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Lance, Soll & Lunghard, LLP
PREPARED BY Lance, Soll & Lunghard, LLP Certified Public Accountants License Number 2584 TECHNICAL PROPOSAL City of La Quinta Auditing Services Date of Submission: December 1, 2023 Valid for 90 Days Authorized by Ryan Domino, CPA, Partner Ryan.Domino@lslcpas.com 203 N. Brea Blvd., Suite 203 Brea, CA 92821 (714) 672-0022 City of La Quinta Auditing Services 1 www.lslcpas.com | 1 TABLE OF CONTENTS TABLE OF CONTENTS ............................................................................................................ 1 1. COVER LETTER ................................................................................................................ 2 Firm’s Background, Qualifications, and Experience ............................................................... 4 A. Years in Business ............................................................................................................ 4 B. Taxpayer Identification Number ....................................................................................... 4 C. Years Performing Auditing Services ................................................................................ 4 D. Resumes .......................................................................................................................... 8 E. Firm Ownership ............................................................................................................. 13 F. Parent Company ............................................................................................................ 13 2. REFERENCES ................................................................................................................. 13 3. COMPLETE PRICING LIST ............................................................................................. 16 4. COMPLEMENTARY SERVICES OFFERED BY LSL ...................................................... 19 5. STAFFING & PROJECT ORGANIZATION & AUDIT APPROACH ................................. 20 6. SUBCONTRACTING SERVICES ..................................................................................... 26 7. DISCLOSURES ................................................................................................................ 27 8. ACKNOWLEDGMENT OF INSURANCE REQUIREMENTS ........................................... 27 9. NON-COLLUSION AFFIDAVIT ........................................................................................ 32 10. ACKNOWLEDGEMENT OF ADDENDA .......................................................................... 33 BENEFITS OF WORKING WITH LSL .................................................................................... 34 Our Core Values ................................................................................................................... 34 Best of Accounting Award ..................................................................................................... 35 Accounting Today Regional Leader ...................................................................................... 35 City of La Quinta Auditing Services 2 www.lslcpas.com | 2 1. Cover Letter December 1, 2023 Claudia Martinez, Finance Director/Treasurer City of La Quinta 78495 Calle Tampico La Quinta, California 92253 Dear Ms. Martinez, LANCE, SOLL & LUNGHARD, LLP (“LSL”) is pleased to present our proposal for professional auditing services and demonstrate our commitment to excellence to the City of La Quinta (“City”). We understand that the City of La Quinta is seeking a qualified firm to provide financial audit services covering a term of five (5) years, beginning with the audit of the 2023-24 fiscal year through 2028. We affirm that our proposal fully aligns with all terms, conditions, and requirements stated in the RFP reissued on November 17, 2023. The LSL team holds itself to a high standard for timely delivery and effective communication of key milestones. We know the importance of being responsive and communicative with our clients and are committed to being available on a day-to-day basis to address any questions or concerns that may arise throughout the engagement. Additionally, any overview training on audits and key financial statements for the City’s Council, Commissioners, executive staff, and other affected parties will be discussed and provided as needed. Independence LSL meets the independence requirements set forth by the Government Auditing Standards and is free of any conflict of interest. Our partners have no ownership in any other business organization that currently or will potentially provide services, supplies, materials, or equipment to the City. We annually distribute a listing of our firm's clients to all employees to ensure that any possible independence threats are properly documented and reviewed. Location Our full-service accounting firm is headquartered in Brea, California with a dynamic team of 15 partners and 145 employees, and we regularly share staff and resources across our offices, providing you access to our entire governmental team throughout the United States. City of La Quinta Auditing Services 3 www.lslcpas.com | 3 This approach ensures that you receive the highest level of service and expertise possible, allowing us to deliver optimal results. Contract Person Ryan Domino is the assigned Engagement Partner for this proposal. He is authorized to make representations on behalf of our firm and can be reached by phone at (714) 672-0022 or by email at Ryan.Domino@lslcpas.com. Our proposal is a firm and irrevocable offer for ninety (90) calendar days following the closing date of receipt of proposals. We welcome the opportunity to discuss any aspect of our proposal to ensure your complete satisfaction. Please contact Ryan for any clarification or contract negotiations regarding this proposal. With our comprehensive government experience, we believe you will find that LSL is the best-qualified accounting firm for the City. Sincerely, Ryan Domino, CPA, Partner Lance, Soll & Lunghard, LLP 203 N. Brea Blvd., Suite 203 Brea, CA 92821 City of La Quinta Auditing Services 4 www.lslcpas.com | 4 FIRM’S BACKGROUND, QUALIFICATIONS, AND EXPERIENCE A. YEARS IN BUSINESS LSL was established in 1929. B. TAXPAYER IDENTIFICATION NUMBER LSL’s Taxpayer Identification Number (TIN) is 95-2700123. C. YEARS PERFORMING AUDITING SERVICES LSL was established in 1929 and has grown as a leader in the government sector. We provide auditing, accounting, and consulting services to over 100 municipal clients, including cities, counties, water and