Maze & AssociatesADMINISTRATIVE SERVICES DEPARTMENT
CUPERTINO
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-3255
(408) 777-3220 • FAX (408) 777-3109
SUMMARY
Agenda Item No.
SUBJECT AND ISSUE
Meeting Date: January 15, 2008
Authorize the City Manager to enter into a contract extension for audit services with Maze
and Associates.
BACKGROUND
The certified public accounting firm, Maze and Associates, has done the annual financial
audit for the City for the past eight years, under an original five-year contract and three-
year extension. Staff and the Council's Audit Committee recommends that the contract be
extended for another two years, with a rotation to a different audit partner.
FISCAL IMPACT
A two-year extension with all optional services rendered will cost the General Fund
$77,465 in the first year and $84,939 for the second year. The fees represent a 3%
increase, higher costs for work required by new auditing standards, and a discount for a
two-year, rather than aone-year extension.
RECOMMENDATION
Authorize the City Manager to enter into a contract extension for audit services with Maze
and Associates.
Submitte
David Woo
Finance Director
Reviewed by:
Carol A. Atwood
Director of Administrative Services
Approved for submission:
David W. Knapp
City Manager
Attachment: Contract extension proposal
MazE &
ASSOCIATES
ACCOUNTANCY CORPORATION
34T8 Buskirk Ave. -Suite 215
Pleasant Mill, California 94523
(925) 930-0902 • FAX (925) 930-0135
maze @maz~a~~oCaates. c®rsa
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January 3, 2008
David Woo, Finance Director
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014-3255
Dear David:
As discussed, our firm is interested in extending our current audit contract with the City for the fiscal years
2007-08 and 2008-09. We have been the City's auditor since 2000 and in that time we have seen dramatic
changes in the City and Redevelopment finances. Particularly significant were the impacts from GASB 34
including restructure of statements and disclosures, addition of infrastructure assets, depreciation of all
capital .assets, consolidation of funds, groups and activities and the creation of Management's Discussion
and Analysis.
1n 2003, we invested considerable time and energy in creating our excel template which creates GASB 34
entity-wide consolidated data from the City's general ledger system. Most other audit firms leave cities to
their own devises to create the consolidated data, eliminate interfund transactions and convert modified
accrual data to full accrual. Our approach, as you know, is to keep our clients efforts in this area to a
minimum. The goods news is that this means the auditors do this work, not you and your staff.
h1 2006, we also invested considerable time and energy in researching and creating our Excel statistics
templates to assist the City in implementing GASB 44. We did not increase our fees despite the increase in
our costs.
Risk Assessment SAS's -The New SAS's
Beginning with fiscal 2007-2008 audits, a new set of Statements of Auditing Standards (SAS's) will
become effective and will require that most auditors change the way they audit. The primary objective of
these Statements is to enhance auditors' application of an audit risk model. The concept is that a set of
financial statements should be evaluated for the underlying risks of material misstatement. Then a
customized audit should be tailored to test for misstatements and test that controls are designed and in
place to prevent and detect misstatements. A general audit approach is not responsive to this concept.
Much of this new guidance is coming out of the aftermath of highly publicized audit failures such as
Enron, Global Crossings and the like. The Statements make it clear that a generalized one-size-fits all
audit approach will not be permitted. Commencing with fiscal 2007-2008 an audit must be based on a
unique audit strategy customized to fit each client and its industry.
A Professional Corporation
We have consistently employed this concept from our firm's beginning in 1986. Our current audit
checklists and programs were originated by reference to Audits Local Governments published by the
Practioners' Publishing Company (PPC), a third party vendor specializing in producing audits guides for
unique industries. PPC has employed the risk model concept since we began using their guide as a
resource. But, we have not simply used their guide as our approach. We customized it further for the
simple reason that California municipalities have many unique risks not faced by municipalities in other
states. As you know, California state law and applicable regulations cover a wide variety of areas such
as cash and investment management, redevelopment compliance, transportation development act
programs, and child development programs. Indeed, even revenues of California municipalities are
complex -Remember Triple Flip?
