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Home My WebLink AboutAgenda Packet - Finance & Human Resources Committee - 03/01/2022FINANCE & HUMAN RESOURCES COMMITTEE MARCH 1, 2022 East Valley Water District was formed in 1954 and provides water and wastewater services to 103,000 residents within the cities of San Bernardino and Highland, and portions of San Bernardino County. EVWD operates under the direction of a 5member elected Board. COMMITTEE MEMBERS David E. Smith Governing Board Member James Morales Jr. Governing Board Member Finance & Human Resources Committee Meeting March 01, 2022 4:00 PM 31111 Greenspot Road, Highland, CA 92346 Via Teleconference In an effort to protect public health and pursuant to Resolution 2022.02, an active State of Emergency still exists and continues to directly impact the ability of the members to meet safely in person; therefore, there will be no physical location to attend this meeting in person and it will be held via teleconference. Members of the public are invited to make a public comment telephonically during the public comment section of the meeting and after each agenda item. In addition, a public comment card may be submitted prior to the start of the meeting, or a request may be submitted to the District Clerk via email at administration@eastvalley.org. Anyone wishing to join the meeting may do so using the following information: DIAL: 12094255876 and enter CONFERENCE ID: 308 612 348# You may also join by clicking HERE to join the meeting via Microsoft Teams. PLEASE NOTE: Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection in the District’s office located at 31111 Greenspot Rd., Highland, during normal business hours. Also, such documents are available on the District’s website at eastvalley.org and are subject to staff’s ability to post the documents before the meeting. Pursuant to Government Code Section 54954.2(a), any request for a disabilityrelated modification or accommodation, including auxiliary aids or services, that is sought in order to participate in the above agendized public meeting should be directed to the District Clerk at (909) 8854900 at least 72 hours prior to said meeting. In order to comply with legal requirements for posting of agenda, only those items filed with the District Clerk by 12:00 p.m. on Wednesday prior to the following Wednesday meeting not requiring departmental investigation, will be considered by the Board of Directors. CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL OF BOARD MEMBERS PUBLIC COMMENTS Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to three (3) minutes, unless waived by the Chairman of the Board. Under the State of California Brown Act, the Board of Directors is prohibited from discussing or taking action on any item not listed on the posted agenda. The matter will automatically be referred to staff for an appropriate response or action and may appear on the agenda at a future meeting. INFORMATIONAL ITEMS 1.Discuss Contract Award for Professional Audit Services REPORTS ADJOURN FINANCE & HUMAN RESOURCES COMMITTEEMARCH 1, 2022East Valley Water District was formed in 1954 and provides water and wastewater services to103,000 residents within the cities of San Bernardino and Highland, and portions of SanBernardino County.EVWD operates under the direction of a 5member elected Board.COMMITTEE MEMBERS David E. Smith Governing Board Member James Morales Jr. Governing Board Member Finance & Human Resources Committee Meeting March 01, 2022 4:00 PM 31111 Greenspot Road, Highland, CA 92346 Via Teleconference In an effort to protect public health and pursuant to Resolution 2022.02, an active State of Emergency still exists and continues to directly impact the ability of the members to meet safely in person; therefore, there will be no physical location to attend this meeting in person and it will be held via teleconference. Members of the public are invited to make a public comment telephonically during the public comment section of the meeting and after each agenda item. In addition, a public comment card may be submitted prior to the start of the meeting, or a request may be submitted to the District Clerk via email at administration@eastvalley.org. Anyone wishing to join the meeting may do so using the following information: DIAL: 12094255876 and enter CONFERENCE ID: 308 612 348# You may also join by clicking HERE to join the meeting via Microsoft Teams. PLEASE NOTE: Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection in the District’s office located at 31111 Greenspot Rd., Highland, during normal business hours. Also, such documents are available on the District’s website at eastvalley.org and are subject to staff’s ability to post the documents before the meeting. Pursuant to Government Code Section 54954.2(a), any request for a disabilityrelated modification or accommodation, including auxiliary aids or services, that is sought in order to participate in the above agendized public meeting should be directed to the District Clerk at (909) 8854900 at least 72 hours prior to said meeting. In order to comply with legal requirements for posting of agenda, only those items filed with the District Clerk by 12:00 p.m. on Wednesday prior to the following Wednesday meeting not requiring departmental investigation, will be considered by the Board of Directors. CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL OF BOARD MEMBERS PUBLIC COMMENTS Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to three (3) minutes, unless waived by the Chairman of the Board. Under the State of California Brown Act, the Board of Directors is prohibited from discussing or taking action on any item not listed on the posted agenda. The matter will automatically be referred to staff for an appropriate response or action and may appear on the agenda at a future meeting. INFORMATIONAL ITEMS 1.Discuss Contract Award for Professional Audit Services REPORTS ADJOURN FINANCE & HUMAN RESOURCES COMMITTEEMARCH 1, 2022East Valley Water District was formed in 1954 and provides water and wastewater services to103,000 residents within the cities of San Bernardino and Highland, and portions of SanBernardino County.EVWD operates under the direction of a 5member elected Board.COMMITTEE MEMBERSDavid E. SmithGoverning Board Member James Morales Jr.Governing Board MemberFinance & Human Resources Committee MeetingMarch 01, 2022 4:00 PM31111 Greenspot Road, Highland, CA 92346Via TeleconferenceIn an effort to protect public health and pursuant to Resolution 2022.02, an active State ofEmergency still exists and continues to directly impact the ability of the members to meetsafely in person; therefore, there will be no physical location to attend this meeting inperson and it will be held via teleconference. Members of the public are invited to make apublic comment telephonically during the public comment section of the meeting and aftereach agenda item. In addition, a public comment card may be submitted prior to the start ofthe meeting, or a request may be submitted to the District Clerk via email atadministration@eastvalley.org.Anyone wishing to join the meeting may do so using the following information:DIAL: 12094255876 and enter CONFERENCE ID: 308 612 348#You may also join by clicking HERE to join the meeting via Microsoft Teams.PLEASE NOTE:Materials related to an item on this agenda submitted to the Board after distribution of theagenda packet are available for public inspection in the District’s office located at 31111Greenspot Rd., Highland, during normal business hours. Also, such documents are availableon the District’s website at eastvalley.org and are subject to staff’s ability to post thedocuments before the meeting.Pursuant to Government Code Section 54954.2(a), any request for a disabilityrelatedmodification or accommodation, including auxiliary aids or services, that is sought in orderto participate in the above agendized public meeting should be directed to the District Clerkat (909) 8854900 at least 72 hours prior to said meeting. In order to comply with legal requirements for posting of agenda, only those items filed with the District Clerk by 12:00 p.m. on Wednesday prior to the following Wednesday meeting not requiring departmental investigation, will be considered by the Board of Directors. CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL OF BOARD MEMBERS PUBLIC COMMENTS Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to three (3) minutes, unless waived by the Chairman of the Board. Under the State of California Brown Act, the Board of Directors is prohibited from discussing or taking action on any item not listed on the posted agenda. The matter will automatically be referred to staff for an appropriate response or action and may appear on the agenda at a future meeting. INFORMATIONAL ITEMS 1.Discuss Contract Award for Professional Audit Services REPORTS ADJOURN Agenda Item #1 March 1, 20221 3 4 7 Meeting Date: March 1, 2022 Agenda Item #1 Discussion Item Regular Meeting TO: Committee Members FROM: Chief Financial Officer SUBJECT: Discuss Contract Award for Professional Audit Services RECOMMENDATION This agenda item is for informational purposes only, no action required. BACKGROUND / ANALYSIS In 2021 the CPA firm of CliftonLarsonAllen, LLP (CLA) completed its fifth and final year of engagement for the District’s annual financial audit. Looking forward to June 2022, staff requested a quote from CLA for the audit for the upcoming year and received a fee quote that is significantly higher than in prior years. For this reason, and just as a matter of due diligence, staff prepared and distributed a Request for Proposal for Professional Audit Services. Six firms responded by submitting proposals. A three-person committee of Finance and IT staff was formed, and each committee member independently scored all proposals based on firm and staff technical qualifications, audit approach, references, and fees. Firms were then ranked in accordance with the total of their scores from the three committee members and are included in the table below, based on their ranking. A summary of fee proposals for fiscal year 2021-22 is shown below in order of staff ranking: FIRM N AME QUALIFIED Y / N N O. O F WATER / WASTEWATER AGEN CY CLIENTS CO S T Y EAR 1* Rogers, Anderson, Malody & Scott, LLP Y 12 37,175$ Dav is Farr Y 9 34,500$ EadiePay ne Y 8 32,910$ Lance, Soll & Lunghard, LLP Y 8 39,840$ Moss, Lev y & Hartzheim, LLP Y 8 29,390$ Badawi & Associates Y 3 31,090$ * Includes Financial Audit of the District, S tate Controller Office Report and S ubmission, and S ingle Audit examination of all federal grants Agenda Item #1 March 1, 20222 3 4 7 Meeting Date: March 1, 2022 Agenda Item #1 Discussion Item Due to the fact that auditors are hired by the Board to audit management, staff is happy to offer a preliminary ranking, but would like the concurrence of the committee before making a recommendation to the Board for awarding a contract for auditing. Accordingly, staff has attached the proposals of the three top ranked firms for committee perusal. Staff’s recommendation is to engage Rogers, Anderson, Malody & Scott (RAMS) to perform audit services for the District over the next three years. Staff would like to commend the work of CliftonLarsonAllen, LLP over the last five years, and to recognize their contributions toward the District obtaining the GFOA Certificate of Achievement for Excellence in Financial Reporting for the last five years. AGENCY GOALS AND OBJECTIVES II - Maintain a Commitment To Sustainability, Transparency, and Accountability A. Practice Transparent and Accountable Fiscal Management REVIEW BY OTHERS This agenda item has been reviewed by the Finance Department. FISCAL IMPACT This item is funded in the current fiscal year budget. Respectfully submitted: ________________ Brian Tompkins Chief Financial Officer ATTACHMENTS 1. Proposal - Rogers Anderson Malody & Scott LLP 2. Proposal - DavisFarr 3. Proposal - EadiePayne EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES FOR THE FISCAL YEARS ENDING JUNE 30, 2022, 2023 AND 2024 (WITH THE OPTION OF TWO ADDITIONAL FISCAL YEARS ) PREPARED BY ROGERS ANDERSON MALODY & SCOTT, LLP 735 E Carnegie Drive, Suite 100 San Bernardino, CA 92408 LICENSE #2596 FEIN 95-2662063 FEBRUARY 23, 2022 CONTACT PERSONS: SCOTT W. MANNO, CPA, CGMA smanno@ramscpa.net BRAD WELEBIR, CPA, CGMA, MBA bwelebir@ramscpa.net 909.889.0871 ■ ROGERS , ANDERSON , MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS , SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Table of Contents Page Transmittal Letter ................................................................................................................................. i Technical Proposal Scope of work ............................................................................................................................. 1 Services to be provided Specific audit approach .............................................................................................................. 2 Engagement approach Audit approach and proposed audit segmentation Level of staff and approximate number of hours assigned to each segment Sample sizes Intelligent audit technology Analytical procedures Understanding of internal control over financial reporting Approach in determining applicable laws and regulations Effect of COVID-19 on our audits Auditing in a remote environment Proposed audit timing License to practice in California ................................................................................................. 10 Independence ............................................................................................................................ 10 Firm qualifications and experience ............................................................................................ 10 About our firm Range of services Governmental Audit Quality Center Single Audit experience ACFR preparation Engagement quality control Equal Opportunity Employer External quality control review Disciplinary action Partner, supervisory and staff qualifications and experience .................................................... 14 Partner and supervisory staff involvement Staff continuity Continuing professional education Assigned personnel Engagement team resumes References ................................................................................................................................. 22 Identification of potential audit problems ................................................................................... 23 GASBS implementation Covid-19 considerations Condition of records Cost bid ..................................................................................................................................... 24 Attachment A: Government clients served Attachment B: Affirmation and Authorization - -i- February 23, 2022 East Valley Water District 31111 Greenspot Road Highland, CA 92346 Dear Evaluation Committee: We are pleased to respond, on behalf of Rogers, Anderson, Malody & Scott, LLP, (RAMS) to your request for a proposal regarding professional auditing services. As a recognized industry leader and innovator, our goal for the past 74 years has been to provide honest, objective and high-quality results to all our clients, including governmental organizations such as yours. Our success in these efforts is witnessed by the continued organic growth of our firm and our list of long-term clients, some we have served for over 20 years. At RAMS, we are committed to achieving the highest quality audit possible. We understand the complexity of performing governmental audits and that is why we have a dedicated team of auditors that possess the specialized knowledge and experience to help ensure our audits are planned and executed in a way that maximizes audit efficiency and effectiveness and provides you the highest quality services. We are aware that the East Valley Water District (the District) will be reviewing other proposals during this process, but we believe that RAMS would be an exceptional choice for the audit for the following reasons. Our firm:  Utilizes Teammate Analytics, a suite of more than 200 Computer Aided Audit Tools (CAATs). This software empowers our audit teams with the ability to perform powerful, meaningful data analysis which builds upon our other robust, substantive audit procedures. This value-added service also helps to identify specific transactions or amounts which may be indicative of fraud.  Performs an intelligent, risk-based audit (using our CAAT) which enables us to focus on key audit areas allowing us to become more efficient resulting in a higher quality audit at a reasonable fee.  Currently provides auditing services to over 70 governmental agencies and not-for-profit organizations, including over 35 special districts and 30 cities, most of which have enterprise activities.  Developed a comprehensive remote working environment for our audits. All our staff currently have the most advanced tools for working remotely in an effective and efficient manner allowing us to still provide a quality audit. Our ultimate goal is to continue to meet your needs, but in a safe environment.  Has an established reputation in the governmental and not-for-profit accounting and auditing community for providing excellent, timely service with high quality reporting to our clients. 735 E. Ca rneg ie Dr. Suite I 00 San Bernardino. CA 92408 909 889 0871 T 909 889 536 1 F rarnscpa . net PARTNERS Terr-y P Shea, CPA Scott W Manno. CPA. CGMA Leena Sha nbha g. CPA MST. CGMA Bradfercl A Welebw. CPA. MBA CGMA Jenny W Liu. CPA. MST Brenda L. Od le, CPA. MST (P,1n11er Emencus) MANAGERS/ STAFF Ga1·denya Duran. CPA CGMA Brianna Schu ltz. CPA. CGMA Seong-Hyea Lee. CPA. MBA Eve lyn Morentin-Barcena. CPA Ve ronica Hernandez. CPA Laura Arvizu. CPA X inlu Zoe Z han g. CPA. MSA John Ma ldonado. CPA MSA Thao Le. CPA. MBA JuliJ Rodnguez Fuentes, CPA MSA MEMBERS Amencan In stit ute of Certified Pub l ic Accountants PCPS The A /CPA Allic111re {01 CPA Firms Gove,nmental Audit Quality Cen te, Emp lo yee Benefit Plan Audit Q11nl1ty Ce11te1 Ca lifornia Soc iet y of Certifi ed Publ ic Accountants Proud Member of All iottGlobalAlliance·· ROGERS , ANDERSON , MALODY & SCOTT , LLP CERTIFIED PUBLIC ACCOUNTANTS. SIN CE 1948 STAB ILITY. ACCURACY . TRUST. -ii-  Is committed to helping you meet all reporting/auditing deadlines, resolving any issues encountered during your audit (e.g., accounting or auditing, new pronouncements, etc.), and providing you with quality audit services.  Understands the audit process can be a stressful experience for you and your staff; we understand that you will have other commitments and your regular workloads during the audit. We make every effort to ensure the audit process, from the interim fieldwork to the preparation of any required financial reports, will be as trouble-free as possible for you and your staff. We accomplish this by comprehensively planning the audit and utilizing our staff and audit technologies in the most efficient and effective manner while keeping disruptions and miscommunications to a minimum.  Has audit team members that are personable and easy to work with, yet still focused on the audit. Through open and responsive communication with all parties involved in the audit process, we work to have the most efficient audit possible by minimizing operational distractions of your staff, while maximizing quality service.  Has an extensive internal quality control review process to ensure your financial reports meet the highest standards. In addition to the preparation of financial reports by the engagement team and reviewed by the engagement manager, each report is also examined by 2 partners and at least 1 professional proofreader.  Has assisted many of our clients with the preparation of their Annual Comprehensive Financial Reports, and all our clients that have submitted their reports for the Government Finance Officers Association (GFOA) or California Society of Municipal Finance Officers (CSMFO) awards have received the awards. Our participation as a GFOA reviewer also indirectly benefits our clients in the quality review process.  Believes that our fee estimate provides a fair and reasonable investment, commensurate with level of service provided and the experience of the audit team members. While we may not be the lowest bidder, that is not our objective. We focus on delivering the best value and price our prospective engagements accordingly.  Is a local Southern California firm. All our employees live, work, and shop in the region, allowing our local cities to benefit from our sales and property taxes. As you will see from our proposal, it was prepared in a clear, concise and simple manner in accordance with the request for proposal. We feel our firm, staff and reputation as a leader in governmental auditing exceeds the need for the excess information you may see in other proposals. Rogers, Anderson, Malody & Scott, LLP is properly licensed to practice in California, including all the assigned professional staff to the engagement. Mr. Welebir (CA License #92181), Partner, and Mr. Manno (CA License #80428), Partner are authorized to represent the firm, are empowered to submit the bid and authorized to sign a contract with the District. We understand the work to be done as listed in the section of this proposal titled Services to be provided. This is a firm and irrevocable offer for sixty (60) days. We can be reached at: 735 E. Carnegie Drive, Suite 100, San Bernardino, CA 92408, (909) 889-0871, bwelebir@ramscpa.net or smanno@ramscpa.net. Thank you for the opportunity to present our proposal to the District. We will be committed to exceeding your expectations of an auditor and believe this proposal provides you with information about our firm, the service team members and our customized audit approach. We look forward to having a long and mutually beneficial relationship with the District. Please feel free to contact us if you have any questions regarding this proposal. Respectfully yours, ROGERS, ANDERSON, MALODY & SCOTT, LLP Scott W. Manno, CPA, CGMA Partner ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -1- Scope of work Services to be provided The District desires the auditor to express an opinion on the fair presentation of the financial statements for the following: the East Valley Water District and the North Fork Water Company in accordance with generally accepted accounting principles. We will be committed to meeting any agreed upon time frames. In addition, we shall:  Apply certain limited procedures related to Management’s Discussion and Analysis and Required Supplementary Information and provide an “in-relation-to" report on the combining and individual fund financial statements and supporting schedules, if applicable.  Provide opinions as to the compliance with the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (OMB Uniform Guidance). RAMS is to provide an "in- relation-to" report on the Schedule of Expenditures of Federal Awards based on the auditing procedures applied during the audit of the financial statements.  Prepare the Annual Financial Transaction Report (currently we utilize a sub-contractor for most of these). Our audit(s) will be in accordance with:  Generally Accepted Auditing Standards as promulgated by the American Institute of Certified Public Accountants, including requirements found in the most recent AICPA audit guide Audits of State and Local Governments.  Government Auditing Standards issued by the Comptroller of the United States of America.  Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (OMB Uniform Guidance).  Minimum Audit Requirements and Reporting Guidelines for Special Districts as prescribed by the State Controller’s Office.  