4DATE:
TO:
FROM:
COUNCIL AGENDA REPORT
MAY 13, 2014
MAYOR AND TOWN COUNCIL
GREG LARSON, TOWN MANAGER
MEETING DATE: 05/19/14
ITEM NO: 9
SUBJECT: AUTHORIZE TOWN MANAGER TO EXECUTE AGREEMENT WITH
CHAVAN & ASSOCIATES LLP TO PROVIDE PROFESSIONAL AUDITING
SERVICES FOR THE TOWN OF LOS GATOS WITH ANNUAL AUDIT
AMOUNTS NOT TO EXCEED $38,000 FOR FY 2014/15, $38,000 FOR FY
2015/16, AND $38,000 FOR FY 2016/17
RECOMMENDATION:
Authorize Town Manager to execute agreement with Chavan & Associates LLP to provide
professional auditing services for The Town of Los Gatos with annual audit amounts not to exceed
$38,000 for FY 2014/15, $38,000 for FY 2015/16, and $38,000 for FY 2016/17.
BACKGROUND:
On November 18, 2011, a Request for Proposal (RFP) for professional auditing services was sent
out to several qualified certified public accountants to audit the Town's financial statements for the
two fiscal years ending June 30, 2012 and 2013 with an option to extend the contract three (3)
additional fiscal years, and exercised in this proposed agreement. Seven certified public accounting
firms submitted their proposals; two were rejected, as they did not meet the mandatory elements as
outlined in the RFP. The remaining five proposals were ranked by a point system as outlined in the
RFP and the top three firms were interviewed. Chavan and Associates LLP was selected as the top
vendor based on both price and qualifications. Staff is recommending authorization to extend this
agreement for the next three fiscal years at a cost of $38,000 per year for a total of $118,000
through the end of fiscal year 2016/17.
PREPARED BY: S C
Director of Finan d Administrative Services
Reviewed by:
Town Manager
Attorney
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PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: AUTHORIZE TOWN MANAGER TO EXECUTE AGREEMENT WITH
CHAVAN & ASSOCIATES LLP TO PROVIDE PROFESSIONAL AUDITING
SERVICES FOR THE TOWN OF LOS GATOS WITH ANNUAL AUDIT
AMOUNTS NOT TO EXCEED $38,000 FOR FY 2014/15,$38,000 FOR FY
2015/16, AND $38,000 FOR FY 2016/17
May 13, 2014
DISCUSSION:
Chavan & Associates LLP, a local firm specializing in governmental accounting, auditing and
consulting, was formed in 1998 and was selected based on their proposal price, quality of proposed
services, and experience. Chavan & Associates LLP has provided the Town's professional auditing
services for two consecutive years.
CONCLUSION:
Staff is recommending the adoption of the resolution authorizing the Town Manager to extend the
agreement with Chavan & Associates LLC for the fiscal years ending June 30, 2014, 2015, and
2016 to provide professional auditing services for the Town of Los Gatos.
ENVIRONMENTAL ASSESSMENT:
Is not a project defined under CEQA, and no further action is required.
FISCAL IMPACT:
Funding is included in the Adopted FY 2014/15 Operating Budget, Program 2301 - 63211.
Attachment:
Agreement for Consultant Services
AGREEMENT FOR CONSULTANT SERVICES
THIS AGREEMENT is made and entered into on by and between TOWN OF
LOS GATOS, a California municipal corporation, (`°town ") and Chavan and Associates, whose
address is 1475 Saratoga Avenue, Suite 180, San Jose, CA 95129. This Agreement is made with
reference to the following facts. This contract will remain in effect from May 1, 2014 to April 30,
2017.
I. RECITALS
1.1 The Town desires to engage Consultant to provide professional independent auditing
services.
1.2 The Consultant represents and affirms that it is qualified and willing to perform the desired
work pursuant to this Agreement.
1.3 Consultant warrants it possesses the distinct professional skills, qualifications, experience,
and resources necessary to timely perform the services described in this Agreement.
Consultant acknowledges Town has relied upon these warranties to retain Consultant.
II. AGREEMENTS
2.1 Scone of Services. Consultant shall provide services as described in that certain "Technical
Proposal for Conducting the Annual Independent Audit of the Town of Los Gatos"
submitted to the Town on December 16, 2011, which is hereby incorporated by reference
and attached as Exhibit A.
2.2 Tenn and Time of Performance. Consultant shall perform the services described in this
agreement as described as Exhibit A, as may be modified from time to time by mutual
verbal agreement of Town and Consultant.
2.3 Compliance with Laws. The Consultant shall comply with all applicable laws, codes,
ordinances, and regulations of governing federal, state and local laws. Consultant
represents and warrants to Town that it has all licenses, permits, qualifications and
approvals of whatsoever nature which are legally required for Consultant to practice its
profession. Consultant shall maintain a Town of Los Gatos business license pursuant to
Chapter 14 of the Code of the Town of Los Gatos.
2.4 Sole Responsibility. Consultant shall be responsible for employing or engaging all persons
necessary to perform the services under this Agreement.
2.5 Information/Report Handling. All documents furnished to Consultant by the Town and all
reports and supportive data prepared by the Consultant under this Agreement are the
Town's property and shall be delivered to the Town upon the completion of Consultant's
services or at the Town's written request. All reports, information, data, and exhibits
prepared or assembled by Consultant in connection with the performance of its services
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pursuant to this Agreement are confidential until released by the Town to the public, and the
Consultant shall not make any of the these documents or information available to any
individual or organization not employed by the Consultant or the Town without the written
consent of the Town before such release. The Town acknowledges that the reports to be
prepared by the Consultant pursuant to this Agreement are for the purpose of evaluating a
defined project, and Town's use of the information contained in the reports prepared by the
Consultant in connection with other projects shall be solely at Town's risk, unless
Consultant expressly consents to such use in writing. Town further agrees that it will not
appropriate any methodology or technique of Consultant which is and has been confirmed
in writing by Consultant to be a trade secret of Consultant.
