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TITLE
AUDIT AGREEMENT - 1985-86 ANNUAL AUDIT clTYAm!&&
CITY MGR.~
3ECOMMENDED ACTION:
Adopt Resolution No.rS/authorizing the City to enter into
an agreement with Deloitte Haskins & Sells for audit services
related to the 1985-86 financial statements and single audit
of federal programs.
ITEM EXPLANATION:
Each year the City conducts an independent audit of the annual
financial statements prepared by the Finance Director. This
audit provides the City Manager and Council with an independ-
ent opinion on the fairness and completeness of the finance
reports and helps to insure the fiscal integrity of the city.
The city typically seeks proposals from CPA firms every three
to five years for the conduct of these audits. The long-term
arrangement allows the city and auditor to learn to work
efficiently together and, by the end of the third year, pro-
vides a more orderly routine audit of the city records.
These agreements do not usually require council approval
because the price of each engagement is usually below the
$10,000 level. However, this year the federal government has
mandated that any agency receiving more than $100,000 in
financial assistance must prepare a "single audit" of all
federal programs in addition to the usual city financial audit.
This law provides for the review of each federal grant for
both fiscal and procedural compliance with all federal
regulations. Any deviation, no matter how small, must be
reported to the federal government.
The city has four programs which fall under the single audit
guidelines:
Housing Authority (HUD) Highway Bridge Repair and
Replacement (Aqua Hedionda
Bridge)
Community Development Revenue Sharing
Block grants (HUD)
The single audit of these programs will cost an additional
$20,000 for the 1985-86 report. Some of these costs can be
charged against the grant programs; however, the Highway and
Block grant projects do not allow for overhead charges of
this type. These costs will be borne by the City.
Staff is recommending that the City continue using the
auditors of the past two years, Deloitte Haskins & Sells,
for the performance of the City's annual audit and the
single audit program.
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Agenda Bill No.g&JT
FISCAL IMPACT:
The 1986-87 Budget includes funding for the regular audit,
costing $9,750 and the single audit at $20,000. The audit
work will begin in late May 1986, and will be completed in
late September. All costs will be paid from the available
funds, no additional transfers are necessary.
EXHIBITS:
1. Resolution No..m/ Authorizing the City to enter into an
agreement with Deloitte Haskins 6 Sells for audit services
related to the 1985-86 financial statements and single audit
of federal programs.
2. Agreement with Deloitte Haskins C Sells for audit services.
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RESOLUTION NO. 8561
A RESOLUTION ON THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, AUTHORIZING THE CITY TO
ENTER INTO AN AGREEMENT WITH DELOITTE HASKINS
& SELLS FOR AUDIT SERVICES RELATED TO THE
1985-86 FINANCIAL STATEMENTS AND SINGLE.AUDIT
OF FEDERAL PROGRAMS
WHEREAS, the City annually retains an independent CPA
firm to perform a review and express an opinion on the annual
financial statements of the City of Carlsbad, and
WHEREAS, the City is also required by federal law to
perform a single audit of all qualified federal programs as
defined by the Single Audit Act of 1984, and
WHEREAS, The City Council has determined that the firm
of Deloitte Haskins & Sells, by virtue of its contact with
city programs, through past audits and familiarity with the
Single Audit Act, can perform these functions in a profes-
sional manner.
NOW, THEREFORE, BE IT RESOLVED by the City Council Of
the City of Carlsbad, California, that the Mayor is
authorized to execute the attached agreement with Deloitte
Haskins c Sells for the conduct of an annual financial
audit and single audit for the fiscal year ended June 30, 1986.
