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HomeMy WebLinkAbout2 - Proposal - Professional Auditing Services_Technical File_The Pun Group LLP CITY OF LAKE ELSINORE Kenneth H. Pun, CPA, CGMA February 20, 2023 Managing Partner 200 E Sandpointe Ave., Suite 600, Santa Ana, CA 92707 (949) 777-8801 ken.pun@pungroup.cpa Ahl 7fm PUN GROUP ACCOUNTANTS&ADVISORS WHY CHOOSE THE PUN GROUP LLP? Kenneth H. Pun, CPA, CGMA Founder& Managing Partner The Pun Group's most : • firm expertise, valuable asset our Personal attention meets technical expertise people, they and their A unique firm culture deep experience drive our 0 Innovation embraced interactionevery clients. " The Pun Group LLP is recognized for its professionalism, integrity and for providing clients with practical solutions unique to their circumstances and issues. You will receive a superior level of service and a quality audit. Thank You! Thank you for allowing us to submit our qualifications to provide you with Professional Auditing Services. The Pun Group LLP Certified Public Accountants and Business Advisors Table of Contents City of Lake Elsinore Letter of Transmittal.......................................................................................1 Independence ................................................................................................3 License to Practice in California ....................................................................3 Firm Qualifications and Experience...............................................................4 Partner, Supervisory, and Staff Qualifications and Experience...................18 Similar Engagements with Other Government Entities ...............................28 Specific Audit Approach...............................................................................30 Identification of Anticipated Potential Audit Problems.................................37 "Prepared by Client" PBC List......................................................................38 Let's Get to Work! ........................................................................................45 Appendix A—Available Training.....................................................................i Appendix B—Certificate of Insurance ...........................................................ii The Pun Group Wins 49 2023 "Best of Accounting" Award "Excellent customer service and staff and partners are expert in their fields." BEST 000 Lani H. State and Local Government Client The Firm has consistently exceeded our expectations as client." dearly rated, ClintO. State and Local Government Client The Pun Group LLP is proud to have won 2023's Best of Accounting°award from ClearlyRated for providing superior service to its clients. 99 Winners of such awards have proven to be industry leaders in service quality based entirely on ratings provided by their clients. On average, clients of 2023 Best of Accounting "We started using Pun Group when the winners are 70% more likely to be satisfied than those who pandemic first started two years ago so work with non-winning firms. had a little apprehension about doing "I am pleased to introduce the 2023 Best of Accounting everything remotely with a new firm. But winners alongside their validated service ratings on the audit went very well and was ClearlyRated.com," said ClearlyRated's CEO, Eric Gregg. completed on time without problem." "These firms have demonstrated a remarkable commitment to delivering amazing experiences, despite another year of Kevin W. upheaval and macroeconomic uncertainty. Hats off to these State and Local Government Client service leaders-it's truly an honor to recognize and celebrate their achievements." The Pun Group LLP received satisfaction scores of 9 or 10 out of 10 from 94.1% of their clients, significantly higher than the industry's average of 50%. 49 Our firm excelled in five key areas: Responsiveness, Quality, Value, Needs Understanding, and Proactive Approach. About ClearlyRated "An excellent partner and amazing service." Rooted in satisfaction research for professional service Jim T. firms, ClearlyRated utilizes a Net Promoter® Score survey Private Sector Client program to help professional service firms measure their service experience, build an online reputation, and differentiate on service quality. THE City of Lake Elsinore PUN GROUP ACCOUNTANTS&ADVISORS 200 E.SandpointeAn Avenue,Suite 707 Santa Ana, California92707 February 20, 2023 City of Lake Elsinore www.pungroup.cpa Administrative Services Department 130 South Main Street Lake Elsinore, California 92530 Re: RFP for Professional Auditing Services Dear Sir or Madam: Please allow us to introduce our Firm and share our qualifications and proposed services plan for the City of Lake Elsinore (the "City") according to your Request for Proposals for Professional Auditing Services for the fiscal years ending June 30, 2023, 2024, and 2025. The Pun Group LLP (the "Firm") has the knowledge and experience necessary to become the City's next public accounting firm and the work plan to ensure a smooth process. This letter is an acknowledgment of the Firm's understanding of the work to be performed. We are offering our commitment to deliver all of the required work, complete the audit, and issue the necessary auditor's reports within the periods outlined by the City. No subcontractors will be utilized for this engagement. The Pun Group is the right choice for the City of Lake Elsinore because: We Understand the Demographics and Your Needs. The Pun Group is reputable for its '41 governmental practice. We are the principal auditors for cities in California such as Bell, Fresno, Gilroy, Hercules, Lakewood, Madera, Montebello, Monterey, Napa, National City, Palm Springs, Salinas, San Mateo, Santa Clarita,Stockton,Tracy,and several others.Accordingly,the proposed engagement team has a deep understanding of the current issues that municipalities are facing, such as varying demographics, economic environments, and the constantly changing landscape of laws and regulations. Recognized Leader in the Governmental Industry. We are a small national Firm with licenses in the States of California, Arizona, and Nevada and a proven leader in professional services to the government sector. All key engagement team professionals are licensed to practice as Certified Public Accountants and meet the Continuing Professional Education requirements under US GAO's Government Auditing Standards to perform the proposed audits. The partners and all employees proposed to perform the requested services do not have a record of substandard audit work nor have any outstanding claim of substandard practice or unsatisfactory performance pending with the State Board of Accountancy or other professional organizations. In addition, we are members of the national AICPA Audit Quality Center. We strongly believe that part of our success is credited to our professionals' participation in various industry-leading organizations. Such affiliations are critical to addressing emerging accounting and auditing issues within the industry environment. ORANGE COUNTY • SAN DIEGO • SACRAMENTO • WALNUT CREEK • LAS VEGAS • PHOENIX 000 City of Lake Elsinore You'll Work with a Team that Embraces Innovation and Continuous Improvement. Our Firm 4�• is committed to continuous improvement as it relates to service delivery. We embrace innovation - and identify areas of technological enhancements in our audit and project management approaches. For example: Secure Data File Transfer System. In order to improve audit efficiency, workflow management software plays an essential role between your organization and our engagement team. We employ a secure data file transfer system called Suralink. Suralink's dynamic request list is integrated with our secure file hosting system for seamless document- request coordination, including the upload of large-size files. It means all our requests are in one place, updated in real-time, and accessible by everyone working on the engagement. Not only makes the operation more cost-efficient, but it also enables you and your team to spend your time getting the job done, not reconciling a messy list of outstanding items. In addition, Suralink's dashboard allows you to visualize the process of document-request fulfillment. Al Auditor. The Pun Group leverages the technology and research tools required to provide excellent services to its clients. With the usage of Artificial Intelligence (Al) technology, the Firm is capable of issuing all reports requested faster than other audit firms without exposing the City to unnecessary risks. Remote Auditing Capability. Remote working arrangements have suddenly become the "new normal" in these trying times. Our Firm has deployed top-notch technology and fully transitioned to "remote auditing," offering our clients the quality services they deserve while being fully "remote" or operating in a "hybrid" schedule. "On-site" audits are still the Firm's preferred method, and we'll continue to offer and promote those as well. Knowledge is Shared with You. As part of our pledge to keep you updated on new technical accounting and financial issues, we implemented our 2023 Virtual Government Accounting S Conference,which qualifies for up to 15 hours of CPE-nearly double what other firms offer.These online sessions are free of charge and part of the service package provided to you. More details and dates can be found on the "Client Training Webinars"topic under this proposal. The Pun Group is proud of its inclusive values and is an avid promoter of equality and diversity. In addition, the Firm is an equal-opportunity employer and complies with all federal and state hiring requirements. We're proud of supporting affirmative-action philosophies and work hard to provide opportunities for self-enhancement to members of disadvantaged groups. This proposal is a firm and irrevocable offer valid for sixty (60) days following the closing date for the receipt of all proposals. Finally, we would like to emphasize one additional point: We want to earn your trust and your business! We are confident that the energetic and experienced team we have assembled is the right one for the City. Our commitment to serving the City of Lake Elsinore cannot be adequately conveyed in a letter, and I look forward to continuing the discussion with you. I'm assigned as your primary contact for contract negotiations and stand steadfast to serve as your engagement/lead partner. I'm also authorized to legally bind the Firm. Should you have any questions or wish to discuss this proposal, please do not hesitate to contact me at (949) 777-8801 or by email at ken.pun@pungroup.cpa. Sincerely, Ib-741. Kenneth H. Pun, CPA, CGMA I Managing Partner I The Pun Group LLP 200 E. Sandpointe Ave., Suite 600, Santa Ana, CA 92707 21PUNGROUP.CPA Independence City of Lake Elsinore Independence The Pun Group LLP requires all employees to adhere to strict independence standards concerning the Firm's clients. These independence standards exceed, in many instances, the rules promulgated by the American Institute of Certified Public Accountants (AICPA). The Pun Group LLP certifies that it is independent of the City of Lake Elsinore and its component units. The Firm meets independence requirements defined by the United States Government Accountability Office's (US GAO's) Government Auditing Standards and the American Institute of Certified Public Accountants (AICPA). Based on that, we have not identified an instance that constitutes a conflict of interest relative to performing the services requested by the City. The Firm had no relationship with the City of Lake Elsinore or any of its component units during the past five (5) years. The Firm will give the City of Lake Elsinore written notice of any professional relationships entered into during the period of the engagement. License to Practice California License to Practice in California The Firm and all key professional staff are licensed by the State of California to practice as Certified Public Accountants and meet the Continuing Professional Education requirements under US GAO's Government Auditing Standards to perform the proposed audits. Firm Registration: California State Board of Accountancy Number— PAR 7601 Federal Identification Number—46-4016990 Insurance If selected, the Firm will maintain the minimum insurance requirements during the entire execution of the agreement with the City of Lake Elsinore. Within ten days from the implementation of the contract, we will furnish the City of Lake Elsinore with satisfactory evidence of the insurance requirements and proof that each carrier is required to give at least 30 days prior written notice of the cancellation of any policy during the entire period of the agreement. The City of Lake Elsinore will be named as an additional named insured under the Firm's policies. A copy of our current certificate of insurance is presented in the Appendices section of this proposal. 31PUNGROUP.CPA City of Lake Elsinore Firm Qualifications and Experience The Pun Group LLP, Certified Public Accountants, and Business OUR FIRM Advisors,founded in 2012, is a limited liability partnership. We are AT A GLANCE a full-service accounting firm comprised of fifty professionals providing auditing, accounting, and advisory services to our clients. 50 full-time auditing, !fit The Firm has become one of the "Top Accounting Firms" in accounting,tax and Orange County according to the Orange County Business Journal advisory professionals and is also on the list of CaICPA Top 150 firms. One of the fastest growing The combination of our hands-on experience and practical firms serving California, knowledge exercised by our audit professionals makes the Firm Nevada and Arizona unique in our field. Our technical expertise and thorough understanding of current regulations and issues—along with the Client retention rate: Firm's commitment to hard work, integrity, and teamwork in every engagement—enable us to help our clients succeed. 90-95% Our Partners' Group—which includes Kenneth Pun, Coley Delaney, Andrew Roth, Frances Kuo, Vanessa Burke, John 6 offices across Georger Jr., Gary Caporicci, and Jim Fritzsche — provides ® 3 states auditing, accounting, and advisory services to numerous governmental entities throughout the United States. With more than two hundred years of combined experience in the industry, we have become a trusted business partner and are well- respected as leaders in the industry in one of the fastest-growing Scalifor— firms. With nearly 100 government and not-for-profit audit clients, our Partners have a real passion for the industry and believe we are unmatched in our municipal experience. The firm also meets Araoa professional standards generally accepted in the United States of America and the standards applicable to financial audits contained OUR in `Government Auditing Standards' issued by the Comptroller AFFILIATIONS General of the United States. The Firm's headquarters are located in Orange County, California, Lk6 'with five branches in San Diego, Walnut Creek, Sacramento (California), Las Vegas (Nevada), and Phoenix (Arizona). PA) �C` AICPA GAQC Member The Orange County Office located at 200 E. Sandpointe Ave., Suite 600, Santa Ana, CA 92707, will perform the requested Ca I CPA �,, services for the City. However, we may assign additional staff `` AICPA from our other offices to the engagement at no extra cost to the MrMSYR EBPAQC Member City. No subcontractors will be used in this engagement. (.AI.I EORNIA �'.` Global Capabilities Bill FINAN FINANCE ICIEAI ` AICPA � FINANCE OFFICERS ceaxarea ro E.�raM. Maaer Fmecreruereyex.w PCPS Member The Pun Group LLP is an independent member of Allinial Global, A MEMBER OF an association of over 100 independent accounting and consulting firms. Based in North America, Allinial Global offers international AMOXGLOBAL support by connecting its member firms to providers and global networks of accounting firms worldwide. 