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HomeMy WebLinkAboutC-4198 -PSA for Auditing Services FY 09-10, FY 10-11qm Mayer Hoffman McCann P.C. Board Resolution The undersigned, being all members of the Board of Directors of Mayer Hoffman McCann P.C., a Missouri professional corporation Othe Corporation", do hereby approve and adopt the following resolution: RESOLVED, that the shareholders of Mayer Hoffman McCann P.C. as listed below are hereby authorized to sign and execute contracts to provide professional services on behalf of the Corporation. 1. Ken Ai -Imam 2. Michael Harrison 3. Marcus Davis 4. Michael Gutierrez 5. Ron Rolwes 8. Michael Harrison 7. Ken AI -Imam 8. Jennifer Farr 9. Matthew Lenton 10.Jim Babcock 11. Benjamin Reyes IN WITNESS WHEREOF, the undersigned have hereunto subscribed their names effective as of February 22, 2010. Frank Maughan L/(g6 PROFESSIONAL SERVICES AGREEMENT WITH MAYER HOFFMAN MCCANN P.C. FOR AUDITING SERVICES THIS AGREEMENT is made and entered into as of this 13th day of April , 2010, by and between the CITY OF NEWPORT BEACH, a Municipal Corporation ("City"), and Mayer Hoffman McCann P.C., a Missouri Professional Corporation, whose address is 2301 Dupont Dr., Suite 200, Irvine, CA 92612 ("Auditor"), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City is required to secure an audit of its Financial Statements and Federal financial assistance ("Single Audit") each year. C City desires to retain Auditor to perform an Audit Examination of its financial statements and a Single Audit for the fiscal year ending June 30, 2010 ("Project"). D. Auditor possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal Auditor for purposes of the Project shall be Ken AI -Imam. F. City has solicited and received a proposal from Auditor, has reviewed the previous experience and evaluated the expertise of Auditor, and desires to retain Auditor to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the above written date, and shall terminate the 30th Day of April, 2011, unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED Auditor shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit A and incorporated herein by reference. The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and the services shall be performed by March 31, 2011. The failure by Auditor to perform the services in a diligent and timely manner may result in termination of this Agreement by City. 4. COMPENSATION TO AUDITOR City shall pay Auditor for the services on a time and expense basis in accordance with the provisions of this Section and the Schedule of Billing Rates attached hereto as Exhibit B and incorporated herein by reference. Auditor's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed Fifty Two Thousand One Hundred Eighty Dollars and no/100 ($52,180.00) without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 4.1 Auditor shall submit monthly invoices to City describing the work performed the preceding month. Auditor's bills shall include the name of the person who performed the work, a brief description of the services performed and/or the specific task in the Scope of Services to which it relates, the date the services were performed, the number of hours spent on all work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Auditor no later than thirty (30) days after approval of the monthly invoice by City staff. 4.2 City shall reimburse Auditor only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Auditor: A. The actual costs of subconsultants for performance of any of the services that Auditor agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement. 011 B. Approved reproduction charges. C. Actual costs and/or other costs and/or payments specifically authorized in advance in writing and incurred by Auditor in the performance of this Agreement. 4.3 Auditor shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit B. 4.4 Notwithstanding any other provision of this Agreement, when payments made by City equal 90% of the maximum fee provided for in this Agreement, no further payments shall be made until City has accepted the final work under this Agreement. 5. PROJECT MANAGER Auditor shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Auditor has designated Matthew Lenton to be its Project Manager. Auditor shall not remove or reassign the Project Manager without the prior written consent of City. City's approval shall not be unreasonably withheld. Auditor, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City. Auditor warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the Administrative Services Department. Dan Matusiewicz shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his/her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES To assist Auditor in the execution of its responsibilities under this Agreement, City agrees to where applicable provide access to and upon request of Auditor, 9 91 9 one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Auditor's work schedule. STANDARD OF CARE 8.1 Ali of the services shall be performed by Auditor or under Auditor's supervision. Auditor represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. By delivery of completed work, Auditor certifies that the work conforms to the requirements of this Agreement and all applicable federal, state and local laws and the professional standard of care. 8.2 Auditor represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Auditor to practice its profession. Auditor shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Auditor shall not be responsible for delay, nor shall Auditor be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Auditor's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. HOLD HARMLESS To the fullest extent permitted by law, Auditor shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers, and employees (collectively, the "Indemnified Parties") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims"), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement, any work performed or services provided under this Agreement including, without limitation, Auditor's presence or activities conducted on the Project (including the negligent and/or willful acts, errors and/or omissions of Auditor, its principals, officers, agents, employees, vendors, suppliers, Auditors, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Auditor to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Auditor. 10. INDEPENDENT CONTRACTOR It is understood that City retains Auditor on an independent contractor basis and Auditor is not an agent or employee of City. The manner and means of conducting the work are under the control of Auditor, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Auditor or any of Auditor's employees or agents, to be the agents or employees of City. Auditor shall have the responsibility for and control over the means of performing the work, provided that Auditor is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Auditor as to the details of the performance or to exercise a measure of control over Auditor shall mean only that Auditor shall follow the desires of City with respect to the results of the services. 11. COOPERATION Auditor agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Auditor on the Project. 12. CITY POLICY Auditor shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Auditor is responsible for keeping the Project Administrator and/or his/her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 5 14. INSURANCE Without limiting Auditor's indemnification of City, and prior to commencement of work, Auditor shall obtain, provide and maintain at its own expense during the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Auditor shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. B. Signature. A person authorized by the insurer to bind coverage on its behalf shall sign certification of all required policies. C. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Requirements. Workers' Compensation Coverage. Auditor shall maintain Workers' Compensation Insurance and Employer's Liability Insurance for his or her employees in accordance with the laws of the State of California. In addition, Auditor shall require each subcontractor to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California for all of the subcontractor's employees. Any notice of cancellation or non -renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (10 calendar days written notice of non-payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Auditor for City. ii. General Liability Coverage. Auditor shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coverage. Auditor shall maintain automobile insurance covering bodily injury and property damage for all activities of the Auditor arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit for each occurrence. iv. Professional Errors and Omissions Insurance. Auditor shall maintain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of five million dollars ($5,000,000). E. Endorsements. Each general liability and automobile liability insurance policy shall be endorsed with the following specific language: The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Auditor. ii. This policy shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Auditor's operations or services provided to City. Any insurance maintained by City, including any self-insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. The insurer waives all rights of subrogation against City, its elected or appointed officers, officials, employees, agents and volunteers. 7 K V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either party except after thirty (30) calendar days (10 calendar days written notice of non-payment of premium) written notice has been received by City. F. Timely Notice of Claims. Auditor shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Auditor's performance under this Agreement. G. Additional Insurance. Auditor shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Auditor, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Auditor is a partnership or joint -venture or syndicate or cotenancy, which shall result in changing the control of Auditor. Control means fifty percent (50%) or more of the voting power, or twenty-five percent (25%) or more of the assets of the corporation, partnership or joint -venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Auditor. Assignments of any or all rights, duties or obligations of the Auditor under this Agreement will be permitted only with the express written consent of City. Auditor shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, document and other writing produced (hereinafter "Documents"), prepared or caused to be prepared by Auditor, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Auditor or any other party. Auditor shall, at Auditor's expense, provide such Documents to City upon prior written request. Documents prepared by Auditor pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Auditor will be at City's sole risk and without liability to Auditor. Further, any and all liability arising out of changes made to Auditor's deliverables under this Agreement by City or persons other than Auditor is waived against Auditor and City assumes full responsibility for such changes unless City has given Auditor prior notice and has received from Auditor written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, notes and communications that result from the services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. RECORDS Auditor shall keep records and invoices in connection with the work to be performed under this Agreement. Auditor shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Auditor under this Agreement. All such records and invoices shall be clearly identifiable. Auditor shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Auditor shall allow inspection of all work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Auditor under this Agreement. 20. WITHHOLDINGS City may withhold payment to Auditor of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Auditor shall not discontinue work as a result of such withholding. Auditor shall have an immediate right to appeal to the City Manager or his/her designee with respect to such disputed sums. Auditor shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 9 21. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Auditor which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Auditor, the additional expense shall be borne by Auditor. Nothing in this paragraph is intended to limit City's rights under the law or any other sections of this Agreement. 22. CITY'S RIGHT TO EMPLOY OTHER AUDITORS City reserves the right to employ other Auditors in connection with the Project. 23. CONFLICTS OF INTEREST The Auditor or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act"), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Auditor shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Auditor shall indemnify and hold harmless City for any and all claims for damages resulting from Auditor's violation of this Section. 24. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first-class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Auditor to City shall be addressed to City at: Attn: Dan Matusiewicz Administrative Services Department City of Newport Beach PO Box 1768 3300 Newport Boulevard Newport Beach, CA 92658 Phone: 949-644-3126 Fax: 949-644-3339 10 All notices, demands, requests or approvals from CITY to Auditor shall be addressed to Auditor at: Attn: Ken AI -Imam Mayer Hoffman McCann P.C. Conrad Government Services Division 2301 Dupont Dr., Suite 200 Irvine, CA 92612 Phone: 949-474-2020, ext. 273 Fax: 949-263-5520 25. TERMINATION In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non -defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Auditor. In the event of termination under this Section, City shall pay Auditor for services satisfactorily performed and costs incurred up to the effective date of termination for which Auditor has not been previously paid. On the effective date of termination, Auditor shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 26. COMPLIANCE WITH ALL LAWS Auditor shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Auditor shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 11 27. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 28. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 29. CONFLICTS OR INCONSISTENCIES In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 30. INTERPRETATION The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 31. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Auditor and City and approved as to form by the City Attorney. 32. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 33. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 12 34. EQUAL OPPORTUNITY EMPLOYMENT Auditor represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY: B : �/ Y ERdjm eonie Mulvihill, Assistant City Attorneyti-I ATTEST: By: Leilani Brown, City Clerk Attachments CITY OF NEWPORT BEACH, A Municipal Corporation ByA Keith Curry, Mayor for the City of Newport Beach AUDITOR: By: -. Ar �: ���` (Corporate Officer) Title: le -46' - Print Name: & z, , ,�//7'.7,��. in (Corporate Financial Officer) Title: Print Name: Exhibit A - Scope of Services Exhibit B - Extra Work Billing Rates 13 EXHIBIT A OUR FIRM'S UNDERSTANDING OF THE OBJECTIVES AND SCOPE OF THE ENGAGEMENT Our understanding of the objectives and scope of the work to be performed is based upon your request for proposal. We will finalize all reports by the 1St week in December each year. Based upon the foregoing we understand the objectives and scope of work to be as follows: 1. We will perform an audit examination of the financial statements of the City of Newport Beach for the fiscal years ending June 30, 2009 through 2010. The City will prepare the financial section of the report. The City will prepare management discussion and analysis and the introductofy section and the statistical section of the report. We will provide guidance so that the CAFR is prepared in conformity with the 2005 edition of the GAAFR and all applicable GASB pronouncements. We will provide a review of the financial statements each year in time for the City to be able to finalize the report by December lst of each year. 2. We will perform a "Single Audit" of the City of Newport Beach and ILJAOC in accordance with the Single Audit Act Amendments of 1996 (Public Law 104-156) and OMB Circular A-133 entitled Audits of States, Local Governments, and Non -Profits Organizations. The City will provide to the Auditors the Schedule of Federal Financial Assistance encompassing all direct and pass-through federal funds received by the City and ILJAOC. 3. We will audit the financial statements of the 1LJAOC for the fiscal years ending June 30, 2009 through 20 10 The auditors will prepare and reproduce the financial statements based on ILJAOC assertions and estimates. 4. We will perform agreed-upon procedures to test and report on the City's Gann Limit for the years ended June 30, 2009 through 201D. 5. We will make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which we become aware to -the City Manager, City Attorney, and the Administrative Service Director. 6. We will provide to those charged with governance the communications required by Statement on Auditing Standards (SAS) No. 114, which conforms to the communication requirements identified to be made to those persons as set forth in the City's request for proposal. 7. We will prepare a letter to the City Council reporting matters dealing with internal control that meet the threshold of being a significant deficiency or material weakness, as defined by SAS No. 112. We will also prepare a letter to City management that will provide other recommendations to the City ensuing from our review of the City's internal control procedures. This letter will address nonreportable conditions (those constructive comments not required to be included in the letter of significant deficiencies to City Council. 13 EXHIBIT A, (Continued) 9. We desire to keep our local government clients abreast of new developments affecting local government finance. We will also advise City staff of new accounting developments during the interim/planning stage of each year's audit. We plan on providing additional client training to our clients in our May 2009 client training conference with respect to new GASB pronouncements. 10. We will assist the City in researching questions regarding tax matters involved in the ordinary course of municipal operations and administration. As the eighth largest tax and attest firm in the nation, MHM has extensive expertise in advising on such matters. Our local office has access to both the reference materials and personnel that the firm has identified to fulfill this need for our clients. 11. Finally, we perceive the scope of our work as being advisors to the City of Newport Beach regarding generally accepted accounting principles. Throughout the year, finance personnel of the City, will have access to Mr. Al -Imam, Engagement Shareholder, Mr. Lenton, Engagement Manager, and Ms. Livingston, Field Audit Manager to seek advice in the application of generally accepted accounting principles, the establishment and segregation of funds, advice regarding debt issuance, and other matters relating to the City. Mayer Hoffinan McCann P.C. and all key personnel are licensed and in good standing with the California State Board of Accountancy to practice as independent certified public accountants. Additionally, Mayer Hoffman McCann P.C. is independent with respect to the City of Newport Beach within the Government Auditing Standards. Mayer Hoffman McCann P.C. is an Equal Opportunity Employer. Mayer Hoffman McCann P.C. adheres to the strict quality control measures and high professional standards of the Public Company Accounting Oversight Board (PCAOB), the American Institute of Certified Public Accountants (AICPA) and California State Board of Accountancy. MHM is a member of the AICPA's Center for Public Company Audit Firms, Employee Benefit Plan Audit Quality Center, Governmental Audit Quality Center and the AICPA's Private Company Practice Section (PCPS). Our professional liability insurance (with policy limits of $5 million per claim and $5 million in the aggregate) is provided by CAMICO, which provides professional liability insurance for most of the audit firms in California. Under the conditions of the current market, CAMICO's insurance is currently rated A-. In addition to CAMICO's assets, our clients are protected by excess insurance that CAMICO has purchased from other carriers. 14 EXHIBIT B CITY OF NEWPORT BEACH, CALIFORNIA Annual Fee Amount Service 2009-10 City of Newport Beach Financial Audit $34,180 City of Newport Beach Standard Single Audit 5,000 ILJAOC Financial Hourly Audit 10,000 ILJAOC Single Audit 3,000 Grand Total Rates (not -to -exceed) 52 $Q These proposed fees are inclusive of any and all out-of-pocket expenses we will incur. The maximum fees contemplate that the books will be closed and ready for audit, that substantially all adjusting entries will be made by City staff prior to the start of final fieldwork and that City staff will provide supporting schedules and reconciliations for all significant asset and liability balances. If additional time is needed for us to assist the City in the resolution or investigation of accounting errors, discrepancies, or reconciliation issues, assistance in the preparation of year end schedules, or to reflect in our workpapers entries made after the start of the audit, we will perform such additional work at our standard hourly rates indicated below. Our fixed fee pricing contemplates up to two major programs for the single audit. A price adjustment of $2,500 will be made for each additional major program. Schedule of Discounted Hourly Rates Standard Quoted Labor Hourly Hourly Class Rates Discount Rates Shareholder -in -Charge $400 225 175 Technical Reviewer 400 225 175 Engagement Manager 280 155 125 Field Audit Manager 280 155 125 Senior Auditor 180 80 100 Staff Auditors 130 40 90 May 4, 2010 Mr. Ken AI -Imam Mayer Hoffman McCann P.C. Conrad Government Services Division 2301 Dupont Drive, Suite 200 Irvine, CA 92612 Dear Mr. AI -Imam: OFFICE OF THE CITY CLERK Leilani I. Brown, MMC Enclosed please find your executed original of Contract No. 4198 between Mayer Hoffman McCann P.C. and the City of Newport Beach. If you have any questions or need additional information, please contact Principal Accountant Rukshana Virany in the Administrative Services Department. Sincerely, Leilani I. Brown, MMC City Clerk Enclosure cc: Rukshana Virany, Administrative Services Department 3300 Newport Boulevard • Post Office Box 1768 • Newport Beach, California 92658-8915 Telephone: (949) 644-3005 • Fax: (949) 644-3039 • www.rily neurnnrt-hParh on „c April 14, 2010 CITY OF NEWPORT BEACH OFFICE OF THE CITY CLERK Leilani I. Brown, MMC Ken AkImam 71 Mayer Hoffman McCann P.C. 71 Conrad Government Services Divisions c, Dupont Drive, Suite 200 '`-' .7, r 02301 rn Irvine, CA 92612 CLCD Dear Mr. AI -Imam- �4 `r: W Enclosed please find three original copies of Contract No. 4198 between Mayer Hoffman McCann P.C. and the City of Newport Beach. Please sign the three original contracts where indicated. Once executed, please return the three original contracts to: Leilani I. Brown, City Clerk City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 Once the original contracts have been received, the City will fully execute the contract and send one original contract to you for your files. Please note that work is not authorized until all party signatures are obtained. If you have any questions or need additional information, please contact Principal Accountant Rukshana Virany in the Administrative Services Department. Sincerely, 44,- Q - �r6W_1__ Leilani I. Brown, MMC City Clerk Enclosures cc: Rukshana Virany, Administrative Services Department 3300 Newport Boulevard • Post Office Box 1768 • Newport Beach, California 92658-8915 Telephone: (949) 644-3005 • Fax: (949) 644-3039 • www. city. newport-beach. ca. us Page 1 of 3 Ken AI -Imam (CBIZ MHM - Orange County) From: Matusiewicz, Dan [DanM@newportbeachca.gov] Sent: Monday, April 26, 2010 11:53 AM To: Ken AI -Imam (CBIZ MHM - Orange County) Cc: Matthew Lenton (CBIZ MHM - Orange County); Virany, Rukshana Subject: FW: Board Resolution Authorizing AI-Imam/Lenton to Execute Contracts Ken, I don't think I ever forwarded this to you but the City Attorney's office is Ok with your signature and the reso on file. Thanks, MT From: Parker, Kristy Sent: Monday, April 19, 2010 1:52 PM To: Brown, Leilani Cc: Matusiewicz, Dan Subject: RE: Board Resolution Authorizing AI-Imam/Lenton to Execute Contracts That is sufficient—please keep the Reso with your contract file. Thank you- Kristy S. Parker Paralegal Office of the City Attorney City of Newport Beach CONFIDE I JAL ITY NOTICE: This email may contain material that is confidential, pi mieged a iWor attorney -work product for the sole use of the addressee. Any review by. reliance or distribution by others or forwarding to others without express permission is strictly prohibited. If you receive this transmission in eaoi: you are advised that any disclosure, copying. distribution or the taking of any action in reliance upon the communication is strictly prohibited. Moreover: any such inadvertent disclosure shall not compromise or waive the attorney-client privilege as to this communication. If you have received (his communication in error, immediately notify the sender. Thank you. From: Brown, Leilani Sent: Monday, April 19, 2010 10:16 AM To: Parker, Kristy Cc: Matusiewicz, Dan Subject: FW: Board Resolution Authorizing AI-Imam/Lenton to Execute Contracts Hi Kristy, Thought this question should go to you. Leilani I. Brown, MMC City Clerk 4/29/2010 Mayer Hoffman McCann P.C. Board Resolution ! The undersigned, being all members of the Board of Directors of Mayer Hoffman McCann P,C., a Missourl professlonal corporation "the Corporation", do hereby approve and adopt the following resolution; j RESOLVED, that the shareholders of Mayer Hoffman McCann P,C. as listed below are hereby authorized to sign and execute contracts to provide professional services on behalf of the Corporation. 