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HomeMy WebLinkAboutAgenda Report - June 1, 2022 C-08CITY OF l��r �� 1 f C A L I F O R N I A COUNCIL COMMUNICATION AGENDA ITEM Coo 8 AGENDA TITLE: Adopt Resolution Authorizing City Manager to Execute a Change Order to the Second One -Year Optional Extension to the Professional Services Agreement with the Pun Group, LLP, of Santa Ana, to Add Funds for New Single Audit Requirements (Amount Not -to - Exceed $90,192 for the Fiscal Year 2021-22 audit, $422,156 For the Life of the Contract) MEETING DATE: PREPARED BY: June 1, 2022 Deputy City Manager RECOMMENDED ACTION: Adopt resolution authorizing City Manager to execute a change order to the optional extension to the professional services agreement with The Pun Group, LLP, of Santa Ana to add funds for new Single Audit requirements in an amount not to exceed $90,192 for the Fiscal Year 2021-22 audit and $422,156 for the life of the contract. BACKGROUND INFORMATION: In March 2018, staff issued a Request for Proposal for audit services. The previous auditors, Macias Gini & O'Connell LLP, had worked with the City for 15 years. Based upon the evaluation of the proposals, the panel ranked The Pun Group, LLP as the top firm for the City. Council approved a one-year contract with The Pun Group and gave direction that Council have involvement in the subsequent RFP process. During the Fiscal Year 2017-18 year-end audit, Council approved Amendment No. 1 to the contract to conduct additional review on purchasing procedures outside the scope of the original contract. On February 6, 2019, staff asked Council for direction on procuring future auditing services. The City Council's 4-0 direction to staff was to forgo the RFP process and extend the contract with The Pun Group based on the terms in the initial bid presented by the Pun Group in March of 2018. The Pun Group honored the terms of the initial bid. On February 20, 2019 the City Council approved Amendment No. 2 to the contract to extend the term to include the completion of the Fiscal Year 2019-20 audit. On December 2, 2020, the City Council approved Amendment No. 3 to the contract to extend the term to include the completion of the Fiscal Year 2020-21 audit. Staff notes that during the previous four audits, The Pun Group has performed exceptionally. Its substantial experience was brought to the forefront. The pointed, direct and probing questions asked by The Pun Group are what a City striving for transparency in financial reporting wants in its auditor. For the Fiscal Year 2020-21 audit, Pun Group's staff conducted a largely remote audit without sacrificing its oversight responsibilities. Strategic and limited onsite access was granted to complete work and provide thorough review of certain processes within the City. APPROVED: s, = - (May 18, 202218:01 PDT) Stephen Schwabauer, City Manager Upon completion of the June 30, 2021 audit, the contract with The Pun Group is up for the final optional one year extensions. On February 2, 2022, Council approved utilizing the last of the two one-year extensions of the contract for the Fiscal Year 2021-22 audit. The City's Single Audit Requirements have since changed, and require adding another major program to be audited at an additional cost of $4,000 each. The City now has to include FEMA (Great Plates) and American Rescue Plan Act (ARPA) in the Fiscal Year 2021-22 audit. The annual cost for the Fiscal Year 2021-22 audit is $90,192, an overall total Not -to -Exceed $422,156 for the life of the contract. FISCAL IMPACT: Costs for the audit services are included in the City's proposed Fiscal Year 2021/22 budget and the General Fund Long Range Financial Plan. FUNDING AVAILABLE: 10095000-72455. Andrew Keys Deputy City Manager CONTRACT AMENDMENT NO. 5 The Pun Group, LLP THIS CONTRACT AMENDMENT NO. 5 is made and effective this day of June, 2022, by and between the CITY OF LODI, a municipal corporation, hereinafter called "CITY", and The Pun Group, LLP, a California limited liability partnership hereinafter called "CONTRACTOR". WITNESSETH: CONTRACT: Contractor and City, entered into an Agreement for Professional Services on June 6, 2018 ("Agreement"), Amendment No. 1 on October 29, 2018, Amendment No. 2 on May 30, 2019, Amendment No. 3 on February 10, 2021 and Amendment No. 4 on March 1, 2022 collectively attached hereto as Exhibit 1 and made a part hereof as though fully set forth herein. The City now requests to increase the fees by $92,192 for a total not to exceed amount of $422,156, as set forth in Exhibit 2, attached hereto and made part of. 2. TERM AND COMPENSATION: Contractor and City agree, that at its option, City may extend the term of the Agreement for an additional one (1) year extension; provided City gives Contractor no less than thirty (30) days written notice of its intent prior to the expiration of the then existing term. In the event City exercises any option under this paragraph, Contractor's compensation will be equal to the amounts shown in Exhibit 1 under the optional Fiscal Years 2020/21 and 2021/22, respectively. All other terms and conditions of the Agreement will remain unchanged. CITY OF LODI, a municipal corporation CONTRACTOR STEVE SCHWABAUER THE PUN GROUP, LLP City Manager By: Attest: Title: OLIVIA NASHED City Clerk Approved as to Form JANICE D. MAGDICH City Attorney KL CONTRACT AMENDMENT NO.4 The Pun Group, LLP 'HIS C,t)NTRA(, f AMI-NDMI_N f NO 4 is rnado and offeutrve Ibis f f- day of J����'1j 2022, by and between the CITY OF LODI, a municipal corporation, hereinafter called "CITY", and The Pun Group, LLP, a California limited liability partnership hereinafter called "CONTRACTOR". WITNESSETH: 1. CONTRACT. Contractor and City, entered into an Agreement for Professional Services on .him, 6, 2018, Amendment No, 1 on October 29, 2018, Amendment No. 2 on May 30 2019, mitt ArnOndrnenl No 3 on February 'In, 2021, collectively attached hereto as Exhibit A and matte a Imrl hereof as 111ough fully set forth herein ("Agreement"). Contractor and City now desire to extend the term of the Agreement through and including June 30, 2023, or the completion and presentation to City of the audits of the Fiscal Year 2021/22, whichever is later. Contractors compensation for optional Fiscal Year 2021/22 is set forth in Exhibit 1. 2. EXTENSION OF TERM AND COMPENSATION: Contractor and City agree, that at its option, City may extend the term of the Agreement for an additional one (1) year extension; provided City gives Contractor no less than thirty (30) days written notice of its intent prior to the expiration of the then existing term. In the event City exercises any option under this paragraph, Contractor's compensation will be equal to the amounts shown in Exhibit 1 under the optional Fiscal Years 2021/22. All other terms and conditions of the Agreement, except as amended herein, will remain unchanged. CITY OF LODI, a municipal corporation City Manager Attest: PAMELA FARRIS Assistant City Clerk Approved as to Form s IiNICt= f7 MAGDICH -ilv Attorney jdm CONTRACTOR THE PUN GROUP, LLP By: /,i, ( Title: )Ag► j 6 f>f1,r) �EiL EXHIBIT A CONTRACT AMENDMENT NO.3 The Pun Group, LLP Fe7kY LX THIS CONTRACT AMENDMENT NO. 3 Is made and effective this i- of - tovem6w, U20, by and between the CITY OF LODI. a municipal corporation, hereinafter killed "CITY", and The Pun Group, LLP, a California limited liability partnership hereinafter ' called ' COitl I'hzACl UFZ°. wI N�S_E_TH 1, CONTRACT' Contractor and City, entered Into an Agreement for Professional 5ervlces on June 8, 2018 ("Agreement'), Amendment No. 'I on October 29, 2018, and Amendment Nr) 2 on May 30, 2019 colloctively attached hereto or, t;xhlhlt A and mane a part neraaf as thougrt fully set forth herein. Contractor and City now doolre to extend the term of the Agreement through and Including June 30, 2022, or the completion and presentation of the audits of the Fiscal Year 2020/21, 2. TERM AND COMPENSATION: Contractor and City agree, that at Its option, City may extend the term of the Agreement for an additional one (1) year extension; provided City gives Contractor no less than thirty (30) days written notice of Its Intent prior to the expiration of the then existing term. In the event City exercises any option under this paragraph, Contractors compensation will be equal to the amounts shown in Exhibit A under the optional Fiscal Years 2020/21 and 2021122, respectively. All other terms and conditions of the Agrgement will remain unchanged. CITY OF LODI, a municipal corporation CONTRACTOR THE i dW GROUP, LLP City Manager Attest: Title: JENNIFER CUSMIR City Clerk Approved as to Form: t7we 7) Mpf(lwr JANICE D. MAGDICH City Attorney CONTRACT AMENDMENT No, 2 The Pun Group, LLP THIS CONTRACT AMENDMENT No. 2 Is made and effective this -I&tqay of Q'Wy, 2019, by and between the GITY or LORI, a municipal corporation, hareinafler called "CITY", and The Pun Group, LLP, a Calilomia limited liability partnership hereinafter called "Contractor," WITNESSETH' CONTRACT: Contractor and City, entered Into an Agreement for Professlonal Services on June 6, 2018 ("Agreement"), and Amendment No. 1 on October 29, 2018 attached hereto as Exhibit A and made a part hereof as though fully set forth hereln. Contractor and City now desire to extend the term of the Agreement through and Including June 30, 2021, or the completion and presentation of the audita of the Fiscal Years 2018119 and 20113/20 Compressive Annual Flnonclal Reports and expand the scope of services to the audits of the Fiscal Years 2018119 and 2019120. The additional cost will not exceed $162,772 during the extended term of the Agreement. 