1995-051-Execute A Contract With Maze And Associates To Provide Auditing Services For Fiscal Years 1994-95 And 1995-96RESOLUTION 1995 - 51
RESOLUTION OF THE TOWN OF LOS GATOS
AUTHORIZING THE TOWN MANAGER TO EXECUTE A
CONTRACT WITH MAZE AND ASSOCIATES
TO PROVIDE AUDITING SERVICES
FOR FISCAL YEARS 1994 -95 AND 1995 -96
RESOLVED, by the Town Council of the Town of Los Gatos, County of Santa
Clara, State of California, that the Town of Los Gatos enter into a contract with Maze &
Associates for financial auditing services for fiscal years 1994 -95 and 1995 -96, and that the Town
Manager is authorized, and is hereby directed, to execute said contract in the name and on behalf
of the Town of Los Gatos.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town
of Los Gatos, California, held on the 15th day of May, 1995 by the following vote:
COUNCIL MEMBERS:
AYES: Randy Attaway, Steven Blanton, Mayor Patrick O'Laughlin
NAYES: None
ABSENT: Joanne Benjamin, Linda Lubeck
ABSTAIN: None
SIGNED:
MA�HE TOW OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK OF THE TOWNtF LOS GATOS
LOS GATOS, CALIFORNIA
CL
Cqx
An Agreement Between the Town of Los Gatos
and Maze & Associates
THIS AGREEMENT, made and entered into this day of 1995, by and
between the TOWN OF LOS GATOS, a municipal corporation of the State of California, hereinafter
referred to as "Town ", and MAZE & ASSOCIATE, whose offices are 1670 Riviera Avenue, Suite
100, Walnut Creek, CA 94596, hereinafter referred to as "AUDITORS ";
WITNESSETH:
IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:
1. Term of Agreement: The Agreement shall cover services rendered pertaining to the
fiscal years ending June 30, 1995 and June 30, 1996.
2. Conduct of Audit:
A. Audit Scone and Work Plan: AUDITORS shall conduct examinations of
the books, records, accounts and financial transactions of all offices, departments,
and funds of TOWN for the fiscal year ending June 30, 1995 and for the fiscal year
ending June 30, 1996. Examination(s) shall be done in accordance with generally
accepted auditing standards, including to the extent necessary and practicable, the
audit standards adopted and the procedures recommended by the American Institute
of Certified Pubic Accountants in its audit guide entitled Audits of State and Local
Governmental Units, as further defined by the National Committee on Governmental
Accounting in its publication entitled Governmental Accounting Auditing and
Financial Reporting, as amended, and Governmental Accounting Standards Board
Statement Board Statement 1 -7, inclusive, and subsequent statements as may be
issued from time to time. Audit of the Transit Assist Program will be done in
accordance with Article 4.5 of the Transportation Development Act and the
allocation instructions of the Metropolitan Transportation Commission. Audits
reference in this section will include a separate audit report of the Transit Assist
Program, a separate audit report of the TOWN Retirement Plan and a separate audit
of the Redevelopment Agency.
B. Examination of Financial Statements: AUDITORS shall examine the
general purpose (combined) balance sheet of all fund types and account groups of the
TOWN of Los Gatos at June 30, 1995 and 1996 and the related statements of
revenues, expenditures /expenses, and changes in fund balances /retained earnings and
changes in financial position of the proprietary funds for the years then ended.
Examinations shall be made in accordance with generally accepted auditing standards
and shall, accordingly, include such tests of the accounting records and such other
auditing procedures as AUDITORS consider necessary in the circumstances.
The purpose of the examinations is to render an independent accountant's
opinion on the fairness of the TOWN' financial statements in relationship to
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generally accepted accounting principles and the consistency of the application of
such principles. The TOWN understands that these examinations, due to limitations
in the auditing processes, cannot be relied upon to discover fraud, defalcations, or
irregularities, should any exist. However, any such matters coming to AUDITORS'
attention shall be communicated to TOWN.
C. Examination on Compliance with Federal Laws and Regulations: In
accordance with the Single Audit Act and OMB Circular A -128, AUDITORS
propose to perform a compliance audit of federal assistance programs of the TOWN
OF LOS GATOS for the years ending June 30, 1995and 1996. Examinations shall
be made in accordance with generally accepted auditing standards, pursuant to the
requirements contained in the Standards for audit of Governmental Organizations
Programs Activities and Functions, issued by the U.S. General Accounting Office,
the Single Audit Act of 1984, and the provisions of OMB Circular A -128, Audit of
State and Local Governments.
