COMMUNITY COLLEGE LEAGUE BOARD OF DIRECTORS Hotel

Transcription

COMMUNITY COLLEGE LEAGUE BOARD OF DIRECTORS
Hotel Solamar, San Diego, CA
April 14, 2011 11:30AM-1:30PM
AGENDA
1. Call to Order and Approval of the Minutes (Action)
11:30-11:40
The meeting will be called to order by Chair Jeanette Mann, action will be taken on the January
23, 2011 meeting minutes, and a report will be provided by the President and Chief Executive
Officer.
2. Organization
2.1 League 3rd Quarter Fiscal Report (Discussion)
11:40-12:00
rd
The board will receive the 3 Quarter fiscal report and provide feedback.
2.2 O Street Remodel and Office Consolidation (Information)
12:00-12:15
The board will discuss the proposed remodel of the O Street office and consolidation of the
Legislative office into the O Street office.
2.3 League Budget Outlook and Strategic Plan (Discussion/Action)
12:15-12:45
The board will review budget scenarios for the League and discuss implications for district
dues and the League’s Strategic Plan.
2.4 President/Chief Executive Officer Evaluation Process (Discussion)
12:45-1:15
The board will discuss the evaluation process for the President/CEO for FY11.
2.5 Selection of Auditor for the League (Action)
1:15 – 1:20
The board will act on the Audit Committee’s recommendation to select an auditor for the
League’s annual audit for Fiscal Years 2011, 2012, and 2013.
3. LEADERSHIP/COORDINATION
1:20-1:30
Representatives of the organizations served by and participating in the League will highlight
major activities of, and issues being addressed by, each organization. Board members will discuss
possible coordination and resolution of issues identified for attention by the League board.
A.
B.
C.
CCCT (Jeanette Mann)
CEOCCC (Chui Tsang)
4CS (Russell Hamilton)
Note:
¾
¾
¾
¾
Information items are those presented for information only and questions from board members
Discussion items are presented so as to receive comments and direction from board members while issue resolution is
in its formative stages
Discussion/Action items are those where discussion may lead to action taken at the meeting
Action items require a vote of the board
Support material in agenda
ITEM 1
LEAGUE
4/11
UNAPPROVED MINUTES
LEAGUE BOARD
January 23, 2011
Sheraton Grand Hotel, Sacramento, CA
1. Opening
First Vice Chair Chui Tsang called the meeting to order at 8:00AM. Other members present were:
Isabel Barreras, Terry Burgesss, Russell Hamilton, John Hendrickson, Jeanette Mann, Georgia
Mercer, Jose Ortiz, Doug Otto (via telephone), Diana Van Der Ploeg, and Jim Wilson. Others
present were: Judy Centlivre, Bobbie Hales, Cary Jung, Scott Lay, and Kimi Shigetani.
CCCT board member Walt Howald did not seek re-election in his district elections last November
leaving the chair of this board vacant. In accordance with the board’s bylaws, and on a motion
made by Isabel Barreras, on a unanimous vote by the board, Jeanette Mann was appointed to
serve as chair of the board for the remainder of the year.
Jeanette Mann assumed leadership of the meeting and reported that she has appointed Riverside
CCD Trustee Mary Figueroa to replace and complete Walt Howald’s term on the board.
Scott Lay distributed a report of activities he has been working on since the last meeting. He
reported that attendance for the Effective Trustee Workshop this year is up around 30% and the
Legislative Conference attendance up 50%. He said the discussion on the League’s Investment
Policy would be postponed to a future meeting. also noted that the April meeting date, the 15th, is
now in conflict with the White House Summit on Community Colleges to be held at San Diego
City College. Scott will determine options for the board meetings to present to board members
via email.
On a motion by John Hendrickson, the board adopted the minutes of the November 20, 2010
meeting as written.
2. Organization
2.1 League Audit
Chui Tsang, chair of the Audit Committee, reported that a conference call with the auditors
was held on January 12 and said that the committee had only a couple of questions for the
auditor at that time. Director of Fiscal Services Cary Jung introduced Bobbie Hales who is a
partner at Gilbert and Associates. Bobbie said her firm issued the required communications
to the committee and that no deficiencies were identified as the audit was conducted. A brief
discussion was held regarding the gift annuity program and there was some concern
expressed regarding the negative balance on the Commission on Athletics budget. On a
motion made by Isabel Barreras, the board voted and agreed to receive the FY2011 audit
conducted and prepared by Gilbert and Associates. Cary noted that this is the final year
in the contract with Gilbert and Associates and a draft RFP will be forwarded to the Audit
Committee soon.
2.2 Second Quarter Financial Report
Scott Lay reviewed the second quarter budget report and said that revenue and expenditures
are on target. He noted that the majority of dues revenue is received early on in the year and
that rental income will fall below budget with the departure of ACCCA from the O Street
office. Staff continues to make every effort to keep expenses down.
2.3 League Strategic Plan
Scott Lay discussed the draft revisions to the Strategic Plan that were prepared at the League
Staff Retreat last August. He said that the updates do not change any of the four goal areas
previously adopted by this board; rather there are adjustments in the objectives either
increasing or decreasing to more accurately coincide with today’s environment. A brief
discussion was held and the board agreed the CEOCCC and CCCT boards should review the
revisions and bring their input back to this board. Therefore, the Strategic Plan will be
agendized for the CEOCCC and CCCT board June meetings and the League board will take
action on it at its July meeting. The board agreed to accept the objectives stated in the
Strategic Plan at this time to provide guidance to staff while the Strategic Plan is under
review by the policy boards.
2.4 Board and President/CEO Goals
Scott Lay reviewed his professional goals as President and CEO of the League as a
continuation of the discussion at the November meeting and noted that in addition to the
goals listed in the agendum, the League will also conduct a statewide poll on community
colleges. The board agreed that the budget impact statements on the individual colleges
Scott provided this year were particularly helpful and would like to see those continue. On a
motion made by Chui Tsang, the board approved the goals for the President/CEO as
stated.
A discussion on goals for the board was also discussed at the November meeting and
Jeanette Mann proposed the following goals:
1) Maintain a prudent reserve
2) Ensure that revenue exceeds expenditures
3) Establish an audit committee
4) Revise the current process for evaluating the President/CEO
5) Approve a plan for implementation of the recommendations of the
Commission on the Future.
On a motion made by Chui Tsang, the board unanimously approved adoption of the
aforementioned goals.
2.5 Office Consolidation Update
Scott Lay briefly described the operational benefits and concerns with regard to the
consolidation of the League’s O Street and L Street offices as was discussed at the November
meeting. He said that ACCCA vacated its space in the O Street Office in December and he
expects the League’s L Street office staff will move to the O Street office in the summer. The
firm contracted to design and oversee the remodel of the League office several years ago will
provide configuration options next month and staff will keep the board up-to-date on the
progress.
League Board 1/11
Page 2 of 3
2.6 League Governing Policies and Bylaws Review
A first reading of the proposed revisions to the League Bylaws was discussed at the
November meeting. The second reading was acknowledged and on a motion made by John
Hendrickson, the board unanimously approved the adoption of the proposed revisions.
Below is a record of the adopted revisions.
Section 1. Audit Committee. There shall be an audit committee, which
shall select the auditor, review findings thereof, and report to the Board
on such findings. The committee shall be composed of the First Vice
President/Treasurer, the immediate past-president of the California
Community College Trustees and the immediate past-president of the
Chief Executive Officers of the California Community Colleges. In the
event of a vacancy in any of these offices, the Chair shall appoint a
member to fill the vacancy.
Section 1. Section 2. Committees. The Board may appoint one or more
committees, each consisting of two or more Directors, and delegate to such
committees any of the authority of the Board except with respect to:
League staff will review the Governing Policies and Bylaws over the summer
to identify updates that might be needed.
3. Leadership/Coordination
A. Russell Hamilton, President of CCCCS, reported there are currently 69 active senates
throughout the state and noted that the Accrediting Commission of Community and Junior
Colleges is looking for more participation from the Classified Senates in the accreditation
process. Russell said that the next Classified Leadership Institute will be held June 23-35 at
the Ventura Crowne Plaza.
B. Jeanette Mann, Acting President of CCCT, said the CCCT board meeting was productive as
board goals were established, which included developing a pool of qualified trustees that
could participate on accreditation site teams. The board discussed the budget concerns as
well as the Commission on the Future recommendations. She also announced that CCCT
board 2nd Vice President Isabel Barreras was recently appointed to the Board of Governors.
C. Chui Tsang, President of the CEOCCC, had no report at this time, noting that the CEO board
will meet immediately after this meeting.
The meeting adjourned at 9:50AM
Scott Lay
President and Chief Executive Officer
Prepared by Judy Centlivre
Executive Assistant
League Board 1/11
Page 3 of 3
ITEM 2.1
LEAGUE
4/11
LEAGUE 3RD QUARTER FISCAL REPORT
(Information)
Background
In July, the League Board of Directors adopted a budget for Fiscal Year 2011. The board received a report
for the second quarter at its January meeting. At that time, the budget’s overall revenues and
expenditures were largely in line with the approved budget.
Due to the timing of the reconciliation of monthly records, the 3rd Quarter Fiscal Report will be
distributed at the meeting. Staff believes the report will continue to show overall revenues and
expenditures consistent with the adopted budget.
ITEM 2.2
LEAGUE
4/11
O STREET REMODEL AND LEGISLATIVE OFFICE CONSOLIDATION
(Information)
Background
League staff currently works out of two offices—an owned building at 2017 O Street and leased space at
1121 L Street. The O Street space was previously occupied by the California Association of Community
Colleges and the L Street office was the occupied by the California Community College Trustees.
Until December 2010, the O Street office was fully occupied by the League (including Commission on
Athletics) and the Association of California Community College Administrators, which leased space.
