HomeMy WebLinkAbout10 Contract for Audit Agenda Item # 10
TRUCKEE DONNER
Public Utih'
ACTION
To: Board of Directors
From: Bob Mescher
Date: October 05, 2011
Subject: Consideration of a Contract for the 2011 Financial Audit
1. WHY THIS MATTER IS BEFORE THE BOARD
The auditors are hired by the Board of Directors and report to the Board of Directors.
2. HISTORY
Baker TillyNirchow Krause has performed the District's annual audits since the 2005
audit.
The Board requested staff to solicit proposals from Baker TillyNirchow Krause and
from other audit firms.
3. NEW INFORMATION
On August 17, 2011, a request for proposal was mailed to 13 audit firms and was also
advertised in the local newspaper.
Four audit firms submitted proposals: Baker Tilly, BKD, Fechter, and Moss-Adams.
Fechter was disqualified because it did not have the required experience of auditing
utilities. Proposals from the qualified three firms are attached.
Per the Board's direction at-the August 3, 2011 Board Meeting, a representative from
each of the firms will be in attendance to give a five-minute presentation regarding
their firm's qualifications. The representatives will be available for questions from the
Board.
4. FISCAL IMPACT
The budget for 2011 audit services is $61,600.
The pricing of the proposals are as follows:
Firm 2011 2012 2013
Baker Till $60,000 $619800 $63,600
BKD $61,100 $62,550 $659200
Moss-Adams $35,000 + Costs* $37,000 + Costs* $39,000 + Costs*
*Moss-Adams has indicated that the out-of-pocket costs ("Costs")would not likely exceed$5,000.
5. RECOMMENDATION
• Review this report and provide comments
• Interview the audit firms' representatives
• Authorize a contact with the selected audit firm to perform the 2011 financial
audit with the option to extend the contract for up to two years
Bob Mescher Michael D. Holley
Acting Administrative Services Manager General Manager
Truckee Donner Public Utility District
Proposal to provide audit services for the year ended December 31,2011
September 12, 2011
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BAKER TILLY
Baker Tilly Virchow Krause,LLP
Ten Terrace Ct,PO Box 7398
Madison,WI 53707-7398
tel 608 249 6622
fax 608 249 8532
bakertilly.com
September 12, 2011
Board of Directors
Truckee Donner Public Utility District
11570 Donner Pass Road
Truckee, CA 96161
Dear Ladies and Gentlemen:
Thank you very much for this opportunity. Baker Tilly Virchow Krause, LLP("Baker Tilly,""we,""us,""our")—a
leading certified public accounting firm with strong roots in serving public power,water utilities, and wastewater
utilities—is pleased to submit this proposal to provide financial auditing and other services for Truckee Donner
Public Utility District("the District,""you,""your")and the two Mello-Roos Community Facilities Districts that are
component units of the District. We understand these services are for a one-year period with the option of
extending the contract for each of the two subsequent fiscal years.
You know the expertise and service quality that Baker Tilly brings to this engagement, as we have served as
your auditors for the past six years and will continue to be diligent with meeting and exceeding your
expectations. Baker Tilly's audit service approach is designed to have us always take a fresh look to identify
opportunities to improve operational efficiencies and internal control. While we have proposed the leadership
team and staff that have been assigned to your engagement recently,we have the capability to rotate new staff
and partners from our Energy and Utilities Group if the Board so desires.
Selecting a firm with solid expertise in utility audits and a team of utility industry specialists who also thoroughly
understand your operating environment brings the most benefit to your organization.There are compelling
reasons for you to select the Baker Tilly team once again for your annual independent financial audit and other
accounting consultation services.These reasons include:
You are a valued Baker Tilly client: The District is an important client at Baker Tilly. We have served you
diligently with outstanding service for six years, meeting your financial audit and other accounting needs.You
know from your experience with us that we are knowledgeable about your business and provide responsive,
timely services from the highest quality technical resources in our firm.We are committed to exceeding your
expectations over the next three years.
Unsurpassed public power specialization:We recognize the complexity of your operating business
environment. For that reason,we have organized our Baker Tilly partners and staff along industry lines to
provide you with an audit team that not only has the necessary knowledge and skills you desire to identify the
strength of internal controls and processes, but also with the specialization of your industry to identify key
indicators that are critical to you. Baker Tilly's Energy and Utilities Group has a substantial history of public
power and energy industry auditing and accounting consulting services. Our Energy and Utilities Group
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Board of Directors
Truckee Donner Public Utility District
September 12, 2011
Page 2
currently provides services to more than 300 utilities, including the District.As the 16t"largest CPA firm in the
nation according to Accounting Today's"Top 100 Firms" list,we can call upon the strengths of specialists in
consulting, internal audit,finance and accounting, and other business service areas to provide the District with
financial auditing and related services and advice.
We provide value to the District with a knowledgeable service team: The Baker Tilly leadership team for
the District has varied little during our period of service to you.At the same time,we have introduced new team
members throughout the term of our engagement, however, they have been individuals with similar knowledge
and utility industry expertise, and we believe the changes have been seamless in terms of our service delivery.
Our intent is to provide you with a consistent point of contact, incorporate rotation of auditors and audit
approach, and minimize the time and effort spent by your staff in explaining District operations and processes
on an annual basis. This balance within our team is vital in allowing the focus to be on performing a quality
audit and providing value—rather than the District's accounting and finance team taking time to retrain audit
staff for the particular nuances of your business and the utility industry in general.
The pedigree of our team is an important element of this proposal and our ability to serve your organization in
an effective and valued manner. Our audit approach is extensive, yet non-intrusive to your staff.Along with our
industry knowledge and experienced staff, our cutting-edge audit techniques are designed to minimize your
staff's audit preparation and support time. Our approach marries intensive analysis and in-depth expertise,
providing outstanding value.The involvement of new field auditors on a periodic basis provides a fresh
perspective and new insights to the audit process and to the District.
With Baker Tilly, you know you receive thoughtful, strategic guidance from a partner who sees the"big picture"
and will work with you to enhance and strengthen your utility over the long term.
Relationships: Baker Tilly's philosophy and desire is to build long-term relationships with our clients.We will
take the time to learn and understand your organization and needs. Our goal is to provide valuable service and
contribute to your success by serving as your most valued advisor. We hope that our client service philosophy,
expertise, and reputation will be major factors you consider when evaluating our firm.
Our proposal details our approach to partnering with you to continue to help you accomplish your objectives.
Please contact me at 608 240 2394 or tom.unkeCaD-bakertilly.com.We recognize the trust you place in us as a
service provider and look forward to continuing our successful partnership.
Sincerely,
BAKER TILLY VIRCHOW KRAUSE, LLP
s
Tom Unke, CPA, Partner
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Firm qualifications and experience...................................................................4
About Baker Tilly Virchow Krause, LLP.............................................................
Utility staff expertise............................... ...............
Public power industry recognition ............... ...
Qualitycontrol ................................................................................................... 5
Peer review letter...................
7
Servicesto be provided......................................................................................8
Qualifications of key personnel.........................................................................9
Audit services engagement team............... ....... 9
Quality of staff.........................
Teamorganization................................................................... . ......................11
Resumes......................................... . ................................................ 12
Similar engagements—public electric and water utilities ............................20
Auditapproach..................................................................................................22
Segmentation of the engagement................................................................... 24
Communicating with the District...................................................................... 29
Industry and market leadership............. ................29
Paperlessaudit software................................................................................. 30
Dataarchiving and imaging............................................................................. 30
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Firm qualifications and experience
About Baker Tilly Virchow Krause, LLP
Baker Tilly Virchow Krause, LLP was founded in 1931 with one core objective: to use our
expertise to help our clients improve their businesses.The firm has grown steadily over
the years, broadening our service offerings and expanding our geographic presence to
meet the evolving needs of our clients.As an independent member of Baker Tilly
International, the world's 8th largest network of accounting firms, we bring you access to
market-specific knowledge in 120 countries.
In 2011, Baker Tilly achieved the ranking of 16th largest accounting and advisory firm in
the United States according to Accounting Today's list of"Top 100 Firms."
Baker Tilly balances such dynamic growth with a deep commitment to operating with
absolute integrity and a belief in the value of trusted relationships. The down-to-earth
style that built the firm remains evident today in a collaborative, client-focused approach.
As you know from our existing relationship with the District, our commitment to you
extends across your entire business.We will adopt an integrated team approach to the
District's engagement, blending our utility-focused professionals with experienced
specialists in the areas most important to you. This combination of financial, business,
and industry-specific expertise ensures you will be working with knowledgeable
professionals who understand your business and the challenges you face—and can
create innovative solutions to help you overcome them.And, because the District will be
working with the same engagement partner that has served you on previous audits, you
can expect to receive the same consistent, efficient, and exceptional service that you
have come to rely on from Baker Tilly professionals.
For more than 80 years, Baker Tilly has understood that our business demands absolute
integrity. We value our client relationships and believe in the power of collaboration—
working with each client to address business needs and goals.We will continue to
deepen and enhance our partnership with the District as we work together to help you
realize your vision.
Utility staff expertise
Baker Tilly has a substantial history of public utility auditing and accounting.The team
that serves the District is part of Baker Tilly's Energy and Utilities Group,which consists
of more than thirty professionals dedicated entirely to serving only users and providers of
utility services. Our Energy and Utilities Group currently provides services to more than
300 public utilities and joint action electric agencies. Energy and Utilities Group members
have extensive prior utility experience,with an average public utility experience level
approaching fifteen years. Our Energy and Utilities Group may be the nation's largest
fully dedicated team serving the public power community. With this level of industry
experience and specialization, you can be assured of valuable, on-target advice.This
an 01
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provides the District with the opportunity for fresh perspectives from new engagement
team members who still have the depth of knowledge of the utility industry.
Public power industry recognition
Baker Tilly is committed to the public power sector and has nationally recognized public
utility and governmental expertise, providing services to utilities in thirty-eight states,
Canada, and Guam. Our largest public power client has twelve billion dollars of assets
and serves more than one million customers.
Many of our clients are members of the Large Public Power Council, including
Sacramento Municipal Utility District, Snohomish County Public Utility District, Long
Island Power Authority, Orlando Utilities Commission, Lower Colorado River Authority,
CPS Energy(San Antonio), Colorado Springs Utilities, and Seattle City Light.
These utilities have searched us out for service due to our commitment to the industry
and depth of utility expertise. Every one of these utilities has needed a nationally
recognized firm to help promote high bond ratings, provide comfort to stakeholders and
serve as an industry advisor while providing external audit services.
We are also sought out by organizations such as the American Public Power Association
(APPA)to speak, teach courses and represent the industry.This year we presented at
the Society of Corporate Compliance and Ethics Utility Conference and presented a half-
day workshop on"Protecting Customer Confidence in Today's Digital World"at the APPA
National Conference.
Quality control
As members of the American Institute of Certified Public Accountants(AICPA), we are
required to develop and maintain a quality control document. This document outlines
major areas of quality control as follows:
Independence, Integrity, and Objectivity
Personnel Management
Hiring
Assigning of Personnel
Professional Development
Advancement
Acceptance and Continuance of Clients and Engagements
ma-
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Engagement Performance
Performance
Consultation
Monitoring
Our quality control document and our adherence to its provisions are subject to periodic
peer review. Our substantial governmental service practice requires that significant
portions of our external quality control review be directed to governmental engagements.
We have received a"clean"opinion, the highest level of assurance obtainable with
respect to our audit practices, in all of our peer reviews.A copy of our most recent peer
review report is presented on the following page.
In addition to the external peer review,we perform internal office inspections annually.
This ensures that we are maintaining our audit quality at the highest possible standards.
Our firm also performs external peer reviews for numerous CPA firms throughout the
United States.
Our audit reports are subject to review by many state departments, as well as the
Committee on Governmental Standards of the State Institute of CPAs.There were no
significant findings for any such reviews.
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Peer review letter
System Review Report
To the Partners of
Baker Tilly Virchow Krause, LLP
and the National Peer Review Committee
We have reviewed the system of quality control for the accounting and auditing practice
of Baker Tilly Virchow Krause, LLP(formally known as Virchow, Krause&Company, LLP)
(the firm)applicable to non-SEC issuers in effect for the year ended March 31, 2009. Our
peer review was conducted in accordance with the Standards for Performing and
Reporting on Peer Reviews established by the Peer Review Board of the American
Institute of Certified Public Accountants.The firm is responsible for designing a system of
quality control and complying with it to provide the firm with reasonable assurance of
performing and reporting in conformity with applicable professional standards in all
material respects. Our responsibility is to express an opinion on the design of the system
of quality control and the firm's compliance therewith based on our review. The nature,
objectives, scope, limitations of, and the procedures performed in a System Review are
described in the standards at www.aicpa.org/prsummary.