41PUNGROUP.CPA City of Lake Elsinore Full-Time Government Auditors As full-time government auditors,we understand that governmental entities do not operate independently but in an increasingly complex web of local, state, and federal relationships. We know how these relationships work, what they mean at the local level,and how every public organization's focus on resource management BIG FIRM EXPERTISE. Is Critical to success. SMALL FIRM VALUES. Also, while many accounting Firms can provide services, not all can build an Our professional backgrounds at major national excellent working relationships with their clients. The Pun Group LLP prides itself on firms showed us how to solve complicated developing lasting, personal relationships with our clients. Our hands-on partner business and accounting challenges,but the involvement and low personnel turnover are crucial tools to our success and are sense of personal connection was missing. highly beneficial to the City. We launched The Pun Group because we believe every client deserves to work with experienced Local Office's Information Technology (IT)Audit Capabilities business advisors and CPAs who have the time— The Pun Group LLP continues our efforts to invest in our IT system to enhance our and take the time—to create an authentic security further and promote audit efficiency. connection.Every client is our top priority! Top security for your data is the key to our success. When we have your data virtualized, our Firm takes all the preventive steps to avoid putting your information at risk. Our In-House IT administrator maintains our server to ensure our IT environment is continuously updated with the latest security fixes. Through VPN A UNIQUE CULTURE. and Microsoft Remote Desktop,our In-House network administrator can lock down ..Personalization"is not just a buzzword—it's part files and system access from a single point, limiting the ability of remote sites to of our firm's culture.We take a personal approach take data from our server. to everything we do.We collaborate with our Access to systems from anywhere and anytime. With more mobility being the clients,so they're always part of the process.We norm rather than the exception, our engagement team needs robust access to the listen to our staff to make sure they have the right engagement files when they are working in your office. Accounting and Auditing support and resources to do a great job.Getting to Software applications are installed in our "Private" server and can be securely know others and discovering how we can serve accessed through VPN and Microsoft Remote Desktop. The Firm uses CCH them better is not just a sign of good business ProSystem fx® Engagement for audit documentation, which allows real-time practices;it's a sign of good people. synchronization of the work papers and instant collaboration quality control review. Secure Data File Transfer System. In order to improve audit efficiency, workflow management software plays an essential role between your organization and our Y engagement team. We employ a secure data file transfer system called Suralink. Suralink's dynamic request list is integrated with our secure file-hosting system for INNOVATION EMBRACED. seamless document-request coordination. It means all our requests are in one New ideas keep you ahead of the game.From place, updated in real-time, and accessible by everyone working on the leveraging the value of emerging technologies to engagement. As a client, you no longer have to manually maintain a spreadsheet further refining trusted processes,we adopt proven amongst several people,only to repeat the process in a day or two. Not only makes solutions to meet your needs. the operation more cost-efficient, but it also enables you and your team to spend your time getting the job done, not reconciling a messy list of outstanding items. The Suralink dashboard, as shown below, allows you to visualize the process of document-request fulfillment. WHERE YOU GO,WE GO. WHERE YOU GROW,WE GROW. REQUEST SUMMARY J24Total R�eques st labOur success is defined by how you achieve yours. Outstanding 7500Partner with accomplished accounting and Fol/filled Noo Accepted:2 Returned:0 IFOutstanding:108 Fulfilled:36 financial professionals who are laser-focused on Rewr�ed 4-o AccePted.loo 7 taking your business to the next level. ■■■■■■■■■■■■■�■�■■■�■■I I■■■■■■■■I I■■■■■I I■■■■■i Interim Audit G 140111 TrIel Ba wmm Cmd rrinti s 51PUNGROUP.CPA City of Lake Elsinore Our Services Our partners and seasoned professionals are always available, guiding clients through their periods of rapid growth as well as difficult times. We are able to do that by offering a portfolio of accounting services that are as diverse as the jurisdictions and entities themselves. The Pun Group LLP has successfully provided professional auditing, accounting, financial reporting, and management advisory/consulting services to a broad spectrum of governmental entities. U ASSURANCE O ADVISORY ® OTHER SERVICES • Financial statements audits • Operational reviews/risk • Assistance with the • Compliance audits advisory services preparation and review of the • Performance audits • Forensic investigation Annual Comprehensive • Internal audits • Financial condition Financial Report • Service organization analysis • Government property lease controls audits • Organizational structure excise tax compliance review review • Sub-recipient monitoring • Cash flow analysis • Implementation of new GASB • Debt restructuring pronouncements consultation • Audit readiness services • Litigation restructuring • Contract Finance consultation Director/Accountant services Cannabis Compliance Services Many cities have authorized commercial cannabis to operate within their local jurisdiction. Compliance issues are common in California's newly regulated cannabis industry, which is C-imphfp no surprise given the complexity of the state's regulatory landscape. The Pun Group LLP has developed a platform to guide government agencies and commercial enterprises through the new and challenging steps in this emerging market. We have partnered with Simplifya,which has developed a cloud- based government agency/licensee compliance solution. Simplifya, headquartered in Denver, Colorado, and at the forefront since legalization in Colorado, has been an industry leader in commercial cannabis compliance since 2016. This new software allows government agencies to monitor their licensees at every stage of the approval process, from initial licensing to renewal and continuing disclosure requirements. Your communities demand that these new cannabis businesses operate based on the ordinances that you have passed. We can help ensure businesses are working in compliance, and when they are not, your team receives an immediate notification. The Pun Group LLP has proven itself as a leader in the assurance and advisory field in the government arena. With the addition of Simplifya to our service offering, we have strengthened our position as a leading firm to help with your compliance needs and in unconventional areas as they emerge. 61PUNGROUP.CPA City of Lake Elsinore Peer Review Being a member of the American Institute of Certified Public Accountants (AICPA), The Pun Group LLP is required to obtain an independent peer review of our audit and accounting practice every three (3) years. The peer reviewer assessed the Firm's quality-control policies, reviewed administrative records, interviewed professional personnel, and inspected the Firm's working papers and reports from a representative sample of accounting and auditing engagements, including governmental audits. The reviewer concluded that the Firm fully complied with the AICPA's stringent standards for quality control and issued a peer review rating of"Pass." A copy of our most recent peer review is presented. DEFPRGRouPcPAszl 8 Daiaon PaWay Ent SLiW 407 Carving W 148M P 607.9626891 rF SM546.7556 F 607.9732174 Report on the Firm's System of Quality Control w EFPRgom*. February 14,2022 To the Owners of The Pun Group,LLP And the National Peer Review Committee We have reviewed the system of quality control for the accounting and auditing practice of The Pun Group,LLP (the firm)in effect for the year ended December 31,2020-Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants(Standards). A summary of the nature,objectives,scope,limitations of,and the procedures performed in a System Review as described in the Standards may be found at www aicoa.orgbrsummary. The summary also includes an explanation of haw engagements identified as not performed or reported in conformity with applicable professional standards,if any,are evaluated by a peer reviewer to determine a peer review rating. Firm's Responsibility The firm is responsible for designing a system of quality control and complying with it to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. The firm is also responsible for evaluating actions to promptly remediate engagements deemed as not performed or reported in conformity with professional standards,when appropriate. and for remediating weaknesses in it system of quality control,if any- Peer Reviewer's Responsibility Our responsibility is to express an opinion on the design of the system of quality control and the fir's compliance therewith based on our review. Required Selections and Considerations Engagements selected for review included engagements performed under Government Auditing Standards, compliance audits under the Single Audit Act and an audit of an employee benefit plan. As a part of our peer review, we considered reviews by regulatory entities as communicated by the firm, if applicable,in determining the nature and extent of our procedures. Opinion In our opinion,the system of quality control for the accounting and auditing practice of The Pun Group,LLP in effect for the year ended December 31,2020,has been suitably designed and complied with to provide the firm wrth reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass,pass MM deficiency(ies)or W.The Pun Group,LLP has received a peer review rating of pass. EFPR ca",CPAs,Par- EFPR Group,CPAs,PLLC Coming,NY 71PUNGROUP.CPA City of Lake Elsinore Federal or State Desk Review No federal or state desk reviews or field reviews have been undertaken of any audits performed by the Firm or any of its partners, managers, or professionals during the past three (3)years. Disciplinary Action State regulatory bodies or professional organizations have taken no disciplinary action against the Firm or any of its partners, managers, or professionals during the past three (3)years. The Firm has no conditions such as bankruptcy, pending litigations, planned office closures, mergers, or any organizational conflict of interest that may affect the ability of the Firm to perform the required duties requested by the City of Lake Elsinore. GFOA Award Program The Pun Group LLP realizes the importance of maintaining the Certificate for Excellence in Financial Reporting from the GFOA. Our professionals are exceptionally well qualified to assist governments in obtaining and maintaining their certificates. The Firm's commitment and involvement in the development of auditing and accounting standards can be shown in our active participation in the GFOA's financial statements certificate programs. 100% of our current clients who submitted their Annual Comprehensive Financial Report to the GFOA received these awards. Also, two of our senior partners, Mr. Gary Caporicci and Mr. John F. Georger, are members of the Government Finance Officers Association and participate in the GFOA Special Review Committee. 81PUNGROUP.CPA City of Lake Elsinore Firm's Experience Providing Similar Services The Pun Group LLP has performed numerous audits of organizations subject to financial and compliance audits.These audits were performed under auditing standards generally accepted in the United States, Government Auditing Standards, Uniform Guidance (formerly known as OMB Circular A-133), and its Compliance Supplement (when applicable), Office of the State Controller's Minimum Audit Requirements and Reporting Guidelines. A representative list of our current clients is as follows: Municipalities Dates Financial Single GFOA Total 11�11 Audit Audit Certificate Hours City of Adelanto 2021 —Present Yes Yes Yes 700 City of Alameda 2019—Present Accounting and Consulting Services 150 City of Arvin 2013—Present Yes Yes N/A 400 City of Baldwin Park 2022—Present Yes Yes Yes 700 City of V, 2018—Present Yes Yes Yes 520 City of Bradbury 2012—Present Yes N/A N/A 150 City of Calexico 2007—Present Yes Yes 750 City of Clovis 2006—Present Yes Yes Yes 500 City of Coachella 2017—Present Yes Yes City of Cottonwood,AZ 2007—Present Yes Yes Yes 400 City of Corona 2021 —Present Yes Yes Town of Corte Madera 2022—Present Yes Yes N/A 400 Town of Danville 1999—Present Yes 00 City of Douglas,AZ 2020—Present Yes Yes Yes 300 City of Desert Hot Springs 2013—Present Yes N/A / City of Fresno 2022—Present Yes Yes Yes 1,450 City of Gardena 2007—Present Yes Yes City of Gilroy 2020—Present Yes Yes Yes 640 City of Glendora 2017—Present Yes City of Gustine 2017—Present Yes N/A N/A 400 City of Hemet 2015—Present City of Hercules 2020—Present Yes Yes Yes 450 City of Lakewood 2013—Present City of Lomita 2020—Present Accounting and Consulting Services 150 City of Lodi 2018—Present 9 1 PUNGROUP.CPA City of Lake Elsinore E—�M City of Lynwood 2016—Present Yes Yes Yes 585 City of Madera�.J= YesY Yes City of Montebello 2022—Present Yes Yes Yes 600 F City of Napa 2019—Present L —2 — City of National City 2013—Present Yes Yes Yes 600 City of Palm Springs 2020—Present City of Patterson 2017—Present Yes Yes Yes 450 City of Placerville 2008 City of Redlands 2022—Present Yes Yes Yes 650 City of Ridgecrest 2009—Present City of Rohnert Park 2020—Present Yes Yes Yes 700 City of Salinas City of San Mateo 2021 —Present Yes Yes Yes 900 City of Santa Clarita 2022—Present Yes Yes 0 City of Seal Beach 2017—Present Yes Yes Yes 410 City of Shaffer 2017—Present Yes City of Stockton 2012—Present Yes Yes N/A 3,000 City of Tra 2021 —Present Yes Yes Town of Tiburon 2022—Present Yes Yes Yes 452 City of Visalia 2021 —Present Yes Yes Imperial County Transportation 2020—Present Yes Yes Yes 600 Commission Nevada County Transportation Compliance Commission 2021 —Present Services N/A San Diego Metropolitan Transit System 2005—Present Yes Yes Yes 1,850 Shasta Regional Transportation Agency 2015—Present Yes i Alameda County Water District 2018—Present Yes Yes N/A 550 Camrosa Water District 2020—Present Investment i _ Pool Carmel Area Wastewater District 2022—Present Yes Yes N/A 150 BCD Wastewater Reclamation 2022—Present Yes Project Central Basin Water District 2018—Present Yes Yes N/A 400 Las Virgenes Municipal Water District Yes 10 1 PUNGROUP.CPA City of Lake Elsinore Municipalities Dates Financial Singi FE"" GFOA Total Audit Audit Certificate Hours Los Angeles County Law Library 2020—Present Yes N/A N/A 180 Marina Coast Water District Yes N A Yes 240 Menlo Park Fire Protection District 2015—Present Yes Yes Yes 240 NALEO Educational Fund and NALEO 2020—Present / 00 Olivenhain Municipal Water District 2019—Present Yes Yes Yes 200 am Municipal Water District 2020—Present Rancho Murieta Community Services 2019—Present Accounting and Consulting Services 800 District Rancho Santa Fe Fire Protection District 2015—Present San Bernardino County Emergency 2020—Present Yes N/A N/A 50 Training Center San Bernardino County Preschool 2020—Present 150 Services Department San Bernardino County Fire Protection 2016—Present Yes N/A N/A 200 District San Elijo Joint Powers Authority 2016—Present Santa Fe Irrigation District 2019—Present Yes N/A N/A 250 Sweetwater Authority a South Bay Cities Council of 2020—Present Yes N/A N/A 100 Governments South Orange County Water Authority 2017—Present Yes Yes Yes South Bay Regional Public 2015—Present Yes N/A N/A 100 Communications Authority Southwestern Community College nictrirt 2009—Present Yes Yes N/A 720 Valley Sanitary District 2015—Present Yes N/A Yes 140 West Valley Mosquito and Vector Control 2016—Present Yes N/A N/A 100 District Zone 7 Water Agency 2020—Present Yes Yes Yes 400 111 PUNGROUP.CPA City of Lake Elsinore THE PUN GROUP ACCOUNTANTS&ADVISORS To th�ment of the We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the California (the `.") for the year ended June 30,- and have issued our report thereon dated We noted the following matters for your reference: Recommendation: We recommended the■ enhance the environmental controls over the IT server room in order to revent otential threats to the IT servers. We also recommended the■ enhance cash recei t rocess for and renew the rental agreements on annual basis.Lastly,we recommended the meeting Inunutes a posted on the=website as soon as they are approved by the Restriction of Use This information is intended solely for the use of the management of the■and is not intended to be,and should not be,used by anyone other than the specific party. Santa Ana,California 200 E.Sandpointe Ave.,Suite 600,Santa Ana,California 92707 Tel:949-777-8800•Fax:949-777-8850 N-.