We came to the conclusion years ago that custom audits were the most effective way to achieve
consistently high quality audit assurance. While we do not believe there will be massive impacts from
the new Standards to our firm's approach (termed "strategy" wider the new standards) we are in the
process of updating our programs and audit checklists. Thus far, we expect the following impacts from
the new requirements:
• Swap out of some areas traditionally tested with enhanced testing of larger transactions;
• Additional documentation by audit staff of the audit process and evaluations;
• Enhanced planning and brainstorming by audit staff.
As we said, although we do not believe these new requirements will have a substantial impact on you and
your staff during the audit, staff will see us obtaining evidence of mitigating controls noted during our
internal control review-whereas in the past, inquiry was sufficient.
For the City of Cupertino, we are budgeting twenty-four hours of additional work because of the new
SAS's, which equates to $3,200 in additional fees for the Basic Financial Statement audit in 2008.
As you can see from the attached extension letter, we are proposing a fee reduction in 2008. In view
of the fact that the City has been along-term client, we are pleased to offer a $5,000 discount for 2008 that
represents the approximate cost of writing a proposal. We understand the budget pressures you face and we
would rather pass on the savings to the City. This discount is effective only if the City chooses to extend
the contract for two more fiscal years.
We still believe we are the best value when it comes to audits.
Municipal Specialty
As you lnay recall, we are a niche firm specializing in municipal audits, which represents over 80% of our
practice. We have summarized our City and related separate financial statement experience below:
Retire Trans-
Client Single -ment portation Financing
City Since CAFR GASB 34 RDA Audit TDA Plan Measure Corp.
Alameda 1990 X X X X X X X
Belmont 1998 X X X X
Benicia 1995 X X X X
Concord 1992 X X X X X X X X
Cupertino 2000 X - X X
Daly City 1992 X X X X X X
Davis 1997 X X X X
EI Cerrito 2005 X X X X X X X
Hayward 1996 X X X X X X X X
Larkspur 1991 X X
Livermore 1988 X X X X X X X
Manteca 1986 X X X X X
Martinez 2001 X X X
Millbrae 1998 X X X
Milpitas 1995 X X X X X
Modesto 2003 X X X X X
Mountain View 2001 X X X X
Napa 2000 X X X X X X X
Newark 1998 X X X X
Oakley 2000 X X
Palo Alto 1998 X X X X X X X
Piedmont 2007 X
Pleasant Hill 1996 X X X X X
Portola Valley 2005 X X X
Richmond 2005 X X X X X
Rio Vista 2004 X X X
Roseville 1998 X X X
San Carlos 2005 X X X X
San Pablo 1995 X X X X X X
San Rafael 2007 X X X X X
Sausalito 2008 X
South San Francisco 2004 X X X X
South Lake Tahoe 2003 X X X X
Vallejo 2004 X X X X X X
Waterford 2004 X X X ?{ X
Woodside 1997 X X X X
As you can see from the client list above, we have a winning combination which has resulted in strong client
loyalty and retention. Several cities, most recently Palo Alto and Livermore, conducted extensive RFP
processes and after evaluating our services against those of our competitors, decided to retain our firm and
did not make a change of auditors. They found our quality of work and value to be unmatched by any other
firm.
We are available to discuss this extension with you further at your convenience. Thank you for your
patronage and consideration.
Yours very truly,
f' f ~p"'1Z W-~
Mark Wong
MazE &
ASSOCIATES
ACCOUNTANCY CORPORATION
347°8 Buskirk Ar/e. -Suite 215
Pleasant Fli/l, California 94523
January 3, 2008 (925) 930-0902 • FAX (925) 930-0135
mazeC mazeassociates.com
www, mazeassociates. com
David Woo, Finance Director
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014-3255
Dear David:
We are pleased to offer to extend our existing contract with the City for up to two additional years. As requested,
we have prepared this letter describing our understanding of the services we are to provide for the City:
® Option 1 - 2 year contract extension with a $5,000 discount (Fiscal years ending June 30, 2008 and
2009). Please see Fees Attachment I.