As required by the standards, engagements selected for review included engagements
performed under the Government Auditing Standards, audits of employee benefit plans,
and audits performed under FDICIA.
In our opinion, the system of quality control for the accounting and auditing practice of
Baker Tilly Virchow Krause, LLP applicable to the non-SEC issuers in effect for the year
ended March 31, 2009, has been suitably designed and complied with to provide the firm
with reasonable assurance of performing and reporting in conformity with applicable
professional standards in all material respects. Firms can receive a rating of pass, pass
with deffciency(ies) or fail. Baker Tilly Virchow Krause, LLP has received a peer review
rating of pass.
Cherry, Bekaert&Holland, L.L.P.
October 13, 2009
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Services to be provided
Based on our review of the request for proposals(RFP)dated August 17, 2011, as well
as our prior work with the District,we understand the scope of services as follows:
Perform an audit of the year-end financial statements in accordance with auditing
standards generally accepted in the United States of America
Issue opinions on the presentation of both the District's combined financial
statements and primary government only financial statements in conformity with
generally accepted accounting principles
Issue a management letter to include recommendations, industry updates, and
required communications
Be available to answer questions from the District on new standards or transactions
during the year
The following timeline demonstrates our commitment to meeting the deadlines
established in the RFP.
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Our detailed audit approach is outlined on pages 22-29.
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Qualifications of key personnel
Audit services engagement team
The engagement team for the District is familiar with the needs of your organization from
our six-year history of providing you with auditing and consulting services. Each team
member possesses strengths that have provided benefit to the District and complements
your work environment.The individuals comprising our team routinely deal with complex
client situations.They have the knowledge and professionalism to develop solid
recommendations by bringing to the District the necessary balance of technical discipline,
creativity, and common sense.As a team, they will provide you with highly coordinated
esw
and responsive service.
Of particular importance is the specialized knowledge and experience of our firm and
individuals on our project team in a number of areas including:
Working knowledge of all aspects of your operations, including organizational,
operational, and work order system issues
Experience in industry topics, including regulatory asset treatment under ASC 980,
accounting and financial reporting for derivative instruments under GASB 53, and
recording of future plant removal costs under ASC 410
Providing assistance in the implementation of new governmental accounting
standards such as GASB 45 for post-employment benefits, GASB 49 for pollution
remediation, and GASB 51 for intangible assets
Conducting organizational and operational analyses designed to improve financial
system effectiveness and efficiency
Analyzing complex integrated financial systems and reviewing implementation
Performing financial and compliance audits of electric, water, and wastewater
utilities and joint action electric agencies
Developing performance measures and benchmarking
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Quality of staff
Our unique corporate culture has attracted the best and the brightest professionals from
universities, industry, and national accounting firms.They come to Baker Tilly to serve
clients in an environment which emphasizes quality over quantity, and where long-term
relationships trump short-term profits.
Our firm invests significantly in our employees, because we know that happy employees
create and sustain satisfied clients.To attract people who are at the top of their
profession,we offer a variety of benefits to our employees, including flexible scheduling,
attractive benefit plans, and other special perks.To retain our employees, we insist upon
an organizational culture that encourages creativity, continuous learning, respect,
employee appreciation, and above all—a positive attitude.We keep turnover low by
striving to be an employer of choice for talented, committed individuals.
Based on our six-year relationship with the District,you know that balancing individuals
with an in-depth knowledge of your operations with professionals that provide a fresh
perspective is essential in allowing us to maximize the service we provide to the District
while minimizing your efforts in explaining your operations.
As such, our team is a combination of members who have worked with you for several
years as well as onsite staff who are new to the District.
As we have several partners with extensive energy and utility experience,we have the
ability to rotate the partner on the engagement if the District so desires.
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Team organization
The Baker Tilly audit team is shown in the following chart. Resumes follow on the next
page.
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Resumes
Thomas E. U nke, CPA
Partner
608 240 2394
thomas.unke@bakertilly.com
Tom Unke, Partner,Team Leader for the Energy and Utilities Group, has
been with Baker Tilly Virchow Krause, LLP since 1991. He specializes in
serving the financial and operational needs of the utility industry. Specific
focus areas include renewable energy development,financial due
diligence, litigation support, audit and accounting, strategic planning, and
joint-costing analyses.
Specific experience
Involved with emerging market issues relative to contract or litigation
support.
Involved with the electric energy markets including MISO, NYISO,
ERCOT, and others.
Develops cost sharing methodologies for cities, townships, and villages in
order to price joint services including wastewater treatment and water
distribution services.
Develops cost-of-service models and rate design concepts used to attract
and retain large industrial customers and send proper price signals
necessary to enhance the customer's effectiveness
and efficiency.
Prepares econometric forecasts of sales, revenues, expenses, and other
operational components necessary to predict the timing of rate
adjustments, project financing, and cash flow.
Completes financial evaluations to determine effect upon utility and city
earnings, cash flow, and levy needed when assessing options to
construct, retire, replace, or abandon utility infrastructure.
Develops activity based models used to price utility services including
marginal, embedded, incremental, and fully loaded recovery of costs
pricing strategies.
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Specific experience (cont.)
Facilitates focus group discussions regarding strategic and operational
initiatives including new business ventures and process change or
development.
Provides expert testimony before state regulatory agencies on electric,
water, and wastewater utility revenue requirements; cost of service; and
rate design issues.
Industry involvement
American Institute of Certified Public Accountants
Wisconsin Institute of Certified Public Accountants
American Public Power Association(APPA)
Various state utility organizations.
Frequent speaker both regionally and nationally on pricing of utility
services,financial planning for utilities, creative and innovative financial
reporting tools, rate unbundling, budgeting, and various accounting topics.
Authors various articles on topics related to the utility industry.
Education
University of Wisconsin- Eau Claire
Bachelor of Business Administration in Accounting and Business Finance
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Aaron W. Worthman, CPA
Partner
608 240 2412
aaron.worthman@bakertilly.com
Aaron Worthman, Partner on the Energy and Utilities team, has been with
. Baker Tilly Virchow Krause, LLP since 1998. He specializes in serving
municipal utilities and joint action agencies. His experience includes
performing financial audits and agreed-upon procedure reviews as well as
preparing rate studies, cost of service studies, rate designs, and financial
forecasts.
Specific experience
Manages financial audits of numerous municipal electric, water, sewer,
and stormwater utilities, as well as joint action agencies.
Provides A-133 compliance audits of federally funded programs.
Reviews/tests internal controls of the administration of grant programs.
Analyzes the financial impact of construction projects on utility customer
rates, borrowing needs, and operational results.
Prepares electric,water, sewer, and stormwater rate filings; cost of
service studies; and rate design.
Testifies as an expert witness before regulating agencies and local
governing bodies to support utility rate adjustments.
Prepares annual budgets and long-range financial forecasts for municipal
utilities.
Assists with retail utility service agreement negotiations related to large
...... industrial developments and intergovernmental agreements.
Industry involvement
American Institute of Certified Public Accountants(AICPA)
Wisconsin Institute of Certified Public Accountants(WICPA)
Instructor for APPA's Utility Education courses.
Speaks on accounting and financial reporting topics at national and
regional conferences as well as at Baker Tilly sponsored seminars.
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Industry involvement(cont.)
Authors nationally and regionally published articles on utility regulation
and accounting issues.
Contributing author in the APPAAdvanced Accounting Manual.
Education
University of Wisconsin—Eau Claire
Bachelor of Business Administration
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Jodi L. Dobson, CPA
Senior Manager
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608 240 2469
jodi.dobson@bakertilly.com
Jodi Dobson, Manager for the Energy and Utilities Group, has been with
. Baker Tilly Virchow Krause, LLP since 1998. She specializes in serving
municipal utilities,joint action agencies, and not-for-profit organizations.
Her experience includes performing financial audits, agreed-upon
procedure reviews, and fraud investigations as well as preparing rate
studies, cost of service studies, rate designs, and financial forecasts.
Specific experience
Manages audits for municipal utilities,joint action agencies, and not-for-
profit organizations.
Performs agreed-upon procedure reviews of jointly owned facilities
contractual billings for joint action agencies.
Prepares utility rate studies including cost of service studies and rate
design options.
Conducts electric unbundling studies for public utilities and utility districts.
Helps governmental units interpret and implement Governmental
Accounting Standards.
Analyzes the financial impact of construction projects on utility customer
rates, borrowing needs, and operational results.
Prepares annual operating budgets and long-range financial forecasts for
electric,water, and wastewater utilities.
Provides support to municipal utilities contesting wholesale rate increases
from power providers.
Leads special projects including chart of account separations, specific
rate designs, departmental cost analysis, development of connection fees
and impact fees, operational benchmarking, and basis of accounting
conversions.
Compiles municipal utility financial statements and annual reports to
regulatory agencies.
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Specific experience (cont.)
Performs compliance audits of state funded programs.
Conducts fraud investigations for municipalities and counties.
Industry involvement
Municipal Electric Utilities of Wisconsin
Wisconsin Waterworks Association
Wisconsin Rural Water Association
GFOA CAFR reviewer
American Institute of Certified Public Accountants
Wisconsin Institute of Certified Public Accountants
Speaks on internal controls, fraud prevention, budgeting, and other
industry topics at management conferences.
Authors articles on utility regulation and accounting issues published
nationwide.
Contributing author in the APPA Advanced Accounting Manual.
Education
Carthage College
Bachelor of Business Administration in Accounting and International
Business
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Tania A. Ibarra
Senior Accountant
608 240 2380
tan!a.ibarra@bakertilly.com
Tania Ibarra, Senior Accountant in the Energy and Utilities team with Baker
Tilly Virchow Krause, LLP, has worked in the utilities industry since 2006.
She has experience assisting with forecasts and budgets of large electrical
capital projects, cost monitoring and controlling, contract management,
and electric margin analysis. She has also led implementation of new
software and business processes through utilization of Lean Six Sigma
methodology.
Specific experience
Provides financial audits of electric, water, and sewer utilities.
Assists in the preparation of reports for federal and state regulatory
agencies.
Compiles municipal utility financial statements and annual reports to
regulatory agencies.
Provides consulting services to public utilities.
Provides various accounting services.
Industry involvement
Lean Six Sigma Green Belt Certification
Education
Clarke College- Dubuque, IA
Bachelor of Arts in Accounting and Business Administration Finance
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Lisa M. Herfel
Senior Accountant
Nam:
608 240 6708
lisa.herfel@bakertilly.com
Lisa Herfel,Accountant with Baker Tilly Virchow Krause, LLP, has been
with the firm since 2009. She specializes in providing auditing, accounting,
and consulting services to the firm's energy and utilities clients.
Specific experience
Provides financial audits of electric,water, and sewer utilities.
Compiles annual reports for the Public Service Commission.
Analyzes and conducts utility rate and impact fee studies.
Compiles financial statements for utility clients.
Education
University of Wisconsin—La Crosse
Bachelor of Science in Accounting and Finance
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Similar engagements— public electric and water utilities
Below are current references for Baker Tilly's similar engagements. This is just a
representative sampling of our clients. We urge you to contact any of these clients to get
their feedback and impressions regarding our services to them.That these clients return
to us again and again for service attests to their satisfaction.
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Phone: 916 732 5193
Scope of work: Financial Audit—Electric and water services; Single audit
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Phone: 209 526 7436
Financial Audit—Electric and Water Services, Complianc
Scope of work: Audit of Renewable Programs, Employee Benefit Plan
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Phone: 530 257 41 74
Scope of work: I Financial Audit
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Phone: 402 475 4211
Scope of work: I Financial Audit
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Phone: 206 684 3832
Scope of work: I Financial audit—Electric services
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Contact: Bill Cherrier, General Manager Financial Services
Phone: 7196688136
Financial Audit—Electric, Gas, Water and Wastewater
Scope of work: Services,financial (non-management)consulting for bon
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Phone: 2103532940
Sco a of work: Financial Audit—Electric Services, Prepaid Gas Supply
p Entity, and Bond Comfort Work
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Contact: Craig Sloan, Controller
Phone: 512 473 3320, ext. 2330
Scope of work: Financial Audit—Electric and Water Services
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Contact: Jacqueline Torres, Director of Finance
Phone: 312 751 6500
Scope of work: Financial audit,A-133 compliance audit, and financial
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Contact: Kenneth Kane, Controller
Phone: 516 719 9880
Agreed-upon Procedures Contract Compliance Reviews,
Benchmark Reviews,Agreed-upon Procedures
Scope of work: Engagement for Analysis of Work Order Asset
Management Business Processes and Construction Work
in Progress and Plant in Service Account Balances
We would be pleased to provide additional references upon request.