Any other applicable standards for other items outlined in the Scope of Work to be performed and/or reports to be issued. Reports to be issued:  A report on the fair presentation of the financial statements in conformity with GAAP.  A report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards (material weaknesses or significant deficiencies).  A report in compliance with requirements applicable to each major federal program and internal control over compliance in accordance with the Uniform Guidance.  Prepare Management Letter that includes significant and less significant (i.e., reportable and non- reportable) recommendations for improvements to internal control.  We will issue reports to those charged with governance (SAS 114 letters) as required by auditing standards. RAMS will also perform the following:  Make an immediate, written notification of all irregularities and illegal acts or indication of illegal acts of which we become aware to the following: District Manager and District Attorney. ·~AICPA GAQC Member mm 11111 ROGERS, ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SIN CE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -2- Specific audit approach Engagement approach Our engagement approach for your audit will be developed, in part, by using established goals which will enable measurement of the audits progress by the engagement partner and lead auditor. This involves frequent communication between the partner and the engagement team to ensure that all audit objectives are achieved in accordance with our goals and that any issues which may arise are communicated and dealt with on a timely basis. In addition, our in-depth knowledge and expertise in governmental accounting and auditing has allowed us to identify key audit and accounting risks in the government environment. More importantly, the approach provides for a complete reassessment of the control environment in each year's audit and thus enables us to respond to any needed risk assessment changes. Our engagement approach has been developed and refined over many years. The foundation of our approach revolves around the following:  Knowledge and experience. We have been auditing governmental entities like the District, both large and small, for over 74 years. This experience has allowed us to gain in-depth knowledge of the governmental environment which in turn allows us to perform a more efficient and effective audit. It also enables us to perform detailed risk assessment procedures allowing us to identify significant audit risk areas within the District and its control environment.  Intelligent design: As discussed later in our proposal, all our audits are designed to be intelligent using our powerful audit software/data analytic tools (Engagement and Teammate Analytics). This allows us to analyze large amounts of data in seconds increasing both the efficiency and, more importantly, the effectiveness of all our audit engagements.  Oversight. Professional judgment is not developed overnight. Our partners, managers and supervisors have been deeply involved in governmental audits on a continuous basis for most of their professional careers. By having direct partner and manager oversight, we can design audit strategies that result in effective and efficient audits.  Timeliness. Deadlines are not just “dates” to us, they are professional commitments. All required deadlines will be met.  Open communication. Open lines of communication with all parties (the engagement team members and District Management and staff) throughout the audit process helps to eliminate “surprises.” Proper planning and proper use of experienced engagement personnel tend to provide for an effective and efficient audit process. Consequently, inefficiencies, disruptions, and lack of understanding are kept to a minimum.  Availability. All engagement team members are available throughout the year for any questions or additional consultation. District staff will have direct access to the partner, manager, and other supervisory staff at all times during the engagement, as well as after.  Cost effectiveness. Our customized audit approach and procedures and our experienced auditors help to reduce your overall audit costs while still providing an effective audit and high-quality reports. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -3- Specific audit approach (continued) As indicated in the previous section of the proposal, the overall objective of the engagement with the District is to conduct an audit of the financial statements in accordance with required auditing standards and the expression of an opinion(s) on those financial statements. Beyond that initial objective, we believe that our engagement approach provides certain other value-added characteristics, at no additional cost, that will benefit the District over the long-term:  All our audits are designed to be performed in an efficient and effective way to minimize disruption to the office operations.  We offer practical observations and recommendations relating to internal control issues, implementation of accounting standards and the policies and procedures regarding both.  We identify opportunities for operating efficiencies which can be used to decrease operating costs of the District. Audit approach and proposed audit segmentation The following is a summary of the audit team’s audit approach for the engagement. The audit will be divided into the following segments: Segment 1 - Interim testing - planning, pre-audit administration, and internal control testing During this phase of the audit, our principal objectives will be to gather information about the District and its environment, including its internal control over financial reporting. To achieve the desired objectives of this phase of the audit, we will:  Meet with the District’s staff to determine convenient dates in which we can begin our audit and to discuss the assistance to be provided by the District’s staff.  Hold brainstorming sessions with engagement team members to discuss the susceptibility of the District’s financial statements to material misstatement and fraud.  Review and evaluate the District’s accounting and reporting processes by reviewing the prior year's audit workpapers, any District-prepared documents such as budgets, in-house financial reports, policies and procedures manuals, minutes of governance meetings, etc., and by using various analytical procedures. Analytical procedures will enhance our understanding of the District and will help us identify areas that may need further assessment and additional testing.  Review and retain copies of any pertinent local, state and federal statutes, regulations, or charters that apply to the District.  Evaluate the design of controls that are relevant to the audit by obtaining a thorough understanding of the District’s internal controls over financial reporting and compliance by documenting key internal control components, utilizing questionnaires, walkthroughs, inquiring of the District’s personnel, and observing and reviewing key supporting documentation (a more thorough explanation of this process is discussed later in the technical proposal).  Test controls, if control risk is to be assessed below maximum, by selecting a sample of transactions within the audit area being tested and reviewing supporting documentation to determine whether the relevant controls are in place and functioning properly.  Document and review with management, any findings noted during the testing of internal controls and provide a preliminary management letter that will include our recommendations for improving any weaknesses in operations. The letter will also include suggestions for improving the efficiency of the District’s operations. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -4- Specific audit approach (continued)  Utilize our powerful audit data analytic software allowing us to analyze large amounts of data in seconds and focusing on areas/transactions that are red flagged. In addition, we will perform the following procedures related to IT General Controls that “touch” financial data:  Security access (including physical) controls: evaluate the general system security settings and password parameters; evaluate the process for adding, deleting, and changing security access; evaluate the access capabilities of various types of users; evaluate access controls to networks and financial applications; evaluate access controls related to data files; and evaluate physical access to networks, servers, etc.  Computer operations: Evaluate backup and recovery processes and review processes of identifying and handling operational problems.  System development and system changes: Evaluate processes related to system development and system changes (if applicable).  Application testing: We will determine if the testing of application controls is deemed necessary based on our professional judgment in the planning stages of the engagement. This phase of the engagement for the audit will be performed by the audit supervisor and two/three staff accountants with direct supervision by the audit manager and partner. Segment 2 - Year-end testing - substantive testing During this phase of the audit, our principal objectives will be to assess the risk of material misstatement at the financial statement level and specific assertions, design overall responses to assessed risks and further audit procedures, perform substantive tests, and complete the audit and evaluate audit findings, if applicable. To achieve the desired objectives of this phase of the audit, we will:  Identify significant risks and develop a detailed audit plan using the results in Segment 1.  Design substantive tests of account balances designed and modified specifically for the District’s operations and assessed level of risk. Substantive procedures will consist of testing material balance sheet accounts, material revenue and expenditure/expense accounts along with various analytical procedures as deemed necessary. In addition, various accounts may be confirmed with outside parties (cash, investments, etc.).  Determine whether our testing supports the assessed level of risk initially assigned at the financial statement level and at the assertion level. If any proposed audit adjustments are noted during this phase, we will discuss and explain them, in detail, with the appropriate level of management prior to posting. This phase of the engagement for the audit will be performed by the audit supervisor and two/three staff accountants with direct supervision by the audit manager and partner. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -5- Specific audit approach (continued) Segment 3 - Reporting - report preparation/audit conclusion (workpaper review) During this phase of the audit, our principal objectives will be to evaluate whether the financial statements, taken as a whole, are free from material misstatement and form an opinion(s) and issue our report. To achieve the desired objectives of this phase of the audit, we will:  Determine whether, based on our substantive testing and other procedures, the financial statements, taken as a whole, are free of material misstatement. This will provide the basis for our opinion(s).  Review all audit workpapers to ensure that the audit was performed in accordance with the required standards (GAAS, GAGAS, etc.) and prepare drafts of all required reports by the agreed-upon dates.  Conduct an independent review of the financial statement draft by the engagement’s quality control partner and issue all reports by the agreed-upon dates. This phase of the engagement will be performed by the audit supervisor and one staff accountant with direct supervision by the audit manager and partner. In addition, the engagement’s quality control partner will perform a detailed quality control review of the financial statements. The above procedures are a general list of procedures to be performed. After our initial review of the District and our detailed risk assessment, we will customize the engagement and gear it towards the needs of the District and the audit itself. In doing so, we will determine which procedures to perform relative to our risk assessment. All our audits are customized to each entity, helping to ensure a complete, effective, and efficient audit. The foundation of the above approach is based on open communication coupled with a strong knowledge of the District's operations and detailed planning at the initial stages of the audit. Our firm is dedicated to performing a timely audit engagement. Prior to the start of the audit, we will meet with District staff and decide on adequate timeframes, agreed upon by both the District and us, for the performance of the audit and the release of the financial statements. We will dedicate the necessary resources to meet any agreed upon time frames. Level of staff and approximate number of hours assigned to each segment Segment Partner Manager Supervisor Staff Total Segment 1 4 4 14 49 71 Segment 2 7 6 22 65 100 Segment 3 9 5 19 16 49 Totals*20 15 55 130 220 * = only includes District audit hours Sample sizes Our sample sizes will be determined in accordance with the AICPA's Audit and Accounting Guide, Audit Sampling, and will be selected using professional judgment as permitted by Statement on Auditing Standards. Our methods are designed to provide the most audit coverage without expending excess time. Our sample sizes will depend upon our preliminary assessment of control risk, our planned substantive testing and analytical procedures as well as our professional judgement. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -6- Specific audit approach (continued) We utilize our Computer Aided Audit Tools (CAAT) software, Teammate Analytics, to draw our audit samples. The software allows us to generate random samples, systematic samples, stratified samples, attributes samples as well as monetary unit samples (also called probability-proportional-to-size or dollar unit sampling). Intelligent audit technology Our audits are designed to be intelligent using our powerful audit software tools (Engagement and Teammate Analytics). In addition, all audit team members are linked to each other using wireless connections which enables them to share information at an almost real-time speed. Below are some of the benefits of our audit technologies:  We utilize Teammate Analytics, a suite of more than 200 dynamic Computer Aided Audit Tools (CAATs). This allows us to analyze large amounts of data in seconds. Using data received directly from the District, we can perform the following: search for duplicate checks, detect transactions occurring on holidays/weekends or during unusual hours, perform Benford’s Law analysis, and identify instances when a vendor has issued multiple invoices with sequential references along with many other tests. The software empowers our audit teams with the ability to perform powerful, meaningful data analysis which will build upon our other value-added services.  We can create our own analytical schedules allowing for easy analysis of current balances to prior year balance, current vs budget balance, thus reducing significant District staff time.  Once your trial balances and financial statements are entered into our software, we can observe your financial statements in the field allowing us to notice any variances and address them immediately.  We link the financial statement schedules directly to our audit software trial balances, and as a result, we can provide the District with fund financial statements almost immediately after importing the trial balances.  We can provide the District with our audited trial balances which show the coding of the financial statement schedules for ease of review for District staff. These reports show each account coded to a specific financial statement line item/function as well as journal entries posted during the audit.  We have the capability to perform effective and efficient audits remotely as well. Analytical procedures In order to properly utilize analytical procedures, industry background and knowledge are needed. With our firm’s long history and qualified staff, we believe we have the necessary knowledge and experience to effectively apply analytical procedures. We will utilize analytical review procedures throughout our audit of the District.  During the interim phase of our audit, we will compare current and prior year unadjusted balances to determine which areas may need additional analysis; we will also compare current year actual amounts to the District’s annual budget (both original and adopted).  During the final phase of our audit, we will perform procedures like those mentioned above, as well as compare certain financial ratios for current and prior years. We will also conduct certain “reasonableness” tests. Any significant variances are investigated further through inquiry and other substantive testing as deemed necessary until resolved to our satisfaction.  Finally, after we have completed our fieldwork, we will compare current and prior year audited balances, keeping in mind expected relationships obtained from our knowledge of the District, similar entities and the general economic environment. In addition, we may choose to use various other analytical techniques such as trend analysis, etc. Unlike other audit firms, we use analytical procedures to supplement our substantive testing, not supplant them. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -7- Specific audit approach (continued) Understanding of internal control over financial reporting Our approach to obtaining an understanding of the District’s internal control over financial reporting will be performed in accordance with professional standards as promulgated by the American Institute of Certified Public Accountants -- our understanding will include the Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. We will use customized procedures which we have developed internally to evaluate your internal control systems. By combining our customized procedures and our detailed knowledge of the District and its environment, we will be able to provide constructive feedback in areas we feel need improvement. In addition to our customized procedures, we will also perform the following: Control Environment. Through inquiry of the District’s personnel, prompted by questionnaires, personal knowledge, and review of the minutes of the governing body meetings, we will obtain an understanding of management’s and the governing body’s attitudes, awareness, and actions concerning the control environment, focusing on the substance of the controls rather than their form. Risk Assessment. Through inquiry of the District’s personnel and the use of questionnaires, we will obtain sufficient knowledge of the District’s risk assessment process to understand how management considers risks relevant to financial reporting objectives and decides upon actions to address those risks. This will include understanding how management identifies risks, estimates the significance of these risks, assesses the likelihood of their occurrence, and relates them to financial reporting. Control Activities. Certain control procedures will be documented during our analysis of the control environment and the accounting system. However, many specific control procedures will still need to be documented that will focus primarily on the District’s major transaction cycles. As mentioned above, we will test the District’s control procedures on which we intend to rely on for safeguarding assets from unauthorized use or disposition and detecting/preventing unauthorized transactions. Any flow charts, organizational charts and any other manuals, programs, and financial and management information systems will be analyzed during this process. Information and Communication. Through inquiry of the District’s personnel, we will identify the major types of transactions engaged in by the District. We will become familiar with the treatment of those transactions, including how the transactions are initiated, the related accounting records, and the manner of processing the transactions. Finally, we will obtain an understanding of the District’s financial reporting process used to prepare financial reports, including the approaches used in making accounting estimates and disclosures. Monitoring. Through inquiry of the District’s personnel and the use of questionnaires, we will obtain sufficient knowledge of the major types of activities the District uses to monitor internal control over financial reporting. We will also determine how those activities are used to initiate corrective actions. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -8- Specific audit approach (continued) Approach in determining applicable laws and regulations We understand the importance of laws and regulations in planning an audit of a local governmental entity and design all our audits to ensure we test transactions for compliance. As part of our audit process, our audit team will obtain an understanding of the laws and regulations that will have a direct and material effect on the District’s financial statements. In determining which laws and regulations are applicable to the District’s financial statement audit, we will consult the following sources:  AICPA Audit and Accounting Guide, Audits of State and Local Governments  California Government Code (investments, GANN limit requirements, etc.)  Applicable State of California laws  U.S. Government Accountability Office’s Government Auditing Standards (The Yellow Book), latest revision  Applicable contracts/grants of the District  Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (OMB Uniform Guidance) After consulting the applicable sources, we will design our audit to provide reasonable assurance of detecting material instances of noncompliance while continuing to refer to the applicable compliance guideline to ensure changes in compliance are not missed. Effect of COVID-19 on our audits The COVID-19 pandemic led to most of our audits being performed remotely in 2021. We were highly flexible with our clients and were able to perform almost all our audits remotely unless the clients requested a limited staff presence on-site. No matter how the pandemic continues to develop in California, we are prepared and able to continue serving our clients remotely, and even on-site with the appropriate precautions. Auditing in a remote environment The availability and use of technology has had a significant impact on the accounting and auditing profession, allowing us to provide professional services across longer distances and timelier than ever before. We have continued to evolve our ability to serve our clients remotely throughout the COVID-19 pandemic and have experienced new efficiencies for both auditor and auditee. We anticipate continuing to perform substantially all our audit work remotely and will work with the District to maximize the remote efficiencies using technology. If the District would like members of the audit team on-site, we will work with District management on determining an acceptable staffing level. We maintain regular and routine contact with our clients throughout the audit planning, fieldwork, and conclusion phases of the audit with the use of email, phone calls, secure portals, video conferencing, project tracking schedules, and any other means necessary to ensure the timely completion of the audit by any agreed-upon deadlines. Our audit team is very responsive to our clients and we encourage our clients to connect with us throughout the year for any matters that may affect the audit or of a general accounting nature. We have found this to be mutually beneficial for both our clients and the annual audit work. Remote auditing has many benefits some tangible, as listed above, others intangible. In performing remote audits, we are bettering our employee’s quality of life by reducing wasted time, reducing traffic congestion on our local freeways while also helping to improve Southern California’s air quality. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -9- Specific audit approach (continued) Proposed audit timing  Auditor transition: Meet with prior auditor to review workpapers.  Entrance conference to meet with management for pre-audit planning.  Preliminary risk assessment procedures. Anticipated timing of each segment May/June September October  Obtain an understanding of systems, internal controls, and current-year issues.  Assess and evaluate design and implementation of key internal controls (including IT related).  Perform tests of internal controls as needed.  Identify control deficiencies  Perform detailed risk assessment procedures.  Draft internal control comment letter.  Develop detailed audit plan - provide management with a detailed listing of items needed to perform the audit, including the timing of when items are needed.  Perform substantive audit fieldwork, including substantive analytical procedures.  Consider whether audit evidence is sufficient to form an opinion.  Conduct exit conference with management to discuss proposed entries, internal control issues, etc.  Determine whether, based on our substantive testing and other procedures, the financial statements, taken as a whole, are free of material misstatement.  Review all workpapers.  Evaluate financial statements and note disclosures.  Perform final analytical procedures.  Draft required reports.  Issue final required reports by or before agreed upon date.  Present to governing body as needed. Segment 1 - Planning/internal control Segment 2 - Substantive testing/analysis Segment 3 - Report preparation/work paper review Audit planning ·~AICPA GAQC Member mm 11111 ROGERS, ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SIN CE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -10- License to practice in California Rogers, Anderson, Malody & Scott, LLP is licensed to practice in the State of California. Our key professional staff, which includes the partners, managers, and supervisors, are all certified public accountants licensed to practice in the State of California and follow all applicable Board of Accountancy standards. Independence Rogers, Anderson, Malody & Scott, LLP is independent of the District and any component units, as defined by general standard number two of the generally accepted auditing standards, and by the second general standard for government auditing in the U.S. Government Accountability Office’s Government Auditing Standards. We have not had any professional relationships with the District within the past five (5) years. Firm qualifications and experience About our firm We are a local firm founded in 1948 and located at 735 E. Carnegie Drive, Suite 100, San Bernardino, California. We provide a full range of services as expected of a full-service accounting firm. We are one of the oldest, most trusted and respected CPA firms in Southern California, with over 73 years of public practice experience, specializing in governmental agency and not-for-profit organization auditing, accounting, and management advisory services. Over sixteen thousand hours per year are devoted to this area of our practice, which includes cities, redevelopment successor agencies, water districts, other special districts, not- for-profit corporations, and joint power authorities. We do not use our government accounting and auditing practice as “fill work” for the firm, it is one of our primary focuses thus allowing us to provide quality services to local governments. We understand your desire engage auditors that have a thorough understanding of the ever-changing complex accounting and compliance issues confronting governments today. Our firm has an extensive history of governmental accounting and auditing. During that time, we have gained valuable experience, acquired an in-depth knowledge of, and obtained the technical expertise needed to perform high quality governmental audits. This expertise has enabled us to provide exceptional, high quality service and to provide solutions at fees we feel represent our value to our clients. In addition, we use our participation in various industry associations to continuously update our knowledge with respect to issues relating to governmental accounting, auditing, and operations. Any insight we gain is immediately passed on to our clients if we feel they will benefit from it. Our firm has a total staff of thirty-nine people, which includes fifteen certified public accountants. The staff consists of five partners, three managers, ten supervisors/senior accountants, sixteen staff accountants, and five support staff. The audit staff consists of twenty-one members who devote over 80% of their time to municipal engagements. The engagement team assigned to the District’s engagement will consist of the following full-time staff: one audit partner, one audit manager, one audit supervisor/senior, and two to three staff auditors. All personnel are out of our San Bernardino office. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -11- Firm qualifications and experience (continued) Range of services Our firm provides various other services in addition to auditing services to governmental entities, including:  Internal control agreed upon procedures  Finance director and accounting support services  Study and evaluation of financial condition and fiscal policies  Transient Occupancy Tax agreed upon procedures  Franchise (refuse, cable) agreed upon procedures  Accounting policies and procedures  Cash management studies  Financing and public bond offering assistance  Franchise agreement assistance (ambulance, cable, television, refuse, etc.) In addition, the firm provides accounting, auditing, attest, and consulting services to for profit and not-for-profit entities. We also provide tax preparation and tax consulting services to individuals, corporations, and partnerships. We provide our municipal audit clients tax consultation at no extra charge. Governmental Audit Quality Center As a member of the American Institute of CPAs Governmental Audit Quality Center (Center), we are committed to adhering to the highest quality standards by voluntarily agreeing to the Center membership requirements, which include designating a partner responsible for the quality of our governmental audit practice, establishing quality control programs, performing annual internal inspection procedures, and making our peer review report findings publicly available. At RAMS, our goal is to continue to enhance our quality initiatives within our governmental audit practice to deliver the highest quality audit services possible. In addition, the Governmental Audit Quality Center provides access to comprehensive resources that will assist us in further enhancing the quality of your audit. The Center membership provides us with timely information on a variety of technical, legislative, and regulatory subjects that we can in turn apply to your audit to help ensure compliance with the appropriate standards and changes in regulations which we pass on to our clients. Single audit experience Most of our municipal clients, and some of our other governmental and not-for-profit clients, have been subject to an audit in accordance with Uniform Guidance. We recently performed single audits for the following entities: Elsinore Valley Muni. Water District City of San Bernardino City of El Cajon City of La Mesa City of San Marcos City of West Covina City of Poway City of Twentynine Palms City of Fillmore City of Woodlake City of Exeter City of Rosemead City of La Verne City of Hawthorne Our specialized Single Audits Team is led by Managers and Supervisors with Intermediate and Advanced Single Audit Certifications issued by the AICPA guaranteeing a successful and thorough engagement. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -12- Firm qualifications and experience (continued) ACFR preparation We have extensive experience in the preparation of Annual Comprehensive Financial Reports (ACFR). For the fiscal years ended June 30, 2019 and 2020, our staff prepared over 20 ACFR’s, with each entity receiving the Certificate of Achievement for Excellence in Financial Reporting from the GFOA. For the fiscal year ended June 30, 2021, again, our staff prepared 29 ACFR’s for our clients for submittal to the GFOA. In addition, we have helped many cities and special districts develop their first year’s report for submittal. Two of our audit partners and four of our supervisory staff are technical reviewers for the GFOA award program. In addition, we review all the ACFR’s for compliance with the GFOA certificate program checklist, as well as addressing any prior year comments, if applicable, to insure they have been addressed. Engagement quality control We have an extensive internal quality control review process to ensure your audit meets the highest standards. In addition to the preparation of financial reports by a senior member of the engagement team, each report is reviewed by the engagement manager/supervisor and then is examined by the engagement partner. Subsequently, a technical review is then performed by the engagement Quality Control partner along with being proofread by at least one professional staff. In addition, all audit workpapers are reviewed by the in-charge auditor and the partner in-charge of the engagement. Equal Opportunity Employer Our firm is an equal opportunity employer and is committed to providing employment opportunities to all qualified persons regardless of race, color, sex, religion, national origin or handicap. Our staff represents a wide range of cultures and ethnic backgrounds. We provide opportunities for advancement for all staff based on ability, skill and desire to advance. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -13- Firm qualifications and experience (continued) External quality control review As a member of the AICPA Private Companies Practice Section, our firm has participated in the “Peer Review” program since 1993 and has been examined every three years since that date by an outside, independent firm of certified public accountants. Participation in this program ensures that our engagements, firm policies, and audit procedures meet the standards of the AICPA, the Yellow Book, and the California State Board of Accountancy. Throughout our participation in this program, the firm has only received pass ratings from the peer reviewers. During each review, an independent firm reviews our policies and procedures and then inspects a representative sample of engagement workpapers and reports, including governmental entities and engagements subject to the Uniform Guidance. For the year ended November 30, 2020, our firm received a rating of pass (the highest rating possible) which indicates our auditing practice is suitably designed and complied with to provide reasonable assurance of performing and reporting in conformity with applicable standards. The results provide confirmation that the custom audit approach and procedures we use are technically sound and in compliance with applicable standards. Disciplinary action The firm has never had any disciplinary action taken or pending against it with state regulatory bodies or professional organizations, nor has it ever had any pending or settled litigation, civil or criminal investigations. In addition, we are not aware of any federal or state desk reviews or field reviews of its audits during the last three years. Our firm does not have a record of substandard work. In addition to the external quality control review, our firm performs in-house monitoring procedures, which mirror the outside peer review procedures, over our audit and attest engagements annually. ·~AICPA GAQC Member Grant Bennett Associates A "UlflSSIOHAl Co,u,c:aATK>N R•port on th• Fi rm's System of Quality Control Ju ne 4 , 202 1 To the Partners of Roger~ And rsol\ Malody & ScotL LLP, and the Peer Review Committee of the California Soci ety o f CPAs We have reviewed the system of quality cont rol for the accounting and audit ing pract ice of Rogers, Anderson, M ody & ScotL LLP (t he firm) in effect for the yea, ended November 30, 2020. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established b)' the Peer Review Boa rd of t he A merican Institute of Certified Public Accountants (Standards). A summary of the nature. objectives, scope, hm 1ta tlons of, and the procedures performed in a System Review as described in the Standards may be found at www a,cpa .org/prsummary. The summa,y also includes an e•planatlon of how engagements Identified as not performed or reported In conformity wi t h applicable professional standards, if any, are evaluated by a peer reviewer to determine a peer review rat ing. 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 wi t h applicable professional standards i n all material respects. The fi rm Is also responsible for eva luating actrons t o p romptly r•m•diat • •ngagements deemed as not performed or reponed in confomiity with professional standards, when appropriate, and for remedi ting weaknesses in its system or quality control, if any. Peer Revl ew«'s Re.sponslbl lity Our responsibi lity is to express an opinion on the design of the system of quality cont rol and the firm's compliance therewith based on our review. Required Selections and Consld•ratlons Engagements se lected for review included engagements pe rformed under Government Auditing Standards, mcluding a compliance audit under t he Single Audit Act, and an audit of an employee benefit plan. As a part of our peer review, we considered reviews by regulatOf')' entitles as communicated by t he firm, if applicable, in determin ing t he nature and extent of our procedures. Opi ni on In our opinion, the system of quality control fa, the account ing and auditing practice or Rogers. Anderson, M ody & ScotL LLP In effect for t he year •nded November 30, 2020, has been suitably designed and complied with t o provide the firm with reasonable assurance of performing and ,eportlng in conformity with applicable professional standards In all material respects:. Firms can receive a rating or poss, pos.s with de(iciency(in) or fail. Rogers. Anderson. Malody & ScotL LLP has received a peer review rating of pass . GRAN T BENNETT ASSOCIATES A PROFESSION AL CORPORATI ON Ce rtified Public Accountants -10850 Gold Center Drive. Su ite 260 Rancho Cordova, CA 95670 916/922·5109 FAX 916/641-5200 Pr inceville, HI 96722 888/769· 7323 ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFI ED PUB LIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -14- Partner, supervisory, and staff qualifications and experience The quality of service you receive is dependent on the capabilities of the individuals assigned to the engagement, and the manner in which those personnel resources are organized to efficiently focus their abilities on providing you with the requested audit services. These professionals are highly trained and knowledgeable and have a thorough understanding of the environment in which governmental and not-for- profit entities operate. This experience is a critical component in providing the District with an effective and efficient audit. Our engagement team will provide significant experience coupled with an extensive, practical understanding of governmental accounting and auditing along with a broad business perspective. Each member will have access to a wide range of technical resources and knowledge bases which will enable them to provide the District with practical observations and effective solutions. Partner and supervisory staff involvement All partners and supervisory staff are working professionals and are actively and continually involved in all aspects of their engagements. We believe that partner and supervisory staff involvement in all areas of the audit is a key aspect of the overall audit process. This involvement includes being on-site for interim and year- end fieldwork, thus facilitating a proper, efficient, and effective audit, with minimal disruption of your staff. In addition, the time spent on-site by the partners and supervisory staff ensures they gain an understanding of the entire District’s accounting processes and procedures. This understanding will enable them to evaluate and develop opportunities for efficiency, as well as offer practical and functional advice for improving your accounting processes and procedures. All professionals on this engagement have worked on audits similar in nature to the District’s, therefore, the District will not have to train our engagement team. Staff continuity Continuity of audit staff is a principal concern with our firm. To retain our staff, we offer extremely competitive wages, opportunities for advancement, generous medical packages, a retirement plan, bonus opportunities, as well as educational benefits. Even with the benefits we provide, we realize we may lose staff at any given time. Knowing this, we plan to provide staff continuity from year to year, which is in the best interest of the District and our firm. Continuity ensures an orderly, efficient, and less disruptive audit experience. Since we cannot guarantee staff will remain with us, principal supervisory and management staff, including engagement partners, managers, other supervisory staff, and specialists, may be changed if those personnel leave the firm or are promoted. However, the District reserves the right to accept or reject replacements. We believe that due to the significant involvement of the partners on all our engagements, any staff transition would have a minimal effect on the audit efficiency and effectiveness of subsequent years. Continuing professional education Our team of auditor specialists stays current in this highly technical practice area by adhering to, and typically exceeding, the continuing professional education requirements of Government Auditing Standards as well as the State Board of Accountancy guidelines. All professionals at our firm participate in continuing professional education (CPE) programs, which are sponsored by various organizations including the Government Finance Officers Association, the American Institute of Certified Public Accountants, the California State Society of Certified Public Accountants, the California Society of Municipal Finance Officers and the Association of Government Accountants. Participation in these programs helps us to ensure that our clients are serviced with the best trained and most proficient government auditors and accountants available. In addition, we periodically provide in-house training taught by our partners and senior level staff using published resources. All staff are required to attend fraud and ethics training. It is our goal to provide our professional staff continuing education which exceeds the minimum standard of 80 hours over two years. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -15- Partner, supervisory, and staff qualifications and experience (continued) In accordance with our firm’s Quality Control document and Government Auditing Standards (GAS), all staff members who work on audits subject to GAS are required to complete CPE in accordance with GAS standards which require 24 hours directly related to governmental accounting and auditing. In addition to the required CPE, we also use the following to increase our technical knowledge: view the Governmental Audit Quality Center Annual Webcast Update and other relevant seminars and review monthly publications from the AICPA, the GFOA, and various other resources. We also attend conferences and seminars sponsored by the GFOA, California Society of Municipal Finance Officers, California State Society of Certified Public Accountants and the California Special Districts Association. Assigned personnel It is our goal to provide you with capable, competent, and personable individuals who offer an extensive background, not only in governmental accounting and auditing, but also in general business practices. By doing so, it allows us to offer practical solutions, as well as provide technical support. This enables you to stay at the forefront of governmental accounting and provides you with the support you need in dealing with the complex issues confronting entities such as yours. In addition, our engagement team has the managerial and supervisory experience to provide the District with a comprehensive audit of the highest quality, while still focusing on personal service. The resumes of the key engagement personnel assigned to the audit are presented below. The following individuals will be assigned to the engagement for the entire contract period (see staff Continuity section of this proposal): Scott W. Manno, CPA, CGMA - Partner, Engagement Partner Scott is a municipal audit partner with the firm and will be the engagement partner. He is licensed to practice as a certified public accountant in the State of California. He has been in public accounting for over 25 years specializing in serving local governments such as yours. As the engagement partner, he will be responsible for overall engagement quality, as well as ensuring that the engagement is performed in the most effective and efficient manner. Scott will directly oversee all engagement staff while assisting in planning and performing the engagement, as well as reviewing all work-papers prepared during the engagement, in addition to all required reports. Scott is a working partner and will be actively and continually involved in all aspects of the engagement. Terry Shea, CPA - Partner, Concurring Partner Terry is also a municipal audit partner with the firm. He is licensed to practice as a certified public accountant in the State of California. Terry has over 40 years of public accounting experience and has provided accounting, auditing, and consulting services for municipalities, special districts, water agencies, and various not-for-profit organizations. As the concurring partner, Terry will work directly with Scott in planning and performing the engagement. In addition, he will provide technical consultation for the engagement team. Brad A. Welebir, CPA, CGMA, MBA - Partner, Quality Control Reviewer Brad will be the Quality Control Reviewer. He is licensed to practice as a certified public accountant in the State of California. He has over 18 years of practical, governmental accounting and auditing experience. Brad will be responsible for the final quality control review of all released opinions and related reports. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -16- Partner, supervisory, and staff qualifications and experience (continued) Brianna Schultz, CPA, CGMA - Engagement Manager Brianna is a manager with the firm and is licensed to practice as a certified public accountant in the State of California. Brianna has over 12 years of experience in providing accounting and auditing services for municipalities, special districts, and various nonprofit organizations. As the engagement manager, she will work directly with the audit in-charge and partner, while supervising the engagement team during all phases of the engagement. In conjunction with the audit in-charge, she will also oversee the preparation of any required reports. Veronica Hernandez, CPA - Audit Supervisor Veronica is a supervisor with the firm. She is licensed to practice as a certified public accountant in the State of California. Veronica has over 6 years’ experience in providing accounting and auditing services for municipalities, special districts and various not-for-profit organizations. As an audit supervisor, Veronica will work closely with the engagement partner and manager and be responsible for planning the audit, supervising the staff assigned to the engagement, and performing reviews of all work-papers prepared for the engagement. In addition, she will also be responsible for the preparation of any required reports. Staff level accountants All staff accountants employed by us and working on governmental audits are qualified to perform such audits. Prior to “audit season”, our staff are subject to a rigorous training regimen in which we go over all aspects of our audit process and audit programs ensuring staff members have a solid foundation prior to starting fieldwork. Each staff member is encouraged to take on increased responsibility for engagements previously worked on. This enables our staff to grow on each engagement and allows them to continue to gain the skills and knowledge required to perform the audits. In summary, we want to emphasize the credentials of the above professionals who will be directly responsible for the quality of service that you will receive. Additionally, our audit team has another attribute that is very important, even though it is intangible -- the professionals assigned to the audits have previously worked together as a multi-disciplined team, thus ensuring a smooth, efficient, and effective audit. We are committed to allocating the necessary resources to ensure that we provide continuity of personnel throughout the term of our relationship with the District. Full engagement team resumes are provided as follows. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -17- Partner, supervisory, and staff qualifications and experience (continued) Engagement team resumes Scott W. Manno, CPA, CGMA Engagement Partner Professional experience Mr. Manno began his career with Thomas, Bigbie and Smith in 1995 after serving honorably in the United States Army. He spent six years with the firm primarily working on audits of municipalities, special districts and redevelopment agencies as well as various not-for-profit organizations. He joined Rogers, Anderson, Malody & Scott, LLP in July 2001. Currently, Mr. Manno serves as a technical reviewer for the GFOA ACFR Award program. Since 2010, Mr. Manno has been serving as a technical volunteer on the California Special Districts Association Audit Committee and is also on the Association’s fiscal committee providing accounting and fiscal program guidance. Also, Mr. Manno has done presentations on fraud. In addition, he is part of the California State Society of Certified Public Accountants Governmental Accounting and Auditing Committee which meets periodically to discuss current events, pronouncements, etc. Education/licenses Bachelor of Science degree from California State University, San Bernardino Certified Public Accountant - State of California Chartered Global Management Accountant - American Institute of Certified Public Accountants Related professional experience Partial listing of relevant governmental agencies served (*includes enterprise fund accounting): Western Municipal Water District East Valley Water District Crestline Village Water District Pine Cove Water District Beaumont Cherry Valley Water District Upper San Gabriel Muni. Water District Big Bear Area Regional Wastewater Agency Triunfo Water and Sanitation District West Basin Water District Helix Water District Mojave Water Agency Idyllwild Water District Chino Basin Desalter Authority Running Springs Water District Ventura Regional Sanitary District Rubidoux Community Services District Mr. Manno has completed over 170 hours of continuing professional education courses over the past three years of which the following select courses are relevant to this engagement:  Audits of State and Local Governments  Government Accounting and Auditing Update  OMB Supplement Addendum and Latest Covid-19 Professional affiliations Mr. Manno is a member of the following organizations:  American Institute of Certified Public Accountants (AICPA)  California Society of Certified Public Accountants (CalCPA)  Association of Government Accountants (AGA)  Association of Certified Fraud Examiners (ACFE)  Government Finance Officers Association (GFOA)  California Special Districts Association (CSDA)  California Society of Municipal Finance Officers (CSMFO) ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -18- Partner, supervisory, and staff qualifications and experience (continued) Terry P. Shea, CPA Concurring Partner Professional experience Mr. Shea began his career with Thomas, Byrne and Smith in 1981. He spent five years with the firm primarily working on audits of municipalities, special districts, redevelopment and other governmental agencies. He joined Rogers, Anderson, Malody & Scott, LLP in 1987 where he has completed governmental audits including municipalities and provided financial consulting services for various cities. Education/licenses Bachelor of Arts degree from California State University, Fullerton Certified Public Accountant - State of California Related professional experience Partial listing of relevant governmental agencies served (*includes enterprise fund accounting): Twentynine Palms Water District East Valley Water District Crestline Village Water District Pine Cove Water District Beaumont Cherry Valley Water District Upper San Gabriel Muni. Water District Big Bear Area Regional Wastewater Agency Triunfo Water and Sanitation District West Valley Water District Helix Water District Vista Irrigation District Idyllwild Water District Crestline-Lake Arrowhead Water Agency Running Springs Water District Ventura Regional Sanitary District Rubidoux Community Services District Mr. Shea served as the Interim Finance Director for the City of Perris from July 1998 to October 2001. He currently serves as the Contract Finance Director for one Riverside County city and one Los Angeles County city. Continuing professional education Mr. Shea has completed over 120 hours of continuing professional education courses in the past three years, of which, the following select courses are relevant to this engagement:  Foundations in Governmental Accounting  Governmental and Not-for-Profit Conference  Governmental Auditing Skills  Audits of State and Local Governments Professional affiliations Mr. Shea is a member of the following professional organizations:  American Institute of Certified Public Accountants (AICPA)  California Society of Certified Public Accountants (CalCPA)  Government Finance Officers Association (GFOA)  California Society of Municipal Finance Officers (CSMFO) ·~AICPA GAQC Member Ter Co Bae Certifie ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -19- Partner, supervisory, and staff qualifications and experience (continued) Brad A. Welebir, CPA, CGMA, MBA Quality Control Partner Professional experience Mr. Welebir joined Rogers, Anderson, Malody & Scott, LLP in 2004. He primarily provides audits and advisory services to governmental agencies, small to mid-sized businesses, and not-for-profit organizations. Mr. Welebir serves as a technical reviewer for the GFOA ACFR Award program. He also serves as the CalCPA Inland Empire chapter chair of the governmental accounting and auditing committee and as the representative for the chapter at the state committee. Education/licenses Master of Business Administration - Accounting Emphasis from California State University, Fullerton Bachelor of Arts in Business Administration from La Sierra University Certified Public Accountant - State of California Chartered Global Management Accountant - American Institute of Certified Public Accountants Related professional experience Partial listing of relevant governmental agencies served (*includes enterprise fund accounting): Riverside County Parks and Open Space District Mission Springs Water District Crestline Village Water District March Joint Powers Authority Beaumont Cherry Valley Water District Upper San Gabriel Muni. Water District Big Bear Area Regional Wastewater Agency Rubidoux Community Services District Crestline-Lake Arrowhead Water Agency San Bernardino Valley Municipal Water District Elsinore Valley Municipal Water District Idyllwild Water District Mojave Water Agency Continuing professional education Mr. Welebir has completed over 120 hours of continuing professional education courses in the past three years of which the following select courses are relevant to this engagement:  Governmental Accounting and Auditing Update  Single Audit Update  Auditing Fraud Risk in the Current Environment  Annual Conference Sessions  GAAP Update Professional affiliations Mr. Welebir is a member of the following professional organizations:  American Institute of Certified Public Accountants (AICPA)  California Society of Certified Public Accountants (CalCPA)  Government Finance Officers Association (GFOA)  California Society of Municipal Finance Officers (CSMFO)  California Special Districts Association (CSDA) ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -20- Partner, supervisory, and staff qualifications and experience (continued) Brianna Schultz, CPA, CGMA Audit Manager Professional Experience Mrs. Schultz began her career with Rogers, Anderson, Malody & Scott, LLP in July 2014, and had over three years’ experience with another public accounting firm serving the same industry. During her time with the firm, she has worked primarily on audits of municipalities, special districts and redevelopment agencies, as well as various non-profit organizations. Education Bachelor of Science degree from California State University, San Bernardino Certified Public Accountant – State of California Chartered Global Management Accountant – American Institute of Certified Public Accountants Related Professional Experience Partial listing of relevant governmental agencies served (*includes enterprise fund accounting): Beaumont-Cherry Valley Water District Elsinore Valley Municipal Water District Rubidoux Community Services District Costa Mesa Sanitary District San Bernardino Valley Municipal Water District Yucaipa Valley Water District Rossmoor Community Services District Rosamond Community Services District Mojave Water Agency Vallecitos Water District Valley Water Company Vista Irrigation District City of La Mesa* Pine Cove Water District City of El Cajon* City of Hawthorne* Mrs. Schultz obtained the AICPA’s Advanced Single Audit Certificate in 2019 and the Intermediate Single Audit Certificate in 2017. She served as the contract Interim Accounting Manager for the City of Glendora in 2016 and the Senior Accountant for the City of Rancho Cucamonga in 2015. Additionally, she is a reviewer for the GFOA ACFR Program. Continuing Professional Education Mrs. Schultz has completed over 100 hours of continuing professional education courses over the past two years of which the following select courses are relevant to this engagement:  COVID-19 Impact on Payroll and Payroll Fraud  Uniform Guidance Update 2021  What You Need to Know About the Changes to Yellow Book Professional Affiliations Mrs. Schultz is a member of the following organizations:  American Institute of Certified Public Accountants (AICPA)  California Society of Certified Public Accountants (CalCPA)  Government Finance Officers Association (GFOA)  California Society of Municipal Finance Officers (CSMFO) ·~AICPA GAQC Member B Ce Chart, ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -21- Partner, supervisory, and staff qualifications and experience (continued) Veronica Hernandez, CPA Audit Supervisor Professional Experience Ms. Hernandez is an Audit Supervisor with the firm. She has over 6 years’ experience in providing accounting and auditing services for municipalities, special districts and various nonprofit organizations. As an audit supervisor, she will work closely with the engagement partner and manager and be responsible for planning the audit, supervising the staff assigned to the engagement, and performing reviews of all workpapers prepared for the engagement. In addition, she will also be responsible for the preparation of any required reports. Currently, Veronica serves as a technical reviewer for the GFOA ACFR Award Program. Education Bachelor of Science degree from California State University, San Bernardino Certified Public Accountant – State of California Related professional experience Partial listing of relevant governmental agencies served (*includes enterprise fund accounting): Beaumont-Cherry Valley Water District Big Bear Area Regional Wastewater Agency Elsinore Valley Municipal Water District Rubidoux Community Services District Sativa Los Angeles County Water District United Water Conservation District Capistrano Bay Comm. Services District Valley Water Company City of Poway* City of Hawthorne* City of Fillmore* City of Beaumont* City of Fillmore* City of San Marcos* City of Moreno Valley* City of Redondo Beach* Continuing Professional Education Ms. Hernandez has completed over 100 hours of continuing professional education courses over the past two years of which the following select courses are relevant to this engagement:  Fiduciary Activities  For the love of Leases  GASB Updates  Lease Trilogy  Pandemic-Related Single Audit Issues and Other Single Audit Updates Professional affiliations Ms. Hernandez is a member of the following professional organizations:  American Institute of Certified Public Accountants (AICPA)  California Society of Certified Public Accountants (CalCPA)  California Society of Municipal Finance Officers (CSMFO) ·~AICPA GAQC Member Ver Au ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -22- References Entity:Elsinore Valley Municipal Water District Scope of work: Financial Audit/ACFR* Date: Year ending June 30, 2015 - present Service accounts:46,000 connections Operating budget:FY2022 operating revenue budget approximately: $96,458,000 Engagement partner :Mr. Scott Manno/Mr. Brad Welebir Total hours:350 Contact person:Mr. Robert Hartwig, Asst General Manager Admin Services, (951) 674- 3146, rhartwig@evmwd.net Address:31315 Chaney Street, Lake Elsinore, CA 92530 Entity: Beaumont Cherry Valley Water District Scope of work: Financial Audit/ACFR* Date: Years ending December 31, 2018 - present Service accounts:19,995 connections Operating budget:FY2022 operating revenue; $18,727,000 Engagement partner:Mr. Scott Manno Total hours:250 Contact person:Mr. William Clayton, Senior Finance and Administrative Analyst (951) 845-9581, william.clayton@bcvwd.org Address:560 Magnolia Avenue, Beaumont, CA 92223 Entity: Rubidoux Community Services District Scope of work: Financial Audit Date: Years ending June 30, 2016 - present Service accounts:5,880 connections Operating budget:FY2022 operating revenue approximately; $14,947,000 Engagement partner:Mr. Scott Manno Total hours:200 Contact person:Mr. Brian Laddusaw, Director of Finance, (951) 684-7580, bladdusaw@rcsd.org.org Address:3590 Rubidoux Blvd. Riverside, CA 92509 Entity: Rosamond Community Services District Scope of work: Financial Audit Date: Years ending June 30, 2015 - present Service accounts:5,000 connections Operating budget:FY2022 operating revenue; $10,040,000 Engagement partner:Mr. Scott Manno/Mr. Terry Shea Total hours:240 Contact person:Mr. Brad Rockabrand, Finance Director (661) 256-5812, brockabrand@rosamondcsd.com Address:3179 35th Street West, Rosamond, CA 93560 Entity: Crestline Village Water District Scope of work: Financial Audit Date: Years ending June 30, 1996 - present Service accounts:4,950 connections Operating budget:FY2022 operating revenue budget approximately: $3,597,000 Engagement partner:Mr. Scott Manno/Mr. Brad Welebir Total hours:250 Contact person:Mr. Nathan Statham, Municipal Finance & Accounting Consultant, (909) 338-1727 Address:777 Cottonwood Drive, Crestline, CA 92325 * = received GFOA award. See Attachment A for a listing of current and recent government clients served. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -23- Identification of anticipated potential audit problems Governmental Accounting Standards Board Statements (GASBS) implementation One potential problem could be the implementation of any future GASBS. With our deep understanding of governmental accounting and auditing, constant training, and broad resources, we do not anticipate any issues during a GASB implementation. Our approach to any GASB statement implementation would be as follows: gain a thorough understanding of the pronouncement; determine applicability to the District; if applicable, discuss the statement and how it will affect the District with District staff; and provide guidance to District staff on the accounting and financial reporting implications. Covid-19 considerations In addition, we will consider the following items related to the pandemic:  Any changes in internal control procedures due to District staff working remotely, staff reductions, including related IT changes.  Pandemic related grant funding (FEMA grants and CARES act funding received directly from the Federal government and amounts passed through from the State and/or counties). Condition of records Our proposed fee assumes the following: the District will be adequately prepared for the audit and the District’s financial operations and working trial balance will be consistent from year to year. If, after we receive the working trial balances, we notice there are excessive new accounts over the prior year; or if there are excessive subsequent journal entries; prepared by client workpapers do not agree to the working trial balances, there are new funds/functions within the District, etc., or other changes that necessitate a significant amount of time to address, we will need to come to an agreed upon change order to address any possible additional costs incurred by the firm. If the need for additional work comes to our attention, we will immediately notify District staff. If you choose to have us perform the additional work, then such work will be performed at the same hourly rates applicable to the audit and set forth in an addendum to the contract between the District and our firm. Management is also responsible for the implementation of new standards issued by the Governmental Accounting Standards Board. We will provide reasonable assistance in the preparation of the items noted herein, but any significant time needed to complete the financial statements will be billed separately. Our proposed fee is also dependent on all items requested at the pre-audit meeting being completed in the format requested or in a mutually agreed upon format and uploaded to the Engagement Organizer hosted by our firm. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -24- Cost bid In accordance with the Request for Proposal for Audit Services issued by the District, Rogers, Anderson, Malody & Scott, LLP hereby submits the following all-inclusive maximum cost proposal (fixed cost): Required items:2022 2023 2024 2025 2026 1. Financial Audit of the District 30,600$ 30,600$ 31,625$ 31,625$ 32,825$ 2. State Controller Office Report and submission 1,500 1,500 1,580 1,580 1,660 3. Travel - - - - - Sub-total Required Items 32,100 32,100 33,205 33,205 34,485 Optional items: A. Separate financial review report for North Fork Water Company 2,680 2,680 2,770 2,770 2,875 B. Single Audit* and related reports 5,075 5,075 5,250 5,250 5,450 C. Compilation of the Annual Report Document 3,500 3,500 3,680 3,680 3,870 D. Audit of internal controls**- - - - - E. Continuing Disclosure Annual Report Document 1,350 1,350 1,420 1,420 1,500 Sub-total Optional Items 12,605 12,605 13,120 13,120 13,695 Grand Total 44,705$ 44,705$ 46,325$ 46,325$ 48,180$ * = for the first major program, each additional major program $3,250. ** = Fees to be based on a determined scope of work and any reporting requirements. Rates for additional professional services: Position 2022 2023 2024 2025 2026 Partner 285$ 285$ 290$ 290$ 300$ Manager 175 175 175 175 180 Supervisor 145 145 150 150 155 Staff accountant 110 110 115 115 120 Fee for optional additional fiscal year For the fiscal year ended June 30, Fee for optional additional fiscal year For the fiscal year ended June 30, ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 EAST VALLEY WATER DISTRICT PROPOSAL FOR PROFESSIONAL AUDITING SERVICES -25- Cost bid (continued) As stated in our technical proposal, we believe our fee estimate provides a fair and reasonable investment, commensurate with level of service provided and the experience of the audit team members. While we may not be the lowest bidder, that is not our objective. We focus on delivering the best value and price our prospective engagements accordingly. However. we do not want fees alone to be an obstacle in the District's selection of their auditor. We would be happy to discuss and negotiate such fee issues and responsibilities with you. ·~AICPA GAQC Member ROGERS , ANDERSON, MALODY & SCOTT, LLP CERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948 Attachment A GOVERNMENT CLIENTS SERVED GFOA Government Client Years Served Awards Crestline Village Water District 04/30/96 to 04/30/21 Crestline-Lake Arrowhead Water 06/30/98 to 06/30/21 San Bernardino Valley Muni Water District 06/30/04 to 06/30/21 Elsinore Valley Municipal Water District 06/30/15 to 06/30/21 Yes Pine Cove Water District 06/30/10 to 06/30/21 Idyllwild Water District 06/30/11 to 06/30/21 Big Bear Area Regional Wastewater 06/30/12 to 06/30/21 Yes Mojave Water Agency 06/30/19 to 06/30/21 Yes Beaumont Cherry Valley Water District 12/31/17 to 12/31/20 Yes Rosamond Community Services District 06/30/15 to 06/30/21 Rossmoor Community Services District 06/30/05 to 06/30/21 Rim of the World Park & Rec. District 06/30/06 to 06/30/21 Heartlands Communications Fac Auth 06/30/07 to 06/30/21 Heartlands Fire Training Authority 06/30/07 to 06/30/21 Consolidated Fire Agencies 06/30/14 to 06/30/21 Successor Agency to the County of SB 06/30/14 to 06/30/21 Riverside County Habitat Con. Agency 06/30/15 to 06/30/21 Santa Ana Watershed Association 12/31/09 to 12/31/20 Capistrano Bay Community Services District 06/30/13 to 06/30/21 Ventura County Public Fin Authority 06/30/12 to 06/30/21 Nipomo Community Services District 06/30/16 to 06/30/21 Yes SBIAA 06/30/17 to 06/30/21 WRCOG 06/30/17 to 06/30/21 San Diego Workforce Partnership 06/30/16 to 06/30/21 Rubidoux Community Services District 06/30/16 to 06/30/21 Conejo Recreation and Park District 06/30/19 to 06/30/21 Upper San Gabriel Valley MWD 06/30/19 to 06/30/21 Yes March Joint Powers Authority 06/30/19 to 06/30/21 Chino Basin Desalter Authority 06/30/19 to 06/30/21 Yes Mountains Recreation and Conservation 06/30/19 to 06/30/21 Palos Verdes Peninsula Transit Authority 06/30/19 to 06/30/21 Yucca Valley Airport District 06/30/19 to 06/30/20 West Basin Municipal Water District 06/30/20 to 06/30/21 Yes North County Dispatch JPA 06/30/19 to 06/30/21 Triunfo Sanitation District 06/30/20 to 06/30/21 Yes Crestline Sanitation District Accounting support Running Springs Water District Accounting support Phelan Pinon Hills Community Services District Accounting support Attachment A (Continued) GOVERNMENT CLIENTS SERVED CSMFO/ GFOA Successor Housing Government Client Years Served Awards Agency Authority City of El Cajon 06/30/07 to 06/30/21 Yes Yes Yes City of Exeter 06/30/17 to 06/30/21 Yes Yes City of Woodlake 06/30/17 to 06/30/21 Yes Town of Yucca Valley 06/30/08 to 06/30/21 Yes Yes Yes City of La Verne 06/30/11 to 06/30/21 Yes Yes Yes City of San Jacinto 06/30/11 to 06/30/21 Yes Yes City of Twentynine Palms 06/30/11 to 06/30/21 Yes Yes Yes City of La Mesa 06/30/11 to 06/30/21 Yes Yes City of Menifee 06/30/14 to 06/30/21 Yes City of San Marcos 06/30/14 to 06/30/21 Yes Yes Yes City of Loma Linda 06/30/13 to 06/30/21 Yes Yes Yes City of Sierra Madre 06/30/12 to 06/30/21 Yes Yes Yes City of Hawthorne 06/30/16 to 06/30/21 Yes Yes Yes City of West Covina 06/30/16 to 06/30/20 Yes Yes Yes City of Aliso Viejo 06/30/16 to 06/30/21 Yes City of Claremont 06/30/16 to 06/30/21 Yes Yes Yes City of Thousand Oaks 06/30/18 to 06/30/21 Yes Yes Yes City of South Pasadena 06/30/18 to 06/30/20 Yes Yes City of Rolling Hills Estates 06/30/19 to 06/30/21 Yes City of Calabasas 06/30/20 to 06/30/21 Yes City of San Bernardino 06/30/20 to 06/30/21 Yes City of Ojai 06/30/20 to 06/30/21 Yes City of Beaumont 06/30/20 to 06/30/21 Yes City of Moreno Valley 06/30/20 to 06/30/21 Yes City of Lawndale 06/30/20 to 06/30/21 Town of Windsor 06/30/19 to 06/30/20 City of Imperial Beach 06/30/21 City of San Dimas 06/30/21 City of Coachella Agreed upon procedures City of Canyon Lake Accounting support City of Rolling Hills Accounting support City of Yucaipa Accounting support City of Angels Camp Accounting support City of Grand Terrace Accounting support - 23 - AFFIRMATION AND AUTHORIZATION NAME OF BIDDER: TITLE: FIRM NAME: STREET ADDRESS: CITY, ZIP FEDERAL TAX I.D. TELEPHONE NUMBER: FAX NUMBER: E-MAIL ADDRESS The undersigned declares that he/she is authorized to enter into an agreement on behalf of the above- named Company. Signature: _______________________________________________________ Scott W. Manno, CPA, CGMA Partner Rogers Anderson Malody & Scott, LLP 735 E. Carnegie Drive, Suite 100 San Bernardino, CA 92408 909.889.0871 909.889.5361 smanno@ramscpa.net Scott Manno Digitally signed by Scott Manno Date: 2022.02.23 12:05:26 -08'00' Please sign and include this page with your proposal. r m l> CJ m ::0 VI I "'C "'C l> ::0 -I z m ::0 VI I "'C VI -I m :E l> ::0 CJ VI I "'C PROPOSAL FOR PROFESSIONAL AUDITING SERVICES EAST VALLEY WATER DISTRICT 31111 Greenspot Road Highland, CA 92346 February 23, 2022 Prepared By: Davis Farr LLP 18201 Von Karman Ave | Suite 1100 Irvine, CA 92612 Contact Person: Jonathan Foster, CPA | Partner Office: 949.474.2020 | Direct: 949.783.1744 Email: jfoster@davisfarr.com Table of Contents Section A – About Davis Farr LLP .................................................................................... 