2. TERM AND COMPENSATION: Contractor and City agree, that at its option, City may extend the term of the Agreement for an additional two (2) one (1) year extensions; provided City gives Conlractor no less than thirty (30) days written notice of Its Intent prior to the expiration of the then existing term, In the event City exercises any option under this paragraph, Conlracbes compensation will be equal to the amounts shown In Exhiblt A under the optional Fiscal Years 2020/21 and 2024!22, respectively, All other terms and conditions of the Agreement will remain unchanged. CITY OF LODI, a municipal corporation kE�- City Manager Attest: J ,ri IFER M. tI IR :AlOLO reit lr Ierk Approved as to Form: JANIC '- MAGDICH jly.Alldrney CONTRACTOR • L— THE PUr GROUP, LLP By: LW4420e -te. •►f Title: CONTRACT AMENDMENT AGREEMENT THE PUN GROUP, LLC THIS CONTRACT AMENDMENT made and effective this .Jday of October, 2018, by and between the CITY OF LODI, a municipal corporation, here Ina r called `CITY', and THE PUN GROUP, LLC, hereinafter called'Contractor." CONTRACT: Contractor and City entered Into an Agroarnonl for Professional Services on July 20, 2018 ('Agreement'). Contractor and Cily now desire to amend the Scope of Servicsa act fortis In 1 h Agreement, 2. SCOPE OF SERVISES AND TERM; The Scope of Services under the Agreement shall be amended to add those services set forth In Exhibit A, attached hereto and incorporated herein, 1 he Lost for these additional servlros shall not exceed 68,000. All other terms and condlttons set forth In the Agreement, Including the term of the Agreement, remain unchanged. CITY OF LODI, a municipal corporation STC1'I C0WA UE. City Manager' Attest: "� k �J �. C Cly Olerk Approved ■tt to Form: •,;-i Attorney `_�� THE PUN GROUP, LLC KENNETH H. PUN Managing Partner TI IF � ACL'Sit1N-rANf56 A0VISOILS EXHIBIT A AMENDMENT NO.1 to PROFESSIONAL SERVICES AGREEMENT DATED JULY 26, 2018 This Amendment No. I is to confirm our understanding of the tents of our engogetnant and ilia nature and limitations or the services we are to provide for the City of Lodi ("City"). We swill appty certain ngtead-upon prncadllros listed in the attached Schedule A that were specified and agreed to by rhe City of Lodi rot ilitcrnril cowials twer Clio City's procurement and m fiirflier described in Resolution No. 85.173 "RGSoildian Adopting it Ft)rinnl Policy and Procedure to ❑overn Contract Change tlrderg. Our review for the period of these agree[$ ippon p ocedriras will Ire from ]tly t, 2017 to September 30, 2018, t7ur enSit gel iranl to itppIy ngrced ttpr>n IIrocedrnca will he rcnducted lit amrdamce wI1h attestation atandardIt established by Nie Amertcnn Institute of Ccrtiflad Pulilit: Accotimlints. 'file auefrcicucy of ilio procedmes iserfornind ar to lie perfnrnwil is solely ilio respomihility of the City 1111d we willrcytiira an nct:nuwIct.iginent in writing of tisatrci;ponsibility. Cansertt.sently, we matte IiD represenlniton retarding tlrr.snfflciesley of the pioccdsires daschbo(l in the riltnCllerl Yr,Isedttle A ait)tar fur ilio lrurpasc lire Wil iulr tIic stgrc.rd-upon pnlccditres report has been requested or for any oars, purpose• Because the agreed-upon procedures listed in the attached Schedule A do not constitute an examination or review, we will not express an opinlon or conclusion on those ngrcW-ulrun procedures, In addition, we have no obligation to puFatm any procetiures beynnd thooe listed in the attached Schedule A. We plan to begin our procedures oil approximilie ly October•29, 2018 and, unless unforeseeable problems are encountered, the engagement should be completed by I)cccsnber 31, 2618, WC will iSarle n wrkttcn relict t uputr cuinpietion of our engagement that lista the piovedures perfoviiL l and our findings, Our rclsni't villi he addressed ill the Matingoinent rind City Council of the City of Lodi. If, for any tenson, we are unable to cninpiele any rit lire 13MC00res, we will describe Ili aur report any restrictions on Ilse irerfnrmance of the puiceduretl, or 1101 issue a report alt] wilhdinw 1;0111 this cligagcnieiil. You unacratund that the rcpnrl Is intended solely for the 411'61-irialion and tree of the City of Lodi, iuxi should not br. used by anyone other than these specified parties. Our report will contain n psragraph Indicating that had we perfonmd additional procedures, other matters might have come to our attention t11at would have boon reported to you, An ngrced-upon piocedutes crigagentettt is not designed to detect instances of fraud or noncompliance with Inws or regultitiona; howover, we will ecsinniunlcate to YOU any known and suspected 11 -nod and noncomplia icc with lows or regulittiarla affet:ting 111c City of Lodi tluit comes to our attention, ht addition, if, It, connection with tiffs engagement, matters ovine to our attention 111,11 contradict the City's pul'chasing and as fbrther described in Resuintion No, 95.173 "Roaolution Adopting a Formal Policy and Procedure to Govern Contract Change Orders, we will disclose those innuers in our report. You are responsible for the internal contrails, poiicies inld procedures over tIriis:trreinettt and compliance with Resoltllion 85-173 and that it is in accordance with the City's policies, proce[lures, Ordiltnnee, Sinte Statutes amt] cutitseii Resoluttans; and for selecting the criteria and procedures and datarmtining that sued criteria and procedures Oris alrproprium far ymir purposes,. You are nlsa respensihle fur, and agree to provide us with, a written asseition about interllid comi-oh river tlic City's ptrc3rnsrng LIIId iia iisrlher de84ribed in Reaoltilion No. 85-173 "Resaittlon Adopting a Formiil Policy rimd Procedtile re 0ovefit C:oiltnct Change. hiders. Iti addition, yali are responsible for providing tis with ( I ) access to all ilsfarinntntr of Which you Luc- awnre 111at m rrstevunl to the perfor{nnnce of r11c iigrcA:d.tllson procedwcs oil the strhjeCt in attar. (2) ndditiotlnl iI,Curnrntisin that we inny request for the put pose or per('atming the agreed-upon procedures, and ()) unicatricted nccavi to persons within tie entity rami whom we daternriru; it ncec miVy to ohtai i evidence. relating to perfoirning those proce(htres, 200 Galuganripointe Avenue, Suite 600, Santa Ann, Califhenia 92707 Teh 949-777-8800• Fax:949-777-8850 www,pungroup,cotn City of Lodi Amendment No, 1 Professional Services Agreement Page 2 Al Iilr. coucimion of ourengngenlcrit, we will require certain written reprewentatiuns in the 1`01117 of a representallon leiter Iitynl nlartngenlent that, among other lllings, will confirim mnnsgtunenl's responsibility for internal controls aver the City's procurement and its flrrtlter described in Resolution No. 85.173 "Rcsolraion Adopting a Forinal policy and Procedure w (Imvcrn Contact C:hnngu OrdUTA in accordance with the City's Vanessa Burke is the engagement partner and is responsible for supervising the engagement and signing t11e report oto authorizing another individual to sign it. We astirnato that our Fees for theseaerviaes will be $8,000, You will not be blued far travel and other out-of-pocket costs Such as report• production. word ploct:ssirtg, poslllge, cic. "f he fee vslinmtc is based ol7 nolicipailid uooparnliou Nil' your Personnel and the nssunlIlIkUl Ihat unexpected circumstn+sces will not be et7Gnunfered during the engagen7enl. If Sf�,S11fIGAlrt additlnnal 311110 is noceslai.y, we will diwtras it wild you and nl'rive at anew fee oFtlnlate brfore we illclll, the ndditionid costa. Dus invi c." far those tees will be rendered eAch month ns work prnRrf:sses and tore 1i11yable on presentation In accordance with our firm policies, work may tae suspended if your account heconles 60 days ur more ovat-dus and will not be resumed until your account In paid In Ai ll, If we elect to terminate our servirc:� far nonpayment, our engagement will be deemed to have been completed upon written notification of terminnfion even ifwc have not completed our report. You will be obligated to compensate us for all time expended through ilia date of termination. We appreciate the opportunity to assist ywi and believe ibis letter accurately sumillarires the. sigrtiiicnllt lanes of aur engogemelit If you have any questions, please let us know. if you agree with the terms of all,, cngngen7ent as described in thin letter, plense. sigrl Ilse atielosed copy and return it to its. If Ilia Hord for arlditionnl procedures prises, or the procedures need to be modlfled, our Isgroament with you will need to be revised. It is customary for us to enumerate these revisions In an addondian to this tetter. If additional specified portles of the report are added, we will require that they acknowledge in writitrg their agrvementwlth the procedures performed or to be parfnslned and their responsibility for the sufficiency of procedures. Very truly yours, Kenneth H. Pun, CPA, COMA Managing Partner RESPONSE: This letter correctly sets forth the understanding of the City of Lodi, Titla; ! fI:41�F>�lY _ f+IfG±NGi� f,if Data: EXHIBIT A AMENDMENT NO.1 to PROF MIONAL SERVICES AGREEMENT DATED kLY 26, 201 g (Attachment A) I Management or governing body has aatabllahed politic+ and procedure+ for purchasing that exceeds established limits according to entity policy, Approval of purchase orders Is required for A current puretsasing manual dellnes reslricllorw on purchases of goods or services from goverrrhrg body members, employee, or other suppllcre that would create a coo 1110 of Interest, _ there Is adequstc segregation of duties among thoae who • fnitknlc lmrchese ordefa. • Approve Furehssc orders. • Njainteln the ontehan Jnuntai.