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2000/05/09 City Council Resolution (7)RESOLUTION NO. 2000- 92 RESOLUTION OF THE COUNCIL OF THE CITY OF ROHNERT PARK EXTENDING AGREEMENT TO PROVIDE AUDITING SERVICES WITH THE ACCOUNTING FIRM OF MACIAS, GINI & COMPANY LLP WHEREAS, the City's financial statements are audited each fiscal year by independent Certified Public Accountants; and WHEREAS, Macias, Gini and Company LLP has conducted said audit since 1993 -94; and WHEREAS, Macias, Gini and Company LLP has submitted a proposal to conduct the annual audit for 1999 -2000, 2000 -01 and 2001 -02 at terms which are acceptable to the City. NOW, THEREFORE, BE IT RESOLVED that the attached engagement letter dated April 24, 2000 be accepted for services to conduct the annual audit for the fiscal year 1999 -2000, with the exception to the proposal as submitted being that auditing services for the following fiscal years 2000 -01 and 2001 -02 will be decided later with evaluation and staff report to be brought forward with recommendation for City Council consideration of the subsequent two audit years, and the City Manager is authorized to execute the documents for the fiscal year 1999 -2000 for and on behalf of the City. BE IT FURTHER RESOLVED that all other terms and conditions contained in the Agreement for Auditing Services approved by Council on March 8, 1994 will remain in full force and effect. DULY AND REGULARLY ADOPTED this 9th day of May , 2000.. ATTEST: rNOW-.4" r,/gF rk CITY OF ROHNERT PARK rfor@6 AYE Mackenzie AYE Reilly NO _Spiro NO Vidak- Madinez AYE Aycs:__(3) P1 ©es_�2Z__Absent:.�) Atsstain: -0) Parbers Kenneth A. Macias Ernest J. Gini Kevin J. O'Connell Macias, Gini & Company LLP Certified Public A­­11.01 April 24, 2000 Mr. Michael Harrow Finance Director /City Treasurer City of Rohnert Park 6800 Hunter Drive, Ste. B Rohnert Park, CA 94928 Mt. Diablo Plaza 2175 N. California Boulevard Suite 620 Walnut Creek, CA 94596 925.274.0190 925.274.3819 rnx www rnaciasgini.com We are pleased to confirm our understanding of the services we are to provide the City of Rohnert Park (the City) for the years ended June 30, 2000, 2001 and 2002. We will audit the general purpose financial statements of the City as of and for the years ended June 30, 2000, 2001 and 2002. • The documents we submit to you will include combining, individual fund and account group financial statements and schedules that will not be audited but will be subject to "in- relation-to" procedures applied during the audit of the general purpose financial statements. In addition, the documents we submit to you will include additional information required by the Government Finance Officers Association for Comprehensive Annual Financial Reports that will not be audited by us, including introductory and statistical sections to be prepared by the City's management. • In addition to our audits of the general purpose financial statements of the City, we will also audit and separately report on the in�liviriiial fianrl financial Statements of the Metropolitan Transportation Commission Programs (MTCP). • Our engagement will also include agreed -upon procedures to review compliance with appropriations limit requirements of Section 1.5 of Article XIIIB of the California Constitution. ■ In addition to our audits of the general purpose financial statements of the City, we will also audit and separately report on the component unit financial statements of the Rohnert Park Financing Authority (Authority) and the Rohnert Park Community Development Commission (Commission). Audit Objectives The objective of our audits is the expression of an opinion as to whether your general purpose financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the general purpose financial statements taken as a whole. The objective also includes reporting on— OFFICE LOCATIONS Sacramento ® Los Angeles a Orange County ® San Diego County ® San Francisco Bay Area April 24, 2000 Page 2 ■ Internal control related to the financial statements and compliance with laws, regulations, and the provisions of contracts or grant agreements, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards. The reports on internal control and compliance will each include a statement that the report is intended for the information and use of the audit committee, management, specific legislative or regulatory bodies, federal awarding agencies, and if applicable, pass - through entities. Our audits of the City, the Authority and the Commission will be conducted in accordance with generally accepted auditing standards, the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and will include tests of accounting records, certain procedures to test the Commission's Compliance with the specific laws, regulations and administrative requirements governing entities as required by health and Safety Code Section 33001.1 and other procedures we consider necessary to enable us to express such opinions and to render the required reports. If our opinions on the general purpose financial statements or the Commission compliance opinions are other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audits or are unable to form or have not formed opinions, we may decline to express opinions or to issue reports as a result of this engagement. Management Responsibilities Management is responsible for establishing and maintaining internal control and for compliance with the provisions of contracts, agreements, and grants. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorizations and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. Management is responsible for making all financial records and related information available to us. We understand that you will provide us with such information required for our audits and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, but the responsibility for the financial statements remains with you. That responsibility includes the establishment and maintenance of adequate records and effective internal control over financial reporting and compliance, the selection and application of accounting principles, and the safeguarding of assets. Management is responsible for adjusting the financial statements to correct material misstatements and for confirming to us in the representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the general purpose financial statements taken as a whole. April 24, 2000 Page 3 Audit Procedures— General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. Because an audit is designed to provide reasonable assurance but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material errors, fraud, other illegal acts, or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial errors, fraud, or other illegal acts or illegal acts that do not have a direct effect on the general purpose financial statements. However, we will inform you of any material errors and any fraud that comes to our attention. We will also inform you of any other illegal acts that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also require certain written representations from you about the financial statements and related matters. Identifying and ensuring that the City complies with laws, regulations, contracts, and agreements is the responsibility of management. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we will perform tests of the City's compliance with applicable laws and regulations and the provisions of contracts and agreements. However, the objective of our audit will not be to provide an opinion on overall compliance and we will not express such an opinion. Audit Procedures — Internal Controls In planning and performing our audits, we will consider the internal control sufficient to plan the audit in order to determine the nature, timing, and extent of our auditing procedures for the purpose of expressing our opinions on the City's, the Authority's and the Commission's general purpose financial statements. We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and we will assess control risk. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the general purpose financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the general purpose financial statements. Tests of controls relative to the general purpose financial statements are required only if control risk is assessed below the maximum level. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. April 24, 2000 Page 4 An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, we will inform the governing body or audit committee of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements. Audit Procedures— Compliance Our audits will be conducted in accordance with the standards referred to in the section titled Audit Objectives. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we will perform tests of the City's, the Authority's, and Commission's compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. Audit Administration, Fees, and Other We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any invoices selected by us for testing. We expect to begin interim audit testing during May of 2000, to conduct our final phase testing during September of 2000. We plan to issue our reports no later than December 31, 2000. Our fees for these services are based on the fees established in the prior engagement letters dated Februar;' 26 1007 and Linn 1I 7 1000 inorease:l fnr 1nflatiQn `thn„ Consumer Pride Tnwlev _ percentage change Urban Wage Earners and Clerical Workers for December 1998 to December 1999 was 4.4 %). The fees for these services are provided as follows: 11 Comprehensive Annual Financial Report, Appropriations Limit Report and Metropolitan Transportation Commission Program Rohnert Park Public Financing Authority Community Development Commission Total 2000 *2001 *2002 $36,500 $38,106 $39,783 3,750 3,915 4,087 5,250 5,481 5,722 $45,500 $47,502 $49,592 Government Auditing Standards require that we provide you with a copy of our most recent quality control review report. Our 1997 peer review report accompanies this letter. *2001 & 2002 to be decided later. April 24, 2000 Page 5 We appreciate the opportunity to be of service to the City and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. Very truly yours, MACIAS, GINI & COMPANY LLP Certified Public Accountants By: Kevin J. O'Connell, CPA Partner KJO /vj RESPONSE: CITY OF ROHNERT PARK This letter correctly sets forth the understanding of the City of Rohnert Park, with the exception that this agreeme is to conduct the annual audit for fiscal year 1999 -2000 only at this time, with he ars 20J01 and 002,with fees listed on page 4 herein,to be decided later. B_v: / Josep tier Per Resolution No. 2000 -92 adopted by the City Council on May 9, 2000. Title: City Manager Date: 6 . &✓ (*,?