electric utilities, and special-purpose government agencies. Government Auditing Standards LSL understands its responsibilities to perform audits and issue opinions on the City’s financial statements as well as its fair presentation. Our financial audits are performed in accordance with the Generally Accepted Government Auditing Standards (GAGAS) issued by the Comptroller General of the United States, and Single Audits are performed in accordance with the requirements of the Uniform Guidance. We will also evaluate the City's internal control system and provide recommendations for growth and improvement. Desk Review / Disciplinary Action There have been no disciplinary actions against our organization since its inception. There have been no litigations against our firm in the past three years. Our Single Audit reports are desk reviewed either by the federal cognizant agency or the State Controller’s Office acting as the Oversight Agency. LSL has never had a report rejected by any of these agencies and is highly regarded and recognized by the staff of the State Controller’s Office for top-quality reports. Peer Review Our firm has participated in the AICPA Peer Review Program since its inception. All our peer reviews have covered governmental engagements and have received pass ratings. Our most recent peer review, conducted by Spafford and Landry CPAs, is provided on the following pages. City of La Quinta Auditing Services 5 www.lslcpas.com | 5 City of La Quinta Auditing Services 6 www.lslcpas.com | 6 City of La Quinta Auditing Services 7 www.lslcpas.com | 7 Single Audit Experience Our firm has extensive experience in performing Single Audits for local government agencies under the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, Audit Requirements of Federal Awards (Uniform Guidance), and the United States Office of Management and Budget (OMB). Exhibit A includes a list of government audit clients for which a Single Audit has been performed in the last fiscal year. Additionally, the table below highlights recent examples of federal programs audited by LSL. GFOA Award Program LSL understands the significance of obtaining and maintaining the Certificate of Excellence in Financial Reporting from the GFOA. We have prepared financial statements and footnote disclosures for many of our local government clients who have received this award. Our governmental partners, managers, and seniors are closely involved in the preparation of these reports. Clients currently receiving the GFOA award are also noted in Exhibit A. Federal Granting Agency AL # Name of Program U.S. Department of Agriculture 10.557 Special Supplemental Nutrition Program for Women, Infant, and Children U.S. Department of Housing & Urban Development 14.195 Section 8 Housing Assistance Payment Program U.S. Department of Housing & Urban Development 14.218 Community Development Block Grants/Entitlement Grants U.S. Department of Housing & Urban Development 14.228 Community Development Block Grants/State's program and Non-Entitlement Grants in Hawaii U.S. Department of Housing & Urban Development 14.239 HOME Investment Partnerships Program U.S. Department of Housing & Urban Development 14.856 Lower Income Housing Assistance Program Section 8 Moderate Rehabilitation U.S. Department of Housing & Urban Development 14.871 Section 8 Housing Choice Vouchers U.S. Department of Transportation 20.106 Airport Improvement Program U.S. Department of Transportation 20.205 Highway Planning and Construction U.S. Department of Transportation 20.507 Federal Transit Formula Grants U.S. Department of Treasury 21.019 Coronavirus Relief Fund (CRF) U.S. Department of Treasury 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) U.S. Environmental Protection Agency 66.458 Capitalization Grants for Clean Water State Revolving Funds U.S. Department of Health and Human Services 93.563 Child Support Enforcement U.S. Department of Health and Human Services 93.667 Social Services Block Grant U.S. Department of Health and Human Services 93.676 Unaccompanied Alien Children Program U.S. Department of Health and Human Services 93.778 Medical Assistant Program - Medicaid Cluster U.S. Department of Homeland Security 97.036 Disaster Grants- Public Assistance (Presidentially Declared Disasters) U.S. Department of Homeland Security 97.067 Homeland Security Grant Program City of La Quinta Auditing Services 8 www.lslcpas.com | 8 D. RESUMES Engagement team resumes are included on the following pages, detailing the position of each team member in the firm, their educational background, and their years and types of experience providing auditing services for cities, counties, and special-purpose government agencies. The resumes also provide information on any continuing education courses taken by the team members during the past three years. City of La Quinta Auditing Services 9 www.lslcpas.com | 9 Ryan Domino, CPA ENGAGEMENT PARTNER ACHIEVEMENTS Ryan currently serves as a technical reviewer for the Government Finance Officers Association (GFOA) and has been a presenter at CSMFO’s chapter meetings. He has been involved with teaching current audit and accounting-related material at LSL’s in-house training seminars, and annual GASB Update. CONTINUING EDUCATION 231 total hours over the last three years, 204 of which were in governmental accounting and auditing subjects. Ryan meets the requirements of governmental CPE Government Auditing Standards. EXPERIENCE Ryan has over 11 years of experience in governmental auditing including financial statement audits, preparation of Annual Comprehensive Financial Reports, Housing Successor compliance audits, TDA compliance audits, Single Audits, Federal Student Financial Aid audits, and various consulting and agreed-upon procedures projects. Ryan is one of the firm’s leaders in ensuring audit quality control and Government Practice training for staff. He is a regular presenter at the firm’s annual GASB Update where he has presented training to our clients on the latest GASB pronouncements and has been a presenter for CSMFO’s chapter meetings. Some of his presentations have covered: General auditing in accordance with GAGAS Accounting for capital assets GASB Statement Nos. 89, 90, 91, and 94 MEMBERSHIPS AICPA, CalCPA, CSMFO, GFOA EDUCATION Bachelor of Arts Degree in Business Administration with an emphasis in Accounting – California State University, Fullerton LICENSES & CERTIFICATIONS Certified Public Accountant: California Texas AICPA Advanced Single Audit Certification AUDIT ENGAGEMENTS City of Agoura Hills, CA City of Carlsbad, CA City of Cathedral City, CA City