HomeMy WebLinkAboutDIEHL, EVANS and COMPANY LLC - 2001-10-150 0
CITY OF HUNTINGTON BEACH
2000 MAIN STREET
CALIFORNIA 92648
OFFICE OF THE CITY CLERK
CONNIE BROCKWAY
CITY CLERK
LETTER OF TRANSMITTAL OF ITEM APPROVED BY THE CITY COUNCIL/
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
DATE: October 30, 2001
TO: Diehl Evans & Co., LLP ATTENTION: Nitin Patel, Partner
Name
2121 Alton Parkway, Suite 100 DEPARTMENT:
Street
Irvine, CA 92606-4906 REGARDING: Professional Services
City, State, Zip
Contract for Audit Services
See Attached Action Agenda Item E-18 Date of Approval 10/ 15/01
Enclosed For Your Records Is An Executed Copy Of The Above Referenced Agenda Item.
Remarks:
7
Connie Brockway
Citv Clerk
Attachments: Action Agenda Page x Agreement x Bonds
RCA Deed _
CC: C. Martin Adm. Serv. x x
Name Department RCA A :....en
R. Sedlak Adm. Serv. x x
Name
Department
Name
Depam -nent
Name
Department
Name
Department
RCA
RCA
RCA
RCA
I Telephone: 7 t4-535-5227 }
Ag erren:
A eG:cm
Insurance
Other
Insurance
Other
Insurance
Other
Insurance
Other
Insurance
C*.er
Insurance
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Council/Agency Meeting Held:
Deferred/Continued to:
p Quad ❑ C ditionally Approved ❑ Denied
Clerk' gnature
Council Meeting Date: October 15, 2001
Department ID Number: AS 01-026
CITY OF HUNTINGTON BEACH
Q
REQUEST FOR COUNCIL ACTION
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SUBMITTED TO:
HONORABLE MAYOR AND CITY COUNCIL'qr^
,C7
D
' 'C C'
-
SUBMITTED BY:
RAY SILVER, CITY ADMINISTRATOR~
7-
PREPARED BY:
CLAY MARTEN, DIRECTOR OF ADMINISTRATIVE SERVICES
SUBJECT:
Approve Professional Services Contract Between the City of
Huntington Beach and Diehl, Evans and Company, LLP for Audit Services.
Statement of Issue, Funding Source, Recommended Action, Altemative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: Should the City continue to contract with the firm of Diehl, Evans and
Company, independent Certified Public Accountants to conduct an audit of the City's
financial statements as required by the City.
Funding Source: Funds are available in General Fund account 10040101.69355, for
$46, 500.
Recommended Action: Approve the attached professional services contract with Diehl,
Evans and Company, LLP for audit services for the fiscal year ending September 30, 2001
and authorize its execution by the Mayor and City Clerk.
Alternative Action(s):
1. Select a different firm to perform the audit
2. Request staff to submit a proposal to the City Council for a multi -year contract
Analysis: The City is required by the City Charter to contract for an annual audit of the
City's financial statements. The City has contracted with Diehl, Evans and Company to
conduct this audit for the past four years and has received quality, professional service.
Initially, staff sent requests for proposals for the audit to 12 different firms for a three-year
contract plus a two-year extension. Staff received responses from the following eight firms:
• Diehl, Evans and Company, LLP
• Lance, Sohl, and Lunghard
• KPMG
• Conrad and Associates
• McGladrey and Pullen
• Caporicci, Cropper, and Larsen
• Vavrinek, Trine, and Day j
� � f
OEQUEST FOR COUNCIL ACTICO
MEETING DATE: October 15, 2001 DEPARTMENT ID NUMBER: AS 01-026
All the firms had the qualifications to perform the City audit.
After reviewing proposals, staff is recommending Diehl, Evans and Company for a one-year
agreement. This will bring the total commitment to Huntington Beach to five years.
Switching auditors requires significant adjustment and workload in order for the auditors to
gain familiarity with City operations and personnel. Since the City recently converted its
financial system to JD Edwards, staff does not feel that it would be wise to switch auditors for
this fiscal year and have to adjust for both an auditor change and a change in accounting
systems. Staff asked Diehl, Evans and Company to submit a one-year proposal. The one-
year amount of this proposal was $46,500. Diehl Evans was also the lowest bid of firms
submitting a five-year proposal.
For the audit for fiscal year 2001-2002, staff will again request proposals for a. multi -year
audit. The firms that submitted proposals will again be sent RFPs.
Environmental Status: Not applicable.
Attachment(s):
RCA Author: Robert Sedlak, Principal Accountant
Diehl Evans Audit Contract.doc -2- 1013101 11;28 AM
ATTACHMENT #1
PROFESSIONAL SERVICES CONTRACT BETWEEN
THE CITY OF HL�iTNGTON BEACH AND
DIEHL EVANS & COMPANY, L.L.P. FOR AUDIT SERVICES
THIS Agreement is made and entered into this 15th day of
2001, by and between the City of Huntington Beach, a municipal corporation of the State of
California, hereinafter referred to as "CITY," and DIEHL EVANS & COMPANY, L.L.P., a
California limited liability partnership, hereinafter referred to as "AUDITOR."
WHEREAS, CITY desires to engage the services of an independent auditor to audit all
City accounts for fiscal year 2000,12001 pursuant to Charter Section 616; and requested and
received proposals from various accounting and auditing firms in this regard: 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
AUDITOR has been selected to perform said services,
NOW, THEREFORE, it is agreed by CITY and AUDITOR as follows:
SCOPE OF SERVICES
Except for the information contained on page 18 of AUDITOR'S Proposal dated
June 8, 2001 under the headings of "MAXIMUM FEES" and "COMPOSITION OF CURRENT
AUDIT FEE," AUDITOR shall provide all services as described in: (a) the CITY'S Request for
Proposal ("RFP"), a copy of which is attached hereto as Exhibit "A" and incorporated herein by
reference; (b) AUDITOR'S Proposal dated June 8, 2001, a copy of which is attached hereto as
Exhibit "B" and incorporated herein by reference; and (c) a letter dated June 29, 2001 to the
CITY' S Director of Administrative Services from AUDITOR. a copy of which is attached hereto
aeree120011diehl evans - 711 L`01
as Exhibit "C" and incorporated herein by reference. The services described in these three
exhibits shall sometimes hereinafter be referred to as the "PROJECT."
2. DESIGNATED CONTACTS
CITY shall assign a staff coordinator to work directly with AUDITOR in the
performance of this Agreement.
AUDITOR hereby designates Nitin Patel, who shall represent AUDITOR and
shall be AUDITOR'S primary contract person with CITY.
3. TIME OF PERFORMANCE
Time is of the essence of this Agreement. The services of AUDITOR are to
commence as soon as practicable after the execution of this Agreement and all tasks specified in
Section 1 shall be completed no later than one (1) year from the date of this Agreement. These
times may be extended with the written permission of CITY. The time for performance of the
tasks identified in Section 1 are generally to be shown in the Scope of Services on the Work
Program/Project Schedule. This schedule may be amended to benefit the PROJECT if mutually
agreed by CITY and AUDITOR.
4. COMPENSATION
In consideration of the performance of the services described herein; CITY agrees
to pay AUDITOR a fee not to exceed Forty Six Thousand Fire Hundred Dollars ($46,500).
5. EXTRA WORK
In the event CITY requires additional services not included in Section 1, or
changes in the scope of services described in Section 1, AUDITOR 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.
amc.")001!deehl evans - 711 UO1 2
6. METHOD OF PAYMENT
A. AUDITOR shall be entitled to progress payments toward the fixed fee set
forth herein in accordance with the progress and payment schedules set forth in Section 1.
B. Delivery of work product: A copy of all reports prepared by AUDITOR
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. Any such product which has not been formally accepted or rejected
by CITY shall be deemed accepted.
C. AUDITOR shall submit to CITY an invoice for each progress payment
due. Such invoice shall:
1) Reference this Agreement;
2) Describe the services performed;
3) Shoe- the total amount of the payment due;
4) Include a certification by a principal member of AUDITOR's firm
that the work has been performed in accordance with the
provisions of this Agreement; and
5) For all payments include an estimate of the percentage of work
completed.
Upon submission of any such invoice, if CITY is satisfied that AUDITOR is
making satisfactory progress toward completion of tasks in accordance with this Agreement,
CITY shall promptly 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 AUDITOR in writing of the reasons for
aereef2001%diehl evans - ":1 1:'01 3
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non -approval within seven (7) calendar days of receipt of the invoice, and the schedule of
performance set forth in Section 1 shall be suspended until the parties agree that past
performance by AUDITOR is in, or has been brought into compliance, or until this Agreement is
terminated as provided herein.
D. Any billings for extra work or additional services authorized by CITY
shall be invoiced separately to CITY. Such invoice shall contain all of the information 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.
HOLD HARMLESS
AUDITOR shall protect, defend, indemnify, save and hold harmless CITY, its
officers, officials, employees, and agents from and against any and all liability, loss, damage,
expenses, costs (including without limitation, costs and fees of litigation of every nature) arising
out of AUDITOR's performance of this Agreement or its failure to comply with any of its
obligations contained in this Agreement.
8. WORKERS' COMPENSATION INSURANCE
Pursuant to California Labor Code Section 1861, AUDITOR acknowledges
awareness of Section 3700 et seq. of said Code, which requires every employer to be insured
against liability for workers' compensation; AT.TDITOR covenants that it will comply with such
provisions prior to commencing performance of the work hereunder; and shall indemnify, defend
agree`2G41diehS eti°ans ?1541 4
and hold harmless CITY from and against all claims. demands, payments, suit, actions,
proceedings, and judgments of every nature and description, including attorney's fees and costs
presented, brought or recovered against the CITY, for or on account of any liability under any of
said acts which may be incurred by reason of any work to be performed by AUDITOR under this
Agreement.
AUDITOR shall maintain workers' compensation insurance in an amount of not
less than One Hundred Thousand Dollars ($100,000) bodily injury by accident, each occurrence,
One Hundred Thousand Dollars (S100,000) bodily injury by disease, each employee, Two
Hundred Fifty Thousand Dollars (S250,000) bodily injury by disease, policy limit.
AUDITOR shall require all subcontractors to provide such workers'
compensation insurance for all of the subcontractors' employees. AUDITOR shall furnish to
CITY a certificate of waiver of subrogation under the terms of the workers' compensation
insurance and AUDITOR shall similarly require all subcontractors to waive subrogation.
