Moss, Levy & Hartzheim LLP - ProposalCITY OF LA QUINTA
PROPOSAL FOR PROFESSIONAL
AUDITING SERVICES RFP
For the Fiscal Years Ending June 30,2017 through 2019
(Optional Fiscal Years Ending June 30,2020 and 2021)
I
Submitted By:
Moss, Levy & Hartzheim, LLP
5800'Hannum Avenue, Suite E
Culver City, California 90230
Phone; (310) 670-2745
Fax: (310) 670-1689
Email: mlhbh@mlhcpas.com
Submitted On:
February 28,2017
Contact Person:
Craig A. Hartzheim, CPA: Partner
Ron A. Levy, CPA: Partner
Hadley Y. Hui, CPA: Partner
CITY OF LA QUINTA
TECHNICAL PROPOSAL
TABLE OF CONTENTS
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I—
Page
Transmittal Letter ,1
Technical Proposal:
n
f Independence 1
License to Practice in California 1r
Firm Qualifications and Experience,1
Partner, Supervisory and Staff Qualifications and Experience 6
Similar Engagements with Other Governments Entities 7
Specific Audit Approach ,9
Insurance 15
Identification of Anticipated Potential Audit Problems 15
Appendices:
Appendix A - Current and/or Recently Completed Government Audits 16
Appendix B — Peer Quality Review Report 18
Appendix C — Resumes 19
Appendix D - References ,26
Appendix E - Segmentation and Budgeted Hours by Segment ,27
,28Appendix F - Disadvantaged and Minority Business Certification
,29Appendix G - Insurance Certificate,
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MOSS, LEVY & HARTZHEIM LLP
CERTIFIED PUBLIC ACCOUNTANTS
PARTNERS
RONALD A LEVY, CPA
CRAIG A HARTZHEIM, CPA
HADLEY YHUI, CPA
ALEXANDER C HOM. CPA
ADAM V GUISE, CPA
TRAVIS J HOLE, CPA
GOVERNMENTAL AUDIT SERVICES
5600 HANNUM AVENUE, SUITE E
CULVER CITY, CA 90230
TEL: 310.670.2745
FAX: 310.670,1689
www.mlhcpas.com
COMMERCIAL ACCOUNTING & TAX SERVICES
433 N. CAMDEN DRIVE, SUITE 730
BEVERLY HILLS. CA 90210
TEL: 310.273.2745
FAX: 310.670.1689
www.mlhcpas.com
Ms. Karla Campos,
Finance Director/Treasurer
City of La Quinta
78495 Calle Tampico
La Quinta, CA 92253
Dear Ms. Campos,
I We are pleased to respond to the Request for Proposal from the City of La Quinta (City) for independent
professional auditing services. We have prepared our proposal to address each of the specifications included in
the City’s Request for Proposal (RFP).
After 59 years in public accounting and 39 years of performing local governmental and non-profit audits, it is
extremely gratifying to witness the continued growth of Moss, Levy & Hartzheim, LLP. The firm is a regional
fill! service public accounting firm with offices in Culver City, Beverly Hills, Santa Maria and clients throughout
the State of California, as well as thirty-one other states. We and the entire staff are pleased with not only the
continuing development of the firm but also the progress and economic health of our clients. We understand that
governmental accounting is a specialized industry with its own accounting standards and requirements, and that is
why we strive to constantly improve the quality of our professional services. This degree of dedication, coupled
with our ability to inform our clients of any new accounting and auditing issues, is paramount to our success.
We feel that our size is such that we are large enough to provide a broad spectrum of services and experience
backed by an in-house training program, professional development courses, and an extensive professional library,
yet not so large as to become impersonal and rigid. Our informal style allows us to be flexible enough to complete
our engagements in a timely manner that is the most convenient for each client. Also, this style allows us to be
more accessible to our clients when our clients have questions or concerns.
Our firm offers many different services that distinguish us from other firms. We offer guidance and assistance
throughout the year, not just during audit season. We are available for questions and minor research issues,
including journal entry assistance, at no additional charge. Also, the engagement partner will be on-site for a
majority of the fieldwork. This policy enables the partner to become acquainted with the City’s daily operations
and key personnel.
It is our understanding that we will perform an audit of the City’s basic financial statements, in accordance with
auditing standards generally accepted in the United States of America as set forth by the American Institute of
Certified Public Accountants, with the objective to express an opinion of the fair presentation of the City’s
governmental activities, the business-type activities, each major fund, and the aggregate remaining fund
information, which will be in full compliance with the Governmental Accounting Standards Board (GASB)
Statement No. 34 and the Government Finance Officers Association’s (GFOA) Blue Book. On the City’s basic
financial statements, we will express an “in-relation-to” opinion on the combining and individual funds financial
statements and supporting schedules based on the auditing procedures applied during the audit.
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OFFICES: BEVERLY HILLS • CULVER CITY • SANTA MARIA
MEMBER AMERICAN INSTITUTE OF C.P.A'S n CALIFORNIA SOCIETY OF MUNICIPAL FINANCE OFFICERS n CALIFORNIAASSOCIATION OF SCHOOL BUSINESS OFFICIALS
We will also perform a single audit on the expenditures of federal grants in accordance with U.S. Office of
Management and Budget (0MB), Title 2 U.S. Code Federal Regulation Part 200, Uniform Administrative
Requirements, Cost Principle and Audit Requirements for Federal Awards Governments, and Nonprofit
Organizations (Uniform Guidance) and test compliance with Single Audit Acts as amended in 1996, and
applicable laws and regulations, if applicable. We will also perform an audit of the City’s Inmate Benefit Trust
Fund and prepare the audit report.
We will also prepare, edit and type all required reports and provide assistance to the City of La Quinta to submit
the City’s Comprehensive Annual Financial Report (CAFR), as requested, for consideration of recognition for
Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers
Association (GFOA).
In addition to the procedures deemed necessary to express our opinion, on the basic financial statements, we
understand that we will also be responsible for performing certain limited procedures involving the management’s
discussion and analysis (MD&A) and the required supplementary information (RSI), as mandated by auditing
standards generally accepted in the United States of America.
Our audits would be conducted in accordance with auditing standards generally accepted in the United States of
America; Government Auditing Standards, issued by the Comptroller General of the United States, including all
applicable auditing standards issued by the American Institute of Certified Public Accountants; the provisions of
the Single Audit Act Amendments of 1996; the U.S. Office of Management and Budget, Title 2 U.S Code of
Federal Regulation Part 200, Uniform Administrative Requirements, Cost Principle and Audit Requirements for.
Federal Awards (Uniform Guidance), and Nonprofit Organizations',and the rules and regulations for successor
agencies as published by the California Office of the State Controller.
It is our understanding that we will be responsible for issuing the following reports: Twenty (20) printed copies
and of the audited CAFR; an independent auditor’s report on internal control over financial reporting and on
compliance and other matters based on an audit of the basic financial statements of the City performed in
accordance with Government Auditing Standards', report on the compliance with the Proposition 111, Article
XIII-B of the California State Constitution and Government Code 7900 on its appropriations limit (GANN limit
calculation); an independent auditor’s report on compliance with requirements that could have a direct and
material effect on each major program and on internal control over compliance in accordance with Uniform
Guidance, if applicable; a Single Audit report which includes a schedule of expenditures of federal awards,
footnotes, findings and questioned costs including significant deficiencies and material weaknesses, if applicable;
a report on Agreed-Upon procedures Applied to Appropriations Limit Worksheets; and the management letter
which includes Statement on Auditing Standards (SAS) No. 114 and No. 115 letters. Additionally, a State
Controller’s Report. All reports will be completed no later than DecemberlOth. of each year.
All noncompliance and significant deficiencies found during the audit will be communicated in writing. The
required reports on compliance and internal controls will communicate any significant deficiencies and
noncompliance issues found during the audit. Significant deficiencies that are also material weaknesses will be
identified as such in the report. Non-reportable conditions discovered will be reported in a separate letter to
management, which will be referred to in the reports on internal controls. All irregularities and illegal acts or
indications of illegal acts of which we become aware of during the course of our audit will be immediately
reported, in writing, to the City Council, City Manager, City Attorney, and the Finance Director.
Our firm, will keep informed the City, Housing Authority, Finance Authority and Successor Agency abreast of
any new developments affecting municipal finance and reporting, impact on accounting and reporting should the
State of California impose statement-mandated procedures impacts of Government Accounting Standards Board
disclosure requirements, required changes in grant procedures, and the like with no exception.
