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HomeMy WebLinkAboutC-9662-2 - On-Call PSA for On-Call Consulting Services Related to the City's Internal Audit ProgramN N ON -CALL PROFESSIONAL SERVICES AGREEMENT WITH THE PUN GROUP LLP FOR ON -CALL CONSULTING SERVICES RELATED TO THE CITY'S INTERNAL AUDIT PROGRAM THIS ON -CALL PROFESSIONAL SERVICES AGREEMENT ("Agreement") is made and entered into as of this 9th day of July, 2024 ("Effective Date"), by and between the CITY OF NEWPORT BEACH, a California municipal corporation and charter city ("City"), and THE PUN GROUP, LLP, a California Limited Liability Partnership ("Consultant"), whose address is 200 E. Sandpointe Ave., Suite 600, Santa Ana, California 92707, and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City desires to engage Consultant to On -call Consulting Services Related to the City's Internal Audit Program ("Project"). C. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the professional services described in this Agreement. D. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the Effective Date, and shall terminate on June 30, 2029, unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED 2.1 Consultant shall perform the on -call services described in the Scope of Services attached hereto as Exhibit A and incorporated herein by reference ("Services" or "Work"). Upon written request from the Project Administrator as defined herein, Consultant shall provide a letter proposal for Services requested by the City (hereinafter referred to as the "Letter Proposal"). The Letter Proposal shall include the following: 2.1.1 A detailed description of the Services to be provided; 2.1.2 The position of each person to be assigned to perform the Services, and the name of the individuals to be assigned, if available; 2.1.3 The estimated number of hours and cost to complete the Services; 2.1.4 The time needed to finish the specific project. 2.2 No Services shall be provided until the Project Administrator has provided written acceptance of the Letter Proposal. Once authorized to proceed, Consultant shall diligently perform the duties in the approved Letter Proposal. 3. TIME OF PERFORMANCE 3.1 Time is of the essence in the performance of Services under this Agreement and Consultant shall perform the Services in accordance with the schedule included in Exhibit A and the Letter Proposal. In the absence of a specific schedule, the Services shall be performed to completion in a diligent and timely manner. The failure by Consultant to strictly adhere to the schedule set forth in Exhibit A and the Letter Proposal, if any, or perform the Services in a diligent and timely manner may result in termination of this Agreement by City. 3.2 Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the Services to be provided for the Project, each party hereby agrees to provide notice within two (2) calendar days of the occurrence causing the delay to the other party so that all delays can be addressed. 3.3 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator as defined herein not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.4 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by hand -delivery or mail. 4. COMPENSATION TO CONSULTANT 4.1 City shall pay Consultant for the Services on a time and expense not -to - exceed basis in accordance with the provisions of this Section and the Letter Proposal and the Schedule of Billing Rates attached hereto as Exhibit B and incorporated herein by reference. Consultant's compensation for all Work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed Seven Hundred Fifty Thousand Dollars and 00/100 ($750,000.00), without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. The Pun Group LLP Page 2 4.2 Consultant shall submit monthly invoices to City describing the Work performed the preceding month. Consultant's bills shall include the name of the person who performed the Work, a brief description of the Services performed and/or the specific task in the Scope of Services to which it relates, the date the Services were performed, the number of hours spent on all Work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Consultant no later than thirty (30) calendar days after approval of the monthly invoice by City staff. 4.3 City shall reimburse Consultant only for those costs or expenses specifically identified in Exhibit B to this Agreement and the Letter Proposal or specifically approved in writing in advance by City. 4.4 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any Work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit B and the Letter Proposal. 5. PROJECT MANAGER 5.1 Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated Kenneth H. Pun to be its Project Manager. Consultant shall not remove or reassign the Project Manager or any personnel listed in Exhibit A or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. 5.2 Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of Services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 5.3 If Consultant is performing inspection services for City, the Project Manager and any other assigned staff shall be equipped with a cellular phone to communicate with City staff. The Project Manager's cellular phone number shall be provided to City. 6. ADMINISTRATION This Agreement will be administered by the Finance Department. City's Finance Director or designee shall be the Project Administrator and shall have the authority to act for City underthis Agreement. The Project Administrator shall represent City in all matters pertaining to the Services to be rendered pursuant to this Agreement. The Pun Group LLP Page 3 7. CITY'S RESPONSIBILITIES To assist Consultant in the execution of its responsibilities under this Agreement, City agrees to provide access to and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Consultant's Work schedule. 8. STANDARD OF CARE 8.1 All of the Services shall be performed by Consultant or under Consultant's supervision. Consultant represents that it possesses the professional and technical personnel required to perform the Services required by this Agreement, and that it will perform all Services in a manner commensurate with community professional standards and with the ordinary degree of skill and care that would be used by other reasonably competent practitioners of the same discipline under similar circumstances. All Services shall be performed by qualified and experienced personnel who are not employed by City. By delivery of completed Work, Consultant certifies that the Work conforms to the requirements of this Agreement, all applicable federal, state and local laws, and legally recognized professional standards. 8.2 Consultant represents and warrants to City that it has, shall obtain, and shall keep in full force and effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Consultant to practice its profession. Consultant shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's Work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS 9.1 To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers, employees and any person or entity owning or otherwise in legal control of the property upon which Consultant performs the Project and/or Services contemplated by this Agreement (collectively, the "Indemnified Parties") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorneys' fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims"), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement, any Work performed or Services provided under this Agreement including, without limitation, defects in workmanship or materials or Consultant's presence or activities conducted on The Pun Group LLP Page 4 the Project (including the negligent, reckless, and/or willful acts, errors and/or omissions of Consultant, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable, or any or all of them). 9.2 Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorneys' fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by Consultant. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the Work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. No civil service status or other right of employment shall accrue to Consultant or its employees. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the Work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance of the Work or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the Services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the Work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Consultant is responsible for keeping the Project Administrator informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. The Pun Group LLP Page 5 14. INSURANCE Without limiting Consultant's indemnification of City, and prior to commencement of Work, Consultant shall obtain, provide, and maintain at its own expense during the term of this Agreement or for other periods as specified in this Agreement, policies of insurance of the type, amounts, terms, and conditions described in the Insurance Requirements attached hereto as Exhibit C, and incorporated herein by reference. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the Services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint -venture or syndicate or co -tenancy, which shall result in changing the control of Consultant. Control means fifty percent (50%) or more of the voting power or twenty-five percent (25%) or more of the assets of the corporation, partnership or joint -venture. 16. SUBCONTRACTING The subcontractors authorized by City, if any, to perform Work on this Project are identified in Exhibit A and the Letter Proposal. Consultant shall be fully responsible to City for all acts and omissions of any subcontractor. Nothing in this Agreement shall create any contractual relationship between City and any subcontractor nor shall it create any obligation on the part of City to pay or to see to the payment of any monies due to any such subcontractor other than as otherwise required by law. City is an intended beneficiary of any Work performed by the subcontractor for purposes of establishing a duty of care between the subcontractor and City. Except as specifically authorized herein, the Services to be provided under this Agreement shall not be otherwise assigned, transferred, contracted, or subcontracted out without the prior written approval of City. 17. OWNERSHIP OF DOCUMENTS 17.1 Each and every report, draft, map, record, plan, document and other writing produced, including but not limited to, websites, blogs, social media accounts and applications (hereinafter "Documents"), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. Additionally, all material posted in cyberspace by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. Consultant shall, at Consultant's expense, provide such Documents, including all logins and password information to City upon prior written request. The Pun Group LLP Page 6 17.2 Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant, and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 17.3 All written documents shall be transmitted to City in formats compatible with Microsoft Office and/or viewable with Adobe Acrobat. 18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the Services in this Agreement, shall be kept confidential unless City expressly authorizes in writing the release of information. 19. INTELLECTUAL PROPERTY INDEMNITY Consultant shall defend and indemnify City, its agents, officers, representatives, and employees against any and all liability, including costs, for infringement or alleged infringement of any United States' letters patent, trademark, or copyright, including costs, contained in Consultant's Documents provided under this Agreement. 20. RECORDS Consultant shall keep records and invoices in connection with the Services to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any Services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all Work, data, Documents, proceedings, and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue Work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return The Pun Group LLP Page 7 that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the Work accomplished by Consultant, the additional design, construction and/or restoration expense shall be borne by Consultant. Nothing in this Section is intended to limit City's rights under the law or any other sections of this Agreement. 23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. 24. CONFLICTS OF INTEREST 24.1 Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act") and/or Government Code §§ 1090 et seq., which (1) require such persons to disclose any financial interest that may foreseeably be materially affected by the Work performed under this Agreement, and (2) prohibit such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. 24.2 If subject to the Act and/or Government Code §§ 1090 et seq., Consultant shall conform to all requirements therein. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. 25. NOTICES 25.1 All notices, demands, requests or approvals, including any change in mailing address, to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first- class mail, addressed as hereinafter provided. 25.2 All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Finance Director Finance Department City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 The Pun Group LLP Page 8 25.3 All notices, demands, requests or approvals from City to Consultant shall be addressed to Consultant at: Attn: Kenneth H. Pun The Pun Group LLP 200 E. Sandpointe Ave., Suite 600 Santa Ana, CA 92707 26. CLAIMS Unless a shorter time is specified elsewhere in this Agreement, before making its final request for payment under this Agreement, Consultant shall submit to City, in writing, all claims for compensation under or arising out of this Agreement. Consultant's acceptance of the final payment shall constitute a waiver of all claims for compensation under or arising out of this Agreement except those previously made in writing and identified by Consultant in writing as unsettled at the time of its final request for payment. Consultant and City expressly agree that in addition to any claims filing requirements set forth in the Agreement, Consultant shall be required to file any claim Consultant may have against City in strict conformance with the Government Claims Act (Government Code sections 900 et seq.). 27. TERMINATION 27.1 In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non -defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. 27.2 Notwithstanding the above provisions, City shall have the right, at its sole and absolute discretion and without cause, of terminating this Agreement at any time by giving no less than seven (7) calendar days' prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for Services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 28. STANDARD PROVISIONS 28.1 Recitals. City and Consultant acknowledge that the above Recitals are true and correct and are hereby incorporated by reference into this Agreement. The Pun Group LLP Page 9 28.2 Compliance with all Laws. Consultant shall, at its own cost and expense, comply with all statutes, ordinances, regulations, and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all Work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 28.3 Waiver. A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 28.4 Integrated Contract. This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 28.5 Conflicts or Inconsistencies. In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 28.6 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 28.7 Amendments. This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 28.8 Severability. If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 28.9 Controlling Law and Venue. The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange, State of California. 28.10 Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer, and it shall not discriminate against any subcontractor, employee or applicant for employment because race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status, sex, sexual orientation, age or any other impermissible basis under law. 28.11 No Attorneys' Fees. In the event of any dispute or legal action arising under this Agreement, the prevailing party shall not be entitled to attorneys' fees. The Pun Group LLP Page 10 28.12 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one (1) and the same instrument. [SIGNATURES ON NEXT PAGE] The Pun Group LLP Page 11 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the dates written below. APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE Date: ��✓Aaron C. Harp � j S City Attorney del ATTEST: Date: P dal c By: Leilani I. Brown City Clerk CITY OF NEWPORT BEACH, a California municipal corporation Date: >/Z9 /?-o7- Y By: Will O' Neill Mayor CONSULTANT: The Pun Group LLP, a California Limited Liability Partnership Date: Signed in Counterpart By: Kenneth H. Pun Founder & Managing Partner Poi? . e z [END OF SIGNATURES] �gcrFoa`' Attachments: Exhibit A — Scope of Services Exhibit B — Schedule of Billing Rates Exhibit C — Insurance Requirements The Pun Group LLP Page 12 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the dates written below. APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE Date: 6�Z6�ZoZ( B : Aaron C. Harp njs City Attorney .�y ATTEST: Date: Leilani I. Brown City Clerk CITY OF NEWPORT BEACH, a California municipal corporation Date: By: Will O' Mayor Neill CONSULTANT: The Pun Group LLP, a California Limited Liability Partnership Date: Zv v� By: '�4. L-- Kenneth H. Pun Founder & Managing Partner [END OF SIGNATURES] Attachments: Exhibit A — Scope of Services Exhibit B — Schedule of Billing Rates Exhibit C — Insurance Requirements The Pun Group LLP Page 12 EXHIBIT A SCOPE OF SERVICES The Pun Group LLP Page A-1 EXHIBIT A SCOPE OF SERVICES The Director of Finance, or designee, shall establish a project -specific timeline and scope of work. It is generally expected that fieldwork will commence in January and the consultant shall render the final report within 90 days of the commencement of fieldwork, unless otherwise specified by the Director of Finance, or designee. A majority of the work may be performed in accordance with the Statement on Standards for Consulting Services issued by the American Institute of Certified Public Accountants (AICPA). Examples of required work include: • Participate in the assessment of the internal control environment and related internal control risks. • Provide an outline or work plan for the project. Conduct interviews of key personnel and supervisors in the Finance Department and other departments to determine if existing policies and procedures are being followed and identify internal control deficiencies. • Review and evaluate the policy and procedures to assess internal control effectiveness and weaknesses. Review and evaluate controls performed directly by Senior Staff or Management or detect Senior Staff or Management override of controls. • Identify inconsistences in internal controls and recommend changes to enhance consistency citywide. • Perform an analysis of selected electronic data on a limited basis for anomalies or unusual transactions. • Test accounting documentation for any identified areas of concern or potential areas of vulnerability. • Test organization compliance with Council and or administrative policies and or operational procedures. • Examine the practices of a department or program to determine if it is achieving economy, efficiency and effectiveness in the employment of available resources. • Create a report identifying internal control weaknesses, potential risks and recommendations to improve internal controls, management practices, and efficiency. • Review payroll change procedures and time and attendance records for potential timecard fraud or unauthorized absences. • The Consultant will also provide recommendations on new, or changes to existing, financial policies and procedures, risk management methods, and ideas to support organizational efficiency and effectiveness. EXHIBIT B SCHEDULE OF BILLING RATES The Pun Group LLP Page B-1 1W:/:11:1k2-3 SCHEDULE OF BILLING RATES Position Partner $350 Director $300 Manager $250 Supervisor $175 EXHIBIT C INSURANCE REQUIREMENTS — PROFESSIONAL SERVICES 1. Provision of Insurance. Without limiting Consultant's indemnification of City, and prior to commencement of Work, Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, policies of insurance of the type and amounts described below and in a form satisfactory to City. Consultant agrees to provide insurance in accordance with requirements set forth here. If Consultant uses existing coverage to comply and that coverage does not meet these requirements, Consultant agrees to amend, supplement or endorse the existing coverage. 2. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. 3. Coverage Requirements. A. Workers' Compensation Insurance. Consultant shall maintain Workers' Compensation Insurance, statutory limits, and Employer's Liability Insurance with limits of at least one million dollars ($1,000,000) each accident for bodily injury by accident and each employee for bodily injury by disease in accordance with the laws of the State of California, Section 3700 of the Labor Code. Consultant shall submit to City, along with the certificate of insurance, a Waiver of Subrogation endorsement in favor of City, its City Council, boards and commissions, officers, agents, volunteers, employees and any person or entity owning or otherwise in legal control of the property upon which Consultant performs the Project and/or Services contemplated by this Agreement. B. General Liability Insurance. Consultant shall maintain commercial general liability insurance, and if necessary umbrella liability insurance, with coverage at least as broad as provided by Insurance Services Office form CG 00 01, in an amount not less than one million dollars ($1,000,000) per occurrence, two million dollars ($2,000,000) general aggregate. The policy shall cover liability arising from premises, operations, personal and advertising injury, and liability assumed under an insured contract (including the tort liability of another assumed in a business contract). C. Automobile Liability Insurance. Consultant shall maintain automobile insurance at least as broad as Insurance Services Office form CA 00 01 covering bodily injury and property damage for all activities of Consultant arising out of or in connection with Work to be performed under this The Pun Group LLP Page C-1 Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit each accident. D. Professional Liability (Errors & Omissions) Insurance. Consultant shall maintain professional liability insurance that covers the Services to be performed in connection with this Agreement, in the minimum amount of one million dollars ($1,000,000) per claim and two million dollars ($2,000,000) in the aggregate. Any policy inception date, continuity date, or retroactive date must be before the Effective Date of this Agreement and Consultant agrees to maintain continuous coverage through a period no less than three years after completion of the Services required by this Agreement. 4. Other Insurance Requirements. The policies are to contain, or be endorsed to contain, the following provisions: A. Waiver of Subrogation. All insurance coverage maintained or procured pursuant to this Agreement shall be endorsed to waive subrogation against City, its City Council, boards and commissions, officers, agents, volunteers, employees and any person or entity owning or otherwise in legal control of the property upon which Consultant performs the Project and/or Services contemplated by this Agreement or shall specifically allow Consultant or others providing insurance evidence in compliance with these requirements to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against City, and shall require similar written express waivers from each of its subconsultants. B. Additional Insured Status. All liability policies including general liability, excess liability, pollution liability, and automobile liability, if required, but not including professional liability, shall provide or be endorsed to provide that City, its City Council, boards and commissions, officers, agents, volunteers, employees and any person or entity owning or otherwise in legal control of the property upon which Consultant performs the Project and/or Services contemplated by this Agreement shall be included as insureds under such policies. C. Primary and Non Contributory. All liability coverage shall apply on a primary basis and shall not require contribution from any insurance or self-insurance maintained by City. D. Notice of Cancellation. All policies shall provide City with thirty (30) calendar days' notice of cancellation (except for nonpayment for which ten (10) calendar days' notice is required) or nonrenewal of coverage for each required coverage. 5. Additional Agreements Between the Parties. The parties hereby agree to the following: The Pun Group LLP Page C-2 A. Evidence of Insurance. Consultant shall provide certificates of insurance to City as evidence of the insurance coverage required herein, along with a waiver of subrogation endorsement for workers' compensation and other endorsements as specified herein for each coverage. Insurance certificates and endorsement must be approved by City's Risk Manager prior to commencement of performance. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf. At least fifteen (15) days prior to the expiration of any such policy, evidence of insurance showing that such insurance coverage has been renewed or extended shall be filed with the City. If such coverage is cancelled or reduced, Consultant shall, within ten (10) days after receipt of written notice of such cancellation or reduction of coverage, file with the City evidence of insurance showing that the required insurance has been reinstated or has been provided through another insurance company or companies. City reserves the right to require complete, certified copies of all required insurance policies, at any time. B. City's Right to Revise Requirements. City reserves the right at any time during the term of the Agreement to change the amounts and types of insurance required by giving Consultant sixty (60) calendar days' advance written notice of such change. If such change results in substantial additional cost to Consultant, City and Consultant may renegotiate Consultant's compensation. C. Right to Review Subcontracts. Consultant agrees that upon request, all agreements with subcontractors or others with whom Consultant enters into contracts with on behalf of City will be submitted to City for review. Failure of City to request copies of such agreements will not impose any liability on City, or its employees. Consultant shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein, and Consultant shall ensure that City is an additional insured on insurance required from subcontractors. For CGL coverage, subcontractors shall provide coverage with a format at least as broad as CG 20 38 04 13. D. Enforcement of Agreement Provisions. Consultant acknowledges and agrees that any actual or alleged failure on the part of City to inform Consultant of non-compliance with any requirement imposes no additional obligations on City nor does it waive any rights hereunder. E. Requirements not Limiting. Requirements of specific coverage features or limits contained in this Section are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue and is not intended by any party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type. If the Consultant maintains higher The Pun Group LLP Page C-3 limits than the minimums shown above, the City requires and shall be entitled to coverage for higher limits maintained by the Consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City. F. Self -insured Retentions. Any self -insured retentions must be declared to and approved by City. City reserves the right to require that self -insured retentions be eliminated, lowered, or replaced by a deductible. Self- insurance will not be considered to comply with these requirements unless approved by City. G. City Remedies for Non -Compliance. If Consultant or any subconsultant fails to provide and maintain insurance as required herein, then City shall have the right but not the obligation, to purchase such insurance, to terminate this Agreement, or to suspend Consultant's right to proceed until proper evidence of insurance is provided. Any amounts paid by City shall, at City's sole option, be deducted from amounts payable to Consultant or reimbursed by Consultant upon demand. H. Timely Notice of Claims. Consultant shall give City prompt and timely notice of claims made or suits instituted that arise out of or result from Consultant's performance under this Agreement, and that involve or may involve coverage under any of the required liability policies. City assumes no obligation or liability by such notice, but has the right (but not the duty) to monitor the handling of any such claim or claims if they are likely to involve City. Consultant's Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the Work. The Pun Group LLP Page C-4 Name. THE PUN GROUP n Account Number. - FV00001238 - Address.- 200 E. SANDPOINTE AVE, SUITE 600, SANTAANA, CA, 92707 Status. Currently In Compliance. Auounr Intarmarian Account Number FV00001238 Risk Type. Professional Services Agreement Do Not Call 1 J, Address Updated- Add— Info —dun Mailing Addr— Physlrel Address Insureds THE PUN GROUP Address 1 200 E. SANDPOINTE AVE Address 2. SUITE 600 City SANTAANA State CA Zip. 92707 Country CITY OF NEWPORT BEACH 100 Civic Center Drive Newport Beach, California 92660 949 644-3126 1949 644-3339 FAX jalimam@newportbeachca.gov August 12, 2024 The Pun Group LLP Attention: Kenneth H. Pun 200 E. Sandpointe Ave., Suite 600 Santa Ana, CA 92707 Re: Informal Request for Proposals (Internal Audit) On July 23, 2024, the City of Newport Beach issued an informal request for proposals for internal audit work to be performed this fall. The City received your proposal dated August 12, 2024, and has awarded a portion of the work to be performed by your firm. We would like The Pun Group to perform internal audit work associated with Topic 1: Financial Reporting for a not -to -exceed amount of $45,000. As outlined in the informal request for proposals, we would like work to begin in August and final reports to be delivered by October 29t". Your primary point of contact on this project is Trevor Power. If you have any questions, please contact me at 949-644-3126. Sincerely, f rO", ev ;BfMIt Jason AI -Imam Finance Director Attachments: Informal Request for Proposals: Internal Audit Proposal for Topics 1-4 INFORMAL REQUEST FOR PROPOSALS: INTERNAL AUDIT Introduction: The City of Newport Beach initiated an internal audit program in 2020. The initial reports provided an enterprise risk assessment, and internal controls review, which identified several areas that should be explored as part of the city's internal audit program. This informal request for proposals includes a solicitation for internal audit work, which covers four topics including financial reporting, budgeting, finance customer service operational review and a business continuity and disaster planning assessment. Instructions: Provide the following items for any or all of the topics identified in the Scope of Work that your firm proposes to perform services for: • Workplan • Cost • Experience with similar engagements. • Schedule (Please note the City would like work to begin in August and final report(s) to be delivered by October 29tn ) o If the work cannot be completed in this timeframe, please provide a schedule your firm feels is required. Pr000sers may submit written auestions to the followine Informal RFP officer by no later than 1:00om on Wednesday, July 31, 2024. Informal RFP Officer: Jason AI -Imam, Finance Director ialimam@newportbeachca.gov Proposals shall be submitted no later than 1:00pm on Monday, August 12, 2024. Any proposal received after this deadline shall not be considered. Evaluation Criteria: Proposals will be evaluated by a review committee. The City may use some or all of the following criterion in its evaluation and comparison of proposals. The criteria listed are not necessarily an all-inclusive list. • The firm's demonstrated experience in providing the requested services; • The firm's responsiveness in clearing stating their understanding of the work to be performed; • The firm's work plan and ability to meet the city's schedule; and • The firm's proposed costs. INFORMAL REQUEST FOR PROPOSALS: INTERNAL AUDIT Scope of Work: Topic 1: Financial Reporting The following tasks shall be performed in accordance with the Statement on Standards for Consulting Services issued by the AICPA: • Task No. 1— Determine whether policies and procedures are established as a matter of practice or in writing governing the following: o Year -End Close o Journal Entry Processing o Chart of Accounts Maintenance o Preparation, Review and Approval of Annual Comprehensive Financial Reports • Task No. 2 — Determine whether account reconciliations are performed on a routine basis to detect mistakes, errors, or other anomalies. • Task No. 3 — Provide recommendations for improvement opportunities and/or increased efficiencies. Topic 2: Budgeting The following tasks shall be performed in accordance with the Statement on Standards for Consulting Services issued by the AICPA: • Task No. 1— Determine whether policies and procedures are established as a matter of practice or in writing governing the following: o Budget Preparation Process o Budget Monitoring o Budget Amendment Process o Monitoring and Oversight Roles and Responsibilities for Key Financial Reporting Activities (for example, budget -to -actual reviews). • Task No. 2 — Determine whether the City performs trend analysis on a routine basis to evaluate current and future fiscal conditions to guide policy and programmatic decisions. • Task No. 3 — Determine whether periodic financial reports (or budget -to -actual reviews) are prepared in a timely manner to guide decision -making and to address performance issues such as declines in revenues, expenditures in excess of appropriations, etc. • Task No. 4 — Provide recommendations for improvement opportunities and/or increased efficiencies. INFORMAL REQUEST FOR PROPOSALS: INTERNAL AUDIT Topic 3: Finance Customer Service Operational Review The following tasks shall be performed in accordance with the Statement on Standards for Consulting Services issued by the AICPA: • Task No. 1— Evaluate the City's customer service function in the Finance Department, which shall include a review of internal controls and policies and procedures, including policies and procedures that have been established as a matter of practice or in writing. • Task No. 2 — Determine whether the operations and internal controls of the customer service function conform to best practices. • Task No. 3 — Review existing, and/or recommend appropriate, performance metrics to evaluate operational effectiveness and efficiency on an ongoing basis. • Task No. 4 — Provide recommendations for improvement opportunities and/or increased efficiencies. Topic 4: Business Continuity and Disaster Planning Assessment The following tasks shall be performed in accordance with the Statement on Standards for Consulting Services issued by the AICPA: • Task No. 1— Determine whether the City has a business continuity plan that defines and addresses the following key elements of business continuity and disaster planning: o Essential Functions o Lines of Succession and Delegation of Authority o Alternate Facilities o Vital Systems, Services, Equipment and Supplies o Timely Resumption of Computer Processing Following Interruption of Service o Training Exercises to Ensure Readiness and Preparedness • Task No. 2 — Determine whether the business continuity plan provides a comprehensive strategy outlining how the City will continue operating during and after a disaster. • Task No. 3 — Identify strengths, weaknesses, gaps, and opportunities for improvement in disaster preparedness and response capabilities. • Task No. 4 — Conduct a risk and impact analysis that incorporates input from city staff. CITY OF NEWPORT BEACH Kenneth H. Pun,, CPA, CGMA Managing Partner 200 E. Sandpointe Ave., Suite 600, Santa Ana, CA 92707 (949)777-88011 ken.pun@pungroup.cpa 0 Lugust 12, 2024 RFP for Enterprise Risk Assessment and Internal Controls Review Services The Pun Group LLP is recognized for its professionalism, integrity and for providing clients with practical solutions unique to their circumstances and issues. You will receive a superior level of service and a quality audit. Thank You! Thank you for allowing us to submit our qualifications to provide you with Enterprise Risk Assessment and Internal Controls Review Services. The Pun Group LLP Certified Public Accountants and Business Advisors City of Newport Beach Transmittal Letter ..................................... WorkPlan.............................................................. Cost....................................................................... Experience with Similar Engagements ................. Schedule............................................................... Let's Get to Work! ................................................. Appendix A — Staff Qualifications and Experience Appendix B — Available Training ........................... Appendix C — Certificate of Insurance .................. .................................. ix For the 4th consecutive year, The Pun Group has been honored with the "Best of Accounting" Award. BEST.t 01 BESTg e BEST.f %� BESTm Accounting Accounting Accounting' Accounting CLIENT SATISFACTION CLIENT SATISFACTION CLIENT SATISFACTION CLIENT SATISFACTION -2021- -2022- 2023- -2024- dearlyrated The Pun Group LLP is proud to have won 2024's Best of Accounting° award from ClearlyRated for consistently delivering exceptional service to its clients for the fourth consecutive year. Winners of such awards have proven to be industry leaders in service quality based entirely on ratings provided by their clients. On average, clients of 2024 Best of Accounting winners are 70% more likely to be satisfied than those who work with non -winning firms. "1 am pleased to introduce the 2024 Best of Accounting winners alongside their validated service ratings on ClearlyRated.com," said ClearlyRated's CEO, Eric Gregg. "These firms have demonstrated a remarkable commitment to delivering amazing experiences despite another year of upheaval and macroeconomic uncertainty. Hats off to these service leaders - it's truly an honor to recognize and celebrate their achievements." The Pun Group LLP received satisfaction scores of 9 or 10 out of 10 from 94.1 % of their clients, significantly higher than the industry's average of 50%. Our firm excelled in five key areas: Responsiveness, Quality, Value, Needs Understanding, and Proactive Approach. About ClearlyRated Rooted in satisfaction research for professional service firms, ClearlyRated utilizes a Net Promoter® Score survey program to help professional service firms measure their service experience, build an online reputation, and differentiate on service quality. The Pun Group is recognized as one of the Top 500 Firms listed by INSIDE Public Accounting. 