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.
.