of Chula Vista, CA City of Fullerton, CA City of Indio, CA City of Lompoc, CA City of Moorpark, CA City of Orange, CA City of Pleasanton, CA City of Rialto, CA City of Riverside, CA City of San Clemente, CA City of San Juan Capistrano, CA City of Santa Monica, CA Eastern Municipal Water District Jurupa Community Services District Orange County Fire Authority Orange County Water District Orchard Dale Water District Rainbow Municipal Water District San Bernardino Muni. Water Dept. Three Valleys Muni. Water Dist. United Water Conservation Dist. Yorba Linda Water Dist. OTHER ENGAGEMENTS California Dept. of Healthcare Svcs. City of American Canyon, CA City of Marfa, TX City of La Quinta Auditing Services 10 www.lslcpas.com | 10 Brandon Young, CPA QUALITY ASSURANCE PARTNER ACHIEVEMENTS Brandon is an expert in Governmental Accounting and Auditing, with over 13 years of experience serving a wide range of clients. He recently was appointed to serve on the prestigious AICPA State and Local Government Expert Panel, with the term beginning in May of 2023, and also has served on the CalCPA Governmental Accounting and Auditing Committee since 2018. CONTINUING EDUCATION 125 total hours over the last three years, 74 of which were in governmental accounting and auditing subjects. Brandon meets the requirements of governmental CPE Government Auditing Standards. EXPERIENCE Brandon has performed all phases of governmental audits with numerous presentations to City Councils, Board of Supervisors, Board of Directors, and Audit Committees over the past twelve years. He routinely presents at CSMFO, local chapter meetings and CalSACA on current accounting and auditing material. He also regularly teaches current audit and accounting-related material at LSL training seminars, webinars, and client education workshops and training events. His work has entailed: The preparation of the ACFR for entities involved in CSMFO and GFOA in the U.S. Audit review and technical assistance throughout the year to deliver the most up-to-date information with current GASB pronouncements Presentation of audit results to Audit Committees or others charged with governance Risk assessment and evaluation of internal controls with COSO and Federal Green Book Single Audits in accordance with new Uniform Guidance MEMBERSHIPS AICPA, AICPA SLG Expert Panel CalCPA, CalCPA State GAA, CSMFO, GFOA EDUCATION Bachelor of Arts Degree in Accounting, Magna Cum Laude – Vanguard University LICENSE Certified Public Accountant: California ENGAGEMENTS City of Chula Vista City of Citrus Heights City of Coronado City of Dinuba City of Dixon City of Emeryville City of Galt City of Lathrop City of Live Oak City of Livingston City of Menlo Park City of Newark City of Pasadena City of Pleasanton City of Riverside City of Roseville City of Santa Monica City of Shafter Coachella Valley Water District County of Sutter County of Yolo Covered California East Bay Municipal Utility District GDPUD Inland Empire Utilities Agency Monterey Peninsula Airport District Orange County Water District San Joaquin Council of Gov. Santa Clarita Valley Water Agency Three Valleys Municipal Water Dist. Union Sanitary District City of La Quinta Auditing Services 11 www.lslcpas.com | 11 Frank North, CPA SENIOR MANAGER ACHIEVEMENTS Frank currently serves as a technical reviewer for the Government Finance Officers Association (GFOA). He has earned the Advanced Single Audit Certification issued by the AICPA for planning, performing, and evaluating Single Audits in compliance with the Uniform Guidance. CONTINUING EDUCATION 142 total hours over the last three years, 86 of which were in governmental accounting and auditing subjects. Frank meets the requirements of governmental CPE Government Auditing Standards. EXPERIENCE With 30 years of experience in governmental audits, Frank has established himself as an outstanding asset and resource at LSL. He has demonstrated his talents in the areas of municipal accounting and auditing. During his time with the firm, Frank has performed all phases of our municipal audits, including ACFR audits, successor agency audits, component units, municipal utilities, and single audits. He has been involved in the following municipal engagements. His work entailed the preparation of the Comprehensive Annual Financial Report for those entities involved in the award programs of the California Society of Municipal Finance Officers and the Government Finance Officers Association of the United States and Canada. MEMBERSHIPS AICPA, CalCPA, GFOA EDUCATION Bachelor of Arts Degree in Business Administration, emphasis in Accounting – California State University, Fullerton LICENSE Certified Public Accountant: California ENGAGEMENTS City of Barstow City of Big Bear Lake City of Canyon Lake City of Chino Hills City of Downey City of Grand Terrace City of Inglewood City of Irwindale City of Malibu City of Manhattan Beach City of Rancho Cucamonga City of Redondo Beach City of Riverside City of Rialto City of San Marino Eastern Municipal Water District City of La Quinta Auditing Services 12 www.lslcpas.com | 12 Calvin Kunkel, CPA AUDIT MANAGER ACHIEVEMENTS Calvin helps our clients prepare and implement their Annual Comprehensive Financial Report (ACFR) for the Government Finance Officers Association (GFOA) award. He brings insightful perspectives to tackling our client’s toughest obstacles. He loves helping clients recognize patterns and effectively apply analytic procedures to resolve their unique and complex challenges. CONTINUING EDUCATION 230 total hours over the last three years, 75 of which were in governmental accounting and auditing subjects. Calvin meets the requirements of governmental CPE Government Auditing Standards. EXPERIENCE Calvin has performed all phases of our government audits, including ACFR audits, Single Audits, and special districts. His work has entailed: Assisting in the preparation of the Annual Comprehensive Financial Report Performing analytical and substantive audit procedures on account balances Planning the nature, timing, and extent of procedures involved in the audit process audits in accordance with the provisions of Government Auditing Standards and the provisions of the Single Audit Act and the Uniform Guidance Assisting clients with the preparation and review of GASB 68, 75, and 84 journal entries Review of capital assets, debt service, and federal and state award schedules MEMBERSHIPS Firm Member, PrimeGlobal EDUCATION Bachelor of Arts Degree in English – Illinois State University Master of Accountancy – Northern Illinois University LICENSE Certified Public Accountant Illinois ENGAGEMENTS City of Burbank City of Cathedral City City of Diamond Bar City of Inglewood City of Palm Desert City of Redondo Beach City of Rialto City of Vacaville Ontario Intl Airport Authority San Bernadino MWD SCAQMD City of La Quinta Auditing Services 13 www.lslcpas.com | 13 E. FIRM OWNERSHIP LSL is a limited liability partnership and is not a wholly owned subsidiary of a parent company. License to Practice LSL is a public accounting firm licensed by the State of California Department of Consumer Affairs as a Public Accounting Partnership. Additionally, we are members of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants. All key members assigned to this engagement are licensed or are in the process of obtaining their license as Certified Public Accountants by the State of California. F. PARENT COMPANY LSL is not a wholly owned subsidiary of a parent company. 