16-0517_WHITE NELSON DIEHL EVANS LLP_Professional Services AgreementCITY OF SAN JUAN CAPISTRANO
PROFESSIONAL SERVICES AGREEMENT
This Agreement is made and entered into as of May 17, 2016 by and between the City of San
Juan Capistrano, a municipal corporation organized and operating under the laws of the State of
California with its principal place of business at 32400 Paseo Adelanto, San Juan Capistrano, CA
92675 ("City''), and White Nelson Diehl Evans, a Limited Liability Partnership with its principal place of
business at 2875 Michelle Drive, Suite 300, Irvine, CA 92606 (hereinafter referred to as "Consultant").
City and Consultant are sometimes individually referred to as "Party'' and collectively as "Parties" in this
Agreement.
RECITALS
A. City is a public agency of the State of California and is in need of professional services
for the following project: Independent Audit Services (hereinafter referred to as "the Project").
B. Consultant is duly licensed and has the necessary qualifications to provide such
services.
C. The Parties desire by this Agreement to establish the terms for City to retain Consultant
to provide the services described herein.
AGREEMENT
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Services.
Consultant shall provide the City with the services described in the Scope of Services attached
hereto as Exhibit "A." In the Scope of Services, "Entities to be Included in Audit," page 8 of Exhibit A,
the City of San Juan Capistrano shall include the Successor Agency to the San Juan Capistrano
Community Redevelopment Agency.
2. Compensation.
a. Subject to paragraph 2(b) below, the City shall pay for such services in
accordance with the Schedule of Charges set forth in Exhibit "B."
b. In no event shall the total amount paid for services rendered by Consultant under
this Agreement exceed the sum of $234,725. This amount is to cover all printing and related costs, and
the City will not pay any additional fees for printing expenses. Periodic payments shall be made within
30 days of receipt of an invoice which includes a detailed description of the work performed. Payments
to Consultant for work performed will be made on a monthly billing basis.
3. Additional Work.
If changes in the work seem merited by Consultant or the City, and informal consultations with
the other party indicate that a change is warranted, it shall be processed in the following manner: a
letter outlining the changes shall be forwarded to the City by Consultant with a statement of estimated
changes in fee or time schedule. An amendment to this Agreement shall be prepared by the City and
executed by both Parties before performance of such services, or the City will not be required to pay for
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the changes in the scope of work. Such amendment shall not render ineffective or invalidate
unaffected portions of this Agreement.
4. · Maintenance of Records.
Books, documents, papers, accounting records, and other evidence pertaining to costs incurred
shall be maintained by Consultant and made available at all reasonable times during the contract
period and for four (4) years from the date of final payment under the contract for inspection by City.
5. Time of Performance.
Consultant shall perform its services in a prompt and timely manner and shall commence
performance upon receipt of written notice from the City to proceed ("Notice to Proceed"). Consultant
shall complete the services required hereunder within the activity schedule in Exhibit "A." The Notice to
Proceed shall set forth the date of commencement of work.
6. Delays in Performance.
a. Neither City nor Consultant shall be considered in default of this Agreement for delays in
performance caused by circumstances beyond the reasonable control of the non-performing party. For
purposes of this Agreement, such circumstances include but are not limited to, abnormal weather
conditions; floods; earthquakes; fire; epidemics; war; riots and other civil disturbances; strikes, lockouts,
work slowdowns, and other labor disturbances; sabotage or judicial restraint.
b. Should such circumstances occur, the non-performing party shall, within a reasonable
time of being prevented from performing, give written notice to the other party describing the
circumstances preventing continued performance and the efforts being made to resume performance of
this Agreement.
7. Compliance with Law.
a. Consultant shall comply with all applicable laws, ordinances, codes and regulations of
the federal, state and local government, including Cai/OSHA requirements.
b. If required, Consultant shall assist the City, as requested, in obtaining and maintaining
all permits required of Consultant by federal, state and local regulatory agencies.
c. If applicable, Consultant is responsible for all costs of clean up and/ or removal of
hazardous and toxic substances spilled as a result of his or her services or operations performed under
this Agreement.
8. Standard of Care
Consultant's services will be performed in accordance with generally accepted professional
practices and principles and in a manner consistent with the level of care and skill ordinarily exercised
by members of the profession currently practicing under similar conditions.
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9. Assignment and Subconsultant
Consultant shall not assign, sublet, or transfer this Agreement or any rights under or interest in
this Agreement without the written consent of the City, which may be withheld for any reason. Any
attempt to so assign or so transfer without such consent shall be void and without legal effect and shall
constitute grounds for termination. Subcontracts, if any, shall contain a provision making them subject
to all provisions stipulated in this Agreement. Nothing contained herein shall prevent Consultant from
employing independent associates, and subconsultants as Consultant may deem appropriate to assist
in the performance of services hereunder.
10. Independent Consultant
Consultant is retained as an independent contractor and is not an employee of City. No
employee or agent of Consultant shall become an employee of City. The work to be performed shall be
in accordance with the work described in this Agreement, subject to such directions and amendments
from City as herein provided.
11. Insurance. Consultant shall not commence work for the City until it has provided
evidence satisfactory to the City it has secured all insurance required under this section. In addition,
Consultant shall not allow any subcontractor to commence work on any subcontract until it has secured
all insurance required under this section.
a. Commercial General Liability
(i) The Consultant shall take out and maintain, during the performance of all
work under this Agreement, in amounts not less than specified herein, Commercial General Liability
Insurance, in a form and with insurance companies acceptable to the City.