-_- � • Ini11e1c�eymcnis_ _ I In-ul purchase r - - pure age order, ttand I eclving report, nvalce are matched and cancelled prior to payment. 1 Obtain and read a copy of city purchasing politico and procedures established by City Council and City Manager. Obtain and mad a copy of Clty'a purehseing manual and conflict of Interest policy, Review rhe City's process and procedure over pmcursrrnant to payment for segregation of dutles In the following areas • In111ate purchssn orders Approve plifchaae orders, maintain.lhc purchase journal. _ _ blhlnls psvmonts_. In ul Durch8sc orders, Salter s � nndnns sample o [ porch s+e orders tftroughatrt the peflad of July 1, 21117 to S eptember 30, 2011 and eurnpsre It ngalnstths 111VotDe and peyrnent moda,and contract. -- I'urchnaes era reviewed Crrr enr,tpllancs with requiremenis of laws Select a rnnclom sample of purchase order< Ihlnughoul[ha and review and ►egulallom. the governing hody, and of iltnding s'mm. if forlcomed rf Ilencc wllhl7 to ihe I ws andher 30, regu ellon sgand fUnding applicable (for exempla, compethlva bidding req u I remen to), P sources. If compcthlve bidding requirements. Change orders ere processed within the scope of the policy a^d Selectaf coni n R nmollnloar an 40orderj[edl0fag she Of 111f raptnied to Council as per the pollcy period of 7uiy 1, 21317 to September 34, 2018, 7r94:c to the mimitca of the meeting appmving the change ander If In exccts of 525,000review for . er Al( lunge orders have the proper outhorizelion and are within tha euthorizsllon^and ge oreporting cottoadthe Glly Council pin For a Ilmlle of aulhorizallon. I accordance with CRY pollcy. _ I _ Changs ordera are decmcd i,l,j raprlate. do not change the scope of For the change orders Wooled, review for scope of work the project, and are within limits ofthe contract. Inthetheork inha egco order a dca compare withto the original limits. pe of [vlenagement reviews the cnlily's ffnnnclnl slalamenis on a periodic Review a sample of department monthly budgets at luno baste and Investigates 319nlCcant varlancas ftam budgets and items that 30. 2018 e are services ast r than pbudge and lnqulreylwlth expected results, mnnagcrncnl as to Ihe.11ature of lha axptxlditurgpvernwis. f � AGREEMENT FOR PROFESSIONAL SERVICES ARTICLE 1 PARTIES AND.PURPOSE Section 1.1 Partlq� THIS AGREEMENT In entered Into an —ji 2018, by and between the CITY OF LO DI, a municipal corporation therelnAr "CITY'), and The Pun ©roup, LLP, a California limited liability partnership (hereinafter "CONTRACTOR"), Section 1.2 Purpose CITY selected the CONTRACTOR to provide the services required In accordance with attached Scope of Services, Exhibit A, attached and Incorporated by this reference. CITY wishes to enter Into an agreement with CONTRACTOR for Auditing Services (hereinafter "Project") as set forth In the Scope of Services attached here as Exhibit A. CONTRACTOR acknowledges that K Is qualified to provide such services to CITY, ARTICLE 2 SCOPE OF SERVICES Section 2.1 Sco�sa aT 5grvicns3 CONTRACTOR, for the benefit and at the direction of CITY, shall perform the Scope of Services as set forth In Exhibit A. Sectlon 2.2 Tlme Far C�meiicvrtirnl and L'tlnt�;li411oi� ai Nnk CONTRACTOR shall commence work pursuant to this Agreement, upon recelpt of a written notice to proceed from CITY or an the date set forth In 8eotlon 2.6, whichever occurs first, and shall perform all services diligently and complete work under this Agreement booed on a mutually agreed upon timeline or as otherwise designated In the Scope of Services. CONTRACTOR shell submit to CITY such reports, diagrams, drawings and other work products as may be designated In the Scope of Services. CONTRACTOR shall not be responsible for delays caused by the failure of CITY atsff to provide required date or review documents within the appropriate time frarnes. The revlew time by CITY and any other agencles Involved In the project shall not be counted against CONTRACTOR'S contract performance period, Also, any delays due to weather, vandalism, acts of God, sic„ shell not be counted, CONTRACTOR shall 1 remain In contact with reviewing agencies and make all efforts to review and return all comments, Sectlon 2,3 Mcellnw, CONTRACTOR shall attend meetings as may be set forth In the Scope of Services, Section 2.4 St CONTRACTOR acknowledges that CITY has railed on CONTRACTOR's capabilities and on the qualNlcatlons of CONTRACTOR's princlpals and staff as Identlfled In Its proposal to CITY, The Scope of Services shall be performed by CONTRACTOR, unless agreed to otherwise by CITY In writing. CITY shall be notified by CONTRACTOR of any change of Project Manager and CITY Is granted the right of approval of all original, additional and replacement personnel at CITY's sole discretion and shall be notified by CONTRACTOR of any changes of CONTRACTOR's project staff prior to any change. CONTRACTOR represents It Is prepared to and can perform all services within the Scope of Services (Exhibit A) and Is prepared to and can perform all services specified therein. CONTRACTOR represents that It has, or will have at the time this Agreement Is executed, all licenses, permits, qualifications, Insurance and approvals of whatsoever nature are legally required for CONTRACTOR to practice Its profession, and that CONTRACTOR shell, at Re own cost and expense, keep In effect during the life of this Agreement all such licenses, permits, qualifications, Insurance and approvals, and shall Indemnify, defend and hold harmless CITY against any Coate associated with such licenses, permits, qualifications, Insurance and approvals which may be Imposed against CITY under thle Agreement, Section 2.5 Subcontracts Unless prior written approval of CITY Is obtained, CONTRACTOR shall not enter Into any subcontract with any other party for purposes of providing any work or services covered by this Agreement. Section 2.6 Term The term of this Agreement commences on July 1, 2018 and terminates upon the completion of the Scope of Services or on June 30, 2019, whichever occurs first, 2 ARTICLE 3 COMPENSATION Section 3.1 Comaansatlon CONTRACTOR's compensation for all work under this Agreement shall conform to the provisions of the Fee Proposal, attached hereto as Exhibit a and incorporated by this reference. CONTRACTOR shall not undertake any work beyond the scope of this Agreement unless such additional work le approved In advance and In writing by CITY. Section 3.2 Method of PALaignl CONTRACTOR shall submit Involces for completed work on a monthly basis, or as otherwise agreed, providing, without limitation, details as to amount of hours, Individual performing said work, hourly rate, and Indicating to what aspect of the Scope of Services sold work Is attributable. CONTRACTOR's compensation for all work under this Agreement shall not exceed the amount of the Fee Proposal. Section 3.3 Costs The Fee Proposal shall Include all reimbursable costs required for the performance of the Scope of Services. Payment of additional reimbursable costs considered to be over and above those Inherent In the original Scope of Services shall be approved In advanced and In writing, by CITY. Section 3.4 8t4linn CITY reserves the right to periodically audit all charges made by CONTRACTOR to CITY for services under this Agreement. Upon request, CONTRACTOR agrees to furnish CITY, or a dealgrated representative, with necessary Information and assistance needed to conduct such an audit. CONTRACTOR agrees that CITY or Its delegate will have the right to review, obtain and copy all records pertaining to performance of this Agreement. CONTRACTOR agrees to provide CITY or Its delegate with any relevant Information requested and shall permit CITY or its delegate access to Its premises, upon reasonable notice, during normal business hours for the purpose of Interviewing employees and Inspecting and copying such books, records, accounts, and other material that may be relevant to a matter under Investigation for the purpose of determining compliance with this requirement. CONTRACTOR further agrees to maintain such records for a period of three (3) years after final payment under this Agreement. 