CONTRACT 5599 Professional Services Agreement CLOSED Agreement No. 5599
Agreement No. ,
PROFESSIONAL SERVICES AGREEMENT
BETWEEN
THE CITY OF EL SEGUNDO AND
THE PUN GROUP LLP
This AGREEMENT is made and entered into this 1St day of October, 2018, by
and between the CITY OF EL SEGUNDO, a municipal corporation and general law city
("CITY") and THE PUN GROUP, a limited liability partnership ("CONSULTANT"). The
parties agree as follows:
1. CONSIDERATION.
A. As partial consideration, CONSULTANT agrees to perform the work listed
in the SCOPE OF SERVICES, below;
B. As additional consideration, CONSULTANT and CITY agree to abide by
the terms and conditions contained in this Agreement;
C. As additional consideration, CITY agrees to pay CONSULTANT a sum not
to exceed Sixty-Four thousand dollars ($64,000) for CONSULTANT's
services. CITY may modify this amount as set forth below. Unless
otherwise specified by written amendment to this Agreement, CITY will
pay this sum as specified in the attached Exhibit "A," which is incorporated
by reference.
2. SCOPE OF SERVICES.
A. CONSULTANT will perform services listed in the attached Exhibit "A,"
which is incorporated by reference.
B. CONSULTANT will, in a professional manner, furnish all of the labor,
technical, administrative, professional and other personnel, all supplies
and materials, equipment, printing, vehicles, transportation, office space
and facilities, and all tests, testing and analyses, calculation, and all other
means whatsoever, except as herein otherwise expressly specified to be
furnished by CITY, necessary or proper to perform and complete the work
and provide the professional services required of CONSULTANT by this
Agreement.
3. PERFORMANCE STANDARDS. While performing this Agreement, CONSULTANT
will use the appropriate generally accepted professional standards of practice existing at
the time of performance utilized by persons engaged in providing similar services. CITY
will continuously monitor CONSULTANT's services. CITY will notify CONSULTANT of
any deficiencies and CONSULTANT will have fifteen (15) days after such notification to
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cure any shortcomings to CITY's satisfaction. Costs associated with curing the
deficiencies will be borne by CONSULTANT.
4. PAYMENTS. For CITY to pay CONSULTANT as specified by this Agreement,
CONSULTANT must submit a detailed invoice to CITY which lists the hours worked and
hourly rates for each personnel category and reimbursable costs (all as set forth in
Exhibit "A") the tasks performed, the percentage of the task completed during the billing
period, the cumulative percentage completed for each task, the total cost of that work
during the preceding billing month and a cumulative cash flow curve showing projected
and actual expenditures versus time to date.
5. NON-APPROPRIATION OF FUNDS. Payments due and payable to CONSULTANT
for current services are within the current budget and within an available, unexhausted
and unencumbered appropriation of the CITY. In the event the CITY has not
appropriated sufficient funds for payment of CONSULTANT services beyond the current
fiscal year, this Agreement will cover only those costs incurred up to the conclusion of
the current fiscal year.
6. FAMILIARITY WITH WORK.
A. By executing this Agreement, CONSULTANT agrees that it has:
I. Carefully investigated and considered the scope of services to be
performed;
ii. Carefully considered how the services should be performed; and
III. Understands the facilities, difficulties, and restrictions attending
performance of the services under this Agreement.
B. if services involve work upon any site, CONSULTANT agrees that
CONSULTANT has or will investigate the site and is or will be fully
acquainted with the conditions there existing, before commencing the
services hereunder. Should CONSULTANT discover any latent or
unknown conditions that may materially affect the performance of the
services, CONSULTANT will immediately inform CITY of such fact and will
not proceed except at CONSULTANT's own risk until written Instructions
are received from CITY.
7. TERM. The term of this Agreement will be from October 1, 2018 to September 30,
2019. Unless otherwise determined by written amendment between the parties, this
Agreement will terminate in the following instances:
A. Completion of the work specified in Exhibit"A";
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B. Termination as stated in Section 15.
8. TIME FOR PERFORMANCE.
A. CONSULTANT will not perform any work under this Agreement until:
i. CONSULTANT furnishes proof of insurance as required under
Section 22 of this Agreement; and
ii. CITY gives CONSULTANT a written notice to proceed.
B, Should CONSULTANT begin work on any phase in advance of receiving
written authorization to proceed, any such professional services are at
CONSULTANT's own risk.
9. TIME EXTENSIONS. Should CONSULTANT be delayed by causes beyond
CONSULTANT's control, CITY may grant a time extension for the completion of the
contracted services. If delay occurs, CONSULTANT must notify the Manager within
forty-eight (48) hours, in writing, of the cause and the extent of the delay and how such
delay interferes with the Agreement's schedule. The Manager will extend the
completion time, when appropriate, for the completion of the contracted services.
10.CONSISTENCY. In interpreting this Agreement and resolving any ambiguities, the
main body of this Agreement takes precedence over the attached Exhibit; this
Agreement supersedes any conflicting provisions.
11.CHANGES. CITY may order changes in the services within the general scope of
this Agreement, consisting of additions, deletions, or other revisions, and the contract
sum and the contract time will be adjusted accordingly. All such changes must be
authorized in writing, executed by CONSULTANT and CITY. The cost or credit to CITY
resulting from changes in the services will be determined in accordance with written
agreement between the parties.
12.TAXPAYER IDENTIFICATION NUMBER. CONSULTANT will provide CITY with a
Taxpayer Identification Number.
13.PERMITS AND LICENSES. CONSULTANT, at its sole expense, will obtain and
maintain during the term of this Agreement, all necessary permits, licenses, and
certificates that may be required in connection with the performance of services under
this Agreement.