® Option 2 - 1 year contract extension (Fiscal year ending June 30, 2008). Please see Fees Attachment II.
This letter serves as an authorized extension of our contract dated June 16, 2000 with the City and incorporates
terms and conditions of that contract. The services we have been engaged to provide are outlined below, but we
are also available to provide additional services at your request:
As requested, the teens of this contract extension require that the Engagement Partner be rotated to either
Katherine Yuen or V ikki Rodriquez.
1) Audit of the Basic Financial Statements, and assistance with the preparation of the Comprehensive Annual
Financial Report, and review of Management Discussion & Analysis.
2) Testing 1 program for compliance with the Single Audit Act and applicable laws and regulations and
issuance of our report thereon.
3) Audit of the basic component unit financial statements of the Redevelopment Agency and testing of
compliance with Guidelines for Compliance Audits of California Redevelopment Agencies and issuance
of our reports thereon.
4) Testing of compliance for the Transportation Development Act Programs and preparation of required
reports, if necessary.
5) Perform procedures and issue agreed upon procedures opinion to comply with Proposition 111
Appropriation Limit increment requirements.
6) Perform procedures and issue agreed upon procedures report for City's Investment Policy.
7) Preparation of the Annual Report of Financial Transaction for the City.
8) Preparation of the Annual Report of Financial Transaction for the Redevelopment Agency.
9) Preparation of the Annual Report of Financial Transaction for the Cupertino Public Facilities Corporation.
R Professional Corporation
Audit Objective
The objective of our audit is to express an opinion on whether your financial statements are fairly presented in all
material respects in conformity with generally accepted accounting principles in the United States of America and
to report on the fairness of accompanying supplemental information when considered in relation to the basic
financial statements taken as a whole. Tl~e objective also includes reporting on:
• h~ternal controls related to the financial statements and compliance with laws, regulations, and the provisions
of contracts or grant agreements, noncompliance with which could have a material effect on the financial
statements in accordance with Government Auditing Standards.
• Internal controls 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 reports on internal control and compliance will each include a statement that the report is intended for the
information and use of the Council or their appointed committee, management, specific legislative or regulatory
bodies, federal awarding agencies, and if applicable, pass-through entities and is not intended to be and should rot
be used by anyone other than these specified parties.
Our audit will be conducted in accordance with generally accepted auditing standards 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 provision of OMB
Circular A-133, and will include tests of accounting records, a determination of major programs in accordance
with Circular A-133 and other procedures we consider necessary to enable us to express such an opinion and to
render the required reports. If our opinion on the financial statements or the Single Audit compliance opinion is
other than unqualified, we will fully discuss the reasons with City management in advance. If, for any reason, we
are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an
opinion or to issue a report as a result of this engagement.
Management Responsibilities
Management is responsible for establishing and maintaining effective internal control and for compliance with the
provisions of applicable laws, regulations, contracts, agreements, and grants. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected benefits and related costs of the
controls. The objectives of internal control are to provide management with reasonable, but not absolute,
assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are
executed in accordance with management's authorizations and recorded properly to permit the preparation of
financial statements in accordance with generally accepted accounting principles, and that federal award programs
are managed in compliance with applicable laws and regulations and the provisions of contracts and grant
agreements.
Management is responsible for making all financial records and related information available to us, including any
significant vendor relationships in which the vendor has the responsibility for program compliance. We
understand that the Finance and Administrative Services Department will provide us with the Closing Checklist
information required for our audit and that the Finance and Administrative Services Department is responsible for
the accuracy and completeness of that information. We will advise the Finance and Administrative Services
Department about appropriate accounting principles and their application and will assist in the preparation of the
financial statements, including the Schedule of Expenditure of Federal Awards, but the responsibility for the
financial statements remains with the Finance and Administrative Services Department. This responsibility
includes the establishment and maintenance of adequate records and effective internal control over financial
reporting and compliance, the selection and application of accounting principles and the safeguarding of assets.
Management is responsible for adjusting the financial statements to correct material misstatements and for
confirming to us in the 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.