(ii)
broad as the following:
Coverage for Co"mmercial General Liability insurance shall be at least as
(1) Insurance Services Office Commercial General Liability coverage
(Occurrence Form CG 00 01) or exact equivalent.
(iii) Commercial General Liability Insurance must include coverage for the
following:
(1) Bodily Injury and Property Damage
(2) Personal Injury/Advertising Injury
(3) Premises/Operations Liability
( 4) Products/Completed Operations Liability
(5) Aggregate Limits that Apply per Project
(6) Explosion, Collapse and Underground (UCX) exclusion deleted
(7) Contractual Liability with respect to this Contract
(8) Broad Form Property Damage
(9) Independent Consultants Coverage
(iv) The policy shall contain no endorsements or prov1s1ons limiting
coverage for ( 1) contractual liability; (2) cross liability exclusion for claims or suits by one insured
against another; (3) products/completed operations liability; or (4) contain any other exclusion contrary
to the Agreement.
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(v) The policy shall give City, its officials, officers, employees, agents and
City designated volunteers additional insured status using ISO endorsement forms CG 20 10 1 0 01 and
20 37 10 01, or endorsements providing the exact same coverage.
(vi) The general liability program may utilize either deductibles or provide
coverage excess of a self-insured retention, subject to written approval by the City, and provided that
such deductibles shall not apply to the City as an additional insured.
b. Automobile Liability
(i) At all times during the performance of the work under this Agreement,
the Consultant shall maintain Automobile Liability Insurance for bodily injury and property damage
including coverage for owned, non-owned and hired vehicles, in a form and with insurance companies
acceptable to the City.
(ii) Coverage for automobile liability insurance shall be at least as broad as
Insurance Services Office Form Number CA 00 01 covering automobile liability (Coverage Symbol 1,
any auto).
(iii) The policy shall give City, its officials, officers, employees, agents and
City designated volunteers additional insured status.
(iv) Subject to written approval by the City, the automobile liability program
may utilize deductibles, provided that such deductibles shall not apply to the City as an additional
insured, but not a self-insured retention.
c. Workers' Compensation/Employer's Liability
(i) Consultant certifies that he/she is aware of the provisions of Section 3700
of the California Labor Code which requires every employer to be insured against liability for workers'
compensation or to undertake self-insurance in accordance with the provisions of that code, and he/she
will comply with such provisions before commencing work under this Agreement.
(ii) To the extent Consultant has employees at any time during the term of
this Agreement, at all times during the performance of the work under this Agreement, the Consultant
shall maintain full compensation insurance for all persons employed directly by him/her to carry out the
work contemplated under this Agreement, all in accordance with the "Workers' Compensation and
Insurance Act," Division IV of the Labor Code of the State of California and any acts amendatory
thereof, and Employer's Liability Coverage in amounts indicated herein. Consultant shall require all
subconsultants to obtain and maintain, for the period required by this Agreement, workers'
compensation coverage of the same type and limits as specified in this section.
d. Professional Liability (Errors and Omissions)
At all times during the performance of the work under this Agreement the Consultant shall
maintain professional liability or Errors and Omissions insurance appropriate to its profession, in a form
and with insurance companies acceptable to the City and in an amount indicated herein. This
insurance shall be endorsed to include contractual liability applicable to this Agreement and shall be
written on a policy form coverage specifically designed to protect against acts, errors or omissions of
the Consultant. "Covered Professional Services" as designated in the policy must specifically include
work performed under this Agreement. The policy must "pay on behalf of' the insured and must include
a provision establishing the insurer's duty to defend.
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e. Minimum Policy Limits Required
(i) The following insurance limits are required for the Agreement:
Commercial General Liability
Automobile Liability
Employer's Liability
Professional Liability
Combined Single Limit
$1,000,000 per occurrence/ $2,000,000 aggregate
for bodily injury, personal injury, and property
damage
$1,000,000 per occurrence for bodily injury and property
damage
$1,000,000 per occurrence
$1,000,000 per claim and aggregate (errors and
omissions)
(ii) Defense costs shall be payable in addition to the limits.
(iii) Requirements of specific coverage or limits contained in this section are
not intended as a limitation on coverage, limits, or other requirement, or a waiver of any coverage
normally provided by any insurance. Any available coverage shall be provided to the parties required
to be named as Additional Insured pursuant to this Agreement.
f. Evidence Required
Prior to execution of the Agreement, the Consultant shall file with the City evidence of
insurance from an insurer or insurers certifying to the coverage of all insurance required herein. Such
evidence shall include original copies of the ISO CG 00 01 (or insurer's equivalent) signed by the
insurer's representative and Certificate of Insurance (Acord Form 25-S or equivalent), together with
required endorsements. All evidence of insurance shall be signed by a properly authorized officer,
agent, or qualified representative of the insurer and shall certify the names of the insured, any
additional insureds, where appropriate, the type and amount of the insurance, the location and
operations to which the insurance applies, and the expiration date of such insurance.
g. Policy Provisions Required
(i) Consultant shall provide the City at least thirty (30) days prior written
notice of cancellation of any policy required by this Agreement, except that the Consultant shall
provide at least ten (1 0) days prior written notice of cancellation of any such policy due to non-
payment of premium. If any of the required coverage is cancelled or expires during the term of this
Agreement, the Consultant shall deliver renewal certificate(s) including the General Liability Additional
Insured Endorsement to the City at least ten (1 0) days prior to the effective date of cancellation or
expiration.
