HomeMy WebLinkAboutAGENDA REPORT 2016 0601 CC REG ITEM 10F ITEM 10.F.
CITYOF MOORPARK,CALIFORNIA
City Council Meeting
ACTION: 40,0Asited Ate
MOORPARK CITY COUNCIL i gees�_ z «
AGENDA REPORT
By: • `
TO: Honorable City Council
FROM: Ron Ahlers, Finance Director
DATE: May 25, 2016 (City Council meeting of June 1, 2016)
SUBJECT: Consider Engagement Letter from External Auditors for Fiscal Year
(FY) 2015/16 Audit
BACKGROUND
Annually the City of Moorpark engages the services of a CPA firm to perform an audit of
the financial statements of the City. The City contracts with the firm of Rogers,
Anderson, Malody & Scott, LLP Certified Public Accountants (RAMS) for these services
for a five year period. The attached letter specifies the performance of the audit in
regards to: Audit Objectives, Management Responsibilities, Auditing Procedures,
Internal Controls and Compliance, Fees charged and a peer performance review.
DISCUSSION
Auditing standards (SAS 114) require that communications from the audit firm be sent
to the governing board of the corporation. The attached engagement letter requires the
signature of a City official. Staff recommends that the City Council authorize the City
Manager to sign the engagement letter.
FISCAL IMPACT
The FY 2015/16 audit shall cost a maximum of $34,700. This amount is included in the
proposed budget for FY 2016/17.
STAFF RECOMMENDATION
Authorize the City Manager to sign the engagement letter, subject to the final language
approval by the City Manager.
Attachment: RAMS Engagement Letter regarding the Fiscal Year 2015/16 Audit
87
RA ROGERS. ANDERSON, MALODY& SCOTT, LLP
MCERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948
May 25, 2016
735 E.Carnegie Dr. Suite 00
San Bernardino,CA 92408
909 889 0871 T
909 889 5361 F To the Honorable City Council
ramscpa.net City of Moorpark
799 Moorpark Avenue
Moorpark, California 93021
PARTNERS
Brenda L. Odle,CPA.MST
Terry P. Shea,CPA
Kirk A.Franks,CPA The following represents our understanding of the services we will provide
Scott W. Manno,CPA.CGMA the City of Moorpark (the City). You have requested that we audit the
Leena Shanbhag,CPA MST.CGMA financial statements of thegovernmental activities, each major fund, and
Bradferd A.Welebir,CPA.MBA.CGMA thea reremaining City,
Jay H.Zercher,CPA(Partner Emeritus)
aggregate fund information of the Ci as of June 30, 2016,
Phillip H. Waller,CPA(Partner Emeritus) and for the year then ended and the related notes to the financial
statements, which collectively comprise the City's basic financial
MANAGERS I STAFF statements. In addition, we will audit the City'scompliance over major
Jenny Liu.CPA.MST p
Seong-Hyea Lee,CPA MBA federal award programs for the period ended June 30, 2016, if applicable.
Charles De Simoni.CPA We are pleased to confirm our acceptance and our understanding of this
Nathan Statham,CPA.MBA audit engagement by means of this letter. Our audits will be conducted with
Brigitta Bartha,CPA the objective of our expressing opinion on each opinion unit and an
Gardenya Duran,CPA p 9 an P p
Juan Romero,CPA opinion on compliance regarding the City's major federal award programs,
Ivan Gonzales,CPA MSA if applicable.
Brianna Pascoe,CPA
Daniel Hernandez,CPA.MBA
Ryan Smith,CPA Accounting principles generally accepted in the United States of America
require that supplementary information, such as management's discussion
and analysis (MD&A) and budgetary comparison information be presented
to supplement the basic financial statements. Such information, although
not a part of the basic financial statements, is required by the
Governmental Adcounting Standards Board, who considers it to be an
essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context.