-svVv.pungroup.com 121 PUNGROUP.CPA City of Lake Elsinore Firm's Experience with Single Audit and Grants The Pun Group LLP works with numerous organizations that receive extensive governmental funding and are subject to auditing under Uniform Grant Guidance.This Firm's specialization helps our audit team understand the procedures' nuances and execute the engagement accordingly.We also assist in preparing the data collection form and preparing the reporting package for submission to the federal audit clearinghouse. The Firm is a member of the AICPA Governmental Audit Quality Center and has demonstrated its commitment to audit quality, including those performed under Government Auditing Standards and Uniform Guidance. Also, we are a recipient of the Single Audit Resource Center's Award for Excellence.This award is based on the positive feedback result from our clients in an independent survey, demonstrating our Firm's highest commitment to quality and client satisfaction. We utilize standardized audit programs from the federal government's Compliance Supplement to ensure that our procedures meet federal standards. Our audit programs are continually updated to reflect the revisions of OMB. Our Uniform Guidance risk-based approach focuses on areas of higher risk of noncompliance. Such an approach truly reflects the federal government's intent by concentrating on the following four steps: 1 2 3 4 Planning& Testing& Reporting& Issuanceto InternalControl Compliance Review Clearing House Assessment Assessment • Obtain and Obtain Draft single audit Draft out Data Perform Audit understanding of report Collection Form Procedures on internal control EQR review and for review Schedule of over compliance provide Issuance of single Expenditures of of major federal recommendations audit package and Federal Awards programs Obtain final submit to the • Perform major Test controls in approvals Federal Clearing program place Issue single audit House determination Test compliance report with the applicable regulations in administering major programs Auditing under Uniform Guidance 1. Planning &Internal control assessment:The engagement team will obtain an understanding of the City and its operating environment and its internal control over the Schedule of Expenditures of Federal Awards. The engagement team will perform the major program determination and communicate with the City's management before conducting major program testing. 2. Testing & compliance assessment: The engagement team will obtain an understanding of internal control over compliance on the direct and material compliance requirements for each major program.The engagement will perform testing on internal controls over compliance to ensure the controls are in place working effectively and properly and that the City is in compliance with the applicable regulations in administering major programs. 3. Reporting & Review: The engagement team will review and prepare the single audit reports and perform quality control procedures following the Quality Control Standards issued by the AICPA. Any comments will be issued to the management or the Charge with Governance, depending on the magnitude of the issues. Upon obtaining the final approvals from management, the Single Audit report will be issued. 4. Issuance to Clearing House: The engagement team will assist the City in drafting the data collection form and completing the final submission, including uploading the audit package to the Federal Clearing House. 131PUNGROUP.CPA City of Lake Elsinore Our Firm has audited hundreds of millions of dollars in federal expenditures, making our engagement team uniquely experienced in single audits. We are familiar with grantors, such as: • Corporation for National and Community Services • Department of Agriculture • Department of Education • Department of Health and Human Services • Department of Housing and Urban Development • Department of Transportation • Environmental Protection Agency • Department of Commerce • Department of Labor • Department of Homeland Security • Department of Justice • Department of Treasury • Executive Office of the President Following are a few examples of the types of federal programs our engagement team has experience auditing: Assistance Listings Child and Adult Care Food Program 10.558 Community Development Block Grants/Entitlement Grants 14.218 Home Investment Partnership 14.239 Housing Vouchers Cluster 14.871 Title XVI Water Reclamation and Reuse Program 15.504 Equitable Sharing Program 16.922 WIA/WIOAAdult Program 17.258 WIA/WIOAYouth Activities 17.259 WIA/WIOADislocated Worker Formula Grants 17.278 Airport Improvement Program 20.106 Highway Planning and Construction 20.205 Federal Transit-Capital Investments Grants 20.500 Federal Transit-Formula Grants 20.507 Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 Capitalization Grants for Clean Water State Revolving Funds Cluster 66.458 Special Programs for the Aging-Title III,Part B-Grants for Supportive Services and Senior Centers 93.044 Special Programs for the Aging-Title III,Part C-Nutrition Services 93.045 Nutrition Services Incentive Program 93.053 Temporary Assistance for Needy Families(TANF)State Programs 93.558 Community Service Block Grant 93.569 Child Care and Development Block Grant 93.575 Child Care Mandatoryand Matching Funds of the Child Care and Development Fund 93.596 ARRA-Emergency Contingency Fund for Temporary Assistance for Needy Families(TANF)State Program: 93.714 National Urban Search and Rescue(US&R)Response System 97.025 Homeland Security Grant Program 97.067 141PUNGROUP.CPA City of Lake Elsinore Firm's Experience with Finance and Community Development Institutions Our Firm has provided professional services to several Finance Authorities, as well as Community Development Agencies. Some examples are: Finance Authorities: • City of Bell Public Finance Authority • City of Desert Hot Springs Financing Authority • City of Hercules Public Financing Authority • City of Lakewood Public Financing Authority • City of Madera Financing Authority • City of Palm Springs Public Financing Authority • City of Patterson Financing Authority • West Patterson Financing Authority • City of Perris Public Financing Authority • City of Pomona Public Financing Authority • Town of Danville Financing Authority Community Development Agencies: • City of Lodi (Special Purpose Audits—Community Development Block Grant/Home Funds) • Morgan Towers (Multi-Family Program), National City Community Development Commission • National City Community Development Commission • Perris Community Economic Development Corporation Firm's Experience with Housing Authorities and Subsidized HUD Programs The assigned engagement team will count on their experience with numerous financial and compliance audits as well as agreed-upon procedures to deliver the requested services. Our team has extensive experience with the following subsidized HUD programs: • Housing Choice Voucher(HCV) • Family Self Sufficiency(FSS) • Shelter Plus Care (SPC) • Housing Opportunities for Persons with AIDS (HOPWA) • Veterans Affairs Supportive Housing (VASH) • Community Development Block Grant (CDBG)—City of Lynwood • HOME Investment Partnership Grant(HOME)—City of Lynwood In addition, our Firm has provided professional services to several Housing Authorities. Some examples are: • Calexico Housing Authority • Culver City Housing Authority • Douglas Housing Authority, AZ • Encinitas Housing Authority • Glendora Housing Authority • Lakewood Successor Housing Authority • National City Community Development Commission • Napa Housing Authority • Morgan Towers (Multi-Family Program), National City Community Development Commission • Monterey Park Housing Authority • Perris Housing Authority • Pomona Housing Authority • Poway Housing Authority • Housing Authority of the Redding • South Gate Housing Authority 15 1 PUNGROUP.CPA City of Lake Elsinore Firm's Expertise and Experience in Governmental Accounting Rules and Regulations, Including Implementation of new GASB Pronouncements Changing federal laws, statutes, ordinances, and compliance provisions have created unprecedented complexity in public accounting today. Our GASB Implementation Specialist, Mr. Gary Caporicci, has helped our clients implement new standards while adapting to changes within the existing standards. Our partners serve on committees that have input into how new standards are written.They actively participate in industry associations focused on state and local governments. By participating in industry associations and activities, we are always up to date on the latest industry changes and their impact on your operations. We will keep you and our colleagues in the Firm fully informed of these developments. Also, our professionals are familiar with the complexities of governmental accounting, auditing, and financial reporting, including but not limited to all GASB pronouncements,the Single Audit Act,and Uniform Guidance(formerly known as OMB Circular A-133) and fund operations. They have held positions as professional certified public accountants and taken on significant roles within and outside government agencies. Such experience brings to our clients the thought leadership, quality, and level of expertise they require. The Firm is well versed and experienced in assisting our clients with the implementation of the applicable GASB pronouncements every year, such as GASB 34, GASB 54, GASB 65, GASB 68, GASB 75, and GASB 84. Mr. Gary Caporicci, as a chair of the California Committee on Municipal Accounting "CCMA,"wrote "white papers"on each of these pronouncements. Throughout the engagement, several new GASB pronouncements will become effective. The Engagement Team will pay specific attention to upcoming statements that will become effective and work with the City to create a plan to address new standards before the implementation period. This step will allow the finance department staff the needed time to be prepared. Special Attention: GASB Pronouncements Effective for Reporting Year 2023 GASB Statement No. 87, Leases The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. Effective Date: The requirements of this Statement are effective for fiscal years beginning after June 15, 2021, and all reporting periods thereafter. GASB Statement No.94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements The primary objective of this Statement is to improve financial reporting by addressing issues related to public- private and public-public partnership arrangements (PPPs). Effective Date: for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. GASB Statement No. 96, Subscription-Based Information Technology Arrangements This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs)for government end users (governments). Effective Date: for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. 16 1 PUNGROUP.CPA City of Lake Elsinore Our Professional's Experience with Pensions and Other Post-Employment Benefits Members of our team have experience in providing professional services to the following employee retirement systems: • California Public Employees' Retirement System (CALPERS) • Culver City Other Postemployment Benefit Plan • Nevada Public Employees Retirement Systems • Sacramento County Employees' Retirement System • San Francisco Community College District • San Diego County Employees Retirement Association • San Diego City Employees' Retirement System • San Diego Transit Corporation Employee's Retirement Plan • San Jose Employee Retirement System • University of California Pension Plans In addition, our team draws years of expertise reviewing budget documents as well as various pension and other post-employment benefits ("OPEB") plan documents, including but not limited to trust agreements, pension, and OPEB actuarial reports, GASB 68 and 75 reports, as well as GASB 75 reports prepared under Alternative Measurement Methods. A relevant list of plans includes: • California Public Employees' Retirement System GASB 68 reports • Public Agency Retirement System ("PARS") GASB 68 reports • San Bernardino County Employees' Retirement Association ("SBCERA") GASB 68 reports • PARS GASB 75 reports Firm's Experience with Tyler Technologies and Their Solutions Our professionals are extremely familiar with Tyler Technologies and their software solutions. Our team will deploy such experience to hit the ground running with no downtime. Some examples of our clients who utilize Tyler Technologies are: Client Name Industry :3 11�n adera, City of Santa Ana Local Government cinitas, City of San Diego Local Government Rohnert Park, City of Walnut Creek Local Government San Elijo JPA San Diego Special District Shafter, City of Santa Ana Local Government Lodi, City of Walnut Creek Local Government Lakewood, City of Orange County Local Government Culver City, City of Orange County Local Government Perris, City of Orange County Local Government Lynwood, City of Orange County Local Government Gardena, City of Orange County Local Government Monterey, City of Orange County Local Government South Gate, City of Orange County Local Government South Bay Regional Communications Orange County Local Government ••: •. t y I e r 171PUNGROUP.CPA City of Lake Elsinore QualificationsPartner,Supervisorv,and Staff Who We Are The engagement team was carefully selected to provide the City with all the services needed to successfully complete the audit. Your assigned Engagement and Technical Partners will be personally involved in the project, leading a team that has significant experience in governmental auditing. You can be confident that our broad experience and technical capabilities will allow us to provide technical support, interpret findings, and offer practical solutions to any issues that may arise. About Your Engagement Team The personnel assigned to this engagement are fully qualified to perform an effective audit of the City, and their extensive experience will be critical to the audit process. Our professionals are familiar with the complexities of governmental accounting, auditing, and financial reporting, including but not limited to all GASB pronouncements, the Single Audit Act, Uniform Guidance (formerly known as OMB Circular A-133), and fund operations. They have held positions as professional certified public accountants, as well as significant roles within and outside of government agencies. Such qualities will bring to an entity like the City of Lake Elsinore the thought leadership, quality, and level of experience it requires. Because of the "familiarity threat" under the professional audit and independence standards that may exist in long- term relationships with audit firms,the Firm is committed and has sufficient resources to rotate engagement partners, managers, and or supervisors assigned to the City's audit with personnel with similar or higher qualifications and experience in order to overcome this threat. If the Firm changes key personnel, we will provide the City with a written notification. Engagement partners, managers,and specialists will only be changed with the express prior written permission from the City. Audit personnel may be replaced only by those with similar or better qualifications and experience. Kenneth H. Pun, CPA, CGMA I Engagement/Lead Partner Kenneth Pun is the Managing Partner and an Assurance Partner at the Firm. With over twenty-one years of public accounting experience in the state and local government sector, he specializes in audits, management, and consulting for governmental organizations. Mr. Pun served as the Contract Deputy Finance Director for the City of San Marino in 2017. He has served as the Chair of the California Society of CPAs Governmental Auditing Accounting Committee. He is a Certified Public Accountant and a Chartered Global Management Accountant. Mr. Pun will actively serve as the Engagement/Lead Partner overseeing the Engagement Team, developing the audit plan, reviewing fieldwork for quality, approving final reports, and communicating with the Finance Department. He will also be responsible for the timely delivery of all services for the City. Coley Delaney, CPA I Technical/Concurring Partner Coley Delaney is a Partner within The Pun Group LLP's Assurance division, in his fifteen (15) years of accounting and auditing experience. He has performed audits and other attestation services for several governmental agencies throughout California, including cities, counties, transportation agencies, public financing authorities, housing authorities, redevelopment agencies, and special districts. He is a Certified Public Accountant. Mr. Delaney will act as the Technical/Concurring Partner and provide a second partner review of significant high-risk areas, audit reports, and resolution of significant accounting, auditing, and reporting matters. 