We will be responsible for retaining all working papers and reports, at our expense, for a minimum of seven (7)
years, unless the firm is notified in writing by the City of La Quinta of the need to extend the retention period. We
will make available all original working papers for examination, upon request, to the City of La Quinta or any
federal and state agencies designated by the City.
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Moss, Levy &, Hartzheim, LLP will perform the audit work within the specified time period, pending no
unforeseen circumstances which the City imposes on our work, each year, the partner or manager of the firm will
contact the City’s Finance Department to set up an entrance conference meeting, discuss the Prepared By Client
(PBC) List and timing of the annual audit, to review any accounting issues known at that time, to provide our
detailed audit plan, and to address any of the City’s personnel concerns about the impending audit.
It is our experience, knowledge and professional staff that enable us to be The Best qualified firm to
complete this engagement.
During the final stages of the audit, we will perform all follow-up necessary to gather outstanding attorney
confirmation letters to ensure the audit is finalized on the date due.
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Moss, Levy & Hartzheim, LLP will be available additional forty (40) hours of exclusive time for research and
assistance concerning accounting and other technical matters each year. Additionally, we will provide the
necessary support for the City to continue receiving the Certificate of Achievement for Excellence in the years
that follow.
The percentage of the audit work we expect to accomplish in each month for the 2017 audit is shown below:
May October November Total
30%50%20%100%
This proposal for auditing services is an irrevocable offer until June P‘, 2017.
Our Firm agrees will all the terms and conditions disclosed in the City’s RFP with no exceptions; if selected, we
will obtain and provide all of the necessary requirements requested by the City.
Thank you for your consideration and please do not hesitate to contact the authorized representatives listed below
with any questions or concerns.
(1) Craig A. Hartzheim, CPA
Partner
5800 Hannum Avenue, Suite E
Culver Ci^, CA 90230
(310) 670-2745
chartzheim@mlhcpas.com
(2) Ron A. Levy, CPA
Partner
2400 Professional Parkway, Suite 205
Santa Maria, CA 93455
(310) 922-2579
rlevy@mlhcpas.com
(3) Hadley Y. Hui, CPA
Partner
5800 Hannum Avenue, Suite E
Culver City, CA 90230
(310)670-2745
hhui@mlhcpas.com
Sincerely,
Craig A. Hartzheim, CPA
Partner
Moss, Levy & Hartzheim, LLP is an Equal Opportunity Employer
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CITY OF LA QUINTA
TECHNICAL PROPOSAL
INDEPENDENCE
Moss, Levy & Hartzheim, LLP is independent of the City of La Quinta and its component units as
defined by auditing standards generally accepted in the United States of America, the U.S. General
Accounting Office’s Government Auditing Standards, the U.S. Securities and Exchange Commission, and
all other authoritative bodies with standard or rule-making authority over the auditing profession.
The firm uses checklists and questionnaires to determine that staff members are independent of each
client being audited and each staff member signs a personal independence declaration prior to
commencing work on an audit client. The partner in charge of the audit reviews all independence work
papers prior to staffing each audit.
Moss, Levy & Hartzheim, LLP has not entered into a professional relationship involving the City of La
Quinta or its component units in the last five years.
LICENSE TO PRACTICE IN CALIFORNIA
Moss, Levy & Hartzheim, LLP is a properly licensed certified public accounting firm as of December 31,
2006, in the State of California, license #6998, as well as SBE/MBE certified. All certified public
accountants engaged in the audit of the City of La Quinta are licensed to practice in the State of California
and have received at least the minimum number of governmental continuing professional education hours
required by the State Board of Accountancy and Government Auditing Standards to perform
governmental audits.
FIRM QUALIFICATIONS AND EXPERIENCE
Moss, Levy & Hartzheim, LLP is a regional firm that performs audits of governmental and non-profit
entities throughout the State of California, from the Oregon border to the Mexico border. For our
governmental clients; we perform our audits in conformance with all GASB pronouncements, including
GASB 34, we also prepare their Comprehensive Annual Financial Report (CAFR). Our firm also
performs review and compilation engagements, as well as tax and consulting services to clients
throughout the United States. The firm currently employs 28 professionals, all of whom are trained in
governmental auditing, and has annual gross revenues in excess of $4 million dollars. The firm has three
offices in California and serves clients in 31 states.
The audit work will be completed by staff from our Culver City office.
Work will be performed onsite at La Quinta and for some planning and wrap-up work, from the
Culver City office.
There will be no subcontractors. All work will be performed by MLH.
MLH is a registered DBE and MBE. Documents are included as an appendix (Please see
Appendix F) to this proposal.
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CITY OF LA QUINTA
TECHNICAL PROPOSAL
FIRM QUALIFICATIONS AND EXPERIENCE (CONTINUED)
The audit team will be as follows:
City of La Quinta ;
(rn
Ron A. Levy, CPA,
Partner
(Technical '
Reviewer)
Craig A. Hartzheim> CPA
Partner
Wilson Lam, CPA, j
',:cfe;cgfm |
Manager
'V
'j
David Ortiz
Computer
,) li . SpecLalist .
Edward Eisenhauer, CPA
Senior Accountant
I ■- . Staffs:-
i Accountant'(s) ,
The Culver City office is currently staffed by six certified public accountants (three partners, two
managers, and one senior accountant). In addition, the Culver City office employs twelve professional
staff, consisting of managers, seniors, and staff accountants. All certified public accountants, managers,
and senior and staff accountants are part of the governmental and non-profit audit practice.
The City will have one partner, one manager, and one senior accountant assigned to the audit on a full
time basis. In addition, one or two staff accountants will be assigned to the audit on a full-time basis.
These employees will not be changed except due to unforeseen circumstances.
It is the firm’s policy to have our partners and audit managers involved in the management function of our
governmental audits. Having both the partner and audit manager involved in the engagement allows the
City to receive immediate response to questions about accounting and audit topics, concerns, and
findings.
Our fi rm currently provides the following services:
Audits:
Governmental (cities, special districts, single audits, and school districts)
Non-Profit
Commercial
Compliance
Transient Occupancy Tax
Employee Benefit Plans
Accounting Services:
Reviews
Compilations
Bookkeeping
Payroll Taxes
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CITY OF LA QUINTA
TECHNICAL PROPOSAL
FIRM QUALIFICATIONS AND EXPERIENCE (CONTINUED)
Management Advisory Services (Non-Audit Clients):
Data Processing Services
Business Consultation
• Pension and Profit Sharing Plan Assistance
Acquisition and Mergers
Income Tax Services:
Preparation
Planning
Tax Audits and Negotiations with Internal Revenue Service and Other Taxing Authorities
Please see Appendix A - Current and/or Recently Completed Governmental Audits for a list of current
governmental audits performed by the firm.
Please see Appendix B - Peer Quality Review Report for a copy of our firm’s July 22,2015 quality review
report, which includes a review of governmental and non-profit engagements.
Our firm has never been the object of any disciplinary action from any federal or state regulatory body or
professional organization, nor is there any disciplinary action pending.
The firm’s recent local similar auditing experience includes the following:
CSMFO and GFOA Award Programs1.
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The firm has or is currently auditing the following entities that have participated in and have
received the CSMFO and/or GFOA Award Programs:
City of Bellflower
City of Brawley
City of Calabasas
City of Covina
City of Culver City
City of El Centro
City of Eureka
City of Fort Bragg
City of Indio
City of La Canada Flintridge
City of Laguna Hills
City of Lompoc
City of Los Alamitos
City of Pacifica
City of Paso Robles
City of Santa Maria
City of Scotts Valley
City of Tracy
City of Watsonville
City of Westlake Village
City of Whittier
City of Winters
City of Yuba City
County Sanitation Districts of
Los Angeles County
Los Angeles County Flood Control District
Ross Valley Sanitary District
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Uniform Guidance
We have performed compliance audits in accordance with Title 2 U.S. Code of Federal
Regulation Part 200, Uniform Administrative Requirements, Cost Principle and Audit
Requirementsfor Federal Awards (Uniform Guidance), for our municipal clients who are
required to have compliance audits (which is the majority of our municipal clients) and
for all of our school District clients.
2.