2.6 Compensation. Compensation for Consultant's professional services shall not exceed
$38,000.00 per fiscal year, inclusive of all costs, as described in that certain "Sealed Dollar
Cost Bid Proposal for the Annual Independent Audit of the Town of Los Gatos" submitted
to the town on December 16, 2011, which is hereby incorporated by reference and attached
as Exhibit B. Payment shall be based upon Town approval of each task.
2.7 Billing. Billing shall be monthly by invoice within thirty (30) days of the rendering of the
service and shall be accompanied by a detailed explanation of the work performed by whom
at what rate and on what date. Also, plans, specifications, documents or other pertinent
materials shall be submitted for Town review, even if only in partial or draft form.
Payment shall be net thirty (30) days. All invoices and statements to the Town shall be
addressed as follows:
Invoices:
Town of Los Gatos
Attn: Accounts Payable
P.O. Box 655
Los Gatos, CA 95031 -0655
2.8 Availability of Records. Consultant shall maintain the records supporting this billing for
not less than three years following completion of the work under this Agreement.
Consultant shall make these records available to authorized personnel of the Town at the
Consultant's offices during business hours upon written request of the Town.
2.9 Assignability and Subcontracting. The services to be performed under this Agreement are
unique and personal 'to the Consultant. No portion of these services shall be assigned or
subcontracted without the written consent of the Town.
2.10 Independent Contractor. It is understood that the Consultant, 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 Consultant 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. Consultant agrees to testify in any litigation brought
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regarding the subject of the work to be performed under this Agreement. Consultant shall
be compensated for its costs and expenses in preparing for, traveling to, and testifying in
such matters at its then current hourly rates of compensation, unless such litigation is
brought by Consultant or is based on allegations of Consultant's negligent performance or
wrongdoing.
2.11 Conflict of Interest. Consultant understands that its professional responsibilities are solely
to the Town. The Consultant has and shall not obtain any holding or interest within the
Town of Los Gatos. Consultant has no business holdings or agreements with any individual
member of the Staff or management of the Town or its representatives nor shall it enter into
any such holdings or agreements. In addition, Consultant warrants that it does not presently
and shall not acquire any direct or indirect interest adverse to those of the Town in the
subject of this Agreement, and it shall immediately disassociate itself from such an interest,
should it discover it has done so and shall, at the Town's sole discretion, divest itself of such
interest. Consultant shall not knowingly and shall take reasonable steps to ensure that it
does not employ a person having such an interest in this performance of this Agreement. If
after employment of a person, Consultant discovers it has employed a person with a direct
or indirect interest that would conflict with its performance of this Agreement, Consultant
shall promptly notify Town of this employment relationship, and shall, at the Town's sole
discretion, sever any such employment relationship.
2.12 Equal Employment Opportunity. Consultant warrants that it is an equal opportunity
employer and shall comply with applicable regulations governing equal employment
opportunity. Neither Consultant nor its subcontractors do and neither shall discriminate
against persons employed or seeking employment with them on the basis of age, sex, color,
race, marital status, sexual orientation, ancestry, physical or mental disability, national
origin, religion, or medical condition, unless based upon a bona fide occupational
qualification pursuant to the California Fair Employment & Housing Act.
III. INSURANCE AND INDEMNIFICATION
3.1 Minimum Scope of Insurance:
Consultant agrees to have and maintain, for the duration of the contract,
General Liability insurance policies 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.
ii. Consultant agrees to have and maintain for the duration of the contract, an
Automobile Liability insurance policy ensuring him/her and his/her staff to
an amount not less than one million dollars ($1,000,000) combined single
limit per accident for bodily injury and property damage.
iii. Consultant shall provide to the Town all certificates of insurance, with
original endorsements effecting coverage. Consultant agrees that all
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certificates and endorsements are to be received and approved by the Town
before work commences.
iv. Consultant agrees to have and maintain, for the duration of the contract,
professional liability insurance in amounts not less than $1,000,000 which is
sufficient to insure Consultant for professional errors or omissions in the
performance of the particular scope of work under this agreement.
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 Consultant; products and completed operations of Consultant,
premises owned or used by the Consultant. This requirement does not apply
to the professional liability insurance required for professional errors and
omissions.
ii. The Consultant's insurance coverage shall be primary insurance as respects
the Town, its officers, officials, employees and volunteers. Any insurance or
self - insurances maintained by the Town, its officers, officials, employees or
volunteers shall be excess of the Consultant'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 Consultant'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.
3.2 All Coverages. 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
been 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.
3.3 Workers' Compensation. In addition to these policies, Consultant shall have and maintain
Workers' Compensation insurance as required by California law and shall provide evidence
of such policy to the Town before beginning services under this Agreement. Further,
Consultant shall ensure that all subcontractors employed by Consultant provide the required
Workers' Compensation insurance for their respective employees.
3.4 Indemnification. The Consultant shall save, keep, hold harmless and indemnify and defend
the Town its officers, agent, employees and volunteers from all damages, liabilities,
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penalties, costs, or expenses in law or equity that may at any time arise or be set up because
of damages to property or personal injury received by reason of, or in the course of
performing work which may be occasioned by a willful or negligent act or omissions of the
Consultant, or any of the Consultant's officers, employees, or agents or any subconsultant.
IV. GENERAL TERMS
4.1 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, nor
does waiver of a breach or default under this Agreement constitute a continuing waiver of a
subsequent breach of the same or any other provision of this Agreement.
4.2 Governing Law. This Agreement, regardless of where executed, shall be governed by and
construed to the laws of the State of California. Venue for any action regarding this
Agreement shall be in the Superior Court of the County of Santa Clara.
4.3 Termination of Agreement. The Town and the Consultant shall have the right to terminate
this agreement with or without cause by giving not less than fifteen days (15) written notice
of termination. In the event of termination, the Consultant shall deliver to the Town all
plans, files, documents, reports, performed to date by the Consultant. In the event of such
termination, Town shall pay Consultant an amount that bears the same ratio to the
maximum contract price as the work delivered to the Town bears to completed services
contemplated under this Agreement, 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.
