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THIS AGREEMENT is made and entered into on the _19 _ day of May , 2016 by
and between the TOWN OF LOS ALTOS HILLS (hereinafter referred to as "TOWN")
and Maze & Associates (hereinafter referred to as "CONTRACTOR"). In
consideration of their mutual covenants, the parties hereto agree as follows:
1. CONTRACTOR. Shall provide or furnish the following specified services and/or
materials:
See Exhibit A.
2. EXHIBITS. The following attached exhibits are hereby incorporated into and made a
part of this Agreement:
Proposal from CONTRACTOR dated April 8, 2016
3. TERMS. The services and/or materials furnished under this Agreement shall
commence May 2016 and shall be terminated with the
completion of audit services for fiscal year June 30, 2018 with
an option to extend to 2020, unless terminated pursuant to Section 5(f).
4. COMPENSATION. For the full performance of this Agreement:
a. TOWN shall pay CONTRACTOR a not to exceed amount
as stated in CONTRACTOR proposal (Exhibit 1) with a
total three-year contract value of one hundred thirty-nine
thousand two hundred one. dollars and zero cents
($139,201.00 ). Payment shall be made within thirty (30) days following
receipt of invoice and completion/delivery of services/goods as detailed in
Sections 1, 2, and 3 of this Agreement and only upon satisfactory delivery/
completion of goods/services in a manner consistent with professional/industry
standards for the area in which CONTRACTOR operates. TOWN is not
responsible for paying for any work done by CONTRACTOR or any
subcontractor above and beyond the not to exceed amount.
b. Town shall not reimburse for any of CONTRACTOR's costs or expenses to
deliver any services/goods. Town shall not be responsible for any interest or late
charges on any payments from Town to CONTRACTOR.
c. CONTRACTOR is responsible for monitoring its own forces/employees/agents/
subcontractors to ensure delivery of goods/services within the terms of this
Agreement. TOWN will not accept or compensate CONTRACTOR for
incomplete goods/services.
Town of Los Altos Hills Page 1 of 4
Short form
Updated 4/23/10
5. GENERAL TERMS AND CONDITIONS.
a. HOLD HARMLESS. CONTRACTOR agrees to indemnify, defend and hold
harmless the TOWN, its officers, agents and employees from any and all
demands, claims or liability of personal injury (including death) and property
damage of any nature, caused by or arising out of the performance of
CONTRACTOR under this Agreement. With regard to CONTRACTOR'S work
product, CONTRACTOR agrees to indemnify, defend and hold harmless the
TOWN, its officers, agents and employees from any and all demands, claims or
liability of any nature to the -extent caused by the negligent performance of
CONTRACTOR under this Agreement.
b. INSURANCE. CONTRACTOR shall file with the TOWN a certificate of insurance
before commencing any services under this Agreement as follows:
WORKERS COMPENSATION INSURANCE: Minimum statutory
limits.
ii. COMMERCIAL GENERAL LIABILITY AND PROPERTY DAMAGE
INSURANCE: General Liability and Property Damage Combined.
$1,000,000.00 per occurrence including comprehensive form,
personal injury, broad form personal damage, contractual and
premises/operation, all on an occurrence basis. If an aggregate limit
exists, it shall apply separately or be no less than two (2) times the
occurrence limit.
iii. AUTOMOBILE INSURANCE: $1,000,000.00 per occurrence.
iv. ERRORS AND OMISSIONS INSURANCE: $1,000,000.00 aggregate.
v. NOTICE OF CANCELLATION: The City requires 30 days written
notice of cancellation. Additionally, the notice statement on the
certificate should not include the wording "endeavor to" or "but failure
to mail such notice shall impose no obligation or liability of any kind
upon the company, its agents or representatives.))
vi. CERTIFICATE OF INSURANCE: Prior to commencement of services,
evidence of insurance coverage must be shown by a properly
executed certificate of insurance and it shall name "The Town of Los
Altos Hills, its elective and appointed officers, employees, and
volunteers" as additional insureds.
vii. To prevent delay and ensure compliance with this Agreement, the
insurance certificates and endorsements must be submitted to:
Town of Los Altos Hills
26379 Fremont Road
Los Altos Hills, CA 94022
Town of Los Altos Hills Page 2 of 4
Short form
Updated 4/23/10
c. NON-DISCRIMINATION. No discrimination shall be made in the employment of
persons under this Agreement because of the race, color, national origin, age,
ancestry, religion or sex of such person.
d. INTEREST OF CONTRACTOR. It is understood and agreed that this Agreement
is not a contract of employment and does not create an employer-employee
relationship between the TOWN and CONTRACTOR. At all times
CONTRACTOR shall be an independent contractor and CONTRACTOR is not
authorized to bind the TOWN to any contracts or other obligations .without the
express written consent of the TOWN. In executing this Agreement,
CONTRACTOR certifies that no one who has or will have any financial interest
under this Agreement is an officer or employee of TOWN.
e. CHANGES. This Agreement shall not be assigned or transferred without
advance written consent of the TOWN. No changes or variations of any kind are
authorized without the written consent of the City Manager. This Agreement may
only be amended by a written instrument signed by both parties.
f. TERMINATION. This Agreement may be terminated by TOWN upon seven (7)
days written notice to CONTRACTOR. Monies owed for work satisfactorily
completed shall be paid to CONTRACTOR within 14 days of termination.
g. RECORDS. All reports, data, maps, models, charts, studies, surveys,
calculations, photographs, memoranda, plans, studies, specifications, records,
files, or any other documents or materials, in electronic or any other form, that
are prepared or obtained pursuant to this Agreement and that relate to the
matters covered hereunder shall be the property of the TOWN. CONTRACTOR
hereby agrees to deliver those documents to the TOWN at any time upon
demand of the TOWN. It is understood and agreed that the documents and
other materials, including but not limited to those described above, prepared
pursuant to this Agreement are prepared specifically for the TOWN and are not
necessarily suitable for any future or other use. Failure by CONTRACTOR to
deliver these documents to the TOWN within a reasonable time period or as
specified by the TOWN shall be a material breach of this Agreement. TOWN and
CONTRACTOR agree that until final approval by TOWN, all data, plans,
specifications, reports and other documents are preliminary drafts not kept by the
TOWN in the ordinary course of business and will not be disclosed to third
parties without prior written consent of both parties. All work products submitted
to the TOWN pursuant to this Agreement shall be deemed a "work for hire."
Upon submission of any work for hire pursuant to this Agreement, and
acceptance by the TOWN as complete, non-exclusive title to copyright of said
work for hire shall transfer to the TOWN. The compensation recited in Section 4
shall be deemed to be sufficient consideration for said transfer of copyright.
CONTRACTOR retains the right to use any project records, documents and
materials for marketing of their professional services.
Town of Los Altos Hills Page 3 of 4
Short form
Updated 4/23/10
h. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the Parties. Any ambiguities or disputed terms between this Agreement
and any attached Exhibits shall be interpreted according to the language in this
Agreement and not the Exhibits.
6. INVOICING. Send all invoices to the contract coordinator at the address below.
This Agreement shall become effective upon its approval and execution by TOWN. In
witness whereof, the parties have executed this Agreement the day and year first
written above.
CONTRACT COORDINATOR and
representative for TOWN:
Deborah Padovan
City Clerk
Town of Los Altos Hills
26379 Fremont Road
Los Altos Hills, CA 94022
CONTRACTOR:
TOWN OF LOS ALTOS HILLS:
:03
hn Harpootlia'n, Mayor
Date
I
Town of Los Altos Hills Page 4 of 4
Short form
Updated 4/23/10
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TOWN 0ErLOS ALTOS 1HLLS
AUDIT PROPOSAL
TABLE OF CONTE, NTS
''—'^'^'''^'~s~fps ^^''^'^~^~^0.~~~~''^'—''—'^Room ^—^'^~—~^'^''..I
Overview...................................................................................................................................................... 3
Independence............................................................................................... ....~...—. set ...~.ame.... 3
ExternalQuality Control Review ......................................................................... .''—''........... .''''...4
PeerReview Letter ....................................................................................................................................... 5
QUALIFICATIONS ''''--'—'--''—'''''''^~'^~'^^^''''~~''''~''''''~—'^^^.~.a 66
License........................................................................................................................... ~~..~,~.,_.,,
Reputation.................................. ..'^'-'''''''^^^'^^---~^~'~^-6
CityClients ................................................................................................................................................. ~8
Grant and Compliance Audit Experience -~`'.—.'~..--.----''''—''''—.'—''.._`—lO
Experience Working with the Town's —.—._..'..'—.''..'-'—...l2
Debt Experience ..—...-_..~..~~...—.~..--'~.....''...—..~.'— 12
Public Financing Authorities and Mello -Roos Experience ..—....... .~.~~a a a~.~..~~...-....al2
AssistiveResources ............ ................ .``.—....~....'.... Rate .'-.~'~...v so a a a''..—saw ...Wl2
Client Training and Professional Development ~.~.~...—.'....'''''''''''..—..—.l3
Books, Periodicals, News Letters and Professional Standards .......................................................... —..l3
Capabilities in General Consulting and —.--...—'—..—...—.._—.—.-I3
ProfessionalActivity .................................................................................................................................. l4
Internal Quality Assurance System ................................ ... -same ..~........~~. pass see .....~—. Alan l5
No �/�io�
un�og�o��� ....... 1..—...'.....~..........~..a.''''''—'''''~.~. -....'l5
Federal or State Field Re -views ...... 0......0.~...~. a * P a 1~—.mass .~... am* ~.......,.. as* .....'15
Litigation......''.......-...~.........~......—.~....--''''''''''..''—...--'l5
AuditToaoo........................................................ ... go" ....... ..... ~~---- am. --'''''''....... .'.--'.l�
StaffTraining ................................................. ........—..—'..~''''..—..'..-....^.....,.WI9
WORKPLAN...,....'..''.~.~.......' --..~...~—.....f ....—.wo22
SpecificAudit Approach ............................................................................................................................ Z3
SpecificAudit Strategy — Interim .............................................................................................................. 23
�en�m and __����uu�zo�� Compliance ................................................ ................... ...... Planes ....'.....23
Specific Audit Strategy — Year End ....................................................... ... —'..'......423
Audit IT Sysiems, Security and Going Green ........................................................................... .......~24
Local Expertise and Resources ...................................... R..'..~......~~.~.......24
InformationSystem Review ............................................................................................................. --.24
System Controls, Transaction Cycle Processing Verification and Sample Sizes .................................... 25
Accessand SctamControls .......................................................................................................... 26
DataExtraction ............................... —'.. *Is .—........~.~. Meade Damage .....~. Mae ease .... sea Raise ...26
AssessingRisk—Interim Phase ............................................................................................................... 26
Fraud Considerations —.....—........'..—''...'.`—..'....'—.........—..-27
TOWN OF LOS ALTOS HILLS
AUDIT PROPOSAL
TABLE OF CONTENTS
WORK PLAN (Continued)
Client Participation inthe Risk Assessment Process .............. ..,.... Noted —..--..—_....—..-28
Assessing Risks —Final Phase .................................. .....'.~*a—.....' -'.—.. was ._....We.
20
Ability toProvide S micas ouaShort Notice ............................................................................................
%0
Communication and Coordination ..------.--...—_--.....—.....--....—.....-29
Prompt Service and Delivery of Reports ..--.--.—..'--....—.---..—'._....-.-....29
Audit Schedule ...................—.-.—...—.._—..—.....—..—.--.—'—.—.._``—.29
Proposed Engagement Segmentation ....................... .—...................
