81-024 Main Hurdman & Cranstoun - Auditing and Consulting Services Reso 5604AGREEMENT FOR AUDITING SERVICES
This agreement made and entered into as of this 20th
day
• of April 19 81 , between the City of Cupertino, County of
Santa Clara, State of California, hereafter referred to as City, and
Main Hurdman & Cranstoun, Certified Public Accountants, hereafter referred
to as Auditors.
PARTIES
WHEREAS, it is the intention of City to provide for the examination of
its financial statements, and WHEREAS, Auditors are Certified Public Accountants,
duly authorized to practice and licensed as such by the California State Board
of Accountancy,
AUDIT PROCEDURES AND SCOPE
THEREFORE, in consideration of the mutual convenants, conditions and premises
hereinafter contained, City hereby engages Auditors, and Auditors hereby agree
to examine the financial statements of all funds of City. It is understood
that the services performed by Auditors is in the capacity of an independent
contractor and not as an officer, agent or employee of the City.
The financial statements shall be completed by City in a format which complies
with generally accepted accounting principles.
The examination shall be made in accordance with generally accepted auditing
standards and accordingly shall include such tests of the accounting records and
such other auditing procedures as Auditors consider necessary in the circum-
stances in order to allow for the expression of an opinion on the financial
statements of all funds of City. It is understood that such procedures are not
designed primarily to disclose defalcations or other irregularities.
RECOMMENDATIONS ON INTERNAL CONTROL
Auditors shall observe the adequacy of the system of internal control
and, if weaknesses are noted, make appropriate recommendations. Auditors'
comments shall be included in a separate letter to be issued as soon as possible
after the conclusion of their examination.
PERIOD COVERED BY AGREEMENT
This agreement shall cover the fiscal years beginning July 1, 1981, subject
to cancellation for subsequent fiscal years by either party by giving written
notice to the other party not later than 30 days before the beginning of such
subsequent fiscal year.
COMPLETION OF AUDIT REPORT
Auditors shall deliver 8 copies of their report as soon as possible after
the examination has been completed.
CONSIDERATION
Said auditing services will be performed by qualified persons having experience
suitable to municipal government. Auditors shall be reimbursed for necessary
expenses agreed upon as follows:
1. Auditing the June 30, 1981 Financial Statements at a maximum fee
of $8,750 plus out-of-pocket expense not to exceed $200.
2. Fees for subsequent years may not exceed the Bay Area Consumer Price
Index•
3. The Revenue Sharing Compliance Audit must be completed prior to fiscal
year ending 1982. The fee for this audit not to exceed $750.
4. Extraordinary Service Schedule:
Partners $ Ro_oo
Managers $
Senior Accountants $
Assistant Accountants $
Clerical $
- 2 -
Fees for services rendered may be billed as the work progresses, but not
more often than once a month. Such fees shall be paid promptly by City. The
maximum annual fee stipulated above contemplates that conditions satisfactory to
the normal progress and completion of the examination will be encountered and that
City accounting personnel will furnish the agreed upon assistance in connection
with the preparation of necessary detail schedules and the production of
documents for Auditor's inspection. However, if unusual circumstances are
encountered which make it necessary for Auditors to do additional work, Auditors
shall report such conditions immediately to the responsible City officials and
both parties may negotiate such additional compensation as appears justified.
EXTRAORDINARY SERVICES*
It is contemplated that from time to time City may wish Auditors to perform
accounting and auditing services in addition to those which are usual and customary
in making an examination of the financial statements of City. If so, Auditors
shall be compensated for any such services performed which are validly authorized
at the hourly rates in effect under this agreement. However, if such additional
services require the expertise of consultants, Auditors and City may negotiate
separate rates and estimated fees for the work contemplated.
IN WITNESS WHEREOF, the parties hereto have signed this agreement as of the
day and year herein first above written.
APPROVED AS TO FORM:
BY
City Attorney ayo -, Ulty o per ino
ATTEST:
CitA/Cl
Main Hurdman & Cranstoun
Auditors
�Jl.