18 1 PUNGROUP.CPA City of Lake Elsinore Andrew Roth, CPA I Compliance Partner Andrew Roth is a Partner within the Firm and will serve as the primary point of contact for your team. He holds an Advanced Certification in Single Audits through the AICPA. Andrew draws more than a decade of governmental and not-for-profit experience in the areas of financial audit and reporting under governmental and financial accounting standards, evaluation of internal controls under the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Integrated Framework, the performance of Single Audits under the Uniform Guidance, subrecipient monitoring of Federal Grants, corporate financial reporting, data analytics, and exempt taxation. He is a Certified Public Accountant. Mr. Roth will lead the audit team in all compliance-related matters, including the Uniform Guidance and Single Audit, and reports issued under specific laws and regulations. John ("Jack") F. Georger, CPA, CIA, CGMA I Quality Control Reviewer Throughout his forty years of experience, Mr. Georger has spent many years in the "Big 4" =j and national firms. He worked diligently alongside numerous governmental municipalities, including cities, counties, and transportation agencies, as well as not-for-profit entities, providing clients with financial and compliance auditing as well as consultation services. Mr. Georger annually instructs over 300 hours in accounting and auditing subjects and has authored training material in governmental accounting and auditing for the AICPA. Mr. Georger is also the technical reviewer of the CCH Knowledge-Based Audits TM of State and Local Governments with Single Audits, GAAP Guide(FASB),and Governmental GAAP Guide (GASB), the gold standard for audit firms throughout the United States. As the Chief Quality Officer in our Firm, he advises clients with their complex accounting questions and supports the engagement team with audit issues. He is a Certified Public Accountant, a Certified Internal Auditor, and a Chartered Global Management Accountant. Mr. Georger is responsible for reviewing all reports issued by the Firm to ensure the utmost quality and compliance with professional standards and the final quality-control assessment within the engagement. Gary M. Caporicci, CPA, CGFM, CFF I GASB Implementation Specialist Gary Caporicci is an appointed member of the State Controller's Retirement Advisory r Committee. Mr. Caporicci is a leading expert and has authored and taught several courses -- for CaICPA and AICPA on GASB 68, Accounting and Financial Reporting for Pensions, and arkGASB 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. As an assurance partner with over forty years of experience, Mr. Caporicci has performed financial, compliance audit, and consultation services to government clients, including cities, counties,transportation agencies, and school districts, as well as various not- for-profit entities. He is a Certified Public Accountant, a Certified Government Financial Manager, and Certified in Financial Forensics. Mr. Caporicci will utilize his expertise in providing advice and consultation during the implementation of the new GASB standards. David Siris, CPA I Engagement/Project Manager David Siris draws more than ten years of governmental accounting experience. Mr. Siris has successfully performed audits and other attestation services for several governmental and non-profit agencies. He is a Certified Public Accountant. Mr. Siris will serve as the primary point of contact for your team and will work to ensure the services are conducted within the deadlines and will provide updates on our team's progress to the partners and you. 19 1 PUNGROUP.CPA City of Lake Elsinore Continuing Education and Professional Development Because of our commitment to providing the highest quality of services to the City, we provide our professionals with technical training to ensure our people stay current on topics within the industry sectors and better equip themselves to serve our clients. All professionals are required to obtain continuing education that exceeds the requirements of the American Institute of Certified Public Accountants (AICPA) and, where applicable, Government Auditing Standards. Our professionals participate in continuing education programs through the following means: • Governmental Accounting and Auditing Conference sponsored by AICPA. • Webinar sponsored by AICPA Government Audit Quality Center. • Annual Conference sponsored by California Society Municipal Finance Officers. • Governmental Accounting and Auditing Conference sponsored by CaICPA. • The Pun Group in-house training on government-specific topics, including but not limited to: GASB updates, Government Auditing Standards Revision, Fraud in State and Local Governments, COSO Internal Control- Integrated Framework, Audit of State and Local Governments, Single Audit, and Mindbridge Al AuditorSTM. II�J In 2022, our government professionals received an average of 52 hours of continuing professional education, compared with the 40 hours of accounting industry requirement. By expanding our knowledge through these seminars/conferences, we can provide the right solutions to our clients. Staff Continuity The Pun Group LLP is committed to maintaining staff continuity throughout audit engagements, and we can assure you that the partners assigned to this audit will be involved throughout the entire contract term. While we cannot guarantee that our staff-level members will stay with the Firm, we encourage loyalty by paying competitive wages, offering opportunities for promotion, using state-of-the-art equipment, and providing excellent working conditions. Also, we offer benefits, including retirement plans, medical plans, profit-sharing programs, and continuing education. Quality-Control System Our Firm meticulously monitors the quality and contents of our reports. The Pun Group LLP is 100% committed to providing only the highest grade of work possible for our clients and for those who rely on our audits. The Firm strives to exceed professional industry standards because of the continuing respect for our clients and our emphasis on creating long-lasting relationships. The Pun Group LLP works exclusively with those who share the same moral integrity and values. Our quality-control system has been crafted with excellence in mind. It not only meets AICPA standards but also matches our own elevated standards, which include following various professional development activities. Engagement Team Resumes The City of Lake Elsinore deserves experienced professionals who work as a team. The Pun Group LLP will provide qualified professionals to perform the audit. No subcontractors will be utilized to perform the requested services. Resumes for key engagement team members are presented as follows: 20 1 PUNGROUP.CPA City of Lake Elsinore EXPERIENCE Kenneth H.Pun is the Managing Partner and an Assurance Partner at The Pun Group LLP,which he founded in 2012 after serving in senior-level positions for well-established national and regional firms. Under his leadership,The Pun Group has become one of the"Top Accounting Firms"in Orange County,according to m_ the Orange County Business Journal. The Pun Group is also on the list of CaICPA's Top 150 firms. ` Prior to founding The Pun Group, Ken served clients in a variety of industries,including small to very large state and local governmental agencies, insurance companies, not-for-profits, healthcare, technology, and manufacturing and distribution clients. His career in public accounting was spent primarily with Regional firms and National firms. Leveraging more than 21 years of public accounting experience, Ken has earned a reputation of being a trusted advisor to governmental and Healthcare organizations throughout California and neighboring states. Kenneth H . Pu n Municipalities and public agencies engage him because of his premier level of client service,commitment, and innovative methods of increasing operational efficiencies and reducing costs. Ken maintains his deep commitment to professional education through his work as an instructor for the California Education Foundation. He has authored training materials in governmental accounting and • a • e rn e n t auditing, such as Financial Reporting for State and Local Governments, 2018 Government Auditing Lead Partner Standards, and Single Audit Fundamentals for California Education Foundation. He is also the technical reviewer of the CCH Knowledge-Based Audits TM of State and Local Governments with Single Audits. He advises clients on those topics at influential industry forums. Internally, Ken mentors audit teams by 1ZEMAIL providing direction and technical guidance to ensure adherence to the firm's quality controls. ken.pun@pungroup.cpa EDUCATION ,M University of California,Riverside IQXY WE Ca ; B.S. Degree—Business Administration, Emphasis in Accounting • ' LEADERSHIP&AFFILIATIONS • Member,American Institute of Certified Public Accountants(AICPA) • Member,California Society of Certified Public Accountants(CaICPA) • Past Chair,CaICPA Governmental Accounting and Auditing Committee • Member,CaICPA California Committee on Municipal Accounting • - Member,CaICPA Governmental Accounting and Auditing Conference Planning Committee • Member Government Finance Officers Association(GFOA) • Member,California Society of Municipal Finance Officers(CSMFO) • Member,CSMFO Professional Standards Committee • Speaker,CSMFO Conference(2014 and 2018) • Instructor,CaICPA Education Foundation • Technical Reviewer,CCH Knowledge-Based AuditsTA9 of State and Local Governments with Single Audits rer,NMI • RELEVANT EXPERIENCE • City of Stockton • City of San Bernardino • City of Palm Springs • City of Desert Hot Springs • City of Lakewood • City of National City • City of Pomona • City of Redding • City of Clovis • City of Shafter CONTINUING PROFESSIONAL EDUCATION • P E R A T 1 • N S Various courses are offered by the Firm online through Thompson Reuters,AICPA,and CaICPA Education Foundation, including: • Governmental and Nonprofit Annual Update • Government Auditing Standards • GASB Basic Financial Statements for State and Local Governments • 0 Single Audits: Uniform Guidance(formerly OMB Circular A-133) • Financial Accounting Standards Board Annual Updates • Statement on Standards for Accounting and Review Services Updates • • - Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. Licensed to Practice i n 211 PUNGROUP.CPA City of Lake Elsinore EXPERIENCE Coley Delaney is a Partner within The Pun Group LLPAssurance division. In his fifteen(15)years of accounting and auditing experience, Coley has worked with governmental agencies, not-for- profit entities, and private for-profit entities. He specializes in conducting financial audits under GAO Yellow Book standards and compliance audits in accordance with Uniform Guidance (formerly known as OMB Circular A-133). Mr. Delaney has performed audits and other attestation services for several governmental agencies throughout California, including cities, counties, redevelopment agencies, public financing authorities, housing authorities, transportation agencies, and special districts, and he has helped them publish their Comprehensive Annual Financial Reports in compliance with ColeyGASB Statement No. 34. CPA Mr. Delaney develops training materials and shares his expertise internally with other Firm professionals.Coley is a frequent speaker at in-house seminars on topics related to government auditing standards and Single Audits. Concurrent Partner EDUCATION University of California, Santa Barbara B.A. Degree—Business Economics, Emphasis in Accounting 0EMAIL LEADERSHIP&AFFILIATIONS coley.delaney@pungroup.cpa • Member, American Institute of Certified Public Accountants (AICPA) • Member, California Society of Certified Public Accountants (CaICPA) WIEBSITE RELEVANT EXPERIENCE www.pun• • • City of Stockton • City of San Bernardino • City of Encinitas • City of Escondido • City of Shafter • City of National City • City of Fairfield • City of Hermosa Beach • City of Industry • San Diego Metropolitan Transit System CONTINUING PROFESSIONAL EDUCATION Various courses are offered by the Firm online through Thompson Reuters, AICPA, and CaICPA Education Foundation, including: • Governmental and Nonprofit Annual Update • Government Auditing Standards • GASB Basic Financial Statements for State and Local Governments AT,M11 • Single Audits: Uniform Guidance(formerly OMB Circular A-133) • Financial Accounting Standards Board Annual Updates • Statement on Standards for Accounting and Review Services Updates ■-■ Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. • 9*9 • • • Licensed to Practice in 22 1 PUNGROUP.CPA City of Lake Elsinore EXPERIENCE Andrew Roth is a Partner within The Pun Group LLP. He has more than twelve (12) years of governmental and not-for-profit experience in the areas of financial audit and reporting under governmental and financial accounting standards, evaluation of internal controls under the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Integrated Framework, the performance of Single Audits under the Uniform Guidance, subrecipient monitoring of Federal Grants,corporate financial reporting,data analytics,and exempt taxation. His client portfolio consists of moderate to large municipalities (cities and counties), municipal transportation districts,water districts, municipal electric utilities,and not-for-profit organizations whose missions involve building communities. His governmental agency clients have federal grant expenditures that range from$100 million to$750 million annually. Andrew Roth In various engagements, Andrew has been responsible for leading the service delivery where CPA he has actively contributed and managed the planning process, implementation of the audit work plan, supervision of multiple audit teams, and provided yearly team updates on the changes in compliance testing requirements for the Single Audits, and preparation of all deliverables including the Annual Comprehensive Financial Reports, the Single Audit, Compliance Reports,Data Collection Forms,and City Council/Board presentations.He has also been a guest speaker on topics involving Federal grants, such as updates to Yellow Book Standards, Compliance Auditing, and Updates to the Uniform Guidance Procurement Requirements. . . . . . .- EDUCATION a I San Diego State UniversityWEBSITE B.A. Degree—Accounting LEADERSHIP&AFFILIATIONS Expertise : • Member,American Institute of Certified Public Accountants (AICPA) • Member, California Society of Certified Public Accountants(CaICPA) RELEVANT EXPERIENCE • City of San Bernardino • City of National City • City of Placerville • City of Shaffer • City of Beaumont • Imperial County Local Transportation • City of Lodi Authority AN M11 • City of Clovis • San Diego Metropolitan Transit System CONTINUING PROFESSIONAL EDUCATION .