19-197 Crowe for Audit Services - Cupertino FS EL 2019 SignedCrowe
Crowe LLP
Independent Member Crowe Global
650 Town Center Drive, Suite 740
Costa Mesa, California 92626-7192
Tel +1 714 668 1234
Fax +1 714 668 1235
www.crowe.com
August 13, 2019
To the Honorable Mayor and City Council
City of Cupertino, California
10300 Torre Avenue
Cupertino, CA 95014-3202
Dear Ladies and Gentlemen
This letter confirms the arrangements for Crowe LLP ("Crowe" or "us" or "we" or "our") to provide the
professional services discussed in this letter to City of Cupertino, California (the "City" or "you", "your" or
"Entity" or "Client") for the year ending June 30, 2019. The attached Crowe Engagement Terms is an integral
part of this letter, and its terms are incorporated herein.
AUDIT SERVICES
Our Responsibilities
We will audit and report on the financial statements of the governmental activities, the business -type
activities, each major fund, and the aggregate remaining fund information, including the individual fund
financial statements of the TDA which collectively comprise the basic financial statements of the City for
the period indicated.
In addition to our report on the financial statements, we plan to evaluate the presentation of the following
supplementary information in relation to the financial statements as a whole, and to report on whether this
supplementary information is fairly stated, in all material respects, in relation to the financial statements as
a whole.
• Combining and Individual Fund Financial Statements and Schedules
In addition to our report on the financial statements, we also plan to perform specified procedures in order
to describe in our report whether the following required supplementary information is presented in
accordance with applicable guidelines. However, we will not express an opinion or provide any assurance
on this information due to our limited procedures.
• Management's Discussion and Analysis
• Schedule of Changes in Net Pension Liability and Related Ratios
• Schedule of Contributions — Miscellaneous Plan
• Schedule of Changes in Net OPEB Liability and Related Ratios
•. Schedule of Contributions — OPEB
• Schedule of Investment Rate of Return - OPEB
The document will also include the following additional information that will not be subjected to the auditing
procedures applied in our audit of the financial statements, and for which our auditor's report will disclaim
an opinion:
To the Honorable Mayor and City Council
City of Cupertino, California
August 13, 2019
Page 2
• Introductory Section of the Comprehensive Annual Financial Report
• Statistical Section of the Comprehensive Annual Financial Report
• Community Profile
The objective of the audit is the expression of an opinion on the financial statements. We will plan and
perform the audit in accordance with auditing standards generally accepted in the United States of America,
and the standards for financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we obtain reasonable, rather than
absolute, assurance about whether the financial statements are free of material misstatement whether
caused by error or fraud. Because of inherent limitations of an audit, together with the inherent limitations
of internal control, an unavoidable risk that some material misstatements may not be detected exists, even
though the audit is properly planned and performed in accordance with applicable standards. An audit is
not designed to detect error or fraud that is immaterial to the financial statements.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment including the assessment
of the risks that the financial statements could be misstated by an amount we believe would influence the
financial statement users. 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.
In making our risk assessments, we consider internal control relevant to the preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances but not for the purpose of expressing an opinion on the effectiveness of the City's internal
control. However, we will communicate in writing to those charged with governance and management
concerning any significant deficiencies or material weaknesses in internal control relevant to the audit of
the financial statements that we have identified during the audit. We will communicate to management other
deficiencies in internal control identified during the audit that have not been communicated to management
by other parties and that, in our professional judgment, are of sufficient importance to merit management's
attention. We will also communicate certain matters related to the conduct of the audit to those charged
with governance, including (1) fraud involving senior management, and fraud (whether caused by senior
management or other employees) that causes a material misstatement of the financial statements,
(2) illegal acts that come to our attention (unless they are clearly inconsequential) (3) disagreements with
management and other significant difficulties encountered in performing the audit and (4) various matters
related to the City's accounting policies and financial statements. Our engagement is not designed to
address legal or regulatory matters, which matters should be discussed by you with your legal counsel.
We expect to issue a written report upon completion of our audit of the financial statements. Our report will
be addressed to City Council of the City. Circumstances may arise in which it is necessary for us to modify
our opinion, add an emphasis of matter or other matter paragraph, or withdraw from the engagement.
In addition to our report on the financial statements and supplemental information, we plan to issue the
following reports:
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and
Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government
Auditing Standards — The purpose of this report is solely to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing, and not to provide an
opinion on internal control over financial reporting or on compliance. This report is an integral part of
an audit performed in accordance with Government Auditing Standards in considering the City's internal
control and compliance. Accordingly, this communication is not suitable for any other purpose.
As part of obtaining reasonable assurance about whether the financial statements are free of material
misstatement, we will also perform tests of your compliance with applicable laws, regulations, contracts and
To the Honorable Mayor and City Council
City of Cupertino, California
August 13, 2019
Page 3
grants. However, 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 errors, irregularities, or illegal acts,
including fraud or defalcations, may exist and not be detected by us. The objective of our audit of
compliance relative to the financial statements will not be to provide an opinion on overall compliance with
such provisions, and we will not express such an opinion. We will advise you, however, of any matters of
that nature that come to our attention, unless they are clearly inconsequential.