2. References The following references highlight our experience in providing professional auditing services to other governmental organizations with similar size and scope as the City of La Quinta. We invite you to contact them to gain insight into our working relationships and quality of service. City of Indio Contact Rob Rockwell, Assistant City Manager/Finance Director E-mail Address RRockwell@indio.org Address 100 Civic Center Mall Indio, CA. 92201 Telephone (760) 391-4029 Dates of Service 2015 – present Project Manager Ryan Domino, Engagement Partner Project Description Audit of the City’s ACFR, which receives the GFOA Award; Single Audit; Measure S AUP; Measure X Audit AUP; AQMD Audit; ERICA Audit; EVRA Audit; AUP over the City’s GANN limit; Indio Water Authority Audit; Landmark Golf AUP Summary of Final Outcome Timely completion; clear communication; value-added insights to client; client satisfaction City of La Quinta Auditing Services 14 www.lslcpas.com | 14 City of Oceanside Contact Jill Moya, CPA, Financial Services Director E-mail Address JMoya@oceansideca.org Address 300 N. Coast Hwy. Oceanside, CA 92054 Telephone (760) 435-3887 Dates of Service 2012 – present Project Manager Ryan Domino, Engagement Partner Scope of Work Audit of the City’s ACFR, which receives the GFOA Award; Single Audit; AUP over the City’s Gann Limit; RDA State Controller’s Report; Building Authority; CDC Audit; Public Financing Authority; Ocean Eleven AUP; REAC Submission AUP; Small Craft Harbor District Audit; Ocean Eleven Casino AUP; OPFA Audit Summary of Final Outcome Timely completion; clear communication; value-added insights to client; client satisfaction City of Fullerton Contact Toni Smart, Fiscal Services Manager E-mail Address Tonette.Smart@cityoffullerton.com Address 303 W. Commonwealth Ave. Fullerton, CA 92832 Telephone (714) 738-6522 Dates of Service 2012 – present Project Manager Ryan Domino, Engagement Partner Scope of Work Audit of City’s ACFR, which receives the GFOA Award; Single Audit; State Controller’s Report, City; AQMD Audit; Final RDA Audit; AUP Gann Limit; FFMA, FFA, FMEF, FPMA AUP; FMA Labor Costing AUP; POA Labor Costing AUP; Due Diligence Review; Cost Allocation Plan; Firefighters Association Negotiations; and Special Consulting Services Summary of Final Outcome Timely completion; clear communication; value-added insights to client; client satisfaction City of La Quinta Auditing Services 15 www.lslcpas.com | 15 City of Riverside Contact Nancy Garcia, Controller E-mail Address ngarcia@riversideca.gov Address 3900 Main Street Riverside, CA 92522 Telephone (951) 826-5466 Dates of Service 2019 – present Project Manager Ryan Domino, Engagement Partner Scope of Work Audit of the City’s ACFR, which receives the GFOA Award; Single Audit; audit of the City’s Water and Electric Utilities; audit of the City’s public financing authority’s financial statements; compliance audit and preparation of the City’s AQMD Fund’s financial statements; compliance audit of the City’s Successor Agency; and performance of agreed-upon procedures over the City’s Appropriations Limit Calculation and NTD reporting. Summary of Final Outcome Timely completion; clear communication; value-added insights to client; client satisfaction City of La Quinta Auditing Services 16 www.lslcpas.com | 16 3. Complete Pricing List ALL-INCLUSIVE MAXIMUM PRICE *Price includes 1 major program. Each additional program is $3,000. MANNER OF PAYMENT Progress payments will be made on the basis of hours of work completed during the course of the engagement and out-of-pocket expenses incurred in accordance with the firm's proposal. Interim billings shall cover a period of not less than a calendar month. The final ten percent (10%) of the total all-inclusive maximum price will be paid upon delivery of the firm's final reports. City of La Quinta Auditing Services 17 www.lslcpas.com | 17 STANDARD HOURLY RATES *The quoted fees above include a standard 3% increase year-over-year. However, this percentage increase will be compared to the CPI indicator each year and will be adjusted if that amount exceeds 3%. The higher of the 3% or CPI indicator will be used each year. LEVEL OF STAFF ASSIGNED AND NUMBER OF HOURS TO BE ASSIGNED Segment/Task Partners Manager Senior Staff Clerical Total City of La Quinta ACFR Audit Interim Testwork 0 0 30 60 0 90 Year-End Testwork 0 0 50 160 0 210 Report/Review/Supervision 40 60 30 0 10 140 Subtotal 40 60 110 220 10 440 Housing Authority Audit Testwork 0029011 Report/Review/Supervision 232029 Subtotal 2349220 Finance Authority Audit Testwork 0029011 Report/Review/Supervision 232029 Subtotal 2349220 TOTAL PROPOSED HOURS City of La Quinta Auditing Services 18 www.lslcpas.com | 18 *Hours proposed are for 1 major program. Segment/Task Partners Manager Senior Staff Clerical Total TOTAL PROPOSED HOURS Successor Agency Audit Testwork 0029011 Report/Review/Supervision 232029 Subtotal 2349220 Single Audit* Testwork 00525030 Report/Review/Supervision 5850220 Subtotal 5 8 10 25 2 50 Gann Limit Testwork 000202 Report/Review/Supervision 011013 Subtotal 011215 State Controller's Report Testwork 00035035 Report/Review/Supervision 050005 Subtotal 0 5 0 35 0 40 Additional Consulting Hours (~50 hrs) Testwork 50000050 Subtotal 50000050 TOTAL PROPOSED HOURS: 101 83 133 309 19 645 City of La Quinta Auditing Services 19 www.lslcpas.com | 19 4. Complementary Services Offered By LSL Our government sector services encompass a broad range of specialties, including: Attestation Automation Compliance Consulting Interim Staffing Outsourced Accounting & Reporting Strategic Planning Tax Services Technology Consulting Training & Seminars Year-end Close Assistance Technology Consulting LSL’s