—. Various courses offered by the Firm online through Thompson Reuters, AICPA, and CaICPA Education Foundation, including: • Governmental and Nonprofit Annual Update • Government Auditing Standards • - E R A T 10 N S GASB Basic Financial Statements for State and Local Governments • Single Audits: Uniform Guidance(formerly OMB Circular A-133) • Financial Accounting Standards Board Annual Updates • Statement on Standards for Accounting and Review Services Updates ' U C A T 10 N Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. Licensed to Practice i n 23 1 PUNGROUP.CPA City of Lake Elsinore EXPERIENCE Jack Georger is the Chief Quality Officer within The Pun Group LLP's Assurance division. By _ leveraging more than forty(40)years of public accounting and auditing experience in the government, agribusiness, financial services, manufacturing, and nonprofit sectors, Mr. Georger brings in-depth knowledge and practical expertise to each engagement. Jack coordinates,plans,and manages financial audit activities,consulting activities,federal and state compliance audit activities, performance audits, and numerous quality control and internal control reviews for a broad mix of governmental agencies and programs throughout the United States. Mr. Georger leads our Peer Review department providing peer review services to other firms under John F. Georger, Jr. the practice monitoring program of the AICPA. Mr. Georger is a continuing professional education course instructor for the AICPA. Annually, he CPA, CIA, CGIVIA instructs over 300 hours in accounting and auditing subjects. Jack has authored training material in governmental accounting and auditing for the AICPA. He is the technical reviewer of the CCH Quality Control Knowledge-Based Audits'of State and Local Governments with Single Audits,GAAP Guide(FASB), Reviewer and Governmental GAAP Guide(GASB). Mr. Georger is licensed to practice as a certified public accountant in the states of California, New York, Virginia, Maryland, the District of Columbia, Missouri (inactive), Connecticut (inactive), and Wyoming(inactive). He is a Certified Internal Auditor(CIA). Q EMML EDUCATION George Mason University Fairfax,Virginia B.S. Degree—Accounting .m qx LEADERSHIP&AFFILIATIONS • Member and Instructor,American Institute of Certified Public Accountants(AICPA) • Member, Institute of Internal Auditors • Member,California Society of Certified Public Accountants(CaICPA) • Member, New York Society of Certified Public Accountants(NYSSCPA) Expertise : • Chairman, NYSSCPA Government Accounting and Auditing Committee • Member, NYSSCPA Auditing Standards Committee • Member, NYSSCPA Sustainability Committee • Member, NYSSCPA Not-for-Profit Committee • Nevada Society of Certified Public Accountants(NSCPA) • Member, Government Finance Officers Association (GFOA)—Reviewer • Member, Institute of Internal Auditors Are M11 • CONTINUING PROFESSIONAL EDUCATION He has instructed over 300 hours of municipal accounting courses offered by the AICPA. ■■ T R A N S P • R T A T 10 N Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. • got Cella N • • Licensed to Practice in 24 1 PUNGROUP.CPA City of Lake Elsinore EXPERIENCE Gary M. Caporicci has more than forty years of diversified business experience, including a specialization in audit and management consulting for government organizations. Gary's clients include public and private universities and colleges, city and county governments, state agencies, joint power authorities,healthcare agencies,transportation agencies,and special districts. Known for ..- 1 p 9 P 9 his expertise in the areas of construction and government, Gary wrote the AICPA audit guides on these topics, and he has authored many audit and accounting courses for professional groups, as well as academic institutions. He frequently speaks and lectures at many professional organizations, governmental seminars, and conferences held by industry associations, other accounting firms, and universities.Also, he authors white papers for the California Committee on Municipal Accounting. Gary M . CaporiCCi Before working with the Firm,Gary founded his accounting practice. He also spent eleven years with a"Big Eight"professional services firm,where he was an Audit Manager and gained broad experience CPA, CGFM , CFF in a wide range of industries such as government, construction, manufacturing, mutual funds, and insurance. Gary has held a consultant position with a "Big Four" practice and was Vice President of GASB a national insurance and financial services company. In 2015 Gary Caporicci was appointed to the State Retirement Advisory Committee by the State _ c i a I i s t Controller. EDUCATION Armstrong University EAIML B.S. Degree—Accounting and Finance ' ' ' LEADERSHIP&AFFILIATIONS • Member and Instructor,American Institute of Certified Public Accountants(AICPA) Cal • Member,Author,and Instructor, California Society of Certified Public Accountants(CaICPA) • � •W WEBSITE • Past Chair, CaICPA Governmental Accounting and Auditing Committee www.pungr • Chair and Speaker,CaICPA Governmental Accounting and Auditing State Conferences • Member,CaICPA Council • Chair,California Committee on Municipal Accounting(CCMA) • Member, Government Finance Officers Association (GFOA) Expertise : • Member,California Society of Municipal Finance Officers(CSMFO) • Member, Governmental Accounting Standards Board (GASB) • Member, Deposit and Investment Risks Disclosure Task Force(GASB No.40) • National Reviewer and Speaker, Government Finance Officers Association • Adjunct Professor, National University • Past Member,Texas Governmental Accounting and Auditing Committee • GFOA Certificate for Excellence in Financial Reporting—Reviewer fil Me • CONTINUING PROFESSIONAL EDUCATION Author and instructor of various municipal accounting courses offered by the AICPA, CaICPA _ Education Foundation,and local universities, including: 6Q ' ' Governmental and Non-profit Annual Update • Government Auditing Standards • GASB Basic Financial Statements for State and Local Governments • Single Audits: Uniform Guidance(formerly OMB Circular A-133) • Financial Accounting Standards Board Annual Updates Ix • P E R A T 10 N S 0 Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. 900 Licensed to Practice in 25 1 PUNGROUP.CPA City of Lake Elsinore EXPERIENCE David Siris, CPA, is an Assurance Services Manager at The Pun Group LLP with more than ten years of experience in providing accounting and audit services, internal control and risk evaluation, and business consulting to privately held and public companies. Mr. Siris has worked with clients in a variety of industries, including cannabis, manufacturing and distribution, large not-for-profits entities, and government entities. David has been responsible for managing, planning, and performing financial and regulatory external and internal audits, subrecipient monitoring of Federal Grants, and developing and conducting internal control procedures and risk assessment evaluations. He has evaluated key David processes within companies to determine areas of operating inefficiencies or potential internal control weaknesses and developed findings into recommended courses of action and into report ' comments and recommendations for resolution. Engagement/ Mr.Siris has also provided accounting support services to local not-for-profits and governments, Project Manager including financial statement analysis and preparation. EDUCATION 1Z EMAIL Cal State University Fullerton, California . . . . . .. B.S. Degree- Finance State of Arizona, Department of Public Safety Level One Fingerprint Clearance ... www.•• cpa LEADERSHIP&AFFILIATIONS • Member,American Institute of Certified Public Accountants (AICPA) • Member, California Society of Certified Public Accountants(CaICPA) Expertise : RELEVANT EXPERIENCE • County of Santa Cruz • City of Santa Barbara • City of Redding • City of Cerritos • City of Phoenix Subrecipient Monitoring • City of Stockton—Cannabis Audit • City of Santa Clarita • Other Commercial Cannabis Audits • City of Stockton . City of Stockton—Cannabis Audit T R A N S P • R T A T 10 N CONTINUING PROFESSIONAL EDUCATION Various courses offered by the Firm online through Thompson Reuters,AICPA,and CaICPA Education Foundation, including: • • Governmental and Non-profit Annual Update Government Auditing Standards • 0 GASB Basic Financial Statements for State and Local Governments • Single Audits: Uniform Guidance(formerly OMB Circular A-133) • Financial Accounting Standards Board Annual Updates • Statement on Standards for Accounting and Review Services Updates 19 • . • 0 Preparation of Tax Returns for Not-for-Profits Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. 409 Licensed to Practice i n 26 1 PUNGROUP.CPA City of Lake Elsinore Equal Employment Opportunity/Affirmative Action Philosophy The Firm is an Equal Opportunity employer and complies with all Federal and State hiring requirements. The Firm also supports Affirmative Action philosophies and works hard to provide disadvantaged groups with opportunities for self-enhancement. It is our intent to maintain a work environment that is free of discrimination or retaliation because of age, race, religious creed (including religious dress and grooming practices), denial of family and medical care leave, color, national origin (including language use restrictions), ancestry, physical disability (including HIV and AIDS), mental disability, medical condition (cancer and genetic characteristics), genetic information, marital status, sex(including pregnancy, childbirth, breastfeeding and/or related medical conditions), gender, gender identity, gender expression, and transgender(including whether or not you have transitioned or are transitioning),sexual orientation, military or veteran status, and retaliation for making a complaint about discrimination or participating in an investigation of a complaint about discrimination or any other status protected by federal, state, or local laws. The policy also prohibits unlawful discrimination based on the perception that anyone has any of those characteristics or is associated with a person who has or is perceived as having any of those characteristics. Discrimination can also include failing to reasonably accommodate religious practices or qualified individuals with disabilities where the accommodation does not pose an undue hardship. All such discrimination is unlawful. The Firm is dedicated to the fulfillment of this policy in regard to all aspects of employment, including but not limited to recruiting, hiring, placement, transfer, training, promotion, rates of pay, and other compensation, termination, and all other terms, conditions, and privileges of employment. This commitment applies to all persons involved in Firm operations and prohibits unlawful discrimination by any employee of the Firm, including supervisors and coworkers, clients or customers or suppliers, or other outside persons. Any staff member or applicant for employment who believes he/she has been the subject of unlawful discrimination or witnessed such discrimination is instructed to submit a written complaint to our supervisor of the Human Resources Department. Any supervisor receiving any written or other complain is to report any complaints of misconduct to Human Resources to try to resolve the claim internally and promptly. The complaint should be specific and should include the names of the individuals involved and the names of any witnesses. If you need assistance with your complaint, or if you prefer to make a complaint in person, contact Human Resources. Confidentiality about your complaint will be kept by the Firm to the extent possible, but the investigation cannot be completely confidential. The Firm will conduct a prompt and thorough investigation of all allegations of discrimination, retaliation, or any violation of the Firm's Equal Employment Opportunity Policy. The Firm will take appropriate corrective and remedial action if and where warranted. The Firm prohibits retaliation against any employee who provides information about, complains, or assists in the investigation of any complaint of discrimination or violation of the Firm's Equal Employment Opportunity Policy. We are all responsible for upholding the Firm's Equal Employment Opportunity Policy, and any claimed violations of that policy should be brought to the attention of your manager and/or human resource personnel. To comply with applicable laws ensuring equal employment opportunities to qualified individuals with a disability, the Firm will make reasonable accommodations for the known physical or mental limitations of an otherwise qualified individual with a disability who is an applicant or an employee unless undue hardship would result. Any applicant or employee who requires an accommodation in order to perform the essential functions of the job should contact Human Resources and discuss the need for accommodation. The Firm will engage in an interactive process with the employee to identify possible accommodations if any, that will help the applicant or employee perform the job. In addition, The Pun Group LLP is a small business enterprise with receipts of less than $20.5 million/year and can be classified as a"minority-owned business"as an APA(Asian-Pacific American-Owned Business Enterprise). We also have a culture of fostering and improving the advancement of women in their careers. Women make up 45% of our partners and 50% of our managers. 27 1 PUNGROUP.CPA City of Lake Elsinore Similar Engagements Other References The following are examples of some of the engagements with similar requirements as the City of Lake Elsinore's proposal. Please feel free to contact these agencies to learn more about their experiences working with us. Name of Public Agency City of Stockton Contact Info Mr. Jay Kapoor (209)937-5435 jay.kapoor@stocktonca.gov Total Hours 3,000 Cost $272,000/ ear Date of Services 2012—Present Scope of Work/Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Financial Report, GFOA Award, Single Audit, GANN Limit, Measure A, Measure W, Measure M, Entertainment Venues, Revenue and Expenditures related to Downtown Marina, Cannabis License Audits, Review of Major Revenues required by the Bankruptcy Agreement with Assured Guarantee. Name of Public Agency San Diego Metropolitan Transit System Contact Info Ms. Erin Dunn, Controller (619)557-4536 erin.dunn@sdmts.com Total Hours Approximately 1,850 hours Date of Services 2005—Present Dollar Value Contract $225,000/ ear Scope of Work/Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Financial Report Audit, GFOA Award, San Diego Transit Corporation Employee's Retirement Plan, AUP/National Transit Database (NTD): MTS, San Diego Transit Corp., San Diego Trolley, Inc., AUP/Transportation Development Act (TDA): MTS, San Diego Transit Corp., San Diego Trolley, Inc., AUP/Indirect Costs, and Public Transportation Modernization Improvement Service Enhancement Account PTMISEA). Name of Public Agency City of Tracy Contact Info Ms. Sara Cowell 209 831-6862 1 sara.cowell@cityoftracy.org Total Hours 960 Contract Price $96,500/ ear Date of Services 2021 —Present Scope of Work/ Financial Audit and Compliance Services: Annual Comprehensive Financial Reports Prepared Report, GFOA Award, Single Audit, GANN Limit, National Transit Database (NTD), State Controller's Reports (City, PFA, Operating Partnership JPA, City's Transit Operator's General Services, and Specialized Services) 28 1 PUNGROURCPA City of Lake Elsinore Name of Public Agency City of Desert Hot Springs Contact Info Mr. Geoffrey Buchheim, Finance Director gbuchheim@cityofdhs.org 760 329-6411 Total Hours 700 Contract Price $75,000/ ear Date of Services 2013—Present Scope of Work/Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Financial Report Audit, GFOA Award, Single Audit, GANN Limit, Desert Hot Springs Successor Agency, Desert Hot Springs Financing Authority, Desert Hot Springs Health and Wellness Foundation, New Market Tax Credit Audit (Desert Hot Springs Health and Wellness Foundation), Annual State Controller's Reports, AUP/Transient Occupancy Tax, Utility User Tax, DHS Housing Audits. Name of Public Agency City of National City Contact Info Mr. Phillip Davis, Financial Analyst pdavis@nationalcityca.gov 619 336-4246 Total Hours 600 Cost $70,000/ ear Date of Services 2013—Present Scope of Work/Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Audit, GFOA Award, Single Audit, GANN Limit, HUD Single Audit/Morgan Towers, Financial and Compliance Reports—Kimball Towers, Annual State Controller's Report. 