46 "Excellent customer service and staff and partners are expert in their fields." Lani H. State and Local Government Client 49 "The Firm has consistently exceeded our expectations as client." Clint O. State and Local Government Client ci "We started using Pun Group when the pandemic first started two years ago so had a little apprehension about doing everything remotely with a new firm. But the audit went very well and was completed on time without problem." Kevin W. State and Local Government Client cc "An excellent partner and amazing service." INSIDE public accounting 0 500 FIRMS 2023- j Jim T. Private Sector Client THE PUN GROUP ACCOUNTANTS & ADVISORS August 12, 2024 City of Newport Beach Jason AI -Imam, Finance Director 100 Civic Center Drive Newport Beach, CA 92660 City of Newport Beach 200 E. Sandpointe Avenue, Suite 600 Santa Ana, California 92707 Re: RFP for Enterprise Risk Assessment and Internal Controls Review Services Dear Jason AI -Imam: www.pungroup.cpa (M Please allow us to introduce our Firm and share our qualifications and proposed services plan for the City of Newport Beach (the "City") according to your Request for Proposals for Enterprise Risk Assessment and Internal Controls Review Services. The Pun Group LLP (the "Firm") has the knowledge and experience necessary to become the City's next public accounting firm and the work plan to ensure a smooth process. This letter is an acknowledgment of the Firm's understanding of the work to be performed. We are offering our commitment to deliver all of the required work, complete the audit, and issue the necessary auditor's reports within the periods outlined by the City. No subcontractors will be utilized for this engagement. The Pun Group is the right choice for the City of Newport Beach because: We Understand the Demographics and Your Needs. The Pun Group is reputable for its ,41 governmental practice. We are the principal auditors for cities in California such as Bell, Coachella, Corona, Fresno, Gardena, Gilroy, Lakewood, Montebello, National City, Palm Springs, Salinas, San Mateo, Santa Clarita, Stockton, Tracy, and several others. Accordingly, the proposed engagement team has a deep understanding of the current issues that municipalities are facing, such as varying demographics, economic environments, and the constantly changing landscape of laws and regulations. Recognized Leader in the Governmental Industry. We are a small national Firm with licenses in the States of California, Arizona, and Nevada and a proven leader in professional services to the government sector. All key engagement team professionals are licensed to practice as Certified Public Accountants and meet the Continuing Professional Education requirements under US GAO's Government Auditing Standards to perform the proposed audits. The partners and all employees proposed to perform the requested services do not have a record of substandard audit work nor have any outstanding claim of substandard practice or unsatisfactory performance pending with the State Board of Accountancy or other professional organizations. In addition, we are members of the national AICPA Audit Quality Center. We strongly believe that part of our success is credited to our professionals' participation in various industry -leading organizations. Such affiliations are critical to addressing emerging accounting and auditing issues within the industry environment. ORANGE COUNTY • SAN DIEGO • SACRAMENTO • WALNUT CREEK • LAS VEGAS • PHOENIX 000 City of Newport Beach You'll Work with a Team that Embraces Innovation and Continuous Improvement. Our Firm 4 �•_ is committed to continuous improvement as it relates to service delivery. We embrace innovation and identify areas of technological enhancements in our audit and project management approaches. For example: Secure Data File Transfer System. In order to improve audit efficiency, workflow management software plays an essential role between your organization and our engagement team. We employ a secure data file transfer system called Suralink. Suralink's dynamic request list is integrated with our secure file hosting system for seamless document - request coordination, including the upload of large -size files. It means all our requests are in one place, updated in real-time, and accessible by everyone working on the engagement. Not only makes the operation more cost-efficient, but it also enables you and your team to spend your time getting the job done, not reconciling a messy list of outstanding items. In addition, Suralink's dashboard allows you to visualize the process of document -request fulfillment. Al Auditor. The Pun Group leverages the technology and research tools required to provide excellent services to its clients. With the usage of Artificial Intelligence (Al) technology, the Firm is capable of issuing all reports requested faster than other audit firms without exposing the City to unnecessary risks. Remote Auditing Capability. Remote working arrangements have suddenly become the "new normal" in these trying times. Our Firm has deployed top-notch technology and fully transitioned to "remote auditing," offering our clients the quality services they deserve while being fully "remote" or operating in a "hybrid" schedule. "On -site" audits are still the Firm's preferred method, and we'll continue to offer and promote those as well. Knowledge is Shared with You. As part of our pledge to keep you updated on new technical Taccounting and financial issues, we implemented our 2023 Virtual Government Accounting Conference, which qualifies for up to 15 hours of CPE — nearly double what other firms offer. These online sessions are free of charge and part of the service package provided to you. More details and dates can be found on the "Client Training Webinars" topic under this proposal. The Pun Group is proud of its inclusive values and is an avid promoter of equality and diversity. In addition, the Firm is an equal opportunity employer and complies with all federal and state hiring requirements. We're proud of supporting affirmative -action philosophies and work hard to provide opportunities for self -enhancement to members of disadvantaged groups. This proposal is a firm and irrevocable offer valid for ninety (90) days following the closing date for the receipt of all proposals. Finally, we would like to emphasize one additional point: We want to keep your trust and your business! We are confident that the energetic and experienced team we have assembled is the right one for the City. Our commitment to serving the City of Newport Beach cannot be adequately conveyed in a letter, and I look forward to continuing the discussion with you. I'm assigned as your primary contact for contract negotiations and stand steadfast to serve as your engagement/lead partner. I'm also authorized to legally bind the Firm. Should you have any questions or wish to discuss this proposal, please do not hesitate to contact me at (949) 777-8801 or by email at ken.pun@pungroup.cpa. Sincerely, Kenneth H. Pun, CPA, CGMA I Managing Partner I The Pun Group LLP 200 East Sandpointe Ave., 600, Santa Ana, CA 92707 21PUNGROURCPA City of Newport Beach Scope of Work, Audit Approach, and Methodology The City of Newport Beach is requesting the Firm to perform Enterprise Risk Assessment and Internal Controls Review Services and issue recommendations on processes to increase efficiencies in regard to Financial reporting, Budgeting, Finance service operational review, and Business Continuity and Disaster planning assessment. The audits are to be completed in accordance with all applicable and generally accepted auditing standards, including, but not limited to, the following: • Generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants (AICPA). • US General Accounting Office's (GAO) Standard for Audit of Governmental Organizations, Programs, Activities, and Functions. • Local Governments and Governmental Accounting Standards Board (GASB) Pronouncements. • The standards applicable to financial audits are contained in the most current version of the Generally Accepted Government Auditing Standards (Yellow Book), issued by the Comptroller General of the United States. The Firm will perform the following services: Topic 1: Financial Reporting • Task No. 1 — Determine whether policies and procedures are established as a matter of practice or in writing governing the following: o Year -End Close o Journal Entry Processing o Chart of Accounts Maintenance o Preparation, Review, and Approval of Annual Comprehensive Financial Reports • Task No. 2 — Determine whether account reconciliations are performed on a routine basis to detect mistakes, errors, or other anomalies. • Task No. 3 — Provide recommendations for improvement opportunities and/or increased efficiencies. Topic 2: Budgeting Task No. 1 — Determine whether policies and procedures are established as a matter of practice or in writing governing the following: o Budget Preparation Process o Budget Monitoring o Budget Amendment Process o Monitoring and Oversight Roles and Responsibilities for Key Financial Reporting Activities (for example, budget -to -actual reviews). • Task No. 2 — Determine whether the City performs trend analysis on a routine basis to evaluate current and future fiscal conditions to guide policy and programmatic decisions. • Task No. 3 — Determine whether periodic financial reports (or budget -to -actual reviews) are prepared in a timely manner to guide decision -making and to address performance issues such as declines in revenues, expenditures in excess of appropriations, etc. • Task No. 4 — Provide recommendations for improvement opportunities and/or increased efficiencies. 3 1 PUNGROUP.CPA City of Newport Beach Topic 3: Finance Customer Service Operational Review • Task No. 1 — Evaluate the City's customer service function in the Finance Department, which shall include a review of internal controls and policies and procedures, including policies and procedures that have been established as a matter of practice or in writing. • Task No. 2 — Determine whether the operations and internal controls of the customer service function conform to best practices. • Task No. 3 — Review existing, and/or recommend appropriate, performance metrics to evaluate operational effectiveness and efficiency on an ongoing basis. • Task No. 4 — Provide recommendations for improvement opportunities and/or increased efficiencies. Topic 4: Business Continuity and Disaster Planning Assessment Task No. 1 — Determine whether the City has a business continuity plan that defines and addresses the following key elements of business continuity and disaster planning: • Essential Functions • Lines of Succession and Delegation of Authority • Alternate Facilities • Vital Systems, Services, Equipment and Supplies • Timely Resumption of Computer Processing Following Interruption of Service • Training Exercises to Ensure Readiness and Preparedness • Task No. 2 — Determine whether the business continuity plan provides a comprehensive strategy outlining how the City will continue operating during and after a disaster. • Task No. 3 — Identify strengths, weaknesses, gaps, and opportunities for improvement in disaster preparedness and response capabilities. • Task No. 4 — Conduct a risk and impact analysis that incorporates input from city staff. At The Pun Group LLP, our approach to conducting risk assessments and internal control audits adheres to current global standards, notably the Enterprise Risk Management (ERM) methodology established by the Committee on Sponsoring Organizations of the Treadway Commission (COSO). In addition, we align with federal government protocols as defined by the Government Accountability Office (GAO), in harmony with COSO standards. The COSO protocol encompasses eight ERM activities categorized within five overarching goals and functions that comprehensively address all facets of ongoing enterprise operations (as illustrated on the right). Furthermore, to support the City's risk assessment process, we acknowledge the significance of other pertinent standards related to information and control, including COBIT, ITIL, and ISO. It's important to underscore that the City seeks our assistance specifically for one aspect of ERM: risk assessment. To execute this effectively, the risk assessment must harmonize with other components of City management, such as strategy, policy and goal formulation, risk response strategies, fostering a risk -aware culture, and transparent monitoring and reporting of outcomes. In accordance with the GAO's guidance, a comprehensive risk assessment should encompass key elements of potential risks that the City may encounter. This approach enables the selection and implementation of countermeasures aimed at preventing or mitigating adverse events. To provide the City with an understanding of the scope of the risk assessment, the following types of financial operations are expected to be evaluated in this process: • Financial capture and reporting • Operational/transactional processes • Policies and procedures • Management practices • Liquidity management • Organizational strategy • Legal and regulatory compliance • Reputation management • Vendor and subcontractor relationships • Fraud detection and prevention • Technology infrastructure • Service delivery mechanisms 41PUNGROUP.CPA City of Newport Beach The following outline presents a general framework detailing how The Pun Group LLP formulates a risk assessment and internal control audit work program. This approach is customized to align with the specific audit services outlined in the City's Request for Proposal (RFP). Our strategy for this engagement will be encapsulated in a comprehensive audit plan, ensuring the provision of the following deliverables: • A comprehensive risk assessment and internal control audit plan tailored to your objectives and designed to address and mitigate identified risks. • Expertise in fraud prevention and forensic auditing, offering guidance on implementing processes and internal controls to prevent issues, as well as identifying and addressing improprieties if necessary. • Utilization of computer -aided auditing techniques (CART) tools, enabling us to review all source data and information repositories to identify risks, anomalies, and control failures. This aids in enhancing the segregation of duties, strengthening system security access, and refining the overall internal control structure. • Thorough documentation and evaluation of processes and internal controls aimed at enhancing the efficiency and effectiveness of internal control operations in alignment with City objectives. • A collaborative service approach that actively engages your personnel at every stage of the internal audit processes. • Balanced audit reporting and ready availability for meetings with City management to discuss internal audit findings and work progress. Effective planning is paramount to achieving audit success. City -specific audit models will serve as valuable references as we tailor audit programs to meet the City's unique requirements. We will streamline internal control audits by concentrating on significant and probable risks that could impact critical and time -sensitive business objectives. Collaboration with your team will be central to establishing an assessment plan that aligns with your specific needs. Attendance at Meetings and Hearings: The engagement team will participate in as many meetings with staff as needed to perform the work scope tasks, present the audit plan prior to beginning fieldwork, and discuss the draft audit reports. The team will attend public meetings to present and discuss its findings and recommendations. Once all issues of discussion are resolved, the completed Financial Reports, Single Audit report (if applicable), and other reports will be delivered to the City according to the agreed -upon schedule. Supplemental Reports, Audits, or Agreed -Upon Procedures: Other services, such as agreed -upon procedures, may be deemed necessary. These services will be performed at agreed -upon rates and will be added to a written agreement before commencing audit work. The Firm and the City of Newport Beach will discuss and approve the scope and associated costs of these tasks. Advice and Consultation: Will be provided throughout the year on matters relating to accounting and financial reporting. Such services do not include any task that entails significant research or a formal report. Report of all Irregularities and Illegal Acts: The Firm will make an immediate written report of all irregularities and illegal acts or indications of illegal actions of which we may become aware. The engagement team will also make all communications to the City required by the audit standards under which the engagement is performed. Working Paper Retention and Access to Working Papers: The Firm will retain, at its own expense, all working papers and reports for a minimum of seven (7) years unless the City of Newport Beach notifies the Firm in writing of the need to extend the retention period. The Firm will make working papers available upon request by the City of Newport Beach or its designees. Also, we will comply with reasonable requests from successor auditors and allow them to review working papers that relate to matters of continuing accounting significance. 51PUNGROUP.CPA City of Newport Beach Level of Staff and Number of Hours to be Assigned to Each Segment of the Engagement The Pun Group LLP is your ideal partner for strengthening financial reporting, budgeting, finance customer service, and business continuity. Our team, experienced in AICPA consulting standards, excels in evaluating and refining critical processes like year-end close, journal entry processing, and budget management. We ensure that your financial controls, customer service operations, and disaster preparedness plans align with best practices and are primed for efficiency and resilience. With a proven track record, The Pun Group is the right choice to elevate your organization's financial integrity and operational effectiveness. Estimated Total Hours*: 1: Financial Reporting (Task 1, 2, & 3) 2: Budgeting (Task 1, 2, 3 & 4) 3: Finance Customer service Operational Reuew (Task 1, 2, 3 & 4) 4: Business Continuitv and Disaster Planning Assessment (Task 1. 2, 3 & 5 60 35 85 185 5 60 35 85 185 5 60 35 85 185 5 60 35 85 185 Audit Firm's Expectations of the Role and Participation of City's Staff in the Audit Process The engagement team will meet with the City's management during the initial planning stage to discuss audit schedules and review the prior year's audit findings (if any). We will deliver a list of all documents to be provided by the City's staff. Once such materials are agreed upon by the engagement team and the City's finance personnel, no other schedules will be requested unless new information comes to light during test work. Our goal is to cause the least interruptions to the City's daily operations; therefore, to the extent possible, we will use information in the form available from the City's records. We believe client/engagement team communication is vital to perform results satisfactorily. With that sentiment in mind, we will hold regular meetings with the City's management to determine the status of the audit as well as any items that will require special attention. Open and frequent communication is critical. 6 1 PUNGROUP.CPA City of Newport Beach Certification We are committed to the performance of a high -quality audit at the most reasonable fee level possible, both initially and throughout the engagement. Also, our partners will provide advice and consultation as needed at no additional cost to the City of Newport Beach. Name of Firm: The Pun Group LLP — Certified Public Accountants and Business Advisors Contact Name: Kenneth H. Pun, CPA, CGMA Contact Email Address: ken.pun@pungroup.cpa Authorization to Represent the Firm I, the undersigned, certify I am duly authorized to represent The Pun Group LLP and am empowered to submit this bid. In addition, I certify I am authorized to contract with the City of Newport Beach on behalf of the Firm. r August 12, 2024 Kenneth H. Pun, CPA, CGMA I Managing Partner Date The Pun Group LLP Total All-inclusive Maximum Price Our fee for these services will be billed at our proposed discounted hourly rates, as indicated in the table below. Where fee estimates are provided for the requested financial accounting and consulting services, these amounts will be billed to the City. Kenneth H. Pun Partner $350/hour Sophia Kuo Supporting Partner $300/hour Dr. Peter Hughes Director $300/hour Masood Yousufzai Supervisor $175/hour Based on our initial understanding of the scope, we estimate the fee to be $180,000. Our Firm has immediate availability to start providing the services requested. We're confident we can fulfill your timeline expectations. Description of Services Topic 1: Financial Reporting (Task 1, 2, & 3) Fees $ 45,125 Professional Discount (125) Topic 2: Budgeting (Task 1, 2, 3 & 4) 45,125 Professional Discount (125) Topic 3: Finance Customer Service Operational Review (Task 1, 2, 3 & 4) 45,125 Professional Discount (125) Topic 4: Business Continuity and Disaster Planning Assessment (Task 1, 2, 3 & 4) 45,125 Professional Discount (125) Total Fixed Price $ 180,000 Any supplemental reports, audits, or agreed -upon procedures not covered by this proposal may be added to a written agreement prior to commencing audit work. The Firm and the City will discuss and approve the scope and associated costs of these tasks. Any additional work will be performed at the above -quoted hourly rates. 7 1 PUNGROUP.CPA City of Newport Beach Out of Pocket Expenses are Included in the Total All-inclusive Maximum Price and Reimbursement Rates The Firm's policy is to maintain flexible billing rates to meet the needs of clients and help them control costs. In the interest of ontinuing our long-term relationship, we will absorb expenses such as travel and printing costs. Additionally, our Partners will be available to provide advice and consultation as necessary to the City of Newport Beach. The Firm will also absorb these costs. Manner of Payment Engagement Team members are required to maintain timesheets detailing the date, number of hours, and work performed for every audit task. The Firm will collect these timesheets and bill the City of Newport Beach at the rates outlined in the Total All-inclusive Maximum Price section in four stages: (1) at the conclusion of the planning phase, (2) at the conclusion of the interim phase, (3) at the conclusion of the Year -End phase, (4) and after presentation and acceptance of the final audit reports. Interim billings will cover a period not less than a calendar month. The billing amounts generally break down as follows: Performed Planning %of ProposalWork 10% Interim 40% Fieldwork 40% Presentation and Acceptance of Reports 10% 8 1 PUNGROUP.CPA City of Newport Beach Our partners and seasoned professionals are always available, guiding clients through their periods of rapid growth as well as difficult times. We are able to do that by offering a portfolio of accounting services that are as diverse as the jurisdictions and entities themselves. The Pun Group LLP has successfully provided professional auditing, accounting, financial reporting, and management advisory/consulting services to a broad spectrum of governmental entities. (t) ASSURANCE • Financial statements audits • Compliance audits • Performance audits • Internal audits • Service organization controls audits Internal Audit Services OADVISORY • Operational reviews/risk advisory services • Forensic investigation • Financial condition analysis • Organizational structure review • Cash flow analysis • Debt restructuring consultation • Litigation restructuring consultation ® OTHER SERVICES • Assistance with the preparation and review of the Annual Comprehensive Financial Report • Government property lease excise tax compliance review • Sub -recipient monitoring • Implementation of new GASB pronouncements • Audit readiness services • Contract Finance Director/Accountant services Our firm places significant emphasis on our internal auditing practice, which serves as a fundamental pillar within our array of services. Our experienced team members bring extensive expertise in conducting audits and assessments across various domains, encompassing compliance, finance, fraud detection, governance, management, operations, policies, procedures, and technology. Our clientele spans government entities, not -for -profit organizations, and diverse sectors within the private industry. Our strong reputation and recognition in the field are founded on a solid track record and a discerning approach to analysis. The Pun Group LLP boasts a rich history of successfully executing internal audit projects for local government entities. Our internal auditing and consulting professionals come from diverse backgrounds, including government service, private sector roles, and public accounting. They exclusively dedicate themselves to internal audit and consulting engagements. Our leadership team, with an average of over 25 years of professional experience, ensures the highest level of expertise. Thanks to our extensive work in the public sector, we have honed a set of well -established best practices, including: • Investigative methodologies • Highly trained auditors • Rigorous engagement oversight and supervision • Robust document management • Comprehensive fieldwork • Precise reporting protocols • Effective communication practices • Proven risk assessment frameworks The Pun Group LLP's internal audit professionals possess an in-depth understanding of local government policies, processes, and procedures. We maintain strict training requirements for our auditing and consulting staff, ensuring their knowledge remains up-to-date. Instead of simply carrying out tasks on behalf of our clients, we actively engage in close collaboration with them to tackle their unique needs. We assess risks, improve cost-effectiveness, efficiency, and overall effectiveness, strengthen internal controls, ensure compliance with laws and regulations, increase revenue streams, and proactively identify and prevent fraud. A pivotal element of our engagements lies in transferring knowledge and guidance to our clients, empowering them to elevate their organizations continuously. Our team operates in a tightly -knit partnership with city management and staff, nurturing a collaborative relationship that optimizes attaining the defined goals and objectives for every engagement. 9 1 PUNGROUP.CPA City of Newport Beach Full -Time Government Auditors As full-time government auditors, we understand that governmental entities do not operate independently but in an increasingly complex web of local, state, and federal relationships. We know how these relationships work, what they mean at the local level, and how every public organization's focus on resource management is critical to success. Also, while many accounting Firms can provide services, not all can build excellent working relationships with their clients. The Pun Group LLP prides itself on developing lasting, personal relationships with our clients. Our hands-on partner involvement and low personnel turnover are crucial tools to our success and are highly beneficial to the City. Local Office's Information Technology (IT) Audit Capabilities The Pun Group LLP continues our efforts to invest in our IT system to enhance our security further and promote audit efficiency. Top security for your data is the key to our success. When we have your data virtualized, our Firm takes all the preventive steps to avoid putting your information at risk. Our In -House IT administrator maintains our server to ensure our IT environment is continuously updated with the latest security fixes. Through VPN and Microsoft Remote Desktop, our In -House network administrator can lock down files and system access from a single point, limiting the ability of remote sites to take data from our server. Access to systems from anywhere and anytime. With more mobility being the norm rather than the exception, our engagement team needs robust access to the engagement files when they are working in your office. Accounting and Auditing Software applications are installed in our "Private" server and can be securely accessed through VPN and Microsoft Remote Desktop. The Firm uses CCH ProSystem fx® Engagement for audit documentation, which allows real-time synchronization of the work papers and instant collaboration quality control review. Secure Data File Transfer System. In order to improve audit efficiency, workflow management software plays an essential role between your organization and our engagement team. We employ a secure data file transfer system called Suralink. Suralink's dynamic request list is integrated with our secure file -hosting system for seamless document -request coordination. It means all our requests are in one place, updated in real-time, and accessible by everyone working on the engagement. As a client, you no longer have to manually maintain a spreadsheet amongst several people, only to repeat the process in a day or two. Not only makes the operation more cost-efficient, but it also enables you and your team to spend your time getting the job done, not reconciling a messy list of outstanding items. The Suralink dashboard, as shown below, allows you to visualize the process of document -request fulfillment. REQUEST SUMMARY 24% Total Requests 146 Outstanding: 75% Fulfilled: 24% Accepted 2 Returned 0 l�rr Returned. 0% Outstanding. 108 Fulfilled 36 Q Accepted:l"o 75% M; '��■�■■■■■■■■■�l l�lrl.rlr�llrlrlr, ,�i■I.rl.�ll.r, ,�����, Interim Audit General Trial Balances ConRrmadons ski BIG FIRM EXPERTISE. SMALL FIRM VALUES. Our professional backgrounds at major national firms showed us how to solve complicated business and accounting challenges, but the sense of personal connection was missing. We launched The Pun Group because we believe every client deserves to work with experienced business advisors and CPAs who have the time — and take the time — to create an authentic connection. Every client is our top priority! A UNIQUE CULTURE. "Personalization" is not just a buzzword — it's part of our firm's culture. We take a personal approach to everything we do. We collaborate with our clients, so they're always part of the process. We listen to our staff to make sure they have the right support and resources to do a great job. Getting to know others and discovering how we can serve them better is notjust a sign of good business practices; it's a sign of good people. -4- INNOVATION EMBRACED. New ideas keep you ahead of the game. From leveraging the value of emerging technologies to further refining trusted processes, we adopt proven solutions to meet your needs. WHERE YOU GO, WE GO. WHERE YOU GROW, WE GROW. Our success is defined by how you achieve yours. Partner with accomplished accounting and financial professionals who are laser -focused on taking your business to the next level. 