COSTS................. .—............ ..... —... Pa. ..'`.....`.'~~.~...~......—..............3I
Total All-inclusive Maximum Price ..........................................................................................................
31
Vrbatour Price Includes .............................................................................................................................
3I
Fees and Billings .—.........--...—...—....'--.—.—_..—_—.......—..3l
CostRationale ..............................................................................................................................................
3I
AdditionalServices ................................................................................................................................
Manner of Payment ............''..~.'...—........'.....—..—.................—.32
REFERENCES ___.__.___.._.__._..-._'..',~~,—,...'....`~,..~..—.34
April 812016
Town of Los Altos Hills
Attention: 2016 Audit RFP
26379 Fremont Road
Los Altos Hills, CA 94022
N1- M A�TE
E$
We appreciate this opportunity to submit our proposal to provide financial audit services for the Town of
Los Altos Hills. We agree to audit the basic financial statements of the Town as well as prepare the
Comprehensive Annual Financial Report (CAFR.} for the fiscal years ending June 30, 2016 through 2018.
We will also audit the Town's Transportation Development Act Program, Gann Limit Report, complete the
State Controllers Report, issue a separate statement for the Sewer Operating and Capital Funds and Single
Audit if needed.
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We are certain we are the most qualified finn to be your independent accountants. Maze & Associates
began operating a quarter of a century ago, and since that time., we have rigorously employed our
philosophy that "We are in Business to Help our Clients Succeed!" Our clients know from experience we
employ a variety of techniques, technologies ' and strategies to maximize effective and efficient audits
without shifting our work onto our clients' staff. We have summarized our reasons below and explained
them in depth in our proposal.
> Municipal auditing is our main business. We believe we have the necessary qualifications and are
your best choice.
o We annually audit over 200 municipalities including special districts, joint powers
authorities, successor agencies, housing authorities and financing authorities.
o We currently have forty-two City or Town clients ranging in size from small towns to large
complex cities, including five with populations in excess of 100,000. We are proud to say
that forty-one of our clients publish award-winning GFRs, the majority of which we have
provided assistance in compiling reports.
o We have experience auditing several dozen large enterprise operations, some operated as
departments or funds of our City/Town clients and others operated as stand-alone
independent special districts and authorities.
o We conduct over three dozen Single Audits annually.
o We currently have many clients that use Tyler Technologies accounting system,
➢ We currently prepare the annual required flags for the State Controller's Office, including the
Annual Report of Financial Transactions and Street Report, for many of our municipal clients.
> Our Partners are actively involved in planning, conducting and completing the audit in our
client's offices and our Partners are available, when you need them. We resolve issues on the spot
while the audit is being perfonned. -
> When our Partners communicate with. you, the Council and Committees, their knowledge is based on
detailed specifies, not information which has been filtered through several layers of review.
T 925-930.0902
Accountancy Corporation F: 925.930.0185
3478 Buskirk Avenue, Suite 215 E maze@mazeassociates.com
Pleasant Hill, CA 94523 w mazeassociates.com
➢We have a long-term track record of client retention beyond our client's original contract terms
because of the quality of our service. Please pay special attention to the client start dates in the
City Clients Section.
Our audit staff average more than 80 hours of training in municipal auditing and accounting
and 1,500 hours of municipal audit experience each year. This means you do not train our staff!
➢ Our audit fee includes providing training and assistance with the implementation of applicable
new GASB statements, at no additional charge, Depending upon the complexity of the GASB
Statement requiring -implementation, the assistance could take the form of free access to web -based
training, one-on-one or group training, suggested footnote disclosure templates and/or Excel
spreadsheet templates.
➢ We are an Equal Opportunity Employer.
One of our Directors, Donald Hester, is a Certified IT Auditor. With our qualified information
security staff we have developed and employ a number of technologies to streamline our audit J
process, ensure open channels of communication and data transfer while securing the confidentiality
Leapfile" data file transfers, "Mimecast!' r-
email of client data. These technologies include LANs, a VPN., '
email protection software, paperless audit workpapers, and a major upgrade of our "direct
downloads" technique eliminating manual financial statement inputs and maximizing easy to use
financial roll -up reports.
> Up to half our total audit time is spent at interim each year, ensuring a smooth year-end audit. L
Our interim audit includes much of the work other firms postpone to year-end; we even begin the
preparation of the notes to financial statements or suggest revisions to client -prepared financial r
statements. L;j
> Our references - indeed, any of our clients, will confirm we are your best choice.
Our firm and all our partaers and employees are independent of the Town of Los Altos Hills and its L i
component units as that term is defined by the General Accountability Office's Government Auditing
Standards, the American Institute of Certified Public Accountants, the California Society of Certified
Public Accountants and the California State Board of Accountancy. We have no present or past L
professional relationships with the Town or any of its Council members or employees that would
compromise our independence. '-
As with all our audits,, we are committed to provide timely, quality audit services to the Town of Los
Altos Hills. We have no doubt that we are the firm best qualified to perfon-ii the services described in the
request for proposal. After you have analyzed our proposal and - most important - talked with our
references,, we are quite confident you will agree. L
The proposal is a firm and irrevocable offer for ninety days.
David Alvey, Vice President and Mark Wong, Vice President are authorized to represent, sign for and
contractually obligate Maze & Associates, a Professional Corporation, located at 3478 Buskirk Avenue,
Suite 215, Pleasant Hill, CA, 94523, (925) 930-0902. L J
We look forward to the, opportunity to work with the Town!
Yours very truly, L
e:� L
David Alvey, CPA
Vice President
DA:smg
2
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-M—TRODUCTION
Overview
We are a professional services corporation located in Pleasant Hill, California. We presently have a total
of forty-seven people including the following:
• Nine shareholders
• Three Directors
Three Managers
* Eight Supervisors
* Seven Senior Associates
• Eight Associates
• Nine office and IT staff members
Fifteen of our professional staff are California Certified Public Accountants, and two additional
staff members are in the process of completing their applications for licensure
Thirty-two (32) of our professional staff members comprise our governmental audit staff, as our fwmls
emphasis is on governmental auditing and accounting. Several of our professional staff have national
accounting fine experience, which we have blended with the more personal approach of a smaller firm.
The proposed audit plan includes professional staff members comprised of the following: engagement
partner, one supervisor, plus associates. All of our proposed professional staff members are full-time
employees.
The majority of our clients are cities or other municipal entities and we do this work twelve months of
the year. We limit our practice in other areas and focus on being the best municipal audit firm .
Northern California. Our clients include several cities and towns similar to the Town of Los Altos Hills
in size. Our audit strategy is tailored to municipalities and h
is quite different from the traditional approach.
adapted from commercial clients by general practice accounting firms.
We have focused on municipalities since our incept -ion in 1986. We are active in GFOA, CSMF0 and
CMTA, and our Partners have been speakers at GFOA, CSNWO and CMTA functions.
We are in business to help our clients succeed. We help you use the ever-growing tangle of accounting
rules properly, but to your best advantage, by helping you keep out of trouble and helping you do the -right
Wig, We stay in touch throughout the year to keep you abreast of municipal accounting developments and
to help you avoid problems, instead of coming in afterwards to assess the damage. We rotate our audit
emphasis based on our planning meetings with you so areas that concern you can be addressed as a normal
part of the audit at no extra cost.
Independence
As independent auditors, our most valuable asset is our independence. Unlike many firms, we have
never allowed our independent audit function to be used to promote consulting or other work. In fact,
consulting and related work have never amounted to more than a few percent of our total revenues, while
our independent audit work has amounted to over eighty percent of our revenues.
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INTRODUCTION (Continued)
Our firm and all our partners and employees are independent of the Town of Los Altos Hills and its
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component units as defined by the General Accountability Office's (GAO) Govemment Auditing
Standards, the American Institute of Certified Public Accountants (AICPA), the California Society of
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Certified Public Accountants (CalCPA) and the California State Board of Accountancy. We have no
present or past professional relationships with the Town or any of its Council members or employees that
would compromise our independence.
We will discuss in advance with the Town'any professional relationships being contemplated during
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the period. of engagement that inay present a potential conflict of interest, If the Town and we
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believe any such relationship -presents a conflict of interest, we will not enter into it.
External Quality Control Review
We are members of the AICPA Quality Review Program, which means we subject ourselves to a peer
review of our workpapers and quality control procedures every three years by independent accountants
specializing in such work. Our most recent peer review was completed in 2014; we again received a
F7
rating of pass, the highest level of assurance possible. The quality control review included several
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governmental audit engagements performed -under the Government Auditing Standards, A copy of our most
recent peer review opinion is located at the end of this section.
All of our clients' CAFRs are also reviewed by CS and/or GFOA for award consideration; every report
submitted has won an award from one of those organizations.
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INTRODUCTION (Continued)
Peer,geview Letter
Jessie C. Powell, CPA (Qel.)
L 1S POWELL & SPAff0PD,, INC. Pafrich 1). Spaffordl CPA
CEVIVIED PUBLIC ACCOUNTANTS biuiwJ bil 16 call fee roill NOW Of AW'11431ativi
N feAvs American al Carldir-1 R,61,- Amrursinril,.
SYSTEM REVMW REPORT
To the Shareholders of
Maze & Associates Accountancy Corporation
and the Peer Review Committee of the CalCPA Peer Review Program
We have reviewed the system of quality control for the accounting and auditing practice of Maze &
Associates Accountancy Corporation (the firm) in effect for the year ended May 31, 2014. Our peer
review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews
established by the Peer Review Board of the American Institute of Certified Pub -lie Accountants. As a
part of our peer review, we considered reviews by regulatory entities, if applicable, in determining the
nature and extent of our procedures. The firm is responsible for designing a system of quality control and
complying with it to provide the firm with reasonable assurance of perforinmg and reporting in
conformity with applicable professional standards in all material respects. Our responsibility is to express
an opinion on the design of the system of quality control and the firm"s compliance therewith based on
our review. The nature, objectives, scope, limitations of, and the procedures performed in a System
Review are described in the standards at)vNvikt.aici)a.ora/t)rstiinmai-v.
As required by the standards, engagements selected for review included engagements perforined. under
Government Auditing Standards.
In our opinion, the system of quality control for the accounting and auditing practice of Maze &
Associates Accouatancy Corporation in effect for the year ended May 31, 2014, has been suitably
designed and complied with to provide the finn with reasonable assurance of performing and reporting in
conformity with applicable professional standards in all material respects. Finns can receive a rating of
pass, pass with deficiency(les) orfad. Maze & Associates Accountancy Corporation has received a peer
review rating ofpass.
August 27, 2014
447 Missouri Cour-f 0 Ped -lands, CA 92373 o P.O. Box 884.7 e Pedlands, CA 92375
Teh,pbone909-792-1852 10 fax 9OD-792-2015
QUA LIF CATIONS
License
Maze & Associates is a properly licensed California Certified Public Accounting firm. We are members of
the following professional organizations:
o American Institute of Certified Public Accountants (AICPA.)
• Government Audit Quality Center (GA.QC) of the AICPA
California Society of Certified Public Accountants (CalCPA.}
Government Finance Officers Association (GFOA.}
California Society of Municipal Finance Officers (CSWO)
• Association of Certified Frand Examiners (ACFE)
All assigned key professional staff are properly licensed to practice in California. Those staff that are
certified public accountants have current California CPA licenses in the attest function, and have received
more than twice the required level of continuing education, including the credits specifically required in
the area of governmental audits. See Qualifications — Audit Team for the resumes of the Proposed audit
team.. I L J
Neither our firm nor any of our employees have a record of substandard or unsatisfactory performance, nor r
have any claims ever been filed with any State Board of Accountancy against our fm or any of our L
employees.