Our audit and work product are intended for the benefit and use of the City only. The audit will not be
planned or conducted in contemplation of reliance by any other party or with respect to any specific
transaction and is not intended to benefit or influence any other party. Therefore, items of possible interest
to a third party may not be specifically addressed or matters may exist that could be assessed differently
by a third party.
The working papers for this engagement are the property of Crowe and constitute confidential information.
However, we may be requested to make certain working papers available to your oversight agency or
grantors pursuant to authority given to them by law, regulation, or contract. If requested, access to such
working papers will be provided under the supervision of our personnel. Furthermore, upon request, we
may provide photocopies of selected working papers to your oversight agency or grantors. The working
papers for this engagement will be retained for a minimum of three years after the date our report is issued
or for any additional period requested by the oversight agency 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 contesting the audit finding for guidance prior to destroying the working papers.
Government Auditing Standards require that we provide you with a copy of our most recent peer review
report, which accompanies this letter along with the related letter of comment and response thereto.
The City's Responsibilities
The City's management is responsible for the preparation and fair presentation of the financial statements
in accordance with accounting principles generally accepted in the United States of America. Management
is also responsible for the design, implementation and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement, whether
due to error or fraud. The City's management is also responsible for complying with applicable laws,
regulations, contracts and grants and such responsibility extends to identifying the requirements and
designing internal control policies and procedures to provide reasonable assurance that compliance is
achieved.
Management has the responsibility to adopt sound accounting policies, maintain an adequate and efficient
accounting system, safeguard assets, and design and implement programs and controls to prevent and
detect fraud. Management's judgments are typically based on its knowledge and experience about past
and current events and its expected courses of action. Management's responsibility for financial reporting
includes establishing a process to prepare the accounting estimates included in the financial statements.
Management is responsible for providing to us, on a timely basis, all information of which management is
aware that is relevant to the preparation and fair presentation of the financial statements, such as records,
documentation, and other matters. Management is also responsible for providing such other additional
information we may request for the purpose of the audit, and unrestricted access to persons within the City
from whom we determine it necessary to obtain audit evidence. Additionally, those charged with
governance are responsible for informing us of their views about the risks of fraud within the City, and their
knowledge of any fraud or suspected fraud affecting the City.
Management is responsible for adjusting the financial statements to correct material misstatements related
to accounts or disclosures. As part of our audit process, we will request from management written
confirmation concerning representations made to us in connection with the audit, including that the effects
To the Honorable Mayor and City Council
City of Cupertino, California
August 13, 2019
Page 4
of any uncorrected misstatements aggregated by us during the audit are immaterial, both individually and
in the aggregate, to the financial statements and to compliance with the requirements of its Federal
programs. Management acknowledges the importance of management's representations and responses to
our inquiries, and that they will be utilized as part of the evidential matter we will rely on in forming our
opinion. Because of the importance of management's representations to an effective audit, you agree to
release Crowe and its personnel from any liability and costs relating to our services under this letter
attributable to any misrepresentations by management.
Management is responsible for the preparation of the supplementary information identified above in
accordance with the applicable criteria. As part of our audit process, we will request from management
certain written representations regarding management's responsibilities in relation to the supplementary
information presented, including but not limited to its fair presentation in accordance with the applicable
criteria, the method of measurement and presentation and any significant assumptions or interpretations
underlying the supplementary information. In addition, it is management's responsibility to include the
auditor's report on supplementary information in any document that contains the supplementary information
and that indicates that we have reported on such supplementary information. It is also management's
responsibility to present the supplementary information with the audited financial statements or, if the
supplementary information will not be presented with the audited financial statements, to make the audited
financial statements readily available to the intended users of the supplementary information no later than
the date of issuance by the City of the supplementary information and the auditor's report thereon.
Management is responsible for the preparation of the required supplementary information identified above
in accordance with the applicable guidelines. We will request from management certain written
representations regarding management's responsibilities in relation to the required supplementary
information presented, including but not limited to whether it has been measured and presented in
accordance with prescribed guidelines, the method of measurement and presentation and any significant
assumptions or interpretations underlying the supplementary information.
OTHER SERVICES
Preparation of the following additional reports on behalf of the City:
1. State of California Annual State Controller's Report
Financial Statement Preparation
The City will provide us with the necessary information to assist in the preparation of the draft financial
statements including the notes thereto. We are relying on the City to provide us with the detailed trial
balance, note disclosure information and any other relevant report information in a timely fashion and
ensure the data is complete and accurate. Management is solely responsible for the presentation of the
financial statements.
With respect to the above other services, we will perform the services in accordance with applicable
professional standards. We, in our sole professional judgment, reserve the right to refuse to do any
procedure or take any action that could be construed as making management decisions or assuming
management responsibilities. In connection with performing the above other services, you agree to: assume
all management responsibilities including making all management decisions; oversee the service by
designating an individual, preferably within senior management, who possesses suitable skill, knowledge,
and/or experience; evaluate the adequacy and results of the services performed; and accept responsibility
for the results of the services.