The Finance and Administrative Services Department is 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 or
illegal acts affecting the government involving (a) management, (b) employees who have significant roles in
internal control, and (c) others where the fraud or illegal acts could have a material effect on the financial
statements. The Finance and Administrative Services Department is also responsible for informing us of the City's
knowledge of any allegations of fraud or suspected fraud or illegal acts affecting the government received in
communications from employees, former employees, grantors, regulators, or others. In addition, the Finance and
Administrative Services Department is responsible for identifying and ensuring that the entity complies with
applicable laws and regulations and for taking timely and appropriate steps to remedy any fraud, illegal acts,
violations of contracts or grant agreements, or abuse that we may 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. The summary schedule of
prior audit findings must be made available for our review
As part of the audit, we will prepare a draft of your financial statements, schedule of expenditures of federal
awards, and related notes. In accordance with Government Audit Standards, the Finance and Administrative
Services Department will be required to review and approve those financial statements prior to their issuance and
have a responsibility to be in a position in fact and appearance to make an informed judgment on those financial
statements. Further, you are required to designate a qualified management-level individual to be responsible and
accountable for overseeing our services.
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. Also, we will plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement, whether from errors, fraudulent financial reporting,
misappropriation of assets, or violations of laws or governmental regulations that are attributable to the entity or to
acts by management or employees acting on behalf of the entity. Because the determination of abuse is subjective,
Governmental Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse. As
required by the Single Audit Act Amendments of 1996 and OMB Circular A-133, our audit will include tests of
transactions related to major federal award programs for compliance with applicable laws and regulations and the
provisions of contracts and grant agreements. Because of the concept of reasonable assurance and because we will
not perform a detailed examination of all transactions, there is a risk that material misstatements or noncompliance,
fraud or other illegal acts, may exist and not be detected by us. 1n addition, an audit is not designed to detect
immaterial misstatements, immaterial illegal acts, or illegal acts that do not have a direct effect on the financial
statements or major programs. We will advise management of any material errors and any fraudulent financial
reporting or misappropriation of assets that comes to our attention. We will also inform the management of any
violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. 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 matters that might arise during 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 nay include tests of physical existence of inventories, and 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 of the engagement, and they may bill the City for
responding to this inquiry. At the conclusion of our audit we will also require certain written representations from
management about the financial statements and related matters.
Audit Procedures -Compliance
Our audit will be conducted in accordance with the standards referred to in the section titled Audit Objectives. As
part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we
will perform tests of the City of Cupertino compliance with certain provisions of laws, regulations, contracts, and
grants. However, the objective of our audit 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 City has complied with applicable laws and regulations and the provisions of contracts and grant
agreements applicable to major programs. Our procedures will consist of the 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 major program. The purpose of those procedures will be to express an opinion
on the City's compliance with requirements applicable to major programs in our report on compliance issued
pursuant to OMB Circular A-133.
Audit Procedures -Internal Controls
In planing and performing our audit eve will consider the adequacy of internal controls in determining the nature,
timing and extent of our auditing procedures applied for the purpose of expressing an opinion on the City of
Cupertino basic financial statements and on its compliance with requirements applicable to major programs, We
will obtain an understanding of the design of the relevant controls and whether they have been placed in operation,
and we will assess control risk. 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 basic 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. Tests of controls relative to the financial statements
are required only if control risk is assessed below the maximum level. 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 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 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.
Our audit is not designed to provide assurance on internal control or to identify reportable conditions. However,
we will inforn the Council or their appointed committee of any matters involving internal control and its operation
that we consider to be reportable conditions under standards established by the American Institute of Certified
Public Accountants. Reportable conditions involve matters coming to our attention relating to significant
deficiencies in the design or operation of internal controls that in our judgment could adversely affect the City's
ability to record, process, summarize and report financial data consistent with the assertions of management in the
basic financial statements. We will inform you of any nonreportable conditions or other matters involving internal
control, if any, as required by OMB Circular A-133.