Reputation
We believe quality and an emphasis on doing our job right is far more important than being cheaper than r
our competitors. Despite the economic pressures faced by municipalities and the need to save money,
there are other, more serious concerns to be weighed, For instance, the perceived or actual audit failures L.'U:
in the municipal audit sector. The City of Bell news, especially the State Controller's Office Report on
that City's audit ficin, raised serious questions about municipal audit quality. Whether this is Justified or
not isn't really the issue. What is at issue is the perception of poor quality in municipal audits. We
received a number of inquiries and requests for proposal from that firm's clients who desired a change in
auditors. A former client of ours, which rotated to them several years ago, called -as and asked if we
would propose on the Town's work, They said that the council simply did not want to expend the energy
to defend whether that firm was providing quality work.
We received calls from other municipalities with a different audit firm that released their fiscal 2009-10
audit reports late. The reason - the audit firm merged and re-marged in, fiscal 2009-10 and the new fmn
placed a `quality control review" on municipal audits. The end result was that CAFR extensions were
needed for 2 0 09-10.
These trends indicate that it would be unwise to reduce audit effort for any municipal audit. Our
commitment to quality and preserving our firm's reputation remains our top priority and serves our clients
best.
Clients tend to remain with us through their difficulties. Consider for a moment high risk audit
environments, which are those entities undergoing financial stress, bankruptcy or fraud. For example,
-these clients are still clients today:
�6 Richmond - Financial Stress (FYs 2002-05)
46 Vallejo - Bankruptcy/Financial Stress (FYs 2010-12)
31
I QUALIFICATIONS (Continued) I
Our practice includes forty two city or town clients and amore .than fifty special district CA -FR award
winners—more municipal clients and more award winners than any other Northern California
accounting firm or international firm branch office. Included in those totals are six award-winning
Special District CAFRs- Eighty percent of our practice is municipal auditing, accounting and consulting,
continuing throughout the entire year. Our growth can be seen in the graph below, which shows the growth
in the number of our total municipal entity clients in blue, City audit clients in green and CAFR award
winners in red.
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
1.998 1999 2000 20012002 2003 2004 2005 2006 2007 2008 2009 2010 20112012 2013 2014
Every one of the above CAFRs won awards from GFOA and/or CSMFO.
As you can see from the client list in the City Clients Section below we have a winning combination that has
resulted in strong client loyalty and retention. Several clients who left have returned after seeing the
difference between our firm and our competitors. Others have remained our clients after completing a
Bill -blown. proposal process, most recently Brentwood, Nfilpitas, Oakley, Pittsburg and South San
Francisco.
7
QUA LIFICAMONS (Continued)
City Clients
The, table below summarizes our most recent experience with audits of cities. We are responsible for all
phases of the work on these clients. All of this work represents recurring annual audit and related
work; all this work and that presented in the table was completed on or before the deadline from the
first year listed for each client.
Pnwrilnfinn > 1 INIAN)
'Prb.n-d-IIa%qn." e 'Infl Win
Atherton
Audit of City CAFR, Successor Agency,
2009 - Present
Yes
Daly City
Single
Single Audit, Transportation Development
1992 - Present
Yes
Yes
Yes
Act Audit, Transportation Measure, JPAs
Yes
Yes
Yes
Benicia
Audit of City CAFR, Successor Agency,
2011 -Present
t/
Hayward
Sin,rale Audit, Transportation Development
2011 - Present
Yes
Yes
Yes
Act Audit, Transportation Measure,
Yes
Yes
Yes
Brentwood
Financing Corporation
2007 - Present
Yes
Yes
Yes
Audit'of City CAFR, Successor Agency,
Richmond
Single Audit, Transportation Development
2005 - Present
V/
Act Audit, Retirement Plan, Financing
Yes
Yes
Yes
Cupertino
Corporation
2012 -Present
Yes
Yes
yes
Audit of City CAFR, Successor Agency,
Santa Clara
Single Audit, Transportation Development
2012 - Present
Yes
Yes
Yes
Dublin
Act Audit, Silicon Valley Power
2012 -Present
VI
t/
V
Audit of City CAFR, Successor Agency,
Yes
Yes
Yes
Vallejo
Single Audit, Transportation Development
Single
2004 - Present
Yes
Yes
Yes
Et Cerrito
Act Audit, Housing Authority
2005 -Present
'Prb.n-d-IIa%qn." e 'Infl Win
Atherton
Financial Statements, Single. Audit
2009 - Present
Yes
Belmont
Audit of City CAFR, Successor Agency,
1998 - Present
V
Single Audit, Transportation Measure
Yes
Yes
Yes
Benicia
Audit of City CAFR, Single Audit
2011 -Present
t/
Transportation Development Art Audit
Yes
Yes
Yes
Audit of City CAFR, Successor Agency,
V
Ve
VII
Brentwood
Single, Audit, Transportation Development
2007 - Present
Yes
Yes
Yes
Act Audit
Brisbane
Audit of City CAFIR, Successor Agency
2011 -Present
Audit of City CAFR, Successor Agency,
Cupertino
Single Audit, Transportation Development
2012 -Present
Yes
Yes
yes
Act Audit
Davis
Audit of City CAPD, SingleAudiI t
2015
Yes
Yes
Yes
Dublin
Audit of City CAFR, Single Audit�
2012 -Present
VI
t/
V
Transportation Measure
Yes
Yes
Yes
Audit of City CAFR, Successor Agency,
Et Cerrito
Single Audit, Transportation Development
Sin0
2005 -Present
Act Audit, Retirement Plan, Financing
Yes
Yes
yes
Corporation
Fairfax
Basic Financial Statements
2009 - Present
Gait
Audit of City CAFE, Successor Agency,
2009 - Present
Single Audit
Yes
Yes
yes
Half Moon Bay
Audit of City CAFR, Single Audit,
2014 - Present
Transportation Development Act Audit
Yes
Yes
Yes
Audit of CAFR, Single Audit
New client in
Lafayette
Transportation Development Act Audit,
2015 -Present
2015 wi U submit
Laorinda School Bus Transportation
rn
for CAFR award
Yes
Authority, Finance Authority
Larkspur
Basic Financial Statements, Transportation
1991 -Present
Development Act Audit
Lathrop
Audit of City CAFI� Single Audit
2011 -Present
Yes
Yes
Yes
Audit of City CAFR, Successor Agency,
Livermore
Single Auditan
Transportation Development
1988 -Present
V
V
Act Audit, Transportation Measure,
Yes
Yes
Yes
Financia g Corporation
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QUALIFICATIONS (Continued) I
CHOi t $t.i*.r' t �CAFE
CIIEVInt 3sqmp S.op
ee -ar'Wark Date SOMISSIOA GFOA Award SIjigIQ Audit
Los Altos
Audit of City CAM Single Audit
2014 - Present
Transportation Measure, Retirement Plan
Yes
yes
yes
Manteca
Audit of City CAFR, Successor Agency,
1986 - Present
Single Audit; Financing Authority
Yes
yes
yes
Martinez
Audit of City CAFR, Single Audit
2001 - Pxesent.
Transportation Development Act Audit
Yes
yes
yes
Audit of City CAFR, Successor Agency,
V
I/
V/
Milpitas
Single Audit Transportation Development
1995 - Present
Yes
Yes
Yes
Act Audit, Financing Corporation
Audit of City CAM Successor Agency,
Mora,ga
Single Audit, Transportation Development
2012 - Present
Yes
Yes
Yes
Act Audit
Morgan Hill
Audit of City CAFR, Single Audit
2015 - Present
New client in
2015 will submit
Transportation Development Act Audit
for CAFR award
Yes
Mountain View
Audit of City CAM Single Audit,
2001 - Present
Transportation Development Act Audit
Yes
Yes
Yes
Audit of City CAFR, Successor Agency,
Oakley
Single Audit, Transportation Development
2000 - Present
Yes
Yes
Yes
Act Audit
Audit of City CAFR, Single Audit
Now client in
V/
Orinda
Transportation Development Act Audit
2015 - Present
2015 will submit
Yes
for CAFR award
Audit of City CAM Single Audit,
Now client in
Pacifica.
Transportation Development Act Audit
2015 - Present
2015 will submit
Transportation Measure
for CAFR award
Yes
Petaluma
Single Audit, Audit of City CAFR, Sing
0
2011 - Present
Transportation Development Act Audit
Yes
Yes
Yes
Audit of City CAM Successor Agency,
Pittsburg
Single Audit, Transportation Development
2011 -Present
Yes
Yes
Yes
Act Audit,, Retirement Plan
Portola. Valley
Financial Statements and Transportation
2005 - Present
Measure
Rancho Cordova
Audit of City CAFR, Successor Agency,
2009 - Present
V
Single Audit, Financing Corporation
Yes
Yes
Yes
Audit of City CAFR, Successor Agency,
✓V
San Leandro
Single Audit, Transportation Development
2011 - Present
yes
Yes
Yes
Act Audit, Transportation Measure
Audit of City CAFR, Successor Agency,
✓
V
V
San Pablo
Single, Audit, Transportation Development
1995 - Present
Act Audit
Yes
Yes
Yes
San Rafael
Audit of City CAFR, Successor Agency,
2007 - Present
V/
✓
Single Audit
yes
Yes
Yes
San Ramon
Audit of City CAFR, Single Audit
2014 - Present✓
✓V
Transportation Development Act Audit
Yes
Yes
Yes
Sausalito
Audit of City CAFR
2006 - Present
✓
Yes
V
Yes
Audit of City CAFR, Successor Agency,
South San Francisco
Single Audit, Transportation Development
2004 - Present
Act Audit, Transportation Measure
Yes
Yes
yes
Financial Statements, Successor Agency,
Turlock
Single Audit, Transportation Development
2013 - Present
✓
Act Audit, Financing Corporation V
Yes
Audit of City CAFR, Successor Agency,
Visalia
Single Audit, Transit Fund, Transportation
2015 - Present
✓✓V
Measure
Yes
yes
Yes
QUALIFICATIONS (Continued)
Grant and Compliance Audit Experience
Our pertinent Non -Transportation Single Audit Act experience is graphed below:
�17
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7
WK. 1`,1-�
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SN
0
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Alameda
American Canyon
ABAG
■
Belmont
Concord
Daly City
Davis
EBMUD
■
East Palo Alto
El Cerrito
■
EID
Food Bank
Galt
■
Livermore
Manteca
Martinez
Milpitas
Mountain View
Napa
Palo Alto
■
Pittsburg
Rancho Cordova
■
Richmond
Roseville
WETA
San Pablo
■
San Rafael
SRVFPD
■
So. Lake Tahoe
So.Sati Francisco
Suisun City
Sunnyvale
Turlock
Vallejo
Waterford
■
lWest Sacramento _I
I
BE
10
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I QUALIFICATIONS (Continued) I
Our pertinent Single Audit Act and Transportation grant experience is graphed below:
MSKUK
Ism
AC Transit
American Canyon
Atherton
+
Belmont
Brentwood
Concord
+
Daly City
+
Davis
East Palo Alto
+
El Cerrito
Galt
Larkspur
+
Livermore
+
Los Banos
Manteca
+
Mountain View
+
Peninsula Corridor Joint Powers Board
+
+
+
Palo Alto
Rancho Cordova
+
San Carlos
4
San Mateo Transit District
4
+
+
San Mateo County Transportation Authority
4
San Pablo
4
+
San Rafael
+
Solano Trans Authority
+
Suisun City
4
Sunnyvale
+
Water Emergency Transportation Authority (ftTA)
Woodside
+
11
QUALHICATIONS (Continued)
Ex
,P erien ce Working with th e To wn's A eco unting System
We have many current and former clients that use the Tyler Technologies accounting system, including
the following:
• City of Dublin
• City of San Leandro
• City of Oakley
• City of San Rafael r
• City of Pittsburg
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All of our audit staff can navigate through the read-only functions of the system with ease, as well as other
general ledger systems of our clients, and can work in any other database systems of the Town.