BAKER TILLY
INTERNATIONAL
BAKER TILLY
Candor.Insight.Results.
Audit approach
Baker Tilly is committed to delivering audit services that provide clients the assurance of
having financial statements that fairly state their financial condition. We actively
communicate our findings and provide knowledge-based insights throughout the audit
process. We prepare final reports that go beyond routine detail to arrive at our opinion.
Our audit will be made in accordance with Generally Accepted Auditing Standards
(GARS)as promulgated by the AICPA, the AICPA audit guide,Audits of State and Local
Governmental Units, and Government Auditing Standards issued by the U.S. General
Accounting Office.
Baker Tilly understands that your audit process should be a year-round effort.To best
serve you,we will use a team approach that puts our technical and industry specialists at
the disposal of the people who know your organization best—you and your employees.
Knowing utilities,we understand the critical details embedded in your financial
statements and will focus considerable time and energy on these risk areas, while paying
additional attention to items of the most concern to you.
Our techniques include:
Identifying key risk areas allowing us to properly concentrate our efforts
Designing predictive tests that define our financial expectations prior to
starting fieldwork
Leveraging industry-specific knowledge to create tests for your operations
Deploying a dedicated team, already familiar with your policies, procedures, and
operations,to maximize our knowledge of your utility
The District can expect to receive a high-quality financial audit without unnecessary
procedures or work papers. Before completing internal planning,we will discuss our
approach with you and modify our plans, as appropriate.
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Our service teams use the latest in audit technology and software to identify exceptions
and perform high-end analytics. These tests form the basis for the opinions we provide
on financial statements.They also give us valuable perspectives we apply to helping our
clients manage their business better.
By maintaining an open dialogue,we will be better able to provide timely insight and
advice,while at the same time building our file for your year-end compliance work.
What can the District continue to expect from Baker Tiilly's audit services?
Experienced audit teams with an industry focus
Open communication in all phases of audit from planning to wrap-up
Effective data analysis using efficient technology tools
Candid professional advice in addition to assurance on the basic
financial statements
Pro-active response to issues that emerge; includes identifying solutions and
wX formulating new pronouncements
Risk-based focus that includes process and control review
BAKER. TILLY
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Segmentation of the engagement
We have a proven audit approach,which is tailored to utilities of your size and includes
sixteen segments of the audit.Those segments, along with the anticipated audit
procedures for each segment, have been taken one step further and customized for the
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District as follows:
1. Control environment
Review policies and procedures associated with implementing internal control
enhancements within the District's operations
Meet with senior management and board representatives to determine the tone at
the top relative to adherence to establish control procedures
Document and assess the communication process in place from management to
staff relative to control activities
Document major systems and processes supporting the financial reporting process
for future use and control assessments
Visit with process owners to determine adequacy and completeness of
control documentation
2. Control activities
Review internal control documentation relative to key systems and processes
in place
Perform test of controls relative to key aspects of the financial reporting and
accounting process
Select sampling methods and assess control inherent in detection risk
3. IT infrastructure and systems
Conduct cursory review of information technology infrastructure relative to financial
reporting risks
Perform high level review of application and systems controls aimed at protecting
transactional integrity
Complete IT infrastructure analysis by providing risk assessment of existing
systems in place
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4. Cash and investments segment
Review ledger account entries, compare cash account balances
Confirm year-end account balances with depositories and reconcile to amounts on
the financial records
Obtain bank reconciliations and substantiate reconciling items
Substantiate cash cut offs in all departments, inter-bank transfers and petty
cash balances
Test investment transactions, test interest earned and trace to receipts and ledger
accounts: confirm investment balances
Test proper recording of other instruments that are marked to market
Test transactions recording unrealized gains and losses
Test compliance with funding requirements of bond resolutions and Mello-Roos
Districts
Test compliance in use of accounts in repayment of outstanding debt
5. Plant in service and inventories
Obtain capitalization policy for capital assets and infrastructure
Obtain summary schedules of capital assets including additions, retirements, and
accumulated depreciation
Test capital asset additions and retirements by project
Perform test counts of inventory balances
Test capital asset depreciation calculations
Review work order processes and controls
6. Revenue and accounts receivable segment
Compare revenues to prior year actual and current budget
Perform validation procedures
Confirm Mello-Roos revenues and receivables to third-party reports
Reconcile other revenues to invoices filed
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7. Other assets(prepaids, deferrals, etc.)
Determine the nature and extent of other existing assets within the organization
Perform substantive tests relative to year-end balances
Conduct assessment of proper financial reporting disclosure
Determine existence/occurrence in evaluation of other assets reported within the
financial statements
8. Current payables
Determine the extent of other payables currently reported within the District's
financial statements
Conduct substantive testing on account balances and determine adequacy of
disclosure within the financial statements
9. Financing segment
Verify bond and note balances owed, information on new issues, if any, trace
transactions to general ledger and recompute interest paid
Test compliance with bond ordinances regarding earnings coverage
10. Net assets
Test proper classification of net assets within the financial statements
11. Laws and regulation compliance
Meet with utility management to identify all significant compliance rules required as
part of the financial reporting process
Enquire as to additional environmental regulations being placed upon the District
relative to account funding
Enquire to management relative to proper disclosure on their financial statements
for compliance to disclosure of commitments and other contingencies within the
financial statements
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12. Payroll
Conduct substantive tests associated with total payroll for the audit year
Perform reconciliations of reported payroll costs to total labor reported in
federal reports
Verify vested vacation and sick pay liabilities
Verify other employee retirement obligations
Determine appropriateness of other liability accounts including accrued payrolls and
related withholdings
13. Operations and maintenance expense segment
Compare expenses to prior years and budgeted amounts
Account analysis of significant variations
Review vouchers payable listings as of year-end, determine proper cut offs and
review for unrecorded liabilities
Perform test of transaction sample and walkthrough of selected transactions to
determine effectiveness of controls
14. Contracts and derivatives
Annually,we will discuss new or revised contracts with management to determine if
they have been properly evaluated for potential treatment as derivatives for financial
reporting
15. Financial reporting segment
Ascertain that all items of audit significance contained in the minutes have been
considered and cross referenced to the working papers
Propose any adjusting entries and obtain adjusted trial balance
Review client prepared financial statements
Review management discussion and analysis(MD&A)
Perform subsequent events review to date of completion of fieldwork
Obtain management and attorney representation letters
Review any past adjustments with financial management
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Verify commitments and contingencies
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BAKER TILLY
INTERNATIONAL
BAKER TI LLY
Candor.Insight.Results.
16. Engagement planning and administration segment
Prepare client information forms, obtain signed engagement letters, complete
company independence procedures
Review of previous audit reports and reports on internal control
Prepare memorandum regarding overall operations for permanent file records
Complete staffing and scheduling summary
Hold planning conference among engagement partner and in-charge auditors
Hold entrance and progress conferences with client
Obtain all documents and information required for permanent file
Read minutes of board meetings
Complete necessary audit analysis of related party transactions and subsequent
events disclosures
Review and evaluate internal controls(includes completion of internal control
questionnaires,flowcharts and other documentation and statistical testing of
revenue, expenditure and payroll systems, as necessary)
Interview selected staff and oversight board members in accordance with the
requirements of SAS 99
Develop and approve audit programs(modification of existing utility specific
programs)
Accumulate all points to be included in management letter, draft letter, and discuss
with management
Review internal contract compliance reports to determine any impact on audit
procedures and financial reporting
Review workpapers for completeness
Undergo partner level workpaper reviews and independent reviews
Hold exit conference with key personnel
Make presentation to the District Board
Ensure that all necessary standards are completed and complied with relative to
professional auditing standards and also those standards required by the AICPA
BAKER. TILLY
INTERNATIONAL
... G :. .:.. ..i ... .,::. .:
..............
..............
:
BAKER TILLY
Candor.Insight.Results.
Communicating with the District
We will maintain an open line of communication with the District,jointly addressing any
issues requiring resolution during your audit and throughout the year:
Pre-audit meeting:
We will meet with the District prior to beginning our fieldwork to review our audit
plan and address any questions or concerns.
Post-audit meeting:
Upon completing the District's audit report and management letter,we will review
these items with District personnel. We will also address other relevant matters that
may have come to our attention. These may include areas in which management
judgments or estimates are involved; errors, irregularities and illegal acts; changes
in accounting policies; significant and unusual transactions; significant audit
adjustments; waived audit adjustments; and any other issues that require
discussion or resolution.
Throughout the year:
If any issues arise during our audit, or throughout the year, that we believe warrant
ow
the District's attention, we will contact appropriate parties for resolution.
We will regularly communicate any new developments in the auditing and accounting
area throughout the year, not just at the time of the audit. In the past year, Russell
Hissom has researched and published articles and whitepapers on Department of Energy
Smart Grid Grant Management, NERC Compliance Audit Readiness, Fair Value
aff
Accounting, Work Order and Asset Management Business Processes(WOAM), and
Enterprise Risk Management. He also teaches Advanced Accounting courses for APPA
on topics such as"GASB 53—Derivative Accounting"and"Application of FAS 71 (ASC
980)—Regulatory Accounting for Utilities."
Information needed to address your technical matters will be addressed promptly,
typically at the time any new accounting pronouncement rules are adopted, providing you
with prompt responses to any matters affecting you.
Industry and market leadership
Our firm is very active in both the AICPA and GASB. Members of the Baker Tilly team
have served on AICPA Governmental Accounting and Auditing Committees, various
technical issues committees, and Private Company Practice Sections. In addition, Baker
Tilly performs many peer reviews for CPA firms,the largest being BDO Seidman, one of
the top twenty largest accounting firms in the United States.This service requires our firm
to be at the forefront of current industry topics and issues.
wo
an ir;je)er:d�,rt me:r:er,A
BAKER TILLY
INTERNATIONAL
...........
On-,
BAKER TI LLY
Candor. Insight.Results.
To help you respond to and prepare for change,we are also actively involved in local and
national associations, keeping us at the forefront of what's happening in the industry. Our
memberships in the following organizations, and our involvement as authors, speakers,
trainers, and promoters of public power accounting and auditing mean we can better
assist you with implementing new regulations or adopting new standards.Associations
we participate in include:
American Public Power Association(APPA)
Edison Electric Institute(EEI)
American Water Works Association(AWWA)
American Wind Energy Association (AWEA)
Many state electric and water industry associations
We are sought out by organizations such as the APPA,the Society for Corporate
Compliance and Ethics, and state utility associations to speak, teach courses, and
represent the industry. We are instructors for the APPA Work Order Asset Management
and Advanced Utility Accounting courses, teaching these courses quarterly at various
locations across the United States.Aaron Worthman, Consulting Partner on your
engagement team, teaches regularly at APPA National and Business and Financial
conferences on financial issues in the energy industry and their impact on public power.
Paperless audit software
Our audit tool is a server-based comprehensive software product with a web-based
interface that combines all financial audit tasks into an electronic paperless format,
including work programs, trial balances, spreadsheets,workpapers, and the
financial statements.
This"paperless"technique results in savings of both time and resources. Because we
are able to obtain the majority of our information electronically,your staff will spend less
time printing and copying information for the audit.
Our approach to auditing computer systems will include documentation of controls,
system interfaces, hardware, security, and cross-training. Based on our understanding of
your IT system,we will design tests specific to those systems.We will use our IT
specialists as a part of this process.
Data archiving and imaging
We retain the audit support and documentation for seven years. Currently this
information is not available through web-based browser access.
BAKER TILLY
INTERNATIONAL
.:.: -
BAKER TILLY
Baker Tilly Virchow Krause,LLP
Ten Terrace Ct,PO Box 7398
Madison,WI 53707-7398
tel 608 249 6622
fax 608 249 8532
bakertilly.com
September 12, 2011
Board of Directors
Truckee Donner Public Utility District
11570 Donner Pass Road
Truckee, CA 96161
Dear Ladies and Gentlemen:
Thank you very much for this opportunity. Baker Tilly Virchow Krause, LLP("Baker Tilly")is pleased to submit.
this price proposal to provide professional audit services for the Truckee Donner Public Utility District(the
District). Our proposal is based on your Request for Proposals(RFP)for qualified public accounting firms to
audit the District's financial statements for the fiscal year ended December 31, 2011,with the option of auditing
the financial statements for each of the two subsequent fiscal years.These audits will be performed in
accordance with generally accepted auditing standards.
