HomeMy WebLinkAboutC27541/C27541A - Audit Svcs for FYE 06/30/ 09 & TOT '08 Contract No. C27541A
CITY OF PALM DESERT
FINANCE DEPARTMENT
STAFF REPORT
REQUEST: APPROVE THE CONTRACT WITH DIEHL, EVANS & COMPANY, LLP
TO PERFORM AUDITING SERVICES FOR THE CITY OF PALM
DESERT, REDEVELOPMENT AGENCY, AND THE PALM DESERT
RECREATIONAL FACILITIES CORPORATION FOR THE FISCAL
YEAR ENDING JUNE 30, 2009, AND THE TRANSIENT OCCUPANCY
TAX AUDIT OF THREE HOTELS FOR CALENDAR YEAR 2008
DATE: MAY 7, 2009
CONTENTS: ONE (1) COPY OF PROPOSED AUDITING FEES
ENGAGEMENT LETTER
Recommendation:
By Minute motion, that the City Council:
1. Approve Contract No. C27540 with Diehl, Evans & Company, LLP to
perform auditing services for the City of Palm Desert, Redevelopment
Agency and Palm Desert Recreational Facilities Corporation for the
year ended June 30, 2009; and
2. Perform the Transient Occupancy Tax audit on three hotels for the
calendar year 2008.
Background:
This is the second year of the existing seven-year contract. Their services include
auditing the City, Redevelopment Agency, 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. Staff finds that Diehl, Evans & Company has a professional staff that is
knowledgeable in the accounting arena and feels comfortable in calling them when an
accounting question arises.
Information on the proposed contract was reviewed by the Audit, Finance and
Investment Committee on April 28, 2009 and they recommended that it be forwarded to
the City Council for review and approval.
Staff Report
Approval of Contract No. C27540 — Diehl, Evans & Company, LLP
May 7, 2009
Page 2 of 2
Staff requests that the City Council approve Contract No. C27540 with Diehl, Evans &
Company, LLP to perform auditing services for the City of Palm Desert, Redevelopment
Agency and Palm Desert Recreational Facilities Corporation for the fiscal year ending
June 30, 2009, and to perform the Transient Occupancy Tax audit for the calendar year
2008.
Submitted By: Approved by:
Paul S. Gibson, Director of Finance hn M. Wohlmuth, City Manager
CITY COUNCIL AC�TION
APPROVED � DENiED
RECEIVED OTHER
MF,FTI G DATE r-�"
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Ori�in�) on File with Cit� lerk's Oftice
W:IAgenda Items12009-05-07L4uditing Services-Dieh/Evans.docx
DIEHL, EVANS � COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS dr CONSULTANTS
tvfICHAEL R.LUDIN,CPA
� q PnRTNERSHIP iNCt,UDING ACCUUNTANCY CORFORA?IONS CRAIG W,SPRAi:ER CPA
NItiN P.PA7'EI_CPA
� R(N3ER7 7.CALLANAN,CPA
5 CORPORATE PARK,SUITE 300 •Ty0'b1AS M6AERL()WS(Ci,CPA
1RV1NE,CALIFORNLA 9260b-5165 *HARVEY 7.SCHROEDER,CPA
(949)399-06(?0•FAX(449)399-0610 +WiLLtAM�C.PENTZ,CPA
www.diehievans.com (� (�
� March 23,2VO7 'APROFESSION�I,COAPORATION
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 Palan Desert,
the Palm Desert Redevelopment Agency, and the Palm Desert Recreation Facilities Corporation (the
City) for the year ending June 30, 2009. We will audit the financial s�tatemen.is of fihe governznental
activities, the business-type activities, the discretely presented component unit, each major fund, and
the aggregate remaining fund 'tnformation, which colleetively comprzse the basic financial statements,
of the City as of and for the year ending June 30, 2009.Accounting standards generally accepted in the
United States of America provide for certain required supplementary information (RSI), such as
management's discussion and analysis (MD&A), to accampany the City's basic financial statements.