14.WAIVER. CITY's review or acceptance of, or payment for, work product prepared
by CONSULTANT under this Agreement will not be construed to operate as a waiver of
any rights CITY may have under this Agreement or of any cause of action arising from
CONSULTANT's performance. A waiver by CITY of any breach of any term, covenant,
or condition contained in this Agreement will not be deemed to be a waiver of any
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subsequent breach of the same or any other tern, covenant, or condition contained in
this Agreement, whether of the same or different character.
15.TERMINATION.
A. Except as otherwise provided, CITY may terminate this Agreement at any
time with or without cause.
B. CONSULTANT may terminate this Agreement at any time with CITY's
mutual consent. Notice will be in writing at least thirty (30)days before the
effective termination date.
C. Upon receiving a termination notice, CONSULTANT will immediately
cease performance under this Agreement unless otherwise provided in the
termination notice. Except as otherwise provided in the termination notice,
any additional work performed by CONSULTANT after receiving a
termination notice will be performed at CONSULTANT's own cost; CITY
will not be obligated to compensate CONSULTANT for such work.
D. Should termination occur, all finished or unfinished documents, data,
studies, surveys, drawings, maps, reports and other materials prepared by
CONSULTANT will, at CITY's option, become CITY's property, and
CONSULTANT will receive just and equitable compensation for any work
satisfactorily completed up to the effective date of notice of termination,
not to exceed the total costs under Section 1(C).
E. Should the Agreement be terminated pursuant to this Section, CITY may
procure on its own terms services similar to those terminated.
F. By executing this document, CONSULTANT waives any and all claims for
damages that might otherwise arise from CITY's termination under this
Section.
16.OWNERSHIP OF DOCUMENTS. All documents, data, studies, drawings, maps,
models, photographs and reports prepared by CONSULTANT under this Agreement are
CITY's property. CONSULTANT may retain copies of said documents and materials as
desired but will deliver all original materials to CITY upon CITY's written notice. CITY
agrees that use of CONSULTANT's completed work product, for purposes other than
identified in this Agreement, or use of incomplete work product, is at CITY's own risk.
17.PUBLICATION OF DOCUMENTS. Except as necessary for performance of service
under this Agreement, no copies, sketches, or graphs of materials, including graphic art
work, prepared pursuant to this Agreement, will be released by CONSULTANT to any
other person or public CITY without CITY's prior written approval. All press releases,
including graphic display information to be published in newspapers or magazines, will
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be approved and distributed solely by CITY, unless otherwise provided by written
agreement between the parties.
18.INDEMNIFICATION.
A. CONSULTANT agrees to the following:
I. Indemnification for Professional Services. CONSULTANT will
save harmless and indemnify and at CITY's request reimburse
defense costs for CITY and all its officers, volunteers,
employees and representatives from and against any and all
suits, actions, or claims, of any character whatever, brought
for, or on account of, any injuries or damages sustained by
any person or property resulting or arising from any negligent
or wrongful act, error or omission by CONSULTANT or any of
CONSULTANT's officers, agents, employees, or
representatives, in the performance of this Agreement, except
for such loss or damage arising from CITY's sole negligence
or willful misconduct.
ii. Indemnification for other Damages. CONSULTANT indemnifies
and holds CITY harmless from and against any claim, action,
damages, costs (including, without limitation, attorney's fees),
injuries, or liability, arising out of this Agreement, or its
performance, except for such loss or damage arising from
CITY's sole negligence or willful misconduct. Should CITY be
named in any suit, or should any claim be brought against it
by suit or otherwise, whether the same be groundless or not,
arising out of this Agreement, or its performance,
CONSULTANT will defend CITY (at CITY's request and with
counsel satisfactory to CITY) and will indemnify CITY for any
judgment rendered against it or any sums paid out In
settlement or otherwise.
B. For purposes of this section "CITY" includes CITY's officers, officials,
employees, agents, representatives, and certified volunteers.
C. It is expressly understood and agreed that the foregoing provisions will
survive termination of this Agreement.
D. The requirements as to the types and limits of insurance coverage to be
maintained by CONSULTANT as required by Section 22, and any
approval of said insurance by CITY, are not intended to and will not in any
manner limit or qualify the liabilities and obligations otherwise assumed by
CONSULTANT pursuant to this Agreement, including, without limitation, to
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the provisions concerning indemnification.
19.ASSIGNABILITY. This Agreement is for CONSULTANT's professional services.
CONSULTANT's attempts to assign the benefits or burdens of this Agreement without
CITY's written approval are prohibited and will be null and void.
20.INDEPENDENT CONTRACTOR. CITY and CONSULTANT agree that
CONSULTANT will act as an independent contractor and will have control of all work
and the manner in which it is performed. CONSULTANT will be free to contract for
similar service to be performed for other employers while under contract with CITY.
CONSULTANT is not an agent or employee of CITY and is not entitled to participate in
any pension plan, insurance, bonus or similar benefits CITY provides for its employees.
Any provision in this Agreement that may appear to give CITY the right to direct
CONSULTANT as to the details of doing the work or to exercise a measure of control
over the work means that CONSULTANT will follow the direction of the CITY as to end
results of the work only.
21.AUDIT OF RECORDS. CONSULTANT will maintain full and accurate records with
respect to all services and matters covered under this Agreement. CITY will have free
access at all reasonable times to such records, and the right to examine and audit the
same and to make transcript therefrom, and to inspect all program data, documents,
proceedings and activities. CONSULTANT will retain such financial and program
service records for at least three (3) years after termination or final payment under this
Agreement.
22.INSURANCE.