10 1 PUNGROUP.CPA City of Newport Beach List of Current Municipal Clients The Pun Group LLP has performed numerous audits of organizations subject to financial and compliance audits. These audits were performed under auditing standards generally accepted in the United States, Government Auditing Standards, Uniform Guidance (formerly known as OMB Circular A-133), and its Compliance Supplement (when applicable), Office of the State Controller's Minimum Audit Requirements and Reporting Guidelines. A representative list of our current clients is as follows: City of Adelanto 2021 — Present Yes 700 City of Anderson 2023 — Present Yes Yes N/A 530 City of Arvin 2013 — Present Yes 00 City of Baldwin Park 2022 — Present Yes Yes Yes 700 City of Bell 2018 — Present Yes 520 City of Bradbury 2012 — Present Yes N/A N/A 150 City of Calexico 2007 — Present Yes 750 City of Clovis 2006 — Present Yes Yes Yes 500 City of Coachella 2017 — Present Yes Yes 410 City of Commerce 2023 — Present Yes Yes Yes 570 City of Cottonwood, AZ 2007 — Present Yes Yesqm"r 400 City of Corona 2021 — Present Yes Yes Yes 640 City of Cudahy 2023 — Present Yes Yes Yes 500 Town of Corte Madera 2022 — Present Yes Yes N/A 400 Town of Danville 1999 — Present Yes Yes Yes City of Douglas, AZ 2020 — Present Yes Yes Yes 300 City of Desert Hot Springs 2013 — Present Yes N/A N/A 0 City of Encinitas 2024 — Present Yes Yes Yes 600 City of Fresno 2022 — Present Yes Yes Yes City of Gardena 2007 — Present Yes Yes Yes 700 City of Gilroy 2020 — Present Yes City of Hercules 2020 — Present Yes Yes Yes 450 City of Indio 2024— Present City of Lake Elsinore 2023 — Present Yes Yes Yes 460 City of Lakewoo 2013 — Present City of Lynwood 2016 — Present Yes Yes Yes 585 City of Madera 2019 — Present Yes City of Menlo Park 2023 — Present Yes Yes Yes 550 111 PUNGROUP.CPA City of Newport Beach City of Montebello County of Monterey 2023 — Present Part of the audit & consulting services pool TBD City of Monterey Park 2023 — Present Yes Yes Yes City of Napa 2019 — Present Yes Yes Yes 750 City City 13 s City of Newport Beach 2024 — Present Part of the internal audit consulting services TBD City of Palm Springs Yes Yes Yes 1,000 City of Paramount 2023 — Present Yes Yes Yes 460 2017 — Present Yes 450 City of Placerville 2008 — Present Yes Yes N/A 400 Pity of Pleasanton Yes 700 City of Pinole 2023 — Present Yes Yes Yes 400 City of Redlands 2022 — Present Yes Yes 65 L City of Ridgecrest 2009 — Present Yes Yes Yes 300 City of Rohnert Park 2020 — Present 70M City of Salinas 2022 — Present Yes Yes Yes 800 City of San Mateo City of Santa Clarita 2022 — Present Yes Yes Yes 1,200 City of Santa Cruz 2023 City of Seal Beach 2017 — Present Yes Yes Yes 410 City of Stockton 2012 — Present City of Tracy 2021 — Present Yes Yes Yes 960 Town of Tibur 2022 — Present City of Vernon 2023 — Present Yes Yes Yes 1000 City of Ventura 2024 — Present Yes City of Visalia 2021 — Present Yes Yes Yes 650 Imperial County Transportation Yes Commission Nevada County Transportation 2021 —Present Compliance N/A N/A 450 Commission Services San Diego Metropolitan Transit System Yes Shasta Regional Transportation Agency 2015 — Present Yes N/A N/A 400 Carmel Area Wastewater District 2022 — Present Yes CAWD/PBSCD Wastewater Reclamation 2022 — Present Yes N/A N/A 150 Project 121 PUNGROUP.CPA City of Newport Beach Central Basin Water District Emerald Bay Service District Helix Water District 2018 — Present 2024 — Present 2024 — Present M Yes A Yes N/A 400 225 3 "20 Los Angeles County Law Library 2020 — Present Yes N/A N/A 180 Marina Coast Water Distric 2012 — P Menlo Park Fire Protection District 2015 — Present Yes Yes Yes 240 NALEO Educational Fnd NALEO Olivenhain Municipal Water District 2019 — Present Yes Yes Yes 200 Padre Dam Municipal Water District K 2020 — Present Rancho Santa Fe Fire Protection District 2015 — Present Yes N/A N/A 120 San Bernardino Counnfy Preschool Services Department 2020 — P San Bernardino County Fire Protection 2016 — Present Yes N/A N/A 200 District San Elijo Joint Powers Authority 2016 — Present Santa Fe Irrigation District 2019 — Present Yes N/A N/A 250 San Mateo County Mosquito & Vector 2024 — Present Control District dh Sweetwater Authority 2022 — Present Yes Yes Yes 270 South Bay Cities Council of Governments 2020 — Present South Orange County Water Authority 2017 — Present Yes Yes Yes 240 oRegional Public 2015 — Present Communications Authority Southwestern Community College District 2009 — Present Yes Yes N/A 720 Valley Sanitary District s West Valley Mosquito and Vector Control 2016 — Present Yes N/A N/A 100 District Zone 7 Water Agency 2020 — Present Yes Yes 131 PUNGROUP.CPA City of Newport Beach The Firm will complete the audit fieldwork and issue all reports within the established timeframe, assuming no internal circumstances within the City cause delays in the audit. 2024 Milestones and Proposed Timeline * j AUG j SEPT OCT Mid End I Mid End 1 Mid End I Initial Planning • Completed Client Acceptance/Contract I • • Prepare Engagement Budget & Engagement Letter I • • Hold Kick Off Meeting w ith City Administrator, Finance, Department Heads, Consultants, and Other Stakeholders j • • Establish a communication plan with Finance for key stakeholders and finalize format for progress reporting to City Administrator I • • Review Prior relevant Reports, Instructions given and Support for significant assumptions and estimates I • Topic 1: Financial Reporting Task 1: Reviewpolicies and procedures (Year -End Close, Journal Entry Processing, etc.) • Step 1: Gather and review existing policies and procedures documents. Step 2: Interview key staff to confirm procedures in practice. Step 3: • • Identify gaps or inconsistencies between documented and practiced procedures. Step 4: Document findings and prepare a summery report. Task 2: Assess routine account reconciliations Step 1: Request Step 2: Review for timeliness, Step 3: • and collect samples of account reconciliations. reconciliations completeness, and accuracy. 1 • • I 1 1 Identify any discrepancies or areas for improvement. Step 4: Document observations and provide feedback to the client. I Task 3: Provide recommendations for improvement I I I • Step 1: Analyze findings from Task 1 and Task 2. Step 2: Research best practices in financial reporting and account reconciliation. Step 3: Draft I • • recommendations for process improvements. Step 4: Review recommendations with senior audit staff before presenting to the client. I I I I Topic 2: Budgeting Task 1: Review policies and procedures (Budget Preparation, Monitoring, etc.) I • Step 1: Collect and review existing budgeting policies and procedures. Step 2: Interview key budgeting staff to confirm processes in practice. Step I • I • 3: Compare documented processes w ith best practices. Step 4: Identify areas for enhancement and document findings. I I I I I Task 2: Assess trend analysis practices I • Step 1: Obtain past trend analysis reports. Step 2: Evaluate the methodology used for accuracy and relevance. Step 3: Interview key personnel to I • I • understand how trend analysis informs decision -making. Step 4: Provide feedback on the robustness and consistency of trend analysis. I Task 3: Review financial reports and budget -to -actual reviews I I I I I • Step 1: Request samples of periodic financial reports and budget -to -actual reviews. Step 2: Assess the timeliness and accuracy of reports. Step I • I • 3: Verify that reports are used effectively in decision -making processes. Step 4: Provide suggestions for enhancing report utility and timeliness. I I I I I Task 4: Provide recommendations for improvement • Step 1: Corrpile insights from Tasks 1-3. Step 2: Research best practices in budgeting processes and financial reporting. Step 3: Develop targeted • I • I recommendations for improving efficiency and effectiveness. Step 4: Prepare a presentation for client stakeholders. I Topic 3: Finance Customer Service Operational Review Task 1: Evaluate internal controls and customer service policies in Finance Department I Step 1: Gather documentation on current customer service policies and procedures. Step 2: Conduct interview s w ith Finance Department staff to • verify the application of policies. Step 3: Perform a w alkthrough of customer service operations to observe processes in action. Step 4: Document 1 • • any control weaknesses and areas for improvement. I I Task 2: Reviewoperations against best practices I I I I • Step 1: Research best practices in finance customer service operations. Step 2: Compare the City's operations against these best practices. Step I 1 • • 1 1 3: Identify discrepancies or opportunities for improvement. Step 4: Prepare a report summarizing findings and suggested enhancements. I I I I I Task 3: Assess and recommend performance metrics Step 1: Review existing performance metrics used in the Finance Department. Step 2: Analyze the effectiveness of current metrics in measuring • operational efficiency and customer satisfaction. Step 3: Research additional or alternative metrics that could enhance performance monitoring. I • • Step 4: Provide recommendations for adopting new metrics or refining existing ones. I Task 4: Provide recommendations for improvement I I I • Step 1: Consolidate findings from all tasks in this topic. Step 2: Draft recommendations focused on improving internal controls, customer service, I 1 • • 1 1 and operational efficiency. Step 3: Review recommendations w ith senior audit staff. Step 4: Prepare and deliver a final report to the client. I I I I Topic 4: Business Continuity and Disaster Planning Assessment Task 1: Reviewthe City's business continuityplan, focusing on key elements Step 1: Request and review the existing business continuity plan. Step 2: Evaluate the plan's coverage of essential functions, lines of succession, • and other key elements. Step 3: Interview key stakeholders to assess the plan's effectiveness and relevance. Step 4: Identify any critical gaps or I I • I • weaknesses. I I I I Task 2: Assess the strategy for post -disaster operations Step 1: Analyze the comprehensiveness of the strategy outlined in the business continuity plan. Step 2: Review past disaster response actions to • evaluate plan effectiveness. Step 3: Interview staff responsible for disaster response and recovery. Step 4: Provide feedback on improving post- I I • I • disaster operations. I I I Task 3: Identify gaps and provide improvement recommendations I I I I I I I • Step 1: Synthesize findings from Tasks 1 and 2. Step 2: Research industry standards for business continuity and disaster recovery. Step 3: I I • I • Develop a list of prioritized recommendations to address identified gaps. Step 4: Prepare a comprehensive report for client review. I I I I Task 4: Conduct risk and impact analysis with city staffinput • Step 1: Collaborate w ith city staff to gather input on potential risks and impacts. Step 2: Conduct workshops or interview s to assess risk I I • I • scenarios. Step 3: Analyze the data to identify the most critical risks. Step 4: Finalize and present a risk and impact analysis report to the client. I I I I Reporting • Revise draft recommendations reports for all relevant tasks based on received feedback and submit the updated versions to the City Administrator. I I I • • • Prepare finalized proposed recommendations for presentation to the City Adrrinistration to meet October 29th deadline. I I • • • Debrief w ith Department Heads after reccomendations Adoption • • * Above proposed timeline is subject to review and approval, and it can be modified as needed to meet the CiVs needs. 141 PUNGROUP.CPA City of Newport Beach Benefits of Choosing The Pun Group LLP The Pun Group LLP is recognized for its professionalism, integrity and for providing clients with practical solutions unique to their circumstances and issues. Our Firm prides itself on being able to provide personalized client services, and with that sentiment in mind, we have carefully chosen our engagement teams. The Pun Group's primary objective is to offer the City of Newport Beach solutions and directions led by highly experienced and capable partners who can successfully implement the work and produce the results you expect. This philosophy and mindset allow us to provide a superior level of service and a quality audit. We trust that this proposal has given you the information needed about the Firm, the engagement team members, the overall audit approach, cost -saving measures, and audit fees. We are committed to exceeding your expectations, and we look forward to bringing our experience and expertise to the City of Newport Beach while providing you with the excellent level of service that you expect and deserve. Thank You Thank you for allowing us to submit our qualifications to provide you with Enterprise Risk Assessment and Internal Controls Review Services. Please direct inquiries to: Kenneth H. Pun, CPA, CGMA Managing Partner Email: ken. pun(apungroup.cpa Phone: (949) 777-8801 1 Fax: (949) 777-8850 Sincerely, The Pun Group LLP Certified Public Accountants and Business Advisors 151PUNGROUP.CPA City of Newport Beach The engagement team was carefully selected to provide the City with all the services needed to successfully complete the audit. Your assigned Engagement and Technical Partners will be personally involved in the project, leading a team that has significant experience in governmental auditing. You can be confident that our broad experience and technical capabilities will allow us to provide technical support, interpret findings, and offer practical solutions to any issues that may arise. About Your Engagement Team The personnel assigned to this engagement are fully qualified to perform an effective audit of the City, and their extensive experience will be critical to the audit process. Our professionals are familiar with the complexities of governmental accounting, auditing, and financial reporting, including but not limited to all GASB pronouncements, the Single Audit Act, Uniform Guidance (formerly known as OMB Circular A-133), and fund operations. They have held positions as professional certified public accountants, as well as significant roles within and outside of government agencies. Such qualities will bring to an entity like the City of Newport Beach the thought leadership, quality, and level of experience it requires. As full-time government auditors, we understand that governmental entities do not operate independently but in an increasingly complex web of local, state, and federal relationships. We know how these relationships work, what they mean at the local level, and how every public organization's focus on resource management is critical to success. Also, while many accounting Firms can provide services, not all can build excellent working relationships with their clients. The Pun Group LLP prides itself on developing lasting, personal relationships with our clients. Our hands-on partner involvement and low personnel turnover are crucial tools to our success and are highly beneficial to the City. Because of the "familiarity threat" under the professional audit and independence standards that may exist in long- term relationships with audit firms, the Firm is committed and has sufficient resources to rotate engagement partners, managers, and or supervisors assigned to the City's audit with personnel with similar or higher qualifications and experience in order to overcome this threat. If the Firm changes key personnel, we will provide the City with a written notification. Engagement partners, managers, and specialists will only be changed with the express prior written permission from the City. Audit personnel may be replaced only by those with similar or better qualifications and experience. Kenneth H. Pun, CPA, CGMA I Engagement/Lead Partner Kenneth Pun is the Managing Partner and an Assurance Partner at the Firm. With over twenty-one years of public accounting experience in the state and local government sector, he specializes in audits, management, and consulting for governmental organizations. Mr. 4 Pun served as the Contract Deputy Finance Director for the City of San Marino in 2017. He has served as the Chair of the California Society of CPAs Governmental Auditing Accounting Committee. He is a Certified Public Accountant and a Chartered Global Management Accountant. Mr. Pun will actively serve as the Engagement/Lead Partner, overseeing the Engagement Team, developing the audit plan, reviewing fieldwork for quality, approving final reports, and communicating with the Finance Department. He will also be responsible for the timely delivery of all services for the City. i I PUNGROUP.CPA City of Newport Beach Sophia Kuo, CPA, M.B.A. I Supporting Partner Sophia Kuo is an Assurance Services Partner in the Firm who holds an Advanced Certification in Single Audits through the AICPA. She possesses extensive auditing experience, including cities, counties, special districts, and not -for -profit entities. She will work closely with the engagement partners directing and supervising the audit team in its daily activities and tasks. She is a Certified Public Accountant and possesses a MAcc in Accounting and an M.B.A. in Business Administration. Ms. Kuo will serve as a key technical advisor, working closely with the engagement lead partner. She will provide expert guidance, overseeing the audit team's daily activities to ensure the successful completion of the project. Dr. Peter Hughes, Ph.D., MBA, CPA, CIA, CFE I Engagement/Project Director Dr. Peter Hughes holds the position of Advisory Services Director within the organization and will act as the primary liaison for your team. He draws more than twenty-five years of governmental experience in the areas of financial audit and reporting under governmental and financial accounting standards, evaluation of internal controls under the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Integrated Framework, the performance of Single Audits under the Uniform Guidance, subrecipient monitoring of Federal Grants, corporate financial reporting, and data analytics. Serving as the Director of Internal Audit for Orange County, he held this position for 17 years, from 1999 to 2016. In this role, he reported directly to the Board of Supervisors. Dr. Hughes will direct and supervise the audit team in its daily activities and tasks in order to deliver all services requested. Masood Yousufzai I Audit Supervisor Masood is a Supervisor within the Firm. He will work with the engagement team and the finance personnel during the auditing process. Mr. Yousufzai will serve as the primary point of contact for your team and will work to ensure the services are conducted within the deadlines and will provide updates on our team's progress to the partners and you. Continuing Education and Professional Development Because of our commitment to providing the highest quality of services to the City, we provide our professionals with technical training to ensure our people stay current on topics within the industry sectors and better equip themselves to serve our clients. All professionals are required to obtain continuing education that exceeds the requirements of the American Institute of Certified Public Accountants (AICPA) and, where applicable, Government Auditing Standards. Our professionals participate in continuing education programs through the following means: • Governmental Accounting and Auditing Conference sponsored by AICPA. • Webinar sponsored by AICPA Government Audit Quality Center. • Annual Conference sponsored by California Society Municipal Finance Officers. • Governmental Accounting and Auditing Conference sponsored by CaICPA. • The Pun Group in-house training on government -specific topics, including but not limited to GASB updates, Government Auditing Standards Revision, Fraud in State and Local Governments, COSO Internal Control - Integrated Framework, Audit of State and Local Governments, Single Audit, and Mindbridge Al AuditorSTM. In 2023, our government professionals received an average of 52 hours of continuing professional education, compared with the 40 hours of accounting industry requirement. By expanding our knowledge through these seminars/conferences, we can provide the right solutions to our clients. ii I PUNGROUP.CPA City of Newport Beach Staff Continuity The Pun Group LLP is committed to maintaining staff continuity throughout audit engagements, and we can assure you that the partners assigned to this audit will be involved throughout the entire contract term. While we cannot guarantee that our staff -level members will stay with the Firm, we encourage loyalty by paying competitive wages, offering opportunities for promotion, using state-of-the-art equipment, and providing excellent working conditions. Also, we offer benefits, including retirement plans, medical plans, profit-sharing programs, and continuing education. Quality -Control System Our Firm meticulously monitors the quality and contents of our reports. The Pun Group LLP is 100% committed to providing only the highest grade of work possible for our clients and for those who rely on our audits. The Firm strives to exceed professional industry standards because of the continuing respect for our clients and our emphasis on creating long-lasting relationships. The Pun Group LLP works exclusively with those who share the same moral integrity and values. Our quality -control system has been crafted with excellence in mind. It not only meets AICPA standards but also matches our own elevated standards, which include following various professional development activities. Engagement Team Resumes The City of Newport Beach deserves experienced professionals who work as a team. The Pun Group LLP will provide qualified professionals to perform the audit. No subcontractors and/or consultants will be utilized to perform the requested services. Resumes for key engagement team members are presented as follows: iii I PUNGROUP.CPA City of Newport Beach EXPERIENCE Kenneth H. Pun is the Managing Partner and an Assurance Partner at The Pun Group, LLP, which he founded in 2012 after serving in senior -level positions for well -established national and regional firms. Under his leadership, The Pun Group has become one of the "Top Accounting Firms" in Orange County, according to the Orange County Business Journal. The Pun Group is also on the list of CaICPA's Top 150 firms. Prior to founding The Pun Group, Ken served clients in a variety of industries, including small to very large state and local governmental agencies, insurance companies, not -for -profits, healthcare, technology, and manufacturing and distribution clients. His career in public accounting was spent primarily with Regional firms and National firms. Leveraging more than 21 years of public accounting experience, Ken has earned a reputation of being a trusted advisor to governmental and Healthcare organizations throughout California and neighboring states. Municipalities and public agencies engage him because of his premier level of client service, commitment, and innovative methods of increasing operational efficiencies and reducing costs. Ken maintains his deep commitment to professional education through his work as an instructor for the California Education Foundation. He has authored training materials in governmental accounting and auditing, such as Financial Reporting for State and Local Governments, 2018 Government Auditing Standards, and Single Audit Fundamentals for California Education Foundation. He is also the technical reviewer of the CCH Knowledge -Based Audits TM of State and Local Governments with Single Audits. He advises clients on those topics at influential industry forums. Internally, Ken mentors audit teams by providing direction and technical guidance to ensure adherence to the firm's quality controls. EDUCATION University of California, Riverside B.S. Degree — Business Administration, Emphasis in Accounting LEADERSHIP & AFFILIATIONS • Member, American Institute of Certified Public Accountants (AICPA) • Member, California Society of Certified Public Accountants (CaICPA) Past Chair, CaICPA Governmental Accounting and Auditing Committee • Member, CaICPA California Committee on Municipal Accounting Member, CaICPA Governmental Accounting and Auditing Conference Planning Committee • Member Government Finance Officers Association (GFOA) Member, California Society of Municipal Finance Officers (CSMFO) Member, CSMFO Professional Standards Committee • Speaker, CSMFO Conference (2014 and 2018) • Instructor, CaICPA Education Foundation • Technical Reviewer, CCH Knowledge -Based Audits TM of State and Local Governments with Single Audits RELEVANT EXPERIENCE • City of National City • City of San Bernardino • City of Palm Springs • City of Desert Hot Springs • City of Lakewood • City of Stockton • City of Pomona • City of Redding • City of Clovis • City of Shafter CONTINUING PROFESSIONAL EDUCATION Various courses are offered by the Firm online through Thompson Reuters, AICPA, and CaICPA Education Foundation, including: • Governmental and Nonprofit Annual Update • Government Auditing Standards • GASB Basic Financial Statements for State and Local Governments • Single Audits: Uniform Guidance (formerly OMB Circular A-133) • Financial Accounting Standards Board Annual Updates • Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. iv I PUNGROUP.CPA City of Newport Beach EXPERIENCE Sophia Kuo is a Partner of The Pun Group, LLP's Assurance division. In her ten years of accounting and auditing experience, Sophia has worked with governmental agencies, not -for - profit entities, and private for -profit entities. She possesses governmental expertise that ranges from GASB audit/reporting, Internal Controls/COSO Framework, Single Audit, Corporate Financial Reporting, Data Analysis, and Taxation. Ms. Kuo has performed audits and other attestation services for several governmental agencies throughout California. Her portfolio includes cities, counties, redevelopment agencies, public financing authorities, housing authorities, transportation agencies, and special districts. Also, she has helped them publish their Annual Comprehensive Financial Reports in compliance with GASB Statement No. 34. EDUCATION Fu Jen Catholic University B.A. Degree — International Trading and Finance, Emphasis in Finance Idaho State University Master of Accounting (MAcc) Master of Business Administration (M.B.A.) LEADERSHIP & AFFILIATIONS • Member, American Institute of Certified Public Accountants (AICPA) • Member, California Society of Certified Public Accountants (CaICPA) RELEVANT EXPERIENCE • City of Coachella • City of Culver City • City of Desert Hot Springs • City of Gardena • City of Laguna Niguel • City of Lakewood • City of Monterey • City of Monterey Park • City of Perris • City of Pomona • City of Stockton • City of Hercules • City of Visalia • City of Glendora CONTINUING PROFESSIONAL EDUCATION Various courses are offered by the Firm online through Thompson Reuters, Al CPA, and CaICPA Education Foundation, including: • Governmental and Non-profit Annual Update • Government Auditing Standards • GASB Basic Financial Statements for State and Local Governments • Single Audits: Uniform Guidance (formerly OMB Circular A-133) • Financial Accounting Standards Board Annual Updates • Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. v I PUNGROUP.CPA City of Newport Beach EXPERIENCE Dr. Peter Hughes served as the Director of Internal Audit for Los Angeles County, Orange County, Caltech, and NASA Jet Propulsion Lab, as well as the Oregon University System. He also was Director of Performance Auditing for Orange County and worked as a Senior Auditor at Arthur Andersen, an international Public Accounting Firm. In all of Dr. Hughes's director roles, he reported administratively to the Board and functionally to the Audit Committee. He was responsible for the development and implementation of a COSO-driven, risk -based, comprehensive, and systematic annual audit plan. This plan was meticulously designed to ensure adequate coverage on a rotational basis of the highest -risk areas that had been identified. He was critical in developing a comprehensive and systematic annual audit plan for all 47 County departments, guided by the COSO Framework. To facilitate this process, Dr. Hughes employed an electronic risk assessment survey tool, aiding departmental managers in identifying and prioritizing areas with the highest risk and vulnerability. These assessments spanned financial, IT, compliance, control, cost-effectiveness, and program performance aspects. Dr. Hughes has held an impressive workload of around 300 project -specific scopes of work completed, each guided by a unique audit program, budget, and timeline. These assignments adhered to the relevant standards set by the AICPA, the Institute of Internal Audit, or Generally Accepted Governmental Auditing Standards. In 2019, the Los Angeles County Audit, Compliance, and Investigative Services received affirmation of full compliance with all relevant audit standards from the Institute of Internal Auditors Quality Assurance and Peer Review Agency. Additionally, his audit reports included observations and recommendations regarding outdated or ineffective policies and procedures, redundant controls, and administrative tasks, whenever applicable. EDUCATION Oregon State University PhD -Administration with an emphasis in Organizational Governance and Strategic Planning University of California at Riverside MBA Degree with emphasis in Statistical Analysis and Organizational Governance Pomona College B.A. Degree, Emphasis in Moral and Ethical Philosophy LEADERSHIP & AFFILIATIONS • Member, American Institute of Certified Public Accountants (AICPA) • Member, California Society of Certified Public Accountants (CaICPA) AWARS & PUBLICATIONS • The year prior, in 2009, Dr. Peter Hughes garnered recognition from the Association of Certified Fraud Examiners for authoring the Most Popular/Influential Article of the Year. The article "Ethics Pays in So Many Ways" presented compelling findings from over a dozen national and international surveys involving corporations, customers, investors, and employees. These surveys conclusively demonstrated that companies prioritizing a supportive work -life balance for their employees adhere to environmental regulations and ensure the quality of their products or services not only attract and retain top -tier employees but also foster customer and investor loyalty, leading to substantial profitability gains on a statistically significant basis. • In the April/May 2020 edition of the Institute of Internal Auditors magazine, Dr. Hughes authored an enlightening article titled "10 FAQs (Frequently Asked Questions) Regarding Assessing an Organizational Culture." This insightful piece delved into the various components that constitute the culture of any organization, shedding light on methods to gauge whether the desired behavior aligns with the actual behavior exhibited by the organization and its employees. CONTINUING PROFESSIONAL EDUCATION Various courses are offered by the Firm online through Thompson Reuters, AICPA, and CaICPA Education Foundation, including: • Governmental and Nonprofit Annual Update • Government Auditing Standards • GASB Basic Financial Statements for State and Local Governments • Single Audits: Uniform Guidance (formerly OMB Circular A-133) • Financial Accounting Standards Board Annual Updates • Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. vi I PUNGROUP.CPA City of Newport Beach EXPERIENCE Masood Yousufzai serves as a Supervisor at The Pun Group, LLP, leveraging over eight years of expertise in delivering comprehensive accounting and audit services. His professional background includes adept management of internal control and risk evaluation processes, along with offering valuable business consulting. Masood has a proven track record of working with clients across diverse industries, including large not -for -profit entities, insurance carriers, manufacturing and distribution, and government entities. Prior to joining The Pun Group, LLP, he excelled in the role of Internal Audit and Special Projects Manager. In his capacity as a Supervisor, Masood takes charge of managing, planning, and executing financial and regulatory external and internal audits. He excels in developing and implementing internal control procedures and conducting thorough risk assessment evaluations. His skill set extends to evaluating critical processes within organizations, identifying operating inefficiencies, and pinpointing potential internal control weaknesses. Masood translates these assessments into actionable recommendations and provides insightful report comments to guide resolution strategies. Masood Yousufzai has also made significant contributions by offering accounting support services to local not -for -profits and government entities. This includes expertise in financial statement analysis and preparation, showcasing his commitment to providing holistic financial solutions. EDUCATION California State University Bakersfield B.A. Political Science California State University Northridge M.P.A. Degree — Public Administration University of California Irvine Applied Accounting Program LEADERSHIP & AFFILIATIONS • Member, California Society of Certified Public Accountants (CaICPA) RELEVANT EXPERIENCE • City of Bell • City of Belmont (Payroll Advisory) • City of Desert Hot Springs • City of Palm Springs • City of Seal Beach • City of Phoenix (Subrecipient Monitoring) • City of Corona • City of San Jose (Subrecipient Monitoring) • City of Perris • South Bay Cities Council of Governments CONTINUING PROFESSIONAL EDUCATION Various courses are offered by the Firm online through Thompson Reuters, AICPA, and CaICPA Education Foundation, including: • Governmental and Nonprofit Annual Update • Government Auditing Standards • GASB Basic Financial Statements for State and Local Governments • Single Audits: Uniform Guidance (formerly OMB Circular A-133) • Financial Accounting Standards Board Annual Updates • Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. vii I PUNGROUP.CPA City of Newport Beach Strengthen Your Accounting Knowledge: TPG Client Training Webinars We pride ourselves in leading the governmental auditing profession nationwide and statewide. Members of our team have been assigned to the AICPA and State Government Accounting and Audit committees. Our membership with these two levels of government keeps us current, and such involvement helps our Firm with the constant changes in accounting and auditing standards, laws and regulations, and compliance provisions, which have created an unprecedented complexity in public accounting for state and local governments. Every year, the Firm hosts a conference to update governmental clients on new technical accounting and financial issues. Since last year, by implementing "Webinars," we've been expanding our horizons and offering our clients 15 hours of Continuing Professional Education (CPE). These sessions are free of charge and part of the service package provided to our clients. CPE courses we offer: GASB 100 Accounting Changes and Error Corrections GASB 101 Compensated Absences __j GASB 103 Financial Reporting Model Improvements viii I PUNGROUP.CPA City of Newport Beach A� ® CERTIFICATE OF LIABILITY INSURANCE DATE (MMIDDMYY) 2/27/2024 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER Burnham WGB Insurance Solutions CA Insurance License OF69771 15901 Red Hill Avenue CONTACT Sarah Cababellro FAX PHONE No:714-573-1770 , 714-824-8300 A/C ADDRESS, Sarah.Caballero@wgbib.com INSURERS AFFORDING COVERAGE NAIC# Tustin CA 92780 INSURERA: National Fire Insurance of Har 20478 INSURED PUN&M-1 INSURERB: Valley Fore Insurance Company 20508 The Pun Group LLP 200 E. Sandpointe Ave., #600 Santa Ana CA 92121 INSURERC: Great Divide Insurance Company 25224 INSURERD: Continental Casualty Company 20443 INSURER E: INSURER F : COVERAGES CERTIFICATE NUMBER:234941955 REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS, INSR LTR TYPE OF INSURANCE ADDL SUBR POLICYNUMBER MMIDDM'POLICY FF MIDDIYY POLICY P LIMITS B X COMMERCIAL GENERAL LIABILITY 7013134445 3/1/2024 3/1/2025 EACH OCCURRENCE $2,000,000 CLAIMS -MADE OCCUR DAMAGETORENTED PREMISES Ea occurrence $ 1,000,000 MED EXP (Any one person) $ 10,000 PERSONAL & ADV INJURY $ 2,000,000 AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $ 4,000,000 GEN'L X POLICY PRO- JECT LOC PRODUCTS - COMP/OP AGG $ 4,000,000 $ OTHER: A AUTOMOBILE LIABILITY 7013117645 3/1/2024 3/1/2025 COMBINED SINGLE LIMIT Ea accident $1,000,000 BODILY INJURY (Per person) $ ANY AUTO OWNED SCHEDULED AUTOS ONLY AUTOS BODILY INJURY (Per accident) $ PROPER-YDAMAGE Per accident $ X HIRED X NON -OWNED AUTOS ONLY AUTOS ONLY D X UMBRELLA LIAB X OCCUR 7013136468 3/1/2024 3/1/2025 EACH OCCURRENCE $ 2,000,000 AGGREGATE $ 2,000,000 EXCESS LIAB CLAIMS -MADE DED X RETENTION $ $ B WORKERS COMPENSATION AND EMPLOYERS LIABILITY Y I N ANYPROPRIETOR/PARTNER/EXECUTIVE WC713136289 3/1/2024 3/1/2025 X STATUTE OERH No Deductible E.L. EACH ACCIDENT $ 1,000,000 OFFICER/M EMBER EXCLUDED? ❑ NIA E.L. DISEASE- EA EMPLOYEE $ 1,000,000 (Mandatory in NH) If yes, describe under DESCRIPTION OF OPERATIONS below E.L. DISEASE- POLICY LIMIT $ 1,000,000 C E8,0 CAB2023594 3/1/2024 3/1/2025 3,000,000agg 1,000,000 Retro 12/29/11 DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES (ACORD 101, Add rtional Remarks Schedule, maybe attached if more space is required) Great Divide Insurance Company AM Best Rating A+ XV Certificate holder(s) is/are named as additional insured per attached endorsements subject to the terms & conditions of the policy: General Liability Additional Insured & Waiver of Subrogation # SB146932G General Liability Primary & Contributory #CNA80103XX Umbrella Policy follows form for General Liability, Auto Liability and Employers Liability Auto Primary and Non -Contributory & Waiver of Subrogation #CA00011013 Auto Designated Insured #IL 02 70 07 20 Work Comp waiver of subrogation applies #WC 00 03 13 CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. Proof of Coverage Cart AUTHORIZED REPRESENTATIVE XXXX)OCXX xxxX)= XX XXXXX --�� ©1988-2015 ACORD CORPORATION. All rights