Long -Term Debt Experience
Because of our depth of experience with municipalities we have experience with virtually every debt type
and structure. We have experience auditing revenue bonds, certificates of -participation, special assessment L J
bonds, Marks Roos bond pools, capital appreciation bonds, variable rate demand bonds, auction rate bonds,,
bond anticipation notes and bonds/swap agreements with synthetic fixed interest rates. Our experience with
swaps by clients including the total notional amount follows: L
-.11.
Contra Costa Transportation Authority - $3 00 million (Forward Swap commitment) F
■ City of Richmond - $199 million, including a counter swap and a swaption L
■ City of Pittsburg - $156 million
City of Roseville - $115 million
South Placer Wastewater Authority- $94 million _J
City of Modesto - $62 million
City of San Pablo - $3 6 million r I
East Bay Municipal Utility District - $90 million I .
Public Financing Authorities and Mello -Roos Experience
We have performed audits. of Public Facilities Financing Authorities and Mello -Roos districts and designed _J
financial statements that went beyond required disclosures to include Inception -to -Date information about
capital projects. These disclosures can allow the reader to see and understand the entire scope and cost of
capital projects, even though they may not remain on the Authorities' books after completion.
We are familiar with public financing authorities and the accounting and auditing problems that can arise
with their use. We have many clients that use financing authorities in issuing debt. We have considerable
experience with the "blending" of financing authority :funds with other Town funds.
Assistive Resources L
Our client support is unmatched by any other firm. As a San Francisco Bay Area municipal audit niche firm. 7,
with six audit partners, we are positioned perfectly to provide staff and Council with a wide variety of
resources. Support ranges from turn key financial statement drafts with linked footnotes and direct
download -based financial statements to professional continuing education sessions. We are active in
professional organizations affecting local government and have a strong presence in neighboring local
govemments -which keeps our Imowledge current that we, readily share with our clients. And we do not
charge extra for the five-minute phone calls throughout the year.
12
I QUALIFICATIONS (Continued) I
Client Training and Professional Development
We can provide you with varying levels of training and professional development resources. We provide
our semi-annual continuing education to our staff and have on occasion opened it up to our clients who wish
to keep their licensees current. Our audit fee includes providing training and assistance with the
implementation of applicable new GASB statements, at no additional charge. Depending upon the
complexity of the GASB Statement requiring implementation, the assistance could take the form of free
access to web -based training, one-on-one or group training, suggested footnote disclosure templates
and/or Excel spreadsheet templates.
We have also developed and conducted training specifically for our clients. Training can be general theory
in nature, semi -customized or fully customized training that fits your operations. Theory intensity can be at
the beginning, intermediate. and advanced levels. On occasion, we have provided our clients with shorter
presentations of now pronouncements and other requirements. At the City of Richmond, for example, we
developed and taught monthly training sessions on virtually every major finance area to its staff over a
twelve month period. Much of their staff assumed new functions in the aftenuath of serious staffmg cuts
several yeaxs ago and -their Finance Director was seeking an economical method of enhancing their
knowledge base and skill sets. At the City of Livermore, we provided customized training on capital assets
to their finance staff, and at the Cities of Richmond, Livermore, and El Cerrito we provided grants
management training to several departments as a means of solving coordination weaknesses. In 2015
%..j J we
also began providing live and taped web -based training,
Books, Periodicals, News Letters, and Professional Standards
We provide our staff and our clients, if they wish, all of the resources they need to complete their work
efficiently and effectively. Our resources include all AICPA. Professional Standards, AICPA Audit and
Accounting Guides, GASB statements, interpretations, implementation guides and concept statements.,
FASBs, ARBs, APBs, Generally Accepted Government Audit Standards (The "Yellow Boole'), Single
Audit Regulations and website links to OMB Circulars, the SF -Sac. Data Collection Form and instructions,
website links for CFDA numbers, the Code of Federal Regulations and publications of the Government
Accountability Office. We also have GFOA documents such as CAFR Checklists, the Governmental
Accounting, Auditing and Financial Reporting Guide (the "Blue Boole'), the GAAFR Review, and ACWA
newsletters. We maintain an up-to-date library of guidelines and other documents we use such as cash and
investment guidelines, and Transportation Development Act regulations mid guidelines, Transportation
Measures A, B and J guidelines and regulations. And, we attend conferences by CSMFO, ACWA, AIPCA
and the CaICPA Education Foundation to keep ourselves current.
Capabilities in General Consulting and Compliance Auditing
We also provide a variety of other services which you may need, including:
+ Training and Continuing Education — Generic or customized to fit your needs!
> Governmental Accounting - Beginning,
Intermediate and Advanced Levels
> Grant Accounting and Management
> Bank Reconciliations
> Management and Accounting
> Cash and Investments
13
> Accounting for Receivables and
Revenues
> Accounts Payable and Purchasing
> Capital Asset Accounting
> Debt Accounting and Management
> Information System Security and
Microsoft training
QUALIFICATIONS (Continued)
Temporary Accounting Assistance - When we are not limited by independence regulations, we
have provided additional accounting help in areas such as:
> Construction in Progress Accounting > Capital Assets
> Owner Participation Agreement/Disposition and > General Ledger Journal Entries
Development Agreement Accounting
> Forecasts and Projections > Debt recording
> Grant Management > Account analysis and clean up
Preparation of Controller's Reports and annual filings - We can prepare any of the following
whether you are an audit client or not:
State Controller's Reports for: > Annual Street Reports
0 Cities > Information Returns
0 Special Districts, or
x Transportation Planning Agencies
Operational Segment Audits such as:
> Cash collection controls and procedures > Police evidence room
> Loans receivable management )> Cal -Card and Purchasing Card
Project Length Audits such as Construction in Progress project audits and Joint Powers Authority
member equity calculations.
Leas e/Franchise/TOT/Indep end ent Operator Agreement Audits including rent recalculations,
revenue controls, payroll/independent contractor compliance and more.
++++ Pre -award Operator/Contractor Analysis and Audits, such as
> Pre -award audits of Engineering Firms funded by CALTRANS
> Independent Analysis of Proposed Airport Operators
> Independent Analysis for Prospective Fire Service Providers
i*+ Information Systems Support customized to fit your needs:
� Information System Reviews and Audits � Security and Microsoft Certified Training
> Network, Vulnerability Scans > Microsoft Small Business Specialist
> Securityand Access Reviews > Payment Card Industry (PCI) Compliance
Professional Activity
We are active members of the Government Finance Officers Association and the California Society of
Municipal Finance Officers as well as the American Instihite of Certified Public Accountants and the
California Society of Certified Public Accountants. We are also a member of the Association of California
Water Agencies (ACWA.). We are frequent speakers at various organizations.
We attend CSMFO Northern California chapter meetings on a regular basis, and we have served as
speakers on various occasions. We also attend the CSMFO Annual Conference, at which our Partners
have been speakers. We have also attended the League of California Cities' annual Financial
Management Seminars.
Amy Meyer and Katherine Yuen serve on the Governmental Accounting and Auditing Committee of the
California Society of CPAs. David Alvey, Amy- Meyer and Mark Wong are CAFR reviewers for, the
CAFR Award Program of the Government Finance Officers Association.
14
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Internal Quality Assurance System
Every one of our audit and assurance engagements has an Engagement Partner responsible for the
successful completion of the work as well as ensuring we, maintain quality levels that satisfy professional
standards. Our very high Partner to staff ratio of one to five is double that of traditional firms. We
specifically structure our work for on-site Engagement Partner participation while the audit is being
conducted. This structure is by design to ensure we have active on the job oversight of staff and timely
completion of the work.
We have always subjected our audit and assurance engagements to a second Quality Assurance Review.
Historically this was performed by a second partner. However, over the past several years audit quality
controls standards have been revised and enhanced. Standards issued by the American Institute of
Certified Public Accountants and General Accountability Office now form the guidance in determining
adequate quality controls for audit firms. While not required by the Standards, we believed it would be
better to have an independent second review of the work by someone without engagement responsibilities
and to have that person report to the shareholders directly as a group rather than any one shareholder.
No Disciplinary Action
We have no record of substandard or unsatisfactory performance, nor have any claims ever been filed with
any State Board of Accountancy against our firm or any of our employees.
Federal or State Field Reviews
We have not been subject to any Federal *or State Field Reviews of our audits during the past three years.
Litigation
We have not been sued over poor work quality, nor have we paid any such claims out of court in the past
three years.
Audit Team
We are proposing to assign David Alvey as Engagement Partner and Mark Wong Technical
Review/Alternate Partner and Cody Smith as Audit Supervisor to your audit. We will also have Donald
Hester, our Information Technology Director, perfonn a review of your information system as it relates to
our work and our Quality Assurance Director, Cory Biggs, perform a Quality Assurance Review of all our
re -ports and workpapers.
We Will balance out our resources with our Senior Associates and Associates to form fully leveraged teams.
All of our audit staff are experienced with basic financial statements, Comprehensive Annual Financial
Reports, large enterprise operations, Successor Agencies, retirement plans, Single Audits, Transportation
Development Act Audits, capital assets and infrastructure, long-term debt, including swaps and related
compliance and continuing disclosures, and all other aspects of municipal accounting and financial
reporting.
15
------ QUALIFICATIONS (Continued).,.
Brief resumes of our proposed team members follow:
DAVIDALVEY, CPA, Engagement Partner - graduated from St Mary's College, Moraga with a
Bachelors of Science Degree in Accounting and a Minor in Business Administration. Davidbas received.
500 hours of continuing education in the past five years. David has experience as an internal auditor at
California Savings Bank in Oakland, CA. He is a Certified
Public Accountant in the State of California.
He is a member of the American Institute of Certified Public Accountants and the California Society of
Certified Public Accountants. David is also a member of the Association of Certified Fraud Examiners.
