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04-26-2016 CC Rpt A07 Return to Agenda COUNCIL AGENDA STAFF REPORT CITY CLERK USE ONLY 4 Meeting Date: April 26, 2016 Item No.: A07 Public Hearing: ❑ Discussion Item: ❑ ( of Chino Hills Consent Item: X April 19, 2016 TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS FROM: CITY MANAGER SUBJECT: PROFESSIONAL SERVICES AGREEMENT WITH LANCE, SOLL AND LUNGHARD, LLP, TO PROVIDE FINANCIAL AUDITING AND REPORT PREPARATION SERVICES FOR FISCAL YEARS 2015-16 THROUGH 2017-18 RECOMMENDATION: Authorize execution of a Professional Services Agreement with Lance, Soil and Lunghard, LLP, to provide financial auditing and report preparation services annually for fiscal years 2015-16 through 2017-18, with an option to extend the agreement for two, one year periods, not to exceed a total of five years. BACKGROUND/ANALYSIS: Lance, Soil and Lunghard, LLP, has been engaged as the City's auditor for 18 fiscal years (FY 1997-98 through FY 2014-15), and has consistently provided high quality services throughout the term of their engagement. The most recent agreement covered the fiscal years 2010-11 through 2014-15. The Government Finance Officers Association's (GFOA) best practice guideline recommends governmental entities undertake a full-scale competitive process for the selection of independent auditors at the end of the term of each audit contract. In compliance with this guideline, the City recently proceeded with a competitive bid process for audit and report preparation services. On January 14, 2016, the City issued a Request for Proposal (RFP). On March 10, 2016, the City received seven bids in response to its RFP for financial auditing and report preparation services from national and local Certified Public Accountant firms. These proposals were reviewed by members of the Finance Department staff. A subsequent interview was conducted on April 4, 2016, with the top two candidates based on experience, audit procedures, and technical competency. On April 12, 2016, the two candidates met with the Finance Committee for a final interview. Based on the results of the analysis and review process, staff is recommending Lance, Soil and Lunghard, LLP to provide financial auditing and report preparation services to the City. 61/139 AGENDA DATE: APRIL 26, 2016 PAGE 2 SUBJECT: PROFESSIONAL SERVICES AGREEMENT WITH LANCE, SOLL AND LUNGHARD, LLP, TO PROVIDE FINANCIAL AUDITING AND REPORT PREPARATION SERVICES FOR FISCAL YEARS 2015-16 THROUGH 2017-18 In addition to their substantial experience with government financial audits and excellent reputation in the industry, Lance, Soil and Lunghard, LLP, maintains a long standing professional relationship with the City and has a valuable amount of institutional knowledge. During the next several years, this experience and knowledge will be integral to providing insight and consultation as the City transitions to a new Enterprise Resource Planning (ERP) system. For these reasons, Lance, Soil and Lunghard, LLP, has been selected as the best candidate to provide financial auditing and report preparation services. FISCAL IMPACT: The total amount required to provide financial audit and report preparation services is $52,680 each year for the fiscal years 2015-16 and 2016-17, with a 3% incremental adjustment for fiscal year 2017-18. This results in a total of $159,620 for the three year service period, with an option to extend two, one year periods for a five year total of $273,072. A total of $53,500 is proposed in the preliminary budget for fiscal year 2016- 17. No new appropriations are required. ENVIRONMENTAL REVIEW: This proposed action is exempt from review under the California Environmental Quality Act (California Public Resources Code §§ 21000, et seq.; "CEQA") and CEQA regulations (14 California Code Regulations §§15000, et. seq.) because it does not involve any commitment to a specific project which could result in a potentially significant physical impact on the environment; and constitutes an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. Accordingly, this action does not constitute a "project" that requires environmental review (see specifically 14 CCR § 15378(b)(4-5)). Respectfully submitted: Recommended by: _ C)Iatx 4k4-44-tAc.Konradt Bartlam, *Manager JO R. l( ncaster, Finance Director KB:JRL:PA:EC:dk Attachments: Professional Services Agreement 62/139 AGREEMENT NO. A2016- FOR PROFESSIONAL SERVICES BETWEEN THE CITY OF CHINO HILLS AND LANCE, SOLL & LUNGHARD, LLP THIS AGREEMENT, made and entered into this 26th day of April, 2016, between the CITY OF CHINO HILLS, a municipal corporation, hereinafter referred to as "City" and Lance, Soil & Lunghard, LLP hereinafter referred to as "Consultant". In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: 1. SCOPE OF SERVICES. Consultant agrees to perform