reserved. ACORD 25 (2016103) The ACORD name and logo are registered marks of ACORD ix I PUNGROUP.CPA ORANGE COUNTY SAN DIEGO BAY AREA LAS VEGAS PHOENIX www.pungroup.cpa Finance Department CITY OF NEWPORT BEACH 100 Civic Center Drive Newport Beach, California 92660 949 644-3126 | 949 644-3339 FAX jalimam@newportbeachca.gov July 15, 2025 The Pun Group LLP Attention: Sophia Kuo 200 E. Sandpointe Ave., Suite 600 Santa Ana, CA 92707 Re: Informal Request for Proposals (Internal Audit) On June 13, 2025, the City of Newport Beach issued an informal request for proposals for internal audit work to be performed this fall. The City received your proposal dated July 14, 2025, and has awarded a portion of the work to be performed by your firm. We would like The Pun Group to perform internal audit work associated with Topic 1: Grant Compliance for a not-to-exceed amount of $45,250. As outlined in the informal request for proposals, we would like work to begin by the end of July and final reports to be delivered by October 10th. Your primary point of contact on this project is Trevor Power. If you have any questions, please contact me at 949-644-3126. Sincerely, Jason Al-Imam Finance Director Attachments: Informal Request for Proposals: Internal Audit Proposal dated July 14, 2025 for Topics 1-3 INFORMAL REQUEST FOR PROPOSALS: INTERNAL AUDIT Introduction: An enterprise risk assessment was conducted in 2025 to evaluate potential risks affecting financial reporting, operational efficiency, regulatory compliance, and service delivery. Using the results of the enterprise risk assessment, an internal audit work plan has been developed in order to identify areas of focus that should be explored as part of the city’s internal audit program. This informal request for proposals includes a solicitation for internal audit work, which covers three topics including grant compliance, long-term funding strategies and cost recovery, and risk management. Instructions: Provide the following items for any or all of the topics identified in the Scope of Work that your firm proposes to perform services for: Workplan. The firm’s proposal shall include recommended testing procedures to address the risks identified in the scope of work. Cost. Total all-inclusive maximum price. Experience with similar engagements. Schedule (Please note the City would like work to begin by the end of July and final report(s) to be delivered by October 10th.) o If the work cannot be completed in this timeframe, please provide a schedule your firm feels is required. Proposers may submit written questions to the following Informal RFP officer by no later than 1:00pm on Monday, June 23, 2025. Informal RFP Officer: Jason Al-Imam, Finance Director jalimam@newportbeachca.gov Proposals shall be submitted no later than 1:00pm on Monday, July 14, 2025. Any proposal received after this deadline shall not be considered. Evaluation Criteria: Proposals will be evaluated by a review committee. The City may use some or all of the following criterion in its evaluation and comparison of proposals. The criteria listed are not necessarily an all-inclusive list. The firm’s demonstrated experience in providing the requested services; The firm’s responsiveness in clearing stating their understanding of the work to be performed; The firm’s work plan and ability to meet the city’s schedule; and The firm’s proposed costs. INFORMAL REQUEST FOR PROPOSALS: INTERNAL AUDIT Scope of Work: The following work shall be performed in accordance with the Statement on Standards for Consulting Services issued by the AICPA. Upon the completion of internal audit work, an audit report shall be issued for each assigned topic, which should include, at a minimum, the following elements: Executive Summary o Purpose and scope of the audit o High-level findings o General assessment of the adequacy and effectiveness of internal controls and processes reviewed Findings and Suggested Recommendations o Observation: What was found. o Condition: Description of the current state or deviation from best practices. o Effect: Impact or potential impact of the issue. o Recommendations: Specific, actionable steps to address the issue. Please note the City would like work to begin by the end of July and final report(s) to be delivered by October 10th. Topic 1: Grant Compliance The firm’s proposal shall include recommended testing procedures to address the following risks: Decentralized Grant Process Unauthorized Grant Expenditures Inadequate Supporting Documentation Non-Compliance with Grant Requirements Timeliness of Drawdowns and Reporting Adequacy of Grant Accounting Subrecipient Monitoring Recommended Testing Procedures: The City’s existing policies, procedures, and practices, including policies and procedures that have been established as a matter of practice or in writing, relative to grant administration will be examined with an additional focus on specific grant transactions such as reimbursement requests, required financial reports, and expenditure tracking. INFORMAL REQUEST FOR PROPOSALS: INTERNAL AUDIT Topic 2: Long-Term Funding Strategies and Cost Recovery The firm’s proposal shall include recommended testing procedures to address the following risks: Timeliness of Updates to Data Inadequate Planning for Asset Replacement Accuracy of Cost Recovery Calculations Commitment to Funding Adequately Recommended Testing Procedures: The City’s existing policies, procedures, and practices, including policies and procedures that have been established as a matter of practice or in writing, relative to Long Term Funding and Cost Recovery will be examined with an additional focus on specific Funding Source Documents and Cost Recovery planning for items such as vehicles, equipment, facilities, long- term liabilities, and insurance reserves. Topic 3: Risk Management The firm’s proposal shall include recommended testing procedures to address the following risks: Liability Insurance Coverage Workers Comp Insurance Coverage Adequacy of Reserve Levels Cost Recovery Methodology Claim Processing Procedures/Compliance with Regulations Claim Experience/Trends Recommended Testing Procedures: The City’s existing policies, procedures, and practices, including policies and procedures that have been established as a matter of practice or in writing, relative to Risk Management will be examined with an additional focus on specific transactions such as insurance renewals, trend data, and establishment of reserves. 7<2)1(:3257 XO\ 352326$/ Proposal for Internal Audit Services 6RSKLD XR 3$0 W Ž Ž ŽŽ 7<2)1(:3257 6RSKLD XR 3$0 W Ž Ž ŽŽ XO\ 352326$/ Proposal for Internal Audit Services 3 P The Pun Group LLP is recognized for its professionalism, integrity and for providing clients with practical solutions unique to their circumstances and issues. You will receive a superior level of service and a quality audit. Thank You! Thank you for allowing us to submit our qualifications to provide you with Internal Audit Services. The Pun Group LLP Certified Public Accountants and Business Advisors WHY CHOOSE THE PUN GROUP LLP? Big firm expertise, small firm values Personal attention meets technical expertise A unique firm culture Innovation embraced Achievable plans to move your organization forward The Pun Group’s most valuable asset is our people, they and their deep experience drive our every interaction with clients. In Memoriam Kenneth H. Pun, CPA, CGMA Founder City of Newport Beach Table of Contents Transmittal Letter ........................................................................................... 1 Workplan ........................................................................................................ 3 Cost .............................................................................................................. 10 Experience with Similar Engagements ........................................................ 12 Schedule ...................................................................................................... 25 Let’s Get to Work! ........................................................................................ 27 Appendix A – About the Firm .......................................................................... i Appendix B – Available Training ................................................................... vi Appendix C – Certificate of Insurance ......................................................... vii For the 5th consecutive year, The Pun Group has been honored with the Best of Accounting" Award. The Pun Group LLP is proud to have won 2025’s Best of Accounting® award from ClearlyRated for consistently delivering exceptional service to its clients for the fifth consecutive year. Winners of such awards have proven to be industry leaders in service quality based entirely on ratings provided by their clients. On average, clients of 2025 Best of Accounting winners are 70% more likely to be satisfied than those who work with non-winning firms. I am pleased to introduce the 2025 Best of Accounting winners alongside their validated service ratings on ClearlyRated.com,” said ClearlyRated’s CEO, Eric Gregg. These firms have demonstrated a remarkable commitment to delivering amazing experiences despite another year of upheaval and macroeconomic uncertainty. Hats off to these service leaders - it’s truly an honor to recognize and celebrate their achievements.” The Pun Group LLP received satisfaction scores of 9 or 10 out of 10 from 94.1% of their clients, significantly higher than the industry’s average of 50%. Our firm excelled in five key areas: Responsiveness, Quality, Value, Needs Understanding, and Proactive Approach. About ClearlyRated Rooted in satisfaction research for professional service firms, ClearlyRated utilizes a Net Promoter® Score survey program to help professional service firms measure their service experience, build an online reputation, and differentiate on service quality. For the 2nd consecutive year, INSIDE Public Accounting has recognized The Pun Group as one of the Top 500 Firms and one of the fastest-growing firms. We started using Pun Group when the pandemic first started two years ago so had a little apprehension about doing everything remotely with a new firm. But the audit went very well and was completed on time without problem.” Kevin W. State and Local Government Client The Firm has consistently exceeded our expectations as an auditor.” Clint O. State and Local Government Client An excellent partner and amazing service.” Jim T. Private Sector Client Excellent customer service and staff and partners are expert in their fields.” Lani H. State and Local Government Client 200 E. Sandpointe Avenue, Suite 600 Santa Ana, California 92707 City of Newport Beach Transmittal Letter July 14, 2025 City of Newport Beach Jason Al-Imam, Finance Director 100 Civic Center Drive Newport Beach, CA 92660 Re: Informal RFP for Internal Audit Services Dear Jason Al-Imam: Please allow us to introduce our Firm and share our qualifications and proposed services plan for the City of Newport Beach (the “City”) according to your Informal Request for Proposals for Internal Audit Services for the Year 2025. The Pun Group LLP (the “Firm”) has the knowledge and experience necessary to become the City’s next public accounting firm and the work plan to ensure a smooth process. This letter is an acknowledgment of the Firm’s understanding of the work to be performed. We are offering our commitment to deliver all of the required work, complete the audit, and issue the necessary auditor’s reports within the periods outlined by the City. No subcontractors will be utilized for this engagement. The Pun Group is the right choice for the City of Newport Beach because: We Understand the Demographics and Your Needs. The Pun Group is reputable for its governmental practice. We are the principal auditors for cities in California, including San Jose, Cupertino, Tracy, Montebello, Corona, Desert Hot Springs, National City, and several others. Accordingly, the proposed engagement team has a deep understanding of the current issues that municipalities are facing, such as varying demographics, economic environments, and the constantly changing landscape of laws and regulations. Recognized Leader in the Governmental Industry. We are a small national Firm with licenses in the States of California, Arizona, and Nevada and a proven leader in professional services to the government sector. All key engagement team professionals are licensed to practice as Certified Public Accountants and meet the Continuing Professional Education requirements under US GAO’s Government Auditing Standards to perform the proposed audits. The partners and all employees proposed to perform the requested services do not have a record of substandard audit work nor have any outstanding claim of substandard practice or unsatisfactory performance pending with the State Board of Accountancy or other professional organizations. In addition, we are members of the national AICPA Audit Quality Center. We strongly believe that part of our success is credited to our professionals’ participation in various industry-leading organizations. Such affiliations are critical to addressing emerging accounting and auditing issues within the industry environment. City of Newport Beach 2 | PUNGROUP.CPA You’ll Work with a Team that Embraces Innovation and Continuous Improvement. Our Firm is committed to continuous improvement as it relates to service delivery. We embrace innovation and identify areas of technological enhancements in our audit and project management approaches. For example: Secure Data File Transfer System. In order to improve audit efficiency, workflow management software plays an essential role between your organization and our engagement team. We employ a secure data file transfer system called Suralink. Suralink’s dynamic request list is integrated with our secure file hosting system for seamless document- request coordination, including the upload of large-size files. It means all our requests are in one place, updated in real-time, and accessible by everyone working on the engagement. Not only makes the operation more cost-efficient, but it also enables you and your team to spend your time getting the job done, not reconciling a messy list of outstanding items. In addition, Suralink’s dashboard allows you to visualize the process of document-request fulfillment. AI Auditor. The Pun Group leverages the technology and research tools required to provide excellent services to its clients. With the usage of Artificial Intelligence (AI) technology, the Firm is capable of issuing all reports requested faster than other audit firms without exposing the City to unnecessary risks. Remote and Hybrid Auditing Capability. At our firm, we have fully embraced a hybrid approach to auditing, combining the flexibility of remote work with the benefits of on-site engagement. While we are fully equipped with advanced technology to perform audits remotely when needed, our preferred method is a hybrid model — balancing remote efficiency with in-person collaboration to deliver the highest quality service to our clients. We continue to offer on-site auditing as needed to best meet client needs. Knowledge is Shared with You. As part of our pledge to keep you updated on new technical accounting and financial issues, we implemented our 2025 Virtual Government Accounting Conference, which qualifies for up to 15 hours of CPE – nearly double what other firms offer. These online sessions are free of charge and part of the service package provided to you. More details and dates can be found on the “Client Training Webinars” topic under this proposal. The Pun Group is proud of its inclusive values and is an avid promoter of equality and diversity. In addition, the Firm is an equal-opportunity employer and complies with all federal and state hiring requirements. We’re proud of supporting affirmative-action philosophies and work hard to provide opportunities for self-enhancement to members of disadvantaged groups. This proposal is a firm and irrevocable offer valid for ninety (90) days following the closing date for the receipt of all proposals. Finally, we would like to emphasize one additional point: We want to keep your trust and your business! We are confident that the energetic and experienced team we have assembled is the right one for the City. Our commitment to serving the City of Newport Beach cannot be adequately conveyed in a letter, and I look forward to continuing the discussion with you. I’m assigned as your primary contact for contract negotiations. I’m also authorized to legally bind the Firm. Should you have any questions or wish to discuss this proposal, please do not hesitate to contact me at (949) 777-8809 or by email at sophia.kuo@pungroup.cpa. Sincerely, Sophia Kuo, CPA, M.B.A. | Partner | The Pun Group LLP 200 East Sandpointe Avenue, Suite 600, Santa Ana, CA 92707 City of Newport Beach 3 | PUNGROUP.CPA Workplan Type and Extent of Analytical Procedures to be Used in the Engagement Our engagement will utilize trend analysis, ratio comparisons, and benchmarking during all three audit phases: 1. Risk Assessment Procedures o Identify areas of potential exposure or control weakness o Compare current practices to prior performance or industry norms 2. Substantive Analytical Procedures o Analyze trends in grant drawdowns, reserve funding, and cost recovery over time o Compare insurance claims activity to historical averages and liability coverage policies 3. Final Analytical Procedures o Review overall audit findings to validate completeness and consistency with known operations Approach to be Taken to Gain and Document an Understanding of the Internal Control Structure Audit risk assessment is established by an internal control review, combined with the engagement team’s understanding of the City’s operations and accounting software. Using the Committee of Sponsoring Organizations COSO) Framework, staff members will evaluate the City’s processes and identify any control deficiencies. These diagnostic review procedures allow the engagement team to assess the City’s systems and controls and to provide constructive feedback to management. During our initial planning phase of the audit, our engagement team, including the engagement Partner and Manager, will obtain an understanding of the entity and its environment. It is an essential aspect of performing an audit, the Statement of Standards for Consulting Services issued by the AICPA. That understanding establishes a frame of reference within which the auditor plans the procedures and exercises professional judgment about assessing the City’s internal controls throughout the examination. During the interim phase of the audit, our engagement team will perform a walkthrough of the focused areas identified by the City, including grant management, long-term funding strategies and cost recover, and risk management. Our auditors will obtain the written policies and procedures, inquire with accounting personnel, and document the process in either a flowchart or narrative summary format. After gaining an understanding of the accounting and internal control systems, our auditor will make recommendations for improvement opportunities and/or increased efficiencies. Laws and Regulations Considered Our internal audit approach is firmly grounded in the most current regulations and professional guidance applicable to municipal entities. Throughout this engagement, our work will adhere to key regulatory and best practice frameworks including relevant provisions of the California Government Code related to insurance, risk reserves, and fiscal oversight, and accepted industry practices in areas such as cost recovery methodology and long-term capital planning. This regulatory foundation ensures that all audit procedures are not only effective but also fully aligned with expectations for public sector governance and transparency. Approach to Compliance Testing Compliance testing will be executed using a risk-based framework, tailored to each of the three core audit areas. In the area of grant compliance, we will examine drawdown processes, documentation adequacy, and adherence to grantor requirements. For cost recovery, our work will focus on evaluating the reliability and consistency of cost allocation methodologies and the documentation that supports those calculations. With respect to risk management, we will review reserve sufficiency, insurance coverage alignment, and claims handling procedures. Our sampling methodology will incorporate random, judgmental, and stratified techniques, ensuring that testing is both representative and responsive to the areas of highest risk. City of Newport Beach 4 | PUNGROUP.CPA City Staff Participation Collaboration with the City’s staff is essential to a successful internal audit. At the onset of the engagement, we will provide a clear and comprehensive Prepared by Client (PBC) list to outline the materials and access needed for our review. To ensure transparency and efficiency, we will hold regular check-ins—typically weekly or bi-weekly—with designated City personnel to communicate progress, clarify requests, and address any emerging issues. Our audit team is committed to minimizing operational disruption by leveraging the City’s existing systems, schedules, and reporting tools. Once materials have been agreed upon, no additional documentation will be requested unless warranted by new findings during the course of testing. Objectives of Our Services Our internal audit services are designed to help the City of Newport Beach strengthen its operational oversight and governance. The primary objective of this engagement is to assess internal controls and compliance practices in the areas of grant administration, long-term financial planning, and risk management. Beyond identifying areas of potential risk or inefficiency, we aim to provide actionable and cost-effective recommendations that support improved accountability, policy refinement, and operational clarity. The Pun Group is committed to delivering final internal audit reports by the City’s requested deadline of October 10, 2025, and to partnering with City leadership in a way that ensures meaningful outcomes and long-term value. Anticipated Challenges and Areas of Focus While we do not expect any significant barriers during this engagement, our audit approach remains proactive and responsive to potential areas of concern. In particular, we will monitor grant administration processes for signs of decentralization or gaps in subrecipient oversight, which are common risks in complex funding environments. We will also assess the adequacy of the City's risk reserves and insurance coverage, identifying any gaps in policy or funding strategies. Our review of cost recovery practices will focus on identifying outdated or unsupported allocation models that may impact fiscal accuracy. Additionally, we will evaluate claims processing workflows for trends or delays that could indicate underlying control weaknesses. Should any issues arise, we will provide timely communication and clear, practical resolution strategies. City of Newport Beach 5 | PUNGROUP.CPA Scope of Work The City of Newport Beach is requesting the Firm to perform Internal Audit Services in accordance with the City’s Year 2025 Internal Audit Work Plan. The scope includes targeted internal audits in the areas of Grant Compliance, Long-Term Funding Strategies and Cost Recovery, and Risk Management. All work will be performed in accordance with applicable professional standards for internal auditing and consulting engagements, including but not limited to: Statement on Standards for Consulting Services issued by the American Institute of Certified Public Accountants (AICPA) Standards for Internal Control in the Federal Government (Green Book), as relevant Standards issued by the Institute of Internal Auditors (IIA), as applicable to best practices for risk-based internal audits in the public sector These standards will guide the planning, execution, and reporting of audit results to ensure the City receives high- quality, objective, and actionable recommendations. The Firm will perform the following services: Topic 1: Grant management Objective: To assess the adequacy, efficiency, and compliance of the City's grant management process, including oversight of subrecipients, reimbursement practices, and financial reporting. Task No. 1 – Determine whether policies and procedures are established as a matter of practice or in writing governing the following: o Grant management process across departments. o Grant compliance monitoring. o Subrecipient monitoring and oversight. Task No. 2 – Evaluate whether the City's structure and systems support effective grant management and compliance by reviewing the following: o Review the organizational chart to identify roles and responsibilities related to grants across departments. o Interview department heads or grant coordinators to determine whether practices align with documented procedures. o Review the chart of accounts and fund structure to confirm that grant revenues and expenditures are tracked separately and accurately. o Determine whether grant-related transactions are properly classified. Task No. 3 – Review the grant reimbursement and expenditure tracking process to assess the efficiency and timeliness of reimbursement requests and the integrity of expenditure tracking: o Obtain a list of all active grants from relevant departments and reconcile to the City’s main grant tracking spreadsheet and/or general ledger. o Sample reimbursement requests and review the timing of submission to the grantor versus the grant agreement terms. o Obtain and review grant expenditure tracking sheets; perform walkthroughs to understand how they are updated and maintained. o Walkthrough the invoice review and approval process to assess controls against unauthorized or non- allowable expenditures. Task No. 4 – Determine whether subrecipient morning process in place by following: o Determine whether subrecipient agreements contain required elements (scope, deliverables, reporting, audit rights). o Sample subrecipients and review documentation to assess whether monitoring practices (e.g., site visits, reporting requirements, risk assessments) are followed per policy and subrecipient agreements. o Review records for evidence of subrecipient performance and financial monitoring. City of Newport Beach 6 | PUNGROUP.CPA Task No. 5 - Determine whether periodic financial reports (or budget-to-actual reviews) are prepared to guide decision-making and to address performance issues such as declines in revenues, expenditures in excess of appropriations, etc. Task No. 6 – Provide recommendations for improvement opportunities and/or increased efficiencies. Topic 2: Long-Term Funding Strategies and Cost Recovery Objective: To assess the City's policies, practices, and planning processes related to long-term financial sustainability and cost recovery, including evaluation of fee structures, funding strategies, and indirect cost recovery. Task No. 1 – Determine whether policies and procedures are established as a matter of practice or in writing governing related to the long-term funding strategies the following: o Obtain and review long-term financial plans, multi-year budgets, or funding strategies (e.g., 3–5 year forecasts). o Evaluate alignment of long-term plans with the City’s priorities, capital improvement plans/needs, and strategic or service delivery strategies. o Verify inclusion of various funding sources, such as projected grant funding, general fund contributions/subsidies, bond proceeds, and alternative funding sources. o Assess assumptions related to revenue growth, expenditure trends, and inflation rates for reasonableness. Task No. 2 – Determine whether policies and procedures are established as a matter of practice or in writing governing related to the cost recovery the following: o Obtain and review cost recovery policies, ordinances, or administrative guidelines. o Obtain and review the City’s cost allocation plan (CAP) or indirect cost rate proposal. o Review the methodologies used for setting user fees, service charges, or permit costs. o Identify services or programs that are expected to recover full or partial costs (e.g., through user fees, grants, or reimbursements). o Compare current fee schedules to actual cost data to assess the adequacy of recovery rates. o Verify whether indirect costs are appropriately allocated and recovered (e.g., through a cost allocation plan or indirect cost rate). Task No. 3 - Review whether the long-term funding strategies and cost recovery address the City’s needs: o Review long-term funding strategies and reserve policies with focus on the following areas: Vehicle and equipment replacement Facility maintenance and upgrades Pension or OPEB obligations Insurance or risk reserves Long-term debt service o Analyze historical spending trends, current budget allocations, and reserve balances. o Assess whether funding levels appear sufficient to support the City's stated needs and replacement cycles. Task No. 4 – Provide recommendations for improvement opportunities and/or increased efficiencies. City of Newport Beach 7 | PUNGROUP.CPA Topic 3: Risk Management Objective: To evaluate the City's risk management practices, including policy governance, insurance coverage adequacy, claims management, and reserve funding for self-insured risks. Task No. 1 – Determine whether policies and procedures are established as a matter of practice or in writing governing related to the risk management the following: o Obtain and review risk management related policies and procedures as a matter of practice or in writing. o Identify whether policies cover key risk areas (e.g., property, liability, cybersecurity, workers’ compensation, insurance procurement). o Interview key personnel (e.g., Risk Manager, Finance Director, Department Heads) to understand roles and responsibilities, confirm whether practices align with written policies, assess how policies are communicated and updated, and Identify any informal practices in place. Task No. 2 – Evaluate the adequacy, timeliness, and transparency of the City's insurance renewal process, and determine whether coverage is appropriate for its risk profile: o Obtain and review current insurance policies for all major risk categories (e.g., property, liability, auto, cyber, workers’ comp). o Review the insurance renewal process for the past 2 years, including broker communications, bid evaluations, selection justifications, and decisions. o Verify that decisions are based on current City risk exposures and recent claims experience. o Ensure that policies are renewed without lapses in coverage and align with the risk profile and activities of the City. Task No. 3 – Evaluate claims management and use of data for risk mitigation: o Obtain historical claim and loss-run data (minimum 2-3 years) categorized by risk type (e.g., property, liability, auto, workers' comp). o Identify trends in claim frequency and severity, and determine whether data is used to inform insurance purchasing and risk mitigation efforts. o Review how claims and incident data are processed, tracked, monitored, and reported, used to inform insurance coverage decisions, and used to support training, process changes, or risk mitigation efforts. Task No. 4 – Review risk-related reserves and self-insurance governance by following: o Determine whether the organization maintains formal reserve policies for risk-related exposures. o Review reserve calculations and assumptions, including reviewing actuarial reports or internal methodologies. o Compare actual reserve balances to required or recommended thresholds. o Evaluate whether the reserves are reviewed periodically based on new claim trends or changes in exposure. o Review whether reserves are included in long-term financial planning. Task No. 5 – Provide recommendations for improvement opportunities and/or increased efficiencies. City of Newport Beach 8 | PUNGROUP.CPA Provided by Client (PBC) Requests Our team will provide detailed document request lists (PBC lists) aligned with each of the City’s internal audit focus areas—grant compliance, funding strategies, and risk management. These lists will be coordinated in advance of fieldwork and refined during the planning phase in collaboration with City staff. We will meet with key personnel to establish audit schedules and review any previous internal audit findings. Once agreed upon, no additional documentation will be requested unless new audit issues arise during testing. Meetings and Presentations The engagement team will be available for all necessary meetings with City staff to complete the internal audit work effectively. This includes an initial kickoff meeting to review objectives and timing, status updates throughout the process, and presentations of draft findings. We will also attend public or committee meetings, if requested, to present our final reports and discuss our recommendations related to internal controls, compliance risks, and operational improvements. Proposed Adjustments and Recommendations Should we identify any proposed adjustments or process enhancements during our procedures, they will be clearly communicated and discussed with the designated City staff. Adjustments and recommendations will be presented in a format that facilitates implementation and aligns with the City’s systems and internal processes. Additional Services (Supplemental Procedures) If agreed-upon procedures or supplemental internal audit services are deemed necessary—such as deeper dives into subrecipient monitoring, reserve adequacy, or cost allocation—these will be provided at pre-approved rates under a separate written agreement. Scope and cost will be jointly reviewed and approved before work commences. Ongoing Advisory Support Throughout the duration of the engagement, we are available to provide informal consultation and advisory support on internal control design, grant administration practices, and risk mitigation strategies. These services do not include formal deliverables or extensive research unless separately authorized. GASB and Technical Guidance Although the focus of this engagement is internal audit, we understand the importance of aligning with applicable accounting standards that influence grant tracking, reserve funding, and long-term planning. Our team, including Mr. Jack Georger, will be available to provide guidance on relevant GASB pronouncements and assist the City in understanding how emerging standards may impact its internal financial processes. Reporting of Irregularities or Noncompliance Any indications of irregularities, potential noncompliance, or control weaknesses identified during our procedures will be promptly communicated in writing to the designated City officials. We will also meet all communication requirements under applicable internal audit and consulting standards, including any required disclosures related to audit scope, findings, and limitations. Working Paper Retention The Firm will retain all internal audit working papers and related documentation for a minimum of seven (7) years at no additional cost. City of Newport Beach 9 | PUNGROUP.CPA Enhancing Auditing Quality with Artificial Intelligence There are plenty of challenges with established audit practices. Outdated CAAT tools, sampling practices, and the explosive growth of big data are some of the examples, and they all present significant barriers to detecting anomalies, intentional or otherwise, in financial data. The Pun Group deploys a comprehensive, risk-based approach, complemented by using MindBridge™'s Artificial Intelligence Platform, to conduct our audit. Through this tool, we can seamlessly analyze thousands and thousands of financial and operating data and records, identifying and cataloging significant risks in mere seconds. The AI Auditor platform works by our side, augmenting our capacity to detect errors or fraud in the collected data not only by analyzing the entire set but by cross-correlating dozens of testing criteria against pre-established data points and presenting us with a view of every user, vendor, and transaction, by risk. All are happening within moments of ingesting analyzed data, which is something standard audit procedures simply cannot accomplish. We utilize these tools to allow our audit team to increase efficiency in the audit process, enhance the existing quality of our work, provide directed testing in areas subject to the highest risk, and quickly assimilate large amounts of data your staff would typically be asked to gather. The tools also help us to meet our professional requirements regarding fraud and internal control, allowing us to: Run Benford’s analysis to check for fraud in transactions. Increase the value of audit findings with complete, 100% data coverage. Isolate risk and control issues before they impact your operations. Improve productivity by automating procedures and eliminating manual tasks. Conduct more direct, efficient, and effective audits to improve overall service quality. Our engagement team easily imports data in a secure environment from the City’s financial software and extracts useful data for testing and analytical procedures particular to the following areas: Successful Fraud Test Kickback or Conflict-of-Interest Schemes Questionable Invoices Dormant Account Schemes Phantom Vendor Schemes Money Laundering Schemes City of Newport Beach 10 | PUNGROUP.CPA Cost Certification We are committed to the performance of a high-quality audit at the most reasonable fee level possible, both initially and throughout the engagement. Also, our partners will provide advice and consultation as needed at no additional cost to the City of Newport Beach. Name of Firm: The Pun Group LLP – Certified Public Accountants and Business Advisors Contact Name: Sophia Kuo, CPA, M.B.A. Contact Email Address: sophia.kuo@pungroup.cpa Authorization to Represent the Firm I, the undersigned, certify I am duly authorized to represent The Pun Group LLP and am empowered to submit this bid. In addition, I certify I am authorized to contract with the City of Newport Beach on behalf of the Firm. July 14, 2025 Sophia Kuo, CPA, M.B.A. | Partner Date Total Price In accordance with the City’s Request for Proposals, we have provided a total all-inclusive maximum price to complete all work outlined in the Scope of Work. This amount represents a fixed fee for an Informal Request for Proposals for Internal Audit Services for the Year 2025, are as follows: 1) The services associated with the topic areas listed above are described in detail in the Scope of Work, Audit Approach, and Methodology sections of our Workplan, beginning on page 5 of this proposal. 