(ii) The Commercial General Liability Policy and Automobile Policy shall each
contain a provision stating that Consultant's policy is primary insurance and that any insurance, self-
insurance or other coverage maintained by the City or any named insureds shall not be called upon to
contribute to any loss.
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(iii) The retroactive date (if any) of each policy is to be no later than the
effective date of this Agreement. Consultant shall maintain such coverage continuously for a period of
at least three years after the completion of the work under this Agreement. Consultant shall purchase
a one ( 1) year extended reporting period A) if the retroactive date is advanced past the effective date
of this Agreement; B) if the policy is cancelled or not renewed; or C) if the policy is replaced by another
claims-made policy with a retroactive date subsequent to the effective date of this Agreement.
(iv) All required insurance coverages, except for the professional liability
coverage, shall contain or be endorsed to waiver of subrogation in favor of the City, its officials,
officers, employees, agents, and volunteers or shall specifically allow Consultant or others providing
insurance evidence in compliance with these specifications to waive their right of recovery prior to a
loss. Consultant hereby waives its own right of recovery against City, and shall require similar written
express waivers and insurance clauses from each of its subconsultants.
(v) The limits set forth herein shall apply separately to each insured against
whom claims are made or suits are brought, except with respect to the limits of liability. Further the
limits set forth herein shall not be construed to relieve the Consultant from liability in excess of such
coverage, nor shall it limit the Consultant's indemnification obligations to the City and shall not
preclude the City from taking such other actions available to the City under other provisions of the
Agreement or law.
h. Qualifying Insurers
(i) All policies required shall be issued by acceptable insurance companies,
as determined by the City, which satisfy the following minimum requirements:
(1) Each such policy shall be from a company or companies with a
current A.M. Best's rating of no less than A:VII and admitted to transact in the business of
insurance in the State of California, or otherwise allowed to place insurance through surplus line
brokers under applicable provisions of the California Insurance Code or any federal law.
i. Additional Insurance Provisions
(i) The foregoing requirements as to the types and limits of insurance
coverage to be maintained by Consultant, and any approval of said insurance by the City, is not
intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise
assumed by the Consultant pursuant to this Agreement, including but not limited to, the provisions
concerning indemnification.
(ii) If at any time during the life of the Agreement, any policy of insurance
required under this Agreement does not comply with these specifications or is canceled and not
replaced, City has the right but not the duty to obtain the insurance it deems necessary and any
premium paid by City will be promptly reimbursed by Consultant or City will withhold amounts sufficient
to pay premium from Consultant payments. In the alternative, City may cancel th_is Agreement.
(iii) The City may require the Consultant to provide complete copies of all
insurance policies in effect for the duration of the Project.
(iv) Neither the City nor any of its officials, officers, employees, agents or
volunteers shall be personally responsible for any liability arising under or by virtue of this Agreement.
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j. Subconsultant Insurance Requirements. Consultant shall not allow any
subcontractors or subconsultants to commence work on any subcontract until they have provided
evidence satisfactory to the City that they have secured all insurance required under this section.
Policies of commercial general liability insurance provided by such subcontractors or subconsultants
shall be endorsed to name the City as an additional insured using ISO form CG 20 38 04 13 or an
endorsement providing the exact same coverage. If requested by Consultant, City may approve
different scopes or minimum limits of insurance for particular subcontractors or subconsultants.
12. Indemnification.
a. To the fullest extent permitted by law, Consultant shall defend (with counsel
reasonably approved by the City), indemnify and hold the City, its officials, officers, employees, agents
and volunteers free and harmless from any and all claims, demands, causes of action, suits, actions,
proceedings, costs, expenses, liability, judgments, awards, decrees, settlements, loss, damage or injury
of any kind, in law or equity, to property or persons, including wrongful death, (collectively, "Claims') in
any manner arising out of, pertaining to, or incident to any alleged acts, errors or omissions, or willful
misconduct of Consultant, its officials, officers, employees, subcontractors, consultants or agents in
connection with the performance of the Consultant's services, the Project or this Agreement, including
without limitation the payment of all consequential damages, expert witness fees and attorneys' fees
and other related costs and expenses. Notwithstanding the foregoing, to the extent Consultant's
services are subject to Civil Code Section 2782.8, the above indemnity shall be limited, to the extent
required by Civil Code Section 2782.8, to Claims that arise out of, pertain to, or relate to the negligence,
recklessness, or willful misconduct of the Consultant. Consultant's obligation to indemnify shall not be
restricted to insurance proceeds, if any, received by the City, its officials, officers, employees, agents or
volunteers .
b. Additional Indemnity Obligations. Consultant shall defend, with counsel of City's
choosing and at Consultant's own cost, expense and risk, any and all Claims covered by this section
that may be brought or instituted against the City, its officials, officers, employees, agents or volunteers.
Consultant shall pay and satisfy any judgment, award or decree that may be rendered against the City,
its officials, officers, employees, agents or volunteers as part of any such claim, suit, action or other
proceeding. Consultant shall also reimburse City for the cost of any settlement paid by the City, its
officials, officers, employees, agents or volunteers as part of any such claim, suit, action or other
proceeding. Such reimbursement shall include payment for the City's attorney's fees and costs,
including expert witness fees. Consultant shall reimburse the City, its officials, officers, employees,
agents and volunteers, for any and all legal expenses and costs incurred by each of them in connection
therewith or in enforcing the indemnity herein provided. Consultant's obligation to indemnify shall not
be restricted to insurance proceeds, if any, received by the City, its officials, officers, employees, agents
and volunteers.
