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HomeMy WebLinkAbout2013-05-28 - AGENDA REPORTS - PROFESSIONAL AUDITING SERVICES (2)CONSENT CALENDAR DATE: SUBJECT: DEPARTMENT: Agenda Item: 12 CITY OF SANTA CLARIT.' AGENDA REPORT City Manager Approval: Item to be presented by: May 28, 2013 AWARD CONTRACT FOR PROFESSIONAL AUDITING SERVICES Administrative Services RECOMMENDED ACTION City Council: 1. Reject the nonresponsive proposal from Moss, Levy & Hartzheim, LLP, and award the Auditing Services contract to McGladrey LLP for an amount not to exceed $330,726 over three fiscal years, with an option for two annual renewals. Transfer salary savings of $44,189 from account 15100-5001.001 to account 12101-5161.002 (Accounting) to cover costs associated with the annual audit for the fiscal year ending June 30, 2013. Effective Fiscal Year 2013-14, increase ongoing base budget in account 12101-5161.002 by $46,333 and an additional $3,549 for Fiscal Year 2014-15. 4. Authorize the City Manager or designee to modify all documents to contract with the next lowest and/or qualified bidder/proposer in the event the awardee is unable to fulfill its obligations or perform, subject to City Attorney final document approval, contingent upon the appropriation of funds by the City Council in the annual budget for such fiscal year. BACKGROUND Annually, the City of Santa Clarita issues various audited financial and compliance reports. These reports are published to meet various federal, state, and other regulatory requirements, and to report to the City Council and the citizens of Santa Clarita on the City's annual financial status. The City's auditors are required by auditing standards to perform the audit to obtain a reasonable assurance about whether the financial statements prepared by management are "free of material APPROUED D misstatements" and to report on the results of the audit in the Independent Auditor's Report. The contract with the current audit firm (Marcum LLP) was awarded in 2009 and is now expiring. In order to ensure the City would be receiving the highest quality auditing services, a Request for Proposal for Professional Auditing Services was issued on February 27, 2013. The Request for Proposal (RFP) was published on Planetbids "Online," the City's purchasing site. The 27 audit firms registered on the site received an email notification that the City had posted its RFP. Three firms that had directly expressed interest in the City's next RFP for auditing services were notified that the RFP was available on the City's purchasing site. In addition, the "Big Four" accounting firms were also notified of the City's RFP. The following seven firms submitted proposals: McGladrey LLP Pun & McGeady, LLP White Nelson Diehl Evans, LLP Mayer Hoffman McCann P.C. Georger & Larson Harshwal & Company LLP Moss, Levy & Hartzheim, LLP After reviewing the submitted proposals, City staff determined the proposal from Moss, Levy & Hartzheim, LLP to be nonresponsive, as the firm did not return the required signed proposal form. Staff and a representative from an outside agency scored the proposals from the remaining six firms, evaluating their qualifications and experience, audit methodology and management approach, quality of personnel, and commitment to timeliness. Each of the six firms were interviewed by the evaluation panel. The evaluation committee selected Pun & McGeady and McGladrey LLP for an interview with a'second evaluation panel. As a result of this process, McGladrey LLP is recommended based on their ability to provide professional guidance, qualified staff, experience auditing comparable -sized cities, and the positive feedback received from their municipal clients contacted for references. McGladrey LLP is the fifth largest accounting firm in the U.S. with 2,400 public sector clients. The firm uses a risk-based audit approach and custom designs its audit plan and procedures responsive to the assessed risks of material misstatement. Unique risks and balances and individual material levels are identified by modifying the audit program for substantive test procedures. McGladrey uses a traditional testing method based on account balances, as well as an analytical review of fluctuations in account balances. In its analysis of the City's accounting internal controls, McGladrey LLP will include a review of the City's general computer controls and Information Technology (IT) general controls. To ensure the highest quality audit, McGladrey incorporates several reviews in its audit