9. GENERAL LIABILITY INSURANCE
In addition to the workers' compensation insurance and AUDITOR's covenant to
indemnify CITY, AliDITOR shall obtain and furnish to CITY, a policy of general public
liability insurance, including motor vehicle coverage covering the PROJECT. The policy shall
indemnify AUDITOR, its officers, agents and employees, while acting within the scope of their
duties, against any and all claims arising out of or in connection with the PROJECT, and shall
provide coverage in not less than the following amount: combined single limit bodily injury and
property damage, including products/completed operations liability and blanket contractual
liability, of $1,000,000 per occurrence. If coverage is provided under a form which includes a
designated general aggregate limit, the aggregate limit must be no less than S 1,000,000 for this
agree.!2001:diehl evans - %`1 L`01 5
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PROJECT. The policy shall name CITY, its agents. its officers, employees and volunteers as
Additional Insureds, and shall specifically provide that any other insurance coverage which may
be applicable to the PROJECT shall be deemed excess coverage and that AUDITOR's insurance
shall be primary.
10. PROFESSIOI\AL LIABILITY INSURANCE
AUDITOR shall furnish a professional liability insurance policy covering the
work performed by it hereunder. Said policy shall provide coverage for AUDITOR's
professional liability in an amount not less than S 1,000,000 per occurrence and in the aggregate.
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).
AUDITOR will make every effort to maintain similar insurance during the
required extended period of coverage following project completion, including the requirement of
adding all additional insureds.
If insurance is terminated for any reason, AUDITOR 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.
11. CERTIFICATES OF INSURANCE
Prior to commencing performance of the work hereunder, AUDITOR shall
furnish to CITY certificates of insurance subject to approval of the City Attorney evidencing the
foregoing insurance coverages as required by this Agreement; the certificates shall:
A. provide the name and policy number of each carrier and policy;
agree.120011diehl evans - 7AFO1 6
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B. shall state that the policy is currently in force; and
C. shall state that such policies 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.
AUDITOR shall maintain the foregoing insurance coverages in force until the
work under this Agreement is fully completed and accepted by CITY.
The requirement for carr-yring the foregoing insurance coverages shall not derogate
from the provisions for indemnification of CITY by AUDITOR under the Agreement. CITY or
its representative shall at all times have the right to demand the original or a copy of all said
policies of insurance. AUDITOR shall pay, in a prompt and timely manner, the premiums on all
insurance hereinabove required.
12. II` -DEPENDENT CONTRACTOR
AUDITOR 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 the CITY. AUDITOR
shall secure at its 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 AUDITOR and its officers, agents and employees and all business licenses, if
any, in connection with the sere ices to be performed hereunder.
13. TERMINATION OF AGREEMENT
All work required hereunder shall be performed in a good and workmanlike
manner. CITY or AUDITOR may terminate AUDITOR's services hereunder at any time with or
without cause, and whether or not PROJECT is fully complete. Any termination of this
aeree:2001Mieh] evans - 7r'1IiD1
Agreement shall be made in writing, notice of which shall be delivered as provided herein. In
the event of termination, all finished reports shall, at the option of the CITY, become its property
and shall be delivered to it by AUDITOR.
14. ASSIGNMENT AND SUBCONTRACTING
This Agreement is a personal service contract and the supervisory work hereunder
shall not be delegated by AUDITOR to any other person or entity without the express written
consent of CITY.
15. CITY EMPLOYEES AND OFFICIALS
AUDITOR 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.
r
16. NOTICES
Any notice or special instructions required to be given in writing under this
Agreement shall be given either by personal delivery to AUDITOR's agent (as designated in
Section 1 hereinabove) or to CITY's Director of Administrative Services 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, addressed as follows:
TO CITY:
Clay Martin
Director of Administrative Services
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
TO AUDITOR:
aeree 200I Idiehl evans - 7111 iO 1 8
Nitin Patel, Partner
Diehl Evans & Company, L.L.P.
2121 Alton Parkway, Suite 100
Irvine, CA 92606-4906
17. MODIFICATION
No waiver or modification of any language in this Agreement shall be valid
unless in writing and duly executed by both parties.
18. SECTION HEADINGS
The titles, captions, section, paragraph, 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 maters 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.
19. 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
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
agree.'2001'diehl evans - 7111'01 9
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-.
20. 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 of the parties hereto shall
retain an originally signed copy hereof. Each duplicate original shall be deemed an original
instrument as against any party who has signed it.
21. IMMIGRATION
AUDITOR 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.
22. LEGAL SERVICES SLBCONTRACTNG PROHIBITED
AUDITOR and CITY agree that CITY is not liable for paygnent of any
subcontractor work involving legal services, and that such legal services are expressly outside
the scope of services contemplated hereunder. AUDITOR understands that pursuant to
Huntington Beach City Charter Section 309, the City Attorney is the exclusive legal counsel for
CITY; and CITY shall not be liable for payment of any legal services expenses incurred by
AUDITOR.
23. ATTORNEY' S FEES
In the event suit is brought by either party to enforce the terms and provisions of
this Agreement or to secure the performance hereof, each party shall bear its own attorney's fees.
as ec.'?001;diehl evans - 7 11/01 10
24. ENTIRETY
The Agreement contains the entire agreement between the parties respecting the
subject matter of this Agreement and supercedes all prior understanding and agreements whether
oral or in writing. The foregoing sets forth the entire Agreement between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by and through their authorized offices the day, month and year first above written.
DIEHL, EVANS & COMPANY, L.L.P. a CITY OF HUNTINGTON BEACH, a
California limited liability partnership municipal corporation of the State of
California
Bv:
1� t'7'N P. PATEN
print name
Its: General/Managing Partner
REVIEWED AND APPROVED:
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Cit dministrator
asree/200U'diehl evans - 7/11:01 11
M ;,or
ATTEST
City Clerk li -,N 01
APPROVED AS TO FORM:
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City Attorney
Tl TTTT wTT /��
of Administrative Services
EXHIBIT A
CITY OF HUNTINGTON BEACH
Administrative Services Department
2000 Main St.
Huntington Beach, CA 92648
Dear Sir or Madam:
The City of Huntington Beach is requesting proposals for its audit
contract for fiscal years ending September 30, 2000-2001 to 2004-
2005.
About the City of Huntington Beach:
The City of Huntington Beach is a full -service City with a General
Fund budget of over $127 million and a total budget of over $270
million for fiscal year 2000-2001.
The Finance Division of the Administrative Services Department will
be responsible for the annual audit. The City has received the
Certificate of Achievement for Excellence in Financial Reporting each
year since 1986. The City prepares its own Comprehensive Annual
Financial Report and the Redevelopment Agency Component Unit
Report.
The City has an exceptionally qualified staff including 6 CPAs. On
October 1, 2000 the City converted its financial system to JD
Edwards. In June, 2001, the City expects to convert its payroll
system as well.
The reporting entity consists of the following entities:
Entities requiring separate reports:
• City of Huntington Beach
• Redevelopment Agency of the City of Huntington Beach
• Huntington Beach Public Financing Authority
• Central Net Operations Authority (Pending CNOA agreement)
•
•
Entities not requiring separate reports:
• Huntington Beach Civic Improvement Corporation
• Huntington Beach Community Facilities District 1990-1
• Reservoir Hill Assessment District
• Huntington Beach Auto Business Improvement District
The City will also require the following reports. -
Single Audit
• Appropriation Limit Calculation
• Air Quality Audit (Assembly Bill 2766)
• Management Letter
Length of Contract:
The City is asking for a proposal to cover three years plus two option
years.
Items to Include in Proposal:
• A statement as to your understanding of the engagement
including
• A statement as to your firm's qualifications to perform
governmental audits
• Resumes of key personnel to be assigned to the engagement
including partner, manager, and senior
• Timetable for completion of the engagement
• Description of
• Listing of professional references
Timetable for Selection of Auditors:
• June 1" , 2001 — Three copies of proposal due to . Richard
Amadril, Central Services Manager, 2000 Main St. Huntington
Beach, CA 92648.
• June 1" to June 21st- City staff analyzes proposals and may
conduct interviews of selected firms.
• July — August 2001- City staff selects firm and contract is
submitted to City Council for approval.
City Staff Contacts:
The City staff contacts are:
• Single Audit- Arnold Ross, Sr. Accountant (714) 536-5238
(rossa@surfcity-hb.org)
• Insurance Requirements — Christine Mendoza- (714) 536-5252
(mendozac@surfcity-hb.org)
• All other audit questions — Robert Sedlak, Principal Accountant,
(714) 536-5907 (sedlakr@surfcity-hb.org)
No bidders conference is planned.
We have included a copy of the City's September 30, 2000
Comprehensive Annual Financial Report for your review. Thank you
for considering proposing to the City of Huntington Beach.