29 1 PUNGROUP.CPA City of Lake Elsinore SpecificIit Approa Scope of Work, Audit Approach, and Methodology The City of Lake Elsinore is requesting the Firm to perform Professional Auditing Services and issue opinions on the City's financial statements. The audits are to be completed in accordance with all applicable and generally accepted auditing standards, including, but not limited to, the following: • Generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants (AICPA). • US General Accounting Office's (GAO) Standard for Audit of Governmental Organizations, Programs, Activities, and Functions. • Local Governments and Governmental Accounting Standards Board (GASB) Pronouncements. • The standards applicable to financial audits contained in the most current version of the Generally Accepted Government Auditing Standards(Yellow Book), issued by the Comptroller General of the United States. • The provisions of the Single Audit Act as amended in 1996. • The provisions of the US Office of Management and Budget (OMB) Uniform Guidance (formerly known as Circular A-133), Audits of State and Local Governments and Non-profit Organizations, and the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. The Firm will perform the following services: ✓ Financial Statement Audits and issuance of an opinion statement on the Annual Comprehensive Financial Report of the City of Lake Elsinore. The audit will be conducted in accordance with Generally Accepted Government Auditing Standards. The report will be in full compliance with all current GASB pronouncements. The following component units will be audited as part of the audit of the City's financial statements: • Lake Elsinore Public Financing Authority • Lake Elsinore Recreation Authority • Successor Agency Redevelopment Agency • Lake Elsinore Facilities Financing Authority In addition, the Firm will assist in meeting the requirements for the Government Finance Officers Association (GFOA) "Certificate of Achievement for Excellence in Financial Reporting." ✓ Prepare a Single Audit Report which will include the following: o Report on compliance and on internal control over financial reporting based on an audit of financial statements performed in accordance with Government Auditing Standards. o Report on compliance with requirements applicable to each major program, internal control over compliance, and on the schedule of expenditures of federal awards in accordance with Uniform Guidance, "Audits of State and Local Governments," and the Single Audit Act of 1984 (Public Law 98-502). o Schedule of Expenditures of Federal Awards. o Notes to Schedule of Expenditures of Federal Awards. o Schedule of Findings and Questioned Costs. o Any other required schedules or reports. o Prepare the Data Collection Form for Reporting on Audits of States, Local Governments, and Non- Profit Organizations. ✓ Audit and prepare the financial statements report related to the Successor Agency of the City of Lake Elsinore. ✓ Test compliance with Proposition 111,Article XII I.B—Review of Appropriation Limit Calculations (GANN). ✓ Issue an Auditor's Communication Letter with any reportable conditions found during the audit. A reportable condition will be defined as a material weakness or significant deficiency. ✓ Issue a separate"Management Letter"that includes recommendations for improvements on internal control, accounting procedures, and other significant observations that are considered to be no reportable conditions. ✓ Provide assistance in the implementation of applicable GASB pronouncements not yet in effect. 30 1 PUNGROUP.CPA City of Lake Elsinore Provided By Client(PBC) Lists: They will be provided for both interim and final audits according to an agreed-upon timeline between the engagement team and the City in order to be reasonably prepared for a field audit. The engagement team will meet with the City's management during the initial planning stage to discuss audit schedules and review the prior year's audit findings (if any). We will deliver a list of all documents to be provided by the City's staff. Once such materials are agreed upon by the engagement team and City's finance personnel, no other schedules will be requested unless new information comes to light in the course of test work. Attendance at Meetings and Hearings: The engagement team will participate in as many meetings with staff as needed to perform the work scope tasks, present the audit plan prior to beginning fieldwork, and discuss the draft audit reports. The team will attend public meetings to present and discuss its findings and recommendations. Once all issues of discussion are resolved, the completed Financial Reports, Single Audit report (if applicable), and other reports will be delivered to the City according to the agreed-upon schedule. Proposed Audit Adjustments: All proposed adjusting journal entries by the Firm will be discussed and explained in a timely manner with the designated Finance Department personnel. Such proposed adjustments will be in a format that shows the lowest level of posting detail needed for data entry in the general ledger systems. Supplemental Reports, Audits, or Agreed-Upon Procedures: Other services, such as agreed-upon procedures, may be deemed necessary. These services will be performed at agreed-upon rates and will be added to a written agreement before commencing audit work. The Firm and the City of Lake Elsinore will discuss and approve the scope and associated costs of these tasks. Advice and Consultation: Will be provided throughout the year on matters relating to accounting and financial reporting. Such services do not include any task that entails significant research or a formal report. GASB Implementation: The Firm will provide technical assistance and training in the implementation of applicable GASB pronouncements not yet in effect. We have a dedicated partner, Mr. Gary Caporicci, who will be responsible for providing advice and consultation for the implementation of these new standards. The Firm will advise the City on the applicability of accounting and reporting standards and other accounting issues and provide guidance on new note disclosures, GASB implementations, and other reporting requirements. We will also provide training, resources, and information on topics relevant to the City's financial reporting and operations. (Based on the scope, additional charges may apply.) Report of all Irregularities and Illegal Acts: The Firm will make an immediate written report of all irregularities and illegal acts or indications of illegal actions of which we may become aware to the City Council, City Manager,Assistant City Manager, and Finance Manager. The engagement team will also make all communications to the City required by the audit standards under which the engagement is performed. The Firm will inform the Finance Manager of each of the following: • The auditor's responsibility under generally accepted auditing standards. • Significant accounting policies. • Management judgments and accounting estimates. • Significant audit adjustments. • Other information in documents containing audited financial statements. • Disagreements with management. • Management consultation with other accountants. • Major issues with management prior to retention. • Difficulties encountered in performing the audit. • Errors, irregularities, and illegal acts. 311 PUNGROUP.CPA City of Lake Elsinore Working Paper Retention and Access to Working Papers: The Firm will retain, at its own expense, all working papers and reports for a minimum of three (3)years unless the City of Lake Elsinore notifies the Firm in writing of the need to extend the retention period. The Firm will make working papers available upon request by the City of Lake Elsinore to the following parties or their designees: • City of Lake Elsinore; • U.S. Department of Housing and Urban Development; • U.S. General Accounting Office; • Parties designated by the Federal or State governments or by the City as part of an audit quality review process; • Auditors of entities of which the City of Lake Elsinore is a component unit; and • Auditors of entities of which the City is a sub-recipient of grant funds. Also,we will comply with reasonable requests from successor auditors and allow them to review working papers that relate to matters of continuing accounting significance. 321PUNGROURCPA City of Lake Elsinore Methodology and Segmentation of Engagement The Firm's audit approach consists of six phases: Engagement Acceptance and General Planning, Planning and Internal Control Evaluation, Fieldwork, Post Fieldwork, Report Preparation and Review, and Final Production. 1 2 3 4 5 6 Engagement Planning& Fieldwork Post Report Final Acceptanceand I nterna l Control Fieldwork Preparation Production General Planning Evaluation Revie•.v responsibilitiesclient tailored approach emphasizing careful planning, open communication,proper assignment of An efficient and effective audit,so disrupbon to office operabons is kept to a minimum Benefits • operating controls Opportunities to make operations Provide advisory services so recommendations can be implemented Meet objectives at no additional 1. Engagement Acceptance and General Planning: The engagement partner and manager will meet with City's management to obtain an update on current City policies and procedures, help identify risk areas and new operations, and establish any specific requirements they may have. Our team will work on the identification of unique transactions, implementation of new GASB pronouncements, and develop the audit work plan for the engagement. Proposed timeline: to commence in April of each year. 2. Planning and Internal Control Evaluation: The engagement team, including the engagement partner,will assess accounting policies adopted by the City in order to obtain an understanding of its structure and its operating environment. Also, our team will review internal controls on all significant transaction classes, perform walkthroughs and/or tests of internal controls, perform preliminary analytical procedures, develop an initial risk assessment, evaluate Single Audit compliance, identify any audit issues, and prepare confirmation correspondence. The engagement team and City's Management will establish expectations, including responsibilities and assignments for the year-end fieldwork,and will hold a progress status meeting at the end of the interim phase. Proposed timeline: mid-April to early June. 3. Fieldwork: The engagement team, including the engagement partner, will conduct audit procedures on account balances in the general ledger, finish confirmation procedures, perform data analysis using our Al tools, search for unrecorded liabilities, perform substantial analytical review procedures, complete work on compliance with Federal Assistance, and conclude fieldwork. The engagement team and City's Management will hold an exit conference at year-end. Periodic update meetings will be held to communicate audit progress to management. Proposed timeline: early October of each year. 4. Post Fieldwork: During the phase, the engagement team, including the engagement partner, will review all documents and evaluate commitments and contingencies. The team will perform an assessment of the going concern and jointly plan for the next steps. Proposed timeline: immediately upon fieldwork completion. 5. Report Preparation and Review:The Firm will review and prepare audit reports and perform quality control procedures following the Quality Control Standards issued by the AICPA. We will also examine reports for compliance with GFOA reporting guidelines at no additional cost. Any comments will be recorded in a letter to management. At the City's request, the engagement partner and manager will present the audit to City's Management and other governing bodies. Proposed timeline: Draft financial statements, notes, and all required supplementary schedules by early November of each year for both ACFR and Successor Agency Report. 6. Final Production: The final phase of our approach entails obtaining the management representation letter and final financial statement report, which may include a final presentation to the City's Management and other governing bodies (if applicable). Proposed timeline: Provide all recommendations, revisions, and suggestions for improvements to the ACFR to the Finance Manager by December 1 of each year. Final reports are printed and delivered to the City no later than December 15 of each year. The Firm will complete the audit fieldwork and issue all reports within the established timeframe,assuming no internal circumstances within the City causes delays in the audit. 33 1 PUNGROUP.CPA City of Lake Elsinore Level of Staff and Number of Hours to be Assigned to Each Segment of the Engagement The Pun Group LLP understands that the City is not only looking to employ our auditing services but is also seeking to receive value within that professional relationship. We believe that our value derives from the in-depth knowledge, experience, and commitment that our auditing firm employs. We stress and emphasize "employ" because all of the knowledge and expertise listed on paper will not benefit you unless it is applied. That is why we have developed a plan that we feel will accomplish the objectives of the City and your particular needs. Our Firm will utilize the information that you have shared with us and our experience from our previous audits of this nature from various government entities and cities to develop a practical plan for all major areas. Estimated Total Hours*: Director/ Supervisory Partner(s) Manager Staff Staff Clerical Total Engagement Acceptance&General Planning 2 3 5 8 0 18 Planning&Internal Control Evaluation 3 5 7 12 0 27 Fieldwork 14 24 36 60 1 136 Post Fieldwork 10 16 24 40 1 90 Report Preparation&Review 14 24 36 60 1 136 Final Production 5 8 12 20 0 45 :i 120 200 'Does not include CPE hours related to Governmental Webinars and/or optional services. Sample Size and the Extent to Which Statistical Sampling is to be Used in this Engagement In our audit approach, random and statistical sampling is used in conjunction with our skilled judgment and knowledge of each situation. When designing an audit sample, our auditors consider the purpose of the audit procedure and the characteristics of the population from which the sample will be drawn. We determine a sample size sufficient to reduce sampling risk to an acceptably low level and select items for such a task in a way that we can reasonably expect it to be representative of the relevant sample and likely to provide the auditor with a reasonable basis for conclusions about the population. Enhancing Auditing Quality with Artificial Intelligence There are plenty of challenges with established audit practices. Outdated CAAT tools, sampling practices, and the explosive growth of big data are some of the examples, and they all present significant barriers to detecting anomalies, intentional or otherwise, in financial data. The Pun Group deploys a MindBridge comprehensive, risk-based approach, complemented by using MindBridgeTM's Artificial Intelligence Platform, to conduct our audit. Through this tool, we can seamlessly analyze thousands and thousands of financial and operating data and records, identifying and cataloging significant risks in mere seconds. The Al Auditor platform works by our side, augmenting our capacity to detect errors or fraud in the collected data not only by analyzing the entire set but by cross-correlating dozens of testing criteria against pre-established data points and presenting us with a view of every user, vendor, and transaction, by risk. All are happening within moments of ingesting analyzed data, which is something standard audit procedures simply cannot accomplish. We utilize these tools to allow our audit team to increase efficiency in the audit process, enhance the existing quality of our work, provide directed testing in areas subject to the highest risk, and quickly assimilate large amounts of data your staff would typically be asked to gather. The tools also help us to meet our professional requirements regarding fraud and internal control, allowing us to: ✓ Run Benford's analysis to check for fraud in transactions. ✓ Increase the value of audit findings with complete, 100% data coverage. ✓ Isolate risk and control issues before they impact your operations. ✓ Improve productivity by automating procedures and eliminating manual tasks. ✓ Conduct more direct, efficient, and effective audits to improve overall service quality. 