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2010-03-16 4-C Exhibit 6M AZE ASSOt^ /A TES Jane 11 1 n da James Finance Director City of Alameda. 2.263 Santa Clara Avenue Alameda, Califcmia 94501 Dear Zen d a: ACCOUNTANCY CORPORATION 7 670 Riviera Avenue -Suffe 700 Walnut Creek, Califomic 945 10 930 -0902 FAX 0-01 Vie are pleased to confirm i u r understanding of the scrvices we are to provide for tb e City of Alameda for the year ended Tun 1992. The services we have been engaged to provi e axe outlined below, but we are als o avai l abl, e to pr o vide accoun ting an d co n sulti n g service s at y our re quest. 1 Audit of the general puTpose f anci l statements. Review and assistance in preparation of the Comprehensive Annual Financial Report. rt. Audit of the component unit financial l s totem en is of the City of Alameda onnnu n it lImprovement Commission. 4;1 Testing of compliance with uu'del Ines for Compliance Audits of California Redevelopment Agen ies for tale City of Al mneda Commun i ty Im py ovcment C o rri sion an d issu an cc of our report thereon. Te sting of ompli an e i th the in 1 e u d i t Ac of 1 84 are d pp] i cable laws n d reg at ns and issuance of our report thereon. -alit of the comp o n ent unit Fin a.n i 1 statements of the City f amc da Residential Mortgage Revenue Bond Fund Issue of 1984. 7) Audit of the component unit fin n i .l statements of the i ty of Alameda Polio and Fire etir anent Sys tem Pen si on Plans 10 79 an d 10 8 2. fM Tests of compliance for Metropolitan Transportation Commission/Transportation Dev el open c n t Act Pr o gr ams an d prep arati on o t re q od reports, Prep arat lo n of En terprise Fan d bu.d get v r u s actu ai s tat ni.e rats. Council City Exhibit 6 to Agenda Item #4- 03 Pros essian a Page 10 Preparation and printing of color graphs and review of statistical informs iation. l l Perform procedures and is sue agreed upo procedures opinion to comply with Propo l 11. 1 Test SB36X State gran fog c ompliance with Metropolitan Tran sportation C omm] ss i on /Tran sportati o n bevel opment Act requirem eats are d prep aration ofrequired report for the ycar end June 30, 199 Test Me asure B fury ds for com pl i an ce with th e Agreement for Dis tributi o n o f Meas ure B Fun to Local Agencies. audi t w il l b e a S in gl e Audit m ad e in accordance with gen eral ly ac ept.e d auditin g s tan dard s for f inan vial a ud] is co n t ain ed in G o vernm nt u d iting Stand arils, i su e d by the Comptr o X l er GeD er al o f the United States; the Single Audit Act of 19 84; and the provisions of OMB Circular A --128, Audits of Late an d Lo cal Go v crnrn nts and will includ e tests of the a ec -nti n g record s of th e City o f am cda and other proced we consider necess t o enable us to ex press an u n qu fied opinion that the fin an ci al s tatem en is are fairly presen to d, in all m aterial respects, in conformity 'or t y with generally accepte accept d accounting prin eiplcs and to report on th Sched o f Fe Fi nanc ial Assistan on th e Ci of d arced a f or a Sin A ud it. if our opinio are other than unqualifie w will fully d iscus s the reasons with you ill advance. Our procedures will in clu de tests of d nou n .r evidence uppo rtin g the transactions recorded in the a cc o un is, an d rnay in el ude tes is o th e ph ys ieal e is tense of inventories, and direct c o ref =a.tio n with S .,lected roil ividuals, cre dito rs, an d banks W e will expect written represen tati o n s fr om y our attorneys a S part of the engagement, and they m ay gill you for responding t o this inquiry. A the con CIusion of our audit w w ill also re quest certaiD written representations from you about the financial statements and related matters. Pkn audit includes e ala ning, on a test basis, eviden supporting the amounts and disclo in the financial statements; therefore, `ore, our audit will involve judgement about the numtrer of transactions to tie examined and the areas to b tes d Also, w will plan and perform the audit to obtain -reasonable ass u r an ee about. wb etb er the fin an ci al statements arc free of m at ri al miss taternent. As require d by the Single Audit Act of 1 our audit will include Wsts of transactions related to federal assistance pr o gra.rns for compliance with appl laws an regulations. H because o f th conc.(:,- of reasonable assurance and because we will not perf onn a de fled e of all transacti there Is a risk that materia .l errors, irregul arities or legal acts, cl u d in g fr au d o r dof'a.l c at i o n s, may exis t are d riot be detected by us. We will advise you of any matters of that nature th a.t come to our attention and will include such matters rs ire the reports re q aired for a Single Audit. Our responsibility as audi is l:irnitd to the period covered by our audit an does not extend to matters that might arise during any later periods for wh ich we are n ot en gaged as auditors Page We understand that you wil provide us with the bas in req uired for our audit and that y are r n ible :for the accuracy completeness o p1 ne of that info ti on W will advise you bout a-ppropriate a ccoun till g grin cipl es s tatements, b ut th e re spo ns ibihty f or tai efi n an vial st ate eats remain rith y o u. This re spo n sibility includes the rn ain t na;nce of adequate r c orris and related in tern a I control sixucture po licies and pr o c duce the selection and application of accoun principles, and th e s afeguarding of assets. W e und erstand I h a.t. y o ux employees will type a]] cash or o co nFmn a.ti we reques an w ill I an y invoices and othe d ocumentation selecte by us for te sting. ur audit s are n u t s pecif ica fly des i n ed an d Cann o t be relic d o n to disc] o se deficiencies i� tb e d es ign o r operation of the internal control structare. However, during the audits, if we become aware of such c c n d iti o n s or w ay s that we bel iev e m an a.gement pr actices can be improv ed, we wit l c omm ti nic ate thcm to you in a sepa:rate letter. ou r fces. fo r th es e services wil l be based on the actual tirne s peat a t o ur s tan lard h curl y rate plus travel a n d oth er out o f' po c et c s is such as rep ort pro du cti on typing, po stage, etc. o ur sta.n da.rd h ourl y rates v ary a ccor din g t o tb e degree o f responsibil i ty in v o l ved an d the experiencc lev cl of tb e peg`s o nn el assign ed to y our audits. o ur my o ices for these fees w ill be ren dered each month a wo rk progres and are pay o n presen In accor w i our firm policies o r a y b s usp cnded if y our a o thirty or m ore o verdue and may not be resumed until your account is p in full. We appreci ate fl o ppo rtumky to be f service to th e City o f Al wn d a. an d bell eve this let ter accurate] s unm ari e s the signif*i an t. tenors o f. o ur engagemen t. If you h ave an y q u s do ns, pleas e l et -as kn o w. If y agree witb fhe t of our engagement as described in this letter, please sign the enclosed copy and ret it to u. Yours very truly, F R This letter co rreal y sets fo rtb the un derstan dig g o f the City of Ali am ed a. ]3y: ]Date: Cit of Alameda Engagement Letter 1992 Audit Fees Attachment Our fees for the work as described in the attached txn a ement letter F ill be follows: item F 1&2 544,415 3 4 2,4.8 3,423 7 3,974 14 3,497 10 3,601 11 1,035 1. 2 13 7 Total $67 -.Ph ese fee s are base d o n antieip ated c o o pera.ti on fir om y o ar perso nnel as i s cus sed i n o ur letter a bo ve and the assumption th t unexpected circumstances Till not be encountered durffig the audits. If Si n] 6 can t a d d:Eti o nal time is necess ar we will d iscus s it with y ou an d arriv e at a new fee befo re we 4 ncur any addiOna.l costs. I )kZE ASSOCIATES A CCOUNTANCY CORPORATION 16 70 Ri viera A vet? u -Suite 10 Woln ut Creek Califomi 945 (5 1 0) 930 "0902 FAX 930-0135 March 5. 1997 enda James F irmnce Director City of Alameda East Wing, Hi storic.Alam Wa H igh School 22 5 o Central Av en ue Atameda, Califomia 94501 Dear Zeiida: 2. are pl eased to eonf m our underAn din g of he servi ces w e. are to provide for the C icy o Alameda for h e year en d ed Jun .e 3 0, 19 97 f Th s rvi oe s we hav e been en gaged to p row idle are outl in ed b el ow, but we are alcSo avai 1 ab I e to prov ide a ezounting and con suiting service s at your request. 1 Audit of ,md assistance in preparation of he Comprehensive A m ual Financial RepoM including pr parati o u of Enterpris e Fund bu dget versus actual statements, GASH 10 compl ianee, preparation an print' ig o f co lor graphs and review of statistical inf6nnation. Audit of the component unit financial statements of the City of Alarneda Community Improvement omm is s ion, t of com with Guidelines for Compliance Audits of California ed evelopm ent Agencie s, ineludin g AB 129 0 comp 1 i ance tests, and is suanee o f our re ports. Testing of compliance wih the Single Audit Act of 1984 and applicable laws an regulations and is suance o f our re port hereon. 4 A unit o f the component unit fi nan dia statements of h e C ity of Alam eda Pot i oe an d lire Retirem ent S Y stn����P��rr and 10 Imp 1 em eutati on of the Govemmental Accounting Standards Board Statement 27, Accounting for Pensions by State and Local Go Employees. Te sts of comp lian oe for Me tropol itan Trwisp ortation Commission/Transportation Developm Act Programs: and prep arati on of requimedi reports. 7) Perform procedures and issue agreed upon procedures opinion to comply with Propositi 111. 9 4 Test M mure B fu nds for compli nce with he Agreem f or Distribution of Measure B Fun to Focal Agencies Perform procedures and issue agreed upon procedures to comply with County reporting DO requirements for the P Citation System and issue our report the reon. 1 d) Preparation of Memorandum on Internal Control. l X Implementation of the Governmental Accounti Standards Board Statement 25, Financial R eporting for Defined Benefit Pon i on Plans and Dote Disclosure fo Defend Contribution Plan. Our audit will be a Single Audit made in accordance with generally accepted auditing standards for financial audits contained in Government Auditing Standards, is sued by the Comptroller General of the n ii2d States; th e S ingl e Aud it Act of 19 84 an d th e provision s o f OMB C it ul 12 9, Audits of State and Local o e rntma.-nts and will include tests of the accounting records of the City and other procWure s we e nS i der nece s s to en W e us t o express an unqualified opini that the financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles an to report on the Schedule of Federal F inancial Assistance of the City for a Single .audit. If our opinions are other than unqualified, wer w ill ful ly discuss th e reasons w you in advance. Our procedures will include tests of document evidence supporting the transactions recorded in the am)unts, and m ay incl duet confirmation with select individuals, creditors and bps, We will e p-nct written repre ores from your attorneys as part of the engagements an they may bill you for responding to t:hi s inquiry. At the conclusion of our audit we will also request certain mitten representations front you abo the fm an cia.l staters ents and related m atters. Th e management of the City is responsible for establishing and m aintaini ng an intem i control struc In l i 11ing i r s pun si ili ty, estimates and judgments by management are required to assess the expected hen e f its and related costs of internal control structure policies and procedures The objectives of an intern co-.trol structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or dispe sltior4 that transactions are executed m accordance with management"; autb orizations and recorded properly to permit the preparation of general purpose fin im ial statements in accordance e with generally ac4, accounting principles and that federal financial as si stance program S are rn anaged in com pliance with app 1 i cable laws and regal ations A n audit includes examining, on a test basis, evidence supporting th amounts and disclosures in the fin ;me ial statements; therefore our audit will involve judgment about the number of transacti to be examined and the areas to be tested, Also, we will plan and perform the audit to obtain reasonable as surance a bout whether the fmanci al s are free of mater misstat As required by the ogle t� of 1 4,.. our dit lfinclude f faun coons -rely f deral. -assist programs for compliance with applicable laws and regulations. However. beea.use of the concept of reasonable assurance and because we will not perform a detailed e a coati c)n of all transactions, there is a risk that material errors, irrialgularities, or ii l gal acts, including fraud or defalcations, ma exist ands not b e detect us. We w ill ad vise you of any natters of that nature that come to our attention and will include such Ou responsib as auditors is Iii itd to th e periods matters in the reports ru gyred for a Single Audit. cov ered by our aud and does not ext to matters that might apse diunn any later periods for -rh i ch we e not tm g as auditors. O ur audits are not specifically designed and cannot be ref i ed on to discl defi i enci es in the design or p erati f the i. nom a centre st cture. Howeve duri nag the au d its, if �e become aware o such cond or wa that we believe management Practices can be improved,, we will communicate them to y o u i n a se liianagern nt recommendation letter. 