1. Ken Al -Imam 2. Michael Harrison 3. Marcus Davis 4. Michael Gutierrez 5. Ron Rolwes 6. Michael Harrison 7. Ken AI -Imam &. Jennifer Farr 9. Matthew Lenton 10, Jim Babcock 11. Benjamin Reyes IN WITNESS WHEREOF, the undersigned have hereunto subscribed their names effective as of February 22, 2010. William L. Hancock Richard A_R_cowarC Paul E. Nation Q--416 2 r6_)) 2 6 FSPY,OTE CITY COUNCIL NEWPORT BEACH CITY OF NEWPORT BEACH 1 3 2010 CITY COUNCIL STAFF REPORT Agenda Item No. April 13, 2010 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Tracy McCraner, Administrative Services Director (949) 644-3123 or TMcCraner(a_NewportBeachCA.gov Dan Matusiewicz, Acting Deputy Director (949) 644-3126 or DanM _NewportBeachCA.gov SUBJECT: ANNUAL FINANCIAL AUDIT CONTRACT EXTENSION RECOMMENDATION: Authorize the City Manager to extend the contract with the CPA firm of Mayer Hoffman McCann P.C., to perform the City's annual financial audit for the fiscal year ending June 30, 2010. DISCUSSION: Per Council Policy F-15 — ANNUAL AUDIT the City is allowed to enter into audit contracts in four-year increments due to administrative burden associated with new auditor orientation. The City was due to go out to bid for audit services for the fiscal year ending June 30, 2009. The City went through a formal bid procedure and issued an RFP for audit services on March 31, 2009. Five firms submitted proposals to perform the City's audits for the four fiscal years ending June 30, 2009 — 2012. Based on the technical content of the proposals, proposed engagement staff and comparable clients, the Audit Selection Committee rated Mayer Hoffman McCann P.C. and Diehl Evans & Company, LLP as the top technical proposals. Sealed dollar cost bids were then opened and these firms were also the lowest bidders for the City audit services (Diehl Evans & Company being the lowest) separated by approximately $4,000 per audit year. However, since both the City Manager and Administrative Services Director were soon retiring, staff recommended that only a one-year contract be approved so that the new Annual Financial Audit Contract Extension April 13, 2010 Page 2 City Manager and Administrative Services Director could participate in a multi-year contract decision the next year. Due to the implementation of the Early Retirement Incentive Program (ERIP), related changes in Administrative Services management and the timing of the Civic Center financing project, staff recommends that it would be desirous for the City to extend the contract to our current firm of Mayer Hoffman McCann P.C. for an additional year. This would provide important historical continuity and lessen the impact on staff related to a potential change in auditors. Staff has been pleased with the performance of our auditors and Mayer Hoffman McCann P.C. is willing to honor its proposed multi-year discounted bid price rate unchanged at the same 2008-09 rate ($39,180). Since the City administers the audit of the Integrated Law and Justice Agency of Orange County (ILJAOC), the proposal also includes audit services for the ILJAOC at the same rate of $13,000 which is wholly paid for by the ILJAOC. The total proposed one-year contract for the City ($39,180) and the ILJAOC ($13,000) total $52,180. This item was discussed during the March 8, 2010, Finance Committee meeting and the Committee concurred with the staff recommendation. Environmental Review: The City Council's approval of this item does not require an environmental review. Public Notice: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Funding Availability: Funding for audit services is available and included in the annual budget. Alternatives: Do not approve the one-year extension for audit services and direct staff to prepare an RFP for 2009-10 audit services. Prepared by: 4an aMatus�iewiczW��' Acting Deputy Director C5 Attachment: Professional Services Agreement Annual Financial Audit Contract Extension April 13, 2010 Page 3 Submitted by: Tracy Mc0 er Administrati a Services Director PROFESSIONAL SERVICES AGREEMENT WITH MAYER HOFFMAN MCCANN P.C. FOR AUDITING SERVICES THIS AGREEMENT is made and entered into as of this day of , 2010, by and between the CITY OF NEWPORT BEACH, a Municipal Corporation ("City"), and Mayer Hoffman McCann P.C., a Missouri Professional Corporation, whose address is 2301 Dupont Dr., Suite 200, Irvine, CA 92612 ("Auditor"), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to cavy on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City is required to secure an audit of its Financial Statements and Federal financial assistance ("Single Audit") each year. C City desires to retain Auditor to perform an Audit Examination of its financial statements and a Single Audit for the fiscal year ending June 30, 2010 ("Project"). D. Auditor possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal Auditor for purposes of the Project shall be Ken AI -Imam. F. City has solicited and received a proposal from Auditor, has reviewed the previous experience and evaluated the expertise of Auditor, and desires to retain Auditor to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the above written date, and shall terminate the 30th Day of April, 2011, unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED Auditor shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit A and incorporated herein by reference. The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and the services shall be performed by March 31, 2011 The failure by Auditor to perform the services in a diligent and timely manner may result in termination of this Agreement by City. 4. COMPENSATION TO AUDITOR City shall pay Auditor for the services on a time and expense basis in accordance with the provisions of this Section and the Schedule of Billing Rates attached hereto as Exhibit B and incorporated herein by reference. Auditor's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed Fifty Two Thousand One Hundred Eighty Dollars and no/100 ($52,180.00) without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 4.1 Auditor shall submit monthly invoices to City describing the work performed the preceding month. Auditor's bills shall include the name of the person who performed the work, a brief description of the services performed and/or the specific task in the Scope of Services to which it relates, the date the services were performed, the number of hours spent on all work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Auditor no later than thirty (30) days after approval of the monthly invoice by City staff. 4.2 City shall reimburse Auditor only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. Unless otherwise approved., such costs shall be limited and include nothing more than the following costs incurred by Auditor: A. The actual costs of subconsultants for performance of any of the services that Auditor agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement. E B. Approved reproduction charges. C. Actual costs and/or other costs and/or payments specifically authorized in advance in writing and incurred by Auditor in the performance of this Agreement. 4.3 Auditor shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would. be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit B. 4.4 Notwithstanding any other provision of this Agreement, when payments made by City equal 90% of the maximum. fee provided for in this Agreement, no further payments shall be made until City has accepted the final work under this Agreement. 5. PROJECT MANAGER Auditor shall designate a Project Manager, who shall coordinate .all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Auditor has designated Matthew Lenton to be its Project Manager. Auditor shall not remove or reassign the Project Manager without the prior written consent of City. City's approval shall not be unreasonably withheld. Auditor, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City. Auditor warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by . the Administrative Services Department. Dan Matusiewicz shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his/her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES To assist Auditor in the execution of its responsibilities under this Agreement, City agrees to where applicable provide access to and upon request of Auditor, 3 one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Auditor's work schedule. 8. STANDARD OF CARE 8.1 All of the services shall be performed by Auditor or under Auditor's supervision. Auditor represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. By delivery of completed work, Auditor certifies that the work conforms to the requirements of this Agreement and all applicable federal, state and local laws and the professional standard of care. 8.2 Auditor represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Auditor to practice its profession. Auditor shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Auditor shall not be responsible for delay, nor shall Auditor be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Auditor's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Auditor shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers, and employees (collectively, the "Indemnified Parties") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims"), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement, any work performed or services provided under this Agreement including, without limitation, Auditor's presence or activities conducted on the Project (including the negligent and/or willful acts, errors and/or omissions of Auditor, its principals, officers, agents, employees, vendors, suppliers, Auditors, subcontractors, anyone employed directly or M indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Auditor to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attomey's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Auditor. 10. INDEPENDENT CONTRACTOR It is understood that City retains Auditor on an independent contractor basis and Auditor is not an agent or employee of City. The manner and means of conducting the work are under the control of Auditor, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Auditor or any of Auditor's employees or agents, to be the agents or employees of City. Auditor shall have the responsibility for and control over the means of performing the work, provided that Auditor is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Auditor as to the details of the performance or to exercise a measure of control over Auditor shall mean only that Auditor shall follow the desires of City with respect to the results of the services. 11. COOPERATION Auditor agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Auditor on the Project. 12. CITY POLICY Auditor shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Auditor is responsible for keeping the Project Administrator and/or his/her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 5 14. INSURANCE Without limiting Auditor's indemnification of City, and prior to commencement of work. Auditor shall obtain, provide and maintain at its own expense during the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Auditor shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. B. Signature. A person authorized by the insurer to bind coverage on its behalf shall sign certification of all required policies. C. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Requirements. Workers' Compensation Coverage. Auditor shall maintain Workers' Compensation Insurance and Employer's Liability Insurance for his or her employees in accordance with the laws of the State of California. In addition, Auditor shall require each subcontractor to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California for all of the subcontractor's employees. Any notice of cancellation or non -renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (10 calendar days written notice of non-payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Auditor for City. General Liability Coverage. Auditor shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal 0 injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coverage. Auditor shall maintain automobile insurance covering bodily injury and property damage for all activities of the Auditor arising out of or in connection with work.to be performed under this Agreement, including coverage for :any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit for each occurrence. iv. Professional Errors and Omissions Insurance. Auditor shall maintain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of five million dollars ($5,000,000). E. Endorsements. Each general liability and automobile liability insurance policy shall be endorsed with the following specific language: I. The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Auditor. This policy shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Auditor's operations or services provided to City. Any insurance maintained by City, including any self-insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. The insurer waives all rights of subrogation against City, its elected or appointed officers, officials, employees, agents and volunteers. 7 V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either party except after thirty (30) calendar days (10 calendar days written notice of non-payment of premium) written notice has been received by City. F. Timely Notice of Claims. Auditor shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Auditor's performance under this Agreement. G. Additional Insurance. Auditor shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Auditor, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Auditor is a partnership or joint -venture or syndicate or cotenancy, which shall result in changing the control of Auditor. Control means fifty percent (50%) or more of the voting power, or twenty-five percent (25%) or more of the assets of the corporation, partnership or joint -venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Auditor. Assignments of any or all rights, duties or obligations of the Auditor under this Agreement will be permitted only with the express written consent of City. Auditor shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, document and other writing produced (hereinafter "Documents"), prepared or caused to be prepared by Auditor, its officers, employees, agents and subcontractors, in the course of implementing this L Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Auditor or any other party. Auditor shall, at Auditor's expense, provide such Documents to City upon prior written request. Documents prepared by Auditor pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Auditor will be at City's sole risk and without liability to Auditor. Further, any and all liability arising out of changes made to Auditor's deliverables under this Agreement by City or persons other than Auditor is waived against Auditor and City assumes full responsibility for such changes unless City has given Auditor prior notice and has received from Auditor written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, notes and communications that result from the services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. RECORDS Auditor shall keep records and invoices in connection with the work to be performed under this Agreement. Auditor shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Auditor under this Agreement. All such records and invoices shall be clearly identifiable. Auditor shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Auditor shall allow inspection of all work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Auditor under this Agreement. 