We believe that the selection of our firm will provide the District with the best possible team to serve you. If you
have any questions or need additional information, please contact me at 800 362 7301 (toll free), 608 240 2394
(direct)or by email at tom.unke(aD-bakertilly.com. We look forward to continuing our relationship with the District
and working with you on this engagement.
Sincerely,
BAKER TILLY VIRCHOW KRAUSE, LLP
Tom Unke, CPA, Partner
BAKER.TILLY
I NTE RNATIONAL
................-1,Ppllllm
BAKER TILLY
Candor.Insight.Results.
Schedule of professional fees
Nature of service to be provided: Total investment:
-------------------
2011 Financial Audit, Management Letter, and Financial Statement Processing $60,000
2012 Financial Audit, Management Letter, and Financial Statement Processing $61,800
2013 Financial Audit, Management Letter, and Financial Statement Processing $63,600
This proposal is an all-inclusive bid. No additional charges for travel will be passed
through to Truckee Donner Public Utility District during the life of this contract.
We would be happy to discuss the details of these estimates further with the District.
BAKER TILLY
INTERNATIONAL
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CFAs&Advisors
Receiving a Quality Audit with Industry Insight
from an Experienced Advisor
Truckee Donner Public Utility District
Leadership Square South Tower
211 N_Robinson,Suite 600
BKOLLP Oklahoma City,OK 73102-9421
405.842.7977 fax 405.600.9799 www.bkd.com
CPAs&Advisors
September 12,2011
Mr. Robert Mescher
Administrative Services Manager&Treasurer
Truckee Donner Public Utility District
11570 Donner Pass Road
Truckee, CA 96161
Dear Mr. Mescher:
By demonstrating sound financial practices and providing reliable,high-quality water and power services
with a customer-service focus,Truckee Donner Public Utility District(TDPUD) is clearly committed to
remaining accountable to the community you serve. However,with the heavily regulated nature of the
utility industry and rising energy costs,maintaining a financially sound organization and remaining up to
date with ever-changing regulations can be challenging. In addition, TDPUD recognizes there are critical
decisions to be made regarding the quantity of power generation,while maintaining competitive prices.
Therefore, it is important TDPUD works with a CPA and advisory firm with the expertise and resources
to provide quality audit services,as well as proactive communication and sound advice to help keep you
current in industry trends,accounting standards and regulations. We believe BKD,LLP is that firm.
As a specialized industry,TDPUD's selection of a quality firm that can be trusted and that has expertise
in working with public utility districts cannot be taken lightly. As a top 10 CPA and advisory firm,BKD
is committed to providing you access to advisors who are responsive year-round to help with audit,
compliance and other matters related to TDPUD's unique operations. BKD currently works with
approximately 280 utility clients. Based on our industry experience,our professionals can deliver timely
and efficient audit services,as well as industry insight regarding the issues you face. Your proposed
engagement team is equipped with knowledge and specialized skills and is ready to share best practices,
offer ideas and provide alternative approaches to help ease the audit process. We are committed to
becoming the trusted advisor you seek.
We believe our proposal will help you select our firm for efficient and objective services delivered by
experienced professionals. We will call you soon to answer questions you may have about this proposal,
or you may reach us by phone or email as provided below.
Sincerely,
Roger J. Watton,CPA Chad M. Moore, CPA
Senior Manager
Partner
402.473.7600 405.842.7977
rwatton@bkd.com cmoore@bkd.com
,P` ra'. 4. •.
E'XpE'rIE'rl ce Dr*
Table of Contents
-----------
ExecutiveSummary........................................................... 1
Our Understanding of Issues TDPUD Faces.. 1
TDPUD's Desired Outcomes.........m...m no.moan some sommmmoo m.........as 1
Solutions for TDPUD........................................................... 2
BKD Is the Right Choice ..................................................... 2
WhyChoose BKD................................................................3
BKD Delivers Value ............................................................ 3
Responseto Request for Proposal.....................................6
Firm's Qualifications.............................9............................. 6
Your Proposed Engagement Team ......................................8
References & Representative Clients ................................. 10
Appendix.......................................................................... 12
Service Description........................................................... 13
Areasof Emphasis............................................................ 16
BKDat a Glance............................................................... 17
BKDPRIDE Values ........................................................... 18
Inside Public Accounting Report........................................ 19
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Executi ve Summary
Citizens of Truckee and the surrounding area count on Tr
Public Utility District(TDPUD)to act as res of increasing sustainable,
o Truckee Donner
valuable resources. To further your mission' p nsible stewards of their
affordable water and electric power resources, strategic planning
important. Timely and accurate audited financial statementsanning is
imperative to maintaining confidence in the management are
more than 85 years, BKD, LLP has been world of funds. For
a clear path through accountingworking to provide our clients cut
every dollar. regulations sand make the most out of
.
Our Understandin
g of Issues TDPUD Faces
Our work with approximately 1,400 government
clients across the country can provide and not-for-profit
p TDPUD insight into issues similar
entities face. We understand that as a public) owned
use your limited resources wise) and cannot y d utility,you must
useP.-
y nnot afford to miss potential
cost-saving ideas. In addition,as you consider incre
power generation,you do not want to risk losi asing the quantity of
With so much at stake do
your competitive rates.
,you not want to won f- der whether your CPA
and advisory firm has the utility expertise and knowledge of
accounting issues and industry challenges to effectivelycomplex
issues you face. address the
Working with inexperienced or inaccessible advisors could
untimely audit reports, missed opportunities or lead to
with regulations that can ultimate) affect possible noncompliance
y ect the perception of your
financial accountability. Without financial transparency,
public scrutiny and jeopardize your trusted reputationp ' y'you could face
serve.
with those you
T'DPUD'S Desired Outcome
TDPUD wants accurate audit services from a national)firm to help Y recognized CPA
and advisory p you maintain financial transparency. You also
want:
• Timely and quality services delivered by a trusted team of
with significant government and utility experienceadvisors
• Year-round communication and guidance regardingindus
try and issues' includingappropriate use oFinancia l
Accounting Standards Board(FASB)Accountin Standards
Codification(ASC)980,Regulated Operations. g ds
A Suggestions to help you make the most of limited resources,
ideas aimed at stretching your dollar with
♦ An experienced team of advisors on site
Solutions for TDPUD
TDPUD has requested information and a fee quote for a financial
statement audit for years ending December 31 nancial
2011,2012 and 2013.
Our experience and approach to the audit process is designed
added value and timely advice. Your proposed g ed to deliver
public utility districts are unique entities p engagement team knows
1 that require an understanding of
a number of accounting and reporting nuances. We have the ex
help you navigate through the complex operatingand peruse to
environments with which you are confronted. compliance
In addition, we believe open communication is crucial to a
working relationship with TDPUD. BKD will communicate
with you on changes in standards, law and regulations e proactively
with a flexible and efficient audit process. Our sand provide you
your numbers to bring proactive solution team will look beyond
faces.
s to the challenges TDPUD
Please see the Service Description section of this ro osal
explanation of our financial statement audit servicep p for a detailed
approach.
BIND Is the Fight Choice
We believe BKD is the right choice to provide TDPUD with
services because, in addition to quality audit
services, we can provide:
♦ Utility industry expertise
• Timely delivery of audit to help improve confidence in financial
ancial
• Assistance demonstrating financial accountability
l A serious focus on quality
• A fresh look from an experienced team
• Proactive planning and communication
• Unmatched client service
After reviewing our proposal, we are confident y ou will find
well qualified to provide professional services t nd BKD is
providing these services, we believe o ° TDPUD. Beyond
trusted advisor you can depend you also well find BKD is the
p d on to provide value for years to come.
Why Choose BKD
BKD Delivers Value
It is more important than ever to monitor expenditures and
exceptional value for your investments. However, info get
understand value is about more than just rice. � informed consumers
professional CPA and advisoryfirm i p value from a
s about the quality of the work and
the merit of the advice. Expect BKD's work to be accurate
insightful. We stand behind it. Our Public Company and
Oversight Board(PCAOB)and peer review Accounting
P s demonstrate the firm's
record of excellence.
As one of the 10 largest CPA firms in the count
national support and resources. BKD is large �' we offer a network of
meet your goals. At the same time we enough to help TDPUD
pride ourselves on hard work and
low overhead, which keeps our fees com
size, service and experience petitive. With our reputation,
experience, can consider sider us a good value.
Experience guidance Utility IndUstry Expertise
BKD provides approximately280
utility companies with audit'financial
reporting,tax, consulting and small business � nancial
services
100 advisors across the firm have utilityex . Approximately
challenges in the power and utility industries.experience We will provide
professional expertise and support to help you stayabreast o
affecting the industry. Our dedication to our hi f the issues
is further demonstrated b our active involvement y ghly specialized industry
Y in a number of
national and state municipal and utility organizations including
American Public Power Association and Nation the
Cooperative Association. al Rural Electric
Timely Delivery of Audit to Help IMprove Confidence
in Financial Statements
Performing your audit according to your timeline
drafts and audit reports are essential to and providing timely
your
expectations you have of your auditor. ur operations and among the
fi When these key items are
delivered,confidence is estab
lished in the technical ability and
professionalism of your service team. We are committed t
that addresses issues quickly, evaluates the effects of new °a process
establishes a plan to avoid unwanted surprises. pia standards and
approach that includes all applicable art Planning with a team
P parties should allow for a successful
transition and timely project completion. Responsive reliability
our client service standards and meetingtimeline is one of
can expect from BKD, Your eline is something you
Assistance Demonstrating Financial
Citizens of Truckee count on the management and the boar
to behave as stewards of their valuable resources. d of TDPUD
fiduciary duty to be financially accountable Utility districts have a
public. y ble to its constituents and the
Timely and accurate audited financial statements
demonstrating your transparency and are key to
Y stewardship of funds. With BKD,
you get a reputable,top 10 firm that is able to leverage best Practices
learned from working with other utilities to helpincrease p s
identify areas that may require attention. efficiencies and
Serious Focus on Quality
People often underestimate the value of a qualityaudit but
never been more important than in toda ' quality has
y s environment. Recent
nationally publicized audit failures, numerous fraud and abuse
and frequently changing auditing, accountingand financial scandals
standards have resulted in a heightened levelcial reporting
renter attention, of scrutiny for public utility
districts. Given this
g tion,you will benefit from a firm whose
approach to service is designed to help keep you out of the media.
BKD's commitment to audit quality means TDPUD is getting
pay for—an audit performed by a firm with a track recordg ng what they
as demonstrated by our peer review and PCA of high quality
of the findings from these reviews which indicate our process works.
Fresh Look from an ExperiencedTeam
Our engagement team will work with you to identifyareas
may warrant a fresh look. The keyto You believe
a successful transition is proper
planning and communication during the information-gathering
We will get to know your financial team members as soon as possible
ring process.
with minimal disruption to your operations. As a result,
are identified and resolved before the b potential issues
they Dine critical business issues.
Proactive Planning & Communication
One of the first things you will notice about BKD is that o
professionals are in communication with you or in offices
industry
your offi
frequently. We pay careful attention to the ces
timely, challenges you face to offer
proactive advice resulting in a better client relationshi . This
knowledge sharing between your team and ours can be b p
determining effective and proactive solutions. In beneficial in
informed about emerging issues in the accountinaddition,to keep you
g industry, we
frequently provide special webinars, alerts, updates, '
articles. p seminars and
Recent topics include:
• Auditing at the Speed of Business
• Does Changing Your Institution's Fiscal Year-End Make
Sense?
• Effects of U.S. Debt Downgrade
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Unmatchead Client Service
You want trusted advisors who will deliver exceptional client
focus on your needs and take the time to address your service,
BKD understands. We take our commitment so s our unique challenges.
penned our five standards of unmatched clientseriously we have
guidelines in The BKD Experience: service,and supporting
P Unmatched Client Service a
book that sets the firm's expectations for seruing clients '
.
Below is a summary of those five standards.
Integrity First
We work hard to do what is right for you. You can rely on us to tell you
"Heartland hired BKD, LLP
after using a Big Four firm for True Expertise
many years. Heartland has From BKD,you can expect trained, capable staff and a high
experienced BKD's commitment supervision by partners and experienced level of
personnel
g
to excellence first hand and our Professionalp nel.