A. Before commencing performance under this Agreement, and at all other
times this Agreement is effective, CONSULTANT will procure and
maintain the following types of Insurance with coverage limits complying,
at a minimum, with the limits set forth below:
T,youe of Insurance Limits
Commercial general liability: $2,000,000
Professional Liability $1,000,000
Business automobile liability $1,000,000
Workers compensation Statutory requirement
B. Commercial general liability insurance will meet or exceed the
requirements of the most recent ISO-CGL Form. The amount of
insurance set forth above will be a combined single limit per occurrence
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for bodily injury, personal injury, and property damage for the policy
coverage. Liability policies will be endorsed to name CITY, its officials,
and employees as "additional insureds" under said insurance coverage
and to state that such insurance will be deemed "primary" such that any
other insurance that may be carried by CITY will be excess thereto. Such
endorsement must be reflected on ISO Form No. CG 20 10 11 85 or 88, or
equivalent. Such insurance will be on an "occurrence," not a "claims
made," basis and will not be cancelable or subject to reduction except
upon thirty(30)days prior written notice to CITY.
C. Professional liability coverage will be on an "occurrence basis" if such
coverage is available, or on a "claims made" basis if not available. When
coverage is provided on a "claims made basis," CONSULTANT will
continue to renew the insurance for a period of three (3) years after this
Agreement expires or is terminated. Such insurance will have the same
coverage and limits as the policy that was in effect during the term of this
Agreement and will cover CONSULTANT for all claims made by CITY
arising out of any errors or omissions of CONSULTANT, or its officers,
employees or agents during the time this Agreement was in effect.
D. Automobile coverage will be written on ISO Business Auto Coverage Form
CA 00 01 06 92, including symbol 1 (Any Auto).
E. CONSULTANT will furnish to CITY duly authenticated Certificates of
Insurance evidencing maintenance of the insurance required under this
Agreement and such other evidence of insurance or copies of policies as
may be reasonably required by CITY from time to time. Insurance must
be placed with insurers with a current A.M. Best Company Rating
equivalent to at least a Rating of"AMI."
F. Should CONSULTANT, for any reason, fail to obtain and maintain the
insurance required by this Agreement, CITY may obtain such coverage at
CONSULTANT's expense and deduct the cost of such insurance from
payments due to CONSULTANT under this Agreement or terminate
pursuant to Section 155.
23.USE OF SUBCONTRACTORS. CONSULTANT must obtain CITY's prior written
approval to use any consultants while performing any portion of this Agreement. Such
approval must approve of the proposed consultant and the terms of compensation.
24.INCIDENTAL TASKS. CONSULTANT will meet with CITY monthly to provide the
status on the project, which will include a schedule update and a short narrative
description of progress during the past month for each major task, a description of the
work remaining and a description of the work to be done before the next schedule
update.
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25.NOTICES. All communications to either party by the other party will be deemed
made when received by such party at its respective name and address as follows:
If to CONSULTANT: If to CITY:
The Pun Group LLP City of EI Segundo
200 East Sandpointe Avenue, Suite 600 350 Main Street
Santa Ana, CA 92707 EI Segundo, CA
Attention: Kenneth Pun Attention: Joseph Lillio
Phone: (949) 777-8800 Phone: (310) 524-2318
Email: Ken.Pun(cD-oungroup corp Email: jlillio@elsegundo.org
Any such written communications by mail will be conclusively deemed to have been
received by the addressee upon deposit thereof in the United States Mail, postage
prepaid and properly addressed as noted above. In all other instances, notices will be
deemed given at the time of actual delivery. Changes may be made in the names or
addresses of persons to whom notices are to be given by giving notice in the manner
prescribed in this paragraph.
26.CONFLICT OF INTEREST. CONSULTANT will comply with all conflict of interest
laws and regulations including, without limitation, CITY's conflict of interest regulations.
27.SOLICITATION. CONSULTANT maintains and warrants that it has not employed
nor retained any company or person, other than CONSULTANT's bona fide employee,
to solicit or secure this Agreement. Further, CONSULTANT warrants that it has not
paid nor has it agreed to pay any company or person, other than CONSULTANT's bona
fide employee, any fee, commission, percentage, brokerage fee, gift or other
consideration contingent upon or resulting from the award or making of this Agreement.
Should CONSULTANT breach or violate this warranty, CITY may rescind this
Agreement without liability.
28.THIRD PARTY BENEFICIARIES. This Agreement and every provision herein is
generally for the exclusive benefit of CONSULTANT and CITY and not for the benefit of
any other party. There will be no incidental or other beneficiaries of any of
CONSULTANT's or CITY's obligations under this Agreement.
29.INTERPRETATION. This Agreement was drafted in and will be construed in
accordance with the laws of the State of California, and exclusive venue for any action
involving this agreement will be in Los Angeles County.
30.COMPLIANCE WITH LAW. CONSULTANT agrees to comply with all federal, state,
and local laws applicable to this Agreement.
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31.ENTIRE AGREEMENT. This Agreement, and its Exhibit(s), sets forth the entire
understanding of the parties. There are no other understandings, terms or other
agreements expressed or implied, oral or written. This Agreement will bind and inure to
the benefit of the parties to this Agreement and any subsequent successors and
assigns.
32.RULES OF CONSTRUCTION. Each Party had the opportunity to independently
review this Agreement with legal counsel. Accordingly, this Agreement will be
construed simply, as a whole, and in accordance with its fair meaning; it will not be
interpreted strictly for or against either Party.
33.SEVERABILITY. if any portion of this Agreement is declared by a court of
competent jurisdiction to be Invalid or unenforceable, then such portion will be deemed
modified to the extent necessary in the opinion of the court to render such portion
enforceable and, as so modified, such portion and the balance of this Agreement will
continue in full force and effect.