20. WITHHOLDINGS City may withhold payment to Auditor of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Auditor shall not discontinue work as a result of such withholding. Auditor shall have an immediate right to appeal to the City Manager or his/her designee with respect to such disputed sums. Auditor shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. D 21. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Auditor which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Auditor, the additional expense shall be borne by Auditor. Nothing in this paragraph is intended to limit City's rights under the law or any other sections of this Agreement. 22. CITY'S RIGHT TO EMPLOY OTHER AUDITORS City reserves the right to employ other Auditors in connection with the Project. 23. CONFLICTS OF INTEREST The Auditor or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act"), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Auditor shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Auditor shall indemnify and hold harmless City for any and all claims for damages resulting from Auditor's violation of this Section. 24. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first-class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Auditor to City shall be addressed to City at: Attn: Dan Matusiewicz Administrative Services Department City of Newport Beach PO Box 1768 3300 Newport Boulevard Newport Beach, CA 92658 Phone: 949-644-3126 Fax: 949-644-3339 10 All notices, demands, requests or approvals from CITY to Auditor shall be addressed to Auditor at: Attn: Ken AI -Imam Mayer Hoffman McCann P.C. Conrad Government Services Division 2301 Dupont Dr., Suite 200 Irvine, CA 92612 Phone: 949-474-2020, ext. 273 Fax: 949-263-5520 25. TERMINATION In the event. that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non -defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Auditor. In the event of termination under this Section, City shall pay Auditor for services satisfactorily performed and costs incurred up to the effective date of termination for which Auditor has not been previously paid. On the effective date of termination, Auditor shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 26. COMPLIANCE WITH ALL LAWS Auditor shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Auditor shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 11 27. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 28. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 29. CONFLICTS OR INCONSISTENCIES In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 30. INTERPRETATION The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 31. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Auditor and City and approved as to form by the City Attorney. 32.. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 33. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 12 34. EQUAL OPPORTUNITY EMPLOYMENT Auditor represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY: By: &�Jk' MAX) Leonie Mulvihill, Assistant City Attorney�1Ei/ ATTEST: By: Leilani Brown, City Clerk CITY OF NEWPORT BEACH, A Municipal Corporation By: Keith Curry, Mayor for the City of Newport Beach AUDITOR: By: (Corporate Officer) Title: Print Name: By: (Corporate Financial Officer) Title: Print Name: Attachments: Exhibit A — Scope of Services Exhibit B — Extra Work Billing Rates 13 EXIBIT A OUR FIRM'S UNDERSTANDING OF THE OBJECTIVES AND SCOPE OF THE ENGAGEMENT Our understanding of the objectives and scope of the work to be performed is based upon your request for proposal. We will finalize all reports by the 1" week in December each year. Based upon the foregoing we understand the objectives and scope of work to be as follows: I. We will perform an audit examination of the financial statements of the City of Newport Beach for the fiscal years ending June 30, 2009 through 2014. The City will prepare the financial section of the report. The City will prepare management discussion and analysis and the introductory section and the statistical section of the report. We will provide guidance so that the CAFR is prepared in conformity with the 2005 edition of the GAAFR and all applicable GASB pronouncements. We will provide a review of the financial statements each year in time for the City to be able to finalize the report by December ls` of each year. 2. We will perform a "Single Audit" of the City of Newport Beach and ILJAOC in accordance with the Single Audit Act. Amendments of 1996 (Public Law 104-156) and OMB Circular A-133 entitled Audits of States, Local Governments, and Non -Profits Organizations. The City will provide to the Auditors the Schedule of Federal Financial Assistance encompassing all direct and pass-through federal funds received by the City and IIJAOC. 3. We will audit the financial statements of the R JAOC for the fiscal years ending June 30, 2009 through 2010. The auditors will prepare and reproduce the financial statements based on 1LJAOC assertions and estimates. 4. We will perform agreed-upon procedures to test and report on the City's Gann Limit for the years ended June 30, 2009 through ID. 5. We will make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which we become aware to -the City Manager, City Attorney, and the Administrative Service Director. 6. We will provide to those charged with governance the communications required by Statement on Auditing Standards (SAS) No. 114, which conforms to the communication requirements identified to be made to those persons as set forth in the City's request for proposal. 7. We will prepare a letter to the City Council reporting matters dealing with internal control that meet the threshold of being a significant deficiency or material weakness, as defined by SAS No. 112. 8. We will also prepare a letter to City management that will provide other recommendations to the City ensuing from our review of the City's internal control procedures. This letter will address nonreportable conditions (those constructive comments not required to be included in the letter of significant deficiencies to City Council. 13 EXHIBIT A, (Continued) 9. We desire to keep our local government clients abreast of new developments affecting local government finance. We will also advise City staff of new accounting developments during the interim/planning stage of each year's audit. We plan on providing additional client training to our clients in our May 2009 client training conference with respect to new -GASB pronouncements. 10. Wewill assist the City in researching questions regarding tax matters involved in the ordinary course of municipal operations and administration. As the eighth largest tax and attest firm in the nation, MHM has extensive expertise in advising. on such matters. Our local office has access to both the reference materials and personnel that the firm has identified to fulfill this need for our clients. 11. Finally, we perceive the scope of our work as being advisors to the City of Newport Beach regarding generally accepted accounting principles. Throughout the year, finance personnel of the City, will have access to Mr. Al -Imam, Engagement Shareholder, Mr. Lenton, Engagement Manager, and Ms. Livingston, Field Audit Manager to seek advice in the application of generally accepted accounting principles, the establishment and segregation of funds, advice regarding debt issuance, and other matters relating to the City. Mayer Hoffman McCann P.C. and all key personnel .are licensed and in good standing with the California State Board of Accountancy to practice as independent certified public accountants. Additionally, Mayer Hoffinan McCann P.C. is independent with respect to the City of Newport Beach within the Government Auditing Standards. Mayer Hoffinan McCann P.C. is an Equal Opportunity Employer. Mayer Hoffinan McCann P.C. adheres to the strict quality control measures and high professional standards of the Public Company Accounting Oversight Board (PCAOB), the American Institute of Certified Public Accountants (AICPA) and California State Board of Accountancy. MHM is a member of the AICPA's Center for Public Company Audit Firms, Employee Benefit Plan Audit Quality Center, Governmental Audit Quality Center and the AICPA's Private Company Practice Section (PCPS). Our professional liability insurance (with policy limits of $5 million per claim and $5 million in the aggregate) is provided by CAMICO, which provides professional liability insurance for most of the audit firms in California. Under the conditions of the current market, CAMICO's insurance is currently rated A-. In addition to CAMICO's assets, our clients are protected by excess insurance that CAMICO has purchased from other carriers. 14 EXHIBIT B CITY OF NEWPORT BEACH, CALIFORIVL4 Annual Fee Amount Service 2009-10 City of Newport Beach Standard Financial Audit $34,180 City of Newport Beach Hourly Single Audit 5,000 H,JAOC Financial Rates Audit 10,000 H JAOC Single Audit 3,000 Grand Total 225 (not -to -exceed) Technical Reviewer These proposed fees are inclusive of any and all out-of-pocket expenses we will incur. The maximum fees contemplate that the books will be closed and ready for audit, that substantially all adjusting entries will be made by City staff prior to the start of final fieldwork and that City staff will provide supporting schedules and reconciliations for all significant asset and liability balances. If additional time is needed for us to assist the City in the resolution or investigation of accounting errors, discrepancies, or reconciliation issues, assistance in the preparation of year end schedules, or to reflect in our workpapers entries made after the start of the audit, we will perform such additional work at our standard hourly rates indicated below. Our fixed fee pricing contemplates up to two major programs for the single audit. A price adjustment of $2,500 will be made for each additional major program. Schedule of Discounted Hourly Rates Standard Quoted Labor Hourly Hourly Class Rates Discount Rates Shareholder -in -Charge $400 225 175 Technical Reviewer 400 225 175 Engagement Manager 280 155 125 Field Audit Manager 280 155 125 Senior Auditor 180 80 100 Staff Auditors 130 40 90 *1 •. C- 4198 PROFESSIONAL SERVICES AGREEMENT WITH MAYER HOFFMAN MCCANN P.C. FOR AUDITING SERVICES THIS AGREEMENT is made and entered into as of this at, day of udq , 2009, by and between the CITY OF NEWPORT BEACH, a Municipal Q rporation ( "City "), and Mayer Hoffman McCann P.C., an independent CPA firm, whose address is 2301 Dupont Dr., Suite 200, Irvine, CA 92612 ( "Auditor"), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City is required to secure an audit of its Financial Statements and Federal financial assistance ( "Single Audit') each year. C City desires to retain Auditor to perform an Audit Examination of its financial statements and a Single Audit for the fiscal year ending June 30, 2009 ( "Project'). D. Auditor possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal Auditor for purposes of the Project shall be Ken AI -Imam. F. City has solicited and received a proposal from Auditor, has reviewed the previous experience and evaluated the expertise of Auditor, and desires to retain Auditor to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the above written date, and shall terminate upon the completion of the Project, unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED Auditor shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit A and incorporated herein by reference. The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and the services shall be performed by March 31, 2010. The failure by Auditor to perform the services in a diligent and timely manner may result in termination of this Agreement by City. 4. COMPENSATION TO AUDITOR City shall pay Auditor for the services on a time and expense basis in accordance with the provisions of this Section and the Schedule of Billing Rates attached hereto as Exhibit B and incorporated herein by reference. Auditor's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed Fifty Two Thousand One Hundred Eighty Dollars and no /100 ($52,180) without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 4.1 Auditor shall submit monthly invoices to City describing the work performed the preceding month. Auditor's bills shall include the name of the person who performed the work, a brief description of the services performed and /or the specific task in the Scope of Services to which it relates, the date the services were performed, the number of hours spent on all work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Auditor no later than thirty (30) days after approval of the monthly invoice by City staff. 