process. McGladrey's proposed 1,100 hours for the Fiscal Year 2012-13 audit, including the preparation of the annual financial reports, exceeds the average hours of the other five respondents by 40 percent. McGladrey's proposed hourly rate is comparable to the average rate of the other respondents and is lower than the rate for the next qualified proposer. Over 30 percent of the audit hours will be performed directly by firm partners and managers. An independent review of ��E the financial statements and key audit areas is performed by a partner. Based on the results of this competitive process, the annual cost to the City for acquiring auditing services will be $107,000 for Fiscal Year 2012-13, $110,210 for Fiscal Year 2013-14, and $113,516 for Fiscal Year 2014-15, for a total of $330,726 over three years. ALTERNATIVE ACTIONS Other direction as determined by City Council. FISCAL IMPACT The project cost for year one is $107,000. With the approval of the requested appropriation, adequate funds will be available in the Fiscal Year 2012=13 budget. The total contracted amount is not to exceed $330,726 over three fiscal years. ATTACHMENTS Draft Professional Services Agreement with McGladrey LLP is available in the City Clerk's Reading File Exhibit A - McGladrey LLP Cost Proposal for Audit Services is available in the City Clerk's Reading File -3- PROFESSIONAL SERVICES AGREEMENT D BETWEEN THE CITY OF SANTA CLARITA AND MCGLADREY LLP Contract No. 43-00175 This AGREEMENT is entered into this day of 20_, by and between the. CITY OF SANTA CLARITA, a municipal corporation and general law city ("CITY") and McGladrey LLP, ("CONSULTANT"). 1. CONSIDERATION. A. As partial consideration, CONSULTANT agrees to perform the work listed in the SCOPE OF SERVICES, below; and B. As additional consideration, CONSULTANT and CITY agree to abide by the terms and conditions contained in this Agreement; and C. As additional consideration, CITY agrees to pay CONSULTANT a sum not to exceed Three hundred thirty thousand, seven hundred twenty six dollars ($330,726) for CONSULTANT's services. CITY may modify this amount as set forth below. Unless otherwise specified by written amendment to this Agreement, CITY will pay this sum as specified in the attached Exhibit "A," which is incorporated by reference. 2. SCOPE OF SERVICES. A. CONSULTANT will perform services listed in the attached Exhibit "A," which is incorporated by reference. B. CONSULTANT will, in a professional manner, furnish all of the labor, technical, administrative, professional and other personnel, all supplies and materials, equipment, printing, vehicles, transportation, office space and facilities, and all tests, testing and analyses, calculation, and all other means whatsoever, except as herein otherwise expressly specified to be furnished by CITY, necessary or proper to perform and complete the work and provide the professional services required of CONSULTANT by this Agreement. 3. PERFORMANCE STANDARDS. While performing this Agreement, CONSULTANT will use the appropriate generally accepted professional standards of practice existing at the time of performance utilized by persons engaged in providing similar services. CITY will continuously monitor CONSULTANT's services. CITY will notify CONSULTANT of any deficiencies and CONSULTANT will have fifteen (15) days after such notification to cure any shortcomings to CITY's satisfaction. Costs associated with curing the deficiencies will be borne by CONSULTANT. Revised 1/2011 Page I of 10 DIAVT 4. PAYMENTS. For CITY to pay CONSULTANT as specified by this Agreement, CONSULTANT must submit a detailed invoice to CITY which lists the hours worked and hourly rates for each personnel category and reimbursable costs (all as set forth in Exhibit "A") the tasks performed, the percentage of the task completed during the billing period, the cumulative percentage completed for each task, the total cost of that work during the preceding billing month and a cumulative cash flow curve showing projected and actual expenditures versus time to date. 5. NON -APPROPRIATION OF FUNDS. Payments due and payable to CONSULTANT for current services are within the current budget and within an available, unexhausted and unencumbered appropriation of the CITY. In the event the CITY has not appropriated sufficient funds for payment of CONSULTANT services beyond the current fiscal year, this Agreement will cover only those costs incurred up to the conclusion of the current fiscal year. 6. ADDITIONAL WORK. A. If CONSULTANT believes