3 ARTICLE 4 MIs,rf 1"NEOUS P v_VjMQKs Section 4.1 rw��dlacrllnln:�tJ� In performing services under this Agreement, CONTRACTOR shall not discriminate In the employment of Its employees or In the engagement of any sub CONTRACTOR on the basis of race, color, religion, sex, sexual orientation, marital status, national origin, ancestry, age, or any other criteria prohibited by law, Section 4.2 AnAcamp i1aiicc In performing services under this Agreement, CONTRACTOR shall comply with the Americans with Disablittles Act (ADA) of 1990, and all amendments thereto, as well as all applicable regulations and guidelines Issued pursuant to the ADA, Section 4.3 IndeT-nif.iGal4vn and C;.Qepr)nsigllit fygr Damage CONTRACTOR -o the fullest extent permitted by law, shall Indemnify and hold harmless CITY, Ile elected and appointed officials, directors, officers, employees and volunteers from and against any claims, damages, losses, and expenses (Including reasonable attorney's fees and costs), arising out of performance of the services to be performed under this Agreement, provided that any such claim, damage, lose, or expense Is caused by the negligent acts, errors or omiselons of CONTRACTOR, any subcontractor employed directly by CONTRACTOR, anyone directly or Indirectly employed by any of them, or anyone for whose acts they may be liable, except those Injuries or damages arl5ing out of the active negligence, sole negligence, or sole willful misconduct of the City of Lodi, Its elected and appointed officials, directors, officers, employees and volunteers. CITY may, at Its election, conduct the defense or participate In the defense of any claim related In any way to this Indemnification, If CITY chooses at Its own election to conduct Its own defense, participate In Its own defense, or obtain Independent legal counsel In defense of any claim related to this Indemnification, CONTRACTOR shall pay all of the costa related thereto, Including without limitation reasonable attorney fees and costa, The defense and Indemnification obligations required by this Agreement are undertaken In addition to, and shall not In any way be limited by the Insurance obligations set forth herein. Section 4.4 1iO1 0), 11tz. Neither the City Council, nor any other officer or authorized assistant or agent or City employee shall be personally responsible for any Ilablilty arising under this Agreement, 2 Section 4.6 CITY CITY shall not be held responsible for the care or protection of any material or parts of the work descfted In the Scope of Services prior to final acceptance by CITY, except as expressly provided herein, Section 4.6 I�,Qur7nrn R��u1c4a� fir oNTf�!!�T � CONTRACTOR shall take out and maintain during the life of this Agreement, Insurance coverage as set forth In Exhibit C attached hereto and Incorporated by this reference. Section 4,7 Succeasars and Aaalq.nR CITY and CONTRACTOR each bind themselves, their partners, successors, assigns, and legal representatives to this Agreement without the written consent of the others, CONTRACTOR shell not assign or transfer any Interest In this Agreement without the prior written consent of CITY, Consent to any such transfer shall be at the sole discretion of CITY. Sectlon 4.8 N.O.U1 Any notice required to be given by the terms of this Agreement shall be In writing signed by an authorized repreeentative of the sender and shall be deemed to have been given when the some is personally served or upon receipt by express or overnight delivery, postage prepaid, or three (3) days from the time of malling If sent by first class or certified mall, postage prepaid, addressed to the respective parties as icillows: To CITY: City of Lodi 221 West Pine Street P,O, Box 3008 Lodi, CA 96241.1910 Attn: Andrew Keys, Deputy City Manager To CONTRACTOR: The Pun Group, LLP 200 E Sandpolnte Ave., Sults 600 Santa Ana, CA 92707 Attn: Kenneth H. Pun, Managing Partner Section 4.9 Cavkernftn Of CITY CITY shall cooperate fully and In a timely manner In providing relevant Information It has at Its disposal relevant to the Scope of Services. Section 4,10 i�,0NTRAG [OR Ie_N—q-q 6; 11 Evil 1110 _ 10Y -P q1 WTY CONTRACTOR agrees that In undertaking the duties to be performed under this Agreement, it shall act as an Independent contractor for and on behalf of CITY and not an employee of CITY. CITY shall not direct the work and means for accomplishment of the services and work to be performed hereunder. CITY, however, retains the right to 5 require that work performed by CONTRACTOR meet specific standards without regard to the manner and means of accomplishment thereof. Section 4.44 ToCW 11AtQ.n CITY may terminate this Agreement, with or without cause, by giving CONTRACTOR at least ten (10) days wrllten notice. Where phases are anticipated within the Scope of Services, at which an Intermediate decision is required concerning whether to proceed further, CITY may terminate at the conclusion of any such phase. Upon termination, CONTRACTOR shall be entitled to payment as set forth In the attached Exhibit B to the extent that 'the work has been performed. Upon termination, CONTRACTOR shall Immediately suspend all work on the Project and deliver any documents or work In progress to CITY. However, CITY shall assume no liability for costs, expenses or lost profile resulting from services not completed or for contracts entered Into by CONTRACTOR with third parties In reliance upon this Agreement. Section 4.12 Q,2(ffl¢Qntls111y CONTRACTOR agrees to maintain confidentiality of all work and work products produced under this Agreement, except to the extent otherwise required by law or permitted In writing by CITY. CITY agrees to maintain confidentiality of any documents owned by CONTRACTOR and clearly marked by CONTRACTOR as "Confidential" or "Proprietary", except to the extent otherwise required by law or pa mltted In willing by CONTRACTOR. CONTRACTOR acknowledges that CITY Is subject to the California Public Records Act, Sectlon 4.13�nllcal�to.1 a,lu.rlad.r�tl�.�c.varIlkllltu .td�+1�9�i�B]G y �v,�° This Agreement shall be governed by the Iowa of the State of Callfomla. Jurisdiction of litigation arising from this Agreement shall be venued with the San Joaquin County Superior Court. If any part of this Agreement Is found to conflict with applicable laws, such part shall be Inoperative, null, and void Insofar as I Is In conflict with sold laws, but the remainder of this Agreement shall be In force and effect, In the event any dispute between the parties arises under or regarding thin Agreement, the prevailing pony In any litigation of the dispute shall be entitled to reasonable attomey's fees from the party who does not prevail as determined by the San Joaquin County Superior Court, Section 4.14 G ty Huelllons I If- i),)rlU Rwtkilrnl]7H«[ CONTRACTOR acknowledges that Lodl Municipal Code Section 3.01.020 requires CONTRACTOR to have a city business license and CONTRACTOR agrees to secure such license and pay the appropriate fees prior to performing any work hereunder, 6 Section 4.16 capPon�a The captions of the sections and subsections of this Agreement are for convenience only and shall not be deemed to be relevant In resolving any question or Interpretation or Intent hereunder, Secllon 4.16 1nuuLratlon, and Modlficall_o_n This Agreement represents the entire understanding of CITY and CONTRACTOR so to those matters contained herein, No prior oral or written understanding shall be of any force or effect with respect to those matters covered hereunder. This Agreement may not be modified or altered except In writing, signed by both parties. Section 4.17 Connract Terms_ Prove All exhibits and this Agreement are Intended to be construed as a single document. Should ary Inconsistency occur between the specific terms of this Agreement and the allached exhibits, the terms of this Agreement shall prevail, Section 4.113 :in_veraihlllty The Invalidity In whole or In part of any provision of this Agreement shall not void or affect the validity of any other provision of this Agreement, Section 4.19 Ownership of Dortiments All documents, photographs, reports, analyses, audlts, computer media, or other material documents or date, and working papers, whether or not In final form, which have been obtained or prepared under this Agreement, shall be deemed the property of CITY. Upon CITY's request, CONTRACTOR shall allow CITY to Inspect all such documents during CONTRACTOR's regular business hours, Upon termination or completion of services under this Agreement, all Information collected, work product and documents shall be delivered by CONTRACTOR to CITY within ten (10) calendar days, CITY agrees to Indemnify, defend and hold CONTRACTOR harmless from any liability resulting from CITY's use of such documents for any purpose other than the purpose for which they were Intended, Section 4,20ulhorltv The undersigned hereby represent and warrant that they are authorized by the parties to execute this Agreement. Section 4.21 Foder.al Trone it F jidiDR(L, ions ❑ If the box at left is chocked, the Federal Transit Funding conditions attached as Exhibit D apply to this Agreement. In the event of a conflict between the terms of this Agreement or any of Its other exhibits, and the Federal Transit Funding Conditions, the Federal Transit Funding Conditions will control, 7 IN WITNESS WHEREOF, CITY and CONTRACTOR have executed this Agreement as of the date first above written. CITY OF LODI, a munIcipal corporation ATTEST: ++ r�1 (TC A�AAJ,��) al'4-9 I�rR