10-0511_DIEHL, EVANS & COMPANY_Personal Services Agreement First Amd (CRA)FIRST AMENDMENT TO
PERSONAL SERVICES AGREEMENT
THIS FIRST AMENDMENT TO THE PERSONAL SERVICES AGREEMENT
between the San Juan Capistrano Community Redevelopment Agency ("Agency") and
Died, Evans & Com any, LLP, ("Consultant") is made and entered into, to be effective the
103- day of , 2010, as follows:
RECITALS
WHEREAS, the Agency and Consultant have entered into that Personal Services
Agreement dated April 19th, 2005, for Annual Auditing Services (the "Agreement"); in the
amount of $42, 988, and
WHEREAS, the Agency and Consultant desire to amend the terms of the Agreement
as provided hereunder.
................................... .................. .....................................................................................................................................................................................................................
AMENDMENT
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained therein, Agency and Consultant agree to the amend Section 2 and 3.1 of the
Agreement as follows:
2011.
Section 2. Term.
The Agreement and services required shall be completed by no later than June 30,
Section 3. Compensation.
3.1 Amount.
The Agency hereby agrees to pay the Consultant an additional sum of
$7,173, for a revised contract price of $50,161 to Consultant for the services described in
Exhibit "A" attached and incorporated herein by reference
All other provisions of the Agreement not amended hereunder shall remain in full
force and effect.
Signature page to follow -
54002S 1
SAN JUAN CAPISTRANO
COMMUNITY REDEVELOPMENT AGENCY
By:
11 Joe ait, Exe utive Director
ATT4
M1
aria rNAgency Sntary
'a
APPROVE AS TO FORM
BY: AIL&I `tic,k—
Omar Sandoval, Agency Cou.nbil
-2-
54CO28A
CONSULTANT
By:
DIE IL, EVANS & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
MICIIAEL R, L(IDIN_ CPA
A PARTNERSHT INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W.SPRAKLR.CPA
NITIN P. PATLL, CPA
RUFRT 7. CALLAN AN. CPA
PMUP It HOLTKAMP. CPA
*,
5 CORPORATE PARR, SUITE 100 *TIIaMAS M. PERLOWSKI, CPA
IRVINE, CALIFORNIA 92606-5165 'HARVEYI. SCrIROEMR. CPA
_ (349) 399-0600 S FAX (949) 399-0610 xI�NNLTx R AWS, CPA
vvww.daellleval1s.col3l
'WILLIANI C. PENTZ, CPA
April 15, 2010 .p rROrESSIONAL C)kPQRAT]ON
Ms. Cindy Russell
Assistant City Manager r'
Administrative Services Director
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Dear Ms. Russell:
We are pleased to confirm our understanding of the services we are to provide the City of San Juan
Capistrano and the San Juan Capistrano Community -Redevelopment Agency (the City) for the year
ending June 30, 2010. We will audit the financial statements of the goverrunental activities, the
business -type activities, each major fund, and the aggregate remaining fund information, which
collectively cori2prisc the basic financial statements, of the City as of and for the year ending
June 30, 2010, Accounting standards generally accepted in the United States of America provide for
certain required supplementary information (RSI), such as management's discussion and analysis
(MD&A), to accompany the City's basic financial statements. As part of our engagement, we will
apply certain limited procedures to the City's RSI. These limited procedures will consist principally of
inquiries of management regarding the methods of measurement and presentation, which management
is responsible for affirming to us in its representation letter. Unless we encounter problems with the
presentation of the RSI or with procedures relating to it, we will disclaim an opinion on it. The
following RSI is required by generally accepted accounting principles and will be subjected to certain
limited procedures, but will not be audited:
1) Management's Discussion and. Analysis.
2) Budgetary Comparison Schedules - General and Major Special Revenue Funds.
Supplementary information other than RST, such as combining and individual fund financial
statements, also accompanies the City's basic financial statements. We will subject the following
supplementary information to the auditing procedures applied in our audit of the basic financial
statements and will provide an opinion on it in relation to the basic financial statements:
1) Combining and individual nonmajor fund financial statements.
2) Schedule of expenditures of federal awards.