the services set forth in Exhibit A "SCOPE OF SERVICES" attached hereto and made a part hereof. Consultant shall submit its work to the City for its review after completing each phase of the project as described in Exhibit A, or when otherwise requested by the City. Consultant shall, at its own cost, make any revisions of its own work as required by the City and re-do, at its own cost, any work which the City finds unsatisfactory due to Consultant's or subcontractor's errors or omissions. Consultant represents and warrants that it has the qualifications, experience and facilities to properly perform said services in a thorough, competent and professional manner and shall, at all times during the term of this Agreement, have in full force and effect, all licenses required of it by law. Consultants shall begin its services under this Agreement on July 1, 2016. 2. STATUS OF CONSULTANT. Consultant is and shall at all times remain as to the City a wholly independent contractor. The personnel performing the services under this Agreement on behalf of Consultant shall at all times be -1- 63/139 under Consultant's exclusive direction and control. Neither City nor any of its officers, employees or agents shall have control over the conduct of Consultant or any of Consultant's officers, employees or agents, except as set forth in this Agreement. Consultant shall not at any time or in any manner represent that it or any of its officers, employees or agents are in any manner officers, employees or agents of the City. Consultant shall not incur or have the power to incur any debt, obligation or liability whatever against City, or bind City in any manner. Consultant shall not disseminate any information or reports gathered or created pursuant to this Agreement without the prior written approval of City except information or reports required by government agencies to enable Consultant to perform its duties under this Agreement. 3. CONSULTANT'S KNOWLEDGE OF APPLICABLE LAWS. Consultant shall keep itself informed of applicable local, state and federal laws and regulations which may affect those employed by it or in any way affect the performance of its services pursuant to this Agreement. Consultant shall observe and comply with all such laws and regulations affecting its employees. City and its officers and employees, shall not be liable at law or in equity as a result of any failure of Consultant to comply with this section. 4. PERSONNEL. Consultant shall make every reasonable effort to maintain the stability and continuity of Consultant's staff assigned to perform the services hereunder and shall obtain the approval of the City Manager of all proposed staff members performing services under this Agreement prior to any such performance. -2- 64/139 5. COMPENSATION AND METHOD OF PAYMENT. Compensation to the Consultant shall be as set forth in Exhibit B attached hereto and made a part hereof. Payments shall be made within thirty (30) days after receipt of each invoice as to all undisputed fees. If the City disputes any of consultant's fees it shall give written notice to Consultant within 30 days of receipt of an invoice of any disputed fees set forth on the invoice. 6. ADDITIONAL SERVICES OF CONSULTANT,. Consultant shall not be compensated for any services rendered in connection with its performance of this Agreement which are in addition to those set forth herein or listed in Exhibit A, unless such additional services are authorized in advance and in writing by the City Manager. Consultant shall be compensated for any additional services in the amounts and in the manner as agreed to by City Manager and Consultant at the time City's written authorization is given to Consultant for the performance of said services. 7. ASSIGNMENT. All services required hereunder shall be performed by Consultant, its employees or personnel under direct contract with Consultant. Consultant shall not assign to any subcontractor the performance of this Agreement, nor any part thereof, nor any monies due hereunder, without the prior written consent of City Manager. 8. FACILITIES AND RECORDS. Consultant shall maintain complete and accurate records with respect to sales, costs, expenses, receipts and other such information required by City that relate to the performance of services under this Agreement. Consultant shall maintain adequate records of services provided -3- 65/139 in sufficient detail to permit an evaluation of services. All such records shall be maintained in accordance with generally accepted accounting principles and shall be clearly identified and readily accessible, Consultant shall provide free access to the representatives of City or its designees at reasonable times to such books and records, shall give City the right to examine and audit said books and records, shall permit City to make transcripts therefrom as necessary, and shall allow inspection of all work, data, documents, proceedings and activities related to this Agreement. Such records, together with supporting documents, shall be maintained for a period of three (3) years after receipt of final payment. 