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HomeMy WebLinkAboutContract 1444c-1444 e ORIGINAL CITY OF CATHEDRAL CITY PROFESSIONAL SERVICES AGREEMENT FOR AUDITING SERVICES THIS AGREEMENT is made and entered into this 8th day of April, 2010, by and between the CITY OF CATHEDRAL CITY, a municipal corporation, and its Redevelopment Agency, Public Financing Authority, Downtown Foundation, and City Urban Revitalization Corporation, hereinafter referred to as "CITY ", and Lance, Soll & Lunghard, LLP, hereinafter referred to as "AUDITOR ". IN CONSIDERATION of the covenants hereinafter set forth, the parties hereto mutually agree as follows: ARTICLE I SCOPE OF AUDITOR'S SERVICES AUDITOR shall perform auditing services and duties set forth in Exhibit A to this Agreement, which is attached hereto and incorporated herein by this reference. Notwithstanding services described above, the CITY may request and AUDITOR may agree to perform other services. The scope of such services and compensation shall be agreed to in writing, signed by both parties and shall become a part of this Agreement. ARTICLE II PERFORMANCE OF SERVICES AUDITOR shall perform all services and duties pursuant to this Agreement in a professional and timely manner, at the direction of the Administrative Services Director, or designee. All directives, instructions, or other communications from CITY to AUDITOR shall be through only the Administrative Services Director, or designee. ARTICLE III TERM This Agreement shall commence on April 19, 2010, and shall terminate on upon completion of audit services for fiscal years ending June 30, 2010 through June 30, 2012, as listed in Exhibit A. The term of this agreement may be extended to include audit services for additional fiscal years, e.g., ending June 30, 2013 and June 30, 2014, with written authorization from the Administrative Services Director. ARTICLE IV COMPENSATION FOR SERVICES CITY shall pay AUDITOR for auditing services rendered and costs incurred pursuant to this Agreement in accordance with the amounts set forth in Exhibit B. Notwithstanding any and all provisions of this Agreement, in no event shall compensation for the services exceed $48,840 each fiscal year, unless authorized in writing by the CITY. All payments due AUDITOR shall be paid to: LANCE, SOLL & LUNGHARD Attention: Richard K. Kikuchi, CPA, Partner 203 N. Brea Blvd., Suite 203 Brea, CA 92821 -4056 AUDITOR will submit invoices monthly for the work completed in the previous month, with 10% withheld due upon submission of the fiscal year -end audit report(s). CITY agrees to pay all undisputed invoice amounts within thirty (30) days of receipt of the invoice. CITY agrees to use its best efforts to notify AUDITOR of any disputed invoice amounts within ten (10) days of the receipt of each invoice. However, CITY'S failure to timely notify AUDITOR of a disputed amount shall not be deemed a waiver of CITY'S right to dispute such amount. ARTICLE V PERSONNEL AUDITOR shall provide all personnel necessary to properly perform the services and duties required under this Agreement, and shall at all times direct such personnel in the performance of such services and duties. Richard K. Kikuchi, i.e., audit partner, shall serve as the principal liaison between CITY and AUDITOR. ARTICLE VI DUTIES OF CITY CITY shall provide or make available to AUDITOR, without charge or expense, all information, data, records, maps, reports, plans, equipment, or other material in its possession necessary for carrying out the services and duties contemplated under this Agreement. ARTICLE VII OWNERSHIP OF DOCUMENTS CITY and AUDITOR agree that all records, data, reports or other documentation prepared by AUDITOR, in response to, or as a result of the performance of this Agreement shall be the sole property of AUDITOR. CITY and AUDITOR acknowledge and agree that all records, data, reports or other documentation prepared by AUDITOR pursuant to this Agreement shall be retained by AUDITOR for seven years after the date of the audit report. ARTICLE VIII CONFLICT OF INTEREST A. All information gained by AUDITOR in performance of this Agreement shall be considered confidential and shall not be released by AUDITOR without CITY'S prior written authorization excepting that information which is a public record and subject to disclosure pursuant to the Public Records Act (Government Code Section 6250 et seq.). AUDITOR, its officers, employees, agents, or subcontractors, shall not voluntarily provide declarations, letters of support, testimony at depositions, response to interrogatories or other information concerning CITY or cooperate in any way with a party who may be adverse to CITY or whom AUDITOR reasonably should know 1 may be adverse in any subsequent litigation. AUDITOR shall incur no liability under this Agreement for material submitted by