As part of our enga�ement, we will apply certain limited procedures to the City's RSI. These Iimited
procedures will cansist principally of inquiries of management regaiding the methods of ineasurement
and presentation, which management is responsible for affirming to us in its representation letter.
Unless we encounter prablems with the presentation of the RSI or with procedures relating to it, we
will disclaim an opinion on it, 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} Budgetary Comparison Schedules - General and Major Special Revenue Funds.
Supplementary information other than RSI, such as combining and individual fund financial
statements, also accompanies the City's basic financial statements. We will subject the following
supplementary information to the auditing proceduzes applied in our audit of the 6asic financial
statements and will provide an opinion on it in relation to the basic financial statements:
1) Combining and individual nonmajor fund financial statements.
2) Schedule of expenditures of federal awards.
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OT[�IER OFFICES AT� 2965 ROOSEVELT STREET 613 W.VALLEY PARKWAY,SU]TE 330
CARLSHAD,CALff'URNIA 92008-2389 ESCONllIDO,CALIFORNIA 92025-2598
(740)'729-2343•FAX(760)729-2234 (7b0)741-3141.FAX(76U)741-9890
Mr.Paul Gibson Ntarch 23, 2009
City of Palm Desert Page 2
The faliowing additional information accompanying the basic financial statements will not be
subjected to the auditin�prQcedures applied in.aur audit of the financial statements, and for which our
auditor's repor!will disclaim an opinion:
1) Introductory Section.
2) Statistical Section.
Audit Objectives:
The objective of our audit is the expression of opinions as to whether your basic f nancial statements
are fairly presented, in all material respects, in conformity with accounting principles generally
accepted in the United States of America and to report on �he fairness of the additional information
referred to in the first paragraph when considered in relation to the basic financial statements taken as a
whole. The objective also includes reporting on:
• Internal control related to the financial statements and compliance with the provisions of
applicable laws, regulations, contracts, agreements, and grants, noncompliance with which
could have a material effect on the .financial statements in accordance with Government
Auditing Standards.
• Internal control related to major programs and an opinian (or diselaimer of opinion) on
compliance with laws, regulations, and the provisions of contracts or grant agreements that
couid have a direct and material effect on each inajor program in accordance with the Single
Audi.t Act Amendments of 1996 and �MB Ci.rcul.ar A-133, Audits of States. Local
Governments and Non-Profit Or�aruzations.
The reports on internal control and compliance will each include a statement that the report is intended
for the information and use of the audit committee, management, specific legislative or regulatory
bodies, federal awarding agencies, and if applicable,pass-througll entities and is not intended to be and
should not be used by anyone other than these specified parties.
Our audit will be conducted in accordance wi�h auditing standards generaliy accepted in the United
States of America; the standards for Fnancial audits contained in Government Auditin� Standards,
issued by the Comptrollez General of the United States; the Single Audit Act Amendments of 1996;
and the provisions of OMB Circular A-133, and will inetude tests aF accounting recards, a
determination of major pro�;ram(s) in accordance with Circular A-133, and other procedures we
consider necessary to enable us to express such opinions and to render the required reports. If our
opinions on the financial statements or the Single Audit compliance opinions are other than
unqualified, we will fully discuss the reasons witla you in advance. If, for any reason, we are unable to
complete the audit or are unable ta form or have not formed opinions, we may decline to express
opinions or to issue a report as a result of this engagement.
M.r. Paul Gibson March 23,2009
City of Palm Uescrt Page 3
Manageraent Responsibilities:
Management is respon.sible for the basic financial statements and all accompanying information as
well as all representations contained therein. Managenr�ent is also responsible for preparation of the
schedule of expenditures of federal awards in accordance with the requirements of OMB Ci.rcular A-
133. As part of the audit, we will assist with preparation o:f your financial statements, schedule of
expenditures of federal awards, and related notes. You are responsible for making a11 management
decisions and performing alI nnanagement functions relating to the financial statements, schedule of
expenditures of federal awards, and related notes and for accepting full responsibility for such
decisions. You will be required to acknowledge in the management representation tetter our assistance
with preparation of the financial statements and the schedule of expenditures of federal awards 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 axe
required to designate an indivi.dual with suitable skill, kn�wl�dge, or experience to oversee any
nonaudit serviccs we provide and for evaluating the adequacy and results of those services and
accepting responsibility for them.