Additional Work is needed to complete the Scope of Work, CONSULTANT will provide the CITY with written notification that contains a specific description of the proposed Additional Work, reasons for such Additional Work, and a detailed proposal regarding cost. 7. FAMILIARITY WITH WORK. A. By executing this Agreement, CONSULTANT agrees that it has: i. Carefully investigated and considered the scope of services to be performed; and ii. Carefully considered how the services should be performed; and iii. Understands the facilities, difficulties, and restrictions attending performance of the services under this Agreement. B. If services involve work upon any site, CONSULTANT agrees that CONSULTANT has or will investigate the site and is or will be fully acquainted with the conditions there existing, before commencing the services hereunder. Should CONSULTANT discover any latent or unknown conditions that may materially affect the performance of the services, CONSULTANT will immediately inform CITY of such fact and will not proceed except at CONSULTANT's own risk until written instructions are received from CITY. 8. TERM. The term of this Agreement will be from June 1, 2013 to December 31, 2015. Unless otherwise determined by written amendment between the parties, this Agreement will terminate in the following instances: A. Completion of the work specified in Exhibit "A." B. Termination as stated in Section 15. Revised 1/2011 Page 2 of 10 N E A V V 9. TIME FOR PERFORMANCE. A. CONSULTANT will not perform any work under this Agreement until: CONSULTANT furnishes proof of insurance as required under Section 22 of this Agreement; and ii. CITY gives CONSULTANT a written notice to proceed. B. Should CONSULTANT begin work on any phase in advance of receiving written authorization to proceed, any such professional services are at CONSULTANT's own risk. 10. TIME EXTENSIONS. Should CONSULTANT be delayed by causes beyond CONSULTANT's control, CITY may grant a time extension for the completion of the contracted services. If delay occurs, CONSULTANT must notify the CITY within forty-eight hours (48 hours), in writing, of the cause and the extent of the delay and how such delay interferes with the Agreement's schedule. The CITY will extend the completion time, when appropriate, for the completion of the contracted services. 11. CHANGES. CITY may order changes in the services within the general scope of this Agreement, consisting of additions, deletions, or other revisions, and the contract sum and the contract time will be adjusted accordingly. All such changes must be authorized in writing, executed by CONSULTANT and CITY. The cost or credit to CITY resulting from changes in the services will be determined in accordance with written agreement between the parties. 12. TAXPAYER IDENTIFICATION NUMBER. CONSULTANT will provide CITY with a Taxpayer Identification Number. 13. PERMITS AND LICENSES. CONSULTANT, at its sole expense, will obtain and maintain during the term of this Agreement, all necessary permits, licenses, and certificates that may be required in connection with the performance of services under this Agreement. 14. WAIVER. CITY's review or acceptance of, or payment for, work product prepared by CONSULTANT under this Agreement will not be construed to operate as a waiver of any rights CITY may have under this Agreement or of any cause of action arising from CONSULTANT's performance. A waiver by CITY of any breach of any term, covenant, or condition contained in this Agreement will not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition contained in this Agreement, whether of the same or different character. 15. TERMINATION. A. CITY may terminate this Agreement at any time with or without cause. B. CONSULTANT may terminate this Agreement at any time with CITY's mutual consent. Notice will be in writing at least thirty (30) days before the effective termination date. Revised 1/2011 Page 3 of 10 901V u C. Upon receiving a termination notice, CONSULTANT will immediately cease performance under this Agreement unless otherwise provided in the termination notice. Except as otherwise provided in the termination notice, any additional work performed by CONSULTANT after receiving a termination notice will be performed at CONSULTANT'S own cost; CITY will not be obligated to compensate CONSULTANT for such work. D. Should termination occur, all finished or unfinished documents, data, studies, surveys, drawings, maps, reports and other materials prepared by CONSULTANT will, at CITY's option, become CITY's property, and CONSULTANT will receive just and equitable compensation for any work satisfactorily completed up to the effective date of notice of termination, not to exceed the total costs under Section 1(C). E. Should the Agreement be terminated pursuant to this Section, CITY may procure on its own terms services similar to those terminated. F. By executing this document, CONSULTANT waives any and all claims for damages that might otherwise arise from CITY's termination under this Section. 