As part of our engagement, we will apply certain limited procedures to the
required supplementary information (RSI) in accordance with auditing
standards generally accepted in the United States of America. These
limited procedures will consist primarily of inquiries of management
regarding their methods of measurement and presentation, and comparing
the information for consistency with management's responses to our
inquiries. We will not express an opinion or provide any form of assurance
MEMBERS on the RSI. The followingRSI is required byaccounting Institute of q � principles generally
Certified Public Accountants accepted in the United States of America. This RSI will be subjected to •
PCPS The AICPA Alliance certain limited procedures but will not be audited:
for CPA Firms
Governmental Audit 1) Management's Discussion and Analysis
Quality Center 2) Budgetary Comparison Schedules-General Fund
California Society of 3) Budgetary Comparison Schedules-Major Special Revenue Funds
Certified Public Accountants 4) Schedule of Funding Progress-OPEB
5) Schedule of the Proportionate Share of the Plans Net Pension
Liability and Related Ratios as of the Measurement Date
6) Schedule of Plan Contributions
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STABILITY. ACCURACY. TRUST.
Honorable City Council
City of Moorpark
Supplementary information other than RSI will accompany the City's basic financial statements.
The supplementary information will be presented for purposes of additional analysis and is not a
required part of the financial statements. Such information will be subjected to the auditing
procedures applied in the audit of the financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and
other records used to prepare the financial statements or to the financial statements
themselves, and other additional procedures in accordance with auditing standards generally
accepted in the United States of America. Our auditor's report will provide an opinion on the
supplementary information in relation to the financial statements as a whole:
1) Combining Schedules of Non-Major Funds
2) Budgetary Comparison Schedules of Non-Major Funds
3) Budgetary Comparison Schedules of Major Non-Special Revenue Funds
Also, the document we submit to you will include the following other additional information that
will not be subjected to the auditing procedures applied in our audit of the financial statements:
1) Transmittal Letter
2) Statistical Section
Schedule of Expenditures of Federal Awards, if applicable
We will subject the schedule of expenditures of federal awards to the auditing procedures
applied in our audit of the basic financial statements and certain additional procedures, including
comparing and reconciling the schedule to the underlying accounting and other records used to
prepare the financial statements or to the financial statements themselves, and additional
procedures in accordance with auditing standards generally accepted in the United States of
America. We intend to provide an opinion on whether the schedule of expenditures of federal
awards is presented fairly in all material respects in relation to the financial statements as a
whole.
Data Collection Form, if applicable
Prior to the completion of our engagement, we will complete the sections of the Data Collection
Form that are our responsibility. The form will summarize our audit findings, amounts and
conclusions. It is management's responsibility to submit a reporting package including financial
statements, schedule of expenditure of federal awards, summary schedule of prior audit findings
and corrective action plan along with the Data Collection Form to the federal audit
clearinghouse. The financial reporting package must be text searchable, unencrypted, and
unlocked. Otherwise, the reporting package will not be accepted by the federal audit
clearinghouse. We will assist you in the electronic submission and certification. You may
request from us copies of our report for you to include with the reporting package submitted to
pass-through entities.
The Data Collection Form is required to be submitted within the earlier of 30 days after receipt
of our auditors' reports or nine months after the end of the audit period, unless specifically
waived by a federal cognizant or oversight agency for audits. Data Collection Forms submitted
untimely are one of the factors in assessing programs at a higher risk.
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Honorable City Council
City of Moorpark
The Objective of an Audit
The objective of our audit is the expression of opinions as to whether your basic financial
statements are fairly presented, in all material respects, in accordance with generally accepted
accounting principles and to report on the fairness of the supplementary information referred to
in the second paragraph when considered in relation to the financial statements as a whole. Our
audit will be conducted in accordance with auditing standards generally accepted in the United
States of America and will include tests of the accounting records and other procedures we
consider necessary to enable us to express such opinions. We cannot provide assurance that
unmodified opinions will be expressed. Circumstances may arise in which it is necessary for us
to modify our opinions or add emphasis-of-matter or other-matter paragraphs. If our opinions on
the financial statements are other than unmodified, we will discuss the reasons with you in
advance. If, for any reason, we are unable to complete the audit or are unable to form or have
not formed opinions, we may decline to express opinions or to issue a report as a result of this
engagement.