Clay Martin,
Director of Administrative Services
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EXHIBIT B
•
CITY OF HUNTINGTON BEACH
FOR THE THREE YEARS ENDING
SEPTEMBER 30, 2003
(WITH AN OPTION FOR THE TWO
YEARS ENDING SEPTEMBER 30, 2005)
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
i TITLE PAGE �
RFP Subject: Certified Audits on the City of Huntington Beach
For the Three Years Ending September 30, 2003
(With An Option For The Two Years Ending
September 30, 2005)
Name of Proposer: Diehl, Evans & Company, LLP
Certified Public Accountants and Consultants
Local Address: 2121 Alton Parkway, Suite 100
Irvine, CA 92606-4906
Telephone: (949) 399-0600
Fax: (949)399-0610
Website: A,,Aw.diehlevans.com
Email: nitinp@diehlevans.com
Contact Persons: Nitin P. Patel, CPA
Engagement Partner
Michael R. Ludin, CPA
Consulting Partner
Date: June 8, 2001
t •
CITY OF HUNTINGTON BEACH
ITABLE OF CONTENTS
IJune 8, 2001
' Page
Number
'
Letter of Transmittal
1 - 2
Qualifications of the Firm:
Size and Location of Firm
3
Range of Activities
3
Licensing and Independence
Participation in "Quality Review" Programs
3
3
Education Programs
4
Participation in Professional Organizations
4-5
'
GFOA and CSMFO Award Programs
5
City Client References
6
Redevelopment Agency and Enterprise Fund Experience
7
'
Water Districts and Special Districts
8
Nonprofit Corporations and Joint Power Authorities
8
'
Experience With Government Bond Offerings
9
Computer Auditing Capabilities
10
Impact of GASB Statement No. 34
11
'
Audit Team
12
Commitment Related To Personnel
12
Nondiscrimination Policy
12
'
Insurance
12
'
Audit Scope and Approach:
Entities To Be Included In Audit
13
Reports To Be Issued and Due Dates
13
Commitment to Deliver Reports on a Timely Basis
13
1
Audits To Be In Accordance With GAAS and Other Requirements
14
Audit Approach
14 - 15
'
Single Audit Approach
15
Approach In Determining Laws and Regulations Subject to Audit
16
Method of Sampling
16
'
Management Letters
16
Other Professional Services
16
Retention Of and Access To Audit Workpapers
16
Audit Timing
17
Schedules to be Prepared by City Staff
17
TABLE OF CONTENTS
(CONTINUED)
June 8, 2001
Fees and Hourly Rates:
Page
Number
Maximum Fees
18
Composition of Current Audit Fee
18
Hourly Rates For Special Services
18
Management Consulting Services:
Consulting on Governmental Tax Issues
19
Cable Television Consulting Services
20
Cable Television Industry References
21
Hotel Transient Occupancy Tax Reviews
22
Litigation Support and Dispute Resolution Services
for Governmental Agencies
23
Reviews of Solid Waste Contractors
24
Redevelopment Agency Consulting
25
Cost Allocation Plans
25
Computer Consulting Services
26
Attachment I - Resumes of Partners and Personnel Assigned to Audit
27 - 30
Attachment II - Resume of Management Consultant
31 - 32
Attachment III - Results of Outside Quality Review
33
DIEHL, EVANS & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
A PARTNERSHIP INCLUMENG ACCOUNTANCY CORPORAIIONS
MICH_AEL A. LUTrIN, CPA
'
2121 ALTO\ PARKWAY, SUITE 100
CRAIG W. MAKER. CPA
NITIN P. PATEL. CPA
IRVINE, CALIFORNIA 92606-4906
• PHILIP H_ HOLTKAMP, CPA
(949) 399-0600 • FAX (949) 399-0610
• THOMAS M. PERLOWSKI. CPA
• HARVEY3. SCHROEDER, CPA
'
vv 7
wwdiehlevansxom June 8, 2001
A PROFESSIONAL CORPORATION
'
Mr. Richard Amadril
Central Services Manager
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
1
Dear Mr. Amadril:
We are pleased to present our proposal to continue to serve as independent auditors for the City of
Huntington Beach. We have prepared this information in accordance with the guidelines set forth in your
1 request for proposal.
Whv We Are The Best Qualified Firm
t We consider ourselves to be the best qualified firm to perform auditing and accounting services for the
q
City of Huntington Beach. Please consider these qualifications:
' . extensive experience in auditing governmental entities. We currently audit sixteen cities
Our firm has ex ns p g g y ,
' sixteen redevelopment agencies, ten water districts, seven other special districts, and over thirty
nonprofit corporations and joint power authorities.
• Unlike many of the large, national and international accounting firms, we have a relatively low staff
turnover rate. This has allowed us to keep continuity in our engagement teams from year to year, and
has allowed our professional staff to gain extensive municipal auditing experience. Since they are
familiar with municipal procedures and records, this will eliminate much disruption to your staff. We
make a commitment to retain the same staff on the audit from year to year, except where such
personnel leave the firm. If a staff member is replaced, we also make a commitment to replace that
person with staff of at least equal experience.
• As of October 1, 2000, the City has converted its financial system to J.D. Edwards One World. Our
' familiarity with the City's accounting system including the chart of accounts will reduce your staff s
time in familiarizing us with J.D. Edwards One World financial system.
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OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W. VALLEY PARK\VAY, SUITE 330
' CARLSBAD. CALIFORNIA 92008-2389 ESCONDIDO, CALIFORNIA 92023-2598
(760) 729-2343 • FAX (760) 729-2234 (760) 741-3141 • FAX (760) 741-9890
Why We Are The Best Qualified Firm Contiliiied
' • The City will require a single audit of its federal grants, in accordance with Government Auditing
Standards and OMB Circular A-133. We perform single audits on substantially all of our city clients.
' • You have expressed a desire to submit your reports for the national award programs. We have
extensive experience in assisting our city clients in obtaining the GFOA "Certificate of Achievement
I for Excellence in Financial Reporting' and the CSMFO "Outstanding Award". We have worked
closely with GFOA reviewers to resolve questions on reports, and Three members of our audit team
are "reviewers" for the CSMFO award program. Over the past five years, all of our city clients that
' have applied have received the GFOA and CSMFO awards. We will assist you to ensure that the
City's financial statements continue to meet all appropriate reporting standards.
• We are a full service CPA firm. Our Management Consulting Department can provide the City with
a wide variety of services, including cable television franchise fee and rate regulation compliance
reviews, hotel transient occupancy .tax reviews, litigation support and dispute resolution services,
reviews of solid waste contractors, consulting on redevelopment agency matters, cost allocation plans
and computer systems consulting.
' We make a commitment to deliver all necessary reports based on the timetable presented herein on
page 13. Also, our understanding of the work to be performed is set forth on pages 13 through 17.
Our goal is to provide the City with the highest quality of service, including a CAFR which meets all
required reporting standards and a comprehensive management letter which is practical and helpful to
' management in improving operations. Also, our goal is to maintain a close, personal relationship with
you and your staff, one which is a year-round working relationship. You should feel comfortable in
calling on us for advice at any time. We will always be available should you require our services.
1 We respectfully request that we be selected as the independent auditors for the City for the three years
ending September 30, 2003, with an option for the two years ending September 30, 2005. We look
1 forward to personally meeting with you to discuss our qualifications.
' We thank the City for the opportunity to present our proposal. Please feel free to contact me, or
Mr. Ludin, at (949) 399-0600 if you have any questions. This proposal constitutes a firm and irrevocable
offer for 90 days from the date of this letter. Mr. Ludin and I are authorized to represent our firm, and bind
' the firm to a contract.
Very truly yours,
DIEHL, EVANS & COMPANY, LLP
By:. - - Qa7Ck
Nitin P. Patel, CPA
Engagement Partner
•QUALIFICATIONS OF THE FI1V
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SIZE AND LOCATION OF THE FIRM
Diehl, Evans & Company, LLP is a Southern California accounting firm with offices in Irvine, Carlsbad
and Escondido. We are one of the oldest CPA firms in Southern California, with over 70 years of public
practice experience.
Diehl, Evans & Company, LLP has extensive experience in governmental auditing and accounting. Over
twenty thousand hours per year are devoted to this area of our practice for over 100 governmental units
including cities, redevelopment agencies, water districts, special districts, nonprofit corporations and joint
power authorities.
Our firm has approximately 45 employees. Your City would be served from our Irvine office, which has
twenty professional staff members.
RANGE OF ACTIVITIES
Diehl, Evans & Company, LLP is a full service CPA firm. We offer a broad range of services, including:
Certified Audits
Compilations and Reviews
Limited Procedure Reviews
Tax Planning
Income Tax Preparation
Management Consulting Services
Our specific services for governmental agencies are more fully set forth in this proposal.
LICENSING AND INDEPENDENCE
Our firm, and all of our certified personnel, are property licensed to practice public accounting in
California.
Also, we meet the independence requirements of "Governmental Auditing Standards" (1994 Edition), as
published by the U.S. General Accounting Office.
Our firm is independent of the City and its component units as defined by the 1994 Governmental Auditing
Standards.
PARTICIPATION IN "QUALITY REVIEW" PROGRAMS
In 1986, our firm began an annual internal quality review program, whereby all three offices are reviewed
for compliance with all current accounting and auditing requirements. Formal reports of these reviews are
presented to the partners, and adjustments in our auditing and reporting procedures are made as necessary.
In January, 2000, our firm underwent a quality review by a group of outside CPAs; under provisions of
the AICPA Quality Review Program. These reviews are required every three years. The 2000 review
included a review of our audits of governmental agencies. On February 11, 2000 we received a final report
with an unqualified opinion on our systems and procedures. A copy of the outside CPAs report is included
herein at Attachment II. Accordingly, we are confident that our current auditing standards and techniques
meet all existing requirements.
No regulatory action has ever been taken against any office of our firm due to substandard work. We had
no significant deficiencies noted in any federal or state desk reviews over the past three years.
• EDUCATION PROGRAMS •
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Diehl, Evans & Company, LLP has a formal continuing education program. All firm auditors are required
to obtain 40 hours of continuing education per year, and at least 24 hours of government related continuing
education courses every two years. Our staff is continually expanding their knowledge of the governmental
industry through our in-house training programs, programs offered by the AICPA, the California Society
of Certified Public Accountants and other professional organizations; and through on-the-job training. We
also publish an Auditing Manual For Governmental Entities for use by our staff. The manual is updated
at least annually.
Noted below is a description of certain in-house education courses taken by our partners and staff to meet
the governmental continuing education requirements. All personnel involved with governmental auditing
are required to attend these courses.
• Understanding, and Auditing, Deposiis and Investments of California Governmental units
• Reviews of Internal Controls in Accordance With Statements on Auditing Standards 55 and 78
• Assessing Audit Risk and Materiality in Conducting An Audit
• Understanding the Gann Computation
• Redevelopment Agency Compliance Audits - Interpreting the Health and Safety Code
• Computer Auditing in the Governmental Environment
• The Single Audit -New Provisions under OMB Circular A-133
• Laws and Regulations in the Government Sector
PARTICIPATION IN PROFESSIONAL ORGANIZATIONS
Our partners and staff are actively involved in professional organizations in the governmental accounting
field. Noted below is a summary of our participation in various national and California governmental
organizations.
GFOA, GASB and FASB
Our firm is an associate member of the Government Finance Officers Association of the United States and
Canada (GFOA).
Also; we have subscriptions with the Governmental Accounting Standards Board (GASB) and the
Financial Accounting Standard Board (FASB). We receive all GASB and FASB Statements,
Interpretations, Technical Pronouncements and Newsletters. We regularly analyze these pronouncements
and advise our governmental clients of changes in accounting rules.