OTHER OFFICES AT:
-1-
2965 ROO,SEWELI' STREET
CARLSBAD, CALIFORNIA 92008-23S9
(760) 729-2343 • FAX (760) 739-7234-
6I3 W, VALLEY PARKWAY. SUITE 330
ESCONDIDO, CALIFORNIA 92025-2598
(760) 741-3141 • FAX {760) 741-9890
Ms. CindyRussell April 15, 2010
City of San Juan Capistrano Page 2
The following additional information accompanying the basic financial statements will not be
subjected to the auditing procedures applied in our audit of the financial statements, and for wbich our
auditor's report will disclaim an opinion:
1) Introductory Section.
2) Statistical Section.
Audit Objectives:
The objective of our audit is the expression of opinions as to whether your basic financial statements
are fairly presented, in all material respects, in conformity with accounting ,principles generally
accepted in. the United States of A3nerica and to report on the fairness of ,the additional information
referred to in the first paragraph when considered in relation to the basic financial statements taken as a
whole. The objective also includes reporting on:
• Internal control related to the financial statements and compliance with the provisions of
applicable laws, regulations, contracts, agreements, and grants, noncompliance with which
could have a material` effect on the financial statements in. accordance with Government
Auditing Standards.
• Internal control related to major programs and an opinion (or disclaimer of opinion) on
compliance with laws, regulations, and the provisions of contracts or grant agreements that
could have a. direct and material effect or. each major program in accordance with the Single
Audit Act Amendments of 1996 and OMB Circular A-133, Audits of States Local
Governments and Non -Profit Organizations.
The reports on internal control and compliance will each include a statement that the report is intended.
for the information and use of the audit committee, management, specific legislative or regulatory
bodies, federal awarding agencies, and if applicable, pass-through entities and is not intended to be and
should not be used by anyone other than these specified parties.
Our audit will be conducted in accordance with auditing standards generally accepted in. the United
States of America; the standards for financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996;
and the provisions of OMB Circular A-133, and will include tests of accounting records, a
determination of major program(s) in accordance with Circular A-1.33, and other procedures we
consider necessary to enable. us to express such opinions and to render the required reports. If our
opinions on the financial staternents or the Single Audit compliance opinions are ether than
unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to
complete the audit or are unable to form or have not formed opinions, we may decline to express
opinions or to issue a report as a result of this engagement.
Ms. Cindy Russell
City of San Juan Capistrano
Management Responsibilities:
April 17, 2010
Page 3
Management is responsible for the basic financial statein.ents and all accompanying information as
well as all representations contained therein. Management is also responsible for preparation of the
schedule of expenditures of federal awards in. accordance with the requirements of OMB Circular A-
133. As part of the audit, we will assist with preparation of your financial statements, schedule of
expenditures of federal awards, and related notes. You are responsible for making all management
decisions and performing all management functions relating to the financial statements, schedule of
expenditures of federal awards, and related notes and for accepting full responsibility for such
decisions. You will be required to acknowledge in the management representation letter our assistance
with preparation of the financial statements and the schedule of expenditures of federal awards and that
you have reviewed and approved the financial statements, schedule of expenditures of federal awards,
and related notes prior to their issuance and have accepted responsibility for them. Further, you are
required to designate an individual with suitable skill, knowledge, or experience to oversee any
nonaudit services we provide and for evaluating the adequacy and results of those services and
accepting responsibility for them.
Management is responsible for establishing and maintaining effective internal controls, including
internal controls over compliance, and for monitoring ongoing activities, to help ensure that
appropriate goals and objectives are met. You are also responsible for the selection and application of
accounting principles; for the fair presentation in the financial statements of the respective financial
position of the governmental activities, the business -type activities, the aggregate discretely presented
component units, each major fund, and the aggregate remaining fund information of the City and the
respective changes in financial position and, where applicable, cash flows in conformity with U.S.
generally accepted accounting principles; and for compliance with applicable laws and regulations and
the provisions of contracts and grant agreements.
Management is also responsible for making all financial records and related information available to us
and for ensuring that management and financial information is reliable and properly recorded. Your
responsibilities also include, including identifying significant vendor relationships in which the vendor
has responsibility for program compliance and for the accuracy and completeness of that information.
Your responsibilities include adjusting the financial statements to correct material misstatements and
confirming to us in the representation letter that the effects of any uncorrected misstatements
aggregated by us during the current engagement and pertaining; to the latest period presented are
immaterial, both individually and in the aggregate, to the financial statements taken as a whole.
