HomeMy WebLinkAboutC27546 - Xtnsn - Auditing SvcsCITY OF PALM DESERT Contract No. C27546
FINANCE DEPARTMENT
Staff Report
Request: Authorize an extension of contract with White Nelson Diehl Evans,
LLP, to perform auditing services for one additional year
Submitted By: Paul S. Gibson, Finance Director
Date: December 10, 2015
Contents: Proposal for auditing services for the year ending June 30, 2016
Recommendation
By Minute motion, that the City Council:
1. Authorize the extension of contract with White Nelson Diehl Evans,
LLP to perform auditing services for one additional year; and
2. Authorize the City Manager to execute same.
Committee Recommendation
The Audit, Investment and Finance Committee discussed this item at its November 24,
2015 meeting, and recommended that the City Council authorize the extension.
Background
On March 27, 2008, the City Council approved the selection of White Nelson Diehl
Evans, LLP as independent auditors for the fiscal years ended June 30, 2008 through
June 30, 2014 and subsequent extension on April 24, 2015 for the fiscal year ended
June 30, 2015. Their services include auditing the City, the Housing Authority's
apartment complexes, Desert Willow and the City's office complex. In addition, they
perform reviews on Waste Management, Time Warner Cable, and various hotels on
behalf of the City. Given the impending retirement of the City's Finance Director,
specific attention will also be directed to Investment Policy compliance. Staff finds that
White Nelson Diehl Evans, LLP has a professional staff that is knowledgeable in the
accounting arena and feels comfortable in calling them when an accounting question
arises.
In the year ahead, the City is continuing the conversion of its comprehensive enterprise
software suite, which in the process changes our current processing procedures. Staff
GAFinanceWiamh Ortega\Staff Repo rts\Aud itors\SR - Auditor Contract Extension 121015.Doc
Staff Report
Extension of Contract for Auditing Services for year ending June 30, 2016 — White
Nelson Diehl Evans, LLP
November 24, 2015
Page 2 of 2
feels it is appropriate to retain the independent auditor who is already familiar with the
City's procedures rather than one that not only must understand our procedures, but
also have a working knowledge of the procedural differences between the two systems.
As mentioned above, a thorough review will also be solicited of all financial transactions
overseen by the outgoing Finance Director to assure transparency and accuracy of the
City's records. Therefore, staff believes that our current auditor is best suited to make
the transition for the City since they know how the City's financials function. Staff will go
out to bid for the fiscal year after 2016.
Staff requests that the City Council accept the recommendation of the Audit, Investment
and Finance Committee to authorize an extension of contract with White Nelson Diehl
Evans, LLP to perform auditing services as the City of Palm Desert's auditors for one
additional fiscal year ending June 30, 2016.
Submitted by:
Paul S.Oilison, Finance Director
Approval:
Job M. Wohlmuth, City Manager
G:\Finance\Niamh Ortega\Staff Reports\Auditors\SR - auditor contract extension 121015.doc
November 10, 2015
Mr. Paul Gibson
Director of Finance
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Dear Mr. Gibson:
We are pleased to present our proposal to continue to serve as independent auditors for the City of
Palm Desert for the year ending June 30, 2016.
White Nelson Diehl Evans LLP is a California certified public accounting and consulting firm with
offices in Irvine, Carlsbad and Escondido. Our firm has specialized in providing services to the
governmental industry for over 80 years and has no intentions of discontinuing these services.
• A significant part of our practice is devoted to providing professional services to the governmental
industry and over the past year, the firm provided services to approximately 100 governmental
organizations and on an annual basis our firm issues over 150 reports on audits of governmental
agencies including, Cities, the Successor Agency to Redevelopment Agencies, Special Districts
and Joint Power Authorities.
• Our firm has devoted a substantial amount of time and resources in order to provide governmental
agencies with quality audits. Our knowledge of the industry is best demonstrated by the fact that
our clients who apply for the "Certificate of Achievement in Financial Reporting" issued by the
Government Finance Officers Association (GFOA) consistently receive that award.