it, which are later released by CITY, its officers, employees, or agents. AUDITOR shall also incur no liability for statements made by it at any public meeting, or for any document released by it for which prior written CITY authorization was obtained. If AUDITOR or any of its officers, employees, or subcontractors does voluntarily provide information in violation of this Agreement, CITY has the right to reimbursement and indemnity from AUDITOR for any damages caused by AUDITOR'S conduct, including without limitation reasonable attorney's fees. AUDITOR shall promptly notify CITY should AUDITOR, its officers, employees, agents or subcontractors be served with any Summons, Complaint, Subpoena, Notice of Deposition, Request for Documents, Interrogatories, Request for Admissions or other discovery requests from any party regarding this Agreement and the work performed hereunder, CITY retains the right, but not the obligation, to represent AUDITOR and /or to be present at any deposition, hearing, or similar proceeding. AUDITOR agrees to cooperate fully with CITY and to provide CITY with the opportunity to review any response to discovery requests provided by AUDITOR. However, CITY'S right to review any such response does not imply or mean the right by CITY to control, direct, or rewrite said response. CITY warrants that AUDITOR will have fully met the requirements of this provision by obtaining CITY'S written approval prior to providing documents, testimony, or declarations; consulting with CITY before responding to a Subpoena or court order; in the case of depositions upon providing Notice to CITY of same; or providing CITY opportunity to review discovery responses prior submission. For purposes of this section, a written authorization from CITY shall include a "faxed" letter. j € S B. AUDITOR covenants that neither it nor any officer or principal of its firm have any interest, nor shall they acquire any interest, either directly or indirectly, which will conflict in any manner or degree with the performance of their services hereunder. AUDITOR further covenants that in the performance of this Agreement, no person having such interest shall be employed by it as an officer, employee, agent, or subcontractor. AUDITOR further covenants that AUDITOR has not contracted with nor is performing any services, either directly or indirectly, with the developer(s) and/or property owner(s) and /or firm(s) and/or partnership(s) owning property in the CITY or the study area and further covenants and agrees that AUDITOR and /or its subcontractors shall provide no service or enter into any contract with any developer(s) and /or property owner(s) and /or firm(s), and /or partnership(s) owning property in the CITY and/or study area prior to completion of this Agreement. ARTICLE IX INDEMNIFICATION AND INSURANCE A. Indemnification. AUDITOR will defend, indemnify and hold harmless CITY, its City Council, Boards, Commissions and its officers, employees and agents (collectively "CITY "), against any claim, loss or liability that arises because of the sole or primary negligence or willful misconduct of AUDITOR, its agents, officers or employees, in performing any of the services under this Agreement. CITY will indemnify and hold harmless AUDITOR, its agents, officers or employees against any claim, loss or liability that arises because of the sole or primary negligence or willful misconduct of CITY personnel or its other agents or if AUDITOR is named as a party in a lawsuit simply because AUDITOR is performing work on CITY'S behalf and there is no allegation of any wrongdoing on the part of the AUDITOR. 4 B. General Liability. AUDITOR shall at all times during the term of the Agreement carry, maintain, and keep in full force and effect, a policy or policies of Commercial General Liability Insurance, with minimum limits of one million dollars ($1,000,000.00) for each occurrence, combined single limit, against any personal injury, death, loss or damage resulting from the wrongful or negligent acts by AUDITOR. An insurer admitted in the State of California and rated in Best's Insurance Guide with a rating A VI or better shall issue said policy or policies. C. Professional Liability. AUDITOR shall at all times during the term of this Agreement, carry, maintain, and keep in full force and effect a policy or policies of professional liability insurance with a minimum limit of one million dollars ($1,000,000.00). Said policy or policies shall be issued by an insurer admitted in the State of California and rated in Best's Insurance Guide with a rating of A VI or better. D. Automobile Liability. AUDITOR shall at all times during the term of this Agreement, carry, maintain, and keep in full force and effect a policy or policies of automobile liability insurance with a minimum limit of one million dollars ($1,000,000.00) per