9. TERMINATION OF AGREEMENT. This Agreement may be renewed annually, but will terminate on June 30, 2019, unless extended in advance and in writing to the City Manager. This Agreement may be terminated with or without cause by either party upon 30 days written notice. In the event of such termination, Consultant shall be compensated for non-disputed fees under the terms of this Agreement up to the date of termination. 10. COOPERATION BY CITY. All public information, data, reports, records, and maps as are existing and available to City as public records, and which are necessary for carrying out the work as outlined in the Scope of Services, shall be furnished to Consultant in every reasonable way to facilitate, without undue delay, the work to be performed under this Agreement. 11. OWNERSHIP OF DOCUMENTS. Upon satisfactory completion of, or in the event of termination, suspension or abandonment of, this Agreement, all original maps, models, designs, drawings, photographs, studies, surveys, reports, 66/139 data, notes, computer files, files and other documents prepared in the course of providing the services to be performed pursuant to this Agreement shall, become the sole property of City. With respect to computer files, Consultant shall make available to the City, upon reasonable written request by the City, the necessary computer software and hardware for purposes of accessing, compiling, transferring and printing computer files. 12. RELEASE OF INFORMATION/CONFLICTS OF INTEREST. (a) All information gained by Consultant in performance of this Agreement shall be considered confidential and shall not be released by Consultant without City's prior written authorization excepting that information which is a public record and subject to disclosure pursuant to the California Public Records Act, Government Code § 6250, et seq. Consultant, its officers, employees, agents or subcontractors, shall not without written authorization from the City Manager or unless requested by the City Attorney, voluntarily provide declarations, letters of support, testimony at depositions, response to interrogatories or other information concerning the work performed under this Agreement or relating to any project or property located within the City. Response to a subpoena or court order shall not be considered "voluntary" provided Consultant gives City notice of such court order or subpoena. If Consultant or any of its officers, employees, consultants or subcontractors does voluntarily provide information in violation of this Agreement, City has the right to reimbursement and indemnity from Consultant for any damages caused by Consultant's conduct, including the City's attorney's fees. -5- 67/139 Consultant shall promptly notify City should Consultant, its officers, employees, agents or subcontractors be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions or other discovery request, court order or subpoena from any party regarding this Agreement and the work performed thereunder or with respect to any project or property located within the City. City retains the right, but has no obligation, to represent Consultant and/or be present at any deposition, hearing or similar proceeding. Consultant agrees to cooperate fully with City and to provide City with the opportunity to review any response to discovery requests provided by Consultant. However, City's right to review any such response does not imply or mean the right by City to control, direct, or rewrite said response. (b) Consultant covenants that neither they nor any officer or principal of their firm have any interest in, or shall they acquire any interest, directly or indirectly which will conflict in any manner or degree with the performance of their services hereunder. Consultant further covenants that in the performance of this Agreement, no person having such interest shall be employed by them as an officer, employee, agent, or subcontractor without the express written consent of the City Manager. Consultant further covenants that Consultant has not contracted with nor is performing any services directly or indirectly with any developer(s) and/or property owner(s) and/or firm(s) and/or partnerships owning property in the City or the study area and further covenants and agrees that Consultant and/or its subcontractors shall provide no service or enter into any agreement or agreements with any developer(s) and/or property owner(s) and/or -6- 68/139 firm(s) and/or partnerships owning property in the City or the study area prior to the completion of the work under this Agreement without the express written consent of the City Manager. 