• We are in a professional alliance with BDO Seidman, a National Accounting Firm, and a network
of accounting firms allowing us the ability to provide quality attestation services. The BDO
Alliance provides us access to BDO's personnel and technical resources which allows White
Nelson Diehl Evans LLP to deliver the range of services and capabilities of a large national firm,
including the use of specialists to support the needs of our clients.
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Ofces located itt Orange and San Diego Counties
The scope of our services for the year ending June 30, 2016 would be as follows:
• A financial audit of the basic financial statements of the City of Palm Desert in accordance in
with auditing standards generally accepted in the United States of America and Government
Auditing Standards issued by the Comptroller General of the United States, to be included in
the Comprehensive Annual Financial Report (CAFR).
• An audit of the Successor Agency's transactions for inclusion in the City's CAFR.
• An audit of the Palm Desert Housing Authority's accounting records located in Lodi,
California, for inclusion in the City's CAFR.
• Compliance testing for 100 tenant files of the Palm Desert Housing Authority.
• SB 341 requirement for financial and compliance audit of the Low and Moderate Income
Housing Asset Fund for inclusion in the City's CAFR.
• An agreed -upon procedures review of the City's compliance with the Investment Policy.
• A Single Audit of Federal Grants to be performed to meet the requirements of the U.S. Office
of Management and Budget (OMB) Circular A-133.
• An agreed -upon procedures review of the calculation of the City's GANN Appropriations
Limit (GANN), as required by Section 1.5 of Article XIIIB of the California Constitution.
• A management letter containing any comments or recommendations resulting from our review
of the systems of internal controls in connection with the financial audits.
• A report communicating information related to the audit to those in charge of governance at the
conclusion of the audits.
Our goal is to provide the City with the highest quality of service, including a CAFR which meets all
required reporting standards. We are confident that our service and experience will be of benefit to the
City and will provide added value over and above the performance of the audit itself. Throughout the
year, you should feel comfortable in calling us for advice regarding accounting and auditing matters,
as we are never too busy to meet the needs of our clients.
Enclosed is an engagement letter to provide the audit services for the year ending June 30, 2016. A
separate engagement letter will be required for the agreed -upon procedures review of the City's
compliance with the Investment Policy.
I thank the City for the opportunity to present our proposal. Please feel free to contact me at
(714) 978-1300 if you have any questions. This proposal constitutes a firm and irrevocable offer for
60 days from the date of this letter. I am authorized to represent our firm, and bind the firm to a
contract.
Very truly yours,
WHITE NELSON DIEHL EVANS LLP
Nitin P. Patel, CPA
Engagement Partner
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Contract No. C27546
November 10, 2015
Mr. Paul Gibson
Director of Finance
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Dear Mr. Gibson:
We are pleased to confirm our understanding of the services we are to provide the City of Palm Desert,
the Successor Agency to the Palm Desert Redevelopment Agency, Palm Desert Housing Authority and
the Palm Desert Recreational Facilities Corporation (the City) as of and for the year ending
June 30, 2016. We will audit the financial statements of the governmental activities, the business -type
activities, the discretely presented component unit, each major fund, and the aggregate remaining fund
information, which collectively comprise the basic financial statements, of the City as of and for the
year ending June 30, 2016.
Accounting standards generally accepted in the United States of America provide for certain required
supplementary information (RSI), such as management's discussion and analysis, to supplement the
City's basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic or historical context. As part of our engagement, we will apply certain limited
procedures to the City's RSI in accordance with auditing standards generally accepted in the United
States of America. These limited procedures will consist of inquiries of management regarding the
methods of preparing the information and comparing the information for consistency with
management's responses to our inquiries, the basic financial statements, and other knowledge we
obtained during our audit of the basic financial statements. We will not express an opinion or provide
any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance. The following RSI is required by generally
accepted accounting principles and will be subjected to certain limited procedures, but will not be
audited:
1) Management's Discussion and Analysis.
2) Schedule of Proportionate Share of the Net Pension Liability and Related Ratios
3) Schedule of Contributions - Defined Benefit Pension Plan
4) Schedule of Funding Progress - Other Post -Employment Benefit Plan
5) Budgetary Comparison Schedules - General and Major Special Revenue Funds.