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CITY OF LA QUINTA
TECHNICAL PROPOSAL
FIRM QUALIFICATIONS AND EXPERIENCE (CONTINUED)
The firm’s recent local similar auditing experience includes the following: (Continued)
Federal and State Grant Programs and the Single Audit
Each of our municipal clients, the majority of our special district clients, and all of our
school district clients receive federal and state grants which require compliance audits,
including American Recovery and Reinvestment Act grants.
Some of our most commonly audited programs are as follows:
Municipal Major Programs:
Community Development Block Grant Funds (CDBG)
Federal Emergency Management Act Funds (FEMA)
Section 8 Housing Assistance Payments
Transportation Enhancement Act (TEA)
Airport Improvement Program (AIP)
Economic Development Grants (EDA)
Home Investment Partnerships Program (HOME)
Capitalization Grants for State Revolving Funds
Surveys, Studies, Investigations, and Special Purpose Grants
Other Common Municipal Programs:
COPS Grants (including LLEBG)
Asset Seizure Funds
Retired Senior Volunteer Program
Other Major Programs:
Senior Nutrition Programs
Child Nutrition Programs
Title I
Title VI
Migrant Education
Vocational Education
Special Education
3.
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4.Non-profit agencies
We have audited numerous non-profit agencies and have also prepared their federal and
state tax returns. Currently, our firm performs audit and/or tax preparation services for
sixty non-profit agencies.
State Controller’s Report and Street Reports
We have prepared State Controller’s Reports, Transit, and Street Reports for numerous
cities, special districts, and redevelopment agencies. We feel this experience allows us to
assist our clients in their preparation of the State Controller’s Reports or prepare the
reports as a separate engagement for our clients.
Investment Compliance
In addition to financial statement audits, we also review our clients’ compliance with
their investment policies and examine investment types, including, but not limited to, an
evaluation of maturity dates (short-term or long-term), types and category, and collateral
to ensure proper disclosure of risk in the basic financial statements.
5.
6.
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CITY OF LA QUINTA
TECHNICAL PROPOSAL
FIRM QUALIFICATION AND EXPERIENCE (CONTINUED)
The firm’s recent local similar auditing experience includes the following: (Continued)
Bond Reporting7.
The firm has assisted several cities in reviewing franchise financial statements as part of
reviewing franchise requests for rate increases. In addition, the firm has performed
transient occupancy audits for ten municipalities and has performed various audits of
operating lease charges (such as use of a sewage treatment plant based on percentage of
use by our client and actual expense as recorded by the treatment plant operator).
8.Other Audits
The firm has recently concluded auditing lease agreements between the County of Los
Angeles and a lessee for a period of 15 years. The firm has assisted several cities in
reviewing franchise financial statements as part of reviewing franchise requests for rate
increases. In addition, the firm has performed transient occupancy audits for eleven
municipalities and has performed various audits of operating lease charges (such as use
of a sewage treatment plant based on percentage of use by our client and actual expense
as recorded by the treatment plant operator). The firm has also performed franchise
audits of Comcast, AT&T, a local sports park, and others for municipal clients who have
requested them.
9.School Districts
Currently, our firm audits thirty-five school districts and related schools throughout the
State of California, including three charter schools. We have also performed audits of
student bodies for nearly all of our school district clients.
10.Special Districts
Currently, our firm audits in excess of one hundred and seventeen special districts
including sanitary districts, an open space district, the County Sanitation Districts of Los
Angeles County (all 25 Districts), water districts, recreation districts, utility districts,
cemetery districts, community services districts, fire districts, ambulance services
districts, airport districts, and vector control districts.
Joint Powers Authorities11.
We have audited the following joint powers authorities (JPAs):
County of San Diego — Emergency Services Organization
Encina Wastewater Authority
Exclusive Risk Management Authority of California
North Coast Emergency Medical Services
Public Agency Self Insurance System
San Diego Geographic Information System
Santa Barbara County Special Education Local Plan Area Joint Powers Agency
Santa Barbara Water Purveyors Joint Powers Agency
Tracy Area Public Facilities Financing Authority
Transportation Authority of Marin
West Contra Costa Integrated Waste Management Authority
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CITY OF LA QUINTA
TECHNICAL PROPOSAL
PARTNER, SUPERVISORY AND STAFF QUALIFICATIONS AND EXPERIENCE
It is expected that Mr. Ron A. Levy, CPA would be the technical (concurring) partner in charge of the
audit of the City. He will be responsible for reviewing the City’s basic financial statements and all other
required statements and reports. He may also be responsible for addressing any City questions or
concerns that arise during the year. He has assisted numerous municipal clients and has prepared award
winning CAFRs.
Mr. Craig Hartzheim, CPA will be the engagement partner assigned to the audit. As engagement partner,
he will oversee the day-to-day operations of the audits, review all audit areas, and be on-site for a
majority of the fieldwork. He has assisted many municipal clients and has also prepared numerous
award-winning CAFRs. It is the firm’s policy during the first year on the audit engagement to have a
partner on-site for a majority of the fieldwork. This policy enables the partner to become acquainted with
the City’s daily operations and key personnel.
Mr. Wilson Lam, CPA, CFE, CGFM will be the manager assigned to the audit. He will oversee the day-
to-day operations of the audits and perform more difficult audit sections.
n Mr. Edward Eisenhauer, CPA, Bin Zeng, Ricardo Rodriguez or Ricky Tzu-Wei Kuo will be the senior
auditor assigned to the audit. As senior auditor, it will be his responsibility to oversee the staff
accountants, do preliminary reviews of audit sections, and perform more difficult audit sections.
Mr. David Ortiz will be the computer specialist assigned to the audit, when needed. Mr. Ortiz has
extensive knowledge in auditing EDP functions. Mr. Ortiz may also perform the statistical sampling
procedures for the audit and also document and test the internal control structure of the computer systems.
In addition to the supervisoiy staff listed above, one or two staff accountants will be assigned to the audit.
All staff accountants assigned to the audit have degrees from accredited universities, have received in-
house governmental audit training, and at present, have at least one year of governmental auditing
experience. All staff accountants will be directly supervised by the senior accountant and manager
assigned to the audits at all times.
All partners, managers, and staff members have worked on numerous governmental engagements
together. Consistently working together will provide the City with a knowledgeable, proficient, and
efficient audit team.
Please see Appendix C - Resumes for each individual’s qualifications and experience.
The firm conducts an annual firm-wide two-day training seminar to update all governmental auditors on
new pronouncements and improved audit techniques. In addition to this firm-sponsored seminar, each
governmental auditor attends the annual governmental accounting conference and many other continuing
education courses and is updated on current accounting/auditing issues through our journals and
supplements, which we receive on a regular basis.
The firm will maintain staff continuity on the engagement throughout the term of the contract, barring any
terminations, or other unforeseen circumstances (departure from the firm, promotion, or assignment to
another office). At the written request of the City, any Moss, Levy & Hartzheim, LLP employee assigned
to the audit can be removed and replaced by another qualified employee. The City retains the right to
approve or reject replacements.
6
CITY OF LA QUINTA
TECHNICAL PROPOSAL
SIMILAR ENGAGEMENTS WITH OTHER GOVERNMENT ENTITIES
Moss, Levy & Hartzheim, LLP has an extensive background in auditing governmental and non-profit
entities with over thirty-nine years of experience in this specialized field. The firm currently performs
thirty-eight municipal audits, over seventy-five special district audits, as well as the audit of the County
Sanitation Districts of Los Angeles County (all 25 districts), and thirty-five school district and related
audits.
We have also recently completed monitoring of one hundred contractors for the County of Los Angeles,
for contract compliance and fiscal monitoring. Additionally, we are also on the master lists and have
signed master contracts with the County of San Diego and the County of Los Angeles for Compliance and
Financial Audits.