AUDITORS shall apply procedures to determine if the TOWN has complied
with Laws and regulations to determine whether there have been events of non-
compliance that may have a material effect on the financial statements. The nature
and extent of such tests shall be solely determined as a matter of AUDITORS
professional judgement. Examples of the types of compliance procedures that might
be performed include:
Tracing the appropriations in the adopted budget to the budget status
report to determine if appropriation amounts are correctly recorded
in the accounting system and resultant financial statements.
Reviewing expenditure reports to determine if appropriations have
been violated (exceeded).
Examining transfers between funds to determine if they have been
authorized.
° Testing cash receipts /revenues to determine if they were accounted
for in the proper funds and accounts; especially those restricted
externally for certain uses.
° Reviewing the municipal improvement, parks and special assessment
bond indentures to selected for compliance testing covenants relating
to the establishment of accounts reserve levels, and repayment.
° Testing investment transactions to determine if they conform with the
TOWN'S investment policy.
Testing purchases to determine adherence to the TOWN'S purchasing
policies.
The Single Audit Act requires AUDITOR to extend auditing procedures to
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all major federal assistance programs as well as non -major federal assistance program
transactions. For the TOWN OF LOS GATOS, major federal assistance programs are
any federal program for which total expenditures of federal financial assistance
exceed $300,000 in a fiscal year.
The following programs will require a compliance audit at June 30, 1995:
Community Development Block Grants, Revenue sharing Program, and Federal Aid
Urban (FAU).
For each major Program identified, AUDITORS shall perform a compliance
audit in accordance with the Single Audit Act of 1984 and OMB circular A -128.
These documents would:
° Test compliance with AUDITORS general requirements outlined in
OMB's supplement.
Test compliance with the specific program requirements set forth in
the supplement.
The general requirements concern prohibition of spending federal funds for
political activity, payment of prevailing wages, civil rights, cash management,
relocation assistance and the adequacy of federal financial reports. However,
AUDITORS are expected to use judgement and expand the compliance test for
particular programs as necessary; for example, if a grant has agreed upon special
conditions.
The specific compliance test relates to the types of services allowed,
eligibility, matching, reporting, and special test prescribed by OMB. In addition,
AUDITORS are required to conduct tests of transactions of major programs to
determine if the costs are allowable under the provisions of each program.
AUDITORS are also required to test for compliance as to cost allowability of any
transactions of non -major programs selected for testing in regular examination of the
TOWN'S financial statements. This expands ordinary tests of transactions as each
transaction must be identified as to whether or not it pertains to any federal assistance
program. AUDITOR is required to report in compliance findings any instances of
non - compliance brought to AUDITOR'S attention as a result of applying the above
procedures and to question any program costs which AUDITORS believe are (1)
unallowable, (2) undocumented, (3) unapproved, or (4) unreasonable costs.
In connection with compliance examination, AUDITORS shall also render
a report on supplementary information in the Schedule of Federal Financial
Assistance. AUDITORS will subject the information in the schedule to the auditing
procedures applied in examination of the general purpose financial statements to
determine if such supplementary information is fairly stated in all material respects
in relation to the general purpose financial statements taken as a whole.
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It is understood that AUDITOR'S compliance testing can not be relied upon
to disclose all instances of non - compliance due to inherent limitations in the auditing
process. Instances of fraud, abuse, non - compliance with laws or regulations, or
illegal acts coming to AUDITOR'S attention will be communicated to TOWN.
D. Study and Evaluation of System of Internal Accounting Control:
AUDITORS shall perform a study and evaluation of internal controls (accounting
and administrative) as part of examination of the general purpose financial statements
as required by the Single Audit Act and the Office of Management and Budge
(OMB) Circular A -128. The purpose of this study and evaluation is to determine the
nature, timing, and extent of auditing procedures necessary for expressing an opinion
on the TOWN'S financial statements and to determine if the TOWN has internal
control systems to provide reasonable assurance that it is managing its federal
financial assistance programs in accordance with applicable laws and regulations. To
fulfill this requirement AUDITORS will:
Identify the significant elements of the system of internal control.
Identify the controls evaluated and those that were not.
° Perform tests of compliance with the controls to determine if the
controls are functioning in accordance with prescribed procedures.
° Report material weaknesses identified as a result of the study,
evaluation and tests.
Report material weaknesses on internal controls related to federal
financial assistance programs.
It is understood that AUDITOR'S evaluation cannot be relied upon to disclose
all weaknesses in internal controls due to inherent limitations in the auditing process.
E. Transit Assist: AUDITORS shall examine the statement of revenues and
expenditures of the Transportation Development Act Program, Article 4.5, of the
TOWN OF LOS GATOS for the fiscal years ending June 30, 1995 and 1996. The
Purpose of examination is to determine if the financial statement of operations is
presented fairly in accordance with generally accepted accounting principles.