accident for bodily injury and property damage. Said policy or policies shall be issued by an insurer admitted in the State of California and rated in Best's Insurance Guide with a rating of A VI or better. E. Worker's Compensation. AUDITOR agrees to maintain in force at all times during the performance of work under this Agreement worker's compensation insurance as required by the law with limits of not less than one million dollars ($1,000,000) per accident. In accordance with the provisions of California Labor Code, Section 3700, every employer shall secure the payment of employee compensation. AUDITOR shall require any subcontractor similarly to provide such compensation insurance for their respective employees. F. Notice of Cancellation. i. All insurance policies shall provide that the insurance carrier shall not cancel the insurance coverage without thirty (30) days prior written notice to CITY. AUDITOR agrees that it will not cancel or reduce said insurance coverage. ii. AUDITOR agrees that if it does not keep the aforesaid insurance in full force and effect, CITY may immediately terminate this Agreement. G. Certificate of Insurance. At all times during the term of this Agreement, AUDITOR shall maintain on file with the CITY Clerk certificates of insurance showing that the aforesaid policies are in effect in the required amounts. The commercial general liability policy or policies shall contain an endorsement naming the CITY as an additional insured, which AUDITOR shall maintain on file with the CITY Clerk. H. Primary Coverage. The insurance provided by AUDITOR shall be primary to any coverage available to CITY in relation to the services provided under this Agreement. The insurance policies (other than worker's compensation and professional liability) shall include provisions for waiver of subrogation. ARTICLE X TERMINATION A. If, at any time during the term of this Agreement, CITY determines, at its sole reasonable discretion, that AUDITOR is not faithfully abiding by any term or condition contained herein, CITY may notify AUDITOR in writing of such defect or failure to perform; which notice must give AUDITOR fifteen (15) days to cure the defect or failure to perform. If AUDITOR has not performed the work or cured the defect to the satisfaction of CITY, CITY may terminate this Agreement immediately by written notice to the AUDITOR to said effect. B. If, at any time during the term of this Agreement, AUDITOR reasonably determines that CITY is not abiding by any material term or condition contained herein, AUDITOR may notify CITY in writing of such defect or failure to perform; which notice must give CITY thirty (30) days to cure the defect or failure to perform. If CITY has not performed the work or cured the defect to the satisfaction of AUDITOR, AUDITOR may terminate this Agreement immediately by written notice to the CITY to said effect. C. Notwithstanding the provision of the above, CITY and AUDITOR may terminate this Agreement upon completion of the services contained in Article I of this Agreement, upon providing the other party thirty (30) days written notice. Thereafter, neither party shall have any further duties, obligations, responsibilities or rights under this Agreement. In said event, AUDITOR shall be entitled to the reasonable value of its services performed from the beginning of the period in which the breach occurs up to the day of notice of termination, less any offset from such payment representing the CITY'S damages from such breach. CITY reserves the right to delay any such payment so as to permit a full and complete accounting of the cost of damages. In no event, however, shall AUDITOR be entitled to receive compensation in excess of the amount provided in this Agreement. Any and all obligations of AUDITOR'S surety shall remain in full force and effect, and shall not be extinguished, reduced, or in any manner waived by termination of this Agreement. ARTICLE XI GENERAL PROVISIONS A. Fair Employment Practices/Equal Opportunity Acts. In the performance of this Agreement, AUDITOR shall comply with all applicable provisions of the California Fair Employment Practices Act (California Government Code Sections 12940 -48) and the applicable equal employment provisions of the Civil Rights Act of 1964 (42 U.S.C. 200e -217), whichever is more restrictive. B. Non - discrimination. AUDITOR shall not discriminate as to race, creed, religion, gender, color, sexual orientation or national origin in the performance of its services and duties pursuant to this Agreement, and will comply with all rules and regulations of the CITY relating thereto. C. Legal Action. i. Should either party to this Agreement bring legal action against the other, the case shall be handled in Riverside County, California. The party prevailing in such action shall be entitled to reasonable