4.2 City shall reimburse Auditor only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Auditor: A. The actual costs of subconsultants for performance of any of the services that Auditor agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement. FA • • B. Approved reproduction charges. C. Actual costs and /or other costs and/or payments specifically authorized in advance in writing and incurred by Auditor in the performance of this Agreement. 4.3 Auditor shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit B. 4.4 Notwithstanding any other provision of this Agreement, when payments made by City equal 90% of the maximum fee provided for in this Agreement, no further payments shall be made until City has accepted the final work under this Agreement. 5. PROJECT MANAGER Auditor shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Auditor has designated Matthew Lenton to be its Project Manager. Auditor shall not remove or reassign the Project Manager without the prior written consent of City. City's approval shall not be unreasonably withheld. Auditor, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City. Auditor warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the Administrative Services Department. Dan Matusiewicz shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his /her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES To assist Auditor in the execution of its responsibilities under this Agreement, City agrees to where applicable provide access to and upon request of Auditor, 3 9 0 one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Auditor's work schedule. 8. STANDARD OF CARE 8.1 All of the services shall be performed by Auditor or under Auditor's supervision. Auditor represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. By delivery of completed work, Auditor certifies that the work conforms to the requirements of this Agreement and all applicable federal, state and local laws and the professional standard of care. 8.2 Auditor represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Auditor to practice its profession. Auditor shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Auditor shall not be responsible for delay, nor shall Auditor be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Auditor's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Auditor shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers, and employees (collectively, the "Indemnified Parties ") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims'), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement, any work performed or services provided under this Agreement including, without limitation, Auditor's presence or activities conducted on the Project (including the negligent and /or willful acts, errors and /or omissions of Auditor, its principals, officers, agents, employees, vendors, suppliers, Auditors, subcontractors, anyone employed directly or 12 indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Auditor to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Auditor. 10. INDEPENDENT CONTRACTOR It is understood that City retains Auditor on an independent contractor basis and Auditor is not an agent or employee of City. The manner and means of conducting the work are under the control of Auditor, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Auditor or any of Auditor's employees or agents, to be the agents or employees of City. Auditor shall have the responsibility for and control over the means of performing the work, provided that Auditor is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Auditor as to the details of the performance or to exercise a measure of control over Auditor shall mean only that Auditor shall follow the desires of City with respect to the results of the services. 11. COOPERATION Auditor agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Auditor on the Project. 12. CITY POLICY Auditor shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Auditor is responsible for keeping the Project Administrator and/or his/her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 5 14. INSURANCE Without limiting Auditor's indemnification of City, and prior to commencement of work. Auditor shall obtain, provide and maintain at its own expense during the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Auditor shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. B. Signature. A person authorized by the insurer to bind coverage on its behalf shall sign certification of all required policies. C. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Requirements. i. Workers' Compensation Coverage. Auditor shall maintain Workers' Compensation Insurance and Employer's Liability Insurance for his or her employees in accordance with the laws of the State of California. In addition, Auditor shall require each subcontractor to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California for all of the subcontractor's employees. Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (10 calendar days written notice of non - payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Auditor for City. ii. General Liability Coverage. Auditor shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal [., 9 • injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coverage. Auditor shall maintain automobile insurance covering bodily injury and property damage for all activities of the Auditor arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit for each occurrence. iv. Professional Errors and Omissions Insurance. Auditor shall maintain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of five million dollars ($5,000,000). E. Endorsements. Each general liability and automobile liability insurance policy shall be endorsed with the following specific language: i. The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Auditor. ii. This policy shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Auditor's operations or services provided to City. Any insurance maintained by City, including any self- insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. The insurer waives all rights of subrogation against City, its elected or appointed officers, officials, employees, agents and volunteers. VA • • V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either party except after thirty (30) calendar days (10 calendar days written notice of non - payment of premium) written notice has been received by City. F. Timely Notice of Claims. Auditor shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Auditor's performance under this Agreement. G. Additional Insurance. Auditor shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Auditor, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Auditor is a partnership or joint- venture or syndicate or cotenancy, which shall result in changing the control of Auditor. Control means fifty percent (50 %) or more of the voting power, or twenty -five percent (25 %) or more of the assets of the corporation, partnership or joint-venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Auditor. Assignments of any or all rights, duties or obligations of the Auditor under this Agreement will be permitted only with the express written consent of City. Auditor shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, document and other writing produced (hereinafter "Documents "), prepared or caused to be prepared by Auditor, its officers, employees, agents and subcontractors, in the course of implementing this rJ� • • Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Auditor or any other party. Auditor shall, at Auditor's expense, provide such Documents to City upon prior written request. Documents prepared by Auditor pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Auditor will be at City's sole risk and without liability to Auditor. Further, any and all liability arising out of changes made to Auditor's deliverables under this Agreement by City or persons other than Auditor is waived against Auditor and City assumes full responsibility for such changes unless City has given Auditor prior notice and has received from Auditor written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, notes and communications that result from the services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. RECORDS Auditor shall keep records and invoices in connection with the work to be performed under this Agreement. Auditor shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Auditor under this Agreement. All such records and invoices shall be clearly identifiable. Auditor shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Auditor shall allow inspection of all worts, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Auditor under this Agreement. 20. WITHHOLDINGS City may withhold payment to Auditor of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Auditor shall not discontinue work as a result of such withholding. Auditor shall have an immediate right to appeal to the City Manager or his /her designee with respect to such disputed sums. Auditor shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. t:] 21. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Auditor which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Auditor, the additional expense shall be borne by Auditor. Nothing in this paragraph is intended to limit City's rights under the law or any other sections of this Agreement. 22. CITY'S RIGHT TO EMPLOY OTHER AUDITORS City reserves the right to employ other Auditors in connection with the Project. 23. CONFLICTS OF INTEREST The Auditor or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Auditor shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Auditor shall indemnify and hold harmless City for any and all claims for damages resulting from Auditor's violation of this Section. 24. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All notices, -demands, requests or approvals from Auditor to City shall be addressed to City at: Attn: Dan Matusiewicz Administrative Services Department City of Newport Beach 3300 Newport Boulevard Newport Beach, CA, 92663 Phone: 949 -644 -3126 Fax: 949 -644 -3339 10 • • All notices, demands, requests or approvals from CITY to Auditor shall be addressed to Auditor at: Attn: Ken AI -Imam Mayer Hoffman McCann P.C. Conrad Government Services Division 2301 Dupont Dr., Suite 200 Irvine, CA 92612 Phone: 949 - 474 -2020, ext. 273 Fax: 949- 263 -5520 25. TERMINATION In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Auditor. In the event of termination under this Section, City shall pay Auditor for services satisfactorily performed and costs incurred up to the effective date of termination for which Auditor has not been previously paid. On the effective date of termination, Auditor shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 26. COMPLIANCE WITH ALL LAWS Auditor shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Auditor shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 11 27. WAIVER A waiver by either parry of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 28. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 29. CONFLICTS OR INCONSISTENCIES In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 30. INTERPRETATION The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 31. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Auditor and City and approved as to form by the City Attorney. 32. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 33. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 12 34. EQUAL OPPORTUNITY EMPLOYMENT Auditor represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: OFFICE F THE CITY ATTORNEY: By: ,, ( - / - _ Aaron C. Harp, Assistant City Attorney ATTEST: r By: .Q Leilani Brown, City Clerk Pr■► Attachments CITY OF NE, WPORT_EACH, A Mug, ipal Corpor do Edward D"SelicH, -Mayo?- for Mayofor the City of Newport Beach AUDITOR: By:�� orate Officer) Title: 5;'4;: .,.4n /. 4i' = Print Name: (Financial Officer) Title.- Print itle: Print Name: Exhibit A — Scope of Services Exhibit B — Extra Work Billing Rates 13 EXHIBIT A Our understanding of the objectives and scope of the work to be performed is based upon your request for proposal. We will finalize all reports by the Vs week in December each year. Based upon the foregoing we understand the objectives and scope of work to be as follows 1. We will perform an audit examination of the financial statements of the City of Newport Beach for the fiscal years ending June 30, 2009 tb% g 404^ i The City will prepare the financial section of the report. The City will prepare management discussion and analysis and the introductory section and the statistical section of the report. We will provide guidance so that the CAFR is prepared in conformity with the 2005 edition of the GAAFR and all applicable GASB pronouncements. We will provide a review of the financial statements each year in time for the City to be able to finalize the report by December I" of each year. 2. We will perform a "Single Audit" of the City of Newport Beach and ILJAOC in accordance with the Single Audit Act Amendments of 1996 (Public Law 104 -156) and OMB Circular A -133 entitled Audits of States, Local Governments, and Non - Profits Organizations. The City will provide to the Auditors the Schedule of Federal Financial Assistance encompassing all direct and pass - through federal funds received by the City and ILJAOC. 3. We will audit the financial statements of the 1LJAOC for the fiscal years ending June 30, 2009 The auditors will prepare and reproduce the financial statements based on ILJAOC assertions and estimates. 4. We will perform agreed -upon procedures to test and report on the City's Gann Limit for the years ended June 30, 2009 threvgh-P� 5. We will make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which we become aware to the City Manager, City Attorney, and the Administrative Service Director. 