Teaman, Ramirez & Smith, Inc - Proposal>
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CITY OF LA QUINTA
PROPOSAL TO PERFORM ANNUAL AUDITS
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March 1,2017I
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Proposal to Perform Annual Audits for the
CITY OF LA QUINTA
Submitted by:
TEAMAN, RAMIREZ & SMITH. INC.
CERT I F I ED PUBL I C ACCOUNTANTS
Contact - Joshua J. Calhoun, CPA
Alternate Contact - Richard A. Teaman. CPA
4201 Brockton Avenue. Suite 100
Riverside, California 92501
Telephone No. (951) 274-9500
E-mail: jcalhoun@trscpas.com
March 1,2017
CITY OF LA QUINTA
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TABLE OF CONTENTS
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Page Number
1-2Letter of Transmittal
3Firm Profile
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3License and Independence
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3-4Range of Activities
4Participation in Peer Review Program
4Audit Staff Technical Qualifications and Experience
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5-10Current Municipal Audit Clients and References
11Single Audits
11GFOA Award Programs for Financial Statements
11Scope of Services
'j Audii Approach
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12-16
16Identification of Anticipated Potential Audit Problems
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Insurance 16
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17-18Appendix A - Peer Review Report
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Appendix B - Audit Team Resumes
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TEAMAN, RAMIREZ & SMITH, INC.
CERTI F I ED PUBL IC ACCOUNTANTS
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March 1,2017
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City of La Quinta
Finance Department
78495 Calle Tampico
La Quinta, California 92253
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Thank you for inviting Teaman, Ramirez & Smith, Inc. to submit our proposal to perform professional
services for the City of La Quinta (the “City”). We hope this proposal conveys our strong desire and
qualifications to fulfill your requirements. We understand this proposal is to audit the City’s financial
statements for the fiscal years ending June 30, 2017 through 2021.
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Teaman, Ramirez & Smith, Inc. is well qualified to provide these services for the following major
reasons:
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jCommitment to deliver quality audit reports on time so requirements of the City can be met in a
timely manner.
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•Ability to provide experienced personnel for year-to-year continuity.I 2)
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Local CPA firm responsiveness and attentiveness. We are proactive in helping clients achieve a
high level of financial reporting, including the implementation of new accounting
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pronouncements.
I jThorough understanding of the reporting requirements of the City. We have assisted many
governments in achieving the GFOA and/or CSMFO financial statement awards for financial
reporting.
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Teaman, Ramirez & Smith, Inc. will take a proactive role in providing professional services to the City
of La Quinta. Not only will we respond to specific requests and needs in a timely manner, we also will
take the initiative to assist you in planning and seeking out opportunities to improve overall efficiency
and control. This will enable City staff to deliver the best and most cost effective service to the citizens
of La Quinta.
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We will provide an audit team to perform the audit at the City with a strong background in governmental
accounting and auditing. Our audit team will be readily available all year to serve the City. Also, our
proposed team will be committed to providing excellent service and quality reports within the time
frame necessary for the City to meet its requirements.
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RichardA. Teaman, CPA ® David M. Ramirez, CPA « Javier H. Carrillo, CPA * Bryan P. Daugherty, CPA • Joshua J. Calhoun, CPA
4201 Brockton Avenue Suite 100 Riverside CA 92501 951.274.9500 TEL 951.274.7828 FAX www.trscpas.com
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In addition to our audit team’s work, a municipal audit manager independent of the audit team and a
municipal audit partner will review all work papers and reports upon completion of the audit to ensure
the quality of the audit.
Quality communication is an integral part of our approach to the services we provide, as is committing
to meet your deadlines. During the engagement we will remain in contact with the City’s designated
representatives to keep the City informed of the status of the engagement. To ensure we are meeting the
City’s needs, we will ask you, after each engagement, to evaluate our services. It will be our utmost
priority to meet the City’s needs and goals in the performance of these audits.
We certify that Joshua Calhoun is entitled to represent the firm, empowered to submit this bid and
authorized to sign a contract with the City of La Quinta. Should you have any questions regarding our
proposal or desire additional information, please call Joshua Calhoun, Partner at (951) 274-9500.
Respectfully submitted,
TEAMAN, RAMIREZ & SMITH, INC.
Joshua J. Calhoun
Certified Public Accountant
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CITY OF LA QUINTAL_)
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Firm Profile
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Teaman, Ramirez & Smith, Inc., founded in approximately 1929, has specialized in auditing
governmental agencies in excess of eighty years. The firm’s audit partners have over 50 years of
combined experience auditing California governments. The firm is a local firm based in Riverside,
California and totals thirty people, including 5 partners. The government audit staff consists of eight
members who devote approximately 80% of their time to government audits. Our goal is to maintain
continuity of staff throughout the audit contract. The audit for the City will be conducted by the
following full-time audit staff:
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1 - Municipal Audit Partner
1 - Municipal Audit Manager
1 - Municipal Senior Accountant
2 - Municipal Staff Accountants
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License and Independence)
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Our firm, all partners and key professional staff are licensed by the California State Board of
Accountancy to practice in the State of California. Our firm is independent of the City of La Quinta and
its coniponent units in accordance with generally accepted auditing standards as promulgated by Rule
101 of the American Institute of Certified Public Accountants Code of Professional Ethics, generally
accepted government auditing standards promulgated by the U.S. General Accounting Office (GAO),
.and the rules of the California State Board of Accountancy and Accounting Oversight Board.
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As part| of the firm’s quality control system, the firm maintains a library which contains the authoritative
rules on independence. All professional employees are required to review the firm’s client list and sign
a representation letter annually that acknowledges their familiarity and compliance with the firm’s
independence, integrity and objectivity policies and procedures. New clients are announced periodically
as new clients are obtained.