1 Section B – Our Prior Experience Auditing Government Agencies .................................. 3 Section C – Client References ......................................................................................... 4 Section D – Partner, Supervisory and Staff Qualifications and Experience ...................... 5 Section E – Audit Approach ........................................................................................... 10 Section F – Implementation of New GASB Pronouncements ......................................... 14 Section G – Scope of Work ............................................................................................ 15 Section H – Proposed Timing of the Audit for FY 2022 .................................................. 15 Section I – Proposed Fees ............................................................................................. 15 APPENDIX Affirmation and Authorization Peer Review Documentation 18201 Von Karman Ave | Suite 1100 | Irvine, CA 92612 760.918.5530 February 23, 2022 East Valley Water District 31111 Greenspot Road Highland, CA 92346 Re: Proposal for Professional Auditing Services We are pleased to provide our proposal to perform auditing services to the East Valley Water District (the “District”) for the year ending June 30, 2022 through 2024 with the option to extend two additional years. Our service philosophy is one of open and constant communication, a proactive approach and responsive, value- added services. We will listen to your ideas and concerns and will bring creative solutions to you in both financial and other operational areas. We are aware that while the District has solicited numerous proposals, Davis Farr LLP would be your best selection for the following reasons which are set forth in greater detail in our proposal:  We take a proactive leadership role in local government accounting and auditing issues. We serve on the Government Accounting and Audit Committee of the Cal CPA Society, the CSMFO Professional Standards Committee and are frequent speakers on technical topics at conferences and training events throughout California.  We currently provide audit services to Special Districts throughout California including Irvine Ranch Water District, Cucamonga Valley Water District and Placer County Water Agency. Our deep understanding of the issues facing California governments enables us to provide high quality audit services to the East Valley Water District.  We extensively utilize data mining software to evaluate anomalies in your accounting data. This helps focus our auditors’ attention on potential errors in the accounting records and transactions that could be more susceptible to fraud. We appreciate the opportunity to share our credentials and look forward to developing our professional relationship. Our proposal remains a firm and irrevocable offer for 90 days. I look forward to you contacting me so that I may answer further any questions which you may have. You may contact me at (949) 783-1744. Very truly yours, Jonathan Foster, CPA Partner 1 East Valley Water District Proposal for Professional Auditing Services Section A – About Davis Farr LLP Background Information – Davis Farr LLP is a full-service regional accounting firm that specializes in providing attest and advisory services to federal, state, and local governments as well as non-profit entities out of our Irvine and Carlsbad offices. This engagement would be serviced by our Irvine office. Our personnel have served governmental and non-profit entities for over 40 years. A breakdown of our government audit personnel by classification is located below. License to Practice in California – Davis Farr LLP and all key personnel are licensed with the California State Board of Accountancy to practice as independent certified public accountants. Independence – Davis Farr LLP is independent with respect to the East Valley Water District or any of its component unites as defined by U.S. General Accounting Office’s Government Auditing Standards and Generally Accepted Auditing Standards. Neither Davis Farr LLP nor the key personnel have any potential or real conflicts of interest. Insurance – Davis Farr LLP has sufficient insurance coverage to meet or exceed the District’s requirements and will provide insurance certificates to the District prior to entering into a contract. Quality Control – Davis Farr LLP and its Partners are members of the American Institute of Certified Public Accountants (AICPA) and is a member of the AIPCA’s Government Audit Quality Center. Our firm is a voluntary participant in the AICPA Peer Review Program. Included in the appendix is our most recent Peer Review report where our firm received a Pass. A Pass demonstrates the highest level of quality control in a Peer Review. The Peer Review included a review of government engagements. Davis Farr LLP has not had any federal or state desk reviews or field reviews during the past three years with the exception of a review performed by the Department of Transportation (DOT). The report concluded that our audit work complied with the requirements of the single audit act, the uniform guidance, and DOT’s major programs and included a recommendation related to documentation. There has been no disciplinary action taken or pending against the firm during the past three years with state regulatory bodies or professional organizations. Training – Every professional of the firm must enroll in continuing professional education courses. Each person is required to take at least 80 hours of training over a two-year period including 24 hours a year specific to government accounting and audit topics. Courses cover a wide spectrum of professional and technical subjects, and include Fraud Auditing, Professional Ethics and Governmental Accounting and Auditing topics to help the practitioner maintain his/her professional expertise. Classification Number of Employees Partners 7 Managers 8 Supervisors 4 Seniors 17 Staff 13 Administrative 3 Total personnel 52 2 East Valley Water District Proposal for Professional Auditing Services Professional Affiliations Government Audit Quality Center – Davis Farr LLP is a member of the Government Audit Quality Center (GAQC). The GAQC promotes the importance of quality governmental audits and the value of such audits to purchasers of governmental audit services. GAQC is a voluntary membership center for CPA firms and state audit organizations that perform governmental audits. National Registry of CPE Sponsors – Davis Farr LLP is registered to provide continuing professional education through the National Association of State Board of Accountancy (NASBA). NASBA recognizes CPE program sponsors who provide continuing professional education programs in accordance with nationally recognized standards. Cal CPA – Many of the CPAs employed by Davis Farr LLP are members of Cal CPA and regularly participate in chapter meetings, education, and events. Cal CPA recognized one of Davis Farr LLP’s partners with their Women to Watch award in the Experienced Leader category. Jennifer Farr, Partner, is chair and member of the Governmental Accounting and Auditing Committee of the CalCPA. American Institute of CPAs – Davis Farr LLP and the firm’s Partners are members of the American Institute of CPAs (AICPA). The AICPA develops standards for audits, provides educational guidance materials to its members, and monitors and enforces compliance with the profession’s technical and ethical standards. CSMFO – The Partners of Davis Farr LLP are members of the California Society of Municipal Finance Officers (CSMFO), the statewide organization serving all California municipal finance professionals. Firm personnel regularly attend CSMFO Chapter Meetings and Conferences. The Partners of Davis Farr LLP are frequent presenters on accounting and auditing technical topics at Chapter Meetings and Conferences and have presented at the 2019, 2020 and 2021 Annual Conferences. GFOA – The Government Finance Officers Association (GFOA) enhances and promotes the professional management of governmental financial resources by identifying, developing, and advancing fiscal strategies, policies, and practices for the public benefit. The Partners of Davis Farr LLP are members of the Certificate of Achievement Program’s Special Review Committee. The Committee reviews Comprehensive Annual Financial Reports submitted to GFOA for the CAFR Award Program. 3 East Valley Water District Proposal for Professional Auditing Services Section B – Our Prior Experience Auditing Government Agencies Davis Farr LLP is a leader in the local government sector throughout California. Currently, we service approximately 60 local, state, and federal government entities. Davis Farr LLP services routinely provided to our clients include, but are not limited to: Our government expertise includes Cities, Special Districts, and other Governmental entities. Among the government agencies that the professionals of Davis Farr LLP have served recently are the following:  City of Avalon  City of Poway  Orange County LAFCO  City of Carlsbad  City of Rancho Santa Margarita  Oxnard Housing Authority  City of Commerce  City of Santee  Placer County Water Agency  City of Coronado  City of Victorville  Salton Sea Authority  City of Costa Mesa  County of Woodland  San Diego County Water Authority  City of Dana Point  County of Fresno Housing Authority  San Diego Association of Governments  City of Delano  County of San Diego  San Diego LAFCO  City of Encinitas  Cucamonga Valley Water District  San Dieguito Riverpark Authority  City of Fontana  Eastern Municipal Water District  Sweetwater Authority  City of Fountain Valley  Hass Avocado Board  Tahoe Regional Planning Agency  City of Garden Grove  Irvine Ranch Water District  Tahoe Transportation District  City of Huntington Beach  Leucadia Wastewater District  Vallecitos Water District  City of Laguna Niguel  Metropolitan Water District of Southern CA  Walnut Valley Water District  City of Mission Viejo  Municipal Water District of Southern CA  West Basin Municipal Water District 4 East Valley Water District Proposal for Professional Auditing Services Section C – Client References For your convenience, we have listed below references for audit work currently being performed by Davis Farr LLP personnel for several agencies throughout California. For each of the references, we currently serve as independent auditors and have served these clients for a number of years. CLIENT 1 Placer County Water Agency 144 Ferguson Road | Auburn, CA Carrie Parks, Deputy Director of Financial Services 530.823.4840 cparks@pcwa.net Financial Statement Audit of Special District CLIENT 2 Financial Statement Audit of Special District CLIENT 3 Financial Statement Audit of Special District. Irvine Ranch Water District 15600 Sand Canyon Ave. | Irvine, CA Eileen Lin, Controller 949.453.5300 lin@irwd.com Cucamonga Valley Water District 10440 Ashford Street |Rancho Cucamonga, CA Jennifer Fillinger, Accounting Supervisor 909.483.7453 jenniferf@cvwdwater.com CLIENT 4 CLIENT 5 Soquel Creek Water District 5180 Soquel Dr. | Soquel, CA Ryan Kinney, Supervising Accountant 831.475.8501 x116 ryank@soquelcreekwater.org Financial Statement Audit of Special District. Financial Statement Audit of Special District. Valley Sanitary District 45500 Van Buren St |Indio, CA Jeanette Juarez, Business Services Manager 760.238.5415 jjuarez@valley-sanitary.org 5 East Valley Water District Proposal for Professional Auditing Services Section D – Partner, Supervisory and Staff Qualifications and Experience The successful outcome of any audit requires personnel with the managerial and technical skills to perform the work required. The engagement team who will serve the East Valley Water District have served together as a team of professionals on numerous financial audit examinations of local government entities. While not anticipated, any personnel substitutions will be of equally qualified personnel. We believe that efficient administrative management and supervision of the audits is an extremely critical factor in achieving the desired results for East Valley Water District. In that regard, our proposal organizational structure for providing independent auditing services is as follows: Jonathan Foster, CPA Jennifer Farr, CPA, MBA Erick Martin, CPA Konstantine Poulios, CISA 6 East Valley Water District Proposal for Professional Auditing Services Jonathan Foster, CPA Partner Mr. Foster will serve as the Engagement Partner to the District. He has 15 years of audit experience with government agencies. The types of audits Mr. Foster are involved in include financial audits of cities and special districts and Single Audits in accordance with the Uniform Guidance. Mr. Foster is also a CAFR and Budget reviewer for the CSMFO award and is a regular presenter at firm wide training and external training events as requested. Mr. Foster has presented at the annual 2019 and 2021 CSMFO conference regarding capital assets and annually teaches an Investment Accounting course for CSMFO. ADDITIONAL RELEVANT EXPERIENCE Irvine Ranch Water District – Proposition 218 Agreed-Upon Procedures Irvine Ranch Water District/Orange County Sanitation District – Fund Specific Audit Metropolitan Water District of Southern California - Local Resource Program Audits Municipal Water District of Orange County - Consulting Employment History  Davis Farr LLP – Since 2015  National CPA Firm – 9 years Education  Bachelor of Accountancy (University of San Diego) Licenses / Registrations  California CPA Certificate No. 117853 Professional Affiliations & Awards  American Institute of Certified Public Accountants  California Society of Certified Public Accountants  Cal CPA Government Audit & Accounting Committee  California Society of Municipal Finance Officers AUDITS OF SPECIAL DISTRICTS AND AGENCIES  Big Bear Area Regional Wastewater Authority  San Diego Association of Governments  Big Bear Community Facilities District  Santiago Aqueduct Commission  Cucamonga Valley Water District  Saticoy Sanitary District  East Orange County Water Agency  Soquel Creek Water District  Irvine Ranch Water District  Tahoe Truckee Sanitation Agency  Orange County Sanitary District  Trabuco Canyon Water District  Placer County Water Agency  Valley Sanitation District  Rancho California Water District  Ventura Regional Sanitation District  San Bernardino Municipal Water  West Basin Municipal Water District Department 7 East Valley Water District Proposal for Professional Auditing Services Jonathan Foster, CPA (continued) Partner Mr. Foster has significant experience working with federal grant programs typically awarded to local governments. These federal awarding agencies include Department of Housing and Urban Development, Department of Homeland Security, Department of Energy, Department of Justice, Department of the Interior, Environmental Protection Agency, and the Executive Office of the President Mr. Foster has also worked on various financial statement, compliance in SOC1 Type II audits (formerly SAS 70) for various commercial companies and Federal agencies. AUDITS OF FEDERAL GOVERNMENT  Centers for Medicare and Medicaid Services  Special Inspector General for Afghanistan Reconstruction AUDITS OF CITIES  City of Avalon  City of Fontana  City of Carlsbad  City of Huntington Beach  City of Commerce  City of Indian Wells  City of Costa Mesa  City of Laguna Niguel  City of Dana Point  City of Rancho Santa Margarita  City of Delano  City of Santee AUDITS OF COMMERCIAL ENTITIES  Cal Domestic Water Company  DHS Consulting  Cahaba GBA  Montebello Land and Water Company  CGS Administrators LLC  Mutual Insurance Company of Arizona  Delta Dental of Arizona  Sunnyslope Water Company 8 East Valley Water District Proposal for Professional Auditing Services Erick Martin, CPA Manager Mr. Martin has ten years of audit experience, spending the majority of that time on audits for local and Federal governments. Mr. Martin has performed financial statement audits of cities and special districts; grant specific audits of funds awarded by Federal, state, and county governments; Single Audits, and compliance audits. Mr. Martin will be responsible for managing the audit engagement and will supervise the audit team. Employment History  Davis Farr LLP: June 2015-current  National CPA firm: January 2011-June 2015 Education  Bachelor of Business Administration – Accounting California State University, Fullerton Licenses / Registrations  CA CPA Certificate No. 121760 AUDITS OF SPECIAL DISTRICTS AND AGENCIES AUDITS OF CITIES  Coachella Valley Mosquito District  Irvine Ranch Water District  Mesa Consolidated Water District  Greater Palms Springs Convention & Visitors Bureau  Puente Basin Water Agency  Orange County Sanitation District  San Bernardino Municipal Water Department  Walnut Valley Water District  West Basin Municipal Water District  Yucaipa Valley Water District  City of Costa Mesa  City of El Segundo  City of Garden Grove  City of Moreno Valley  City of Poway  City of San Marcos  City of Upland  City of Villa Park AUDITS OF FEDERAL GOVERNMENT  Centers for Medicare and Medicaid Services  Special Inspector General for Afghanistan Reconstruction 9 East Valley Water District Proposal for Professional Auditing Services Jennifer Farr, CPA, MBA Quality Control Reviewer Ms. Farr will serve as the Quality Control Reviewer on this audit. She will provide technical assistance to the audit teams, review audit reports and workpapers. Ms. Farr is a Certified Public Accountant with over 20 years of experience in local government auditing. Ms. Farr is a frequent speaker and author on matters pertaining to technical accounting and audit issues including new GASB pronouncements. Employment History  Davis Farr LLP – Founding Partner  Shareholder – National CPA Firm Education  Bachelor of Arts in Business Administration & Accounting (California State University, Fullerton)  Bachelor of Arts in English (California State University, Fullerton)  Master of Business Administration (California State University, Fullerton) Licenses / Registrations  California CPA Certificate No. 76292 Professional Affiliations & Awards  California Society of Certified Public Accountants  Government Accounting & Auditing Committee o Current Chair of Committee  California Society of Municipal Finance Officers  American Institute of Certified Public Accountants  Government Finance Officers Association o Financial Review Committee AUDITS OF SPECIAL DISTRICTS AND SPECIAL PURPOSE GOVERNMENTS  Coachella Valley Assoc of Governments  Rancho California Water District  Cucamonga Valley Water District  Salton Sea Authority  Eastern Municipal Water District  San Diego Association of Governments  Inland Empire Utilities Agency  San Diego County Water Authority  Irvine Ranch Water District  Santa Rosa Regional Resources Auth  Leucadia Wastewater District  South Coast Water District  Los Angeles Homeless Services Authority  Southern CA Association of Governments  Mesa Water District  Sweetwater Authority  Middle Fork Financing Authority  Vallecitos Water District  Moulton Niguel Water District  Vista Irrigation District   Orange County Sanitation District  Walnut Valley Water District   Orange County Water District  West Basin Municipal Water District  Placer County Water Agency  Yucaipa Valley Water District 10 East Valley Water District Proposal for Professional Auditing Services Konstantine Poulios, CISA IT Specialist Konstantine Poulios, a Senior Manager with the firm, has over 20 years of experience in information technology audit, compliance, and consulting for the financial services, healthcare, and cloud services industries. Mr. Poulios has vast experience in the performance of System and Organization Controls (SOC) examinations for many commercial Information Technology companies nationwide. Mr. Poulios has also conducted information security reviews on financial systems based on ISO/IEC 27001, as well as assisted companies with the compliance of the Sarbanes-Oxley Act. Mr. Poulios will serve as the IT Auditor and Information Technology Specialists for the financial statements audit. IT RISK ASSESSMENTS: Local Government IT Assessments - Mr. Poulios assists the firm’s financial statement auditors by reviewing information systems of our municipal clients and identifying and communicating IT risks to the auditors to assist the planning and risk assessment of the audit and communicated deficiencies and recommendations to the client. Los Angeles County Metropolitan Transportation Authority (METRO) -Mr. Poulios served as the IT Manager on the Information Technology Risk Assessments. The Risk Assessment included a review of METRO Operations and the IT Organization to determine if Information Technology Services (ITS) is meeting the needs of the organization. IT Internal Audit / Compliance: - Mr. Poulios served as an IT Internal Auditor/Consultant for nearly 10 years with First Data Corporation and the U.S. Office of Personnel Management. In addition, Mr. Poulios served as the Security Compliance Manager for over 3 years with Cornerstone OnDemand and TrueCar. Mr. Poulios performed information technology reviews based on ISO 27001 and the Federal Information System Controls Audit Manual (FISCAM), coordinated with internal/external audit and technology personnel in the performance of internal control projects (including SOC engagements), documented policies/procedures, reviewed third party security controls, performed user access reviews of SOX significant systems, and monitored internal vulnerabilities using third party tools (e.g., Nessus). Employment History  Davis Farr LLP: February 2018 – Present  TrueCar: 2015 – 2017  Cornerstone OnDemand: 2014 - 2015  Top 10 National CPA Firm: 2008 – 2014  First Data Corporation: 2001 – 2007  US OPM / OIG: 1998 – 2001 Education  Bachelor of Science in Accounting, University of Scranton Licenses / Registrations  Certified Information Systems Auditor, Certificate No. 0126702 Professional Affiliations & Awards  Information Systems Audit and Control Association (ISACA) 11 East Valley Water District Proposal for Professional Auditing Services Section E – Audit Approach Davis Farr plans and conducts our engagements in the most efficient manner possible, and our audit approach is unique with regard to the following:  Our firm is sensitive to the priorities and work requirements of our clients. We work around the schedules of our clients when scheduling segments of the audit or requesting documentation in order to minimize disruption of District staff and to complete the audit in a timely manner.  