HomeMy WebLinkAboutVan Lant & Fankhanel, LLP 2015-05-12; Amendment 08 2020-06-30CITY OF UKIAH
AMENDMENT NO. 8
TO
PROFESSIONAL SERVICES CONTRACT 1415-197
BETWEEN
VAN LANT & FANKHANEL, LLP and THE CITY OF UKIAH
This Amendment No. 8, entered on June 30, 2020, revises the Agreement for
Professional services dated May 12, 2015 between the City of Ukiah and Van Lant &
Fankhanel, LLP for professional consulting services relating to providing auditing
services.
This Amendment No. 8 revises the following as per Exhibit A:
1.The time of completion has been amended to extend the agreement for an
additional two (2) years, to provide auditing services for fiscal years ending 2020
and 2021.
2.The Basis for Compensation has been amended to accommodate the two (2)
additional years, adding $73,000 to the agreement, resulting in a revised not to
exceed amount of $268,850.
Except as expressly amended by this Amendment, all other terms remain unchanged and
in full force and effect.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS
AMENDMENT ON THE EFFECTIVE DATE:
VAN LANT & FANKHANEL
BY: DATE:
BRETT VAN LANT
CITY OF UKIAH
BY: DATE:
SAGE SANGIACOMO, CITY MANAGER
ATTEST
BY: DATE:
KRISTINE LAWLER, CITY CLERK
C# 1415-197-A8
8/4/2020
08-19-2020
8/19/2020
April 20, 2020
To: City Council and Management
City of Ukiah
300 Seminary Avenue
Ukiah, CA 95482-5400
We are pleased to confirm our understanding of the services we are to provide the City of Ukiah (City) for the year
ending June 30, 2020. We will audit the financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information, including the related notes to the financial
statements, which collectively comprise the basic financial statements, of the City as of and for the year ended June
30, 2020. 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 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)Budget schedules.
3)Pension information.
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 we will provide an opinion on it in relation to the financial
statements as a whole, in a report combined with our auditor’s report on the financial statements:
1)Schedule of expenditures of federal awards, as applicable.
2)Non-major funds financial statements and budget schedules
The following other information accompanying the financial statements will not be subjected to the auditing
procedures applied in our audit of the financial statements, and our auditor’s report will not provide an opinion or
any assurance on that other information.
1) Introductory section
2) Statistical section
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EXHIBIT A - C #1415197-AMENDMENT 8
Audit Objectives
The objective of our audit is the expression of opinions as to whether your 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 second paragraph when considered in relation to the financial
statements as a whole. The objective also includes reporting on—
Internal control over financial reporting and compliance with provisions of laws, regulations, contracts, and
award agreements, noncompliance with which could have a material effect on the financial statements in
accordance with Government Auditing Standards.
Internal control over compliance related to major programs and an opinion (or disclaimer of opinion) on
compliance with federal statutes, regulations, and the terms and conditions of federal awards that could
have a direct and material effect on each major program in accordance with the Single Audit Act
Amendments of 1996 and Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
The Government Auditing Standards report on internal control over financial reporting and on compliance and other
matters will include a paragraph that states that (1) 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 entity’s internal control or on compliance, and (2) the report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the entity’s internal control and
compliance. The Uniform Guidance 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 the Uniform Guidance. Both
reports will state that the report is not suitable for any other purpose.
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 the Uniform Guidance,
and will include tests of accounting records, a determination of major program(s) in accordance with the Uniform
Guidance, 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 and Management of
the City. 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 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 we may withdraw from this engagement.
We will also provide a report on agreed upon procedures performed on the City’s calculation of its annual
appropriations limit as required by Article XIII B of the California State Constitution. We will perform the procedures
in the Article XIII B Appropriations Limit Uniform Guidelines as published by the League of California Cities. This
report will include a statement that the report is intended solely for the information and use of management, City
Council and specific legislative or regulatory bodies and is not intended to be and should not be used by anyone
other than these specified parties.
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 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 government or to acts by management or employees acting on behalf of the government. 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,
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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, 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 generally accepted auditing standards.
Audit Procedures—Internal Control
Our audit will include obtaining an understanding of the government 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 the Uniform Guidance, 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 the Uniform Guidance.
An audit is not designed to provide assurance on internal control or to identify significant deficiencies or material
weaknesses. 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 the Uniform Guidance.
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.