4.4 Amendment. No modification, waiver, mutual termination, or amendment of this
Agreement is effective unless made in writing and signed by the Town and the Consultant.
4.5 Disputes. In any dispute over any aspect of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, including costs of appeal.
4.6 Notices. Any notice required to be given shall be deemed to be duly and properly given if
mailed postage prepaid, and addressed to:
Town of Los Gatos Chavan & Associates, LLC
Attn: Town Clerk Attn: Sheldon Chavan, Partner
110 E. Main Street 1475 Saratoga Avenue, Suite 180
Los Gatos, CA 95030 San Jose, CA 95129
or personally delivered to Consultant to such address or such other address as
Consultant designates in writing to Town.
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4.7 Order of Precedence. In the event of any conflict, contradiction, or ambiguity between the
terms and conditions of this Agreement in respect of the Products or Services and any
attachments to this Agreement, then the terms and conditions of this Agreement shall
prevail over attachments or other writings.
4.8 Entire Agreement. This Agreement, including all Exhibits, constitutes the complete and
exclusive statement of the Agreement between the Town and Consultant. 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.
IN WITNESS WHEREOF, the Town and Consultant have executed this Agreement.
Town of Los Gatos by:
Greg Larson, Town Manager
Recommended by:
Stephen Conway, Finance and Administrative
Services
Approved as to Form:
Robert Schultz, Town Attorney
Consultant, by:
Sheldon TFKavan, Partner
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ATTACHMENTS
Attachment A
CHIANG, HAMMON & COMPANY
Certified Public Accountants
2007 W. Hedding Street, Sufte 207 San Jose, CA 95128
(408) 244 -2002 (408) 244 -2333 Fax
System Review Report
June 28, 2011
To the members of Chavan & Associates LLP
and the Peer Review Committee of the CaICPA
We have reviewed the system of quality control for the accounting and auditing practice
of Chavan & Associates LLP in effect for the year ended December 31, 2010. 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
Public Accountants. The firm is responsible for designing a system of quality control and
complying with it to provide the firm reasonable assurance of conforming 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
www.aicpa.org/vrsummary.
As required by the standards, engagements selected for review included engagements
performed under the Government Auditing Standards.
In our opinion, the system of quality control for the accounting and auditing practice of
Chavan & Associates LLP in effect for the year ended December 31, 2010, has been
suitably designed and complied with to provide the firm with reasonable assurance of
conforming with applicable professional standards in all material respects. Firms can
receive a rating of pass, pass with deficiency(ies) or fail. Chavan & Associates LLP, has
received a peer review rating ofpass.
C� 14
Chiang, Hammon & Company
Chavan & Associates,
Cerfified Public Accountants
January 1, 2014
Town of Los Gatos
110 E Main St
Los Gatos, CA 95030
We are pleased to confirm our understanding of the services we are to provide for the Town of
Los Gatos for the fiscal years ending June 30, 2014, 2015 and 2016. We will audit the financial
statements of the governmental activities, each major fund, and the aggregate remaining fund
information of Town of Los Gatos and the related notes to the financial statements, which
collectively comprise Town of Los Gatos's basic financial statements. In addition, we will audit
the entity's compliance over major federal award programs and MTC/TDA grants for the periods
ending June 30, 2014, 2015 and 2016. Our audit will be conducted with the objective of our
expressing an opinion on each opinion unit. Finally, we will perform agreed upon procedures and
issue the related report in relation to the Town's GANN appropriation's limit
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis and budgetary comparison information be presented to
supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial statements
in an appropriate operational, economic, or historical context. As part of our engagement, we will
apply certain limited procedures to the required supplementary information (RSI) in accordance
with auditing standards generally accepted in the United States of America. These limited
procedures will consist primarily of inquiries of management regarding their methods of
measurement and presentation, and comparing the information for consistency with
management's responses to our inquiries. We will not express an opinion or provide any form of
assurance on the RSI. The following RSI is required by accounting principles generally accepted
in the United States of America. This RSI will be subjected to certain limited procedures but will
not be audited:
1. Management's Discussion and Analysis.
2. Major fund schedules of revenues and expenditures and changes in fund balance - budget
to actual. This includes the general fund and any other major funds with legally adopted
budgets.
Supplementary Information Other than RSI
Supplementary information other than RSI will accompany Town of Los Gatos's basic financial
statements. We will subject the following supplementary information to the auditing procedures
applied in our audit of the basic financial statements and certain additional procedures, including
comparing and reconciling the supplementary information to the underlying accounting and other
records used to prepare the financial statements or to the financial statements themselves, and
additional procedures in accordance with auditing standards generally accepted in the United
States of America. We intend to provide an opinion on the following supplementary information
in relation to the financial statements as a whole:
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Chavan & Associates, UP
Certified Public Accountants
1. Nonmajor governmental fund combining balance sheets and schedules of revenues,
expenditures and changes in fund balances, and combining budgetary schedules.
2. Agency and private purpose trust fund combining schedules of fiduciary net position.
3. Other supplementary schedules as requested by the Town and required by GASB and
GFOA.
The following items will be included in our final reports but will not be subjected to the auditing
procedures applied in our audit of the financial statements:
1. Introductory Section
2. Statistical section
Schedule of Expenditures of Federal Awards
We will subject the schedule of expenditures of federal awards to the auditing procedures applied
in our audit of the basic financial statements and certain additional procedures, including
comparing and reconciling the schedule to the underlying accounting and other records used to
prepare the financial statements or to the financial statements themselves, and additional
procedures in accordance with auditing standards generally accepted in the United States of
America. We intend to provide an opinion on whether the schedule of expenditures of federal
awards is presented fairly in all material respects in relation to the financial statements as a
whole.