By 4/ —
44,Partner
- 3 -
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p
eF9 f Y
CL 4
CUPERTE'40, CA 05014
RESOLUTION NO. 5604
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO
AUTHORIZING EXECUTION OF AGREEMENT WITH MAIN HURDMAN &
CRANSTOUN FOR AUDIT SERVICES
WHEREAS, there has been presented to the City Council an agreement
pertaining to provision of annual financial audit of the City's accounting
records, and the terms and conditions of said agreement having been approved
by the Director of Finance and the City Attorney;
NOW, THEREFORE, BE IT RESOLVED that the Mayor and the City Clerk are
hereby authorized to execute said agreement in behalf of the City of Cuper-
tino.
PASSED AND ADOPTED at a regular meeting of the City Council of the City
of Cupertino this 20th day of April 1981 by the following
vote:
Vote Members of the Citv Council
AYES: Gatto, Johnson, Plungy, Rogers, Sparks
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
/s/ Lucille Campagna-Blaise
Deputy City Clerk
APPROVED:
/s/ Reed Sparks
Mayor, City of Cupertino
THIS IS TP. CERTIFY THAT THE WITHIN
INF T F.:-!MEI^!T I SATRUE AND CCRRECTCOPY
OF THE Of:I FINAL ON FILE IN THIS OFFICE.
ATTEST-.--,.-.- 7Fr7:__
, 19 f/CITY I_E:!:i:O Il HEPERTINO
(ATTACHMENT)
4
i• e■p■11
City of Cupertino
AGREEMENT NO
BY THIS AGREEMENT made and entered into on the 11th day of December 19 81
by and between the CITY OF CUPERTINO (Hereinafter referred to as CITY) and
Name (1) Main Hurdman (2)
Address _ Suite 1.200, itan N. Sprond qt -City San .Tngp Zip 95113Phone 26/-1000
(Hereinafter referred as CONTRACTOR), in consideration of their mutual covenants, the parties hereto agree as follows:
CONTRACTOR Shall provide or furnish the following specified services and/or materials:
SEE ATTACHMENT A
DELIVERY:
EXHIBITS: The following attached exhibits hereby are made part of this Agreement:
TERMS The services and/or materials furnished under this Agreement shall commence on December 11, 1981
and shall be completed before
COMPENSATION For the full performance of this Agreement, CITY shall pay CONTRACTOR:
GENERAL TERMS AND CONDITIONS
Hold Harmless. Contractor agrees to save and hold harmless the City, its officers, agents and employees from any and
all damage and liability of every nature, including all costs of defending any claim, caused by or arising out of the per-
formance of this agreement. City shall not be liable for acts of Contractor in performing services described herein.
Insurance. Should the City require evidence of insurability Contractor shall file with City a Certificate of Insurance
before commencing any services under this agreement. Said Certificate shall be subject to the approval of City's
Director of Administrative Services.
Non -Discrimination. No discrimination shall be made in the employment of persons under this agreement because of
the race, color, national origin, ancestry, religion or sex of such person.
Interest of Contractor. It is understood and agreed that this agreement is not a contract of employment in the sense
that the relation of master and servant exists between City and undersigned. At all times Contractor shall be deemed to
be an independent contractor and Contractor is not authorized to bind the City to any contracts or other obligations in
executing this agreement. Contractor certifies that no one who has or will have any financial interest under this
agreement is an officer or employee of City.
Changes. This agreement shall not be assigned or transferred without the written consent of the City. No changes or
variations of any kind are authorized without the written consent of the City.
CONTRACT CO-ORDINATOR and representative for CITY shall be:
Name Department
Address
pertino, CA 95014 Telephone
This Agreement shall become effective upon its execution by CITY, in witness thereof, the parties have executed this
Agreement the day and year first written above.
CONTR TOR: CI C PERTINO:
By GU. -+4 By
Title Main Hurdman Title City Manager
APPROVALS
Department Head Date City Cle / Date
PURPOSE:
SCOPE AND
APPROACH:
SCHEDULE
OF FEES:
GENERAL:
ATTACHMENT A
CONSULTANT CONTRACT
Main Hurdman, Certified Public Accountants
To provide consulting services in the area of reviewing the
City's data and word processing needs.