F. Retire,_ ment Plan: AUDITORS will examine the statement of assets and
members' equity of the TOWN OF LOS GATOS Retirement Plan as of June 30,
1995 and 1996 and the related statement of changes in members' equity for the years
then ended. Examinations of the defined contribution plan financial statements shall
be made in accordance with generally accepted auditing standards the purpose of
which is to enable us to express an independent accountant's opinion on the fairness
of the plan's financial statements in relationship to generally accepted accounting
principles and their consistency of application.
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G. Redevelopment Agency: AUDITORS shall conduct a Redevelopment
Agency audit to include tests of compliance with the Guidelines for Compliance
Audits of California Redevelopment Agencies issued by the State Controller
H. In connection with the examination of the financial statements, the
AUDITORS shall conduct a review of the systems of internal accounting control, the
accounting procedures employed by the TOWN, including the TOWN's data
processing and related compliance with the laws, rules, and regulations, and shall
submit to the TOWN a separate comprehensive report in letter from detailing their
findings, observations, opinions, comments, or recommendations resulting from said
review.
I. Dates of Audit (s): AUDITORS shall perform audit(s) as soon as the
TOWN's accounts are ready after the close of the fiscal year. TOWN shall complete
its closing of fiscal year activities no later than July 31. Audit to be completed within
ninety (90) days after the closing of fiscal year activities.
3. Availability of Town Records: Any and all TOWN records necessary for the conduct
of this examination shall be made available to AUDITORS by TOWN, and AUDITORS shall be
entitled to use any and all internal audits and records of TOWN as may be necessary or convenient
for the performance of this Agreement.
4. Audit Reports: AUDITORS shall submit audit reports and management letter(s)
within ninety (90) days following the closing of the TOWN's books and accounts. The audit report
shall contain AUDITORS' opinion, the financial statements, and related footnotes. AUDITORS shall
submit twenty (20) copies of each audit report and management letter. AUDITORS shall type, print,
and assemble the financial statements. It is expected that the completed audit would be submitted
to the TOWN by October 15th of 1995 and 1996.
5. Compensation for Audit: AUDITORS shall be compensated for the provision of
services outlined herein under Paragraphs 1 through 4 (pertaining to the audit) as follows:
General Purpose Financial
1995
1996
Statement Report
$28,080
$28,549
Town of Los Gatos Single Audit
2,355
2,394
Transit Assist Program
1,820
1,850
Redevelopment Agency Reports
3,315
3,370
CAFR
4,455
4,529
Proposition 1 I1 Report
605
615
Out of Pocket Travel Costs
1.200
1.220
TOTAL
$41,830
$42,527
It is agreed that the fees for the June 30,
1995 and 1996 fiscal years
are
subject to review and negotiation based upon the actual audit hours required.
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In all cases, total annual compensation shall be inclusive of labor, travel
report preparation and printing, and other expenses.
Upon completion of each year's audit, TOWN shall make a determination as
to the satisfactory completion of said audit, and shall make payment of the invoice
within thirty (30) days after the receipt of said invoice.
6. Additional Services: During the audit process, should extraordinary circumstances
arise which would warrant more intensive and detailed services be performed, the firm shall provide
all facts related to the extraordinary circumstances, and the estimated costs of additional services.
There will be no payment for additional services performed without prior written approval of the
Town Manager. For additional services in excess of the 15% contingency fee will require Council
approval. However, should the firm's hours decrease (i.e. TOWN staff prepares additional schedules
or typing), the Town Manager may substitute additional services, so long as the total annual
compensation is not exceeded.
7. Insurance.
A. Minimum Scope of Insurance:
i. AUDITORS agrees to have and maintain, for the duration of the
contract, a General Liability insurance policy insuring him/her and
his /her firm to an amount not less than: one million dollars
($1,000,000) combined single limit per occurrence for bodily injury,
personal injury and property damage.
AUDITORS agrees to have and maintain, for the duration of the
contract, an errors and ommissions insurance policy insuring his and
his firm to an amount not less than $750,000.
ii. AUDITORS shall provide to the Town all certificates of insurance,
with original endorsements effecting coverage. AUDITORS agrees
that all certificates and endorsements are to be received and approved
by the Town before work commences.
AUDITORS shall provide to the Town all certificates of insurance,
with original endorsements effecting coverage. Certificates of such
insurance shall be filed with the Town on or before commencement
of performance of this agreement.
B. General Liability:
The Town, its officers, officials, employees and volunteers are to be
covered as insured as respects: liability arising out of activities
performed by or on behalf of the AUDITORS; products and
completed operations of AUDITORS, premises owned or used by the
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AUDITORS.
ii. The AUDITORS's insurance coverage shall be primary insurance as
respects the Town, its officers, officials, employees and volunteers.