Demeanor
Board of Directors and staff are you can depend
glad we transitioned to BKD. on prepared and attentive advisors to help meet your
BKD's personnel have broug ht needs and provide new ideas.
a level of utility experience, Responsive Reliability
integrity and professional Accurate and thorough work, combined with
demeanor at standards we did require, and at BKD, we would timely delivery, is what you
not experience before. BKD not want it any other way.
responds to our questions in a Principled Innovation
We want you to succeed. For TDPUD, that means lookingf
discusses accounting treatments to streamline a process,to better document work to train or new ideas
timely manner and openly
your own staff to ensure the best course of and to improve your effectiveness.
action is taken and accounting
standards met. Heartland looks
forward to a continued
successful relationship with
BKD and highly recommends
them to anyone in the utility
industry. "
Mike Malone
Financial Operations Manager
Heartland Consumers Power District
Madison,South Dakota
.. .....
.........
.............
........
Response to Request for Pr -X.-I-...
oposal
For your convenience, we have structured our accor '
proposal
Proposal(RFP). We believe our proposal will d p ding to the questions in your Request for
P demonstrate our qualifications to serve TDPUD.
Firm's Qualifications
A. A description of the audit firm's qualifications
More than 424 governmental entities nationwide on depend
choice. With approximately 180 advisors in B p BKD as their CPA and advisory firm of
KD National Not-for-Profit& Government Group, we have
the experience and commitment you require as you look for e
Y help enhancing your performance.
Our Climbs & Services
Ir
:L ASSURANCE
Develop strong compliance
Programs and find
solutions
for tough issues
a
Expand your resources and achieve Demonstrate strong governance
Your n^ission,responsibly through solid financial reportin.9
OPERATIONS MANAG
EMENT
Keep your vital systems and OUTSOURCING
data safe
Gain operational efficiency by cor-
trolling,the ebb and flow of your
business cyc.e
Geographically spread throughout the U.S., our significant
of organizations.g t client base reflects the diversity of
governmental entities, both in size and
clients we serve and the services types The following graphs demonstrate the we provide.
1CD Not-for-Profit 8c Government Clients BKD N w
forrct& Government Services
Government 41%
Education 29% Accounting
Social
Outsourcing 3%
Services 6°l°
;% Consulting 7%
Museums
&Misc.1% Tax Services 9%
Membership
Organizations 8% Religion 5%
Social Advocacy 1% Grantmaking&Gifting 9°/a Audit&
Assurance 81%
�3BK0
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Specialized ills & Expertise
BKD National Not-for-Profit& Government Group advisors offer
necessary to help you achieve your objectives. Our advisorsspecialized skills and expertise
include:
• Auditors and internal auditors
• A-133 audit professionals
• Tax advisors
• Internal controls and risk assessment advisors
• Employee benefit plan professionals
• Form 990 specialists
• Finance advisors
• Litigation and support professionals
• Forensic advisors
• Strategic planners
• Information technology professionals
Our COMMitment to Government
Our commitment to the industry accounting profession also expands
fi p nds to Involvement on National Industry
Committees, such as the American Institute of Certified Public Accountants (AICPA)and Governmental
Accounting Standards Board(GASB).
Andy Richards, senior manager in our Little Rock office was involved
standards-setting process as a practice Fellow with the , with governmental accounting
GASB In Norwalk, Connecticut. He is a member
of the AICPA State&Local Government Expert Panel which i
financial reporting and auditing issues and works t identifies state and local government
o achieve resolutions benefiting the public interest.
BKD National Not-for-Profit& Government Group advisors al
exhibitors, speakers and sponsors in regional and n so actively serve as participants,
g national associations for government and not-for-profit
organizations, including:
• American Public Power Association(APPA)
• American Society of Association Executives(ASAE
• Association of Government Accountants(AGA)
• Government Finance Officers Association(GFOA)
• National League of Cities(NLC)
• National Society of Accountants for Cooperatives NSAC
Your Proposed Engagement Team
B. Biographies of the key personnel
The most critical factor in providing you high-quality service is choosing our engagement
take team selection seriously and have the appropriate team of advisors to g gement team. We
meet your needs.
Engagement Team Organ izationa :
PublicTruckee Donner
Engagement
3.
Team Experience
Roger I Watton, CPA
t$,4pilydne, °
Roger is regional industry leader for BKD National Not-for-Profit&
�~ f
Government Group. He has more than 35 years of experience in accoun
ting,
audit and consulting for not-for-profit and governmental entities.
served as the engagement
j
.w :. � :-n�� •� He has
.tvrir::h w er
a
`� partner on varietyis- � w�� curr engagements and
3_.: entl sends m
A.. Y p ore than 50 percent of his time working in the not-for-profit
g r profit
f a and government industries. He has been a presenter ands speaker on a v
' of not-for-profit an government-related topics an p variety
d p d attends several not-for-
profit and government seminars and conventions annually.
Roger is a member of the American Institute of Certified
and Nebraska Society of Certified Public Accountants. He is involved Public Accountants
Municipalities, Government Finance Officers Association with the League of Nebraska
tion and National League of Cities.
He is a graduate of University of Nebraska-Lincoln,with a B.S. degree in g business administration.
Cha:.
r `.
...........
Chad is a member of BKD National Not-for-Profit
BKD Oklahoma's commercial enterprises & Government Group and
... rp ises team. He has more than 11 years of
experience in audit and consultingservices for electric utilities,
ft
A manufacturers, state and local governments and not-for-profit
� He also helps BKD with firmwide internal training, including organizations.
new professionals and government _ Camp BKD for
g and not-for-profit instruction for new in-
charges.
He is a member of the American Institute of Certifie
d Public Accountants,
8
.................
Oklahoma Society of Certified Public Accountants, Government Finance Officers Associ
National Society of Accountants for Cooperatives. Chad presents to various or anon and
and industry-related matters facing electric utilities and is licensed in Oklahoma.organizations on accounting
Chad is actively involved in the community through his participation in numerous char'
organizations. He also received the local office AchievingClient Excel stable and civic
unmatched client service. Excellence Award for providing
He is a 2001 graduate of Northwestern Oklahoma State University,Alva, B.S.accounting. Douglas E. Tye,, CPA
,w a degree in
tr,:A
j Po
5
` Doug is accounting and auditing director f '� g or BKD s Oklahoma offices.
He
::y; improvements assists with recommended
r:..-v to internal controls on
, selects of
accounting
a,ggg
methods, budgets and cash flow projections, bond issues and deb
. F refunding.
` He has more than 30 years of experience providing audit
� g , accounting,
consulting and tax services to clients in the governmental and not-for-
health care and commercial enterprises industries. profit,
We Doug is a member of the American Institute of Certified Public
Oklahoma Society of Certified Public Accountants Accountants,
the Healthcare Financial Management Association. and Oklahoma Chapter of
He has served on the boards of various charitable organizations in Tulsa including
Sisters and the Arthritis Foundation. Big Brothers Big
He is a graduate of University of Missouri,Columbia, with a B.S.B.A. degree in
g accounting.
James ,.� ` .
st, w
James has four years of in-charge experience providing audit and attestation services
various industries, including manufacturers, government agencies, 1 to clients from
g employee oyee benefit plans, electric
cooperatives and not-for-profit entities.
He is a member of the American Institute of Certified Public Accou ntants and the Oklahoma Society of
Certified Public Accountants.
James is a 2006 graduate of University of Central Oklahoma, Edmond with a B
.S. in accounting.
Caleb K. = elor, CPA
Caleb has more than two years of experience in audit and consultingservices f
manufacturers, state and local governments and not-for-profit organizations. or electric utilities,
firmwide internal training, including Cam BKD for new He also helps BKD with
p professionals and is actively involved with the
BKD Oklahoma recruiting team.
He has received computer-assisted auditing techniques trainingand is AC
Oklahoma City and Tulsa offices. an L software champion for the
Caleb is a member of the American Institute of Certified Public Accountants
Certified Public Accountants. He is licensed in Oklahoma. and Oklahoma Society of
He is a 2008 graduate of The University of Oklahoma with a B.S. degree in accounting ccounting and an M.Acc.
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Cost Proposal
Your Investment
BKD knows our clients do not like fee surprises. Neither do we. Our goal is to be candid
we want to answer your questions about fees upfront. We determine g ndid and timely, and
variables: the complexity of the work,the ro'ect's s our fees by evaluating a number of
p � cope,the time we will spend and the level of
professional staff needed.
Our fees may increase if our duties or responsibilities change because of new rules r
accounting or auditing standards. We will consult with Y is you should this happen. regulations and
Proposed -Inclusive Fees
Truckee Donner Public Utility District
Financial Statement Audit for the Years Endill 11111111111 1 December 31 61 100
G2 550 65 200
Hourly Rates
Any work outside the scope of this engagement will be priced accordingto
our hourly rates.
Staff Levels
Hourly Rates
Partner
Mana er 275 to 350
Staff Senior. Su ervisor 190 to 250
115 to 190
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S"S ADAIN4 S
PROPOSAL FOR
Truckee Donner Public Utility
District
Prepared by,
Julie Desimone, Business Assurance Partner
Moss Adams UP
3121 West March Lane, Suite 100
Stockton, CA 95219
(209) 955-6100
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September 6, 20 11.
Board of Directors
Truckee Donner Ptit)lic Utility Distri(I
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--1 S 7 0 Don ner Pass Road
Truckee, CA 961.0-1
1)ea r B oa rd,
We are leased t(--)present this pi-oposal tO Truckee Donner Public Utjfit�,,-I)Istrj(,t(the"District")
P
1`01-annual audit services[-)egjnnit-19 With the fiscall yeai,ending Decernber 31, 2011.We underst.-And
these audit sei-vices are to be done in conformity wit], general1v accepted account�nja pi-inciples.
We believe 01.11-(ILia-lifficatiorls , tl
Utility entities a-re arnoT and we encouri-Pae yot.kf
t. :,best-
W conta(I our existing clients to discUss Ow-capabilities,Moss Adams offers the f(AlOwing to the
District,
Commitment to COMMUnication and on tirne delivery of audit report,manage m,,,D, t pFI,,,r to the ao fi'i te- r -
t dtm -� f- W
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MOSS AAD-A" LMS
Board of Directors
Truckee DO"ner Public Utflfliq-[)ist-1-ict
We hope this proposal exPI-esses our enthusiasm and desire to provide sel-vices to'Fruckee Donner
PUbfic Utility District.We are You will I)e pleased.�vitfi our inclustry strength and
business ifisights.We welcome any que'
stiol's You-may have about this proposal and th,--Ink v(-.)u
again 101-'YoUr consideration of Moss Adarns.
Sincerely,
.4
julle De.-sirnone, CPA
Busi.ness Assurance Partij.er
For Mo,ss Ada-ms Lj,p
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-ADAMS11.11
TABLE OF CONTENTS
ABOUT MOSS ADAMS
FIRM BACKGROUND
INDUSTRY-SPECIFIC CAPABILITIES
PEER REVIEW
4
AUDIT SERVICES 6
APPROACH TO YOUR AUDIT
6
AUDIT TIMELINE
YOUR SERVICE TEAM 13
CLIE NT REFERENCES 15
CLIENT REFERENCES
15
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L K SSAV-m- k
S ,
ABOUT MOSS ADAMS
.......... .......... ......
Moss Ad
iitns
FIRM BACKGROUND
s
Jams Provides accounting, tax,and consulting
se."ic(-? o Public and pnivate n.i. dd.e-r.arket
enterprises in many di (gent ir)( ustries.Founded ill
1913 and headquartered in Seattle, ,a s ajja 0�a,N'�)
ss
Adams has 2 oc a iol-Is in Wj,hilIgto�aa,Oregon,
California,a.,Arizona, New Mexico,a.a.na.d €arl sas, �#
f �
0W-Dass-urarice services inn u e audits,a€°c( aag,
iflitemal controls,business rise a anaig men , royalty
C(.-m-iPfi.ance,and efa) )loYee :)ene.(A plan Y Our tax
services include tax planning,,federal,state'an .local tax
compliance,cost segregation,and as:a and development tax credits.krVer : �}
£..elks , ' f r b s.
u l), ac <a:v 1sor sera ices or�aa�sr�.ers sand�a�;quisitions,corporate orate din,-11-1ce, tialtlatiora :f�
persona w a
eal. ,management, busies planning,litigation an(i forensic�Iccf.)ur�.ting i .r
tion
tech-1a0logy integration€egratio�n and f e v`y3.�?Y�s,is n�j corn. enss'ItLon.
c—' O er -Iddidonal services such as in c-stinent banking and WS-set maaaGag.enlent by d..Y. v;� g 3
.ar 9 <a. <a :; € te a ; �� .. . . �� .�.� <a. a a,- upon
Moss Aclanis s
headquartered in the West.Our stuff o (ve r. s�00 includes
Adams 's also a 1`oundj11(;rnembe
r of Pra, i-tpv,,:i global aiarice of accot_11-1til:10 ��
an Ea:�s�:��:iation o independent firin = a �_ M ,_�. �firms.This alliance is
. �. e a ar ets of North America,South America,
LP-Of)e,aaad Asia,
s P I
Our Utility Services GrOLIJ) is foCuSed on [lie delivery of high-value c-ILI(fit.