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located ut Orange and San Diego Counties
Contract No. C27546
We have also been engaged to report on supplementary information other than RSI that accompanies
the City's financial statements. We will subject the following supplementary information to the
auditing procedures applied in our audit of the financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the financial statements or to the financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America and will provide an opinion on it in relation to the financial statements as a whole:
1) Combining and individual fund financial statements.
2) Schedule of expenditures of federal awards.
The following other information accompanying the basic financial statements will not be subjected to
the auditing procedures applied in our audit of the financial statements, and our auditors' report will
not provide an opinion or any assurance on that other information:
1) Introductory Section.
2) Statistical Section.
Audit Objectives:
The objective of our audit is the expression of opinions as to whether your basic financial statements
are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting
principles and to report on the fairness of the supplementary information referred to in the third
paragraph when considered in relation to the financial statements as a whole. The objective also
includes reporting on:
1) Internal control related to the financial statements and compliance with the provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a material
effect on the financial statements in accordance with Government Auditing Standards.
2) Internal control related to major programs and an opinion (or disclaimer of opinion) on
compliance with laws, regulations, and the provisions of contracts or grant agreements that
could have a direct and material effect on each major program in accordance with the Single
Audit Act Amendments of 1996 and OMB Circular A-133, Audits of States, Local
Governments, and Non -Profit Organizations.
The Government Auditing Standards report on internal control over financial reporting and on
compliance and other matters will include a paragraph that states (1) that the purpose of the report is
solely to describe the scope of testing of internal control and compliance and the results of that testing,
and not to provide an opinion on the effectiveness of the City's internal control or on compliance, and
(2) that the report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the City's internal control and compliance.
The OMB Circular A-133 report on internal control over compliance will include a paragraph that
states that the purpose of the report on internal control over compliance is solely to describe the scope
of testing of internal control over compliance and the results of that testing based on the requirements
of OMB Circular A-133. Both reports will state that the report is not suitable for any other purpose.
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Contract No. C27546
Audit Objectives (Continued):
Our audit will be conducted in accordance with auditing standards generally accepted in the United
States of America; the standards for financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996;
and the provisions of OMB Circular A-133, and will include tests of accounting records, a
determination of major program(s) in accordance with Circular A-133, and other procedures we
consider necessary to enable us to express such opinions. We will issue written reports upon
completion of our Single Audit. Our reports will be addressed to the City Council. We cannot provide
assurance that unmodified opinions will be expressed. Circumstances may arise in which it is
necessary for us to modify our opinions or add emphasis -of -matter or other -matter paragraphs. If our
opinions on the financial statements or the Single Audit compliance opinions are other than
unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to
complete the audit or are unable to form or have not formed opinions, we may decline to express
opinions or issue reports, or may withdraw from this engagement.
Audit Procedures - General:
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; therefore, our audit will involve judgment about the number of transactions to be
examined and the areas to be tested. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements. We will plan
and perform the audit to obtain reasonable rather than absolute assurance about whether the financial
statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial
reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that
are attributable to the City or to acts by management or employees acting on behalf of the City. Because
the determination of abuse is subjective, Government Auditing Standards do not expect auditors to
provide reasonable assurance of detecting abuse.
Because of the inherent limitations of an audit, combined with the inherent limitations of internal
control, and because we will not perform a detailed examination of all transactions, there is a risk that
material misstatements or noncompliance may exist and not be detected by us, even though the audit is
properly planned and performed in accordance with U.S. generally accepted auditing standards and
Government Auditing Standards. In addition, an audit is not designed to detect immaterial misstatements
or violations of laws or governmental regulations that do not have a direct and material effect on the
financial statements or major programs. However, we will inform the appropriate level of management of
any material errors or any fraudulent financial reporting or misappropriation of assets that come to our
attention.
We will also inform the appropriate level of management of any violations of laws or governmental
regulations that come to our attention, unless clearly inconsequential, and of any material abuse
that comes to our attention. We will include such matters in the reports required for a Single Audit.