r, F-l—,RAI �Alo_O �,r8TEPHEN SCHWABAUER , Clerk City Manager APPROVED AS TO FORM: THE PUN GROUP, LLC, a California limited JANICE D. MAGDICH, Clty Attorney liability partnership r Name: KENNETH H. PUN rh Title: Managing Partner Attachments:�l Exhibit A — Scope of Services Exhibit to —Fat Proposes Exhibit C — Insurance Requirements Exhibit D — Federal Tranell Funding Conditions (if AppBcable) Funding Source: (Business Unit S Account No.) 000101. CMBay.01,7011 5 Exhlbit A Scope of Work The Errorl Reference source not found. Is requesting an opinion as to the fair presentation of Its basic financial statements In accordance with generally accepted accounting principles (GAAP) and applicable laws end regulallons. These audits are to be performed In accordance with all applicable and generally accepted auditing standards, Including, put n9i Illnlled to, the following: Generallyaccepted auditing standards ea set forth by the American Institute of Carilfied Public Accountants, + The standards applicable to financial audile contained In the most current version of the Generally Accepted Government Auditing standards (Yellow Book), Issued by the Comptroller General of the United Stales. The provisions of the Single Audit Act as amended In 1998. The provisions of U,S. Office of Management and Budget (OM6) Uniform Ouldance (formerly known as Circular A-133), Audits of State and Looel Governments and Nan -Profit Organizations and the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for f=ederal Awards. To accomplish this teak, the Firm will: ✓ Perform an audit of all funds of the Cltyy +`ha audit will be conduclod In accordance with Generally Amor3lod GovernmentAuditing Slnndarda. The ZAFR will be In full con,pllanca with all current GASB pronounce3>>anln. ✓ Provide assistance In meeting the requirements for the Government Finance Officers Association (OFOA) "Certificate of Achievement for Excellence In (Financial Reporting", ✓ Prepare a Single Audit Report which will Include the following: o Report on compliance and on Internal control over financial reporting based on audit of financial statements performed In accordance with Government Auditing Standards, o Report on compliance with requirements applicable to each major program, Internal control over compliance, and on the schedule of expenditures of federal awards In accordance with Uniform Guidance, "Audits of State and Local Governments", and the Single Audit Actor 1994 (Public Law 9P1.602). o Schedule of Expenditures of Federal Awards. o Notes to Schedule of Expenditures of Federal Awards, o Schedule of Findings and Questioned Costs. o Any other required schedules or reports. o Prepare the Bate Collection Form for Reporting on Audits of States, Local Govemments, and Non - Profit Organizations, ✓ Perform agreed-upon auditing procedures pertaining to the City's GANN Limit (Appropriations Limit) and render a letter annually to the City regarding compliance, ✓ Issue a separate "management letter" that Includes recommendallons for Improvemente on Internal control, accounting procedures and other algni fcenl observations that are considered to be no reportable conditions. Management lettere should be addressed to the City Manager, ✓ Provide assistance In the Implementation of applicable GASB pronouncements not yet In effect. The Flrm will be available for consullallon by phone on sccounling and financial Issues during the year at no extra cost, The Firm will alae serve as author for certaln addllion projects and Mottles as may be deemed necewiary by the City. The Firm will make an Immediate written report of all Irregularities and Illegal eats or indlcotlons of Illegal acts of which they become aware to the following parties: (a) City Manager; (b) Internal Services Director/Depuly City Manager; and (c) City Attorney. Supplemental reports, audile, or agreed-upon procedure 33 must be added In a written agreement prior to commencing audit work. The Firm and the City wlll discuss and apiwived the scope and associated costs of these teaks. Working Paper Retention and Access to Working Papers The Firm, will retain, nI ils awn expense, all working gapers and reports for a minimum of Q) seven years, un%sa the 'IIy natifles the F-Irm In writing of the need to extend the retention period, upon request, thn Firm will maks working papers avnitable to Errorl Rolfaronce satItco not found, or other governmanlal agaricles Inrluded In the raderal Or state grant audlis I ho Firm will comply with reaeonoble requests from suCceseoroudltors end allow them to review working papers that rmnle to matters of contlnuinp accountlnp slgniflcance, Objectives of Our Services Cur primary 0bi6Cllve for 11,n proposed audit Is to examine the Cily's linenclal stalername and express our opinion on their fairness of presentotlon, fn accordance with generally accepted uccounling principles. oilier objectives that will benefit Ilia City Include the following; 0 To offer barteflelel observations and recommendations about policies and procedures for accounting and operating controls • To Idenllfy opponum iloa to m 9116 Clty operations more efficient and reduce costa r To ❑orlorm Ilia oudlH efflclon(N and effectively, so dlsrupllon to office operations is minlmlzed • To piovlde contlnuinp ndulsory servicer sn the City can Implement recommandatlons • To meet Itlesa ❑blecttvea at no nddlijonal cool to the Cily TI1e Engagement Tearn will perform the audit In accordance wllh the Firm's quallty-control procedureg, which Includu following standard audit programs, careful planning, using Industry.standardized software for audiling and Intemal control doculnentollon, and welcolning an objective ravlew of audit work The Finn will supply portable computers to the onelte staff members, Out audit appronrh emphasizes careful planning, open communlcellon, and proper asslgnment of responsibilities Thle method ensures that audit rRqulramenls will be mel with minimal dlsruptlon of the Clly's dally operations, and that the audit WN proceed efficlently wllh It'll understanding between 1110 Engagement Team and the City, Proposed Segmentation of the Engagement and Proposed Tlmellne The audit will be performed In four phases. InItIsiplanningMeetingl During a mutually acceptable time frame, normally May/June of each year. Tho Engagement partner and Managar will meet with City's Management to gal up to speed with City policies and procedures, establish any specific fequlfemenls Management may have, IdenlItIvatlon of unique trensectlone, rmpIsmien tation of new GASB pronouncements. and develop the audit work plan for the engagement. Interim I May commence August/SeFlember of each year. The Engagement Team—Including the Engagement Panner—will assess accounting poiicle9 adopted by the City, obtain an understanding of the City and Ito operating environment, review Internal controls on all significant irensociton classes. perform welkthroufths and/or tests of Internal control, perform preliminary analytical procedures, develop Inillol risk aasessmvnt. evaluala Sing In Audit compliance (If needed), Identify any audit Insuea, find prepare cnnllrmation correspondence Thn Erigagemont Team ord City Management will establish expectallons Including rasponsibllllles and aeslgnmenla for the year-end audit, and will hold a programa status meeting at the end of the Interim phase, Year -End I May commence by October of each year. The Engagement Team --Including the Engagement Partner—will conduct audit procedures on account balances In the general ledger, finlah confirmation procedures, perform prellminary analytical procedures, search for unrecorded IIobI[it Ias, perform substantive analyllcat review procedures, campIate work on compliance with Federal As9late nce, and conclude fieldwork. The Engagement Taam end City Management will h a I d an exit conference at the end of the Year -End phase. Periodic update meetings will be held to communicate audit progress to management Reporting I Draft c❑plea of reports WN be provided by early November of each yen$; Final reports end management letter will be providnft no later then Novambnr i srh of each your. Reports will be available for December 111 Council meeting. The Firm wilt review and pr opuru audit reports and parfom+ quality control procedures In nccordanre with the ❑uglily Control Standwris issued by lite AICPA, We will also review reports for compliance with GFOA repot ling guldellnes at no addIIle naI cost, Any commenta will be issued In a letter to Management. At the Clty'a requea1, the Engagement Partner and Manager will present the audit la the City's goveming body. The Firm will complete the audit fieldwork and Issue all reports within the established timeframe, assuming no Internal City circumstances causes delays In the audit, Level of Staff and Number of Hours to be Aaelgned to Each Proposed Segment of the Engagement The Pun Group, LLP understenda Iha: the City Is not only looking to employ our audIting services, but Is also seeking to receive value within that professional relationship. We believe that our value Is derived from our In-depth knowledge, experience, nod commitment that our auditing firm employs. We stroas and emphasize "emptW, berause all of the knowladgo and euperitse