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Ranee !of Activities
The firm's range of activities, besides municipal audits, includes commercial/non-profit audits, reviews,
compilations, fraud examinations, financial services, all types of tax returns and tax planning,
accounting systems assistance, and management advisory services. In addition, over the years, our firm
has adjvised local governments on various issues including real estate transactions, self-insurance
reserves, bond issues, and the implementation of new accounting standards. We compiled financial
statements for 22 assessment districts and community facilities districts for the County of Riverside
during the late 1990s and early 2000 years. Our firm has advised many local governments on various
issues, including the implementation of new accounting pronouncements, along with a variety of other
services, including the following:
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CITY OF LA QUINTA
U Agreed upon procedure engagements relating to dissolution of RDA’s.
Special agreed upon procedures engagements relating to golf course receipts and other activities.
Special agreed upon procedures engagements relating to investments and other activities.
Audit of contract refuse hauler companies seeking rate increases.
Special gross receipts audits for compliance with City business license tax.
Special audits of motels and hotels for compliance with payment of transient occupancy tax.
Assistance with payroll tax related matters.
Assistance with recording activities resulting from the issuance of bonds.
'Preparation of appropriations limit resolutions and documentation relative to Government Code
Section 7902 (a) and 7910.
Preparation of street reports, and various State Controller’s Reports,
internal Control evaluations and recommendations, assistance with fraud prevention programs.
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Participation in Peer Review Program
Our firm underwent peer reviews by the American Institute of Certified Public Accountants in July
1990, August 1993, June 1996, July 1999, June 2002, June 2005, August 2008, November 2011, and the
State Cpntroller’s Office in August 1990 and received unqualified opinions. Our November 2014 report
had one item on it that relates to the audit of pension plans and does not impact other areas of our
practice such as nonprofits and governments. On each of these reviews, governmental and pension
related audit engagements were selected for review. There have been no disciplinary or regulatory
actions taken against our firm. A copy of our most recent peer review report is included in Appendix A.
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Audit Staff Technical Qualifications and Experience
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We pl^ to provide continuity of audit staff from year to year, which is in the best interest of the City
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and is most efficient from our firm’s perspective.
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The audit staff represent highly trained government auditors. While staff training is a continual process,
because of our high level of audit supervision, we avoid putting our clients in a position of having to
‘‘train”'the auditors. All audit staff are required to complete at least 80 hours of continuing education
every 2 years, with a majority of these hours relating specifically to government accounting and auditing
subjects. Continuing education requirements are met through classes put on by professional
organizations, such as the CalCPA, GFOA, the AICPA, along with an intensive in-house training
program devoted to government accounting and auditing subjects.
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Resumes for the key individuals serving your City are included at Appendix B.
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Current Municipal Audit Clients and References
The City of La Quinta understandably desires that its auditors have proven experience, in-depth
knowledge and technical expertise in dealing with the unique issues facing governmental entities. Our
practice has been active in the audit of governmental entities for over 80 years. The following is a
partial list of current and prior municipal audit clients:
Coachella Valley Recreation and Park District
Coachella Valley Resource Conservation District
Coachella Water Authority
City of Colton*
Colton Redevelopment Agency
City of Corona* @
City of Corona Dial-A-Ride Fund
Corona Parking Authority
Corona Redevelopment Agency
Cove Communities Public Safety Commission
City of Dana Point*@
City of Desert Hot Springs
Desert Hot Springs Redevelopment Agency
Desert Resorts Regional Airport Authority
City of Diamond Bar*
City of Eastvale@#
East Valley Resource Conservation District
City of El Segundo*@
Elsinore Valley Municipal Water District*®
Encina Wastewater Authority®
City of Escondido*®
Escondido Community Development
Commission
Fern Valley Water District#
City of Galt®
Galt Redevelopment Agency
Goleta Sanitary District
City of Grand Terrace*
Grand Terrace Redevelopment Agency
City of Hemet*®
Hemet Redevelopment Agency
City of Highland
Home Gardens Sanitary District
Idyllwild Water District
City of Adelanto#
Adelanto Public Utility Authority#
Town of Apple Valley*
Apple Valley Redevelopment Agency
City of Banning*
City ofBuena Park*®
Banning Redevelopment Agency
Banning Transit System
City ofBig Bear Lake*
Big Be^ Lake Fire Protection District
Big Bear Lake Improvement Agency
City ofjBlythe*#
Blythe Hnancing Authority#
Blythe Redevelopment Agency
City ofjCapitola®
Capitola Redevelopment Agency
Carpinteria Sanitary District#
Central Basin Municipal Water District*®
Channel Islands Beach Community Services
District#
City of Chino*
Chino Redevelopment Agency
Citrus Pest Control
District No. 2#
City of Coachella*
Coachella Fire Protection District
Coachella Redevelopment Agency
Coachella Sanitary District
Coachella Valley Association of Governments
Coachella Valley Joint
Powers Insurance Authority
Coachella Valley Mosquito and
Vector Control District
Coachella Valley Public Cemetery District
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J Ontario Redevelopment Agency
Ontario Redevelopment Financing Authority
Otay Water District@#
City of Palm Desert*
Palm Desert Redevelopment Agency
Palm Springs Civic Center Authority
Palo Verde Cemetery District
Palos Verdes Peninsula Transit Authority
Palos Verde Valley Transit Agency
City of Perris*#@
Perris Housing Authority#
Perris Joint Powers Authority#
Perris Public Financing Authority#
Perris Redevelopment Agency
Perris Utility Authority#
Perris Valley Cemetery District#