1 Preparation of M emoran dum on Internal Control O ur audit will be a Sin A ma de in accordan with generally accepted au diting standards for financial audits contained in Government i f i g Standards, is sued by the Comp `o11 e General of ffie UIPAit d states; the S ingle A u d it A ct o f 1984 au d the provisions of OMB Circular 129, A of State a d Local Govemi and will include tests of the accounting records of the City and other proced we c onsider necessary to enable us to Express an unqualified opinion that the f in an c i al statements are Fairly pnisented, in all ni aterial respects, in conform it f with generally accepted accountin g prim ip les and to report on the Schedule of Federal Financial Assistmice of t o C ity fora Sin Audit. if our opinions are otber th- unqualified, we will fully discuss reasons with you in advance Our procedures mi i nclude tests of docum entary evidence supporting the transacti recorded in the accounts, an may inc lude direct confirmation with selected individuals, creditors an banks. We will �r'tten representat ons from yon r att orneys as part of the engagement, and th ey may b i l i you f or expect rc °,pon ding to this m qu iry A the conclusion of our audit we w also request certain wriften representations from you about the financial statements and re lated matters. The management Of the City is respon sible for establishing and maintaining an internal control structure. In fu lfilling this respons estim and j udgm en ts by managem are req to assess the expected bc. are d related co sts o f internal co11tro 1 struc pol i c es and procedure s. Th e obi ectiv es of an internal c�utrol structure are to provide management with reasonable, but not absolute,, as suran ce that assets are safeguarded against loss from unauth use or d i sposition, that transactions are executed in accordance with management's authori ati ons and recorded properly to permit the preparation of general purpose financial statemen in accordance with generally accepted accounting principles an that federal fi nancial asp s i stance pro grarn s are m ana. ed in com pliance w ith app] cable 1 a s and regu latlon s. A n audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financ stat or eats; therefore, our au will involve judgment about the number of transacti to be e in and e areas to be tested. Also,, F Fill plan and perfom the audit to obtain reasonable a46;su ranee about r hether the financial statements are free of material m isstatement. As required b the S ingle Audit Act of 1984, our audit will include tests of transactions related to f d era assistance progr for compliance with applicable l aws and regulations. H b ecause of the concept of reasonable a s,suranee and because we will n ot perform a detailed examination of all tran sactions, there is a ri A that mat i iTegularriti e �a-Pacts, includi�au .-d efa�i ation�� r n _b -dete by us. We will advise you of any m atters of that nature that come to our attention and Nvi ll include such ni atters in the rep orts required for a Single Audit. Our responsibility as aud i s lim to the period c overed by our aud acid d oes not exte to natt th might arise during any later periods fox which w OP are not en gaged Ins au O ur audits are not specifically designed and cannot be relied on to disclose deft ienc ie s in the design or cF p ration of the internal control stru eture However., dun ng the audits, if we b eceme aware of su eb c,o nd iti on s or gas th at we bel ieve m ana gem ent practi ce s can b inn prow ed, we w ill common i cate them to you in a se parate management recommen letter. We un derstand that you wi 11 provi de u s with the .Annual C a os in g Ch ecki i st information requ ire for our aud an th at you ire responsible for the accu racy and completeness of that information. We will begin our audit after the Annual Closing Cbecklist informati has been provided to u s. We w ad vise you about appropriate account princ statements, but th respons f or the finan tatem eiit rem w ith you. This responsibility includes the maintenance of adequate records an related intern contro s po li pies and procedures, the selection and application of accounting principle and the safeguarding of assets. Our fees for these services will be billed 'used on the actual time expected to be spent at our standard hourly rates, including trave and other out costs suc as report production, typ ing postage, etc. Our standard hourly rates vary according to the degree of responsibility invo l e d and the exp level of the personnel assig to your audits. Our M' 'V dices for the se fees will be ren der l each month as work progne s s and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes thirty days or more ov erdue and may n ot be resumed until your account is paid in full. Th e. se fees are based on anticipated cooperation from your personnel as discussed in our letter above, the com of schedules an data requested on our Annual Closing Checklist, and th e assumption that there gill be n o unexpected increase s in wor scope, su eh as new in gl Audit A ct pro gram new d ebt is s� s, etc or delays which are be yon d ou contro If sign ifi ant additi onal time i s neees sar i, M X I di s cus s it w ith y ou an a ve at a new fee before Nve in cur an additional costs. If you intend to reproduce or publ the financial st atements, or anv portion of thern, we must see the final Primers proofs before publication. We; appreciate th opportun t o be of serv ice, t o the City an be this letter accurate summ ant s the sivi i fi cant terms of our engagement. If you have any questions, pl ease let us know. If you agree with the terms of our engagement as d escribed in this i etter, please sign the enclosed copy and return it to us. As requ by go event audit standard we are en cl o ing a copy of our mo r ecent peer review letter. Yours very truly, Tirnothy 3 isc� RESPONSE: Thi letter co-rrectly sets forth the understanding of the City. y� D cit Y Cit of Alameda En Letter k� 1997 Fees Attachment Our fees fo r th e work- as de scri b c,-d in t1i e attached en ent letter w 111 be as fo I I ows Item Fee 1&10 $58935 2 3 35852 4 25414 F� 5 -ILC- .1 31400 6 2 7 1 165 A 8 844 9 1645 jr 1 Total $7 8507--3 Dur fees are based on our 1996 fees adjusted for a 2.6 percent incirease in the Ba Area Consumer Price In de x, except for item ten NN7h] ch i s a one time fee to implem ent th e new GAS B. kzE ASSO�C.IATE-S bn ar 15.200 5 Jucil c A= B oyes Fi nanc o Director C ity f ameda 2 263 Santa Clara Al ameda, CA, 94501 ACCOU NTANC Y. CORPORA T 193 San 'ue Drive Suite 100 Walnut Cree fi fog: 7f 945 (925) 930 -090 -a FAX (925) 930-0135 E ^Maid, raze rnazassois tes_ art D ear Ju f71e A= We are 1 nfi -n nd r an i rl cr o f the s r is e T are to pro vi for the City of la e c for the y ear Erg Jun 0, 00 io see ices �e have been nka od to pro i d e art outlined below, but we are also availabl to p r e add tional sere? c c s at your re q L t: audit of thz e bas is Ewan c i a ll -statements. preparation of _Aemorandum on Tntemal Control S tructuTe. an -as s tanc c th trac pr arati Orn O f the Comprehensive An nual Financial Report ort inc hiding prep and print in g o f co I or .rap hs an d re vi e of S tati sti cal inforniati on. 2) of vie bas io c onip onent unit financl ,stat rn rLt of the Conm Im Co of the C of Alaracda and testing of c omp li ce w--th Guidelines for C ompliance Audits of Califomia Rlr.d eNre lo oment zo c i s d uar e of our reports t� ere o� Testina two prograrnr for compliance vwith the Single Audit Act amendments of 1996 and applicable law and re lations and issuance of our report fli reon. 4 Testing o f comp 11 an o e with P o s i b on 11 I Ap roprl ation L uni Increment and is scan c e o f our report tdi neon. dig of bas' c c mp rent unit ari ci al statenitnts of the' C__LV of Alame Police and Fire Rairement S ystem Pension Plans 1079 and 1082. A ud i t of the has' component uni a h na.ncial siatement of the Alameda Reuse and tdevelopment u or`it. 7) Test st ensure lnd s for c or pl c ith the cement for li tri ��zti on o f Measure Funds to Local A gencies, rrf ors procedures and issue agreed upon procedures to comply i fri County reporting requirements for th l- Parkin cr Q tats cn system and issue our rep ol there Tests O f C omp 1 ia:- c for Mezopolitan Transp o rtati can orrr=' s s ioi Transp of ti on D �topment A ct r •'l rrr 7fi 0 _n z rs� r n #v w 0 r.arrT y� rr vz.rH _L Lr, L-li CI AA� �Jrk.ri CrraUk;1I Ul I Uti U11 Z; PU L�j. pr 1 Pcr -L Iii �Y' c du c an d 1 S r .2 i D �l1Y 2 rY 3 1 JY T� r l T om' r f r r� ,n pr r s for a sped repot 40 �1le U on use rtut.aVl_ease r nlj.e stn o4 atc0 _bV 3"NTaNry cony eye I prop eTt y at Alameda _P oLgt, and i i l r, our report "Iereors, r We understand that f` 'a' statements wi be pras rated in accordance it�� the financial repo rt�rra model d°scri ed in Gp� iat' 3 -1. A udit O TI i.e o l e ct i ve 0 f 0 Ur a.u is to e pnz ss an opinion on whethor y our basin f mmcial s tatani e nts are fa presented ill all material resp ects in conform with g e n erally ac pt d ac co anti rag principles in the Un States of A m erica and to rep ort n the fairness of acc. ompanyin g suppi em ental Mnfonnation h eni -ons iEercd in re ration t the bass c fin an c ial state ;rents taken as a wh o e. The o bj ective als o in eludes rep o tirl� on: Internal c)ntr ois ncl ated to the fmancial ,statements and compliance with laws regulations, and trio p.ro isions of con tracts or era-rit agre ements, iionc ompli 'tb hi�rl could have a n) l effect on the financial tat comments in aoc ordan c e with Governmenr Audit Standards, InteiTal c ontro ls related to maj or programs and an opinion or disc of opinion) orr com I iar,oe w itl Ia s, r e orii lati ons an d tb e ro is i ns o f ontracts or ant age, ements that c oul d have a d ire ct and m ater L al e ff a on r,h major pro am in accordance with the Single Audit Act A mendments of 1 996 and MB Circular A ,-I ud is of s a T es, Loy a o ernm ents, and N TPr of t Organizations. 'l r rt, n internal or�trol and com plian mill each include statement that The report is i nteTi ded for the informa vian and use of the ounci l or their appointed o=ittee manaoemenT, specific legislative or regulator bodies, ):ed ral air and g agencies. an if app livable, p ass through entities. Our audit will be conducted in accordance with g encrally accepted auditing standards in the United States of America:; the standard�: for financial audits contain cd in Government Auditing- Standards, issue by the OM J)tr_0 eneral o f the United States; the S i-n ci c Audit A ct Am end ments. of 1 and the provision of OMB C ircular -1 f and wil include sts of a-e. �rntin record a dete inat ion of mad or p r'og:`a s in ac-cor ritl it ular any! other pro °dun s onsid r necessary to enable us to express su��i an opinion aild to render the required reparts. If o ur opinion on the basic fry an ci al .statements or the Single Audit' compliance ovini n oth than un q r_r al fF ed w will fully discuss the r so� with C ity ar uge.tnent in d'Vanc e, if, f`Ar aiiy reason. Nve are unable to complete the audit or are unable to form or have not formed are opinion we may decline to e pres are o or to i ssue a report as a result of this en Manage rn en t R ies puusi bilirties Management is re spo n sible for es tab lishing and maintaining interna control and for c wirii the prov isions of nir a 7c ements, and o. rants. In falfillina this re spun s ib ilit estimates and j ud g e rats b rnana ernent arc requMe' �o assess the expected benefits and related costs of the controls. The objectives of intom l contr l an to provide an B ement with reasonable, b ut n ot absolute, assurariCe that pis are safe uar d ag ainst loss from unauthorized ns e or di that transactions are executed i n ac %c o i daii. c with mana- gemant's authorizations =d recorded properly to permit the, preparation of basic f mancial statements in accordan cc with U.enerall ac c-c t d accounting principles, and that federal a ward pr agams are managed in compliance with app li c ab I I awS an d re c1ru I ati ons an d the pr o v is to ns o f c o ntracts and Pxa ii t acje e v-nts Manae- -1 -nt i r sp O Trs l- H e Y Di mak] n o, all fn ciaa records and reiaa.