��oarasuftin services directed a the public power distribution,generation tn> r� ��a,�, a����
-fj
rya arket s.Our irila has formed e this Group so t� ����.�������individual �� ����a��aa r'
s time,experiences
:: .r� e � : 11'13 clients and the ifa� ustry, e�a�jve oil-going
oener audit sex�-�€���a� �"� ���.�a9��� }-Washington,Oregon, Idaho,� h skax H a�x;�::. � ��
_aiif Arizona aniNew
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Me'xico including-public utility districts,,Municipal entities, cooperative ter gajji&jti(.)jjs,11111tual
corporati oils,Joint Powers entitie's-and independent po%,ver Producers.Ott"clients deal "vith many
of the sanie issues,risks, Opportunities and constraints You do.We are experienced and familiar
N,ith the terrain facing you arid this n-jakes us l
nore(-4'ft.�ctive auditors and business advisor,,..
T'his focus of resources and talent ensures you work with ffotessionals knowledgeable about the
j'S_S11-eS a"(J C0)Idffi0]IS),T)U faCe,We are genuinely excited about serving the ejectric indUstryand
have a long-term commitMe"t to this area,The talerite(.1 it,(jividuals stjj)p(.-1rtjng mir Utilitv"liellts
have dedicated then-iselves and.11-0cu.sed their career iri this ij.j(.J(jst,ty. C
In a(Idi-If.-ion to otir coreALK-11t,accounti-na an.d ,,--a a.sery -led to serve
the ParticlUlar needs of the energ ices,, we have evolved and expan(
,�v indtistrV w�f-
contracting, j_)j..j sill iLh a broad array of cons u�t.ijjg.-,jctivi ties including
Ibility nd djversific�iti()n, hiterlial controls reviei-v, rates,Rn'ecasting and
many others."I'liroug', our Northwest Services Group we als o offer jnj. i,oj-j-n�jt
t.-en.ology cons-ulting,perft-)rrnance atidits, restructurin %, , o n
c h
9�111(1 W!0F.I 110w design, roS(
Consulting and 'St-ategic planning.North
b w(-,',S'-Coil,ulting's experience includes Cooperatives
Municipal entit'ies,public-utility fjistrifja..,�, t1l
e BPA a-nd reglorii) utifity planningassoc';.1ti(
Moss Adarns is tfi(.k fo)ujjdjjjcY-1
"IC1101-firm of TeIer(,_),-ee,a nation a] z"tfiliation ofregional ziccou t-I till
fir-MS th;--it alter gether serves over(.')0 electric and 600 telecom c
,fie.n.tsAIle fil-ms meet several
to-ries a year I,,-.o discuss industry sj)ecific developmej-)ts.ThisAfli 4.
ation berieffts you be c ause it-
assures Your auditor-is expanding itS breadth and depth of kllo�-] dIg i
I e e and Prolessional resources
r-elated tO tile fil(ILISU`V
I
Moss Adams is also)M,anchor sponsor of a national seiries ofannual Professional educ;ation
COUTSes tailored to ISI-he electric E_jjj(j telecoi-n jr, Justries,The f-.ivent provides strong course contetit"
�Ijld invaluable networking op],)Ortu n i ties,I,
Experience Auditing Electric Utilities with Generation and Transmission Assets
0LIr Utility Services ter-Mill has specific experience with the foll
-HOW111gy q,'pes of igeneratjon assets,
Hvdroelectric,Natural Gas,Coal,Diesel, Nuclear, Bio-Fijel -rid,Geothermal,Solar and Methane
1
production Wi
Our experience includ�,s tax credits and illCentiV eS,&Wditjng contracting, -accounting
constructioll
(lets performance reviews for ti-jese.0 !oil assets. In terrns oft-ransi-nission
assets,our experience includesauditing,cont-racti
zn� Inll,`.,Per-fOrmaince reviews and accounting,
Several of our clients have entered int.O.joint power a gencies and siniflar en
"I'der to m.eet their currentrld a future fi.:)ad denjands,t Ou tities (fike 1"ING(".) in
C011tracting,accou.n.tillo,,entits 1-experiencein this area includes auditing,
tv tvpe and I'oraiat'ion,,taxation and forecasting.
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1 S:
DAMS
Experience with Power Supply Contracts
Most of our chents have contract's with 111A 011cluding Slice)and Other counterparfles.We✓are w ed
versed ill the intricac ies of power c ontracts i.n.chidin.c,derivativeis,guarantees,joint
i operations,cost
recognition, regulatory accounting,infrastr-ticture designservices and billino models, We are also
ava ilable to a ssist with the challencv c-s that lay ahead wit h BPA's t ier ed-ra te structti.rean
rene�vaijle 1)ortfoli()requirements,
Experience Auditing Clients that Utilize Regulatory Accounting
s
Regulatory Accounting is used by 1110st if DOt all our electric Utility clients,Based on this,our
experience is(extensive%We under'stal-id rna-Hao'einent�iji(j board
positions surrounAirio t1hisarea of
ac('Ounting,the regulatory environment a nd hoc -v it applies to the rate MM119 Process and
3110(%ations.
Capital Markets
Asa lizitionally recognize(I fil-ji,
we are aMlstorned to addressing issues pertainjr.10 ow- to the capital
and bond niarket.We have extensive exper ienceassistj g it$ ?"
n clients with tax-exempt and
M"flicipal bond offerings,and. wit-h the audit.and a(-
Iting Js--.-,ues relate(JI to tax-exempt debt,
-COW
Issties pertaining to tax-exempt debt have become increasingiv corllplex ij) recent years and
hiclude such ite-rns as arl-_)it-nage abillity'debt defeasance aml "efil 1-1d it'"s.conduit debt disclosure
aild reporting,filtel'est rate swaps and other derivak-Jive instruments,testi.no of I covellanit
tl-
cOl-nPliance arid capitalized int(-,,rest-,just to narne a fe�,v, We also have experience�,,�Jth CREffs all(I
Build Anler.ica Bonds.
The professionals who will serve the District are intima,EelY fan-jillar with these issues and
C011tinually receive technical updates and educatk-m on these(,'(,')rnPJicated 100cs.N—lany ofour
partners and senior Managers are nationally recognized spe(akers,iDstrUctors,and practit ioners.111
this specific area.
Industry Lending Sources
We now the financU aCCOunting,reporting-,--jild
Ilk.requirem.ents specific to ��` "`11(justr� from.
9 Rtira-1 Utilities Service', National R_Ljri] (jtijibes
Finance Corporation,C'(_-)Bank, Federal Financing Bank M)d other developmellt funding programs.
Our firm audits over 315) RUS borrowers an(I we meet the 1-C-1cluirement'S Under 1.7 73,5 QL.ialff,ic1-RdK,)ns
of CPA (Certification, Indepe nd ence and Peer Revfe-vlv�Requireme nt),
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S ADIN
Association Memberships
Be-lmv is a listing ofour various affijj�jtjojjs associated with the electric UtijitV.ill(-kistrv, Our
involvement includes conference parti(j atio.11
P training,presentations,,111(i �'v'ritina
tn articles.
Northwest Public Power Association(NWPPA)'
American Public Power Association(APPA)
National Rural Electric Cooperative Association(NRECA)
Oregon Rural Electric Coo ears tive Association(ORE CA)
Washington Public Utility District Association(WPUDA)
California Municipal Utility Association(CMUA)
Telergee
Theseaff"liat'o-f
1. 1 Is benefitvou bec%-'1-1use it assures YOUF aUditor is expa"Chrig it's bj-ea(-'1t-h and depth of
kn ow ledge a.Ili d professiolial resources related to'the industi-y.
Aiudil. Exp(--�-nencr-.,
Moss Ad,.-mis is one<.-)fthe"10st experienced fii,rns in the Western United States in
audits in accordance with the Single Audit Act and Office of MM)agernent and Budget COMB)
Circular A-1-33 (A-1133 A-u dit),Acicordirtg to -1 Hie U.S. Census BLII-e,-j�j,s Single Audit Database,we
have perforiried (.-)ver 1,200 A-1-33 Audits f A-clie.17its since 1-997; the secotnd greatest number
arm.-mg tailfirjjj-.&� in the West,`'.le v.-.-IS. aiW ity of these au-dits
I la r - have been Conducted b y tile 1.
I-nernbers Of(Al"fil-m-wide Not-ft)
Group,which ilicludes all of the Merrit)ers of
the audil.tearn,that would be serving You,
Smart Grid and other Grants and Contracts
We -q experience auditiria sinart grid ()-rants- Upon receivilig federal dollars,ot
all grants to determine if an 33"audit is necessary,We start with or,-11-it
a PI)r o,ach is to review
docurnents,mstructK)rjs fj-0-rj j "iss-th"f)[Th h)-ericies, ,-i - ' e
_j X'Sting regulatory guidance.Then
talk to manac):ement,e 'anline internal audits'amid review cLjj,rent,,-jtj(jit guides and J)ractice aids
a"d state accounting bodifs,When we nee( urther inforniation,to determine
Ws atthe GoveriiiiientAc:cotti.it<-11),Iitv Office
f-GAO'),the OMB,a -i(-i�Ivpropriate�uranto-.-, -el
I ag r c -s DOE)
les such a
PEER R EVIEW
M os s A
darns participates in a I)eer revievv-proararj)anti is reviewed by a-riother .A firm three gears. every
firm of Clifton Gunderson [,[,p
In our last revievv%the Independent accoulitijo
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conducteda "full scope:_peer"evievv forthe year ended April 30, 200811"he quality Control review
includ.ed rcwjew of e.ngagtments I
)erf"Ormed under Gow--mu-nent Auditing Standards.
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-N- 110 Sz!,i-A DiNNI ks,
AUDIT SERVICES
APPROACH TO YOUR AUDIT
Atidits ar(.,,necessary for rm"'.1v I-ea sffrls includirto def_)t reqUirernents,accou ita bilitY to rnembet-s?
Support 1,01,counter parties and regulatorY re-port-Ing.We believe it is imp(.')rtant to j)rov1de cyrenter
�?afut-x fi-oai ari v rr t.tiian simply c(.1)J'1PI.Yi-f19 V-6th a requirement.We tr eat.the audit as an
OPPOrtunity to view your organization globally and believe it is in'Port,"I't to undej,stamd 30111-
business and, the kevs to Your success,
Our kapproach to an audit takes into consideration-our electric Utility exj.-)erience tempered by the
charactel,istics unique tO.Vour m-ganization.We Lindc.,rstand the uIlique elements(�)f F"ERC/RUS
accounting,deferred debits and crediu.z.,lvvlork order co11strtjcti(,)rj f0j-tttilitv pl�., t.h -it(.)r,%.?
plays a very difft.,rent role f(A.-a utilit 11 ow invei
Y$exception-based hitting,umque,--IsPects Of cooperative
equity,etc,We approach the process by assessing the high-i-isk areas and f0cusino the audit tinie
rld effort 'Fhese are�Is 11 io,
ght 11clude accounts receivable, utility plallt,(i eferred
deb its/lci�ecfits,derivatives,debt and Powel-SuPPIV-,This risk-L)ased audit zipproach focuses our
efforts on %41-lat is important to lk-�Ouand enabfe"s_lls to present vou wit-I,
meaning
,ful suggestions.