Audit of the Financial Statements
We will conduct our audit in accordance with auditing standards generally accepted in the United
States of America (U.S. GAAS) and Government Auditing Standards of the Comptroller General
of the United States of America and in accordance with Standards and Procedures for Audits of
California K -12 Local Educational Agencies. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the basic financial statements are free
from material misstatement. An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The procedures selected depend on
the auditor's judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to error, fraudulent financial reporting, misappropriation of
assets, or violations of laws, governmental regulations, grant agreements, or contractual
agreements. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of significant accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
Because of the inherent limitations of an audit, together with the inherent limitations of internal
control, an unavoidable risk that some material misstatements may not be detected exists, even
though the audit is properly planned and performed in accordance with U.S. GAAS and
Government Auditing Standards of the Comptroller General of the United States of America.
In making our risk assessments, we consider internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit procedures that are
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W,avan 0 Anociatesi, UP
Cerfined Public Accountants
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. However, we will communicate to you in writing
concerning any significant deficiencies or material weaknesses in internal control relevant to the
audit of the financial statements that we have identified during the audit.
We will issue a written report upon completion of our audit of Town of Los Gatos's basic
financial statements. Our report will be addressed to the governing body of Town of Los Gatos.
We cannot provide assurance that unmodified opinions will be expressed. Circumstances may
arise in which it is necessary for us to modify our opinions, add an emphasis -of- matter or other -
matter paragraph(s), or withdraw from the engagement.
In accordance with the requirements of Government Auditing Standards, we will also issue a
written report describing the scope of our testing over internal control over financial reporting
and over compliance with laws, regulations, and provisions of grants and contracts, including the
results of that testing. However, providing an opinion on internal control and compliance over
financial reporting will not be an objective of the audit and, therefore, no such opinion will be
expressed.
Audit of Major Program Compliance
Our audit of Town of Los Gatos's major federal award program(s) compliance will be made in
accordance with the requirements of the Single Audit Act, as amended; and the provisions of
U.S. Office of Management and Budget Circular A -133, Audits of States, Local Governments,
and Non - Profit Organizations; and will include tests of accounting records, a determination of
major programs in accordance with Circular A -133, and other procedures we consider necessary
to enable us to express such an opinion on major federal award program compliance and to
render the required reports. We cannot provide assurance that an unmodified opinion on
compliance will be expressed. Circumstances may arise in which it is necessary for us to modify
our opinion or withdraw from the engagement.
Circular A -133 requires that we also plan and perform the audit to obtain reasonable assurance
about whether the entity has complied with applicable laws and regulations and the provisions of
contracts and grant agreements applicable to major federal award programs. Our procedures will
consist of determining major federal programs and performing the applicable procedures
described in the U.S. Office of Management and Budget Circular A -133 Compliance Supplement
for the types of compliance requirements that could have a direct and material effect on each of
the entity's major programs. The purpose of those procedures will be to express an opinion on the
entity's compliance with requirements applicable to each of its major programs in our report on
compliance issued pursuant to Circular A -133.
Also, as required by Circular A -133, we will perform tests of controls to evaluate the
effectiveness of the design and operation of controls that we consider relevant to preventing or
detecting material noncompliance with compliance requirements applicable to each of the
entity's major federal award programs. However, our tests will be less in scope than would be
necessary to render an opinion on these controls and, accordingly, no opinion will be expressed
in our report.
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chavan & Associates, to
Certified Public Accountants
We will issue a report on compliance that will include an opinion or disclaimer of opinion
regarding the entity's major federal award programs, and a report on internal controls over
compliance that will report any significant deficiencies and material weaknesses identified;
however, such report will not express an opinion on internal control.
Management's Responsibilities
Our audit will be conducted on the basis that management understands that they have
responsibility:
1. For the preparation and fair presentation of the financial statements in accordance with
accounting principles generally accepted in the United States of America;
2. For the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material
misstatement, whether due to error fraudulent financial reporting, misappropriation of assets,
or violations of laws, governmental regulations, grant agreements, or contractual agreements;
3. For safeguarding assets;
4. For identifying all federal awards expended during the period;
5. For identifying and ensuring that the entity complies with laws, regulations, grants, and
contracts applicable to its activities and its federal award programs; and
6. To provide us with:
a. Access to all information of which management is aware that is relevant to the
preparation and fair presentation of the financial statements, such as records,
documentation, and other matters;
b. Additional information that we may request from management for the purpose of the
audit; and
c. Unrestricted access to persons within the entity from whom we determine it necessary
to obtain audit evidence.
With regard to the supplementary information referred to above, you acknowledge and
understand your responsibility (a) for the preparation of the supplementary information in
accordance with the applicable criteria, (b) to provide us with the appropriate written
representations regarding supplementary information, (c) to include our report on the
supplementary information in any document that contains the supplementary information and that
indicates that we have reported on such supplementary information, and (d) to present the
supplementary information with the audited financial statements, or if the supplementary
information will not be presented with the audited financial statements, to make the audited
financial statements readily available to the intended users of the supplementary information no
later than the date of issuance by you of the supplementary information and our report thereon.
In addition, as required by Circular A -133, it is management's responsibility to prepare the
schedule of expenditures of federal awards in accordance with Circular A -133 requirements,
follow up and take corrective action on reported audit findings from prior periods and to prepare
a summary schedule of prior audit findings, and follow up on current year audit findings and
prepare a corrective action plan for such findings. Management is also responsible for submitting
the reporting package and data collection form to the appropriate parties. Management will also
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Cham & Associates, UP
Certified Public Accountants
make the auditor aware of any significant vendor relationships where the vendor is responsible
for program compliance. You agree that you will confine your understanding of your
responsibilities as defined in this letter to us in your management representation letter.
As part of our audit process, we will request from management, written confirmation concerning
representations made to us in connection with the audit.
We understand that your employees will prepare all confirmations we request and will locate any
documents or invoices selected by us for testing.