13. DEFAULT. In the event that Consultant is in default of any of the provisions of this Agreement, City shall have no obligation or duty to continue compensating Consultant for any work performed after the date of default and can terminate this Agreement immediately by written notice to the Consultant. 14. INDEMNIFICATION. (a) Consultant represents it is skilled in the professional calling necessary to perform the services and duties agreed to hereunder by Consultant, and City relies upon the skills and knowledge of Consultant. Consultant shall perform such services and duties consistent with the standards generally recognized as being employed by professionals performing similar service in the State of California. (b) Consultant is an independent contractor and shall have no authority to bind City nor to create or incur any obligation on behalf of or liability against City, whether by contract or otherwise, unless such authority is expressly conferred under this agreement or is otherwise expressly conferred in writing by City. City, its elected and appointed officials, officers, agents, employees and volunteers (individually and collectively, "Indemnitees") shall have no liability to Consultant or to any other person for, and Consultant shall indemnify, defend, protect and hold harmless the Indemnitees from and against, any and all liabilities, claims, actions, causes of action, proceedings, suits, damages, judgments, liens, -7- 69/139 3 levies, costs and expenses of whatever nature, including reasonable attorneys' fees and disbursements (collectively "Claims"), which the Indemnitees may suffer or incur or to which the Indemnitees may become subject by reason of or arising out of any injury to or death of any person(s), damage to property, loss of use of property, economic loss or otherwise occurring as a result of or allegedly caused by the negligent or wrongful acts or omissions of Consultant, its agents, officers, directors or employees, in performing any of the services under this agreement. If any action or proceeding is brought against the Indemnitees by reason of any of the matters against which Consultant has agreed to indemnify the Indemnitees as above provided, Consultant, upon notice from the CITY, shall defend the Indemnitees at Consultant's expense by counsel acceptable to the City. The Indemnitees need not have first paid any of the matters as to which the Indemnitees are entitled in order to be so indemnified. The insurance required to be maintained by Consultant under paragraph 15 shall ensure Consultant's obligations under this paragraph 14(b), but the limits of such insurance shall not limit the liability of Consultant hereunder. The provisions of this paragraph 14(b) shall survive the expiration or earlier termination of this agreement. The Consultant's indemnification does not extend to Claims occurring as a result of the City's sole negligent or willful acts or omissions. 15. INSURANCE. A. Insurance Reauirements. Consultant shall provide and maintain insurance acceptable to the City Attorney in full force and effect throughout the term of this Agreement, against claims for injuries to persons or -8- 70/139 damages to property which may arise from or in connection with the performance of the work hereunder by Consultant, its agents, representatives or employees. Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:VII. Consultant shall provide the following scope and limits of insurance: (1) Minimum Scope of Insurance. Coverage shall be at least as broad as: (a) Insurance Services Office form Commercial General Liability coverage (Occurrence Form CG 0001). (b) Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability, including code 1 "any auto" and endorsement CA 0025, or equivalent forms subject to the written approval of the City. (c) Workers' Compensation insurance as required by the Labor Code of State of California and Employer's Liability insurance and covering all persons providing services on behalf of the Consultant and all risks to such persons under this Agreement. (d) Errors and omissions liability insurance appropriate to the Consultant's profession. (2) Minimum Limits of Insurance. Consultant shall maintain limits of insurance no less than: (a) General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general -9- 71/139 aggregate limit shall apply separately to the activities related to this Agreement or the general aggregate limit shall be twice the required occurrence limit. (b) Automobile Liability: $1,000,000 per accident for bodily injury and property damage. (c) Workers' Compensation and Employer's Liability: Workers' Compensation as required by the Labor Code of the State of California and Employers Liability limits of$1,000,000 per accident. (d) Errors and