13. California Labor Code Requirements.
a. Consultant is aware of the requirements of California Labor Code Sections 1720
et seq. and 1770 et seq., which require the payment of prevailing wage rates and the performance of
other requirements on certain "public works" and "maintenance" projects. If the services are being
performed as part of an applicable "public works" or "maintenance" project, as defined by the Prevailing
Wage Laws, and if the total compensation is $1 ,000 or more, Consultant agrees to fully comply with
such Prevailing Wage Laws, if applicable. Consultant shall defend, indemnify and hold the City, its
elected officials, officers, employees and agents free and harmless from any claims, liabilities, costs,
penalties or interest arising out of any failure or alleged failure to comply with the Prevailing Wage
Laws. It shall be mandatory upon the Consultant and all subconsultants to comply with all California
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Labor Code prov1s1ons, which include but are not limited to prevailing wages, employment of
apprentices, hours of labor and debarment of contractors and subcontractors.
b. If the Services are being performed as part of an applicable "public works" or
"maintenance" project, then pursuant to Labor Code Sections 1725.5 and 1771.1, the Consultant and
all subconsultants performing such Services must be registered with the Department of Industrial
Relations. Consultant shall maintain registration for the duration of the Project and require the same of
any subconsultants, as applicable. This Project may also be subject to compliance monitoring and
enforcement by the Department of Industrial Relations. It shall be Consultant's sole responsibility to
comply with all applicable registration and labor compliance requirements.
14. Verification of Employment Eligibility.
By executing this Agreement, Consultant verifies that it fully complies with all requirements and
restrictions of state and federal law respecting the employment of undocumented aliens, including, but
not limited to, the Immigration Reform and Control Act of 1986, as may be amended from time to time,
and shall require all subconsultants and sub-subconsultants to comply with the same.
15. Laws and Venue.
This Agreement shall be interpreted in accordance with the laws of the State of California. If
any action is brought to interpret or enforce any term of this Agreement, the action shall be brought in a
state or federal court situated in the County of Orange, State of California.
16. Termination or Abandonment
a. City has the right to terminate or abandon any portion or all of the work under this
Agreement by giving ten (1 0) calendar days written notice to Consultant. In such event, City shall be
immediately given title and possession to all original field notes, drawings and specifications, written
reports and other documents produced or developed for that portion of the work completed and/or
being abandoned. City shall pay Consultant the reasonable value of services rendered for any portion
of the work completed prior to termination. If said termination occurs prior to completion of any task for
the Project for which a payment request has not been received, the charge for services performed
during such task shall be the reasonable value of such services, based on an amount mutually agreed
to by City and Consultant of the portion of such task completed but not paid prior to said termination.
City shall not be liable for any costs other than the charges or portions thereof which are specified
herein. Consultant shall not be entitled to payment for unperformed services, and shall not be entitled
to damages or compensation for termination of work.
b. Consultant may terminate its obligation to provide further services under this
Agreement upon thirty (30) calendar days' written notice to City only in the event of substantial failure
by City to perform in accordance with the terms of this Agreement through no fault of Consultant.
17. Documents. Except as otherwise provided in "Termination or Abandonment," above, all
original field notes, written reports, Drawings and Specifications and other documents, produced or
developed for the Project shall, upon payment in full for the services described in this Agreement, be
furnished to and become the property of the City.
18. Organization
Consultant shall assign Nitin Patel as Project Manager. The Project Manager shall not be
removed from the Project or reassigned without the prior written consent of the City.
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20. Limitation of Agreement.
This Agreement is limited to and includes only the work included in the Project described above.
21. Notice
Any notice or instrument required to be given or delivered by this Agreement may be given or
delivered by depositing the same in any United States Post Office, certified mail, return receipt
requested, postage prepaid, addressed to:
CITY:
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: Michelle Bannigan
and shall be effective upon receipt thereof.
22. Third Party Rights
CONSULTANT:
White Nelson Diehl Evans LLP
2875 Michelle Drive, Suite 300
Irvine, CA 92606
Attn: Nitin Patel
Nothing in this Agreement shall be construed to give any rights or benefits to anyone other than
the City and the Consultant.
23. Equal Opportunity Employment.
Consultant represents that it is an equal opportunity employer and that it shall not discriminate
against any employee or applicant for employment because of race, religion, color, national origin,
ancestry, sex, age or other interests protected by the State or Federal Constitutions. Such non-
discrimination shall include, but not be limited to, all activities related to initial employment, upgrading,
demotion, transfer, recruitment or recruitment advertising, layoff or termination.
24. Entire Agreement .
This Agreement, with its exhibits, represents the entire understanding of City and Consultant as
to those matters contained herein, and supersedes and cancels any prior or contemporaneous oral or
written understanding, promises or representations with respect to those matters covered hereunder.
Each party acknowledges that no representations, inducements, promises or agreements have been
made by any person which are not incorporated herein, and that any other agreements shall be void.
This Agreement may not be modified or altered except in writing signed by both Parties hereto. This is
an integrated Agreement.
25. Severability
The unenforceability, invalidity or illegality of any provision(s) of this Agreement shall not render
the provisions unenforceable, invalid or illegal.
26. Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the successors in
interest, executors, administrators and assigns of each party to this Agreement. However, Consultant
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shall not assign or transfer by operation of law or otherwise any or all of its rights, burdens, duties or
obligations without the prior written consent of City. Any attempted assignment without such consent
shall be invalid and void.
27. Non-Waiver
None of the provisions of this Agreement shall be considered waived by either party, unless
such waiver is specifically specified in writing.