Our responsibility as auditors is limited to the period covered by our audit and does not extend to any
later periods for which we are not engaged as auditors. Our procedures will include tests of
documentary evidence supporting the transactions recorded in the accounts, and may include tests
of the physical existence of inventories, and direct confirmation of receivables and certain
other assets and liabilities by correspondence with selected individuals, funding sources,
creditors, and financial institutions. We will request written representations from your attorneys
as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion
of our audit, we will require certain written representations from you about your responsibilities for
the financial statements; schedule of expenditures of federal awards; federal award programs;
compliance with laws, regulations, contracts, and grant agreements; and other responsibilities
required by general accepted auditing standards.
Contract No. C27546
Audit Procedures - Internal Controls:
Our audit will include obtaining an understanding of the City and its environment, including internal
control, sufficient to assess the risks of material misstatement of the financial statements and to design
the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test
the effectiveness of certain controls that we consider relevant to preventing and detecting errors and
fraud that are material to the financial statements and to preventing and detecting misstatements
resulting from illegal acts and other noncompliance matters that have a direct and material effect on the
financial statements. Our tests, if performed, will be less in scope than would be necessary to render an
opinion on internal control and, accordingly, no opinion will be expressed in our report on internal
control issued pursuant to Government Auditing .Standards.
As required by OMB Circular A-133, we will perform tests of controls over compliance to evaluate the
effectiveness of the design and operation of controls that we consider relevant to preventing or
detecting material noncompliance with compliance requirements applicable to each major federal
award program. However, our tests will be less in scope than would be necessary to render an opinion
on those controls and, accordingly, no opinion will be expressed in our report on internal control issued
pursuant to OMB Circular A-133.
An audit is not designed to provide assurance on internal control or to identify significant deficiencies
or material weakness. However, during the audit, we will communicate to management and those
charged with governance internal control related matters that are required to be communicated under
AICPA professional standards, Government Auditing Standards, and OMB Circular A-133.
Audit Procedures - Compliance:
As part of obtaining reasonable assurance about whether the financial statements are free of material
misstatement, we will perform tests of the City's compliance with provisions of applicable laws,
regulations, contracts, and agreements, including grant agreements. However, the objective of those
procedures will not be to provide an opinion on overall compliance and we will not express such an
opinion in our report on compliance issued pursuant to Government Auditing Standards.
OMB Circular A-133 requires that we also plan and perform the audit to obtain reasonable assurance
about whether the auditee has complied with applicable laws and regulations and the provisions of
contracts and grant agreements applicable to major programs. Our procedures will consist of test of
transactions and other applicable procedures described in the OMB Circular A-133 Compliance
Supplement for the types of compliance requirements that could have a direct and material effect on
each of the City's major programs. The purpose of those procedures will be to express an opinion on
the City's compliance with requirements applicable to each of its major programs in our report on
compliance issued pursuant to OMB Circular A-133.
Other Services:
We will also assist in preparing the financial statements, schedule of expenditures of federal awards
and related notes of the City in conformity with U.S. generally accepted accounting principles and
OMB Circular A-133 based on information provided by you. These nonaudit services do not
constitute an audit under Government Auditing Standards and such services will not be conducted in
accordance with Government Auditing Standards.
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Contract No. C27546
Management Responsibilities:
Management is responsible for (1) establishing and maintaining effective internal controls, including
internal controls over compliance, and for evaluating and monitoring ongoing activities, to help ensure
that appropriate goals and objectives are met; (2) following laws and regulations; (3) ensuring that
there is reasonable assurance that government programs are administered in compliance with
compliance requirements; and (4) ensuring that management is reliable and financial information is
reliable and properly reported. Management is also responsible for implementing systems designed to
achieve compliance with applicable laws, regulations, contracts, and grant agreements. You are also
responsible for the selection and application of accounting principles; for the preparation and fair
presentation of the financial statements, schedule of expenditures . of federal awards, and all
accompanying information in conformity with U.S. generally accepted accounting principles; and for
compliance with applicable laws and regulations and the provisions of contracts and grant agreements.
