HomeMy WebLinkAbout1987-05-26; City Council; 9020; Audit agreement - 1986-87 annual auditRB#
DEPT. FIN
MTG. 5/26/87
RECOMMENDED ACTION:
TITLE:
AUDIT AGREEMENT -
CITY MGR.~ 1986-87 ANNUAL AUDIT
Adopt Resolution No. 9&9/ authorizing the City to enter into
an agreement with Deloitte Haskins & Sells for audit services
related to the 1986-87 financial statements and singe 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. The
propsed agreement represents the fourth year with Deloitte
Haskins & Sells. These agreements do not usually require
Council approval because the price of each engagement is
usually below the $10,000 level. However, last year the federal government 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 five programs which fall under the single audit
guidelines: 1) Housing Authority (HUD) 3) Highway Bridge Repair
and Replacement (Agua
Hedionda Bridge)
2) Community Development Block Grants (HUD) 4) Revenue Sharing
5) Area Agency on Aging -
Senior Citizens
The single audit of these programs will cost approximately
$15,000 for the 1986-87 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.
PAGE 2 of AB# 9820
Staff is recommending that the City continue using the
auditors of the past three years, Deloitte Haskins &
Sells, for the performance of the City's annual audit
and the single audit program.
FISCAL IMPACT:
The 1987-88 Budget includes funding for the regular audit,
costing $15,000 and the single audit at $15,000. The audit
work will begin in late May 1987, 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. %9/ Authorizing the City to enter into an
agreement with Deloitte Haskins & Sells for audit services
related to the 1986-87 financial statements and single audit
of federal programs.
2. Agreement with Deloitte Haskins & Sells for audit services.
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RESOLUTION NO. -- 9091
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, AUTHORIZING THE CITY TO ENrER
INTO AN AGREEMENT WITH DELOITrE HASKINS & SELLS FOR
AUDIT SERVICES RELATED r0 THE 1986-87 FINANCIAL
STATEMENTS AND SINGLE AUDIr OF FEDERAL PROGRAMS. -
WHLREAS, the Citb annually retains an independent
*eview arid express an opinion on the annual financial
'arlsbad , and
WHEREAS, the City is also required by federal law
If all qualified federal proorams as defined by the S
md
WHEREAS, the City Council has determined that the
CPA firm to perform a
statements of the City of
to perform a single aud t
ngle Audit Act of 1984,
firm of Deloitte Haskins &
Sells, by virtue of its contact with city programs, throuqh past audits and
'amiliarity with the Single Audit Act, can perform these functions in a
irofessional manner.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad,
'alifornia, that the Mayor is authorized to execute the attached agreement with
Ieloitte Haskins & Sells for the conduct of an annual financial audit and single
wdit for the fiscal year ended 3une 30, 1987.
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PASSED, APPROVED, AND ADOPTED at a regular meeting of the Carlsbad Citl
'ouncil held on the 26th day of Ma), 1987, by the following vote, to wit:
AYES:
NOES: None
ABSENT: None
Council Members Lewis, Kulchin, Pettine, Mamaux and Larson
ITTEST:
SEAL )
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 from July 1, 1986 to 3une 30, 1987; 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 DURATION
1. The Auditor shall conduct an examination of the financial
statements, accounts, records and procedures of all funds, agencies
andlor subdivisions of the City of Carlsbad covering operations of the
City during the period July 1, I986 to June 30, 1987.
2. The engagement shall include an audit of all federal program grant
funds as required under the Single Audit Act of '1984.
3. The engagement shall include a review of the system of internal
control and of compliance with budgetary and legal requirements by the
City.
B. AUDIT STANDARDS
1. The Auditor shall conduct the examination in accordance with
generally accepted auditing standards and procedures applicable to
governmental units, as prescribed in the following documents:
a.
and Local Governmental Units.
b. General Accounting Office, Standards of Audit Governmental
Orgariizat ions, Programs, Activities, and Functions.
c. Statements of the Governmental Accounting Standards Board.
AICPA, Statements of Auditing Standards and Audits of State
2. Should the Auditor encounter circumstances requiring an increase
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 agreement will be modified by mutual agreement as to
additional work and compensation. Such modifications must be in
writing and approved by the Finance Director and/or City Manager.
C. REPORTS AND OTHER COMMUNICATIONS
I. The Auditor shall submit a written report on observed weaknesses
in internal accounting controls.
2. The Auditor shall submit a management letter on observed
mmaqement weaknesses.
3. The Auditor shall submit a written report containing an expression
of opinion that the financial statements are fairly stated, or, if a
qualif led or adverse opinion or disclaimer of opinion is necessary,
the reasons theref or.
4. The Auditor shall submit a written report affirming that the City
is in compliance with applicable legal provisions referred to in
Section A-3 above or as required by the Single Audit Act of 1984. If
the City was not in compliance 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 compliance with the standards set by Governmental
Accounting, Auditing and Financial Reporting (GAAFR).
6. The Auditor shall prepare and submit to the City one final typed
copy of the combined 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 combined financial statements. The
Auditor shall provide 15 copies of the letters and reports as
described in Sections l.C(l), I.C(2), I.C(4) and 'l.C(7).
7. The Auditor shall prepare separate financial statements for the
City Water Enterprise and Redevelopment Agency complete with separate
opinions.
8. The Auditor shall revise his written reports as may be required
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.
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 .
8.
shall respond promptly to requests for information, provide all necessary
City staff shall render all feasible assistance to the Auditor, and
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 arid statistical sections to be
included in the annual financial report, and shall submit all sections to
the Auditor for review prior to September 30, 1987.