Audit Administration and Fees
Our all - inclusive maximum fee for these services will be $38,000 per year for each of the fiscal
years ending June 30, 2014, 2015 and 2016 and includes out -of- pocket costs (such as report
reproduction, word processing, postage, travel, copies, telephone, etc.). Our standard hourly
rates vary according to the degree of responsibility involved and the experience level of the
personnel assigned to your audit as follows:
Engagement Partner $200 per hour
Manager $95 per hour
Staff Auditor $65 per hour
Clerical $35 per hour
Our invoices for these fees will be rendered each month as work progresses and are payable on
presentation. In accordance with our firm policies, work may be suspended if your account
becomes thirty days or more overdue and may not be resumed until your account is paid in full. If
we elect to terminate our services for nonpayment, our engagement will be deemed to have been
completed upon written notification of termination, even if we have not completed our report.
You will be obligated to compensate us for all time expended and to reimburse us for all out -of-
pocket costs through the date of termination. The above fee is based on anticipated cooperation
from your personnel and the assumption that unexpected circumstances will not be encountered
during the audit. If cooperation is not provided as anticipated and at a level that hinders the
progress of the services to be provided, we retain the right to terminate the contract for cause
with thirty (30) days notice. During that time, the Town will have the opportunity to provide the
cooperation required to complete the audit and C &A may rescind the cancellation.
If the services to be performed by C &A are not performed in an acceptable manner to the Town,
the Town may cancel this contract for cause by providing notice to C &A, giving at least thirty
(30) days notice of the proposed cancellation and the reasons for same. During that time period,
C &A may seek to bring the performance of services to a level that is acceptable to the Town, and
the Town may rescind the cancellation if such action is in Town's best interest. Not - withstanding
the above provisions, the Town may, upon the expiration of thirty (30) days written notice to
C &A, terminate the agreement at will. Payment for services or goods received prior to
termination shall be made by the Town provided those goods or services were provided in a
manner acceptable to the Town. Payment for those goods and services shall not be unreasonably
withheld.
Page 15 1475 Saratoga Ave, Suite 180, San Jose, CA 95129
Tel: 408 -217 -8749 • G -Fax: 408 -872 -4159
info @cnatip.com • w .cnallp.com
Chavan & associates, ALP
Certified Public Accountants
Sheldon Chavan, CPA, is the engagement partner for the audit services specified in this letter.
His responsibilities include supervising Chavan & Associates LLP's services performed as part
of this engagement and signing or authorizing another qualified firm representative to sign the
audit report.
Other Matters
The audit documentation for this engagement is the property of Chavan & Associates LLP and
constitutes confidential information. However, we may be requested to make certain audit
documentation available to state and federal agencies and the U.S. Government Accountability
Office pursuant to authority given to it by law or regulation, or to peer reviewers. If requested,
access to such audit documentation will be provided under the supervision of Chavan &
Associates LLP's personnel. Furthermore, upon request, we may provide copies of selected audit
documentation to these agencies and regulators. The regulators and agencies may intend, or
decide, to distribute the copies of information contained therein to others, including other
governmental agencies. We agree to retain our audit documentation or work papers for a period
of at least five years from the date of our report.
We will be available during the year to consult with you on financial management and
accounting matters of a routine nature
During the course of the audit, we may observe opportunities for economy in, or improved
controls over, your operations. We will bring such matters to the attention of the appropriate level
of management, either orally or in writing.
At the conclusion of our audit engagement, we will communicate to management and the Council
the following significant findings from the audit:
• Our view about the qualitative aspects of the entity's significant accounting practices;
• Significant difficulties, if any, encountered during the audit;
• Uncorrected misstatements, other than those we believe are trivial, if any;
• Disagreements with management, if any;
• Other findings or issues, if any, arising from the audit that are, in our professional judgment,
significant and relevant to those charged with governance regarding their oversight of the
financial reporting process;
• Material, corrected misstatements that were brought to the attention of management as a
result of our audit procedures;
• Representations we requested from management;
• Management's consultations with other accountants, if any; and
• Significant issues, if any, arising from the audit that were discussed, or the subject of
correspondence, with management.
In accordance with the requirements of Government Auditing Standards, we have attached a copy
of our latest external peer review report of our firm for your consideration and files.
Page 16 1475 Saratoga Ave, Suite 180, San Jose, CA 95129
Tel: 408- 217 -8749 • E,-Fax: 408- 872 -4159
info @cnallp.com • www.cualip.com
Chavan & Associates, UP
Certified Public Accountants
If the foregoing is in accordance with your understanding, please indicate your agreement by
signing this letter and emailing it to us at info @cnallp.com. If you have any questions, please let
us know.
We appreciate the opportunity to be your financial statement auditors and look forward to
working with you and your staff.
Very truly yours,
C t� 04 ap
Sheldon Chavan, CPA, Partner
Chavan & Associates LLP
RESPONSE:
This letter correctly sets forth the understanding of the Town of Los Gatos.
Officer signature:+
Title: �i Al ��_ d- � v t ti . j e_g0 t ��S
Date: // Y
Page 17 1475 Saratoga Ave, Suite 180, San Jose, CA 95129
'I el: 408- 217 -8749 • E -Fax: 4118 -872 -4159
info @cnallp.com • w .cnallp.com
Attachment B
NOT TO EXCEED PRICE FOR PROPOSED SERVICES SCHEDULE
Basic Services to be Provided:
Town Audit
Successor Agency Audit and Reporting
Single Audit and Report
MTC /TDA Audit and Report
CAFR Preparation
GANN Agreed Upon Procedures
Management letter
Total All- Inclusive Maximum Price
Year Ending June 30
2014 2015 2016
$ 26,800 $ 26,800 $ 26,800
3,800
3,800
3,800
1,800
1,800
1,800
1,000
1,000
1,000
3,000
3,000
3,000
800
800
800
800
800
800
$ 38,000
$ 38,000
$ 38,000
CHAVA -1 OP ID: AX
CERTIFICATE OF LIABILITY INSURANCE
DATnAI11
CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS,
04/11Df/YYY)
/14
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS
CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES
BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED
REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.
IMPORTANT: H the certificate holder is an ADDITIONAL INSURED, the poliey(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to
the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the
certificate holder in lieu of such endorsement(s).