Technology Consulting department, led by a former government auditor, has been implementing custom software solutions since 2001. Our Technology team primarily focuses on solutions for the public sector, specializing in software customization, implementation, ongoing training, along with consulting on process automation and robotic process automation (RPA). Training & Seminars LSL regularly leads seminars and training courses on introductory governmental accounting, preliminary views on financial reporting, internal control risk assessments, and all GASB updates and best practices, which are made available to our clients for additional information and continued support. These will be opportunities made available through our firm to the City for training or continuing professional education credits on current issues or governmental auditing and accounting in general. Pricing At LSL, we adopt a holistic approach to serving our clients, providing customized services tailored to each client’s unique circumstances and organizational structures. We take pride in providing personalized and efficient services. Therefore, LSL does not offer set “corresponding” pricing to the complementary services listed above. However, our standard hourly billing rates, as provided in Section 3, Complete Pricing List, can serve as a baseline for any potential complementary services desired by the City. We welcome the opportunity to discuss any aspect of our complementary services to ensure a comprehensive understanding of the City’s needs. City of La Quinta Auditing Services 20 www.lslcpas.com | 20 5. Staffing & Project Organization & Audit Approach ORGANIZATIONAL CHART Brandon Young, CPA Quality Assurance Partner 13 years of experience Ryan Domino, CPA Engagement Partner 11 years of experience Frank North, CPA Senior Manager 30 years of experience Calvin Kunkel, CPA Audit Manager 9 years of experience Senior Associate Staff Associate Staff Associate Staff Associate Staff Associate City of La Quinta Auditing Services 21 www.lslcpas.com | 21 APPROACH TO REQUESTED SERVICES LSL’s Understanding of the Scope of Work LSL understands that the City of La Quinta is seeking a qualified firm to perform the City’s financial audit and its component units, consisting of the following final financial and compliance reports: 1. City’s ACFR Audit 2. Housing Authority Audit 3. Finance Authority Audit 4. Successor Agency Audit 5. Single Audit 6. GANN Limit Agreed-Upon Procedures 7. State Controller’s Report Project Management Methodology At the beginning of the engagement, we will hold a planning meeting with you to determine the timeline, expectations, and desired outcome of the agreement on the issuance of financial statements. Throughout the process, we will have periodic meetings with you to provide updates and discuss progress. Upon award of contract and per the City’s requested timeline, LSL will work closely with the City to develop an audit plan and timeline to ensure compliance and timely deliverables. Areas of concern and potential findings will be communicated to the City as soon as they are discovered to mitigate any surprises throughout the audit. As part of the Scope of Work and time requirements, we assume that the City will provide all necessary information needed to complete the financial statement and single audits. We will proactively identify and communicate any pending information from the City that could hinder our ability to complete the objectives of the engagement in a timely manner. Project Timeline LSL assumes under the time requirements that the City will have closed its books and will present the LSL team with general ledger balances that are auditable prior to the start of fieldwork. A sample timeline is provided on the following page displaying the key stages of the audit and the deliverables. City of La Quinta Auditing Services 22 www.lslcpas.com | 22 Proposed Work Plan At LSL, we use a governmental audit program that will be tailored to the City’s operations to accommodate its specific circumstance and organizational structure. LSL’s audit programs are organized by financial statement category, which we believe is the most effective and efficient approach to substantially reduce the risk of omitting important procedures. Our approach is designed to increase audit efficiency by linking financial statement assertions, audit objectives, and procedures that are basic to most governmental audit engagements. Proposed Segmentation Our audit services will be divided into the three succeeding segments: Segment 1 – Planning and Obtaining an Understanding Segment 2 – Financial Audit Testing Segment 3 – Conclusion Segment 2 Year-end Testing will begin in early October. Exit Conference will be held on the last day of fieldwork. Entrance Conference will be held before interim begins. Segment 1 Interim Testing will begin in April/May. November Segment 3 Draft Audit Letters, and Other Reports will be provided to the City at the end of October or early November. The City will provide the Draft ACFR back to LSL by mid- November. Final Reports and Approval will be delivered by December 15th. Delivery of Financial Statements and Presentation of Financials - LSL will be available as requested to present the results of the financial audit. December October April/May City of La Quinta Auditing Services 23 www.lslcpas.com | 23 Segment 1 – Planning and Obtaining an Understanding LSL will provide an annual audit communication letter, engagement letter, and Government Audit Quality Center Information letter. The audit communication letter is to be provided to the City Council and/or Board of Directors and can be communicated orally to those charged with governance, if requested, where we will discuss planning stages, responsibilities of the City Council and/or Board of Directors, Auditors, and Management, and provide an opportunity to communicate with us as the auditors. An entrance conference will be scheduled prior to the agreed-upon week of interim testing to ensure that the transition to new auditors is as seamless as possible. Discussions in this meeting include, but are not limited to, an understanding of reports and key milestones for deliverables, prior audit reportable conditions and issues, and “Prepared by Client” (PBC) schedules. A trial balance is requested for our planning meeting to assist the LSL team in obtaining knowledge of economic conditions, industry elements, and new standards that may affect the City. We will compile a list of PBC items based on our review of the prior year's financial statements and the gathered information that