His relevant experience includes:
City of American Canyon
City of Larkspur
,American River Authority
City of Los Altos
Alameda County Transportation Authority
City of Livermore
Alameda County Transportation hnprovement Authority
City of Manteca
Alameda -Contra Costa Transit District
East Palo Alto Sanitary District
Alaineda Mastic Senior Center
Mid -Peninsula Water District
Association of Bay Area Governments
Middle Fork Project Finance Authority
Bay Area Clean Water Agencies
Monument Crisis Center
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City of Benicia
City of Napa
Bethel Island Municipal Improvement District
City of Oakley
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Calaveras County Water District
Partners in School Innovation
Castle Rock County Water District
City of Petaluma
Central Contra Costa Sanitary District
City of Pittsburg
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Central Market Community Benefit Trust
Placer County Water Authority
Clausen House
City of Pleasant Hill
Coastside County Water District
Regional Park Foundation
Contra Costa Water Financing Authority
Richmond Housing Authority
Contra Costa Water District
City of Rio Vista
Contra Costa Water District Retirem&nt Plan
City of Roseville
LJ
City of Cupertino
City of San Leandro
City of Daly City
San Mateo Community College Foundation
City of Davis
San Mateo County Transportation Authority
Delta Diablo Sanitation District
Peninsula County Joint Powers Authority
Diablo Water District
San Mateo County Transit District
DSRSD/EBMUD Recycled Water Authority
Santa Clara Valley Water District
Dublin San Rmnon Services District
Skyline County Water District
East Bay Municipal Utilities District (EBNfM)
Solano Irrigation District
EBMLTD Employee Retirement System
Solano Transportation Authority
East Palo Alto Sanitary District
South San Joaquin Irrigation District
Education Pioneers
Southern Marin Fire Protection District
El Dorado Irrigation District
Stanislaus Waste to Energy
City of Escalon
Stinson Beach County Water District
Fairfield -Suisun Sewer District
Stopwaste
Freeport Regional Water Authority
City of Sunnyvale
City of Gait
Upper Mokelumne River Watershed Authority
City of Hayward
Walnut Creek Chamber of Commerce
ED Business Solutions
The Wellness Community
Landmark Heritage Foundation
West Bay Sanitary District
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QUALIFICATIONS (Continued)
MIRK WONG, CPA, Technical -ReviewlAlternate Partner— Mark is a Certified Public Accountant in the
State of California. He is a year-round municipal auditor and has been with Maze & Associates since
1996.
Mark has received over two hundred and forty hours of continuing education in the past three years as an
instructor and participant. Over the years, he has successfully advised and assisted clients on successfully
finplementing GASB pronouncements, grants compliance and internal controls.
Mark is a member of the Government Finance Officers Association (GFO.A) CA -YR award Special
Review Committee. Over the years, he has reviewed CAFR reports that were submitted by municipal
governments to GFOA.
Mark is also a member of the American Institute of Certified Public Accountants and the California
Society of Certified Public Accounts. He holds a Master of Business Administration degree in
Accounting from Golden Gate University. His wide ranging audit experience 'includes the following:
Alameda County Transportation Improvement Authority
Alameda County Transportation Authority
Alameda Reuse and Redevelopment Authority
City of Alameda
Alameda Municipal Power
City of Albany
Town of Atherton
City of Brisbane
City of Belmont
Coastside County Water District
Contra Costa Transportation Authority
City of Cupertino
City of Daly City
East Bay Municipal Utility District
City of East Palo Alto
City of Emeryville
City of Half Moon Bay
City of Hayward
Town of Hillsborough
Housing Authority of the City of Richmond
Kentfield Fire Protection District
City of Larkspur
17
City of Livermore
City of Millbrae
City of Modesto Police Department
Northcoast County Water District
City of Pacific Grove
City of Piedmont
City of Pinole
City of Pleasant Hill
Town of Portola Valley
City of San Carlos
City of San Leandro
City of Santa Clara
Santa Clara Valley Water District
City of Sausalito
St. Vincent de Paul Society
City of South Lake Tahoe
City of South San Francisco
City of Suisun City
City of Sunnyvale
City of Vallejo
City of Visalia
Town of Woodside
QUALIFICATIONS (Continued)
CODY P. SMITH, CPA, Audit Supervisor - graduated Simima Cum Laude from the University of San
Francisco in May, 2008 with a Bachelor of Science in Business Administration of Accounting. Prior to
graduating from the University of San Francisco, Cody also spent two years at St. Mary's College of
California. After graduating, Cody worked at Rothstein, Kass & Company as a Hodge Fund Audit & Tax
Company
Associate and while there received 80 hours of continuing education. Cody joined Maze & Associates in
August, 2009 as an Audit Associate. He is now an Audit Supervisor. Cody has received over 600 hours
of continuing education since joining the firm. Cody's expertise includes financial statement and single
audits for: Municipalities, Non -Profits, Special Districts, Transit Agencies, Insurance Funds and Public
Housing Authorities. Cody became a Certified Public Accountant (CPA.} in the State of California in
January, 2011. His relevant experience includes:
AC Transit
City of Alameda
Alameda Municipal Power
Association of Bay Area Governments
City of Atherton
City of Belmont
City of Brentwood
City of Brisbane
California Groundwater Authority
City of Concord
City of Cupertino
City of Daly City
East Contra Costa Costa Habitat Conservancy
City of East Palo Alto
City of El Cerrito
Food, Bank of Contra Costa
City of Hayward
City of Livermore
Livermore Amador Valley Transit Authority
Livennore Recreation & Park District
Town of Los Altos
City of Los Banos
City of Manteca
City of Millbrae
City of Mountain View
City of Napa
City of Piedmont
Town of Portola Valley
Redwood Empire Municipal Insurance Fund
City of Richmond
Richmond Housing Authority
City of Santa Clara
San Mateo County Transportation Authority
Peninsula County Joint Powers Authority
San Mateo County Transit District
SF Bay Area Water Transportation Authority
City of San Carlos
City of San Pablo
City of San Rafael
City of Santa Clara
Sonoma County Agricultwe Preservation &
Oven Space District
City of South San Francisco
City of Stockton
City of Suisun City
Silicon Valley Education Foundation
City of Vallejo
City of Woodside
CORY BIGGS, CPA, Quality Assurance Director - Cory is a graduate of CSU Hayward with a B.S. in
Business., emphasis in Accounting. He is a California CPA with over twenty-nine years experience, three
with Deloitte, Haskins & Sells, three with Seiler & Company, a large Bay Area local firm, and the rest
with us. He is a member of the AICPA and California Society of CPA's. Cory's experience includes
cities, school districts, and a variety of high-tech and commercial for-profit organizations. Cory has
accumulated three hundred twenty hours of continuing education in the past three years as an in-
house instructor and participant. His relevant municipal experience includes:
City of Alameda
City of American Canyon
Association of Bay Area Governments
Town of Atherton
City of Belmont
Belmont San Carlos Fire Department
18
Livermore ArnadorNalley Transit Authority
City of Los Altos
Town of Los Altos Hills
Town of Los Gatos
City of Manteca
City of Martinez
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QUALIFICATIONS (Continued)
Cory Biggs (Continued)
Belmont Net Six Joint Powers Authority
Belmont South San Mateo Police Authority
City of Capitola
Coastside County Fater District
City of Concord
Contra Costa County Bond Funds
Contra Costa Transportation Authority
City of Cupertino
City .of Daly City
City of Dublin
Dublin San Ramon Services District
East Bay Municipal Utility District
City of El Cerrito
City of Emeryville
City of Hayward
Town of Hillsborough
City of Livermore
Livermore- Amador Valley Transit Authority
Livermore-Amador Valley Water Mgt. Auth.
Livermore Area Recreation and Park District
City of Millbrae
City of Milpitas
City of Modesto
City of Mountain View
City of Napa
City of Palo Alto
Placer County Water Agency
City of Pleasant Hill
Town of Portola Valley
Richmond Housing Authority
San Francisco Bay Transit Water Emergency Authority
City of San Carlos
San Ramon Valley Fire Protection District
Santa Clara Valley Water District
City of 8 aratoga.
City of South Lake Tahoe
South Lake Tahoe Basin Waste, Management Authority
City of South San Francisco
San Francisco Bay Area Water Emergency Transit
Authority
DONALD E. HESTER, 1T Director - Donald's clients include local municipalities, non -profits,
corporations and federal government agencies, specializing in a wide array of compliance programs and
security assessments such as PCL FISMA, COBIT, ITIL and IS027002. He is a guest lecturer and
speaker on security topics for CMTA, CSMFO, MISAC, CISOA, ISACA and others and he has served on
various advisory committees and as a subject matter expert in information technology and security.
Donald also teaches IT Audit and Forensics at the University of San Francisco and Microsoft courses for
Los Positas College, San Diego City College and for the @One program of the California State
Chancellor's office. Donald graduated with honors from tho American Military University with a
Bachelor's Degree in Security Management with a concentration in Information Security. He has nearly
20 years of experience in the security field. Donald has been with us for ten years now and has received
more than 320 hours of continuing education in the past three years and has over 900 hours of
instructional work. His certifications include; CISSP, CISA, CAP, MCT, MCITP, MCTS, MCSE
Security, MCSA Security, MCDST, Security+ and CTT+. Donald is also a Chairman and past Treasurer
for the Brentwood Veterans Memorial Building and Commandant and past Treasurer for the Delta Diablo
Dot. 1155 Marine Corps League.
Staff Training
We believe the level of training we provide is unmatched by any other accounting firm. Our audit staff
receives an average of 80 hours of continuing education annually, including an average of over 48
hours of municipal audit and accounting training. These are twice the amount required by
professional standards,
19
QUALIFICATIONS (Continued)
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Our program places heavy emphasis on governmental accounting and auditing classes conducted by our
own staff, supplemented by courses offered by the California Society of Certified Public Accountants, the
American Institute of Certified Public Accountants, the Government Finance Officers Association, the r
California State Municipal Finance Officers Organization and the Association of California Water
Agencies.
We accomplish this task by reserving a solid week in January or February and another week in
July solely for staff training. Our training is very specific and very participatory; lectures are almost
non-existent as people are involved in a continual give-and-take format designed to educate while it helps
us improve our services. We deal with specific clients and situations, we solve problems and do case
studies, and we train people for real-life situations through role-play exercises. Everyone is equal in these
exercises and everyone contributes their own experience in the field and the ideas they have formulated
from that experience. Suggestions coming out of staff training sessions are the source of most of the
service improvements and refinements we make each year.
A. listing of our continuing education courses provided to all our staff, both certified and non -certified, over
the past three years is as follows:
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20x3
2014
2015
Spring Summer Spring Summer
1.l.
Spring Summer
Area/Course 140
Hrs. 40 Hrs.
8 Hrs. 40 Hrs.
8 Hrs. 40 Hrs.
W., I -
Municipal Audit - Practice Analysis and Review
Managing Municipal Audits - Audit Supervisors
Cities in the News
Control Testing
91
Quality Control I
G.,AAP.Updates
Cash, Debt, and Capital Asset Auditing Updates
Researching CCI -I, Best Practices Consulting/ Governmental Accounting
GASBIFASB Update
GASB3d'- Training
GASB Update
GASB 68
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Journal Entry Testing
Compliance Audits
Transportation Audits - TDA, STIP and Measures A, B, C
RDA Compliance/Successor Auditor
Single Audit Compliance
Kl"
Y'05`1212 01--Z'
Audit Standards Update
New SASS, Risk Assessment and Impacts on Approach
Assessing Internal Control Risks/ Sample Sizes
Updating our Audit Approach
Yellow Book Update
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Team Buildingi-, Building and Maintaining Effective and Successful Teams
CCH Paperless Audit Software/ Trial Balance Function
I ,IT Information Systems Review Updates
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QUALIFICATIONS (Continued)
Qualifications and Continuity
Our people accumulate over 1500 hours of purely m. * unicipal audit and accounting experience
annually, far more than in any general service accounting firm.
We provide our clients continuity while introducing enough new people to keep our perspective
fresh and provide you with the benefits of rotation. We intend to retain all the people assigned to
your audit throughout this year's entire engagement. In future years we plan to rotate no more
than one person on each segment whom we will replace with someone of equal experience.