The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable assurance about
whether the auditee has complied with federal statutes, regulations, and the terms and conditions of federal awards
applicable to major programs. Our procedures will consist of tests of transactions and other applicable procedures
described in the OMB 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 these 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 the Uniform Guidance.
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 the Uniform Guidance 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. We will
perform the services in accordance with applicable professional standards. The other services are limited to the
financial statements, schedule of expenditures of federal awards, and related notes services previously defined.
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We, in our sole professional judgment, reserve the right to refuse to perform any procedure or take any action that
could be construed as assuming management responsibilities.
Management Responsibilities
Management is responsible for (1) establishing and maintaining effective internal controls, including internal controls
over federal awards, 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 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 (including federal statutes) and the provisions of contracts and grant agreements (including
award agreements). Your responsibilities also include identifying significant contractor relationships in which the
contractor has responsibility for program compliance and for the accuracy and completeness of that information.
Management is also responsible for making all financial records and related information available to us and for the
accuracy and completeness of 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) access to personnel, accounts, books, records, supporting documentation, and other information
as needed to perform an audit under the Uniform Guidance, (3) additional information that we may request for the
purpose of the audit, and (4) unrestricted access to persons within the government from whom we determine it
necessary to obtain audit evidence.
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 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 government 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 government 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 the Uniform Guidance, it is
management’s responsibility to evaluate and monitor noncompliance with federal statutes, regulations, and the
terms and conditions of federal awards; take prompt action when instances of noncompliance are identified
including noncompliance identified in audit findings; promptly follow up and take corrective action on reported audit
findings; and prepare a summary schedule of prior audit findings and a separate corrective action plan. The
summary schedule of prior audit findings should be available for our review in a timely manner.
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 the Uniform Guidance. 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 include the audited financial statements with any
presentation of the schedule of expenditures of federal awards that includes our report thereon OR 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 the Uniform Guidance; (2) you believe the schedule
of expenditures of federal awards, including its form and content, is stated fairly in accordance with the Uniform
Guidance; (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.
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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. 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 include the audited financial statements with any presentation of the
supplementary information that includes our report thereon OR 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, schedule of expenditures
of federal awards, and 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,
preferably from senior management, with suitable skill, knowledge, or experience; evaluate the adequacy and
results of those services; and accept responsibility for them.
Engagement Administration, Fees, and Other
We understand that your employees will prepare all cash, accounts receivable, or other confirmations and
schedules we request and will locate any documents selected by us for testing.
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 electronically 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. The Data Collection Form
and the reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditors’
reports or nine months after the end of the audit period.
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.
The audit documentation for this engagement is the property of Van Lant & Fankhanel, LLP (VLF) 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 the Oversight Agency or its designee, 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 VLF,
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.
The audit documentation for this engagement will be retained for a minimum of seven years after the report release
date or for any additional period requested by the Oversight Agency for Audit, or Pass-through Entity. If we are
aware that a federal awarding agency, pass-through entity, or auditee is contesting an audit finding, we will contact
the party(ies) contesting the audit finding for guidance prior to destroying the audit documentation.
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We will begin our audit in May/June of 2020 and plan to issue our reports in December of 2020. Brett Van Lant is
the engagement partner and is responsible for supervising the engagement and signing the reports or authorizing
another individual to sign them.
Our fees for these services will be as stated below. Our invoices for these fees will be rendered each month as
work progresses and are payable on presentation.
In accordance with our firm policies, work may be suspended if your account becomes 30 days or more overdue
and may not be resumed until your account is paid in full. 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(s). You will be obligated to compensate us for all time expended and to reimburse us for all
out-of-pocket costs through the date of termination. The above fee is based on anticipated cooperation from your
personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant
additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the
additional costs. In addition, the above fees are based on the assumption that the Single Audit will include no more
than one major programs, in accordance with the Uniform Guidance.
We appreciate the opportunity to be of service to the City of Ukiah 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 a copy and return it to us.
Very truly yours,
VAN LANT & FANKHANEL, LLP
Brett Van Lant
Certified Public Accountant
RESPONSE:
This letter correctly sets forth the understanding of the City of Ukiah.
Management Signature:
Title:
Date:
Service 2019/20 2020/21
City audit and related reports 31,200$ 31,200$
Single Audit, if required 2,500 2,500
State Controller's Report Preparation 1,700 1,700
GANN Limit 500 500
Street Report 600 600
Grand Total (not-to-exceed)36,500$ 36,500$
Fiscal Year
6
City Manager
08-19-2020