Management is also responsible for making all financial records and related information available to us
and for the accuracy and completeness for that information. You are also responsible for providing us
with (1) access to all information of which you are aware that is relevant to the preparation and fair
presentation of the financial statements, (2) additional information that we may request for the purpose
of the audit, and (3) unrestricted access to persons within the City from whom we determine it
necessary to obtain audit evidence.
Your responsibilities also include identifying significant vendor relationships in which the vendor has
responsibility for program compliance and for the accuracy and completeness of that information.
Your responsibilities include adjusting the financial statements to correct material misstatements and
confirming to us in the management representation letter that the effects of any uncorrected
misstatements aggregated by us during the current engagement and pertaining to the latest period
presented are immaterial, both individually and in the aggregate, to the financial statements taken as a
whole.
You are responsible for the design and implementation of programs and controls to prevent and detect
fraud, and for informing us about all known or suspected fraud affecting the City involving
(1) management, (2) employees who have significant roles in internal control, and (3) others where the
fraud could have a material effect on the financial statements. Your responsibilities include informing
us of your knowledge of any allegations of fraud or suspected fraud affecting the City received in
communications from employees, former employees, grantors, regulators, or others. In addition, you
are responsible for identifying and ensuring that the government complies with applicable laws,
regulations, contracts, agreements, and grants. Management is also responsible for taking timely and
appropriate steps to remedy fraud and noncompliance with provisions of laws, regulations, contracts,
and grant agreements, or abuse that we report. Additionally, as required by OMB Circular A-133, it is
management's responsibility to follow up and take corrective action on reported audit findings and to
prepare a summary schedule of prior audit findings and a corrective action plan.
Contract No. C27546
Management Responsibilities (Continued):
You are responsible for identifying all federal awards received and understanding and complying with
the compliance requirements and for the preparation of the schedule of expenditures of federal awards
(including notes and noncash assistance received) in conformity with OMB Circular A-133. You
agree to include our report on the schedule of expenditures of federal awards in any document that
contains and indicates that we have reported on the schedule of expenditures of federal awards. You
also agree to make the audited financial statements readily available to intended users of the schedule
of expenditures of federal awards no later than the date the schedule of expenditures of federal awards
is issued with our report thereon. Your responsibilities include acknowledging to us in the written
representation letter that (1) you are responsible for presentation of the schedule of expenditures of
federal awards in accordance with OMB Circular A-133; (2) you believe the schedule of expenditures
of federal awards, including its form and content, is fairly presented in accordance with
OMB Circular A-133; (3) the methods of measurement or presentation have not changed from those
used in the prior period (or, if they have changed, the reasons for such changes); and (4) you have
disclosed to us any significant assumptions or interpretations underlying the measurement or
presentation of the schedule of expenditures of federal awards.
You are also responsible for the preparation of the other supplementary information, which we have
been engaged to report on, in conformity with U.S. generally accepted accounting principles (GAAP).
You agree to include our report on the supplementary information in any document that contains and
indicates that we have reported on the supplementary information. You also agree to make the audited
financial statements readily available to users of the supplementary information no later than the date
the supplementary information is issued with our report thereon.
Your responsibilities include acknowledging to us in the written representation letter that (1) you are
responsible for presentation of the supplementary information in accordance with GAAP; (2) you
believe the supplementary information, including its form and content, is fairly presented in
accordance with GAAP; (3) the methods of measurement or presentation have not changed from those
used in the prior period (or, if they have changed, the reasons for such changes); and (4) you have
disclosed to us any significant assumptions or interpretations underlying the measurement or
presentation of the supplementary information.
Management is responsible for establishing and maintaining a process for tracking the status of audit
findings and recommendations. Management is also responsible for identifying and providing report
copies of previous financial audits, attestation engagements, performance audits, or other studies
related to the objectives discussed in the Audit Objectives section of this letter. This responsibility
includes relaying to us corrective actions taken to address significant findings and recommendations
resulting from those audits, attestation engagements, performance audits, or studies. You are also
responsible for providing management's views on our current findings, conclusions, and
recommendations, as well as your planned corrective actions, for the report, and for the timing and
format for providing that information.