16. OWNERSHIP OF DOCUMENTS. All documents, data, studies, drawings, maps, models, photographs and reports prepared by CONSULTANT under this Agreement are CITY's property. CONSULTANT may retain copies of said documents and materials as desired, but will deliver all original materials to CITY upon CITY's written notice. CITY agrees that use of CONSULTANT's completed work product, for purposes other than identified in this Agreement, or use of incomplete work product, is at CITY's own risk. 17. PUBLICATION OF DOCUMENTS. Except as necessary for performance of service under this Agreement, no copies, sketches, or graphs of materials, including graphic art work, prepared pursuant to this Agreement, will be released by CONSULTANT to any other person or public CITY without CITY's prior written approval. All press releases, including graphic display information to be published in newspapers or magazines, will be approved and distributed solely by CITY, unless otherwise provided by written agreement between the parties. 18. INDEMNIFICATION. CONSULTANT agrees to indemnify and hold CITY harmless from and against any claim, action, damages, costs (including, without limitation, attorney's fees), injuries, or liability, arising out of the performance of this agreement by CONSULTANT. Should CITY be named in any suit, or should any claim be brought against it by suit or otherwise, arising out of performance by CONSULTANT of services rendered pursuant to this Agreement, CONSULTANT will defend CITY (at CITY's request and with counsel satisfactory to CITY) and will indemnify CITY for any judgment rendered against it or any sums paid out in settlement or costs incurred in defense otherwise. 19. ASSIGNABILITY. This Agreement is for CONSULTANT's professional services. CONSULTANT's attempts to assign the benefits or burdens of this Agreement without CITY's written approval are prohibited and will be null and void. Revised 1/2011 Page 4 of 10 20. INDEPENDENT CONTRACTOR. CITY and CONSULTANT agree that CONSULTANT will act as an independent contractor and will have control of all work and the manner in which is it performed. CONSULTANT will be free to contract for similar service to be performed for other employers while under contract with CITY. CONSULTANT is not an agent or employee of CITY and is not entitled to participate in any pension plan, insurance, bonus or similar benefits CITY provides for its employees. Any provision in this Agreement that may appear to give CITY the right to direct CONSULTANT as to the details of doing the work or to exercise a measure of control over the work means that CONSULTANT will follow the direction of the CITY as to end results of the work only. 21. AUDIT OF RECORDS. CONSULTANT will maintain full and accurate records with respect to all services and matters covered under this Agreement. CITY will have tree access at all reasonable times to such records, and the right to examine and audit the same and to make transcript therefrom, and to inspect all program data, documents, proceedings and activities. CONSULTANT will retain such financial and program service records for at least three (3) years after termination or final payment under this Agreement. 22. INSURANCE. A. Before commencing performance under this Agreement, and at all other times this Agreement is effective, CONSULTANT will procure and maintain the following types of insurance with coverage limits complying, at a minimum, with the limits set forth below: Tyne of Insurance Limits Commercial general liability: $1,000,000 Professional Liability $1,000,000 Business automobile liability $1,000,000 Workers compensation Statutory requirement B. Commercial general liability insurance will meet or exceed the requirements of ISO -CGL Form No. CG 00 01 11 85 or 88. The amount of insurance set forth above will be a combined single limit per occurrence for bodily injury, personal injury, and property damage for the policy coverage. Liability policies will be endorsed to name CITY, its officials, and employees