PRODUCER Phone: 925- 932 -7823
R. C. Fischer & Co.
P.O. Box 8101 Fax: 925- 932 -0962
Walnut Creek, CA 94596.8101
S Totah- Edward
NAMEACT
PHONE FAX No
E# AIL
ADDRESS:
INSURERS AFFORDING COVERAGE
NAICY
INSURER A: Amencan Cas Co of Reading PA
20427
EACH OCCURRENCE
INSURED Chavan & Associates, LLP
Sheldon toga Chavan Ave
147$ Saratoga A #180
San Jose, CA 95129
INSVRER8:TainCiyFlminsuranceCo
29459
PhNadelphia lndemnly Ins. Co
INSURER C:
18058
INSURER D:
04126114
INSURER E:
$ 300,00
CIAIMS.MADE J OCCUR
INSURER F,
C EKAVES CERTIFICATF NIIMRFR• Ramm^u su,uevn-
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD
INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS
CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS,
EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
INSR -
LTR TYPE OF INSURANCE
POLICY NUMBER
POLICY EFF
MM,DDIYYYY
P ICY EXP
MMMD
LIMITS
GENERAL LIABILITY
EACH OCCURRENCE
Is 2,000,00
A COMMERCIAL GENERAL LIABILITY
X
030637077
0426113
04126114
PREMISES Ea occurrence
$ 300,00
CIAIMS.MADE J OCCUR
MED EXP (Any one person)
$ 10,00
X Buslnssa OwlMn
-
PERSONAL S ADV INJURY
$ 2,000,000
Package
GENERAL AGGREGATE
$ 4,000,00
GEHL AGGREGATE LIMIT APPLIES PER:
PRODUCTS- COMP/OP AGG
$ 4,000,00
POLICY PRO- LOC
$
AUTOMOBILE
LABILITY
COMBINED I GLE LIM
accident
$
A
ANY AUTO
30637077
0426/13
04/26114
BODILY INJURY Per Parson)
$
AL O SCHEDULED
BODILY INJURY (Par accident)
$
ALTOS AUTOS
X
HIREDAUTOS X NON-0WNED
AUrO$
RTY DAMN E
Peraccident
$
UMBRELLA LIAB
aCClxi
EAC'OCCURRENCE
$
AGG REGATE
$
EXCESS LIAR
CLAIMS -MADE
DED RETENTION$
$
WORKERS COMPENSATION
X WCSTATU. OTH-
AND EMPLOYERS' LIABILITY YIN
TOR
E.L. EACH ACCIDENT
$ 1,000,00
B ANY PROPRIETOR/PARTNER,EXECUrIVE
OFFICERMIEMBER EXCLUDED?
N/A
57WECER8244
01131114
01/31115
E. L. DISEASE - EA EMPLOYE
$ 1,000,00
(Mandatory NN)
I es,
E.L. DISEASE - POLICY LIMIT
$ 1,000,00
I'910N OFF
DESCRIPTION OF OPERATIONS bNOw
C Professional E&O
PHSD785546 1
10101113 10/01/14
Limit 3,000,00
Claims Made
Ded.. 5,00
DESCRIPTION OF OPERATIONS /LOCATIONS /VEHICLES (AUech ACORD 101, Additional Remarks Schedule, I/more space is required)
RE: Operations of the Denied insured
Toa/D of Los Gatos, its officers, officials, employees and volunteers are
additional insureds per form 8SB146932E 06/11.
TOWLGA
Town of Los Gatos
Steve Conway /Jennifer Callaway
110 East Main Street
Los Gatos, CA 95030
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE
THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN
ACCORDANCE WITH THE POLICY PROVISIONS.
AUTHORIZED REPRESENTATIVE
01988 -2010 ACORD CORPORATION All rinhfe rnenn,n,f
ACORD 25 (2010105) The ACORD name and logo are registered marks of ACORD
>3
CNA
SB- 146932 -E
(Ed. 06/11)
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
BLANKET ADDITIONAL INSURED - LIABILITY EXTENSION
This endorsement modifies insurance provided under the following:
BUSINESSOWNERS LIABILITY COVERAGE FORM
Coverage afforded under this extension of coverage endorsement does not apply to any person or organization covered
as an additional insured on any other endorsement now or hereafter attached to this Policy.
1. ADDITIONAL INSURED —BLANKET VENDORS
WHO IS AN INSURED is amended to include as an
additional insured any person or organization (referred
to below as vendor) with whom you agreed, because
of a written contract or agreement to provide
insurance, but only with respect to "bodily injury" or
"property damage" arising out of "your products" which
are distributed or sold in the regular course of the
vendor's business, subject to the following additional
exclusions:
1. The insurance afforded the vendor does not apply
to:
a. "Bodily injury" or "property damage" for which
the vendor is obligated to pay damages by
reason of the assumption of liability in a
contract or agreement. This exclusion does
not apply to liability for damages that the
vendor would have in the absence of the
contract or agreement;
b. Any express warranty unauthorized by you;
c. Any physical or chemical change in the
product made intentionally by the vendor;
d. Repackaging, except when unpacked solely
for the purpose of inspection, demonstration,
testing, or the substitution of parts under
instructions from the manufacturer, and then
repackaged in the original container;
e. Any failure to make such inspections,
adjustments, tests or servicing as the vendor
has agreed to make or normally undertakes to
make in the usual course of business, in
connection with the distribution or sale of the
products;
f. Demonstration, installation, servicing or repair
operations, except such operations performed
at the vendor's premises in connection with
the sale of the product;
g. Products which, after distribution or sale by
you, have been labeled or relabeled or used
as a container, part or ingredient of any other
thing or substance by or for the vendor; or
h. "Bodily injury" or "property damage" arising
out of the sole negligence of the vendor for its
SB- 146932 -E
(Ed. 06/11)
own acts or omission or those of its
employees or anyone else acting on its
behalf. However, this exclusion does not
apply to:
(1) The exceptions contained in
Subparagraphs d. or f.; or
(2) Such inspections, adjustments, tests or
servicing as the vendor has agreed to
make or normally undertakes to make in
the usual course of business, in
connection with the distribution or sale of
the products.