You agree to assume all management responsibilities relating to the financial statements, related notes,
and any other nonaudit services we provide. You will be required to acknowledge in the management
representation letter our assistance with preparation of the financial statements, schedule of
expenditures of federal awards and related notes and that you have reviewed and approved the
financial statements, schedule of expenditures of federal awards and related notes prior to their
issuance and have accepted responsibility for them. Further, you agree to oversee the nonaudit
services by designating an individual, preferable from senior management, with suitable skill,
knowledge, or experience; evaluate the adequacy and results of those services; and accept
responsibility for them.
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Contract No. C27546
Management Responsibilities (Continued):
With regard to the electronic dissemination of audited financial statements, including financial
statements published electronically on your website, you understand that electronic sites are a means to
distribute information and, therefore, we are not required to read the information contained in these
sites or to consider the consistency of other information in the electronic site with the original
document.
Audit Administration, Fees and Other:
Noted below is a listing of work required by City staff to assist in the audit.
1. Technical assistance in familiarizing our staff with:
• The flow of information through the various departments and accounting systems.
• Reports generated by your accounting system.
• The system of internal controls.
• Controls established to monitor compliance with federal grants.
2. Preparation of trial balances for all funds, after posting of all year end journal entries.
3. Preparation of schedules supporting all major balance sheet accounts, and selected revenue and
expenditure accounts.
4. Typing of all confirmation requests.
5. Pulling and refiling of all supporting documents required for audit verification.
6. If applicable, assistance with the preparation of the CAFR and notes to the financial statements,
including:
a. Determination of major funds.
b. Determination of general and program revenues and allocation of program revenues to:
1. charges for services,
2. operating grants and contributions, and
3. capital grants and contributions.
c. Determining components of net position into net investment in capital assets, restricted and
unrestricted position.
d. Assistance in determining the amounts to be reported (1) in the Reconciliation of the Balance
Sheet of Governmental Funds to the Statement of Net Position and (2) in the Reconciliation of
the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental
Funds to the Statement of Activities.
7. Preparation of the management's discussion and analysis, transmittal letter and all statistical tables
for the CAFR.
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Contract No. C27546
Audit Administration, Fees and Other (Continued):
Our maximum annual fees for the year ending June 30, 2016 are as follows:
City:
Audit (1)
$ 38,973
Financial Statement Preparation
5,845
Recreation Facilities Corporation:
Audit
7,916
Financial Statement Preparation
2,558
Single Audit
5,359
Gann Limit Verification"w
365
Redevelopment Agency/Successor Agency - Audit:
Palm Desert Housing Authority (2)
4,202
Palm Desert Housing Authority (3)
6,303
Audit of Successor Agency's transactions for
inclusion in the City's CAFR (4)
8,555
SB341 Requirement for financial and compliance
audit of the Low and Moderate Income Housing Asset Fund
5,100
Agreed -upon Procedures Review - Compliance with
Investment Policy
7,500
1. Includes audit of the financial records at Desert Willow Golf Course.
2. Audit of the Palm Desert Housing Authority accounting records located in Lodi, California.
3. Compliance testing for 100 tenant files of the Palm Desert Housing Authority.
4. Audit of the activity of the Successor Agency's financial transactions for fiscal year 2016 for
inclusion in the CAFR of the City of Palm Desert, and additional audit work for the separate audit
of the Successor Agency.
The maximum annual fees stipulated herein contemplate that conditions satisfactory to the normal
progress and completion of the examination will be encountered and the City accounting personnel
will furnish the agreed upon assistance in connection with the audit. However, if unusual
circumstances are encountered which make it necessary for us to do additional work; we shall report
such conditions to the responsible City officials and provide the City with an estimate of the additional
accounting fees involved.