34.AUTHORITYIMODIFICATION. The Parties represent and warrant that all necessary
action has been taken by the Parties to authorize the undersigned to execute this
Agreement and to engage in the actions described herein. This Agreement may be
modified by written amendment.
35.ACCEPTANCE OF ELECTRONIC SIGNATURES. The Parties agree that this
Agreement, agreements ancillary to this Agreement, and related documents to be
entered into in connection with this Agreement will be considered signed when the
signature of a party is delivered by electronic (.pdf) or facsimile transmission. Such
electronic or facsimile signature will be treated in all respects as having the same effect
as an original signature.
36.CAPTIONS. The captions of the paragraphs of this Agreement are for convenience
of reference only and will not affect the interpretation of this Agreement.
37.TIME IS OF ESSENCE. Time is of the essence for each and every provision of this
Agreement.
38.FORCE MAJEURE. Should performance of this Agreement be prevented due to fire,
flood, explosion, acts of terrorism, war, embargo, government action, civil or military
authority, the natural elements, or other similar causes beyond the Parties' reasonable
control, then the Agreement will immediately terminate without obligation of either party
to the other.
39.STATEMENT OF EXPERIENCE. By executing this Agreement, CONSULTANT
represents that it has demonstrated trustworthiness and possesses the quality, fitness
and capacity to perform the Agreement in a manner satisfactory to CITY.
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CONSULTANT represents that its financial resources, surety and insurance experience,
service experience, completion ability, personnel, current workload, experience in
dealing with private consultants, and experience in dealing with public agencies all
suggest that CONSULTANT is capable of performing the proposed contract and has a
demonstrated capacity to deal fairly and effectively with and to satisfy a public CITY.
[Signatures on next page]
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Agreement No. 5599
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IN WITNESS WHEREOF the parties hereto have executed this Agreement the
day and year first hereinabove written.
CITY ' E EG O THE PUN GROUP LLP
Greg pe er, Kenne h Pun,
City M ag r Managing Partner
ATTE T.
Trac Weaver,
City Clerk
APPROVED AS TO FORM;
w ' I
Mark D. Hensley,
City Attorney
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Agreement Nchx�Wt9A
THE 12
. (....,
' COtI N 1 AN I S
September 27, 2018
City of El Segundo
350 Main Street
El Segundo, California 90245
RE: Engagement of The Pun Group LLP(the"Firm")
We are pleased to confirm our understanding of the services we are to provide the City of El Segundo, California
(the "City") for the year ending September 30, 2018.
We will audit the financial statements of the governmental activities, business-type activities, each major fund,
the aggregate remaining fund information, and the Budgetary Comparison Schedules — General Fund and all
major- special revenue fund, including the related notes to the financial statements, which collectively comprise
the basic financial statements, of the City as of and for the year ended September 30, 2018.
Accounting standards generally accepted in the United States of America provide for certain Required
Supplementary information (RSi), such as Management's Discussion and Analysis (MD&A), to supplement the
City's basic financial statements. Such information, although not a part of the basic financial statements, is
required by the Governmental Accounting 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 City's RSi in accordance with auditing
standards generally accepted in the United States of America. These limited procedures will consist of inquiries of
management regarding the methods of preparing the information and comparing the information for consistency
with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We will not express an opinion or provide any assurance on the
information because the limited procedures do not provide us with sufficient evidence to express an opinion or
provide any assurance. The following RSI is required by generally accepted accounting principles and will be
subjected to certain limited procedures, but will not be audited:
1) Management's Discussion and Analysis
2) Schedules of Changes in the Net Pension Liability and Related Ratios
3) Schedules of Plan Contributions—Pension
4) Schedule of Changes in the Net OPEB Liability and Related Ratios
5) Schedules of Plan Contributions-OPEB
We have also been engaged to report on Supplementary Information other than RSI that accompanies the City's
financial statements. We will subject the following Supplementary information to the auditing procedures applied
in our 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 and will provide an opinion on it in relation to the financial
statements as a whole:
1) Schedule of Expenditures of Federal Awards
2) Combining Fund Financial Statements
3) individual Fund Financial Statements and Schedules
200 East Sandpointe Avenue, Suite 600,Santa Ana,California 92707
Tel:949-777-8800® Fax:949-777-8850
,www.pungroup.co
Agreement No. 5599
City of El Segundo
Engagement Letter
September 27, 2018
Page 2
The following other information accompanying the financial statements will not be subjected to the auditing
procedures applied in our audit of the financial statements, and our auditor's report will not provide an opinion or
any assurance on that other information.
1) introductory Section
2) Statistical Section
Audit Obiectives
The objective of our audit is the expression of opinions as to whether your financial statements are fairly
presented, in all material respects, in conformity with U.S. 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. The objective also includes reporting on—
• internal control over financial reporting and compliance with provisions of laws, regulations, contracts,
and award agreements, noncompliance with which could have a material effect on the financial
statements in accordance with Government Auditing Standards.
• Internal control over compliance related to major programs and an opinion (or disclaimer of opinion) on
compliance with federal statutes, regulations, and the terms and conditions of federal awards that could
have a direct and material effect on each major program in accordance with the Single Audit Act
Amendments of 1996 and Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance).
The Government Auditing Standards report on internal control over financial reporting and on compliance and
other matters will include a paragraph that states that (1) the purpose of the report is solely to describe the scope
of testing of internal control and compliance and the results of that testing, and not to provide an opinion on the
effectiveness of the entity's internal control or on compliance, and (2) the report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the entity's internal control and
compliance. The Uniform Guidance report on internal control over compliance will include a paragraph that states
that the purpose of the report on internal control over compliance is solely to describe the scope of testing of
internal control over compliance and the results of that testing based on the requirements of the Uniform
Guidance. Both reports will state that the report is not suitable for any other purpose.