To the Honorable Mayor and City Council
City of Cupertino, California
August 13, 2019
Page 5
BOND OFFERINGS
With respect to any official statements issued by the City with which Crowe is not involved, the official
statement should indicate that the auditor is not involved with the contents of such official statement. The
disclosure should read as:
"Crowe LLP, our independent auditor, has not been engaged to perform and has not performed, since
the date of its report included herein, any procedures on the financial statements addressed in that report.
Crowe LLP also has not performed any procedures relating to this official statement."
FEES
Our fees, including out-of-pocket expenses and certain internal technology charges, are outlined below.
Certain internal technology charges will be billed per hour of professional time or at a flat fee. Internal
technology charges reflect our estimate of the costs for technology and related support on this engagement.
Our invoices are due and payable upon receipt. Invoices that are not paid within 30 days of receipt are
subject to a monthly interest charge of one percent per month or the highest interest rate allowed by law,
whichever is less, which we may elect to waive at our sole discretion, plus costs of collection including
reasonable attorneys' fees. If any amounts invoiced remain unpaid 30 days after the invoice date, you agree
that Crowe may, in its sole discretion, cease work until all such amounts are paid or terminate this
engagement.
Audit of City financial statements for the year ending June 30,2019 (includes
CAFR, TDA, City Investment Policy, Proposition 111, City State Controller
Report and Report of Internal Controls) $ 76,000
Circumstances may arise under which we must perform additional work and, thus, require additional billings
for our services. Examples of such circumstances include, but are not limited to:
• Changing audit requirements
• New professional standards or regulatory requirements
• New financial statement disclosures
• Work caused due to the identification of, and management's correction of, inappropriate application of
accounting pronouncements
• Erroneous or incomplete accounting records
• New or unusual transactions
• Change in your organizational structure or size due to merger and acquisition activity or other events
• Change in your controls
• Agreed -upon level of preparation and assistance from your personnel not provided
• Failure of your staff to prepare information in a timely manner
• Numerous revisions to your information
• Lack of availability of appropriate City personnel during audit fieldwork.
Additionally, to accommodate requests to reschedule audit fieldwork without reasonable notice, additional
billings for our services could be required, and our assigned staffing and ability to meet agreed -upon
deadlines could be impacted.
Our fee assumes that we will be provided with auditable trial balances for all funds at year end, that all bank
accounts and investment accounts will be reconciled through the end of the year being audited to the trial
balances, that interfund and transfer accounts will balance, that subsidiary ledgers will reconcile to the
general ledger and that beginning fund equity amounts will be reconcilable to prior year audited ending fund
equity. We assume that the City will cooperate with our requests for information such as explanations of
account activity.
To the Honorable Mayor and City Council
City of Cupertino, California
August 13, 2019
Page 6
Additionally, we assume the City will provide a copy of the capital assets ledger including current year
additions and dispositions and depreciation by functional expense. We assume that requested records such
as invoices, contracts, grant agreements and supporting documentation will be located and provided to us.
We also assume the City will prepare confirmation letters, the Introductory Section, the MD&A section, the
Statistical section of the report and the Community Profile section of the report.
Our fee does not include implementation of any other future accounting or auditing pronouncements and/or
government requirements that may change, thus, the scope or amount of auditing necessary to complete
our engagements may increase beyond what is currently anticipated. Should such events occur, we would
present you with our estimate of any possible increase prior to beginning our audit for the given year. An
equitable adjustment in the proposed fee will be negotiated if the cost of time required for performance of
the audit service is increased or decreased pursuant to a change in scope of the audit requested by the
City or required by State or Federal regulations.
When we become aware of circumstances which impact the amount or scheduling of our work, we will
issue, for your approval, a formal change order detailing the reason and the anticipated impact of the
change.
Our fees are exclusive of taxes or similar charges, as well as customs, duties or tariffs, imposed in respect
of the Services, any work product or any license, all of which Client agrees to pay if applicable or if they
become applicable (other than taxes imposed on Crowe's income generally), without deduction from any
fees or expenses invoiced to Client by Crowe.
To facilitate Crowe's presence at Client's premises, Client will provide Crowe with internet access while on
Client's premises. Crowe will access the internet using a secure virtual private network. Crowe will be
responsible for all internet activity performed by its personnel while on Client's premises.
MISCELLANEOUS
For purposes of this Miscellaneous section, the Acceptance section below, and all of the Crowe
Engagement Terms, "Client" will mean the entity(ies) defined in the first paragraph of this letter and will also
include all related parents, subsidiaries, and affiliates of Client who may receive or claim reliance upon any
Crowe deliverable.
Crowe will provide the services to Client under this Agreement as an independent contractor and not as
Client's partner, agent, employee, or joint venturer under this Agreement. Neither Crowe nor Client will
have any right, power or authority to bind the other party.
This engagement letter agreement (the "Agreement") reflects the entire agreement between the parties
relating to the services (or any reports, deliverables or other work product) covered by this Agreement. The
engagement letter and any attachments (including without limitation the attached Crowe Engagement
Terms) are to be construed as a single document, with the provisions of each section applicable throughout.