Omissions Liability: $1,000,000 per claim. B Other Provisions. Insurance policies required by this Agreement shall contain the following provisions: (1) All Policies. Each insurance policy required by this paragraph 15 shall be endorsed and state the coverage shall not be suspended, voided, canceled by the insurer or either party to this Agreement, reduced in coverage or in limits except after 30 days' prior written notice by Certified mail, return receipt requested, has been given to the City, (2) General Liability and Automobile Liability Coverages. (a) City, its officers, officials, and employees and volunteers are to be covered as additional insureds as respects: liability arising out of activities Consultant performs, products and completed operations of Consultant; premises owned, occupied or used by Consultant, or automobiles owned, leased or hired or borrowed by Consultant. The coverage shall contain no --10-- 72/139 special limitations on the scope of protection afforded to City, its officers, officials, or employees. (b) Consultant's insurance coverage shall be primary insurance as respect to City, its officers, officials, employees and volunteers. Any insurance or self insurance maintained by City, its officers, officials, employees or volunteers shall apply in excess of, and not contribute with, Consultant's insurance. (c) Consultant's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. (d) Any failure to comply with the reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, its officers, officials, employees or volunteers. (3) Workers' Compensation and Employer's Liability Coverage. Unless the City Manager otherwise agrees in writing, the insurer shall agree to waive all rights of subrogation against City, its officers, officials, employees and agents for losses arising from work performed by Consultant for City. C. Other Requirements. Consultant agrees to deposit with City, at or before the effective date of this contract, certificates of insurance necessary to satisfy City that the insurance provisions of this contract have been complied with. The City Attorney may require that Consultant furnish City with copies of original endorsements effecting coverage required by this Section. The -11- 73/139 certificates and endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. City reserves the right to inspect complete, certified copies of all required insurance policies, at any time. (1) Consultant shall furnish certificates and endorsements from each subcontractor identical to those Consultant provides. (2) Any deductibles or self-insured retentions must be declared to and approved by City. At the option of the City, either the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its officers, officials, employees and volunteers; or the Consultant shall procure a bond guaranteeing payment of losses and related investigations, claim administration, defense expenses and claims. (3) The procuring of such required policy or policies of insurance shall not be construed to limit Consultant's liability hereunder nor to fulfill the indemnification provisions and requirements of this Agreement. 16. NONDISCRIMINATION/NONPREFERENTIAL TREATMENT. STATEMENT. In performing this Agreement, the Parties shall not discriminate or grant preferential treatment on the basis of race, sex, color, age, religion, sexual orientation, disability, ethnicity, or national origin, and shall comply, to the fullest extent allowed by law, with all applicable local, state and federal laws relating to nondiscrimination. 17. UNAUTHORIZED ALIENS. Consultant hereby promises and agrees to comply with all of the provisions of the Federal Immigration and Nationality Act (8 U.S.C.A. & 1101, et seq.), as amended; and in connection therewith, shall not -12- 74/139 employ unauthorized aliens as defined therein. Should Consultant so employ such unauthorized aliens for the performance of work and/or services covered by this contract, and should the Federal Government impose sanctions against the City for such use of unauthorized aliens, Consultant hereby agrees to, and shall, reimburse City for the cost of all such sanctions imposed, together with any and all costs, including attorneys' fees, incurred by the City in connection therewith. 18. ENTIRE AGREEMENT. This Agreement is the complete, final, entire and exclusive expression of the Agreement between the parties hereto and supersedes any and all other agreements, either oral or in writing, between the parties with respect to the subject matter herein. Each party to this Agreement acknowledges that no representations by any party which are not embodied herein and that no other agreement, statement, or promise not contained in this Agreement shall be valid and binding. 