(3) - PROGRESS AND COMPLETION
The work under this contract will begin upon execution of this agreement
and shall be comleted by October 31, 1987 for the Comprehensive Annual Report
arid December 31, 1987 for the Single Audit, provided all other deadlines are
met.
the Auditor and agreed to in writing by the Finance Director.
(4) FEES TO BE PAID TO AUDITOR
Extensions of time may be granted by the Finance Director if requested by
The City shall pay the Auditor a total fixed fee of $15,000 for services
rendered in connection with the Comprehensive Annual Report and an amount not to
exceed $15,000 in connection with the Single Audit. The City shall compensate
the Auditor for additional work agreed upon in writing and approved by both
parties as allowed under Section 1.8.2 of this agreement.
(5) PAYMENT OF FEES
Periodic progress billings may be submitted for services rendered to date,
but riot more often than monthly. The final payment for any audit shall become
due after the submission of all reports required by Section C and their
acceptance by the City and federal grantor agencies. Invoices should be mailed
to the attention of Finance Director, City of Carlsbad, 1200 Elm Avenue,
Carlsbad, CA 92008-1989.
The City shall retain 10% of the total fees paid until all reports have
been received and accepted by the City or grantor agencies.
,
(6) PAYMENT OF FEES OR COMMISSIONS
The Auditor warrants that their firm has not employed or retained any
company or person, other than a bona fide employee working for the Auditor, to
solicit or secure this agreement, and that Auditor has not paid or agreed to pay
any company or person, other than a bona fide employee, any fee, commission,
percentage, brokerage fee, gift, or any other consideration contingent upon, or
resulting from, the award &r making this agreement. For breach or violation of
this warranty, the City shall have the right to annul this agreement without
liability, or, in its discretion, to deduct from the agreement price or
consideration, or otherwise recover, the full amount of such fee, commission,
percentage, brokerage fee, gift or contingent fee.
(7) NONDISCRIMINATION CLAUSE
The Consultant shall comply with applicable State and Federal laws
,regarding nondiscrimination.
(8 1 TERMINATION OF CONTRACT
In the event of the Auditor's failure to perform the work as provided for
in this agreement, the City may terminate this aqreemerrt for nonperformance by
notifying the Auditor by certified mail of the termination of the agreement.
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. The
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 completed. Based
upon that finding as reported to the City Council, the Council shall determine
the final payment of the agreement. Final payment shall be in compliance with
the Code of Federal Regulations. The Auditor agrees to cooperate with the City
and any subsequent audit firm employed by the City by providing access to and/or
copies of any work papers associated with any City audit as needed.
Auditor's obligations under this Section shall be consistent with existing
American Institute of Certified Public Accountant (AICPA) guidelines and
standards.
The
(9) DISPUTES
If a dispute should arise regarding the performance of work under this
agreement, the following procedure shall be used to resolve any question of fact
or interpretat ion not otherwise settled by agreement between parties.
questions, if they become identified as a part of a dispute among persons
operating under the provisions of this agreement, shall be reduced to writing 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 recommended
methods of resolution which would be of benefit to both parties. The Finance
Qirector or principal receiving the letter shall reply to the letter along with
a recommended 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. In such cases, the action of the City Council
shall be binding upon the parties involved, although nothing in this procedure
shall prohibit the parties seeking remedies available to them at law.
(10) SUSPENSION OR TERMINATION OF SERVICES
Such
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
In the event of such suspension or
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 completed and the compensation to be made. Compensation
is to be made in compliance with the Code of Federal Regulations. The Auditor
shall make any work papers or files available to the City or its representatives
consistent with the AICPA guidelines and standards.
(11) STATUS OF THE AUDITOR
The Auditor shall perform the services provided for herein in Aud
own way as an independent certified public accountant and not as an emp
tor's
oyee of
the City.
completion date of work and the personnel assigned.
( 12) HOLD HARMLESS AGREEMENT
The Auditor shall be under control of the City only as to the
The City, its agents, officers 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 from, or claimed to have been caused by, or resulting from, 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.
apply to the Auditor's opinion or other products described within this
agreement.
(13) ASSIGNMENT OF CONTRACT
This Section does not
The Auditor shall riot 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. The
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 hy the subcontractor, as the Auditor is for the acts and omissions of
persons directly employed by Auditor. Nothing contained in this contract shall
create any contractual relationship between any subcontractor of the Auditor arid
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
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approved in writing by the City.
(15) PROHIBITED INTEREST
No official of the City who is authorized in such capacity on behalf of
the City to negotiate, make, accept, or approve, or take part in negotiating,
making, accepting, or approving of any agreement, shall become directly or
indirectly interested personally in this agreement or in any part thereof. No
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 functions in connection with the performance of this agreement
shall become directly or indirectly interested personally in this agreement or
any part thereof.
(16) VERBAL AGREEMENT OR CONVERSATION
No verbal agreement or conversation with any officer, agent, or employee
of the City, either before, during, or after the execution of this agreement,
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 agreement.
('17) SUCCESSORS OR ASSIGNS
Subject to the provisions of paragraph (12), Hold Harmless Agreement, all
terms, conditions, and provisions hereof shall insure to and shall bind each of
the parties hereto, and each of their respective heirs, executors,
administrators, successors and assigns.
(18) EFFECTIVE DATE
This agreement shall be effective on and from the day and year first above
written.
( 19 CONTRACT RENEWAL
This contract may be renewed annually by the City Council and Deloitte
Haskins and Sells.
IN WITNESS WHEREOF, we have hereunto set our hands and seals.
ciry OF CARLSBAD /1
CLAUDE A. LEWIS Mayor
ATTES r :
By
Title
APPROVED AS TO FORM:*,