Timelin ess is everything and n-ieeting your-deadlines is OL11'p,i(-)rjt--V.It'is our,general policy that
M'!dilt partIlffS pe rfOrm their i-eview whIle the audit is oli-goillu
1 ch A101-%,s us to address jnv
isstle-s- with I-nanagernent pl-ior to aUdit completion arid to J j-!-av1fjg j.tj f*eld
r.s I-t 1 0 F",
yOkJ d0f)'t want to spend a !()t oftime educatino brand new staff�jj)ojj V
standards,Our Industry f(.)"S�i-SSUreS YOU won't have to. By their verly"natUre, '-Iudits cc-m be
disruptive t()a COMPMIY. �s clay tc)day Ifunctions a,'](] primary business mission,Strikii-io.a blalance
bet-ween completing thOrMflh audit and distractij.1f)
g your managemcmt an
d aCCOM.-Itilla te�IMS
requires a thorough
.err munication of expectal"iol-K 11, addition,we rmake every effort to use y(clur
existing m011111 ' ear end documentation sc)as to avoid having your staff cre- -Ivsis.
/y ate,-,idditj(.)n,-_jj �jna
The rnu:ljori ty of Oki.r tra nsition e fforts he directed toward oaij,jijji cIn ti n d erstandi rig of your
accouiatillgs.J ,voLirinteriial(,f,:)ntrolenvv()ul-orgalliZ�lti(),),Ssti-ategic
direction,Through.car eftil listening and leall-ling,we can mi
Dinlize the challenges of transition.
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MOSSADAM.S.,)
Tra o
nsitin Step
Actions
7�!
ntrance Meetings Conference with your finance department and other appropriate
.......------....................grou-Ps-to-discuss risks, expectations, Process, and timelines,
Planning Sessions -------------
—-------------------------------
Discussions with key managers to discuss risks. expectations, the
audit process and firrielines, and to share key strategic, financial, and
operational information,
Review Working Papers Examination of your prior auditor's working papers to understand
their audit approach and the timing of their Procedures and to assure
their procedures were adequate for our team to rely on the opening
balances in your financial statements,
Design Audit Approach We devise an efficient and effective approach that addresses the
potential risks we discover during the transition,
f
AUdftor T ransItion
Great planning, understanding roles and responsibilities. In our successful transitions, we meet
with the key members Of Our clieffs team, This"'getting to know you" meeting lays the ground work
for our la pnning and is an effective way to make Initial introductions, We use the information from
this meeting to begin our planning process.
Open communication of expectations.This is the greatest SUCCPSs factor in transitioning ack
, but l
of it can also be the Most significant impediment, At the beginning Of our work, '00z will make
inquiries of various
Individuals regarding the expectations of us. In addition, we willtake the
OPPOrtunitY to c0mmunicate our expectations fo r a successfull audit.
Regular updates.We will meet with ap
Propriate Parties throughout the audit pr cess 1nterim and
10
final fieldwork)to compare planneid activities with actual acComplishnients,
COMMitment from both parties to meet deadlines,
In accol-dance With Statement.on Auditing St-andards (SAS) 1!1,;�e consider the follo vi
I v- ng matters,
The District's business/Industry matters and accounting Policies and proc edures, including data
Processing systerns
Timing of conduct and completion of audit and reporting subi-nission deadlines
Planned assessed levels of control risk-. including design and imPlementation-of internal controls
Technology assessment
Preliminary materiality judgments
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Analysis of new accounting pronouncernentsand auditing standards that may impact t.lie District
n efficient audit approach and design f tailored audit programs
Financial statement items or conditions likely to require additional analysis or expansion of audit
tests
Nature of reports to be issued
Also, w1th SAS No.99,our team will hold internal 'brainstornlfiw" Illeetings as well
The rrrarn objective of this phase of Lestirig is to ass(''ss the a .eqluacy of-I the DLstk ict"s E.di. .b-
nal
3 iderstandlifi O rile design-Ind inip �:���a.err�.L��.iori of theconrl rol environment; � 5 _ £rrr���r�
yy^^��^^���3 y p^} ^pg �� l�y,gf p gg6ttpp } y-�g y pq z} }�g}y }i ^� � � �.�€,:,� X.f.#`t��F'3.���.
assessment,f'�.d.ld test..�.,ontk~4. f €:k�„�L.ivities' ifi `�,1rb-�€€,3�0.ion,�.,46.3'Rk��3 ulli cat15..n and n..Loni C`+ rillo as
a p"(Tr& te Y i results of these
fthese t-est,e}-1 b le s to A eterm f n ke the n unf.-)e { qk level f sug) q L.111tk tests t.o use,This assessment incl-Lt(jes:
ve
Obtain knowledge of the design and implementation of controls relevant to financial reporting
and
compliance with lees and regulations that have direct and material effect on determination of
financial statement amounts,
Obtain cOPses of system, Policy andProcedure documentation from various departments. We. re
tain
these cloples in our permanent working Paper files and update them annually.
41 Orr tests of internal controls will be conducted in the most efficient manner
Possible
f . � �� i and
combinedins workorder/utilityplant section s m possible. or example, when testing additions toiiib plant, we will incorporate f the rii, accounts payable, purchasing, overhead. and
capitalized interest systems,
Our Information technology audit specialists will evaluate general computer ontroi�. General
computer Controls provideassurance that data are Programsh process the deb ry ��protected
i
fr from unauthorized modification and processed i accordance Y ith 3 liana i.;rt 5 � t;A�i rx....ions, n
that confidentiality is maintained. � �� ��intentions, �
Any signifier t matters r elathl for the internal control structure e a are noted during
will be provided to the Board and ni'a-nagernent at the completion of 011ir audiL
Substarifilve
will -le c0111111111licateCt to management an(.] will be included in our letter of-reconilliendatiorls that.
The exterift of sti r°tantive test,illo is dependent..€� r(.rrr file resUl.s of our irrt rrial con
and x rrr K Th is rrr includ es tests of balances and/or .ransa bolls, cwaf rnatior s
certain testing 3'Yrr.£l be Performedprio.ia to year end.to eng.sure��'e meet yourf eA,f i:5�-s p ex- c
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Samplinc-,,
M'V%,"ill select a sarnple of transactioT.is Morder-tope I-
foryn tests of your internal controls.
S,-A1111)li119 ill.Other areas will be dependera on.the resits of control testing,evidence gained
through substantive analytical procedures and our M)iliq to use autornated tools to audit ba
transactions, Jances
Analytical Pro Ged iu rt-,�
As required,analytica! pj,00--�du.res are ccinducted during the Planrifiig and final phases oft-he audit,
In�--Iddition,we use analytical procedure
s in order tote st several fin,111cial statement bahances,In
Particular, use analytical procedures ill testill-9 revenue .-tnd certain (.-.,ost.s, 1,�ValUatil-1gyOLIF
revenue I
and costs by custorner and is an efficient and effective means of obtaininp-,audit
evidence and providing usef',.�] f(--edback to
How we establish materiality
Conduct preliminary analysis of financial statements to make initial judgment of materiality.
Consider the needs and expectations of the readers of the financial statements.
For each balance presented in your financial statements, evaluate relative levels of inherent risk and
control risk, and assess the risk of material misstatement reSUIting from fraud or error,
How desion ot,iir ai-j
dilt pry cedi-ires
For each balance wesented ire V-(.--�Ur `
1 k financial staterneflits,we evaluate tlle relative levels of"inherent
risk and control rilsk,as well as mak--e an assessn-�ent of thte risk of nl,---iterial rnisstatement result-fila
fi-C)", fraud or error, `e tai-Jor our audit prograrns fi.-)r each halance t(, j-)-l-
.1ta i rl evi e c
COn-ibination of , d 1.1 e tron')a
-1) internal U)"t"Ol testing-, (2) an.alV6c,-1J ProCedUres,.and (3) substanti t i
ive tes
The balance of evidence to be obtaint--;(I f-,,-om each �--)the three gent:%1-cld IV pes 0I,Procedures is
detern-iinec] using an audit-app-roa(-J-1 decision rnoclel taking into-)acc
Ount the strenoth of vour
syster-T) of internal controls,
Oreating efficien"'Y by wili,".Ain g U----chnology
OUF t-R)al is to mininiize the disriupti
n
ucm V, your staff while<Jainjn.g as much Msigllt into yot)j
-iz(-?-cl auditin
operatioris as possibie.We use cornpute, g tools such as ML whicl, �Illovv us to access
data and conduct audit tests on uP to 100%of tr�,ansactions,providing' k
effective a rnens of',- ,us with very effident and
it,(-ljti ng('ritical irff-Orrnation thatafft"ct's YOM-financial staternents.
We�-IISO Use audit Soft-ware that allows us to link our vvorking papers and Mialysis directly L r
-.-ilance,which allokvs us to au"tomate workino-paf)er prepa
trial b. t .1
irat-j(-)n and provides-us the abilit-V
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S ,NK) S AD LLP
to analYze AccOu'its in many different ways-Thismethod creates less work for you, reduces the
mar guin for hurnan error,,-,r-id delivers tirnesaiving[)enefits.
tl
Moss Adams has intern�jljv(jevelof)ed the core ofa paperless audit,system,Our systern is unk -e
froni traditional systems 1-u
ors it i"COFPorates an internal control and risk evaluatic)n' model.
Ongoing communicatfor'"!
At NI-loss Adams,t,,�,,e e-niphasize effective and ongoin
level of sery ice which is kased()n V{.--)ttr spe C01-11-1111."'i('at'i0J)s,YOU-will notice a suj.-�erior
cific expectations rather thar,()III-()wjj�js.,tjmptj()11s.,j,o
save Vol]vah-ulbje tiTyle ot-Ir tearer accepts responsi bility f-"(,-)r managinu t
between our organjz,:�-ti()jj.s 1-1,f-'1ir)eS of
j fl-C111 1-C)Utifie phone cadis about in.i.n.-lediate issues(.-)f concern to ajiv
fori-nal meetings you wows](1 lilie Lis to conduct.We believe thisis central to a successful
relationship.We also Propose periodic status meetings to e heldr ut t emvaeg h grnent,
In addition,you require Proactive communications about our engagement findings. We INIll notif",
voll a bout a n y ernerging opera tional
dcCOUT"Urig,con-tpliance,�and regulatory i-natter
s or kA concerns,le understand you nee( jjjsigljtfjj.j M-,d timely Infol-m-Itfol,and Vou don t need,or want, �jjjv
Surprises,
Board arid �---iudft COrTMI't-t�:,,-e rese,u,� ion
C(,:)TYUTDUniU1tjor!with the Board and manager t tljyf:)tgyhout the audit is vital to this process, it is
il'r'Portant we ch---,�arly k.mderstf--u-id Your concerns.-.-in(.j y0j., understand why we examine cer-taff)
areas more than oftlers,Alfu-,r the audit is complete,we Prepare a pre'sentatiorl for the Board
-1 ghtin
and Audit Coi-nmittee highlic �cf past,elvents,co
Wal'iSOFIS to fildustr benc.h.mF I rks an d
su<gestioi uture.1'"hiroughoti.t t1le year,we will meet-periocl. v
4. �).s fbr the f, ficaliv With Tman,--Igernent to
discLls-s Current happenincy�:,issues and con'cel,r)-S,
frv,lanagjernent letier of recoau endatioll's
it is custor,narvfor our firij, to Produce a Managei-nent,Letter ot'Recon-irr�itjjcja tiolls 111 Conjunction
with each enoagement.The audit pro-,ess ives[Is a,-, OPPOI-tunity to assess Performance ancl
trends and sl--)ot-e-n,kergino needs Oropport-u-nit-ies. By reportino t' -.,se condition.,-,, -jcj s --jj _()peni-100-
uP to discussioni,the management letter can play an 1-mportant role in establishing,,-in agen(la for
the re-fnait-lder of the year.