Our audit will be conducted in accordance with auditing standards generally accepted in the United States of
America; the standards for financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States; the Single Audit Act Amendments of 1996; and the provisions of the
Uniform Guidance, and will include tests of accounting records, a determination of major program(s) in
accordance with the Uniform Guidance, and other procedures we consider necessary to enable us to express such
opinions. We will issue written reports upon completion of our Single Audit. Our reports will be addressed to the
City Council.We cannot provide assurance that unmodified opinions will be expressed. Circumstances may arise
in which it is necessary for us to modify out-opinions or add emphasis-of-matter or other-matter paragraphs. if our
opinions 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 issue reports, or we may withdraw from this engagement.
Agreement No. 5599
City of EI Segundo
Engagement Letter
September 27, 2018
Page 3
Nllana�,,cntent Resnonsil,liIities
Management is responsible for (1) establishing and maintaining effective internal controls, including internal
controls over federal awards, and for evaluating and monitoring ongoing activities, to help ensure that appropriate
goals and objectives are met; (2) following laws and regulations; (3) ensuring that there is reasonable assurance
that government programs are administered in compliance with compliance requirements; and (4) ensuring that
management and financial information is reliable and properly reported. Management is also responsible for
implementing systems designed to achieve compliance with applicable laws, regulations, contracts, and grant
agreements. You are also responsible for the selection and application of accounting principles; for the
preparation and fair presentation of the financial statements, schedule of expenditures of federal awards, and all
accompanying information in conformity with U.S. generally accepted accounting principles, and for compliance
with applicable laws and regulations (including federal statutes) and the provisions of contracts and grant
agreements (including award agreements). Your responsibilities also include identifying significant contractor
relationships in which the contractor has responsibility for program compliance and for the accuracy and
completeness of that information.
Management is also responsible for making all financial records and related information available to us and for
the accuracy and completeness of that information. You are also responsible for providing us with (1)access to all
information of which you are aware that is relevant to the preparation and fair presentation of the financial
statements, (2) access to personnel, accounts, books, records, supporting documentation, and other information as
needed to perform an audit under the Uniform Guidance, (3) additional information that we may request for the
purpose of the audit, and (4) unrestricted access to persons within the government from whom we determine it
necessary to obtain audit evidence.
Your responsibilities include adjusting the financial statements to correct material misstatements and confirming
to us in the management representation letter that the effects of any uncorrected misstatements aggregated by us
during the current engagement and pertaining to the latest period presented are immaterial, both individually and
in the aggregate, to the financial statements as a whole.
You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and
for informing us about all known or suspected fraud affecting the government involving (1) management, (2)
employees who have significant roles in internal control, and (3) others where the fraud could have a material
effect on the financial statements. Your responsibilities include informing us of your knowledge of any
allegations of fraud or suspected fraud affecting the government received in communications from employees,
former employees, grantors, regulators, or others. in addition, you are responsible for identifying and ensuring
that the government complies with applicable laws, regulations, contracts, agreements, and grants. Management is
also responsible for taking timely and appropriate steps to remedy fraud and noncompliance with provisions of
laws, regulations, contracts, and grant agreements, or abuse that we report. Additionally, as required by the
Uniform Guidance, it is management's responsibility to evaluate and monitor noncompliance with federal statutes,
regulations, and the terms and conditions of federal awards; take prompt action when instances of noncompliance
are identified including noncompliance identified in audit findings; promptly follow up and take corrective action
on reported audit findings; and prepare a summary schedule of prior audit findings and a separate corrective
action plan.
You are responsible for identifying all federal awards received and understanding and complying with the
compliance requirements and for the preparation of the schedule of expenditures of federal awards (including
notes and noncash assistance received) in conformity with the Uniform Guidance. You agree to include our report
on the schedule of expenditures of federal awards in any document that contains and indicates that we have
reported on the schedule of expenditures of federal awards.
Agreement No. 5599
City of EI Segundo
Engagement Letter
September 27, 2018
Page 4
You also agree to include the audited financial statements with any presentation of the schedule of expenditures of
federal awards that includes our report thereon or make the audited financial statements readily available to
intended users of the schedule of expenditures of federal awards no later than the date the schedule of
expenditures of federal awards is issued with our report thereon. Your responsibilities include acknowledging to
us in the written representation letter that (1) you are responsible for presentation of the schedule of expenditures
of federal awards in accordance with the Uniform Guidance; (2) you believe the schedule of expenditures of
federal awards, including its form and content, is stated fairly in accordance with the Uniform Guidance; (3) the
methods of measurement or presentation have not changed from those used in the prior period (or, if they have
changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or
interpretations underlying the measurement or presentation of the schedule of expenditures of federal awards.
You are also responsible for the preparation of the other supplementary information,which we have been engaged
to report on, in conformity with U.S. generally accepted accounting principles. You agree to include our report on
the supplementary information in any document that contains, and indicates that we have reported on, the
supplementary information. You also agree to include the audited financial statements with any presentation of
the supplementary information that includes our report thereon or make the audited financial statements readily
available to users of the supplementary information no later than the date the supplementary information is issued
with our report thereon. Your responsibilities include acknowledging to us in the written representation letter that
(1) you are responsible for presentation of the supplementary information in accordance with GAAP; (2) you
believe the supplementary information, including its form and content, is fairly presented in accordance with
GAAP; (3)the methods of measurement or presentation have not changed from those used in the prior period (or,
if they have changed, the reasons for such changes); and (4)you have disclosed to us any significant assumptions
or interpretations underlying the measurement or presentation of the supplementary information.