We do everything we can, to ensure continuity because it helps you, it helps our staff and it helps us. We
schedule the entire year in advance to avoid conflicts, and we give priority to clients who are able to
accurately predict the date their books will be closed, so that the staff on their audit will not be affected if
another client's closing or audit is delayed. We attempt to match personalities as well as skills and
abilities so that our staff and yours will got along well.
WORKPLAN
Work Plan:
April/May 2016:
Final Award, execute contract
June 2016:
Prepare Interim Checklist
Entrance conference and detailed audit plan
Complete interim. audit tests
Review financial statement formats and disclosures and provide comments
Prepare Annual Closing Checklist
Prepare Accounting Issues Memorandum
Prepare draft recommendations, if any
Complete Gann. Report
Interim exit conference
July/August:
Town closes books, completes -preparation of data on Atai-aal Closing Checklist
September 2016:
We review Annual Closing Checklist information
We prepare draft financial statements
We perform Partner Level Analytical Review of fund -level statement and email questions to Town
Town answers email Analytical Review questions
We I refine audit scope based on answers to analytical review questions
Early October 2016:
Final phase entrance conference, start of year-end field -work in the Town's offices
Finalize answers to Analytical Review questions
Complete Fund -level year-end audit tests
Complete entity -wide audit tests
We complete drafts of re and/or review and provide comments on Town -prepared reports
21
WORK PLAN (Continued)
Late October 2016:
Town prepares Management's Discussion & Analyses
We review Management's Discussion & Analyses
Drafts are finalized and approved
Early November 2016:
We issue all re orfs in final form
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December 2016:
Present audit reports to the Council
Specific Audit Approach
Our audit strategy is designed specifically for municipalities. We perform half our audit well before year-
end so we can identify problems early. Our strategy maximizes our efficiency and lessons the load on our
clients. When engaged to prepare the financial statements, we prepare proformas of them for your review,
well before year-end and we give you detailed interim and final -phase checklists of all the items we will
need from you months in advance. We, have integrated GASB 34 requirements into our strategy so that
there is a seamless transition to the entity -wide statements.
We will plan the audit in detail and prepare an Audit Plan which details the information we will need r I
from you to complete our interim and year-end audits, along with the, person responsible for preparing it and
the date they will have it ready. We tailor it to refer directly to the schedules you already prepare.
We do not require special reports or reconciliations just for our audit. We have found that coordinating L
our team and our client's staff works very well because it helps minimize the impact on your staff at year
end. This way the Audit Plan includes most data we need from you so you and your staff can plan and
schedule your work accordingly. Our clients know from prior experience with our firm, that we excel
at minimizing our impact on Town staff. L Lj
Specific A Wit Strategy --In terim
Unlike older -style firms, we perform most of our important work at interim, well before the end of the
fiscal year. We use our interim work to identify and solve problems and plan the year-end closing and audit
in detail. Well before we begin our interim work we'll send you a list of the items we need, so you will
have time to prepare.
We forecast many year-end amounts at interim, so that we can limit the amount of work required at year- LJ
end and concentrate instead on areas of concern, For example, we normally perform all our cash and
investment testing at interim, including sending confirmation letters to depositories and detenninm'g F
financial statement categorizations. Performing these last two steps at interim allows plenty of time to L J
follow -up on confirmations or resolve questions about the proper categorization of an *investment without
delaying the audit. As another example, we test long-term debt at interim and forecast year-end balances F,
and transactions for each debt issue. L
We use remote inquiry as much as possible at interim, in order to increase our efficiency and reduce our
impact on your staff. We can download Council Minutes and other documents from your Website for
review. Combining these abilities with our checklists has allowed us to perform larger portions of the audit
in our own offices and reduce our questions to writing so that you have more time to deal with them.
22
WORK PLAN (Continued)
Laws,.Regulations and Compliance
Our audits are designed to ensure that we test transactions for compliance with the Single Audit Act and
other applicable, laws and regulations, including the California Government Code, provisions of
applicable Grant guidelines, California Constitution Gann Limit requirements, requirements of local
measures, Transportation Development Act requirements, etc. We identify applicable laws and
regulations as part of our audit planning each year.
The California Government Code has many provisions and underlying regulations relating to investments
and the investment policy, all of which are tested as part of our audit of cash and investments. That Code
and the underlying regulations also form the basis of our compliance audit tests of Housing Successors..
Child Development Programs, debt and other areas.
To the extentossible, we also begin our tests of compliance with laws and regulations at interim,
p erim.,
including use of the OMB Circular A-133 and the Compliance Supplement and any other applicable
compliance guidelines. Even if the work cannot begin until year-end we determine the applicable laws and
regulations for our compliance testing so that we may incorporate the necessary information in our year-end
closing checklist, Our audit samples for pwposes of compliance vary based on the grant or compliance
guidelines and are program -specific. The samples are stratified to ensure we test transactions that are
representative of the costs charged to grants.
Speciflic Audit Strategy - Year End
At year-end we do not repeat any of the work we performed at interim. Instead, we focus on the items in
your Audit Plan and on the Basic Financial Statements. Our year-end audit field -work actually starts
in our office, so that when we do arrive in your offices we are fully prepared and we minimize our impact
on your operations.
In our offices, we cross-reference or reconcile your Audit Plan information) reports and schedules. The
Engagement Partner performs our detailed Analytical Review and emails our questions to you in
advance of our arrival in your offices. Our experience is that this Analytical Review identifies any
issues remaining after our interim work, as well as most potential audit adjustments. This gives all of us
time to address -these items in person while the audit field -work is proceeding, instead of by telephone,
fax and e-mail afterward.
As part of the analytical procedures, when we start work in your offices, we will need you to complete
your responses to the Analytical Review, but we will not need much of your time and we will not ask for
more schedules or reports. Our Engagement Partner and Supervisor will meet with you on the first day of
the year-end audit to discuss any remaining unanswered Analytical Review questions, review the status of
the year-end closing and to determine if modifications to our year-end approach are needed. This meeting
sets the stage for the year-end audit.
At the conclusion of our year-end work, our Partner and Supervisor will review the final financial
statement drafts with you and your staff. The following week, our Quality Assurance Director will
perform a "quality assurance review" of the, financial statements and workpapers so that we will be ready
to sign the financial statements as soon as the Town approves them.
We designed this strategy specifically to fit cities and the complications introduced by GASB 34. it
requires our Partners to be fully and actively involved in the planning and performance of the work and it
allows us to issue final financial statements and reports immediately after we finish our field -work in your
offices.
23
WORK, PLAN (Continued)
You will find our strategy allows you to control the audit process, enables you to spread the work over the
year as you wish and greatly reduces the pressure at year end.
Audit IT Systems, Security and Going Green
Hand-in-hand with our continuing investment in our people, has been our increased investment M systems
and hardware support. We have a full-time staff of three. people who maintain our state-of-the-art
�_
systems capabilities and provide increasing levels of such service to our clients.
Every person on our staff is provided with a Windows operating system PC networked with other audit F
team PCs and a printer via our own wireless LAN establish at the start of each audit in our client's office. L
Years ago, we completely eliminated hardcopy workpapers by converting to ProSystemsfx Engagement
paperless audit software published by Commerce Clearing House. We use Word as our word processor
and Excel for preparation of financial statements and schedules and Outlook for personal information
management.
Because of our shift from hardeopy documentation to softeopy and our obligation under professional
standards to maintain confidentiality of client data, we instituted state-of-the-art security protections to
ensure client data remains confidential and secure. For example, many CPAs use email as a I method of
communicating financial data to and from clients. But emails are not secure communications! We therefore
employ a secure data file transfer system called "LeapFile" under which• we exchange data files with our L
clients using a secure website. This keeps data confidential and has the added benefit of permitting,
dovailoads of large excel files or Microsoft Office fides that may be erroneously rejected by some email
scanning software. In the event one of our staff works out of Town or telecommutes, they access data via
our virtual private network. Our VPN, LANs, and audit software are password protected and
encrypted to ensure your data remains confidential and secure.
We will also use some type of connection to the internet during our audit, but coordinate it with our
client's IT Staff to ensure there ate no breaches in security or protocols. f-7
Local Expertise and Resourees
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Our expertise and resources are local which provides our clients with timely on -the -spot responses to
issues and questions as they arise. Our Audit Supervisors are on site daily while the audit team is in the
field and our Audit Managers are on-site two to three days per week or as needed. Our Engagement
Partners are on site at least weekly checking on progress, discussing and resolving issues with the Audit
Team, as well as meeting with our client as needed. In cases of highly complex operations or unusual
issues, our Technical Review Partner is brought out to meet with the audit team and provide technical
support, coxisultation and participate in meetings with our clients as needed. With all our resources
available locally, our clients are assured of in depth, timely audits and expedient resolutions to questions
and issues as they arise.
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14ormation System Review
Information System Security became an important part of financial statement audits and we have
performed an Information Systems Review (ISR) with every audit since 2001. Unlike our competitors,
we extend our review to not only encompass the financial system, but also the network environment that
houses that system. From our perspective, the internal controls that are present in the overall network
environment are critical to understanding the internal controls over the financial system. I
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WORK PLAN (Continued)
Unlike financial statements, there are currently no authoritative standards that local governments
must employ to ensure that adequate and appropriate IT controls are designed and implemented.
We extensively researched this area and concluded it was most appropriate to base our ISR on the
certification and accreditation framework developed by the National Institute of Standards and
Technology (NIST) for the Federal Information Security Management Act (FISMA) which is the
minimum security required for federal government agencies information. systems. NIST recommends
states, local governments and Indian tribes comply with these -standards as well. Our reviews include
procedures to determine that your systems are adequately protected from unauthorized internal
access, provide for reasonable measures to ensure continuation of service, provide for security of
data from physical 'or network access and have internet access defenses including hacker
prevention, detection and deterrent systems.
Our 'Information systems reviews are performed by qualified information security professionals
who hold at least the Information Systems Audit and Control Association's (ISACA) Certified
Information Systems Auditor (CIS.A) or the (ISC)2's Certified Information Systems Security
Professional (CISSP). Both certifications require continuing professional education. As a value
added service we will provide the Town with a matrix of the Town's maturity as compared with NISTIS
certification and accreditation framework. Each internal control taken from NIST SP 800-53Rev4 is
ranked in this maturity matrix and an average score is provided to the Town to give the Town a
benchmark.
System Controls, Transaction Cycle Processing Verficadon and Sample Sizes
With any data processing system upon which we intend to rely as a means of reducing substantive testing,
we, perform a variety of tests to verify the accuracy of transaction processing, the reliability of system
control points and authorization controls, appropriateness of profile structures including Super -user rights
access, and automated Rinctionality such as sub -ledger integration and auto journal, entry validity and set up
controls.
Gaining an understanding of the design of relevant procedures, controls and authorization levels is
integratedI
with our risk assessment procedures discussed under the Client Tailored Risk Assessment section
below. As part -of our risk assessment process we identify those transaction cycles we intend to rely on.
Both processing procedures and controls that are to be relied on are tested with our audits.