Pine Cove Water District
Pinyon Pines County Water District
City of Rancho Mirage* @
Rancho Mirage Redevelopment Agency
Rancho Mirage Transit Fund
City of Riverside*®
Riverside Redevelopment Agency
County of Riverside*
Riverside Civic Center Authority
Riverside County A.D.s 159 & 161
Riverside County Asset Forfeiture Accounts
Riverside County C.F.D.s 88-8 & 87-1
Riverside County Desert Judicial District
Riverside County Economic Development
Agency (RDA & Successor to RDA) #
Riverside County Flood Control & Water
Conservation District®
Riverside County Habitat Conservation Agency
Riverside County Judicial District
Riverside County Money Purchase Pension
Plan
Riverside County Regional Park & Open Spaces
District
Riverside County Sheriffs Department Asset
Forfeiture Accounts
City of Indian Wells
Indian Wells Redevelopment Agency
City of Indio*
Indio Civic Center Authority
Indio Public Financing Authority
Indio Redevelopment Agency
Inland Empire West Resource Conservation
District*
Jacqueline Cochrane Regional Airport
Authority#
City of King City*
King City Redevelopment Agency
City of Lake Elsinore*®#
Lake Elsinore Public Financing Authority#
Lake Elsinore Recreation Authority#
Lake Elsinore Redevelopment Agency
Lake Elsinore Transit System
City of|La Puente*®
La Puente Redevelopment Agency
Lee Lake Water District
City of|Loma Linda*
Loma Linda Redevelopment Agency
Mammoth Community Water District#
March Inland Port Airport Authority#
March Joint Powers Authority*#
March Joint Powers - Caretaker
March Joint Powers Redevelopment Agency
March Joint Powers Utility Authority#
Mojave Desert and Mountain Integrated Waste
Management Authority
City ofiMoorpark*®
Moorpark Redevelopment Agency
City of Murrieta*®
City of Needles*
Needles Public Financing Authority
Needles Redevelopment Agency
Newhall County Water District
City of Norco
OMNITRANS
City of Ontario*
Ontario Industrial Development Authority
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CITY OF LA QUINTA
Victor Valley Wastewater Reclamation
Authority*
Water Replenishment District of Southern
California
West Valley Vector Control District
Western Municipal Water District
City of Yucaipa*
Town of Yucca Valley*@
Yucca Valley Community Center Authority
Yucca Valley Financing Authority
Yucca Valley Redevelopment Agency
Yuima Municipal Water District#
Riverside County Transportation Commission
Riverside Parking Authority
Riverside - San Bernardino Housing & Finance
Agency
Riverside Transit Agency*
Riverside Transit Fund
Running Springs Water District
City of San Bernardino*
San Bernardino Associated Governments
San Bernardino County-Chino Civic Center
Authority
San Bernardino County-Needles Public
Facilities Authority
City of San Jacinto*
San Jacinto Redevelopment Agency
San Jacinto Mountain Area Water Study Agency*
City of,Santa Paula*@
Santa I^aula Redevelopment Agency
City of!Santee*@
Santee Public Financing Authority
Saticoy Sanitary District
City of Shafter*#@
Shafter Joint Powers Financing Authority#
City of|Solvang@
City of South El Monte*
South Orange County Wastewater Authority
Southern Coachella Valley Community Services
District#
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Sunline Transit Agency*
City ofjTehachapi*
Tehach'api-Cummings County Water District®
Thermal Sanitary District
Triunfo Sanitation District®
City of Twentynine Palms®
Twentjjnine Palms Water District
Valley Sanitary District
Van Horn Regional Treatment Facility
Ventura Regional Sanitation District®
Victor Valley Economic Development
Authority
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- Single Audit Procedures Performed (in
accordance with 0MB Circular A-133)
# - Current Clients
® - Participated in CSMFO and/or GFOA
award programsr
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CITY OF LA QUINTA
The following are audit client references for which similar services have been provided:
1) Jennifer Erwin, Deputy Finance Director
City of Perris
(951)943-2906
101 North D Street
Perris, California 92570
Website: http://www.cityofperris.org
Engagement Partner: Richard Teaman
Total Hours: Approx. 1135/year
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a) The City of Perris incorporated in 1911 as a General Law City and provides the following
services: general administrative services, public safety (police and fire), highways and streets,
culture-recreation, community development (planning, building, zoning), water, sewer and
sanitation. Our firm conducted the annual audit of the City of Perris for the years ended Jime
; 30, 1998 through 2016 (including Single Audit in each of those years except 2005, 2006 &
! 2007), and provided assistance with the State Controller's Report preparation. Street Report
1 preparation, implementation of GASB 34, conversion to a full CAFR format, assistance in
I obtaining the GFOA and CSMFO awards of excellence in financial reporting and other areas
I as requested by the City.LJ
b) The Perris Redevelopment Agency consisted of three project areas and annual expenditures of
j approximately $15 million. We performed the audit of the Agency for the years ended June
! 30, 1998 through 2011 including preparation of the Annual Report of Financial Transactions to
i the State Controller (State Controller’s Report), Statement of Indebtedness preparation,
; implementation of GASB 34 and performance of agreed upon procedures engagements relating
to the transfer to the successor agency. We audited the successor agency as part of the City
I upon dissolution of the RDA in January 2012 and through June 30, 2016.
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c) We have audited the Perris Public Financing Authority since 1998. Our services included
i preparation of the Annual Report of Financial Transactions to the State Controller (State
! Controller's Report) and implementation of GASB 34.I
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d) We have audited the Perris Joint Powers Authority, Perris Housing Authority, and Perris
Utility Authority. Our services included preparation of the Annual Report of Financial
' Transactions to the State Controller (State Controller's Report), as applicable.
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Kevin Keoppen, Accounting Manager
Otay Water District
(619) eif^-2222
2554 Sweetwater Springs Blvd
Spring Valley, CA 91978
Website: http://www.otaywater.gov
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Engagement Partner: Richard Teaman
Total Hours: Approx. 400/year
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The Otay Water District was established in 1956 for the purpose of providing water and sewer
services to the properties in the San Diego County area, serving approximately 50,000 customers.