28. Time of Essence
Time is of the essence for each and every provision of this Agreement.
29. City's Right to Employ Other Consultants
City reserves its right to employ other consultants, including engineers, in connection with this
Project or other projects.
30. Prohibited Interests
Consultant maintains and warrants that it has not employed nor retained any company or
person, other than a bona fide employee working solely for Consultant, to solicit or secure this
Agreement. Further, Consultant warrants that it has not paid nor has it agreed to pay any company or
person, other than a bona fide employee working solely for Consultant, any fee, commission,
percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or
making of this Agreement. For breach or violation of this warranty, City shall have the right to rescind
this Agreement without liability. For the term of this Agreement, no director, official, officer or employee
of City, during the term of his or her service with City, shall have any direct interest in this Agreement,
or obtain any present or anticipated material benefit arising therefrom.
[SIGNATURES ON FOLLOWING PAGE]
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SIGNATURE PAGE FOR PROFESSIONAL SERVICES AGREEMENT
BETWEEN THE CITY OF SAN JUAN CAPISTRANO
AND WHITE NELSON DIEHL EVENS LLP
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written
above.
CITY OF SAN JUAN CAPISTRANO WHITE NELSON DIEHL EVENS LLP
By: By:
Pam Patterson, Esq., Mayor
Its:
Printed Name: _________ _
ATTEST:
By:
Maria Morris, City Clerk
APPROVED AS TO FORM:
By:
Jeff Ballinger, City Attorney
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SIGNATURE PAGE FOR PROFESSIONAL SERVICES AGREEMENT
BETWEEN THE CITY OF SAN JUAN CAPISTRANO
AND WHITE NELSON DIEHL EVENS LLP
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written
above.
WHITE NELSON DIEHL EVENS LLP
By:
Its:
Printed Name:_ -,
ATTEST:
By:
APPROVED AS TO FORM:
By: ~Ba~.~~
11
SIGNATURE PAGE FOR PROFESSIONAL SERVICES AGREEMENT
BETWEEN THE CITY OF SAN JUAN CAPISTRANO
AND WHITE NELSON DIEHL EVENS LLP
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written
above.
CITY OF SAN JUAN CAPISTRANO WHITE NELSON DIEHL EVENS LLP
By: By:
Pam Patterson, Esq., Mayor
Its:
Printed Name: (V f/"{r-1 f fA-rt~L
ATTEST:
By :
Maria Morris, City Clerk
APPROVED AS TO FORM:
By:
Jeff Ballinger, City Attorney
11
EXHIBIT A
Scope of Services
SPECIFIC AUDIT APPROACH
SEGMENTATION OF THE AUDIT HOURS. BY PARTNER AND STAFF LEVEL
Supervisory
Description of Services Partners Managers Staff Staff Clerical Total
Audit of City of San Juan Capistrano 12 24 104 104 244
Audit of San Juan Capistrano
Housing Authority 1 4 30 35
Single Audit, when applicable 1 4 30 2 37
Preparation of Annual Street Report 2 10 12
Preparation of City State
Controller's Report 2 30 32
Preparation of San Juan
Capistrano Public Financing
Authority State Controller's
Report 1 9 10
Preparation of CAFR 4 30 4 38
Total Hours 14 41 104 243 6 408
SEGMENTATION OF THE AUDIT HOURS. BY PHASES OF THE AUDIT
Supervisory
Partners Managers Staff Staff Clerical Total
Planning 2 4 8 14
Interim Fieldwork 4 8 24 80 116
Final Fieldwork and Review 8 29 72 163 6 278
Total Hours 14 41 104 243 6 408
METHOD OF SAMPLING
Our approach is to utilize random sampling based in our testing of the internal control systems related
to cash receipts, cash disbursements, payroll and utility billings. Based on a statistical conclusion used
by the firm our sample sizes can range from 25 to 60 transactions for each system. A random sample
selection allows each item in the population of an equal chance of being selected. In addition, for
disbursements, we may select a stratified sample of all transactions over a specified dollar amount for
review.
EXHIBIT A-Page 1 of 9
EXHIBIT A
Scope of Services
COMPUTER AUDITING CAPABILITIES
White Nelson Diehl Evans LLP uses technology to make the audit process more effective. We utilize a
paperless audit software, ProSystem fx Engagement, which allows us to manage our audit
documentation electronically. Some of the benefits of paperless audit are:
• Receive the City's schedules in either hard copy or electronic format.
• Import and integrate trial balance data from virtually any accounting system. We avoid the
time and expense of keying in account numbers, descriptions and account balances. We
simply take your electronic trial balance and import it directly into our audit software.
• Create our own lead sheets, which can include prior year balances. This helps us to easily
identify significant fluctuations between fiscal years.
• CAFR schedules are linked to trial balances. CAFR is updated automatically for any last minute
journal entries, if any.
Our approach includes using IDEA (Interactive Data Extraction and Analysis) which is a data analysis
software that can be used to analyze large amounts of information. It allows the firm to extract data
from the City's accounting records to tailor specific audit tests based on risk assessments. Some audit
procedures that IDEA can be utilized for are:
• Mechanical accuracy of worksheets or general ledgers.
• Exception and gap/completeness testing for missing check numbers.
• Cross checking different data bases for common information such as employee names.
• Duplicate testing of invoice numbers.
• Completeness of general ledger balances.
The firm also has document management software which allows our clients to access our web portal.
We utilize the web portal to transfer data files that are confidential or too large to be sent by e-mail.