The following are the most significant engagements performed in the last three years that are similar to
the engagement described in the Request for Proposal (RFP):
CITY OF CULVER CITY
Audit of basic financial statements, former Redevelopment Agency, Single Audit,
Municipal Bus Line, REAC Report, and prepared City, former RDA, and Transit State Controller Reports
CAFR prepared in accordance with GAAP
Received GFOA Certificate of Achievement in Financial Reporting
2011 to 2015
Engagement Partner - Craig A. Hartzheim, CPA
800 Hours
Contact: Jeff Muir, (310) 253-6016
CITY OF TRACY
Audit of basic financial statements, former Redevelopment Agency, and Single Audit Report
CAFR prepared in accordance with GAAP
Received GFOA Certificate of Achievement in Financial Reporting
2004 to 2014
Engagement Partner-Hadley Y. Hui, CPA
600 Hours
Contact: Robert Harmon, (209) 831-4125
CITY OF COVINA
Audit of basic financial statements, former Redevelopment Agency, and Single Audit Report
CAFR prepared in accordance with GAAP
Received GFOA Certificate of Achievement in Financial Reporting
2013 to Present
Engagement Partner - Craig A. Hartzheim, CPA
600 Hours
Contact: Anita Agramonte, (626) 384-5516
CITY OF YUBA CITY
Audit of basic financial statements, former Redevelopment Agency, and Single Audit Report
Prepared the City’s State Controller Report and Street Report
CAFR prepared in accordance with GAAP
Received GFOA Certificate of Achievement in Financial Reporting
2008 to Present
Engagement Partner - Ron A. Levy, CPA
600 Hours
Contact: Robin Bertagna, (530) 822-4615
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CITY OF LA QUINTA
TECHNICAL PROPOSAL
SIMILAR ENGAGEMENTS WITH OTHER GOVERNMENT ENTITIES (CONTINUED)
The following are the most significant engagements performed in the last three years that are similar to
the engagement described in the Request for Proposal (RFP): (Continued)
CITY OF EL CENTRO
Audit of basic financial statements, former Redevelopment Agency, Single Audit Report, GANN Limit,
and prepared the City’s State Controller Report
CAFR prepared in accordance with GAAP
Received GFOA Certificate of Achievement in Financial Reporting
2007 to Present
Engagement Partner - Hadley Y. Hui, CPA
500 Hours
Contact: Leticia Salcido, (760) 773-4573
Please see Appendix D - References for a list of five references that are similar to the engagement as
described in the RFP.
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8
CITY OF LA QUINTA
TECHNICAL PROPOSAL
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SPECIFIC AUDIT APPROACH
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During the first year of the new engagement, we will utilize the prior year’s financial statements, the
current year’s budget, and acquire knowledge of the City’s systems to determine materiality for the
different audit sections. Each year, we will select a sample of transactions to determine to what extent the
systems are functioning as described to us.
assessment of the internal control structure and the results of our assessment in accordance with
Government Auditing Standards.
Please see Appendix E — Segmentation and Budgeted Hours by Segment for a schedule of the level of staff
and number of hours to be assigned to each segment of the engagement.
The extent of our sample size will depend upon our
i
9
CITY OF LA QUINTA
TECHNICAL PROPOSAL
SPECIFIC AUDIT APPROACH (CONTINUED)
The selection of transactions for testing will be made using a combination of random, systematic, and
haphazard sampling techniques. We will identify the strength of the systems upon which we can rely in
planning our substantive tests. Our internal control review will meet all of the following requirements of
AICPA: Statement on Auditing Standards (SAS) No. 55, Consideration of the Internal Control Structure
in a Financial Statement Audit, as amended by SAS No. 78; SAS No. 99, Consideration of Fraud in a
Financial Statement Audit; SAS No. 106, Audit Evidence', SAS No. 107, Audit Risk and Materiality in
Conducting an Audit', SAS No. 108, Planning and Supervision',SAS No. 109, Understanding the Entity
and Its Environment and Assessing the Risks of Material Misstatement', and SAS No. 110, Performing
Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained.
It is estimated that the sampling size for transaction testing for compliance with systems as actually
implemented would be as follows:
1. Minimum of 60 disbursement items, including automatic and manual checks and bank
debits.
II. Minimum of 20 - 40 payroll checks, including direct deposits for payroll testing, depending
on the number of employees.
III. Minimum of 40 - 60 receipt items.
We have extensive knowledge in auditing computer systems. We have assisted numerous clients with the
implementation of accounting software and database business systems. This assistance has provided our
firm with a thorough background in computer systems with respect to both the software applications
aspect and also insight into auditing such systems. It is our policy to have a computer specialist as part of
the audit team and to be used on an as-needed basis. This individual assists the audit team in documenting
the computer system internal control structure and highlighting strengths and weaknesses relating to the
computer structure of the City.
In addition, all of our staff is equipped with networked laptop computers. These computers are equipped
with not only word processing and spreadsheet capabilities, but also various functional software, such as
PPC Audit - e-Tools, Creative Solutions Accounting, Adobe Acrobat, random sampling software, Lacerte
Tax Program, and Easy Accounting Software, which contain amortization programs and depreciation
programs, and other applications as well (including the Governmental Accounting Research System
which includes all GASB publications).
We will perform expectation analytics and preliminary analytical review procedures using the prior fiscal
year’s audited statements and the current fiscal year’s budget. In the preliminaiy stage, we will adopt ratio
analysis procedures to compare the relationships between account balances and classes of transactions
between prior periods and against budgets and industry statistics. This may include budgets, trial
balances, and/or draft financial statements to help us identify the source of individual fluctuations. We
will then adopt trend analysis to compare current data with prior periods, which is particularly useful for
analyzing revenue and expenditures. Any unexpected trends or deviations will be discussed with relevant
City staff to obtain explanations.
10
CITY OF LA QUINTA
TECHNICAL PROPOSAL
SPECIFIC AUDIT APPROACH (CONTINUED)
The chart below shows some of MLH’s preliminary audit procedures:
Go over timing and planning with
Management
Set meetingNone
Standard required communicationsDiscuss any matters with predecessorLetter
Visit sites and go through internal controls,
such as the legal court, parks and recreation,
fire, police, transit, etc.
Set location site visitsInternal control memos
Analyze budget-to-actual variances. Look at
capital projects, status of property tax
assessments as part of the focus
Obtain budget and budget
amendments
Ensure budgetary compliance
Ensure grant compliance Analyze grantsObtain grant documents, any
service concession agreements
Analyze policies and proceduresObtain policies and procedures Evaluate effectiveness of policies, updates
and relate to key compliance matters
Analyze internal controls, including computer
controls
Obtain client internal control
memos of client if they exist
Evaluate internal controls
Short interviews of accounting and
selected operating personnel for
documentation of process
Set preliminary "materiality" limitsObtain prior year financials Determine which items are important for
testing
Testing of cash receipts, cash disbursements,
and payroll transactions
Obtain appropriate schedules Ensure effective procedures
Analyze important events highlighted in
Council meetings, test and inquire as necessary
Obtain Council minutes Ensure knowledge of key government
communication, Look for major
agreements and key decisions
Client to prepare letters and auditor to send
letters
Draft confirmations-third party
letters for Independent verification
of cash, property taxes, attorney,
etc. for client to sign and auditor to
mail
Independent verification of selected
balances
Meet with client and agree upon document
request list for audit
Develop document request list for
client to review and agree upon
To clarify client - auditor requests
Perform selected testing on balances such as
receipts, disbursements, and payroll
Ensure preliminary results make sensePreliminary trial balance
Audit selected components of any new reports
and changes for compliance
Discuss 6ASB 68 and any changesObtain updates on retirement
plans
Scan ledgers and accounts for accounting
propriety
Minimize client interruptions and view
transactions
Request screen view access only
for computer analysis
Focus on controls where the risk
assessment of material misstatement of
cash, card and internet transactions could
occur
Site visitationsConsider site visitations on areas
where there are significant cash,
card, deposits and billing controls,
internet site controls
Discuss with client, prepare attorney letters for
confirmation and response
Obtain and prepare long term debt schedules
Send legal letters, talk with client, review
disclosures
Look for commitments, contingencies and
disclosure
Legal bills, key litigation
Analyze for disclosure and complianceObtain long-term debt
Ensure auditing standards are applied for
proper accrual and disclosure
Commitments and Contingencies
11
CITY OF LA QUINTA
TECHNICAL PROPOSAL
SPECIFIC AUDIT APPROACH (CONTINUED)
We will also review the following documents in order to determine compliance with applicable laws and
regulations:
Minutes of the governing body with special attention to: indications of new revenue
sources, including federal and state grants; expenditure/expense authorizations and related
appropriations, including any special or restrictive provisions; appropriation transfers;
authorization for bank or other debt incurred; awards to successful bidders; authorization
for new leases entered into; changes in licenses, fines, or fees; authorization for fund
balance commitments or assignments; and authorization for significant new employees.