will be provided to the City one month prior to testing or earlier if requested. We operate on a paperless software system and provide a secured cloud-based portal for all clients. The City will have a separate folder that can be customized to organize, and upload requested schedules, support documents, etc. After interim testing, we will hold an exit meeting to discuss potential weaknesses, if any, and provide feedback for improvements or valuable information gathered from any outside clientele that would benefit the City. Segment 2 – Financial Audit Testing Based on the information gathered thus far, we will utilize a customized audit program based on the risk assessment developed during our assessment of the City’s internal controls and Government Auditing Standards. The primary benefit of a tailored program is a focused set of procedures to address relevant areas. We believe that this approach is both effective and efficient and is critical to compliance with other material laws and regulations. We will annually compile another customized PBC list for the year-end testing provided at least one month prior or earlier if requested. We will request trial balances from the City for our analytical review to be provided one week before testing is scheduled to commence. Year-end testing will include testing of the balance sheet, revenue and City of La Quinta Auditing Services 24 www.lslcpas.com | 24 expenditures accounts, confirmation of selected balances, analytical procedures, evaluation of the internal controls, and preparation of reports and letters. Segment 3 – Conclusion Based on our year-end exit meeting we will discuss a plan to finalize the financial statements according to the timetable of the City. We will schedule dates for the initial and final drafts including time for LSL’s and the City’s review and approval of the financial statements. This period will also account for review by the engagement partner and quality assurance partner. After the review and receipt of the signed Representation Letter from the City, LSL will provide a final report around December 15th of each year. Approach to Selecting Sample Sizes For tests of controls, we use audit sampling. Tests of controls are procedures directed towards determining the effectiveness of the design or operation of an internal structure policy or procedures. Audit sampling is typically used for tests of controls and compliance that involve the inspection of documents and reports indicating the performance of the applicable policy or procedures and compliance with the applicable laws and regulations. Sample sizes vary based on the population and risk-based calculations. Type And Extent Of Analytical Procedures For the audits of the financial statements, we will use analytical procedures as an overall review of the financial information in the preliminary and final stages of the audits. These procedures are designed to assist us in planning our audits and in assessing the propriety of the conclusions reached and evaluating the overall financial statement presentation. The procedures to be utilized consist of determining expectations for changes to significant revenue, expenditure, and balance sheet accounts, reading the financial statements and related notes, reviewing the budget and related material, and focusing on overall relationships within the financial statements. Once determined, these are reviewed to evaluate if the changes appear reasonable or require further analysis. For all significant differences, explanations are obtained as to why the situation occurred and additional substantive procedures may be applied, and related evidence is gathered to resolve concerns and questions. Drawing Audit Samples for Compliance The sampling procedures test the operating effectiveness of an internal control structure policy or procedure by determining how the policy or procedure was applied, the consistency with which it was applied during the audit period, and by whom it was applied. We will draw samples for disbursements, receipts, and payroll when applicable. Each document selected City of La Quinta Auditing Services 25 www.lslcpas.com | 25 will be tested for various attributes that are designed to verify compliance with different aspects of internal controls and applicable laws and regulations. Additionally, each sample item will be tested for coding to the proper accounts and posting to the general ledger. LSL’s Approach to Understanding the City’s Internal Control Structure LSL will perform procedures as required by SAS 122-125 to obtain an understanding of the City and its environment along with assessing the risks of material misstatements in order to gain insight into the internal control structure over the financial statements. Our review will encompass various areas such as financial reporting, cash, revenues and receivables, utility billing, expenses, accounts payable, payroll, capital assets, long-term debt, and grant reporting. We will issue a management letter (SAS 115 Letter) that identifies any significant deficiencies and/or material weaknesses found as required by the Government Auditing Standards. Throughout the year, LSL will conduct interviews with the management of finance and responsible parties of each audit section to understand the processes and controls through observation and discussions. We will also perform sampling transactions as part of a “walk- through” process to verify that the system of control is functioning as per the policies and procedures. Determining Laws and Regulations Subject To Audit Test Work The Laws and Regulations that will be subject to audit test work are determined by the applicable laws, regulations, contracts, and grant agreements which we identify through the understanding we obtain of the City and our extensive experience with other governmental entities. Working Paper Retention and Access All working papers and reports will be retained at LSL’s expense for a minimum of three (3) years unless otherwise notified in writing by the City of the need to extend that retention period. Upon written request, we will make working papers available to parties designated by the City. Furthermore, we will respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance. Irregularities and Illegal Acts LSL acknowledges our responsibility to make an immediate, written report of all irregularities and illegal acts, or indications of illegal acts, of which we become aware to the Finance Director, the City Manager, and the City Attorney. City of La Quinta Auditing Services 26 www.lslcpas.com | 26 6. Subcontracting Services