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HomeMy WebLinkAbout1981-05-26; City Council; 6607; 1981 audit independent CPA selectionCITY OF CARLSBAD ..AG?t*'DA BILL NO. , hO7 . Dept.H May 26, 1981 DATE : Finance Denartment DEPARTMENT : Subject: Selection of Independant CPA for 1981 ALidit Statement of the Matter The Finance Director has requested proposals from six certified public accounting firms for the performance of the City's annual audit. resnrjnded with proposals as outlined below. Five of these firms Firm cost Peat, Marwick, Mitchell & Co. $16,000 Cooners & Lybrand GeGrge A. Peterson & Co. Diehl, Evans & Co. 1~,000 lC,OOO 9,450 Conrad & Associates 9,315 These nronosals have been evaluated and all have been found to be responsive to the City ' s request for nronosal . based on the fol lcwing criteria: The Finance Di rector ' s recornendation i s 1. The firm's municin6l exnerience 2. The audit staff's municipal experience 3. Familiarity with the annual report certification requirements of the 4. Availability of other services 5. cost California and Natimal Finance Officers Associations Exhibits: for the City's 1980-81 audc Report from Finance Director - dated May 18, 1981, regarding audit proposals. Resol ution No. 6 S q< ' accepting Conrad & Associates proposal Fiscal Imnact: Costs for this audit will be part of the 1981-82 fiscal year. The proPosed budget contains $6,000 in general funds and $4,000 in water funds for this audit. Rqcommendaticns: Adopt Resolution No. b .q r/ acceFting the proposal of Conrad & Associates for the City's 1980-81 audit. APPROVED 5. MEMO RAN DUM TO: Frank Aleshire, City Manager FROM: James F. Elliott, Finance Director RE: Proposals for 1980-81 Audit DATE: May 18, 1981 I have reviewed the proposals from five CPA firms for the 1980-81 audit. My review is summarized on the attached outline. All five firms have excellent backgrounds. choose from. It is refreshing to have a field of well qualified firms to Prices for the proposed audit ranged from $9,315 to $16,(400. Both local and international firms responded to our request for proposals. Several firms have partners who are active in the California or National Municipal Finance Officers Associations, Standards and Practices Committees. And all firms have had some municipal experience. My recommendation is to accept the proposal of Conrad and Associates for their audit engagement. association with the Standards and Practices committee of the California Finance Officers Association, a satisfied user base and the lowest price of the five proposals. An agenda bill is attached for your review, if this recommendation meets with This firm offers extensive municipal experience, close your approval. / dh encls. (2) Peat, Marwick, Mitchell and Company - $16,000 Peat, Marwick, Mitchell and Company (PMM & Co.) is one of the world's largest public accounting and consulting firms. to the City of Carlsbad was issued by the San Diego office wh ch has clients in the school and special district area of gobernment. The proposal audit staff has significant experience in dealing with public sector clients in these areas, a1 though little municipal experience is indicated. PMP.1 & Co. has an extensive professional staff available to provide various consulting services, in addition to providing audit support. The PMM &i Co proposal Coopers & Lybrand - $10,000 Coopers & Lybrand is one of the largest international public accounting and consulting firms. by the San Dfego office. Orange County, Los Angeles and Northern California area. The San Diego staff has extensive commercial accounting experience. One individual on the audit engagement team has considerable experience with school district accounts. Coopers and Lybrand's Los Angeles office at a reduced rate if this firm is selected as the City's auditors (approximately 30% savings). Lybrand partners from other locations have been involved in establishing the National Municipal Finance Officers Association's standards for certification of annual reports. The proposal received by the City of Carlsbad was prepared The firm lists several municipal clients in the A wide variety of consulting services are available from Coopers & George A. Peterson & Company - $10,000 George Peterson has been the City's audit firm for the past three years. Peterson is a local La Jolla based firm. The prinicipal municiDa1 client for Peterson is the City of Carlsbad. in the proposal includes school and special districts, as well as several federal grant programs. as listed above. with the City's audit in the past. extensive consulting services, they are available to perform numerious special audits as the City may require. firm is familiar with the California Society of Municipal Finance Officers requirements for certification. Other governmental experience listed The audit staff's experience is generally the same All members of the proposal audit staff have had contact Although Peterson does not list Peterson has indicated that the Diehl Evans and Company - $9,450 Diehl Evans was the City's audit firm for the four year period ending June 30, 1977. Diehl Evans has several offices in Southern California, one of which is here in Carlsbad. municipal clients, many from San Diego County. not evident from the information contained in the proposal. had some experience in assisting clients in the achievement of annual report certi f i cati on from the Cal i forni a Society of Muni ci pal Finance Officers (CSMFO) . The firm lists a large number of The staff's experience is The firm has Conrad & Associates - $9,315 Conrad & Associates is located in Newport Beach. exDerience auditing cities , federal programs, schools and special districts. Conrad has recently completed audits of federal programs for the County of San Diego. to be particularly well qualified with considerable experience in municipal and federal grant audits. is a member of the Professional and Technical Standards Comnittee for the California Society of MuniciDal Finance Officers, the body that sets the financial statement certification standards for California Society. These standards are similar to those established by the Municipal Finance Off i cers Assoc i at i on. Conrad has extensive The staff's experience parallels the firms. The staff seems One of the partners of Conrad & Associates \ 1. '.' 1 4 5 6 7 a 9 10 11 14 16 18 19 20 . 21 ' 2? 