2) Any supplemental reports, audits, or agreed-upon procedures not covered by this proposal may be added to a written agreement prior to commencing audit work. The Firm and the City will discuss and approve the scope and associated costs of these tasks. Any additional work will be performed at the quoted hourly rates shown on the following page. Engagement Partner Concurring Partner Director Manager Total Hours Topic 1 : Grant Management (1)30 15 35 95 175 Topic 2: Long-Term Funding Strategies and Cost Recovery (1)30 15 30 90 165 Topic 3: Risk Management (1)25 15 30 90 160 All-Inclusive MaximumPriceServiceCategory Hours by Role 129,000$ 45,250$ 42,750 41,000 2) Total Engagement Cost City of Newport Beach 11 | PUNGROUP.CPA Rates for Additional Professional Services Below are the Firm’s hourly billing rates, delineated by staffing levels: Out of Pocket Expenses are Included in the Total all-Inclusive Maximum Price and Reimbursement Rates The Firm’s policy is to maintain flexible billing rates to meet the needs of clients and help them control costs. In the interest of starting our long-term relationship, we will absorb expenses such as travel and printing costs. Additionally, our Partners will be available to provide advice and consultation as necessary to the City of Newport Beach. The Firm will also absorb these costs. Manner of Payment The Firm will invoice the City of Newport Beach in three stages based on the percentage of work completed, as outlined below. Engagement Team members will maintain detailed timesheets documenting the date, hours worked, and specific tasks performed. Billing will be based on the rates outlined in the Total All-Inclusive Maximum Price section. Interim billings will not cover a period of less than one calendar month. The payment schedule is as follows: Partner(s) 350$ Concurrent Partner 350$ Director 300$ Manager(s) 200$ Senior Accountant(s) 175$ Clerical 150$ Hourly Billing Rates Work Performed % of Proposal Amount Planning 25% Fieldwork 50% Acceptance of Reports 25% City of Newport Beach 12 | PUNGROUP.CPA Experience with Similar Engagements Internal Audit Experience The Pun Group LLP has a well-established internal audit practice that serves as a cornerstone of our advisory services. We have a proven track record of delivering risk-based internal audits and operational assessments for government entities, not-for-profit organizations, and select private-sector clients. Our team of professionals—many of whom bring backgrounds in government service, public accounting, and private industry—are solely dedicated to internal audit and advisory engagements. Our leadership team averages over 25 years of professional experience, ensuring high- level oversight, technical accuracy, and timely delivery. Our internal audit methodology emphasizes strong investigative procedures, rigorous supervision, detailed fieldwork, and clear communication. We maintain strict adherence to industry standards, including the AICPA’s Statement on Standards for Consulting Services, and apply a structured approach to reporting, document management, and risk evaluation. We have extensive experience conducting internal audits and advisory reviews across California municipalities, with relevant expertise in the City of Newport Beach’s requested areas: grant compliance, long-term funding strategies and cost recovery, and risk management. Relevant Engagements by Topic Grant Compliance Our team has performed grant compliance reviews for clients, including the Cities of San Jose, Stockton and Tracy. These engagements have included federal program audits, Single Audit reviews, subrecipient monitoring, and GANN Limit testing. Our work involved assessing the timeliness and accuracy of drawdowns, evaluating the adequacy of supporting documentation, and verifying compliance with Uniform Guidance—directly aligning with the City’s identified risks related to decentralized grant processes and regulatory non-compliance. Long-Term Funding Strategies and Cost Recovery We have performed funding strategy and cost recovery reviews for jurisdictions including the Cities of Palm Springs, Gardena, and Montebello. These engagements focused on cost allocation models, asset replacement planning, reserve adequacy, and long-term liabilities. Our assessments included validation of data inputs, review of funding policies, and evaluation of long-range fiscal sustainability. Risk Management Our work with the City of Desert Hot Springs and City of Monterey involved evaluating risk management protocols, insurance coverage levels, reserve methodology, and claim processing procedures. We provided actionable recommendations based on historical claim trends and compliance with regulatory and internal policies—experience that directly supports the City’s objectives under this topic. City of Newport Beach 13 | PUNGROUP.CPA References The following are examples of some of the engagements with similar requirements as the City of Newport Beach’s proposal. Please feel free to contact these agencies to learn more about their experiences working with us. Name of Public Agency City of Cupertino Contact Info Ms. Kristina Alfaro, Director of Administrative Services KristinaA@cupertino.org | (408) 777-3356 Address 10300 Torre Ave, Cupertino, CA 95014 Total Hours 1120 hours Contract Price $148,000/year Date of Services 2023 – Present Scope of Work/ Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Financial Report, GFOA Award, Single Audit, GANN Limit, Investment Policy. Name of Public Agency City of Tracy Contact Info Ms. Sara Cowell, Director of Finance sara.cowell@cityoftracy.org | (209) 831-6862 Address 333 Civic Center Plaza, Tracy, CA 95376 Total Hours 960 hours Contract Price $96,500/year Date of Services 2021 – Present Scope of Work/ Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Financial Report, GFOA Award, Single Audit, GANN Limit, National Transit Database (NTD), State Controller’s Reports (City, PFA, Operating Partnership JPA, City’s Transit Operator’s General Services, and Specialized Services). Name of Public Agency City of Desert Hot Springs Contact Info Mr. Geoffrey Buchheim, Finance Director gbuchheim@cityofdhs.org | (760) 329-6411 Address 11999 Palm Drive, Desert Hot Springs, CA 92240 Total Hours 700 hours Contract Price $75,000/year Date of Services 2013 – Present Scope of Work/ Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Financial Report Audit, GFOA Award, Single Audit, GANN Limit, Desert Hot Springs Successor Agency, Desert Hot Springs Financing Authority, Desert Hot Springs Health and Wellness Foundation, New Market Tax Credit Audit (Desert Hot Springs Health and Wellness Foundation), Annual State Controller’s Reports, AUP/Transient Occupancy Tax, Utility User Tax, DHS Housing Audits. Name of Public Agency City of San Jose Contact Info Ms. Stephanie Gutowski Stephanie.Gutowski@sanjoseca.gov | (408) 975-4420 Address 200 E. Santa Clara St., San Jose, CA 95113 Contract Price $551,500/year Date of Services 2022 – Present Scope of Work/ Reports Prepared Fiscal monitoring of the City’s entitlement grants from HUD, including CDBG, HOME, HOPWA, and ESG programs Name of Public Agency City of Corona Contact Info Ms. Christine Thompson, CPA christine.thompson@coronaca.gov | (951) 736-2327 Address 400 South Vicentia Avenue, Corona, CA 92882 Contract Price $74,000/year Date of Services 2021 – Present Scope of Work/ Reports Prepared Housing compliance services, including preparation and submission of reports to ensure adherence to affordable housing program regulations. City of Newport Beach 14 | PUNGROUP.CPA Our Firm has audited hundreds of millions of dollars in federal expenditures, making our engagement team uniquely experienced in single audits. We are familiar with grantors, such as: Following are a few examples of the types of federal programs our engagement team has experience auditing: Corporation for National and Community Services Department of Agriculture Department of Education Department of Health and Human Services Department of Housing and Urban Development Department of Transportation Environmental Protection Agency Department of Commerce Department of Labor Department of Homeland Security Department of Justice Department of Treasury Executive Office of the President City of Newport Beach 15 | PUNGROUP.CPA List of Current Municipal Clients The Pun Group LLP has performed numerous audits of organizations subject to financial and compliance audits. These audits were performed under auditing standards generally accepted in the United States, Government Auditing Standards, Uniform Guidance (formerly known as OMB Circular A-133), and its Compliance Supplement (when applicable), Office of the State Controller’s Minimum Audit Requirements and Reporting Guidelines. A representative list of our current clients is as follows: Municipalities Dates Financial Audit Single Audit GFOA Certificate Total Hours City of Adelanto 2021 – Present Yes Yes Yes 700 City of Anderson 2023 – Present Yes Yes N/A 530 City of Arvin 2013 – Present Yes Yes N/A 400 City of Baldwin Park 2022 – Present Yes Yes Yes 700 City of Bell 2018 – Present Yes Yes Yes 520 City of Bradbury 2012 – Present Yes N/A N/A 150 City of Calexico 2007 – Present Yes Yes N/A 750 City of Clovis 2006 – Present Yes Yes Yes 500 City of Coachella 2017 – Present Yes Yes Yes 410 City of Commerce 2023 – Present Yes Yes Yes 570 City of Cottonwood, AZ 2007 – Present Yes Yes Yes 400 City of Corona 2021 – Present Yes Yes Yes 640 City of Cudahy 2023 – Present Yes Yes Yes 500 City of Cupertino 2023 – Present Yes Yes Yes 1120 Town of Corte Madera 2022 – Present Yes Yes N/A 400 Town of Danville 1999 – Present Yes Yes Yes 400 City of Douglas, AZ 2020 – Present Yes Yes Yes 300 City of Desert Hot Springs 2013 – Present Yes N/A N/A 700 City of Encinitas 2024 – Present Yes Yes Yes 600 City of Fairfield 2025 – Present Yes Yes Yes 928 City of Fresno 2022 – Present Yes Yes Yes 1,450 City of Gilroy 2020 – Present Yes Yes Yes 640 City of Hercules 2020 – Present Yes Yes Yes 450 City of Indio 2024– Present Yes Yes Yes 708 City of Lake Elsinore 2023 – Present Yes Yes Yes 460 City of Lakewood 2013 – Present Yes Yes Yes 380 City of Madera 2019 – Present Yes Yes Yes 470 City of Menlo Park 2023 – Present Yes Yes Yes 550 City of Newport Beach 16 | PUNGROUP.CPA Municipalities Dates Financial Audit Single Audit GFOA Certificate Total Hours City of Montebello 2022 – Present Yes Yes Yes 600 County of Monterey 2023 – Present Part of the audit & consulting services pool TBD City of Monterey Park 2023 – Present Yes Yes Yes 612 City of National City 2013 – Present Yes Yes Yes 600 City of Newport Beach 2024 – Present Part of the internal audit consulting services TBD City of Pacific Grove 2023 – Present Yes Yes Yes 490 City of Paramount 2023 – Present Yes Yes Yes 460 City of Patterson 2017 – Present Yes Yes Yes 450 City of Placerville 2008 – Present Yes Yes N/A 400 City of Pleasanton 2024 – Present Yes Yes Yes 700 City of Pinole 2023 – Present Yes Yes Yes 400 City of Redlands 2022 – Present Yes Yes Yes 650 City of Redwood City 2025 – Present Yes Yes Yes 1,340 City of Rialto 2025 – Present Yes Yes Yes 685 City of Ridgecrest 2009 – Present Yes Yes Yes 300 City of Rohnert Park 2020 – Present Yes Yes Yes 700 City of Salinas 2022 – Present Yes Yes Yes 800 City of San Mateo 2021 – Present Yes Yes Yes 900 City of Santa Clarita 2022 – Present Yes Yes Yes 1,200 City of Santa Cruz 2023 – Present Yes Yes Yes 800 City of Seal Beach 2017 – Present Yes Yes Yes 410 City of Stockton 2012 – Present Yes Yes N/A 3,000 City of Tracy 2021 – Present Yes Yes Yes 960 Town of Tiburon 2022 – Present Yes Yes Yes 452 City of Vernon 2023 – Present Yes Yes Yes 1000 City of Ventura 2024 – Present Yes Yes Yes 960 City of Visalia 2021 – Present Yes Yes Yes 650 Imperial County Transportation Commission 2020 – Present Yes Yes Yes 600 San Diego Metropolitan Transit System 2005 – Present Yes Yes Yes 1,850 Carmel Area Wastewater District 2022 – Present Yes Yes N/A 150 CAWD/PBSCD Wastewater Reclamation Project 2022 – Present Yes N/A N/A 150 Emerald Bay Service District 2024 – Present Yes Yes N/A 225 City of Newport Beach 17 | PUNGROUP.CPA Municipalities Dates Financial Audit Single Audit GFOA Certificate Total Hours Helix Water District 2024 – Present Yes Yes Yes 320 Los Angeles County Law Library 2020 – Present Yes N/A N/A 180 NALEO Educational Fund and NALEO 2020 – Present Yes N/A N/A 300 Olivenhain Municipal Water District 2019 – Present Yes Yes Yes 200 Padre Dam Municipal Water District 2020 – Present Yes Yes Yes 250 San Bernardino County Preschool Services Department 2020 – Present Yes Yes N/A 150 San Bernardino County Fire Protection District 2016 – Present Yes N/A N/A 200 San Mateo County Mosquito & Vector Control District 2024 – Present Yes N/A N/A 220 Sweetwater Authority 2022 – Present Yes Yes Yes 270 South Bay Cities Council of Governments 2020 – Present Yes N/A N/A 100 South Orange County Water Authority 2017 – Present Yes Yes Yes 240 South Bay Regional Public Communications Authority 2015 – Present Yes N/A N/A 100 West Valley Water District 2018 – Present Yes N/A N/A 430 City of Newport Beach 18 | PUNGROUP.CPA Partner, Supervisory, and Staff Qualifications and Experience The engagement team was carefully selected to provide the City with all the services needed to successfully complete the audit. Your assigned Engagement and Technical Partners will be personally involved in the project, leading a team that has significant experience in governmental auditing. You can be confident that our broad experience and technical capabilities will allow us to provide technical support, interpret findings, and offer practical solutions to any issues that may arise. About Your Engagement Team The professionals assigned to this engagement are highly qualified to deliver a thorough and effective internal audit aligned with the City of Newport Beach’s objectives. Our team brings significant experience in evaluating risk, internal controls, and compliance practices across public sector entities, with deep knowledge of the AICPA’s Statement on Standards for Consulting Services. Many of our professionals have served in key roles within and outside of government, providing insight into operational efficiency, regulatory compliance, and long-term financial planning. As full-time government specialists, we understand the complexity of public-sector environments and how intergovernmental relationships and resource constraints impact performance. Our approach goes beyond technical compliance—we offer actionable insights and tailored recommendations that align with the City’s goals for enhanced accountability and effective governance. While numerous firms offer audit services, The Pun Group, LLP stands out for its high partner involvement, low staff turnover, and strong client relationships. We recognize the importance of trust and continuity and are committed to transparent communication and collaborative execution throughout the engagement. To maintain objectivity and independence throughout the internal audit process, we have the internal capacity to rotate engagement leadership as needed. Any proposed changes to key engagement personnel will be communicated in writing and will require prior written approval from the City. All replacements will meet or exceed the qualifications of the originally assigned team members. Sophia Kuo, CPA, M.B.A. Engagement/Lead Partner Sophia Kuo, CPA, MAcc, MBA, serves as an Assurance Services Partner and will act as the Engagement Lead Partner for the City of Newport Beach’s internal audit engagement. With extensive experience auditing cities, counties, special districts, and not-for-profit entities, Ms. Kuo brings a deep understanding of public sector operations, risk environments, and compliance frameworks. She holds an Advanced Single Audit Certification from the AICPA and has led numerous engagements focused on grant compliance, long-term funding strategies, and internal control assessments. In alignment with the City’s scope of work, Ms. Kuo’s expertise will ensure the audit team thoroughly evaluates the effectiveness of policies and procedures related to grants administration, cost recovery planning, and risk management practices. She will oversee all aspects of the engagement, including the development of the audit plan, supervision of day- to-day fieldwork, review of findings and recommendations, and final approval of deliverables. Ms. Kuo will also serve as the primary liaison with the City, ensuring open communication and timely delivery of reports that support transparency, accountability, and operational improvement. City of Newport Beach 19 | PUNGROUP.CPA John (“Jack”) F. Georger, CPA, CIA, CGMA | Technical/Concurring Partner With over forty years of experience, Mr. Jack Georger brings deep expertise in public sector auditing and internal control evaluation, making him exceptionally qualified to support the City of Newport Beach’s internal audit engagement. His background includes extensive work with Big 4” and national firms, where he served a wide range of governmental entities—including cities, counties, and transportation agencies—delivering financial audits, compliance reviews, and consulting services across complex risk environments. Mr. Georger has significant experience assessing grant compliance, long-term funding mechanisms, and risk management processes, making him well suited to contribute technical insight in each of the City’s audit focus areas. He is a recognized authority in the field, instructing over 300 hours annually in accounting and auditing and serving as a key author and technical reviewer for industry-leading publications such as the CCH Knowledge-Based Audits™ of State and Local Governments, the GAAP Guide (FASB), and the Governmental GAAP Guide (GASB). As Technical/Concurring Partner on this engagement, Mr. Georger will provide an independent, high-level review of audit reports and risk areas, ensuring the integrity and quality of all deliverables. His role will include resolving complex accounting, auditing, and reporting matters, particularly those related to internal controls, cost recovery, compliance with grant requirements, and adequacy of reserve planning. Mr. Georger holds CPA, CIA, and CGMA designations and brings the level of expertise and professional scrutiny this engagement requires. Ross Gotthoffer, CPA | Director/Quality Control Reviewer Ross Gotthoffer, CPA will serve as Engagement Director and Quality Reviewer for the City of Newport Beach’s internal audit. With 20+ years of experience in governmental audits across California and Florida, he specializes in financial and compliance audits, internal controls, and risk management. In his dual role, Mr. Gotthoffer will provide strategic oversight and technical guidance throughout the engagement. As Engagement Director, he will lead fieldwork execution aligned with the City’s internal audit objectives, focusing on grant compliance, long-term financial planning, and risk management. As Quality Reviewer, he will ensure all audit reports and deliverables meet professional standards for clarity, accuracy, and compliance. He is a licensed CPA in Florida and California. Masood Yousufzai, CPA | Engagement Manager Masood Yousufzai holds a B.A. in Political Science and an M.P.A. Degree in Public Administration. Mr. Yousufzai is an Advisory Services Manager with more than six years of experience in providing accounting and audit services, internal control and risk evaluations, and business consulting to privately held and public companies with clients in a variety of industries, including large not-for-profit entities, insurance carriers, manufacturing and distribution, and government entities. Mr. Yousufzai worked as an Internal Auditor and Special Projects Manager prior to joining the Firm for the Ontario International Airport Authority and as a Revenue Analyst for the City of San Clemente. Masood has been responsible for managing, planning, and performing financial and regulatory external and internal audits as well as developing and conducting internal control procedures and risk assessment evaluations. He has evaluated key processes within companies to determine areas of operating inefficiencies or potential internal control weaknesses, developing findings into a recommended course of action for resolution. Mr. Yousufzai will direct and supervise the project team in its daily activities and tasks in order to deliver all services requested. City of Newport Beach 20 | PUNGROUP.CPA Continuing Education and Professional Development Because of our commitment to providing the highest quality of services to the City, we provide our professionals with technical training to ensure our people stay current on topics within the industry sectors and better equip themselves to serve our clients. All professionals are required to obtain continuing education that exceeds the requirements of the American Institute of Certified Public Accountants (AICPA) and, where applicable, Government Auditing Standards. Our professionals participate in continuing education programs through the following means: Governmental Accounting and Auditing Conference sponsored by AICPA. Webinar sponsored by AICPA Government Audit Quality Center. Annual Conference sponsored by California Society Municipal Finance Officers. Governmental Accounting and Auditing Conference sponsored by CalCPA. The Pun Group in-house training on government-specific topics, including but not limited to GASB updates, Government Auditing Standards Revision, Fraud in State and Local Governments, COSO Internal Control- Integrated Framework, Audit of State and Local Governments, Single Audit, and Mindbridge AI Auditors™. In 2024, our government professionals received an average of 52 hours of continuing professional education, compared with the 40 hours of accounting industry requirement. By expanding our knowledge through these seminars/conferences, we can provide the right solutions to our clients. Staff Continuity The Pun Group LLP is committed to maintaining staff continuity throughout audit engagements, and we can assure you that the partners assigned to this audit will be involved throughout the entire contract term. While we cannot guarantee that our staff-level members will stay with the Firm, we encourage loyalty by paying competitive wages, offering opportunities for promotion, using state-of-the-art equipment, and providing excellent working conditions. Also, we offer benefits, including retirement plans, medical plans, profit-sharing programs, and continuing education. Quality-Control System Our Firm meticulously monitors the quality and contents of our reports. The Pun Group LLP is 100% committed to providing only the highest grade of work possible for our clients and for those who rely on our audits. The Firm strives to exceed professional industry standards because of the continuing respect for our clients and our emphasis on creating long-lasting relationships. The Pun Group LLP works exclusively with those who share the same moral integrity and values. Our quality-control system has been crafted with excellence in mind. It not only meets AICPA standards but also matches our own elevated standards, which include following various professional development activities. Engagement Team Resumes The City of Newport Beach deserves experienced professionals who work as a team. The Pun Group LLP will provide qualified professionals to perform the audit. No subcontractors and/or consultants will be utilized to perform the requested services. Resumes for key engagement team members are presented as follows: City of Newport Beach 21 | PUNGROUP.CPA EXPERIENCE Sophia Kuo is a Partner within The Pun Group, LLP’s Assurance division. In her ten years of accounting and auditing experience, Sophia has worked with governmental agencies, not-for- profit entities, and private for-profit entities. She possesses governmental expertise that ranges from GASB audit/reporting, Internal Controls/COSO Framework, Single Audit, Corporate Financial Reporting, Data Analysis, and Taxation. Ms. Kuo has performed audits and other attestation services for several governmental agencies throughout California. Her portfolio includes cities, counties, redevelopment agencies, public financing authorities, housing authorities, transportation agencies, and special districts. Also, she has helped them publish their Annual Comprehensive Financial Reports in compliance with GASB Statement No. 34. EDUCATION Fu Jen Catholic University B.A. Degree – International Trading and Finance, Emphasis in Finance Idaho State University Master of Accounting (MAcc) Master of Business Administration (M.B.A.) LEADERSHIP & AFFILIATIONS Member, American Institute of Certified Public Accountants (AICPA) Member, California Society of Certified Public Accountants (CalCPA) RELEVANT EXPERIENCE City of Coachella City of Culver City City of Desert Hot Springs City of Gardena City of Laguna Niguel City of Lakewood City of Monterey City of Monterey Park City of Perris City of Stockton City of Visalia City of Pomona City of Hercules City of Glendora CONTINUING PROFESSIONAL EDUCATION Various courses are offered by the Firm online through Thompson Reuters, AICPA, and CalCPA Education Foundation, including: Governmental and Non-profit Annual Update Government Auditing Standards GASB Basic Financial Statements for State and Local Governments Single Audits: Uniform Guidance (formerly OMB Circular A-133) Financial Accounting Standards Board Annual Updates Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. Sophia Kuo CPA, M.B.A. Engagement/ Lead Partner EMAIL sophia.kuo@pungroup.cpa WEBSITE www.pungroup.cpa Expertise: CITIES COUNTIES TRANSPORTATION AGENCIES ENTERPRISE OPERATIONS HIGHER EDUCATION NOT-FOR-PROFIT Licensed to Practice in: California Hawaii City of Newport Beach 22 | PUNGROUP.CPA EXPERIENCE Jack Georger is a Partner and Chief GASB Implementation Specialist within The Pun Group LLP’s Assurance division. By leveraging more than forty years of public accounting and auditing experience in the government, agribusiness, financial services, manufacturing, and nonprofit sectors, Mr. Georger brings in-depth knowledge and practical expertise to each engagement. Jack coordinates, plans, and manages financial audit activities, consulting activities, federal and state compliance audit activities, performance audits, and numerous quality control and internal control reviews for a broad mix of governmental agencies and programs throughout the United States. Mr. Georger leads our Peer Review department providing peer review services to other firms under the practice monitoring program of the AICPA. Mr. Georger is a continuing professional education course instructor for the AICPA. Annually, he instructs over 300 hours in accounting and auditing subjects. Jack has authored training material in governmental accounting and auditing for the AICPA. He is the technical reviewer of the CCH Knowledge-Based Audits™ of State and Local Governments with Single Audits, GAAP Guide (FASB), and Governmental GAAP Guide (GASB). Mr. Georger is licensed to practice as a certified public accountant in the states of California, New York, Virginia, Maryland, the District of Columbia, Missouri (inactive), Connecticut inactive), and Wyoming (inactive). He is a Certified Internal Auditor (CIA). EDUCATION George Mason University Fairfax, Virginia B.S. Degree – Accounting LEADERSHIP & AFFILIATIONS Member and Instructor, American Institute of Certified Public Accountants (AICPA) Member, Institute of Internal Auditors Member, California Society of Certified Public Accountants (CalCPA) Member, New York Society of Certified Public Accountants (NYSSCPA) Chairman, NYSSCPA Government Accounting and Auditing Committee Member, NYSSCPA Auditing Standards Committee Member, NYSSCPA Sustainability Committee Member, NYSSCPA Not-for-Profit Committee Nevada Society of Certified Public Accountants (NSCPA) Member, Government Finance Officers Association (GFOA) – Reviewer Member, Institute of Internal Auditors CONTINUING PROFESSIONAL EDUCATION He has instructed over 300 hours of municipal accounting courses offered by the AICPA. Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. John F. Georger, Jr. CPA, CIA, CGMA Technical/ Concurring Partner EMAIL jack.georger@pungroup.cpa WEBSITE www.pungroup.cpa Expertise: CITIES COUNTIES TRANSPORTATION AGENCIES ENTERPRISE OPERATIONS HIGHER EDUCATION NOT-FOR-PROFIT Licensed to Practice in: California Arizona Nevada City of Newport Beach 23 | PUNGROUP.CPA EXPERIENCE Ross Gotthoffer, a Director in The Pun Group LLP's Assurance division, boasts over two decades of public accounting and auditing experience across diverse sectors such as government, agribusiness, financial services, manufacturing, and nonprofits. His wealth of knowledge and practical expertise enhances every engagement. As a seasoned Quality Control Reviewer at the CPA firm, Mr. Gotthoffer ensures the highest standards of accuracy and compliance. His meticulous approach encompasses the evaluation of financial statements, auditing processes, and regulatory adherence. With a proven track record, he actively contributes to enhancing overall quality control protocols, providing valuable insights, and fostering a culture of excellence within the organization. Mr. Gotthoffer's responsibilities include conducting comprehensive quality reviews of all reports, ensuring that audits align with both firm and professional standards. He serves as a key resource for technical and operational issues, bringing a depth of expertise to the role. Additionally, Mr. Gotthoffer holds the position of technical reviewer for significant publications like CCH Knowledge-Based Audits™ of State and Local Governments with Single Audits, GAAP Guide (FASB), and Governmental GAAP Guide (GASB). He is a licensed certified public accountant in the states of California and Florida. EDUCATION University of South Florida, Tampa, Florida Master of Accountancy LEADERSHIP & AFFILIATIONS Member, American Institute of Certified Public Accountants (AICPA) Member, Florida Institute of Certified Public Accountants (AICPA) Member, Government Finance Officers Association (GFOA) – Reviewer CONTINUING PROFESSIONAL EDUCATION Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. Ross Gotthoffer CPA Director/ Quality Control Reviewer EMAIL ross.gotthoffer@pungroup.cpa WEBSITE www.pungroup.cpa Expertise: CITIES COUNTIES TRANSPORTATION AGENCIES ENTERPRISE OPERATIONS HIGHER EDUCATION NOT-FOR-PROFIT Licensed to Practice in: California Florida City of Newport Beach 24 | PUNGROUP.CPA EXPERIENCE Masood Yousufzai is an Advisory Services Manager at The Pun Group LLP with more than six years of experience in providing accounting and audit services, internal control and risk evaluation, and business consulting to privately held and public companies with clients in a variety of industries, including large not-for-profits entities, insurance carriers, manufacturing and distribution, and government entities. Mr. Yousufzai worked as an Internal Audit and Special Projects Manager prior to joining the Firm. Masood has been responsible for managing, planning, and performing financial and regulatory external and internal audits and for developing and conducting internal control procedures and risk assessment evaluations. He has evaluated key processes within companies to determine areas of operating inefficiencies or potential internal control weaknesses and developed findings into recommended courses of action and into report comments and recommendations for resolution. Mr. Yousufzai has provided accounting support services to local not-for-profits and governments, including financial statement analysis and preparation. EDUCATION California State University Bakersfield B.A. Political Science California State University Northridge M.P.A. Degree – Public Administration University of California Irvine Applied Accounting Program LEADERSHIP & AFFILIATIONS Member, California Society of Certified Public Accountants (CalCPA) RELEVANT EXPERIENCE City of Bell City of Gardena City of Desert Hot Springs City of Palm Springs City of Seal Beach City of Phoenix (Subrecipient Monitoring City of Corona South Bay Cities Council of Governments City of San Jose (Subrecipient Monitoring) City of Perris CONTINUING PROFESSIONAL EDUCATION Various courses offered by the Firm online through Thompson Reuters, AICPA, and CalCPA Education Foundation, including: Governmental and Nonprofit Annual Update Government Auditing Standards GASB Basic Financial Statements for State and Local Governments Single Audits: Uniform Guidance (formerly OMB Circular A-133) Financial Accounting Standards Board Annual Updates Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. Masood Yousufzai Engagement Manager EMAIL masood.yousufzai@pungroup.cpa WEBSITE www.pungroup.cpa Expertise: CITIES COUNTIES TRANSPORTATION AGENCIES ENTERPRISE OPERATIONS NOT-FOR-PROFIT CPA Candidate in: California City of Newport Beach 25 | PUNGROUP.CPA Schedule Methodology and Segmentation of Engagement The Firm’s audit approach consists of six phases: Engagement Acceptance and General Planning, Planning and Internal Control Evaluation, Fieldwork, Post Fieldwork, Report Preparation and Review, and Final Production. 