Audit Administration, Fees, and Other
At the conclusion of the engagement, we will complete the appropriate sections and sign the Data Collection Form
that swnmarizes our audit findings. We will provide copies of an original and print ready master of our report to
the City of Cupertino; however, 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,
auditor's reports, and a corrective action plan) along with the Data Collection Fonn to the designated federal
clearinghouse and, if appropriate, to pass-through entities. The Data Collection Fonn and the reporting package
must be submitted within 30 days after receipt of the auditors' reports or nine months after the end of the audit
period, unless a longer period is agreed in advance by the cognizant or oversight agency for audits. At the
conclusion of the engagement, we will provide information to management as to where the reporting packages
should be submitted and the number to submit.
The audit documentation for this engagement is the property of Maze & Associates and constitutes confidential
information. However, pursuant to authority given by law or regulation, we may be requested to make certain audit
documentation available to a federal agency providing oversight of 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 Maze & Associates 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.
Our fees for these services are billed based on our contract with the City, which in turn is based on the actual time
expected to be spent at our standard hourly rates, including travel and other out-of-pocket costs such as report
production, typing, postage, etc. Our standard hourly rates vary according to the degree of responsibility involved
and the experience level of the personnel assigned to your audit. 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 the City's account becomes thirty days or more overdue and may not be resumed until the City's
account is paid in full.
These fees are based on anticipated cooperation from City personnel, the completion of schedules and data
requested on our Checklists, and the assumption that there will be no unexpected increases in work scope, such as
new Single Audit Act programs, new debt issues, etc., or delays which are beyond our control, as discussed on the
Fees Attachment to this letter. If significant additional time is necessary, we will discuss it with City management
and arrive at a new fee before we incur any additional costs.
We understand you will provide us with basic workspace sufficient to accommodate the audit team assigned to
your audit. We understand the basic workspace will be equipped with a telephone and direct Internet access,
preferably a temporary network outside of your network, a public )P address and a wired connection. We
understand you will also provide us with access to a fax machine and read only access to your general ledger
system.
Goven~ment Auditing Standards require that we provide the City with a copy of our most recent quality control
review report. Our 2006 peer review report accompanies this letter.
We appreciate the opportunity to be of service to the City 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.
~ ~ ~~~
Maze & Associates
RESPONSE:
This letter correctly sets forth the understanding of the City of Cupertino.
By
Title:
Date:
City of Cupertino Engagement Letter
Fees Attachment I -Two Year Contract Extension
Our fees for the work described in the attached engagement letter will be as follows, unless they are adjusted for
one or more of the items below:
MAZE & ASSOCIATES
AUDIT & ACCOUNTING SERVICES SUMMARY OF FEES
FOR THE YEARS ENDED JUNE 30, 2008 AND 2009
Actual Proposed Fees for the
Fees in Year Ended June 30, (a)
Service Notes 2007 2008 2009
Audit & Attest Service:
Audit of the Basic Financial Statements included in the
Comprehensive Annual Financial Report (Including (b), (o) $50,679 $55,400 $57,062
implementation on New SAS's)
Audit of federal award program and preparation of the
Single Audit Report and Data Collection Form - 1 Program 7,372 7,593 7,821
Preparation and Audit of the Redevelopment Agency
Financial Statements and Compliance Report (d) 4,306 4,435 4,68
Preparation and Audit of the Transportation Development
Act Program Financial Statements and Compliance Report (e) 2,302 2,371 2,442
Perform Agreed Upon Procedures and Issue:
Report on the City's GANN Limit Increment 878 905 932
Report on the City's Investment Policy 4,153 4,278 4,406
Audit & Attest Services 69,690 74,982 77,231
Optional Services:
Preparation of Annual Reports of Financial Transactions for:
City (0 5,588 5,756 5,929
Redevelopment Agency (0 559 576 593
Cupertino Public Facilities Corporation (f) 1,118 1,151 1,186
TOTAL FEES $76,956 $82,465 $84,939
Deduct discount for contract extension
Net Fees
5,000
$77,465
Notes:
(a) Fees are based on 2007 fees adjusted fora 3% cost of living increase in each subsequent year.
(b) Fee assumes we will audit the financial statements and ensure they comply with award program requirements.