Transaction cycle processing and control tests typically iIvolve sampling techniques. "Most of our
transaction samples are selected and tested during the interim portion of our work. Each sample will run
Broin twenty-five to sixty transactions in size. We use interval and judgment sampling tectmiques with a
high degree of stratification. Most municipalities operate more than one major revenue system. Therefore,
we typically detennine which revenue transactions are processed with common procedures and controls and
deem that to be a single population and subj'ect it to a single sample.. Other revenue cycles processed with
separate controls are tested with their own samples. For example, it is common for separate samples to be
selected for governmental receipts and each major enterprise fund. Transaction cycles we sample are
dependent on materiality to each client's financial statements but typically include, payroll, disbursements,
receipts, loans receivable, investments and budget transactions and in accordance with the requirements of
Statement of Auditing Standards 999 we also sample journal entries. Samples from each grant audit or
major federal award program are also made. Samples are triple purpose samples and we test for correct
recordinR compliance with applicable policy or regulation and key control attributes - both ma u
_o i manual and
automated. This includes verification of sub -ledger integration and auto -joumal entry validity, if -needed.
25
WORKPLAN (Continued)
Profiles, Access and Setup Controls
Despite advances in information technology automation and system control features, classic segregation of
duties concepts remain a mainstay for providing adequate internal controls. what has changed however, is
the necessity to determine system profile structures and actual system access. We inquire how our clients
establish and maintain system profiles for relevant staff with the objective of determining whether controls
are in place to provide for adequate segregation of duties and to determine if system profiles are appropriate
based on the individual's duties. We also determine how our clients monitor access and we test access
through reviews of access logs, observation and in some extreme cases, with fully observed access attempts. F
We will also inquire about procedures and controls used to ensure only those system fiinctions and controls
assigned to an employee are in fact setup in system profiles. Considerations include Super User Rights,
system profile set up, and system authorization functionality such as transaction initiation, review and
approval,, automated entry setup and posting. Work typically involves inquiry of staff with Super -User
Rights and determining. how the organization provides a check and balance against the possibility that one
person with Super -User Rights can intentionally or inadvertently assign unauthorized access. We often
review access logs and examine approvals of profile changes and review authorization levels.
Data Extraction
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We employ rather simple data extraction techniques these days since most modem systems provide easy L
download capabilities to text or Excel files. We have been utilizing data extraction for over fifteen years.
We first began data extraction as a means of downloading data from our client's financial systems for L -,j
upload directly into the financial statements. Then we expanded this to include transaction details,
account infonnation and other data contained in our clients systems that we need for audit. Our Chief
Operations Officer, Chris Hunt, oversees our data extraction needs and has successfully worked with all
of our clients and their systems to achieve data extractions for our use. We are extremely adopt at L
converting from text, delimited and fixed width files, and with every system used by clients. F-1
Assessing Risks — Interim Phase
Beginning with fiscal 2007-2008 audits, a new set of Statements of Auditing Standards became effective
and required that most auditors change the way they audit. Much of this new guidance came, out of the
aftermath of higbly publicized audit failures such as Enron, Global Crossings and the like. The
Statements make it clear that a generalized one -size -fits all audit approach will not be permitted. An audit
must be based on a unique audit strategy customized to fit each client and its industry.
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The primary objective of these Standards is to require the auditor's application of an audit risk model.
The concept is that a set of financial statements should be evaluated for the underlying risks of material
misstatement. Then., a customized audit should be tailored to test for misstatements and verify that L
controls are designed and in place to prevent and detect misstatements.
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We have consistently employed a risk based concept from our firm's inception in 1986. Our audit L
checklists and programs were originated by reference to Audits of Local Governments published by the
Practioners' Publishing Company (PPC), a third party vendor specializing in producing audit guides for
unique industries. But, we have not simply used their guide as our approach. We have customized it
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further for the simple reason that California municipalities have many uniqub risks not faced by
municipalities in other states. As you know, California state law and applicable regulations cover a wide
variety of areas such as cash and investment management, redevelopment compliance, transportation L
development act programs, and child development programs. Indeed, even revenues of California
municipalities are unusual and complex such as the Triple Flip and Proposition 1A securitization.
all -
01
I WORK PLAN (Continued)
Our primary objective in an audit of each client's financial statements is to opine on whether the financial
statements, including disclosures, are free of material misstatement. Our opinion must be based on
sufficient, appropriate audit evidence that we. obtain and this evidence must be documented. To achieve
this objective, we further refine our approach to be responsive to each individual audit. We may reduce
the scope of our substantive audit tests provided we conclude there are effective specific controls in place
which would detect and correct misstatements due to errors or fraud.
Fraud Considerations
Beginning with our 2004 audits, we employed additional audit steps required by Statement of Auditing
Standards #99, Consideration of Fraud in a Financial Statement _4udlt, SAS #99 requires auditors to
consider risk areas that may be susceptible to fraud and to then modify their audit strategy. We, have been
employing a variation of the SAS 499 concept since the early 1990's. For example, for many of our
recurring clients, we visited all of their cash collection sites. We performed cash counts and reviewed
cash handling practices and procedures, including security measures employed to limit access to cash.
This and our planning meetings with our clients' staff have resulted in the inclusion of a variety of special
emphasis areas in our audits.. We combine our fraud consideration brain storming sessions with our
overall risk assessment process discussed below.
Client Tailored Risk Assessment
Our strategy to assessing risk begins with a brainstorming session of our audit team where they review
your prior year financial statements andoperations to identify areas of major audit risk. We also
incorporate our consideration of other factors such as the risk of fraud, the economy, regulatory
complexities or changes, credit market conditions and others into our initial assessment. We -may also
compare unusual transactions and. estimates to those used by other municipalities or to current trends and
issues. Since we are a niche firm specializing in California municipalities this is relatively easy. For
example, certain development agreements are unique to municipalities. These agreements usually contain
complex financial transactions and legal restrictions. With so much experience in this area we can
quickly design an efficient response to these risks.
Major audit risks are further evaluated through consideration of relevant assertions to determine, 'inherent
risk due to error or fraud. For example, cash on hand has a relative higher inherent risk of loss due to theft
than an infrastructure asset. High and medium inherent risk audit areas are further evaluated to determine
relevant internal controls needed to prevent., detect and correct errors or fraud.
We start our evaluation of your internal controls by interviewing staff and meeting with Department
heads as needed. We review policies and procedure manuals and other documentation to determine the
design of procedures mid controls. As part of our evaluations we doctunent narrative memoranda
outlining the duties of each pertinent person as well as our GRID evaluation of the important nexus
control points. The GRID is our own design; it is a two -axis chart we use to identify potential conflicts of
duties in your controls. We enhance our evaluation by reviewing system profile, reports, paying special
attention to super -user rights. This data is then used to determine the presence or absence of
compensating controls designed to mitigate conflicts of duties vested in a single individual.
We then test to verify that procedures and controls are operating effectively such that they reduce the risk
that errors or fraud could occur and go undetected and uncorrected. We use a variety of techniques to
verify controls are effective including: sampling, observation, documentation of reviews, examining
system access reports and comparisons with other data.
27
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After this has been completed, we assess the risk of material misstatement which is determined by the
relative inherent risk of an area and the associated control risk to plan our substantive tests. That is, the
risk that controls are not in place or are not operating effectively. Areas with a low risk of material
misstatement assessment may receive limited substantive procedures while those with a high risk of
material misstatement will receive significant substantive procedures.
We then design our final phase audit plan to ensure we obtain sufficient appropriate evidence about
the financial statements and disclosures. Specific audit procedures are developed and documented in
our audit programs and we develop potential internal control points for further evaluation as to
significance and communicate those to staff.
Client Participation in the Risk Assessment Process
Of course, any risk assessment process is incomplete without our cliexits' active participation. We hold L
meetings with senior finance staff and others within the organization to discuss their views and
assessments of risks affecting the financial statements. Our inquiries are backed up by reviews of the FTI
aminal budget, mid -year budget revisions, internal audit reports, grantor performance and monitoring L
correspondence and any other pertinent data we deem relevant.
We must also establish two-way communication with the Council or Audit Committee which we typically L
accomplish by meeting to discuss the audit process and timing, management representations and fraud
considerations. For those organizations without an Audit Committee, we typically attend a Council
meeting or meet with representatives of the Council. . L
Assessing Risks - Final Phase
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Although the majority of our evaluations and testing of internal controls is completed with our interim L ii
testing, it is during the final phase that actual year end balances, transactions and disclosures are known
and our substantive procedures axe employed. These procedures and data often reveal unusual or
unexpected results that must be considered in the risk assessment process. Risk assessment processes are L
iterative and cumulative. That is, we must continually re-evaluate our assessments based on information
and procedures gathered. It is not uncommon for an initial assessment and the corresponding substantive
audit work to be restructured as a result of new data. Indeed it is the intent of current audit standards that
the audit be responsive, to risks. L
Our substantive procedures are selected to be responsive to the assessed risk and relevant assertion and
typically involve analytical procedures, third -party connation, estimation techniques, mini -max tests.,
trend analyses, recomputations, corroboration with other tests, tests in total, sampling and comparisons to
data gathered in other municipal audits.
Risk assessment procedures would be incomplete without an evaluation of the adequacy of our evidence
obtained including internal control tests, any significant deficiencies or material weaknesses and
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substantive test results. These factors are considered prior to the release of our opinion n a final re- L
assessment process that includes our quality assurance review.
Ab ility to Provide Services on a Sh o rt Notice
We are always ready to provide our clients with the services they need. Depending on the amount of work
involved we can adjust our calendar to accommodate smaller projects at any time. Larger projects can be
problematic during our peak busy season whicli lasts from mid-August through December. During those L
months, our approach to providing services on a short notice is predicated on the principle that we must
satisfy our existing obligations before accepting now work. In the rare instance that we are unavailable
due to existing commitments, we, have a number of recommended consultants that can assist the Town.
28
ORK PLAN (Continued)
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Communication and Coordination
We will meet with you at the start of each phase of work and conduct an exit conference at the end.,
of each phase of work. This will ensure you 1wow everything we do, with plenty of time to address
any issues.
Two key objectives for a well-run audit are to ensure timely communication of the audit results and to
provide for seamless coordination of the external auditors with Town staff. The concept is virtually
identical to our Accounting Issues Memorandum and detailed Interim and Closing Checklists that we
typically prepare for our clients.
The Accounting Issues Memorandum concept was originated by one of our staff over a decade ago to
function as a partner's brief of an engagement's status. It worked so well we expanded it to all our audits
and share it with our clients. It has proven to be an indispensable communication and coordination tool
ever since. This informal memo condenses and summarizes the audit status and issues as of the end of
our interim work. It includes housekeeping matters, maj or and minor potential findings, scheduled audit
fieldwork start and finish dates, etc. We produce this memo right in your office before the conclusion of
our interim work, so you have an idea of what we've found so far and whether there are areas that need
work.
Our Memorandiun on Internal Control is drafted at year-end and may include significant issues raised
-with our interim phase Accounting Issues Memorandum as well as issues arising from our year-end work.
We review a draft with you, so that you -will have plenty of time to consider the facts and discuss our
findings before, the audit results are presented to the Council and Committees.
Prompt Service and Delivery of Reports
We have always focused on reducing financial statement turn -around time and we have never missed a
deadline. We nonnally complete the review of the final draft of the financial statements on the last day of
our field -work in our clients' offices or within two weeks thereafter.
Our audit strategy emphasizes detail planning and coordination of our staff and client staff to complete
the audit as efficiently as possible. We have found that completing all our work and our reports as part of
our field -work dramatically reduces the time required to issue final reports to our clients.
Our strategy allows our clie� ts ample time to review all report drafts before issuance, while ensuring that
all reports are. issued timely. Many clients have been able to advance the date on which their reports
are presented to Council.
Audit Schedule
We have timed our audit to complete all your reports so that they are ready to print by your
deadlines. We will start our work as soon as you appoint us your auditors, with an entrance conference
as soon as possible. Please, see the proposed segmentation of the engagement on the schedule at the end
of this section.