1. Engagement Acceptance and General Planning: Our engagement partner and manager will meet with City management to discuss the scope of services, confirm expectations, review prior findings (if applicable), and identify areas of heightened risk. This initial planning phase will focus on developing a tailored work plan for each audit area—Grant Compliance, Long-Term Funding Strategies and Cost Recovery, and Risk Management. Proposed timeline: Late July 2. Planning and Internal Control Evaluation: The engagement team will review the City’s policies, procedures, and control frameworks relevant to each topic. This includes walkthroughs, process mapping, and analysis of prior audit results or enterprise risk assessment findings. We will identify key internal controls, assess their design and implementation, and develop targeted audit procedures for fieldwork. Proposed timeline: Early August 3. Fieldwork: Our team will perform fieldwork based on the risk areas identified in planning. Testing procedures will include document review, transaction sampling, compliance evaluation, and control testing. For grant compliance, we will assess supporting documentation, reporting timeliness, and subrecipient oversight. For cost recovery and risk management, we will test planning models, reserves, insurance practices, and related data. Periodic status meetings will be held with City staff. Proposed timeline: August–September 4. Post Fieldwork: During this phase, the engagement team, including the engagement partner, will review all documents and evaluate commitments and contingencies. The team will perform an assessment of the going concern and jointly plan for the next steps. Proposed timeline: immediately after fieldwork completion. 5. Report Preparation and Review: Following fieldwork, we will prepare internal audit reports for each topic area. Reports will include an executive summary, findings, impact assessments, and recommended corrective actions. All reports undergo internal quality control review prior to delivery. Drafts will be reviewed with City management to ensure clarity, accuracy, and alignment with City priorities. Proposed timeline: Draft reports by early October. 6. Final Production: Once all issues have been resolved and reports finalized, we will deliver the final audit reports in accordance with the City’s deadline. At the City’s request, the engagement partner and manager will present findings to executive leadership or public governing bodies. Proposed timeline: Final reports delivered no later than October 10, 2025. The Firm will complete the audit fieldwork and issue all reports within the established timeframe, assuming no internal circumstances within the City causes delays in the audit. Expe rtis e & Expe rience – Our team has extensive experience auditing not-for-profit organizations, ensuring accurate and compliant audits. Customized Solutions – We tailor our audit approach to fit your unique needs and challenges. Benefits •Efficiency & Timeliness – We deliver high-quality audits on time, minimizing disruption to your operations. Proactive Risk Management – We identify and address financial and operational risks early. Strengthening Financial Health – We improve your financial management and operational efficiency through internal control reviews and recommendations. City of Newport Beach 26 | PUNGROUP.CPA Level of Staff and Number of Hours to be Assigned to Each Segment of the Engagement The Pun Group LLP understands that the City of Newport Beach seeks not only experienced internal audit services but also measurable value in the form of timely insights and actionable recommendations. To meet these expectations, we have assembled a team of professionals with deep public-sector experience and hands-on expertise in the areas of Grant Compliance, Long-Term Funding Strategies and Cost Recovery, and Risk Management. Estimated total engagement hours: Approximately 500 hours Our team structure includes: Partner-level oversight Manager-level coordination and field review Senior and staff auditors for fieldwork execution City of Newport Beach 27 | PUNGROUP.CPA Let’s Get to Work! Benefits of Choosing The Pun Group LLP The Pun Group LLP is recognized for its professionalism, integrity and for providing clients with practical solutions unique to their circumstances and issues. Our Firm prides itself on being able to provide personalized client services, and with that sentiment in mind, we have carefully chosen our engagement teams. The Pun Group’s primary objective is to offer the City of Newport Beach solutions and directions led by highly experienced and capable partners who can successfully implement the work and produce the results you expect. This philosophy and mindset allow us to provide a superior level of service and a quality audit. We trust that this proposal has given you the information needed about the Firm, the engagement team members, the overall audit approach, cost-saving measures, and audit fees. We are committed to exceeding your expectations, and we look forward to bringing our experience and expertise to the City of Newport Beach while providing you with the excellent level of service that you expect and deserve. Thank You Thank you for allowing us to submit our qualifications to provide you with Internal Audit Services. Please direct inquiries to: Sophia Kuo, CPA, M.B.A. Partner Email: sophia.kuo@pungroup.cpa Phone: (949) 777-8809 | Fax: (949) 777-8850 Sincerely, The Pun Group LLP Certified Public Accountants and Business Advisors City of Newport Beach i | PUNGROUP.CPA Appendix A – About the Firm About the Firm Established in 2012, The Pun Group, LLP stands as a limited liability partnership comprising a team of sixty dedicated professionals who specialize in providing auditing, accounting, and advisory services. Our firm, which includes Certified Public Accountants and Business Advisors, has garnered recognition as one of the foremost accounting entities in Orange County, as acknowledged by the Orange County Business Journal. Additionally, we proudly secure a place among the CalCPA Top 150 firms. Our distinction within the industry lies in the fusion of hands-on experience and pragmatic knowledge demonstrated by our audit professionals. This combination sets our firm apart. We possess a profound grasp of prevailing regulations and issues bolstered by our technical acumen. Furthermore, our commitment to diligence, integrity, and collaborative teamwork is evident in every engagement we undertake, thus contributing to our clients' success. The Partners’ Group is a distinguished assembly comprising notable professionals such as Sophia Kuo, Frances Kuo, Coley Delaney, Andrew Roth, John Georger Jr., and Jim Fritzsche. We specialize in providing auditing, accounting, and advisory services to numerous governmental entities across the United States. With a collective experience of over two centuries, we have established ourselves as a trusted business ally and have gained recognition as industry leaders in a rapidly expanding market. Our dedication to the field is evident through our work with nearly 100 government and not-for-profit audit clients, demonstrating our unwavering passion and unparalleled municipal experience. Moreover, our practices adhere to professional standards embraced nationwide within the United States of America, including the rigorous criteria outlined in the Government Auditing Standards issued by the Comptroller General of the United States. The Firm’s headquarters are located in Orange County, California, with five branches in San Diego, Walnut Creek, Sacramento California), Las Vegas (Nevada), and Phoenix (Arizona). The Orange County Office, located at 200 East Sandpointe Avenue, Suite 600, Santa Ana, CA 92707, will perform the requested services for the City. However, we may assign additional staff from our other offices to the engagement at no extra cost to the City. No subcontractors will be used in this engagement. Global Capabilities The Pun Group LLP is an independent member of Allinial Global, an association of over 100 independent accounting and consulting firms. Based in North America, Allinial Global offers international support by connecting its member firms to providers and global networks of accounting firms worldwide. OUR AFFILIATIONS OUR FIRM AT A GLANCE 60 full-time auditing, accounting, tax and advisory professionals One of the fastest growing firms serving California, Nevada and Arizona 6 offices across 3 states Client retention rate: 90 – 95% City of Newport Beach ii | PUNGROUP.CPA Full-Time Government Auditors As full-time government auditors, we understand that governmental entities do not operate independently but in an increasingly complex web of local, state, and federal relationships. We know how these relationships work, what they mean at the local level, and how every public organization’s focus on resource management is critical to success. Also, while many accounting Firms can provide services, not all can build excellent working relationships with their clients. The Pun Group LLP prides itself on developing lasting, personal relationships with our clients. Our hands-on partner involvement and low personnel turnover are crucial tools to our success and are highly beneficial to the City. Local Office’s Information Technology (IT) Audit Capabilities The Pun Group LLP continues our efforts to invest in our IT system to enhance our security further and promote audit efficiency. Top security for your data is the key to our success. When we have your data virtualized, our Firm takes all the preventive steps to avoid putting your information at risk. Our In-House IT administrator maintains our server to ensure our IT environment is continuously updated with the latest security fixes. Through VPN and Microsoft Remote Desktop, our In-House network administrator can lock down files and system access from a single point, limiting the ability of remote sites to take data from our server. Access to systems from anywhere and anytime. With more mobility being the norm rather than the exception, our engagement team needs robust access to the engagement files when they are working in your office. Accounting and Auditing Software applications are installed in our “Private” server and can be securely accessed through VPN and Microsoft Remote Desktop. The Firm uses CCH ProSystem fx® Engagement for audit documentation, which allows real-time synchronization of the work papers and instant collaboration quality control review. Secure Data File Transfer System. In order to improve audit efficiency, workflow management software plays an essential role between your organization and our engagement team. We employ a secure data file transfer system called Suralink. Suralink’s dynamic request list is integrated with our secure file-hosting system for seamless document-request coordination. It means all our requests are in one place, updated in real-time, and accessible by everyone working on the engagement. As a client, you no longer have to manually maintain a spreadsheet amongst several people, only to repeat the process in a day or two. Not only makes the operation more cost-efficient, but it also enables you and your team to spend your time getting the job done, not reconciling a messy list of outstanding items. The Suralink dashboard, as shown below, allows you to visualize the process of document-request fulfillment. BIG FIRM EXPERTISE. SMALL FIRM VALUES. Our professional backgrounds at major national firms showed us how to solve complicated business and accounting challenges, but the sense of personal connection was missing. We launched The Pun Group because we believe every client deserves to work with experienced business advisors and CPAs who have the time – and take the time – to create an authentic connection. Every client is our top priority! A UNIQUE CULTURE. Personalization” is not just a buzzword – it’s part of our firm’s culture. We take a personal approach to everything we do. We collaborate with our clients, so they’re always part of the process. We listen to our staff to make sure they have the right support and resources to do a great job. Getting to know others and discovering how we can serve them better is not just a sign of good business practices; it’s a sign of good people. INNOVATION EMBRACED. New ideas keep you ahead of the game. From leveraging the value of emerging technologies to further refining trusted processes, we adopt proven solutions to meet your needs. WHERE YOU GO, WE GO. WHERE YOU GROW, WE GROW. Our success is defined by how you achieve yours. Partner with accomplished accounting and financial professionals who are laser-focused on taking your business to the next level. City of Newport Beach iii | PUNGROUP.CPA Our Services Our partners and seasoned professionals are always available, guiding clients through their periods of rapid growth as well as difficult times. We are able to do that by offering a portfolio of accounting services that are as diverse as the jurisdictions and entities themselves. The Pun Group LLP has successfully provided professional auditing, accounting, financial reporting, and management advisory/consulting services to a broad spectrum of governmental entities. ASSURANCE ADVISORY OTHER SERVICES Financial statements audits Compliance audits Performance audits Internal audits Service organization controls audits Operational reviews/risk advisory services Forensic investigation Financial condition analysis Organizational structure review Cash flow analysis Debt restructuring consultation Litigation restructuring consultation Assistance with the preparation and review of the Annual Comprehensive Financial Report Government property lease excise tax compliance review Sub-recipient monitoring Implementation of new GASB pronouncements Audit readiness services Contract Finance Director/Accountant services Independence The Pun Group LLP requires all employees to adhere to strict independence standards concerning the Firm’s clients. These independence standards exceed, in many instances, the rules promulgated by the American Institute of Certified Public Accountants (AICPA). The Pun Group LLP certifies that it is independent of the City of Newport Beach and its component units. The Firm meets independence requirements defined by the United States Government Accountability Office’s (US GAO’s) Government Auditing Standards and the American Institute of Certified Public Accountants (AICPA). Based on that, we have not identified an instance that constitutes a conflict of interest relative to performing the services requested by the City. Insurance If selected, the Firm will obtain and maintain the minimum insurance requirements during the entire execution of the agreement with the City of Newport Beach. Within ten days from the implementation of the contract, we will furnish the City of Newport Beach with satisfactory evidence of the insurance requirements and proof that each carrier is required to give at least 30 days prior written notice of the cancellation of any policy during the entire period of the agreement. The City of Newport Beach will be named as an additional named insured under the Firm’s policies. A copy of our current certificate of insurance is presented in the Appendices section of this proposal. License to Practice in California The Firm and all key professional staff are licensed by the State of California to practice as Certified Public Accountants and meet the Continuing Professional Education requirements under US GAO’s Government Auditing Standards to perform the proposed audits. Firm Registration: California State Board of Accountancy Number – PAR 7601 Federal Identification Number – 46-4016990 City of Newport Beach iv | PUNGROUP.CPA Peer Review Being a member of the American Institute of Certified Public Accountants (AICPA), The Pun Group LLP is required to obtain an independent peer review of our audit and accounting practice every three (3) years. The peer reviewer assessed the Firm’s quality-control policies, reviewed administrative records, interviewed professional personnel, and inspected the Firm’s working papers and reports from a representative sample of accounting and auditing engagements, including governmental audits. The reviewer concluded that the Firm fully complied with the AICPA’s stringent standards for quality control and issued a peer review rating of “Pass.” A copy of our most recent peer review is presented below. City of Newport Beach v | PUNGROUP.CPA Federal or State Desk Review No federal or state desk reviews or field reviews have been undertaken of any audits performed by the Firm or any of its partners, managers, or professionals during the past three (3) years. Disciplinary Action State regulatory bodies or professional organizations have taken no disciplinary action against the Firm or any of its partners, managers, or professionals during the past three (3) years. The Firm has no conditions such as bankruptcy, pending litigations, planned office closures, mergers, or any organizational conflict of interest that may affect the ability of the Firm to perform the required duties requested by the City of Newport Beach. City of Newport Beach vi | PUNGROUP.CPA Appendix B – Available Training Strengthen Your Accounting Knowledge: TPG Client Training Webinars We pride ourselves in leading the governmental auditing profession nationwide and statewide. Members of our team have been assigned to the AICPA and State Government Accounting and Audit committees. Our membership with these two levels of government keeps us current, and such involvement helps our Firm with the constant changes in accounting and auditing standards, laws and regulations, and compliance provisions, which have created an unprecedented complexity in public accounting for state and local governments. Every year, the Firm hosts a conference to update governmental clients on new technical accounting and financial issues. Since last year, by implementing “Webinars,” we’ve been expanding our horizons and offering our clients 15 hours of Continuing Professional Education (CPE). These sessions are free of charge and part of the service package provided to our clients. CPE courses we offer: City of Newport Beach vii | PUNGROUP.CPA Appendix C – Certificate of Insurance www.pungroup.cpa ORANGE COUNTY SAN DIEGO BAY AREA LAS VEGAS PHOENIXSACRAMENTO Finance Department CITY OF NEWPORT BEACH 100 Civic Center Drive Newport Beach, California 92660 949 644-3126 | 949 644-3339 FAX jalimam@newportbeachca.gov July 15, 2025 The Pun Group LLP Attention: Sophia Kuo 200 E. Sandpointe Ave., Suite 600 Santa Ana, CA 92707 Re: Informal Request for Proposals (Internal Audit) On June 13, 2025, the City of Newport Beach issued an informal request for proposals for internal audit work to be performed this fall. The City received your proposal dated July 14, 2025, and has awarded a portion of the work to be performed by your firm. We would like The Pun Group to perform internal audit work associated with Topic 1: Grant Compliance for a not-to-exceed amount of $45,250. As outlined in the informal request for proposals, we would like work to begin by the end of July and final reports to be delivered by October 10th. Your primary point of contact on this project is Trevor Power. If you have any questions, please contact me at 949-644-3126. Sincerely, Jason Al-Imam Finance Director Attachments: Informal Request for Proposals: Internal Audit Proposal dated July 14, 2025 for Topics 1-3 INFORMAL REQUEST FOR PROPOSALS: INTERNAL AUDIT Introduction: An enterprise risk assessment was conducted in 2025 to evaluate potential risks affecting financial reporting, operational efficiency, regulatory compliance, and service delivery. Using the results of the enterprise risk assessment, an internal audit work plan has been developed in order to identify areas of focus that should be explored as part of the city’s internal audit program. This informal request for proposals includes a solicitation for internal audit work, which covers three topics including grant compliance, long-term funding strategies and cost recovery, and risk management. Instructions: Provide the following items for any or all of the topics identified in the Scope of Work that your firm proposes to perform services for: • Workplan. The firm’s proposal shall include recommended testing procedures to address the risks identified in the scope of work. • Cost. Total all-inclusive maximum price. • Experience with similar engagements. • Schedule (Please note the City would like work to begin by the end of July and final report(s) to be delivered by October 10th.) o If the work cannot be completed in this timeframe, please provide a schedule your firm feels is required. Proposers may submit written questions to the following Informal RFP officer by no later than 1:00pm on Monday, June 23, 2025. Informal RFP Officer: Jason Al-Imam, Finance Director jalimam@newportbeachca.gov Proposals shall be submitted no later than 1:00pm on Monday, July 14, 2025. Any proposal received after this deadline shall not be considered. Evaluation Criteria: Proposals will be evaluated by a review committee. The City may use some or all of the following criterion in its evaluation and comparison of proposals. The criteria listed are not necessarily an all-inclusive list. • The firm’s demonstrated experience in providing the requested services; • The firm’s responsiveness in clearing stating their understanding of the work to be performed; • The firm’s work plan and ability to meet the city’s schedule; and • The firm’s proposed costs. INFORMAL REQUEST FOR PROPOSALS: INTERNAL AUDIT Scope of Work: The following work shall be performed in accordance with the Statement on Standards for Consulting Services issued by the AICPA. Upon the completion of internal audit work, an audit report shall be issued for each assigned topic, which should include, at a minimum, the following elements: • Executive Summary o Purpose and scope of the audit o High-level findings o General assessment of the adequacy and effectiveness of internal controls and processes reviewed • Findings and Suggested Recommendations o Observation: What was found. o Condition: Description of the current state or deviation from best practices. o Effect: Impact or potential impact of the issue. o Recommendations: Specific, actionable steps to address the issue. Please note the City would like work to begin by the end of July and final report(s) to be delivered by October 10th. Topic 1: Grant Compliance The firm’s proposal shall include recommended testing procedures to address the following risks: • Decentralized Grant Process • Unauthorized Grant Expenditures • Inadequate Supporting Documentation • Non-Compliance with Grant Requirements • Timeliness of Drawdowns and Reporting • Adequacy of Grant Accounting • Subrecipient Monitoring Recommended Testing Procedures: The City’s existing policies, procedures, and practices, including policies and procedures that have been established as a matter of practice or in writing, relative to grant administration will be examined with an additional focus on specific grant transactions such as reimbursement requests, required financial reports, and expenditure tracking. INFORMAL REQUEST FOR PROPOSALS: INTERNAL AUDIT Topic 2: Long-Term Funding Strategies and Cost Recovery The firm’s proposal shall include recommended testing procedures to address the following risks: • Timeliness of Updates to Data • Inadequate Planning for Asset Replacement • Accuracy of Cost Recovery Calculations • Commitment to Funding Adequately Recommended Testing Procedures: The City’s existing policies, procedures, and practices, including policies and procedures that have been established as a matter of practice or in writing, relative to Long Term Funding and Cost Recovery will be examined with an additional focus on specific Funding Source Documents and Cost Recovery planning for items such as vehicles, equipment, facilities, long- term liabilities, and insurance reserves. Topic 3: Risk Management The firm’s proposal shall include recommended testing procedures to address the following risks: • Liability Insurance Coverage • Workers Comp Insurance Coverage • Adequacy of Reserve Levels • Cost Recovery Methodology • Claim Processing Procedures/Compliance with Regulations • Claim Experience/Trends Recommended Testing Procedures: The City’s existing policies, procedures, and practices, including policies and procedures that have been established as a matter of practice or in writing, relative to Risk Management will be examined with an additional focus on specific transactions such as insurance renewals, trend data, and establishment of reserves. &,7<2)1(:3257%($&+ -XO\ 352326$/ Proposal for Internal Audit Services 6RSKLD.XR&3$0%$ WĂƌƚŶĞƌ ϮϬϬ͘^ĂŶĚƉŽŝŶƚĞǀĞ͕͘^ƵŝƚĞϲϬϬ͕^ĂŶƚĂŶĂ͕ϵϮϳϬϳ ;ϵϰϵͿ ϳϳϳͲϴϴϬϵůƐŽƉŚŝĂ͘ŬƵŽΛƉƵŶŐƌŽƵƉ͘ĐƉĂ (& &,7<2)1(:3257%($&+ 6RSKLD.XR&3$0%$ WĂƌƚŶĞƌ ϮϬϬ͘^ĂŶĚƉŽŝŶƚĞǀĞ͕͘^ƵŝƚĞϲϬϬ͕^ĂŶƚĂŶĂ͕ϵϮϳϬϳ ;ϵϰϵͿ ϳϳϳͲϴϴϬϵůƐŽƉŚŝĂ͘ŬƵŽΛƉƵŶŐƌŽƵƉ͘ĐƉĂ -XO\ 352326$/ Proposal for Internal Audit Services (& - 3 P The Pun Group LLP is recognized for its professionalism, integrity and for providing clients with practical solutions unique to their circumstances and issues. You will receive a superior level of service and a quality audit. Thank You! Thank you for allowing us to submit our qualifications to provide you with Internal Audit Services. The Pun Group LLP Certified Public Accountants and Business Advisors WHY CHOOSE THE PUN GROUP LLP?  Big firm expertise, small firm values  Personal attention meets technical expertise  A unique firm culture  Innovation embraced  Achievable plans to move your organization forward The Pun Group’s most valuable asset is our people, they and their deep experience drive our every interaction with clients. “ ” In Memoriam Kenneth H. Pun, CPA, CGMA Founder City of Newport Beach Table of Contents Transmittal Letter ........................................................................................... 1 Workplan ........................................................................................................ 3 Cost .............................................................................................................. 10 Experience with Similar Engagements ........................................................ 12 Schedule ...................................................................................................... 25 Let’s Get to Work! ........................................................................................ 27 Appendix A – About the Firm .......................................................................... i Appendix B – Available Training ................................................................... vi Appendix C – Certificate of Insurance ......................................................... vii For the 5th consecutive year, The Pun Group has been honored with the "Best of Accounting" Award. The Pun Group LLP is proud to have won 2025’s Best of Accounting® award from ClearlyRated for consistently delivering exceptional service to its clients for the fifth consecutive year. Winners of such awards have proven to be industry leaders in service quality based entirely on ratings provided by their clients. On average, clients of 2025 Best of Accounting winners are 70% more likely to be satisfied than those who work with non-winning firms. “I am pleased to introduce the 2025 Best of Accounting winners alongside their validated service ratings on ClearlyRated.com,” said ClearlyRated’s CEO, Eric Gregg. “These firms have demonstrated a remarkable commitment to delivering amazing experiences despite another year of upheaval and macroeconomic uncertainty. Hats off to these service leaders - it’s truly an honor to recognize and celebrate their achievements.” The Pun Group LLP received satisfaction scores of 9 or 10 out of 10 from 94.1% of their clients, significantly higher than the industry’s average of 50%. Our firm excelled in five key areas: Responsiveness, Quality, Value, Needs Understanding, and Proactive Approach. About ClearlyRated Rooted in satisfaction research for professional service firms, ClearlyRated utilizes a Net Promoter® Score survey program to help professional service firms measure their service experience, build an online reputation, and differentiate on service quality. For the 2nd consecutive year, INSIDE Public Accounting has recognized The Pun Group as one of the Top 500 Firms and one of the fastest-growing firms. “We started using Pun Group when the pandemic first started two years ago so had a little apprehension about doing everything remotely with a new firm. But the audit went very well and was completed on time without problem.” Kevin W. State and Local Government Client “The Firm has consistently exceeded our expectations as an auditor.” Clint O. State and Local Government Client “An excellent partner and amazing service.” Jim T. Private Sector Client “Excellent customer service and staff and partners are expert in their fields.” Lani H. State and Local Government Client 200 E. Sandpointe Avenue, Suite 600 Santa Ana, California 92707 City of Newport Beach Transmittal Letter July 14, 2025 City of Newport Beach Jason Al-Imam, Finance Director 100 Civic Center Drive Newport Beach, CA 92660 Re: Informal RFP for Internal Audit Services Dear Jason Al-Imam: Please allow us to introduce our Firm and share our qualifications and proposed services plan for the City of Newport Beach (the “City”) according to your Informal Request for Proposals for Internal Audit Services for the Year 2025. The Pun Group LLP (the “Firm”) has the knowledge and experience necessary to become the City’s next public accounting firm and the work plan to ensure a smooth process. This letter is an acknowledgment of the Firm’s understanding of the work to be performed. We are offering our commitment to deliver all of the required work, complete the audit, and issue the necessary auditor’s reports within the periods outlined by the City. No subcontractors will be utilized for this engagement. The Pun Group is the right choice for the City of Newport Beach because: We Understand the Demographics and Your Needs. The Pun Group is reputable for its governmental practice. We are the principal auditors for cities in California, including San Jose, Cupertino, Tracy, Montebello, Corona, Desert Hot Springs, National City, and several others. Accordingly, the proposed engagement team has a deep understanding of the current issues that municipalities are facing, such as varying demographics, economic environments, and the constantly changing landscape of laws and regulations. Recognized Leader in the Governmental Industry. We are a small national Firm with licenses in the States of California, Arizona, and Nevada and a proven leader in professional services to the government sector. All key engagement team professionals are licensed to practice as Certified Public Accountants and meet the Continuing Professional Education requirements under US GAO’s Government Auditing Standards to perform the proposed audits. The partners and all employees proposed to perform the requested services do not have a record of substandard audit work nor have any outstanding claim of substandard practice or unsatisfactory performance pending with the State Board of Accountancy or other professional organizations. In addition, we are members of the national AICPA Audit Quality Center. We strongly believe that part of our success is credited to our professionals’ participation in various industry-leading organizations. Such affiliations are critical to addressing emerging accounting and auditing issues within the industry environment. City of Newport Beach 2 | PUNGROUP.CPA You’ll Work with a Team that Embraces Innovation and Continuous Improvement. Our Firm is committed to continuous improvement as it relates to service delivery. We embrace innovation and identify areas of technological enhancements in our audit and project management approaches. For example: Secure Data File Transfer System. In order to improve audit efficiency, workflow management software plays an essential role between your organization and our engagement team. We employ a secure data file transfer system called Suralink. Suralink’s dynamic request list is integrated with our secure file hosting system for seamless document- request coordination, including the upload of large-size files. It means all our requests are in one place, updated in real-time, and accessible by everyone working on the engagement. Not only makes the operation more cost-efficient, but it also enables you and your team to spend your time getting the job done, not reconciling a messy list of outstanding items. In addition, Suralink’s dashboard allows you to visualize the process of document-request fulfillment. AI Auditor. The Pun Group leverages the technology and research tools required to provide excellent services to its clients. With the usage of Artificial Intelligence (AI) technology, the Firm is capable of issuing all reports requested faster than other audit firms without exposing the City to unnecessary risks. Remote and Hybrid Auditing Capability. At our firm, we have fully embraced a hybrid approach to auditing, combining the flexibility of remote work with the benefits of on-site engagement. While we are fully equipped with advanced technology to perform audits remotely when needed, our preferred method is a hybrid model — balancing remote efficiency with in-person collaboration to deliver the highest quality service to our clients. We continue to offer on-site auditing as needed to best meet client needs. Knowledge is Shared with You. As part of our pledge to keep you updated on new technical accounting and financial issues, we implemented our 2025 Virtual Government Accounting Conference, which qualifies for up to 15 hours of CPE – nearly double what other firms offer. These online sessions are free of charge and part of the service package provided to you. More details and dates can be found on the “Client Training Webinars” topic under this proposal. The Pun Group is proud of its inclusive values and is an avid promoter of equality and diversity. In addition, the Firm is an equal-opportunity employer and complies with all federal and state hiring requirements. We’re proud of supporting affirmative-action philosophies and work hard to provide opportunities for self-enhancement to members of disadvantaged groups. This proposal is a firm and irrevocable offer valid for ninety (90) days following the closing date for the receipt of all proposals. Finally, we would like to emphasize one additional point: We want to keep your trust and your business! We are confident that the energetic and experienced team we have assembled is the right one for the City. Our commitment to serving the City of Newport Beach cannot be adequately conveyed in a letter, and I look forward to continuing the discussion with you. I’m assigned as your primary contact for contract negotiations. I’m also authorized to legally bind the Firm. Should you have any questions or wish to discuss this proposal, please do not hesitate to contact me at (949) 777-8809 or by email at sophia.kuo@pungroup.cpa. Sincerely, Sophia Kuo, CPA, M.B.A. | Partner | The Pun Group LLP 200 East Sandpointe Avenue, Suite 600, Santa Ana, CA 92707 City of Newport Beach 3 | PUNGROUP.CPA Workplan Type and Extent of Analytical Procedures to be Used in the Engagement Our engagement will utilize trend analysis, ratio comparisons, and benchmarking during all three audit phases: 1. Risk Assessment Procedures o Identify areas of potential exposure or control weakness o Compare current practices to prior performance or industry norms 2. Substantive Analytical Procedures o Analyze trends in grant drawdowns, reserve funding, and cost recovery over time o Compare insurance claims activity to historical averages and liability coverage policies 3. Final Analytical Procedures o Review overall audit findings to validate completeness and consistency with known operations Approach to be Taken to Gain and Document an Understanding of the Internal Control Structure Audit risk assessment is established by an internal control review, combined with the engagement team’s understanding of the City’s operations and accounting software. Using the Committee of Sponsoring Organizations (COSO) Framework, staff members will evaluate the City’s processes and identify any control deficiencies. These diagnostic review procedures allow the engagement team to assess the City’s systems and controls and to provide constructive feedback to management. During our initial planning phase of the audit, our engagement team, including