-.Id information aNFail ble to us. We underst that you wDl provide us witli the losing Checklist Information re quired f or our aud an tl tiat i s r� p n;= 1 I� �c urac F aii irlpletcn ss t? i� r�Fn tiorx. riil d is u abo gar a ppropriate aoeo L� M -r c:ipl -es artd it app li.cation and Till s ist i n floe pre paration of th financ ia statement ML cI din 1� c��odul e of pen iture of Federal A ands, but; the responslbilit for �1� n i I .r��� r� yin with y ou. This resp nsib ility includes the establishment and maintenance of adequate r e rcls mid effecti i.ra ±emaI cont-ml c)v r-.r fir iancia.l r eportirna an compliance. the selection and application of a�cor ti n(T principles and the safe au& dingy of assets. a n ag om eat is responsible for adjusting the financial statements t correct neat "rial rill sstat�.znents an d for c o n F1 rm i n to us in tale representation letter that the effects of any ane o ted mi s staterne.nts r a �e d �s r1 l rr ��t e n rrI I7 a inin to e latest er p ies I to ire r a #c t 3 t]� L individually and I'll t 1le ci re ate, t o th financial state taken as a w hole. You are res f or the design and ii -.p i errientatio n of pro grt is an controls to prevent an detect fraud, and for informing as a bout all kno z.L or suspeaed fraud affectin tie ove nt i��volvi�i� maz�ag ra nt b e��p l.a ees ]�o have significant ro ies i�l intern o r trc i Y ari d c nth ors where t `rand col h a e rr� ateri a] effect ct on the an i aI s t i nt F ar also responsible for infonninr.; us of Your knowledge of any l e Kati ns o F fraud o r suspected fraud affectin2 the a0vernm erit received in communications from ermpl o ees, former employees, regulators, or o .thers. In addition, you are respons ibJU for ldentifying and ensuring that the enti complies wit]a a pplicable l aws and re gulations. dd itionatl as requircrd by NM C ircular A 1 3 3, it is ,anao em ent's responsibility to fo up and take correo i e actin; rl. on repo ted audit #3 ndiu gs and to prepare a sur, :.=ar .sch dule f p� audit f ding and a eorrectilre action plan. The, s s che dule of prior audit f din o s must be made available for our revICW. Audit P ruced u re General A li audit, i noludes exam ninin o a test basis. videti ee suppoirtinor the amounts and disclosures in the financial s tatements; therefore, ouT audit wi i nvolve j ud gment about the n amb r of trarisa ti o n s to be examine and the areas to be tested. Also, we will plan acid perform the audit to obtain reasonable assuranuc about w hether the financial s arc. free of material misstatement. wh ether from err ors, f�au dul ant (man c l a l rep o rFin ga rn is appro pri ati on o f as s ets o r vi o latio ns of IaNv s or gover e u tal regu 1 atioits that are attri utab I e to the enLit y or to acts b -F m anagement or emplo ees acting n behalf of the entity. .s r uir d by the in l� Audit Act Amendments o f 1 an ircul r A -1,33. our au dit i 1 I include tests of transac i or, s related to as or fede awar pro for c omp I lan ue w ith a ppli c ab l e laws an r cru l a.t ions and the pro i s l n s o contracts an gant ageC..m nts. B °cause of the eon ep *t of rr, onable assurance and because Nve will not p�rforn� a detailed e amiliation of al trans acti ons there is a risk that material errors, non c c) mp lian c e, fraud o other illegal acts, may gist and not hl detect °d by us. In addition, an audit is not deni ed to de tec im- nateriai misstatements. inu ateri al ill acts, or illegal acts th at d not h ave a d ire c t eff c t on the financi statements o r m ajor pro gram We will dvi se m an ale nien t o are material orror and any fraudulent f man c ial re p orr�� or is a.pprupzi ati on of assets thrlt comes to our attention. W il.l also inform the rnana.ge'ment of any violations of laws or governmental regu] ations that come to our attention, unless clearly inn oiisequential. We will include suc matters in the reports. required for a Sin Au Our responsibility as auditors is I invited to the period covered by our audit and does not extend to matters that might arise du any late periods for which we are not en gaged as auditors. Our proced will hIc 1 tests of documental -y evidence .supporting the tr i actions T carded in the accounts, and may i11 ludo direct confirmation with selectod in dividuals, cr ditors an hanks. We Nvil I re quest rirte.n representati n s from your attorricys as paxt of the engagement, an tb.ey ma bill the City f or res po. ding to this inquiry t the o n c lu n of our audit v� e ill a' r r e ei fain 'rTttcr� repr. c entati o i� s fr rr�ar�agcr�erlt abo the f m a n e ial statern ents and related m atters. edit P rucediu j OULT) aUCe ti Our andit :I I be c�ona du. cted i11 echo dare itti the sTap lards ref rre d to in. the S ti on titled Audit b ectives As part o f ob Lalnin reas o li ab e as��ui�a� e aDo t t�� r 1- bas; o t� r�anelal s�atel tints arc re cif lr�atierial ZT! �l�isstaterne t, ill p rform tests or` d-, City's e omp 14 ain tie ith ee:rt� in p x� i5i f l a��r5, rc���l�tIOrl�. contracts. Tid gra��ts. Ho�vre,v -i tli c o b' ect] e of cur audit '11 not to provide an opinion on o��oral l c o inp 1 i ai ce an 1 w e ���ill not °�c ���e� s suc�� an Cep i n Ton m our re n com plia.n� Ce Ts ued P U ITSuan t T L and +ra'6% O NIB Circular A-1- requi r s that we also plan and perform the ludit to obtain reasonab a assurance about w neth er tl,.- Cite has c:orrrp 1 ied witli applic laws and re gulations' and the provisions of contracts and &rant c m e rn t s appli0, aL i e `o r -n aj or pro o r ins. O ur proc, ed ur -s Sri l i c o ns 1 st o1 C p p G b? e pr'o�edures descr i i dar c Y ll le i ens for the types of oomphanc� r�qi;irements that co u] d hav a dire aterial 4 each major r rarn�s. i. r arpos� of thosee procedures will P be to express an op ini t o rri on on the ity s cornpli ar e with requirE-ments applicable to maj programs in our re port on co pli �lcl issued u rs iA r_t to I :rc u lar ,1. 3. Audit 1'roced ure Intern C ontrol s In pla=Llng and erfoni_-h o our audit we will consider the adequacy of internal controls dete .i nin the nature. tni tt of our auditing pro cedrs applied for the pu of expressing axe o on tlle basic fin anc ial stat meInts an d o n its. co m anc e with re quire m en is app lie ab le to w aj or prograTD s. We Sri i] obtain a n and -rstan m of the design of the rele vant ev t controls and whether tl�e have been p laced operario n, and we wii 1 ass 'Oss contro risk. Tests o Clontro may be performed to test th e effectiveness o certain controls that we consider re levant to p reventing and dttectrDcT errors and fraud that are terrai to the basic rri a i a statem and t o prev eTitin g ry an t ctr ti rr�_rs s tat ents resulting f rom i llegal acts and other noncompl matters 1 -at have a direct an materia effect on the basic financial statements. Tests of controls relative. to the basic finEnc i al statements are regal red only if control r'sly is asses cd below the max=' um level. Our to tc;, if performed, will be less zn scope than w ould be nec e ssary to reader an opinion o n M vernal control and ac cordingly o opinion will be 1-F i n our report on internal control issued pursuant to Govermnent,4uditing s re qu Ire d by ONIB C i cu I ar 13 3. we wi I P erfOnn teStS of Cor2tro to evaluate the effe criv%cn ss of the desi gyn and operation of control that we consider relevant to preventing or d etect n cr .aten'ai noncompli n e wi col np 1ia�_c e ro qulr ments applicable to each m aj r pro cr aim Howe our tests will h e less in scope th would be ne c e s sary to render an opinion o n th ose c ontro is an a c cc)rdin g t no opinion will b e expressed in our report on intema I or.tro i is s ue d p u rs an t to OMB C ircular 13 3 3. Our udi": is not des i g e to pro ass uEanc e on intorna_l control or to identif reportable. cond it i ons, Howcver. we wil i n .foi -m the oun c i l o r their appointed c o f any matters i vo lv in i ntemal control and its op erati oil rliat w Nc onider to be reportable conditions under standards established by the American Institute of Certified Public cco untan s, Reportable conditions i rivol c natters corning to car attention relating to si anif icant defic eno_: s in the desiogn or operation of internal controls that in our judgment could adVOTSelY affect the City' 's ability to record, pro (;ess, su m m arTz c and report fuia.ncI a I data c onsistent with the assert o m'ana ement in th e basic financial stalements. W will inform you of any nonre ortable conditions or other matters Invo ing Internal ontro1. 1f are a_ require c' by ONE ircular -13 Fee's O ur fees f ,r th eso services are billed based on our contract with the City- wil'�h in Turn is u sed on th acrua time e pe cted Lo be sp�njt� t our starrdard loo urly rate including travel and other Dui p t cosh s c]� report production., lyp- mg, p ostag e, etc. Our standard hourly rates vary a Clording to the decree of re vousil�ili i Folved and the e :peri cnce level o f th e p.--.rsonnel ass iped to your au dit. O ur iuvo ices f or dies. f ees w ill b r adere d each month as work progcsses aci are payab on presentation. In accc?r e wi our firm policies� work Mav he suspended. if tl�e it s ac uT.t becomes thirr days or rrtoT-e overdue and may not be resume until the City' acco Li t is paid in full. These fees are based ou antic.Tat d cooperate on from City pers z el }he comp l etion of s0hedul e ar d data requested 311 our C .he 1 lis 1:s, and tb o assumption that tliej will be no unexpected Jn r (�M cs to w�;rk scope, such as Tjow LS in c2, L�-di L A ct pro L;rams, ne w debt iss E �s. etc_, or del ays which are b and our c.ont{ of �s discussed on t1 le Fees ttac 4 rent to this I °p er, If Signi�ac ant additio na I time, is necessary... e NN: i.t.l discuss It with Cite m, ana em t Inc: arrivC at a new fee b e-IL e~ r e inn e I1�r• additional cost We uE.d erstaii d u wil provide us wi a basic workspace su i nt to accommodatc the aa i iced to ur audit. we, understand the basic workspace will b,-. equipped with a tci phone and direr- c hitern et access preTerC tclrip rar y net r rl aside i Vo ur ne two rk. a p u--b 1P address an a wired c rme ct'on. we u nderstand you �11I a].s prop 7 de us with act s to a fax ruachine a, read only access to our S Go ve rv. er�t L J require that �e provid de tj- ity �iz c e y ur axis re t q aJ itycontrol rear i ew rep oit. 0 uT 2 0 0 2 peer re "Virg report accompanies This We api)reu the oppo rMnitv to be o f se rv ic to the 11) anci b ei i e -v e t -s I .atter a eurat ly s urn m arm n s the sip.1fieant terms of our e ngag .went. If you hav e any qu stiens, p Ira let us kn ow. If you agree with the te rms of r en a errs c at as des rile in h i s letter please si i the enclosed copy and ret= it to us. Maze Associates r f P DNS E: i i e r c Fie sets rr�� un d Ts taudin O f t ��e C ity o f A t c d B Title: Financial O fficer Date: Fe r u ar y 22., 200 City of Ala eda ngagem ent Leiter Fees Attach m eni •ur fec.:s for th work descri bcd in die aft ached engagernent letter will be as t0i1ows in' tl� e r���ed 5�r OrA� or More of the items b c o .0 Fe as i e F. in an C lal'S Late meets Mem o ra c n Intcrrlal on r l�- and C AFR assistance 4 866 Co mmunity Improvement C ommission Audit �,4 7 7 Single _audit Act Report (t,�vo proms arras) 12, 005 cvlc w of it 's Appropriati Limit 705 Police au l F i.rc Retirement Plans 10 9 and 1082 4 3 0 Iameda ]reuse acrd Redevelopment A u. th on ry 9 eas rare 'E3 2. 8 7 ar ing ivatr n stem Au 2278 i TC A P rogram s A 3 3 871 U a vy report on ms 's u se of renta l ease revenue 3, 5 R enewa l D iscount Fees O ur rccurr__na fees h av c. been adjusted only for the ch in e ser vices Gera PDnent o f th a Area Cost of IJv i n c,r IndeX for th San Francisco Bay Area (2).1. The fe as above include 4 audit c osts, wkii h hay.- been Getai l ed separately in the -Mclos ed schedule. A dditional Se rvices 'The abov fees are for audit and assurance services de.• e'rib d in the ac companyin g e1 i& agcrrient letter. 'Thy do not i roc l fee for ass istm with clos�hy books nor prow idea othCr a000untiL sel V. l cs. h Uid h ;it r require ass i sta� _ee beer r d alad It S er YFi e.� w ar x d s to A cc o tip ervice,s list of serv ices that we ha v.-. provi to our c Sergi is es P rolrr kited by th GA New indepeudenc e ru les i s u ed by the G overnmentai A O ffice prola i it au d itors fro to pee -form i g certain sere is ,-s. have pro ided ch dale of Tasks P Under tl� e GAO lr) depeadcnc. e, Ruh which lists the most frequentl y o ccurring types of services w c are no lon allow t p rovide to the t F. Report l in li tion Our too based on our understanding th ail i rronnation and materials necessary to finalize all our reports will lac provided to us N fore we complete our rear -end f e�ld ork in -rour offices. In the case of i 1 this includes ail the materials and information r quirc5d to print the CAFR, As in the past, w e will provide f iDal draft; or a l:` OUT' r vpol is before we leave your offices. We Fi11 schedule, a. Final Cliancres Meetim with you for a date no more than ter o wecks afl or we oo yap l etc ou r fie ldwork, .t that m tin g, we will finalize all reports for p r i ntMc.. Aficr that d at e, report c (Tes you make and changes require b ecause infonnatiorr was not reedy ere timcly will be bi1ed at our normal hourly rates. Post- 'losin Client d ustinu Entries. The fire step HI our ���arT .n� audit is 'Ja prep- nation or financial stat•o errt dra fro- Fur T7 nal c i s leg trial balance. 