Management is responsible for establishing and maintaining effective internal controls, including
internal controls over compliance, and for monitoring ongoing act�vities, tn help ensure that
appropriate goals and objectives are met. Ynu are also responsible for the selection and application of
accounting principles; for the fair presentation in the financial statements of the respective financial
positi.on of the governmental activitzes, the buszness-type activities, the aggregate discretely presented
component units, each majar fund, and the aggregate remaining fund information of the City and the
respective changes in financial position and, where applicable, ca.sh flows in conformity witl� LI.S.
generally accepted accounting principles; and for compliance with applicable laws and regulations and
the provisions�f contracts and grant agreements.
Mana�;ement is also responsible for making all financial records a.nd related information available to us
and for ensuring that management and financial information is reliable and properly recorded. Your
responsihilities also include, including identifying significant vendor relationships in which the vendor
has responsibility for program compliance and for the accuracy and completeness af that information.
Your responsibilities include adjusting the Fnancial statements to correet material misstatements and
- confirming to us in the representation letter that the effects of any uncorrected misstatements
aggregated by us during the current en.gagement and pertainin� to the latest period presented are
i.mmaterial,both individually and in the aggregate,to the f nancial 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 abnut all known or suspected fraud or illegal acts affecting the government
involving (1)management, (2}employees who have significant roles in internal control, and (3)athers
where the fraud or illegal acts could have a material effect on the financial statements. Your
responsibilifiies include infornung us of your knowlec3ge of any allegations of fraud or suspected fraud
affecting the gavernment received in coznmunications fiom employees, former employees, gxantors,
regulators, or others. In addition, you are responsible for identifying and ensuring that the entity
complies with applicable laws, regulations, contracts, agreeznents, and grants. Additionally, as required
by OlVIB Circular A-I33, it is management's responsibility to follow up and take conective action on
reporled audit findings and to prepare a summary schedule of prior audit findings and a corrective
action plan.
Mr. Paul Gibson March 23, 2009
City of Palm Desert Page 4
Management Responsibilities (Continued}:
Managezx�ent is responsible for establishing and maintaining a process for tracking the status of audit
findings and recommendations. Management is also responsible for identifying :for us 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 i.nformation.
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. We will plan a.nd 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 fnancial reporting, (3}misappropriation of assets, or
(4)violations of laws or governmental regulatians that are attributable to the entity or to acts by
management or employees acting an behalf of the entity. Because the deterrnination of abuse is
subjective, Government Auditinu Standards do not expect auditors to provide reasonable assurance of
detecting abuse.
Because an audit is designed to provide reasonable,but not absolute assurance and because we will not
perform a detailed examinatian of all transactions, there is a risk that material misstatements or
nancompliance may exist and not be detected by us. In addition, an audit is not designed to detect
imrnaterial misstatements or violations of laws nr governmental regulations that do not have a direct
and material effect on the financial statements or major programs. However, we will inform you of any
material ezrors and any fraudulcnt financial reporting or misappropriation of assets that come to our
attention. We will also inform you of any violations of laws or governmental regul.ations that come to
our attention, unless clearly inconsequential. VJe will inciude such matters in the reports required far a
Singie Audit. Our responsibility as audit�rs is limited to the period covered by our audit and does not
extend to any later periods for which we are�zot engaged a.s auditars.
Our procedures will include tests of documentaxy evidence supporting the transactions recordec3 in the
accounts, and may include tests of the physical existence of inventories, an.d direct confirmation of
receivables and certain other assets and liabilities by correspondence with selected individuals,
creditors, and financial institutions. We will request written representations from your attorneys as part
af the engagement, and they may bill you for responding to this inquiry. At the conclusion of our
audit, we will also require certain written representations from yau about the financial statements and
related matters.