6. We will provide to those charged with governance the communications required by Statement on Auditing Standards (SAS) No. 114, which conforms to the communication requirements identified to be made to those persons as set forth in the City's request for proposal. 7. We will prepare a letter to the City Council reporting matters dealing with internal control that meet the threshold of being a significant deficiency or material weakness, as defined by SAS No. 111 8. We will also prepare a letter to City management that will provide other recommendations to the City ensuing from our review of the City's internal control procedures. This letter will address nonreportable conditions (those constructive comments not required to be included in the letter of significant deficiencies to City Council. 13 SECTION G. (CONTINUED 9. We desire to keep our local government clients abreast of new developments affecting local government finance. We will also advise City staff of new accounting developments during the interiin/planning stage of each year's audit. We plan on providing additional client training to our clients in our May 2009 client training conference with respect to new GASB pronouncements. 10. We will assist the City in researching questions regarding tax matters involved in the ordinary course of municipal operations and administration. As the eighth largest tax and attest firm in the nation, MHM has extensive expertise in advising on such matters. Our local office has access to both the reference materials and personnel that the firm has identified to fulfill this need for our clients. 11. Finally, we perceive the scope of our work as being advisors to the City of Newport Beach regarding generally accepted accounting principles. Throughout the year, finance personnel of the City, will have access to Mr. AI -Imam, Engagement Shareholder, Mr. Lenten, Engagement Manager, and Ms. Livingston, Field Audit Manager to seek advice in the application of generally accepted accounting principles, the establishment and segregation of funds, advice regarding debt issuance, and other matters relating to the City. Mayer Hoffman McCann P.C. and all key personnel are licensed and in good standing with the California State Board of Accountancy to practice as independent certified public accountants. Additionally, Mayer Hoffinan McCann P.C. is independent with respect to the City of Newport Beach within the Government Auditing Standards. Mayer Hoffman McCann P.C. is an Equal Opportunity Employer. Mayer Hoffinan McCann P.C. adheres to the strict quality control measures and high professional standards of the Public Company Accounting Oversight Board (PCAOB), the American Institute of Certified Public Accountants (AICPA) and California State Board of Accountancy. MHM is a member of the AICPA's Center for Public Company Audit Firms, Employee Benefit Plan Audit Quality Center, Governmental Audit Quality Center and the AICPA's Private Company Practice Section (PCPS). Our professional liability insurance (with policy limits of $5 million per claim and $5 million in the aggregate) is provided by CAMICO, which provides professional liability insurance for most of the audit firms in California. Under the conditions of the current market, CAMICO's insurance is currently rated A -. In addition to CAMICO's assets, our clients are protected by excess insurance that CAMICO has purchased from other carriers. 14 EXHIBIT B CITY OF NEWPORT BEACH, CALIFORNIA Annual Fee Amount Service 2008 -09 2"2-10 2010 -11 2011 -12 Total City of Newport Beach Financial Audit $34,180 $34,864 35,5 36,27 140,877 City of Newport Beach Single Audit 5,000 5,10 5, 2 5,306 X41 08 ILJAOC Financial Audit 10,000 1 00 10 4 612 16 1 W AOC Single Audit 3,000 3,060 3 21 3.18 12,364 Grand Total (not -to- exceed) 52 0 224 541W 55373 215 These proposed fees are inclusive of any and all out -of- pocket expenses we will incur. The maximum fees contemplate that the books will be closed and ready for audit, that substantially all adjusting entries will be made by City staff prior to. the start of final fieldwork and that City staff will provide supporting schedules and reconciliations for all significant asset and liability balances. If additional time is needed for us to assist the City in the resolution or investigation of accounting errors, discrepancies, or reconciliation issues, assistance in the preparation of year end schedules, or to reflect in our workpapers entries made after the start of the audit, we will perform such additional work at our standard hourly rates indicated below. Our fixed fee pricing contemplates up to two major programs for the single audit. A price adjustment of $2,500 will be made for each additional major program. Schedule of Discounted Hourly Rates Standard Quoted Labor Hourly Hourly Class Rates Discount Rates Shareholder -in- Charge $400 225 175 Technical Reviewer 400 225 175 Engagement Manager 280 155 125 Field Audit Manager 280 155 125 Senior Auditor 180 70 110 Staff Auditors 130 30 100 0 0 CITY OF NEWPORT BEACH ►iai' 12 2009 FINANCE COMMITTEE STAFF REPORT A j Agenda Item No. g May 12, 2009 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Dennis Danner, Director, (949) 644 -3123 ddanner(c_ city. newport- beach.ca. us Dan Matusiewicz, Finance Officer, (949) 644 -3126 d matu iAcity. newport- beach. ca. us SUBJECT: ANNUAL FINANCIAL AUDIT CONTRACT EXTENSION RECOMMENDATION: Authorize the City Manager to extend the contract with the CPA firm of Mayer Hoffman McCann P.C., to perform the City's annual financial audit for the fiscal year ending June 30, 2009. DISCUSSION: The City's current financial auditing firm is Mayer Hoffman McCann P.C. Per City Council Policy F -15 — ANNUAL AUDIT - the City is required to go out to bid for audit services for the fiscal year ending June 20, 2009. The Policy states that the City will normally award an audit contract for a four -year period and that the audit contract may be renewed for an additional four -year period, without going through a new invitation for bid procedure, with the same firm, if the City Council is satisfied with the performance of the auditors and authorizes the extension. The contract for Mayer Hoffman McCann P.C. has expired. Per the Council Policy, the City issued an RFP for audit services dated March 31, 2009. Known CPA firms, specializing in municipal governments with offices in Orange County, were invited to propose. The proposals were due back on April 24, 2009. Five firms submitted proposals to perform the City's audits for the four fiscal years ending June 30, 2009 — 2012 including: Diehl, Evans & Company, LLP; Macias Gini & O'Connell LLP; I anre _-W R I_ �p�b� of 1 P _l �nn�ir�y JZ _I arcnn ant M yQ� Hnf McCam _P_„C _ _ Annual Financial Audit Contract Extension May 12, 2009 Page 2 City. W'0; rKs ffice. Based on the technical content of the proposals, proposed engagement staff and comparable clients, the Audit Selection committee rated Mayor Hoffman McCann P.C. and Diehl Evans & Company, LLP as the top technical proposals. Sealed dollar cost bids were then opened and these firms were also the lowest bidders for the City audit services (Diehl Evans & Company being the lowest) separated by approximately $4,000 per audit year. Both firms have a long history of municipal audit expertise and we strongly believe that either firm would do an outstanding job for the City. However, since both the City Manager and Administrative Services Director will be retiring from City service this year, staff believes it would be desirous for the City Council to extend the contract to our current auditing firm of Mayer Hoffman McCann P.C. for a limited one -year term, which would allow the new City Manager and the new Administrative Services Director to participate in the selection of the auditor and the appropriate renewal period. Extending the contract to our current auditor would also provide important historical continuity to the new management. Mayer Hoffman McCann P.C. is willing to honor its annualized four year bid price rate, even though we are only recommending a contract renewal term of one additional year. This represents a substantial savings over their current contract, with a reduction for the City's audit from their current contract price of $47,328 to $39,180, or a savings of $8,148. Since the City administers the audit of the Integrated Law and Justice Agency of Orange County (ILJAOC), the proposal also includes audit services for the ILJAOC at a rate of $13,000 which is wholly paid for by the ILJAOC. The proposed contract rate represents a savings to the ILJAOC of $3,301. The total proposed one -year contract for the City ($39,180) and the ILJAOC($13,000) total $52,180. If the audit contract extension is approved by the City Council for one year, City staff will contact each of the CPA firms that responded to the RFP and inform them of the extension and invite the firms to resubmit new proposals for audit services next year when the new City Manager and new Administrative Services Director can be part of the decision making process. Environmental Review: The City Council's approval of this item does not require an environmental review. Public Notice: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Annual Financial Audit Contract Extension May 12, 2009 Page 3 Funding Availability: Funding for audit services is available and included in the annual budget. Alternatives: Do not approve the one year extension for audit services and direct City Staff to come back and recommend an award of contract for auditing services to one of the five respondents to the audit services RFP for a term of up to four years. Prepared by: Matusiewicz, Attachment: Professioh%iTServices Agreement Submitted by: O. - 0 0 PROFESSIONAL SERVICES AGREEMENT WITH MAYER HOFFMAN MCCANN P.C. FOR AUDITING SERVICES THIS AGREEMENT is made and entered into as of this _ day of 2009, by and between the CITY OF NEWPORT BEACH, a Municipal Corporation ( "City"), and Mayer Hoffman McCann P.C., an independent CPA firm, whose address is 2301 Dupont Dr., Suite 200, Irvine, CA 92612 ( "Auditor"), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City is required to secure an audit of its Financial Statements and Federal financial assistance ( "Single Audit') each year. C City desires to retain Auditor to perform an Audit Examination of its financial statements and a Single Audit for the fiscal year ending June 30, 2009 ( "Project'). D. Auditor possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal Auditor for purposes of the Project shall be Ken AI -Imam. F. City has solicited and received a proposal from Auditor, has reviewed the previous experience and evaluated the expertise of Auditor, and desires to retain Auditor to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the above written date, and shall terminate upon the completion of the Project, unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED Auditor shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit A and incorporated herein by reference. The City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and the services shall be performed by March 31, 2010. The failure by Auditor to perform the services in a diligent and timely manner may result in termination of this Agreement by City. 4. COMPENSATION TO AUDITOR City shall pay Auditor for the services on a time and expense basis in accordance with the provisions of this Section and the Schedule of Billing Rates attached hereto as Exhibit B and incorporated herein by reference. Auditor's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed Fifty Two Thousand One Hundred Eighty Dollars and no /100 ($52,180) without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 4.1 Auditor shall submit monthly invoices to City describing the work performed the preceding month. Auditor's bills shall include the name of the person who performed the work, a brief description of the services performed and /or the specific task in the Scope of Services to which it relates, the date the services were performed, the number of hours spent on all work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Auditor no later than thirty (30) days after approval of the monthly invoice by City staff. 4.2 City shall reimburse Auditor only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing in advance by City. Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Auditor: A. The actual costs of subconsultants for performance of any of the services that Auditor agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement. 2 9 0 B. Approved reproduction charges. C. Actual costs and /or other costs and/or payments specifically authorized in advance in writing and incurred by Auditor in the performance of this Agreement. 4.3 Auditor shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit B. 4.4 Notwithstanding any other provision of this Agreement, when payments made by City equal 90% of the maximum fee provided for in this Agreement, no further payments shall be made until City has accepted the final work under this Agreement. 5. PROJECT MANAGER Auditor shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Auditor has designated Matthew Lenton to be its Project Manager. Auditor shall not remove or reassign the Project Manager without the prior written consent of City. City's approval shall not be unreasonably withheld. Auditor, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City. Auditor warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the Administrative Services Department. Dan Matusiewicz shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his /her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES To assist Auditor in the execution of its responsibilities under this Agreement, City agrees to where applicable provide access to and upon request of Auditor, 3 0 • one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Auditor's work schedule. 