O.ur firm conducted the annual audit of the District for the years ended June 30, 2004 to 2008, and
returning for fiscal years ended June 30, 2014 and June 30, 2016. Our services also included
assisting in preparing the State Controller’s report and agreed-upon procedures engagement related
to their investments policy.
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Christa Elms, Interim Finance Director
City of Blythe
(^60) 922-6161
235 N. Broadway
Blythe, CA 92225
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Engagement Partner: Richard Teaman
Total Hours: Approx. 800/year
a) The City of Blythe was incorporated in 1916 as a General Law City and provides the following
I services: public safety (police and fire), highways and streets, water, sanitation, health and
1 social services, culture-recreation, public improvements, community development (planning,
j building, zoning) and general administrative services. Our firm conducted the audit for the
! years ended June 30, 1992 through 2016 (including Single Audits in several years). Our
i services included assistance with Appropriations Limit Calculations, State Controller’s Report
I preparation and assistance with GASB standards implementation and assistance.
bj The Blythe Redevelopment Agency consists of one project area and seven outstanding bond
issues. We performed the audit of the Agency for the years ended June 30, 1992 through 2011.
; Our services included preparation of the Statement of Indebtedness and Annual Report of
i Financial Transactions to the State Controller. We audited the successor agency as part of the
I City upon dissolution of the RDA in January 2012 and through June 30, 2016.
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c) We performed the audit of the Blythe Financing Authority for the years ended June 30, 1998
(Inception May 1998) through 2016. Our services included the preparation of the State
Controller’s report.
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CITY OF LA QUINTA
James Zervis, Administrative Services Director
City of Shafter
(661)746-012
336 Pacific Avenue
Shafter, CA 93263
Website: http://www.shafter.com
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Engagement Partner: Richard Teaman
Total Hours: Approx. 400/year
a) The City of Shafter was incorporated in 1915 as a General Law City and provides the
I following services: public safety (police and fire), highways and streets, water, sanitation,
health and social services, culture-recreation, public improvements, community development
(planning, building, zoning) and general administrative services. Our firm conducted the audit
I for the years ended June 30, 2008 through June 30, 2010 and returning for fiscal years ended
' June 30, 2014 and June 30, 2016 (including Single Audits in several years). Our services
' included assistance with Appropriations Limit Calculations, and assistance with various GASB
' Standards implementation and assistance.
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The Shafter Community Development Authority consists of one project area and three
outstanding bond issues. We audited the successor agency as part of the City from June 30,
2014 to June 30,2016.
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James Riley, Interim Finance Director
City of Eastvale
(951)361-0900
12363 Limonite Avenue, Suite 910
Eastvale, CA 91752
Website: http://www.eastvaleca.gov
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Engagement Partner: Richard Teaman
Total Hours: Approx. 250/year
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u aj The City of Eastvale was incorporated in 2010 as a General Law City and provides the
following services: public safety (police and fire), public services, community development,
and general administrative services. Our firm conducted the audit for the years ended June 30,
2011 through 2016. Our services included assistance with Appropriations Limit Calculations,
and assistance with GASB standards implementation and assistance.
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CITY OF LA QUINTA
Single Audits (in accordance with OMB Circular A-133 and Uniform Guidance^'—<
As indicated in the above list of clients, our firm performs single audits in accordance with OMB
Circular A-133 for several clients each year. In addition to the above list, our firm has performed single
audits for numerous other clients, involving many different federal programs. The Partner in charge of
the City’s audits has 30 years of experience performing single audits. We will take into account the
“ARRA” Single Audit requirements during our audit.
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GFOA Award Program for Financial Statements
Our firm has been providing assistance to California governments in obtaining the GFOA and/or
CSMFO awards for financial reporting for many years. We have helped various governments obtain the
awards for the first time, and in addressing comments from previous years. To date, all of our clients’
attempts to obtain these awards have been successful.
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Scone of Services
The scope of the audits will be to perform the audits of the City of La Quinta in accordance with
generally accepted auditing standards; the A.I.C.P.A. industry audit guide, Audits of State and Local
Governmental Units, as amended; the Government Finance Officers Publication, Governmental
Accounting. Auditing and Financial Reporting, as amended; the standards for financial audits contained
in the tf.S. General Accounting Office publication Government Auditing Standards, the Single Audit
Act, as amended, and the Office of Management and Budget provisions of Uniform Guidance
(previously under Circular A-133) for Single Audits, applicable State Audit Guides, as applicable to the
issuance of the reports listed in the RFP.
The engagement will include Appropriations Limit Annual Review Compliance Letters in order to assist
the City meeting the requirements of Section 1.5 Article XIIIB of the California Constitution. We will
also assist the City in the preparation of the financial statements and the State Controllers’ Report.
We agree the City may broaden the scope of our engagement and we agree to hold ourselves available to
perform such additional work as the City may desire and as independence standards allow. Progress
billings, covering a period not less than a calendar month, will be submitted. A final billing will be
submitted upon delivery of all required reports. No billings will be made for out-of-pocket expenses or any
other expenses such as typing, clerical, printing or travel costs.
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CITY OF LA QUINTA
Audit Approach'
The engagement partner is a working partner and will be involved in much of the audit. He will assume
overall responsibility for services provided to the City and its component units. He will also serve as a
technical consultant to the Finance Department. He will provide overall guidance to the audit staff. The
engagement partner will be responsible for the primary portion of the field audit, including preparation
of all audit reports. He will supervise staff assigned to the engagement. The manager and staff
accountants will perform audit field work under the supervision of the engagement partner.