New agreements and amendments to agreements including, but not limited to: grant
agreements; debt and lease agreements; labor agreements; joint venture agreements;
disposition and development agreements; and other miscellaneous agreements.
Administrative Code
Investment Policy
1.
2.
3.
4.
The main extent of our work would be what is required to enable us to express an opinion on the basic
financial statements in accordance with:
AICPA Industry Audit Guide for State and Local Governmental Units
AICPA A udit Standards
National Committee on Governmental Accounting, Auditing and Financial Reporting
(Amended) Publication
Laws of the State of California
Requirements of Title 2 U.S Code of Federal Regulation Part 200, Uniform
Administrative Requirements, Cost Principle and Audit Requirements for Federal Awards
(Uniform Guidance).
GAO Standards for Audit of Governmental Organizations, Activities and Functions, the
Guidelinesfor Financial and Compliance Audits of Federally Assisted Programs
Our firm’s own additional standards and procedures
The audit will be conducted in accordance with auditing standards generally accepted in the United States
of America. The primary purpose of the audit is to express opinions on the basic financial statements, and
such an audit is subject to the inherent risk that material errors or fraud may exist and not be detected by
us. If conditions are discovered which lead to the belief that material errors, defalcations, or fraud may
exist, or if any other circumstances are encountered that require extended services, we will promptly
advise the City.
If convenient for the City’s staff, the approximate target dates for the fiscal year 2017 audit would be as
follows:
1.
2.
3.
4.
5.
6.
7.
Entrance conference and Interim fieldwork - Week of May IS'**
Exit conference - May 19'*'
Year-end fieldwork - Week of October 2"*^ & 9'’*
Exit conference - October 13‘*’
Draft management letter, financial statements, and other audit reports - No later than
November 20”'
Final management letter, financial statements, and other audit reports - No later than
December 10*
Presentation to Audit Committee, City Council & Budget, and Finance Commission -
Open
1.
2.
3.
4.
5.
6.
7.
12
CITY OF LA QUINTA
TECHNICAL PROPOSAL
SPECIFIC AUDIT APPROACH (CONTINUED)
Each year, the partner or manager of the firm will contact the City’s Finance Department to set up an
entrance conference meeting. The purpose of this meeting will be to discuss the scope and timing of the
annual audit, to review any accounting issues known at that time, to provide our detailed audit plan, and
to address any of the City’s personnel concerns about the impending audit.
During the first year of the engagement, we will prepare narrative flow charts and other documentation of
the internal control structure and of the major systems, such as revenue and cash receipts, purchasing and
cash disbursements, payroll and personnel, inventory, property and equipment, grant compliance,
investment activities, and the budget process. We will obtain our information through discussions with
appropriate City staff and the review of available documented policies, organizational charts, manuals,
programs, and procedures. Once we obtain'this information, we will evaluate the systems of internal
controls and revise our standard governmental audit programs.
Before year-end fieldwork, we will discuss with the City any assistance the City may need with the year-
end closing.
Our year-end fieldwork would begin on October 2““*. The year-end audit work would begin with an
analytical review of all significant balance sheet and revenues and expenditure/expense accounts for each
fund, which includes substantive tests on all balance sheet accounts. Analytical procedures will be used
to supplement the substantive tests, not supplant them. We will perform analytical procedures during
interim and year-end fieldwork on all balance sheet and revenue and expense/expenditure accounts.
The primary objective of the year-end audit work is to audit the final numbers that will appear in the
City’s basic financial statements. Our fieldwork would also consist of procedures required under SAS
No. 99, Consideration of Fraud in a Financial Statement Audit.
We will perform procedures such as:
Confirmations by positive and negative circularization including but not limited to all
cash and investment accounts; selected receivable and revenue balances; all bonds, loans,
notes payable, and capital leases; all notes receivable; all insurance carriers; all legal
firms employed on the City’s business; and other miscellaneous confirmations deemed
necessary
Physical verifications and observations
Analysis and review of evidential material
Interviews and investigative efforts
Electronic data processing testing for computer and software reliability
Numerous other procedures
During the entire engagement, our audit team will be determining whether the audit is in compliance with
Uniform Guidance, and if this is required through review of the City Council minutes, examination of the
general ledger, and discussion with finance personnel. If a compliance audit is required, we would
perform tests of: specific requirements; claims for advances and reimbursements; and amounts claimed or
used for matching in compliance with the Single Audit Act. The compliance audit will be conducted in
accordance with auditing standards generally accepted in the United States of America, the GAO
Standards for Audits of Governmental Organizations, Programs, Activities, and Functions, and the GAO
Guidelines for Financial and Compliance Audits of Federally Assisted Pro^ams.
The year-end fieldwork should be completed no later than October IS***.
(a)
(b)
(c)
(d)
(e)
(f)
13
CITY OF LA QUINTA
TECHNICAL PROPOSAL
SPECIFIC AUDIT APPROACH (CONTINUED)
The chart below shows some of MLH’s final audit procedures:
Tf^'
Entrance conferenceSet TimingNone
Set visitation of locations such as
Courts, Parks and Rec, Transit, etc.
Cash and other controls testing
Review and start risk assessmentPoiicies and procedures
Analyze records and update
anaiytical procedures
Ensure proper closing of booksObtain updated generai iedger
Update understanding of internal
controls and document key changes
Re-evaluate internal controls. Assess risk and
dollar significance, brainstorm, look at IT
controls
Obtain internal control memos, if there
are any changes- all key locations
Implement significant changes in
financial reporting methods
Ensure improvement in financial reportingObtain prior GFOA CAFR comments
Apply auditing proceduresTo commence audit properly on fi nal numbersObtain and further agree upon audit
schedules as agreed upon in the contract
andRFP
Work on current year GASB 34
presentations
Obtain/prior year GASB 34 conversion
entries /prepare GASB 34 Entries
Ensure that ail GASB 34 conversion entries are
proper
Obtain capital asset documents and
update for impairments
Analyze capital asset ledgers Review or updates from preliminary and
analyze for Impairment
Test schedules of credit agreementsAnalyze credit agreementsContracts and agreements
Look at selected billings and revenue
agreements
Look for proper accruals and revenue
payments
Journal entries and post-closing
Confirm balances and analyze for
proper accruals as necessary
Risk Management Determine coverage
Discuss and analyze internal service
cost allocations
Internal service allocation proprietyCost allocations
Analyze allocations as necessary
from client calculations and
documents
Ensure agreement complianceAllocation agreements
Read documents and necessary
update
Review for any needed updates, GASB 68Obtain OPEB and PERS documents
Test bond compliance and obtain
bond ratings
Bond complianceBond agreements
Analyze significant contributions for
compliance
Contributions Compliance'
Match to year-end books and
records and reconcile to accounts
Independent verification of accountsThird party letters
I
Hold timely status meetings with the
client
Ensure proper audit processNone
Post as necessary with clientAdjusting entries, and any possible
management points
Obtain client agreement
Attend finance and board meetingsCompliance with contract and governanceNone
Read MDStA, prepare financials,
reports and read supplementary
information
Ensure documents match, are consistent and
appropriately completed
MO&A, prepare financials, reports and
supplementary Information
The Governmental Accounting, Auditing and Financial Reporting (GAAFR), issued by the Government
Finance Officers Association (the “Blue Book”) and other GFOA publications are often used as additional
tools when preparing and reviewing the financial statements of our governmental clients. The. firm has
and uses its extensive library of current AICPA, GFOA, and GASB publications and pronouncements.
14
CITY OF LA QUINTA
TECHNICAL PROPOSAL
SPECIFIC AUDIT APPROACH (CONTINUED)
As part of our audit engagements we issue our clients management letters if we note certain observations
or recommendations that we feel need to be disclosed. Our firm’s philosophy regarding the management
letter is that the management letter is to help management improve its internal control and accounting
procedures and not to criticize the management in charge. This is why we present our management letters
to management in draft form for open discussion prior to issuance.
The workpapers for this engagement are the property of Moss, Levy & Hartzheim, LLP and constitute
confidential information. However, we may be requested to make certain workpapers available to any
Cognizant Agency pursuant to authority given to it by law or regulation, any parties designated by the
federal or state governments or by the City as part of an audit quality review process, and other audits of
entities of which the City is a sub-recipient of grant funds or component unit.