General Audit Procedures
We will conduct our audit in accordance with auditing standards generally accepted in the
United States of America (U.S. GMS), the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States of
America; the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200,
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards (Uniform Guidance), and any state or regulatory audit requirements. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
basic financial statements are free from material misstatement. An audit involves performing
procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to
error, fraudulent financial reporting, misappropriation of assets, or violations of laws,
governmental regulations, grant agreements, or contractual agreements. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
Internal Control Audit Procedures
Because of the inherent limitations of an audit, together with the inherent limitations of internal
control, an unavoidable risk that some material misstatements may not be detected exists, even
though the audit is properly planned and performed in accordance with U.S. GAAS and
Government Auditing Standards of the Comptroller General of the United States of America,
and any state or regulatory audit requirements.
In making our risk assessments, we consider internal control relevant to the City's preparation
and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control. However, we will communicate to you in writing
concerning any significant deficiencies or material weaknesses in internal control relevant to the
audit of the financial statements that we have identified during the audit.
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Honorable City Council
City of Moorpark
Audit of Major Program Compliance, if applicable
Our audit of the City's major federal award program(s) compliance will be conducted in
accordance with the requirements of the Single Audit Act, as amended; and the Uniform
Guidance, and will include tests of accounting records, a determination of major programs in
accordance with the Uniform Guidance and other procedures we consider necessary to enable
us to express such an opinion on major federal award program compliance and to render the
required reports. We cannot provide assurance that an unmodified opinion on compliance will
be expressed. Circumstances may arise in which it is necessary for us to modify our opinion or
withdraw from the engagement.
The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable
assurance about whether the City has complied with applicable laws and regulations and the
provisions of contracts and grant agreements applicable to major federal award programs. Our
procedures will consist of determining major federal programs and performing the applicable
procedures described in the U.S. Office of Management and Budget OMB Compliance
Supplement for the types of compliance requirements that could have a direct and material
effect on each of the City's major programs. The purpose of those procedures will be to express
an opinion on the City's compliance with requirements applicable to each of its major programs
in our report on compliance issued pursuant to the Uniform Guidance.
Also, as required by the Uniform Guidance, we will perform tests of controls to evaluate the
effectiveness of the design and operation of controls that we consider relevant to preventing or
detecting material noncompliance with compliance requirements applicable to each of the City's
major federal award programs. However, our tests will be less in scope than would be
necessary to render an opinion on these controls and, accordingly, no opinion will be expressed
in our report.
We will issue a report on compliance that will include an opinion or disclaimer of opinion
regarding the City's major federal award programs, and a report on internal controls over
compliance that will report any significant deficiencies and material weaknesses identified;
however, such report will not express an opinion on internal control.
Compliance with Laws and Regulations
As part of obtaining reasonable assurance about whether the financial statements are free of
material misstatement, we will perform tests of the City's compliance with the provisions of
applicable laws, regulations, contracts, and agreements. However, the objective of our audit will
not be to provide an opinion on overall compliance and we will not express such an opinion.