This Agreement may not be amended or varied except by a written document signed by each party. It
replaces and supersedes any other proposals, correspondence, agreements and understandings, whether
written or oral, relating to the services covered by this letter, and each party agrees that in entering this
Agreement, it has not relied on any oral or written representations, statements or other information not
contained in or incorporated into this Agreement. Any non -disclosure or other confidentiality agreement is
replaced and superseded by this Agreement. Each party shall remain obligated to the other party under all
provisions of this Agreement that expressly or by their nature extend beyond and survive the expiration or
termination of this Agreement. If any provision (in whole or in part) of this Agreement is found unenforceable
or invalid, this will not affect the remainder of the provision or any other provisions in this Agreement, all of
which will continue in effect as if the stricken portion had not been included. This Agreement may be
To the Honorable Mayor and City Council
City of Cupertino, California
August 13, 2019
Page 7
executed in two or more actual, scanned, emailed, or electronically copied counterparts, each and all of
which together are one and the same instrument. Accurate transmitted copies (transmitted copies are
reproduced documents that are sent via mail, delivery, scanning, email, photocopy, facsimile or other
process) of the executed Agreement or signature pages only (whether handwritten or electronic signature),
will be considered and accepted by each party as documents equivalent to original documents and will be
deemed valid, binding and enforceable by and against all parties. This Agreement must be construed,
governed, and interpreted under the laws of the State of Illinois, without regard for choice of law principles.
We are pleased to have this opportunity to serve you, and we look forward to a continuing relationship. If
the terms of this letter and the attached Crowe Engagement Terms are acceptable to you, please sign
below and return one copy of this letter at your earliest convenience. Please contact us with any questions
or concerns.
(Signature Page follows)
To the Honorable Mayor and City Council
City of Cupertino, California
August 13, 2019
Page 8
ACCEPTANCE
I have reviewed the arrangements outlined above and in the attached "Crowe Engagement Terms," and I
accept on behalf of the Client the terms and conditions as stated. By signing below, I represent and warrant
that I am authorized by Client to accept the terms and conditions as stated.
IN WITNESS WHEREOF, Client and Crowe have duly executed this engagement letter effective the date
first written above.
Crowe LLP and the Engagement Authorized Signer below are licensed or otherwise
authorized by the California Board of Accountancy.
City of Cupertino, California
Signature
M-�t
Printed Name
Woo Qmco
Title
Date
CITY COUNCIL APPROVAL:
Crowe LLP
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Signature
Katherine V. Lai
Printed Name
Partner
Title
August13 2019
Date
The City Council has reviewed the services and Crowe Engagement Terms described in this letter and
evaluated the services pursuant to the Client's policies. After considering all relevant factors, the Audit
Committee or those charged with governance hereby approve hiring Crowe to provide the services
described above.
Authorized Representative of the City Council:
gnature
Printed Name
Title
Date —
Crowe Engagement Terms
Crowe wants Client to understand the terms under which Crowe provides its services to Client and the
basis under which Crowe determines its fees. These terms are part of the Agreement and apply to all
services described in the Agreement as well as all other services provided to Client (collectively, the
"Services"), unless and until a separate written agreement is executed by the parties for separate services.
Any advice provided by Crowe is not intended to be, and is not, investment advice.
CLIENT'S ASSISTANCE — For Crowe to provide Services effectively and efficiently, Client agrees to
provide Crowe timely with information requested and to make available to Crowe any personnel, systems,
premises, records, or other information as reasonably requested by Crowe to perform the Services. Access
to such personnel and information are key elements for Crowe's successful completion of Services and
determination of fees. If for any reason this does not occur, a revised fee to reflect additional time or
resources required by Crowe will be mutually agreed. Client agrees Crowe will have no responsibility for
any delays related to a delay in providing such information to Crowe. Such information will be accurate and
complete, and Client will inform Crowe of all significant tax, accounting and financial reporting matters of
which Client is aware.
PROFESSIONAL STANDARDS — As a regulated professional services firm, Crowe must follow
professional standards when applicable, including the Code of Professional Conduct of the American
Institute of Certified Public Accountants ("AICPA"). Thus, if circumstances arise that, in Crowe's
professional judgment, prevent it from completing the engagement, Crowe retains the right to take any
course of action permitted by professional standards, including declining to express an opinion or issue
other work product or terminating the engagement.
REPORTS — Any information, advice, recommendations or other content of any memoranda, reports,
deliverables, work product, presentations, or other communications Crowe provides under this Agreement
("Reports"), other than Client's original information, are for Client's internal use only, consistent with the
purpose of the Services. Client will not rely on any draft Report. Unless required by an audit or other
attestation professional standard, Crowe will not be required to update any final Report for circumstances
of which we become aware or events occurring after delivery.
CONFIDENTIALITY — Except as otherwise permitted by this Agreement or as agreed in writing, neither
Crowe nor Client may disclose to third parties the contents of this Agreement or any information provided
by or on behalf of the other that ought reasonably to be treated as confidential and/or proprietary. Client
use of any Crowe work product will be limited to its stated purpose and to Client business use only.