8. STANDARD OF CARE 8.1 All of the services shall be performed by Auditor or under Auditor's supervision. Auditor represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. By delivery of completed work, Auditor certifies that the work conforms to the requirements of this Agreement and all applicable federal, state and local laws and the professional standard of care. 8.2 Auditor represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Auditor to practice its profession. Auditor shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Auditor shall not be responsible for delay, nor shall Auditor be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Auditor's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Auditor shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers, and employees (collectively, the "Indemnified Parties') from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement, any work performed or services provided under this Agreement including, without limitation, Auditor's presence or activities conducted on the Project (including the negligent and/or willful acts, errors and /or omissions of Auditor, its principals, officers, agents, employees, vendors, suppliers, Auditors, subcontractors, anyone employed directly or CI 0 9 indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Auditor to indemnify the indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Auditor. 10. INDEPENDENT CONTRACTOR It is understood that City retains Auditor on an independent contractor basis and Auditor is not an agent or employee of City. The manner and means of conducting the work are under the control of Auditor, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Auditor or any of Auditor's employees or agents, to be the agents or employees of City. Auditor shall have the responsibility for and control over the means of performing the work, provided that Auditor is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Auditor as to the details of the performance. or to exercise a measure of control over Auditor shall mean only that Auditor shall follow the desires of City with respect to the results of the services. 11. COOPERATION Auditor agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Auditor on the Project. 12. CITY POLICY Auditor shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Auditor is responsible for keeping the Project Administrator and /or his/her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. • • 14. INSURANCE Without limiting Auditor's indemnification of City, and prior to commencement of work. Auditor shall obtain, provide and maintain at its own expense during the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Auditor shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by Citys Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. B. Signature. A person authorized by the insurer to bind coverage on its behalf shall sign certification of all required policies. C. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Requirements. L Workers' Compensation Coverage. Auditor shall maintain Workers' Compensation Insurance and Employer's Liability Insurance for his or her employees in accordance with the laws of the State of California. In addition, Auditor shall require each subcontractor to similarly maintain Workers' Compensation Insurance and Employer's Liability Insurance in accordance with the laws of the State of California for all of the subcontractor's employees. Any notice of cancellation or non - renewal of all Workers' Compensation policies must be received by City at least thirty (30) calendar days (10 calendar days written notice of non - payment of premium) prior to such change. The insurer shall agree to waive all rights of subrogation against City, its officers, agents, employees and volunteers for losses arising from work performed by Auditor for City. ii. General Liability Coverage. Auditor shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal D • i injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coveraoe. Auditor shall maintain automobile insurance covering bodily injury and property damage for all activities of the Auditor arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit for each occurrence. iv. Professional Errors and Omissions Insurance. Auditor shall maintain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of five million dollars ($5,000,000). E. Endorsements. Each general liability and automobile liability insurance policy shall be endorsed with the following specific language: i. The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Auditor. ii. This policy shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from the Auditor's operations or services provided to City. Any insurance maintained by City, including any self - insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. The insurer waives all rights of subrogation against City, its elected or appointed officers, officials, employees, agents and volunteers. 7 0 0 V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either party except after thirty (30) calendar days (10 calendar days written notice of non - payment of premium) written notice has been received by City. F. Timely Notice of Claims. Auditor shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Auditor's performance under this Agreement. G. Additional Insurance. Auditor shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Auditor, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Auditor is a partnership or joint- venture or syndicate or cotenancy, which shall result in changing the control of Auditor. Control means fifty percent (50 %) or more of the voting power, or twenty -five percent (25 %) or more of the assets of the corporation, partnership or joint-venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Auditor. Assignments of any or all rights, duties or obligations of the Auditor under this Agreement will be permitted only with the express written consent of City. Auditor shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, document and other writing produced (hereinafter "Documents "), prepared or caused to be prepared by Auditor, its officers, employees, agents and subcontractors, in the course of implementing this U 0 0 Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Auditor or any other party. Auditor shall, at Auditor's expense, provide such Documents to City upon prior written request. Documents prepared by Auditor pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Auditor will be at City's sole risk and without liability to Auditor. Further, any and all liability arising out of changes made to Auditor's deliverables under this Agreement by City or persons other than Auditor is waived against Auditor and City assumes full responsibility for such changes unless City has given Auditor prior notice and has received from Auditor written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, notes and communications that result from the services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. RECORDS Auditor shall keep records and invoices in connection with the work to be performed under this Agreement. Auditor shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Auditor under this Agreement. All such records and invoices shall be clearly identifiable. Auditor shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Auditor shall allow inspection of all work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Auditor under this Agreement. 20. WITHHOLDINGS City may withhold payment to Auditor of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Auditor shall not discontinue work as a result of such withholding. Auditor shall have an immediate right to appeal to the City Manager or his /her designee with respect to such disputed sums. Auditor shall be entitled to receive interest on any withheld sums at the rate of return that City.earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. • • 21. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Auditor which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Auditor, the additional expense shall be bome by Auditor. Nothing in this paragraph is intended to limit City's rights under the law or any other sections of this Agreement. 22. CITY'S RIGHT TO EMPLOY OTHER AUDITORS City reserves the right to employ other Auditors in connection with the Project. 23. CONFLICTS OF INTEREST The Auditor or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act"), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Auditor shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Auditor shall indemnify and hold harmless City for any and all claims for damages resulting from Auditor's violation of this Section. 24. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Auditor to City shall be addressed to City at: Attn: Dan Matusiewicz Administrative Services Department City of Newport Beach 3300 Newport Boulevard Newport Beach, CA, 92663 Phone: 949-644-3126 Fax: 949 -644 -3339 T 0 0 All notices, demands, requests or approvals from CITY to Auditor shall be addressed to Auditor at: Attn: Ken AI -Imam Mayer Hoffman McCann P.C. Conrad Government Services Division 2301 Dupont Dr., Suite 200 Irvine, CA 92612 .Phone: 949 - 474 -2020, ext. 273 Fax: 949 - 263 -5520 26. TERMINATION In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this .Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Auditor. In the event of termination under this Section, City shall pay Auditor for services satisfactorily performed and costs incurred up to the effective date of termination for which Auditor has not been previously paid. On the effective date of termination, Auditor shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 26. COMPLIANCE WITH ALL LAWS Auditor shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Auditor shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 11 0 0 27. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 28. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 29. CONFLICTS OR INCONSISTENCIES In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 30. INTERPRETATION The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 31. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Auditor and City and approved as to form by the City Attorney. 32. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 33. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 12 0 0 34. EQUAL OPPORTUNITY EMPLOYMENT Auditor represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: OFFICE OF THE CIIT+Y ATTORNEY: By: e Aaron C. Harp, Assistant City Attorney ATTEST: In Leilani Brown, City Clerk Attachments: CITY OF NEWPORT BEACH, A Municipal Corporation By: Edward D. Selich, Mayor for the City of Newport Beach AUDITOR: 0 (Corporate Officer) Print 0 (Financial Officer) Title: Print Name: Exhibit A — Scope of Services Exhibit B — Extra Work Billing Rates 13 EXHIBIT A SECTION G Our understanding of the objectives and scope of the work to be performed is based upon your request for proposal. We will finalize all reports by the I" week in December each year. Based upon the foregoing we understand the objectives and scope of work to be as follows: 1. We will perform an audit examination of the financial statements of the City of Newport Beach for the fiscal years ending June 30, 2009 thFaueh 2W . The City will prepare the financial section of the report. The City will prepare management discussion and analysis and the introductory section and the statistical section of the report. We will provide guidance so that the CAFR is prepared in conformity with the 2005 edition of the GAAFR and all applicable GASB pronouncements. We will provide a review of the financial statements each year in time for the City to be able to finalize the report by December 1" of each year. 2. We will perform a "Single Audit" of the City of Newport Beach and ILJAOC in accordance with the Single Audit Act Amendments of 1996 (Public Law 104 -156) and OMB Circular A -133 entitled Audits of States, Local Governments, and Non - Profits Organizations. The City will provide to the Auditors the Schedule of Federal Financial Assistance encompassing all direct and pass - through federal funds received by the City and 1LJAOC. 3. We will audit the financial statements of the ILJAOC for the fiscal years ending June 30, 2009 4aeagtr-404-2. The auditors will prepare and reproduce the financial statements based on ILJAOC assertions and estimates. 4. We will perform agreed -upon procedures to test and report on the City's Gann Limit for the years ended June 30, 2009aw ^^� 5. We will make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which we become aware to the City Manager, City Attorney, and the Administrative Service Director. 6. We will provide to those charged with governance the communications required by Statement on Auditing Standards (SAS) No. 114, which conforms to the communication requirements identified to be made to those persons as set forth in the City's request for proposal. 7. We will prepare a letter to the City Council reporting matters dealing with internal control that meet the threshold of being a significant deficiency or material weakness, as defined by SAS No. 112. 8. We. will also prepare a letter to City management that will provide other recolmnendations to the City ensuing from our review of the City's internal control procedures. This letter will address nonreportable conditions (those constructive comments not required to be included in the letter of significant deficiencies to City Council. 