' PARTICIPATIOPIN PROFESSIONAL ORGANIZATIPS CONTINUED
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CSMFO and CRA
' Our partners (Mr. Michael Ludin, Mr. Craig Spraker and Mr. Nitin Patel) and our Director of Management
Consulting (Mr. Bill Morgan) are associate members of the California Society of Municipal Finance
I Officers (CSMFO). Our personnel regularly attend local CSMFO chapter meetings throughout Southern
California, and the annual statewide conference. We often provide public speakers for these meetings.
Our firm also is an active member in the California Redevelopment Association (CRA). We receive
monthly newsletters from CRA to keep us up to date on legal developments affecting redevelopment
agencies. Mr. Morgan periodically serves as a public speaker for seminars and workshops sponsored by
CRA.
1 CSCPA
Mr. Ludin, Mr. Spraker, Mr. Patel, Mr. Morgan and several of our managers are all members of the
Governmental Accounting and Auditing (GAA) Committee of the Orange County Chapter, California
Society of Certified Public Accountants (CSCPA). Mr. Ludin and Mr. Morgan have both served as
chairman of this committee, and have been involved over the years in preparing position papers issued on
governmental accounting matters.
GFOA AND CSMFO AWARD PROGRAMS
The partner and manager will be involved in all phases of report preparation or review, including the
' drafting of footnotes. Reporting checklists will be used to assure compliance with all reporting
requirements. Based on the high quality of our review process, we have been able to assist various cities
in obtaining the GFOA "Certificate of Achievement for Excellence in Financial Reporting" and the
' "Outstanding Award" for financial reporting from CSMFO. During the past five years, the following
clients received awards:
Big Bear Lake Del Mar Los Alamitos San Juan Capistrano
Burbank Garden Grove Palm Desert Santa Clarita
' Cerritos Healdsburg Placentia Signal Hill
Chino Huntington Beach Rancho Palos Verdes Simi Valley
Claremont Irvine Redondo Beach Thousand Oaks
Coronado Lakewood San Clemente Westminster
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• CITY CLIENT REFERENCES •
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One means of judging the high quality of our auditing and accounting services would be contact with some
of our existing clients. We are including the names and phone numbers of our current city clients. We
encourage you to contact any of these individuals.
City of Cathedral Cite City of Downey
Mr. Dudley Haines Mr. John Michicoff
Director of Administrative Services Finance Director
(760) 770-0340 (562) 904-7262
City of Cerritos
Ms. Becky Lingad
Finance Manager
(310) 860-0311
City of Chino
Mr. David D. Cain
Director of Finance
(909) 627-7577
City of Commerce
Mr. Thomas Bachman
Director of Finance
(323) 722-4805
City of Garden Grove
Mr. Anthony J. Andrade
Controller
(714) 741-5061
City of Hesperia
Mr. A.B. Brand
Interim Finance Director
(760) 947-1442
City of Irvine
Ms_ Kathy Rafferty
Manager of Fiscal Services
(949) 724-6027
Citv of Coronado City of Lakewood
Mr. Jack Van Sambeek Mr. Larry Schroeder
Director of Administrative Services Director of Finance
(619) 522-7300 (310) 866-9771
City of Del Mar
Ms. Suzanne Wellcome
Financial Director
(619) 755-9354
City of Palm Desert
Mr. Paul S. Gibson
Director of Finance
(619) 346-0611
Citv of Signal Hill
Mr. Dennis MacArthur
Director of Finance
(562) 989-7319
City of Simi Valley
Mr. Steve Elam
Director of General Services
(805)583-6749
City of Tustin
Mr. Ronald Nault
Finance Director
(714) 573-3061
City of Westminster
Ms. Sheri PeasIey
Director of Finance
(714) 898-3311
IVEVELOPMENT AGENCY EXPEROCE
Currently, we audit the following sixteen redevelopment agencies.
1 Cathedral City Redevelopment Agency Irvine Redevelopment Agency
1 Cerritos Redevelopment Agency Lakewood Redevelopment Agency
Chino Redevelopment Agency Marin County Redevelopment Agency
Commerce Redevelopment Agency Palm Desert Redevelopment Agency
Coronado Redevelopment Agency Signal Hill Redevelopment Agency
Downey Redevelopment Agency Simi Valley Redevelopment Agency
' Garden Grove Redevelopment AsencAgency v Tustin Redevelopment
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Hesperia Redevelopment Agency Westminster Redevelopment Agency
ENTERPRISE FUND EXPERIENCE
Most cities audited by our firm have a water utility enterprise fund. Noted below is a partial listing of other
enterprise funds audited by our firm over the past five years:
City
Enterprise
Big Bear Lake
Water
Burbank
Water, Electric, Refuse, Golf
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Cerritos
Reclaimed Water
Chino
Water, Sewer, Sanitation System
Claremont
Transit, Sewer, Sanitation, Cemetery
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Coronado
Golf Course, Sewer
Del Mar
Sewer
Downey
Golf Course, Transit System
Healdsburg
Water, Sewer, Electric, Transit, Airport
Lakewood
Water
Redondo Beach
Harbor
San Juan Capistrano
Water, Sewer
Santa Clarita
Transit
Seal Beach
Sewer
Sinai Valley
Water, Sanitation, Transit
Westminster
Water
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' WAR DISTRICTS AND SPECIAL DISWTS
' ow is a listing of water and special districts audited b our firm over the past year.
Noted bet g p y p y
Water Districts
Borrego Water District La Puente Valley County Water District
Castaic Lake Water Agency Leucadia County Water District
Cucamonga County Water District Mesa Consolidated Water District
Devil's Den Water District Trabuco Canyon Water District
El Toro Water District Vallecitos Water District
S ecial Districts
Beach Cities Health District Orange County Cemetery District
Downey Cemetery District Sunset Beach Sanitary District
Garden Grove Sanitary District Valley Wide Recreation and Park District
Midway City Sanitary District
NONPROFIT CORPORATION'S AND JOINT POWER AUTHORITIES
Noted below is a partial listing of nonprofit corporations and joint power authorities audited by our firm
over the past year. A substantial number of these entities are "component units" which are combined into
the general purpose financial statements of cities or other organizations which exercise oversight
responsibility.
Cathedral City Community Service District
Cathedral City Public Financing Authority
Coronado Financing Authority
Coronado Improvement Corporation
Del Mar Public Facilities Corporation
Discovery Museum of Orange County
Downey Civic Center Corporation
Downey Recreational Area Authority
Downey Water Facilities Corporation
Garden Grove Cable Corporation
Garden Grove Fire Training Facility
Garden Grove Improvement Corporation
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Garden Grove Library Corporation
Garden Grove Willowick Golf Course
Human Options. Inc.
Huntington Beach Public Financing Authority
Huntington Beach Public Improvement Corp.
Irvine Child Development Center
Operating Corporation
Irvine Senior Foundation
Public Cable Television Authority
South County Senior Services
Southeast Area Animal Control Authority
United Cerebral Palsy Association r
of Orange County
Most of our governmental clients regularly issue bonds and other financing vehicles. Our firm is often
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' involved with the following types of financing:
Tax Anticipation Notes
Tax Allocation Bonds
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Revenue Bonds
Certificates of Participation
Special Assessment District Bonds
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Residential Mortgage Revenue Bonds
Industrial Development Bonds
Municipal Sale/Leaseback Arrangements
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Lease Purchases
Bank Notes
The Firm provides a variety of services in connection with these financing arrangements, depending on
' the extent of our association with the offering. Under guidelines provided by the A1CPA, we are
"associated with" an offering if we provide any of the following services:
1. Manually sign the auditors' report included in the offering document.
2. Provide a "consent letter" or "comfort letter' in connection with the official statement.
3. Review drafts of the official statement at the q
CitY 's request.
' 4. Assist in the preparation of supplemental financial information included in the official statement.
' Under these circumstances, we perform a "subsequent events' review of the City's financial condition
immediately prior to the effective date of the offering. Such reviews are not part of our standard fee
arrangements, and would be subject to a separate fee quotation.
' Finally, we regularly issue separate certified audit reports on individual bond issues, such as mortgage
revenue bonds and industrial development bonds.
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In connection with our evaluation of internal controls, our in-house computer audit consultant will perform
a review of your EDP systems. His review will include the following areas:
• Organizational controls.
• Physical controls over the hardware and peripheral equipment.
• Operational controls (input, processing and output controls).
More specifically, our auditors verify to what extent the City is utilizing:
• Terminal controls (password restrictions, etc.)
• Program access restrictions
• Master file change controls
• On-line editing
0 Batch and hash total controls
Back-up procedures
Management review of documents and reports provided by the computer system
After our internal controls evaluation, we will determine to what extent computer auditing techniques will
be utilized. For some testing, we may audit `'through" the City's EDP -produced records, rather than
"around" them. The extent of our computer auditing will be determined based on our analysis of the cost
effectiveness of these techniques.
For cities that use a fully -integrated, on-line computer system, our audit staff members may become
knowledgeable with the City's procedures for accessing and making "inquiries" into the various computer
applications. In some instances, we may be able to randomly access and print-out sample data without
significant assistance from City staff. Otherwise, we may need to request that City programmers assist
us in accessing and printing -out the desired data. Alternatively, we may download selected City data into
our portable computers, and then perform random audit tests on the data using our own computer -auditing
softwrare programs.
Each of our audit staff members is equipped with portable computers that are used to assist in workpaper
preparation, trial balance adjustments, etc. We utilize Accountants Trial Balance, Lotus 1-2-3, Excel,
Word,WordPerfect, dBase and other programs to assist us in our audit work.
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' *PACT OF GASB STATEMENT NA
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In June 1999, the GASB issued Statement No. 34, Basic Financial Statements - and Management's
' Discussion and Analvsis - for State and Local Governments. That pronouncement established a whole new
governmental financial reporting model for state and local governments. The purpose of the new financial
reporting model is to provide more understandable and useful financial reports to a wider range of users
than the previous model did. Comprehension, implementation, and explanation of GASB Statement No. 34
will be an ongoing process as City management and auditors analyze, interpret and implement the new
standards in the City's environment. Generally, most governments will make no significant changes to
' their financial accounting system. The Statement does not make changes to the underlying accounts that
are necessary for preparing the fund financial statements; it only changes the presentation. In most
instances, governments will also have the information in their records for consolidating the fund financial
' statements and making the adjustments necessary to prepare the government -wide financial statements.