'That means any entries y ors maI after handil, c trs yo ur rti 1 -ti r L-. r r•y 2:. j �w f t 3 pis ins C�'1, c� r't i Ll� 1ir :3d1 L dLiu L a c�_tiY ��.L o 13) UIN'" �i l� ci 111PULLM LLI� �lE 11 1 ti balance. C .Iv 1l if the camo are munater1 If you m a ke such en tries and the a c ounts are in fact 1 deer ial. e f will 'oil] Vol] for the costs o f �h a d i �s 4rn r re -i a orlr nor= a7 he ur rai es, e c u rr in a Audit Adj ustm e nts each year e include the p rior year s ad j ustMEY entr; e•s as tier Steps i{; Jir I os in fy Checklist. s c that ou care i co, r porate these e., -Ar cs ire Four l s :c If '4y are req d to cont. Tnuc to rake Ch ese sam e adi u st rrienTs as part of r i is Fcar's au dit, e will bill for this ser -ice at our norma lio urly rates. F Printing u- s a c nvenience can sc.ad your AF to a printer we u se l cally. LPW do rot char- for d li er n camera- r-Wady pr in t incest .rs "M any r111t f e u cho i'ce are d de 1 1 ering the CAF Rs or F t y o u. How Fib 1 b ii 1 fir a diti nai time p on t pr�ir�ti r� r normal ho �rrl rates. TL1 Intl udts c ;han gts after the repa "t �o to the pr] nt. -r, obta n1�� rev le ll1cT an �r ��1��F�I -Ing Pr m ter S Proafs, tLa. We can also l lw ith �'l d 5 i in lt ink covers t d iv iders co lor eh i s, in d i ngs Orl-r c harts maps, etc. We, will estiinate fliese costs for you ofoi proceeding. iri gl e skit d it Act Addition pro gm s will cost $5,908 each. anl e ss tla e re are oilier factors la c]i add h pro arri s cost} M that cas w will provid a cost estimate b �fc)re procecdu' au Grant P rog r m s e q u.i rin g e p a ra t o u chi t 'rant p.ro gams requiring separate audits repres eat a s i Lyn i fi ant increa ;1 i I NN 0 rk scope, and fees for th es e audits vary bas e ors Ilie gant requlremeuts. If }you wis h us to dcterrn y zee are d i d e ntit Fhich p ro graois arU su b j e ct t audi, we will b ill v o u fa r th at ti m e at our normal li o urly .rate s. hancye,s in City Personnel Our per is that chana s an f or reductions in Fin E Department staff c-aa have a p ronou ne ed imp a --t on cost o p er-56 ruling th e a.udiL If suc c ges occur, we w i II ni eet w ith you to assess the it irr r)act and arrive at a new f l b fore ���e begin th e next phase f our w ork. However, e r er;ic the ri ft to v .sJT tll..ig subj ect at tfi e co n cl s ion of the audit, based on our actual performarc are d our actual costs. r� PLISUCA J U�t 0 f r Foe e y R d-, L}:e: 17. cr Hill, Cd Ju 1 2 002 T o thel Sharehald,=20-rs As sociates Accountancy orporat an mat Ur e f Ca lifor, a 4040 i �0r Sjite 1 S ap JQsa Ca 9511 Tai: (4CB) 55 -G00 Fes= 5' -"9'8G3 We have re'Vi ewe d th e system of quaff ty control .for the accounting and auditing pra te o' soeiatas Accountancy C o rporati on (the f=) in effect for the year ended May 3 2002_ syst.e i of quality ;ontrol encompasses the ms's or anizatmnal =ire and the poiiicles adopted and Procedures e, tab she to provi it with reasonab ass mance of conforrnin with p rodsi o nal stand Kid s. The elements of qu Zty control are descn in the St on QqaEty C ontro l S t an dards i by the American M ate of Certified Public Accountants I P The design of the syst and compiiance with it are the resp onsibility of the Our responsIbEty is to CX PTeSS an opLmon on the de sign of the system, and the f= "s compliance with the Spq em based o our revi ew. Our -r was coaduct in accord [th standards established by the Pear Resew Board of the A P p €xrforui our re i e w e o btained an understmding understanding of the system qu alit y cunt L of f the i' s a e untinz and au ditmn pr In a d dition, w tested compliance with the f 's quLity Contro p c ii ies and proc edures. to the extent we considered appropriate. These t est Q e V P r AA the SID ti n of the fi poE i e and procures o selected en nts. -Fla e cau s e our rev. e was b as ed o e t e it would not n sar�y s lo s an nesses in th e- system o f quoli co ntrol or aH Instances o f lac o f compfl ante with it. Be cause the are herent Ii tations the effectiven of any system of quality* conUol., depaTtures from the syst may occur and not be d ete ed moo, pro f e on of any evaluation of a sy stem of qu ali ry %Ontro l to Rare per od is subj t th risk that th system of qu ty contr may became M' ad egLl at e b eoau se of hanzes conditio or b oaus e the degee o compHarice Vath the policies or procedures may d etenorate. fn our oprLio n the s -y t ern of qu ty c o r the accounting an auditor practi o Maz Associates Account Corpo irn effect for the year ended May 1, 2002, has been d e i died t o meet t r quzr rats o f the qu ay co ntrDl st an dards for an accounting and au ditin p raeti c -e e st ab E sh d by the AICPA and was compEed nth daring the year then ende to provide the with rtasonable assurance ofcomplyffig lNith p rofessional standards. r N ichol s, Rick Cornp an Aj AiZE ,ASSOCIATES March 06 20 J u l l wn B Dyer, F m' mice Director City of Al 2263 S an ta Clara lama, CA 94501 ACCOUNTANCY CORP RATI 1931 S M D rive Su 100 Waln Creek, Califomia 94596 (925) 930 -0902 v FAX (925) 930 -0135 E li� it x maze ma a so crates: om Dear Jueale is We are pleased to confirm our mid rstan dffi g of the services we are to prov for the City o f Alameda for the year en d ed June 3 0, 2 0 0 6 7,h e services we have b e n en gaged to provi de are outlined b e 1 ow, but al so avai lab I e to provide additional se at your rcq st: 1 Audit of the basic financial stater ents, preps rati m of Memorandum on Internal Control Stmeture, and as s i start ce with the prep arati on o f th e Comprehensi ve dual Fin anti al Report in clu d ing prep arataon an d pri nting of color graphs and review of statistical inforination 2 Audit of b ins i o component .nit financial stat men of the Comm nity npro �m nt Co mm iss inn of the City of Alameda a d testing of compliance viritb Guidelines for Compliance Audits of Califomia (l velop cnt Agencies and issuance of our re ports thereon. Assumes no new project areas. 3 Testing two programs for co mpliarr e with the Single Audit AGt amendments of 1996 acid applicable la ws an d r gu r ati o n s an d j s suan cc of our rep ort thereon. 4 Testing of corn pl i ance with Pr opus ition 11 I Appropriation Limi In cre meat and issuance c our report th creon. Audit of basic component unit financial statem ej)ts of the C ity of A lameda Police and Fire Retirement Fstem Pens Flan 1 079 and 1082. A udit of the basi com ponent unit financial statem of th A lameda Reuse and Redevelopment Authority. 7 Test Measure B funds for compliance with the Agreement for Distribution of Measure B Funds to Local Agencies. 8 P er form agree. -u poi pr to comp w ith County rep o rtin r q u i re rn cats fir the P a rein i tati on st ns and i ssue our report t1ier on. Tests of compli for Metropolit it an Trap spur ta.tion o1T missi r Transporta.tion De -'el opmont A ct Programs mi d preparation of required reports. 10 Pei f mi procures and issue agreed upon procedures for the special repor'tm g to the US Navy on use of rentaY Iease rep u e, generatod by i av co��veyed property at AI am da Foint, an d issue our report th reon A Professional cc por8 ffoLl t We understand that financial statements w be presented in a rd an o wi tli the financi r mo d es cribed in GAS B S tat ernent 3 4. ed Obj ecti The, obi octive o f our au d I t i s to expres s an op inion on wh eth r you r bas is f i n ano i al statom ents are fairly pre sent d in all materia r sp oot, in con fonnity with generally accept d accounting principles in the United States of i rioa and to report on the fai rness of accompanying suppl mtntal information when considered in relation to the bas i D f mancial state m nts taken as a whole. The objective also in l ndcs reporting on Inturnal controls rel ated to the finan i al s and coiDpliance with l aws, regulation and the provisions of c -Datra ttis or grant agreements, noncompliance w ith whi could h ave a materi effect on th fi star em ents In accordance with Go vernment A ud ifing Standards Inte.m al contro I s re 1 ate d to maj or programs an d an opini on or di sc l aim s' of op in i on on com Fl iance wi th laws, regal ati ons, and the provisions of contracts or grant agreem that could have a direct and m awrial effect t on each m aj or program in accordance with th e S in l e A udit A ct Am en drn nts of 19 96 an d ONM C ireul ar -1 d is of 8tat s, Local Govemmen ts, and Non -Proftl Organizations. The repurts on inters aX control and comp will each includ(-, a statement that the report is intended for th e information and use of the Council or their appointed coramittee, management, spec l egi sl ague or regulator bodies. d federal a ward incr agencies, and if applicable, pass-through entities. Our audit wi ll be conducted in aeeor ce with generally acr.,rpted auditin stan dards in the United States of m ri c a; financial the standard_ for nan e ial and its eontai A n ed in Government Audithig Standa7-ds, issued b the omptrollcr General of th e United States; the Single Audit Act Amendments of 1 996; and the provision of OMB i r ul a r A-133, and will iii l ud e tests of accounting records, a determination of maj progrwns in accordance with C i rau lar A-133 an other procedures w e consi to e nable us to express su ch an opin an to render th e required reports. If our opinion on the bas financial st.at m i is or the Single Audit compliar)ce opinion is other than unqualified, we will fal l F discuss the reasons with i management in advance. If, for any reason, we are una ble to com plete th au or are una ble to fornn o have not formed an o pinion, w ma y decline to e pmss an opinion or to issue a report as a result of this engagement. M anagement Responsibilities M anagem ent is respon for es tablishing and maint intemal control and for comp Tian c with the provisions of contracts, agreements, and grants. In ffilfifa this responsibility, estimates and 'udgments by rnana emcr rnt are req uir M to assess the e pe ted benefits and related tests of the controls. The obje;ctives of inte,m as c ontro l are to p rc)v i d e m art agern ent w ith reasonable, but not absol assuranct that assets are safe against loss from u n aufr) prized use or disposition, th a.t transactions are ex ecuted in accordance w i a management's auth and rec r d d prop t p ermit the pr aration of basic .~man ial statements in a rkanon ith n eral l accepted accounting principles, an that federal award p rog m arc managed in compliance w itfi appl ica -�Ie laws and regu lations and the provi s ioiis of oontrarts and rant a Management ement is re for ma king all financial records an re lated i availa to us. We information on re u ired f or our au dit an that is un dert�d that you will provide us with e losing Checklist res ors s J b l e f or the acouracy and ooinp l etene s s of that information. W will a d v i se you about appropriate a�ounting p rinciples and their a pplication an will assist in the preparation of the financial statements, including the Schcdule of E pencli tare of Federal Awar b ut the res p ons ibility for the fin are ci a l statem ants rem ains with y ou. T� i s responsibility includes the establishment and maintenance of ad equate records and effective intern as control over financial reporting and compliance, the selectiOD and application of accountrng principles and the safeguarding of assets. Management 1s respons for adjusting the fi statements to correct material mi sstatc.m eats an for confmning to us in the re presentation Ietter th at the effects of any unoorro tad mis"ern eats aggregated b us during; the current engagem emt and pertaining to th e, late peri pre sented are immaterial, both individually and in the agge ate, to the FmanciaJ statements taken as a wbo le. You are r spun sib le fog the design and ire i ementati on of programs and control s to prevent and detect fraud, and for inform inn us about al l I own or involving �ho ave s i ificant roles in su speetod f tau d affecting the go ernm ent a) management m eats employees o acs internal contro 1, and c oth w here the fraud could have a material effect on the financ statements. You are, al s res p on si b 1 for i r�f� rn ire us of o ur knmvI edge of any allegations of fraud or susp acted fraud affecting th e g overnment -received in co mmunications from emp form employees, r egulators, or others. In ad dition, y ou are responsible for Identifying and ensuring that the entity complies with applicable laws and regulations. A dditionally, as req uired. by OMB Ci A-133, it is management s responsibil to foll up and take c.o rrective action on reported audit fi ndings and to prepare a su sob edule of prior audit findings and a oorre ti ve action p lan. Fhe su ary schedu a e of prior and 11 find rags must be -Wade a ai tab I e for our review. Audit 1 ur General An audit includes earn: inin on a test basis, eviderr ee supporting the amounts an d isclosures in th e financial statements; th ereforc, our audit will involve j ud gm n t a bout the number of transactions to be examin and the areas to be tested. Also, we will plan an perform the audit to obtain reason assurance a bout whether the, fui an e ia statements au f ree of material mis statem ernt, whether from errors, fraud financial repo m i sap P ro P ri ati o n o f as s ets, o r -v i o l ati o n s of I axes or gox7e= ental re gul ation s th at are attri butab l e to the enti ty o to acts b management or employees acting on behalf of the entity. As required