ACCCA recently departed the space as it expanded its staff. With the L Street lease expiring, the newly
available space and continued budget difficulties for community colleges, staff examined the cost benefits
of consolidating the offices. With a consolidation deemed programmatically sound for the organization
and net savings of $55,000 annually, staff proceeded to examine a remodel of the O Street office for the
consolidation.
Remodel
Staff engaged DesignTech, the interior design and space planning firm that has worked with the
organization since its founding to examine functional use needs of the O Street office, prepare blueprints
for a possible remodel, and secure bids for the remodel.
The prepared plans:
Upstairs
x relocate the fiscal services staff to the ACCCA space to enable each staff member to have an
office
x reconfigure the fiscal services office area for the legislative staff
x relocate a COA office to the side of the building with other COA staff
x upgrade the break room space, improves ADA compliance, and eliminates the “break table” in
the library area
Downstairs
x reconfigure the copy room and work area to be more efficient
x provide offices for the executive assistant and shared office for Director of Policy and Northern
California regional representative
x add workspace and improved storage
x improve the break room space
Bids
DesignTech sought bids from two local contractors—Carlisle Construction and Champas Construction.
While the Carlisle Construction bid initially appeared much lower, it excluded many of the necessary
costs included in Champas.
A staff panel of three (Kimi Shigetani, Cary Jung and Scott Lay) determined that the Champas bid was
thorough and most appropriate and checked references, including the Association of California School
Administrators.
Timeline
To minimize staff disruption, construction will be scheduled for July, with project completion intended by
mid-August.
Cost
Construction
Furniture
Moving of L Street
Equipment
$113,760
$10,000
$15,000
$5,000
Total:
$143,760
The costs of the project will be paid from the categorical reserves for the Building and
Furnishings/Equipment and doing so will not require the deviation from the required maintenance of a
categorical reserves level exceeding 33% of the League’s operating budget.
Summary
Many of the improvements included in the construction costs being made at O Street are routine and due
anyway (such as painting and ADA improvements). Even without considering that, the costs of
construction and consolidation will be paid for completely within three years due to the net savings of the
consolidation of the two offices.
ITEM 2.3
LEAGUE
4/11
LEAGUE FISCAL OUTLOOK AND STRATEGIC PLAN
(Discussion)
Background
Approximately 45% of the League’s annual revenues come from dues paid by member community
college districts. These dues are based on the total state general apportionment and local property
revenues from the most recently concluded fiscal year. For example, the FY 2011 dues will be based on
the final 2009-10 fiscal year data.
While 2009-10 had significant cuts, the cuts in 2011-12 are anticipated to be greater, and staff is
preparing multiple-year fiscal and operational plans. This may require revisiting the Strategic Plan goals.
Staff is currently awaiting final data from the Chancellor’s Office for 2009-10, which is expected to be
available before the board meeting. With that data and with scenarios for the 2011-12 state budget, staff
will provide an outlook as to the dues picture for the League.
Combined with revenue assumptions on conference attendance and district service programs and expense
assumptions, staff will begin a conversation with the board that will continue with the adoption of the FY
2012 budget in July.
Goal 1: Advance the League as the primary advocacy organization for community college districts. Outcomes: Districts have the information and training to effectively advocate for legislative priorities. Districts have sufficient resources to achieve the community college mission. Districts have maximum local control and authority. Objectives: 1.1 By June 30, 2011, League staff will be able to import I4A contact information into a program which will target distribution of information to specific legislative districts for use in League advocacy campaigns. • Measure of Success: Send out targeted legislative call to action using the program by June 30, 2011. • Major Activities Underway: www.ccleague.net Launched – parallel database being created 1.2 By Fall 2012, 50% of colleges will respond to each League‐sponsored request for action on budget and legislative issues within the specified time period. • Measure of Success: Percentage of colleges that respond to requests. • Major Activities Underway: www.ccleague.net Launched – parallel database being created Changes: 1.1 Replaces 1.2: By December 15, 2009, the League will distribute to legislators a biennial document on the League’s vision, mission, and services. Reason(s) for change: x previous goal implemented x previous goal 1.2 accomplished (creating advocacy database) x weakness in I4A in tying constituent information to legislative districts 1.2 Modifies 1.3: By June 30, 2010, 50% of the districts will respond to League requests for action on legislative and budget issues within 7 days. Reason(s) for change: x Challenge of measuring response rates. x Representatives to coordinate visits. 1.3a By Fall 2011, 50% community colleges will attend League‐sponsored district meetings with their legislators. •
Measure of Success: Number of legislative meetings Regional Representatives set and/or assist with. •
Major Activities Underway: Regional Representatives scheduling meetings associated with budget. 1.3b By Fall 2011, 50% of community colleges will host an advocacy issue event on campus to inform larger community about student success. •
Measure of Success: Number of on‐campus events organized by colleges. 1.4 By June 2012, an average of 30% of CEOs and trustees, per year, will have attended a League Legislative Conference throughout the span of the five‐year strategic plan (2007‐2012). •
Measure of Success: Review of conference attendance data, beginning in 2007, compiled by League staff. •
Major Activities Underway: Annual Legislative Conference 2011 changed to include Student Success Symposium 1.5 As bills are introduced, staff will prioritize one or more bills/issues of importance for the colleges for extensive focus each year, resulting in at least 5 bills/issues by June 2015. • Measure of Success: Creation of 5 issue/bill focuses by June 2015, that may include the following materials/efforts: number of responses to Legislative Alerts, the 1.3 Replaces 1.4: By September 30, 2010, 50% of CEOs will host a legislator on their campus each semester. Reason(s) for change: Districts are expanding the use of regional consortia and using the League’s Regional Representatives to coordinate visits. 1.4 Modifies 1.5: By June 30, 2010, 50% of the CEOs and 50% of local community college trustees will attend the League Legislative Conference. Reason(s) for change: x State budget cuts have significantly affected conference attendance. x The League plans to continue to increase electronic information distribution. x Goal is familiarizing leaders with legislative process, rather than promoting conference attendance. 1.5 New objective: Reason(s) for change: x Educate college leaders on legislative process; “tell the story” to prepare for significant issues. development of policy background papers and materials to be provided to the colleges so that they can most effectively advocate on the issue(s), and the number of meetings the Regional Representatives have with northern and southern CA community colleges on each chosen issue. GOAL 2: Promote effective leadership at all levels for community colleges. Outcomes Trustees and CEO’s have the knowledge and skills necessary to effectively govern their districts. Colleges have effective leaders at all levels within the colleges. Objectives 2.1 By July 2011, the League will have a plan to evaluate the effectiveness of current trustee education materials and regularly update the materials. •
Measure of Success: Completion of evaluation plan and updating of materials. •
Major Activities Underway: Advisory Committee on Education Services considering process, metrics for evaluation. 2.2 By July 1, 2012, 50% of experienced trustees will participate in at least one annual continuing education program in accordance with Accreditation Standard IV, Section B, 1.f. •
Measure of Success: Percent participation in programs. 2.1 Modifies 2.1: Over a four‐year period, 100% of trustee education materials will be reviewed and updated. Reason(s) for change: x Combines the “review, update and evaluated” separate objectives. x Staff changes; deferral to the Advisory Committee on Education Services. 2.2 Modified Reason(s) for change: x Specified program to be consistent with accreditation. •
Major Activities Underway: Advisory Committee on Education Services considering online curriculum; new Drexel University partnership for online delivery 2.3 Within 18 months of election, 75% of new trustees will complete a trustee training as part of the continuing education program. •
Measure of Success: Percent completing within first 18 months. •
Major Activities Underway: Advisory Committee on Education Services considering online curriculum; new Drexel University partnership for online delivery 2.4 By July 2012, the League will have an online training program for trustee education. •
Measure of Success: Development of the online training program. •
Major Activities Underway: Advisory Committee on Education Services considering online curriculum; new Drexel University partnership for online delivery 2.5 By July 2012, the League will have an online repository of district leadership development models. •
Measure of Success: Completion of online repository of leadership development models. 2.3 No change (renumbering 2.4) 2.4 Modifies 2.5: By January 2010, the current trustee education programs and services will be expanded to include access to online training. Reason(s) for change: x Staff changes; budget constraints. 2.5 Modifies 2.6: The League will develop a model CEO succession plan for districts. Reason(s) for change: x Legal, political concerns with promoting a “model succession” policy that pre‐supposes best candidates come from incumbent district. 2.6 By December 2011, the League will have a CEO Education Program to include: ¾ Annual coordination of CEO leadership development opportunities with other organizations such as the Association of California Community College Administrators and the Northern/Southern CEO Conferences. ¾ A “New CEO” program offered twice a year to include mentorship by an experienced CEO for 6 months. ¾ An online orientation for CEOs new to California. ¾ Information on the process of applying, interviewing and becoming a new CEO. •
Measure of Success: By July 2013, 75% of all CEOs will participate in at least one annual education program. •
Major Activities Underway: Advisory Committee on Education Services considering online curriculum; new Drexel University partnership for online delivery 2.7 The League will establish at least one strategy to identify and address current and future trends that impact community colleges, and educate community colleges about the impact of these trends. •
Measure of Success: An established strategy. 2.6 Modifies 2.7, 2.8, 2.9: CEO Education Reason(s) for change: x Recognizes new coordination of NorCal and SoCal CEO conferences and success of New CEO Orientation. Recognizes need to add online education for new CEOs who may arrive out of sync with in‐person orientation. 2.7 Replaces 2.11 Makes goal of “Commission on the Future” type activities an annual goal. •
Major Activities Underway: Commission on the Future implementation; Regional Representatives advocacy program 2.8 The League will take specific steps to ensure that themes and speakers embracing and representing the diversity of California are included at all League conferences, meetings and trainings. •
Measure of Success: Incorporation of diverse themes and speakers. Goal 3 – Deliver outstanding services and programs that engage districts and support their operations. Outcomes Districts will achieve fiscal savings and administrative efficiencies. Districts will make better informed decisions. Objectives 3.1 By June 30, 2015, work with Advisory Committee and Foundation to assist in determining how the League can develop programs to benefit the districts. • Measure of Success: Annual meeting of Advisory Committee and inclusion of appropriate League and Foundation staff. 2.8 Renumbers 2.12
3.1 Modifies 3.1: By June 1, 2008, form an Advisory Committee on District Services to enable more district leaders to inform the League how it may be of greater service. Reason(s) for change: x Committee established. x Proposes coordination for the Foundation to recognize overlap in serving districts. 3.2 Review and evaluate current district services programs for relevance and fiscal impact on districts biennially. • Measure of Success: Commence the review and analysis. 3.3 By June 30, 2015, increase by 20% the number of entities participating in the League Corporate Partner program (2009 baseline). • Measure of Success: Increase in number of partners participating. 3.4 By June 30, 2015, increase by 10% 2010 baseline fiscal savings from League sponsored programs. Measure of Success: Achieve percent increase in savings. 3.5 Produce quality events to support community colleges. • Measure of success: • Ongoing evaluation of registration procedures to ensure accuracy of registration numbers • Proceed forward with moving to online system to reduce costs and increase accuracy of payments and accounting • Implement online process requiring presenters and affiliate organizations to order and prepay A/V and any food and beverage orders 3.2 Modifies 3.2: By December 31, 2008, commence a biennial comprehensive review and fiscal analysis of all current district services and programs. Reason(s) for change: x Continue objective. 3.3 Modifies 3.3: By June 30, 2009, double the number of entities participating the League Corporate Partners program. Reason(s) for change: x Previous objective successfully attained. New goal recognizes that biennial doubling is not possible, but seeks annual growth. 3.4 Modifies 3.4: By June 30, 2012, increase by 20% systemwide fiscal savings from League‐sponsored programs. Reason(s) for change: x Previous objective attained; continued growth sought. 3.5 New Objective: Reason(s) for change: x Staffing changes. x Recognize the ability of the League to uniquely coordinate and support events such as the Partner Conferences and the “Community College Centennial.”