ANALYTICAL PROCEDURES
Analytical procedures are used in the planning and final stages of the audit. In the planning phase, we
use analytical procedures to identify unusual financial transactions and comparing relationships to
expected results. We compare current year information to the prior years for balance sheet items,
revenues and expenditures. In addition, revenues and expenditures are compared to budgets to
identify unexpected results. In the final stages of the audit, the financial statements are reviewed to
identify expected relationships such as comparing debt paid to expenditures recorded on
governmental funds, transfers between funds, depreciation expense, etc. For all significant
relationships identified, explanations are obtained as to why the situation occurred and additional
audit procedures are applied to resolve any concerns.
APPROACHTOINTERNALCONTROL
Our audit will include obtaining an understanding of the entity and its environment, including internal
control, sufficient to assess the risks of material misstatement of the financial statements and to
design the nature, timing, and extent of further audit procedures. Our understanding of the internal
EXHIBIT A-Page 2 of 9
EXHIBIT A
Scope of Services
controls will be completed by completing narratives and checklists for various processes related to
internal control.
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 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. financial statements. 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.
As required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirement for Federal Awards {Uniform Guidance), we will
perform tests of controls over compliance to evaluate the effectiveness of the design and operation
of controls that we consider relevant to preventing or detecting material noncompliance with
compliance requirements applicable to each major federal award program. However, our tests will be
less in scope than would be necessary to render an opinion on those controls and, accordingly, no
opinion will be expressed in our report on internal control issued pursuant to the Uniform Guidance.
An audit is not designed to provide assurance on internal control or to identify significant
deficiencies. However, during the audit, we will communicate to management and those charged
with governance internal control related matters that are required to be communicated under AICPA
professional standards, Government Auditing Standards, and the Uniform Guidance.
SINGLE AUDIT APPROACH
The single audit will be performed in accordance with all the requirements of the Single Audit Act, the
Uniform Guidance and Government Auditing Standards issued by the GAO (the 11Yellow Book") for
cities that expend greater than $750,000 in federal awards in fiscal year 2015-2016 and subsequent
years.
• We will identify the Major and Non major Federal Programs of the City through the risk-based
approach required by the Uniform Guidance. This approach includes consideration of current
and prior audit experience, oversight by Federal agencies and pass-through entities, and the
inherent risk of the federal program.
• We will review all federal and industry-specific publications and guidance and inform the City
of any recent changes.
• We will perform tests of controls to evaluate the effectiveness of the design and operation of
controls that we consider relevant to preventing or detecting material noncompliance with
applicable compliance requirements. If weaknesses in the internal controls are noted, we will
modify our audit program as needed.
• Our audit will include tests of transactions related to major federal award programs for
compliance with applicable compliance requirements and certain provisions of laws,
regulations, contracts and grant agreements.
• Our procedures will consist of the applicable procedures described in the Uniform Guidance
for the types of compliance requirements that could have a direct and material effect on each
EXHIBIT A-Page 3 of 9
EXHIBIT A
Scope of SeNices
of the City's major programs. The purpose of those procedures will be to express an opinion
on the City's compliance with requirements applicable to major programs in our report on
compliance issued pursuant to the Uniform Guidance.
• We will assist the City in completing and filing the Data Collection Form.
DETERMINING LAWS AND REGULATIONS SUBJECT TO AUDIT
Under provisions of AICPA Auditing Standards, management of the City is responsible for identifying
to its outside auditors any laws and regulations which would have a significant effect on the audit.
This would include federal laws (such as federal grant regulations), State laws (such as permitted
investments under the California Government Code) and local laws (such as restrictions on special
revenues levied by the City). After our selection as auditors, we will consult with City officials
regarding these matters, to determine what laws and regulations need to be evaluated in connection
with our audit. If a City is not able to identify specific laws and regulations that effect it, we have
references (California Government Code and Health and Safety Code) to the more common laws, rules
and regulations in our standard audit programs for the usual activities of a California City or Successor
Agency to the Redevelopment Agency which will assist us in identifying laws and regulations to review
in the audit.
CONSIDERATION OF FRAUD IN A FINANCIAL STATEMENT AUDIT
Under the provisions of AU Section 316, Consideration of Fraud in a Financial Statement Audit, we will
gather information necessary to identify risks of material misstatement due to fraud by (a) inquiring of
management and others within the City about the risks of fraud, (b) considering the results of the
analytical procedures performed in planning the audit, (c) considering fraud risk factors, and
(d) considering any other information that comes to our attention during the audit. Prior to the
commencement of final fieldwork, we will conduct a brainstorming session among the audit team
members to identify any specific risk factors based on our understanding the City. Also, prior to final
fieldwork, we will send a planning letter to all City Council members inquiring as to their knowledge of
any fraud. Should any fraud risk factors be identified, our audit plan will incorporate specific
procedures to address such risks.
IRREGULARITIES AND ILLEGAL ACTS
We will make an immediate, written report of all irregularities, illegal acts or indications of illegal acts
of which we become aware, to the following parties: Mayor, City Manager, Assistant City ManageG
and CFO/City Treasurer.
POTENTIAL AUDIT PROBLEMS
We do not anticipate any significant potential audit problems. If any potential audit problems are
identified, we will immediately discuss them with the City's management. Our approach is to
coordinate the resolution of any problems with the City's management. Considering our experience
with auditing governmental entities and resources, we expect minimal disruption to the City's
management in resolving any identified audit problems.
EXHIBIT A-Page 4 of 9
-....