Management is responsible for establishing and maintaining a process for tracking the status of audit findings and
recommendations. Management is also responsible for identifying and providing report copies of previous
financial audits, attestation engagements, performance audits, or other studies related to the objectives discussed
in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to
address significant findings and recommendations resulting from those audits, attestation engagements,
performance audits, or studies. You are also responsible for providing management's views on our current
findings, conclusions, and recommendations, as well as your planned corrective actions, for the report, and for the
timing and format for providing that information.
You agree to assume all management responsibilities relating to the financial statements, schedule of expenditures
of federal awards, and related notes, and any other nonaudit services we provide. You will be required to
acknowledge in the management representation letter our assistance with preparation of the financial statements,
schedule of expenditures of federal awards, and related notes and that you have reviewed and approved the
financial statements, schedule of expenditures of federal awards, and related notes prior to their issuance and have
accepted responsibility for them. Further,you agree to oversee the nonaudit services by designating an individual,
preferably from senior management, with suitable skill, knowledge, or experience; evaluate the adequacy and
results of those services; and accept responsibility for them.
Audit Procedures—General
An audit includes examining, on a test basis, evidence supporting the arnounts and disclosures in the financial
statements; therefore, our audit will involve judgment about the number of transactions to be examined and the
areas to be tested. 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. We will plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent
financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are
attributable to the government or to acts by management or employees acting on behalf of the government.
Agreement No. 5599
City of El Segundo
Engagement Letter
September 27, 2018
Page 5
Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to
provide reasonable assurance of detecting abuse.
Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, and
because we will not perform a detailed examination of all transactions, there is a risk that material misstatements
or noncompliance may exist and not be detected by us, even though the audit is properly planned and performed
in accordance with U.S. generally accepted auditing standards and Govermnent Auditing Standards. In addition,
an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that
do not have a direct and material effect on the financial statements or major programs. However, we will inform
the appropriate level of management of any material errors, any fraudulent financial reporting, or
misappropriation of assets that come to our attention.We will also inform the appropriate level of management of
any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential, and
of any material abuse that comes to our attention.We will include such matters in the reports required for a Single
Audit. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later
periods for which we are not engaged as auditors.
Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts,
and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain
other assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial
institutions.We will request written representations from your attorneys as part of the engagement, and they may
bill you for responding to this inquiry. At the conclusion of our audit, we will require certain written
representations from you about your responsibilities for the financial statements; schedule of expenditures of
federal awards; federal award programs; compliance with laws, regulations, contracts, and grant agreements; and
other responsibilities required by generally accepted auditing standards.
Audit Procedures—Internal Control
Our audit will include obtaining an understanding of the government and its environment, including internal
control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature,
timing, and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of
certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the
financial statements and to preventing and detecting misstatements resulting from illegal acts and other
noncompliance matters that have a direct and material effect on the financial statements. Our tests, if performed,
will be less in scope than would be necessary to render an opinion on internal control and, accordingly,no opinion
will be expressed in our report on internal control issued pursuant to Government Auditing Standards.
As required by the Uniform Guidance, we will perform tests of controls over compliance 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 major federal award program. However, out-
tests
urtests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no
opinion will be expressed in our report on internal control issued pursuant to the Uniform Guidance.
An audit is not designed to provide assurance on internal control or to identify significant deficiencies or material
weaknesses. However, during the audit, we will communicate to management and those charged with governance
internal control related matters that are required to be communicated under AICPA professional standards,
Government Auditing Standards, and the Uniform Guidance.
Agreement No. 5599
City of EI Segundo
Engagement Letter
September 27, 2018
Page 6
Audit l'a•oce(Iures—Comnli.ince
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 provisions of applicable laws, regulations, contracts, and
agreements, including grant agreements. However, the objective of those procedures will not be to provide an
opinion on overall compliance and we will not express such an opinion in our report on compliance issued
pursuant to Government Auditing Slandards.
The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable assurance about
whether the auditee has complied with federal statutes, regulations, and the terms and conditions of federal awards
applicable to major programs. Our procedures will consist of tests of transactions and other applicable procedures
described in the 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 these 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.
Communication with Those Charged with Governance
As part of our engagement, we are responsible for communicating significant matters related to the audit that are,
in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process as well
as other matters we believe should be communicated to those charged with governance. Generally accepted
auditing standards do not require the auditor to design procedures for the purpose of identifying other matters to
communicate with those charged with governance. Such matters include, but are not limited to, (1) the initial
selection of and changes in significant accounting policies and their application-,(2)the process used by management
in formulating particularly sensitive accounting estimates and the basis for our conclusions regarding the
reasonableness of those estimates; (3) all uncorrected audit adjustments that are material in nature; (4) any
disagreements with management, whether or not satisfactorily resolved, about matters that individually or in the
aggregate could be significant to the financial statements or our report; (5) our views about matters that were the
subject of management's consultation with other accountants about auditing and accounting matters; (6) major
issues that were discussed with management in connection with the retention of our services, including, among other
matters, any discussions regarding the application of accounting principles and auditing standards; (7) serious
difficulties that we encountered in dealing with management related to the performance of the audit; and(8)matters
relating to our independence as your auditors.
Third-Party Service Providers
We may from time to time, and depending on the circumstances, use third-party service providers in sewing your
account. We may share confidential information about you with these service providers, but remain committed to
maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies,
procedures, and safeguards to protect the confidentiality of your personal information. in addition, we will secure
confidentiality agreements with all service providers to maintain the confidentiality of your information and we
will take reasonable precautions to determine that they have appropriate procedures in place to prevent the
unauthorized release of your confidential information to others. In the event that we are unable to secure an
appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your
confidential information with the third-party service provider. Furthermore, we will remain responsible for the
work provided by any such third-party service providers.