•
Maintain high quality of event planning and management 3.6 Be a driven/proactive organization with effective communications systems and increase outreach to all members of the California community college population • Measure of Success: • Enhancement of organization website. o Development of online membership directory o Ease‐of‐use developments • Make available to organization population an Annual Report o Work with organization departments to generate content o Create, print and distribute Annual Report to population • Provide effective e‐mail communications with population o Maintain integrity and accuracy of e‐mail addresses in database o Implement tracking code in e‐mails to determine readability • Annually conduct population surveys to establish baseline data and statistics, ensuring the League is meeting/exceeding expectations. 3.6 New Objective: Reason(s) for change: x Change in staff x Greater focus on communication with districts and other interested parties using technology x Enhanced transparency and data collection Goal 4 – Be a highly effective and innovative organization Outcomes The League is a dynamic organization that responds to district needs. Objectives 4.1 Maintain 100% membership by community college districts in the League. 4.2 Annually, the League will provide opportunities for coordination and collaboration between the boards of the CCCT and the CEOCCC. • Measure of Success: Level of coordination among boards. 4.3 Annually, the League will update the staffing plan to ensure a staff that, to the maximum extent possible, is diverse and sufficient to meet the requirements of the strategic plan. • Measure of Success: An updated staffing plan. 4.4 Annually, 100% of League staff will have an individual development plan and performance evaluation. • Measure of Success: Percent of staff with development plan and performance evaluation each year. No changes. 4.5 By June 2007, implement a quarterly staff meeting to monitor the strategic plan accomplishments. • Measure of Success: Quarterly staff meetings that focus on strategic plan accomplishments outside of day to day staffing issues. 4.6 By June 2012, the Internet4Associations management software suite will be 100% operational. • Measure of Success: Percent of desired software functions operational. 4.7 By June 2012, a desk manual documenting work duties and processes of League staff will be completed by each staff person. • Measure of Success: Completion of manual and annual updates. 4.8 By June 2011, provide public access to League governing board documents and financial statements. • Measure of Success: Addition to the website of all pertinent documents and continual updates as needed. 4.6 Updated to reflect new date. Reason for Change: x Changes to I4A have impacted the ability to have all modules be 100% operational prior to June 2011. 4.7 New Objective Reason for Change: x Organizational effectiveness in case of staff illness and for emergency preparedness. 4.8 New Objective Reason for Change: x Greater transparency in order to be more responsive to requests for information.
Item 2.5
LEAGUE
4/11
SELECTION OF AUDITOR
(Action)
Background
For the last six years, the League has used Gilbert Associates to conduct the annual
required audit and for fiscal practice consultation. The League customarily conducts a
request for proposal (RFP) process every three years to allow the board to select an
auditor.
Selection of FY 2011 – FY 2013 Auditor
For the first time, the League board of directors has an audit committee to review both
the process for selection of, and substance of the reports from, the auditor. League
Director of Fiscal Policy Cary Jung worked with the audit committee--Chui Tsang,
Terrence Burgess and Georgia Mercer--in the development of the RFP.
The League received seven proposals for audit and tax preparation services for the next
three fiscal years. After a careful evaluation of each, the proposals from James Marta and
Company and Gilbert Associates (the current auditor) ranked highest. Staff then
presented the two highest ranking proposals to the audit committee.
The audit committee recommends that James Marta and Company be selected. While the
relationship with Gilbert has been productive and the firm should be considered for future
worth with the League, it is sound practice to change auditors periodically to ensure
significant issues are not being overlooked.
Marta has a strong background working with non-profits, including several community
college districts. Their references spoke very highly of them from both a customer service
and integrity standpoint. While money was not the primary factor, the cost of Marta’s
services during the term of the contract would be almost $17,000 less than Gilbert.
Recommendation
It is recommended that the board select James Marta and Company to conduct the
League’s annual audit for FY 2011, FY 2012 and FY 2013.
James Marta & Company
Certified Public Accountants
Accounting, Auditing, Tax, and Consulting
February 18, 2011
Cary Jung
Director of Fiscal Services
Community College League of California
2017 O Street
Sacramento, California 95811
Dear Mr. Jung,
Please find enclosed a copy of our formal proposal document.
We believe that our knowledge and understanding of non-profit organizations and educational
institutions in California allow us to be a valuable resource to you throughout the year. While most
CPA firms primarily provide tax with audit services second, our firm primarily provides audit
services to non-profit and governmental entities. Our staff is prepared to provide the technical
service and be a resource. Based on our review of your prior year financial statements and tax
returns, we feel we can provide your organization with an exceptional level of service at a
reasonable fee. We hope you will contact our references.
If you need information in addition to this proposal, please do not hesitate to call.
Sincerely,
James P. Marta CPA, ARPM
701 Howe Avenue, Suite E3, Sacramento, CA 95825 916-993-9494 fax 916-993-9489
www.jpmcpa.com [email protected]
Certified Public
Accountants
COMMUNITY COLLEGE LEAGUE
OF CALIFORNIA
Proposal for Audit and Tax Services
For the Fiscal Year’s Ending
June 30, 2011, 2012 and 2013
CONTACT:
JAMES P. MARTA, CPA,
PRINCIPAL
701 HOWE AVENUE, E3
SACRAMENTO, CA
(916) 993-9494
(916) 993-9489 FAX
Certified Public Accountants
Accounting, Auditing, Tax, and Consulting
February 18, 2011
Cary Jung
2017 O Street
Dear Mr. Jung,
We are pleased to respond to your request to provide a proposal for the annual audit and tax
services for the Community College League of California for the year’s ending June 30, 2011,
2012 and 2013. This proposal will provide you with relevant information on how we may serve
you.
We have been providing audit and accounting services for nonprofit and governmental agencies
as well as consulting and tax services since 1988. An extensive background with nonprofit and
governmental agencies and commitment to the industries allow us to bring you an audit which
goes beyond the minimum statutory requirements. Our depth of experience means that we bring
creative and practical solutions to assist you in meeting the challenges that you face in your dayto-day operations and recommendations that are tailored to your unique needs. We provide
hands-on service to not just identify issues, but to actively assist you in resolving them. We are a
continual resource to you and your staff. We are available to answer your questions yearround at no additional cost to you.
Please be assured that if we are accepted for this engagement, We will commit the resources
necessary for the successful and timely completion of the work. Please do not hesitate to contact
me if I can provide any additional information.
Sincerely,
James P. Marta, CPA, ARPM
701 Howe Avenue, Suite E3, Sacramento, CA 95825 916-993-9494 fax 916-993-9489
www.jpmcpa.com [email protected]
Table of Contents
EXECUTIVE SUMMARY
SECTION 1
Profile of James Marta & Company ...........................................................................................1
James Marta & Company Advantage
Our Services
Professional Integrity
Peer Review
References
SECTION 2
Audit Methodology and Tax Services ........................................................................................ 4
Proposed Services
Audit Approach
Audit Process
Benefits of Our Process
Assurances
SECTION 3
Audit and Tax Team.................................................................................................................. 10
SECTION 4
Audit and Tax Fees .................................................................................................................... 16
APPENDIX A: Peer Review Report
EXECUTIVE SUMMARY
As a full service audit, tax, and management consulting firm, we pride ourselves in our ability to
serve the diverse needs of non-profit organizations and educational institutions in a rapidly
changing environment. We feel our firm is uniquely qualified to perform the audit of the
Community College League of California for the following reasons:
Ø Over 23 years experience auditing non-profit organizations, community colleges, school
districts and other government entities.
Ø Dedication to the industry;
o Audit services
o Consulting
o Tax
o Accounting
o Participation in research and resolution of industry issues
Ø Current experience with association audits, taxes and consulting. We understand the
fundraising, conference, dues, special tax issues.
Ø
Ø Experience with non-profits, including Single Audits and new Form 990 preparation
Ø Design of internal control policies and procedures for non-profit organizations to achieve
fiscal independence.