Management Responsibilities
Our audit will be conducted on the basis that management and, when appropriate, those
charged with governance acknowledge and understand that they have responsibility:
a. For the preparation and fair presentation of the financial statements in accordance with
accounting principles generally accepted in the United States of America;
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Honorable City Council
City of Moorpark
b. For the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material
misstatement, whether due to error, fraudulent financial reporting, misappropriation of
assets, or violations of laws, governmental regulations, grant agreements, or contractual
agreements;
c. For safeguarding assets;
d. For identifying all federal awards expended during the period including federal awards
and funding increments received prior to June 30, 2016, and those received in
accordance with the Uniform Guidance generally received after June 30, 2016, if
required;
e. For preparing the schedule of expenses of federal awards (including notes and noncash
assistance received) in accordance with the Uniform Guidance requirements, if required;
f. For the design, implementation, and maintenance of internal control over compliance;
g. For identifying and ensuring that the City complies with laws, regulations, grants, and
contracts applicable to its activities and its federal award programs, if applicable;
h. For following up and taking corrective action on reported audit findings from prior periods
and preparing a summary schedule of prior audit findings, if applicable;
i. For following up and taking corrective action on current year audit findings and preparing
a corrective action plan for such findings, if applicable;
j. For submitting the reporting package and data collection form to the appropriate parties, if
required;
k. For making the auditor aware of any significant vendor relationships where the vendor is
responsible for program compliance, if required;
I. To provide us with:
i. Access to all information of which management is aware that is relevant to the
preparation and fair presentation of the financial statements such as records,
documentation, and other matters;
ii. Additional information that we may request from management for the purpose of
the audit; and
iii. Unrestricted access to persons within the City from whom we determine it
necessary to obtain audit evidence.
m. For including the auditor's report in any document containing financial statements that
indicates that such financial statements have been audited by the City's auditor;
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I!ounoo algesouoH
Honorable City Council
City of Moorpark
Terry Shea, CPA, is the engagement partner for the audit services specified in this letter. His
responsibilities include supervising services performed as part of this engagement and signing
or authorizing another qualified firm representative to sign the audit report.
Our fees for these services are detailed in Attachment "A" to this agreement. Our standard
hourly rates vary according to your audit. Our invoices for these services will be rendered each
month and are payable upon presentation. If we elect to terminate our services for nonpayment,
our engagement will be deemed to have been completed upon written notification of
termination, even if we have not completed our report(s). You will still be obligated to
compensate us for all time expended and to reimburse us for all out-of-pocket costs through the
date of termination. The above fee is based on anticipated cooperation from your personnel and
the assumption that unexpected circumstances will not be encountered during the audit. If
significant additional time is necessary, we will discuss it with you and arrive at a new fee
estimate before we incur the additional costs.
Whenever possible, we will attempt to use the City's personnel to assist in the preparation of
schedules and analyses of accounts. This effort could substantially reduce our time
requirements and facilitate the timely conclusion of the audit. Further, we will be available during
the year to consult with you on financial management and accounting matters of a routine
nature.
With respect to any non-attest services we perform, City's management is responsible for (a)
making all management decisions and performing all management functions; (b) assigning a
competent individual to oversee the services; (c) evaluating the adequacy of the services
performed; (d) evaluating and accepting responsibility for the results of the services performed;
and (e) establishing and maintaining internal controls, including monitoring ongoing activities.
Government Auditing Standards require that we document an assessment of the skills,
knowledge, and experience of management, should we participate in any form of preparation of
the basic financial statements and related schedules or disclosures as these actions are
deemed a non-audit service.
During the course of the audit we may observe opportunities for economy in, or improved
controls over, your operations. We will bring such matters to the attention of the appropriate
level of management, either orally or in writing.
We agree to retain our audit documentation or work papers for a period of at least seven years
from the date of our report.
At the conclusion of our audit engagement, we will communicate to those charged with
governance the following significant findings from the audit:
• Our view about the qualitative aspects of the City's significant accounting practices;
• Significant difficulties, if any, encountered during the audit;
• Uncorrected misstatements, other than those we believe are trivial, if any;
• Disagreements with management, if any;
• Other findings or issues, if any, arising from the audit that are, in our professional
judgment, significant and relevant to those charged with governance regarding their
oversight of the financial reporting process;
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• Material, corrected misstatements that were brought to the attention of management as
a result of our audit procedures;
• Representations we requested from management;
• Management's consultations with other accountants, if any; and
• Significant issues, if any, arising from the audit that were discussed, or the subject of
correspondence, with management.