Assistance r Your Personnel
We will ask that your personnel, to the extent possible, prepare required schedules and analyses, and make
selected invoices and other required documents available to our staff. This assistance by your personnel will
serve to facilitate the progress of our work and minimize our time requirements.
Agreement No. 5599
City of EI Segundo
Engagement Letter
September 27,2018
Page 7
Data Collection Form
At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection Form that
summarizes our audit findings. It is management's responsibility to submit the reporting package (including
financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings,
auditors' reports, and corrective action plan) along with the Data Collection Form to the Federal Audit
Clearinghouse. We will coordinate with you the electronic submission and certification. if applicable, we will
provide copies of our report for you to include with the reporting package you will submit to pass-through entities.
The Data Collection Form and the reporting package must be submitted within the earlier of 30 days after receipt
of the auditors' reports or nine months after the end of the audit period.
Independence
Professional standards require that a firm and its members maintain independence throughout the duration of the
professional relationship with a client. in order to preserve the integrity of our relationship, no offer of
employment shall be discussed with any The Pun Group LLP professionals assigned to the audit, during the one
year period prior to the commencement of the year end audit. Should such an offer of employment be made, or
employment commences during the indicated time period, we will consider this an indication that our
independence has been compromised. As such, we may be required to recall our auditors' report due to our lack
of independence. In the event additional work is required to satisfy independence requirements, such work will
be billed at our standard hourly rates.
Access to WorkinL, Papers
The audit documentation for this engagement is the property of The Pun Group LLP and constitutes confidential
information. However, pursuant to authority given by law or regulation, we may be requested to make certain
audit documentation available to the Oversight Agency for Audit or its designee, a federal agency providing direct
or indirect funding, or the U.S. Government Accountability Office for purposes of a quality review of the audit,to
resolve audit findings, or to carry out oversight responsibilities. We will notify you of any such request. if
requested, access to such audit documentation will be provided under the supervision of The Pun Group LLP
personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the
aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained
therein to others, including other governmental agencies.
The audit documentation for this engagement will be retained for a minimum of seven years after the report
release or for any additional period requested by the oversight agency for audit or pass-through entity. If we are
aware that a federal awarding agency, pass-through entity, or auditee is contesting an audit finding, we will
contact the party(ies) contesting the audit finding for guidance prior to destroying the audit documentation.
The Firm is required to undergo a "peer review" every three years. During the course of a Peer Review
engagement, selected working papers and financial reports, on a sample basis, will be inspected by an outside
party on a confidential basis. Consequently, the accounting and/or auditing work we performed for you may be
selected. Your signing this letter represents your acknowledgement and permission to allow such access should
your engagement be selected for review. As a result of our prior or future services to you, we may be required or
requested to provide information or documents to you or a third-party in connection with a legal or administrative
proceeding (including a grand jury investigation) in which we are not a party. if this occurs, our efforts in
complying with such request or demands will be deemed a part of this engagement and we shall be entitled to
compensation for our time and reimbursement for our reasonable out-of-pocket expenditures (including legal fees)
in complying with such request or demand. This is not intended, however, to relieve us of our duty to observe the
confidentiality requirements of our profession.
Agreement No. 5599
City of EI Segundo
Engagement Letter
September 27, 2018
Page 8
Termination
We acknowledge the City's right to terminate our services at any time, and the City acknowledges our right to
resign at any time (including instances where in our judgment, our independence has been impaired or we can no
longer rely on the integrity of management), subject in either case to our right to payment for all direct and
indirect charges incurred through the date of termination or resignation or thereafter as circumstances and this
agreement may require, plus applicable interest, costs, fees and attorneys' fees.
Dispute Resolution Procedure, Waiver of Jury Trial, Jurisdiction and Venue for All Disnutes, and
Governing
We appreciate the opportunity to serve as the City's auditor and anticipate a productive, harmonious relationship.
if the City becomes dissatisfied for any reason with the services we have performed or the fees charged, we
encourage the City to bring that to our attention immediately. Most such problems should be remedied by
communication and discussion. However, a dispute could arise between us, regarding the construction or
application of this agreement and/or the performance of any services under this agreement, which cannot be
resolved by discussion. The City and this Firm believe that such accountant-client disputes are more satisfactorily
resolved through confidential, binding arbitration than by litigation in court. Therefore, the City and this Firm
choose confidential binding arbitration to resolve such disputes. it is understood and agreed that choosing binding
arbitration waives a trial by jury.
The place of the confidential binding arbitration will be JAMS in Orange County, California. Arbitration
proceedings may be commenced by either the City or this Firm, by giving all other interested parties written
notice; and the proceedings shall be governed by the California Arbitration Act (Code Civ. Proc., §1281 et seq.),
except as is otherwise specified herein.
The arbitrator must decide all disputes in accordance with the California Arbitration Act, and the applicable rules
of JAMS (except to the extent such rules conflict with this arbitration agreement). The arbitrator shall have the
power to decide all matters, including legal questions raised by pleading or summary judgment motions. That
decision shall be in accordance with California law; and the California Evidence Code shall govern all
proceedings before the arbitrator. The arbitrator's award shall be final and binding, and a judgment upon the
award may be entered and enforced by any court of competent jurisdiction.
By entering into this arbitration agreement, the City and this Firm expressly waive the right to commence an
action in court, except with respect to provisional remedies; and waive the right to trial by jury.
The City and this Firm each agree to submit to the jurisdiction of any state or federal court in Orange County,
California, in any action or proceeding arising out of or relating to the enforcement of the arbitration provisions of
this agreement, or for any other purpose. The City and this Firm agree not to bring any action or proceeding of
any kind in any other court. The City and this Firm waive any defense of inconvenient forum to the maintenance
of any action or proceeding in Orange County, California.