19. GOVERNING LAW. The City and Consultant understand and agree that the laws of the State of California shall govern the rights, obligations, duties and liabilities of the parties to this Agreement and also govern the interpretation of this Agreement. Any litigation concerning this Agreement shall take place in the San Bernardino County Superior Court. 20. ASSIGNMENT OR SUBSTITUTION. City has an interest in the qualifications of and capability of the persons and entities who will fulfill the duties and obligations imposed upon Consultant by this Agreement. In recognition of that interest, neither any complete nor partial assignment of this Agreement may be made by Consultant nor changed, substituted for, deleted, or added to without the -13- 75/139 prior written consent of City. Any attempted assignment or substitution shall be ineffective, null, and void, and constitute a material breach of this Agreement entitling City to any and all remedies at law or in equity, including summary termination of this Agreement. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement. 21. MODIFICATION OF AGREEMENT. The terms of this Agreement can only be modified in writing approved by the City Council and the Consultant. The parties agree that this requirement for written modifications cannot be waived and any attempted waiver shall be void. 22. AUTHORITY TO EXECUTE. The person or persons executing this Agreement on behalf of Consultant warrants and represents that he/she/they has/have the authority to execute this Agreement on behalf of his/her/their corporation and warrants and represents that he/she/they has/have the authority to bind Consultant to the performance of its obligations hereunder. 23. NOTICES. Notices shall be given pursuant to this Agreement by personal service on the party to be notified, or by written notice upon such party deposited in the custody of the United States Postal Service addressed as follows: City. Attention: City Clerk City of Chino Hills 14000 City Center Drive Chino Hills, California 91709 -14- 76/139 Consultant. Attention: Deborah Harper, CPA Lance, Soil & Lunghard, LLP 203 N. Brea Blvd. Brea, CA 92821 The notices shall be deemed to have been given as of the date of personal service, or three (3) days after the date of deposit of the same in the custody of the United States Postal Service. 24. CONSISTENCY. In interpreting this Agreement and resolving any ambiguities, the main body of this Agreement takes precedence over the attached Exhibits; this Agreement supersedes any conflicting provisions. Any inconsistency between the Exhibits will be resolved in the order in which the Exhibits appear below: A. Exhibit A: Scope of Work B. Exhibit B: Compensation 25. SEVERABILITY. The invalidity in whole or in part of any provision of this Agreement shall not void or affect the validity of the other provisions of this Agreement. -15- 77/139 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. LANCE, SOLL & L€ INGHARD. LLC CITY OF CHINO HILLS B �r Art Bennett Mayor Titre Pa e-bh ATTEST: By - Cher0 Ba€z City Clerk Title APPROVED AS TO FORM: Mark D. Hensley City Attorney -16- 78/139 EXHIBIT A SCOPE OF SERVICES The City's Request for Proposal and the Consultant's proposal as submitted will jointly become the Scope of Services for this Professional Services Agreement. A, Scope of Work to be Performed The City of Chino Hills desires a Comprehensive Annual Financial Report (CAFR) and its component unit financial statements to be prepared by the independent auditor and to be fully compliant with all current GASB pronouncements. The City will submit the CAFR to the Government Finance Officers Association (GFOA) for review in their Certificate of Achievement for Excellence in Financial Reporting program. The City has received this award annually for 20 consecutive years and desires to continue to receive this award. The City further desires that the selected firm will prepare the annual Cities Financial Transactions report and submit the report to the State Controller's Office. The selected independent auditor will be required to perform the following tasks. - 1. The audit firm will perform an audit of all funds of the City. The audit will be conducted in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller of the United States. The City's Comprehensive Annual Financial Report (CAFR) will be prepared and word processed by the audit firm. The CAFR will be in full compliance with Generally Accepted Accounting Principles established by Governmental Accounting Standards Board (GASB). The audit firm will render their auditors' report on the basic financial statements which will include both Government-wide Financial Statements and Fund Financial Statements. The audit firm will also apply limited audit procedures to Management's Discussion and Analysis (MD&A) and required supplementary information pertaining to the General Fund and each major fund of the