Our past experience, relating to our approach to the audits, has indicated that the most important service
that can be rendered to clients is to be available at all times during the year. This approach allows the
clients the opportunity to consult with the auditors about technical problems and alternative approaches
to accounting issues that arise during the year.
We take a customized approach to each and every audit. We will apply the recently adopted “Risk
Assessment” audit standards to your audits. An overriding objective throughout the planning process is
the identification of risks that should be assessed as to whether they could result in material
misstatement of the financial statements. We perform risk assessment procedures to provide a
satisfactory basis for the assessment of risks at the financial statement and relevant assertion levels.
Obtaining an in-depth understanding of the entity and its environment, including its internal control, is an
essential aspect of the consideration of risk. We use a variety of risk assessment procedures when obtaining
this understanding, including observation and inspection (walkthroughs), and inquiries of management and
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others, discussions among the engagement team, and preliminary analytical procedures. Some aspects of
the risk assessment procedures can only be determined after information is gathered about the entity and its
envirorment; and therefore, we tailor our procedures in response to the information gathered. The results of
our risk assessment determine of the nature, timing, and extent of further audit procedures to be performed
in response to those risks.
Additionally, we have incorporated SAS (Statement on Auditing Standard) No. 99, Consideration of
Fraud in a Financial Statement Audit, into our audit process. As a result, we will specifically: 1) evaluate
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whether programs and controls address identified fraud risks and whether the controls are suitably
designed and plaeed in operation and; 2) assess the fraud risks, taking into account our evaluation, to
determine whether an audit response is required. As part of this assessment we will discuss how fraud
could possibly occur and be prevented with various City personnel. Additionally, we will examine
adjusting journal entries as part of our assessment. Under SAS 99 we are required to review and assess
the City’s'operations with regard to fraud. Realizing the sensitivity of such a subject, we will conduct
our procedures in such a way as to not cause alarm. We will take the time to explain the reasoning of
why we are asking such questions and that they are not meant to be accusatory but rather are necessary
for us to complete our assignment. This requirement applies to all financial statement auditors but we
believe our communicative approach is superior to others.
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CITY OF LA QUINTA
Our sampling methods are designed to provide the most coverage possible without expending excess
time where impractical. We also concentrate efforts towards those areas known to be susceptible to
error. Sample sizes will depend upon our preliminary assessment of control risk and the extent of our
planned substantive tests and analytical procedures.
Shortly after our appointment as auditors, we will schedule a preaudit planning meeting during which
we will discuss any special concerns, needs and the timing of the audit with appropriate members of the
City’s staff. We will also schedule audit progress meetings and an exit conference with the appropriate
City staff during our engagement to discuss any findings and issues we encountered during the audit.
All of our recommendations will be discussed with appropriate personnel in a timely manlier. Drafts of
all financial reports and management letters will be submitted prior to the issuance of final reports.
We are aware of the amount of additional work and inconvenience the annual audit brings to the City’s
staff. However, we feel our service approach, and the experience level of the Partner and staff assigned
to yourjaudit, will eliminate many of the common problems experienced during an audit, such as;
recommendations made without a thorough understanding of the feasibility of the
recommendation;
‘year-end surprises;'
new and inexperienced audit staff each year, without adequate supervision.
The fieldwork will normally be coordinated with City staff and begin as soon as the City’s books and
records are in auditable form. This normally takes place in two stages. Each year we will update our
knowledge of your major internal accounting control systems and test such systems (risk assessment).
At the same time, City staff will be interviewed in order to assist in resolving any shortcomings before
performing the field work portion of the audit. This generally is completed prior to year-end and often
leads io worthwhile suggestions for improving internal controls as well as the efficiency and
effectiveness of accounting operations and procedures. All of our recommendations will be discussed
with appropriate City personnel in a timely manner, and if appropriate, in a formal written management
letter at the conclusion of the audit. In addition, we will complete as much of the single audit
compliance, if applicable, in this stage of the audit. We will review the minutes of the City Council
meetings during both stages of the audit.
We use models based on statistical sampling theories to help determine sample sizes using nonstatistical
sampling methods as necessary for our substantive tests of balances and transactions, tests of controls
and tests of compliance. The objective of tests of compliance is to determine whether an organization
has complied with laws and regulations that may have a material effect on each major program.
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CITY OF LA QUINTA
Therefore, we select samples that will provide sufficient evidence for that purpose. After defining the
population, we determine sample sizes and select samples from each major program. Factors that may
affect the sample sizes include the following:
a) The amount of expenditures for the program and the individual awards;
b) The newness of the program or changes in its conditions;
c) Prior experience with the program, particularly as revealed in audits and other evaluations;
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d) The extent to which the program is carried out through subreceipients;
e) The level to which the program is already subject to program reviews or other forms of
independent oversight;
f)' The adequacy of controls for ensuring compliance;
g) The expectation of adherence or lack of adherence to the applicable laws and regulations; and
h) The potential impact of adverse findings.
The audit team will have laptop computers onsite during the audit fieldwork utilizing state-of-the-art
software and cloud based programs. We utilize programs such as Microsoft Excel, AdvanceFlow,
Checkpoint and Firm Flow to assist in our audit procedures and provide for greater efficiency and
effectiveness. All audit staff have significant experience working with many various accounting
systems in our government audits. Additionally, we utilize a cloud-based secured portal system that can
be utilized for file exchanges. This will allow for the sending of documents, such as account analysis
and schedule, drafts and final report and financial statements. This is an effective tool to aid in the
efficiency and progress of the audit.
Analytical procedures will be performed in the planning stage of the audit (risk assessment process) and
in our substantive testing, based on the results of our risk assessment. These procedures will include
comparing account balances to the prior year and to the current period’s budget, and consideration of
expected relationships among the accounts and periods. Analytical procedures will also be performed in
the overall review stage of the audit.