(c) Includes twenty-four hours of additional work because of the new SAS's which equates to $3,200 in
additional fees for the Basic Financial Statement audit in 2008.
(d) Redevelopment Agency is in the start-up stage. Fee does not reflect the impacts from new debt issues,
new DDAs/OPAs or significant increases in activity.
(e) Fee covers up to two projects.
(~ Report will assembled from data supplied by the City without audit or verification.
City of Cupertino Engagement Y after
Fees Attachment II -One Year Contract Extension
Our fees for the work described in the attached engagement letter will be as follows, unless they are adjusted for
one or more of the items below:
MAZE & ASSOCIATES
AUDIT & ACCOUNTING SERVICES SUMMARY OF FEES
FOR THE YEAR ENDED JUNE 30, 2008
Service
Audit & Attest Service:
Audit of the Basic Financial Statements included in the
Comprehensive Annual Financial Report (Including
implementation on New SAS's)
Audit of federal award program and preparation of the
Single Audit Report and Data Collection Fonn - 1 Program
Preparation and Audit of the Redevelopment Agency
Financial Statements and Compliance Report
Preparation and Audit of the Transportation Development
Act Program Financial Statements and Compliance Report
Perform Agreed Upon Procedures and Issue
Report on the City's GANN Limit Increment
Report on the City's Investment Policy
Actual
Fees in
Notes 2007
(b), (c) $50,679
7,372
(d) 4,306
(e) 2,302
Proposed Fees
June 30, (a)
2008
$55,400
7,593
4,435
2,371
Audit & Attest Services
Optional Services:
Preparation of Annual Reports of Financial Transactions for:
city (~
Redevelopment Agency (f)
Cupertino Public Facilities Corporation (0
TOTAL FEES
878 905
4,153 4,278
69,690 74,982
5,588 5,756
559 576
1,118 1,151
$76,956 $82,465
Notes:
(a) Fees are based on 2007 fees adjusted fora 3% cost of living increase in each subsequent year.
(b) Fee assumes we will audit the financial statements and ensure they comply with award program requirements.
(c) Includes twenty-four hours of additional work because of the new SAS's which equates to $3,200 in
additional fees for the Basic Financial Statement audit in 2008.
(d) Redevelopment Agency is in the start-up stage. Fee does not reflect the impacts from new debt issues,
new DDAs/OPAs or significant increases in activity.
(e) Fee covers up to two projects.
(f) Report will assembled from data supplied by the City without audit or verification.
KATHERINE YUEN, Engagement Partner--Katherine has her Bachelor of Science degree in Business
Administration from the University of California, Berkeley. She is currently pursuing a Master's Degree in
Financial Planning from the Golden Gate University. She is a California CPA and a member of the AICPA. She
is presently in charge of the audits of the cities Alameda, Benicia Campbell, Davis, Manteca, Martinez, and
Newark, among others. Katherine has received over eight hundred hours of training in the past twelve years.
She has participated in the following audits:
Alameda Power and Telecom
Alameda Mayors' Conference
City of Benicia
Alameda Reuse and Redevelopment Authority
City of Alameda
Association of Bay Area Governments
Town of Atherton
City of Belmont
City of Campbell
Central Contra Costa County Solid Waste Authority
City of Davis
City of Daly City
East Bay Recreation and Park District
E1 Dorado Irrigation District
City of Emeryville
City of Half Moon Bay
City of Hayward
Hindu Culture and Community Center
Town of Larkspur
Las Trampas, Inc.