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PASSED, APPROVED AND ADOPTED at a regular meeting of
the City Council of the City of Carlsbad, California, held
on the 20th day of M?Y , 1986 by the following
vote, to wit:
AYES: Council Members Casler, Lewis, Kulchin, Chick and Pettine
NOES: None
ABSENT: None
ATTEST
MARY H. EASLER, Mayor
d ALETHA L. RAUTENKRANZ, City Clerk
AGREEMENT FOR AUDIT SERVICES
RELATED TO THE ANNUAL AUDIT OF THE CITY'S
FINANCIAL REPORTS FOR THE YEAR ENDED JUNE 30, 1986
THIS AGREEMENT, made and entered into as of the day of
' 19-- , by and between the CITY OF CARLSBAD, a municipal
corporation, hereinafter referred to as "City," and DELOITTE HASKINS & SELLS
hereinafter referred to as "Auditor."
RECITALS
City requires the services of an independent certified public accountant
to perform the annual audit of the City's financial statements for the one year
period fran July 1, 1985 to June 30, 1986; and
The Auditor possesses the necessary skills and qualifications to provide
the services required by City;
NOW, THEREFORE, in consideration of these recitals and the mutual
covenants contained herein, the City and Auditor agree as follows:
(1) AUDITOR 'S OBLIGATIONS
A. SCOPE AND DlRATiON
1. The Auditor shall conduct an examination of the financial
statements, accounts, records and procedures of a1 1 fmds, agencies
and/or subdivisions of the City of Carlsbad covering operations of the
City during the period July 1, 1985 to June 30, 1986.
2. The engagement shal 1 include an audit of all federal program grant
flnds as required under the Single Audit Act of 1984.
3.
control and of canpliance with budgetary and legal requirements by the
City.
The engagement shall include a review of the system of internal
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B. AUDIT STANDARDS
1. The Auditor shall conduct the examination in accordance with
general ly accepted auditing standards and procedures applicable to
govermental units, as prescribed in the following documents:
a. AICPA, Statements of Auditing Standards and Audits of State
and Local Government a1 Units.
b. General Accounting Office, Standards of Audit Govermental
Organizations, Programs, Activities, and Functions.
c.
Should the Auditor encounter circumstances requiring an increase
Statements of the Governnental Accounting Standards Board.
2.
in the scope of the audit, or in the extent of detailed investigation,
written notice to that effect will be given to the Finance Director,
and this agrement will be modified by mutual agrement as to
additional work and canpensation. Such modifications must be in
writing and approved by the Finance Director and/or City Manager.
C. REPORTS AND OTHER COMMUNICATIONS
1.
in internal accounting controls.
2. The Auditor shall submit a management letter on observed
management weaknesses.
3. The Auditor shall submit a written report containing an expression
of opinion that the financial statements are fairly stated, or, if a
qualified or adverse opinion or disclaimer of opinion is necessary,
the reasons therefor.
4. The Auditor shall submit a written report affirming that the City
is in canpliance with applicable legal provisions referred to in
Section A-3 above or as required by the Single Audit Act of 1984.
The Auditor shall submit a written report on observed weaknesses
If
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the City was not in canpliance with specific legal provisions, the
Auditor shall so state in his written report.
5. The Auditor shall assist the City in preparing final financial
statements in cunpliance with the standards set by Governmental
Accounting, Auditing and Financial Reporting (GAAFR).
6.
copy of the canbined financial statements, notes to the financial
statements and the supplemental data section of the annual financial
report as defined in GAAFR. The Auditor shall provide one original of
the auditor's opinion on the canbined financial statements. The
Auditor shall provide 15 copies of the letters and reports as
described in Sections l.C(l), l.C(2), l.C(4) and l.C(7).
7. The Auditor shall prepare separate financi a1 statements for the
Ci ty Water Enterprise and Redevelopment Agency cmpl ete wi th separate
opinions.
8.
for their acceptance by federal grantor agencies. The Auditor shall
make available working papers upon request, in accordance with federal
and state grant provisions.
9.
after the submission of his written reports.
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The Auditor shall prepare and submit to the City one final typed
The Auditor shall revise his written reports as may be required
The Auditor shall attend up to two (2) public meetings to be held
(2) CITY OBLIGATIONS
A. The City shall have adjusted or closed all accounts and shall have
them available for examination by August 15, 1986.