23 24 25 26 27 28 RESOLUTION NO. 6545 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFONIA, ACCEPTING THE PROPOSAL OF CONRAD & ASSOCIATES FOR THE PERFORMANCE OF THE 1980-81 ANNUAL AUDIT. WHEREAS it is in the City's interest to annually perform an ndependent audit of the City's financial records; and WHEREAS the Finance Director has requested proposals from arious certified public accounting firms for the performance of his audit; and WHEREAS the proposal of Conrad & Associates has been found to e the most beneficial to the City of Carlsbad at this time; NOW, THEREFORE, BE IT RESOLVED, that the City Council of the ity of Carlsbad does hereby accept the proposal of Conrad & .ssociates as described in Attachment "A" , and does hereby .nstruct the staff to begin work on the 1980-81 annual audit of he City's financial statements. adjourned PASSED, APPROVED, AND APOPTED at a/regular meeting of the :ity Council of the City of Carlsbad, California, on the 26th day of May , 1981 by the 'ollowing vote, to wit: AYE F : NOES: None -' Council Mahers Packard, hear, Lewis and Kulchin ABSENT : Council &der Casler J RONALD C. PACKARD, Mayor LTTEST: aQdL 8. ~THA L. RA TEN :SEAL) I -. .. Proposal of Audit Services to the City of Carlsbad May 1981 *. .' CERTIFIED PUBLIC ACCOUNTANTS FOURTEEN CORPORATE PLAZA DRIVE NEWPORT BEACH, CALIFORNIA 92660 *' CONRAD %SSOCLATES 7141759-0511 Mr. James F. Elliott Finance Director City of Carlsbad 1200 Elm Avenue Carlsbad, California 92008 Dear Mr. Elliott: Conrad & Associates is pleased to respond to the City of Carls- bad's request for proposal for audit services dated Aprfl 8, 1981. In preparing this proposal, I carefully reviewed your request for proposal, the audited financial statements for the ~ year ended June 30, 1980 and met with you to get answers to the many questions which I had regarding the City and the desires of youirself and the City. We understand the difficulty of selecting a CPA firm from among many proposals received; however, we believe Conrad & Associates is best qualified for the following reasons which are set forth in greater detail in our proposal. * \ . .. Our goal is to provide the City of Carlsbad with the assistance necessary to make the necessary changes to com_nly with the National Council on Governmental Accounting's (NCGA) Statement #1 for the year ended June 30, 1981. The engagement partner, Michael A. Harrison, has this requisite expertise and has assisted several other Southern California cities in this endeavor. Our goal is to provide a timely audit and conple'ted draft * of the audited financial statements for inclusion in the City's 1st Comprehensive Annual Financial Report. Our committment is that our performance will be highly professional and timely. The City of Carlsbad can be assured that they are receiving an audit team that is experienced in auditing local governments, including extensive experience with California cities. It is our intention to provide continuity of personnel from year to year. The City of Carlsbad can be assured that'they will be receiving an in the field "decision maker". As a "work- ing" engagement partner, I estimate that one-third of total time expended on the engagement will be partner time. With this approach, supervision is at a maximum and the City does not spend unnecessary.time in training of individuals of the CPA firm. Mr. James F. Elliott Finance Director May 5, 1981 Page Two . Our fee assures the City of the lowest possible cost with the highest quality of professional service. Conrad & Associates is licensed in good standing with the Cali- fornia State Board of Accountancy to practice as independent certified public accountants. We thank you for this opportunity to provide services to the City of Carlsbad and look forward to this assignment with enthusi-. asm. Should you have any questions, please do not hesitate to contact me or Ronald L. Conrad at the address and phone number listed on our letterhead. Very truly yours, CONRAD & ASSOCIATES Michael A. Harrison, CPA Partner .. Section A B C D E F G H I Table of Contents Our Firm's Understanding of the Objectives and Scope of the Engagement Approach and Timing of the Engagement About Conrad & Associates Supervision and Audit Team Organization Chart Qualifications and Related Experience of the Personnel Who Will Serve the City of Carlsbad Our Prior Experience Auditing Cities, Redevelopment Agencies, Special Districts and State Government Activities Our Prior Experience in Auditing Federally Assisted Programs Re f e r ence s Estimated Hours and Maximum Fee to Perform this Engagement .' Page - 1 3 5 7 18 20 23 26 28 I SECTION A be th Our Firm's Understanding of the 0bject.ives and Scope of the Engagement , Our perfo .e City understanding of the objectives and scope of the work to rmed are based upon your request for proposal, a review of 's June 30, 1980 financial statements, including the fi- nancial-statements of the water utility fund. foregoing, we made extensive inquiries of Mr. Jim Elliott, Director of Finance, and inspected certain of the records of the City : In addition to the Based upon the foregoing discussion and reviews, we under- stand the objectives and scope of work to be as follows: 1. 2. 3. 4. 5. We will perform an examination of all funds and account groups of the City of Carlsbad. We will issue our accountant's report on the various funds and account groups as of and for the year ended June 30, 1981. For the year ended June 30, 1981, we will perform the necessary 'compliance audit testwork as set forth in the Audit Guide and Standards for Revenue Sharing and Anti- recession Fiscal Assistance Recipients, December 1977. We will issue our accountant's reports on compliance and internal accounting controls. In connection with our examination of the City's Water Enterprise Fund, we will issue our accountant's report on the separate financial statements of the Water Enterprise Fund At the conclusion of our examinations we will present in the form of a management letter our findings and recom- mendations rel'ating to internal accounting controls. These comments will be discussed.with the City Admin- istrator and/or Finance Director prior to the letter's issuance. Included in our management letter will be items only of significance. Finally, we perceive the scope of our work as being advisors on matters of accounting where requested by the Finance Director. While our principal function is to perform timely