attorney's fees, which shall be fixed by the judge hearing the case, and such fee shall be included in the judgment. ii. Should any legal action about a project between CITY and a party other than AUDITOR require the testimony of AUDITOR when there is no allegation that AUDITOR was negligent, CITY shall compensate AUDITOR for its testimony and preparation to testify at the hourly rates in effect at the time of such testimony. D. Compliance with Applicable Law. AUDITOR and CITY shall comply with all applicable laws, ordinances and codes of the federal, state and local government. E. Assignment. This Agreement shall not be assignable by either party without the prior written consent of the other party. Notwithstanding the foregoing, AUDITOR may use the services of persons and entities not in its employ, when it is appropriate and customary to do so upon prior approval by CITY. AUDITOR'S use of others for CITY shall not unreasonably restrict additional services, provided AUDITOR notifies CITY in advance. F. Independent Contractor. AUDITOR is and shall at all times remain, as to CITY, a wholly independent contractor. Neither CITY nor any of its agents shall have control over the conduct of AUDITOR or any of AUDITOR'S employees, except as herein set forth. AUDITOR expressly warrants not to, at any time or in any manner, represent that it, or any of its agents, servants or employees, are in any manner the agents, servants or employees of CITY, it being distinctly understood that AUDITOR is, and shall at all times remain to CITY, a wholly independent contractor and AUDITOR'S obligations to CITY are solely such as are prescribed by this Agreement. G. Titles. That titles used in this Agreement are for general reference only and are not part of this Agreement. H. Extent of Agreement. This Agreement and Exhibit "A" hereto represent the entire and integrated Agreement between CITY and AUDITOR and supersede all prior negotiations, representations or Agreements, written or oral. This Agreement may be modified or amended only by a subsequent written Agreement signed by both parties. I. Legal Construction i. This Agreement is made and entered into in the State of California and shall in all respects be interpreted, enforced and governed under the laws of the State of California. ii. This Agreement shall be construed without regard to the identity of the persons who drafted its various provisions. Each and every provision of this Agreement shall be construed as though each of the parties participated equally in the drafting of same, and any rule of construction that a document is to be construed against the drafting party shall not be applicable to this Agreement. iii. The article and section, captions and headings herein have been inserted for convenience only, and shall not be considered or referred to in resolving questions of interpretation or construction. iv. Whenever in this Agreement the context may so require, each gender shall be deemed to refer to and include any other gender and the singular shall refer to and include the plural. 1 J. The City of Cathedral City and its Redevelopment Agency will be required to sign an annual engagement letter as required by Governmental Auditing Standards. The terms of these Engagement Letters are incorporated by reference into this agreement. K. Notices. All notices pertaining to this Agreement shall be in writing and addressed as follows: If to AUDITOR: Lance, Soll & Lunghard, LLP Attention: Richard K. Kikuchi, CPA, Partner 203 N. Brea Blvd., Suite 203 Brea, CA 92821 -4056 If to CITY: Tami Scott, Administrative Services Director City of Cathedral City 68 -700 Avenida Lalo Guerrero Cathedral City, CA 92234 1 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. LANCE, SOLL & LUNGHARD, LLP By: Pa ner Dated: _April 6, 2010 CITY OF CA EDRAL CITY By: • e minis ative ervices Director Dated: 17$11 i) Attest: ,2 City Clerk Dated: 4 (41/v € S p 4 • I CITY OF CATHEDRAL CITY SERVICES SUMMARY Exhibit A CITY hereby engages AUDITORS' to perform audits and examinations of the accounting books and records of CITY for the fiscal years beginning, respectively, on July 1, 2009, July 1, 2010, and July 1, 2011. 