' The more obvious exceptions for most governments will be depreciation records for capital assets and
infrastructure. Most governments will make accrual entries to record receivables and payables and
consolidating and eliminating entries as trial balance or workpaper adjustments (using a separate
worksheet or spreadsheet). GASB Statement No. 34 does not require that a separate general ledger be
maintained to support the government -wide financial statements.
While GASB Statement No. 34 will generally not require changes to a government's general or subsidiary
ledgers, changes may be required by other pronouncements, such as GASB Statement No. 33, Accounting
and Financial Reporting for Nonexchange Transactions, that must be adopted before or simultaneous with
GASB Statement No. 34.
Included below is a list of our clients which are in the process of implementing GASB No. 34 for the year
ending June 30, 2000.
City of Palm Desert
City of Irvine
City of Garden Grove
Mesa Consolidated Water District
El Toro Water District
Castaic Lake Water Agency
We are assisting these clients by providing information in key areas such as infrastructure reporting
requirements and changes required in the financial statements under the new reporting model.
We can be of assistance in key areas for your implementation phase in the year ending September 30,
2002.
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' 0 AUDIT TEAM •
The audit team will consist of the engagement partner, audit manager, senior and one staff accountant.
' The engagement partner will be Mr. Nitin P. Patel, CPA. He will be the primary contact for all matters
involving the City audit and will be responsible for assuring that all work for the City is performed in a
' complete and timely manner.
Mr. Michael R. Ludin, CPA, will act as consulting partner on any unusual accounting or auditing
' problems.
Mr. Jacob C. Rahn, CPA, will serve as audit manager. He will coordinate the engagement, supervise the
' senior accountant, schedule all field work, monitor time budgets, review all workpapers and resolve any
accounting or auditing problems prior to submission of final reports_
' The audit senior will be Ms. Daphne Fuertez, CPA. She will assume responsibility for all field work,
prepare the audit plan and audit programs, review and analyze internal controls, research accounting and
auditing problems, assist in preparing the City's financial statements, prepare management letters and
supervise staff assistants.
1 Resumes for the above partners and personnel are included at Attachment I on pages 27 through 30.
' COMMITMEI\T RELATED TO PERSONNEL
We make a commitment to retain the same personnel on the City from year to year, except where such
' personnel leave the firm, or where the change is approved by the City. If a staff member is replaced, we
make a commitment to replace that person with staff of at least equal experience.
' NONDISCRIMINiATION POLICY
' Our firm has a policy to provide equal employment opportunities to all qualified persons without regard
to race, color, age, sex, religion, national origin or handicap.
INSURANCE
Our firm can meet the insurance requirements of the City of Huntington Beach.
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' 0 AUDIT SCOPE AND APPROACP
' ENTITIES TO BE INCLUDED Ill AUDIT
City of Huntington Beach
Redevelopment Agency of the City of Huntington Beach
Huntington Beach Public Financing Authority
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Central Net Operations Authority
Huntington Beach Civic Improvement Corporation
Huntington Beach Community Facilities District 1990-1
Reservoir Hill Assessment District
Huntington Beach Auto Business Improvement District
' REPORTS TO BE ISSUED AND DUE DATES
Due Dates
City of Huntington Beach - Comprehensive Annual Financial Report February 28, 2002
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Redevelopment Agency of the City of Huntington Beach -
Annual Report, Including Report on Compliance February 28, 2002
Huntington Beach Public Financing Authority February 28, 2002
Central Net Operations Authority February 28, 2002
' AB 2766 Subvention Funds Report February 28, 2002
' Management Letter February 28, 2002
Report on Compliance with Article XIIIB Appropriation Limit February 28, 2002
tSingle Audit Reports: April 30, 2002
• Independent Auditors' Report on Compliance and on Internal
' Controls Over Financial Reporting Based on Audit of Financial
Statements Performed in Accordance With Government Auditing
Standards
• Independent Auditors' Report on Compliance with Requirements
Applicable to Each Major . Program and Internal Control Over
' Compliance in Accordance with OMB Circular A-133 and
Supplementary Schedule of Expenditures of Federal Awards.
COMMITMENT TO DELIVER REPORTS ON A TIMELY BASIS
' If all books and records, schedules and documents are made available to us by December 1, we make a
commitment to have audit team members available and to provide all reports by the due dates specified
above.
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We will audit the general purpose financial statements of the City and the component units noted on the
preceding page. The financial statements of all entities where the City exercises oversight will be
combined with the City's financial statements, in accordance with GASB Statement 14. Our audits will
be in accordance with generally accepted auditing standards as set forth by the AICPA, and will include
such auditing procedures as we consider necessary under the circumstances. The combining, individual
fund and account group financial statements will be subjected to auditing procedures as we consider
necessary in relation to the general purpose financial statements taken as a whole. The scope of our audits
will not include any statistical information, and we will not express an opinion concerning it.
Our audits will conform with the guidelines set forth in the AICPA's Industry Audit Guide, Audits of State
and Local Governmental Units. Also, each examination will comply with the standards for financial and
compliance audits contained in the Government Auditing Standards 1994 Edition), issued by the U.S.
General Accounting Office, and the requirements of OMB Circular A-133.
Our audit of the Redevelopment Agency will include an audit on compliance in accordance with Health
and Safety Code Section 33080.1 and Sections I through V of the "Guidelines for Compliance Audits of
California Redevelopment Agencies" issued by the State Controller's Office.
Also, we will perform a limited procedures review of the City's Gann Spending Limitation Computation
as required by Section 1.5 of Article X1I1B of the California Constitution. Our review will be performed
in conformance with the provision of the "League of California Cities Uniform Guidelines".
AUDIT APPROACH
Planning and Initial Work:
After our appointment as auditors, members of our audit team will meet with you and your staff to
discuss the scope and timing of the audits and any accounting issues known at that time. We will
update our narratives or other documentation of the major internal accounting control systems. such
as revenue and cash receipts, cash disbursements, purchasing and accounts payable, payroll, inventory,
property and equipment, grant administration and the budget process. These are used to evaluate the
systems of internal control and to revise our standard audit programs as needed. We will select a
random sample of transactions from throughout the year to determine that the systems are functioning
as described to us. We will identify the strengths of the systems upon which we can rely in planning
our substantive tests and in setting materiality limits. Our internal control review will meet all the
requirements of AICPA Statement on Auditing Standards No. 55, "Consideration of the Internal
Control Structure in a Financial Statement Audit', as amended by Statement on Auditing Standards
No. 78.
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•AUDIT APPROACH (CONTINUE*
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2. Final Audit Work:
During the final audit work, we will concentrate on auditing the final amounts that appear in the City's
CAFR. Our work may include:
Confirmation of cash and investments, major receivables, long-term debt and major revenues if
appropriate.
• Detailed audit of all significant balance sheet and revenue and expenditure/expense accounts for
each fund group.
• Analytical procedures on balance sheet and revenue and expenditure accounts, to evaluate and
explain unusual fluctuations from prior year balances or current year budgeted amounts.
Our firm uses comprehensive audit programs for Cities. Redevelopment Agencies and Single Audits.
The programs are amended, as necessary, for each audit.
SINGLE AUDIT APPROACH
The single audit will be performed in accordance with all the requirements of the Single Audit Act
Amendments of 1996, OMB Circular A-133, Government Auditing Standards issued by the GOA (the
"Yellow Book") and AICPA Statement on Auditing Standards No. 68, "Compliance Auditing Applicable
to Governmental Entities and Other Recipients of Governmental Financial Assistance''.
When we begin the single audit, we will identify the Major and Nonmajor Federal Financial Assistance
Programs of the City. Each Major and Nonmajor program will be identified as either a low risk or high
risk program. Programs to be tested will be selected based on our assessment of risk for each program.
We will identify the types of activities that are either specifically allowed or prohibited by the laws,
regulations, and contract or grant agreements pertaining to the programs and document an understanding
' of the internal controls the City has to provide reasonable assurance that federal awards are expensed only
for allowable activities or costs. We will test the internal controls that are in place to determine if they are
effective in detecting material noncompliance.
' We will select a sufficient number of transactions to support a low level of assessed control risk. If no
exceptions in the function of key controls are noted, we will conclude that a low level of control risk was
1 achieved. If weaknesses in the internal controls are noted, we will modify our audit program as needed.
Our compliance testing will include testing on the 14 compliance areas as applicable that are identified in
' the OMB Circular A-133 Compliance Supplement. We will use the OMB Circular A433 Compliance
Supplement to identify program specific requirements. If the information for testing specific requirements
is not identified in the Compliance Supplement, we will use the grant agreement.
' As part of our single audit, we will request that the City complete the "Data Collection Form' required to
be completed by the Single Audit Act Amendments of 1996. The form will assist us in identifying the
federal programs which will be required to be tested.
40ROACH IN DETERMINING LAWWD
' REGULATIONS SUBJECT TO At;DIT
' Under provisions of AICPA Statement on Auditing Procedures No. 68, Management of the City is
responsible for identifying to its outside auditors any laws and regulations which would have a significant
effect on the audit. This would include federal laws (such as federal grant regulations), State laws (such
I as permitted investments under the California Government Code) and local laws (such as restrictions on
special revenues levied by the City). After our selection as auditors, we will consult with City officials
regarding these matters, to determine what laws and regulations need to be evaluated in connection with
1 our audit.
METHOD OF SAMPLING
' AICPA Statement on Auditing Standards No. 39 allows an auditor to utilize either judgement sampling
1 or statistical sampling techniques, based on the auditor's professional evaluation. We anticipate using
judgment sampling techniques. We will not determine our sample sizes for substantive testing of year-end
balances until our preliminary evaluation of internal controls.
MANAGEMENT LETTERS
In connection with each audit, a complete review of internal controls will be made of all significant
accounting procedures. Our firm uses an internal control questionnaire and a computer systems
' questionnaire to develop information for the management letter. Upon the completion of each audit and
discussion with appropriate City staff, our firm will submit a management letter which shall identify
weaknesses observed during these reviews and throughout the audit, assess their effects on financial
management and recommend steps toward eliminating the weaknesses.