However, Client and Crowe each agree that either party may disclose such information to the extent that it:
(i) is or becomes public other than through a breach of this Agreement, (ii) is subsequently received by the
recipient from a third party who, to the recipient's knowledge, owes no obligation of confidentiality to the
disclosing party with respect to that information, (iii) was known to the recipient at the time of disclosure or
is thereafter created independently, (iv) is disclosed as necessary to enforce the recipient's rights under
this Agreement, or (v) must be disclosed under applicable law, regulations, legal process or professional
standards.
THIRD PARTY PROVIDER — Crowe may use a third -party provider in providing Services to Client, which
may require Crowe to share Client confidential information with the provider. If Crowe uses a third -party
provider, Crowe will enter into a confidentiality agreement with the provider to require the provider to protect
the confidentiality of Client's confidential information, and Crowe will be responsible to Client for maintaining
its confidentiality. The limitations on Client's remedies, vis-a-vis Crowe, in this Agreement will also apply to
any subcontractors.
DATA PROTECTION — If Crowe holds or uses Client information that can be linked to specific individuals
who are Client's customers ("Personal Data"), Crowe will treat it as confidential as described above and
comply with applicable US state and federal law and professional regulations (including, for financial
institution clients, the objectives of the Interagency Guidelines Establishing Information Security Standards)
in disclosing or using such information to carry out the Services. Crowe has implemented and will maintain
physical, electronic and procedural safeguards reasonably designed to (i) protect the security,
confidentiality and integrity of the Personal Data, (ii) prevent unauthorized access to or use of the Personal
Data, and (iii) provide proper disposal of the Personal Data (collectively, the "Safeguards"). Client warrants
(i) that it has the authority to provide the Personal Data to Crowe in connection with the Services, (ii) that
Client has processed and provided the Personal Data to Crowe in accordance with applicable law, and (iii)
will limit the Personal Data provided to Crowe to Personal Data necessary to perform the Services. To
provide the Services, Client may also need to provide Crowe with access to Personal Data consisting of
protected health information, financial account numbers, Social Security or other government -issued
identification numbers, or other data that, if disclosed without authorization, would trigger notification
requirements under applicable law ("Restricted Personal Data"). In the event Client provides Crowe access
to Restricted Personal Data, Client will consult with Crowe on appropriate measures (consistent with legal
requirements and professional standards applicable to Crowe) to protect the Restricted Personal Data,
such as: deleting or masking unnecessary information before making it available to Crowe, using encryption
when transferring it to Crowe, or providing it to Crowe only during on -site review on Client's site. Client will
provide Crowe with Restricted Personal Data only in accordance with mutually agreed protective measures.
Otherwise, Client and Crowe agree each may use unencrypted electronic media to correspond or transmit
information and such use will not in itself constitute a breach of any confidentiality obligations under this
Agreement.
GENERAL DATA PROTECTION REGULATION COMPLIANCE — If and to the extent that Client provides
personal data to Crowe subject to the European Union General Data Protection Regulation ("GDPR"), then
in addition to the requirements of the above Data Protection section, this section will apply to such personal
data ("EU Personal Data"). The parties agree that for purposes of processing the EU Personal Data, (a)
Client will be the "Data Controller" as defined by the GDPR, meaning the organization that determines the
purposes and means of processing the EU Personal Data; (b) Crowe will be the "Data Processor" as defined
by GDPR, meaning the organization that processes the EU Personal Data on behalf of and under the
instructions of the Data Controller; or (c) the parties will be classified as otherwise designated by a
supervisory authority with jurisdiction. Client and Crowe each agree to comply with the GDPR requirements
applicable to its respective role. Crowe has implemented and will maintain technical and organizational
security safeguards reasonably designed to protect the security, confidentiality and integrity of the EU
Personal Data. Client represents it has secured all required rights and authority, including consents and
notices, to provide such EU Personal Data to Crowe, including without limitation authority to transfer such
EU Personal Data to the U.S. or other applicable Country or otherwise make the EU Personal Data available
to Crowe, for the duration of and purpose of Crowe providing the Services. The types of EU Personal Data
to be processed include name, contact information, title, and other EU Personal Data that is transferred to
Crowe in connection with the Services. The EU Personal Data relates to the data subject categories of
individuals connected to Client, Client customers, Client vendors, and Client affiliates or subsidiaries ("Data
Subjects"). Crowe will process the EU Personal Data for the following purpose: (x) to provide the Services
in accordance with this Agreement, (y) to comply with other documented reasonable instructions provided
by Client, and (z) to comply with applicable law. In the event of a Crowe breach incident in connection with
EU Personal Data in the custody or control of Crowe, Crowe will promptly notify Client upon knowledge that
a breach incident has occurred. Client has instructed Crowe not to contact any Data Subjects directly,
unless required by applicable law. In the event that a supervisory authority with jurisdiction makes the
determination that Crowe is a data controller, Client will reasonably cooperate with Crowe to enable Crowe
to comply with its obligations under GDPR. Crowe will reasonably cooperate with Client in responding to or
addressing any request from a data subject, a supervisory authority with jurisdiction, or the Client, to the
extent necessary to enable Client to comply with its obligations under GDPR as the Data Controller. Client
will promptly reimburse Crowe for any out-of-pocket expenses and professional time at Crowe's then -
current hourly rates. Client will provide prompt written notice to Crowe (with sufficient detailed instructions)
of any data subject request or other act that is required to be performed by Crowe as the Data Processor
on behalf of Client as the Data Controller. Crowe shall promptly delete or procure the deletion of any EU
Personal Data after the cessation of any Services involving the processing of Client's EU Personal Data.