examinations as set forth above, we also .believe continuous communication between the City Finance Department and Independent auditor is mutually beneficial. All examinations will be conducted in accordance with gen- erally accepted auditing standards adopted by the American Institute of Certified Public Accountants, and will accordingly include such test of the accounting records and such other audit- ing procedures as considered necessary. However, this type of examination includes only test checks of transactions, rather than a detailed check of all transactions, and thus may not necessarily disclose irregularities, should any exist. Adequate systems of internal control and separation of duties are the principal safe- guards against irregularities. The financial examinations for the City will conform with the quidelines set forth in the American Insti.tute of Certified Public Accountants ' Industr Governmental Units a .mental Accounting's Financial Renortina y Audit Guide, Audits of State and Local .s amended for the National Council on Govern- Statement 1, Governmental Accounting and PrinciDles. We will Prermre the financial 1. 2 & &A _.. ~ statements and notes thereto to be included in the Comprehensive Annual Financial Report of the City of Carlsbad. We will also issue final reports as set forth in #2 and #3 above. . Approximately August 1 (after the final closing of the books by City personnel for the year ended June 30), we will commence performing our year end substantive audit. Our examination will include tests which we deem necessary, but will include con- firmations by 3rd parties of significant sources of City revenue, confirmation of receivables, reconciliation and confirmation of bank accounts, confirmation of investments, testing of invest- ment income, testing payroll and personnel records for the validity and fund classification of payroll charges, testing detail. supporting expenditures charged various funds. The afore- mentioned tests are only a few of the tests performed during the examination and by no means is it meant to be all inclusive. We expect the final examination to be approximately 3 weeks in dura- tion and we will complete fieldwork, with the exception of further follow-up on non-responding eonfirmations of significance. Prepa- ration of the pencil draft of the financial statements fo-r inclusion in the City's Comprehensive Annual Financial Report and accountant's report thereon of all funds of the City, a separate report of the Water Utility Fund, the revenue sharing compliance report, and our management letter would be complete in typed draft form to discuss with the City by approximately September 18. Based upon the City's review, we would issue all reports final within 60 days after the close of the City's books or September 30 with the exception of the Comprehensive Annual Financial Report. We will be working with the City Finance Department and will review the final draft of the Comprehensive Annual Financial Report when completed by the City's Word Processing Department. I -4- SECTION C About Conrad & Associates Conrad & Associates is located in Newport Beach, California and has a staff of twenty-one (21) individuals, including eighteen (18) professionals. The three partners of Conrad & Associates each have extensive "Big 8" public accounting experience. Since 1972, Conrad & Associates has specialized in governmental account- ing and auditing. The majority of'our firm's talents and profes- sional time for the past eight years has been in performing accounting and audit services to the public sector. Conrad & Associates is a member of the Private Companies Accountants (AICPA). Members of this section are required to sub- mit to peer review. * Practice Section of the American Institute of Certified Public Membership in this section is a commitment to extensive training programs, to adequate malpractice insurance, and to full participation in peer review. In every member. firm, each member of the professional staff must enroll in continuous professional education courses. Each is required to take at 1e,ast 120 hours of classes over a three-year period. Courses cover a wide spectrum . of professional and.technica1 subjects, often prepared by the .AICPA, to help the practitioner maintain his professional ex- pertise. Peer review is the underpinning that gives substance to the statement that the Private Companies Practice Section for CPA firms is designed to enhance the quality of the practice. Peer reviews are intensive reviews of a firm's quality control system. The review encompasses policies and procedures on: 1. How a firm implements independence requirements 2. How personnel are assigned 3. Provisinz for consultation when technical assistance is .' rerpj. red 4. How field work is supervised 5. Hiring practices '. 1 6. Continuing Professional Education programs 7. . Promotion of personnel 8. Decision on obtaining and retaining clients 9. Internal inspection of the firm's, work I This means that when you contract with ou'r firm to perform ser- vices for you, you will know that we have agreed to comply with the strict membership requirements of the section to which we belong and have agreed to have our compliance with those require- ments reviewed by others. Thus, there is greater assurance that our personnel are adequately trained and up-to-date on profes- sional developments. Accordingly, membership in this Division provides additional assurance that our firm will comply with professional accounting and auditing standards. The personnel who will be c,onducting the audit examination of Our the City of Carlsbad and the firm of Conrad & Associates have extensive experience in governmental accounting and auditing. experience is set forth in sections that follow. As a local Newport Beach CPA Firm, our office contains ap- proximately 3,600 square feet of space. To accomodate our clients, we have an in-house Centurion EDP facility and other up-to-date equipment, including a Wang Word Processor, for pro- duction of financial statements and other documents of the best quality . _. .' t SECTION D Supervision and the Audit Team Organization Chart The successful outcome of any audit requires personnel with the managerial and technical skills to perform the work required. The engagement team who will serve the City of Carlsbad have served together as a team of professionals on numerous financial and compliance