Livermore Area Recreation and Park District
City of Los Altos
Town of Los Gatos
City of Manteca
City of Martinez
City of Millbrae
City of Milpitas
City of Monterey
City of Newark
City of Oxnard
City of Palo Alto
City of Pinole
City of Pleasant Hill
City of Roseville
City of San Carlos
City of San Mateo
City of San Ramon
San Ramon Valley Fire Protection Agency
City of South Lake Tahoe
City of Tracy
City of Walnut Creek
City of Woodland
Town of Woodside
VIKKI RODRIGUEZ, Engagement Partner--Nikki graduated from San Diego State University where she
received her Bachelor of Science Degree in Accounting with a Minor in English. She is a Certified Public
Accountant in the State of California. She is a member of the American Institute of Certified Public
Accountants and the California Society of Certified Public Accountants. Nikki spent a year and a half working
as an accountant at the City of Daly City and her college years working part time for both municipal government
and nonprofit organizations prior to joining the firm in 1998. Nikki has accumulated over 360 hours of continuing
education in the past three years as an instructor, participant and student. She has attended the past two annual
Nonprofit Organization Conference held in May. Her audit experience includes the following:
City of Alameda
Alameda Power & Telecom
City of Belmont
Calaveras County Water District
Coastside County Water District
Contra Costa Water District
Delta Diablo Sanitation District
Dublin San Ramon Services District
E1 Dorado Irrigation District
City of Emeryville
City of Half Moon Bay
City of Larkspur
City of Livermore
Livermore Amador Valley Transit Authority
Town of Los Altos Hills
Town of Los Gatos
City of Milpitas
City of Newark
City of Palo Alto
City of Pleasant Hill
City of San Carlos
City of San Mateo
City of Suisun City
Skyline County Water District
City of Tracy
City of Visalia
~Il ~l GRG.J-. cJ C%GG~ ~ (JGZ/7'~1 CTi//i~
16360 Monterey Rd., Suite 170
Morgan Hill, CA 95037
Tel: (408) 779-3313
Fax: (408} 776-1555
July 28, 2005
To the Shareholders
Maze & Associates Accountancy Corporation
Walnut Creek, California
CERTIF/ED PUBL/C ACCOUNTANTS
4040 Moorpark Ave., Suite -100
San Jose., Ca 95117
Tel: (408) 557-9890
Fax: (408) 557-9893
We have reviewed the system of quality control for the accounting and auditing practice of Maze & Associates
Accountancy Corporation (the fuln) in effect for the year ended May 31, 2005. A system of quality control
encompasses the firrn's organizational structure, the policies adopted and procedures established to provide it with
reasonable assurance of conforming with professional standards. The elements of quality control are described in
the Statements on Quality Control Standards issued by the American Institute of Certified Public Accountants
(AICPA). The firm is responsible for designing a system of quality control and complying with it to provide the
firm reasonable assurance of conforming with 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 with its system of
quality control based on our review.
Our review was conducted in accordance with standards established by the Peer Review Board of the AICPA.
During our review, we read required representations from the firm, interviewed firm personnel and obtained an
understanding of the nature of the firm's accounting and auditing practice, and the design of the firm's system of
quality control sufficient to assess the risks implicit in its practice. Based on our assessments, we selected
engagements and administrative files to test for conformity with professional standards and compliance with the
firm's system of quality control. The engagements selected represented a reasonable cross-section of the firm's
accounting and auditing practice with emphasis on higher-risk engagements. The engagements selected included,
among others, engagements performed under GovernmentAuditing Standards. Prior to concluding the review, we
reassessed the adequacy of the scope- of the peer review procedures and met with firm management to discuss the
results of our review. We believe the procedures we performed provide a reasonable basis for our opinion.
In performing our review, we obtained an understanding of the system of quality control for the firm's accounting
and auditing practice. In addition, we tested compliance with the firm's quality control policies and procedures to
the extent we considered appropriate. These tests covered the application of the firm's policies and procedures on
selected engagements. Our review was based on selected -tests therefore it would not necessarily detect all
weaknesses in the system of quality control or all instances of noncompliance with it. There -are inherent
limitations in the effectiveness of any system of quality control and therefore noncompliance with the system of
quality control may occur and not be detected. Projection of any evaluation of a system of quality control to future
periods is subject to the risk that the system of quality control may become inadequate because of changes in
conditions, or because the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the system of quality control for the accounting and auditing practice of Maze & Associates
Accountancy Corporation in effect for the year ended May 31, 2005, has been designed to meet the requirements of
the quality control standards for an accounting and auditing practice established by the AICPA and was complied
with during the year then ended to provide the firm with reasonable assurance of conforming with professional
standards.
Nichols, Rick & Company
www.nichotsrick.com