LSL will not be subcontracting any portion of the City’s audit. All staff assigned to the audit engagement will be employed by LSL on a full-time basis and have extensive experience providing auditing services for cities, counties, and special-purpose government agencies. LSL collaborates with a third-party for the preparation of the SCO (State Controller's Office) reports, to ensure that reports are prepared and filed correctly and timely by experts in those reports. Our governmental staff consists of three (3) Partners, two (2) Senior Managers, six (6) Managers, three (3) Supervisors, and sixteen (16) Professional Staff. Proposed team members will be available for ninety (90) days from the proposal due date. LSL will promptly notify the City of any changes in key personnel prior to award. Staff Continuity To ensure the quality of our staffing, we have established firm policies that prioritize the continuity of engagement teams, except in cases where an employee has left the firm or has been promoted. In the event of any changes in staffing at the Manager position and above, LSL will first seek written permission from the City. Quality of Staff Assurance LSL is committed to providing the City with a stable and experienced team that is dedicated to delivering a high-quality audit and exceptional service. We understand the importance of maintaining a strong and reliable team throughout the engagement, and we will work closely with the City to ensure that any staffing changes are handled with minimal disruption to the continuity of the engagement. Continuing Education At LSL, we strongly emphasize professional development and continuing education to ensure that our team members are up to date on the latest developments in governmental accounting and auditing. As a firm policy, all LSL government staff are required to complete a minimum of 40 hours of continuing education every year, with at least 24 hours in governmental accounting and auditing in a two-year period. Our educational programs are designed to provide our team members with the knowledge and skills necessary to deliver high-quality services to our clients. We offer a variety of training opportunities, including those provided by CalCPA, AICPA, Government Audit Quality Center, and GFOA. City of La Quinta Auditing Services 27 www.lslcpas.com | 27 7. Disclosures LSL affirms that there is no information to disclose and no negative history of any alleged significant prior or ongoing agreement failure, civil or criminal litigation, or investigation pending that involves us, or in which LSL has been judged guilty or liable within the last five (5) years. 8. Acknowledgment of Insurance Requirements Insurance Coverage LSL will provide the minimum insurance coverage as outlined in Exhibit E (“Insurance Requirements”). We have provided evidence of coverage with the submission of our proposal on the following pages and the actual insurance forms will be provided upon award of contract. EXCEPTIONS Indemnification Lance, Soll & Lunghard, LLP (“Contracting Party”) and the City of La Quinta (“City”) both agree to hold each other harmless from any and all claims arising from knowing misrepresentations, intentional withholding, or concealment of information by their respective managements. They also agree to indemnify each other for any claims made by third parties resulting from such actions. This provision applies regardless of the nature of the claim. Each party (the "Indemnifying Party") shall indemnify, defend, and hold harmless the other party (the "Indemnified Party"), its affiliates, and its respective officers, directors, employees, agents, and representatives from and against any and all claims, damages, losses, liabilities, judgments, settlements, costs, and expenses (including reasonable attorney’s fees) arising from or in connection with any breach of this agreement by the Indemnifying Party or its representatives, except to the extent that such claims, damages, losses, liabilities, judgments, settlements, costs, and expenses are caused by the negligence or intentional misconduct of the Indemnified Party. The Indemnified Party shall promptly notify the Indemnifying Party of any such claim and reasonably cooperate with the Indemnifying Party in the defense of such claims at the Indemnifying Party’s expense. Mutual Indemnification is required to maintain independence in accordance with professional auditing standards. City of La Quinta Auditing Services 28 www.lslcpas.com | 28 Ownership of Documents All working papers, schedules, lead sheets, draft products, and other documents necessary to produce the final deliverables are proprietary to Lance, Soll & Lunghard, LLP (“Contracting Party”), and only the final deliverables are the ownership of the City of La Quinta (“City”). Working papers, schedules, lead sheets, draft products, and other documents may only be made available to the City upon request or at the request of any grantor or federal oversight agency. This is in accordance with professional auditing standards. ATTACHMENT 2 INSURANCE REQUIREMENTS ACKNOWLEDGEMENT Must be executed by proposer and submitted with the proposal I, ________________________________________ (name) hereby acknowledge and confirm that __________________________________ (name of company) has reviewed the City’s indemnification and minimum insurance requirements as listed in Exhibits E and F of the City’s Agreement for Contract Services (Attachment 1); and declare that insurance certificates and endorsements verifying compliance will be provided if an agreement is awarded. I am _________________________________ of ______________________________, (Title) (Company) Commercial General Liability (at least as broad as ISO CG 0001) $1,000,000 (per occurrence); $2,000,000 (general aggregate) Must include the following endorsements: General Liability Additional Insured General Liability Primary and Noncontributory Commercial Auto Liability (at least as broad as ISO CA 0001) $1,000,000 (per accident) Personal Auto Declaration Page if applicable Errors and Omissions Liability $1,000,000 (per claim and aggregate) Worker’s Compensation (per statutory requirements) Must include the following endorsements: Worker’s Compensation Waiver of Subrogation Worker’s Compensation Declaration of Sole Proprietor if applicable Ryan Domino Lance, Soll & Lunghard, LLP Partner Lance, Soll & Lunghard, LLP LSL has raised exceptions to the Indemnification clause as set forth by the City of La Quinta. 