Ø Specialized training in preparation of non-profit tax returns.
o Resource to help you address special concerns
Ø Experience providing training to non-profit organizations and educational institutions on
Internal Controls, Fraud Prevention and Detection, and Board Governance Responsibility
and Accountability.
Ø Staff that can be a resource to you
o Helping your staff understand various grant accounting and tax compliance
requirements
o A resource to the management year-round
o Communicating to your Board in a way that gives them a good perspective about
how the organizations are performing as compared to others
Ø Members and presenters for the California Society of Association Executives (CalSAE)
and the California Association of School Business Officials (CASBO).
PROFILE OF
JAMES MARTA & COMPANY
PROFILE OF JAMES MARTA & COMPANY
Section 1
We are a resource to you, answering the questions and meeting the needs of people. We assist in
developing practical solutions by understanding the roles of business, management, technology,
accounting, and finance to help you meet your needs. We can make a difference.
THE JAMES MARTA & COMPANY ADVANTAGE
We have specialized in providing high-quality, value-added audit and consulting services to nonprofit organizations since 1988. We are large enough to serve and small enough to provide caring
attention.
<
COMMITMENT TO NON-PROFITS AND COMMUNITY COLLEGES
James Marta & Company is a CPA firm that specializes in non-profits and governmental entities.
Because of our specialized knowledge and ability we serve non-profits and government agencies
in California, Alaska, Washington and Oregon.
We specialize in providing high-quality value-added audit and consulting services to Non-profits
We are the leader in non-profit organizations for many reasons:
Ü Current member and presenter for California Society of Association Executives.
Ü Current committee chair for the Sacramento Section Accounting Research and Development
Committee.
Ü Current and past board member for various non-profit organizations.
Ü Presented courses for the California Association of School Business Officials (CASBO) and
have written various articles for industry publications.
Ü For the past 23 years, we have worked with over one hundred non-profits, community
colleges and school districts providing audit, accounting, consulting, and tax services.
Our experience and understanding of non-profit organizations allows us to be a year-round
resource to you.
While the range of services provided by most accounting firms has expanded significantly, audits
continue to be the dominant aspect of our practice. In the course of carrying out your audit, we
will generate quality information to help you in the process of your ongoing business decisions.
This insight will help lead to greater operating efficiencies and will facilitate clear, concise, and
understandable financial reporting, which is respected by your members.
QUALITY, VALUE, SERVICE
1
SOLUTIONS
Section 1
OUR SERVICES
While we are a full-service firm offering assurance, tax, financial advisory and consulting
services, audits continue to be the dominant aspect of our practice. In the course of carrying out
an audit, we generate information and develop insights that will result in improved controls and
safeguards leading ultimately to greater efficiencies and clear, concise, and understandable
financial reporting that is respected by your community. The professionals on our team combine
competence with judgment, maturity, and creativity – all prerequisites for a quality audit.
In addition to these services, we also offer the following:
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Ü
Organizational Structure Analysis
Fraud Investigation
Budget Analysis
Specialized Compliance Reviews
Temporary Controllership
Cash Forecasting
Compiled Financial Statements
Lease/Purchase Calculations
Accounting Policies and Procedures
Litigation Support Services
Internal Control Design and Assessment
Cost Benefit Analysis
Customized Seminars
Performance Audits
Strategic Planning
Year-End Closing Assistance
Tax Strategies and Compliance
Arbitrage Calculations
Mello-Roos Bonding Calculations
Self-Insurance Program Analysis
PROFESSIONAL INTEGRITY
Integrity is at the very core of our practice. By consistently performing our duties with the
highest sense of integrity and within the framework of applicable professional standards as well
as our firm’s code of conduct, we can provide tough and relevant advice for you while
maintaining our independence. This serves to uphold the public’s trust on our profession.
PEER REVIEW
We are committed to the highest standards in performing quality audits. We are proud to be one
of the firms nationwide that volunteered for membership in the American Institute of Certified
Public Accountants (AICPA) Peer Review Program in which an independent review of our
accounting and auditing practice is performed by our peers every three years. The peer review
program offers clients tangible, objective information about the quality controls of a CPA firm
and, thus, about the quality of the documents prepared by that firm. Our peer review was
recently completed which resulted in an unmodified report which indicates that our firm
measures up to the accounting profession’s high standard of quality and professionalism. A copy
of the peer review report is presented in Appendix A for your review
2
SOLUTIONS
Section 1
EXPERIENCE
We have been performing audit and consulting services for non-profit organizations and
governmental agencies for over 23 years. In addition, we are actively involved in CalSAE and
CASBO and we give presentations at the annual conferences.
Below are some of the clients we have audited or provided specialized services to over the years.
Nonprofit / Other Governmental Organizations
Special Districts Association of Oregon
State Association of Retirement Systems
Shelter Inc. of Contra Costa County
Martin’s Achievement Place
Sierra College Community District (Arbitrage)
California Transit Finance Authority
Sacramento Metropolitan Air Quality
Management District
Blue Mountain Wilderness Program
Sacramento City Education Foundation
California Association of Special Districts
California Association of Joint Powers
Authorities
CHARIS Youth Center
California Transit Finance Corporation
Shelter Inc. of Contra Costa County
State Association of County
Retirement Systems
California Water Reuse Financing Authority
Guiding Hands
Canaan Place
Community College Districts
Sonoma Community College District
San Diego Community College District
Solano Community College District
Marin Community College District
Fremont Newark Community College
Sierra Joint Community College District
Feather River Community College
Yosemite Community College District
School Districts
San Juan Unified School District
Winters Joint Unified School District
Berryessa Union School District
Loomis Union School District
Newcastle Elementary School District
Moreland School District
San Leandro Unified School District
Monterey Peninsula Unified School District
Natomas Unified School District
North Sacramento School District
Eureka City Unified School District
Ackerman Elementary School District
Washington Unified School District
Acalanes Union High School District
Twin Rivers Unified School District
Tahoe Truckee Unified School District
Elk Grove Unified School District
River Delta Unified School District
Heritage Peak Charter School
Lincoln Unified School District
Center Unified School District
Woodland Joint Unified School District
San Mateo Union High School District
Davis Joint Unified School District
Esparto Unified School District
Berkeley Unified School District
5
SOLUTIONS
Section 1
REFERENCES
We work hard to earn the trust of our clients and strive to develop a long-term partnership.
Please call our references to find out what difference we can make for our clients. If you speak
to our references we are confident you will understand how we are different and can be a
valuable part of your team and that we truly enjoy working in this industry and being a resource
to you.
ORGANIZATION
CONTACT
TYPE OF WORK
Shelter, Inc. of Contra Costa County
1815 Arnold Drive
Martinez, CA 94553
Tim O’ Keefe
Executive Director
Phone (925) 957-7595
Fax (925) 335-9815
Single Audit
Tax
2007 to present
Martin’s Achievement Place
P.O. Box 560
Citrus Heights, CA 95611
James Martin
Executive Director
Phone (916)- 338-1001
Fax (916) 338-1044
Single Audit
Tax
1990 to present
Charis Youth Center
714 West Main St
Grass Valley, CA 95945
James Powell
Controller
(530) 477-9800
Audit
2000 to present
State Association of County
Retirement Systems
1415 L Street, Suite 200
Sacramento, CA 95814
Sulema Peterson
SACRS Administrator
(916) 441-1850
Audit
Tax
2006 to present
We develop strong and lasting relationships with our clients because our
success depends on your success.
3
SOLUTIONS
AUDIT METHODOLOGY
AND
TAX SERVICES
AUDIT METHODOLOGY AND TAX SERVICES
Section 2
Our firm’s commitment to excellence has always motivated us to continuously assess the
integrity of our audit process and ensure that they are responsive to the changing environment
and comply with evolving standards.
PROPOSED SERVICES
We are proposing to perform a financial statement audit in accordance with auditing standards
generally accepted in the United States of America. The purpose of a financial statement audit is
to express an opinion as to the fairness of the information contained in the financial statements.
In addition, we will prepare the Federal Return of Organizations Exempt from Income Tax, Form
990; the California Exempt Organization Annual Information Return, Form 199; California
Registration/Renewal Fee Report to the Attorney General, Form RRF-1; management letter and
report on internal control over financial reporting and on compliance with recommendations.
AUDIT APPROACH
Our audit approach has a strong emphasis on early planning and is designed to gain a thorough
understanding of you organization and the environment in which it operates, including internal
control. We work with management to identify these risks and perform a high quality detailed
review of financial operations. With the knowledge of how your organization functions
combined with our expertise in the industry, we can tailor our approach by focusing our audit
testing to the areas of highest risk. This advance planning typically results in an effective, cost
efficient, and timely audit which will ultimately benefit our clients. Our approach involves:
<
Risk assessment. We identify and assess the risk of material misstatements at different
levels through interviews with management, analytical procedures, observations, and
inspection. Based on our assessment, we will plan and perform procedures that are
responsive to risks identified. This will cover the following areas:
Ü
Ü
Ü
Ü
Ü
Financial reporting framework
Business and industry
Accounting policies and practices
Financial performance
Internal controls
<
Process of Review. Our process includes a corresponding review of all work performed,
management letters, and reports to assure that all appropriate professional and technical
standards are maintained. With this process, we also assess new standards and their
potential impact on the audit process and its resulting report.
<
Use of various audit tools. We use audit software programs designed to work on a
paperless environment and simplify the routine aspects of audit work. In addition, we use
computer assisted auditing techniques which gives us the ability to analyze large amounts
of data and efficiently select risky items.