34 1 PUNGROUP.CPA City of Lake Elsinore Our engagement team easily imports data in a secure environment from the City's financial software and extracts useful data for testing and analytical procedures particular to the following areas: • Successful Fraud Test 0 Kickback or Conflict-of-Interest Schemes • Questionable Invoices 0 Dormant Account Schemes • Phantom Vendor Schemes 0 Money Laundering Schemes Type and Extent of Analytical Procedures to be used in the Engagement Analytical procedures are one of many financial audit processes that help an auditor understand the client's operation and changes in the environment and identify potential risk areas to plan other audit procedures. Such procedures include a comparison of financial information on prior periods, budgets,forecasts, and industry benchmarks. We use trend and ratio analysis to identify any uncertain or unusual events. To perform these analyses, our Firm surveys cities and counties and develops benchmarks on specific vital financial indicators, such as the cost of services to tax revenues ratios, average general fund balance, capital assets, debt-to-capital, and general fund unassigned fund balance to total general fund expenditures,etc. Our engagement members have extensive experience in successfully implanting analytical procedures to the City's benefit. Our analytical procedures process is performed during three stages of the audit: (a) at the start, (b) in the middle, and (c) at the end. These three stages are risk assessment procedures, substantive analytical procedures, and final analytical procedures: • Risk assessment procedures are used to assist the auditor in understanding the business better and in planning the nature, timing, and extent of audit procedures. • Substantive analytical procedures are used to obtain evidential matters about particular assertions related to the account balances or classes of transactions. During the interim phase, our engagement team will set up expectations for the year-to-date results and balances and compare them with budgeted and prior-year amounts. This process allows us to forecast year-end amounts, reducing the workload during the year-end phase and allowing us to focus on areas of concern. • Final analytical procedures are used as an overall review of the financial information in the last review stage of the audit. The Engagement Partner(s) and Manager(s)will perform a high-level analytical analysis of the financial information, comparing its data both quantitatively and qualitatively to ensure the amounts are fairly presented in all material respect in the financial statements. Approach to be Taken to Gain and Document an Understanding of the Internal Control Structure Audit risk assessment is established by an internal control review, combined with the engagement team's understanding of the City's operations and accounting software. Using the Committee of Sponsoring Organizations (COSO) Framework, staff members will evaluate the City's processes and identify any control deficiencies. These diagnostic review procedures allow the engagement team to assess the City's systems and controls and to provide constructive feedback to management. During our initial planning phase of the audit, our engagement team, including the engagement Partner and Manager, will obtain an understanding of the entity and its environment. It is an essential aspect of performing an audit under generally accepted auditing standards. That understanding establishes a frame of reference within which the auditor plans the procedures and exercises professional judgment about assessing risks of material misstatement of the financial statements and responding to those risks throughout the examination. During the interim phase of the audit, our engagement team will perform a walkthrough of all significant accounting systems, including processes for financial reporting, revenue recognition and cash receipts, purchasing/contract management and cash disbursements, payroll and related liabilities, and others. Our auditors will obtain the written policies and procedures, inquiring accounting personnel, and document the process in either a flowchart or narrative summary format.After gaining an understanding of the accounting and internal control systems, our auditor will make a preliminary assessment of control risk, at the assertion level, for each material account balance or class of transactions. 35 1 PUNGROUP.CPA City of Lake Elsinore The form and extent of this documentation are influenced by the size and complexity of the entity and the nature of its accounting and internal control systems. Generally, the more complex the entity's accounting and internal control systems and the more extensive the auditor's procedures, the broader our documentation will need to be. Approach to be Taken in Determining Laws and Regulations that Will be Subject to Audit Test Work The Firm stays continually up to date with audit requirements—including new regulations, compliance supplements, state guidelines, and related contracts—to ensure that we conduct audits under applicable laws and regulations. We test transactions for compliance with the Single Audit Act, California Government Code, GANN Appropriations Limit, provisions of applicable grant guidelines, requirements of local measures, and others. For example, the Single Audit Act requires that we determine which grants to include in our audit and select transactions from those grants for detailed testing. While most items will be tested as part of the Interim phase, we cannot determine which grants will be selected for the Single Audit until the year-end/fieldwork stage of the audit. Our compliance audits of cash, investments, debt covenants, and other areas will be performed following the California Government Code, which has many provisions and regulations covering investments. Approach to be Taken in Drawing Audit Samples for Purposes of Tests of Compliance To test compliance, we will follow the AICPA's Audit Sampling Considerations of Uniform Guidance Compliance Audits.We will select an appropriate sample size based on our professional judgment and knowledge.Any deviations from control and compliance requirements will be documented. Objectives of Our Services Our primary objective for the proposed audit is to examine the City's financial statements and express our opinion on the fairness of the presentation, following generally accepted accounting principles. Other objectives that will benefit the City include the following: • To offer beneficial observations and recommendations about policies and procedures for accounting and operating controls • To identify opportunities to make City operations more efficient and reduce costs • To perform the audit efficiently and effectively. Disruptions to office operations are kept to a minimum • To provide continuing advisory services so the City can implement recommendations • To meet these objectives at no additional cost to the City The Engagement Team will perform the audit abiding by the Firm's quality-control procedures,which include following standard audit programs, careful planning, using industry-standardized software for auditing and internal control documentation, and welcoming an objective review of audit work. In other words, our client-tailored approach emphasizes careful planning, open communication, and proper assignment of responsibilities. The Firm will supply portable computers to the on-site staff members. 36 1 PUNGROUP.CPA City of Lake Elsinore Identification of Anticipated Potential AuditProblems While we do not expect any problems with the audit, we will carefully investigate and monitor the following relevant accounting issues: Investments: • Compliance with GASB 31 and GASB 34 • Authorization and approval process for City investments • Controls to assure the City's compliance with investment limitations and types of specific investments • Monitoring by the City of its investments Financial Reporting: • Compliance with current reporting and disclosure requirements issued by GASB • Compliance with the various GASBs in effect • Perform valuations of OPEB benefits to determine the liability for all benefits promised to active, retired, and inactive plan members as of each valuation date • Compliance with Governmental Accounting Standards Board (GASB) Statements 74 and 75 • Compliance with infrastructure obligations and regulatory provisions Internal Control Structure: • City's internal control functions and compliance with proper internal control philosophies • Computer-system processes and controls and adequacy of the control environment 37 1 PUNGROUP.CPA City of Lake Elsinore "Prepared i PRC List Audit Firm's Expectations of the Role and Participation of City's Staff in the Audit Process The engagement team will meet with the City's management during the initial planning stage to discuss audit schedules and review the prior year's audit findings (if any). We will deliver a list of all documents to be provided by the City's staff. Once such materials are agreed upon by the engagement team and City's finance personnel, no other schedules will be requested unless new information comes to light in the course of test work. Our goal is to cause the least amount of interruptions to the City's daily operations; therefore, to the extent possible, we will use information in the form available from the City's records. We believe client/engagement team communication is vital to perform results satisfactorily. With that sentiment in mind, we will hold regular meetings with the City's management to determine the status of the audit as well as any items which will require special attention. Open and frequent communication is critical. A sample list exemplifying items requested in our PBC lists follows: INTERIM AUDIT Description■ Directory Internal directory of City staff(name, position by department, email, phone number) ■ Policies New or updated policies and procedures for Finance Department, Human Resources, Information Technology, and Risk Management in PDF Manual Copy of accounting manual (if available) YTD TB Year-to-date Trial Balance as of interim fieldwork(Excel file) Chart of Accounts Chart of accounts effective for FYXX-XX Flowcharts Please update the attached flowchart/narrative provided for any changes in effect in FYXX-XX MOUs MOUs (if any new in effect for FYXX-XX) Manual Journal Entries Journal Entry(JE) Report for all manual JEs during the year ended June 30, 20XX(Excel file) Minutes Minutes-July 1, 20XX, to the most recent Conflict Code Conflict of Interest Code adopted/applicable during FYXX-XX (PDF File) Attorneys YTD expense report for all attorney fees the City has paid in FYXX-XX (sorted by the firm if possible-with a brief description of the type of work performed for the City) Form 700s Current CA Form 700s (Statement of Economic Interests)for board members, VPs, and Directors Related Parties Listing of active vendors and employees (name and address only-fraud procedure) IT Systems List of all financial management applications, name, vendor, version, function Disaster Recovery Disaster Recovery/Contingency Plans, if any new policies/procedures were adopted in FYXX-XX IT Security Copy of IT Logical Security policies and procedures Information Technology Please see the attached 'Information Technology General Controls General Controls Questionnaire.' Adopted Budget The adopted budget for the year ended June 30, 20XX Budget Resolution Board minutes for adopting the FYXX-XX budget Budget Amendments Listing of budget amendments for FYXX-XX(through interim date) Confirmations Please prepare the confirmation letters, and make sure the balances are updated for 20XX. We will provide you with templates for related party/fraud confirmation to be sent to the City Council by us. 381 PUNGROURCPA City of Lake Elsinore Financial Reporting Mddh Chart of Accounts Chart of accounts effective for FYXX-XX Fund Roll-Ups Listing of which GL funds are grouped together as financial statement funds Account Groupings Account roll-ups for the Statement of Net Position and Statement of Revenue, Expenses, and Changes in Net Position line items, effective for FYXX-XX Journal Entries Listing of journal entries in FYXX-XX(Excel) New Accounts List of bank/investment accounts opened/closed during the year-if any, please provide proof of proper authorization Cash &Investments ■ Investment Policy Investment Policy in place for FYXX-XX. Suppose a new policy is adopted annually, and a copy of the resolution adopting the policy. ■ Bank Reconciliations Bank reconciliations for September 20XX, November 20XX, February 20XX, and April 20XX - Loans All new loans/notes agreements in FYXX-XX, if any. Fee Schedules Fee schedules applicable during FYXX-XX Resolution Signed resolution adopting any new fee schedules in FYXX-XX C/R Listing Cash receipts detail for FYXX-XX(most recently available at interim fieldwork) M Check Registers Check register for all checks issued in FYXX-XX (most recently available for interim fieldwork) ■ Wire Transfers Access to the listing of wire transfers made in FYXX-XX(most recently available for interim fieldwork) Payroll Registers An electronic copy of payroll registers YTD Salary Schedules Salary schedule effective for FYXX-XX EE Listings Copy of employee listing for: (i) New hires (ii)Terminations (iii) Employees with merit pay rate increase in FYXX-XX Official Statements Official statements, including debt service schedules for any new debts or capital leases issued in FYXX-XX, if any. (PDF file) Journal Entries Journal entry recording proceeds of new debt issuance (if applicable) ■ Proof of Payment Proof of payment on the principal for all bonds and capital leases according to debt amortization schedules. Hires/Separations Listing of new hires (valuation date)for Pension participants Census Data Census data for all plans for XXXX valuation date (XXXX measurement date) ■ Prelim SEFA Preliminary Schedule of Expenditures of Federal Awards(SEFA)for all Federal grants expended in FYXX-XX Calculation Gann Limit calculation worksheets 20XX Resolution Resolution adopting 20XX Gann Limit Finance Letterer CA Dept of Finance Letter Successor Agency ROPS Recognized Obligation Payment Schedules for 20XX 391PUNGROURCPA City of Lake Elsinore YEAR-END AUDIT DescriptionName Trial Balance Trial Balance Year-to-date Trial Balance as of June 30, 20XX(Excel)with the following columns: a)Account number b)Account name/description c) Beginning balance (7/1/XX) d) Ending balance (6/30/XX) e)Adopted budget f) Final budget Client Journal Entries Copy of Journal Entry Posting report with backup attached for all journal entries posted after unadjusted year-end trial balance was provided to auditors. iBudget Amendments Listing of budget amendments for FYXX-XX(entire year) B-A Revenues Most recent revenues report with Budget and Actual comparison in FYXX-XX. (Excel file) B-A Expenses Most recent expense report with Budget and Actual comparison in FYXX-XX. (Excel file) Financial Reporting - Chart of Accounts Chart of accounts effective for FYXX-XX Fund Roll-Ups Listing of which GL funds are grouped together as financial statement funds Account Groupings Account roll-ups for the Statement of Net Position and Statement of Revenue, L Expenses, and Changes in Net Position line items, effective for FYXX-XX Journal Entries Listing of journal entries in FYXX-XX(Excel) New Accounts List of bank/investment accounts opened/closed during the year- if any, please provide proof of proper authorization Cash &Investments - List of Accounts List of all bank and investment accounts June Statements June 20XX statements for all accounts July Statements July 20XX statements for all accounts Bank Reconciliations Bank reconciliations for June 20XX for all deposit accounts O/S Check Listings Outstanding check listings on 6/30/20XX DIT Listings Deposit in transit listing at 6/30/20XX Investment Report Investment report for 6/30/20XX GASB 31 GASB 31 fair market value adjustment for FYXX-XX Restricted Cash Summary for all restricted cash and investments held by fiscal agents by trustee account on June 30, 20XX (Excel file) Investment Statements Trustee statements for all restricted cash and