Notwithstanding the forgoing, Crowe may retain a copy of the EU Personal Data as permitted by applicable
law or professional standards, provided that such EU Personal Data remain subject to the terms of this
Agreement.
INTELLECTUAL PROPERTY — Crowe may use ideas, concepts, methodologies, data, software, designs,
utilities, tools, models, techniques, systems, Reports, or other know-how that it develops, owns or licenses
("Materials") in performing the Services. Crowe retains all intellectual property rights in the Materials
(including any improvements or knowledge developed while performing the Services), and in any working
papers compiled in providing the Services, but not in the Client information reflected in them. Upon payment
for Services and subject to the other terms of this Agreement, Client will use Reports, as well as any
Materials therein, only to the extent necessary and permitted under this Agreement.
AGGREGATED DATA — Client hereby acknowledges and agrees that Crowe may aggregate Client content
and data with content and data from other clients ("Data Aggregations") for purposes including, without
limitation, product and service development, commercialization, industry benchmarking, or quality
improvement initiatives. Crowe will scrub Client content and data so that Client sensitive information is not
disclosed and so that all data is anonymized. All Data Aggregations will be the sole and exclusive property
of Crowe.
LEGAL AND REGULATORY CHANGE — Crowe may periodically communicate to Client changes in laws,
rules or regulations. However, Client has not engaged Crowe, and Crowe does not undertake an obligation,
to advise Client of changes in (a) laws, rules, regulations, industry or market conditions, or (b) Client's own
business practices or other circumstances (except to the extent required by professional standards). The
scope of Services and the fees for Services are based on current laws and regulations. If changes in laws
or regulations change Client's requirements or the scope of the Services, Crowe's fees will be modified to
a mutually agreed amount to reflect the changed level of Crowe's effort.
PUBLICATION — Client agrees to obtain Crowe's specific permission before using any Report or Crowe
work product or Crowe's firm's name in a published document, and Client agrees to submit to Crowe copies
of such documents to obtain Crowe's permission before they are filed or published.
CLIENT REFERENCE — From time to time Crowe is requested by prospective clients to provide references
for Crowe service offerings. Client agrees that Crowe may use Client's name and generally describe the
nature of Crowe's engagement(s) with Client in marketing to prospects, and Crowe may also provide
prospects with contact information for Client personnel familiar with Crowe's Services.
NO PUNITIVE OR CONSEQUENTIAL DAMAGES — Any liability of Crowe will not include any
consequential, special, incidental, indirect, punitive, or exemplary damages or loss, nor any lost profits,
goodwill, savings, or business opportunity, even if Crowe had reason to know of the possibility of such
damages.
LIMIT OF LIABILITY — Except where it is judicially determined that Crowe performed its Services with gross
negligence orwillful misconduct, Crowe's liability will not exceed fees paid by Client to Crowe for the portion
of the work giving rise to liability. A claim for a return of fees paid is the exclusive remedy for any damages.
This limit of liability will apply to the full extent allowed by law, regardless of the grounds or nature of any
claim asserted, including, without limitation, to claims based on principles of contract, negligence or other
tort, fiduciary duty, warranty, indemnity, statute or common law. This limit of liability will also apply after this
Agreement.
INDEMNIFICATION FOR THIRD -PARTY CLAIMS — In the event of a legal proceeding or other claim
brought against Crowe by a third party, except where it is judicially determined that Crowe performed
Services with gross negligence or willful misconduct, Client agrees to indemnify and hold harmless Crowe
and its personnel against all costs, fees, expenses, damages and liabilities, including attorney fees and any
other fees or defense costs, associated with such third -party claim, relating to or arising from any Services
performed or work product provided by Crowe that Client uses or discloses to others or this engagement
generally. This indemnification is intended to apply to the full extent allowed by law, regardless of the
grounds or nature of any claim, liability, or damages asserted, including, without limitation, to claims, liability
or damages based on principles of contract, negligence or other tort, fiduciary duty, warranty, indemnity,
statute or common law. This indemnification will also apply after termination of this Agreement.
NO TRANSFER OR ASSIGNMENT OF CLAIMS — No claim against Crowe, or any recovery from or against
Crowe, may be sold, assigned or otherwise transferred, in whole or in part.
TIME LIMIT ON CLAIMS — In no event will any action against Crowe, arising from or relating to this
engagement letter or the Services provided by Crowe relating to this engagement, be brought after the
earlier of 1) two (2) years after the date on which occurred the act or omission alleged to have been the
cause of the injury alleged; or 2) the expiration of the applicable statute of limitations or repose.