4
SOLUTIONS
<
Section 2
Open communication. Throughout the audit, we provide explanations regarding the
procedures that we do so you’re not left in the dark. More importantly, we make every
attempt to keep the audit liaison informed and appraised of our findings and the status of
our work from the preliminary audit work through the delivery of the report and other
required audit communications. When you receive your draft report, there shouldn’t be
any surprises. An interim and year-end status report is provided with our audit. It
highlights the following:
Ü
Ü
Ü
Summary of the audit report
Financial position and results of operations
Current issues and significant Trends
5
SOLUTIONS
Section 2
AUDIT PROCESS
Once appointed the auditor of your organization, we will promptly agree on the dates of the
interim and year-end fieldwork and the corresponding deliverables and answer questions
concerning your industry, your organization’s business activities, operations and accounting, or
the preparation of the financial statements. The following are the key phases of our audit process:
PHASE I - AUDIT PLANNING
SPECIFIC PROCEDURES
Compliance Review:
Annually, a review is made of federal and state compliance requirements
regarding our audits. For nonprofits this involves reviewing the related audit
guides and reviewing related laws and compliance. The audit team is trained
on new requirements before site work begins.
Introduction of Staff
> Meet with representatives to discuss:
- Approach to the audit
- Client assistance checklist
- Timelines
Review of Prior Year’s Audit Work
> Review of prior year’s work papers (this step is coordinated with the prior
year’s auditors)
Risk Assessment Procedures
> Obtain an understanding of the external and internal factors affecting the
organization
> Review and evaluate the design of internal controls including district
policy and procedure manuals.
> Review of the significant transaction cycles
> Assess the risk of material misstatements
Audit Planning
> Develop the individual plan for the audit (based on the internal control
review, risks identified, and our understanding of the client and the industry)
Staff
Month
Complete
All
June
Principal
Manager
June
Principal
Manager
June
Principal
Manager
August
Principal
Manager
August
> Establish materiality
> Perform preliminary analytical procedures
> Plan audit procedures in response to assessed risks
6
SOLUTIONS
Section 2
PHASE II – INTERIM FIELD WORK
SPECIFIC PROCEDURES
Internal Controls Testing
> Test of controls.
> Tests performed on transactions from significant transaction cycles and
systems.
Interim Exit Conference
> Meeting with management to discuss results of interim work
Interim Management Letter
> Preliminary management comments are drafted into a letter and issued to
the management and audit committee
7
Senior
Staff
August
Principal
Manager
August
Principal
August
SOLUTIONS
PHASE III- YEAR-END FIELDWORK AND AUDIT COMPLETION
SPECIFIC PROCEDURE
> Obtain financial statements and enter them into financial statement
program
> Compliance
- Complete any general compliance requirements
Section 2
Senior
Staff
August
Substantive Testing and Analytical Procedures
> Perform analytical procedures as necessary
> Verify account balances for the relevant financial statement assertions
> Perform substantive testing
> Evaluation of evidence obtained
Principal
Manager
Senior
Staff
August
Operations
> Evaluate opportunities for improvements
Principal
August
Draft Audit Report
> Prepare audit report based on audit work and evidence obtained
> Prepare all related disclosures
Manager
Senior
September
Exit Conference
> Meet with management/audit committee to discuss results of audit
> Review draft audit report
Principal
Manager
September
Final Audit Report
> Issue report
Principal
September
Tax Returns
>Prepare and issue tax returns
Principal
September
Governing Board Meeting
> Presentation of report to the board
Principal
October
8
SOLUTIONS
Section 2
Making the audit as easy as possible. We will make every effort to use schedules and analyses
already prepared for internal purposes to eliminate unnecessary duplication of effort between our
staff and yours. Because we are experienced in working with organizations like yours, we have
prepared customized forms and procedural checklists to streamline our process. You will
receive, in advance, a listing of the items we will need from you such as:
Ü
Ü
Ü
Ü
Ü
Completion of transaction testing schedules (supplied by the auditor).
Completion of questionnaires (provided to you in electronic form)
Completion of various account schedules
Preparing bank statement reconciliations and confirmation letters
Providing other information to be used in the notes to the financial statements
The completion of these schedules by management before the start of the actual
fieldwork will produce a smoother engagement, with fewer interruptions to you. This
will benefit you by keeping your audit costs down and ensuring the performance of a
timely audit.
BENEFITS OF OUR PROCESS
Ultimately, an audit should not be just checking if the numbers agree to some backup
documentation. One of our goals is to help our clients better understand and control their
business. We bring our considerable experience into your process to broaden the support of your
business and operations.
<
We have the expertise in dealing with the different sources of funding and we understand
where the risk resides in non-profit organizations. We have the necessary knowledge
and experience regarding various contractual agreements, bond financing, federal and
state funding and related compliance issues. The risk for the program revenues is that
these amounts are not properly accumulated or that the recorded amount does not meet
State and Federal guidelines. Our approach is to carefully test the systems and controls
designed to report this information. This proven approach means a better accountability
and assurance for you.
<
We provide an analysis of your operations. We review for you significant relationships
between funding, expenditures, and service levels. This is an important step because it
helps provide assurance that you are receiving the funding you have earned and helps you
focus on your programs from a management perspective. It also identifies programs that
are encroaching on general fund resources. Other important benefits include:
Ü
Ü
Ü
Opportunities to identify training needs for personnel
Recognition of growing program costs and potential effect on future budgets
Identification of opportunities to improve procedures and training
9
SOLUTIONS
<
Section 2
We understand the pressures facing non-profit organizations. We give management
practical advice on what role a board should be playing in oversight of a non-profit
organization. The leaders on the board provide that direct community connection. We
have helped our nonprofit organizations identify and develop additional revenue sources,
develop accounting systems that ensure accountably and full utilization of the grant
resources. We provide that entrepreneurial insight to help you promote your program to
the community and business.
ASSURANCES
We affirm that we meet the independence requirement of the Auditing Standards Generally
Accepted in the United States of America. In addition, we affirm that we do not have any record
of substandard audit work and we meet all specific requirements imposed by state or local law or
rules or regulations. We are not aware of any relationship with Community College League of
California that results in a conflict of interest.
Our goal is to help our clients better understand and
control their organization.
.
10
SOLUTIONS
AUDIT AND TAX TEAM
AUDIT AND TAX TEAM
Section 3
The quality of our work depends on our ability to assemble an effective team with the right
combination of technical skills and industry experience. We invest in our professional staff by
providing them with the best training and tools to achieve excellence in every engagement and
assure compliance with professional standards.
Our approach involves a high-level of participation from the firm’s principals. From the outset,
the principals are involved in the engagement planning and audit fieldwork all through the
completion of the audit and tax returns. Our experienced team will always be available to
address issues and concerns you may have relating to your audit or taxes. This increased level of
involvement results in a superior level of quality.
Each of our staff undergoes a rigorous professional development program designed to ensure that
each member of the team can carry out his or her responsibilities according the exacting
standards set by our profession.
James P. Marta CPA, ARPM
David Becker, CPA
Ronald Empedrad, CPA
Alana Theiss, CPA
Eldora Tse
Principal
Director of Assurance Services
Manager
Senior
Staff
Our experienced team will always be available to address issues and
concerns you may have relating to your audit or taxes.
10
SOLUTIONS
AUDIT AND TAX TEAM
Section 3
James P. Marta, CPA, ARPM
POSITION
Principal
YEARS OF
EXPERIENCE
Twenty-two
EDUCATION
Portland State University, B.S. Accounting and B.S. Finance-Law
Insurance Institute of America, Associate in Risk Pool Management
EXPERIENCE
Partner with mid-sized CPA firm specializing in government and nonprofit audits and tax compliance. Primary focus has been on community
colleges, school districts and non-profit association audits, tax, consulting
and accounting.
Organizational wide audits and specialized compliance reviews for nonprofits, community colleges, school districts and government agencies.
Member of Governor’s team to improve the efficiency of government for
the California Department of Motor Vehicles and the State Assembly.
Consultant to governments, nonprofits and small business in the areas of
accounting system design and needs analysis, implementation of
accounting and internal control recommendations, budget forecasts and
projections, client training seminars, federal and state compliance, and
development of interim reporting formats.
Corporate and Nonprofit taxation and taxation issues
Teaching:
Single Audit Act – Association of Government Internal Auditors
Bond Financing – California Association of School Business Officials
Accountability and Internal Controls – California Association of Joint
Powers Authorities
Management and Finance – Insurance Education Association
PROFESSIONAL
AFFILIATIONS
•
•
•
•
•
American Institute of Certified Public Accountants (AICPA)
California Society of Certified Public Accountants (CSCPA)
California Association of Joint Power Authorities (CAJPA)
California Association of School Business Officials (CASBO)
California Special Districts Association (CSDA)
11
SOLUTIONS
AUDIT AND TAX TEAM
Section 3
David T. Becker, CPA
POSITION
Director of Assurance Services
YEARS OF
EXPERIENCE
Twenty-three
EDUCATION
EXPERIENCE
California State University Sacramento, B.S. Accounting
Partner with regional CPA firm specializing in Non-Profits and
Government audits.
Chair of California Association of School Business Officials Accounting
R&D Committee – Sacramento Section and Member of California Society
of Association Executives.
Consultant to community colleges, school districts, non-profit
organizations and governmental agencies in the areas of accounting system
design and needs analysis, implementation of accounting and internal
control recommendations, training workshops, federal and state
compliance, and fraud investigation.
Teaching:
State Compliance Guidelines - California Association of School Business
Officials
Other Post Employment Benefits (GASB 45) – California Association of
School Business Officials
Non-Profit Board Governance Workshops
Non-Profit Audit and Tax Compliance Workshops
Management and Finance – Insurance Education Association
PROFESSIONAL
AFFILIATIONS
•
•
•
•
•
California Society of Certified Public Accountants (CSCPA)
California Society of Association Executives (CalSAE)
California Association of School Business Officials (CASBO)
California Association of Joint Power Authorities (CAJPA)
12
SOLUTIONS
AUDIT AND TAX TEAM
Section 3
Ronald A. Empedrad, CPA
POSITION
Manager
YEARS OF
EXPERIENCE
Six
EDUCATION
University of the Philippines
Bachelor of Science in Business Administration and Accountancy
EXPERIENCE
•
•
•
•
•
•
RELATED
CONTINUING
EDUCATION
•
•
•
Managing audit jobs for school districts and non-profit
organizations from the planning stage to the drafting of annual
reports by utilizing various types of computer software to
perform audit procedures.