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.NL1 /1()S" S ADAMS
AUDIT TIMELINE
The following is the Proposed schedule fiC.)r the first yeaarau(ut for the District,
Audit
i ScheduleProposedTiming
Schedule to meet vv t� ,sr�-rr' r t^r �E f�y if {q y y:. l,f ..,,..E S3G tS5 rb'sb'd tf:y3 1, = t b.'� 4r,
�ko.�Jng papers, Late cfoh;er 2011
Audit Planning
Meet with rTrana�%erw n.for-pre-a dit plariniri£:arid to obta:'
an u:nderstanding of sy&t_rrjs,
Otltrols,and,Current yeN�.r€S rues, Lacw 0cto b ef�w��
4f t£vtw r3Ya a `rt''r".t D,9 ii 4 detailed isfi'. of ii y needed b pit. �_,2 n. o
he aLl
the tire- ritg of when i erns are?i,ei�,'�ded.. � Late October 20,11
Interim Fieldwork
Perform tests of inter nai contrnis,
Audit Fieldwork
co firrrralbons c,,{;ash, and other #wu €€ r-
r w, .ned necessay ,. u rya r` h r}
11
Perforr f SUbsta i ��e a�.dit field r g' ' ,g' :
March/April 2012
Wrap aifit n .rr ;t'r�YwPreparation
of financial stater,,,,z)nts
April 2 12
Report Preparation
Pi Fe e t draft of filar-c€ai stat ier ts.audit �
�,,.r� r�:>�rr•t,�:�n�;�r�rar�aer�r���rr�i�;tt��r to s�;r�#or
,.w,anao ern en,
TD
e a e
r� , �t draft�f:rrjCjrw;a a�;�'€ �t.1 •.r�a 9•� ��xx�r•��s 3 f
g :L•J, „. t �.o� `.,an rnLz: agerni4:r�.;€.-,tt`r t i board
r
TBD
Board Communications
Present final are it re r-t.financial statementsMoss Adams uses can electj-()jjiC Workpaper 1-11anagement systelll fbr Our engagemeiit file
,
managementletters
9 ffin-working Papers are the propel,ty Of Moss Adams amd MlStitute co-
rr orrT,-.i l()tj.We���ay e as e�t ������ever, o Ma teem available fray rev,(ew by r� (� 3� ,agencies
�'ij.#.s�3'��jt.t.��authority�pit. 'given C.�C...S�-�.<���3��
response is required 3}v Td.�i�pfbY i�A S:t�, b.� i:�. ��ikl3 access tO Such e llg£)gern`,.n .E.4elatr"kd.dl.Scur e
r`r:vide undo theupei°�.ri jOrr O :� r Moss Adams so line .Further-More,, a pt'm request,
be
e r required�_0 �r r�=id(—� )h0't.()Co j)1es Of sek—�:t d �ils�ager�ri nt-rN�.lat (10(' ��r�:nta ����
� r �r
�10-encjes 01-Other thin arpties, `e N?01.r. :,--it ry sjoel-Icier��r-�jtrr°�. �<�.���r�;=�r��{� 3�r���arl( . �..�r4 �Y
r 1 `' � to
WWW.MDSSADAMS.CDM
S"""S"',ADALMS 1.131
distribute the copies()I-ajormation contained therein to ml-hers,including other goverlinlent
agencies.
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M()S*,Sl ADAMS
YOUR SERVICE TEAM
Your team will consist()f individuals frorn otjj c;,ijifornia Ce.ntral Valle-V and Portland,Oregon
offices. We�iliticipate,,-ippi-()xi.iii,-itely 700,1�,!of the hours to corne from the California Central Valley
offic(-.�S, the rernai-nder-%evill be served With UtilitV m.embers fi-Orn Portland. We have seject(--�(]
-ed on t hei r ex perience serving irri gation
the followillo individuals to w Ork with the District b,,,�s
districts
el eCtTic ut if,i ties,and I -.1nicipalities along witt) their dedicat'" t:0 PI-Ovidillf-f superior
client service. 0
f
Ajdllk-:� Des i rrior--�,e, Bus' Hity
I., er feir d C. Od ub
vice Grou p
Engagement Fartner/Reviewer
Role,
Pordand,Oreo .)TI
Office, 71
Julie Desinione 's a business assurance part ner and the chair of the Firm's
--e Grot,q). She has been.mvorking]n public accountin
Utfliq.!Servic : arc serving
utilities for over ten year; and is responsible for nunierous audit engagen-i(ants. In addtntioo aUdit"
services,J-u1je has performed rn�-.-mv cons11.1till,j�)1-f)ject
technical and operational lb s and speaking engagements covering
iscl,ies, I'110ugh Julie's horne base is Portland,Oreg-on,approximately
D,
()f 110r I U-silless is locat(,-,A in California".
So-rne specific areas of her prof(..�ssional experienc(-.3-111CILide:adwinc(j Utflit,_aCCOLH-1611<1
cooperative matters,te,Ahnical auditing services illcludfii�g�A-133,colltracti oi
.4 1_5 11,_ ssues and internal
control ev.- luation.Julie is a licensed certified pu.blic accountant and�
I 11stitute of Certified Public Account,,jnts and Washin , j rnember of the An-terican
<;-ton Society of' Ted Public Account,-Ints,
Cei
During the la,_,t th.ree ve,,-irs,Julie C(.)y ipleted in excess of the required CO-ritinuirig 1:)rofiessionaj
education in Accounting and Auditing necessary to Inadntain fier license,
Clients Julie c0rithlues to serve include, imper~ial Iri-I.,igation District,Southern C a.if rn a ubli
.1 1 *o- i P ' c
Power Authority Northern California Power Acre ncy,"Fr'Allsillission Agency of'Northern Calif()rnia,
Alaska Power Company., Public Ultility, District No, I of Ck-irk CO'UrYty,and Eugene W,--iter
Electric Board.
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ALM
Cheryl Eisenk--�clur._ ffil� ines,-s &,-,-surance Vlarmg�,,-
Engagement Manager
Role,
California ("entra.l. Valley
Office�
Cheryl Eisen.hour is, less assurance m an.-I.ger vvith over eigh t v ars
ience providing ZICCOLInting and ad -v services to 11011profit and
expei
Vism
gove rn rr)-e rit industry clients.She will be a
b t'lisset to 'the audit tearn as she
Bras spent the past three years auditing both the California State Senate and the California State
Asserribly(co,611bined as the Califorrija State Legislature).This J)rovides a unique into th-e
C`aillfift-�rnja government funding and budgeting pr o(,ess.
ling net-YI will be the fieldi-vork iri-ch,11-ge
responsible for plam execution,and comple'.10Y) Of the audit arid deli veral.fles.She will provide
I
daily strpervisi(-n and oversight to Oul-staff while they are onsite.Chet�yl is a licensed _certified
Public accminta nt in the stEate of Califor nia ar.).d a i-flember,of the.A[C-PA.She graduated frolli
University of Cfliforlia Santa Barbal-,1 vvfth a Bachelor of Arts, E(,(:)n<:)m_ics-with an Accountitio
C'oncentra.troil
1<.e i t h S;
Ir"novit-, Duism�--ss AsSLJre,,-)nce ")en10r
Rolex In-charge
Ncture Not
Ava Wbif,'. Office: Porth.-ind,Oreg(-,)n
Keit1h SiMovic is a business assu.ralice seniior�vitj) M-re than four years()f
exf)ej,iejice it, p1j6 lic accoi.inting. Keit.h.has assura n ice(.�xperjc-.f-nce With -1-1
broad Client base., iinclud.ing(ffility,Forest Products,
Disti-ibution.,Heilthcare and Not-f6r-Pj-(-)fjt()I-(
-I i za t
Jons,as well as a variety of experience jyj
other types of industry.Keith is a licensed c ertified public accc,,mritant in the'state of0regon, 1--fe
graduated vviitfi a Bachelor of Busin.ess,Administraltion With.a conicent.rt'.1tic)IlA
Oregon State Unhv-ersity. 111 accounting ft,or-11
Clients Keith Continues to serve inclu.de:Transmission Agency of Northern (.':ahfi-)r.n.ia,Southern
Calift')HIL'I Public Pm%,,er.Authority, it of.
Jdaho Falls, Eugene Water and Electric Board'.Norther.1-1
Liahts,Inc,and Power Resources C"'ooperative.
The reniahjj.jja st,.Iff Il_)en-ibers will 1.)e fi-0111 OU"Cflifornia Ce.n.trt,.Il Vajjey Offices.
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0 : .P
CLIENT REFERENCES
CLIENT REFERENCES
The final rne'kasure of an accountirIg fir'll's caplability t()deliver on its promises lies not.in what is
said ir,its Proposal but In the testirn�.oriy of the compan.ies it has served,The clients li-.sted below
'have received similar serx�ices as those ProPosed to the District,Several of these client's have also
received.singlc---� (governrn(-.�Jlt)audit services. We en('OLIY�ige�?Okj.to (,011ta',
(t these references for
feedback at)out the qUahtV of service we provide and level of"satisfact-ion.
Client Name
Contact Name
Phone Number
City of Portland are Kingston --
Clark County Public Utility (503)823-4358
District Rick Dyer (3601)992-3384
Eugene Water& Electric Board Cathly Bloom (.54-1)4.84-2411
Imperial Irrigation District- Greg Broeking (760)339-9304
Lewis County Public Utility
District Rich Bauer (360) 748-9261
McMinnville Water& Light Mark Carlton (503')435-3111
Northern California Power I
Agency Donna Stevener (916)781-4244
Pacific Northwest Generating
Cooperativel/Power Resources Jof Wissler
f 503' 288-1234
Cooperative
Southern California Public
Power Authority Vernon Oates (6'26) 793-9364
Tacoma Public Utilities Scott Cannaday (253) 502-8512
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0, S" S ADAMS UP
COMPETITIVE FEES
Moss Adams is C offi-mitted to competitive fees for the DistrIct,that''aire coniniensurate with the
experience and necessary level ofservice de'scribed it! this proposal.At all tilnes,we want you. to
feel that the dollars you spend for,our prof' ssiorjaj services bring V(-,)u exceptional value.()u.r audit
e
fee is hase(j upon our assessnient of the audit scope, o1jr knowledge ofthe industry issues, the
l'isks inl-iererit in Iyour business,alld the ef"kn-I required to Cornplete a thORK1911 au'dit. Based on
undersuanding of"your service needs and the nature of Your operations,we have ire par the
following"Not-I"o-Exceed'I"f(-,,e estimate,
Fees for Fees for Fees for
Service Description Year Year
Year
Ending Ending Ending
2011 2012 2013
annual financial statement audit
Management report including a review of the internal 000,$35
control structure assess ment of control risk $37,000 $39,000
Out-of-pocket costs
WE! U riderstaild these audit services are to be done i-n conforri-flty wit-], ge.neral.1y accepted
accountilig principles and that the Distfict requires 20 bound c( k.y
)pies-and one electronic(:()pv of the
financial st,':.iternent a utjj,k-including tie Coanpetent,units and 20 bound copies and orie electr"onic
co v of the financial statement audit excluding the competent units,
In the fee quote reflected al..)ove we icave t,"ke"I i"t-0 account District staff,jJ_IcJUdiJ_I0()'11-1�!nagernen t
Perso.nnel,will be a vailaDle during the a udit tc)assist with providinin information
ex hMations and the preparilti Z� I Z.- ,docunientation,
P ion of cor or).S
Since opeli coni mu is 81 1
Irnportant in (PLIality relatioJiships,we dlci not charge clients every
th-ne t hey have q uestioris,c oncerns,or wal-it,t,o 1-ur-, an idea past us.in 'a
_!,,Ct,we encou rage ongo.-I'll)"
dial(Tue as it helps to kee
?n p us in front ofyour business issues and concerns.Ifthe advice we offe'r
requires a substaritifl tiM,(!conin-iftmen-t-,we first cliscLiss tj-1(.SCOI)e C)f j.-h e work and establish
-in agreement on t he fees with yoti.
The s(-,oj-,)e of work and related quotes are subjecttifOffl-flrni�s cheritaccept-lan.ce process
verifies that thefirsnli.and the client J)oth undey4and the specific services we are being asked to
Perforni 2) aSSUres that the terins of the conlCract-are acce e to of pariJes and in a greefrient
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Nffos- S-AIDAMS
with Professional audit Standards',and 3.) confirms that we have st-a-t."fed the engagenient with
client.In addition,we will need to cc)m� 0 the P-0spective
ou-1-Profession plete our inquiries of your former auditor as required by
independence.al audit staridards.And finally,although we have r)erforrned an initial review of our
fl-()m l)istrict,we will lierfr)rm a m.ore detailed inquiry of our p�artners and staff to
ensure we have nnet apf)licable independence standards.
Our proPosed fees are also based on a presumption that vour books and 1—ecords will be in good
Condition,and that"YOLU*accounting and finall(-e staff x.
vill 1)rovide reasonableand custonia ry
assistance�. The estimate is also based(M�ICCOUntijjg.and aUditing standards that have been issued
as of the(late of this proposal submission,ill
Cluding SAS 103 through 1.1",which cover a rMAUe Of
issues on an auditoCs assessil-ient of r1sk and required audit docunientation.Accf-mriting-and
auditing stan.dards can and do change;,S(.--)if future ch�anges are siGnificant enougli to warrant it,we
would modify oill, al audit tl tn
)proacl-i.,procedures,and scope of vvoi-111-1,Bef-6r(-.--,,doij-.1to So.liowever,we
Would necrotiate--ijiv a(jjj_j_stn
ient to our fees with
2