6. City staff shall render all feasible assistance to the Auditor, and
shall respond prunptly to requests for information, provide a1 1 necessary
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books and records, and provide physical facilities required by the Auditor
for the expeditious conduct of the engagement.
C. The City shall prepare all introductory and statistical sections to be
included in the annual financial report, and shall submit all sections to
the Auditor for review prior to October 15, 1986.
(3) PROGRESS AND COMPLETION
The work under this contract will begin upon execution of this agrement
and shall be canleted by October 31, 1986. Extensions of time may be granted by
the Finance Director if requested by the Auditor and agreed to in writing by the
Finance Director.
(4) FEES TO BE PAID TO AUDITOR
The City shall pay the Auditor a total fixed fee
services rendered under this agrement. The City shal
for additional work agreed upon in writing and approve1
allowed under Section 1.B.2 of this agrement.
(5) PAYMENT OF FEES
of $ 29.75 0.QOfor
canpensate the auditor
by both parties as
Periodic progress billings may be submitted for services rendered to date,
but not more often than monthly.
due after the submission of all reports required by Section C and their
acceptance by the City and federal grantor agencies.
The final payment for any audit shall becme
Invoices should be mailed
to the attention of Finance Director, City of Car
Carl sbad, CA 92008-1989.
The City shall retain 10% of the total fees
been received and accepted by the City or grantor
(6) PAYMENT OF FEES OR COMMISSIONS
sbad, 1200 Elm Avenue,
paid until all reports have
agenci es .
The Auditor warrants that their firm has not employed or retained any
canpany or person, other than a bona fide employee working for the Auditor, to
solicit or secure this agrement, and that Auditor has not paid or agreed to pay
any canpany or person, other than a bona fide employee, any fee, canmission,
percent age, brokerage fee, gift, or any other cons iderat ion cont ingent up0 n, or
resulting fran, the award or making this agrement. For brezch or violation of
this warranty, the City shall have the right to annul this agrement without
liability, or, in its discretion, to deduct fran the agrement price or
consideration, or otherwise recover, the full amount of such fee, canmission,
percent age, brokerage fee, gift or contingent fee.
(7) NONDISCRIMINATION CLAUSE
The Consultant shall canply with applicable State and Federal laws
regard i ng nodi sc rimi nation.
(8) TERMINATION OF CONTRACT
In the event of the Auditor's failure to
in this agreement, the City may terminate this
notifying the Auditor by certified mail of the
perform the work as provided for
agrement for nonperformance by
termination of the agrement.
The Auditor, thereupon, has five working days to deliver all documents owned by
the City and copies of all work in progress to the Finance Director.
Finance Director shall make a determination of fact based upon the documents
delivered to City of the percentage of work which the Auditor has performed
which is usable and of worth to the City in having the audit canpleted. Based
upon that finding as reported to the City Council, the Council shall determine
the final payment of the agrement. Final payment shall be in cunpliance with
the Code of Federal Regulations.
(9) DISPUTES
The
If a dispute should arise regarding the performance of work under this
agrement, the following procedure shall be used to resolve any question of fact
or interpretation not otherwise settled by agrement between parties. Such
questions, if they becane identified as a part of a dispute among persons
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operating under the provisions of this agrement, shall be reduced to wr'iting by
the principal of the Auditor or the Finance Director. A copy of such documented
dispute shall be forwarded to both parties involved along with recanmended
methods of resolution which would be of benefit to both parties.
Director or principal receiving the letter shall reply to the letter along with
a recanmended method of resolution within ten calendar days. If the resolution
thus obtained is unsatisfactory to the aggrieved party, a letter outlining the
dispute shall be forwarded to the City Council for their resolution through the
office of the City Manager. The City Council may then opt to consider the
directed solution to the problem.
shall be binding upon the parties involved, although nothing in this procedure
shall prohibit the parties seeking renedies available to them at law.