EXHIBIT A
Scope of Services
AUDITS TO BE IN ACCORDANCE WITH GAAS AND OTHER REQUIREMENTS
We will audit the financial statements of the City and the component units noted on the preceding
page. The financial statements of all entities where the City exercises oversight will be combined with
the City's financial statements, in accordance with GASB requirements. Our audit will be in
accordance with auditing standards generally accepted in the United States of America as set forth by
the AICPA, and will include such auditing procedures as we consider necessary under the
circumstances. We will apply certain limited procedures, which consist principally of inquiries of
management regarding methods of measurement and presentation of required supplementary
information. However, we do not audit such information and do not express an opinion on it. Any
supplemental financial statements will be subjected to auditing procedures as we consider necessary
in relation to the financial statements taken as a whole. The scope of our audit will not include any
statistical information, and we will not express an opinion concerning it.
Our audits will conform with the guidelines set forth in the AICPA's Industry Audit Guide, Audits of
State and Local Governmental Units. Also, each examination will comply with the standards for
financial and compliance audits contained in the Government Auditing Standards, issued by the
U.S. General Accounting Office, the provisions of the Single Audit Act and the provisions of Title 2 U.S.
Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles/ and Audit
Requirement for Federal Awards (Uniform Guidance).
Also, we will perform an agreed-upon procedures review of the City's Gann Spending Limitation
Computation as required by Section 1.5 of Article XIIIB of the California Constitution. Our review will
be performed in conformance with the provision of the "League of California Cities Uniform
Guidelines".
AUDIT APPROACH
• Our audit approach is tailored to meet the technical requirements while maintaining professional
skepticism without forgetting that we provide a service. The following aspects of our audit
approach will add additional value to the audit services and minimize the amount of time spent
by the City's staff in dealing with the audit.
• We will assign experienced staff auditors including the in-charge field auditor having at least
3 years of experience. For first year engagements, all other staff will have at least 1 year of
experience. You will not spend time training our auditors.
• Whenever possible, we will use same format for audit supporting schedules used in prior years for
the current year audit. This will reduce time spent by the City staff in dealing with the audit when
a different audit firm is chosen.
• Throughout the year we are available as a resource to our clients in researching technical
questions, dealing with new pronouncements, reviewing complex financial entries and helping
with any other issues as they arise.
• The work papers will be reviewed by the manager or partner as field work is being completed to
minimize additional questions after the fieldwork is completed.
EXHIBIT A-Page 5 of 9
EXHIBIT A
Scope of Services
Our firm uses a governmental audit program which will be modified to the City of San Juan
Capistrano's operations to accommodate specific client circumstances. Our audit programs are
organized by the financial statement approach and general procedures. The requirements by the
Standards for assessing risk are utilized to modify the audit programs to focus on the higher risk areas
ofthe financial statements.
1. Audit Planning Procedures:
• Pre-audit conference with· the City to establish process of communication between the
audit team and City staff.
• Discuss any new accounting pronouncements to be implemented in the current year.
• Establish scope of work and timing of fieldwork.
2. Interim Fieldwork:
Gather information about the City and its environment, including internal control:
• Evaluate the design of internal controls that are relevant to the audit and determine
whether the control, either individually or in combination is capable of effecting,
preventing or detecting and correcting material misstatements.
• Determine that the controls have been implemented, that is, that the controls exist and that
the City is using it.
• Specific areas to review include:
Accounts payable/cash disbursements
Accounts receivable/cash receipts
Payroll disbursements
Utility billing process
Investment compliance
Property and equipment
• Review of minutes of the City of SanJuan Capistrano.
• Review of important contracts and debt agreements.
• Interim exit conference with the City to review results of interim fieldwork, including any
findings.
3. Final Audit Work:
During the final audit work, we will assess "risk" of material misstatement based on understanding
of the City's audit environment, including its internal control, to identify account balances to audit
that appear in the City's financial statements. Our audit programs will be specifically tailored to
address any significant risks identified. The Prepared by Client (PBC) list will be provided at least
one month in advance of fieldwork. Our work may include:
• Confirmation of cash and investments balances and testing of bank reconciliations.
• Confirm significant receivable balances or review subsequent cash receipts to verify
receivable balance.
• Search for unrecorded liabilities.
• Testing of interfund balances and transfers.
EXHIBIT A-Page 6 of 9
EXHIBIT A
Scope of Services
• Test capital asset additions and depreciation expense.
• Confirm long-term debt balances and review the accounting treatment of debt issued or
refunded.
• Test support for other significant assets or liabilities.
• Analytical procedures on balance sheet and revenue and expenditure accounts/ to evaluate
and explain unusual fluctuations from prior year balances or current year budgeted
amounts.
• Review of attorney letters for significant legal matters affecting the Citls financial position.
• An exit conference will be held to review any significant adjustments or'findings. · ·
The audit workpapers will be reviewed by our management team as the work is being performed
in the field so that at the conclusion of the fieldwork we are able to report any adjustments or
findings.
AUDIT APPROACH REDEVELOPMENT AGENCY /SUCCESSOR AGENCY
Recent legislation related to the dissolution of Redevelopment Agencies will impact our audit
approach as detailed below. Our procedures will include:
• Audit the balances reported for cash 1 investments1 receivables/ payables/ capital assets and
long term liabilities as of end of the year.
• Review the activity reported on ROPS.
• Review the activities of the Successor Agency to ensure compliance with AB 261 AB 1484 and
other relevant legislation enacted.