2. This insurance does not apply to any insured
person or organization, from whom you have
acquired such products, or any ingredient, part or
container, entering into, accompanying or
containing such products.
3. This provision 2. does not apply to any vendor
included as an insured by an endorsement issued
by us and made a part of this Policy.
4. This provision 2. does not apply if "bodily injury" or
"property damage" included within the "products -
completed operations hazard" is excluded either
by the provisions of the Policy or by endorsement.
2. MISCELLANEOUS ADDITIONAL INSUREDS
WHO IS AN INSURED is amended to include as an
insured any person or organization (called additional
insured) described in paragraphs 2.a. through 2.h.
below whom you are required to add as an additional
insured on this policy under a written contract or
agreement but the written contract or agreement must
be:
1. Currently in effect or becoming effective during the
term of this policy; and
2. Executed prior to the "bodily injury," "property
damage" or "personal and advertising injury," but
Only the following persons or organizations are
additional insureds under this endorsement and
coverage provided to such additional insureds is
limited as provided herein:
a. Additional Insured —Your Work
That person or organization for whom you do
work is an additional insured solely for liability
Page 1 of 5
CNA
due to your negligence specifically resulting
from your work for the additional insured
which is the subject of the written contract or
written agreement. 'No coverage applies to
liability resulting from the sole negligence of
the additional insured.
The insurance provided to the additional
insured is limited as follows:
(1) The Limits of Insurance applicable to the
additional insured are those specified in
the written contract or written agreement
or in the Declarations of this policy,
whichever is less. These Limits of
Insurance are inclusive of, and not in
addition to, the Limits of Insurance shown
in the Declarations.
(2) The coverage provided to the additional
insured by this endorsement and
paragraph F.9. of the definition of "insured
contract' under Liability and Medical
Expenses Definitions do not apply to
"bodily injury" or 'property damage"
arising out of the 'products- completed
operations hazard" unless required by the
written contract or written agreement.
(3) The insurance provided to the additional
insured does not apply to 'bodily injury,"
"property damage," or 'personal and
advertising injury" arising out of the
rendering or failure to render any
professional services.
b. State or Political Subdivisions
SB- 146932 -E
(Ed. 06/11)
This insurance does not apply to 'bodily
injury," 'property damage" or 'personal and
advertising injury" arising out of operations
performed for the state or municipality.
c. Controlling Interest
Any persons or organizations with a
controlling interest in you but only with respect
to their liability arising out of:
(1) Their financial control of you; or
(2) Premises they own, maintain or control
while you lease or occupy these
premises.
This insurance does not apply to structural
alterations, new construction and demolition
operations performed by or for such additional
insured.
d. Managers or Lessors of Premises
A manager or lessor of premises but only with
respect to liability arising out of the ownership,
maintenance or use of that specific part of the
premises leased to you and subject to the
following additional exclusions:
This insurance does not apply to:
(1) Any "occurrence" which takes place after
You cease to be a tenant in that premises;
or
(2) Structural alterations, new construction or
demolition operations performed by or on
behalf of such additional insured.
A state or political subdivision subject to the
e. Mortgagee, Assignee or Receiver
following provisions:
A mortgagee, assignee or receiver but only
(1) This insurance applies only with respect
with respect to their liability as mortgagee,
to the following hazards for which the
assignee, or receiver and arising out of the
state or political subdivision has issued a
ownership, maintenance, or use of a premises
permit in connection with premises you
by you.
own, rent, or control and to which this
insurance applies:
This insurance does not apply to structural
pP Y
(a) The existence, maintenance, repair,
alterations, new construction or demolition
operations performed by or for such additional
construction, erection, or removal of
insured.
advertising signs, awnings, canopies,
cellar entrances, coal holes,
f. Owners/Other Interests —Land is Leased
driveways, manholes, marquees,
An owner or other interest from whom land
hoistaway openings, sidewalk vaults,
has been leased by you but only with respect
street banners, or decorations and
similar exposures; or
to liability arising out of the ownership,
maintenance or use of that specific part of the
(b) The construction, erection, or
land leased to you and subject to the following
removal of elevators; or
additional exclusions:
(2) This insurance applies only with respect
This insurance does not apply to:
to operations performed by you or on your
(1) Any "occurrence" which takes place
behalf for which the state or political
after you cease to lease that land; or
subdivision has issued a permit.
SB- 146932 -E
(Ed. 06/11) Page 2 of 5
SB- 146932 -E
CNA (Ed. 06/11)
(2) Structural alterations, new
Damage To Property, is replaced by the
construction or demolition operations
following:
performed by or on behalf of such
k. Damage To Property
additional insured.
g. Co -owner of Insured Premises
"Property damage" to:
A co-owner of a premises co -owned by you
1. Property you own, rent or occupy,
including any costs or expenses
and covered under this insurance but only
incurred by you, or any other person,
with respect to the co- owners liability as co-
organization or entity, for repair,
owner of such premises.
replacement, enhancement,
h. Lessor of Equipment
restoration or maintenance of such
property for any reason, including
An person or organization from whom you
Y P 9 Y
prevention of injury to a person or
lease equipment. Such person or organization
damage to another's property;
are insureds only with respect to their liability
arising out of the maintenance, operation or
2. Premises you sell, give away or
use by you of equipment leased to you by
abandon, if the "property damage"
such person or organization. A person's or
arises out of any part of those
organization's status as an insured under this
premises;
endorsement ends when their written contract
3. Property loaned to you;
or agreement with you for such leased
equipment ends.