investments held by fiscal agents on June 30, 20XX (PDF file) Credit Risk Schedules for investment disclosure: a)credit rating for each investment - b) maturity dates ■ Credit Risk Listing of amounts invested in single issuers in excess of 5% of total investments - A/R Aging An aged detailed listing of all accounts receivable on June 30, 20XX 40 1 PUNGROUP.CPA City of Lake Elsinore . Allowance Calculation of uncollectible accounts on June 30, 20XX, along with a description of methodology and assumptions used ■ Accruals Supporting documents (i.e., subsequent receipts)for receivables accrued post-June 30, 20XX . Grants A detailed listing of grant receivables and backup documents for all accrued grant payments received (i.e., copies of checks, etc.) ■ Interest A detailed listing of all interest receivable on June 30, 20XX (include interest allocation worksheet if applicable) - Taxes/Assessments * A detailed listing of all taxes/assessments receivable on June 30, 20XX . Roll-forward List beginning balances, additions, deletions, and ending balances for all loans and notes receivable (separated by type/funding source) ■ New Loans Copy of check, receipt, deposit slip, bank statement, and loan agreement for all new loans/notes. ., Loan Paym Copy of checks/cash receipts showing payments of principal on all major loans/notes receivables (selections to be made on a test basis for others) - Disclos Update listing and description of all loans and notes receivables. - TPA Rep Third-party administrator loan portfolio report(if applicable) ■ Reconciliation of all amounts due from/to other funds by the fund. Identify payable and receivable funds. Advances I Schedule of advances to/from funds&new loan agreements for new advances Transfers Reconciliation of transfers in/out of funds by the fund. Identify transferor and transferee funds and provide a description of the purpose for transfers. Other - reps Prepaid detail listing as of June 30, 20XX(Excel file) ■ Inventory A detailed listing of inventory with units on hand, cost, and extended cost as of June 30, 20XX - Other Other assets detail listing as of June 30, 20XX(Excel file) . Deposits Deposits detail listing as of June 30, 20XX(Excel file) Capital Assets Roll-forward Schedule of beginning balances, additions, deletions, and ending balances of capital assets and accumulated depreciation (Excel file)on June 30, 20XX Details of Adds/Deletes A detailed listing of all additions and deletions for all capital assets (Excel file) during FYXX-XX - Depreciation Depreciation Report for depreciation expense for capital assets for FYXX-XX . CIP CIP detail schedule showing by project and with beginning balance, additions, deletions(capitalized), reclassifications, and ending balance for the year ended June 30, 20XX(Excel file) Gain/Loss Calculation of gains and losses for all capital assets disposed of during FYXX-XX Donations ddmk Listing of amount and description of donated capital assets, if any - Impairments Listing of any impairments of capital assets during FYXX-XX . Inventory Copy of the inventory of capital assets done in FYXX-XX - Listing A detailed listing of property held for resale on June 30, 20XX . Valuation Support for valuation of properties on June 30, 20XX(appraisal, specially commissioned report, etc.)-lower cost or NRV 411 PUNGROUP.CPA City of Lake Elsinore Additions/Purchases Support for purchases/contributions/donations of land held for resale Deletions/Sales Support for sales/donations/contributions of land held for resale _ Declaration Declaration of intent to sell for City and Successor Agency - Affirmation Council affirmation on a five-year time limit to sell properties Accounts Payable - Detail A detailed listing of all accounts payable (Excel file)on June 30, 20XX - A/P Aging A/P Aging Report as of June 30, 20XX(by the vendor if possible) Accrual Detail A/P Accrual detail listing as of June 30, 20XX Check Registers Accounts payable check registers from July 1, 20XX, through the date of year-end fieldwork(as close as possible) - Deposits Listing of all deposits payable as of June 30, 20XX (Excel file) ■ Accrual Calculation Detailed listing and calculation of all accrued salaries payable(Excel file)on June 30, 20XX - Payroll Registers Payroll register(s)for pay period(s) included in accrual at June 30, 20XX ■ 941s Form 941s for FYXX-XX(all quarters)and the reconciliations to the total annual payroll. . Roll-forward A detailed listing of all unearned revenues for all funds(including beginning balance, additions, deletions, and ending balances) Unavailable Schedule of unavailable revenue to be recognized as revenue in the government-wide financial statement. - Roll-forward/Amort Long-term Debt Schedule as of June 30, 20XX(Excel file) Proof of Payment Proof of payment on the principal for all bonds and capital leases according to debt amortization schedules. Deferred Charges Amortization of deferred charges (bond premiums and costs of issuance) schedule - Covenants Supporting documents on the City's compliance with debt covenants. Compensated Absences ■ Calculation Calculation of vacation and sick leave payable- by the employee if possible (hours and rate info by EE) Roll-forward List beginning balances, additions, deletions, and ending balances by the fund and by short-term portion and the long-term portion at 6/30/XX - Register , June 30 leave balance register ■ Policie Copies of any new sick leave buy-back policies, new contracts, and changes in vacation policy. Pension Year-End -Z75—nsus data support Additional info for covered payroll, service credits, and period of service for employees listed on the CalPERS Census Data file LContributions (Billing and "My CalPERS" billing and payment summary reports for each plan showing Payment Summary) EE and ER contributions made during FYXX-XX Contributions (Reported Member "My CalPERS" reported member summary reports for each plan showing EE Summary Report) and ER contributions made during FYXX-XX GASB 68/71 CalPERS GASB 68 valuation reports for each City plan for 6/30/1 XX valuation date (6/30/XX measurement date) Census data CalPERS GASB 68 census data for each Agent plan ■ CalPERS Contributions Amount of CalPERS contributions made in FYXX-XX(supporting documents &calculation)my CalPERS 42 1 PUNGROURCPA City of Lake Elsinore MRIPERS Reconciliation Reconciliation of contributions between payroll and CalPERS - Journal Entries Pension journal entries and supporting documents - Covered Payroll Annual covered payroll (CaIPERS) ME MMV ' Calculation Liability for current fiscal year claims and changes in estimates for workers' comp, dental, and general liability(as applicable); hhL- Payments Current year claim payments for workers'comp, dental, and general liability. 017 Run Reports Loss run reports for workers'comp, dental, and general liability as of June 30, 20XX _ Roll-forward List beginning balances, additions, deletions, and ending balances by the I fund and by short-term portion and long-term portion. -Etuarial Study Actuarial study for calculation of workers'comp/general liability(if applicable) ■ SSAE 16 SSAE 16("SOC I, Type 2")report from third-party administrators, if any,for both WC and GL Excess Coverage Agreement and declaration of coverage for excess insurance over self- insured amount(BICEP/CSAC) -,Calculation The calculation for the remaining landfill closure liability - Gain/Loss Calculation/amortization schedule for deferred gains/losses on refunding .• GASB 54 Detail of GASB 54 fund balance breakdowns for all governmental funds — (nonspendable,istricted, committed, assigned) ■ Descriptions Description of restrictions, commitments, and assignments of fund balances for all governmental funds._ - �oard resolutions for any amounts deemed to be" - Deficit Balances Listing and explanation of deficit fund balances and net assets-if any. Resolution Copy of board resolutions for all commitments of fund balances for governmental funds as of June 30, 20XX. - Net Position Net position worksheet(for Government-Wide Statements) - Detail Sales taxes revenues detail - Detail Local property taxes detail - Detail Other revenues detail Final SEFA Single Audit SEFA Schedule (list amount awarded, amount spent-with indirect costs listed separately from direct costs)-also, please include pass- through amounts - ant D Award contracts fo ants listed on SEF E SEFA Reconciliation Expenditure detail (reconciled to the general ledger)for ALL grants listed on SEFA. I Property Federally funded real property schedule/inventory(by each grant) ARM - Regulators Copies of any regulator/grantor audit/review reports issued during the year on Findings Status of any implementations of corrective action plans for prior year . findings, if applicable - Transmittal Transmittal letter(if ACFR) ■ - City Officials NIP" List of City Officials and Council Members(if ACFR) 43 1 PUNGROUP.CPA City of Lake Elsinore Org Chart City organization chart (if ACFR) MD&A Management's Discussion and Analysis Program Revenues GASB 34 Program Revenues worksheet- Excel FYXX - ISF Allocation Internal service fund allocation -asidual Capital Outlay Allocation of residual capital outlays to functions/programs - Depreciation Allocation of governmental activities depreciation by function/program - Footnotes Footnote supporting schedules (where applicable) 0 Commitments/Contingencies Listing and description of any commitments and contingencies that are required for note disclosure (i.e., cost to complete construction) - Subsequent Events Description of subsequent events for note disclosure, if anyw ■ PPA Journal entry and all supporting documents for prior period adjustments, if any 0 RSI -BtoA RSI - Budget to actual schedules-General Fund and all major special revenue funds (Excel) - SI -BtoA SI -Supplementary budget to actuals for any funds to be included (Excel) -ff-Agency Funds MJ=K-Additions and deletions for agency funds (Excel - Stats Section Statistical section schedules(Excel), if applicable - Conversio Support for conversion entrie or - onciliations Reconciliation of amounts affected by Water Dept. (interfunds, transfers, contributions, pension, etc.) - Cash Flows Cash flows worksheet for Water Dept.financials (provided by other auditors) . Copy of audited financial statement Water Dept. 44 1 PUNGROURCPA City of Lake Elsinore Let's Get to Work! Benefits of Choosing The Pun Group LLP The Pun Group LLP is recognized for its professionalism, integrity and for providing clients with practical solutions unique to their circumstances and issues. Our Firm prides itself on being able to provide personalized client services, and with that sentiment in mind,we have carefully chosen our engagement teams.The Pun Group's primary objective is to continue offering the City of Lake Elsinore solutions and directions led by highly experienced and capable partners who can successfully implement the work and produce the results you expect. This philosophy and mindset allow us to provide a superior level of service and a quality audit. We trust that this proposal has given you the information needed about the Firm, the engagement team members, the overall audit approach, cost-saving measures, and audit fees.We are committed to exceeding your expectations, and we look forward to bringing our experience and expertise to the City of Lake Elsinore while providing you with the excellent level of service that you expect and deserve. Thank You Thank you for allowing us to submit our qualifications to provide you with Professional Auditing Services. Please direct inquiries to: Kenneth H. Pun, CPA, CGMA Managing Partner Email: ken.pun(@pungroup.cpa Phone: (949) 777-8801 1 Fax: (949) 777-8850 Sincerely, L� The Pun Group LLP Certified Public Accountants and Business Advisors 45 1 PUNGROUP.CPA City of Lake Elsinore Strengthen Your Accounting Knowledge: TPG Client Training Webinars We pride ourselves in leading the governmental auditing profession nationwide and statewide. Members of our team have been assigned to the AICPA and State Government Accounting and Audit committees. Our membership with these two levels of government keeps us current, and such involvement helps our Firm with the constant changes in accounting and auditing standards, laws and regulations, and compliance provisions, which have created an unprecedented complexity in public accounting for state and local governments. Every year, the Firm hosts a conference to update governmental clients on new technical accounting and financial issues. Since last year, by implementing "Webinars,"we've been expanding our horizons and offering our clients 15 hours of Continuing Professional Education (CPE). These sessions are free of charge and part of the service package provided to our clients. CPE courses we offer: How to GASB Revenues Single Audit Prevent and Expense & Yellow GASB Fraud Recognition Book 87 Using the Project Update Lease Latest 7t GASB AICPA GASB 84GASB Financial Auditing Update Fiduciary Project •• Update i I PUNGROUP.CPA City of Lake Elsinore Appendix 1 of Insurance oizo® CERTIFICATE OF LIABILITY INSURANCE DAT 3(/720D/YYVY) 3/1/2022 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER.THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER,AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED,the policy(ies)must be endorsed. If SUBROGATION IS WAIVED,subject to the terms and conditions of the policy,certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER CONTANAME:CT Sarah Caballero Wood Gutmann&Bogart PHONE 714-824-8300 q�i�c No:714-573-1770 15901 Red Hill Ave.,Suite 100 E-MAIL Tustin CA 92780 ADDRESS: scaballero@wgbib.com INSURERS AFFORDING COVERAGE NAIC# INSURER A:Great Divide Insurance Company INSURED PUNBM-1 INSURERB:Travelers Property Casualty 25674 The Pun Group,LLP 200 East Sandpointe Avenue,Suite 600 INSURERC:Valley Fore Insurance Co. 20508 Santa Ana CA 92707 INSURER D:National Fire Ins Co. INSURER E: INSURER F: COVERAGES CERTIFICATE NUMBER:80570923 REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT,TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN,THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR TYPE OF ADDLSUBR POLICY EFF POLICY EXP LIMITS LTR POLICY NUMBER MWDDIY MM/DDIYYY C X COMMERCIALGENERALLIABILITY Y 7013134445 3/1/2022 3/1/2023 EACHOCCURRENCE $2,000,000 CLAIMS-MADE FxIOCCUR DAMAGE TO RENTED P S rt n $1 000,000 MED EXP(Arty one person) $10,000 X $0 deductible PERSONAL&ADV INJURY $2,000,000 GEWL AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $4,000,000 X POLICY JJ'ECT LOC PRODUCTS-COMP/OP AGG $4,000,000 OTHER $ D AUTOMOBILE LIABILITY 7013117645 3/1/2022 3 rAm CO INloBD SINGLE LIMIT $1000000 n IxANY AUTO BODILY INJURY(Per person) $ ALL OWNED SCHEDULED BODILY INJURY(Per accident) $ AUTOS AUTOS NON-OWNED PROPERTY DAMAGE HIRED AUTOS X AUTOS Per accident $ B ' UMBRELLA LIAB OCCUR 7013136M 311/2D22 W12023 EACH OCCURRENCE $1,000,000 EXCESS LAB CLAIMS-MADE AGGREGATE $1,000,000 DED RETENTION$ $ D WORKERS COMPENSATION 7013'34493 311f2o22 311I- X IPER RITE I I ERH No Deductible C AND EMPLOYERS'LIABILITY YIN 7013136289 .1.22 3M 2D23 ANY PROPRIETOR/PARTNER/EXECUTIVE ❑ E.L.EACH ACCIDENT $1,000,000 OFFICER/MEMBER EXCLUDED? NIA (Mandatory in NH) E.L.DISEASE-EA EMPLOYEE$1,000,000 If yes,describe under DESCRIPTION OF OPERATIONS below E.L.DISEASE-POLICY LIMIT $1,000,000 A �E&O CAB20235902 311r= 3r112023 3,000.000 agg 1,000,000 Retro 12r29111 DESCRIPTION OF OPERATIONS 1 LOCATIONS I VEHICLES(ACORD 101,Additional Remarks Schedule,may be attached if more space is required) Great Divide Insurance Company AM Best Rating A+XV Certificate holder(s)is/are named as additional insured per attached endorsements subject to the terms&conditions of the policy: General Liability Additional Insured&Waiver of Subrogation#SB146932G General Liability Primary&Contributory#CNA80103XX Umbrella Policy follows form for General Liability,Auto Liability and Employers Liability Auto Primary and Non-Contributory&Waiver of Subrogation#CA00011013 Auto Designated Insured#IL 02 70 07 20 See Attached.. CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. PROOF OF INSURANCE AUTHORIZED REPRESENTATIVE ©1988-2014 ACORD CORPORATION. All rights reserved. ACORD 25(2014101) The ACORD name and logo are registered marks of ACORD ii I PUNGROUP.CPA ORANGE COUNTY SAN DIEGO BAY AREA LAS VEGAS PHOENIX www.pungroup.cpa