1992-052-Sign A Contract With Maze & Associates To Provide Auditing Services For Fiscal Years 1991-92, 1992-93 And 1993-94RESOLUTION NO. 1992 -52
RESOLUTION OF THE TOWN OF LOS GATOS
AUTHORIZING THE TOWN MANAGER TO SIGN A
CONTRACT WITH MAZE & ASSOCIATES
TO PROVIDE AUDITING SERVICES
FOR FISCAL YEARS 1991-92,1992-93 AND 1993 -94
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 1991 -92, 1992 -93 and 1993 -94 with
the option of two additional years extension, and that the Town Manager is authorized, and
is hereby directed, to execute said contract (Exhibit A) 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 6th day of April, 1992 by the following vote:
COUNCIL MEMBERS:
AYES: Randy Attaway, Joanne Benjamin, Steven Blanton, Brent N. Ventura
NAYES: None
ABSENT: Eric D. Carlson
ABSTAIN: None
SIGNED:
VI -MAYOR OF TH TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
AT�'EST:
Jf�7t
CLERK OF THE TOWN OF LC S GATOS
LOS GATOS, CALIFORNIA
An Agreement Between the Town of Los Gatos
and Maze & Associates �'�'—
FOR AUDIT SERVICES
THIS AGREEMENT, made and entered into this day of 1992,
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 ";
W I T N E S S E T H:
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, 1992; June 30, 1992 and June 30,
1994. The TOWN retains the option of extending this Agreement twice, for periods
of one (1) year, to cover services pertaining to the fiscal year ending June
30, 1995, and the fiscal year ending June 30, 1996. Unless the TOWN specifically
notifies AUDITORS within sixty (60) days of receipt of AUDITOR'S report of a
decision to cancel this Agreement, the Agreement shall remain in effect for the
additional year.
2. Conduct of Audit:
A. Audit Scope 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, 1992, for the fiscal year ending June
30, 1993 the fiscal year ending June 30, 1994 and subject to
extension of the agreement on fiscal year ending June 30, 1995 and
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, 1992,
1993 and 1994 and the related statements of revenues,
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expenditures /expenses, and changes in fund balances /retained
earnings and changes in financial position of the proprietary funds
for the years Lhen 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 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, 1992, 1993, 1994. Examinations shall be made in
accordance with generally accepted auditing standards, pursuant to
the requirements contained in the Standards for audit of
Governmental Orzanizations. 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.
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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 all major federal assistance programs as well as non-
major federal assistance program transactions. For the TOWN OF LAS
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, 1992: 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
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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.
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.
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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 LAS GATOS for the fiscal years
ending June 30, 1992, 1993, 1994. The purpose of examination is to
determine if the financial statement of operations is presented
fairly in accordance with generally accepted accounting principles.
F. Retirement Plan: AUDITORS will examine the statement of
assets and members' equity of the TOWN OF LAS GATOS Retirement Plan
as of June 30, 1992, 1993, 1994 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.
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. Special Audits: AUDITORS shall conduct special audits on
specific functional areas as may be requested by the TOWN. The
compensation for these services will be billed at the hourly rate,
as stated on page 12 of the AUDITORS' proposal dated February 27,
1992. These costs are Partner $160, Manager $95, Supervisor $55,
Associate $48, Office staff $37.
I. 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.
J. Date(s) of Audit(s): AUDITORS shall perform audit(s) as
4 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
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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 1992, 1993 and 1994.
5. Compensation for Audit: AUDITORS shall be compensated for the
provision os services outlined herein under Paragraphs 1 through 4 (pertaining
to the audit) as follows:
It is agreed that the fees for the June 30, 1993 and 1994
fiscal years are subject to review and negotiation based upon the
actual audit hours required. It is further agreed that the Town will
pay a 15% contingency fees established for additional services such
issues as the Gann Limit Review. However, in no circumstances hall
the maximum fee be greater than $45,000.
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
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1992
1993
1994
General Purpose Financial
Statement Report
$24,860
$26,103
$ 27,408
Town of Los Gatos Single Audit
2,004
2,104
2,209
Retirement Plan
1,821
1,912
2,008
Transit Assist Program
1,730
1,816
1,907
Redevelopment Agency Reports
2,398
2,518
2,644
Combining Statements
1,184
1,243
1,305
Proposition 111 Report
904
950
998
TOTAL
$34,901
$ 36,646
$ 38,479
It is agreed that the fees for the June 30, 1993 and 1994
fiscal years are subject to review and negotiation based upon the
actual audit hours required. It is further agreed that the Town will
pay a 15% contingency fees established for additional services such
issues as the Gann Limit Review. However, in no circumstances hall
the maximum fee be greater than $45,000.
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
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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.
iii. 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:
i. 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
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.
iii. 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
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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.
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
pperformance 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.
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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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first written above:
TOWN OF LOS GATOS: MAZE & ASSOCIATES
DAVID W. KNAPP
Town Manager
TITLE
APPROVED AS TO FORM:
DATE
KA'HERINE ANDERTON
To Attorney
ATTEST:
MARIAN COSGROVE, Town Clerk
MGR042;A: MISC MAZE&ASO.AGR
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