Other Services
We will also assist in preparing the following based on the information provided by you:
a) financial statements and related notes of the City in conformity with U.S. generally accepted accounting
principles and the Uniform Guidance
b) State Controller Cities Financial Transactions Report
Agreement No. 5599
City of EI Segundo
Engagement Letter
September 27, 2018
Page 9
These nonaudit services do not constitute an audit under Gove7-177nent Auditing Standards and such services will
not be conducted in accordance with Government Auditing Standards.We will perform the services in accordance
with applicable professional standards. The other services are limited to the financial statements and related notes
services previously defined. We, in our sole professional judgment, reserve the right to refuse to perform any
procedure or take any action that could be construed as assuming management responsibilities.
We are always available to meet with you and/or other management personnel at various times throughout the
year to discuss current business, operational, accounting and auditing matters affecting your City. Whenever you
feel such meeting are desirable please let us know; we are prepared to provide services to assist you in any of
these areas.
Report Distribution and Other
We will provide copies of our reports to the City; however, management is responsible for distribution of the
reports and the financial statements. Unless restricted by law or regulation, or containing privileged and
confidential information, copies of our reports are to be made available for public inspection.
Most Recent External Quality Control Review
Government Auditing Standards require that we provide you with a copy of our most recent external peer review
report and any letter of comment, and any subsequent peer review reports and letters of comment received during
the period of the contract. Accordingly, our 2014 peer review report accompanies this letter.
Planned Scope and Timing of the Audit
We expect to begin our audit on October 1, 2018 and to issue our reports no later than March 31, 2018. Kenneth
Pun is the engagement partner and is responsible for supervising the engagement and signing the reports or
authorizing another individual to sign them.
Fee
Our fee for these services will be $60,000 for the year ended September 30, 2018. Our fees are based on certain
assumptions, including the required assistance described above. To the extent that certain circumstances included
but not limited to those listed in Appendix A, arise during the engagement, our fee estimate may be significantly
affected and additional fees may be necessary. Additional services provided beyond the described scope of
services will be billed separately.
Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In
accordance with our firm policies, work may be suspended if your account becomes 60 days or more overdue and
may not be resumed until your account is paid in full. 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 be obligated to compensate us for all time expended and to reimburse us for all
out-of-pocket costs through the date of termination.
in regards to the Single Audit, there will be an additional fee of$4,000 for each major program in excess of one
(1). The number of programs determined to be a major program will be based on the determination required by
the Single Audit Act Amendments of 1996 and the provisions of the Uniform Grant Guidance and will be
discussed with you prior to commencement of any audit work.
"A,rt ik.
Agreement No. 5599
City of EI Segundo
Engagement Letter
September 27, 2018
Page 10
Agreement
It is hereby understood and agreed that this engagement is being undertaken solely for the benefit of the City and
that no other person or entity shall be authorized to enforce the terms of this engagement.
If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return
it to us.
We appreciate the opportunity to be of service to the City of El Segundo and believe this letter accurately
summarizes the significant terms of our engagement. If you have any questions, please let us know.
Very truly yours,
The Pun Group LLP
Kenneth H.Pun, CPA, CGMA
Managing Partner
RESPONSE:
This letter correctly sets forth the understanding of the City of El Segundo.
By:
Title:
....................
Date:
Agreement No. 5599
APPENDIX A
City of EI Segundo
Circumstances Affecting Timing and Fee Estimate
Circumstances may arise during the engagement that may significantly affect the targeted completion dates and
our fee estimate. As a result, additional fees may be necessary. Such circumstances include but are not limited to
the following:
1. Changes to the timing of the engagement at your request. Changes to the timing of the engagement usually
require reassignment of personnel used by The Pun Group LLP (the "Firm") in the performance of services
hereunder. However, because it is often difficult to reassign individuals to other engagements, the Firm
may incur significant unanticipated costs.
2. All requested schedules are not (a) provided by the accounting personnel on the date requested, (b)
completed in a format acceptable to the Firm (c) mathematically correct, or (d) in agreement with the
appropriate underlying records (e.g., general ledger accounts). The Firm will provide the accounting
personnel with a separate listing of required schedules and deadlines.
3. Weaknesses in the internal control structure.
4. Significant new issues or unforeseen circumstances as follows:
a. New accounting issues that require an unusual amount of time to resolve.
b. Changes or transactions that occur prior to the issuance of our report.
c. Changes in the City's accounting personnel,their responsibilities, or their availability.
d. Changes in auditing requirements set by regulators.
5. Significant delays in the accounting personnel's assistance in the engagement or delays by them in
reconciling variances as requested by the Firm. All invoices, contracts and other documents which we will
identify for the City,are not located by the accounting personnel or made ready for our easy access.
6. A significant level of proposed audit adjustments are identified during our audit.
7. Changes in audit scope caused by events that are beyond our control.
8. Untimely payment of our invoices as they are rendered.
Agreement No. 5599
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Svsteni Review Report
The Pun Group, LLP
Santa Ana, California;
and the Peer Review Committee of the California Society of CPAs
We have reviewed the system of quality control for the accounting and auditing practice of
The Pun Group, LLP (the firm) in effect for the year ended December 31, 2014. Our peer
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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 deten-nining 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
ii 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 wxyyy.a i e oa,or0orso Ill 111,gy.
As required by the standards, engagements selected for review included an engagement
performed under Government Auditing Standards.
Ino ur opinion, the system of quality control for the accounting and auditing practice of The
'Pun Group, LLP in effect for the year ended December 31, 2014, has been suitably
designed and complied with to provide the fine 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 wilh deficiency(ies) or fail. The Pun Group, LLP
o has received a peer review rating of pass.
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Ontario, California
October 13, 2015
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