10/12/2023 The Liberty Company Insurance Brokers Lic #0D79653 5955 De Soto Ave, Ste 250 Woodland Hills CA 91367 Lindsey Jamall (888) 918-3960 ljamall@libertycompany.com Lance Soll & Lunghard LLP 203 N Brea Blvd Ste 203 Brea CA 92821 Sentinel Insurance Company 11000 Hartford Casualty Insurance Company 29424 23-24 BOP/UMB/WC A 57SBABM1263 10/12/2023 10/12/2024 2,000,000 1,000,000 10,000 2,000,000 4,000,000 4,000,000 A 57SBABM1263 10/12/2023 10/12/2024 2,000,000 A 10,000 57SBABM1263 10/12/2023 10/12/2024 1,000,000 1,000,000 B 57WECAZ7TWB 10/12/2023 10/12/2024 1,000,000 1,000,000 1,000,000 SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. INSURER(S) AFFORDING COVERAGE INSURER F : INSURER E : INSURER D : INSURER C : INSURER B : INSURER A : NAIC # NAME:CONTACT (A/C, No):FAX E-MAILADDRESS: PRODUCER (A/C, No, Ext):PHONE INSURED REVISION NUMBER:CERTIFICATE NUMBER:COVERAGES IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. OTHER: (Per accident) (Ea accident) $ $ N / A SUBR WVD ADDL INSD THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. $ $ $ $PROPERTY DAMAGE BODILY INJURY (Per accident) BODILY INJURY (Per person) COMBINED SINGLE LIMIT AUTOS ONLY AUTOSAUTOS ONLY NON-OWNED SCHEDULEDOWNED ANY AUTO AUTOMOBILE LIABILITY Y / N WORKERS COMPENSATION AND EMPLOYERS' LIABILITY OFFICER/MEMBER EXCLUDED? (Mandatory in NH) DESCRIPTION OF OPERATIONS below If yes, describe under ANY PROPRIETOR/PARTNER/EXECUTIVE $ $ $ E.L. DISEASE - POLICY LIMIT E.L. DISEASE - EA EMPLOYEE E.L. EACH ACCIDENT EROTH-STATUTEPER LIMITS(MM/DD/YYYY)POLICY EXP(MM/DD/YYYY)POLICY EFFPOLICY NUMBERTYPE OF INSURANCELTRINSR DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required) EXCESS LIAB UMBRELLA LIAB $EACH OCCURRENCE $AGGREGATE $ OCCUR CLAIMS-MADE DED RETENTION $ $PRODUCTS - COMP/OP AGG $GENERAL AGGREGATE $PERSONAL & ADV INJURY $MED EXP (Any one person) $EACH OCCURRENCE DAMAGE TO RENTED $PREMISES (Ea occurrence) COMMERCIAL GENERAL LIABILITY CLAIMS-MADE OCCUR GEN'L AGGREGATE LIMIT APPLIES PER: POLICY PRO-JECT LOC CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YYYY) CANCELLATION AUTHORIZED REPRESENTATIVE ACORD 25 (2016/03) © 1988-2015 ACORD CORPORATION. All rights reserved. CERTIFICATE HOLDER The ACORD name and logo are registered marks of ACORD HIRED AUTOS ONLY Evidence of Coverage Evidence of Coverage Affinity Insurance Services 1100 Virginia Drive, Suite 250 Fort Washington, PA 19034 Professional Liability APL-275513554 10/12/23 10/12/2023 10/12/2024 Per Claim/Aggregate Lance, Soll & Lunghard, LLP 203 N Brea Boulevard Suite: 203 Brea, CA 92821-4056 A 20443 $3,000,000 Lance, Soll & Lunghard, LLP 203 N Brea Boulevard Suite: 203 Brea, CA 92821-4056 Continental Casualty Company Affinity Insurance Services, Inc. Evidence of Coverage ATTACHMENT 3 NON-COLLUSION AFFIDAVIT FORM Must be executed by proposer and submitted with the proposal I, ________________________________________ (name) hereby declare as follows: I am _________________________________ of ______________________________, (Title) (Company) the party making the foregoing proposal, that the proposal is not made in the interest of, or on behalf of, any undisclosed person, partnership, company, association, organization, or corporation; that the proposal is genuine and not collusive or sham; that the proposer has not directly or indirectly induced or solicited any other proposer to put in a false or sham proposal, and has not directly or indirectly colluded, conspired, connived, or agreed with any proposer or anyone else to put in a sham proposal, or that anyone shall refrain from proposing; that the proposer has not in any manner, directly or indirectly, sought by agreement, communication, or conference with anyone to fix the proposal price of the proposer or any other proposer, or to fix any overhead, profit, or cost element of the proposal price, or of that of any other proposer, or to secure any advantage against the public body awarding the agreement of anyone interested in the proposed agreement; that all statements contained in the proposal are true; and, further, that the proposer has not, directly or indirectly, submitted his or her proposal price or any breakdown thereof, or the contents thereof, or divulged information or data relative hereto, or paid, and will not pay, any fee to any corporation, partnership, company, association, organization, proposal depository, or to any member or agent thereof to effectuate a collusive or sham proposal. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Proposer Signature: __________________________________________________ Proposer Name: __________________________________________________ Proposer Title: __________________________________________________ Company Name: __________________________________________________ Address: __________________________________________________ Ryan Domino, CPA Partner Lance, Soll & Lunghard, LLP Ryan Domino, CPA Partner Lance, Soll & Lunghard, LLP 203 N. Brea Blvd., Suite 203, Brea, CA 92821 ATTACHMENT 4 ACKNOWLEDGEMENT OF RECEIPT OF ADDENDA Must be executed by proposer and submitted with the proposal; If no addenda has been issued, mark “N/A” under Addendum No. indicating Not Applicable and sign ADDENDUM NO. SIGNATURE INDICATING RECEIPT N/A except for release of Q&A and announcement of the due date extension from October 20 to December 1, 2023 City of La Quinta Auditing Services 34 www.lslcpas.com | 34 BENEFITS OF WORKING WITH LSL LSL is a multi-location firm with formidable resources that provides a personal feel and hands- on client experience. LSL is ranked #15 on the Orange County Business Journal’s CPA Firm Book of Lists, which highlights the top accounting firms in Orange County. OUR CORE VALUES As we continue to grow and evolve, we recognized our core values needed to grow and change with us. Our values weren’t decided on by management and handed down, every member of the LSL team worked together to share what values matter most to us. From there, we came up with the following five core values that embody how we approach each other, our work, and our clients. City of La Quinta Auditing Services 35 www.lslcpas.com | 35 BEST OF ACCOUNTING AWARD LSL CPAs delivers high-quality service and has consistently secured the ClearlyRated Best of Accounting award. This exclusive program awards accounting firms who demonstrate high-level service of excellence within the accounting industry and solely leverages statistically validated survey responses from our clients. ACCOUNTING TODAY REGIONAL LEADER LSL CPAs has been recognized as an Accounting Today Regional Leader in 2023. The list ranks the top CPA firms that have shown exceptional growth, embraced technology, and who ‘think outside the box’ when providing solutions.