At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection
Form that summarizes our audit findings. It is management's responsibility to submit the reporting
package (including financial statements, schedule of expenditures of federal awards, summary
schedule of prior audit findings, auditors' reports, and corrective action plan) along with the Data
Collection Form to the federal audit clearinghouse. We will coordinate with you the electronic
submission and certification. If applicable, we will provide copies of our report for you to include with
the reporting package you will submit to pass -through entities. The Data Collection Form and the
reporting package must be submitted within the earlier of 30 days after receipt of the auditors' reports
or nine months after the end of the audit period, unless a longer period is agreed to in advance by the
cognizant or oversight agency for audits.
We will provide copies of our reports to the City; however, management is responsible for distribution
of the reports and the financial statements. Unless restricted by law or regulation, or containing
privileged and confidential information, copies of our reports are to be made available for public
inspection.
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Contract No. C27546
Audit Administration, Fees and Other (Continued):
The audit documentation for this engagement is the property of White Nelson Diehl Evans LLP and
constitutes confidential information. However, subject to applicable laws and regulations, audit
documentation and appropriate individuals will be made available upon request and in a timely manner
to grantor agencies or their designees, a federal agency providing direct or indirect funding, or the
U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit
findings, or to carry out oversight responsibilities. We will notify you of any such request.
If requested, access to such audit documentation will be provided under the supervision of White
Nelson Diehl Evans LLP personnel. Furthermore, upon request, we may provide copies of selected
audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute
the copies or information contained therein to others, including other governmental agencies.
In accordance with our firm's current record retention policy, all of your original records will be
returned to you at the conclusion of this engagement. Our audit documentation files will be kept for a
period of seven years after the issuance of the audit report. All other files will be kept for as long as
you retain us as your auditors. However, upon termination of our service, all records will be destroyed
after a period of seven years. Physical deterioration or catastrophic events may further shorten the life
of these records. The audit documentation files of our firm are not a substitute for your original
records.
Government Auditing Standards require that we provide you with a copy of our most recent external
peer review report and any letter of comment, and any subsequent peer review reports and letters of
comment received during the period of the contract. Our most recent peer review report accompanies
this letter.
We appreciate the opportunity to be of service to the City of Palm Desert and believe this letter
accurately summarizes the significant terms of our engagement. If you have any questions, please let
us know. If you agree with the terms of our engagement as described in this letter, please sign the
enclosed copy and return it to us.
Very truly yours,
WHITE NELSON DIEHL EVANS LLP
Nitin P. Patel, CPA
Engagement Partner
RESPONSE:
This letter correctly sets forth the understanding of the City of Palm Desert.
By —
Title
Date
Contract No. C27546
fl4Heidenreich & Heidenreich, CPAs, PLLC
10201 S. 51n Street, Suite #170
Phoenix, AZ 85044
(480)704-6301 fax 785-4619
System Review Report
August 3, 2012
To the Owners of
White Nelson Diehl Evans, LLP
and the Peer Review Committee of the CA Society of CPAs
We have reviewed the system of quality control for the accounting and auditing practice of White
Nelson Diehl Evans, LLP (the firm) in effect for the year ended March 31, 2012. Our peer review was
conducted in accordance with the Standards for Performing and Reporting on Peer Reviews
established by the Peer Review Board of the American Institute of Certified Public Accountants. The
firm is responsible for designing a system of quality control and complying with it to provide the firm
with reasonable assurance of performing and reporting in conformity with applicable professional
standards in all material respects. Our responsibility is to express an opinion on the design of the
system of quality control and the firm's compliance therewith based on our review. The nature,
objectives, scope, limitations of, and the procedures performed in a System Review are described in
the standards at www.aicpa.org/prsummary.
As required by the standards, engagements selected for review included engagements performed
under the Govemment Auditing Standards and audits of employee benefit plans.
In our opinion, the system of quality control for the accounting and auditing practice of White Nelson
Diehl Evans, LLP in effect for the year ended March 31, 2012, has been suitably designed and
complied with to provide the firm with reasonable assurance of performing and reporting in conformity
with applicable professional standards in all material respects. Firms can receive a rating of pass,
pass with deficiency(ies) or fail. White Nelson Diehl Evans, LLP has received a peer review rating of
pass.
Heidenreich & Heidenreich, CPAs, PLLC