' )
Our audit approach recognizes the importance of laws and regulations in planning the audit of a local
governmental entity. As a part of the audit, our firm obtains an understanding of those laws and
regulations that have a direct and material effect on the determination of financial statement amounts.
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CITY OF LA QUINTA
We then design the audit to provide reasonable assurance of detecting material instances of
noncompliance. We obtain our understanding of applicable laws and regulations by becoming familiar
with the following:
The terms and provisions of grant agreements and contracts.
State and federal restrictions affecting funding received by the City; i.e., gas tax law, etc.
The Municipal Code of the City.
State laws regarding authorized investments, spending limits, debt limits, etc.
City policies regarding investments, purchasing, budgets, and the establishment of funds.
Bond covenants of outstanding issues.
Personnel Policies adopted by the City.
Other laws and regulations as appropriate in the circumstances.
Our review of the internal control will be by questionnaire and procedural write-up of your accounting
system.' Each of the approaches requires inquiry and observation of City personnel and operations. We
will also utilize the City’s budget, organizational charts, financial reports, policies and procedures, and
other applicable documents. Comments and recommendations relating to the accounting system will be
discussed with appropriate City personnel and where appropriate they may be included in our reports.
Our recommendations will be directed at safeguarding City assets, improving the effectiveness of City
proced^es, and improving the reporting of financial information, as applicable.
The second stage of the audit is primarily concerned with auditing the final numbers and disclosures that
will appear in the City’s financial statements and will begin as soon as the City’s books and records are
ready for audit. Drafts of all financial reports and management letters will be submitted prior to the
issuance of final reports. We have a proven track record of delivering reports on time. Each year we
will initiate an exit conference to discuss any suggestions, which either of us may have for improving
the conduct of the annual audit process, management letters, or any other matters of interest.
Throughout the year we are always available for meetings or discussions in order to meet your needs.
Findings and reports shall be kept confidential and reported only to the City.
In the levent that any irregularity in records indicates the City may have suffered or will suffer a
monetary loss, we will report such loss to the appropriate City personnel immediately upon discovery in
the form of a written report.
Responses to City notifications will be prompt and all reports will be remitted in a timely manner to
meet your needs. We make it a practice to be proactive in providing guidance and assistance to our
audit clients throughout each fiscal year to ensure proper and timely implementation of new and
significant accounting pronouncements, and also with laws and regulations.
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The following includes the proposed segmentation of the audit engagement, and the level of staff
involved for each segment:
Estimated
Hours
Level of
StaffDescription
4Preaudit planning with City staff.Partner
Entrance conferences and auditors perform interim audit
procedures Partner, Senior, Staff 180
City Staff provides trial balances and supporting schedules for
audit. Auditors commence final examination procedures.Partner, Senior, Staff 180
Exit conference where auditors propose AJE’s and discuss internal
control and compliance findings from the audit, as applicable.Partner, Senior 2
Auditors and City staff prepare draft financial statements and
reports, |(including single audit and management letter), state
controller’s report and complete file reviews.
Partner, Manager,
Senior, Staff 80
Partner, Senior 4All reports are finalized and submitted.
Assistance expected from City staff will include providing us with documents and information included
in our comprehensive request list provided at the start of the audit process, answering operational and
procedural type questions, and preparing confirmation letters and covering related costs of necessary
confimiations as part of the audit.
Identification of Anticipated Potential Audit Problems
We doj not anticipate any significant audit problems for this engagement, other than the extra work
t
normally required for a first-year audit in obtaining applicable documents and information. We will
provide a detailed request list early in the audit process to ensure the audit progresses in a timely
manner. Should any other issues arise, we will discuss them with appropriate City staff at that time.
Insurance
Insurance certificates and insurance documents will be provided upon direct request in the final
evaluation process. The Firm possesses sufficient insurance coverage based on comparable audit service
engagements.
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APPENDIX A
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DAMORE
HAMRIC&
SCHNEIDER.
INC.
SYSTEM REVIEW REPORT
November 12. 2014
To the Shareholders
Teaman, Ramirez & Smith, Inc.
and the Peer Review Committee of the California Society of CPAs
We have reviewed the system of quality control for the accounting and auditing practice of
Teaman, Ramirez & Smith, Inc. (the firm) in effect for the year ended May 31, 2014. Our peer
review was conducted in accordance with the Standards for Performing and Reporting on Peer
Reviews established by the Peer Review Board of the American Institute of Certified Public
Accountants. As a part of our peer review, we considered reviews by regulatory entities, if
applicable, in determining the nature and extent of our procedures. The firm is responsible for
designing a system of quality control and complying with it to provide the firm with reasonable
assurance of performing and reporting in conformity with applicable professional standards in all
material respects. Our responsibility is to express an opinion on the design of the system of
quality control and the firm’s compliance therewith based on our review. The nature, objectives,
scope, limitations of, and the procedures performed in a System Review are described in the
standards at www.aicpa.org/prsummarv.
As required by the standards, engagements selected for review included engagements performed
under Government Auditing Standards; and audits of employee benefit plans.