audit examinations of local government entities. Mr. Michael A. Harrison, partner, is solely responsible for the coordination of the examination with the City of Carlsbad and fulfillment of the requirements'set forth in the request for proposal. He is a "working" partner and will be on-site to pro- vide overall coordination and guidance to all staff personnel participating in the audit examination. This will assure the City of Carlsbad that the results of the engagement meet the OS- jectives and scope set forth within this proposal. Mr. Harrison will be working closely with the Finance Director and his as- sistant and will Se principally responsible for the preparation of all financial statements to be included in the Comprehensive Annual Financial Report to be issued to the 'City Council of the City of Carlsbad. Mr. Al-Imam, Mr. Maese and Ms. Moskal will be conducting a substantial portion of the audit field work under the direction of Mr. Harrison. Mr. Conrad, Executive and Governmental Partner in our firm, has a vast amount of experience in the audits of federally as- sisted programs and will also be available on an advisory basis to Mr. Harrison or the management or City Council of the City of Carlsbad, should they so desire. The chart on the following page illustrates the organization of the audit team for the audit of the City of Carlsbad. Resumes .of the audit team are included in the pages that follow. .' 1 .. AUDIT TEAM ORGANIZATION CHART Michael A. Harrison Engagement Partner I City Council City of Carlsbad Ronald L. Conrad Consulting Partner Government Ben Maese - Ken Al-Imam Kathleen Moskal I Engagement Staff MICHAEL A. HARRISON, CPA Engagement Partner California Certificate No. 192993 - 12/73 EDUCATION B.A. Accounting - California State University, Fullerton PROFESSIONAL & CIVIC AFFILIATIONS American Institute of Ce'rtified Public Accountants California Society of Certified Public Accountants, Member of Committee on Governmental Accounting and Auditing Municipal Finance Officers Association' California Society of Municipal Finance Officers, Member of Professional and Technical Standards Committee Orange County Chamber of Commerce, Member of Economic Development Committee Saddleback Valley Chamber of Commerce 'PROFESSIONAL EXPERIENCE 10 years - Peat, Marwick, Mitchell & Co. (Senior Manager) 10 months - Conrad & Associates (Partner) RELATED EXPERIENCE Mr. Harrison has considerable experience which includes staff and management responsibilities in public sector auditing, accounting, financial reporting and evaluation of internal accounting controls. In addition, Mr. Harrison is well verse2 in computer concepts and controls and has performed numerous reviews of major data processing installations. Mr. Harrison has also managed the financial audits of several higli technology, construction and commercial clients. His experience in loca.1 government and with federally assisted programs includes the following: 0 . _. 0 City of Buena Park, including water revenue bonds, Federal Revenue. Sharing, Department of Housing and Urban Development Community development block grant examination and the Redevelopment Agency of the City of Buena Park City of -Sari Clemente, including water revenue bonds, federal revenue sharing and the Redevelopment Agency of the City of San Clemente City of San Juan Capistrano City of Commerce, including U.S. Dept. of Commerce EDA Grants, Federal Revenue Sharing and the Redevelopment Agency of the City of Commerce City of La Habra, including State Grant examinations, Federal Revenue Sharing and examination of the La Habra Redevelopment Agency City of South Gate Housing Authority - Department of Housing and Urban Development (Section 8 Housing Assistance grant examination) Comprehensive Employment .and Training Act (CETA) subgrant audits of the San Diego's Regional Employment and Training Commission, including principal responsibilities for the major audits of the City of San Diego, San Diego Unified School District, City of Oceanside, City of Carlsbad, City of Vista, City of La Mesa, City of Imperial Beach, City of Chula Vista, City of National City and United Way of San Diego Orange County Environmental Management Agency - Harbors, Beaches, Parks District - Flood Control District County of Orange - Department of Health, Education and Welfare audits funded under Title I11 of the Older Americans Act of 1965, ir:cluding grant audits of the City of San Juan Capistrano, Saddleback Unified School District, Saddleback Communi.,ty Hospital, City of Buena Park, City of Huntington Beach, City of Santa Ana, City of Cypress, City of Tustin, City of Fullerton, Senior Theater/Stop Gap, Friendly Center, Nueva Esperanza, City of La Habra, Southwest Fullerton Community Center, City of Garden Grove, Santa Ana Community Convalescent Hospital, Orange County Community Development Council, City of Irvine, San Clernente Seniors, Inc., Friends of Oasis, Legal Aid Society of Orange County, Feedback Foundation, City of Anaheim and Volunteer Bureau of North Orange County County of Orange - Federal Aeronautics Administration grant examination (John Wayne-Orange County Airport) Coastline Regional Occupational Program Cali f orni a Watkr Pol lut i on Control Associ at i on Orange County Transit District, including compliance examinations of Dial-a-Ride Orange County Manpower Commission t Orange County Sanitation Districts . Comprehensive Employment and Training Act (CETA) subgrant audits complying with standards of Department of Labor, Manpower Administration for the North-Orange County Manpower Consortium which includes the cities of Brea, Cypress, Fullerton, La Habra, La Palma, Westminster and Yorba Linda. County of Orange - Secondary Federal Revenue Sharing audits for the City of La Habra Older American Services, Big Sisters of Orange County, Free Clinic of Orange County, Teenage Resource Center Family Homes Program, Orange County Community development Council, Inc., Southwest Minority Economic Development Association, Legal Aid Society of Orange County Outreach Program, Boys Club of Buena Park, Youth Dental Clinic, The Peoples Clinic, Inc., Catholic Community Agencies Immigration and Citizenship Services, City of Huntington Beach Seniors' Outreach Program, Gary Center and Clinica De Salud Mental Prior to joining Conrad & Associates as the Partner in charge Harrison was responsible for the development and management of the local government audit practice of the Orange County office of Peat, Marwick, Mitchell & Co. (PMM & Co.). In- cluded in his responsibilities were the training of staff individuals assigned to approximately 10,000 annual hours of accounting and audit work in the government sector. Mr. Harrison has instructed governmental audit training courses for staff, senior accountants and management on both a local and national level while at PMM & Co. 