Whenever possible, we use accounting support already prepared by the District staff to avoid duplication or unnecessary requests for audit supporting schedules. Typically, we request support for balance sheet items, the year ending trial balance and cash and long-term debt confirmations.  Our firm’s expertise is in governmental auditing. Our auditors are GASB experts and skilled at addressing audit issues that are specific to local governments. You will not spend time training our personnel.  When formulating internal control recommendations, we obtain a thorough understanding of the specific circumstances at your District to provide a tailored, practical recommendation.  Throughout the year we are a resource to our clients in providing accounting advice, researching technical questions, dealing with tax problems, and helping with other problems as they arise. Audit Software - We utilize CaseWare audit software for the electronic workpapers. We have the ability to accept audit documentation in either hard copy or electronic format. CaseWare allows us the ability to import trial balances that can be provided in either excel or a text document. Some of the benefits of using CaseWare trial balance software are as follows:  We create our own lead sheets (i.e., analytical review comparison schedules). This limits the amount of time finance staff spends creating audit schedules. Our software automatically generates analytical review reports by account number for ease of analyzing significant fluctuations between fiscal years.  We can link the financial statement schedules directly to the CaseWare trial balances. Additionally, journal entries are easy to post to the financial statement schedules and the risk of data entry error is minimized.  We can provide the District with reports showing the coding of the financial statement schedules for ease of review by District staff. These reports show each account coded to a specific financial statement line item as well as journal entries that are posted during the audit. Data Mining Software - We have a dedicated team of personnel trained to use special data mining software, IDEA. Our software uses source data from your accounting system to search for anomalies, such as duplicate or voided checks, cross-referencing vendor addresses with employee addresses, detecting accounting transactions recorded on the weekend, reviewing journal entry postings for unauthorized individuals. The IDEA software identifies specific transactions for the auditors to review for potential fraud or error. Internal Control Evaluation - Our approach to evaluating internal controls involves observation and inquiry. We spend time with the personnel responsible for the accounting cycles to gain an understanding of the processes. We also carefully evaluate your policies and procedures. After our initial evaluation, we identify key controls in your processes and design test to evaluate the effectiveness of those processes. In the initial year of the audit, we will focus on the following accounting cycles:  Billing and cash receipting  Capital assets  Purchase and disbursements  Payroll  Investment and cash controls  Information systems 12 East Valley Water District Proposal for Professional Auditing Services In future years, we will review the accounting cycles noted above but also look at other processes such as credit card transactions, petty cash, inventory controls, offsite cash receipting, employee reimbursements, contract compliance, and other areas. Our goal is to modify our audit approach every year to further evaluate your internal controls. Audit Stage Procedures Performed Planning and Inquiry During the planning phase of the audit, we plan to perform the following procedures:  Meet with finance personnel to obtain an understanding of significant transactions during the year.  Communicate with the Board of Directors regarding fraud, compliance with laws, and any concerns they have regarding the finances of the District.  Perform internal control evaluations as noted on the previous page.  Determine materiality levels that will be used in selecting audit transactions.  Perform a risk assessment to develop the audit plan for the year.  Review minutes of Board of Directors meetings.  Review important new contracts, bond documents, and agreements.  Evaluate compliance with investments.  Test purchase orders and contract management.  Test a sample of cash disbursements to determine adherence to policies and internal controls.  Perform a review of the organization’s information systems and controls.  Perform compliance testing of federal grants, as necessary.  Review the prior audited financial statements and provide feedback to District staff regarding best practices for financial reporting.  Provide a GASB Update and templates for implementing new accounting standards as needed. Year-End Testing After the books are closed and ready for audit, we will perform our year-end procedures which include the following:  Confirm 100% of all cash and investment balances and test market values provided by your investment custodians.  Test for proper cutoffs of accounts receivable and other receivables.  Test additions and deletions to capital assets. We will review depreciation expense for reasonableness.  Test current liabilities and perform a search for unrecorded liabilities.  Test the balances of accrued payroll and employee related liabilities.  Confirm long-term debt with independent parties.  In years of new debt issuances, we will review the journal entry to record the debt to ensure the accuracy of the accounting.  Testing of actuarial valuations and calculations related to OPEB obligations and disclosures under GASB 75.  Testing of actuarial valuations and calculations related to pension obligations and disclosures under GASB 68.  Evaluation of claims and judgments payable.  Testing of restrictions and classifications of net position.  Analytically and substantively test revenues and expense reported in the financial statements.  Analyze grant revenues and expenses, if any, to ensure proper matching within the fiscal year.  Test the reasonableness of interest income, realized, and unrealized gains/losses on investments.  Analytically and substantively test revenues and expenses reported in the financial statements.  We will incorporate an element of unpredictability every year that will focus on an audit area that is not typically considered a high or significant risk area such as petty cash, credit card purchases, new vendors, travel expenses, etc. The aforementioned tests are only a few of the tests performed during the examination and by no means is it meant to be all inclusive. During the final stage of the audit, we will meet with Finance staff to review our audit findings and any adjusting journal entries. 13 East Valley Water District Proposal for Professional Auditing Services Audit Stage Procedures Performed Single Audit Approach As part of our Single Audit for the years in which the District expends granter than $750,000, we will perform the following procedures in accordance with the Uniform Guidance:  Perform an evaluation of the major programs required to be tested.  Review OMB guidance and the OMB Compliance Supplement for the grant program audited.  Review internal controls for each of the applicable 14 compliance areas for each program audited.  Using AICPA sampling guidance, we will select a sample for each of the applicable 14 compliance areas for each program audited. We will test the sample for compliance with those 14 areas.  Test the indirect cost rate, if applicable.  Review monitoring reports for noncompliance and follow up on the resolution of past noncompliance, if applicable.  Issue a single audit report of federal expenditures.  File the data collection form within the specified deadline. Completion of the Audit and Preparation of Financial Statements The nature and extent of the work required is dependent on our assessment of the likelihood of misstatements in the financial statements together with our conclusions from the planning and testing stages of the audit. All of the audit information is then used to reach a conclusion on whether the financial statements taken as a whole conform with generally accepted accounting principles.  We will review significant events after year end.  We will review attorney letters for significant legal matters.  We will prepare the financial statements and ensure accurate and complete disclosures in the notes to the financial statements.  We will meet with the Board of Directors to present the results of the audit. 14 East Valley Water District Proposal for Professional Auditing Services Section F – Implementation of New GASB Pronouncements The District will be required to implement the following accounting standards during the upcoming fiscal years. Part of our service to you includes consulting on these new auditing standards. A sampling of significant new GASB pronouncements planned or proposed for local governments that may impact the East Valley Water District are listed below: The objective of this Statement is to better meet the information needs of the financial statement users by improving accounting and financial reporting for leases by governments. GASB 87: Leases The primary objective of this Statement is to provide guidance related to public- private and public-public partnership arrangements in which a government contracts with an operator to provide public services. This statement also provides guidance for accounting and financial reporting for availability payment arrangements in which a government compensates an operator for services in an exchange transaction. GASB 94: Public-Private and Public-Public Arrangements This Statement provides guidance to governments on the accounting and financial reporting for subscription- based information technology arrangements. GASB 96: Subscription Based IT Agreements 15 East Valley Water District Proposal for Professional Auditing Services Section G – Scope of Work Our understanding of the objectives and scope of the work to be performed is as follows:  We will perform an audit examination of the financial statements of the East Valley Water District. Our examination will be conducted in accordance with generally accepted auditing standards, the AICPA Audit and Accounting Guide, Audits of State and Local Government Units, and the Government Auditing Standards issued by the Comptroller General of the United States. We will ensure that the report is prepared in conformity with the most recent edition of the GAAFR, the GAAFR Update, and subsequent GASB pronouncements.  We will prepare a letter to the Board of Directors summarizing the audit results in accordance with the Codification of Auditing Standards Section 260.  We will prepare a letter to the Board of Directors reporting matters dealing with internal control that meet the threshold of being a significant deficiency or material weakness, as defined by the Codification of Auditing Standards Section 265. We will immediately report any irregularities or illegal acts that come to our attention to management and/or those charged with governance.  We will meet with the Board of Directors to discuss the results of the audit.  We will prepare the State Controller Report and submit to the State Controller’s Office  We will perform a financial review of the North Fork Water Company  Finally, we perceive the scope of our work as being advisors to the District regarding generally accepted accounting principles. Throughout the year, the management and other finance personnel of the District will have access to us to seek advice in the application of generally accepted accounting principles, advice regarding debt issuance, financial statement preparation and content, and any other matters relating to the District. Each year, we will go over upcoming accounting standards in a meeting with District staff. Section H – Proposed Timing of the Audit for FY 2022 The following proposed timing is subject to the District’s revision and approval. The review of the North Fork Water Company would commence immediately upon award of contract: Task 01 Interim Request List Provided 60 days prior to interim Task 02 Audit Planning Meeting First day of fieldwork Task 03 Interim Audit Procedures As scheduled by the District Task 04 Final Audit Request List Provided Final day of interim Task 05 Final Audit Fieldwork September 5-9 Task 06 Exit Meeting September 19 Task 07 Annual Report Changes September 30 Finalization of Audit Reports Within 5 days of approval to finalize, no later than October 11 Task 08 16 East Valley Water District Proposal for Professional Auditing Services Section I – Proposed Fees REQUIRED ITEMS:2022 2023 2024 2025 2026 1. Financial Audit of the District 27,500$ 27,500$ 27,500$ ** 2. State Controller Office Report and Submission 2,500$ 2,500$ 2,500$ ** 3. Travel Expenses -$ -$ -$ ** SUB-TOTAL REQUIRED ITEMS 30,000$ 30,000$ 30,000$ ** OPTIONAL ITEMS:2022 2023 2024 2025 2026 A. Separate financial review report for North Fork Water Company 2,750$ 2,750$ 2,750$ ** B. Single audit examiniation of all federal grants 4,500$ 4,500$ 4,500$ ** C. Compilation of the Annual Report Document 4,400$ 4,400$ 4,400$ ** D. Audit of Internal Controls ********** E. Continuing Disclosure Annual Report ********** SUB-TOTAL OPTIONAL ITEMS 11,650$ 11,650$ 11,650$ $$ GRAND TOTAL 41,650$ 41,650$ 41,650$ $$ * Option years can be renewed for applicable CPI increase for the County for that fiscal year ** Davis Farr currently does not perform these services Single audit includes one major program, additional major programs may be audited for $2,500 Fee for optional additonal Fiscal Year Additional work may be performed at the hourly rates quoted below Rate Partner 175$ Manager 150$ Supervisor/Senior 125$ Staff 100$ 17 East Valley Water District Proposal for Professional Auditing Services APPENDIX East Valley Water District | Proposal for Professional Auditing Services East Valley Water District | Proposal for Professional Auditing Services East Valley Water District | Proposal for Professional Auditing Services expect quality Eden C. Casareno CONTACT PERSON FEBRUARY 23, 2022 Office: 951.241.7805 East Valley Water District PROPOSAL FOR PROFESSIONAL AUDITING SERVICES PREPARED BY EadiePayne 3880 Lemon St., Suite 300 Riverside, CA 92501 Mobile: 909.809.7662 ecasareno@eadiepaynellp.com WWW.EADIEPAYNELLP.COM EAST VALLEY WATER DISTRICT TABLE OF CONTENTS Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Understanding and Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Specific Audit Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Individuals Authorized to Make Representations for the Firm . . . . . . . . .10 Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Firm Qualifications and Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Peer Review Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Scope of Single Audit Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Audit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Resumes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 PAGE Page 6 No . 2 Page 6 No . 3 Page 6 No . 4 Page 6 No . 5 Page 6 No . 6 Page 6 No . 7-9 Page 6 No . 10 Page 7 No . 11 Page 7 No . 12 Page 7 RFP REFERENCE EadiePayne | 3880 Lemon St., Suite 300 | Riverside, CA 92501EadiePayne | 3880 Lemon St., Suite 300 | Riverside, CA 92501 WWW.EADIEPAYNELLP.COMWWW.EADIEPAYNELLP.COM 1 February 23, 2022 Brian Tompkins, CPA Chief Financial Officer East Valley Water District 31111 Greenspot Road Highland, CA 92346 Via Email: finance@eastvalley.org Dear Mr. Tompkins, On behalf of Eadie and Payne, LLP (EadiePayne), we are pleased to provide you with our proposal to perform audit services for East Valley Water District (the District) for the fiscal years ending June 30, 2022 through 2024, with an option to extend the contract through fiscal year ending June 30, 2026. These audits will be performed in accordance with auditing standards generally accepted in the United States of America, the standards set forth for financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, and the State Controller’s Minimum Audit Requirements and Reporting Guidelines for California Special Districts. Why Choose EadiePayne? Not a One size Fits all Approach:Not a One size Fits all Approach: EP recognizes that no two entities are the same. We pride ourselves in co-developing our audit plans with management to insure that we meet or surpass expectations. Ongoing Consulting and Staff Training:Ongoing Consulting and Staff Training: EP is including in our proposal 20 hours of complimentary routine consulting and training to ensure that management and staff are up to date on relevant accounting and compliance issues. The application of these hours will be co-developed with the District based on its needs, including any assistance needed with the implementation of new GASB statements. Communication:Communication: Effective and efficient communication is essential to a successful audit as well as client relations. EP streamlines the communication process with management and governing bodies as we appreciate the difficulties of managing the audit process while retaining the regular responsibilities of the day-to-day operations. Technology:Technology: EP has invested highly in cutting edge audit and supporting technologies. This ensures that the District will timely, efficient, and secure results. We believe our audit approach and credentials within our teams’ resumes demonstrate our qualifications, competence, and capacity to perform the audit service requested by the District. We are committed to perform the services requested within the time frame required by the District. LETTER OF TRANSMITTAL EadiePayne | 3880 Lemon St., Suite 300 | Riverside, CA 92501EadiePayne | 3880 Lemon St., Suite 300 | Riverside, CA 92501 WWW.EADIEPAYNELLP.COMWWW.EADIEPAYNELLP.COM 2 We appreciate the opportunity to share our credentials and look forward to developing our professional relationship. Sincerely, Eden C. Casareno Brandon Ferrell Partner-in-Charge of Attest Services Senior Manager ecasareno@eadiepaynellp.com bferrell@eadiepaynellp.com 909.809.7662 909.767.3011 EAST VALLEY WATER DISTRICT | 3 UNDERSTANDING AND COMMITMENT EadiePayne is pleased to provide you with our proposal to perform audit services for the District for the fiscal years ending June 30, 2022 through 2024, with an option to extend the contract for two optional one-year periods thereafter. The audits will be performed in accordance with auditing standards generally accepted in the United States of America, the standards set forth for financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, and the State Controller’s Minimum Audit Requirements and Reporting Guidelines for California Special Districts. The following component units will be included in the audits of the District: • East Valley Water District Financing Authority • North Fork Water Company The following reports will be issued at the end of the audit of the District: • Independent auditor’s report on the financial statements of the District; • Report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards; • Communication with those charged with governance which will include the auditor’s responsibilities, compliance with independence requirements, significant accounting practices, corrected and uncorrected misstatements, and other significant matters, findings and issues; and • Management comments letter setting forth best practice recommendations. We will assist in other services as requested in the RFP: • Preparation of the Annual Comprehensive Financial Report for the District to meet the requirements of the GFOA Certificate of Achievement for Excellence in Financial Reporting program; • Routine consulting and staff training on accounting and technical matters for up to 20 hours annually; • Immediate written notification to District management and Board of irregularities or illegal acts, if found during our audit; • Preparation of the District’s Financial Transactions Report required by the State Controller’s Office; • North Fork Water Company review; and • Single Audit, including assistance in the preparation of the schedule of expenditures of Federal awards and completion of the Data Collection Form. It is our understanding that the District will prepare the basic financial statements for the District, including the notes to the financial statements, management’s discussion and analysis and statistical section. The District will also prepare the financial statements for the North Fork Water Company. We are also available to perform the following optional services, if required: • Report on audit of internal controls over financial reporting in accordance with SAS 130 • Annual report document • Continuing disclosure annual report We are committed to perform the services requested within the time period specified in the RFP (page 9). EAST VALLEY WATER DISTRICT | 4 Standard Number Title Effective Date FYE Summary GASB 87 Leases June 30, 2022 Statement 87 requires that governments recognize the following: a lease liability and an intangible asset representing a right to use the leased asset or a lease receivable and deferred inflow of resources for assets leased. It also provided guidance for additional reporting in financial statements. GASB 89 Accounting for Interest Cost Incurred before the End of a Construction Period June 30, 2022 Statement 89 establishes guidance designed to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period. It also simplifies accounting for interest cost incurred before the end of a construction period. GASB 91 Conduit Debt Obligations June 30, 2023 Statement 91 provides a single method for government issuers to report conduit debt obligations and related commitments. The enhanced guidance is designed to eliminate diversity in practice associated with these issues. GASB 92 Omnibus 92 Various Statement 92 includes guidance addressing various accounting and financial reporting issues identified during the implementation and application of certain GASB pronouncements. GASB 93 Replacement of Interbank Offered Rates Various Statement No. 93 assists state and local governments in the transition away from existing interbank offered rates (IBORs) to other reference rates. GASB 94 Public-Private and Public-Public Partnerships and Availability Payment Arrangements June 30, 2023 Statement No. 94 provides guidance to improve accounting and financial reporting for public-private and public-public partnership arrangements (commonly referred to as P3s) and availability payment arrangements (APAs). GASB 96 Subscription-Based Information Technology Arrangements June 30, 2023 GASB Statement No. 96 provides accounting and financial reporting guidance for subscription-based information technology arrangements (SBITAs). It is based on the standards established in Statement 87, Leases. GASB 97 Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans Various GASB 97 will result in more consistent financial reporting of defined contribution pension plans, defined contribution OPEB plans, and other employee benefit plans, while mitigating the costs associated with reporting those plans. The requirements also will enhance the relevance, consistency, and comparability of (1) the information related to Section 457 plans that meet the