OTHER PROFESSIONAL SERVICES
We will be available for any other professional assistance you require to research and answer accounting
and reporting problems raised by the City, regardless of the time of year. Such assistance may include,
but is not limited to, tax questions, the review of bond documents, cost allocation programs and employee
' benefit programs. We also will keep the City informed of new developments affecting municipal finance
and reporting, changes in grant rules and regulations, etc. We will be available for training sessions on
any accounting or computer matters, and we will be available to attend City Council or other Board
1 meetings as needed
1 RETENTION OF AND ACCESS TO AUDIT WORKPAPERS
In accordance with provisions of OMB Circular A-133 and GAO requirements, our audit workpapers will
' be maintained for at least three years after the date of the report. These workpapers will be made available
as necessary to your cognizant audit agency (or its designee), to GAO representatives, or to any other
federal or state agency needing access to the workpapers. Also, our firm will respond to any reasonable
inquiries of successor auditors and we will allow any successor auditors to review our workpapers.
1 -16-
• AUDIT TIMING 0
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Assuming that the City's books are closed and ready for examination and that all necessary schedules and
documents are available for our use by December 1 �` , the time schedule for the various phases of the audit
would be approximately as follows:
Interim Work
Inventory Observations/Confirmation Mailings
Year-end Field Work
Deliver Reports
July - August
September 30
December 1 - January 31
See Due Dates on Page 13
SCHEDULES TO BE PREPARED BY CITY STAFF
1. Bank reconciliation for all accounts
2. Schedule of investments
3. Schedule of receivables
4. Inventory listings
5. Schedule of general fined assets
6. Schedule of fixed assets including depreciation for proprietary funds
7. Schedule of general long-term debt
8. Schedule of long-term debt for proprietary funds
9. Schedule of interfund receivables/payables and interfund transfers
10. Schedule of deposits payable
11. Schedule of accounts payable including accrued liabilities
12. Schedule of reserves of fund balances
13. Schedule of contributed capital for proprietary fund types
14. Schedule of deferred revenue
15. Schedule of compensated absences
16_ Schedule of interest income allocations
-17-
' FEES AND HOURLY RATES e
' MAXIMUM FEES
'
Our maximum fees for the five years ending September 30, 2005 will be as follows:
2001
2002
2003
2004
2005
'
City Audit, includes
management letter and
appropriation limit report
S 21,800
$ 21,800
$ 22,850
$ 23,425
$ 24,105
Redevelopment Agency - Audit
5,500
5,500
5,650
5,775
5,900
Huntington Beach Public
Financing Authority
1,730
1,730
1,775
1,800
1,835
Central Net Operations Authority
2,000
2,000
2,025
2,060
2,100
AB 2766 Subvention Funds Report
1,630
1,630
1.675
1,710
1,740
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Single Audit of Federal Grants
5.960
5,960
6.595
6,800
6.890
TOTALS
$ 38,620
$ 38.620
$ 40.570
$ 41,570
S 42,570
COMPOSITION OF CURRENT AUDIT FEE
' Our proposed fee for the year ending September 30, 2001 is computed as follows:
Standard
Hours
Rates
Partners
58 x
$ 140 =
$ 8,120
1
Manager
110 x
95
10,450
Senior Accountant
320 x
65
20,800
Staff Accountants
307 x
55 =
16,885
Clerical
35 x
40 =
1,400
57,655
Discount (33%)
_ (19.035)
TOTAL
830
$ 38.620
IHOURLY RATES FOR SPECIAL SERVICES
If the City wishes us to perform consulting or other services outside the scope of the services described
herein, a separate written request from the City will be required. Our hourly rates for these services during
each year under the basic contract will be as follows:
I2001
Nitin Patel. CPA - Partner $ 140
' Michael Ludin, CPA - Partner 140
Bill Morgan, CPA - Director of Management Consulting 140
' Manager 95
Senior Accountant 65
Staff Accountants 55
' -18-
' A-AGEMENT CONSULTING SEROES
' CONSULTING ON GOVERNMENTAL TAX ISSUES
Over the years, Diehl; Evans & Company, LLP has developed a wide knowledge of tax issues related to
governmental entities and their employees. Our Tax Department regularly issues tax opinions to
governmental agencies setting forth the tax consequences of various proposed transactions. We also assist
' our governmental clients with tax reporting and compliance requirements.
Each year our firm publishes a "Government Tax Manual". This manual is distributed to both client and
' nonclient governmental units at a series of tax workshops which normally are presented in December each
year.
' Noted below are areas where we have extensive experience in assisting clients with their tax questions:
Taxation of Employee Fringe Benefits
• Expense Reimbursement Plans
• Fringe Benefit Rules Related to Automobiles and Other Vehicles
• Cafeteria Plans
' • 457 Deferred Compensation Plans
• Group Term Life Insurance Plans
Tax Reporting and Compliance
• Employee v. enden Contractor
s Independent Contra to Issues
• Form W-2 and Form 1099 Reporting
' • Payroll Tax Reporting
• Workers' Compensation Tax Issues
Other Areas of Emphasis
' . Assistance in the Formation of Government -Related Nonprofit Corporations
F �
' • Assistance in Selection of Retirement Plans
' -19-
' CAPE TELEVISION CONSULTING SEOCES
i
Our Management Consulting Department offers a wide range of services to California cities and counties
' with respect to the cable television industry. Our cable work for governmental agencies can be grouped
into four broad categories of service:
' 0 Cable TV Franchise Fee Compliance Reviews - We have reviewed the cable franchise agreements of
various cities, and then have written programs to review compliance with various key financial
provisions of the agreements. Our concentration has been on verifying the proper reporting of "gross
' revenues" (including advertising revenues) and the proper and timely payment of franchise fees.
• Cable TV Rate Regulation Reviews - This work involves compliance reviews of FCC Forms 1205,
1210, 1220 and 1240, with reports to the cities on the propriety of cable rates and equipment and
installation charges. In prior years, we reviewed three "cost -of -service" filings on Form 1220.
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Assistance with Cable TV Franchise Transfers - We have worked closely with certain cities on the
transfer of their franchise from one cable operator to another. We have participated in negotiations
between the City and its cable operators, have assisted in drafting transfer resolutions, settlement
agreements, City staff reports, etc. Also, we have performed a comprehensive "due diligence" review
of a cable operator for two of our city clients. This involved extensive on -site work at the cable
company's headquarters in Dallas, Texas.
Expert Witness Testimonk - In 1997, Mr. William Morgan was retained by the City and County of San
Francisco to act as an "expert witness" in a possessory interest tax dispute between the City and its
cable operator.
Over the past six years, we have provided cable TV consulting services to the following thirty-one
California cities and counties:
City of Alhambra
City of Berkeley
City of Burbank
City of Camarillo
City of Concord
City of Costa Mesa
Citv of Cypress
City of El Cerrito
City of Encinitas
City of Escondido
City of Fountain Valley
City of Garden Grove
City of Glendale
City of Glendora
City of Hermosa Beach
City of Huntington Beach
City of Lakewood
City of La Palma
Citv of Lomita
City of Manhattan Beach
City of Milpitas
City of Moorpark
City of Oceanside
City of Richmond
City and County of San Francisco
City of Stanton
City of Temecula
City of Vista
City of West Covina
City of Westminster
Contra Costa County
Listed on the following page are references for a number of these cities and certain attorneys that have
retained our services for work in the cable field.
-20-
CA TELEVISION INDUSTRY REFEROCES
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Ms. Sheri D. Ungar
Deputy City Attorney
City of Burbank
275 East Olive Avenue
Burbank, CA 91510-6459
(818) 238-5700
Mr. Peter Dragovich
Senior Administrative Analyst
City of Concord
1950 Parkside Drive, MS/01
Concord, CA 94519-2578
(510) 671-3085
Ms. Patricia Burke
' Cable TV Administrator
Contra Costa County
10 Douglas Drive, Suite 210
' Martinez, CA 94553
(825)313-1183
Mr. Brett Hodgkiss
Management Analyst
'
City of Encinitas
505 South Vulcan Avenue
Encinitas, CA 92024-363;
(619) 633-2616
Mr. Clayton C. Phillips
Director of Finance
City of Escondido
201 North Broadway
' Escondido, CA 92025
(619) 741-4675
Ms. Christina Sansone
Deputy City Attorney
City of Glendale
613 East B roadway, 11220
Glendale, CA 91206-4394
(818) 548-2080
Mr. Scott F. Field
Deputy City Attorney
City of Huntington Beach
P.O. Box 190
Huntington Beach. CA 92648
(714) 536-5662
Ms. Joan Barry
Program Specialist
City of Oceanside
300 North Coast Highway
Oceanside, CA 92054
(760) 966-4763
Mr. Vern Waton
Assistant Assessor
City and County of San Francisco
875 Stevenson Street
San Francisco, CA 94103
(415) 554-5501
Mr. Karl Schwarm
Management Analyst
City of Vista
600 East Eucalyptus Avenue
Vista, CA 92085
(760) 726-1342
Mr. Jack J. Keating
Communications Director
City of West Covina
1444 W. Garvey Ave. South
West Covina, Ca 91793
(626) 814-8580
Mr. William M. Marticorena
Attorney at Law
Rutan & Tucker, LLP
Suite 1400
611 Anton Boulevard
Costa Mesa, CA 92626
(714) 641-5100
-21 -
HOTIPTRANSIENT OCCUPANCY TAX VIEWS
' Over the (past five ears our firm has developed extensive experience in performing limitedprocedures
rocedures
(p ) y p p p g p
reviews on various hotels and motels for compliance with City Transient Occupancy Tax Ordinances. In
many instances, our work has uncovered substantial noncompliance by hotel operators and the
underreporting of transient occupancy taxes to the City. These engagements normally include the
tfollowing procedures:
• A review of the City's TOT Ordinance to identify all major areas requiring compliance by the hotel;
and a review of the City's internal policies and procedures for monitoring the receipt of TOT.
a Documentation of each hotel's internal controls over the accounting for, and reporting of, room rents.
' • Verification of "exemptions" taken by the hotel for government employees and "non -transient" guests.
' • Testing of the mathematical accuracy of annual, quarterly or monthly TOT reports; computation of late
payment penalties and interest due to the City.
' Noted below are five cities for which we have performed TOT reviews, together with the number of hotels
reviewed and appropriate references.