by the Single Audit pct a men�d of 1 996 and N i rcular i 13 3. our and it wi I1 in�elude tests f transacts ns related to a or federal award programs s for comp liars ce with applic l a s and regulations and die pro��isi on s of contracts an d grant l a u rance and because e i l l not p erform a d A'd i t ed agreern o the concept o rea s p examin of all transaction there is a risk that material errors, noncompli fraud or oth illegal acts, m ay exist a.ji d n ot be detected by us. In addition, are audit is not deli ed to detect immateria m isstaternernts, i mmater ial I I legal acts, o i 1l egal acts t1l at dO n Ot have a direct effect on the firs ancia stater n ents or m a j or progr. We qw. ill advise rn au a g em nt of any material errors wi d any fraudulent financial rep ortin g c m i sappropriation of assets that conies to our attention. We will also infon the management of any violations of la ws or governmental regu th come to our attenti unless clearly in conseq u enti We will M cl u d e such m atters in th e reports 1 A Our rasp r sibility as auditors is firnited to the period covered by our audit and does r uirc+ for a Sing not e en to matters that might arise during any l ater periods for which we are not engaged as au ditors. Our r ced ures fil I in���lu 1.ests ofd curuentar avid ei�ce supporting tl -ie transact recorded i n the accounts. p r ind cred a tors and banks. e will l re u st i tten and may include direct onfirniatlon nth selected representations from your attorne as part of the engagement, and they may bill the City for respond to this inq uir y, th concl rsior� of our auk it �e �i I] also requ certain written representations from man agemen t about the financial ial statements and re -f ated Audit Procedures Compliance O ur au dit w be con ducted III accord i th the stan dards referred to ill tale secti tided A Objectives As art oi' obtain i n o reasonab assur ce about ��hcth er t he bay is finan staterr ►eats are f ree o f material n hiss atcment, Svc it l perform tests of the city "s compliance with certain previsi of l a 's, regulations, o rltra. is and ants. 1 f o e� the o�j ective of our audit will not be to provide an opinion oil overall compl ian c.e and we will not exp ress sued an opinion in our re port on compliance issued p ursuan t to Gove? Auditin IB ireul ar -13) 3 req u ire s th we s o p Ian are d p erfon n the and it t o obtai n r eason ab le, as suranoe about fi ether the City has complied w applicable laws and regulations and th provi sions of contracts and grant agmeme,nts applicable to major pro g:rar ns. Our pr endures w ill consi of the applicab procedums described in the it r -133 C Supplement for the types of comp l ian re requ irem eats that could have a d irect an material effect ors ea.c m program Ti purpose of th ose procedures will be to express an opinion on the City" s compliance with requirements applicable to major programs in our report on compliance issued pars uaii t to OMB C ireul ar 13 3. A udit Procedures I C In plamdn g and perforrn in g our and it we vii I I cons id r th e adequacy o f intern ail contro 1 s in determining the nature, tim ing and extent of our au d itmg procures applied fo the purpo of e pres s i n g an op on the bas nano ia.l statern ents and. on i is comp] i arrce with requ irements applicable to maj programs. We w o btain an understanding of the d e si n of th e re levant controls and whether they have been placed in o peration, F on, and e a ll se s s co ntro l i r is Tests of controls may be perf ormed to t est e effectiveness ss c f certain controls that we oonsi relevant to preventing and detecting errors and fraud that are material to the basic, financi FLl statements ar) d to preventing and dewcting misstatements re sulting from illegal acts an other u on rn li n ce m atters th at have a d irect a n d material effect on th e bas fin a cia.l statements. Tests of control p re 1 ative t o the basic f:r na rrc ial statements are required only if contro risk is assessed below the maximum level. Our tests, if erfor m will b e less in scope than would be necessary to render an op i ri i on on ternal control. and, accord lagl n o op i n i on �v a I l be e pre s s d in our report on intemal oontr o 1 is su ed pursuant to Govern n7e A uditing A s r(-,q u fired by NfB C it u l a r 13 3 w e wil 1 perform t gists o f contro is to ev a] u ate the eff ectiv eness o th e tics i gn and operation of ontr ols that nsider relevant to preventmg or detecting material noncompliance wi ever our tests will be less in scope than would copl lc�r�� r��uz rer�en�s applicable to each rr�a� p rogram. F be n t o ren zm opi on those con an according no opinion will be expre in our report on l ri t er n al oorrtro I i s sued Tau rs cant to 0 MB C ireu l ar 13 3. Our audit is not desi gee to provid assurance on internal control or t o i dentif F re portable cond it i ons. How we wil l i reform the C ounce I or tli e ir appointed cornmitt ee of any matters invo lving 1r)tel contro and its operation that we consider to be reportable condition render standards established by the American Institute of Ce rtiffi-A pub liG Accountams. Deportable cond i rivo lve matters corn to our attenti r elating to significant d efl ci rieies in th e des i gn or operation o f intemaI controls that in our J u dgm on eou Id ad vers el y a eCt the C it 's ability to record, procer;s, summarize an report financial data uDnsist nt with the assertions of manaament in the basic fin aneial statements. W e wi ll n form y ou of any norweportable conditions or other matters invoIv in g intern al e onto 1. i f are y, as r qu ired by OMB C ircul ar 13 3 F ees Our feF s for t iese sere ices are b ill ed based on our contract Fit's the C it Which in turn is based on t1ie ac tua l tinge, e petit e d to be spent at our standard hourly rates, including tra e l and o out -of-pocket o sts such as repo production, on, t Fpin a,. postage., etc.. Our standard h ourly rates va according to the degree of responsibility involved and the experieiirc l cN7el of the personnel assigned to y our audit. Oux invoices for these fees will be rendered each inontli as or k progresses ai)d are pay on presentati ore. In accordance with our f inn policies, work may be su erg led �f the it F' account becomes thirty days or more overdue and may not be resumed until the Cite' s p a r,ouli is Is p ai d M full. These fees are based oii a.I1ti ci p ate cooperatioii from C ity personnel, the c ompletion of sc and data re u e st ed on ou Checklists, are d the assumption th at there w i ll be no un ex p ected m c r ea ses u) )xork s such as ncw SM& Audit Act program n e F debt i ssu etc., or delays li ic are beyond our control, as di seusse on the Fees ch.r� iA to thl' s l etter If s I gird ant addlti mia l time is neoessar 1 d iseuss it ith r ni ana er rrt ar) d aiTivc at a new fee 'bef e incur arid. additional costs. We un you will provide us with b asic worksp suffici to accor=iodate the audit team ass to our a.0 iit. We un derstand the b asi c workspace wil be Nuipp d with a t lephonf; and direct Intemet access, pre ferab l a temporary network outsi of your network a p I) a (l dres s and a wired corm ectioli. INre and rst C.nd you w i ll also provide us ith acces to a fax machine and rea only arses s to your general ledger system. overn en t Audifiiig Standards require that N e provide the City Mth a c*py of our most re cnt duality control r eport. p ter review report ac omp ie s tai s X etter. We app reciate the opp Drtunity to be of s c nic to the City and beli this le tter acc s u= arizes th s igni fi c-f t te of our engagement. If you have any que stions, please I et us know, if you agree with the tee of our n g- agement as dos i�bed in this l etter, pl eas r, sign th enclosed copy and rc ri it to us. la e &.5 ?D aze Associates RESPONSE: This l etter c orr ctly sets forth the understanding of the City of Alameda.. By: Titic: Chief F Officer Date: March 14, 2006 C ity of Alameda Engagement Letter Fees Attachment our f ;i fog the work d escribed in tb e attach ed e ngagement I otter w i 1l be as fol I o s, unl es s they are adi ust d for on e or more of the it 'b l ow: Item B a i r F inancial tat m ents, Memoran dm on Internal ontro 1:� and CAFR assistance C on=uri'ty Tsnprovem nt Conuniss Au S ing le Audit Act R eport two program Rev i oil ity' s Appropriation Limit Financial Statements for: Police aril Fire Retirement Plans 1 079 and 10 Alameda R ease and Redevel opmcmt Authorit Measure 13 Parking Citation Sy stem Audit .,N4 TC[rD,A Programs Aud U S Navy re ort on AR RA' s use o f rental/] ease rovenue Renewal I isrount Total Fee $86,990 ,iO 12 10 720 4.430 9670 ,0 2 3 3.750 4,OO OL_ 12873 0 2 006 Fees o ur recui fets have. b een adjusted only for th change in th e s ery i yes component Df the, Bay Area Cost of Living Index for the San Francisco Bay Area (2.5%). The Fees above include GASB 34 audit costs, w have been detailed separately in the enclosed schedll I V, S ervices Prohibited b y the GAO New independence ru les issued by the Governmental AGoounting Off i e p rohibit au from perfoniiing certain services. We ha e provided a schedule of Tasks Prohibited Linder the .o Independen Rul w hich lists the most frequently occurring types of se-rvi ces F are no l on ger allowed to provide to the City. Report Final ization Our f e is based on our understanding that all infonnation and materials necessary to fin aline all our reports Will be roe' i d d to us b efore we compl our scar end fieldwork i n your e ff ices. In the case of CAFRs this includes all the materials and information required to print the AY We will provide final drafts of all our rep orts before we leave, your off e w schedule a Final Changes Meet iii g with you for a date no more than two w eek s aft w w mplete our fieldwork. At that meeting, we i 1 l finalize all reports for rintin F. After that date, re port changes you ru a e and changes r quired because 'formation was not re i�� cd timely will he billed at our normal d ourly rates. Post-Closing li rat Adj Entries Th e first step in our year -end audit is th pre paration f financial statement drafts from F our final closing trial balance. That rnealis an entri m ake ale after hand us you closing trial balance must be handled as audit ad j ustinents, or in e trenle ases b re- inpu�i� g the entire trial ha 1 are c e even if the am u nts are irru r� ateri -al If you make such cntri e s ail d the am Dun is are in fact i mm atcrr a We +II ba l I }you f or tie os of th e ad j ust ents or re -input at our non nal hourl rate. Recu r�r'i na Audit Adjustmen I -a 1p year we include file prior ear's ad j ustii�g entries as r� ems' Steps i� our F i r� If we are r equired t coati slue to ma to s lilt; C hecklist, so that you can incorporate tl� cse entries in your cl w these r adjustments Lis part o f` this ear's au dit, we. will bill for thi se 'see at our normal 11ourly rates. CAY R.Prin ting As a c onveni e n o e, we c send vour CAFR t o a printer we use local We do n ot charge for NO deliverLig carnera ady print m asters to any printer of your choice mid delivering the CA--Rs or BES to you. However, we will b i l l you for miy additional time spent on the CA.FR printing at our n o ral hourly rates. This include:, changes after th e report goe s to th e printer, obtaXnin g rev iewin and or de li e ring printer' proofs, etc We can also h with CAFR des i including covers, tab dividers, col chow ce s, bindings, or ani ati on, ch arts, snap s, {:c. we will cst the se. costs for you before proceeding. S ingle k u d it Act Additional programs will cost $6,060 each, urn l e s them a-re other factors which add to that a pro ani' s o st; in that case we ,ail l provide de a cost e sti.rnat before proceeding. rare 'P r'u rams eq tan ng S eparate Audit G rant progTams requ irin sep arate audits r epresent a significant in crease in work scop and fees for these audits vary based on the grant req uiremen ts. If y ou wish us to determ im an d id entify Nvh i ch pro grazes s are sub j e t to audit, we wi X I b i I 1 you for that tun e at our norm al h our] y rates. C hanges in City Personnel Our experien is that changes and /or reductions in Finance Dt,-partmcnt staff can have a pronounced imp as on costs of perform ing the au d it. If such chary ge s occur, we wi I I meet witli you to asses s their impact are d arri a a n ew fee before mfr be gin the n e t ph ase o f our w ork However, we re sen7e th c right to revis it the i s sub j ect at th e: core c.l us ion c f the audit, based on your actual perform a_nce an d our actual costs JP I'11�e C P UB L IC A 00C UNTA T 16360 M Rd., S uite 170 4040 Moorpark A ve., Suite 100 M or g an H1 CA 95037 S Jose. C a 9511 Tel: (408) 779-3313 Tel. (408) 55 0 Fax. (40B) 776 -1555 Fax. X408) 557 983 J 28, 2005 To the Sbarcholders Associates Accountancy 0 tiOn allhut Creel, Cdifornia W e have YeNi the system of ty control for the accounting and auditing practicc of Maze Associates Accountancy Co n: ion the firm) in dfw for the year ended May 31, 2D05. A system of quality control eno)m asses the f n's or Mc the policies adopted and procrdures