Mr. Paul Gibson March 23, 2009
City of Palm Desert Page 5
Audit Procedures-Internal Contrals:
Our audit will inciude obtaining an understanding a£the entity 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 preven.tin� and deteeting errors and
fraud that are material fio the financial statements and to preventin� and detecting misstatements
r�sulting from illegal acts and other noncompliance matters that have a direct and matexial effect an the
financial statements. Our tests, if performec�, will be less in scope than would be necessary to render an
opinion on internal cantrol and, accordingly, no opinion will be expressed in our report on internal.
control issued pursuant to Governrnent Au.ditin�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 controis that we consider relevant to preventing or
deteeting material noncompliance wifih compliance requiretnents applicable to each major federal
award program. However, our tests will be less in scope than would be necessary ta render an opinion
on#hase controts and, aecordingly,no opinion wiIl be expressec� 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 signi�cant deficiencies.
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 Auditin�Standards, and OMB Circular A-I33.
Audit Procedures -Compliance:
As part of obtaining reasonable assurance about whether the financiat sta.tements are free of material
misstatement, we will perform tes-ts of the City's campliance with applicable laws and regulations and
the provisions of 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 perfarm 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 proceduxes described in the OMB Circular A-133 Compliance
� Su lement for the types of compliance requixements 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
campliance issued pursuant to OMB Circular A-133.
Mr. Yaul Uibson March 23, 2009
City of Palm Desert Page 6
Audit Administration,Fees and Other:
Nntc�d below is a listing of work rec�uired by City sta.ff to assist in the audit.
1. Technical assistance in familiarizing our staff with:
• T'he flow of information through the various departments and accounting systems.
• Reparts generated by your accounting system.
• The system of internal controls.
� Controls established to monitor campliance with federal grants.
2. Preparation of trial balances for all funds, after posting of ali year end journal entries.
3. Preparation of schedules supporting al1 major balance sheet accounts, and s�lected revenue and
expendituxe accounts.
4. Typing of a11 confirmation requests.
5. 1'ulling and ref ling of all supporting documents required for audit verification.
6. If applicable, assistance with the preparatian of the CAFR and notes to the financial statements,
including:
a. Determination of major funds.
b. Determination of general and program revenues and allocation af program revenues to:
1. charges for services,
2. operatin� �;rants and coniributions, and
3. capital grants and contributions.
c. Determining components of net assets into capital assets net of related debt, restricted and
unrestricted assets.
d. Assistance in determining the amounts to be reported (1)in the Reconciliation of the Statement
of Revenues, Expenditures and. Changes in Fund Balances of Governmental Funds to the
Statement of Activities and(2) the Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets.
7. Preparation of the manager�aent's discussion and analysis, transmifital letter and all statistical tables
for the CAFR.
We will comply with all other provisions of our technical and cost proposals dated �'ebruary 22, 2�08
and the City's request for proposal dated February l, 2008, which is incorporated herein by reference.
Mr. Paul Gibson March 23, 2009
City of Palm Desert Page 7
Auciit Administration, Fees and Other(Continaed):
Our maximum annual f'ees for the year ending June 30, 2009 are as foltows:
City:
Audit(1} $ 32,959
Redevelopment Agency:
Audit(2} 19,570
Recreation Facilities Corporation:
Audit 6,696
Single Audit 4,532
Gann Limit Verification 309
�—_. 64(,�66
1. Tncludes audit of the financial records at Desert Willow Golf Course.
2. Includes audit of financial recards main.tained in Lodi, California and compliance testing related to
104 tenant files.
The rnaximum annual fees stipulatcd herein contemplate tha.t eanditions satisfactory to the normal
progress and com,pletion of the examination wi11 be encountered and the City accounting personnel
will furnish the agreed upon assistance in connection with the audit. Tiowever, if unusual
circumstances are encountered which make it necessary for us to do additional work; we shall report
such conditions to the respansible City afficials and provide the City with an estimate of the additional
accounting fees involved. You may terminate our services or we may withdraw from this engagement
at any time. Any disputes arising under this agreement shall be mediated under the rules of the
American Arbitration Association.