13 SECTION G. (CONTINUED 9. We desire to keep our local government clients abreast of new developments affecting local government finance. We will also advise City staff of new accounting developments during the interim/planning stage of each year's audit. We plan on providing additional client training to our clients in our May 2009 client training conference with respect to new GASB pronouncements. 10. We will assist the City in researching questions regarding tax matters involved in the ordinary course of municipal operations and administration. As the eighth largest tax and attest firm in the nation, MHM has extensive expertise in advising on such matters. Our local office has access to both the reference materials and personnel that the firm has identified to fulfill this need for our clients. 11. Finally, we perceive the scope of our work as being advisors to the City of Newport Beach regarding generally accepted accounting principles. Throughout the year, finance personnel of the City, will have access to Mr. Al -hnam, Engagement Shareholder, Mr. Lenton, Engagement Manager, and Ms. Livingston, Field Audit Manager to seek advice in the application of generally accepted accounting principles, the establishment and segregation of funds, advice regarding debt issuance, and other matters relating to the City. Mayer Hoffman McCann P.C. and all key personnel are licensed and in good standing with the California State Board of Accountancy to practice as independent certified public accountants. Additionally, Mayer Hoffman McCann P.C. is independent with respect to the City of Newport Beach within the Government Auditing Standards. Mayer Hoffman McCann P.C. is an Equal Opportunity Employer. Mayer Hoffman McCann P.C. adheres to the strict quality control measures and high professional standards of the Public Company Accounting Oversight Board (PCAOB), the American Institute of Certified Public Accountants (AICPA) and California State Board of Accountancy. MHM is a member of the AICPA's Center for Public Company Audit Firms, Employee Benefit Plan Audit Quality Center, Governmental Audit Quality Center and the AICPA's Private Company Practice Section (POPS). Our professional liability insurance (with policy limits of $5 million per claim and $5 million in the aggregate) is provided by CAMICO, which provides professional liability insurance for most of the audit firms in California. Under the conditions of the current market, CAMICO's insurance is currently rated A -. In addition to CAMICO's assets, our clients are protected by excess insurance that CAMICO has purchased from other carriers. 14 EXHIBIT B CITY OF NEWPORT BEACII, CALIFORNIA Annual Fee Amount Service 2008419 2010 -11 2011 -12 otal City of Newport Beach Financial Audit $34,180 36 2 70,608 City of Newport Beach Single Audit 5,000 5, 5,306 ILJAOC Financial Audit 10,000 1 00 10 4 1 , 2 ILJAOC Single Audit 3,000 3,060 3,121 3,183 Grand Total (not -to- exceed) 52180 24 54-2M These proposed fees are inclusive of any and all out -of- pocket expenses we will incur. The maximum fees contemplate that the books will be closed and ready for audit, that substantially all adjusting entries will be made by City staff prior to. the start of final fieldwork and that City staff will provide supporting schedules and reconciliations for all significant asset and liability balances. If additional time is needed for us to assist the City in the resolution or investigation of accounting errors, discrepancies, or reconciliation issues, assistance in the preparation of year end schedules, or to reflect in our workpapers entries made after the start of the audit, we will perform such additional work at our standard hourly rates indicated below. Our fixed fee pricing contemplates up to two major programs for the single audit. A price adjustment of $2,500 will be made for each additional major program. Schedule of Discounted Hourly Rates Standard Quoted Labor Hourly Hourly Class Rates Discount Rates Shareholder -in- Charge $400 225 175 Technical Reviewer 400 225 175 Engagement Manager 280 155 125 Field Audit Manager 280 155 125 Senior Auditor 180 70 110 Staff Auditors 130 30 100 co 9 ACORD,M CERTIFICATE OF LIABILITY INSURANCE DATE(MM /DD/YYYY) 11/09/2009 PRODUCER (847) 385 -6800 Lemme Insurance Group, Inc. 111 W. Campbell Street 4th Floor Arlington Heights, IL 60005 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. INSURERS AFFORDING COVERAGE I NAIC # INSURED Mayer Hoffman McCann P.C. 11440 Tomahawk Creek Parkway Leawood, KS 66211 INSURERA: Interstate Fire & Casualty Company INSURER B: GENERAL LIABILITY COMMERCIAL GENERAL LIABILITY l CLPIASM?DE l OCCU INSURERC: INSURER D: EACH OCCURRENCE INSURER E: DAMAGE TO RENTED PREMISES Ea occurence COVERAGES 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. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR DD' N R TYPE FIN RAN E POLICY NUMBER POLICY EFFECTIVE DATE MM /DD/Y POLICY EXPIRATION DATE MM /DD/Y LIMITS GENERAL LIABILITY COMMERCIAL GENERAL LIABILITY l CLPIASM?DE l OCCU EACH OCCURRENCE DAMAGE TO RENTED PREMISES Ea occurence $ MEDEXP (Anyone person) � PERSONAL& ADV INJURY $ $ GENERAL-AGGREGATE $ GEN'L AGGREGATE LIMIT APPLIES PER: POLICY JE� LOC PRODUCTS COMP/OP AGG $ _- AUTOMOBILE LIABILITY ANY AUTO ALL OWNED AUTOS SCHEDULED AUTOS HIRED AUTOS NON -OWNED AUTOS COMBINED SINGLE LIMIT (Ea accident) $ BODILY INJURY (Per person) $ BODILY INJURY (Per accident) $ PROPERTY DAMAGE (Per accident) $ GARAGE LIABILITY ANYAUTO AUTO ONLY -EA ACCIDENT $ OTHER THAN EAACC I AUTO ONLY: AGG $ $ EXCESS /UMBRELLA LIABILITY OCCUR 71 CLAIMS MADE DEDUCTIBLE RETENTION $ EACH OCCURRENCE $ AGGREGATE $ $ $ $ EMPLOYSCOMPBILITY ON AND EMPLOYERS' LIABILITY ANY PROPRIETOR/PARTNER/EXECUTIVE OFFICER /MEMBER EXCLUDED? If yes, scribe under SPECIAL PROVISIONS below WC STATU- OTH- T DRY LIMIT ER E.L. EACH ACCIDENT _$_..__________._ $ E.L. DISEASE- EA EMPLOYEE DISEASE - POLICY LIMIT $ I OTHER Professional Liability I ACL- 1000076 11/1/09 11/1/10 dE�.L. $5,000,000 Per Claim and Annual Aggregate DESCRIPTION OF OPERATIONS/ LOCATIONS /VEHICLES / EXCLUSIONS ADDED BY ENDORSEMENT/ SPECIAL PROVISIONS v�ri �rovh r � I wr..✓cn VAIYI.CLLH 1 IVIY City of Newport Beach SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION Attn: Dennis C Danner DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL 30 DAYS WRITTEN 3300 Newport Blvd. NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO DO SO SHALL Newport Beach, CA 92663 IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR AUTHORIZED ArnlZn or mnni max V v. -wv�iv vvnr vnxrwn r�00 Client #: 50265 11IIAVCUnr ACORDTM CERTIFICATE OF LIABILITY INSURANCE DATE(MM /DD/YYYY) ADD'L INSRE 08/06/09 PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION CBIZ - Columbia ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE 7160 Columbia Gateway Drive HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR Suite 303 ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. 09/01/09 09/01/10 Columbia, MD 21046 INSURERS AFFORDING COVERAGE NAIC # INSURED Mayer Hoffman McCann P.C. INSURER A: Hartford Casualty Inc Co 54219 INSURER B: The Hartford 54219 11440 TOMAHAWK CREEK PARKWAY INSURER C: MED EXP (Any one person) LEAWOOD, KS 66211 INSURER D: CLAIMS MADE F1 OCCUR INSURER E: COVERAGES 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. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR ADD'L INSRE TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE DATE MM /DD/YY POLICY EXPIRATION DATE MM /DD/YY LIMITS A GENERAL LIABILITY 42SBABU2483 09/01/09 09/01/10 EACH OCCURRENCE $1,000,000 X COMMERCIAL GENERAL LIABILITY DAMAGE TO SES $300,000 MED EXP (Any one person) $10,000 CLAIMS MADE F1 OCCUR PERSONAL & ADV INJURY $1,000,000 GENERAL AGGREGATE s2,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: POLICY PRO- JECT LOC PRODUCTS - COMP /OP AGG s2,000,000 A AUTOMOBILE LIABILITY ANYAUTO 42SBABU2483 09/01/09 09/01/10 COMBINED SINGLE LIMIT (Ea accident) $1,000,000 ALL OWNED AUTOS SCHEDULED AUTOS BODILY INJURY (Per person) $ HIRED AUTOS X NON -OWNED AUTOS BODILY INJURY (Per accident) $ X PROPERTY DAMAGE (Per accident) $ RAGE LIABILITY AUTO ONLY - EA ACCIDENT $ OTHER THAN EA ACC $ ANY AUTO R $ AUTO ONLY: AGG A EXCESS /UMBRELLA LIABILITY X OCCUR El CLAIMS MADE 42SBABU2483 09/01/09 09/01/10 EACH OCCURRENCE s5,000,000 AGGREGATE $5,000,000 DEDUCTIBLE X RETENTION $ 10 000 $ B WORKERS COMPENSATION AND EMPLOYERS' LIABILITY 42WECTK9683 09101/09 09/01/10 X WCYTATU- OTH- E.L. EACH ACCIDENT _ $1,000,000 ANY PROPRIETOR/PARTNER /EXECUTIVE OFFICER/MEMBER EXCLUDED? If yes, describe under E.L. DISEASE - EA EMPLOYEE $1,000,000 E.L. DISEASE - POLICY LIMIT 1$1,000,000 SPECIAL PROVISIONS below OTHER DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES / EXCLUSIONS ADDED BY ENDORSEMENT / SPECIAL PROVISIONS Certificate Holder is an additional insured under the Commercial General Liaiblity coverage as per written contract. *General Liability - Primary/Non Contributory. *Waiver of Subrogation Included. City of Newport Beach Dennis C Danner 3300 Newport Blvd Newport Beach, CA 92663 -0000 LD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL _3f) DAYS WRITTEN :E TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO DO SO SHALL iE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR AUTHORIZED REPRESENTATIVE CBIZ Insurance Services, Inc. oT c 7Fm3'IUu4z SBA © ACORD CORPORATION 1988 R11 Avrur�r ACORDT. CERTIFICATE OF LIABILITY INSURANCE LTR NSR 08 /15 /07D/YYYY) PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION CBIZ- Fairfax - B Jones ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE 9302 Lee Highway Suite 200 Fairfax, VA 22031 HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. GENERAL LIABILITY v COMMERCIAL GENERAL LIABILITY CLAIMS MADE 5_1 OCCUR 42SBABU2483 703 654 -6333 INSURERS AFFORDING COVERAGE NAIC # INSURED Mayer Hoffman McCann P.C. 11440 TOMAHAWK CREEK PARKWAY INSURER A: Hartford Casualty Ins Co 541219 INSURER B: The Hartford 541219 INSURER C: $1,000,000 LEAWOOD, KS 66211 INSURER D: GENERAL AGGREGATE INSURER E: GEN'L AGGREGATE LIMIT APPLIES PER: POLICY PRO LOC JECT PRODUCTS - COMP /OP AGG l.V V ChAu r-A 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. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. LTR NSR TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE DATE MM /DD/YY POLICY EXPIRATION DATE MWDD/YY LIMITS • GENERAL LIABILITY v COMMERCIAL GENERAL LIABILITY CLAIMS MADE 5_1 OCCUR 42SBABU2483 09/01/07 09/01/08 EACH OCCURRENCE $1,000,000 DAMAGE TO RENTED PREMISES $300,000 MED EXP (Any one person) $10,000 PERSONAL & ADV INJURY $1,000,000 GENERAL AGGREGATE s2,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: POLICY PRO LOC JECT PRODUCTS - COMP /OP AGG s2,000, O00 • AUTOMOBILE LIABILITY ANY AUTO ALL OWNED AUTOS SCHEDULED AUTOS HIRED AUTOS NON -OWNED AUTOS 42SBABU2483 09/01/07 09/01/08 COMBINED SINGLE LIMIT (Ea accident) $1,000,000 BODILY INJURY (Per person) $ X BODILY INJURY (Per accident) $ X PROPERTY DAMAGE (Per accident) $ GARAGE LIABILITY ANY AUTO AUTO ONLY - EA ACCIDENT $ OTHER THAN EA ACC AUTO ONLY: AGG $ $ A EXCESS/UMBRELLA LIABILITY X1 OCCUR F] CLAIMS MADE R X DEDUCTIBLE RETENTION $ 10,000 42SBABU2483 09/01/07 09/01/08 EACH OCCURRENCE $5,000,000 AGGREGATE s5,000,000 $ B EMPLOYERS' LIABILITY WORKERS COMPENSATION AND ANY PROPRIETOR /PARTNER /EXECUTIVE OFFICER/MEMBER EXCLUDED? If yes, describe under SPECIAL PROVISIONS below 42WECGQ8911 09/01/07 09/01/08 X WC LIMIT OTH- E.L. EACH ACCIDENT $1,000,000 E.L. DISEASE - EA EMPLOYEE $1,000,000 E.L. DISEASE - POLICY LIMIT $1,000,000 OTHER DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES / EXCLUSIONS ADDED BY ENDORSEMENT / SPECIAL PROVISIONS Certificate Holder is an additional insured with respect to General Liabiltiy as required by written contract subject to all policy terms, conditions, definitions & exclusions. City of Newport Beach Dennis C Danner 3300 Newport Blvd Newport Beach, CA 92663 V^IYV GLLH 11VIV SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL _3.0_ DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO DO SO SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR REPRESENTATIVES. AUTHORIZED REPRESENTATIVE CBIZ Insurance Services, Inc, ^�� k­ Ire./ 1 Or Z FFIVIZ44yt91 SBJ © ACORD CORPORATION 1988 IMPORTANT If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). 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). DISCLAIMER The Certificate of Insurance on the reverse side of this form does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder, nor does it affirmatively or negatively amend, extend or alter the coverage afforded by the policies listed thereon. MUTUAL INSURANCE COMPANY The CPAs' Insurance Company 1235 Radio Road, Redwood City, CA 94065 -1217 650.802.2500 / 800.652.1772 Fax: 650.802.2700 / 888.4- CAMICO (422 -6426) www.camico.com CERTIFICATE OF INSURANCE Date: December 28, 2005 To: City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 Attn: Dennis C. Danner Re: Mayer Hoffman McCann, P.C. 11440 Tomahawk Creek Parkway Leawood, KS 66211 Policy No.: KSL103721 -01 This is to certify that as of the date hereof a CAMICO policy of accountants professional liability insurance insuring Mayer Hoffman McCann, P.C. as the Named Insured is in effect. The policy period of such policy is 12/31/2005 to 12/31/2006 and the per claim/aggregate limits of liability thereunder are $5,000,000.00 / $5,000,000.00 respectively. Such insurance is subject to cancellation as provided in the policy and to non - renewal by the Company or by the Named Insured. Coverage is subject to all the terms and conditions of the policy. Should any of the above described policies be cancelled before the expiration date thereof, CAMICO will mail 30 days written notice to the certificate holder. CAMICO MUTUAL INSURANCE COMPANY BY n Ric Rosario Vice President of Risk Management CRT - 2005 -LET (rev. 07/05)