listed on paper will not benafil you unless it is applied. That Is why we have developed a plan that we feel will accomplish the objectives of Iho City and your particular needs. Our Firm will utilize the Information that you have shared with us and our experience from our previous sudlts of this nature, from various government antliles and cities to develop on effective plan for all major areae, Example of Major Areas (not limited to): Audit of the City's financial statements and the related notes to financial statements ■ Single Audit procedures and required reporting (If applicable) Agroad-upon procedures an Approprlallons Limit calculation Communication with those charged with governance Intornat Cantral and Menagement Letters (I I ap plicable) Total Hours: Phrbnre 7e Mongers -- 114 89parvbery 129 Senior Accounts Die 167 81of Assountanls — - 161 --� CMrloal 6 Sample Size and the Extent to Which Statistical Sampling Is to be Used In this Engagement In our audit approach, stallellcal sampling Is used In conjunction with our sklllad judgment and knowledge of each situation. When designing on audit sample, our auditors consider the purpose of the audit procedure and the characledellce of the papulallon from which the sample will be drawn. We determine a sample site auMcloni to reduce sampling risk to an acceptably low level and ealect Itema for the sample In such o way thal we ca n rennonably expect the nr.mtiple to be representative of the relevant population and likely b provide the auditor with a reasonable basis for coricluslons about the population. Extent of Use of On -Sita Automated Systems In the Eng gement Our Firm uses two powerful software applications In our audit: Casa Ware IDEA, which Is a dale mining soltware, and MlndBrldge, which Is an ertlnclel Intelligence audit tool. We deploy them tools to allow our Audit teem@ to inrrno" elllciency In the procous, to enhance the eNlenng quality of our work, and to quickly seslmilete large amounts of Jule your staff would normally be coked to Bather. The tools also help us meal our profeeslonal requirements regarding fraud and Internal oontrol. The benefit to you Is we: a Conduct more efficient and effective audita, while Improving audit quality Increase the value of audit findings with complete, 100% data coverage Identify risk and control Issues before they Impact your business Improve productivity by automating procedures and eliminating manual leeks Our engagement team can easily Import data from the City's financial software and extract useful date for the purpose of testing and analytical procedures particular In the following areas! s Successful Fraud Test • Kickback or Conlllct•ofdnterest Schemes a Questionable Invoices • DormentAccount Schemes I Phantom Vendor Schemes 0 Morley Laundering Schemes grass I- Planning Phass e- InWrs Phase 0 - vear DW phnss N• llepollnt 16 448 400 tag Sample Size and the Extent to Which Statistical Sampling Is to be Used In this Engagement In our audit approach, stallellcal sampling Is used In conjunction with our sklllad judgment and knowledge of each situation. When designing on audit sample, our auditors consider the purpose of the audit procedure and the characledellce of the papulallon from which the sample will be drawn. We determine a sample site auMcloni to reduce sampling risk to an acceptably low level and ealect Itema for the sample In such o way thal we ca n rennonably expect the nr.mtiple to be representative of the relevant population and likely b provide the auditor with a reasonable basis for coricluslons about the population. Extent of Use of On -Sita Automated Systems In the Eng gement Our Firm uses two powerful software applications In our audit: Casa Ware IDEA, which Is a dale mining soltware, and MlndBrldge, which Is an ertlnclel Intelligence audit tool. We deploy them tools to allow our Audit teem@ to inrrno" elllciency In the procous, to enhance the eNlenng quality of our work, and to quickly seslmilete large amounts of Jule your staff would normally be coked to Bather. The tools also help us meal our profeeslonal requirements regarding fraud and Internal oontrol. The benefit to you Is we: a Conduct more efficient and effective audita, while Improving audit quality Increase the value of audit findings with complete, 100% data coverage Identify risk and control Issues before they Impact your business Improve productivity by automating procedures and eliminating manual leeks Our engagement team can easily Import data from the City's financial software and extract useful date for the purpose of testing and analytical procedures particular In the following areas! s Successful Fraud Test • Kickback or Conlllct•ofdnterest Schemes a Questionable Invoices • DormentAccount Schemes I Phantom Vendor Schemes 0 Morley Laundering Schemes Type and Extent of Analytical Procedures to be Used In the Engagement Analyllcal procedures are one of many financial audit processes which help an auditor understand the cllent's oporntlon and changes In the enulronment, and to Idenilly potential risk areas to plan olhar audit procedures. Analytical Procedures Includes comlmrlaon of flnonclal Information on prior periods, budget, forecast, and Industry benchmark, We use trend and ralfo analysis to Identify any uncerinfn or unusual events. In order to perform these analysis, our firm performs a survey of Miss and counties and develops benchmarks on certain key financial Indicators, such no cost of services to tax revenues ratlos, average genorel fund balance, capital assets, debt per cnpltal, ganeral hind unassigned fund balurme to total general fund expenditures, etc, Our staff member% have provlous experience In atrccessfully Implanling onalyltcnt procedures to the CRy's benefit. Analytical procedures are performed at lhrae stages of audit; at start, In middle and at end of audit. These three eiages are risk asnosement procedures, oubalantive anolyllr,al procedures, and final snalytical procedtiree: R Isk assessment procedures are used to assist the auditor to better understand the business and to plan the nature, timing and extent of audit procedures. Substantive analytical proceduree are used to obtain evidential matter about particular assertions related to account balances or classes of transactions. During Interim phase, our engagement team will eel up expectations for the year -lo -tale results and balances and compare them with budgeted and prior -year amounts. This allows us to forecast year-end amounts, reducing the workload during the year -and phase and allowing us to focus on areea of concern. Final an tlylleal procedures are used as an overall review of the financial Information In the final review stage of the audit, The Engagc;mHnl Padrief and Marling❑r wilt perform a hlgh•leual analVIlcsl review of the IInariclal Informallon eonrl the financial dela for both quaniltativoiy and qualltatively, to ensure the omOunt presented In the fananclal statements are fairly presented in all material respect. Approach to be Taken to Gain and Document an Understanding of the City's Internal Control Structure Audit risk assessment to be established by an Internal control review, combined with the Engagement Team's understanding of the City's operations and accounting software. Using the Committee of Sponsoring Organizations (COSO) Framework, staff members will evaluate the Clty's processes and Identify any control deficiencies, 'rl,nse dlagnoetio review procedures allow Pin Engagement Teamto evaIu91e the City's systema and controls and to vrnvlde constructive feedback to City Management. During our Initial I�lnnning phase of the audit, our nngngement teem, Including the Engagement Partner and Manager will obtain an unelmstanding of the entity and Its anv[ronrnent This Is an essential aspect of performing an audit In nuccrdence with generally accepted auditing standards. In particular, [het understanding establishes a frame of reference within which the auditor pians the audit and exercleee professional judgment about assessing risks of material misstatement of the financial statements and responding to those flake throughout the audit. Wring interim phase of the audit, our Engagsimnf Team will perform a walkthrough of all significant accounting systems, Including processes for financial reporting, revenue recognition and cash recalple, purchasinglaonlract management and cash dlsbursemerds, and payroll and related Ilablllttes, etc. Our auditors will obtain the written policies and procedures, Inqulring occounling pernannel, and document the process In elther a flowchart or narrative summary format. After ohlolning an undarawriding of ilia occounling and Internal control syslems, our auditor will make n pretlminary assessment of control risk, at the assertion level, for eaclr malarial accournl balance or class of transactions. The form and extent of this dacumenlutlon Is Influenced by the size and complexity of the entity, and the nature of I[ia enllty's accounting and internal control systems. Denoral[y, the more complex the anilty's accatinling and Inturnal control systems and the more extenstie the auciltor's procedures, the more extensive our documentetlon will need to be. Approach to be Taken In Determining Laws and