RESPONSE TO LEGAL PROCESS — If Crowe is requested by subpoena, request for information, or
through some other legal process to produce documents or testimony pertaining to Client or Crowe's
Services, and Crowe is not named as a party in the applicable proceeding, then Client will reimburse Crowe
for its professional time, plus out-of-pocket expenses, as well as reasonable attorney fees, Crowe incurs in
responding to such request.
MEDIATION — If a dispute arises, in whole or in part, out of or related to this engagement, or after the date
of this agreement, between Client or any of Client's affiliates or principals and Crowe, and if the dispute
cannot be settled through negotiation, Client and Crowe agree first to try, in good faith, to settle the dispute
by mediation administered by the American Arbitration Association, under its mediation rules for
professional accounting and related services disputes, before resorting to litigation or any other dispute -
resolution procedure. The results of mediation will be binding only upon agreement of each party to be
bound. Costs of any mediation will be shared equally by both parties. Any mediation will be held in Chicago,
Illinois.
JURY TRIAL WAIVER — FOR ALL DISPUTES RELATING TO OR ARISING BETWEEN THE PARTIES,
THE PARTIES AGREE TO WAIVE A TRIAL BY JURY TO FACILITATE JUDICIAL RESOLUTION AND TO
SAVE TIME AND EXPENSE. EACH PARTY AGREES IT HAS HAD THE OPPORTUNITY TO HAVE ITS
LEGAL COUNSEL REVIEW THIS WAIVER. THIS WAIVER IS IRREVOCABLE, MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND APPLIES TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS WRITTEN CONSENT TO A BENCH TRIAL WITHOUT A JURY.
HOWEVER, AND NOTWITHSTANDING THE FOREGOING, IF ANY COURT RULES OR FINDS THIS
JURY TRIAL WAIVER TO BE UNENFORCEABLE AND INEFFECTIVE IN WAIVING A JURY, THEN ANY
DISPUTE RELATING TO OR ARISING FROM THIS ENGAGEMENT OR THE PARTIES' RELATIONSHIP
GENERALLY WILL BE RESOLVED BY ARBITRATION AS SET FORTH IN THE PARAGRAPH BELOW
REGARDING "ARBITRATION."
ARBITRATION — If any court rules or finds that the JURY TRIAL WAIVER section is not enforceable, then
any dispute between the parties relating to or arising from this Agreement or the parties' relationship
generally will be settled by binding arbitration in Chicago, Illinois (or a location agreed in writing by the
parties). Any issues concerning the extent to which any dispute is subject to arbitration, or concerning the
applicability, interpretation, or enforceability of any of this Section, will be governed by the Federal
Arbitration Act and resolved by the arbitrator(s). The arbitration will be governed by the Federal Arbitration
Act and resolved by the arbitrator(s). Regardless of the amount in controversy, the arbitration will be
administered by JAMS, Inc. ("JAMS"), pursuant to its Streamlined Arbitration Rules & Procedures or such other
rules or procedures as the parties may agree in writing. In the event of a conflict between those rules and
this Agreement, this Agreement will control. The parties may alter each of these rules by written agreement.
If a party has a basis for injunctive relief, this paragraph will not preclude a party seeking and obtaining
injunctive relief in a court of proper jurisdiction. The parties will agree within a reasonable period of time
after notice is made of initiating the arbitration process whether to use one or three arbitrators, and if the
parties cannot agree within fifteen (15) business days, the parties will use a single arbitrator. In any event
the arbitrator(s) must be retired federal judges or attorneys with at least 15 years commercial law experience
and no arbitrator may be appointed unless he or she has agreed to these procedures. If the parties cannot
agree upon arbitrator(s) within an additional fifteen (15) business days, the arbitrator(s) will be selected by
JAMS. Discovery will be permitted only as authorized by the arbitrator(s), and as a rule, the arbitrator(s) will
not permit discovery except upon a showing of substantial need by a party. To the extent the arbitrator(s)
permit discovery as to liability, the arbitrator(s) will also permit discovery as to causation, reliance, and
damages. The arbitrator(s) will not permit a party to take more than six depositions, and no depositions may
exceed five hours. The arbitrator(s) will have no power to make an award inconsistent with this Agreement.
The arbitrator(s) will rule on a summary basis where possible, including without limitation on a motion to
dismiss basis or on a summary judgment basis. The arbitrator(s) may enter such prehearing orders as may
be appropriate to ensure a fair hearing. The hearing will be held within one year of the initiation of arbitration,
or less, and the hearing must be held on continuous business days until concluded. The hearing must be
concluded within ten (10) business days absent written agreement by the parties to the contrary. The time
limits in this section are not jurisdictional. The arbitrator(s) will apply substantive law and may award
injunctive relief or any other remedy available from a judge. The arbitrator(s) may award attorney fees and
costs to the prevailing party, and in the event of a split or partial award, the arbitrator(s) may award costs
or attorney fees in an equitable -manner. Any award by the arbitrator(s) will be accompanied by a reasoned
opinion describing the basis of the award. Any prior agreement regarding arbitration entered by the parties
is replaced and superseded by this agreement. The arbitration will be governed by the Federal Arbitration
Act, 9 U.S.C. §§ 1 et seq., and judgment upon the award rendered by the arbitrator(s) may be entered by
any court having jurisdiction thereof. All aspects of the arbitration will be treated by the parties and the
arbitrator(s) as confidential.
