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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, PAGE 1 OF 9 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. PAGE 2 OF 9 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 PAGE 3 OF 9 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. PAGE 4 OF 9 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 PAGE 5 OF 9 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 PAGE 6 OF 9 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 PAGE 6 OF 9 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 PAGE 7 OF 9 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. PAGE 8 OF 9 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 PAGE 9 OF 9