You are responsible for the design and implementation of programs and controls to prevent and detect
fraud, and for inforaning-us about all known or suspected fraud or illegal acts affecting the government
involving (1) management, (2) employees who have significant roles in internal control, and (3) others
where the fraud or illegal acts could have a material effect on the financial statements. Your
responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud
affecting the government received in communications from employees, former employees, grantors,
regulators, or others. In addition, you are responsible for identifying and ensuring that the entity
complies with applicable laws, regulations, contracts, agreements, and grants. Additionally, as required
by OMB Circular A-] 33, it is management's responsibility to follow up and take corrective action on
reported audit findings and to prepare a summary schedule of prior audit findings and a corrective
action plan.
Ms. Cindy Mussell April 15, 20'1.0
City of San Tuan Capistrano Page 4
Management Responsibilities (Continued):
Management is responsible for establishing and maintaining a process for tracking the status of audit
findings and recommendations. Management is also responsible for identifying for us previous
financial audits, attestation engagements, performance audits, or other studies related to the objectives
discussed in the Audit Objectives section of this letter. This responsibility includes relaying to 'us
corrective actions taken to address significant findings and recommendations resulting from those
audits, attestation engagements, performance audits, or studies. You are also responsible for providing
management's views on our current findings, conclusions, and recommendations, as well as your
planned corrective actions, for the report, and for the timing and format for providing that inforrn.ation.
Audit Procedures - General:
An audit includes examining, on a test basis, evidence supporting the amounts, and disclosures in the
financial statements; therefore, our audit will involve judgnnent about the number of transactions to be
examined and the areas to be tested. We will plan and perforin the audit to obtain reasonable rather
than absolute assurance about whether the financial. statements are free of material misstatement,
whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or
(4) violations of laws or governmental regulations that are attributable to the entity or to acts by
management or employees acting on behalf of the entity. Because the determination of abuse is
subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of
detecting abuse.
Because an audit is designed to provide reasonable, but not absolute assurance and because we will not.
perforrn a detailed examination of all transactions, there is a risk that material misstatements or
noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect
immaterial misstatements or violations of laws or governmental regulations that do not have a direct
and material effect on the financial statements or major programs. However, we will inform you of any
material errors and any fraudulent financial reporting; or misappropriation of assets that come to our
attention. We will also inform you of any violations of laws or governmental regulations that come to
our attention, unless clearly inconsequential. We will include such matters in the reports required for a
Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not
extend to any later periods for which we are not engaged as auditors.
Our procedures will include tests of documentary evidence supporting the transactions recorded in the
accounts, and may include tests of the physical existence of inventories, and direct confirmation of
receivables and certain other assets and liabilities by correspondence with selected individuals,
creditors, and financial institutions. We will request written representations from your attorneys as part
of the engagement, and they may bill you for responding to this inquiry. At the conclusion. of our
audit, we will also require certain written. representations from you about the financial statements and
related matters.
Ms. Cindy Russell
City of San Tuan Capistrano
Audit Procedures - Internal Controls:
April 15, 2010
Page 5
Our audit will include obtaining an understanding of the entity and its environinent, including internal
control, sufficient to assess the risks of material misstatement of the financial statements and to design
the nature, tinning, and extent of further audit procedures. 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 OMB Circular A-133, 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 OMB Circular A-133.
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 OMB Circular A-133.
Audit Procedures - Compliance -
As part of obtaining; reasonable assurance about whether the financial statements are free of material
misstatement, we will perforin tests of the City's compliance with applicable laws and regulations and
the provisions of contracts and agreements, including grant agreements. However, the objective of
those procedures will not be to provide an opinion on overall compliance and we will not express such
an opinion in our report on compliance issued pursuant to Government Auditing Standards.
OMB Circular A-133 requires that we also plan and perform the audit to obtain reasonable assurance
about whether the auditee has complied with applicable laws and regulations and the provisions of
contracts and grant agreements applicable to major programs. Our procedures will consist of test of
transactions and other applicable procedures described in the OMB Circular A-133 Compliance
Supplement for the types of compliance requirements that could have a direct and material effect on
each 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 each of its major programs in our report on
compliance issued pursuant to OMB Circular A-133.
