ANY AUTO ALL OWNED SCHEDULED AUTOS AUTOS BODILYINJURY (Per ( ) $ HIRED AUTOS NON -OWNED AUTOS PROPERTY DAMAGE Per acciden $ $ UMBRELLA LIAR OCCUR EACH OCCURRENCE $ EXCESS LIAB CLAIMS -MADE AGGREGATE $ DED RETENTION $ WORKERS COMPENSATION WC STATU• I JOTH- AND EMPLOYERS' LIABILITY Y I N ANY PROPRIETORIPARTNER/EXECUTIVE OFFICER/MEMBER EXCLUDED? LAN I A ER E.L. EACH ACCIDENT $ E.L. DISEASE - EA EMPLOYEE $ (Mandatory in NH) If yes, describe under DESCRIPTION OF OPERATIONS below E.L, DISEASE - POLICY LIMIT - $ A Professional Liability CH16APLOBAHYNNV 05/15/2016 05/15/2017 $1,000,000 Each Claim and Annual Aggregate DESCRIPTION OF DPERATIONS I LOCATIONS I VEHICLES (Attach ACORD 101, Additional Remarks Schedule, if more space is required) (City of Huntington Beach 2000 Main Street Huntington Beach, CA 92646 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 U 1988-2010 ACORD CORPORATION. All rights reserved. ACORD 25 (2010105) The ACORD name and logo are registered marks of ACORD PROFESSIONAL SERVICES SERVICE: Financial Auditing Services SERVICE DESCRIPTION: Provide financial auditing services for all funds of the City's reporting entity, a Single Audit Report of the City's federal grant programs, an AB 2766 Audit relating to the City's Air Quality Fund, and an audit of the West Orange County Water Board (WOCWB), a fiduciary fund of the City of Huntington Beach. VENDOR: Davis Farr LLP OVERALL RANKING: 1 SUBJECT MATTER EXPERTS/RATERS: 1. Finance Manager -Accounting 2. Finance Project Manager 3. Deputy Director of Economic Development 4. Public Works Project Manager I. MINIMUM QUALIFICATIONS REVIEW • Written Proposal Score: 1,555 VENDOR NAME —Minimum, Qualifications Review - Total Weighted Maximum Criteria Score Score Compliance with RFP 80 100 Technical Approach 510 600 Qualifications 495 600 Clarity 170 200 Local Vendor Preference 0 100 Cost 300 400 Total 1,555 2,000 II. DUE DILIGENCE REVIEW • Interview Ranking: 1 Davis Farr LLP — Summary of Review • Leader in local government sector auditing throughout Southern California servicing approximately 60 local, state, and federal government entities. • Highly qualified: auditing governmental entities for over 30 years. • Serves on the Government Accounting and Audit Committee of the Cal CPA Society and are frequent speakers on technical topics at conferences and training events in California. • Provides an annual Governmental Accounting Standards Board (GASB) Technical Update for clients. • Proven track record of finding discrepancies. Currently providing audit services to the City for Hotels and Leases. • References: Excellent references from the cities of Carlsbad, Commerce, Delano, and Victorville as well as the Irvine Ranch Water District. Davis Farr LLP — Pricing • Pricing of $144,900 is competitive (mid -range of eight __proposals submitted) HB -281- Item 10. - 30 PROFESSIONAL SERVICES SERVICE: Financial Auditing Services SERVICE DESCRIPTION: Provide financial auditing services for all funds of the City's reporting entity, a Single Audit Report of the City's federal grant programs, an AB 2766 Audit relating to the City's Air Quality Fund, and an audit of the West Orange County Water Board (WOCWB), a fiduciary fund of the City of Huntington Beach. VENDOR: Vendor #2 OVERALL RANKING: 2 SUBJECT MATTER EXPERTS/RATERS: 1. Finance Manager -Accounting 2. Finance Project Manager 3. Deputy Director of Economic Development 4. Public Works Project Manager I. MINIMUM QUALIFICATIONS REVIEW • Written Proposal Score: 1,550 VENDOR NAME — Minimum Qualifications Review Total Weighted Maximum Criteria Score Score Compliance with RFP 80 100 Technical Approach 510 600 Qualifications 480 600 Clarity 180 200 Local Vendor Preference 0 100 Cost 300 400 Total II. DUE DILIGENCE REVIEW • Interview Ranking: 2 Vendor #2`- Summary, of Review • Partners at the firm have served governmental agencies since 1989, under the umbrella of its predecessor firm, where all key personnel assigned provided outstanding services to governmental entities throughout California. • Firm specializes in Governmental Auditing. • Strong experience in audits of local governments as well as experience with preparation of Comprehensive Annual Financial Reports and assistance with the implementation of new GASB Pronouncements. • References: References from the cities of Stockton, Desert Hot Springs, Clovis, and Town of Danville as well as the San Diego Metropolitan Transit System. Vendor #2 - Pricing • Pricing of $144, 727 is competitive (mid -range of eight proposals submitted) Item 10. - 31 HB -282- City of Huntington Beach 2000 Main Street ♦ Huntington Beach, CA 92648 (714) 536-5227 ♦ www.huntingtonbeachca.gov Office of the City Clerk Robin Estanislau, City Clerk November 14, 2016 Davis Farr LLP ATTN: Jennifer Farr 2301 Dupont Drive, Ste. 200 Irvine CA 92612 Dear Ms. Farr: Enclosed is a copy of the fully executed "Professional Services Contract Between the City of Huntington Beach and David Farr LLP for Financial Audit Services." Sincerely, Robin Estanislau, CIVIC City Clerk RE:pe Enclosure Sister Cities: Anjo, Japan ♦ Waitakere, New Zealand