'of the commercial and local government audit practice, Mr. I RONALD L. CONRAD, CPA . Executive .and Governmental Consultina Partner EDUCATION California Certificate No. 24435R --.3/18/77 Iowa Certificate No. 937 -- 8/1/69 Minnesota Certificate No. R3340 -- 3/13/75 Nebraska Certificate No. 1259 -- 10/16/72 B.S. - University of Southern California, School of Business PROFESSIONAL & CIVIC AFFILIATIONS American Institute of Certified Public Accountants California Society of Certified Public Accountants Iowa Society of Certified Public Accountants Newport Beach Chamber of Commerce UCI' Foundation PROFESSIONAL EXPERIENCE 4 years - Peat, Marwick, Mitchell & Co. ' 10 years - Conrad & Associates (Partner) RELATED EXPERIENCE Mr. Conrad is the founder and executive partner of Conrad & Associates. Mr. Conrad has had extensive experience with non-profit entities, especially those which are federally funded. He has been responsible for numerous contracts with the Department of Labor in Regions VII, IX and X. The successful completion of the audits with the followimg government agencies were accomplished under the supervision and leadership of Mr,., Conrad: Financial and Compliance Audits for the Department of Labor CETA (Migrant Program) CETA (Indian Program) 1 Job Corps (Geographical Area No. 11, Western part of the United States) CETA (Various local prime and subgrantee audits) - f Categorical Programs 1. NYC (Neighborhood Youth Corps) , 2. OM (Operation Mainstream) 3. EEA (Emergency Employment Act) 4. CEP (Comprehensive Employment Program) Communitv Service Administration Proarams Headstart (Fiscal and compliance audit, reported to the Department of Health, Education and Welfare) Weatherization Crisis Intervention Action Agency Programs in Region VI1 Retired Senior Volunteer Program (RSVP) Action Agency Programs in Region VI1 Retired Senior Volunteer Program (RSVP) Foster Grandparent Program Regional Training Session for Program Managers Four Statewide Meetings (Iowa, Nebraska, Missouri, Kansas), for Grantee Personnel Department of Defense Audit of unappropriated funds for U.S. Air Force bases Department of Housina and Urban Development Audited government housing projects and senior citizen housing programs State Department of Social Services (Iowa) Financial and compliance audits of nursing homes under Medicaid - Title XIX Mr. Coprad has recently been in charge of the administration and overall supervision of a major contract with the U-S. Department of Labor. This contract was for the Job Corps Center Audits in the Western part of the United States. The contract was successfully completed on a timely basis on April 30, 1980. Mr. Conrad has an extensive background in auditing construction projects. He was in-charge of numerous HUD audits performed by Conrad & Associates as well as all the Job Corps audits that required auditing construction I - 13 - projects. In addition to the extensive experience in auditing construction projects, Mr.' Conrad also has participated in the development and operation of several commercial construction projects for a number of our real estate investor clients. Mr; Conrad is currently partner in-charge of Conrad & Asso- ciates' engagement with the San Diego Regional Employment and Training Consortium (RETC). This major engagement to audit Titles IID, VI, VI Special Projects, IIB, 111, IV Summer Youth, IV Exemplary Youth, IV YCCIP and IV YETP under the Comprehensive Employment and Training Act is well on its way to a successful completion for fiscal 1979 and 1980 under the direction of Mr. Conrad. Mr. Conrad is also in-charge of Conrad & Associates' engagement with the Shasta County, California Auditors office. The combined total of funds being audited in San Diego and Shasta Counties under the direction of Mr. Conrad is approximately $100 million for fiscal 1979 and 1980. Mr. Conrad has attended several training courses on the audits of governmental units and federally assisted programs, including the 1980 "Audits of CETA Programs'' sponsored by the American Institute of Certified Public Accountants. . -14-' BEN MAESE Senior Accountant EDUCATION B.S. (Accounting) San Diego State University, 1978 Passed two parts of CPA Examination, November 1980 PROFESSIONAL EXPERIENCE 2 1/2 years - Conrad & Associates RELATED EXPERIENCE Mr. Maese has had staff and senior accountant responsi- bilities principally within governmental and non-profit organizations. accountant responsibilities including the evaluation of interna1,accounting controls and compliance matters on federally assi'sted programs at numerous locations, the following: Mr. Maese has had in-charge or staff including . El Paso Texas Job Corps Center . Gary Job Corps Center . Guthrie Job Corps Center . Albuquerque Job Corps Center . Bonsall Union School District . Poway Unified School District . Poway Municipal Water District . Rincon Del Diablo Water District . Grossmont Union High School District . North San Diego County Business College . San Diego Regional Employment and Training Consortium Mr. Maese has a vast amount of experience in auditing includ- ing the evaluation of.interna1 accqunting controls and compliance. senior accountant capacity. He w,ill be performing on this engagement in a .. - 15 - 1 D I I I I KEN AL-IMAM Senior Accountant EDUCATION B.A. - California State University, Fullerton (Accounting) Passed all parts of CPA examination, November 1978 Graduate Studies - California State University, Fullerton PROFESSIONAL EXPERIENCE 1 year - Robertshaw Controls (Junior Accountant) 2 years - Conrad & Associates (Senior Accountant) RELATED EXPERIENCE Mr. Al-Imam has served in staff and senior accountant capacities for the following housing authority and other federally assisted program audits (financial and compliance): City of South Gate Housing Authority (Section 8 HUD Examination) . San Diego Regional Employment and Training Consortium (CETA subgrant examination of MAAC) County of Orange - Title I11 Older Americans Act examinations (financial and compliance) for the City of Santa Ana, Santa Ana Community Convalescent Hospital, Friendly Center, Abrazar-Nueva Esperanza, Southwest Fullerton Daycare Center, Volunteer Bureau of North Orange County, Cal-State Long Beach Nutrition Program, MORE Nutrition Program, Feedback Foundation, City of La Habra and City of Garden Grove In addition to the above related experience, Mr. Al-Imam has also functioned in staff and senior capacities on various commercial and non-profit organizations. I' KATHLEEN MOSKAL Staff, Accountant E DU CAT I ON B.S. - University of Southern California (Accounting), 1978 International Education - Nagoya International School-Japan Singapore American School, Singapore PROFESSIONAL EXPERIENCE 1 year - Fluor Corporation (Staff Accountant) 1 year - Union Oil Co. of California (General Accountant). 