Ms. Cindy Russell
City of San Tuan Capistrano
Audit Administration, Fees and Other:
Noted below is a listing of work required by City staff to assist in the audit.
1. Technical assistance in familiarizing our staff with:
April 15, 2010
Page 6
® The flow of information through the various departments and accounting systems.
• Reports generated by your accounting system.
• The system of internal controls.
• Controls established to monitor compliance with. federal grants.
2. Preparation of trial balances for all funds, after posting of all year end journal entries.
3. Preparation of schedules supporting all major balance sheet accounts, and. selected revenue and
expenditure accounts.
4. Typing of all confirmation requests.
5. Pulling and refiling of all supporting documents required for audit verification.
6. Assistance with the preparation of the CAFR and notes to the financial statements, including:
a.. Determination of major funds.
b. Detennination of general and program revenues and allocation of program revenues to:
1. charges for services,
2. operating grants and contributions, and
3. capital grants and contributions.
c. Determining components of net assets into capital_ assets net of related debt, restricted and
unrestricted assets.
d. Assistance in determining the amounts to be reported. (1) in the Reconciliation of the Statement
o f . Revenues, Expenditures and Changes in Fund Balances of Govermnental Funds to the
Statement of Activities and (2) the Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets.
7. Preparation of the management's discussion and analysis, transmittal letter and all statistical tables
for the CAFR.
We will comply with all other provisions of our technical. and cost proposals dated February 16, 2005,
which is incorporated herein by reference.
Ms. Cindy Russell
City of San Juan Capistrano
Audit Administration, Fees and Other (Continued):
Our maximum annual fees for the year ending June 30, 2010 are as follows:
City:
Audit (1)
Redevelopment Agency:
Audit
(1) Includes single audit and GANN verification.
April 1 5, 2010
Page 7
$ 28,962
7,173
36.135
The maximum annual fees stipulated herein contemplate that conditions satisfactory to the normal
progress and completion of the examination will be encountered and the City accounting personnel
will furnish the agreed upon assistance in connection with the audit. However, if unusual
circumstances are encountered which snake it necessary for us to do additional work; we shall report
such conditions to the responsible City officials and provide the City with an estimate of the additional
accounting fees involved. You may terminate our services or we may withdraw from this engagement
at any time. Any disputes arising under this agreement shall be mediated ,under the rules of the
American Arbitration Association.
At the conclusion of the engagement, we will complete the appropriate sections ofthe Data Collection
Dorm that summarizes our audit findings. It is management's responsibility to submit the reporting
package (including financial statements, schedule of expenditures of federal awards, summary
schedule of prior audit findings, auditors' reports, and corrective action plan) along with the Data
Collection Form to the federal audit clearinghouse. We will coordinate with you the electronic
submission and certification. If applicable, we will provide copies of our report for you. to include with
the reporting package you will submit to pass-through entities. The Data Collection Form and the
reporting package must be submitted within the earlier of 30 days after receipt of the auditors' reports
or nine months after the end of the audit period, unless a longer period is agreed to in advance by the
cognizant or oversight agency for audits.
The workpapers for this. engagement are the property of Diehl, Evans and Company, LLP and.
constitute confidential information._ However, we may be requested to make certain workpapers
available to grantor agencies pursuant to authority given to it by law or regulation. If requested, access
to such workpapers will be provided under the supervision of our personnel. Furthermore, upon
request, we may provide photocopies of selected workpapers to the grantor agencies. The grantor
agencies may intend., or decide, to distribute the photocopies or information contained therein to
others, including other governmental agencies.
Ms. Cindy Russell April 15, 201.0
City of San Juan Capistrano Page g
Audit Administration, Fees and Other (Continued):
In accordance with our firm's current record retention policy, all of your original records will be
returned to you. at the conclusion of this engagement. Our accounting workpaper files will be kept for
a period of seven years after the issuance of the audit report. All other files will be kept for as long as
you retain us as your accountants. However, upon termination of our service, all records will be
destroyed after a period of seven years. Physical deterioration or catastrophic events may further
shorten the life of these records. The working papers and files of our firm are not a substitute for your
origival records.