as "additional insureds" under said insurance coverage and to state that such insurance will be deemed "primary" such that any other insurance that may be carried by CITY will be excess thereto. Such endorsement must be reflected on ISO Form No. CG 20 10 11 85 or 88, or equivalent. Such insurance will be on an "occurrence," not a "claims made," basis and will not be cancelable or subject to reduction except upon thirty (30) days prior written notice to CITY. C. Professional liability coverage will be on an "occurrence basis" if such coverage is available, or on a "claims made" basis if not available. When coverage is provided on a "claims made basis," CONSULTANT will continue to renew the Revised 1/2011 Page 5 of 10 NNIa � V insurance for a period of three (3) years after this Agreement expires or is terminated. Such insurance will have the same coverage and limits as the policy that was in effect during the term of this Agreement, and will cover CONSULTANT for all claims made by CITY arising out of any errors or omissions of CONSULTANT, or its officers, employees or agents during the time this Agreement was in effect. D. Automobile coverage will be written on ISO Business Auto Coverage Form CA 00 0106 92, including symbol 1 (Any Auto). E. CONSULTANT will furnish to CITY duly authenticated Certificates of Insurance evidencing maintenance of the insurance required under this Agreement and such other evidence of insurance or copies of policies as may be reasonably required by CITY from time to time. Insurance must be placed with insurers with a current A.M. Best Company Rating equivalent to at least a Rating of "AMI." F. Should CONSULTANT, for any reason, fail to obtain and maintain the insurance required by this Agreement, City may obtain coverage at CONSULTANT'S expense and deduct the cost of such insurance from payments due to CONSULTANT under this Agreement or terminate. In the alternative, should CONSULTANT fail to meet anv of the insurance requirements under this agreement, City may cancel the Agreement immediately with no penalty, G. Should CONSULTANT'S insurance required by this Aereement be cancelled at any point prior to expiration of the policy, CONSULTANT must notify City within 24 hours of receipt of notice of cancellation. Furthermore. CONSULTANT must obtain replacement coverage that meets all contractual requirements within 10 days of the prior insurer's issuance of notice of cancellation. CONSULTANT must ensure that there is no lapse in coverage. 23. USE OF SUBCONTRACTORS. CONSULTANT must obtain CITY's prior written approval to use any consultants while performing any portion of this Agreement. Such approval must approve of the proposed consultant and the terms of compensation. 24. INCIDENTAL TASKS. CONSULTANT will meet with CITY monthly to provide the status on the project, which will include a schedule update and a short narrative description of progress during the past month for each major task, a description of the work remaining and a description of the work to be done before the next schedule update. 25. NOTICES. All communications to either party by the other party will be deemed made when received by such party at its respective name and address as follows: If to CONSULTANT: McGladrey LLP 18401 Von Karman Avenue Irvine, CA 92612-8531 Attention: Jeffrey M. Altshuler, Partner If to CITY: City of Santa Clarita 23920 Valencia Boulevard., Suite 300 Santa Clarita, CA 91355 Attention: Carmen Magaha, Finance Manager Revised 1/2011 Page 6 of 10 I E a V V Any such written communications by mail will be conclusively deemed to have been received by the addressee upon deposit thereof in the United States mail, postage prepaid and properly addressed as noted above. In all other instances, notices will be deemed given at the time of actual delivery. Changes may be made in the names or addresses of persons to whom notices are to be given by giving notice in the manner prescribed in this paragraph. 