INSURANCE
Moss, Levy & Hartzheim, LLP will maintain at least the minimum insurance requirements as dictated by
the City’s Consulting Services Agreement (Agreement) during the entire duration of the engagement. If
selected to provide audit services, within 10 days from the execution of the Agreement, Moss, Levy &
Hartzheim, LLP shall furnish the City satisfactory evidence of the insurance requirement and evidence
that each carrier is required to give at least 30 days prior written notice of the cancellation. The City shall
be named additional insured under Moss, Levy & Hartzheim, LLP’s policies as noted in the Agreement.
Please see Appendix G - Insurance Certificate.
IDENTIFICATION OF ANTICIPATED POTENTIAL AUDIT PROBLEMS
We do not anticipate any problems with the audit. The City Council, City Manager, City Attorney, and
the Finance Director will be immediately notified in writing of any fraud, other illegal acts, or indications
of illegal acts found during the course of our work. All other discrepancies or weaknesses in the internal
control system that we become aware of will be communicated to management through discussion, the
management recommendation letter, and/or if it is a reportable condition, as part of the single audit report,
if necessary.
Minimal assistance of the City’s staff is required during the course of the audit; however, we do ask that
the City provide the following: cooperation in answering questions, requested confirmations, bank
reconciliations, a general ledger, and other items as requested.
Under penalties of perjury, I declare that I am an authorized signer and that there are no, and have never
been any financial interests between any officials or employees of the City of La Quinta and Moss, Levy
& Hartzheim, LLP.
Respectfully submitted.
Craig AfHartzheim, CPA
Partner
Moss, Levy & Hartzheim, LLP is an Equal Opportunity Employer
15
CITY OF LA QUINTA
APPENDIX A - CURRENT AND/OR RECENTLY COMPLETED GOVERNMENTAL AUDITS
FIRE PROTECTION DISTRICTS
Cayucos Fire Protection District, CA
Lakeport Fire Protection District, CA
Orcutt Fire Protection District, CA
COUNTIES
Los Angeles County, CA (Master List)
San Diego County, CA (Master List)
SANITATION DISTRICTS
Carpinteria Sanitation District, CA
Cayucos Sanitation District, CA
County Sanitation Districts of Los Angeles County, CA
-All 25 Districts
Encina Wastewater Authority, CA
Montecito Sanitation District, CA
Orange County Sanitation District, CA - Internal Audits
Ross Valley Sanitaiy District, CA
Triunfo Sanitation District, CA
OTHER DISTRICTS
Beach Cities Health District
County ofSan Diego Emergency Services Organi2ation
County of San Diego First 5 Commission
County ofSan Diego In-Home Supportive Services
Public Authority
County ofSan Diego Health and Human Services Agency
Child Development Program Grant
County ofSan Diego MIOCR Grant
County ofSan Diego RLETC Grant
County ofLos Angeles Delta Sigma Theta, Head Start
Program, Inc.
County ofSan Diego DA Office ofAuto Ins. Fraud
Grant, Urban Auto Fraud Grant, WC Ins Fraud Grant
Los Angeles County Flood Control District
Marin/Sonoma Mosquito and Vector Control District
Peninsula Health Care District
San Diego Geographic Information Source
Tracy Area Public Facilties Financing Agency
West Contra Costa Integrated Waste Management
Authority
UTTLITY DISTRICTS
Georgetown Divide Public Utility District
WATER/IRRIGATION DISTRICTS
Aldercroft Heights County Water District, CA
Foothill Municipal Water District, CA
Main San Gabriel Basin Watermaster, CA
Marina Water District, CA
North Marin Water District, CA
Sweetwater Springs Water District, CA
Valley County Water District, CA
Valley ofthe Moon Water District, CA
TRANSPORTATION DEVELOPMENT ACT
Arroyo Grande, CA
Brawley, CA
Calexico, CA
El Centro, CA
Grover Beach, CA
Holtville, CA
Paso Robles, CA
San Luis Obispo County and Cities Area Planning
Council:
Local Transportation Fund
State Transit Assistance Fund
South County Area Transit, CA
South County/San Luis Obispo Transit, CA
Transportation Agency for Monterey County, CA
Transportation Authority of Marin
Association ofMonterey Bay Area Governments
Santa Cruz Regional Transportation Commission
AMBULANCESERVICES DISTRICT
Cambria Community Healthcare District
North Coast Emergency Medical Services
CEMETERY DISTRICTS
Arroyo Grande Cemeteiy District, CA
Atascadero Cemeteiy District, CA
Gridley-Biggs Cemetery District, CA
San Miguel Cemetery District, CA
Santa Maria Cemetery District, CA
COMMUNITYSERVICES DISTRICTS
Cambria Community Services District, CA
Cuyama Community Services District, CA
Groveland Community Services District, CA
Heritage Ranch Community Services District, CA
Los Alamos Community Services District, CA
Nice Community Services District, CA
Rancho Murieta Community Services District, CA
Santa Ynez Community Services District, CA
Varidenberg Village Community Services District, CA
I
TRANSIENT OCCUPANCYTAX AUDITS
Represented the following municipalities and/or counties
in the audit ofthe hotel "bed tax" records:
RECREATION AND PARK DISTRICTS
Conejo Recreation and Park District, CA
Isla Vista Recreation and Park District, CA
Mountains Recreation and Conservation Authority, CA
Rancho Simi Recreation and Park District, CA
Hayward Recreation and Park District, CA
BUILDING AUTHORITY
County ofSan Diego Regional Building Authority, CA
Pismo Beach, CA
Santa Maria, CA
South Lake Tahoe, CA
Whittier, CA
Ojai, CA
Arroyo Grande, CA
Bellflower, CA
Bishop, CA
Calexico, CA
Carmel, CA
16
CITY OF LA QUINTA
APPENDIX A - CURRENT AND/OR RECENTLY COMPLETED GOVERNMENTAL AUDITS
CITIES AND REDEVELOPMENT AGENCIES
Adelanto, CA
Arcadia, CA
Arroyo Grande, CA
Atascadero, CA
Buellton, CA
Calabasas, CA
California City, CA
Carmel-by-the-Sea, CA
Covina, CA
Culver City, CA
Dinuba, CA
El Centro, CA
Eureka, CA
Greenfield, CA
Grover Beach, CA
Holtville, CA
Hughson, CA
Indio, CA
La Canada Flintridge, CA
La Habra Heights, CA
La Mirada, CA
Los Alamitos, CA
Morgan Hill, CA
Ojai, CA
Paso Robles, CA
Santa Maria, CA
Signal Hill, CA
Taft, CA
Watsonville, CA
Westlake Village, CA
Windsor, CA
Yorba Linda, CA
Yuba City, CA
SCHOOLDISTRICTS
Acton-Agua Dulce Unified School District
Ballard School District
Bellflower Unified School District
Beverly Hills Unified School District
Blochman Union School District
Bradley Elementary School District
Buellton Union School District
Calaveras County Schools
Calexico Unified School District
Calipatria Unified School District
Carpinteria Unified School District
Casmalia School District
Castaic Union School District
Cayucos Elementaiy School District
Coast Unified School District
Cold Springs School District
College Elementary School District
Eastside School District
El Segundo Unified SchoolDistrict
Garvey SchoolDistrict
Goleta Union School District
Graves SchoolDistrict
Heber School District
Hughes-Elizabeth Lakes Union SchoolDistrict
Keppel Union School District
Lancaster School District
Magnolia Union School District
Manhattan Beach Unified SchoolDistrict
Mark Twain Union Elementary SchoolDistrict
Meadows Union SchoolDistrict
Mission SchoolDistrict
Monrovia Unified SchoolDistrict
Montecito Union SchoolDistrict
Mulberry SchoolDistrict
Novato Unified SchoolDistrict
Orcutt Union School District
Pacific Unified School District
Palmdale SchoolDistrict
Pleasant Valley Union School District
San Ardo Elementary School District
San Lucas SchoolDistrict
San Miguel Joint Union School District
Santa Maria Joint Union High School District
Shandon Unified SchoolDistrict
Solvang Elementary SchoolDistrict
Temple City UnJted School District
Torrance Unified School District
Vallecito Union SchoolDistrict
Westmoreland Elementary SchoolDistrict
Wilsona School District
I
PUBLIC FINANCING AUTHORITIES
The majority of our Municipalities issue debt and do
so through an established Public Financing Authority.