Main Hurdman, Consultants, will serve as consultants to the City
and to the project with responsibilities to provide the following
functions:
1. Attend major systems development meetings and provide a
detailed sequential task schedule.
2. Design information system and word processing questionnaire
for distribution to City personnel.
3. Assist in formatting the requirement analysis and identify
systems and processing needs.
4. Assist in determining the equipment configuration best
suited to the City's needs.
5. Provide guidelines for preparing requests for proposals for
software and hardware.
6. Evaluate proposals submitted in response to requests for
proposals.
Fees to cover the scope of this project are not to exceed $7,500.
Reimbursement for services will be made upon the City receiving and
accepting as satisfactory reports at the end of each major functions
as defined under Scope and Approach.
Reimbursement Schedule:
Function
2
$ 600
Function
3
1,200
Function
4
2,225
Function
5
2,000
Function
6
1,475
The City reserves the right to terminate the project at anytime and
shall not be liable for any remaining element of the proposed work
not actually performed by the consultant. Consultant will be required
to submit reports at the end of each major phase as determined under
Scope and Approach and the City will not be liable for fees and expenses
incurred by the consultant for subsequent phases until reports for the
preceding phase have been received and accepted as satisfactory by the City.
City of Cupertino
AGREEMENT
�c-r No /)
iv--
N
(ATTACHMENT)
006105
BY THIS AGREEMENT made and entered into on the day of�7` 19
by and between the CITY OF CUPERTINO (Hereinafter referred to as CITY) and
Name (1) Main Hurdman (2)
Address Two North Second Street City- San Jose, CA Zip 95113 Phone 287-7000
(Hereinafter referred as CONTRACTOR), in consideration of their mutual covenants, the parties hereto agree as follows:
CONTRACTOR Shall provide or furnish the following specified services and/or materials:
See Exhibit I — Agreement
Exhibit II — Main Hurdman CPA Proposal
DELIVERY:
EXHIBITS: The following attached exhibits hereby are made part of this Agreement:
Exhibits I and II
TERMS The services and/or materials furnished under this Agreement shall commence on See Exhibit I
and shall be completed before
COMPENSATION For the full performance of this Agreement, CITY shall pay CONTRACTOR:
GENERAL TERMS AND CONDITIONS
Hold Harmless. Contractor agrees to save and hold harmless the City, its officers, agents and employees from any and
all damage, and liability of every nature, including all costs of defending any claim, caused by or arising out of the per-
formance of this agreement. City shall not be liable for acts of Contractor in performing services described herein.
Insurance. Should the City require evidence of insurability Contractor shall file with City a Certificate of Insurance
before commencing any services under this agreement. Said Certificate shall be subject to the approval of City's
Director of Administrative Services.
Non -Discrimination. No discrimination shall be made in the employment of persons under this agreement because of
the race, color, national origin, ancestry, religion or sex of such person.
Interest of Contractor. It is understood and agreed that this agreement is not a contract of employment in the sense
that the relation of master and servant exists between City and undersigned. At all times Contractor shall be deemed to
be an independent contractor and Contractor is not authorized to bind the City to any contracts or other obligations in
executing this agreement. Contractor certifies that no one who has or will have any financial interest under this
agreement is an officer or employee of City.
Changes. This agreement shall not be assigned or transferred without the written consent of the City. No changes or
variations of any kind are authorized without the written consent of the City.
CONTRACT CO-ORDINATOR and representative for CITY shall be:
Name Blaine Snyder Department
Finance
Address 10300 Torre Avenue Cupertino, CA 95014 Telephone (408) 252-4505
This Agreement shall become effective upon its execution by CITY, in witness thereof, the parties have executed this
Agreement the day and year first written above.