26. CONFLICT OF INTEREST. CONSULTANT will comply with all conflict of interest laws and regulations including, without limitation, CITY's Conflict of Interest Code (on file in the City Clerk's Office). It is incumbent upon the CONSULTANT or CONSULTING FIRM to notify the CITY pursuant to Section 25. NOTICES of any staff changes relating to this Agreement. A. In accomplishing the scope of services of this Agreement, all officers, employees and/or agents of CONSULTANT(S), unless as indicated in Subsection B., will be performing a very limited and closely supervised function, and, therefore, unlikely to have a conflict of interest arise. No disclosures are required for any officers, employees, and/or agents of CONSULTANT, except as indicated in Subsection B. Initials of Consultant B. In accomplishing the scope of services of this Agreement, CONSULTANT(S) will be performing a specialized or general service for the CITY, and there is substantial likelihood that the CONSULTANT'S work product will be presented, either written or orally, for the purpose of influencing a governmental decision. As a result, the following CONSULTANT(S) shall be subject to the Disclosure Category "1" of the CITY's Conflict of Interest Code: 27. SOLICITATION. CONSULTANT maintains and warrants that it has not employed nor retained any company or person, other than CONSULTANT's bona fide employee, 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 CONSULTANT's bona fide employee, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. Should CONSULTANT breach or violate this warranty, CITY may rescind this Agreement without liability. 28. THIRD PARTY BENEFICIARIES. This Agreement and every provision herein is generally for the exclusive benefit of CONSULTANT and CITY and not for the benefit of any other party. There will be no incidental or other beneficiaries of any of CONSULTANT's or CITY's obligations under this Agreement. 29. INTERPRETATION. This Agreement was drafted in, and will be construed in accordance with the laws of the State of California, and exclusive venue for any action involving this agreement will be in Los Angeles County. Revised 1/2011 Page 7 of 10 D01VT` 30. COMPLIANCE WITH LAW. CONSULTANT agrees to comply with all federal, state, and local laws applicable to this Agreement. 31. ENTIRE AGREEMENT. This Agreement, and its Attachments, sets forth the entire understanding of the parties. There are no other understandings, terms or other agreements expressed or implied, oral or written. There is ne (il) Attachment(s) to this Agreement. This Agreement will bind and inure to the benefit of the parties to this Agreement and any subsequent successors and assigns. 32. RULES OF CONSTRUCTION. Each Party had the opportunity to independently review this Agreement with legal counsel. Accordingly, this Agreement will be construed simply, as a whole, and in accordance with its fair meaning; it will not be interpreted strictly for or against either Party. 33. SEVERABILITY. If any portion of this Agreement is declared by a court of competent jurisdiction to be invalid or unenforceable, then such portion will be deemed modified to the extent necessary in the opinion of the court to render such portion enforceable and, as so modified, such portion and the balance of this Agreement will continue in full force and effect. 34. AUTHORITY/MODIFICATION. The Parties represent and warrant that all necessary action has been taken by the Parties to authorize the undersigned to execute this Agreement and to engage in the actions described herein. This Agreement may be modified by written amendment. CITY's executive manager, or designee, may execute any such amendment on behalf of CITY. 35. ACCEPTANCE OF FACSIMILE SIGNATURES. The Parties agree that this Agreement, agreements ancillary to this Agreement, and related documents to be entered into in connection with this Agreement will be considered signed when the signature of a party is delivered by facsimile transmission. Such facsimile signature will be treated in all respects as having the same effect as an original signature. 36. CAPTIONS. The captions of the paragraphs of this Agreement are for convenience of reference only and will not affect the interpretation of this Agreement. 37. TIME IS OF ESSENCE. Time is of the essence for each and every provision of this Agreement. 38. FORCE MAJEURE. Should performance of this Agreement be prevented due to fire, flood, explosion, acts of terrorism, war, embargo, government action, civil or military authority, the natural elements, or other similar causes beyond the Parties' reasonable control, then the Agreement will immediately terminate without obligation of either party to the other. 