Analysis, testing, and evaluation of internal controls
Preparing nonprofit, corporate and individual income tax
returns
Performing nonprofit organizational audits as well as federal
and state compliance testing
Supervising accounting for government and nonprofit
organizations
Developing staff audit training programs as well as forms and
audit approaches in response to new standards
Governmental Accounting and Auditing standards updates
Accounting and Audit Update and Standards
Accounting and Audit Aspects of Nonprofit Organizations
13
SOLUTIONS
AUDIT AND TAX TEAM
Section 3
Alana N. Theiss, CPA
POSITION
Senior Accountant
YEARS OF
EXPERIENCE
Five
EDUCATION
University of Phoenix
Bachelor of Science in Business Administration,
Concentration in Accounting
EXPERIENCE
RELATED
CONTINUING
EDUCATION
•
•
•
•
•
•
•
•
•
Audits of school districts and non-profit entities
Accounting for governmental and public entities
Audits of governmental entities
Substantive account testing and Analysis
Program year accounting and allocations
Audit reporting and disclosures
Nonprofit tax preparation
Individual tax preparation
Corporate tax preparation
•
•
•
Accounting and auditing standards updates
Governmental and nonprofit audit training
Accounting and audit aspects of insurance cooperatives and
insurance pools
14
SOLUTIONS
AUDIT AND TAX TEAM
Section 3
Eldora Y. Tse
POSITION
Staff Accountant
(pursuing CPA certificate)
YEARS OF
EXPERIENCE
One
EDUCATION
California Polytechnic State University, San Luis Obispo
Bachelor of Science in Business Administration,
Concentration in Accounting and Finance
EXPERIENCE
•
•
•
•
•
•
Accounting for nonprofit and governmental entities
Audits of school districts and nonprofit entities
Internal control and compliance testing for governmental
and nonprofit entities
Substantive account testing and Analysis
Program year accounting and allocations
Audit reporting and disclosures
15
SOLUTIONS
AUDIT AND TAX FEES
AUDIT AND TAX FEES
Section 4
We have a record of providing high-quality and value-added services for a fair fee. As a small
firm, our low overhead makes it possible for us to provide a low-cost alternative at a time when
cutting expenses is a top priority for nonprofit organizations.
Clasification
Principal / Director
Manager
Senior
Staff
Total Hours
20
24
56
50
Sub-total
Less: Engagement Discount
First Year Proposed Fees
Discounted
Hourly Rate
220
140
110
90
Total Amount
$
4,400
3,360
6,160
4,500
150
$
Fee Breakdown
Audit Services
Tax Preparation
Total
$
Proposed Fees
For the Year Ending June 30, 2011
18,420
(1,120)
17,300
$
16,350
950
17,300
$
$
$
17,300
17,800
18,400
The fees quoted are based upon several assumptions about the adequacy of the accounting
records, the degree of assistance to be provided by your personnel, and current auditing and
accounting standards. Our fees do not include any accounting services such as closing year-end
accounts or account reconciliation. If, at any time during our engagement, extraordinary matters
come to our attention that requires an extension of our services, we will consult with you
concerning additional work to be done by you or an adjustment to our fees.
In the event that the GASB, FASB, or AICPA issues additional standards or audit procedures
that require additional work during the audit period, we will discuss these requirements with you
before proceeding further. Before starting the additional work, we will prepare an estimate of
the time necessary, as well as the fee for performing the additional work. Our fee for addressing
the additional requirements will be our standard hourly rates for each person involved in the
additional work. Our standard hourly rates are listed below:
16
SOLUTIONS
APPENDIX A
PEER REVIEW REPORT
12
SOLUTIONS
13
SOLUTIONS
14
SOLUTIONS
COMMUNITY COLLEGE LEAGUE
OF CALIFORNIA
Proposal for Professional Services
Years Ending
June 30, 2011, 2012 and 2013
SUBMITTED BY:
Gilbert Associates, Inc.
CPAs and Advisors
Contact Person: Bobbie N. Hales, CPA
2880 Gateway Oaks Drive, Suite 100
http://www.gilbertcpa.com
(916) 646-6464
February 21, 2011
February 21, 2011
Mr. Cary Jung
2017 O Street
Sacramento, CA 95811
Dear Mr. Jung:
On behalf of Gilbert Associates, Inc., I am pleased to present our proposal to continue our professional
services to the Community College League of California (League). We value our relationship with the League
and are proud to be associated with you.
We have enjoyed serving the League the past several years. We understand that you are considering a rotation
of your auditors this year. I would like to share with you what we believe are some compelling reasons to
retain Gilbert Associates.
Rotate or Retain?
Some organizations do consider the periodic rotation of auditors to be healthy. One of the key reasons for this
is to obtain a fresh perspective. However, we believe that we achieve this goal by maintaining healthy
skepticism during our engagements and by constantly seeking to help our clients improve. Additionally,
during the planning phase of the audit, we take great care in assessing our client’s operations and business
risks to ensure that we prepare a plan relevant to each year audited. Our client retention rate provides some
evidence of this. We have served over 200 nonprofit organizations and in the past 3 years, very few have
chosen to rotate their audit services.
California’s Nonprofit Integrity Act and the federal government’s Sarbanes-Oxley rules do not require
rotation of audit firms. However, if you would like to retain our firm’s expertise while still obtaining a new
perspective, we can offer to you rotation of the audit team on your engagement. Because of the size of our
nonprofit practice, we have many professionals who devote their time to this sector.
Besides the rotation issue, the caliber of service and the firm’s expertise should be a primary consideration.
Our past audits have always been delivered on time and without surprise costs. Additionally, we have assisted
your team with the implementation of your accounting system and have always been available for questions
throughout the year. We believe our credentials in the nonprofit and association industry are unmatched and
our service to the League has been exceptional. Following is a summary of our service capabilities:
¾ Experience with Not-for-Profit Organizations – With over 200 not-for-profit clients, Gilbert
Associates, Inc. has one of the largest CPA practices in California dedicated to serving organizations like
yours. In total, they represent nearly 40% of our practice, far higher than most firms that do not provide
this level of specialization. To provide our clients with the best possible expertise, we have assembled a
Nonprofit Industry Team whose members are highly trained not only in auditing not-for-profit
organizations, but also in such areas as accounting and information systems, financial management,
taxation, and strategic planning.
Mr. Cary Jung
February 21, 2011
¾ Reputation and Capabilities of Our Firm – Providing quality and innovative services has been a
trademark of Gilbert Associates, Inc. since 1984. With eight shareholders and approximately sixty staff
to serve you, we are the eighth largest CPA firm in Sacramento. The firm has the resources to meet your
needs, while retaining a personal approach to business. We value the relationships developed with clients
and our staff and treat each uniquely based on their needs. As a result, our retention rate of both clients
and staff is outstanding.
¾ Objective, Value-Added Service Approach – Our comprehensive services to a wide variety of
nonprofits provide us with a unique view of their management. You will find us eager to share their best
practices. We frequently provide clients with valuable recommendations that help them avoid problems,
save money, and generate positive changes within their organizations, all as a result of our audit
relationship. We maintain a substantial database of nonprofit benchmarking data. You will have access
to our data providing useful comparisons of your operations, compensation levels, and other statistics that
can be used to benefit your organization.
¾ National Resources – We are members of CPA Associates International (CPAAI), an association of
independent certified and chartered accounting firms with over 50 firms in the U.S. and 125 member
firms worldwide. Our membership in CPAAI allows us to provide clients with access to broader
technical and industry expertise, access specialty skills, geographic coverage and knowledge of business
trends.
¾ Personalized, Responsive Service – We take pride in our attentiveness to clients. While there are
several experts in our Nonprofit Industry Team who are capable of answering your questions, you will
also find that the shareholder responsible for services to you is very accessible and interested in helping in
even the smallest way. As an important client of our firm, you can expect to receive our highest level of
attention.
¾ Why Choose Gilbert Associates? – What separates Gilbert Associates from other firms that serve
nonprofits is our commitment to organizations in this sector. Similar to the passion nonprofits have for
their mission, we are passionate about our services to them. This passion is demonstrated by the portion
of our firm’s practice devoted to nonprofits, the expert, leading-edge training we receive and provide to
others, and our devotion to adding value by delivering meaningful benchmark information and ideas to
our clients so that they may improve their operations. Nonprofits are our business, not just a supplement
to it.
*****
We are proud of our association with the League and are very interested in maintaining our professional
relationship with you. We look forward to participating in your ongoing success and helping you to meet the
challenges ahead. Since I will continue to be actively involved in providing services to you, please call me at
(916) 646-6464 if you have any questions regarding our proposal.
Yours very truly,
GILBERT ASSOCIATES, INC.
Bobbie N. Hales, CPA
Shareholder
Attachments
TABLE OF CONTENTS
Page
PROFILE OF GILBERT ASSOCIATES ............................................................................................ 3
OUR EXPERIENCE SERVING NOT-FOR-PROFIT ORGANIZATIONS ................................... 4
SCOPE OF SERVICES AND PROJECT SCHEDULE ..................................................................... 8
PROFESSIONAL FEES...................................................................................................................... 10
RESUMES .............................................................................................................. ATTACHMENT A
REFERENCES ......................................................................................................... ATTACHMENT B
PEER REVIEW REPORT ..................................................................................... ATTACHMENT C
NEWSLETTER....................................................................................................... ATTACHMENT D
PROFILE OF GILBERT ASSOCIATES
Gilbert Associates, Inc. was incorporated in June of 1984 and is a professional certified public accounting
firm licensed for public practice in the State of California (No. AC2642). We are currently the second largest
local firm in Sacramento according to the most recent ranking in the Sacramento Business Journal. We are
proud to have two offices – a home office and a satellite office. Our home office is located in Sacramento,
California and our satellite office is located in Folsom, California.