the engagement Partner and Manager, will obtain an understanding of the entity and its environment. It is an essential aspect of performing an audit, the Statement of Standards for Consulting Services issued by the AICPA. That understanding establishes a frame of reference within which the auditor plans the procedures and exercises professional judgment about assessing the City’s internal controls throughout the examination. During the interim phase of the audit, our engagement team will perform a walkthrough of the focused areas identified by the City, including grant management, long-term funding strategies and cost recover, and risk management. Our auditors will obtain the written policies and procedures, inquire with accounting personnel, and document the process in either a flowchart or narrative summary format. After gaining an understanding of the accounting and internal control systems, our auditor will make recommendations for improvement opportunities and/or increased efficiencies. Laws and Regulations Considered Our internal audit approach is firmly grounded in the most current regulations and professional guidance applicable to municipal entities. Throughout this engagement, our work will adhere to key regulatory and best practice frameworks including relevant provisions of the California Government Code related to insurance, risk reserves, and fiscal oversight, and accepted industry practices in areas such as cost recovery methodology and long-term capital planning. This regulatory foundation ensures that all audit procedures are not only effective but also fully aligned with expectations for public sector governance and transparency. Approach to Compliance Testing Compliance testing will be executed using a risk-based framework, tailored to each of the three core audit areas. In the area of grant compliance, we will examine drawdown processes, documentation adequacy, and adherence to grantor requirements. For cost recovery, our work will focus on evaluating the reliability and consistency of cost allocation methodologies and the documentation that supports those calculations. With respect to risk management, we will review reserve sufficiency, insurance coverage alignment, and claims handling procedures. Our sampling methodology will incorporate random, judgmental, and stratified techniques, ensuring that testing is both representative and responsive to the areas of highest risk. City of Newport Beach 4 | PUNGROUP.CPA City Staff Participation Collaboration with the City’s staff is essential to a successful internal audit. At the onset of the engagement, we will provide a clear and comprehensive Prepared by Client (PBC) list to outline the materials and access needed for our review. To ensure transparency and efficiency, we will hold regular check-ins—typically weekly or bi-weekly—with designated City personnel to communicate progress, clarify requests, and address any emerging issues. Our audit team is committed to minimizing operational disruption by leveraging the City’s existing systems, schedules, and reporting tools. Once materials have been agreed upon, no additional documentation will be requested unless warranted by new findings during the course of testing. Objectives of Our Services Our internal audit services are designed to help the City of Newport Beach strengthen its operational oversight and governance. The primary objective of this engagement is to assess internal controls and compliance practices in the areas of grant administration, long-term financial planning, and risk management. Beyond identifying areas of potential risk or inefficiency, we aim to provide actionable and cost-effective recommendations that support improved accountability, policy refinement, and operational clarity. The Pun Group is committed to delivering final internal audit reports by the City’s requested deadline of October 10, 2025, and to partnering with City leadership in a way that ensures meaningful outcomes and long-term value. Anticipated Challenges and Areas of Focus While we do not expect any significant barriers during this engagement, our audit approach remains proactive and responsive to potential areas of concern. In particular, we will monitor grant administration processes for signs of decentralization or gaps in subrecipient oversight, which are common risks in complex funding environments. We will also assess the adequacy of the City's risk reserves and insurance coverage, identifying any gaps in policy or funding strategies. Our review of cost recovery practices will focus on identifying outdated or unsupported allocation models that may impact fiscal accuracy. Additionally, we will evaluate claims processing workflows for trends or delays that could indicate underlying control weaknesses. Should any issues arise, we will provide timely communication and clear, practical resolution strategies. City of Newport Beach 5 | PUNGROUP.CPA Scope of Work The City of Newport Beach is requesting the Firm to perform Internal Audit Services in accordance with the City’s Year 2025 Internal Audit Work Plan. The scope includes targeted internal audits in the areas of Grant Compliance, Long-Term Funding Strategies and Cost Recovery, and Risk Management. All work will be performed in accordance with applicable professional standards for internal auditing and consulting engagements, including but not limited to:  Statement on Standards for Consulting Services issued by the American Institute of Certified Public Accountants (AICPA)  Standards for Internal Control in the Federal Government (Green Book), as relevant  Standards issued by the Institute of Internal Auditors (IIA), as applicable to best practices for risk-based internal audits in the public sector These standards will guide the planning, execution, and reporting of audit results to ensure the City receives high- quality, objective, and actionable recommendations. The Firm will perform the following services: Topic 1: Grant management Objective: To assess the adequacy, efficiency, and compliance of the City's grant management process, including oversight of subrecipients, reimbursement practices, and financial reporting.  Task No. 1 – Determine whether policies and procedures are established as a matter of practice or in writing governing the following: o Grant management process across departments. o Grant compliance monitoring. o Subrecipient monitoring and oversight.  Task No. 2 – Evaluate whether the City's structure and systems support effective grant management and compliance by reviewing the following: o Review the organizational chart to identify roles and responsibilities related to grants across departments. o Interview department heads or grant coordinators to determine whether practices align with documented procedures. o Review the chart of accounts and fund structure to confirm that grant revenues and expenditures are tracked separately and accurately. o Determine whether grant-related transactions are properly classified.  Task No. 3 – Review the grant reimbursement and expenditure tracking process to assess the efficiency and timeliness of reimbursement requests and the integrity of expenditure tracking: o Obtain a list of all active grants from relevant departments and reconcile to the City’s main grant tracking spreadsheet and/or general ledger. o Sample reimbursement requests and review the timing of submission to the grantor versus the grant agreement terms. o Obtain and review grant expenditure tracking sheets; perform walkthroughs to understand how they are updated and maintained. o Walkthrough the invoice review and approval process to assess controls against unauthorized or non- allowable expenditures.  Task No. 4 – Determine whether subrecipient morning process in place by following: o Determine whether subrecipient agreements contain required elements (scope, deliverables, reporting, audit rights). o Sample subrecipients and review documentation to assess whether monitoring practices (e.g., site visits, reporting requirements, risk assessments) are followed per policy and subrecipient agreements. o Review records for evidence of subrecipient performance and financial monitoring. City of Newport Beach 6 | PUNGROUP.CPA  Task No. 5 - Determine whether periodic financial reports (or budget-to-actual reviews) are prepared to guide decision-making and to address performance issues such as declines in revenues, expenditures in excess of appropriations, etc.  Task No. 6 – Provide recommendations for improvement opportunities and/or increased efficiencies. Topic 2: Long-Term Funding Strategies and Cost Recovery Objective: To assess the City's policies, practices, and planning processes related to long-term financial sustainability and cost recovery, including evaluation of fee structures, funding strategies, and indirect cost recovery.  Task No. 1 – Determine whether policies and procedures are established as a matter of practice or in writing governing related to the long-term funding strategies the following: o Obtain and review long-term financial plans, multi-year budgets, or funding strategies (e.g., 3–5 year forecasts). o Evaluate alignment of long-term plans with the City’s priorities, capital improvement plans/needs, and strategic or service delivery strategies. o Verify inclusion of various funding sources, such as projected grant funding, general fund contributions/subsidies, bond proceeds, and alternative funding sources. o Assess assumptions related to revenue growth, expenditure trends, and inflation rates for reasonableness.  Task No. 2 – Determine whether policies and procedures are established as a matter of practice or in writing governing related to the cost recovery the following: o Obtain and review cost recovery policies, ordinances, or administrative guidelines. o Obtain and review the City’s cost allocation plan (CAP) or indirect cost rate proposal. o Review the methodologies used for setting user fees, service charges, or permit costs. o Identify services or programs that are expected to recover full or partial costs (e.g., through user fees, grants, or reimbursements). o Compare current fee schedules to actual cost data to assess the adequacy of recovery rates. o Verify whether indirect costs are appropriately allocated and recovered (e.g., through a cost allocation plan or indirect cost rate).  Task No. 3 - Review whether the long-term funding strategies and cost recovery address the City’s needs: o Review long-term funding strategies and reserve policies with focus on the following areas:  Vehicle and equipment replacement  Facility maintenance and upgrades  Pension or OPEB obligations  Insurance or risk reserves  Long-term debt service o Analyze historical spending trends, current budget allocations, and reserve balances. o Assess whether funding levels appear sufficient to support the City's stated needs and replacement cycles.  Task No. 4 – Provide recommendations for improvement opportunities and/or increased efficiencies. City of Newport Beach 7 | PUNGROUP.CPA Topic 3: Risk Management Objective: To evaluate the City's risk management practices, including policy governance, insurance coverage adequacy, claims management, and reserve funding for self-insured risks.  Task No. 1 – Determine whether policies and procedures are established as a matter of practice or in writing governing related to the risk management the following: o Obtain and review risk management related policies and procedures as a matter of practice or in writing. o Identify whether policies cover key risk areas (e.g., property, liability, cybersecurity, workers’ compensation, insurance procurement). o Interview key personnel (e.g., Risk Manager, Finance Director, Department Heads) to understand roles and responsibilities, confirm whether practices align with written policies, assess how policies are communicated and updated, and Identify any informal practices in place.  Task No. 2 – Evaluate the adequacy, timeliness, and transparency of the City's insurance renewal process, and determine whether coverage is appropriate for its risk profile: o Obtain and review current insurance policies for all major risk categories (e.g., property, liability, auto, cyber, workers’ comp). o Review the insurance renewal process for the past 2 years, including broker communications, bid evaluations, selection justifications, and decisions. o Verify that decisions are based on current City risk exposures and recent claims experience. o Ensure that policies are renewed without lapses in coverage and align with the risk profile and activities of the City.  Task No. 3 – Evaluate claims management and use of data for risk mitigation: o Obtain historical claim and loss-run data (minimum 2-3 years) categorized by risk type (e.g., property, liability, auto, workers' comp). o Identify trends in claim frequency and severity, and determine whether data is used to inform insurance purchasing and risk mitigation efforts. o Review how claims and incident data are processed, tracked, monitored, and reported, used to inform insurance coverage decisions, and used to support training, process changes, or risk mitigation efforts.  Task No. 4 – Review risk-related reserves and self-insurance governance by following: o Determine whether the organization maintains formal reserve policies for risk-related exposures. o Review reserve calculations and assumptions, including reviewing actuarial reports or internal methodologies. o Compare actual reserve balances to required or recommended thresholds. o Evaluate whether the reserves are reviewed periodically based on new claim trends or changes in exposure. o Review whether reserves are included in long-term financial planning.  Task No. 5 – Provide recommendations for improvement opportunities and/or increased efficiencies. City of Newport Beach 8 | PUNGROUP.CPA Provided by Client (PBC) Requests Our team will provide detailed document request lists (PBC lists) aligned with each of the City’s internal audit focus areas—grant compliance, funding strategies, and risk management. These lists will be coordinated in advance of fieldwork and refined during the planning phase in collaboration with City staff. We will meet with key personnel to establish audit schedules and review any previous internal audit findings. Once agreed upon, no additional documentation will be requested unless new audit issues arise during testing. Meetings and Presentations The engagement team will be available for all necessary meetings with City staff to complete the internal audit work effectively. This includes an initial kickoff meeting to review objectives and timing, status updates throughout the process, and presentations of draft findings. We will also attend public or committee meetings, if requested, to present our final reports and discuss our recommendations related to internal controls, compliance risks, and operational improvements. Proposed Adjustments and Recommendations Should we identify any proposed adjustments or process enhancements during our procedures, they will be clearly communicated and discussed with the designated City staff. Adjustments and recommendations will be presented in a format that facilitates implementation and aligns with the City’s systems and internal processes. Additional Services (Supplemental Procedures) If agreed-upon procedures or supplemental internal audit services are deemed necessary—such as deeper dives into subrecipient monitoring, reserve adequacy, or cost allocation—these will be provided at pre-approved rates under a separate written agreement. Scope and cost will be jointly reviewed and approved before work commences. Ongoing Advisory Support Throughout the duration of the engagement, we are available to provide informal consultation and advisory support on internal control design, grant administration practices, and risk mitigation strategies. These services do not include formal deliverables or extensive research unless separately authorized. GASB and Technical Guidance Although the focus of this engagement is internal audit, we understand the importance of aligning with applicable accounting standards that influence grant tracking, reserve funding, and long-term planning. Our team, including Mr. Jack Georger, will be available to provide guidance on relevant GASB pronouncements and assist the City in understanding how emerging standards may impact its internal financial processes. Reporting of Irregularities or Noncompliance Any indications of irregularities, potential noncompliance, or control weaknesses identified during our procedures will be promptly communicated in writing to the designated City officials. We will also meet all communication requirements under applicable internal audit and consulting standards, including any required disclosures related to audit scope, findings, and limitations. Working Paper Retention The Firm will retain all internal audit working papers and related documentation for a minimum of seven (7) years at no additional cost. City of Newport Beach 9 | PUNGROUP.CPA Enhancing Auditing Quality with Artificial Intelligence There are plenty of challenges with established audit practices. Outdated CAAT tools, sampling practices, and the explosive growth of big data are some of the examples, and they all present significant barriers to detecting anomalies, intentional or otherwise, in financial data. The Pun Group deploys a comprehensive, risk-based approach, complemented by using MindBridge™'s Artificial Intelligence Platform, to conduct our audit. Through this tool, we can seamlessly analyze thousands and thousands of financial and operating data and records, identifying and cataloging significant risks in mere seconds. The AI Auditor platform works by our side, augmenting our capacity to detect errors or fraud in the collected data not only by analyzing the entire set but by cross-correlating dozens of testing criteria against pre-established data points and presenting us with a view of every user, vendor, and transaction, by risk. All are happening within moments of ingesting analyzed data, which is something standard audit procedures simply cannot accomplish. We utilize these tools to allow our audit team to increase efficiency in the audit process, enhance the existing quality of our work, provide directed testing in areas subject to the highest risk, and quickly assimilate large amounts of data your staff would typically be asked to gather. The tools also help us to meet our professional requirements regarding fraud and internal control, allowing us to:  Run Benford’s analysis to check for fraud in transactions.  Increase the value of audit findings with complete, 100% data coverage.  Isolate risk and control issues before they impact your operations.  Improve productivity by automating procedures and eliminating manual tasks.  Conduct more direct, efficient, and effective audits to improve overall service quality. Our engagement team easily imports data in a secure environment from the City’s financial software and extracts useful data for testing and analytical procedures particular to the following areas:  Successful Fraud Test  Kickback or Conflict-of-Interest Schemes  Questionable Invoices  Dormant Account Schemes  Phantom Vendor Schemes  Money Laundering Schemes City of Newport Beach 10 | PUNGROUP.CPA Cost Certification We are committed to the performance of a high-quality audit at the most reasonable fee level possible, both initially and throughout the engagement. Also, our partners will provide advice and consultation as needed at no additional cost to the City of Newport Beach. Name of Firm: The Pun Group LLP – Certified Public Accountants and Business Advisors Contact Name: Sophia Kuo, CPA, M.B.A. Contact Email Address: sophia.kuo@pungroup.cpa Authorization to Represent the Firm I, the undersigned, certify I am duly authorized to represent The Pun Group LLP and am empowered to submit this bid. In addition, I certify I am authorized to contract with the City of Newport Beach on behalf of the Firm. July 14, 2025 _________________________________________ _______________________________ Sophia Kuo, CPA, M.B.A. | Partner Date Total Price In accordance with the City’s Request for Proposals, we have provided a total all-inclusive maximum price to complete all work outlined in the Scope of Work. This amount represents a fixed fee for an Informal Request for Proposals for Internal Audit Services for the Year 2025, are as follows: (1) The services associated with the topic areas listed above are described in detail in the Scope of Work, Audit Approach, and Methodology sections of our Workplan, beginning on page 5 of this proposal. (2) Any supplemental reports, audits, or agreed-upon procedures not covered by this proposal may be added to a written agreement prior to commencing audit work. The Firm and the City will discuss and approve the scope and associated costs of these tasks. Any additional work will be performed at the quoted hourly rates shown on the following page. Engagement Partner Concurring Partner Director Manager Total Hours Topic 1 : Grant Management (1)30 15 35 95 175 Topic 2: Long-Term Funding Strategies and Cost Recovery (1)30 15 30 90 165 Topic 3: Risk Management (1)25 15 30 90 160 All-Inclusive Maximum PriceService Category Hours by Role 129,000$ 45,250$ 42,750 41,000 (2) Total Engagement Cost City of Newport Beach 11 | PUNGROUP.CPA Rates for Additional Professional Services Below are the Firm’s hourly billing rates, delineated by staffing levels: Out of Pocket Expenses are Included in the Total all-Inclusive Maximum Price and Reimbursement Rates The Firm’s policy is to maintain flexible billing rates to meet the needs of clients and help them control costs. In the interest of starting our long-term relationship, we will absorb expenses such as travel and printing costs. Additionally, our Partners will be available to provide advice and consultation as necessary to the City of Newport Beach. The Firm will also absorb these costs. Manner of Payment The Firm will invoice the City of Newport Beach in three stages based on the percentage of work completed, as outlined below. Engagement Team members will maintain detailed timesheets documenting the date, hours worked, and specific tasks performed. Billing will be based on the rates outlined in the Total All-Inclusive Maximum Price section. Interim billings will not cover a period of less than one calendar month. The payment schedule is as follows: Partner(s) 350$ Concurrent Partner 350$ Director 300$ Manager(s) 200$ Senior Accountant(s) 175$ Clerical 150$ Hourly Billing Rates Work Performed % of Proposal Amount Planning 25% Fieldwork 50% Acceptance of Reports 25% City of Newport Beach 12 | PUNGROUP.CPA Experience with Similar Engagements Internal Audit Experience The Pun Group LLP has a well-established internal audit practice that serves as a cornerstone of our advisory services. We have a proven track record of delivering risk-based internal audits and operational assessments for government entities, not-for-profit organizations, and select private-sector clients. Our team of professionals—many of whom bring backgrounds in government service, public accounting, and private industry—are solely dedicated to internal audit and advisory engagements. Our leadership team averages over 25 years of professional experience, ensuring high- level oversight, technical accuracy, and timely delivery. Our internal audit methodology emphasizes strong investigative procedures, rigorous supervision, detailed fieldwork, and clear communication. We maintain strict adherence to industry standards, including the AICPA’s Statement on Standards for Consulting Services, and apply a structured approach to reporting, document management, and risk evaluation. We have extensive experience conducting internal audits and advisory reviews across California municipalities, with relevant expertise in the City of Newport Beach’s requested areas: grant compliance, long-term funding strategies and cost recovery, and risk management. Relevant Engagements by Topic Grant Compliance Our team has performed grant compliance reviews for clients, including the Cities of San Jose, Stockton and Tracy. These engagements have included federal program audits, Single Audit reviews, subrecipient monitoring, and GANN Limit testing. Our work involved assessing the timeliness and accuracy of drawdowns, evaluating the adequacy of supporting documentation, and verifying compliance with Uniform Guidance—directly aligning with the City’s identified risks related to decentralized grant processes and regulatory non-compliance. Long-Term Funding Strategies and Cost Recovery We have performed funding strategy and cost recovery reviews for jurisdictions including the Cities of Palm Springs, Gardena, and Montebello. These engagements focused on cost allocation models, asset replacement planning, reserve adequacy, and long-term liabilities. Our assessments included validation of data inputs, review of funding policies, and evaluation of long-range fiscal sustainability. Risk Management Our work with the City of Desert Hot Springs and City of Monterey involved evaluating risk management protocols, insurance coverage levels, reserve methodology, and claim processing procedures. We provided actionable recommendations based on historical claim trends and compliance with regulatory and internal policies—experience that directly supports the City’s objectives under this topic. . City of Newport Beach 13 | PUNGROUP.CPA References The following are examples of some of the engagements with similar requirements as the City of Newport Beach’s proposal. Please feel free to contact these agencies to learn more about their experiences working with us. Name of Public Agency City of Cupertino Contact Info Ms. Kristina Alfaro, Director of Administrative Services KristinaA@cupertino.org | (408) 777-3356 Address 10300 Torre Ave, Cupertino, CA 95014 Total Hours 1120 hours Contract Price $148,000/year Date of Services 2023 – Present Scope of Work/ Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Financial Report, GFOA Award, Single Audit, GANN Limit, Investment Policy. Name of Public Agency City of Tracy Contact Info Ms. Sara Cowell, Director of Finance sara.cowell@cityoftracy.org | (209) 831-6862 Address 333 Civic Center Plaza, Tracy, CA 95376 Total Hours 960 hours Contract Price $96,500/year Date of Services 2021 – Present Scope of Work/ Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Financial Report, GFOA Award, Single Audit, GANN Limit, National Transit Database (NTD), State Controller’s Reports (City, PFA, Operating Partnership JPA, City’s Transit Operator’s General Services, and Specialized Services). Name of Public Agency City of Desert Hot Springs Contact Info Mr. Geoffrey Buchheim, Finance Director gbuchheim@cityofdhs.org | (760) 329-6411 Address 11999 Palm Drive, Desert Hot Springs, CA 92240 Total Hours 700 hours Contract Price $75,000/year Date of Services 2013 – Present Scope of Work/ Reports Prepared Financial Audit and Compliance Services: Annual Comprehensive Financial Report Audit, GFOA Award, Single Audit, GANN Limit, Desert Hot Springs Successor Agency, Desert Hot Springs Financing Authority, Desert Hot Springs Health and Wellness Foundation, New Market Tax Credit Audit (Desert Hot Springs Health and Wellness Foundation), Annual State Controller’s Reports, AUP/Transient Occupancy Tax, Utility User Tax, DHS Housing Audits. Name of Public Agency City of San Jose Contact Info Ms. Stephanie Gutowski Stephanie.Gutowski@sanjoseca.gov | (408) 975-4420 Address 200 E. Santa Clara St., San Jose, CA 95113 Contract Price $551,500/year Date of Services 2022 – Present Scope of Work/ Reports Prepared Fiscal monitoring of the City’s entitlement grants from HUD, including CDBG, HOME, HOPWA, and ESG programs Name of Public Agency City of Corona Contact Info Ms. Christine Thompson, CPA christine.thompson@coronaca.gov | (951) 736-2327 Address 400 South Vicentia Avenue, Corona, CA 92882 Contract Price $74,000/year Date of Services 2021 – Present Scope of Work/ Reports Prepared Housing compliance services, including preparation and submission of reports to ensure adherence to affordable housing program regulations. City of Newport Beach 14 | PUNGROUP.CPA Our Firm has audited hundreds of millions of dollars in federal expenditures, making our engagement team uniquely experienced in single audits. We are familiar with grantors, such as: Following are a few examples of the types of federal programs our engagement team has experience auditing: Corporation for National and Community Services Department of Agriculture Department of Education Department of Health and Human Services Department of Housing and Urban Development Department of Transportation Environmental Protection Agency Department of Commerce Department of Labor Department of Homeland Security Department of Justice Department of Treasury Executive Office of the President City of Newport Beach 15 | PUNGROUP.CPA List of Current Municipal Clients The Pun Group LLP has performed numerous audits of organizations subject to financial and compliance audits. These audits were performed under auditing standards generally accepted in the United States, Government Auditing Standards, Uniform Guidance (formerly known as OMB Circular A-133), and its Compliance Supplement (when applicable), Office of the State Controller’s Minimum Audit Requirements and Reporting Guidelines. A representative list of our current clients is as follows: Municipalities Dates Financial Audit Single Audit GFOA Certificate Total Hours City of Adelanto 2021 – Present Yes Yes Yes 700 City of Anderson 2023 – Present Yes Yes N/A 530 City of Arvin 2013 – Present Yes Yes N/A 400 City of Baldwin Park 2022 – Present Yes Yes Yes 700 City of Bell 2018 – Present Yes Yes Yes 520 City of Bradbury 2012 – Present Yes N/A N/A 150 City of Calexico 2007 – Present Yes Yes N/A 750 City of Clovis 2006 – Present Yes Yes Yes 500 City of Coachella 2017 – Present Yes Yes Yes 410 City of Commerce 2023 – Present Yes Yes Yes 570 City of Cottonwood, AZ 2007 – Present Yes Yes Yes 400 City of Corona 2021 – Present Yes Yes Yes 640 City of Cudahy 2023 – Present Yes Yes Yes 500 City of Cupertino 2023 – Present Yes Yes Yes 1120 Town of Corte Madera 2022 – Present Yes Yes N/A 400 Town of Danville 1999 – Present Yes Yes Yes 400 City of Douglas, AZ 2020 – Present Yes Yes Yes 300 City of Desert Hot Springs 2013 – Present Yes N/A N/A 700 City of Encinitas 2024 – Present Yes Yes Yes 600 City of Fairfield 2025 – Present Yes Yes Yes 928 City of Fresno 2022 – Present Yes Yes Yes 1,450 City of Gilroy 2020 – Present Yes Yes Yes 640 City of Hercules 2020 – Present Yes Yes Yes 450 City of Indio 2024– Present Yes Yes Yes 708 City of Lake Elsinore 2023 – Present Yes Yes Yes 460 City of Lakewood 2013 – Present Yes Yes Yes 380 City of Madera 2019 – Present Yes Yes Yes 470 City of Menlo Park 2023 – Present Yes Yes Yes 550 City of Newport Beach 16 | PUNGROUP.CPA Municipalities Dates Financial Audit Single Audit GFOA Certificate Total Hours City of Montebello 2022 – Present Yes Yes Yes 600 County of Monterey 2023 – Present Part of the audit & consulting services pool TBD City of Monterey Park 2023 – Present Yes Yes Yes 612 City of National City 2013 – Present Yes Yes Yes 600 City of Newport Beach 2024 – Present Part of the internal audit consulting services TBD City of Pacific Grove 2023 – Present Yes Yes Yes 490 City of Paramount 2023 – Present Yes Yes Yes 460 City of Patterson 2017 – Present Yes Yes Yes 450 City of Placerville 2008 – Present Yes Yes N/A 400 City of Pleasanton 2024 – Present Yes Yes Yes 700 City of Pinole 2023 – Present Yes Yes Yes 400 City of Redlands 2022 – Present Yes Yes Yes 650 City of Redwood City 2025 – Present Yes Yes Yes 1,340 City of Rialto 2025 – Present Yes Yes Yes 685 City of Ridgecrest 2009 – Present Yes Yes Yes 300 City of Rohnert Park 2020 – Present Yes Yes Yes 700 City of Salinas 2022 – Present Yes Yes Yes 800 City of San Mateo 2021 – Present Yes Yes Yes 900 City of Santa Clarita 2022 – Present Yes Yes Yes 1,200 City of Santa Cruz 2023 – Present Yes Yes Yes 800 City of Seal Beach 2017 – Present Yes Yes Yes 410 City of Stockton 2012 – Present Yes Yes N/A 3,000 City of Tracy 2021 – Present Yes Yes Yes 960 Town of Tiburon 2022 – Present Yes Yes Yes 452 City of Vernon 2023 – Present Yes Yes Yes 1000 City of Ventura 2024 – Present Yes Yes Yes 960 City of Visalia 2021 – Present Yes Yes Yes 650 Imperial County Transportation Commission 2020 – Present Yes Yes Yes 600 San Diego Metropolitan Transit System 2005 – Present Yes Yes Yes 1,850 Carmel Area Wastewater District 2022 – Present Yes Yes N/A 150 CAWD/PBSCD Wastewater Reclamation Project 2022 – Present Yes N/A N/A 150 Emerald Bay Service District 2024 – Present Yes Yes N/A 225 City of Newport Beach 17 | PUNGROUP.CPA Municipalities Dates Financial Audit Single Audit GFOA Certificate Total Hours Helix Water District 2024 – Present Yes Yes Yes 320 Los Angeles County Law Library 2020 – Present Yes N/A N/A 180 NALEO Educational Fund and NALEO 2020 – Present Yes N/A N/A 300 Olivenhain Municipal Water District 2019 – Present Yes Yes Yes 200 Padre Dam Municipal Water District 2020 – Present Yes Yes Yes 250 San Bernardino County Preschool Services Department 2020 – Present Yes Yes N/A 150 San Bernardino County Fire Protection District 2016 – Present Yes N/A N/A 200 San Mateo County Mosquito & Vector Control District 2024 – Present Yes N/A N/A 220 Sweetwater Authority 2022 – Present Yes Yes Yes 270 South Bay Cities Council of Governments 2020 – Present Yes N/A N/A 100 South Orange County Water Authority 2017 – Present Yes Yes Yes 240 South Bay Regional Public Communications Authority 2015 – Present Yes N/A N/A 100 West Valley Water District 2018 – Present Yes N/A N/A 430 City of Newport Beach 18 | PUNGROUP.CPA Partner, Supervisory, and Staff Qualifications and Experience The engagement team was carefully selected to provide the City with all the services needed to successfully complete the audit. Your assigned Engagement and Technical Partners will be personally involved in the project, leading a team that has significant experience in governmental auditing. You can be confident that our broad experience and technical capabilities will allow us to provide technical support, interpret findings, and offer practical solutions to any issues that may arise. About Your Engagement Team The professionals assigned to this engagement are highly qualified to deliver a thorough and effective internal audit aligned with the City of Newport Beach’s objectives. Our team brings significant experience in evaluating risk, internal controls, and compliance practices across public sector entities, with deep knowledge of the AICPA’s Statement on Standards for Consulting Services. Many of our professionals have served in key roles within and outside of government, providing insight into operational efficiency, regulatory compliance, and long-term financial planning. As full-time government specialists, we understand the complexity of public-sector environments and how intergovernmental relationships and resource constraints impact performance. Our approach goes beyond technical compliance—we offer actionable insights and tailored recommendations that align with the City’s goals for enhanced accountability and effective governance. While numerous firms offer audit services, The Pun Group, LLP stands out for its high partner involvement, low staff turnover, and strong client relationships. We recognize the importance of trust and continuity and are committed to transparent communication and collaborative execution throughout the engagement. To maintain objectivity and independence throughout the internal audit process, we have the internal capacity to rotate engagement leadership as needed. Any proposed changes to key engagement personnel will be communicated in writing and will require prior written approval from the City. All replacements will meet or exceed the qualifications of the originally assigned team members. Sophia Kuo, CPA, M.B.A. │ Engagement/Lead Partner Sophia Kuo, CPA, MAcc, MBA, serves as an Assurance Services Partner and will act as the Engagement Lead Partner for the City of Newport Beach’s internal audit engagement. With extensive experience