39. STATEMENT OF EXPERIENCE. By executing this Agreement, CONSULTANT represents that it has demonstrated trustworthiness and possesses the quality, fitness and capacity to perform the Agreement in a manner satisfactory to CITY. CONSULTANT represents that its financial resources, surety and insurance experience, service experience, completion ability, personnel, current workload, experience in dealing with private consultants, and experience in dealing with public agencies all suggest that CONSULTANT is capable of performing the proposed contract and has a demonstrated capacity to deal fairly and effectively with and to satisfy a public CITY. Revised 1/2011 Page 8 or 10 40. PROTECTION OF RESIDENT WORKERS. The City of Santa Clarita actively supports the Immigration and Nationality Act (INA), which includes provisions addressing employment eligibility, employment verification, and nondiscrimination. Under the INA, employers may hire only persons who may legally work in the United States (i.e., citizens and nationals of the U.S.) and aliens authorized to work in the U.S. The employer must verify the identity and employment eligibility of anyone to be hired, which includes completing the Employment Eligibility Verification Form (I-9). The CONSULTANT shall establish appropriate procedures and controls so no services or products under the Contract Documents will be performed or manufactured by any worker who is not legally eligible to perform such services or employment. [SIGNATURES ON NEXT PAGE] Revised 1/2011 Page 9 of 10 N N a T 7 IN WITNESS WHEREOF, the parties hereto have executed this contract the day and year first hereinabove written. FOR CONSULTANT: By: Print Name & Title Date: FOR CITY OF SANTA CLARITA: KENNETH W. STRIPLIN, CITY MANAGER By: City Manager Date: ATTEST: By: City Clerk Date: APPROVED AS TO FORM: JOSEPH M. MONTES, CITY ATTORNEY By: City Attorney Date: Revised 1/2011 Page 10 or 10 Cost proposal to provide audit services in response to RFP No. AS -12-13-25 City of Santa Clarita May 16, 2013 City of Santa Clarita Attn: Ms. Jennifer Killian, Buyer Page 2 May 16, 2013 City of Santa Clarita Purchasing 23920 Valencia Blvd., Suite 120 Santa Clarita, CA 91355-2196 Dear Ms. Jennifer Killian, Buyer: McGladrey LLP (McGladrey) is pleased to present the following pricing information relative to auditing the City of Santa Clarita (the City) financial statements and compliance for the fiscal years ending June 30, 2013, 2014 and 2015 as described in RFP No. AS -12-13-25 and related Addendum No. 1. The requested information is as follows: All-inclusive maximum pricing containing direct and indirect costs and out-of-pocket expenses ATTACHMENT A (page 1) AUDIT WORK PRODUCT COST SHEET Based upon your understanding of the needs as described in the Request for Proposal, your proposed fees for this engagement are as follows: Audit Services 2012.13 2013.14 2014.15 3 -Year Total City Audit S 68,850 $ 70,916 S 73,043 $212,808 Transit Audit $ 1,500 $ 1,545 $ 1,591 $ 4,636 Single Audit — including report preparation and submission to Federal Audit Clean n house $ 13,500 $ 13,905 $ 14,322 $ 41,727 AB2766 Audit S 1,000 $ 1,030 $ 1,061 $ 3, 091 GANN Limit Review S 700 S 721 S 743 $ 2,164 SC Watershed Recreation and Conservation Authority Audit S 2,100 $ 2,163 $ 2,228 $ 6,491 Open Space Preservation District Audit $ 1,200 $ 1,236 $ 1,273 $ 3,709 SC Public Television Authority Audit Bi -annual $ 1, 300 $ 1, 339 $ 1,379 $ 4,018 Subtotal I S 90,150 5 92,855 S 95,640 S 278,645 City of Santa Clarita Attn: Ms. Jennifer Killian, Buyer Page 3 ATTACHMENT A (page 2) Financial Statement WAGE RATE ANNUALLY PER HOUR 125 Preparation 2012-13 2013-14 2014-15 3-Yeer Total Comprehensive Annual Financial $116-$123 20 $64-$68 1,100 Report g 6,200 $ 6,386 $ 6,578 $ 19,164 Tramrt Report $ 700 $ 721 $ 743 $ 2,164 State Controller Reporting for Cloy and Public Financing Authority $ 2,800 $ 2, 884 $ 2,971 $ 8,655 State Controller Reporting for Trarsrt (inckides Specmlimd Services report) $ 500 $ 515 Is 530 $ 1,545 AS 2766 Report $ 550 $ 566 Is 563 $ 1,699 SC 'Watershed Recreation and Cor,servation Auttnrdy Report $ 600 $ 618 $ 636 $ 1,854 Open Space Preservation District Report $ 500 $ 515 $ 530 $ 1,545 SC Pubic Television Ardhonty Report (Bi -annual) include In 2013-14 $ 0 WA $ 0 Subtotal $ 11,850 $ 12,205 $ 12,571 $ 36,626 POSITION Partners Managers Supervisory Staff Staff Other(Specify) Clerical support staff Total Annual Hours: ESTIMATED HOURS WAGE RATE ANNUALLY PER HOUR 125 $366-$38B 225 $249-$264 370 $140-$157 360 $116-$123 20 $64-$68 1,100 City of Santa Clarita Attn: Ms. Jennifer Killian, Buyer Page 4 ATTACHMENT B SCHEDULE OF PROFESSIONAL FEES AND EXPENSES Project Labor Costa POSITION 2012-13 2013-14 2014-15 Partners $366 $377 $388 Managers $249 $256 $264 Supervisory Staff $148 152 $152 Staff $116 $119 $123 Other (Specify): Clerical au ort staff $ 64 $ 66 $ 68 MISCELLANEOUS EXPENSES Out-of-pocket