CONT TOR: q'Vr CITY OF_CUPERTINO:
By f/jlBy
Title Title -L.na-
APPROVALS
Department Heaa--,-),,/ ate City C rk / Date
E-
City of Cupertino
AGREEMENT BETWEEN CITY AND MAIN HURDMAN
Exhibit I
Scope of Project
The firm of Main Hurdman will provide consulting services to developm and
document a service rate structure and supporting accounting system. They will
be responsible for the projects as outlined in their proposal of March 26, 1982
and described in that proposal as Phase I, II and III.
Objectives
1. To identify all areas and types of service where the City may charge
for services provided.
2. To develop a rate structure that accurately reflects direct and indirect
support service cost.
3. Design and implement a cost accounting system to support service cost and
revenues by types of service.
TPrmC
The service furnished under this agreement shall commence on or before September 20,
1982 and shall be completed before January 15, 1983.
Compensation
Fees to cover the scope of this project are not to exceed $15,200. Reimbursement
for service will be made upon the City receiving and accepting satisfactory
reports at the end of each phase as defined in the firm's proposal.
General
The City reserves the right to terminate this agreement at any time and shall
not be liable for any service provided after date of notice.
Mai',
urdman
Certified Public Accountants
Exhibit II
Suite 1200, Two North Second Street, San Jose, CA 95113, Telephone: 408/287-7000
Mr. Blaine Snyder
Director of Finance
Department of Finance
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
Dear Mr. Snyder:
March 26, 1982
We are pleased to submit this proposal to assist the
City of Cupertino in undertaking a services rate study directed
to developing rate structures that will assure the City is
receiving all revenues to which it is entitled for services
performed.
Our Understanding Of The Situation
The City of Cupertino currently charges fees for
items such as: permits, plans checking, Parks and Recreation
Services and other city charges.
City Administration has discussed the situation
with the general feeling that the City may not be collecting
all of the revenue they would be entitled to for services
provided. Activities have been identified where services
are provided to meet specific requests but -are not being
charged.
The Director of Finance has conducted initial
studies to further define such activities; to evaluate the
current user rate structure; and to establish means to best
resolve needs in this important area of revenue.
The initial study indicated along with other infor-
mation the following:
• The current designation and structure of
rates (types, ranges) have existed for
some time. They cover only the basic rates
charged by municipalities.
KMG Klynveld Main Goerdeler-International firm
Mr. Blaine Snyder
City of Cupertino
March 26, 1982
Page 2
• Current fee rate amounts are based on
state guidelines
• Documentation supporting the make-up of
the fee rate calculation is no longer
available.
• It cannot be determined if support func-
tion costs or overhead costs are adequate-
ly reflected in determining cost of ser-
vices.
• Information on actual direct cost for
individual services is not readily avail-
able.
• The city does not have a municipal cost
accounting system to support effective rate
determination and monitoring.
Considering the scope of work, the work load of the
staff, and importance to the City, Administration is interested
in consultative assistance to develop improvements in the rate
structures and supporting accounting system.
Objectives
The objectives of the proposed study are to assist
the City in three areas:
1. To identify all areas and types of ser-
vices where the City should be charging
for services provided.
2. To develop service rate structure which
accurately reflect support center costs,
departmental and administrative overhead,
and service center direct costs.
3. To design and implement a municipal cost
accounting system to support development
of service costs and revenues by organi-
zational segment and type of service -
to support departmental revenue/cost
reporting - and fund utilization analysis.
Mr. Blaine Snyder
City of Cupertino
March 26, 1982
Page 3
Scope And Approach
We are proposing for economy of performance and
to facilitate management of separate tasks that the project
be undertaken in separate phases as summarized below.
The multi -phased approach will facilitate review
of each phase's results to move effectively into the next
phase.
We have structured the approach in Phase II to
have City personnel perform the analysis of historical data
as may be necessary to analyze accounting records and develop
detail cost data not directly available from reports. The
extent of this work will not be known until the completion
of Phase I. If assistance is required from our staff for
the analysis of cost data this can be provided.
Phase I
Major tasks are summarized below for each phase.
1. Define scope and approach.
2. Prepare initial drafts for working session
review covering:
i
a. Segments of City functions and services
provided by segment.
b. Cost centers for cost accumulation -
administrative centers, support centers,
service centers.