Regulations that Will be Subject to Audit Teat Work The Firm slays con linually up to dHto with asidll requirornenle—lncluding new raguleilons, compllsncesupplamente, 91818 guidallnes, and perlinent conlracls—to oneura Thal we conduct audita in accordance Will applicable laws and regulations. We teal transactions for compliance with the Single Audit Act, Callfornla Government Cade, GANN Appropriations Limit, provisions of applicable grant guidelines, requirements of local measures, etc, For example, the Single Audit Act raqulree that we delermine which grants to Include In our audit and select Iraneectlons from those grants far delialled testing. While most Iransecllons are tented as pan of the Interim phase, we cannot determine which grants to lest for the Single Audll until the Ynar-End plroee of audit, Our compilance audlls of oash, Investments, debt covenants, and other areas aro parformed In acoordancewlth the California Government code, which hes many provisions and regulations covering Invflnlments, Approach to be Taken In Drawing Audit Samples for Purposes of Teats of Compliance 7'o test compliance, we lotlow No AICPA's Audlt Sampling consldernllons of tlnlfarm QUldence (ampllance Audits. We will select an appropriate sample Sire based on our professional Judgment and knowledge. Any (fevlations from control and compliance requirements will bo documented, List of SchedulesiTables to be Prepared By the City to Assist In the Conduct of Fieldwork A sample of "PBC" list can be found on the Appendices section of this proposal, GASB Implementation Specialist Gary M. Caporlccl, the r-'lr m's GASB Implementation 513601011511, Is an appointed mambor' to the 8I818 Rellrement Advisory Committee by Me State Conxoller and hoe tremendous expertise In asslsling clinnlr with the Implementatlon of GASB pronouncement 9. For more Ihan 40 years, Mr. Caporlccl has Successfullyprovidod profeasionalauditing, accounting, financial reporting and management ndvlsolYlconsuiting services to a broad apactrum of governmental entitles. Capoflcol Is a loader In 111 n new OASa standards going Into effect In the coming Ye are. He will actively aselet the Clty during the process of Implurrlentallon and comptlance reieiad to new accounting standards. Client Training Seminar Every year, the Firm hosls a conference to update governmental ciior,ls on nuw technicaleccounling and flnanclal Issues, The daylong see,, -n • hold In Danville, Clovis and Crrangs,"uonty -- qualifies for eight hours oICPE, Porticlpants of vv!i yoar's training seminar will receive a high-level examination of numerous technical Issues, rn::+uding the follr)sving: • GASB Updates • Government Auditing Slondards and aingle Audit Updates • Survey of Cities and Countles Implemenistlon of the Now oPE13 Standards • Publlc Sector Employee Benefits 2018: B19 Tlcket Items That Finance Directors and staff Need to Plan for Importantly, all of our clients are Invited to attend the Pun Group, LLP client training seminar FREE OF CHARGE. Identificatlon of Anticipated Potential Audit Problems While we do not expect any problems with the audit, we will carefully Investigate and monitor the following relevant accounting Issues; Investments: Compliance with GASO 31 and GASH 34 Authorization and approval process for city Iftivaslments ContfolB to assure City's compliance will' Invealment limitations and types of speelflc Investments Monitoring by the City or Its Investments Financlal Reporting: • CAFR compURnce, with curre~it roporting and disclosure requirements Issued by GARB CAM ollgihlilty for finsnORI reporting conformance awards Issued by GFOA • Compliance with the various GA59s In efrocl • perform vaiugllons Of opto benefits to determine the liability for ag benefits promised to active, retired, and Inactive plan members as or each veluallon date • Compliance with Governmental Accounting Standards Board (GASB) Statements 74 and 75 Compliance with Infregtruclum ohilgallone and regulatory provisions Internal control structure: City's Internal control functforrs and eompllnnce with proper inlemat control philosophies • Computer-ayelem proc:sasea and controls, and adequacy of the control environment over the period of ti'e engagement, several now GA513 pronouncements will Become eriecllve, The Engagement Tanm will pay ,po cific ailenllon to the following new and upcoming pronounCemanlS, and any others that become effective during the proposal period, In eater to Uelefmine proper Implementation proceduree; 0 A S 8 72 - Folr Val UQ Mo astrremonf and Application GAS 73 - Accounting and Pfnancraf Reporting for Pensfons end Related Assefs That Ana Not within the 5oope of GA SS SIafern ant 6d, and Amendments to Cndalo Provislorrs or GA 88 Stofoments 67 and B8 • GAS 74 -- Fin anelot Reporfliq far Po slamplayma at Benefit Plans Other Than Pansfon Piens G A S 9 75 - Accounfln9 and Ffnanclal Reporting for Pvstamployment 19anellfs 0010 rhan Pon Won& • GASe 79 - 77ta Nlararchy of Gonerally Accepted Aocount Princfplaa for Stdte and [.oval Goveraments GASB 77 - Tax Abatement Disclosures • GASB 7e- Pensions Provided through Certain MuRlpie-Employer Defined Soneflt Pension Plans GARB 79 - Corfsln External uivealrrrsni Pools and Poor Parrlclponts • GASB 60 - Blanding Requfruments for Certain: Component Unfts-•on amendment of GASB Statement 14 GASB 81- I00v0c86fe Splrf-,nreresr Agreements GASB 82 - Pension tssues.-an amendment of GASB Statements No, 67, No. 88, and No. 73 • GASB 83 - Certain Asset Re 7rement Obligations • GASB 84- FiduciaryAcflvlllsd • GASB elf - Ornnfbuo 2017 GASB Be - Cadoln Debt Extlegulshment Issues GASB 87 - Leases Cost Proposal Exhibit B We are committed to Ilia performance of a high quellty audit at the Most reasonable fee level poellbla, bolh InItlully and rliraughoul Itle engagement Also, our periners will provide advice and coneullnllon as needed, at no addltlonnl cost to the Errorl Reference source not round, Certlnoatlon Name of Firm: The Pun Group, LLP Contact Name; Kenneth H. Pun, CPA, CGMA and Business Advleore Contact Telephone Number (049) 777-8801 Contact Email Address: ken.pun®pungroup,com I, the underelgned, cerllry I em duly aulhorrr.ed to rr+vEisent the above nomad firm and am empowered to submlt this bid, In addition, I ovrllfy I em authorized to contrnvi .14h the Errorl RAference source above nanol found. on behalf of the named firm, April 30, 2018 Kenneth H, Pun, CPA, COMA Managing Partner Date The Pun Group, LLP Total All -Inclusive Maximum Prlcta Following are our total fixed fees for Errorl Reference source not found,. alrAudit .,aawadRaWs ee, ! er,t0! MOM s erase s er,(oe Al- VIvAvdIondRost adNp■A■11MyorVrepem) ! _ 1,000 ! _ I,OeO ! liters e,tes s 4,162 rtiAYN ADeIMIalon UMN (AUP) ! __ o,r■cl■i Puipmo AUdIt..Ifeegr TraAtA A"141-011104_ will l0n CA"J p ti vewmen sloth 0,.Wj40M§FMft( ! e0p ! w,000 !T 610 10,100 ! 620 ! 10,101 0 too s —. ... -- ! 10.101 ! mo 10,101 "The Single Audit leas are buried on (I) one major program- If the Errarl Reference source not found, applres far addlllonal funding subseyuenl to the Prepocotlon of Ih(s propanol, the res (o audit addlllnnel major pso$rema will be 54,000eeeh. The number of programa determined to be "major" will bo beaod on OMB Unlrnrnl GUIdarlca. 'rho Fngegernent Team will dlecuea We with the Clly'e Wringament baron alerting 8Inflle Audit work. Cost Breakdown Schedule of PlofeestonaI Fina and Expanee5 fof the Audit of the 7017116 Financial Slolemenle - -- 8lanIrdLoOy 6lendeld � Flaudy ilorvl�eal _ _ t3u01rvlfallrTeem — _— 6ar�o►Audatera _ _ _ Flalla 70 1U _176 167 ."MAP 0 Hain H7udCRals 1 Rate— ^-- T"Ov_rvlsaa _ _ 0 6 6e,17a6 i 10,050,00• -- — 114 1< 700.00 6 700,00 a 77.600.00 MWIS Orb 171 1 17600 1 176,00 6 77,675.00 9, aerOo m— -- — 1119 6 /50.40 6 77.600.00 llenlorAudllore — — _ _ i 76,17000 OWNAu!kee7lI.F1p 0 1 100.00 "aim, f 600,00 Gadal J f�,10ap0 - ` Yolal for ganlaea oeeonbed n 0vol an0 of 1116 RFP dul•ul•pakko! B�a,nnwr _ ------- Mots and i. ghq_a -- Intruded 7h1 0ata0ap Induded Magidir1511me Brno, aub and Aao1sWre _ – klONldld toga ArvMaelOR—of oleoounl — �_--• i�10o,00J rr 7elal 1114ncludve l mimun 2017•te audit - — — -- --- i re,0v0 05 } Schedule of Profeselonel Fees end bpenlsa for the Audit of the Lt illll f Flnenclal Stplamanle-_ _ - Tdd lora,MW b1aw1tied b lloDI n 1101 the RFP Dul•el-Poowol Ea�arlsys _ Mash and Led�ing— — .. Ina luded Tlm►parlelton _-- —� _-- — lneNOW EKeCulhe Tkns Ice Raraamh urd Aaalalano, _ i�a>thDhaad0rlalWaeaun! ,--, __ . �f7.0fa100 Tnul ell_Inclualro merllmum rleo !ol 016 201!•17 audit s_ eP 660,0x6 8lanIrdLoOy ilorvl�eal _ _ t3u01rvlfallrTeem — _— 6ar�o►Audatera _ _ _ Flalla 70 1U _176 167 ."MAP 0 Tdal A 111,000,00 6 7:,60000 1 77.676,00 1 0 0 0 • _ i 0 6 6e,17a6 101.000 1 100.00 8ubiefal aY t�x10a00 Tdd lora,MW b1aw1tied b lloDI n 1101 the RFP Dul•el-Poowol Ea�arlsys _ Mash and Led�ing— — .. Ina luded Tlm►parlelton _-- —� _-- — lneNOW EKeCulhe Tkns Ice Raraamh urd Aaalalano, _ i�a>thDhaad0rlalWaeaun! ,--, __ . �f7.0fa100 Tnul ell_Inclualro merllmum rleo !ol 016 201!•17 audit s_ eP 660,0x6 Schedule of ftfeselonal Fees and 15"nlss for the Audit of bis 20190 Fin anclel Statements 6srulcs�e-- _ - Puengs AI.II�M - 6ipdw1 7r�m _ _ lorkrAudkom161 410AU011M Clorlod eghbW Thier ler awj"' � wsolbrd h i+ellon II aRhs Hd* 18 _ 111 178 61mdmd 14 floss ouow "WV Ants 8 4s 0.110 S__. 