At the conclusion of the engagement, we will complete the appropriate sections of and sign the Data
Collection Form that summarizes our audit findings. We will provide copies of our reports to the City
of Palm Desert; however, it is managemenf's r.esponsibility to submit the reporting package (including
financial statements, schedule of expenditures of federal awards, summary schedule of prior audit
findings, auditors' reports, and a cc�rrective aetion plan) along with the Data Collection Form to the
designated federal clearinghouse and, if appropriate, to pass-through entities. The Data Col.lection
Form and the reporting package must he 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 lon�;er period is agreed to in
advanee by the cognizant or oversight agency for audits. At the conclusion of the engagement, we will
provide information to management as to whexe the reporting packages should be submitted and the
numher to submit.
Mr. Paul Gibson March 23, 2004
City of Palm Desert Page 8
Audit Administration,Fees and Other(Continued):
The workpapers for this engagement are ihe property of Diehl, Evans and Company, I.,LP and
constitute confidential information. However, we may be requested to make certain workpaper.s
available to grantor agencies pursuant to authority given to it by law or regulation. If requested,access
to such workpapers will be provided under the supervision of our personnel. Furthermore, upon
request, we may provide photocopies of selected workpapers to the grantor agencies. The grantor
agencies may intend, or decide, to distribute the photocopies or informatian con#ained therein to
others,including other governmental agencies.
Tn 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 accounting workpaper files will. be kept for
a period of seven years after the issuance of the audit report. All other files will be ke�t for as long as
you retain us as your accountants. However, upon termination of our service, aIl records will be
destroyed after a period of seven years. Physical deterioration or catastrophic events may further
shorten the life of these records. The working papers and files of our firm are not a substitute for your
original records.
� � * *
We appreciate the opportunity to be of serviee to the City of Palzn Desert and believe this letter
accurately summarizes the signifzcant terms of our engagement. If you have any questions, please let
us know. If you agree with the terms af our engagement as described in this letter, please sign the
enclosed copy and return it to us.
Very truly yours,
DIEHL, EVt�NS &COMPANY, LLI'
By N`�=- � ��
Nitin P. Patel, CPA
Engagement Partner
R.ESPONSE:
This letter correctly sets forth the understanding
of the City of Palm Desert.
By
Tit1e
Date
DIEHL, EVANS � COMPANY, LLP
CERTIFIED PUBllC ACCUI�NTA:VTS 6t CONSULTANTS
�tICIiAEL R LUDLN.CPA
A PARTFERSHIP INCLUANCi AC,COIJN'TAhCY CORPORATIONS CR41G 0.�.SPRAKER,(RA
NITIN P.PATFL,CPA
RCII3ER'L J.CA[.L.ANAN.CPA
5 CORPORATE PARK,SUITE IOO `PH[LIP Ei.HOL.TKAMI',CPA
'THOMAS M.Pt-RLOWSKI,CPA
1RV1NE,CAL[FORNfA 42606-S1b5 'HARVFX 7.SCfIR<)EDGR.CPA
(949)399-Qb00•FAX(949}399-OG10 xr!vNsrt�rt.nMFs.cra
'WtLLIAM C.PENT7_,CI'A
www dielilev_ans.com
March 23, 2009 `APROFESSIONALCORPORATTON
Mr. Paul Gibson
Director of Finanee
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92660
Dear Mr. Gibson:
We are pleased to confirm our understanding of the nature and limitations of the services we are to
provide for the City of Pa1m Desert.
We will apply the agreed-upon procedures, which the City of Palm Desert has specified, listed in the
attached schedule, to the Transient Occupancy Tax Returns of three ho�els as specified by the City for
the calendar year 2008. This engageinent is solely to assist the City of Palm Desert in regards to the
Transient Occupaa�cy Tax Returns filed by the hotels. Our engagement to appiy agreed-upon
procedures will be conducted in accordance with attesta.tion standards established by the American
Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility
of those parties specified in the report. Consequentiy, we make no representation regarding the
sufficiency di the procedures described in the attached schec3ule, either for the purpose far which this
report has be�n requested, or for any other purpose. If, for any reason, we are unable to complete the
procedures, we will deseribe any restrictions on the performance of the pracedures in our report, or
wil] nat issue a report as a result of this engagement.