Big Bear Lake 2 Ms. Julie Wiley
Senior Accountant
(909) 866-5831
' Burbank 15 Mr. Robert P. Elliot
Deputy Finance Officer
(818) 238-5500
' Irvine 7 Mr. Jeffrey F. Niven
Manager of Fiscal Services
' (949) 724-6027
Manhattan Beach 8 Mr. Russell J. Morreale
Financial Services Manager
(310) 545-5621
' Palm Desert 8 Mr. Paul S. Gibson
Director of Finance
(619) 346-0611
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LITIGATI0��5LIPPORT AND DISPUTE RESOLD* SERVICES
FOR GOVERNMENTAL AGENCIES
i
Diehl, Evans & Company, LLP has provided extensive assistance to governmental entities in resolving
litigations and disputes. In some instances, we have been hired directly by a City or redevelopment agency
to provide a financial analysis of a disputed transaction, and then to assist the governmental agency in
' negotiating a settlement with an adversarial parry. In other instances, we have been retained by attorneys
for a governmental agency to work in a confidential attorney/client relationship, to prepare for depositions
and trial. We are also available to act as "expert witnesses" should the need arise. Noted below are
examples of litigation support and dispute resolution services provided to California governmental
agencies in recent years.
' Dispute Resolution Services for Redevelopment Agencies
In recent years, a Southern California redevelopment agency entered into a development agreement with
' a local company to construct commercial office buildings on land owned by the agency. Management of
the agency suspected that the developer had overcharged the agency for construction costs on the
' buildings. Our firm was retained to do an investigation of building construction costs. As a result of our
review, the redevelopment agency filed a civil lawsuit against the developer to recover improperly charged
construction costs. Our firm then was retained by agency attorneys to assist in preparing for trial and in
negotiating a settlement with the developer.
Also, another Southern California redevelopment agency entered into a development agreement with an
' outside developer to construct and operate a commercial shopping center. Under terms of the development
agreement, the agency was to share in the distribution of net rental income from the operation of the
shopping center. However, the shopping center never produced net distributable income, in part, because
of excessive charges against the project by the developer. We were retained by the redevelopment agency
to analyze the propriety of costs and expenses charged to the project, and to assist the agency in
negotiating a settlement in its dispute with the developer.
Fraud_ Investigation for Police Department
' Our firm was retained by a Southern California Police Department to assist the Criminal Investigations
Division with the prosecution of fraud cases. Our work on these fraud cases included the following
' services:
• Analysis of business records confiscated through search warrants and subpoenaed bank records
' • Review of case files prepared by police detectives
• Tracing of cash receipts and cash disbursements related to the embezzlement of funds
• Preparation of reports for the Police Department, summarizing the facts of each case, the source and
1 disposition of embezzled funds, and the identification of evidence to be used at trial.
I
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RVEWS OF SOLID WASTE CONTRAPORS
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Franchise Compliance Reviews
Two Southern California cities have retained our firm to perform comprehensive franchise compliance
reviews of their solid waste contractors.
On one City, our engagement included a review of the City's franchise agreement, an investigation of the
waste contractor's revenues and expenses for unusual or questionable items, a recalculation of the
contractor's profit using various assumptions, an analysis of dump fees for residential, commercial and
other routes, a review of the contractor's tax returns, a comparison of the refuse rates with other cities in
the area, an impact study on the reduction of refuse collection from biweekly to weekly, and a cost study
on the effect of using the SERRF project dumpsite versus the County Landfill in Puente Hills.
On another City, our engagement included a review of the franchise agreement, a review of the waste
contractor's systems and procedures, a physical inventory of commercial and residential trash containers,
a review of the propriety of disposal charges from the landfill site and a survey of residential users
regarding customer service issues.
Review of Pilot Recvcling Program
Several Orange County cities entered into certain agreements with a disposal company to conduct a "pilot"
recycling program over a six month period. Our firm was retained to determine the actual cost of the pilot
recycling program and to determine the amount of recycling revenue generated from the sale of recycled
materials. Because of the condition of the disposal company's accounting records, it was necessary for us
to completely reconstruct all cost data for the pilot program. Our experience with this pilot program
provided us with practical insight into the accounting and record keeping problems unique to disposal
companies.
Assistance with Trash Rate Negotiations
We have been retained on two engagements to assist cities with trash rate negotiations. Schedules and
other information were provided to each City by the trash Contractor justifying proposed rate increases.
Our findings assisted the cities in negotiating trash rates for residential customers within each City.
-24-
1
RWVELOPMENT AGENCY CQNSU G
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We are one of the most experienced CPA firms in California in providing consulting services to
redevelopment agencies. We regularly consult with executive directors and finance directors of agencies
on how to structure transactions to meet all requirements of the Health and Safety Code. We also provide
advice on such matters as low and moderate income housing strategies, mergers of project areas, transfers
and loans between project areas and techniques for creating agency indebtedness.
In recent years, we have performed management studies on three redevelopment agencies. These
engagements involved a complete review of each agency's operations. Reports were issued setting forth
suggestions for changes in operational policies and procedures. Also, the chart of accounts for each agency
was revised and expanded to bring the accounting system into compliance with state law.
Also, our firm periodically conducts redevelopment agency workshops and publishes a "Redevelopment
Handbook". This publication sets forth generally accepted accounting principles and reporting standards
for agencies, and explains how to comply with various sections of the California Community
Redevelopment Law and the Government Code. Our handbook is recognized as an authoritative guide in
California, as it has been reproduced and distributed by the California Redevelopment Association.
1 COST ALLOCATION PLANS
Our governmental agencies often require an overhead cost allocation plan. The primary purposes of such
' a plan are to allocate indirect costs among the departments or agencies benefiting from the overhead, and
to set or revise user fees which are based primarily on a cost reimbursement basis.
We have a thorough knowledge of the various authoritative pronouncements upon which such plans are
prepared, including:
• Office of Management and Budget Circular A-87.
• "Cost Accounting for California Cities".. published by the League of California Cities.
• "Cost Accounting Policies and Procedures Manual", published by the California Uniform Public
Construction Cost Accounting Commission (CUCCAC).
Cost allocation plans prepared by our firm have included detailed narrative descriptions of the operation
of each department or agency and comprehensive schedules showing allocations of cost.
During 1998, our firm prepared a City -Wide Cost Allocation PIan for the City of Indio.
1 - ?5 -
*MPUTER CONSULTING SERVICP
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Our in-house computer consultants can provide the City with a wide range of computer services. Noted
below are some of the specific services we provide:
System Design:
Determination of Customer Needs
Determination of Hardware Needs
Software Selection
Evaluation:
Preparation of RFPs to send to vendors
Evaluation of responses from vendors
Documentation and Training:
Preparation of user manuals
Disaster Recovery Manuals
System documentation
User training
Support and Consultation:
Backup and Security Procedures
Ongoing training
Recommendations for hardware and
software upgrades
-26
1 0 0
1 ATTACHMENT I
RESUMES OF PARTNERS AND
PERSONNEL ASSIGNED TO AUDIT
I
F
PART*S AND PERSOINWEL ASSIGI`EDOA
NITIN P. PATEL CPA
1
Position
Engagement Partner
Education
University of California at Irvine
Bachelor of Arts in Economics
California State University at Long Beach
Masters of Accounting Program
Professional
Organizations
American Institute of Certified Public Accountants
California Society of Certified Public Accountants
' California Society of Municipal Finance Officers (CSMFO)
- Associate Member
CSMFO Professional and Technical Standards Review Committee
- Report Reviewer for Award Program
' Range of
Experience Has been with Diehl, Evans & Company, LLP since 1986 with emphasis in
governmental accounting and financial reporting.
' Responsible for firm's in-house governmental accounting and auditing training
programs.
Experience includes supervision of over one hundred audits of governmental
agencies including cities, redevelopment agencies, non-profit corporations, joint
powers authorities and special districts.
Other experience includes providing consulting services for governmental agencies
including special internal control reviews, cost allocation plans, cable television
rate reviews, reviews of City Treasurer operations and transient occupancy tax
reviews of city hotels/motels.
1 -27-
t
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MICHAEL R. LUDIN CPA
Position Consulting Partner
Education California State University, Fullerton
Bachelor of Arts in Business Administration,
with concentration in Accounting, 1975
Professional
Organizations American Institute of Certified Public Accountants
California Society of Certified Public Accountants
Governmental Accounting and Auditing Committee of the Orange County Chapter,
California Society of CPAs, Past Chairman
Associate Member of Government Finance Officers Association (GFOA)
Associate Member of California Society of Municipal Finance Officers (CSMFO)
CSMFO Professional and Technical Standards Committee - Report Reviewer for
Award Program
Range_ of
Experience Has been with Diehl, Evans & Company, LLP since 1978 with emphasis in
governmental auditing and financial reporting.
Experience includes supervision of over one hundred audits of governmental
agencies including cities, redevelopment agencies; nonprofit corporations, and joint
power authorities.
Public speaker on municipal accounting and frequent instructor at firm's in-house
governmental accounting and auditing seminars.
Managing Director of firm's Irvine office.
ININ
E: ON
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JACOB "JAKE" C. RA.HN, CPA
Position Audit Manager
Education Concordia University, Irvine
Bachelor of Science, Accounting/Management, 1993
Professional
Organizations California Society of Certified Public Accountants
Range of
Experience Joined Diehl, Evans & Company, LLP in May, 1994, concentrating on audits of
governmental agencies and nonprofit corporations. Prior audit engagements
include:
City of Burbank
City of Cerritos
City of Downey
City of Healdsburg
City of Huntington Beach
City of Lakewood
City of Palm Desert
City of Placentia
City of San Juan Capistrano
City of Simi Valley
City of Tustin
City of Westminster
Capistrano Valley Water District
Cucamonga County Water District
El Toro Water District
Marin County Redevelopment Agency
Orange County Cemetery District
Mesa Consolidated Water District
-29-
aPARTNERS APERSON-INTEL ASSIGNED TO A
DAPHIME FUERTEZ, CPA
Position Audit Senior
1
Education De La Salle University, Philippines
Bachelor of Science in Accounting; 1995
Range of
Experience Has been with Diehl, Evans & Company, LLP since September 1998. She has
audited and prepared financial reports on cities, redevelopment agencies and
nonprofit corporations. Experience includes auditing for the following clients:
City of Downey
'
City of Palm Desert
City of Rancho Palos Verdes
'
City of San Juan Capistrano
City of Tustin
City of Westminster
'
Castaic Lake Water Agency
Santa Clarita Water Company
El Toro Water District
Southeast Area Animal Control Authority
Trabuco Canyon Water District
United Cerebral Palsy Association
1
Waste Water Disposal Company
1 Prior
Experience Prior to working for Diehl, Evans & Company, LLP, she worked for Union
Incorporated in Irvine, CA for two years as a staff accountant. Her routine duties
' as staff accountant included verifying daily cash receipts, sales reports and
processing weekly payroll. Other duties included preparing month -end journal
entries, assisting in the annual closing process and account reconciliation reports.