Any insurance or self - insurance maintained by the Town, its officers,
officials, employees or volunteers shall be excess of the
AUDITORS's insurance and shall not contribute with it.
Any failure to comply with reporting provisions of the policies shall
not affect coverage provided to the Town, its officers, officials,
employees or volunteers.
iv. The AUDITORS's insurance shall apply separately to each insured
against whom a claim is made or suit is brought, except with respect
to the limits of the insurer's liability.
C. All Coverage: Each insurance policy required in this item shall be endorsed
to state that coverage shall not be suspended, voided, cancelled, reduced in
coverage or in limits except after thirty (30) days' prior written notice by
certified mail, return receipt requested, has be given to the Town. current
certification of such insurance shall be kept on file at all times during the
term of this agreement with the Town Clerk.
8. Indemnification. The AUDITORS shall save, keep and hold harmless indemnify and
defend the Town its officers, agent, employees and volunteers from all damages, costs or expenses
in law or equity that may at any time arise or be set up because of loss or liability arising by reason
of, or in the course of performing work which may be occasioned by a willful or negligent act or
omissions of the AUDITORS, or any of the AUDITORS's employees, or any sub - consultant.
9. Termination of Agreement. The Town shall have the right to terminate this
agreement with or without cause by giving not less than fifteen (15) days written notice of
termination. In the event of termination, the AUDITORS shall deliver to the Town all plans, files,
documents, reports, performed to date by the AUDITORS. In the event of such termination, the
AUDITORS shall be paid for all satisfactory work, unless such termination is made for cause, in
which event, compensation, if any, shall be adjusted in light of the particular facts and circumstances
involved in such termination.
10. Compliance with Laws. The AUDITORS shall comply with all applicable laws,
codes, ordinances, and regulations of governing federal, state and local laws. AUDITORS represents
and warrants to Town that it has all licenses, permits, qualifications and approvals of whatsoever
nature which are legally required for AUDITORS to practice its profession. AUDITORS represents
and warrants to Town that AUDITORS shall, at its sole cost and expense, keep in effect or obtain
at all times during the term of this Agreement any licenses, permits, and approvals which are legally
required for AUDITORS to practice its profession. AUDITORS shall maintain a Town of Los Gatos
business license pursuant to Chapter 15 of the Code of the Town of Los Gatos.
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11. Confidential Information. All data, documents, discussion or other information
developed or received by or for the AUDITORS in performance of this Agreement are confidential
and will not be disclosed to any person except as authorized by the Town Manager, or their designee
or as required by law.
12. Independent Contractor. It is understood that the AUDITORS, in the performance
of the work and services agreed to be performed, shall act as and be an independent contractor and
not an agent or employee of the Town. As an independent contractor he /she shall not obtain any
rights to retirement benefits or other benefits which accrue to Town employee(s). With prior written
consent, the AUDITORS may perform some obligations under this Agreement by subcontracting,
but may not delegate ultimate responsibility for performance or assign or transfer interests under this
Agreement.
13. Conflict of Interest. The AUDITORS has no holdings or interests within the Town
of Los Gatos. AUDITORS has no business holdings or Agreements with any member of the staff
or management of the Town or its representatives.
14. Waiver. No failure on the part of either party to exercise any right or remedy
hereunder shall operate as a waiver of any other right or remedy that party may have hereunder.
15. Governing Law. This Agreement, regardless of where executed, shall be governed
by and construed to the laws of the State of California.
16. Entire Agreement. This Agreement constitutes the complete and exclusive statement
of the Agreement between the Town and AUDITORS. No terms, conditions, understandings or
agreements purporting to modify or vary this Agreement, unless hereafter made in writing and
signed by the party to be bound, shall be binding on either party.
17. Disputes. In any dispute over any aspect of this agreement the prevailing party shall
be entitled to reasonable attorney's fees, as well as all reasonable costs (not limited to those allowed
by statute).
18. Execution. This Agreement may be executed in several counterparts each of which
shall constitute one and the same instrument and shall become binding upon the parties when at least
one copy, here of shall have been signed by both parties hereto. In proving this agreement, it shall
not be necessary to produce or account for more than one such counterpart.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year
first written above:
TOWN OF LOS GATOS:
DAVID W. KNAPP
Town Manager
APPROVED AS TO FORM:
LARRY ANDERSON
Town Attorney
ATTEST:
MARIAN COSGROVE, Town Clerk
MSHARENAZEAGR
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TITLE
DATE
MAZE & ASSOCIATES