29
WORK PLAN (Continued)
Proposed Engagement Segmentation
Our proposed segmentation of the audit, including staff level and the number of hours to be assigned to
each segment of the audit is included on the next page. This proposed segmentation is based on cities and
towns similar to Los Altos Hills,
Town of Los Altos Hills
Proposed Engagement Segments and Budget
Audit Activities
Planning & bud get/Conflrm/Checldists
Engagement
Partner
1,00
Review
Director
Budgeted Hours
Supervisors Associates
3.00
Administrative
Total
4.00
Fraud Assessment - SAS # 99
1.00
1.00
2.00
Minutes -resolutions
Re2orts
16.00
1.00
24,00
4.00
1.00
44.00
Supervision/review
16.00
3.00
40.00
59.00
Conferences &weefings
4.00
1.00
5.00
MD&AReylew
-
4.00
4.00
Accountin Issues Memo
Analytical review
1.00
4.00
2.00
2,00
3.00
6.00
Internal Control Evaluation
8,00
8.00
Journal Entries (Testing)
8.00
8.00
. _
Information Systems Review
3.00
3.00
Cash & Investments
40.00
40.00
Revenue/Receivables
40.00
40.00
Interfunds
8.00
8.00
Capital Assets
40.00
40.00
Disbursements/Pa ables
24.00
24.00
Payroll/Accrued liabilities
24.00
24.00
Unearned/Unavailable Revenue & Deposits
4.00
4.00
Iron ,Term ]Debt
16.00
16.00
PERS/Pension including GASB 68) & OPIB
40.00
40.00
Fund Balance & Net Position
8.00
8.00
Commitments & Contin envies
3.00
3.00
Risk Management
2,00
2.00
Budget
1.00
1.00
Subtotal - Basic Financial Statements (CAFR Audit
43.00
6.00
77-00
267.00
4.00
397.00
Additional Services:
State Controllers Report._
1.00
33.00
34.00
Vansportation Development Act Audit
1.00
3.00
16.00
1.00
21.00
-GRAND TOTAL
45.00
6.00
80.00
316.00
---5.00
452.001
30
COSTS
Total All-inclusive Maximum Price
Our Total All -Inclusive Maximum Prices for the services specified in the Request for Proposal for the
fiscal years ending June 30, 2016 through June 30, 2018 with the option to extend for two additional
years are detailed at the end of this section.
What Our Price Includes
Our price includes all the basic audit work and reports, statements and other deliverables specified in your
request for proposal. Our price also includes the items below at no additional cost:
1) year-round support and telephone consultation on pertinent issues affecting your Town,
2) copies of our journal entries and our leadsheets used to support the amounts in your financial
statements,
3) a Study Session for the Council. to discuss the audit process, financial statements and
recomnie-ndations,
4) active Partner involvement in your work every year,
5) our Interim Audit Checklist,
6) our Annual Closing Checklist,
7) our into -rim Accounting Issues Memorandum,
8) preliminary draft financial statements at interim,
9) overviews and summaries of upcoming pronouncements and regulations affecting the audited financial
statements,,
10) direct dump of general ledger data into our ProSystems trial balance software which is fully linked to
financial statement formats, and associated roll -up reports,
11) annual on-line training classes,
12) training for the implementation of applicable new GASB statements,
Fees and Billings
Our fees. are on a not -to -exceed basis. In deterniining our fees, we understand that the Town's records will
be in condition to be audited; that is, transactions will be properly recorded in the general ledger and
subsidiary records, these accounting records and the original source documents will be readily available, to
use, we will be furnished with copies of bank reconciliations and other reconciliations and analyses prepared
by the Town and Town personnel will be reasonably available to explain procedures, prepare audit
correspondence and obtain files and records.
We do not post separate rate structures for municipal audit work. We view this work as being every
bit as important and valuable as the work we perform for other clients and we put our best people on
it. Any consulting work you request will be performed at the same rates as our audit work.
Cost Rationale
We have always completed our work in the time budgeted and for the agreed upon fee. We have never
requested additional fees after our work was completed. As always, we, finish what we start, regardless of
the accuracy of our budgets.
Additional Services
Any additional services will be performed and billed only on the Town's prior authorization at our
standard billing rates.
31
L COSTS (Continued)
Manner of Payment
Progress billings will be sent on the basis of actual hours of work completed during the course of the
engagement. We do not bill for out-of-pocket expenses as they axe included in our stated all-inclusive
maximum price.
J.AVU I JLUIVV
Town of Los Altos Hills
& ^e..daa
2016 Audit Service RFP
Fee Schedule Summary
'd
Audit Firm: Maze and Associates
CALIFORNIA
Fiscal year ending June 30, (Optional Extension)
Summary of Fees (Details in subsequent tabs) 2016 2017 2018 2019 2020
Fieldwork
Interim Audit $13;1511.00 $13,916.00 $14,333.00 $14,763.00 $15,206.00
Final Audit 315525.00 323471.00 33:,445.00 341448.00 35:0481.00
Reporting
Total Cost Proposal $459036.00 $46,387.00 $47,778-00 $49,211.00 $50;687.00
Our hours for interim and final include report production.
GOS ALTOS HILLS
Town of Los Altos Hills
�4 2016 Audit Service RFP
baFee Schedule Workshe
r*
32
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et: Interim Audit
ALIFORNIA,
Audit Firm: Maze and Associates
Il MESOIRIJ:113
WE
wo
Partner
13.5
250
$3,375.00
,Managers
1.8
160
288.00
Supervisory Stal r
24
110
.2j640.00
Staff
94.8
75
71110.00
Administrative
1.5
65
98.00 1
Subtotal: Fiscal year ending June 30, 2016
$13,v511-0
Escalation
2017
103%
13,916-00
2018
103%
14,333.00
2019
103%
14,763.00
2020
103%
15.?206.00
32
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COSTS (Continued)
jos ALTOS MfwjM
Town of Los Altos Hills
2016 Audit Service RFP
a
� •� Fee Schedule Worksheet: Final Fieldwork
CALIFORNIA Audit Firm: Maze and Associates
Escalation If
2017 1.030 32,471..00
2018 1.03% 33,445.00
2019 103% 341448.00
2020 103% 35,451..00
LOS :ALTOS
Town of Los Altos Hills
M
2016 Audit Service RFP
a
.� Fee Schedule Worksheet; Reporting
CA
L F 0 R N Audit Firm: Maze and Associates
Partner250
:.a:::u,za:�r.:::esa�cs:�:::::s.awa:.se.;
43.00 1.00 Free
:: _..�--..._....sa,sa.•a:-a:�••lllal.:�rea:.r,,..� c. ,_;te—
.=.x..�a.e. - —^.
1.00 1 1250.00
— •-r s��aa �r---
Managers 160
4xvu:ava.wuxni.ata4nl.Wv�z•}•w.u.'1.Ha..n4•anu•\wru��rar.•••_••�.••N+-s..�a..wis.w.xwefw aev �....s..Mu�b..�.�..��.n.wbw.Mwww.wwlww..mc.msuvox.mawtwMtu.YY.at�u•••�•.�••�_�
6.00
S11waRr'nm[nw.a'RQsverinRm.n.v.O �tY.avatui-.n.x.totvse�.�.asinax
esN�aaOT.x�.q•iPa:iwFaPn
J.mCs-Ya.b.�.\a.nFisA9M.i4CYusai`K�•'V��S-..4
960.00
Supervisory Staff 110
iKap...tix..�.aexw�r��aueu.a.eve�dJ....-••• _••-•aasxu .. w urv+.n.wa....a. a..ai. �---eYas.ara.44 .• _ _.r.a�•�••—•••-
77.00 3.00
.w.,sbawv.lu.are.aslswiu:.ralrlawaaasria4saawwabnaa.r:..mxa.w+a-.a+•.G�,.ttw.ri.v�:cae�ai:lW.aleueelr..alwu.a�u.af..t..erul.wb.�..a+wteblu
80800.00
-•.sVl+.l....oaa.nwaawousZvcuu..tr�-••��--•—.••...tea
staff 75
..x.,N....xa..rr�v�....n....•....ax..,w,...r,,...1,w.,av:•.:.,a�:l...��.ti.r...m.....::...xx......�n.:.....�.x..o>��Iaa:..e.a..:�w.1,io.•d.x,.xo..�.ae�..�.n,....ax®.,�bs.>.�n.....+�nw..www..as.rs.n.vu.�•ewxan��-,La,...�..._
267.00 16.00
c.. •. M.:<axx.....
�.rs.mo..wsmcx..eb.R..wQ.eaaum,..x+eR+o�.+ar.,..,wwu+...ns
33.00 2%700.00
x.aronxuua�.�...
Administrative 65
aclMxu.���:C�^.:.YI.YRr.x�.....a.++...w.aa+..sysa."•.•.a+w✓MYw.wM.a.ai.wMuasb..wuraw K.N.wa.fJxKt.M'Il�f. tiia.`.wa.Y!].VMM.u..�•---•
4.00 1.00
..<— - mww.nwsax...wwa.w+r.N11M.wlar..lw«u.YMa...a ALwL�r�iN...va..E.wl�.va.alN.�r.w.._
�
-.qu.war+.avww.It..ar.w.r..wegw.x.rwwww.Naw._
326.Q0
— __r.w.t�.aawaw.
Printing Cost
Included
Subtotal: Fiscal year ending June 30,
.w.y.......,�,..�......�.�.�..._......ww............x....wax.�..w....�r.x_.......,._...».....ww«.....�.....x.,...._..�............_.^.�....�.....,
2016
$45,036.00
Escalation
2017
103%
46,387.00
* Per the RFP, it does not appear that the Town normally does not require a single audit.
2018
103°l
47,778.00
if It is required, our fee is $3,500 per each major program.
2019
103%
49,211.00
2020
1031
50,687.00
33
F
RMFERENCES
References
F
C of Altos – A client since 2014
iv , L -
Principal contact – Kim Juran-Karageorgiou, Administrative Services Director (650) 947-2836
Workscope and reports: F -
Comprehensive Annual Financial Report L
Memorandum on Internal Control and Required Communications
Single Audit Act Report
Proposition 111 Agreed Upon Procedures Report
Los Altos Library Authority Report
City ofHayward – A client from 1996 to 2007, rotated back to Maze & Associates in 201. I
Principal contact — Dustin Clausen (510) 583--4000
Workscope and reports:*
Comprehensive Annual Financial Report
Memorandum on Internal Control and Required Communications L
Single Audit Act Report
Proposition 111 Agreed Upon Procedures Report
Gann Limit Agreed Upon Procedures Report L
Measure B Compliance Report
Transportation Development Act Report
Sewer Enterprise Fund Financial Statements
Water Enterprise Fund
Hayward Public Financing A ithority
Deferred Compensation Plan Financial Statements
LJ
City of Beh, ont - A client since 1998
Principal contact- Thomas Fit, Finance Director (650) 595-7433
Workscope and reports: L
Comprehensive Annual Financial Report (consistent GFOA award winner)
Memorandum on Internal Control and Required Communications
Single Audit Act Report L
Proposition 111 Agreed Upon Procedures Report
Transportation Development Act Audit Report
South County Fire Authority Financial Statements
Net Six Financial Statements
South San Mateo Police JPA Financial Statements
Ralston/Holly/Harbor Projects Financial Statements L J
Annual Street Report
Annual Report of Financial Transactions for the City
34
L j
F
L