1 year - Walker Spring and Stamping (Junior Accountant) 7 months - Conrad & Associates (Staff Accountant) RELATED EXPERIENCE Ms. Moskal, in addition to her three years of accounting experience in private industry, has paaticipated in the audit examinations of several federally assisted programs including. CETA financial and compliance audits of the following cities: City of Vista . City of Chula Vista . City of Imperial Beach . . City of La Mesa . City of National City Ms. Moskal has substantial staff audit experience, including examination of internal controls and performance of audit procedures relating to a City's payroll system. Ms. Moskal will be performing in a similar capacity on this engagement. Ms. Moskal is a resident of the City of Carlsbad. - 17 - SECTION E Qualifications and Related ExDerience Of the Personnel Who Will Serve the City of Carlsbad In the preceding sections of this proposal, we described our firm's understanding of the objectives and scope of the engage- ment, our approach, the size and structure of our firm and the supervision and organization of the audit team. This section of the proposal presents the qualifications of the audit team who will conduct the City of Car-lsbad and financial and compliance examinations as set forth under "Our Firm's Understanding of the Objectives and Scope of the Engagement." We perform believe 1. 2. 3. 4. have listed below facts regarding the audit team who will the audit examinations at the City of Carlsbad. We these are very important and deserve special emphasis. Each of the audit team members has had extensive previpus experience in financial and compliance audits of fede- rally assisted programs. Mr. Conrad and Conrad & Associates have had extensive experience in the audits of governmental units and non-profit organizations. Each of the audit team members has had extensive experience in performing audit procedures and in evaluating internal accounting and administrative controls. Mr. Harrison has ten years prior experience with the CPA firm of Peat, Marwick, Mitchell & Co. While with the Orange County office of Peat, Marwick, Mitchell & Co., he was the senior manager and was responsible for the development of that office's local government accounting and audit practice. During 1975, 1976, 1977 and 1978, Mr. Harrison was selected by that firm's Department of Professional Development to instruct regional audit training and governmental audit training courses. In addition to instructing the three day regional audit training courses for PMM & Co.;during 1976 and 1977, he organized and instructed one day courses in local govern- ment for beginning staff accountants in all of PMM & Co.'s seven California offices. .. Mr. Harrison has extensive experience in the audits of local governments.including numerous cities, redevelop- ment agencies and grant programs'. w,B . 5. Mr. Harrison is extremely familiar with NCGA Statement #1 and has assisted several cities in Southern California in making changes necessary to comply with this recently issued statement. He has also assisted two Southern California cities in upgrading their financial statements which have received the Municipal Finance Officer's Association (MFOA) Certificate of Conformance for Excellance in Financial Reporting. Three Southern California cities which asked for Mr. Harrison's assistance in upgrading their financial statements also received annual report recognition under the California Society of Municipal Finance Officers (CSMFO) program. Mr..Harrison is also a member of the CSMFO Professional and Technical Standards Committee which is responsible for reviewing Annual Reports submitted for award. -. SECTION F "-7 L' Our Prior Experience Auditing Cities, Redevelopment Agencies, Special Districts, County and State Government Activities Mr. Michael A. Harrison is a partner with Conrad & Associates and is responsible for the commercial and local government audit Sractice. Prior to joining Conrad & Associates, Mr. Harrison was the senior manager in the Orange County, California office of Peat, Marwick, Mitchell & Co. He was responsible for the development and management of that office's local government audit practice. Included in his responsibilities were the training of staff in- dividuals assigned to approximately 10,000 hours of annual audit and accounting work in the government sector. Mr. Harrison has been directly responsible for the following municipal audits: City of Commerce - examination of all funds of the City and Redevelopment Agency. The City receives numerous grants and entitlements, including Federal Revenue Sharing, Compre- hensive Employment and Training Act Funds, Housing and Com- munity Development Act funds, U.S. Department of Agriculture (UDAG) funds, Public Works Employment Act and others. Separate examinations of redevelopment agency compliance and revenue sharing compliance were made. Additionally, separate examinations were made of projec'is under the Public Works Employment Act (Economic Development Administration). City of Buena Park - examination of all funds of the City and Redevelopment Agency. Mr. Harrison was also responsible for the performance of separate financial and compliance exami- nations of the Community Development Block Grant Program of the City under the Department of Housing and Urban Develop- ment's Audit Guide and Standards for Community Development Block Grant Recipients. Other audit examinations performed ihcluded revenue sharing and redevelopment agency compliance, and separate financial examinations of the Buena Park Visitor and