Because the agreed-upon procedures listed in the attached schedule do not constitute an examination,
we will not express an opinion on the Transient Occupancy Tax Returns. In addition, we have no
obligation to perform any procedures beyond those listed in the attached schedule.
We will submit a report for the three hotels Iisting the procedures performed and our findings. This
report is zntended salely for the use of the City of Palm Desert, and should not be used by anyone other
than the City. Our reports will contain a paragraph indicating that had we performed additional
procedures, other matters might have came to our attention that would have been reported ta you.
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OTHER OI�'FICES AT; 2465 ROOSF.VEI;]'S'fRLET 613 W.VALLEY PARKWAY.SUITE 330
CARLSBAD,CALIFORNIA 92008-2389 HSCONUlE30,CAL,IFORNIA 92025-2598
{760j 729-2343•['AX{760)724-2234 (760)74l-3141�FAX(760)741-9890
Our fees for these serviccs for each hotel will be $1,800 for a total fee of$5,400. The fees are based
on anticipated cooperation from the City and the Hotel's personnel and the assumption that unexpected
circumstances will not be encountered during the engagement. If significant additional time is
necessary, we will discuss it with you and arrive at a new fee esti�nate before we incur the additional
costs. Our invoices for these fees will be rendered each month as work progresses and are payable on
presentation. If we elect to terminate our services for nonpayment, our engagement will be deemed to
have been completed upon written notification of termination even if we have not completed our
report. You will be obligated ta compensate us for all time expended and to reimburse us for atl out-
of-packet expenditures throu,gh the date nf termination.
We appreciate the opportunity to assist you 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. If the need for additional services arises, our engagement with you will need to be revised. It I5
customary for us to enumerate these revisions in an addendum to this letter. If additional specified
parties of the report are added, we will require that they acknowledge in writing their responsibility for
the sufficiency of procedures.
Very truly yours,
DIEHL, EVA�v�S &COMPANY, LLP
By: /V� P ��
Nitin P. Patel, CPA
Engagement Partner
RESPONSE:
This letter correctly sets forth th�understanding
of the City of Palm Desert
By:
Title:
Date:
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SCHEDULE OP PROCEDURES TO BE PERFORMED
Our procedures for each hotel as agreed upon by the�nanagement of the City of Palm Desert will be as
follows:
1. We will review the City Municipal Code a.nd related ordinances and resolutions related to
transient occupancy tax.
2. We will verify the mathcmatical accuracy and tzmeliness af transient occupancy reports filed
with the City for the calendar year 2008.
3. We will trace the gross revenues reported on the transient occupancy tax returns prepared by
the Hotel to gross revenues recorded in the Hotel's accounting records and verify that these
were in accordance with the City's ordinance.
4. We will select a sample of rental transactions during the review period and for each transaction
selected, we will verify tax computations and trace the arnounts af rental revenues and transient
occupancy tax collected to the books and records of the hotel.
5. We will review the internal control procedures of the Hotel to determine the following:
a. How "gross rents"and "uncollected rents"were accounted for and reported to the City.
b. What procedures were in place to identify transient and non-transient guests,
c. �Iow exemptions, including complimentary rooms, were documented and reported to
the City.
6. We will review the supporting documentation for exemptions claimed on the transient
occupancy tax returr�s.
7. We will inquire how the Hotel handles reservations and payments made on line through a third
party such as Expedia.com and how the tra.nsient occupancy tax was collected and reported to
the City on these transactions.
8. We wi�1 exarnine the Hotel's "Transient Occupancy Registration Permit" and determine
whether it was posted in a eonspicuous place.
9. We will perfarm additional procedures that we consider necessary to verify the reasonableness
of reported revenues of th�Hotel operator.
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