C. General classifications of costs.
d. Methods of allocation with advantages
and disadvantages.
3. Design forms and provide instructions for City
personnel to measure actual direct time/cost
of performing specific services; and record
volumes and frequency of occurances during the
time period. This will provide a test sampling
of actual time and direct costs to perform
specific services.
Mr. Blaine Snyder
City of Cupertino
March 26, 1982
Page 4
Phase I (Cont.)
Phase II
4. Design forms to: accumulate detailed annual
cost data for various support and service centers
from accounting records; perform allocations;
and develop cost for service performed for in-
dividual services.
5. Participate in working session to select, final-
ize all items in 2, 3, 4 above.
1. Provide instructions for City personnel to an-
alyze accounting records and accumulate detailed
data during period selected for analysis of
costs. Note: These will have to provide for
translating "Expenditures" into actual costs
or expenses giving effect to encumbrances,
accruals, other period costs. Monitor work.
2. Provide instructions for City personnel to make
allocations of various costs; and develop costs
for services performed based on accounting
records; and make comparisons to costs for
services performed based on test recording
of actual service performance. Monitor work.
3. Review, analyze costs and allocations (tasks
5 & 6 above); develop new structure of rates;
project impact of new rates.
4. Provide worksheet for determining, accounting
for fees between "proceeds of taxes" and "non
proceeds of taxes" (Prop. 4).
5. Participate in working session to finalize
results of Phase II tasks 1, 2, 3 and 4.
6. Prepare and present final report of recommended
rate structures and instructions for City per-
sonnel.
Mr. Blaine Snyder
City of Cupertino
March 26, 1982
Page 5
Phase III Cost Accounting Coding Structure
1. Participate in working session to define cost
center/profit and loss center concept reporting
and accounting requirements of the City as
well as fund usuage analysis requirements.
2. Design a uniform operations/accounting coding
structure.
3. Refine and define all detail account code re-
ferences. Test that it will accomodate all
types of transactions.
4. Participate in working session to finalize.
5. Prepare and present final report and instruc-
tions for implementation.
Mr. Blaine Snyder
City of Cupertino
March 26, 1982
Page 6
Schedule, Fees
Based on -experience with similar engagements and
our knowledge of your operation, we estimate that Phase I
will require from three to five weeks elapsed time to com-
plete.
Phase II time frame will depend on the test period
to be utilized, the extent to which accounting records must
be analyzed to provide sufficient detail, availability of
City personnel for the analysis, and adequate time for tally
measurement of activities. The time frame should be well
delineated during the conclusion of Phase I.
Phase III can be on-going with the latter part of
Phase I and with Phase II and should not require more than
three to five weeks elapsed time.
Our professional fees are based on actual hours
of service rendered, multiplied by the standard hourly rates
of the individuals performing the work. Out-of-pocket ex-
penses will be billed at actual amount incurred.
Based on our engagement plan, we estimate that
total fees for each Phase will be:
Phase
I
$5,400
Phase
II
$5,000
Phase
III
$4,800
Phase II fees are based on our consultants pro-
viding forms, instructions and monitoring with detailed
analysis and accumulation of accounting data allocations and
development of cost for services to be performed by City
personnel.
The City may wish our consultants to perform some
of the analysis and accumulation.of cost data from account-
ing records. If such services were desired our consultants
and the City can define work plans and assignments and nego-
tiate separate fees for the work contemplated.
Mr. Blaine Snyder
City of Cupertino
March 26, 1982
Page 7
Summary
m
We commend the City in its identification of need
and forward planning to assure all revenues are realized.
Completion of the proposed undertaking will assure
that all services are being charged for at rates commensurate
with current cost levels and including appropriate support
and overhead costs. The City will also benefit through im-
proved reporting and analysis of costs of services and funds
monies utilization.
We appreciate the opportunity to be of service and
look forward to working with the City on this timely and
important project.
Very truly yours,
MAIN HURDMAN
Certified Public Accountants