OTHER SCHOOL ENTITIES
Academia Semillas del Pueblo Charter School
Albert Einstein Academy
Antelope Valley Schools Transportation District
Bright Star Secondary Charter Academy
East Bay Regional Occupational Program
Garr Academy ofMathematics and Entrepreneurial Studies
Pacoima Charter School
Santa Ynez Valley Charter School
Southern California Regional Occupational Center
Stella Middle Charter Academy
Synergy Charter Academy
Tri-Valley Regional Occupational Program
17
CITY OF LA QUINTA
APPENDIX B - PEER QUALITY REVEW REPORT
Our Peer Review included reviews of governmental (including municipalities & school districts) and non
profit engagements. In the past three (3) years our firm has not been required to submit under any Federal
or State desk review or field review of our audits.
Jmjip C. P«>t: IlCrA(R<i.)
Pfilricl; D. SpoflorJ, CPAPo\vaL& SpArnoRD. IMG
iu C-tUfnli fkiwl J AiCCRUrifD PUBLIC ACCOUfrA^rS
System Reviesv Report
To llic Partners of
Moss, Levy & Harlzhcim, LLP
and the Peer Review Committee of ilic CaliTomta Society of CPAs
Wc have reviewed tlic System ofquality control for the accounting and auditing practice of Moss, Levy &
Hnrtzlicim, LLP (the firm) in effect for the yciir ended December 31,2014. Our review was conducted in
accordance witfi standards for Perfonning and Reporting on Peer Reviews established by the Peer Review
Board of the American Institute of Certified Public Accounlnnts. As a part of our peer review, wc
considered reviews by regulatory entities, if applicable, in determining the nature and c.xtcnt of our
procedures. The firm is responsible for designing a ^slcm 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. Tlic nature,
objectives, scope, limitations of, and the procedures pcrromicd in a System Review are described in the
standards at vv\vw.aicpa.ora/prsuminnrv.
As required by the standards, engagements selected for review included cngagemenis performed under
Governmenl/iudiling Standards and audits of employee benefit plans.
Wc noted the following deficiencies during our review:
1. Deficiency — The finn docs not have quality control policies and procedures to address
the fonn and content of workpaper documentation or a related file review process by the
engagement partner for its audit engagements, including audits of employee benefit plans
and audits subject to Goveriment Auditing Standards, As a result, wc noted
documentation deficiencies on the engagements reviewed in the following areas: I)
compliance payroll testing for an ERISA audit engagement; 2) proper testing of certain
major program compliance requirements, low risk determination and fraud
• considerations; 3) the 80 hour requirement for engagements perfonned under
Government Auditing Standards was not met for certain cng.ngcmcnt team niembers; and
4) lock down of audit files. TIic finn also did not perform rinimal monitoring that
properly covered all areas of quality control. There were docimicntation issues noted in
the firm's previous peer review. Tlic firm will perform the required procedures when
subsequent engagements ore perfonned, which is imminent. '
Recommendation - Wc recommend that tlic film modify its current policies and
procedures to include a mcclmnism for assuring the firm's documentation Is properly
prepared, reviewed and included in the work files. The firm should also expand on its
monitoring procedures to co\‘cr these areas.
In our opinion, except for the deficiency described above, the system of quality' control for the accounting
and auditing practice of Moss, Levy & Hartziieim, LLP in effect for the year ended December 31,2014,
has been suitably designed and complied with to provide (he firm with reasonable assurance of
performing and reporting in conformi^ with applicable professional standards In all material respects.
Firms can receive a rating ofpass, pass with deficiency (ies) os fail. Moss, Levy & Hartzhcim, LLP hns
received a peer review rating of pass with deficiencies.
July 22.2015
• P.O.DcxSE.J7 • RXmkCA 93373
909-79?..IS'53 « r'a-.9Cy-793-3-015
447^'lI
18
CITY OF LA QUINTA
APPENDIX C - RESUMES
Ron A. Levy, C.P.A. - Partner
• California licensed C.P.A. with 39 years of audit experience with governmental and non
profit entities
• Technical partner (concurring) in charge of all governmental and non-profit audits,
currently including 38 municipal audits, 75 special district audits, and 35 school district
and related audits
• Has assisted governmental clients with year-end closing, key position interviews,
preparation of award winning CAFRs, and preparation of State Controller’s Reports
• Has met or exceeded all continuing education requirements, including recent courses in
the following:
2016, 2015, and 2014 Governmental Accounting Conference
2016, 2015, and 2014 School District Conference
GASB 34 Training Seminars
Planning a Governmental Audit Engagement
Auditor‘s Reports on Audits of Local Governments
Governmental Accounting Update
Audits of State and Local Governments
Compliance Auditing, Audit Sampling, and Concluding the Audit
The Single Audit Act
• Member of the following:
American Institute of Certified Public Accountants
California Society of Municipal Finance Officers
California Society of Certified Public Accountants
California Association of School Business Officials
Kiwanis Club
• Bachelor of Science degree from Oregon State University, was conferred in 1977
• Taught accounting courses at a branch of La Verne College and Chapman College
• Knowledgeable in all areas of tax law including non-profit tax issues
• Mr. Levy’s ancestry is of Hispanic descent
19
CITY OF LA QUINTA
APPENDIX C - RESUMES
Craig A. Hartzheim, C.P.A. - Partner
• California licensed C.P.A. with 32 years of audit experience with governmental, non
profit, and commercial entities
• Engagement partner for governmental and non-profit audits (Culver City office)
including 15 municipal audits, 40 special district audits (including Los Angeles County
Flood Control District and the County Sanitation Districts of Los Angeles County), and
12 school districts and related audits
• Has assisted governmental clients with year-end closings, key position interviews,
preparation of award winning CAFRs, and preparation of State Controller’s Reports
• Has met or exceeded all continuing education requirements including recent courses in
the following:
2016, 2015, and 2014 Governmental Accounting Conference
2016, 2015, and 2014 School District Conference
Single Audits ofGovernmental Entities
Preparing Governmental Financial Statements
Yellow Book, Government Auditing Standards
GAAS Guide
Other Comprehensive Basis of Accounting (OCBOA) Statements
Audit Standards update
Implementing SAS112 and 114
Fraud in Audits
Auditing update
• Bachelor of Science degree in Accounting from Marquette University, was conferred in
1982
• Member of the following:
American Institute of Certified Public Accountants
California Society of Certified Public Accountants
• Knowledgeable in all areas of tax law including non-profit and payroll tax issues
20
CITYOFLAQtJINTA
APPENDIX C - RESUMES
Hadley Y. Hui, C.P.A. - Partner
• California licensed C.P.A. with 18 years of audit experience with governmental, non
profit, and commercial entities
• Partner in charge of 10 municipal audits, 26 special district audits, 8 special audits for the
County of San Diego, and 20 school districts and related audits
• Supervisor for the CSS and DPSS Monitoring Projects for Los Angeles County
• Has met or exceeded all continuing education requirements including recent courses in
the following:
2016, 2015, and 2014 Governmental Accounting Conference
2016, 2015, and 2014 School District Conference
Fraud in Audits
Risk-Based Auditing Part 1, Part 2
Accounting and Auditing Update
Guide to Auditing Control Course 1, Course 2
• Extensive knowledge of database systems, networking, and various accounting software
I
• Bachelor of Arts degree in Economics with a minor in Accounting from University of
California - Los Angeles, was conferred in 1997
• Member of the following:
American Institute of Certified Public Accountants
California Society of Certified Public Accountants
21
CITY OF LA QUINTA
APPENDIX C - RESUMES
Wilson Lam, C.P.A., C.F.E., C.G.F.M. - Manager
• California licensed C.P.A. with 10 years of audit experience with governmental,
profit, and commercial entities
• Auditor for 4 special district audits, 3 municipal audits, and 9 school district audits
• Has met or exceeded all continuing education requirements including recent
the following:
cours
non
es in
2016, 2015, and 2014 Governmental Accounting Conference
2016, 2015, and 2014 School District Conference
2016 and 2015 Single Audit Compliance
GASB 34 Training Seminars
Auditors ’ Responsibilitiesfor Detection of Fraud