~
MANAGEMENT LETTERS
In connection with each audit1 a complete review of internal controls will be made of all significant
accounting procedures. Our firm uses an internal control questionnaire/ computer systems
questionnaire and narration to gain an understanding of the internal control process as part of our
audit. We will identify weaknesses and after discussion with the appropriate City staff, we will submit
a management letter which will identify weaknesses observed during these reviews and throughout
the audit. The management letter will also assess the effect of the management letter comments on
the financial reporting process and recommend steps towards eliminating the weaknesses.
EXHIBIT A-Page 7 of 9
EXHIBIT A
Scope of Services
SCOPE OF WORK AND TIMING
ENTITIES TO BE INCLUDED IN AUDIT
City of San Juan Capistrano
San Juan Capistrano Housing Authority
San Juan Capistrano Public Financing Authority
REPORTS TO BE ISSUED AND DUE DATES
City of San Juan Capistrano:
Comprehensive Annual Financial Report
Report on Compliance with Article XI liB
Appropriations Limit (GANN)
Management Letter
Audit Committee Letter
Single Audit Reports:
• Independent Auditors' Report on Internal Control
Over Financial Reporting and on Compliance and
Other Matters Based on Audit of Financial
Statements Performed in Accordance With
Government Auditing Standards
• Independent Auditors' Report on Compliance for
Each Major Program and on Internal Control Over
Compliance Required by the Uniform Guidance
and on the Schedule of Expenditures of Federal
Awards.
Data Collection Form Filing
San Juan Capistrano Housing Authority:
Financial Audit
State Controllers' Office Reports:
Annual Financial Report-City
Annual Street Report-City
Annual Financial Report-Public Financing Authority
Draft
November30
November30
November30
November 30
November30
January 4
November 11
N/A
N/A
N/A
Final*
December20
December20
December20
December20
December20
January 20
December1
January 31
As required by SCO
January 31
*Final dates included above reflect the date of the electronic copy. Hard copies will be provided by the dates included in
the RFP of January 5 (CAFR and single audit) and December 20 (GANN report, management letter, audit committee letter).
COMMITMENT TO DELIVER REPORTS ON A TIMELY BASIS
If all books and records, schedules and documents are made available to us by October 17, we make a
commitment to have audit team members available and to provide all reports by the due dates
specified above.
EXHIBIT A-Page 8 of 9
EXHIBIT A
Scope of Services
AUDIT TIMING
Assuming that the City's books are closed and ready for examination and that all necessary schedules
and documents are available for our use by October 17th each year, the suggested time schedule for
the various phases of the audit would be approximately as follows:
Entrance conference and audit planning meeting with key
City staff. Discussion of any prior audit concerns and the
performance of interim work.
Interim audit fieldwork and conference with City staff to
discuss results of interim fieldwork.
Final audit fieldwork and management review
Exit conference to summarize the results of the fieldwork
and to review significant findings
Deliver draft copies of reports
Deliver final reports
CLIENT REFERENCES
For a list of client references, see page 8.
Completed By
June 30
July 31
October28
November4
November30
See page 8
RETENTION OF AND ACCESS TO AUDIT WORKPAPERS
In accordance with provisions of the Uniform Guidance, GAO requirements, and the California Board
of Accountancy, our audit workpapers will be maintained for at least seven years after the date of the
report. These workpapers will be made available as necessary to your cognizant audit agency (or its
designee), to GAO representatives, or to any other federal or state agency needing access to the
workpapers. Also, our firm will respond to any reasonable inquiries of successor auditors and we will
allow any successor auditors to review our workpaper.
EXHIBIT A-Page 9 of 9
EXHJBIT B
Schedule of Charges/Payments
TOTAL All-INCLUSIVE MAXIMUM PRICE
Our maximum fees for the five years ending June 30, 2020 will be as follows:
Fiscal Year
Option Years
Description of Services 2015-16 2016-17 .. 20_17-1.8 . 2018-1~ 2019-20
Audit of City of San Juan Capistrano $ 29,260 $ 29,260 $ 29,995 $ 30,745 $ 31,515
Audit of San Juan Capistrano
Housing Authority 3,625 3,625 3,715 3,805 3,900
Single Audit, when applicable (1) 3,745 3,745 3,840 3,935 4,035
Preparation of Annual Street Report 1,250 1,250 1,280 1,310 1,345
Preparation of City State
Controller's Report 3,050 3,050 3,125 3,205 3,285
Preparation of San Juan Capistrano
Public Financing Authority State
Controller's Report 985 985 1,010 1,035 1,060
Preparation of CAFR 3,640 3,640 3,730 3,825 3,920
Out of pocket expenses (2)
Total Not to Exceed Fees $ 45,555 $ 45,555 $ 46,695 $ 47,860 $ 49,060
(1) This fee contemplates auditing two major programs. Additional major programs will be audited
for an additional cost of $2,000 each.
(2) Out of pocket expenses are included in the fees above.
EXHIBIT B-Page 1 of 2
EXHIBIT B
Schedule of Charges/Payments
HOURLY RATES FOR ADDITIONAL PROFESSIONAL SERVICES
If the City wishes us to perform consulting or other services outside the scope of the services
described herein, a separate written request from the City will be required. Our hourly rates
for these services during each year under the basic contract will be as follows:
Fiscal Year
Option Years
Position 2015-16 2016-17 2017-18 2018-19 2019-20
Partners $ 225 $ 225 $ 231 $ 236 $ 242
Managers 175 175 179 184 188
Supervisory Staff 125 125 128 131 135
Staff 90 90 92 95 97
Clerical 60 60 62 63 65
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EXHIBIT B -Page 2 of 2