Convention Bureau. The examination of the City also includes the Water Utility Enterprise Fund. City of South Gate - Conrad & Associates and Mr. Harrison, as partner, performed a separate financial and compliance exami- nation of the Housing Authority of the City for 1979 and 1980. Additionally, qt the direction of the City Council of the City, our firm has assisted the City in special audit areas. City of San Clemente - examination of all funds of the City and Redevelopment Agency. The city receives numerous grants and entitlements, including Federal Revenue Sharing, CETA and others. The audit examination includes three enterprise funds, the water utility, sewage and sanitation utility and golf course funds. Additionally, Mr. Harrison was responsi- ble for separate revenue sharing and redevelopment agency compliance examinations. City of La Habra - examination of all funds of the City and Redevelopment Agency. ';?le audit of the City included the City's Water Utility Enterprise Fund. Separate audit exami- nations were performe&.for the Library Corporation, various CETA grants administered by the City and Educational Aid and Alternative Education Aid Grants. Orange County Transit District - Mr. Harrison managed the examination of this District in 1977 and 1978. The District receives SB325 funds from the State of California and Section 5 Operating Assistance Funds from the Urban Mass Trans- portation Administration. In addition, Mr. Harrison per-. formed management audits of various dial-a-ride operators throughout the County of Orange. Orange County Harbors, Beach and Park District and Orange County Flood Control District - Mr. Harrison has been responsible for each of these examinations conducted for the Auditor-Controller of the County of Orange. Orange County Manpower Commission - Mr. Harrison has per- formed an examination of the financial statements of the Commission including a review of the internal audit sub- grantee function. Orange County Sanitation Districts - Mr. Harrison has per- formed audit examinations of the eight Orange County Sanitation Districts. The Districts receive Capital Projects Funds from the Environmental Protection Agency. Conrad & Associates was awarded a contract by the Iowa State .' Department of Social Services to review the financial statements of approximately 500 nursing homes in Iowa for the purpose of determining accurate costs'in regard to the State's Cost Reim- bursement Program for intermediate care patients in the homes. The State of Iowa was highly satisSied with the firm's work and has shown this satisfaction by renewing its contract twice, the last time for a three year period. . As a result of these contracts with the State of Iowa under Titles XIX and XX, Conrad & Associates has audited many activities relating to State and County activities, including County con- valescent homes and State schools for the mentally retarded. ' Conrad & Associates has performea significant audit work under contract for the Counties of Orange, Shasta and San Diego. - .. SECTION G , Our Firm's Prior Experience Auditing Federally Assisted Programs Conrad & Associates has performed more than 600 audits of programs financed by the federal government. Included in these audits were many programs administered through the Department of Housing and Urban Development, Department of Labor, Department of Commerce, Department of Health, Education & Welfare and Department of the Treasury. In July 1978, Conrad & Associates was awarded the contract by the National office of Department of Labor to audit twenty-five Job Corps Centers in the Western Part of the United States. Several of the audits exceeded $30 million in funds expended. The total amount of federal funds for all the audit locations was in excess of $200 million. Under the direction of Mr. Ronald L. Con- rad, the contracts were completed in a timely and efficient manner. In 1980, Conrad & Associates was awarded the contract to audit all of San Diego County, Califsrnia's CETA subcontracts. The audit awarded by the San Diego Regional Employment and Train- ing Consortium (RETC) is well on its way to a successful com- pletion. The award by RETC to Conrad & Associates was for audit of approximately $94 million for fiscal 1979 and 1980, which includes funding under Titles IID, VI, VI Special Projects, IIB, 111, IV Summer Youth, IV Exemplary Youth, IV YCCIP, IV YETP and VII. Many of the very substantial locations, including the City of San Diego, San Diego's United Way, San Diego Community College, San Diego Unified School District and others, together with dozens of small locations, are complete through the exit conferences with the auditees. We suggest you contact the'San Diego Regional Em- ployment and Training Consortium (RETC) to determine their satis- faction with our firm's knowledge and professionalism and specific progress in San Diego. Recently, we were awarded the contract to aud.it approximately $5.3 million of CETA funds in Shasta County, California. The audit of the fiscal 1979-1980 locations'in Shasta County is par- tially complete and scheduled for completion in the Spring of 1981. The foregoing contracts for San Diego and Shasta Counties are under the direction of Ronald L. Conrad,.as engagement partner. Mr. Michael A. Harrison, partner in-charge of the commercial and local government practice, has extensive experience in the audits of federally assisted programs and the all funds exami- nations of cities, special districts and redevelopment agencies. The.financia1 and/or compliance audits for which Mr. Harrison has been directly responsible for the planning, fieldwork and issuance of financial reports are as follows; ..?