Internal Control and Fraud in Governmental Engagements
Government Auditing Standards - Yellow Book
Implementing SAS112 & 114
Advanced Fraud Techniques
Grants Management
Risk-Based Auditing Part 1, Part 2
2016 Accounting and Auditing Update
Guide to Auditing Control Course 1, Course 2
• Bachelor of Arts in Accounting and Finance from California State University - Fullerton,
was conferred in 2005
Edward R. Eisenhauer, CPA— Senior Accountant
• California licensed CPA with 31 years of experience, and 10 years of audit experience
with governmental, non-profit, and commercial entities
• Auditor for 12 municipal and audits 3 special district audits
• Has met or exceeded all continuing education requirements including recent-courses in
the following:
2016, 2015, and 2014 Governmental Accounting Conference
2016, 2015, and 2014 School District Conference
Accounting and Auditing Standards Update: Risk Assessment Standards
Advanced Audit Standards Workshop: Understanding Risk Assessment
GAAS Update
Auditors ’ Responsibilitiesfor Detection of Fraud
Internal Control and Fraud in Governmental Engagements
Government Auditing Standards - Yellow Book
Implementing SAS 112 & 114
Advanced Fraud Techniques
Grants Management
• Bachelor of Science degree in Accounting from University of Wisconsin- Whitewater,
was conferred in 1982
• Knowledgeable in all areas of tax law including non-profit and payroll tax issues
22
CITY OF LA QUINTA
APPENDIX C - RESUMES
Bin Zeng - Senior Accountant
Auditor with 9 years of audit experience with governmental and commercial entities
Auditor for 9 municipal audits, and 12 special district audits
Bachelor of Arts degree in Business Economics from the University of California - Los
Angeles, was conferred in 2007
Has met or exceeded all continuing education requirements including recent courses in the
following:
2016, 2015, and 2014 Governmental Accounting Conference
2016, 2015, and 2014 School District Conference
2016 Accounting and Auditing Standards Update: Risk Assessment Standards
2016 Advanced Audit Standards Workshop: Understanding Risk Assessment
2016 GAAS Update
Auditors ’ Responsibilitiesfor Detection of Fraud
Internal Control and Fraud in Governmental Engagements
Government Auditing Standards - Yellow Book
Implementing SAS112 & 114
Advanced Fraud Techniques
Grants Management
Ricardo Rodriguez - Senior Accountant
• Senior Accountant with 15 years of audit experience with governmental, non-profit, and
commercial entities
• Previously assigned to various municipal engagements
• Has met or exceeded all continuing education requirements including recent courses in the
following:
2016, 2015, and 2014 Govermnental Accounting, Conference
2016, 2015, and 2014 School District Conference
2016 Accounting and Auditing Standards Update: Risk Assessment Standards
2016 Advanced Audit Standards Workshop: Understanding Risk Assessment
2016 GAAS Update
• Bachelor of Science in Accounting from California State University of Long Beach, was
conferred in 1999
23
CITY OF LA QUINTA
APPENDIX C - RESUMES
Ricky Tzu-Wei Kuo - Senior Accountant
• Auditor with 8 years of audit experience with governmental and commercial entities
• Auditor for 8 municipal audits, 12 special district audits, and 1 school district audits
• Senior accountant for the Los Angeles County DMH Monitoring Projects
• Has met or exceeded all continuing education requirements including recent courses in the
following:
2016, 2015, and 2014 Governmental Accounting Conference
2016, 2015, and 2014 School District Conference
• Bachelor of Science in Business Administration with an emphasis in Accounting from
California State University - Los Angeles, was conferred in 2005
Susan Chin — Staff Accountant
• Auditor with 7 years of audit experience with governmental, non-profit, and commercial
entities
• Auditor for 3 municipal audits, 2 special district audits, and 3 school district audits
• Staff accountant for the Los Angeles County DMH Monitoring Projects
• Has met or exceeded all continuing education requirements including recent courses in
the following:
2016, 2015, and 2014 Governmental Accounting Conference
2016, 2015, and 2014 School District Conference
• Bachelor degree from University of California — Los Angeles, was conferred in 1992
Cody Hartzheim- Staff Accountant
• Auditor with 3 years of audit experience with governmental, non-profit, and commercial
entities
• Auditor for 9 municipal audits and 10 school district audits
• Has met or exceeded all continuing education requirements including recent courses in
the following:
2016 and 2015 Governmental Accounting Conference
2016 and 2015 School District Conference
• Bachelor of Science in Accounting and Finance from Marquette University, was
conferred in 2014
24
CITY OF LA QUINTA
APPENDIX C - RESUMES
Israel Morel - Staff Accountant
• Auditor with 3 years of audit experience with governmental, non-profit, and commercial
entities
• Auditor for 6 municipal audits and 3 school district audits
• Has met or exceeded all continuing education requirements including recent courses in
the following:
2016, 2015 and 2014 Governmental Accounting Conference
2016, 2015 and 2014 School District Conference
• Bachelor of Science in Business Administration with emphasis in accounting from
California State University - Dominguez Hills, was conferred in 2013
Sheila Falcon - Staff Accountant
• Auditor with 4 years of audit experience with governmental and commercial entities
• Has met or exceeded all continuing education requirements including recent courses in
the following:
2016, 2015, and 2014 Governmental Accounting Conference
2016, 2015, and 2014 School District Conference
• Bachelor of Science Degree in Accounting from the University of California - Long
Beach, was conferred in 2002
David Ortiz - Computer Specialist
• Auditor with 22 years of audit experience with governmental and commercial entities
• Computer specialist - with emphasis in fund accounting software
• Extensive knowledge of database systems, networking, and accounting software
• Bachelor of Science degree in Business Administration with an emphasis in Accounting
from California Polytechnic State University, San Luis Obispo, was conferred in 2000
25
CITY OF LA QUINTA
APPENDIX D - REFERENCES
CITY OF COVINA
2013 to Present
Audit of basic financial statements in conformity with GASB34 & 45, Successor to the Redevelopment
Agency, and Single Audit Report
Received GFOA Certificate of Achievement in Financial Reporting
Contact: Anita Agramonte (600 Hours)
125 E. College Street, Covina, CA 91723
(626)384-5516
CITY OF CULVER CITY
2011 to 2015
Audit of basic financial statements in conformity with GASB 34, Successor to the Redevelopment Agency,
Single Audit Report, Municipal Bus Line, REAC Report, and prepared City, RDA, and Transit State
Controller Reports, Received GFOA Certificate of Achievement in Financial Reporting
Contact: Jeff Muir (585 Hours)
9770 Culver Blvd. Culver City, CA 90232
(310) 253-6016
CITY OF LA CANADA FLINTRIDGE
2013 to Present
Audit of basic financial statements in conformity with GASB 34, Single Audit Report, and review of the
City’s GANN Limit, Prepared State Controller Reports
Received GFOA Certificate of Achievement in Financial Reporting
Contact: Daniel Jordan, Ph.D. (420 Hours)
1327 Foothill Boulevard, La Canada Flintridge, CA 91011
(818)790-8880
CITY OF LAGUNA HILLS
2009 to 2015
Audit of basic financial statements in conformity with GASB 34, and Single Audit Report
Prepared City’s State Controller’s Report, and review of the City’s GANN Limit
Partner — Craig A. Hartzheim, CPA
Contact: Janice Mateo-Reyes, (949) 707-2623 (400 Hours)
Received GFOA Certificate of Achievement in Financial Reporting
CITY OF INDIO
2011 to 2015
Audit of basic financial statements in conformity with GASB 34/CAFR, Redevelopment Agency,
Single Audit Report, review of the City’s GANN Limit, and testing of cash receipts and review internal
control over cash receipts at the Parks & Recreation Department
Contact: Veronica Alvarado (320 Hours)
100 Civic Center Mall, Indio, CA 92201
(760) 541-4238
I
26
CITY OF LA QUINTA
APPENDIX E - SEGMENTATION AND AUDITED HOURS BY SEGMENT
Estimated HoursI
I
Partner/
Technical
Senior Manager Partner
I
TotalStaffClericalAUDIT SEGMENTS
248664Planning
246864Risk Assessment
844Audit Conferences
3144617Correspondence
Review/Documentation of
Internal Controls (including Single Audit):
Documentation of systems
Testing of systems
20812
221012
11536282625Compliance Testing (including Single Audit)
10716422425Year End Balances Testing
Revenue and Expense/E>q3enditure
Analysis (Analytical Procedures)85182245
1121826123620Preparation, Review, and Findings
5489413411415353GRAND TOTAL
27
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