definition of a pension plan and the benefits provided through those plans and (2) investment information for all Section 457 plans. With the list of new GASB pronouncements continuing to grow, EadiePayne prides itself in being a resource for its clients in the understanding and implementation of these new pronouncements. Our team understands that the implementation of these pronouncements can be quite the undertaking and is committed to assisting the District every step of the way. New GASB Pronouncements|UNDERSTANDING AND COMMITMENT EAST VALLEY WATER DISTRICT | 5 SPECIFIC AUDIT APPROACH EadiePayne is experienced in meeting the needs and expectations of our clients. Our goal is to perform quality audits that provide reasonable assurance to the District’s leaders that the District’s financial statements are fairly stated and that the District complies with certain federal, state and local requirements. Our approach is differentiated by the following: • Smooth transition in initial year; • Focus on internal control; • Use of technology; and • Open communication. Initial Year Transition Changing audit firms is a challenging undertaking. Our goal is to assist the District in the orderly transition from the prior auditors. With your permission, we will work directly with your prior auditors to obtain information about opening balances. If possible, we will review and obtain copies of prior year audit workpapers. Throughout the first year, we will be in constant communication with the District team. Successful transitions happen because both auditors and clients are aware of ongoing issues, challenges and opportunities. Internal Control Our audit of the District will begin with documenting our understanding of the City and its environments, including its internal control. As part of our internal control procedures, we will obtain an understanding of the District’s IT environment and controls. We utilize IT specialists in performing the IT assessment. Our experience in performing IT assessments have revealed cybersecurity vulnerabilities in some of our clients. As customer preferences, operating efficiency demands, and health and safety requirements are leading to a more digitized and electronically connected word, our IT specialists can provide you recommendations in this area. Use of Technology The Firm utilizes a dynamic audit software that institutes a fully integrated audit approach. This integrated audit approach leverages automated processes steered by auditor expertise to drive the overall audit process - not standardized, predefined checklist methods. This solution improves audit preparation and execution while promoting efficiency, quality, and client understanding. We utilize CCH Solutions, an integrated solution consisting of Prosystem fx Engagement, Knowledge Coach, and Teammate Analytics to increase efficiency and quality of our audits. Open Communication As your auditors, we report directly to the District’s Board of Directors while working closely with management in the performance of our audit. Our engagement will commence with an entrance conference with key personnel. Throughout the engagement, our team will provide status reports and stay in close communication with management to discuss steps performed, significant issues, conclusions, and recommendations. We will present our audit reports to the Audit Committee and Board of Directors. EAST VALLEY WATER DISTRICT | 6 Proposed Timeline of the Engagement Kick-off Meeting May 2022 (Date to be determined) Planning May 2022 (Dates to be determined) Presentation of Audit Plan May 2022 (Date to be determined) Preliminary/Interim Fieldwork June 2022 (Dates to be determined) Progress Meeting Final Field Work September 5 to 16, 2022 Exit Conference September 19, 2022 Draft Statements & Other Reports September 30, 2022 Report Issuance - Financial Audit October 11, 2022 Report Issuance - Single Audit October 18, 2022 Board Presentation October 26, 2022 CA State Controller's Report Submission January 31, 2023 AUDIT PHASE I AUDIT PHASE IV AUDIT PHASE III AUDIT PHASE II June 2022 (Date to be determined) Phase I: Planning Our audit approach reflects the risk assessment standards applicable for governmental audits. To accomplish this, we must truly understand your organization and its environment, systems, procedures, internal controls, and most importantly, the people. Specifically, this process involves: • Reading the minutes of the meetings of the Board of Directors and any applicable committees; • Reviewing important contracts, debt issues, leases, and grant agreements; • Reviewing organizational charts, manuals, and program documents; • Comparison and inquiry regarding fluctuations of revenues and expenditures by fund, budget vs. actual; • Reviewing prior-year audit files, findings, and recommendations; • Reviewing policies and procedures over significant business processes such as banking and investment, purchasing, and grant management; and • Data analytics. SPECIFIC AUDIT APPROACH Review Procedures for the Company March 14 to 17, 2022 Report Issuance - Company's Review March 28, 2022 REVIEW FOR THE COMPANY EAST VALLEY WATER DISTRICT | 7 As part of the risk assessment process, EadiePayne obtains an understanding of laws, regulations, and provisions of contracts and grant agreements that have a direct and material effect on the District’s financial statements. Because governments are subject to many laws, regulations, and provisions of contracts or grant agreements, this process involves discussions with management, legal counsel, or grant administrators about your compliance requirements. Phase II: Interim Field Work Our internal control testing plan includes the following: • Obtaining written documentation of related policies and procedures; • Conducting interviews and walkthroughs to obtain an understanding of the internal control system; • Testing a sample of transactions to assess implementation; and • Assessment of IT general controls, including logical access controls over the new system, program change management controls and back-up and recovery controls. Although the control testing we will review specific accounting cycles, we also address other processing such as credit card transactions, inventory process, contract compliance. Each year we will modify our approach to evaluate changes in the District’s internal controls. At the end of this phase, we will have another meeting with key personnel to discuss steps performed, significant issues, conclusions, and recommendations and provide a request list for year-end procedures (Progress Meeting). Phase III: Final Field Work We direct our audit emphasis to the areas of significant risk, focusing on the unique characteristics of the District’s operating environment, the effectiveness of your internal controls, your financial statement amounts and disclosures, and the applicable compliance requirements. Utilizing data analytics and other audit techniques, EadiePayne reviews and analyzes account balances and transactions and certain general ledger accounts. Audit procedures may include, among others: • Confirmations of cash and investment balances; • Testing of bank reconciliations; • Examination of subsequent receipts of receivable balances; • Search for unrecorded liabilities; • Review of attorney letters; • Testing journal entries; • Use of client-prepared schedules and analysis; • Examination of supporting documents; and • Data mining analytics. All proposed audit adjustments will be discussed and explained to the designated Finance and Accounting personnel. We will request all entries booked after the year-end procedures have commenced to be provided to us. At the end of Phase II, we ask a designated Finance and Accounting personnel to formally approve all audit adjustments (Exit Conference). SPECIFIC AUDIT APPROACH EAST VALLEY WATER DISTRICT | 8 SPECIFIC AUDIT APPROACH Phase IV: Reporting The following reports will be prepared and delivered to the District based on timelines stated in the RFP: • Independent Auditor’s Report, expressing an opinion on the fair presentation of the District’s basic financial statements; • Report on internal control and compliance (in accordance with Government Auditing Standards); • Issue a separate “management letter” that includes recommendations for improvements in internal control, accounting procedures and other significant observations that are non-reportable conditions; • Auditor’s communication to those charged with governance that identifies significant audit findings, difficulties encountered, corrected and uncorrected misstatement, and other audit matters. A draft of these reports and copies of any journal entries and explanations to support changes to the trial balance will be provided to management for review prior to their issuance. All irregularities and illegal acts, or indications of illegal acts of which we become aware will be reported to the appropriate level of management and the Board of Directors. Eden C. Casareno, Engagement Partner, will present the audit reports, findings and recommendations to District’s management, Audit Committee, and the Board of Directors. Level of Staff and Number of Hours As noted in the transmittal letter, we are also providing 20 hours of complimentary consulting and staff training in addition to the above. Position/Task Planning Interim Field Work Final Field Work Reporting SCO Report Review Procedures & Reporting Single Audit TOTAL PROJECT HOURS Partner/Technical Reviewer 4 4 4 10 1 2 4 29 Supervisor 8 8 30 10 1 4 8 69 Senior 8 8 30 10 0 12 10 78 Staff 8 16 30 0 8 0 20 82 Clerical 00040 116 TOTALS 28 36 94 34 10 19 43 264 Audit and Related Reports Sample Sizes Sampling is one of many audit procedures we use to provide sufficient appropriate audit evidence to support our auditor’s opinion. We may use audit sampling procedures to obtain audit evidence during our testing of your internal controls and compliance and in our tests of details. We will select our sample sizes based on the characterization of the population. Statistical as well as non-statistical sampling may be used. Sample sizes will generally range from 25-60 items depending on the nature of transactions and purpose of the test. We may also use dual- or multi-purpose samples if the situation permits. In all cases, Teammate Analytics (Artificial Intelligence based data analytics tool) will be used to obtain a representative sample of the total population of the items to be tested. In addition, Teammate Analytics will also enable us to analyze 100% of the population which will provide more reliable results and more relevant insight. EAST VALLEY WATER DISTRICT | 9 Analytical Procedures We will use analytical procedures during the planning, performance, and review phases of our audit. We will analyze current and prior-year amounts to ensure changes from year to year are reasonable and proper. Variances will be followed up until we are satisfied that the current-year financial statements are fairly presented. We may also use specific ratio analyses and trend analyses of these ratios as well as budget to actual comparisons. We will use the many analytic tools available with Teammate Analytics to achieve success in this area. For example, with payroll testing, we are able to use the entire data set to derive employees with excessive overtime and time off. In testing manual journal entries posted we are able to use the entire population based on accounting software report to easily spot outlying entries for further inspection. Determining Laws and Regulations As part of the risk assessment process, EadiePayne obtains an understanding of laws, regulations, and provisions of contracts and grant agreements that have a direct and material effect on the District’s financial statements. Because governments are subject to many laws, regulations, and provisions of contracts or grant agreements, this process involves discussions with management, legal counsel, or grant administrators about your compliance requirements. Internal Control Audit risk assessment is established by an internal control review, combined with the engagement team’s understanding of the District’s operations and accounting software. Using the Committee of Sponsoring Organizations (COSO) Framework, staff members will evaluate the District’s processes and identify any control deficiencies. These diagnostic review procedures allow the engagement team to assess the District’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. Samples for Tests of Compliance To test compliance, we will follow the AICPA’s Audit Sampling Considerations of Uniform Guidance Compliance Audits. We will select appropriate sample size based on our professional judgment. Any deviations from control and compliance requirements will be documented and communicated to management. SPECIFIC AUDIT APPROACH EAST VALLEY WATER DISTRICT | 10 INDIVIDUALS AUTHORIZED TO MAKE REPRESENTATIONS FOR THE FIRM Eden C . Casareno, CPA License No. 89066 EadiePayne 3880 Lemon St., Suite 300 Riverside, CA 92501 Mobile: (909) 809-7662 Office: (951) 241-7805 ecasareno@eadiepaynellp.com Frank M. Zabaleta, CPA License No. 62419E EadiePayne 3880 Lemon St., Suite 300 Riverside, CA 92501 Mobile: (909) 557-8628 Office: (951) 241-7812 zabaleta@eadiepaynellp.com EadiePayne meets the independence requirements as defined by auditing standards generally accepted in the United States of America and the U.S. General Accountability Office’s Government Auditing Standards with respect to the District and its component units. INDEPENDENCE EAST VALLEY WATER DISTRICT | 11 EadiePayne is a leading local public accounting and business advisory firm in Southern California offering attest, accounting, management consulting, and tax services. With over 100 years of experience, our professional services team have successfully completed hundreds of audit engagements for governments, not-for-profit organizations and commercial businesses. Our office is in Riverside, California, and our professional services team includes approximately 20 professionals. Our governmental audit team consists of 10 professionals. EadiePayne has been providing accounting and auditing services for water districts, agencies, and other mutual water companies for over 40 years. We understand the environment in which the District operates and the challenges that it faces. We pride ourselves in being able to partner with our clients to take advantage of opportunities and to overcome challenges. Additionally, EadiePayne has developed proprietary processes for remote auditing that ensure the quality and efficiency of our audits in this new remote world we find ourselves in. In the last year we have completed over 50 fully remote or hybrid audits over a large geographical area. We will work with the District to design an audit approach that best suits the District’s needs and concerns, whether it be in person, fully remote, or a hybrid approach. We assembled an audit team possessing extensive knowledge of highly technical government accounting standards such as GASB 34, 68, 75, and 87 as well as government operations. Our team members have direct experience in assisting governments in assessing emerging risk, deploying the Committee of Sponsoring Organizations of Treadway Commission (COSO) Internal Control Framework, applying generally accepted accounting principles (GAAP), and complying with State and Federal regulations. Having managed numerous, large, complex projects, our team can ensure timely and dependable delivery of services to the District. FIRM QUALIFICATIONS AND EXPERIENCE EAST VALLEY WATER DISTRICT | 12 FIRM QUALIFICATIONS AND EXPERIENCE EadiePayne is licensed to practice as a certified public accounting firm in the State of California, license number 411. All of EadiePayne’s partners and assigned key engagement team members are certified public accountants (CPAs) licensed to practice in the State of California. License to Practice in California EAST VALLEY WATER DISTRICT | 13 We assembled the following professionals to be the District’s audit team. Their resumes provide information on their government auditing experience, continuing professional education (CPE) and membership in professional organizations (resumes are provided on pages 23 to 27. The quality of our staff is assured by providing relevant governmental CPE as required by Governmental Auditing Standards as well as day-to-day close supervision and training by more experienced professionals. Key personnel will be available to the extent proposed for the duration of the project. We acknowledge that no person designated as “key” to the project shall be removed or replaced without the prior written concurrence of the District. We acknowledge the District’s right to request replacement of any member of the firm’s auditing team at any time. All personnel will be available for on-site work activities as needed. PARTNER, SUPERVISORY AND STAFF QUALIFICATIONS AND EXPERIENCE Eden C. Casareno, CPAEden C. Casareno, CPA Engagement PartnerEngagement Partner 20 Years of Experience20 Years of Experience Principal point-of-contact for management, Audit/Finance Committee and Board of Directors; leads the team in assessing potential risks and developing solutions; overall commitment of timely delivery of service from EadiePayne. STAFFSTAFF Jaclyn Shankel, CPAJaclyn Shankel, CPA SupervisorSupervisor 4 Years of Experience4 Years of Experience Oversees the team in the field; assigns and reviews the work performed by senior/staff auditors; identifies and resolves potential audit issues; proposes recommendations for improvements. Kyle Pangan, CPAKyle Pangan, CPA Senior AccountantSenior Accountant 4 Years of Experience4 Years of Experience Document the District’s accounting and financial reporting processes; test and evaluate internal controls; analyze financial records; and prepare audit documentation. Brandon Ferrell, CPABrandon Ferrell, CPA Technical ReviewerTechnical Reviewer 15 Years of Experience15 Years of Experience Ensures that engagement meets EadiePayne’s high standards of quality. David McKissicDavid McKissic Information Technology ConsultantInformation Technology Consultant 23 Years of Experience23 Years of Experience Assess whether the IT control environment provides assurance that systems are operating as intended and that output is reliable. EAST VALLEY WATER DISTRICT | 14 Water Entities Served Big Bear Municipal Water District | Cedarpines Park Mutual Water Company | Fontana Union Water Company | Riverside Highland Water Company | Riverside Public Utilities | San Bernardino Valley Water Conservation District | San Gorgonio Pass Water Agency | Twentynine Palms Water District | West Valley Water District Cities Served City of Barstow | City of Compton | City of Eastvale | City of Huntington Park | City of Industry | City of Montebello | City of Moreno Valley | City of Riverside | City of Oxnard | City of Stockton Special Districts & Joint Powers of Authorities Served County of San Bernardino Special Districts | Hesperia Recreation and Park District | Inland Empire Resource Conservation District | Inland Valley Development Agency | Law Library for San Bernardino County | Orange County Public Law Library | Riverside County Law Library | San Bernardino Public Safety Authority | San Bernardino Regional Emergency Training Center | Wrightwood Community Services District Counties Served County of Los Angeles | County of San Bernardino Auditor-Controller/Treasurer/Tax Collector | County of Riverside | County of San Bernardino Department of Behavioral Health | County of San Bernardino Purchasing Department | Riverside County Department of Public Social Services | Riverside County Sheriff’s Department | Successor Agency to the County of San Bernardino Not-for-Profit Clients Served Antioch Church of Long Beach || ARC School of Hope || Building a Generation || California Central Service Association || California Housing Foundation, Inc. || Friends of CID || Girl Scouts of San Gorgonio || Immanuel Baptist Church of Highland || Immanuel Baptist Church of Ridgecrest || Inland Counties Regional Center, Inc. || Inland Empire Electrical Training Center || Inland Empire Latino Lawyers Association, Inc. || Inland Empire NECA-IBEW Labor-Management Cooperation Committee || KVCR Educational Foundation || Legal Aid Society of San Bernardino || Lions Camp at Teresita Pines || Local Union 477 IBEW Southern Sierras Chapter Training Fund || National Electrical Contractors Association, Southern Sierras Chapter | | Redlands Country Club || Rivers and Lands Conservancy || Santa Ana Watershed Association || SCPGA Foundation || Springboard CDFI || Technical Employment Training, Inc. FIRM QUALIFICATIONS AND EXPERIENCE Clients Served| EAST VALLEY WATER DISTRICT | 15 EadiePayne has successfully completed many projects that are similar to the services requested by the District. As requested, we presented 6 projects (completed and ongoing) below. We strongly encourage the District to reach out to our contact at each project to truly understand our commitment to working with our clients to ensure a quality and timely audit. REFERENCES Contact Name Betsy George, Chief Financial Officer Contact Telephone Number (805) 200-5400 Contact Email Address betsy.george@oxnard.org Contact Address 300 W. Third Street, Oxnard, CA 93030 Scope of Work Financial audits; single audits; Comprehensive Annual Report preparation (GFOA award recipient); assistance with GASB 68 & 75; assistance with corrective action plan; agreed-upon procedures for checks/warrants, EFTs and ACHs; agreed-upon procedures for Measure O; filing of SCO streets and financial transactions report; and Gann Appropriations Limit report Years Audited 2015 - Present Water Service Accounts and Annual Operating Budget Water accounts ~43,000/Water operating expenses~$51 million; Wastewater accounts ~40,000/ Wastewater operating expenses ~$30 million Client Service Executives Eden C. Casareno and Mary Maxion Contact Name Ray Kolisz, General Manager Contact Telephone Number (760) 367-1304 Contact Email Address rkolisz@29palmswater.org Contact Name Cindy Byerrum, Outside Accountant Contact Telephone Number (909) 204-8858 Contact Email Addres cbyerrum@eidebailly.com Contact Address 72401 Hatch Road, Twentynine Palms, CA 92277 Scope of Work Financial audits, preparation of financial statements, SCO report filing, Implementation of GASB pronouncements Years Audited 2018-Present Water Service Accounts and Annual Operating Budget Water accounts ~8,000/ Operating budget ~$5.2 million Client Service Executives Eden C. Casareno and Brandon Ferrell Contact Name Thomas Todd, Chief Financial Officer Contact Telephone Number (951) 845-2577 Contact Email Address ttodd@sgpwa.com Contact Address 1210 Beaumont Avenue, Beaumont, CA 92223 Scope of Work Financial audit, preparation of financial statements, assistance with hiring asset management company, and assistance with GASB 68 & 75 Years Audited 2017-2021 Water Service Accounts and Annual Operating Budget The Agency provides water to 3 water retailers / Operating expenses ~ $25 million Client Service Executives Eden C. Casareno and Brandon Ferrell Twentynine Palms Water District San Gorgonio Pass Water Agency City of Oxnard EAST VALLEY WATER DISTRICT | 16 Contact Name Mike Burrows, Executive Director Contact Telephone Number (909) 382-4100 Contact Email Address mburrows@sbdairport.com Contact Address 1601 E. Third Street, Suite 100, San Bernardino, CA 92408 Scope of Work Financial audit, including a Water Fund, single audits, preparation of GAAP financial statements, special procedures, SCO report filing, and cash reconciliation procedures Years Audited 2013-Present Client Service Executives Eden C. Casareno and Brandon Ferrell Contact Name Nick Chavez, General Manager Contact Telephone Number (760) 244-5488 Contact Email Address nchavez@hesperiaparks Contact Address P.O. Box 401055, Hesperia, California 92340 Scope of Work Financial audits, preparation of financial statements, SCO report filing Years Audited 2011-Present Client Service Executives Eden C. Casareno and Brandon Ferrell Contact Name Josue Palos, Division Manager Contact Telephone Number (909) 386-8824 Contact Email Address josue.palos@dpw.sbcounty.gov Contact Address 268 W Hospitality Lane 4th Floor, San Bernardino, California 92415 Scope of Work Financial audits, including Water and Sewer Funds Years Audited 2017-Present Water Service Accounts and Annual Operating Budget Water accounts ~13,000 / Operating Budget ~ $6.4 million Client Service Executives Eden C. Casareno and Mary Maxion Hesperia Recreation and Park District San Bernardino County Special Districts Inland Valley Development Agency REFERENCES EAST VALLEY WATER DISTRICT | 17 CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS 111 E. Victoria Street 2nd Floor, Santa Barbara, CA 93101, (805) 962-9175, Fax: 1 (805) 880-0350, www.mcgowan.com Report on the Firm’s System of Quality Control July 24, 2019 To the Partners of Eadie & Payne, LLP and the Peer Review Committee of California Society of Certified Public Accountants We have reviewed the system of quality control for the accounting and auditing practice of Eadie & Payne, LLP (the firm) in effect for the year ended April 30, 2019. 