4. Personal property in the care,
With respect to the insurance afforded these
custody or control of the insured;
additional insureds, the following additional
5. That particular part of any real
exclusions apply:
property on which you or any
This insurance does not apply:
contractors or subcontractors working
directly or indirectly in your behalf are
(1) To any "occurrence" which takes place
performing operations, if the "property
after the equipment lease expires; or
damage" arises out of those
operations; or
() y ' j ry," "property damage" or
2 To "bodily injury,"
"personal and advertising injury" arising
6. That particular part of any property
out of the sole negligence of such
that must be restored, repaired or
additional insured.
replaced because "your work" was
incorrectly performed on it.
Any insurance provided to an additional insured
designated under paragraphs b. through h. above
Paragraph 2 of this exclusion does not
does not apply to "bodily injury' or "property
apply if the premises are "your work" and
damage" included within the "products- completed
were never occupied, rented or held for
operations hazard"
rental by you.
3. The following is added to Paragraph H. of the
Paragraphs 1, 3, and 4, of this exclusion
BUSINESSOWNERS COMMON POLICY
do not apply to "property damage" (other
CONDITIONS:
than damage by fire or explosion) to
H. Other Insurance
premises:
(1) rented to you:
4. This insurance is excess over any other
insurance naming the additional insured
(2) temporarily occupied by you with the
as an insured whether primary, excess,
permission of the owner, or
contingent or on any other basis unless a
(3) to the contents of premises rented to
written contract or written agreement
you for a period of 7 or fewer
specifically requires that this insurance be
consecutive days.
either primary or primary and
A separate limit of insurance applies to
noncontributing.
Damage To Premises Rented To You as
4. LEGAL LIABILITY— DAMAGE TO PREMISES
described in Section D — Liability and
Medical Expenses Limits of Insurance.
A. Under B. Exclusions, 1. Applicable to
Business Liability Coverage, Exclusion k.
SB- 146932 -E Page 3 of 5
(Ed. 06/11)
CNA
Paragraphs 3, 4, 5, and 6 of this
exclusion do not apply to liability
assumed under a sidetrack agreement.
Paragraph 6 of this exclusion does not
apply to "property damage" included in
the "products- completed operations
hazard."
B. Under B. Exclusions, 1. Applicable to
Business Liability Coverage, the last
Paragraph of 2. Exclusions is deleted and
replaced by the following:
Exclusions c, d, e, f, g, h, 1, k, I, m, n, and o,
do not apply to damage by fire to premises
while rented to you or temporarily occupied by
you with permission of the owner or to the
contents of premises rented to you for a
period of 7 or fewer consecutive days. A
separate limit of insurance applies to this
coverage as described in Section D. Liability
And Medical Expenses Limits Of
Insurance.
C. The first Paragraph under item S. Damage To
Premises Rented To You Limit of Section
D. Liability And Medical Expenses Limits
Of Insurance is replaced by the following:
The most we will pay under Business Liability
for damages because of "property damage"
to any one premises, while rented to you, or
temporarily occupied by you, with the
permission of the owner, including contents of
such premises rented to you for a period of 7
or fewer consecutive days, is the Damage to
Premises Rented to You limit shown in the
Declaration.
5. Blanket Waiver of Subrogation
We waive any right of recovery we may have
against:
a. Any person or organization with whom you
have a written contract that requires such a
waiver.
6. Broad Knowledge of Occurrence
The following items are added to E.
Businessowners General Liability Conditions
in the Businessowners Liability Coverage
Form:
e. Paragraphs a. and b. apply to you or to any
additional insured only when such
"occurrence," offense, claim or "suit" is known
to:
(1) You or any additional insured that is an
individual;
SB- 146932 -E
(Ed. 06/11)
SB-146932 -E
(Ed. 06/11)
(2) Any partner, if you or an additional
insured is a partnership;
(3) Any manager, if you or an additional
insured is a limited liability company;
(4) Any "executive officer" or insurance
manager, if you or an additional insured is
a corporation;
(5) Any trustee, if you or an additional
insured is a trust; or
(6) Any elected or appointed official, if you or
an additional insured is a political
subdivision or public entity.
This paragraph e. applies separately to you
and any additional insured.
7. Bodily Injury
Section F. Liability and Medical Expenses
Definitions, item 3. 'Bodily Injury" is deleted and
replaced with the following:
"Bodily injury" means bodily injury, sickness or
disease sustained by a person, including death,
humiliation, shock, mental anguish or mental
injury by that person at any time which results as
a consequence of the bodily injury, sickness or
disease.
8. Expanded Personal and Advertising Injury
Definition
a. The following is added to Section F. Liability
and Medical Expenses Definitions, item 14.
Personal and Advertising Injury, in the
Businessowners General Liability
Coverage Form:
h. Discrimination or humiliation that results in
injury to the feelings or reputation of a natural
person, but only if such discrimination or
humiliation is:
1. Not done intentionally by or at the
direction of:
a. The insured; or
b. Any "executive officer," director,
stockholder, partner, member or
manager (if you are a limited liability
company) of the insured; and
2. Not directly or indirectly related to the
employment, prospective employment,
past employment or termination of
employment of any person or person by
any insured.
b. The following is added to Exclusions, Section
B.:
Page 4 of 5
8
CNA
(15) Discrimination Relating to Room,
Dwelling or Premises
Caused by discrimination directly or
indirectly related to the sale, rental, lease
or sub -lease or prospective sale, rental,
lease or sub -lease of any room, dwelling
or premises by or at the direction of any
insured.
(16) Fines or Penalties
Fines or penalties levied or imposed by a
governmental entity because of
discrimination.
c. This provision (Expanded Personal and
Advertising Injury) does not apply if
SB- 146932 -E
(Ed. 06/11)
SB- 146932 -E
(Ed. 06/11)
Personal and Advertising Injury Liability is
excluded either by the provisions of the Policy
or by endorsement.
9. Personal and Advertising Injury Re- defined
Section F. Liability and Medical Expenses
Definitions, item 14, Personal Advertising Injury,
Paragraph c. is replaced by the following:
c. The wrongful evictio n
into, or invasion of
occupancy of a room
that a person or
committed by or on
landlord or lessor.
from, wrongful entry
the right of private
dwelling or premises
organization occupies
behalf of it's owner,
Page 5 of 5