expenses Meals and lodging Transportation CAFR printing Other (Specify) Subtotal -0- $3,000 -0- -0- $3,090 $3,183 $1.000 $1,030 $1,061 $1.000 $1,030 $1,061 WE 000 Total maximum price for the audit (include annual subtotals from Attachment A $107,000 -0- -0- $5,150 $5,305 $110,210 $113,516 Fee assumptions Our not -to -exceed fee proposal is contingent upon our continued understanding of your requirements as described in our proposal. Our fees are predicated on existing GASB pronouncements through Statement No. 70. Should there be new pronouncements beyond Statement No. 70 that require significant assistance from us in implementation during our contract period or significant management turnover, our fees may require revision. Please note for the miscellaneous expenses, these amounts are based on estimates. If actual amounts incurred for meals and lodging, transportation and CAFR printing are less than these estimates, we will reduce these amounts to actual costs to the City. If, however, actual amounts are higher than these estimates, we will not pass the difference to the City and instead absorb those additional costs ourselveF City of Santa Clarita Attn: Ms. Jennifer Killian, Buyer Page 5 Additionally, our fees for the Single Audit procedures and required reporting assume that the City is a low risk auditee as defined by OMB Circular A-133 and are predicated on no more than three major programs annually (average annual major program based on the City's single audit for the fiscal years ended June 30, 2012 and 2011). If additional major programs are required (above three annually), or the City's risk level changes (from low risk to high risk) our fees would be adjusted by $6,500 for each additional major program identified. Rates for additional professional services The City agrees that it will not associate us with any public or private securities offering without first obtaining our consent. Therefore, the City agrees to contact us before it includes our reports or otherwise makes reference to us, in any public or private securities offering. We may conclude that we are not otherwise associated with the proposed offering and that our association with the proposed offering is not necessary, providing the City agrees to clearly indicate that we are not associated with the contents of the official statement or memorandum. Should the City require the inclusion of the auditor's report (opinion) in the official statement of new debt issues, McGladrey policy requires additional post -audit reviews as well as a review of the draft official statement. Our additional charges for these efforts range from $9,900 to $13,900 for each new debt issue. These fees are subject to negotiation. Additional services not included in this proposal will be based on the preceding discounted billing rates based on the level of experience required. Some of the examples of services outside the scope of this proposal which would be charged to the City at our discounted billing rates, include new audit reports that may be required as a result of the passage of laws or regulations, separately issued financial statements for component units not included within the scope of this proposal and/or other attestation services that the City may require. Informal advice and consultation fees, not requiring significant research or a formal report, are included in the total all-inclusive maximum price. I certify that I, Jeffrey M. Altshuler, am entitled to represent the firm, empowered to submit the bid, and authorized to sign a contract with the City. Sincerely, McGladrey LLP A& 6?1�gL effrey M. Altshuler Partner, West Region Public Sector Practice Leader jeffrey.altshuler@mcgladrey.com Peter George Director, West Region Assurance Practice peter.george@mcgladrey.com www.mcgladrey.com McGladrey LLP is the largest U.S. provider of assurance, tax and consulting services focused on the middle market, with more than 6,500 professionals and associates in 75 offices nationwide. McGladrey is a licensed CPA firm and a member of RSM, the seventh largest global network of independent accounting, tax and consulting firms. McGladrey, the McGladrey signatures, The McGladrey Classic logo, The power of being understood, Power comes from being understood and Experience the power of being understood are trademarks of McGladrey LLP. For more information, join our Facebook fan page at McGladrey News, follow us McGladrey on Twitter @McGladrey, and connect with us on Linkedln and YouTube. © 2013 McGladrey LLP. All Rights Reserved.