The audit documentation for this engagement is the property of Rogers, Anderson, Melody &
Scott, LLP (RAMS) and constitutes confidential information. However, we may be requested to
make certain audit documentation available to regulators and federal agencies and the U.S.
Government Accountability Office pursuant to authority given to it by law or regulation, or to
peer reviewers. If requested, access to such audit documentation will be provided under the
supervision of RAMS personnel. Furthermore, upon request, we may provide copies of selected
audit documentation to regulators. The regulators may intend, or decide, to distribute the copies
of information contained therein to others, including other governmental agencies.
In accordance with the requirements of Government Auditing Standards, we have attached a
copy of our latest external peer review report of our firm for your consideration and files.
Please sign and return the original of this letter to indicate your acknowledgment of, and
agreement with, the arrangements for our audit of the financial statements and compliance over
major federal award programs including our respective responsibilities. Please keep the copy for
your records.
We appreciate the opportunity to be your financial statement auditors and look forward to
working with you and your staff.
Respectfully,
Rogers, Anderson, Melody & Scott, LLP
Afr _
Terry Shia, CPA
Partner
RESPONSE:
This letter correctly sets forth our understanding of the City of Moorpark.
Title:
Date:
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Attachment"A"
CITY OF MOORPARK
SCHEDULE OF PROFESSIONAL FEES AND EXPENSES
FOR THE AUDIT OF THE JUNE 30, 2016 FINANCIAL STATEMENTS
Base Services: Total
City Audit& Related Reports $ 23,000
Successor Agency Audit 5,000
Single Audit& Related Reports(if applicable) 3,500
Sub-total Base Costs 31,500
Optional Services:
State Controller's Report-Cities Financial Transactions Report 3,200
Sub-total Optional Costs 3,200
Annual Maximum Fees $ 34,700
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Grant Bennett Associates
A PROFESSIONAL CORPORATION ,•:,:u:::.•;: -ion. :r ads;-:uz;•i;
.:r... a t:i,r,1(.:•r.,. Fern.
SYSTEM REVIEW REPORT
June 30.2015
To the owners of Rogers.Anderson.Malody&Scott,LLP and the Peer Review
Committee of the California Society of Certified Public Accountants
We have reviewed the system of quality control for the accounting and auditing practice
of Rogers,Anderson,Malody&Scott.LLP (the firm)in effect for the year ended
November 30,2014. Our peer review was conducted in accordance with the Standards
for Performing and Reporting on Peer Reviews established by the Peer Review Board of
the American Institute of Certified Public Accountants. As part of our peer review, we
considered reviews by regulatory entities,if applicable,in determining the nature and
extent of our procedures. The firm is responsible for designing a system of quality
control and complying with it to provide the firm with reasonable assurance of
performing and reporting in conformity with applicable professional standards in all
material respects. Our responsibility is to express an opinion on the design of the system
of quality control and the firm's compliance therewith based on our review. The nature,
objectives,scope,limitations of,and the procedures performed in a System Review are
described in the standards at www.aicpa.oreiprsummarv.
As required by the standards, engagements selected for review included engagements
performed under the Government Auditing Standards and audits of employee benefit
plans.
In our opinion,the system of quality control for the accounting and auditing practice of
Rogers,Anderson,Malody&Scott,LLP in effect for the year ended November 30,
2014,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. Rogers,Anderson,Malody&Scott, LLP received a peer review
rating of pass.
GRANT BENNETT ASSOCIATES
A PROFESSIONAL CORPORATION
Certified Public Accountants
GB A 1375 Exposition Boulevard, Suite 230 P.O. Box 223096
C P A Sacramento, CA 95815 Princeville, HI 96722
awxgtapamm 916/922-5109 FAX 916/641-5200 888/769-7323
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