200.00 a 170.00 T0121 a 460.00 I 40oAe a 178,00 (80.00 146.06 a 10.000.00 a 47.800,00 a 47,676.00 781 e Now i 160 00 a 170.00 i 47.600.00 i 48,146.00 a ~ 800.00 L6*0.00 I 100.00 f7a 1D0100 RFP - a 14�,1E10.001 Ou1.of,PackoI EApvnraw ulaalr Wid LW4 -- hohded ., Thrnportaum tieNldsd Eksoldlla 11me for Roes& h end As11111nae bsludld Left f ref+drag/mrasd TaMllill•lnal411w1e1r1rlt11um rlosfer6ls Iefeel eudll a II�11L00� Out of Pocket Expenses In the Total Maximum Price and Reimbursement Rates The Firm's policy Is to maintain flexible billing rates In order to most the needs of clients and help them control costa In the Interest of efarOng our long-term reiationahip, we will absorb all costs required to Familiarize ourselves with the operations and eocounting systems, a well ee, travel and printing coots. Additionally, our Piutners will be avollabla to Ixovlde advice and aonsuileilon as necoosary to the lrnrorl Refnronce eourna not found., Theee coats will also be absorbed by bin Firm, Rken for Additional Profesolonal Services Below Is the Firm's standard hourly billing miss, delineated by staffing levels: P_artnsri•)_ - — S 260 Benlorwonager(.) - 40% i 226 M040446)— $ 200 IBupsrvlsoris) - - - -- I Ira BantorAmountsnt(s) $ 100 �BIslfAccounlanl(s) t+ __120 Modest i 100 Any supplemental reports, audits, or agread-upon pmceduroa not covered by this proposal may be added In a written agreement prior to commencing audit work. Tiro Firm and the City Wit discuss and approve the scope and associated oasts of Iheee tasks, Any additional work will be performed at the above quoted hourly rates, Manner of Payment Engagement Team members are required to maintain tlmesheets detailing the date, number of hours, and warts performed for every audit bask. The Firm Wit collect thee@ limeshaele and bill the I!rrmirl Refersnds nourco not found., at the rates oullined In the Total All-Incluelve Maximum Price $sultan, In four stages, S1) at the conclusion of the planring phase, (z) at the canctuaion of the Interim phase, (3) at the conclusion of the Yeer-End phase, (A) and atter presentation and acceptance otthe final audit reports, Interim blilings will cover a period not less then s'ealende► mono', The billing arnoanle generally break down w ibtlaws: For Flsnft 10% Far hl■rlmwork 40% For Y+sr-end w ark 40% At ftsonletion end Asseptanse of Flnel Rapsrb 10% Exhibit: C J[!gtvnnao f3ojillirgolqi JA_(Qr�jdnlrnobU The Contreotor nherl lake out end mrinleln during the Ills of Hile ganlydU 111"itncu rwvorogo as Voted bobW, Thai* Inlu anee vellviul alroh prutucl {tie Conlraatar And enyq suuconrreefor purlormirlq v ork pavarpd by 1010 oanitaCI Irom dolma fef dnn%ogps for pppaonol iilluly. Indildlrlg araldunrnt Olintlr, AA well as hilum clolmll Ior prapertyfluma)faa, Which may 111100 nam Coaliooafs Opafeflons undar Hila oanlfact, iOalller Audi oparalla" bs by Commalar or by any sulloonlrnclor at by nnyano dlrpcky or rndlraolly enylloyed by allllur of Ihdm, pfd em am Duel aIsuch Iilia .1 Fon Ce Ph 111 be as follow"; t. rSlOaLl1GLILf1f�OlJ:9E0ljjaL.LLglf lU 2• %Uh!I1nL1, !N iVc nUr{ MgpILE Lu1BIMIY 01,000,000 Is. Occurrence 11,000,000Bodlly Idury • Es. Person 11,000,000 Bodfly Injury . Es, 0rmlrrance 12,000,000 AgWorgals 11,000,000 Property OsMap • is, Occurrence mum Nal 1e6� Inns 51111fn.Utl11 put )nim, Cn,tlhpola of Inaurence oNy rogWrod� Narm Conlruetor 119,111111 and saptililloa alai nay Innroncn wrzrnge pirlulood to Ilio Chyy of lodl enrll proyWo hrr e r.laVne porlod rmrowtno lamllnOlMYn of aa+n,eQu "h1uh Is pl loosl oona,slant wIh Ihn Okbnl pD,Iwl Or elelalno Of UrnVallons found In IIIc Cnlllomla Toil Clolln i Act (ColllarMn 0ovarnmeN Coda Section 010 01 484'). NOTE: 11) The elreat sddreta of Iho j'1j,TY OF 1,00[ mGel be shown olon0 with (q) end (b) above: 221 Wool Plne Sirens, Lodi, Catlloinfe, 99241.1010: (21 ttto tnc101111000e11I0C41e mull 11118, on 110 1801 Of n in endorsement, e do ealpkon of the ptpfgplthal 1114 Inauring A copy of the Derllnallb of Insurer" with the follaWlrle endowments shell be firmlahed to the CRY: (el Q+JUMIU10tt tuu'JupsIivJ4ft'rfle a„ nunh h,eapsior r pew Wwdsd by Ibis o0ry shall alm upr>ly to the Coy nr ; �4 hs elaulad and nnix,lnted noistdo. CorMlaslorls.01Rcarn,Ailerlts, Emplayoea, and VulbRlesra no oiwl!Irnel nulled IRsurrom (Thle etldole0ment shell be on a Inca lumished to the Clly and shell be Included wlth ConheoloVe pallolwj (b) trthnaLT InattfBldfl.CudlrLi2m0131 like ikmuio ur4-aA In nffom1111 by file end wa dentins laf the Ad d III onaI Inaureda ohall apply a0, primary Inguru noo. ArTollier Inpurrtnco mstnfelnW by The City of Lodi or Us alRc0,n and employee ahsll be sNcr, nu only and not con Itlbullno wtlII I h a Insvra-%w it horde of by IN D enduraamant. (o) rI oIn�"Inntire fris i,nod oa4■relly end Rol aall aollvely, burl Ihn Inclusion herein of more Monona Insured the 11 not upa►Ists 10 ]nor@Ass the tlmll of the onmpoti ft Ilebelly, (d) P tI&pl� JjJ=L11192 of f,hjjj In GGYo.1, 119 (`dtd(aalr, 1 T N a popsy Inns� Hat bu t:wi:clad mg 110 coWl110 coWlupD reduced by the 60mpeny wllhuul 30 days' prior wililvn noun n eucl• cane lollop of toductlon In eovoragn l0 1110 ftlek N1hne0ar. CRY of l o,rlf 221 W. Plna BL, Lodi, CA Go240, kOLlId.RAlgutlQlt._i11a1lrnnaa Tim CumiAclor olrall We out and maintain during ilia Igo of UdR contract, walkaep CU'lli,onar111un Iuaixmim lur ell Of Conlractel's nmpfoyaos employed a1 ilia silo of Ilia prolDol and, If any work Ie suhlal, ConlrarWr shall rumbre Iha a0minlra,Clof atndluny to prov,do Workoelt Compnnoalfon fnaufonCe for off of 1110 1011010, an1010Yu91 01111003 Nub en,p00011 via caysrod by lbs proloollan akarded by the Conuoalor. In ogee any oeYo of mnplayoaa engaged In hPTArdonework undar(ills conlior% nt the silo of the project lsnolproloclpdundoe Ihn Wpd,nrd C011lpoilallon 51e1ute, Ills Conlreclar shall rllavtdu nod lhell triune each subtanllnoldr to Prov}da htearnnes for lho pralonlfan of said omplayaos. , A wolvor of sullfcgullon Is requrrnu for walknrs componaellon tnauran0e. This pollay may 1111 l,0 car,culhd Har Ihecormcpa hduced by the tbnlpnny willlau170 dsye'prtor wriflen nouac al euoh Cenoallnllon or fedtrotlon Inaavafepu fo 11111 fifak Mannps��, Cky of Lad1, 7x1 W phtiet 91., La[Tl, CA 9d240. NOTE: No contract agreement win be stoned nor MU spy work begin on o project unll the proper Insurance aertl0oals In received by the City RESOLUTION NO. 2022-139 A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE CITY MANAGER TO EXECUTE AN AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT WITH THE PUN GROUP, LLP, OF SANTA ANA, FOR AUDITING SERVICES WHEREAS, in March 2018, Council approved a one-year contract with The Pun Group and gave direction that Council have involvement in the subsequent RFP process; and WHEREAS, during the Fiscal Year 2017-18 year-end audit, Council approved Amendment No. 1 to the contract to conduct additional review on purchasing procedures outside the scope of the audit; and WHEREAS, on February 6, 2019, Council provided direction to staff to forgo the RFP process and extend the contract with The Pun Group based on the terms of the initial bid; and WHEREAS, on February 20, 2019, the City Council approved Amendment No. 2 to the contract to extend the term to include the completion of the Fiscal Year 2019-20 audit; and WHEREAS, on December 2, 2020, the City Council approved Amendment No. 3 to the contract to extend the term to include the completion of the Fiscal Year 2020-21 audit; and WHEREAS, during these past four audits, The Pun Group performed exceptionally; and WHEREAS, upon completion of the June 30, 2022 audit, the contract with The Pun Group is up for the final optional one-year extension. On February 2, 2022, the City Council approved utilizing the last of the two one-year extensions of the contract for the Fiscal Year 2021-22 audit; and WHEREAS, the City's Single Audit requirements have since changed and require adding another major program to be audited at an additional cost of $4,000 each; and WHEREAS, the City now has to include FEMA (Great Plates) and American Rescue Plan Act (ARPA) in the Fiscal Year 2021-22 audit. NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby authorize the City Manager to execute an amendment to the Professional Services Agreement with The Pun Group, LLP, to add funds for new Single Audit requirements in an amount not to exceed $90,192 for the Fiscal Year 2021-22 audit and $422,156 for the life of the contract; and BE IT FURTHER RESOLVED, pursuant to Section 6.3q of the City Council Protocol Manual (Res. No. 2019-223), the City Attorney is hereby authorized to make minor revisions to the above -referenced document(s) that do not alter the compensation or term, and to make clerical corrections as necessary. Dated: June 1, 2022 I hereby certify that Resolution No. 2022-139 was passed and adopted by the City Council of the City of Lodi in a regular meeting held June 1, 2022 by the following vote: AYES: COUNCIL MEMBERS — Hothi, Khan, and Kuehne NOES: COUNCIL MEMBERS — None ABSENT: COUNCIL MEMBERS — Nakanishi and Mayor Chandler ABSTAIN: COUNCIL MEMBERS — None ct�t��� OLIVIA NASHED City Clerk 2022-139