e stablished to per de ft nth reawnabla as umcc of conformin I' th professional standards. The elernents of quality oontrol are described in the Statements on Quali Control Standards issued by the American Insti tute of Certified Public Accwntants Af SPA The firm is responsible for designin a system of quali cDntr of and complying ma it to provide the fir nk reasonable assurance of co nfo rmi ng W professi standards in 91 material respects. Our responsibility is to exp an opim on the design of the system of quality control and the firm's compliance wi its s stem Of quality oo aml based, on our re i ew. review r �a conducted in accordance rdanoe Sri th standards established by the Peer bier Board of the Ai PA. Ow- Dun our re" env, ire read required representati ons f m the firm., inter a ed firm' p�rsoz�nel as d obtained an un derma d of the nature of the firm's awounting and auditing practice, and the design of the firm's system of q ua lity control si ff.ci en t to assess the risks implicit in its practice. ased o our ass sm eats, w selected engagi and ad-m iui s trative files to test fo r co nfo rrn ty with professional sty dams and compliance xxith the f r m" s system of rl uuil i nt corol The engagements sel e ed represented a rea-sonable cross section of the firm' s accounti n or and audltin g p r`actice �1,ith emphasis on higher -risk e nizagerne= 71 e engagements selected included, amen g others, cngager nents perforz n ed under G overnm e n t A a di tin landards. Prior to concluding the r aew, we reassessed the ad e racy of the scope of the peer reNicw procedures and mot i th firm management to discuss the erformed rovide a reasonabI a basis for our opinLiori. r�sL�l is o f our r r e e be l a ��e ro�.cd ups p p in pe rfo rmi n g our rex. i eiv, eve obtaln ed an and a rstandi ng of th e system of qual i ty oontro 1 for t h e limn s a o tiD g and audAi n ra ctic... In addi tion eve tested compliance wi th the firm's quality ccr�trol pol ici �s and p rocedures to gp the cxttnt we considered appropriate. These tests covered the application of the firm's policies and procedures on selcoted en cra emen ts. Our revicw i� as based on selected tests therefore it would not necessarily detect all �vu ncsses in the system of quality control or all instances of noncompliance with it. There are inherent l i ni;i to ti o as in the of feodNFrmess of any system of quality control and therefore n c n compl i ance iAith the system of quality i contro ma y occur and not be detected. Projection of any eval uatio n of a system of q 1 i ty n tml to fry t ure p eriods is sub `ect to the risk Lhat the system of quality control may become inadequate, because of changes in oou di6ons, or because tile deg e of campliar�ce i ih �e policies or procedures may d etc r orate. In our opi the syst of qual i y control for the accounting are d ate di ti n g practice of Maze Associates OMbOn in effect for the year ended May 31 2005, has been designed tc) meet the requi rements of Acc� untan cy rP es tablished by the IpA and was corr�pliod th c quality CDntrol standards for au accounting and au dtt� n g practice es 'it]� d��ri1 tie r then ended to ro 'ide the firm with reasonable assurance of corrf'or ing with professional sta r) da rds. A s i c�st rrxa in a �stcr re 's 7 e IxaVe issued a lctt er under this date that sets f`ortli Comm en is ti1� t ���e re of co nsi JE d to be of suffl c i cnt si gn if ca nc� tc .ff�,ct the opi ni orI ex in 1 011 S report_ f Nichols, Rick ompally M, kZE ASSOCIATES March 19. 2009 Ann Marie Gailant Finance T ire for C ity of A tarn da 2263 S anta C lara Alarn da, CA 94501 ear .A.n n Mari ACCOUNTANCY P RATION 34 78 B uskirk Ave. Suite 2 1 Pleasant Hill, Califfamia 94523 (925) 930 0902 FAX (925) 930 maze @mazeassociates. co m Wo are, plcased to c onfirm our understariding of the setilices we are to pro f de for the City of Al ameda for the year elided .l urn o 30, 2009. 'Ffi e serv ices we have b eii engaged to provide are outlined below, but we are also avai lable to pr i d e add itional scrviees at your request: 1 Audit of the basic financ statements, preparation of Maio rand um on Ir lem 1 C ontro l S tructu re, and ass i.sta.n ce with the preparation of the omprefi n i e Annual 1� i nand al Report �ncl u dire parati�i� air d printing o f color graphs an rev of tatsstr a i"for rl A udit of the basic cornporl lit un it finan ei al stat r rents of the ommun ity Tm provernent Cony mi ss of of tiz�g i c with Guidelines for Compliance Audits of Cal ifornia the pity of Ala.r�i da and t lied e el op merit Agencits and is suance of ou reports th y n. (Assum no new project areas.) Test rig two pro rani s for compli with the i ngle Audit Act aillerldMentS of 1996 an applicable l aws and regu l ati on s and is s an e of our re -port ther eon. 4 Testing of rompli nee with Proposition 111 Appropriati Dn Limit vicar ent and is suance of our report th r ye Audit f ba i4 cor nponent unit financial statemcnts of the City of Al ameda Poli and Fire Retirement ment S ystem Pension Pl ans 1 7 and 1082. A u dit of the basic comp onent un financial st un eats of th Alameda R euse and Redevelopment Autli ority. 7 Test e su re B funds for ojnpl i an with the Agreement for Distribution of Iea. t��` Funds t� I���:a1 Agencies, Perform agreed upon prDc du r s to oornp l y witl County r porti n g r equirei nents for the Park.'In g C itati on ystern and i s s e our report th erco n, Tests of corn p l iance for M etropo l itall TI port. ti on Corsi a7i is sjon f Fraii spot tation Developm Act Pro grani s and 1)Tcparatio n of req u i r�;d repo its 1 Test of corn p I i an cc for Prop 1 B Prograrn and pr paration of requ ired report. A Professional Corpora A u di Objective 'lie ob j otive of cur aui d it i s to express opinions as to w h ether your fin anci al s# tem ents are fairl y presented ire a I material respects in con formity iter ,r genera accepted accounting pr in the United ited States of America and to P rovidt l i itedi assu rance on accompanying supplemental Information. O ther information accompanying will not be txud ited by us and we will expres no opin on it. Th e obj eotive also in cludes reporti oil: Int. -.m al controls re,l at.ed to the f nan ei al statements and compliance with laws, regulations, and the provi of contracts or grant agreements, n oncom pli ance it w hic h Gou h ave materia effect on die. financial st.at rn exits i n acco rd an ce w ith Go ve ra me n I A uc landa-r s 0 lriternal controls re Iatcd to rnaj p and are ()Pi 11 1011 or d of op i nion Oil cornpl ian with 1 s r gu 1 ati 0 ri axe th c- p ro r s iorss of contr� et or grant agr'eem nts that oou 1 d ha e a d r re et an r n at r`i al effect on e �e1l r* or p rogram M accord w ith the Audit Act A mend ni eats of 1 996 and 4B Circular l .4 ud t of aw, Lo a l G o ire rn en and Mon -Prqfi t Organ i nation The rc-p arts on l ntcrnei1 control ai i d coinpliaiice w each include a statem that the r pol is intended for the i nforii; ati oi� and use of the Counci or the ir appointed comet it�ee, rr��r�agefrtent, specific legisl ati e or re�� !atoms bod ies, federal award agencies, and i f applicable, pass- tlirou h o ntities and is not intended to be a« d should ii of he used by anyone oth{�r than these specified pasties. Our a ii will be core ducted in accordance, with generally aooepted auditing standards in the United States of A merica; the standards for fi jean i ai audits contai n d in overn in-ent itiri Standards, iss b tli e Corm fro I I c, G ener l of th e Un itod States; the Burgle Au it Act Amen drnents of l and the provision of OMB ircu lar -13 -3 and vv i l 1 inc lude tests of accounting r ecords,, a d ter'inInation of major proal'am In ace.ordan e With C I rcular A land other procedures we cons ider necessary to enable us to express sucl, opt n rot's and to rendcr the required reports, If our opinion on the financial statements or tha in gl Audit compliance opinions are oth r than unqual we w fu lly discuss the reasons witli City managem nt in advance. If, for any reason, ire are a ri a -b l e to eornpl ete the au or are unable t o fon or have n formed opinions, we rn ay decline to express opi n 1c)ns or to i a poil as a result of this en a ein nt. Maw--Lgement R esponsibilities art ao r11er1t is r`espon s i i� to for the basic financi stater n eats and all ar.coni pan i n i ��for��ati ors as 11 as al re re €,entati oii s cotta i n ed ther r- ire A s part of the audit, r� r i l i prepare a draft o your fin are e i al s�ater�rer�ts p I sell edu le of expenditu of federal aw ards, and rcl aced notes. You are respons for rn akin g all manager neiit decisions and per n}iig all management functions relating to the financial stat.emeiit the schedu Ic of expend itur�es f f'cdera I award s a ii d rel ated rotes an d for aeeeptin g fu I1 respons ibi l ity for such d e is toms. Ou i 1 be required to ac riowl ed ge in the management representation letter that you have rcvi eared and approved the fin aii i; i al statem rats, the schedu of expen of foderal awards, and re lated notes p rior t their issuanco an have acre ted responsibil for them. Further, you are requ ired to designate are individual with su itable skill, k I ed ge, or e p r i 4-n ce, to overs any norsau dit s r w e pro v ide and for ev aluating the ad equ acy acr resu 1is of those sere -ices and accepting responsibility for them. M any ment is responsible for establishing and maintaining i ntemal controls, inclu dirt g rllon itori rig 01 acti F iti es; for tl e se le for are appl ieati of a ccount' principles; for the fair' pre ei�t��i��� in the fin ancial statements of financial p siti rr f the i s ari ous a tiviti es� major funds, and the, aggregate, remaining fund information and changes in financi position and, w here a pplicabl e, c h fl ows ill con fon-D ity w ith U, generally acce accounting princip and for federal award progmin compliance with app l i cable laws aril regul an d the p of con tracts ari grant agreer ne s. Mana.gcement is responsi for making al financial records and relat&d infonnat.i ors a a labl e to us, including an si gnificant vendor relationships in which the vendor has the responsibility for program compliance and for the accuracy and completeness of that information. We understand that th City w i l l provide t) s with the Clos C heckl i st inf onnati on required for our audit an that the City i responsi for th accurac and comp leteness of that in onration Managemcnt is responsible for adjusting the financial statements to correct material rn i sst te,me nt an for eonfi ran in t us in the representati l etter that the effects o f and uneorreete nn i sstatejnents aggregated by Li duri th cu rrent en gage m en t and perta to th latest p eri o d p re i in rn ateri a 1. both i n d i v 1 du aI 1 y an d i n th e aggregate, to the fi nanei i taternent taker as a whol e. Y OU res i hl e for th d and imp lementation lementation of prograins and c ritr is to pFevent and detect fraud, and for i nf:)1 1il in g u about all Icno n or suspected fraud o I llegal acts affe ti ng the govt rm n ent involv a rnanag(.ment, b em l o ees �ho ha 'e s gory i rf icant ro I i n i ra ni al ontrol, tad (c otl� ��s where th fraud or illegal afts coul have a material effect on the fin ancial statements. The City is also responsible for inform 11S of its k nowledge of any allegations of fraud or suspected fraud or illegal acts affecting it received in commun from ern to gees- fon r e��p l o �ees, grantors,- regu lators, or others. In a dditi on the it i s responsible for p identifVing and ensuring that it complies Nvith applicable laws and regulations, Additionally, as r5quired by OMB I reu 1 Car 13 3 1 t i s In a n. a gem nt' s re s po n s i b i 1 i ty to f'o l l o w u p and tale oot ve anti Oil on reporte d an d it f n d i ri gs and to prepare a sr iumar F sched of pri audit findings and a corrc aive action plan. The surniinary schedule of p rior alA d i t findings must he 1nade available for our rev' ow. I ana rn exit is re ponsib le f or establishment and inaintenariee of a pro ess for trackin I.he stags of audit findings and reeoinmendati ons. Management is also responsible for identifying for us pre i us audits or other en gagernents or studies related to the objectives disru se-d in the Audit Obje ctives se Lion of tliis letter. :a i s responsibilit includes relaying t us c orrective actions ta ken to address significant ant fi rrd iii gs and reeom nen ations resulting fi ozn those aLld or other engagem or stud i s. Y ou a al responsibl f or providing man agement's views Oil OUT' cu rrent findings, 011el itsions, a nd recommendatio as 1l as our plann eorreeti acti Audit Procedures Fenerrall An audit includes am;n HICY all a test basis. evidence, support tl�e a���u��ts and disc losuFes tip the financial statements; fli erefore, o ur aLld it W i I 1 i nvo ive j Lid gn i unt about the n urn bey of tram sa etions to be exam in ad and tai e areas i:o be tested. Al 'e w i l l plan and perform the audit to obtain reasonabl rather th an absolute assurance about 1i eth er th c financial statenn ents are free of material iii z statement w hether #`i om errors, fl audu lent fin ancial report g, m of assets, or violati of laws or governmental regulatioiis that are attri butable to the it or to. acts by 1n anagement o r enn ployees actin oji behalf of the City. B ecause the d of abu se is subjective, overnfnej -7taf Auditing Standards do not expect and itors to provide reasonab l e assurance of d e tc cti rig abuse. B ecause an audit i de signed to provide reasonable, but rot absolute, assurance ai d because we w ill not perform a detailed. examination of all transacti on there is a r i sk th at material inis�tate�nents or non o n pl ian e m a exist an not be detected by us. In add ition, an audit is not d to detect im Misstatements, i mmateria l i l legal acts, or v i o lati un of 1a ws, or governmental regul ations that do not have a direct and T nateri al eff of on di e fi nan cia 1 statc,n or m ajor prograins. We will advise the City of any material errors and any fraudu financi reporting or misappropriation of assets that come tc) ou attention. We wi also infon ii the City of any v of laws or govemm regulations that com to our attent unless clearly inronsequa ,ntial W i ll inc Such in otters i n the reports �`e r� i red for i n gl e Aud O ur responsibility as and it rs is l i it iced to the period coverz� by our audi a-nd d oes not extend to hatters tliat ini ght ari during any later periods for whi we are not engap;ed a au p u r" t`ooed r yes i 11 i-n c ludo tests of docum%tntar v id erl e supporting the traTi acti recorded in the ac unts, and IT) 2L M e 1 u de tests c)f ph ys i c a l ca e xi ste n ce stenee of Mvelltorr s, an di rect c onfirmati on of as Investment and certa creditors and Finaneia[ institutions. We ill oth e�` ab-suts and I la i i i! I es b eorrc spond n ce with se I e�.ted customer sp re u es written rep r s+�titati 011s frorTj y attDrii eye as part of th e en a-g ent, an they i ay bill th C i te or s on d in g to th inq At the eolle jus iota of ou audit w wi ll also req u WC certain wri tten representation from rn an age ment about the fi Handal s tate rnents a re lat d matter's. Audit Proced Interna Controls Our aud ud it ill in l ud{� obtaining are un derstanding of the City and its envirunrnent, including i ntemal control, suffi ei ent to assess the risks of ma- terral xn 1 1 sstat i nent of the �nanci al statements and to d si ri the natu t�t� and )tent of further audit ro e�dur s Tests of controls in a F be. performed to test the e ffec tiven of certain contro that we co ns :.der rele t o pr enti ng and d e rrors rs and fraud that are mat to the financi g staters', y�ts and to r�� e�� t.i g and d tcet i r� t�r, i s sta.te e��ts �`u 1 t t n fro i 11 ��1 arts an othe t� on r� p i a�� e f u r tots i�" rf �r��� F 11 ���s in M atte rs th at H ave a d reet a.n tin at.ei i 1 effect o n th rf i nalp l l statenieats. p Scope th w ou l d be neatssary to render an opinion on internal control arid, accordingly, no opin i on w be e P re, sled in our r epo vt on inter nal coil t ro 1 i ssu ed p li rsua t Gov e rn inen. t A s r e u it d by OMB C it ul ar A -1 we w I l perform teats of contro s to e valu at the e ffectiveness of th e deli g all(i c erati on o f contro that cons ider relev t prevent n r d teetrn a In aterl al noncompliance w u iretr� ���ts ap to ca h niaj r pr n, However, ver, mir tests will b less in scope than would co mp l iance he n ssa to ren de an op i n ion o i l th ose c ont ro ls, an acco rd i ngly, no opin w i l l b e expresse III ou l report Oil I internal e ntr I a ssuec1 p u rsLjant to O B C ircu lar A 3. An audit is not des ibm d to rov d assur�anco on internal ontrol or to ident'f si crn'fiea��t d f'iere�� i re��er der ri l� the au i eoi t i cafe t r ar�ageinent and the oun i i i ntemal contra l r l ated matters that are re u i„ d t b core irnun iBated und p1`of s si orya twid and s, oi�erm s iti7l to a s and t r u ar Audit Procedu Complianc art of obtain in r s assur e about b th er th financial state nts are free of rnat. ri al r n sstatem en t g 1 f' n r n s laws, 5 re g ul ati ons, contracts and gr o-nt s. e SFr 11 per fon tests of the Cry s ornpl ranee it cert Ho air r the. obj ective, of our aud wil not be to pro ids an opinion on ovaral l c mpl i aii e and we wi ll n ot l M'Css su ch an o p n our jn�ion i rep on w m pi i an e i ssuedi pu rsu ant to Governinent Audi Standards eo 11 Circ 1 '2. re u ire that e also plays a"d p rfon n the audit to obtain reasonable assu about l� p r ovisions r�tx�ao�.s and _ant jjej]ler` t1le C ity has compli d Nvith applicable laws and regulations and the a r -r n e,nts ap i cab to maj rogral� s. u l` p ocedLIres wi ll otjsr st of tests of transactions and tli e applicable 'p l p roc -.du rcs described in the A C ircu la r A-133 ompl e Supp lement for the typ of oornp i an e c u it eats that eou ld have a d i� ct and in at�eri al effect on each mad or pro fit aj�. The e �r�l of those Procedures re ill be to express an opinion oil the it 's compliance with requirements applicable to rnajor progl`arns M our r eport on comp 1 i ancc>. i s sued pursuant to GMIB C1 rou I ar -1 3, A gaze d-U pon Procedures Ou r serv ices to apply ag roved u res will be co nducted in accordance with attestation stair lord s established by the American Institute; of Certified Public Accountants, The, sufficiency of the procedures is solely the r s r� s i h i l it of those par e speoi f`i d i rl til e report. Consequently ly, e take no repr serltati on rcgard i n th s uf`# i c i �r�c of the procedures; des ribed in the r' port either `or th purpo� for which the report had been req uestcd or for ajiy other p If, for any reason, wo are una ble to compl the proced we w i ll describe an r`e'stri n the performance of the procedures irr our report, or ill not 15SUC a report as a resu it of this en Because agreed -ropon procedures do not on'stitut an exam ire ation, e w r l 1 not ex press air opinion. In addition, Nve have n obl igation to perform any procedures beyond tho agreed to. &unit i�dministr tion,. F. a n d Oth er We in ay frorn t1 rye to t1 rile, a1i d on the c j rcumstancees, use third-party service rovi tiers in s r ins y our ar,Gou nt. We may share, confidential inform about you with these servic providers, but remain corns n itted to maintai th confid e-11t1 l ity an security of your in f orrmatiori. A ccord ing ly, we maintain intern al po li ei es, rro cede s, and saf eguards to p rotect the con f a d e.nti al lty of your pers ojial i n formats n In addit we w ill secure confidentiality agreements with all service providers to maintain the confidentiality of your information and w e will take reasona preca.uti ons t d etermine that the hav appropriate p rocedures in place to p revent the unauthorizf, rel ease of your confidential informati ors to others. 1n the event that wo are unable to secure an app ropriate 0o1lf i dentia sty agrceeinent, you o i 11 be asked to provide your consent pri to the sharing of your er. ur then we will remain re s p on sible f or the. confidential i nformation w ith the th servi provi 1d work provided by any s uch th ird-party se1�f i oe providers. At the conclusion cif til e ell gagelTleilt, ee �v i l l comp etc th ppr`opr�iat.e sectio air d si th dat Collecti l~ orir� that summarizes our audit findi figs. It is 1 nanagernent s responsibilit t salblzlit tlie reporting package (including Finan statements, sched of expend of federal awards, suminary scN,.dulu of prio audit findi and it is repo a ii d a corn c tIv e action pl a long with the D ata C Forrn to the clesignated fe i fi pr0pl�i t:e, to pass throu emits es. Tl�e Data Collection l eotion Fo» air d the reporting pack age c a« i n ast L submitted within the earli of 3 0 days after re eipt of the auditors' reports or nine Months after the en of th e au d it p ri0d 1111 ess a 10 11 ger peri o i agreed in advance by tli e, cogn i7ant or ove rsi ght agency f or au d I ts, At the conclu of the e n g, gei ent we will provide information to man agement as t o whero tht reportin packages should be submitted. Wi regard t0 the el ctron is d i sseniiiiation of audited financial statemclits, includ financial l s tatements publ el o tr�on i cal'.y you we site, you understa.�d tli at electronic site are a in�ans t.o d istribute �ii fo1 nd to er fore, we are of required to read the, 'nfbi ation conta in tli e e sites o to conside the co of othe Information jr, tli.e el c trorj ie site with the ori gin al document. The audit d oeun��ntati on for this en a elnent is our p��o er and co n stitutes mnfi deist' al infot7r�ati c��. However, ursuitnt to Authority given by jaw or regulation, we may be requested to make certain audit docurn entatiol7 a ai 1 abl e to a federal agency proved i1� g oversi of direct 0r in d it et fund ilig or the o ernmeiit Accou face for purposes o a quality revi e F of the aud it, to resolve audit findings or 'to c�arTy out ti ors i lit 1`es o1� s ibi I ifi es. We w�i 11 notify you of an such request. If requ o�tod access t suds au docu rn entafi ors g p wil be rov i d ed und er the sup ig i lien of Maze A ssociates pe- rsonil el Fu upon request, we rn air p rov i de co p i s of selected au d it docti me T hese to the aforern enti oned parties. parti es may intend, or dec id e, t d i s'tr' bate the cop i es or 'ii form at1 on contained thcerei n to others. i roc lud i n otli er overnm ental agenel es, wee i 11 re i n aL1 d i t docu ell tat ion fo i` seven y ears psi rs uant to .state regri 1 ate on s. We, expect to be ill Our audit iii March '2009 and to issue our re ports no l at er than I ecernber, 2009. The nai of` the en Fage��ient al1 is Katherine uen h o wi i 1 be responsible for s�� icing the engagelr�er�t and s niiig the, the p report. u r f cs for these services are bi l x ed based on our Qontract with th e C sty. Our standard h our ly rates vary a ordi ng to the d o of respons intro jviced and the exporience l evel of the personnel assigned to your audit, Our i nvo i ees for these fees wi ll be rendered each r oah as work progresses and are payable on presentation, In accordance witjj our f 1 111 pol icies, work- m ay he su spended if the City's account b(,-comes th ilyty days or more overdue and 1ilay not be resumed u nti 1 the City's account is paid in fu 11. Thes -w fees are based on antic ipated cooperation frorn Cite personnel, the cor nplet1 cn of schtdu 1 es and data requested on our h e.cklists, and the assum ption that there J 11 be no une peetcA increases in w ork scope, s uch as new ire g 1 e Audit Act prograrns, n ew debt i ssue�s, etc., or de F lays ly i r h are beyond our contro as discussed o il the Fees Attachment to this ]otter. if sigi�if scant additional time is necessary. we Fil I discuss 1t rti� it niana etnent and ar�`i ve t a n cw fee before e incur any additional costs. We and e��stmid yoij ill provi us Nv ith basic orkspa.c sufficient to accommodate the audit team assi il d t oiir aud We u nders.ta -nd the basic N�, or s paee wi ll be equipped with a telephone and direct Internet access. preferably a temper i network outside of your neMiork. a publ IP add ress and a wired connection We understaA you wi ll also provide us Nv ith access to a fax machine and read only access to your general ledgtr syst rn of ?ei nmeW Auditing Sta-n-dards requ ire that axe provide the City iN Ith a copy Of OUT ITI st recent q ual ity c ontrol review i and 1 tte: of LOITI I ell t. O »post remit p eer r i e-w report. th l etter o f c omment and ou r s p(ti s s ecompail' t his l etter. We appreciate the oppoiiiinity to be Of s rVict,� to the. City and believe letier accuratel y summarizes th significant terms of ou;° en agrement. If you have an q uesti ns, please let us know. If you a ee with the term of o enU ern as desr.-ribed in this letter, please sign the n elosed Gopy a nd ret m the en c opy to us. Maze S. Ass i at s Tli i s 1 €otter correctl y sits forth th e u n derstand ing of th C ity. By: T it l t,-: Late; C ity Df Manse a En gagement Letter Fees Att cb m ent Ou f cs for thu work described in the attached engagement letter will be as follows, unles they are adjusted for (Al or Inoa of the IteMS be to It in as i e F inan ei al S tatements, Mernorandurn on Internal. ontrol s an d 'A FR assi stance omrnun sty frn provern en t Co m rn 1 ss1on Audit S in gle Audit Act Report (two pro T anis Review Rtv of City's Appropri Limit Financ.ial Staternents for: Pol and Fi Retirement Plans 1 079 and 10 Taro eda Reu se ands Red eve Iopment Au thority M caure B Parking Citation System T UT1 'fir rams A udit Prop 1B TOTAL Fee {a} 104,989 6 13 7 5 11,792 3 .5 267 2, 580 397 5155.179 00 9 'Fees u a` I`ec _1 rfi 11 g f ees 11 a vc been ad j 11 steel on ly fo r th e eh an Dle i ii th scr oe s Boni p i ctit of the Bay rea Cost of X., i ving Ind for the aii F ranci s o Bay Area of 3.0%. PDF Copies of Reports scanned cop of the above reports are avai lable upon reque at no charge. Th ese scanned Gopi s (00 d are riot h igh quality and the file si zes niay be large, depending on the length of the repoil. if you inten to post the CAFR to your webs ite, we do not reconi mend using the scann cop to d o so one of the €o ptions below should be used. If y ou woo ld li e a high cr qu al ity PD file, there are three op tions. Th fees s h own b e l ow are b ase d on a C A nnual Fin Report. Please contact us if T or your FF or if you'd like quote for y ou n �o u 1 lime us t�� r���r� one of the following th options the preparation of a li l e for another t pc of report. In add ition, should you decide on one of the fol lowing options, p lease let us know at l east a week in advance. 