Government_ Auditing Standards require that we provide you with a copy of our most recent external
peer review report and any letter of comment, and any subsequent peer review reports and letters of
comment received during the period of the contract. Our 2009 peer review accompanies this letter,
We appreciate the opportunity to be of service to the City of San Juan Capistrano and believe this letter
accurately summarizes the significant terms of our engagement. If you have any questions, please let
us know. If you agree with the terms of our engagement as described in this letter, please sign the
enclosed copy and return it to us.
Very truly yours,
DIEHL, EVANS R COMPANTY, LLP
?titin. P. Patel, CPA.
Engagement Partner
RESPONSE:
This letter correctly sets forth the understanding
of the City of San Juan Capistrano
Title
Date
"HEIDENREICH, PLLC
10201 S. 51" Street #170
Phoenix, AZ 85044
(480)704-6301 fax 785-4619
System Review Report
January 28, 2009
To the Owners of
Diehl, Evans & Company, LLP
and the Peer Review Committee of the CA Society of CPAs
We: have reviewed the system of quality control for the accounting and auditing practice of Diehl,
Evans & Company, LLP (the firm) in effect for the year ended September 30, 2008. Our peer
review was conducted in accordance with the Standards for Performing and Reporting on Peer
Reviews established by the Peer Review Board of the American Institute of Certified Public
Accountants. The firm is responsible for designing a system of quality control and complying with
it to provide the firm with reasonable assurance of performing and reporting in conformity with
applicable professional standards in all material respects. Our responsibility is to express an
opinion on the design of the system of quality control and the firm's compliance therewith based
on our review. The nature, objectives, scope, limitations of, and the procedures performed in a
System Review are described in the standards at www.aicpa.org/prsummary.
As required by the standards, engagements selected for review included engagements performed
under the Government Auditing Standards and audits of employee benefit plans.
In our opinion, the system of quality control for the accounting and auditing practice of Diehl,
Evans & Company, LLP in effect for the year ended September 30, 2008 has been suitably
designed and complied with to provide the firm with reasonable assurance of performing and
reporting in conformity with applicable professional standards in all material respects. Finns can
receive a rating of pass, pass with deficiency{ies) or tail. Diehl, Evans & Company, LLP has
received a peer review rating of pass.
Heidenreich & Heidenreich, CPAs, PLLC
32400 PASEO AOELANTO
SAN JUAN CAPISTRANO, CA 92675
(949) 493-1171
(949) 493-1053 FAx
www sanjuancapistrano. org
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Diehl, Evans & Company, LLP
5 Corporate Park, Suite 100
Irvine, CA 92606-5165
DATE: May 11, 2010
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ME=MBERS OF THE CITY COUNCIL
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SAM ALLEVATp
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THOMAS W. HR€BAR
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MARK NIELSEN
DR. LONDRES USO
FROM: Christy Jakl, Deputy City Clerk (949) 443-6310
RE; First Amendment to Personal Services Agreement — Annual Auditing Services (City &
Community Redevelopment Agency)
Thank you for maintaining documentation confirming compliance with the terms of the
agreement related to insurance,
Please keep in mind this documentation must remain current with our office during the term of
this agreement. If you have questions related to insurance requirements, please call me at
(949) 443-6310.
If you have questions concerning the agreement, please contact Laura Rocha, Accounting
Manager at (949) 443-6307.
An original agreement is enclosed for your records.
Cc: Laura Rocha, Accounting Manager
San Juan Capistrano: Preserving- the Fast to Enhance the Future
0 Printed on IW recycled paper
Today's Date: May, 4 2010 Transmittal Routing
(Check All That Apply)
❑ City Attorney
❑ City Manager
❑ City Clerk
CIP No. (if any):
Project Manager's Last Name: Rocha Phone Extension: 6307
Council or CRA Meeting Date (if applicable):
APPROVING AUTHORITY: (Check One)
® Mayor
CRA Chair
J City Manager
Provide (1) executed original contract for each signing party, including the City. If the agreement is to be
recorded — only (1) original will be recorded with certified copies going to other parties.
Please provide the mailing address of any party to receive an agreement — unless the mailing address is
included within the body of the agreement:
Name(s) 1 Street _ City St Zig
OTHER INSTRUCTIONS:
F
a .JJ _AJ
ffVJL-- �21) -- _ .
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Form Date: 61-2004 D - 7