The firm consists of eight shareholders, seven senior managers, five managers, fifteen senior associates and
twelve staff associates. The firm has approximately 60 professional and administrative employees, including
26 licensed CPAs. All of our professional and administrative staff are located in our home office in
Sacramento, California.
All of the professional members of the staff have been extensively involved and trained in the audits of
nonprofit organizations. Our firm’s services are currently comprised of 75% audit and related consulting,
15% tax, and 10% small business management and other services. Services to nonprofit organizations and
associations account for approximately 40% of our audit practice.
3
OUR EXPERIENCE SERVING
NOT-FOR-PROFIT ORGANIZATIONS
We have made a commitment to serving the needs of the not-for-profit community. Accordingly, we serve an
unusually large and diverse group of nonprofit organizations, with annual budget sizes up to $300 million.
Following is a sample of some of the not-for-profit clients we have served:
Animal Protection Institute
American Red Cross, Sacramento Sierra Chapter
Arts and Business Council
Associated Students of the University of
California, Davis
Association of California School Administrators
Bloodsource (Sacramento Medical Foundation)
Building Industry Association
California 4-H Foundation
California Alliance of Child and Family
Services
California Association for Health Services at
Home
California Association of Health Facilities
California Association of Homes and Services
for the Aging
California Business Roundtable
California Chamber of Commerce
California Children and Families Association
California Council of the Blind
California Dental Association Foundation
California Foundation for Agriculture in the
Classroom
California Institute for Mental Health
California Medical Association Foundation
California Optometric Association
California Public Interest Research Group
California School Boards Association
California School Employees Association
California Society of Association Executives
California Society of CPAs
California Tomato Growers Association
California Union of Safety Employees
California Wilderness Coalition
Child Haven
Center for Health Improvement
Center for Youth Citizenship
DFA of California
Disabled Sports USA Far West
East Bay Zoological Society
Foundation for California Community Colleges
Folsom Chamber of Commerce
Girl Scouts of Tierra del Oro
Hemophilia Council of California
Jewish Federation of the Sacramento Region
Junior Achievement of Sacramento
KVIE
La Cooperativa Campesina de California
Linking Education and Economic Development,
Sacramento
Lilliput Children’s Services
Local Government Commission
Mercy Foundation
Mono Lake Foundation
Nehemiah Corporation of America
Pacific Legal Foundation
Resources Legacy Fund
San Francisco Zoological Society
Sacramento Area Youth Golf Association
Sacramento Metro Chamber of Commerce
Sacramento Children’s Home
Sacramento Country Day School
Sacramento Zoological Society
Safety Center, Inc.
Search Group, Inc.
St. Francis Home for Children
Sierra Health Foundation
Smith River Alliance
Society for the Blind
Strategies to Empower People
Tahoe Donner Association
Transitional Living and Community Support
United Advocates for Children of California
United Animal Nations
United Way, California Capital Region
Volunteers of America of Greater Sacramento
and Northern Nevada
Water Education Foundation
WEAVE
4
Our firm’s commitment to meeting the needs of nonprofit organizations goes beyond our services to them.
Our Nonprofit Industry Team engages in a variety of other professional activities that help us to develop
expertise, including the following:
¾ We are active members in the Nonprofit Committee of the Sacramento chapter of the California Society
of CPAs, and Bobbie Hales has served as Committee Chair. David Ljung, the shareholder-in-charge of
our Nonprofit Industry Team, serves as a director for the California Association of Nonprofits and for the
Nonprofit Resource Center. Both Bobbie and David have served as directors and/or volunteers with
many other nonprofit organizations.
¾ Every year we attend the AICPA’s National Nonprofit Industry Conference in Washington, D.C., the
premier conference in the country, to obtain leading-edge information on financial, accounting, audit and
tax matters affecting organizations such as the League. We also attend the AICPA’s Nonprofit Financial
Executive Forum held annually in San Francisco. We take ideas from these conferences and apply the
benefits directly to our clients.
¾ We have donated hundreds of hours of instruction on accounting, taxation, and Board development
matters on behalf of the Nonprofit Resource Center of Sacramento. Through their programs, we provide
financial training to nonprofit CEOs and financial executives. In addition, we train prospective nonprofit
Board members through the Center’s Board Link program.
¾ We distribute a free newsletter, Nonprofit Agendas, which helps our clients stay informed of important
issues that affect them. A past issue is included as Attachment D.
Engagement Team
Not-for-profit organizations represent our firm’s largest area of specialization. This expertise positions us to
render to clients the best possible advice and solutions. All of our staff have extensive experience in serving
nonprofit organizations and receive specialized training in accounting and auditing of these types of entities.
In an effort to meet your specific organizational needs, we have assembled a service team that has significant
experience serving nonprofit organizations. Profiles of the individuals who will be primarily responsible for
our services to the League are included below:
Bobbie Hales, a shareholder within our Nonprofit Industry Team, will have overall
responsibility for our services to the League. She will be personally involved in planning the
audit and will meet with your staff during our audit fieldwork. She has over fifteen
years of professional experience, including five years with the international firm
PricewaterhouseCoopers. She has served over 100 not-for-profit organizations and invests
virtually all of her professional time working with clients in this industry. Bobbie has worked
with the League for the past several years. Bobbie has served as a Director of the Sacramento
Chapter of the California Society of CPAs and has served as the Chair of its Nonprofit
Committee. Bobbie has also served as a Director for a number of local nonprofit
organizations.
David Ljung, the shareholder-in-charge of our Nonprofit Industry Team, will serve as a
technical advisor to the League. He has thirty-three years of professional experience,
including eleven years with the international firm, Deloitte, and has provided service to over
150 not-for-profit organizations. As one of the region’s premier financial consultants to notfor-profit organizations, he has assisted many clients in the areas of financial management,
strategic planning, internal controls, and operating policies and procedures.
5
Rosina Bugarin, a senior manager within our Nonprofit Industry Team, will continue to
assist Bobbie and will have general on-sight responsibility for the engagement. As the
engagement manager, Rosina will be responsible for project management, team coordination,
and workpaper design. With eleven years of professional experience, she has served over 50
not-for-profit organizations and has focused primarily on this industry for the majority of her
career. Rosina has worked with the League for the past three years. She is an outstanding
supervisor and a leader of our firm’s training programs for entry-level staff.
Jennifer Glass, a returning senior accountant, and two staff accountants will complete the audit team, all of
whom will have had significant experience auditing other nonprofits.
Darla Colson, a tax partner within our Tax Industry Team, will oversee the preparation of
your tax and information returns and will address any other tax issues or questions you
have. Darla is one of the most experienced CPAs in California regarding tax-exempt
organizations.
Resumes for this service team, including information on recent continuing professional education, are
included as Attachment A.
Retention Practices
We strive to maintain continuity for all of our clients as it is beneficial to everyone involved. Typically, the
partner and manager will never change and we expect to return at least one of the other staff members to your
engagement as well.
The unpredictable element for any service firm is staff retention. Although we can’t predict the future with
any certainty, our firm’s track record for staff retention is exceptional. We take good care of our staff and, as
a result, our turnover is much lower than our counterparts. Should there be a change in one of the key
members of your audit team, we will notify you during the planning stages of the audit.
Independence and Quality Control
Gilbert Associates has an active quality control committee that monitors and maintains audit quality and
integrity, including safeguards of independence. In addition to internal oversight, the firm is subject to a
triennial external peer review. During the firm’s peer review for the year ended November 30, 2007, it
received an unqualified opinion with no letter of comments. A copy of the report has been included as
Attachment C.
6
SCOPE OF SERVICES AND PROJECT SCHEDULE
Scope of Services
It is our understanding that the scope of services to be provided to the League will include the following:
¾ Audit of the financial statements of the League for the years ending June 30, 2011, 2012 and 2013.
¾ Preparation of a management letter describing significant audit issues, including our observations and
recommendations concerning operating and administrative matters and internal controls.
¾ Presentation of the audit report and management letter to the Audit Committee and the Board of
Directors.
¾ Preparation of annual federal and California information returns, including Forms 990, 199, and RRF-1.
Value-Added Service
Our goal is to be a resource to you in ways that go beyond the audit. While we are careful not to jeopardize
our independence, we view the audit as a platform for building a business advisory relationship with our
clients. Some additional ways in which we help our clients include:
¾ We advise clients on their governance structure to improve their fund development capabilities and to
fulfill their fiduciary responsibilities. We provide training to Board members on financial matters.
¾ We advise clients regarding their strategies for building their reserves.
¾ We advise clients on financing issues.
¾ We have recommended alternative funding sources and commented on the effectiveness of current
funding programs.
¾ We help identify possible compensation and benefits packages and provide market salary data.
¾ Through an alliance with a human relations consulting firm, we help address personnel and employment
issues.
One of our hallmarks is our willingness to provide frank and valuable feedback as part of the audit. Whether
they are recommendations for improvements in internal controls or discussions of your operations, we strive
to develop management comments and advice that will help you improve as an organization. By
benchmarking the League with the dozens of other nonprofits we serve, our management letter or other
informal dialogue may discuss a variety of areas. Clients are frequently surprised at the depth and variety of
management comments they receive as a result of our audit.
GENERAL AUDIT APPROACH
Our approach to the audit involves assessing the business and financial risks to management and the Board of
Directors, and tailoring our procedures to address those risks. This approach helps us to perform an effective
and efficient audit by focusing our efforts on what is truly significant to the organization. This approach also
helps us to provide important feedback to you as part of our value-added services.
7
We will use a combination of analytical and detail testing procedures during our audit of the League. This
helps accomplish two goals. The detail tests help us is to determine that the internal control system the League
has in place is functioning as intended. Second, our analytic procedures provide an overall business
perspective on the League to identify fluctuations or changes that may be caused by errors or irregularities.