We noted the following deficiency during our review:
1. Deficiency - The firm's quality control policies and procedures require all personnel to
obtain continuing professional education covering accounting and auditing topics directly
related to their assignments, and such policies and procedures also require personnel
assigned to engagements to have the degree of technical training and proficiency required
in the circumstances. Our review disclosed that while the firm's personnel complied
with the continuing professional education requirements of the state board of
accountancy, insufficient courses had been taken covering auditing topics of the
specialized industry in which some of the firm's audit clients operate. Consequently, the
firm's personnel were not aware of some requirements of professional standards and did
not possess sufficient experience in certain matters regarding the audits of employee
benefit plans. As a result, a couple of the firm's audits of employee benefit plans did not
1515 River 1^ I>rive. Suite 150
Sacramento, CA 95815
Tel (916) 481-2856
Fax (916) 4884428
http;//w\\w.dhscpa.com
Page 2
include adequate planning and documentation in the areas of internal controls, risk
assessment, and substantive procedures, and therefore it did not obtain sufficient
appropriate audit evidence to provide reasonable assurance in the areas of participant
data, allocations, contributions, benefit claims, and investments as required by
professional standards. In addition, in one instance the work done and conclusions
reached to support the audit opinion issued were not documented in the workpapers. The
subsequent year’s engagements have been performed and the firm has indicated that it
performed the testing and documented its procedures in these areas to support its opinion
issued on the financial statements.
Recommendation - The firm should adhere to its quality control policies and procedures
that require personnel to obtain technical training in all subject areas relevant to their
assignments, and include coverage of the firm’s industry specialties. In addition, the firm
should hold training sessions at least annually covering industry specific deficiencies
identified by regulatory agencies (the Department of Labor for employee benefit plans).
The firm’s quality control partner should emphasize compliance with these requirements
when performing monitoring procedures.
In our opinion, except for the deficiencies described above, the system of quality control for the
accounting and auditing practice of Teaman, Ramirez & Smith, Inc. in effect for the year ended
May 31, 2014, has been suitably designed and complied with to provide the firm with reasonable
assurance of performing and reporting in conformity with applicable professional standards in all
material respects. Firms can receive a rating ofpass, pass with deficiency(ies), or fail. Teaman,
Ramirez & Smith, Inc. has received a peer review rating ofpass with deficiency.
Damore, Hamric & Schneider, Inc.
Certified Public Accountants
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AUDIT TEAM RESUMES
'1
Joshua Calhoun. CPA. Partner
Joshua'Calhoun has eight years’ experience auditing governments in California. He is a member of the
Ameriean Institute of Certified Public Accountants and the California Society of Certified Public
Accountants (CalCPA). Mr. Calhoun is also an instructor for our in-house continuing education and
training programs.
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Mr. Calhoun received his Bachelor of Science Degree in Business Administration with a concentration in
Accounting and minor in Finance from California State University, San Bernardino. He is currently
licensed to practice as a Certified Public Accountant (CPA) in California.
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Mr. Calhoun’s governmental auditing experience includes the following cities, redevelopment agencies and
special districts:
Fiscal YeartslClient NameFiscal YearCslClient Name
08-09 thru 15-16
08-09 thru 11-12
08-09 thru 15-16
08-09 thru 15-16
City of Perris*
Perris Redevelopment Agency
Perris Public Financing Authority
Perris Utility Authority
Riverside County Redevelopment
Agency
City of Shafter*
08-09 thru 15-16
08-09 thru 15-16
08-09 thru 11-12
12-13 thru 15-16
City of Blythe*
Blythe Public Financing Authority
Blythe Rledevelopment Agency
Carpinteria Sanitary District
Channel Islands Beach Community
Service District
Citrus Pest Control District
Jacqueline Cochrane Regional Airport Auth. 08-09 thru 15-16
City of Eastvale
Fern Valley Water District
City of liake Elsinore*
Lake Elsinore Public Financing Authority
Lake Elsinore Recreation Authority
March Joint Powers Authority
March Joint Powers Redevelopment Agency 08-09thru 11-12
March Joint Powers Utility Authority
March Inland Port Airport Authority
Mammoth Community Water District
Otay Water District
Perris Valley Cemetery District
08-09 thru 15-16
12-13 thru 15-16
14-15 thru 15-16
08-09 thru 15-16
12-13 thru 15-16
12-13 thru 15-16
12-13 thru 15-16
08-09 thru 15-16
08-09 thru 15-16
08-09 thru 15-16
09-10 thru 15-16
13-14 thru 15-16
08-09 thru 15-16
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08-09 thru 15-16
08-09 thru 09-10 &
13-14 thru 15-16
08-09 thru 09-10Shafter Community Dev. Agency
Shafter Joint Powers Financing
Authority
Shafter TDA
Southern Coachella Valley
Community Services District
City of Twentynine Palms
Twentynine Palms Redevelopment
Agency
Water Facilities Authority
City of Wildomar
Wildomar Cemetery District
Wildomar Measure Z
Yuima Municipal Water District
13-14 thru 15-16
13-14 thru 15-16
12-13 thru 15-16
08-09 thru 09-10
08-09 thru 09-10
15-16
15-16
15-16
15-16
08-09 thru 15-16
* = Single Audit Procedures performed
Mr. Calhoun has for the calendar year ending, as of December 31,2016,112 hours of CPE with over 60 hours
in governmental training. Included in this training were the GFOA Annual Governmental GAAP Update,
Accounting and Auditing, Audit Risk Assessment Standards, and American Institute of Certified Public
Accountant courses. As of December 31, 2015, 70 hours of CPE with 18 hours in governmental training, and
as of December 31,2014,73.5 hours of CPE with 21.5 hours in governmental training.
More detailed information can be provided upon request.
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Richard A. Gallo, Jr.. Manager
Mr. Gallo has thirteen years of experience auditing California governmental agencies. Mr. Gallo also serves as
an instructor for our in-house continuing education program. Mr. Gallo received his Bachelor of Science
Degree in Business Administration, with a concentration in accounting, from the University of California,
Riverside.