1. The audit firm will perform an audit of all funds of the City of Cathedral City. The audit will be conducted in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards (2007), issued by the Comptroller of the United States. The City's Comprehensive Annual Financial Report (CAFR) will be prepared by City staff. The CAFR will be in full compliance with Governmental Accounting Standards Board (GASB) Statement Nos. 34 and 45. The audit firm will render their auditors' report on the basic financial statements, which will include both Government -Wide Financial Statements and Fund Financial Statements. The audit firm will also apply limited audit procedures to Management's Discussion and Analysis (MD &A) and required supplementary information pertaining to the General Fund and each major fund of the City. The audit firm will conduct a financial and compliance audit of the Cathedral City Redevelopment Agency. The compliance audit shall include the provisions of laws and regulations identified in the Guidelines for Compliance Audits of California Redevelopment Agencies, issued by the State Controller. City staff shall prepare component unit financial statements (the Annual Financial Report) for each year of the engagement, in accordance with GASB 34 requirements. However, the City has elected to exclude MD &A from the basic financial statements. Although GASB has determined MD &A is necessary to supplement the basic financial statements, it is not required. The City has two additional component units, the Cathedral City Public Financing Authority and the Cathedral City Downtown Foundation. As blended component units of the City, they will be subject to the same auditing procedures as applied to the City's financial statements. These are reported as debt service funds and an enterprise fund. Separate financial statements are not prepared for these two component units. 2. The audit firm shall perform agreed -upon auditing procedures pertaining to the City's GANN Limit (Appropriations Limit) and render a letter annually to the City regarding compliance. q 4 3. The audit firm shall issue a separate "management letter" that includes recommendations for improvements in internal control, accounting procedures and other significant observations that are considered to be non - reportable conditions. Management letters shall be addressed to the City Manager. In addition to submitting a report on the examination of the financial statements of CITY, AUDITORS' shall set forth their findings and/or recommendations on those matters noted and observed during the conduct of the examination of the financial records and developed within the scope usually associated with such an examination relating to, but not limited to, the following: • Improvement in systems of internal control. • Improvement in accounting system. • Apparent noncompliance with laws and rules and regulations. • Any other material matter coming to the attention of the firm during the conduct of the examination. 4. The audit firm shall issue a separate "communications with those charged with governance" report in accordance with the American Institute of Certified Public Accountants (AICPA) Statement on Auditing Standards No. 114. The audit committee letter covers such topics as the auditor's responsibility during the audit, the scope and timing of the audit and significant audit findings, including qualitative aspects of accounting practices, difficulties encountered in performing the audit, corrected and uncorrected misstatements, disagreements with management, management representations, management consultation with other independent accountants, and other audit findings or issues. This letter should be addressed to the Mayor and City Council. 5. If necessary, the audit firm will perform a single audit on the expenditures of federal grants in accordance with OMB Circular A -133 and prepare the related Single Audit Report. This report will include the Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards and the Independent Auditor's Report on Compliance with Requirements Applicable to Each Major Program, Internal Control over Compliance and on the Schedule of Expenditures of Federal Awards in Accordance with OMB Circular A -133. In addition, the single audit report will include an appropriate schedule of expenditures of federal awards, footnotes, findings and questioned costs, including reportable conditions and material weaknesses, and follow -up on prior audit findings where required. 6. The audit firm will perform an audit of the program financial statements related to Senate Bill (SB) 621 funds received and expended. The audit firm will also prepare the audit report to include an independent auditor's report, statement of status of funds, notes to program financial statements, auditor's report on internal control over financial reporting and on compliance and other matters based upon the audit of the financial statements performed in accordance with Government Auditing Standards (2007), and schedule of findings, if any. 7. AUDITORS' shall provide a .pdf file for all reports. For any necessary hard copy reports, AUDITORS' shall provide eight (8) copies. 1 • I CITY OF CATHEDRAL CITY MAXIMUM PRICE SUMMARY Exhibit B Base Periods 2010 -11 2011 -12 2012 -13 City Audit $35,930 $35,930 $35,930 Gann Limit Review Report $ 500 $ 500 $ 500 Redevelopment Agency (RDA) Audit $ 7,240 $ 7,240 $ 7,240 Single Audit $ 3,320 $ 3,320 $ 3,320 SB 621 Audit $ 1,850 $ 1,850 $ 1,850 Total $48,840 $48,840 $48,840