1. INDIVIDUAL PDF CAFR PAGE 5200 Print words, ri umbers, and stati stics to PI F then scan anyth not available d i gital l e� t rhea aNvard certificates.- etc). Use W i ZIP to archive individual PDF prints "as is" and send them to you, and you wi l l thert coin p i l e repo rt, Th i s option re u i res th at you h ave a fu 1l copy of Adobe Acrob at St lord or Professional, and kii o� 1 edg° about the pro gram, as e1 I as a way to "u nzip" th e fi 1 es. Th r s sly ou Id be used if yo u are vwi I in g to assernb I e, the PDF report, but sti 11 would I i k y to h ave a h i gh quality `printed to PDF 7 lF I Qua ily e d iull i -H Time to oiiiplete: 2 -3) business dad's File size I -2' 1 113 (varies es with n urn ber of pages s armed) Print c i Jiumbers an statistics to P F, then scan anything not avai lable digitally l tterhead, a a ce etc). C ompile into one document with omb dd d page numbers, l Tab l of Contents, aD d P F bookmarks for easy docurnent navigation. This opti is ideal for pl acement o n a bsite or distribution v1a e rnai 1. ual It y: Mrd i urn Ni gh d p n d i ng on nurn ber of p ages scanned Time to C omp let 7 -f0 bustn (-,ss days F si )AB (varies with nu le er of pages s can ne d 11 C AMERA FEAT PDF CAFR $1,000 Print Nvords, numbers, and stati sti s t PDF and compi into one document wi em bedded p n Li iiibcrs, hiss rt av ai lable di gital pages lette ad, award certificates, etc) but *no canning* as we d not lia e the Facilities to scan docuni nts a ``camera ready`' qu This opti ii could be sent to a-11 print slop to geiie.rate are officia] bound copy, for plae rn cnt on a web site, or distribution aria mail. Q uality, Veit' High 1 1 me to Co inpletc: 7 business days 1-1 I e s i ze: ITOB Add itiou a i Se x vices Th above fees are f or au and assurance services d escri bed i ll til accompany en gagl.-Trient 1 eller. Th e y do not incl ude fees for ass i ti ng with e 1 o s ing the boo ks nor prov i d ing other accounting servi c �s. S the City r q uir assistance beyon audit services we wi provide a cast esti ni ate befo 1) roc e ding. Repo i-t Finalization Cur fee is based on our understanding that all infonnati ors and irn ateri als neces t fi nal i Ze all our reports will be provided to us before, we comp l(,-te, c)ur year-end fieldwork ill your offices. In the case of CA F s, th i s in lu des al l the mat ri al s an infoniiati oil re qu i red t o pr the CAF R. As in the past:, we wi 11 provide final drafts of all our reports before %N�e leave, our offlices. We will schedule a Final Changes Meeting with you for a d ate no more th t fo wee aft we comp] et our fieldwork, At that rneetin we wi 1I fi nal i e i i reports for printing. After that date, report changes you finale a id rhang requ because in formati on was n ot r c i ed ti me ly wi 11 bla bi l led at ou r norm al hou rates. Past- C[osin Client Adjusting Entries The first step in Our vear -eiid audit is the p of fi i�aiieial statervient drafts from your Final closing trial ba.laii e. That i nears -any entries you make after handing us y our closing IA'MI balance »lust be. handled as audit adj ustiTients, or in ex treme cases, by re- iliputting the entire trial balance. even if the amou Fits are i iiiirnaterl' a 1. ff you ni ake such cntri s and the amounts are in fact immaterial. Nv w 11 bi1I you for [he casts o f the ad or re input at our n it n a] 91 u rly rates. Re cuirri'ng Audit Adjustments each year we include the prior year's adjustincr entries as new steps I II Oul C losing Checklist, so that you can iiicorporate theso e ntries in your c losing. If we are required to continue to ina.1 e these, sake adjustments as part of this ear's au dit, we w ill bill for this ser-v ice, at our nonna hourly rates. C ,kFR rinti nu As con enience, we can send y CA FR to a printer �e u se locally. W d n ot c f or d l ivering carnera print masters to any printer of your choice and deli vering the CAFRs or BFS to you. F] o r 1•, will bill Fora for any additional time spent on the AF printing at our nomn a l hourly rates. This iDcludes changes after the report goes to the printer'. obta-i n i i� g, revie ing and or delivering printer's proofs, ere. W e can al so hel p wit.li CAFR des i ll i11c ding covers, tabs d iv id rs, col o r ch i ees, bind ings, organ i 7 on c h arts, Map S,, etc. We w ill esti these costs for you before proceeding. Single Audit Act Additional programs wi ll eac cost $6,.817 in 2DO9,. unless there are other factors w hich add to tliat pro grarn s co st; 1n that cas we, wi I I p roari de a cost est irn ate befo p roceed i ng. G rant P rograms Req ring Separate Audit G rant prograrns requiring separate aud represent a signi ficant increase inWDrk scope, and fees for th ese au dits var y based on the grant requ irernents. If you wi sh us to dctcnill e and ide.nflfy which pros -rams art sub& pct to and it, we wl l I bi I I you for that tilnc at ou r normal li ourly rates C hanges in City Personnel Our experien i s that changes and /or reductions in Fin 1 eparti -neat staff can li ave a pr y oun o d i nipaef Ott costs of p rfor i n g the audit. If such clianges occur, we w iTicct with you to assess t Ii i r i p act and arrive at a n ew fee before w e beg the nex p h as c of ou work. However'. w resent e the right to rcvi si t t.li i s subj cct at tl�.e eoriol u s ioii of the and it, based on you r actua I perfonna ii ee and our actual costs. C( F� CERTIFIED PUBLIC ACCOUNTANTS 16350 Monterey fed., ui e 170 4040 Moorpark Ave., Suit 230 Morgan Hill, CA 95037 San Jose_, Ga 95117 Tel. (40.5) 779-3313 Tei: (408) 557-9890 Fax: 406 77 6 155 5 Fax: (408),557-9893 October 7, 2009 To k, harco d ers M aze As s ociates. Accountancy CDrp Drab on Pleasant Calif a 'We have rcvie �i t'he syst= of qu cont m] for fbit accolriti and auditing practice of M2ae Asso ciates Acc ountancy Coilporation (the f in offea for the Ycar tr ded May 3 l 200K A systonr of gmlity wn l .aucon pas scs the 's org structure., the p olici s adoptrd and pro etdiure s cstab lisped to provi it with re as onab 1 e assnra�ce o f cD o with profc s sional standards. e elements of quality control ate d b cd in the Statements on Quality Control Standiuds issued by the Amtrican institute of ertif i Public A ccomtants 'l he arm is responsib3 e for d esigning a g stern of quality control an comp with it to grovidt th o f i rya sonar l e assLuaTxme of wnforraiiag nth P profess iona l standards in ill material r p e cts. Our resp onsibility tD oxpross an opinion. on the desiga of the system of quality control and the f `s canVli with it system of quality c untia l based. on our rnviaw. Gar rvview was conducted i n arc ordaace_ with staid ards established 'b the Peat' Reviaw Board of tie I Dig our rcviewv e rea re quires representations from the interview fl= personnei and obtained an un derstanding of 'the natuie of the fimns account gy, and auditing practice, and the d esip of the fi s system of quality control suffi cient to as se s th. v, ri implicit in its pza tiro. Based on our assess nts ire selected m gagr.mcnts and a files to Est for coi or t Mth professional standards and comp Hance with the faines sy�m of qu ality zrtrol. e ongag err n selt;ctcd rVresentad a reasonable ores sectiDu of the ms's accounting wid audiCmg practice with emphasis on higher -risk engagements. The engagements sel eet included, am ong others, engage. men gerli or t imd er ovemm emi udi� `tan lords, Prior c oncluding the re ear we rcasse ssod tb e adi .quary of the scope of the peer r i nv procedures and met with ftrm nwmage=nt to disc= th re sults Df our r5vi r. o h�Eevc tb� pwc u sire pc or ed provide a reas unable basis for our op mien. In p rf'orr ng oar review we obtained are undurst ding of the systems of quality control fbr the pi's aocDunting and auditing pTac ti In addi tion, wc tested or li a= with t u. fig +s qual ity control poll Iles and procedures to tha extent cow' d Bred agpropii ate. "r` h t ose tes covzred the application of the firm s poll o yes and proce dures on set cct-,di engagein: ts. Our review was based on s elected tests therefore it w unld 310 t necnsarily d etect all weaknesses in th(r systerrr of qn ali r miatrol or al l insta =s Gf no Bianco vdth it* There are ffiher nt Rmitations in the eff `e ctiv cne ss of any system of quality control and thrTefore with the system of quality control may oc and riot be detected,. PTojection of any evaluation of a s ystem of quality control to fat=e p criod.s is subject to the Tisk that t system of quality control is beco= ioadequate b ecause of changes in canditiens, or because ihe degr€ e of c=plianmc with the poi ivies or pro=dures may deteri ora te In our opinion, the system of quality control for the a 000unting and aivdi6ng practice of Mamie Associates Accountancy Carporation L effbct fe r the y %-,n&d May 1, 2 00 8, has be en d as ligurd to meet the requirements Of the quality control standaids f or an accounting an a uditing practice cs bushed by the AI CPA and was complie si nahl p f�ssink .�i th r r r� cx tT rte '�i�a ti �n r r� to rtrrtitr; rl p- i i r�r� wiQh f standards. A s is customary in a system review, we 11ave issued a letter under ffiis date that sets forth come=ts that W= not co i &,reds to be of sufficient significance to affect tai-, opi o expressed ia this report. N ichols, Rick Comp any www.nicho(srick.com CE'F377F1ED PUBLIC ACCOUNTANTS 1 5300 Monterey Rd., Suite 17D 4D40 Moorpark Ave., Suite 230 Morgan Hill, CA 95037 Sw .fie., Ca 95117 Tel: (4DB) 779 -3313 Tek (408) 7 -9890 Fax: (4 776 155 F ax: 57-93 O c tober 7.200 rr, the Shareholde Maze Ass ociates Ac e mintancy Corpo Pl easant Hill Cal ife is 'We have re e e -d the counting acid auditing practice of Maze Associi atr, s Aocountancy Corporai�on (the for the year ende May 31, 200 9, and have issued our report thereon dated October 7, 2008. 'rha.t report shouLl d be read in conjuncti with the co=ents in tH, s letteT, which were considered in d el r iiiing Dur opinion_ The matters descnih ed below were not considered to he of sufficient i i i ance to ay=fer t the opinion expressed in that report. Finding ThD firm's quality contrDl policies and pros d m-s do not requirr, documentation of prelmh inary .a ud i its about audit material li mits including audits subj t to Government AudIfing St an da rds. Duri the planning phase, audit m ateriality is discussed and documented Gn a qualitative, but not qu a ntitative, level. At the completi of fieldwork, however, p o tenth passt!d audit adjustments are eval uat d ill relati on to a material ity l evoi estate] ishe d as a percent of total revenues or total as sets. l eoo=mdati ml The firm should reN i s e its quality can tml document to require that a prelimina quantitative j udgr a rmt aboutmateriality limits be documented duriu g thft planning phase. Fix The firm' quality cGn trol policies and prue d ure s require completion of a reporting and discl cheer ist. o �e er, on an a di t n g rat r r� d t t r w i w e acted that sp references to Government Auditing Standards in the auditor's repa were ire ompl eti. and outdated, and the f'6 atti g of findin an questioned cost in th e reporting package lacked spec if i e required elements. Reoo= n atic Ai The firm should Gompare its reporting ch ec list for audits wbject to Government editing Standw rd-� to c urrent l i ary versi o s on a more ftequent h asis. i lio Is, RiGk Company rev. nR-� il�o[sri, k. r,om M f 4M AZE- ASSOC October 2 00 8 all o oC Ce rtified l r ntarzt P er Re viftw Progr 12 3 5 Radio Road R edwood i x CA 94065 -1217 Ladies and Ge ACCOUN TANCY CORPORATION 347 Buskirk A veg su ite 21 Pleasant i/4 Calif 94523 (925) 930-0902 FAX (925) 930- mazeOma eassoclate om p r e.s cants our r p onse to the, rep and l corer of co i e nts issued in D tion �vltli tfi� review of our a C D stir r and auditing practice for the ye ar May 1, 2008. The matters di cuss here iii wene. brought to the attent of all p eT s o eJ +Uamediately upon the co mpletion of the r -vl t In ad the m atters di scus s d in th 'L letter it I be i �t spe i al emphasis in our mo ni turfing p ro cedure i. P lanning ;[ateria As part of our l p I tati on of th risk assessment st and SAS 114, h ave aln,; in Dxp or at d quantitative materiality docnmentafion into our au dit pl proms. Rep D qLn i e e di is Our over ;sin e n t luditing Sta repo tin hefklists axe, r-, nt,. and v iff are m lu ing as an additional step in our p u axnc review pros ur s the specifi r quire, =1 for the rem e F r to o n riu that all v rb* a- c our aud r repo i c ons istent i cui east Y ow Book require�ni nts F We be K th e s e acti ons are r asp ns the to the Endin -S 0 f the Nov iew o ur \r x truly M azze Z11ASs0c;;L A ccountancy c O 0zat� O A Prosaionaf Corparatiprr