City. 2. The audit firm will perform, if required, a single audit on the expenditures of federal grants in accordance with OMB Circular A-133 in each year required, and render the appropriate audit reports on Internal Control over Financial Reporting based upon the audit of the City's financial statements in accordance with Government Auditing Standards and the appropriate reports on compliance with Requirements Applicable to each Major Program, Internal Control over Compliance and on the Schedule of Expenditures of Federal Awards in Accordance with OMB Circular A-133. Single audit reports will include appropriate schedules of expenditures of federal awards, footnotes, findings and questioned costs, including reportable conditions and material weaknesses, and follow up on prior audit findings where required, 3. The audit firm shall perform agreed-upon auditing procedures pertaining to the City's GAIN Limit (Appropriations Limit) and render a letter annually to the City Council regarding compliance. 4. The audit firm shall perform agreed-upon auditing procedures pertaining to the City's investment Policy and render a letter every six (6) months to the City Council regarding compliance, 79/139 5. The audit firm shall issue a separate "management letter for each audit that Includes recommendations for improvements in internal controls, accounting procedures, and other significant observations that are considered to be non-reportable conditions. Management letters shall be addressed to the City Council. 3. The audit firm will prepare and submit the California State Controller's Cities Financial Transactions Report. 7. The audit firm shall perform an audit of the Tres Hermanos Conservation Authority. 8. The audit firm shall perform an audit of the Chino Hills Community Foundation. B. Auditing Standards to be Followed To meet the requirements of this Request for Proposal, the audit shall be performed in accordance with: 1, Generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants; 2. The standards applicable to financial audits contained in the most current version of the Generally Accepted Government Auditing Standards (Yellow Book), issued by the Comptroller General of the United States; 3. The provisions of the Single Audit Act; and 4. The provisions of U. S. Office of Management and Budget (OMB) Circular A-133, Audits of State and Local Governments and Non-Profit Organizations. C. Working Paper Retention and Access to Working Papers All working papers and reports must be retained at the auditor's expense for a minimum of seven (7) years, unless the firm is notified in writing by the City of the need to extend the retention period. The auditor will be required to make working papers available to the City or any government agencies included in the audit of federal grants. In addition, the firm shall respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance. D. Irregularities and Illegal Acts Auditors shall be required to make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware to the following parties: City Council, City Manager; City Attorney; and the Finance Director. 80/139 EXHIBIT B Lee@ • CPAC N•i) A135/.80F18. LANCE,SOLL t LUNGHARO,LLP AUDIT FEE SCHEDULE FINANCIAL AUDITING AND REPORT PREPARATION SERVICES SCHEDULE OF PROFESSIONAL FEES AND EXPENSES The compensation for the financial auditing and report preparation services to be provided in each fiscal year,in accordance with this agreement,is shown below: Description of Ssrvices 2015-2016 2016-2017 2017-2018 Financial Auditing and Report Preparation Services $_ 38,560 $ 38,560 $ 39,720 Single Audit(1 program)** 3,710 3,710 3,820 GANN Limit 470 470 480 InvestmentAUP 1,530 1,630 , 1,580 State Controller's Report 2,030 2,030 2,090 Tres Hermans Financial Report 1,910 1,910 1,970 Chino Hills Community Foundation Financial Report 4,470 4,470 4,600 Maximum Total Fee $ 52,680 $ 52,680 $ 64,260 ** $1,500 per additional program 3%increase 2018-2019; $ 55,888 3%increase 2019-2020: $ 57,564 HOURLY RATES FOR ADDITIONAL SERVICES: The City, during the term of this agreement, may request that Consultant provide special services in accordance with the provisions of this agreement. if Consultant agrees to perform the special services,the Consultant's hourly fees to perform these services for the term of the agreement are as follows,unless a lesser fee is agreed to in a separate agreement between the City and Consultant. Partner $292 /hour Manager $ 196 lhour Senior $ 162 /hour Professional Staff $ 128 /hour Expenses: All expenses Incurred by Lance, Soil &Lunghard, LLP In performing the services In accordance with this agreement are included in the above annual fee quotes. These expenses include,but are not limited to:meals and lodging,transportation, communications,report reparation,word processing,printing,and postage. 81/139