I
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ATTACHMENT II
RESUME OF MANAGEMENT CONSULTANT
1
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I
RES�1 OF MANAGEMENT CONSULT
' WILLIAM S. MORGAN
' Oualifications
Certified Public Accountant (CPA)
' Director of Management Consulting,
Diehl, Evans & Company, LLP
Education
University of Southern California
' Bachelor of Science in Accounting, 1967
Professional Organizations
American Institute of Certified Public Accountants (Member)
' AICPA Management Consulting Services Division (Member)
California Society of Certified Public Accountants (Member)
' California Society of Municipal Finance Officers (Associate Member)
California Redevelopment Association (Associate Member)
Committees of CSCPA:
' Governmental Accounting and Auditing Committee, Orange County Chapter (Past Chairman)
' Litigation Consulting Services and Alternative Dispute Resolution Committee
Fraud Investigations Committee
Range of Experience
' Mr. Morgan was employed by Arthur Young and Company (now Ernst and Young) from 1967 through
1972. He has been employed by Diehl, Evans & Company, LLP since 1972 with emphasis in services for
governmental agencies. He has extensive experience in management consulting, tax consulting, auditing
and financial reporting for governmental units. He is a frequent public speaker on governmental issues.
Examples of Management Consulting Projects Performed or Supervised
' 9 Expert Fitness Testimony City of San Francisco vs. Viacom Cable
' • Mediation of Lawsuit Acted as "Mediator" in Lawsuit Between
City of Lake Forest and County of Orange
I
WILLIAM S. MORGAN (CONTINUED)
Examples of Management Consulting Projects Performed or Supervised (Continued)
• Computer System "Needs Analysis"
And Software Selection
• Cable TV Franchise Fee and Rate
Regulation Compliance Reviews
• Fraud Investigations
• Transient Occupancy Tax Reviews
on City Hotels/Motels
• Reviews of City Treasurer
Operations
• Systems and Procedures Studies
on Redevelopment Agencies
• Performance and Operational
Review of Redevelopment Agency
• Cost Allocation Plans
1
• Reviews of City Solid
' Waste Contractors/
Trash rate Negotiations
• Special Study on Economic and
' Tax Consequences of Closing the
Long Beach Naval Hospital
City of Ventura
City of Whittier
31 California Cities Under Contract
Over the Past Six Years
Burbank Police Department
Los Angeles District Attorneys Office
Phoenix, AZ Police Department
City of Burbank
City of Irvine
City of Manhattan Beach
City of Palm Desert
City of Huntington Beach
City of Palm Desert
Marin County Redevelopment Agency
South Gate Redevelopment Agency
Burbank Redevelopment Agency
City of Indio
City of Fullerton
City of Monterey Park
City of Irvine (Waste Management
of Orange County Inc.)
City of Signal Hill (EDCO Disposal)
City of Lakewood (B-Z Disposal Services)
Cities of Dana Point, San Juan Capistrano
and San Clemente (Solag Disposal)
Regional Waste Management Authority, Yuba City
(Yuba -Sutter Disposal, Inc.)
City of Lakewood
32 -
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ATTACHMENT III
RESULTS OF OUTSIDE QUALITY REVIEW
d. i
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' February 11, 2000
' To the Partners
To Diehl, Evans and Company, LLP:
I have reviewed the system of quality control for the accounting and auditing practice of
' Diehl, Evans and Company, LLP an effect for the year ended September 30,1999. A system of
quality control encompasses the firm's organizational structure and the policies adopted and
procedures established to provide it with reasonable assurance of complying with professional
standards. The elements of quality control are described in the Statements on Quality Control
Standards issued by the American Institute of Certified Public Accountants (AICPA). The design
' of the system and compliance with it are the responsibility of the firm. My responsibility is to
express an opinion on the design of the system, and the firm's compliance with the system based
on my review.
1
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The review was conducted in accordance with standards established by the Peer Review
Board of the AICPA. In performing the review, I obtained an understanding of the system of
quality control for the firm's accounting and auditing practice. In addition, I tested compliance
with the firm's quality control policies and procedures to the extent I considered appropriate.
These tests covered the application of the firm's policies and procedures on selected engagements.
Because the review was based on selective tests, it would not necessarily disclose all weaknesses
in the system of quality control or all instances of lack of compliance with it.
Because there are inherent limitations in the effectiveness of any system of quality control,
departures from the system may occur and not be detected. Also, projection of any evaluation of a
system of quality control to future periods is subject to the risk that the system of quality control
may become inadequate because of changes in conditions, or because the .degree of compliance
with the policies or procedures may deteriorate.
In my opinion, the system of quality control for the accounting and auditing practice of
Diehl, Evans and Company, LLP in effect for the year ended September 30,1999, has been
designed to meet the requirements of the quality control standards for an accounting and auditing
practice established by the AICPA and was complied with during the year then ended to provide
the firm with reasonable assurance of conforming with professional standards.
Perry . Henderson, CPA
Master: Public Administration: Member: American Institute of CPAs, SEC Practice Section, California Society of CPAs. AICPA Key Legislative Contact Program,
California Society of Municipal Finance Officers, California Association of Nonprofits. Present and Past service includes: Chairman, CSCPA Nonprofit C nanira:ions Committee,
Citrus Belt Chapter, Member, CSCPA Peer Review Committee; CSCPA Professional Conduct Committee; Adjunct Faculty Member, University of Redlands; Author & Lecturer.
1200 Nevada Street, Suite 203 • Redlands, CA 92374 0 Phone: (909) 792-4268 • Fax: (909) 792-5659
e-mail pmhcpa@compuserve.com
33
9
C.
EXHIBIT C
DIEHL, EWS & COMPANY, LLP 0/
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
A PARTNERSHIP I\'CLUDI1✓; ACCOI:%-rAtiCY CORPORAT10%5
At1CH.aEL R_ LUDIC. CAA
CR.AIG %V SPRAKEK CPA
2121 ALTON PARK,.VAY, SUITE 100 NITIN P PATEL, CPA
IRVINE, CALIFORNIA 92606-4906 `PHONI H- . PERL W CPA
`THOALAS �1. PERLOt�'SKI, CPA
(9491399-0600 • FAX (949) 399-0610 `H.ARL'Ey 1. SCHROEAER, CPA
"k W-%V.dieh1C%ws mm •ATRVIYSS1o�'a1 UU-4C AAT1o"4
June 29, 2001
Mr. Clay Martin
Director of Administrative Services
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Dear Mr. Martill:
At Robert Sedlak's request, listed below are the proposed fees for the audits of the City of Huntington
Beach and rel�ited entities for the year ending September 30.2001.
2001
City Audit, includes
,managernent
letter and
appropriation limit report
S 26,200
Redevelopment Agency - Audit
6,600
Huntington Beach Public
Financing Authority-
2,100
Central Net Operations Authority
2,400
AB 2766 Subvention Funds Report
2,000
Single Audit of Federal Grants
7.200
TOTALS 46 �00
The scope of A ork is the same as indicated in our audit proposal dated June 8, 2001,
If you have any questions, please call me.
Very truly yours,
Nitin P. Patel
1:200I'Firm\Prom64FII1NTINGTON BEACH fees.doc
OTHER OFFICES AT- 2965 ROOSEVELT STREET 613 W. VALLEY PARKWAY, SUITE 330
CARLSBAD- CALIFORN[A 92003--2389 ESCONDIDO, CALIFORNIA 92025-2598
(760) 729 2343 • FAX (160) 729 2234 (760) 741-3141 . FAX (760) 741-9890
RCA OUTING I iEET
INITIATING DEPARTMENT:
Administrative Services
SUBJECT:
Approve Professional Services Contract Between the
City of Huntington Beach and Diehl, Evans and
Company, LLP for Audit Services.
COUNCIL MEETING DATE:
October 15, 2001
RCA ATTACHMENTS
STATUS ,.
Ordinance (w/exhibits & legislative draft if applicable)
Not Applicable__
Resolution (w/exhibits & legislative draft if applicable)
Not Applicable
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (wlexhibits if applicable)
(Signed in full by the City Attorney)
Attached
Subleases, Third Party Agreements, etc.
(Approved as to form by City Attome)
Not Applicable
Certificates of Insurance (Approved by the City Attomey)
Not Applicable
Financial Impact Statement (Unbudget, over $5,000)
Not Applicable
Bonds (If applicable)
Not Applicable
Staff Report (If applicable)
Not Applicable
Commission, Board or Committee Report (If applicable)
Not Applicable
Findings/Conditions for Approval and/or Denial
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED
RETURNED
FORWARDED
Administrative Staff
Assistant City Administrator (Initial)
City Administrator (Initial)
( )
( )
rCity Clerk
EXPLANATION FOR RETURN OF ITEM:
RCA Author: Robert Sedlak
0
•
J�
HUNTINLTON BEACH
CITY OF HUNTINGTON BLEACH
INTER -DEPARTMENT COMMUNICATION
Connie Brockway, City Clerk
Office of the City Clerk
Liz Ehring, Deputy City Clerk 11
To:
Date: / Meeting Date: �0 /S O/ Agenda Item: -
Proposed Cily Coungi1 Agenda items: The City Clerk's Office/City Administrator's Office must return your
agenda item due to the following requirements that have not been met. When your Agenda Item is ready to
resubmit, please return to: Elaine Kuhnke, Management Assistant, Administration
I, I
Signature(s) Needed
A
On RCA
B
On Agreement
C
Other
2.
Attachments
A
Missing -
B
Not identified
C
Other
3.
Exhibits
A
Missing
B
Not identified
C
Other y[ , 4- f -Ztgu- r' 0
(1 /':? tt
4. 1
Insurance Certificate (Proof Of insurance)
A I
Not attached
B
Not approved by City Attorney's Office
C
Signed form notifying City Clerk that department ill be responsible for obtaining insurance certificate on this item. (See form attached)
S.
Wording On Request For Council Ac ' n (RCA) Unclear
A
Recommended Action on RCA not c plete
B
Clarification needed on RCA
C
Other
6.
City Attorney Approv equired
7.
Agreement Needs To Be Changed
= A
Page No.�
8.
1 Other
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