Mr. Gallo’s governmental auditing experience includes the following cities, redevelopment agencies and
special districts:
Fiscal Yearts')Fiscal Yeaifsl Client NameClient Name
2000-01 to 2015-16
2012-13 to 2015-16
2012-13 to 2015-16
2000-01 to 2010-11
2000-01 to 2015-16
2008-09 to 2015-16
2008-09 to 2009-10
2002-03 to 2003-04
2000-01 to 2001-02
2001-01 to 2001-02
Perris, City oP
Perris Housing Authority
Perris Joint Powers Authority
Perris RDA, City of
Perris PFA, City of
Perris Utility Authority
Perris Valley Cemetery District
Pine Cove Water District
Riverside Civic Center Authority
Riverside City Hall Authority
Riverside County Economic
Development Agency
Riverside County Flood &
Water Conservation District
Apple Valley, Town oP
Blythe, City oP
2002-03
2001-02 & 2003-04
to 2015-16
2001-02 & 2003-04
to 2015-16
2001-02 & 2003-04
to 2015-16
Blythe PFA, City of
Blythe RDA, City of
Channel Islands Beach
Community Services District 2000-01,2001-02, &
2003-04 to 2015-16
2000-01
2003-04,2004-05
Chino Civic Center Authority
Citrus Pest Control District No. 2
Coachella Valley Public
Cemetery District
Eastvale,| City of
Elsinore jValley Municipal
Water District
Fern Valley Water District
Goleta Sanitary District
Lake Elsinore, City oP
2003-04 to 2011-12
2005-06 to 2007-08,
2012-13 to 2013-14
2003-04 to 2006-07
2012-13 to 2014-15
Riverside County Open Space
and Park District
San Bernardino County Library
San Jacinto Mountain Area
Water Study Agency
Santee, City of
Santee Public Financing Authority
Shatter, City oP
Shatter Community Development Agency
Shatter Joint Powers Financing Authority
Solvang, City of
Southern Coachella Valley
Community Services District
Successor Agency to the Riverside
County Redevelopment Agency
Twentynine Palms, City oP
Twentynine Palms Redevelopment
Agency
Twentynine Palms Water District
Valley Sanitary District
Western Municipal Water District
Yuima Municipal Water District
2005-06
2000-01
2002-03
2002-03 to 2011-12
2000-01 to 2001-02
2001-02 to 2003-04,
2012-13 to 2015-16
2001-02 to 2003-04,
2012-13 to 2015-16
2001-02 to 2003-04,
2012-13 to 2015-16
2001-02 to 2003-04
2004-05 to 2005-06
2012-13 to 2014-15
2012-13 to 2014-15
2007-08 to 2009-10
2007-08 to 2009-10
2007-08 to 2009-10
2002-03
Lake Elsinore PFA, City of
Lake Elsinore RA, City of
Lake Elsinore RDA, City of
Mammoft Community Water
District
March Inland Port Airport
Authority
March Joint Powers Authority*
March Joint Powers Caretaker
March Joint Powers RDA
March Joint Powers Utility
Authority
Otay Water District*
Palo Verde Cemetery District
2002-03 to 2006-072004-05 to 2015-16
2012-13 to 2015-16
2007-08 to 2009-10
2000-01 to 2015-16
2000-01 to 2015-16
2000-01 to 2001-02
2000-01 to 2010-11 2007-08 to 2009-10
2001-02 to 2003-04
2001-02
2000-01
2007-08 to 2015-16
2003-04 to 2015-16
2004-05 to 2007-08
2003-04 to 2004-05
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*= Single Audit Procedures performed
Mr. Gallo has for the calendar year ending, as of December 31, 2016, 60 hours of CPE with 18.5 hours in
governmental training, as of December 31, 2015, 20 hours of CPE with 12 hours in governmental training, and
as of December 31,2014,37.5 hours of CPE with 21.5 hours in governmental training.
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Daniel Rivera, Senior Accountant
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Mr. Daniel Rivera has two years of experience auditing California governmental agencies. He is a member of
the American Institute of Certified Public Accountants and the California Society of Certified Public
Accountants (CalCPA).
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Mr. Rivera received his Bachelor of Arts Degree from California State University, San Bernardino, California.
He is actively pursuing the CPA exam.
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Mr. Rivera’s governmental auditing experience includes several cities and special districts:
Client Nme FFiscal YearCsl Client Name iscal Year(s1
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14-15 thru 15-16
14-15 thru 15-16
14-15 thru 15-16
Otay Water District
Perris Valley Cemetery District
City of Shafter*
Shafter Joint Powers Financing
Authority
Shafter TDA
Southern Coachella Valley
Community Services District
Water Facilities Authority
City ofWildomar
Wildomar Cemetery District
Wildomar Measure Z Fund
14-15
14-15
15-16
14-15 thru 15-16
15-16
14-15 thru 15-16
14-15 thru 15-16
14-15 thru 15-16
14-15 thru 15-16
14-15 thru 15-16
14-15
14-15
14-15
14-15 thru 15-16
City of Blythe*
Blythe Public Financing Authority
Carpinteria Sanitary District
Citrus Pest Control District
Jacqueline Cochrane Regional Airport Auth
City of Eastvale
Fern Valley Water District
City of liake Elsinore*
Lake Elsinore Public Financing Authority
Lake Elsinore Recreation Authority
March Joint Powers Authority
March Joint Powers Utility Authority
March Inland Port Airport Authority
Mammo^ Community Water District
14-15 thru 15-16
14-15 thru 15-16
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14-15 thru 15-16
15-16
15-16
15-16
15-16
e Audit Procedures performed* = Sing
Mr. Rivera has for the calendar year ending, as of December 31,2016, 56.5 hours of CPE with over 15 hours in
governmental training. Included in this training were the GFOA Annual Governmental GAAP Update,
Accouriting and Auditing, Audit Risk Assessment Standards, and American Institute of Certified Public
Accountant courses. As of December 31, 2015, Mr. Rivera had 45 hours of CPE with 28 hours in
governmental training.
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More detailed information can be provided upon request.
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