NOTIFICATION OF NON -LICENSEE OWNERSHIP — Crowe ("the Firm") and certain owners of the Firm
are licensed by the California State Board of Accountancy. However, the Firm has owners not licensed by
the California State Board of Accountancy who may provide Services under this agreement. If Client has
any questions regarding licensure of the personnel performing Services under this engagement, please do
not hesitate to contact Crowe.
NON -SOLICITATION — Each party acknowledges that it has invested substantially in recruiting, training
and developing the personnel who render services with respect to the material aspects of the engagement
("Key Personnel"). The parties acknowledge that Key Personnel have knowledge of trade secrets or
confidential information of their employers that may be of substantial benefit to the other party. The parties
acknowledge that each business would be materially harmed if the other party was able to directly employ
Key Personnel. Therefore, the parties agree that during the period of this Agreement and for one (1) year
after its expiration or termination, neither party will solicit Key Personnel of the other party for employment
or hire the Key Personnel of the other party without that party's written consent unless hiring or engaging
party pays to the other party a fee equal to the hired or engaged Key Personnel's compensation for the
prior twelve-month period with the other party.
CROWE GLOBAL NETWORK — Crowe LLP and its subsidiaries are independent members of Crowe Global,
a Swiss organization. "Crowe" is the brand used by the Crowe Global network and its member firms, but it is
not a worldwide partnership. Crowe Global and each of its members are separate and independent legal
entities and do not obligate each other. Crowe LLP and its subsidiaries are not responsible or liable for any
acts or omissions of Crowe Global or any other Crowe Global members, and Crowe LLP and its subsidiaries
specifically disclaim any and all responsibility or liability for acts or omissions of Crowe Global or any other
Crowe Global member. Crowe Global does not render any professional services and does not have an
ownership or partnership interest in Crowe LLP or any other member. Crowe Global and its other members
are not responsible or liable for any acts or omissions of Crowe LLP and its subsidiaries and specifically
disclaim any and all responsibility or liability for acts or omissions of Crowe LLP and its subsidiaries. Visit
www.crowe.com/disclosure for more information about Crowe LLP, its subsidiaries, and Crowe Global.
The Peer Review Report provided is of Crowe Horwath LLP due to the most recent
peer review being conducted prior to our legal name change on June 1, 2018.
wherry Bekaert
System Review Report
To the Partners of Crowe Horwath LLP
and the AICPA National Peer Review Committee
We have reviewed the system of quality control for the accounting and auditing practice of Crowe Horwath LLP
(the "firm") applicable to engagements not subject to PCAOB permanent inspection in effect for the year ended
March 31, 2016, Our peer review was conducted in accordance with the Standards for Performing and
Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public
Accountants. As a part of our peer review, we considered reviews by regulatory entities, if applicable, in
determining the nature and extent of our procedures. The firm is responsible for designing a system of quality
control and complying with it to provide the firm with reasonable assurance of performing and reporting in
conformity with applicable professional standards in all material respects. Our responsibility is to express an
opinion on the design of the system of quality control and the firm's compliance therewith based on our review.
The nature, objectives, scope, limitations of, and the procedures performed in a System Review are described in
the standards at www.aicpa.org/prsummary.
As required by the standards, engagements selected for review included engagements performed under
Government Auditing Standards, audits of employee benefit plans, audits performed under FDICIA, audits of
carrying broker -dealers, and examinations of service organizations [Service Organizations Control (SOC) 1 and
SOC 2 engagements].
In our opinion, the system of quality control for the accounting and auditing practice of Crowe Horwath LLP
applicable to engagements not subject to PCAOB permanent inspection in effect for the year ended March 31,
2016, has been suitably designed and complied with to provide the firm with reasonable assurance of
performing and reporting in conformity with applicable professional standards in all material respects. Firms can
receive a rating of pass, pass with deficiency(ies) or fail. Crowe Horwath LLP has received a peer review rating
of pass.
�J
Cherry Bekaert LLP
August 23, 2016
H/� � C"1 �� American InSlih�te Gf CPAs
). Peer Review Program 22O Leigh Farm Road
Administered aythe National Peer Review Committee Durham, NC 27707-8110
October 31, 2016
James L Powers
Crowe Horwath LLP
225 W Wacker Dr Ste 2600
Chicago, IL 60606
Dear Mr. Powers:
It is my pleasure to notify you that on October 27, 2016 the National Peer Review Committee accepted
the report on the most recent system peer review of your firm. The due date for your next review is
September 30, 2019. This is the date by which all review documents should be completed and submitted
to the administering entity.
As you know, the report had a peer review rating of pass. The Committee asked me to convey its
congratulations to the firm.
Sincerely,
# 'I 'Ill",
Michael Fawley
Chair —National PRC
nprc@aicpa.org 919 4024502
cc: Samuel Edward Johnson; Scot D Ivey
Firm Number: 100 14904
Letter ID: 1122915A
Review Number 446067
T 1.919A02.4502 1 F: 1.919.402.4876 1 nprc@aicpa.org