- .I I? I F' J I. - U.S. Department of Housing and Urban Development - Community Development Block Grant examination of the City of Buena Park, complying with the audit guide for Community Development Block Grant Recipients. Section 8 audit of the City of South Gate Hous- ing Authority, complying with the HUD audit guide for Public Housing Authorities. Conrad & Associates has also performed a number of Low Rent Housing Authority audits whi'ch are funded by the Housing and Urban Development Department. These audits varied from small units to large entities sponsored by cities. . U.S. Department of Health, Education and Welfare - During 1980, Conrad & Associates, under the direction of Mr. Harrison, conducted the audits of 35 grants of Senior Citizens Programs funded under Title I11 of the Older Americans Act of 1965. This project was'completed in November, 1980. Should you have in- quiries as to the quality of the work and our firm's ability fio meet time deadlines, we suggest you contact the Office of the Auditor, Controller, County of Orange, California. Conrad & Associates has performed numerous other audits for HEW over the years. Many of these audits were of Headstart programs. U.S. Department of Labor - Comprehensive Employment and Training Act (CETA) subgrant audits for the North Orange County, California Manpower Consortium which includes the California cities of Brea, Cypress, Fullerton, La Habra, La Palma, West- minster and Yorba Linda. Comprehensive Employment and Training Act (CETA) subgrant audits for the City of Buena Park. San Diego Regional Employment and Training Consortium - including the City of San Diego, San Diego Unified School Dis- trict, United Way of San Diego and the Cities of Oceanside, Vista. - Carlsbad, Imperial Beach, La Mesa, National City, Chula Vista and U.S. Department of Commerce - City of Commerce, California, auditscornplying with audit instructions for Local Public Works-Economic Development Administration. U.S. Department of Treasury - County of Orange, California, 13 secondary recipients audits complying with the Audit Guide and -I_ Standards for Revenue Sharing and Anti-recession Fiscal Assistance Zecipients. Revenue Sharing examinations of the cities of La Habra, Com- merce, San Clemente and Buena Park (primary recipients). In addition to the management of the financial and compliance examinations of federal funds and programs, Mr. Harrison partici- pated in a two day seminar entitled "Examinations of Federally Assisted Programs", has instructed modules of government audit training'pertaining to Federally Assisted programs and has attended and instructed various other governmental audit courses. 1 -! 1 - 24 - _- Our firm has performed financial and management audits of the non-appropriated funds for the United States Air Force. These audits required auditing compliance with.Air Force directives. We also performed several management audits of the Air Force. Conrad & Associates has performed audits in Regions VI, VII, IX and X for the Department of Labor, as well as for the National Office. Our firm has a very good reputation in all of these regions and with the National Office. I I I I .' I - 25 - w .. SECTION H .- References The following are references of individuals which we invite the City of Carlsbad to verify. The credibility of Conrad & Associates and of the engagement partner, Michael A. Harrison, can be found by contacting any of these individuals. References of Conrad & Associates Mr. James Roosevelt Former Member of the U.S. House of Representatives President of James Roosevelt & Company, Inc. 110 Newport Center Drive, Suite 200 Newport Beach, California 92660 (714) 640-8167 Mr. Douglas Patty Chairman of the Board of Directors and Chief Executive Officer of Heritage Bank (The largest independent bank in Orange County) Member of the Board of Directors of Orange Coast Savings 2171 Campus Drive Irvine, California 92715 & Loan (714) 833-3700 City of South Gate Mr. George Wanner, Director: of Finance (213) 567-1331 County of Orange Office of the Auditor - Controller Mr. Dick Kataoka, Principal (714) 834-2699 San Diego Regiona&,Employment and Training Consortium Mr. Richard J. Castro Fiscal .Management Administrator (714) 238-1445 U.S. Department of Labor Mr. Don Byrd Regional Audit Manager Region IX San Francisco, CA 94109 (415) 556-8424 -. I I -- Ahditional References as to the Competence of the Engagement Part- ner in Conducting Audits of Federally Assisted Programs and of Local Government Units Mr. John Mitsuuchi Director of Finance City of Commerce (213) 722-4805 Mr. Ted Ab0 Director of Finance City of Buena Park (714) 521-9900 Orange County Transit District Mr. Jerry Diekman Manager of Accounting Mrs. Gretchen Waltzman Manager of Data Processing (714) 971-6200 - 27 - _- I -I,,’ SECTION I .Hourly Rates and Maximum Fee to Perform This Engagement We propose to complete the requested audit examinations of the City of Carlsbad as follows: Not to exceed fee including Estimated out of pocket Hours expenses Ail funds examination of the City of Carlsbad .(excluding water utility) Portion of audit examina- tion attributable to audit of Water Utility Enterprise and separate financial state- ments thereof. Audit procedures and accountants’ reports on compliance and int=lrnal control--federal revenue sharing Not to exceed fee, ‘including, expense 250 80 15 - 345 Conversion to NCGA Statement #1, Consultation with Finance Director regarding Comprehen- sive Annual Finance Report, Closure of Funds and required entries, classification of funds, encumbrance accounting, statist- ical tables, etc. and initial proforma of Comprehensive Annual Financial Report (Partner time) - 60 405 - $6,750.00 2,160.00 . 405.00 9,315.00 None $9,315.00 Our estimates above contemplate reasonable assistance from the City persdnnel including the furnishing of trial balances, reconciliations, typing of confirmation requests and production of supporting documents for review. Our estimate contemplates that our firm will prepare and issue separate typed statements on the Water Utility Enterprise and compliance reports on revenue sharing and a final pencil draft of the financial statements for inclusion in the City's typed Comprehensive Annual Financial Report. Our billing rates which would be in effect for providing additional services over the next year are based upon level of experience and are as follows: Classi f icat ion Hourly Rate Partner $40 Supervisor '3 0 Senior Accountant 27 Staff Accountant 23 All new engagements require an initial investment of time to become familiar with the new client organization, develop a perm- anent file of working papers and to perform other one-time startup activities. Since the City has indicated that it anticipates retaining the successful firm for several years, we have not included such costs in the above estimates, including the specific partner time involved in the City's conversion to NCGA Statement 81. For years subsequent to June 30, 1981, we would agree to adjustments to the basic fee in accordance with the All Urban Index of the Consumers Price Index for the Long Beach, Anaheim area on a calendar year basis. .