auditing cities, counties, special districts, and not-for-profit entities, Ms. Kuo brings a deep understanding of public sector operations, risk environments, and compliance frameworks. She holds an Advanced Single Audit Certification from the AICPA and has led numerous engagements focused on grant compliance, long-term funding strategies, and internal control assessments. In alignment with the City’s scope of work, Ms. Kuo’s expertise will ensure the audit team thoroughly evaluates the effectiveness of policies and procedures related to grants administration, cost recovery planning, and risk management practices. She will oversee all aspects of the engagement, including the development of the audit plan, supervision of day- to-day fieldwork, review of findings and recommendations, and final approval of deliverables. Ms. Kuo will also serve as the primary liaison with the City, ensuring open communication and timely delivery of reports that support transparency, accountability, and operational improvement. City of Newport Beach 19 | PUNGROUP.CPA John (“Jack”) F. Georger, CPA, CIA, CGMA | Technical/Concurring Partner With over forty years of experience, Mr. Jack Georger brings deep expertise in public sector auditing and internal control evaluation, making him exceptionally qualified to support the City of Newport Beach’s internal audit engagement. His background includes extensive work with “Big 4” and national firms, where he served a wide range of governmental entities—including cities, counties, and transportation agencies—delivering financial audits, compliance reviews, and consulting services across complex risk environments. Mr. Georger has significant experience assessing grant compliance, long-term funding mechanisms, and risk management processes, making him well suited to contribute technical insight in each of the City’s audit focus areas. He is a recognized authority in the field, instructing over 300 hours annually in accounting and auditing and serving as a key author and technical reviewer for industry-leading publications such as the CCH Knowledge-Based Audits™ of State and Local Governments, the GAAP Guide (FASB), and the Governmental GAAP Guide (GASB). As Technical/Concurring Partner on this engagement, Mr. Georger will provide an independent, high-level review of audit reports and risk areas, ensuring the integrity and quality of all deliverables. His role will include resolving complex accounting, auditing, and reporting matters, particularly those related to internal controls, cost recovery, compliance with grant requirements, and adequacy of reserve planning. Mr. Georger holds CPA, CIA, and CGMA designations and brings the level of expertise and professional scrutiny this engagement requires. Ross Gotthoffer, CPA | Director/Quality Control Reviewer Ross Gotthoffer, CPA will serve as Engagement Director and Quality Reviewer for the City of Newport Beach’s internal audit. With 20+ years of experience in governmental audits across California and Florida, he specializes in financial and compliance audits, internal controls, and risk management. In his dual role, Mr. Gotthoffer will provide strategic oversight and technical guidance throughout the engagement. As Engagement Director, he will lead fieldwork execution aligned with the City’s internal audit objectives, focusing on grant compliance, long-term financial planning, and risk management. As Quality Reviewer, he will ensure all audit reports and deliverables meet professional standards for clarity, accuracy, and compliance. He is a licensed CPA in Florida and California. Masood Yousufzai, CPA | Engagement Manager Masood Yousufzai holds a B.A. in Political Science and an M.P.A. Degree in Public Administration. Mr. Yousufzai is an Advisory Services Manager with more than six years of experience in providing accounting and audit services, internal control and risk evaluations, and business consulting to privately held and public companies with clients in a variety of industries, including large not-for-profit entities, insurance carriers, manufacturing and distribution, and government entities. Mr. Yousufzai worked as an Internal Auditor and Special Projects Manager prior to joining the Firm for the Ontario International Airport Authority and as a Revenue Analyst for the City of San Clemente. Masood has been responsible for managing, planning, and performing financial and regulatory external and internal audits as well as developing and conducting internal control procedures and risk assessment evaluations. He has evaluated key processes within companies to determine areas of operating inefficiencies or potential internal control weaknesses, developing findings into a recommended course of action for resolution. Mr. Yousufzai will direct and supervise the project team in its daily activities and tasks in order to deliver all services requested. City of Newport Beach 20 | PUNGROUP.CPA Continuing Education and Professional Development Because of our commitment to providing the highest quality of services to the City, we provide our professionals with technical training to ensure our people stay current on topics within the industry sectors and better equip themselves to serve our clients. All professionals are required to obtain continuing education that exceeds the requirements of the American Institute of Certified Public Accountants (AICPA) and, where applicable, Government Auditing Standards. Our professionals participate in continuing education programs through the following means:  Governmental Accounting and Auditing Conference sponsored by AICPA.  Webinar sponsored by AICPA Government Audit Quality Center.  Annual Conference sponsored by California Society Municipal Finance Officers.  Governmental Accounting and Auditing Conference sponsored by CalCPA.  The Pun Group in-house training on government-specific topics, including but not limited to GASB updates, Government Auditing Standards Revision, Fraud in State and Local Governments, COSO Internal Control- Integrated Framework, Audit of State and Local Governments, Single Audit, and Mindbridge AI Auditors™. In 2024, our government professionals received an average of 52 hours of continuing professional education, compared with the 40 hours of accounting industry requirement. By expanding our knowledge through these seminars/conferences, we can provide the right solutions to our clients. Staff Continuity The Pun Group LLP is committed to maintaining staff continuity throughout audit engagements, and we can assure you that the partners assigned to this audit will be involved throughout the entire contract term. While we cannot guarantee that our staff-level members will stay with the Firm, we encourage loyalty by paying competitive wages, offering opportunities for promotion, using state-of-the-art equipment, and providing excellent working conditions. Also, we offer benefits, including retirement plans, medical plans, profit-sharing programs, and continuing education. Quality-Control System Our Firm meticulously monitors the quality and contents of our reports. The Pun Group LLP is 100% committed to providing only the highest grade of work possible for our clients and for those who rely on our audits. The Firm strives to exceed professional industry standards because of the continuing respect for our clients and our emphasis on creating long-lasting relationships. The Pun Group LLP works exclusively with those who share the same moral integrity and values. Our quality-control system has been crafted with excellence in mind. It not only meets AICPA standards but also matches our own elevated standards, which include following various professional development activities. Engagement Team Resumes The City of Newport Beach deserves experienced professionals who work as a team. The Pun Group LLP will provide qualified professionals to perform the audit. No subcontractors and/or consultants will be utilized to perform the requested services. Resumes for key engagement team members are presented as follows: City of Newport Beach 21 | PUNGROUP.CPA EXPERIENCE Sophia Kuo is a Partner within The Pun Group, LLP’s Assurance division. In her ten years of accounting and auditing experience, Sophia has worked with governmental agencies, not-for- profit entities, and private for-profit entities. She possesses governmental expertise that ranges from GASB audit/reporting, Internal Controls/COSO Framework, Single Audit, Corporate Financial Reporting, Data Analysis, and Taxation. Ms. Kuo has performed audits and other attestation services for several governmental agencies throughout California. Her portfolio includes cities, counties, redevelopment agencies, public financing authorities, housing authorities, transportation agencies, and special districts. Also, she has helped them publish their Annual Comprehensive Financial Reports in compliance with GASB Statement No. 34. EDUCATION Fu Jen Catholic University B.A. Degree – International Trading and Finance, Emphasis in Finance Idaho State University Master of Accounting (MAcc) Master of Business Administration (M.B.A.) LEADERSHIP & AFFILIATIONS  Member, American Institute of Certified Public Accountants (AICPA)  Member, California Society of Certified Public Accountants (CalCPA) RELEVANT EXPERIENCE  City of Coachella  City of Culver City  City of Desert Hot Springs  City of Gardena  City of Laguna Niguel  City of Lakewood  City of Monterey  City of Monterey Park  City of Perris  City of Stockton  City of Visalia  City of Pomona  City of Hercules  City of Glendora CONTINUING PROFESSIONAL EDUCATION Various courses are offered by the Firm online through Thompson Reuters, AICPA, and CalCPA Education Foundation, including:  Governmental and Non-profit Annual Update  Government Auditing Standards  GASB Basic Financial Statements for State and Local Governments  Single Audits: Uniform Guidance (formerly OMB Circular A-133)  Financial Accounting Standards Board Annual Updates  Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. Sophia Kuo CPA, M.B.A. Engagement/ Lead Partner EMAIL sophia.kuo@pungroup.cpa WEBSITE www.pungroup.cpa Expertise: CITIES COUNTIES TRANSPORTATION AGENCIES ENTERPRISE OPERATIONS HIGHER EDUCATION NOT-FOR-PROFIT Licensed to Practice in: California Hawaii City of Newport Beach 22 | PUNGROUP.CPA EXPERIENCE Jack Georger is a Partner and Chief GASB Implementation Specialist within The Pun Group LLP’s Assurance division. By leveraging more than forty years of public accounting and auditing experience in the government, agribusiness, financial services, manufacturing, and nonprofit sectors, Mr. Georger brings in-depth knowledge and practical expertise to each engagement. Jack coordinates, plans, and manages financial audit activities, consulting activities, federal and state compliance audit activities, performance audits, and numerous quality control and internal control reviews for a broad mix of governmental agencies and programs throughout the United States. Mr. Georger leads our Peer Review department providing peer review services to other firms under the practice monitoring program of the AICPA. Mr. Georger is a continuing professional education course instructor for the AICPA. Annually, he instructs over 300 hours in accounting and auditing subjects. Jack has authored training material in governmental accounting and auditing for the AICPA. He is the technical reviewer of the CCH Knowledge-Based Audits™ of State and Local Governments with Single Audits, GAAP Guide (FASB), and Governmental GAAP Guide (GASB). Mr. Georger is licensed to practice as a certified public accountant in the states of California, New York, Virginia, Maryland, the District of Columbia, Missouri (inactive), Connecticut (inactive), and Wyoming (inactive). He is a Certified Internal Auditor (CIA). EDUCATION George Mason University Fairfax, Virginia B.S. Degree – Accounting LEADERSHIP & AFFILIATIONS  Member and Instructor, American Institute of Certified Public Accountants (AICPA)  Member, Institute of Internal Auditors  Member, California Society of Certified Public Accountants (CalCPA)  Member, New York Society of Certified Public Accountants (NYSSCPA)  Chairman, NYSSCPA Government Accounting and Auditing Committee  Member, NYSSCPA Auditing Standards Committee  Member, NYSSCPA Sustainability Committee  Member, NYSSCPA Not-for-Profit Committee  Nevada Society of Certified Public Accountants (NSCPA)  Member, Government Finance Officers Association (GFOA) – Reviewer  Member, Institute of Internal Auditors CONTINUING PROFESSIONAL EDUCATION He has instructed over 300 hours of municipal accounting courses offered by the AICPA. Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. John F. Georger, Jr. CPA, CIA, CGMA Technical/ Concurring Partner EMAIL jack.georger@pungroup.cpa WEBSITE www.pungroup.cpa Expertise: CITIES COUNTIES TRANSPORTATION AGENCIES ENTERPRISE OPERATIONS HIGHER EDUCATION NOT-FOR-PROFIT Licensed to Practice in: California Arizona Nevada City of Newport Beach 23 | PUNGROUP.CPA EXPERIENCE Ross Gotthoffer, a Director in The Pun Group LLP's Assurance division, boasts over two decades of public accounting and auditing experience across diverse sectors such as government, agribusiness, financial services, manufacturing, and nonprofits. His wealth of knowledge and practical expertise enhances every engagement. As a seasoned Quality Control Reviewer at the CPA firm, Mr. Gotthoffer ensures the highest standards of accuracy and compliance. His meticulous approach encompasses the evaluation of financial statements, auditing processes, and regulatory adherence. With a proven track record, he actively contributes to enhancing overall quality control protocols, providing valuable insights, and fostering a culture of excellence within the organization. Mr. Gotthoffer's responsibilities include conducting comprehensive quality reviews of all reports, ensuring that audits align with both firm and professional standards. He serves as a key resource for technical and operational issues, bringing a depth of expertise to the role. Additionally, Mr. Gotthoffer holds the position of technical reviewer for significant publications like CCH Knowledge-Based Audits™ of State and Local Governments with Single Audits, GAAP Guide (FASB), and Governmental GAAP Guide (GASB). He is a licensed certified public accountant in the states of California and Florida. EDUCATION University of South Florida, Tampa, Florida Master of Accountancy LEADERSHIP & AFFILIATIONS  Member, American Institute of Certified Public Accountants (AICPA)  Member, Florida Institute of Certified Public Accountants (AICPA)  Member, Government Finance Officers Association (GFOA) – Reviewer CONTINUING PROFESSIONAL EDUCATION Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. Ross Gotthoffer CPA Director/ Quality Control Reviewer EMAIL ross.gotthoffer@pungroup.cpa WEBSITE www.pungroup.cpa Expertise: CITIES COUNTIES TRANSPORTATION AGENCIES ENTERPRISE OPERATIONS HIGHER EDUCATION NOT-FOR-PROFIT Licensed to Practice in: California Florida City of Newport Beach 24 | PUNGROUP.CPA EXPERIENCE Masood Yousufzai is an Advisory Services Manager at The Pun Group LLP with more than six years of experience in providing accounting and audit services, internal control and risk evaluation, and business consulting to privately held and public companies with clients in a variety of industries, including large not-for-profits entities, insurance carriers, manufacturing and distribution, and government entities. Mr. Yousufzai worked as an Internal Audit and Special Projects Manager prior to joining the Firm. Masood has been responsible for managing, planning, and performing financial and regulatory external and internal audits and for developing and conducting internal control procedures and risk assessment evaluations. He has evaluated key processes within companies to determine areas of operating inefficiencies or potential internal control weaknesses and developed findings into recommended courses of action and into report comments and recommendations for resolution. Mr. Yousufzai has provided accounting support services to local not-for-profits and governments, including financial statement analysis and preparation. EDUCATION California State University Bakersfield B.A. Political Science California State University Northridge M.P.A. Degree – Public Administration University of California Irvine Applied Accounting Program LEADERSHIP & AFFILIATIONS • Member, California Society of Certified Public Accountants (CalCPA) RELEVANT EXPERIENCE  City of Bell  City of Gardena  City of Desert Hot Springs  City of Palm Springs  City of Seal Beach  City of Phoenix (Subrecipient Monitoring  City of Corona  South Bay Cities Council of Governments  City of San Jose (Subrecipient Monitoring)  City of Perris CONTINUING PROFESSIONAL EDUCATION Various courses offered by the Firm online through Thompson Reuters, AICPA, and CalCPA Education Foundation, including:  Governmental and Nonprofit Annual Update  Government Auditing Standards  GASB Basic Financial Statements for State and Local Governments  Single Audits: Uniform Guidance (formerly OMB Circular A-133)  Financial Accounting Standards Board Annual Updates  Statement on Standards for Accounting and Review Services Updates Has met/exceeded the current CPE educational requirements to perform audits of governmental agencies. Masood Yousufzai Engagement Manager EMAIL masood.yousufzai@pungroup.cpa WEBSITE www.pungroup.cpa Expertise: CITIES COUNTIES TRANSPORTATION AGENCIES ENTERPRISE OPERATIONS NOT-FOR-PROFIT CPA Candidate in: California City of Newport Beach 25 | PUNGROUP.CPA Schedule Methodology and Segmentation of Engagement The Firm’s audit approach consists of six phases: Engagement Acceptance and General Planning, Planning and Internal Control Evaluation, Fieldwork, Post Fieldwork, Report Preparation and Review, and Final Production. 1. Engagement Acceptance and General Planning: Our engagement partner and manager will meet with City management to discuss the scope of services, confirm expectations, review prior findings (if applicable), and identify areas of heightened risk. This initial planning phase will focus on developing a tailored work plan for each audit area—Grant Compliance, Long-Term Funding Strategies and Cost Recovery, and Risk Management. Proposed timeline: Late July 2. Planning and Internal Control Evaluation: The engagement team will review the City’s policies, procedures, and control frameworks relevant to each topic. This includes walkthroughs, process mapping, and analysis of prior audit results or enterprise risk assessment findings. We will identify key internal controls, assess their design and implementation, and develop targeted audit procedures for fieldwork. Proposed timeline: Early August 3. Fieldwork: Our team will perform fieldwork based on the risk areas identified in planning. Testing procedures will include document review, transaction sampling, compliance evaluation, and control testing. For grant compliance, we will assess supporting documentation, reporting timeliness, and subrecipient oversight. For cost recovery and risk management, we will test planning models, reserves, insurance practices, and related data. Periodic status meetings will be held with City staff. Proposed timeline: August–September 4. Post Fieldwork: During this phase, the engagement team, including the engagement partner, will review all documents and evaluate commitments and contingencies. The team will perform an assessment of the going concern and jointly plan for the next steps. Proposed timeline: immediately after fieldwork completion. 5. Report Preparation and Review: Following fieldwork, we will prepare internal audit reports for each topic area. Reports will include an executive summary, findings, impact assessments, and recommended corrective actions. All reports undergo internal quality control review prior to delivery. Drafts will be reviewed with City management to ensure clarity, accuracy, and alignment with City priorities. Proposed timeline: Draft reports by early October. 6. Final Production: Once all issues have been resolved and reports finalized, we will deliver the final audit reports in accordance with the City’s deadline. At the City’s request, the engagement partner and manager will present findings to executive leadership or public governing bodies. Proposed timeline: Final reports delivered no later than October 10, 2025. The Firm will complete the audit fieldwork and issue all reports within the established timeframe, assuming no internal circumstances within the City causes delays in the audit. •Expe rtis e & Expe rience – Our team has extensive experience auditing not-for-profit organizations, ensuring accurate and compliant audits. •Customized Solutions – We tailor our audit approach to fit your unique needs and challenges. Benefits •Efficiency & Timeliness – We deliver high-quality audits on time, minimizing disruption to your operations. •Proactive Risk Management – We identify and address financial and operational risks early. •Strengthening Financial Health – We improve your financial management and operational efficiency through internal control reviews and recommendations. City of Newport Beach 26 | PUNGROUP.CPA Level of Staff and Number of Hours to be Assigned to Each Segment of the Engagement The Pun Group LLP understands that the City of Newport Beach seeks not only experienced internal audit services but also measurable value in the form of timely insights and actionable recommendations. To meet these expectations, we have assembled a team of professionals with deep public-sector experience and hands-on expertise in the areas of Grant Compliance, Long-Term Funding Strategies and Cost Recovery, and Risk Management. Estimated total engagement hours: Approximately 500 hours Our team structure includes:  Partner-level oversight  Manager-level coordination and field review  Senior and staff auditors for fieldwork execution City of Newport Beach 27 | PUNGROUP.CPA Let’s Get to Work! Benefits of Choosing The Pun Group LLP The Pun Group LLP is recognized for its professionalism, integrity and for providing clients with practical solutions unique to their circumstances and issues. Our Firm prides itself on being able to provide personalized client services, and with that sentiment in mind, we have carefully chosen our engagement teams. The Pun Group’s primary objective is to offer the City of Newport Beach solutions and directions led by highly experienced and capable partners who can successfully implement the work and produce the results you expect. This philosophy and mindset allow us to provide a superior level of service and a quality audit. We trust that this proposal has given you the information needed about the Firm, the engagement team members, the overall audit approach, cost-saving measures, and audit fees. We are committed to exceeding your expectations, and we look forward to bringing our experience and expertise to the City of Newport Beach while providing you with the excellent level of service that you expect and deserve. Thank You Thank you for allowing us to submit our qualifications to provide you with Internal Audit Services. Please direct inquiries to: Sophia Kuo, CPA, M.B.A. Partner Email: sophia.kuo@pungroup.cpa Phone: (949) 777-8809 | Fax: (949) 777-8850 Sincerely, The Pun Group LLP Certified Public Accountants and Business Advisors City of Newport Beach i | PUNGROUP.CPA Appendix A – About the Firm About the Firm Established in 2012, The Pun Group, LLP stands as a limited liability partnership comprising a team of sixty dedicated professionals who specialize in providing auditing, accounting, and advisory services. Our firm, which includes Certified Public Accountants and Business Advisors, has garnered recognition as one of the foremost accounting entities in Orange County, as acknowledged by the Orange County Business Journal. Additionally, we proudly secure a place among the CalCPA Top 150 firms. Our distinction within the industry lies in the fusion of hands-on experience and pragmatic knowledge demonstrated by our audit professionals. This combination sets our firm apart. We possess a profound grasp of prevailing regulations and issues bolstered by our technical acumen. Furthermore, our commitment to diligence, integrity, and collaborative teamwork is evident in every engagement we undertake, thus contributing to our clients' success. The Partners’ Group is a distinguished assembly comprising notable professionals such as Sophia Kuo, Frances Kuo, Coley Delaney, Andrew Roth, John Georger Jr., and Jim Fritzsche. We specialize in providing auditing, accounting, and advisory services to numerous governmental entities across the United States. With a collective experience of over two centuries, we have established ourselves as a trusted business ally and have gained recognition as industry leaders in a rapidly expanding market. Our dedication to the field is evident through our work with nearly 100 government and not-for-profit audit clients, demonstrating our unwavering passion and unparalleled municipal experience. Moreover, our practices adhere to professional standards embraced nationwide within the United States of America, including the rigorous criteria outlined in the Government Auditing Standards issued by the Comptroller General of the United States. The Firm’s headquarters are located in Orange County, California, with five branches in San Diego, Walnut Creek, Sacramento (California), Las Vegas (Nevada), and Phoenix (Arizona). The Orange County Office, located at 200 East Sandpointe Avenue, Suite 600, Santa Ana, CA 92707, will perform the requested services for the City. However, we may assign additional staff from our other offices to the engagement at no extra cost to the City. No subcontractors will be used in this engagement. Global Capabilities The Pun Group LLP is an independent member of Allinial Global, an association of over 100 independent accounting and consulting firms. Based in North America, Allinial Global offers international support by connecting its member firms to providers and global networks of accounting firms worldwide. OUR AFFILIATIONS OUR FIRM AT A GLANCE 60 full-time auditing, accounting, tax and advisory professionals One of the fastest growing firms serving California, Nevada and Arizona 6 offices across 3 states Client retention rate: 90 – 95% City of Newport Beach ii | PUNGROUP.CPA Full-Time Government Auditors As full-time government auditors, we understand that governmental entities do not operate independently but in an increasingly complex web of local, state, and federal relationships. We know how these relationships work, what they mean at the local level, and how every public organization’s focus on resource management is critical to success. Also, while many accounting Firms can provide services, not all can build excellent working relationships with their clients. The Pun Group LLP prides itself on developing lasting, personal relationships with our clients. Our hands-on partner involvement and low personnel turnover are crucial tools to our success and are highly beneficial to the City. Local Office’s Information Technology (IT) Audit Capabilities The Pun Group LLP continues our efforts to invest in our IT system to enhance our security further and promote audit efficiency. Top security for your data is the key to our success. When we have your data virtualized, our Firm takes all the preventive steps to avoid putting your information at risk. Our In-House IT administrator maintains our server to ensure our IT environment is continuously updated with the latest security fixes. Through VPN and Microsoft Remote Desktop, our In-House network administrator can lock down files and system access from a single point, limiting the ability of remote sites to take data from our server. Access to systems from anywhere and anytime. With more mobility being the norm rather than the exception, our engagement team needs robust access to the engagement files when they are working in your office. Accounting and Auditing Software applications are installed in our “Private” server and can be securely accessed through VPN and Microsoft Remote Desktop. The Firm uses CCH ProSystem fx® Engagement for audit documentation, which allows real-time synchronization of the work papers and instant collaboration quality control review. Secure Data File Transfer System. In order to improve audit efficiency, workflow management software plays an essential role between your organization and our engagement team. We employ a secure data file transfer system called Suralink. Suralink’s dynamic request list is integrated with our secure file-hosting system for seamless document-request coordination. It means all our requests are in one place, updated in real-time, and accessible by everyone working on the engagement. As a client, you no longer have to manually maintain a spreadsheet amongst several people, only to repeat the process in a day or two. Not only makes the operation more cost-efficient, but it also enables you and your team to spend your time getting the job done, not reconciling a messy list of outstanding items. The Suralink dashboard, as shown below, allows you to visualize the process of document-request fulfillment. BIG FIRM EXPERTISE. SMALL FIRM VALUES. Our professional backgrounds at major national firms showed us how to solve complicated business and accounting challenges, but the sense of personal connection was missing. We launched The Pun Group because we believe every client deserves to work with experienced business advisors and CPAs who have the time – and take the time – to create an authentic connection. Every client is our top priority! A UNIQUE CULTURE. “Personalization” is not just a buzzword – it’s part of our firm’s culture. We take a personal approach to everything we do. We collaborate with our clients, so they’re always part of the process. We listen to our staff to make sure they have the right support and resources to do a great job. Getting to know others and discovering how we can serve them better is not just a sign of good business practices; it’s a sign of good people. INNOVATION EMBRACED. New ideas keep you ahead of the game. From leveraging the value of emerging technologies to further refining trusted processes, we adopt proven solutions to meet your needs. WHERE YOU GO, WE GO. WHERE YOU GROW, WE GROW. Our success is defined by how you achieve yours. Partner with accomplished accounting and financial professionals who are laser-focused on taking your business to the next level. City of Newport Beach iii | PUNGROUP.CPA Our Services Our partners and seasoned professionals are always available, guiding clients through their periods of rapid growth as well as difficult times. We are able to do that by offering a portfolio of accounting services that are as diverse as the jurisdictions and entities themselves. The Pun Group LLP has successfully provided professional auditing, accounting, financial reporting, and management advisory/consulting services to a broad spectrum of governmental entities. ASSURANCE ADVISORY OTHER SERVICES  Financial statements audits  Compliance audits  Performance audits  Internal audits  Service organization controls audits  Operational reviews/risk advisory services  Forensic investigation  Financial condition analysis  Organizational structure review  Cash flow analysis  Debt restructuring consultation  Litigation restructuring consultation  Assistance with the preparation and review of the Annual Comprehensive Financial Report  Government property lease excise tax compliance review  Sub-recipient monitoring  Implementation of new GASB pronouncements  Audit readiness services  Contract Finance Director/Accountant services Independence The Pun Group LLP requires all employees to adhere to strict independence standards concerning the Firm’s clients. These independence standards exceed, in many instances, the rules promulgated by the American Institute of Certified Public Accountants (AICPA). The Pun Group LLP certifies that it is independent of the City of Newport Beach and its component units. The Firm meets independence requirements defined by the United States Government Accountability Office’s (US GAO’s) Government Auditing Standards and the American Institute of Certified Public Accountants (AICPA). Based on that, we have not identified an instance that constitutes a conflict of interest relative to performing the services requested by the City. Insurance If selected, the Firm will obtain and maintain the minimum insurance requirements during the entire execution of the agreement with the City of Newport Beach. Within ten days from the implementation of the contract, we will furnish the City of Newport Beach with satisfactory evidence of the insurance requirements and proof that each carrier is required to give at least 30 days prior written notice of the cancellation of any policy during the entire period of the agreement. The City of Newport Beach will be named as an additional named insured under the Firm’s policies. A copy of our current certificate of insurance is presented in the Appendices section of this proposal. License to Practice in California The Firm and all key professional staff are licensed by the State of California to practice as Certified Public Accountants and meet the Continuing Professional Education requirements under US GAO’s Government Auditing Standards to perform the proposed audits. Firm Registration: California State Board of Accountancy Number – PAR 7601 Federal Identification Number – 46-4016990 City of Newport Beach iv | PUNGROUP.CPA Peer Review Being a member of the American Institute of Certified Public Accountants (AICPA), The Pun Group LLP is required to obtain an independent peer review of our audit and accounting practice every three (3) years. The peer reviewer assessed the Firm’s quality-control policies, reviewed administrative records, interviewed professional personnel, and inspected the Firm’s working papers and reports from a representative sample of accounting and auditing engagements, including governmental audits. The reviewer concluded that the Firm fully complied with the AICPA’s stringent standards for quality control and issued a peer review rating of “Pass.” A copy of our most recent peer review is presented below. City of Newport Beach v | PUNGROUP.CPA Federal or State Desk Review No federal or state desk reviews or field reviews have been undertaken of any audits performed by the Firm or any of its partners, managers, or professionals during the past three (3) years. Disciplinary Action State regulatory bodies or professional organizations have taken no disciplinary action against the Firm or any of its partners, managers, or professionals during the past three (3) years. The Firm has no conditions such as bankruptcy, pending litigations, planned office closures, mergers, or any organizational conflict of interest that may affect the ability of the Firm to perform the required duties requested by the City of Newport Beach. City of Newport Beach vi | PUNGROUP.CPA Appendix B – Available Training Strengthen Your Accounting Knowledge: TPG Client Training Webinars We pride ourselves in leading the governmental auditing profession nationwide and statewide. Members of our team have been assigned to the AICPA and State Government Accounting and Audit committees. Our membership with these two levels of government keeps us current, and such involvement helps our Firm with the constant changes in accounting and auditing standards, laws and regulations, and compliance provisions, which have created an unprecedented complexity in public accounting for state and local governments. Every year, the Firm hosts a conference to update governmental clients on new technical accounting and financial issues. Since last year, by implementing “Webinars,” we’ve been expanding our horizons and offering our clients 15 hours of Continuing Professional Education (CPE). These sessions are free of charge and part of the service package provided to our clients. CPE courses we offer: City of Newport Beach vii | PUNGROUP.CPA Appendix C – Certificate of Insurance www.pungroup.cpa ORANGE COUNTY SAN DIEGO BAY AREA LAS VEGAS PHOENIX SACRAMENTO