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.aicpa.org/prsummary. The summary also includes an explanation of how 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 its 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 firm’s compliance therewith based on our review. Required Selections and Considerations Engagements selected for review included engagements performed under Government Auditing Standards including a compliance audit 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 Eadie & Payne, LLP in effect for the year ended April 30, 2019, has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass, pass with deficiency(ies) or fail. Eadie & Payne, LLP has received a peer review rating of pass. McGowan Guntermann Report on the Firm’s System of Quality Control July 24, 2019 To the Partners of Eadie & Payne, LLP and the Peer Review Committee of California Society of Certified Public Accountants We have reviewed the system of quality control for the accounting and auditing practice of Eadie & Payne, LLP (the firm) in effect for the year ended April 30, 2019. 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 de- scribed in the Standards may be found at www.aicpa.org/prsummary. The summary also includes an explanation of how 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 reason- able assurance of performing and reporting in conformity with applicable professional standards in all material re- spects. 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 its 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 firm’s compliance therewith based on our review. Required Selections and Considerations Engagements selected for review included engagements performed under Government Auditing Standards including a compliance audit 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 Eadie & Payne, LLP in effect for the year ended April 30, 2019, has been suitably designed and complied with to provide the firm with reasonable as- surance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass, pass with deficiency(ies) or fail. Eadie & Payne, LLP has received a peer review rating of pass. McGowan Guntermann CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS 111 E. Victoria Street 2nd Floor, Santa Barbara, CA 93101, (805) 962-9175, Fax: 1 (805) 880-0350, www.mcgowan.com Report on the Firm’s System of Quality Control July 24, 2019 To the Partners of Eadie & Payne, LLP and the Peer Review Committee of California Society of Certified Public Accountants We have reviewed the system of quality control for the accounting and auditing practice of Eadie & Payne, LLP (the firm) in effect for the year ended April 30, 2019. 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.aicpa.org/prsummary. The summary also includes an explanation of how 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 its 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 firm’s compliance therewith based on our review. Required Selections and Considerations Engagements selected for review included engagements performed under Government Auditing Standards including a compliance audit 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 Eadie & Payne, LLP in effect for the year ended April 30, 2019, has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass, pass with deficiency(ies) or fail. Eadie & Payne, LLP has received a peer review rating of pass. McGowan Guntermann Our peer review letter dated July 24, 2019 expressed an opinion that the system for quality control for the auditing practice of EadiePayne met the objectives established by the AICPA. The quality control review included a review of specific governmental audit engagements performed under Government Auditing Standards and the Single Audit Act. PEER REVIEW LETTER EAST VALLEY WATER DISTRICT | 18 The quality of EadiePayne’s audits was affirmed by the State Controller’s Office. The State Controller’s Office initiated a quality control review of our audit of City of Oxnard’s financial statements. The review examined whether EadiePayne, as the City’s auditor, performed the scope of work in compliance with applicable auditing standards. EadiePayne received a clean opinion from the State Controller’s Office affirming the quality of our audits. The firm has had no federal or state desk reviews or field reviews of its audits during the past three (3) years. Neither had the firm any disciplinary action taken or pending against it during the past three (3) years with state regulatory bodies or professional organizations. PEER REVIEW LETTER State Controller’s Report| EAST VALLEY WATER DISTRICT | 19 SCOPE OF SINGLE AUDIT SERVICES The Single Audit requirement applies when the District has expended $750,000 or more of federal funds in a given fiscal year. Federal funds can come directly from a federal agency or can be passed- through from the State, county or another non-federal entity. In the Single Audit, our goal is to determine whether the District has complied with federal statutes, regulations, and the terms and conditions of federal awards that may have a direct and material effect on each of its major programs. The compliance audit includes gaining an understanding of and testing internal control over compliance for major program. We will use a risk-based approach to determine which federal programs are major programs. Our determination of the programs to audit is based on an overall evaluation of the risks of noncompliance occurring that could be material to the individual federal programs. Our procedures will include performing procedures described in the OMB Compliance Supplement applicable to the major federal program. We can assist in the preparation of the schedule of expenditures of Federal awards for the period covered by the financial statements. We will issue the following reports: • An “in-relation-to” report on the schedule of expenditures of federal awards • A report on the internal control structure used in administering federal programs • A report on compliance with general and specific requirements related to major federal awards. We will also complete the sections of the Data Collection Form that are our responsibility. EAST VALLEY WATER DISTRICT | 20 AUDIT FEES Total All-Inclusive Maximum Price EadiePayne’s total all-inclusive maximum price for the financial audit of the District and other services for the fiscal years ending June 30, 2022 through 2026 is as follows: REQUIRED ITEMS:2022 2023 2024 2025 2026 1. Financial Audit of the District $ 26,250 $ 26,910 $ 27,580 $ 28,270 $ 28,980 2. State Controller Office Report and Submission 1,195 1,220 1,250 1,280 1,310 3. Travel Expenses - - - - - SUB-TOTAL REQUIRED ITEMS $ 27,445 $ 28,130 $ 28,830 $ 29,550 $ 30,290 OPTIONAL ITEMS:2022 2023 2024 2025 2026 A. Separate financial review report for North Fork Water Company $ 2,615 $ 2,680 $ 2,750 $ 2,820 $ 2,890 B. Single audit examination of all federal grants 5,465 $ 5,600 $ 5,740 5,880 6,030 C. Compilation of the Annual Report Document - - - - - D. Audit of Internal Controls 16,200 16,610 17,030 17,460 17,900 E. Continuing Disclosure Annual Report - - - - - SUB-TOTAL OPTIONAL ITEMS $ 24,280 $ 24,890 $ 25,520 $ 26,160 $ 26,820 GRAND TOTAL $ 51,725 $ 53,020 $ 54,350 $ 55,710 $ 57,110 Fee for Fiscal Year Fee for optional additional Fiscal Year The above fees are inclusive of all costs, including meals, travel, and lodging. If it should become necessary for the District to request the Auditor to render any additional services, services shall be performed at the same rates set forth in the schedule of fees and expenses included above. EAST VALLEY WATER DISTRICT | 21 AUDIT FEES Rates by Partner, Supervisory and Staff POSITION 2021/22 2022/23 2023/24 2024/25 Partner 245$ 251$ 257$ 263$ Manager 200$ 205$ 210$ 215$ Supervisor 150$ 154$ 158$ 162$ Senior Accountant 120$ 123$ 126$ 129$ Staff Accountant 100$ 103$ 106$ 109$ Clerical Staff 85$ 87$ 89$ 91$ EAST VALLEY WATER DISTRICT | 22 APPENDIX EAST VALLEY WATER DISTRICT | 23 Resumes EDEN C. CASARENO, CPA Engagement Partner Office: 951.241.7805 | Mobile: 909.809.7662 | ecasareno@eadiepaynellp.com Ms. Casareno joined EadiePayne in 2002 and became a partner in 2009. Ms. Casareno ensures continual communication and high- quality execution, leveraging her 20 years of experience performing financial and compliance audits, assisting clients with complex governmental accounting and reporting requirements, evaluating internal control design and implementation, and developing solutions for government clients. Based on her experience providing similar services to governmental clients, Ms. Casareno can offer valuable insight on internal controls, ensuring successful identification of findings and development and implementation of solutions. Ms. Casareno’s governmental clients served include: In addition, she led the EadiePayne team in providing agreed-upon procedures to former redevelopment agencies in eight cities in Los Angeles County, Riverside County, San Bernardino County, and consulting services to City of Eastvale (property tax study), City of Moreno Valley (credit card process review), City of Riverside Public Utilities (water and electric revenues study), County of San Bernardino (CAL-Card audit, Countywide Risk Assessment study and Department of Behavioral Health special procedures), and West Valley Water District. RECENT RELEVANT CPE: • Avi Kwa Ame Farms • Cedarpines Park Mutual Water Company • City of Compton • City of Huntington Park • City of Moreno Valley • City of Oxnard • City of Riverside • County of Riverside • Fontana Union Water Company • HARD Foundation • Hesperia Recreation and Park District • Inland Empire IBEW-NECA Labor Management Cooperation Committee AICPA Annual Update for Accountants and Auditors: 2021 CCH 2021 GAAP, GAAS & SSARS Update: 2021 CSMFO Annual Conference: 2021, 2020, 2019 AICPA OMB Compliance Supplement and Covid-19 Audit Implications, 2021 AICPA GAQC 2020 Compliance Supplement: 2020 AICPA GAQC Update: 2020, 2019, 2018 EP Audit & Accounting Matters Related to Covid-19: 2020 EP GASB 87-Leases: 2020 CCH Common Frauds in Governmental Entities: 2020 CalCPA Government Auditing and Accounting Conference: 2020 AICPA 2020 State and Local Government Audit Planning Considerations: 2020 CSMFO Impact of Covid-19 on Financial Reporting and Single Audit: 2020 • Inland Empire Latino Lawyers Association • Inland Empire Resource Conservation District • Inland Valley Development Authority • Law Library for San Bernardino County • Legal Aid Society of San Bernardino, Inc. • Orange County Public Law Library • Riverside County Law Library • Riverside Highland Water Company • San Bernardino County Special Districts • San Gorgonio Pass Water Agency • Twentynine Palms Water District EDUCATION BS Degree in Business Administration, emphasis in Accounting, University of California, Riverside Leadership Excellence Summit, Brainard Strategy Leadership Academy Advanced Single Audit Certificate PROFESSIONAL ORGANIZATIONS American Institute of Certified Public Accountants California Society of Certified Public Accountants California Society of Municipal Finance Officers California Special Districts Association APPENDIX EAST VALLEY WATER DISTRICT | 24 BRANDON FERRELL, CPA Technical Reviewer Office: 951.241.7814 | Mobile: 909.767.3011| bferrell@eadiepaynellp.com Mr. Ferrell leads in the planning, organization and execution of attest engagements. He has strong interpersonal, communication, and project management skills, which are necessary to meet your service expectations. Mr. Ferrell is able to apply technical accounting and auditing knowledge to real-life situations of the clients he serves. He is committed to exceeding his clients expectations by providing quality and timely service in an ever-changing environment. Mr. Ferrell’s governmental clients served include: As a senior manager, Mr. Ferrell will work closely with management to ensure that EadiePayne is being responsive to the reporting needs within the time frame developed by management. Additionally, Mr. Ferrell will perform top level review of project work. Mr. Ferrell leads EadiePayne’s Knowledge Coach and Data Analytics implementation. • Cedarpines Park Mutual Water Company • City of Moreno Valley • City of Oxnard • City of Riverside • City of Stockton • County of Riverside • Fontana Union Water Company • Hesperia Recreation and Park District • Inland Empire Latino Lawyers Association Inc • Inland Empire Resource Conservation District • Inland Valley Development Agency • Law Library of San Bernardino County • Legal Aid Society of San Bernardino, Inc. • Riverside County Law Library • Riverside Highland Water Company • San Bernardino Regional Emergency Training Center • San Bernardino County Special Districts • San Gorgonio Pass Water Agency • Twentynine Palms Water District • Wrightwood Community Services District ACADEMY, 2019 EDUCATION BS Degree in Business Administration with emphasis in Accounting, University of La VerneBS Degree in Business Administration with emphasis in Accounting, University of La Verne PROFESSIONAL ORGANIZATIONS American Institute of Certified Public Accountants California Society of Certified Public Accountants National Society of Accountants for Cooperatives - Program Committee California Special Districts Association - Fiscal Committee - Audit Committee RECENT RELEVANT CPE: Calcpa The CARES Act: How it Impacts Government and Public Agencies: 2021 AICPA Preparing for your Single Audit: 2021 AICPA Compliance Supplement and Single Audit Update: 2021 EP New SAS, SSARS and SSAE: 2021 Calcpa Risk Assessment Compliance Standards: 2021 AICPA Government Audit Quality Center Update: 2021, 2020, 2019, 2018 AICPA CPA Best Practices For Working Remotely: 2020 Wolters Kluwer Government Accounting & Auditing Update: 2020 Wolters Kluwer Common Deficiencies: Audits Under Gov’t Auditing Standards and the Single Audit Act: 2020 Wolters Kluwer Government Auditing Standards and Foundations: 2020 EP A&A Matters Related to Covid: 2020 CSMFO GASB Update -The Implementation Guides are here: 2020 CSMFO Lease Accounting, Part Deux: 2020 CSMFO One Day You’ll Wake up and Have Material Weaknesses in Internal Control: 2020 CSMFO Read all About it: The Blue Book Has Been Updated: 2020 CSMFO SB 998-The Do’s, The Don’ts, and The “It Depends:” 2020 EP GASB 87-Leases: 2020 EAST VALLEY WATER DISTRICT | 25 DAVID W. MCKISSIC Information Technology Consultant Office: 951.241.7800 | mckissic@eadiepaynellp.com Mr. McKissic joined the EadiePayne team in 2017 as the firm’s Information Technology Operations and Security Consultant. He is a solution driven IT professional with a long list of satisfied customers in a wide range of service industries. He is skilled in the strategic planning, design, and implementation of highly scalable, robust, and secure networks. Mr. McKissic has performed IT risk assessments, remediation testing, and attest services for several municipal government clients. He provides Cybersecurity Awareness Training to organizations on an ongoing basis, and is competent in speaking about topics such as Disaster Recovery and BCP, Importance of Device security, How to prepare for Social Engineering and Phishing Attacks, and The Importance of Multi-Factor Authentication in a Modern Workplace. Mr. McKissic has over 15 years of experience in business development, strategic planning, and technology evangelism, with 6+ years as Chief Technology Officer for IT service organizations. Most recently he serves as a senior engineer of Acorn Technology Services, where he helps lead the team of IT service engineers and helpdesk technicians. David has a deep passion for all things technology and thrives where he can bring high value solutions to organizations, often reaching goals under budget and ahead of schedules. Mr. McKissic began his IT career in 1999 with his consulting firm Dave2k.org, performing Y2K compliance updates for local government and municipality organizations. While still in high school, David obtained CompTIA A+, and Network+ certifications. During his time in college he obtained Cisco CCNA, and CompTIA Security+ certifications. Mr. McKissic is currently pursuing ISC2 CISSP certification. Mr. McKissic currently provides information technology consulting services to over 65 clients, in various industries, including governmental agencies and municipalities. His governmental clients served include: • City of Covina • City of Compton • City of Lomita • City of La Quinta • City of Monrovia • City of Oxnard • City of San Jacinto • City of South Pasadena • First 5 of Riverside County • Hesperia Recreation and Park District • Jurupa Recreation and Park District • Beaumont Recreation and Park District • Riverside Community College District • Riverside County Fire Department • Rubidoux Community Services District • San Bernardino County Special Districts` EDUCATION CSNT, New England Institute of Technology, Warwick RI, 2005 PROFESSIONAL ORGANIZATIONS Orange County VMWare Users Group (VMUG) Southern California Cloud Computing groups CERTIFICATIONS Criminal Justice Information System Security EAST VALLEY WATER DISTRICT | 26 JACLYN SHANKEL, CPA Supervisor Office: 951.241.7819 | Mobile: 909.557.5751| jshankel@eadiepaynellp.com Ms. Shankel joined EP in 2018 as a senior accountant, and was promoted to supervisor in January 2020. Ms. Shankel assists in the planning and execution of the engagement, provides valuable guidance to staff during audit fieldwork, and serves as a central point of contact for clients during the audit. She has developed strong skills in the application of accounting principles, including a thorough understanding of government accounting and correlated compliance requirements. Additionally, Ms. Shankel demonstrates strong skills in interpersonal communication, which provides opportunities for collaboration between the audit team and the client. Ms. Shankel’s clients served include: • Avi Kwa Ame Farms • Cedarpines Park Mutual Water Company • City of Compton • City of Huntington Park • City of Moreno Valley • City of Oxnard • City of Riverside • County of Riverside • Fontana Union Water Company • HARD Foundation • Hesperia Recreation and Park District • Inland Empire IBEW-NECA Labor Management Cooperation Committee • Inland Empire Latino Lawyers Association • Inland Empire Resource Conservation District • Inland Valley Development Authority • Law Library for San Bernardino County • Legal Aid Society of San Bernardino, Inc. • Orange County Public Law Library • Riverside County Law Library • Riverside Highland Water Company • San Bernardino County Special Districts • San Gorgonio Pass Water Agency • Twentynine Palms Water District ACADEMY, 2019 EDUCATION BA in Business and History, Walla Walla University (Summa Cum Laude)BA in Business and History, Walla Walla University (Summa Cum Laude) MA in Early Modern History, King’s College, London (Merit)MA in Early Modern History, King’s College, London (Merit) PROFESSIONAL ORGANIZATIONS American Institute of Certified Public Accountants California Society of Certified Public Accountants RECENT RELEVANT CPE: CCH 2021 GAAP, GAAS & SSARS Update: 2021 AICPA OMB Compliance Supplement and Covid-19 Audit Implications, 2021 EP Single Audit Intermediate Training: 2020 CSMFO GASB Update, 2020 CSMFO Material Weaknesses in Internal Control, 2020 CSMFO Actuarial Information/Valuations 101, 2020 CSMFO Lessons in Cybersecurity from the Hacker’s Playbook, 2020 GASB Pension Standards Overview, 2020 COVID-19 Impact on Payroll and Payroll Fraud, 2020 Teammate Analytics, 2020 Leaderology SOPs Ascent Program, 2020 AICPA Government Audit Quality Center Update: 2019 Overview of Governmental Accounting: 2019 EP The Firm’s System of Quality Control: 2019 Statement of Cash Flows: 2019 CSMFO Annual Conference, 2019: IT Control Environment CSMFO Annual Conference, 2019: Don’t be a victim of Fraud Regulatory Ethics Guidebook for CPAs: AICPA Code of Professional Conduct: 2021 Form 990: Fovernance, Transparency, and Transactions with Interested Persons: 2021 Financial Instruments Accounting Standard Update Explained: 2021 Forensic Accounting: Fraud Investigations: 2021 CalCPA New Manager Series: 2021 EAST VALLEY WATER DISTRICT | 27 KYLE PANGAN, CPA Senior Accountant Office: 951.241.7833 | Mobile: 909.557.3421| kpangan@eadiepaynellp.com Mr. Pangan joined EadiePayne in 2019 as a Senior Accountant, bringing over a year of not-for-profit audit experience. He exhibits a strong understanding of generally accepted accounting principles. He also has proven to be a key team member in audit engagements by finding efficiencies in performing substantive procedures and effectively communicating important accounting matters to the engagement team. Mr. Pangan’s clients served include: • Cedarpines Park Mutual Water Company • City of Compton • City of Huntington Park • City of Oxnard • City of South Pasadena • County of Riverside • Hesperia Recreation and Park District • Inland Empire Labor-Management Cooperation Committee • Inland Empire Latino Lawyers Association • Inland Empire Resource Conservation District • Inland Valley Development Agency • Law Library for San Bernardino County • Legal Aid Society of San Bernardino • Riverside County Law Library • Riverside Highland Water Company • San Bernardino County Special Districts • San Gorgonio Pass Water Agency • Twentynine Palms Water District • Wrightwood Community Services District PROFESSIONAL ORGANIZATIONS American Institute of Certified Public Accountants California Society of Certified Public Accountants RECENT RELEVANT CPE: New Auditing Standards Effective For Years Ending 12/15/21+SSARS & SSAE Updates 2021 GAAP, GAAS, & SSARS Update AICPA OMB Compliance Supplement and Covid-19 Audit Implications, 2021 EP Single Audit Intermediate Training: 2020 Wolters Kluwer GAAP for State and Local Governments: 2020 Wolters Kluwer Common Deficiencies: Audits Under Gov’t Auditing Standards and the Single Audit Act: 2020 Thomson Reuters Internal Control and Fraud in Governments & Nonprofits: 2020 CSMFO Actuarial Information Valuation 101: 2020 CSMFO Keynote Speaker Rebecca Ryan: 2020 CSMFO Read All About it: The Blue Book has Been Updated: 2020 GAO’s Yellow Book - Attestation Engagements: 2020 Major Program Determination Under Uniform Guidance: 2020 Audit Documentation: 2019 Audits of State and Local Government: 2019 Government Accounting Principles: 2019 EDUCATION Bachelor of Technology in Accounting, British Columbia Institute of Technology Associate’s Degree in Accounting Management, British Columbia Institute of Technology