(10)
The Finance
In such cases, the action of the City Council
SUSPENSION OR TERMINATION OF SERVICES
This agreement may be terminated by either party upon tendering 30 days
written notice to the other party.
termination, upon request of the City, the Auditor shall assemble the work
product and put same in order for proper filing and closing and deliver one copy
of said product to City. ' In the event of termination, the Auditor shall be paid
for work performed to the termination date; however, the total shall not exceed
the guaranteed total maximum. The City shall make the final determination as to
the portions of tasks canpleted and the canpensation to be made.
i s to be made in canpl i ance with the Code of Federal Regulations.
(11) STATUS OF THE AUDITOR
In the event of such suspension or
Compensation
The Auditor shall perform the services provided for herein in Auditor's
own way as an independent certified public accountant and not as an employee of
the City.
completion date of work and the personnel assigned.
The Auditor shall be under control of the City only as to the
(12) HOLD HARMLESS AGREEMENT
The City, its agents, off cers and employees shall not be liable for any
claims, liabilities, penalties, fines, or any damage to goods, properties, or
effects of any person whatever, nor for personal injuries or death caused by, or
resulting fran, or claimed to have been caused by, or resulting fran, any act or
omission of Auditor or Auditor's agents, employees or representatives. Auditor
agrees to defend, indemnify and save free and harmless the City and its
authorized agents, officers, and employees against any of the foregoing
liabilities or claims of any kind and any cost and expense that is incurred by
the City on account of any of the foregoing liabilities.
( 13) ASSIGNMENT OF CONTRACT
The Auditor shall not assign this contract or any part thereof or any
monies due thereunder without the prior written consent of the City.
(14) SUBCONTRACTING
The Auditor shall not subcontract any of the work to be performed under
this contract by the Auditor unless approved by the City in writing.
Auditor shall be fully responsible to the City for the acts and omissions of
Auditor's subcontractor and of the persons either directly or indirectly
employed by the subcontractor, as the Auditor is for the acts and missions of
persons directly employed by Auditor. Nothing contained in this contract shall
create any contractual relationship between any subcontractor of the Auditor and
the City. The Auditor shall bind every subcontractor and every subcontractor of
a subcontractor by the terms of this contract applicable to Auditor's work
unless specifically noted to the contrary in the subcontract in question
approved in writing by the City.
The
It
(15) PROHIBITED INTEREST
No official of the City who is authorized in such capacity on behalf of
the C ty to negotiate, make, accept, or approve, or take part in negotiating,
making, accepting, -or approving of any agreement, shall becune directly or
indirectly interested personally in this agreement or in any part thereof.
officer, employee, or attorney, of or for the City who is authorized in such
capacity and on behalf of the City to exercise any executive, supervisory, or
other. similar fmctions in connection with the performance of this agrement
shall becane directly or indirectly interested personally in this qrement or
any part thereof.
(16) VERBAL AGREEMENT OR CONVERSATION
No
No verbal agrement or conversation with any officer, agent, or employee
of the City, either before, during, or after the execution of this agrement,
shall affect or modify any of the terms or obligations herein contained nor such
verbal agreement or conversation entitle the Auditor to any additional payment
whatsoever under the terms of this agrement.
(17) SUCCESSORS OR ASSIGNS
Subject to the provisions of paragraph (12), Hold Harmless Agrement, all
terms, conditions, and provisions hereof shall insure to and shall bind each of
the parties hereto, and ezzh of their respective heirs, executors,
administrators, successors and assigns.
(18) EFFECTIVE DATE
This agrement shall be effective on and frun the day and year first above
written.
IN WITNESS WHEREOF, we have hereunto set our hands and seals.
CITY OF CARLSBAD
By
Title
MARY H. CASLER, Mayor
ATTEST: APPROVED AS TO FORM:
city Clerk -