You can expect our entire audit team to be involved in performing audit procedures. We do this to help
ensure that we keep informed on the unique aspects of your operations.
In addition to the nonprofit conferences previously mentioned, all of our staff receive in-house training on
nonprofit accounting and auditing. Our firm has developed a set of electronic practice aids, customized for
auditing nonprofit organizations, that we use to streamline our audit procedures, including workpaper
templates, audit programs, questionnaires, and other tools. Since the firm conducts such a large number of
nonprofit audits, our staff are well “seasoned” in the practical application of these tools and techniques. All
of our audit personnel have laptops and software for their use in performing audit work, including utilization
of a paperless audit software program.
SPECIFIC AUDIT APPROACH
Our audit approach is risk-based which means that we use our evaluation of the internal control structure,
control environment, and control procedures to determine the type of audit work and the amount of work that
will be performed in each area. After reviewing our understanding of the internal controls, the audit is
planned by the audit engagement shareholder and manager to ensure that the audit is efficient, focused, and
results in the maximum benefit to your organization. We have found that this approach results in findings that
are qualitatively different from those of other firms.
Our audit approach is broken down into two phases. These phases are Phase I - Audit Planning and Phase II Tests of Controls and Substantive Procedures. These phases are as follows:
Phase I – Audit Planning
This phase has been designed to help us gain an understanding of your business, evaluate basic controls and
control environment of your organization, and perform a detailed planning analysis for the audit engagement.
In performing the planning phase of the audit we will consider and/or perform the following in order to
establish the level and type of effort necessary to conduct the audit:
x Update our understanding of the League through inquiry, review of financial statements and budgets, and
review of laws and regulations.
x Obtain an understanding of the internal controls and perform a control risk assessment through
completion of internal control questionnaires, performing walkthroughs, and preparing flowcharts to
document how the League processes its major transactions (receipts, disbursements, and payroll).
x Evaluate material factors effecting the financial statements such as laws and regulations.
x Determine the audit approach, including development of audit programs.
x Perform preliminary analytical review by reviewing interim financial reports, budgets and board minutes.
x Determine materiality levels.
8
During the planning phase of the engagement, we will provide a list of schedules and other information we
expect to need for our audit. Given our experience with your organization, we do not anticipate this
information to be greatly different than what you have been providing to us in the past. We will also request
assistance in preparing confirmations and locating supporting documents. We anticipate beginning this phase
of the audit upon our engagement.
Phase II – Tests of Controls and Substantive Procedures
The second phase of the audit includes testing of internal controls over the significant financial systems of the
League and is designed to evaluate whether the controls the League has in place over financial transactions
are operating as prescribed. These tests are determined based on our understanding of the organization
obtained above in Phase I. The tests will include selecting a sample from the significant transaction cycles
(receipts, disbursements, and/or payroll) and reviewing for compliance with the control procedure. The
second phase also includes our substantive testing, analytical procedures, and report preparation. This phase
has been designed to test the validity of the financial statement assertions (valuation or allocation, existence or
occurrence, completeness, rights and obligations, presentation and disclosure) included in the financial
statements. In conducting this phase of the audit the following represents some of the procedures we will
perform:
x Verify balance sheet account balances by obtaining evidential matter through confirmation, examination,
observation, computation, or inspection of information.
x Test details of additions to and reductions from accounts such as investments, property, and debt.
x Test details of transactions affecting income and expense accounts.
x Analytical procedures will be applied to revenue and expense accounts. This test will include a
comparison of current year balances to the previous year and budgeted amounts. Explanations for
significant changes will be requested from the League staff.
x Perform procedures to identify significant events subsequent to year-end such as review of board minutes
and examination of subsequent disbursements and receipts from the date of the balances sheet.
x Discuss any audit adjustments or potential areas for improvement with the League staff.
x Inquiry of legal counsel concerning litigation, claims, and assessments.
x Preparation of the financial statements. Ensure proper presentation and disclosure through completion of
a nonprofit disclosure checklist and through an extensive review process which includes the manager,
shareholder, and technical review shareholder.
In recent years, the audit of the League has been performed in September and we are available to perform our
audit during that timeframe and deliver reports based upon historical timelines. Although we don’t anticipate
problems, in order to minimize potential audit issues the key management members of our audit team will
meet with the management of the League before the commencement of the audit, during audit fieldwork and
at the conclusion of the audit fieldwork. If problems were to arise, these meetings will serve to
collaboratively establish timely resolution of the issue. Fee adjustments are rare and can be assessed when the
audit scope is increased after fees have been established (merger occurring after engagement fee set but prior
to fieldwork) and when the organization’s financial records are not in order. Any fee adjustments will be
discussed with management prior to commencement of additional work.
9
PROFESSIONAL FEES
We would be very pleased to continue our service to the League and are confident you will be satisfied with
our knowledgeable staff and commitment to excellent client service. Our proposed fee for the June 30, 2011
audit is $20,000, including out-of-pocket expenses. Our proposed fee for the June 30, 2012 and 2013 audits
are $20,500 and $20,750, respectively.
The estimated fees for preparation of your informational returns for June 30, 2011, 2012 and 2013 are $2,950,
$3,000 and $3,050, respectively.
We want to serve as a resource to you and encourage your questions or requests for help in any way. We
would be pleased to meet with management, the Board of Directors, or the Audit Committee at any time
throughout the year to discuss issues of concern. Routine phone calls to ask us questions are encouraged,
and you will not be billed for these minor requests. If there are special services or projects for which you
would like our assistance, we will provide an estimate of any additional fees in advance.
10
ATTACHMENT A
RÉSUMÉS
Bobbie N. Hales, CPA
POSITION:
Shareholder
YEARS OF EXPERIENCE:
Fifteen
EDUCATION:
California State University, Fresno, BS
California State University, Sacramento (Accountancy)
EXPERIENCE:
Has served over 75 not-for-profit organizations.
Responsible for oversight of all aspects of attestation
engagements including planning, execution, and
presentation of results to governing boards and
committees.
Provides clients with recommendations on a wide variety of
issues including internal financial controls and general
operating matters.
Provides internal and external training on financial matters
and audit issues and procedures
SEC experience including initial public offerings, business
combinations, 10SB filings, and quarterly and annual
reporting.
Experience with a Big Four CPA firm before joining
Gilbert Associates.
PROFESSIONAL AFFILIATIONS:
American Institute of Certified Public Accountants,
member
California Society of Certified Public Accountants, member
California Society of Certified Public Accountants
(CalCPA); Sacramento Chapter, Past Director and
Nonprofit Committee Chair
Sacramento Metropolitan Chamber of Commerce,
Leadership Sacramento
RECENT CONTINUING EDUCATION:
AICPA National Not-For-Profit Industry Conference
CalCPA Not-for Profit Conference
11
David E. Ljung, CPA
POSITION:
Shareholder
Thirty-Three
EDUCATION:
State University of New York, B.S. Accounting
EXPERIENCE:
Direct not-for-profit and association industry team.
Served over 250 entities in the sector, including trade and
professional associations, foundations, charitable and
civic organizations, research and education providers, and
unions.
Provide a broad variety of advisory services in the areas
of financial management, strategic planning, internal
controls, and operating matters.
Frequent speaker to nonprofit boards and other groups
regarding industry issues and best practices.
Nonprofit Resource Center, Board Chair
CPA Associates, International, Nonprofit Committee
Chair
American Institute of Certified Public Accountants
California Society of Certified Public Accountants,
Sacramento Chapter Nonprofit Committee
American Leadership Forum
Sacramento Metropolitan Chamber of Commerce,
Leadership Sacramento
x AICPA National Not-For-Profit Conference
x AICPA Nonprofit Financial Executive Forum
x CSCPA, Not-For-Profit Conference
12
Rosina Bugarin, CPA
POSITION:
Senior Manager
Eleven
EDUCATION:
University of California, Santa Barbara, B.S. (Accountancy)
EXPERIENCE
Manager on a variety of nonprofit engagements, including
trade and professional associations, charitable and civic
organizations, foundations, and educational and artistic
organizations.
Manage and supervise staff on each engagement, with
varying degrees of experience. Responsible for financial
statement presentation, footnotes, management letters and
other communications.
Assist in the daily progress of fieldwork and participate in
meetings and conferences with clients to explain audit
results, reports and recommendations.
Direct training to staff on audit and accounting matters
related to nonprofits, including researching and
implementing new standards.
California Society of Certified Public Accountants (CalCPA)
x AICPA National Advanced Accounting and Auditing
Technical Symposium
x Internal Control Essentials for Financial Managers,
Accountants and Auditors
x Nonprofit Accounting and Reporting from Start to Finish
x Controller’s Workshop: Financial Issues
x The Accountant’s Responsibility for Fraud
13
Darla A. Colson, MS Tax, CPA
POSITION:
Shareholder
Twenty-Eight
EDUCATION:
California State University, Sacramento, B.S.
Golden Gate University, M.S. Tax
EXPERIENCE:
Chair of firm’s tax department.
Chief Financial Officer of Gilbert Associates, Inc.
Review, preparation and representation to IRS and FTB for
all types of taxes including individual, partnership,
corporate, and non-profit.
Assistance in tax planning and entity structure tax planning.
Manage tax components of association and nonprofit
engagements.
Shareholder in-charge on association and nonprofit audits,
accounting and tax work.
Consultant to associations and nonprofits in the areas of
internal controls, budgeting, personnel recruitment and
accounting system upgrade.
Significant experience providing workshops for board
members on various aspects of business operations. Budget
preparation and understanding financial statements.
California Society of Certified Public Accountants (CalCPA)
California Association of Nonprofits
Folsom Chamber of Commerce
x Certificate in Financial Planning from California Society
of CPAs
x Individual Tax Update
x Taxation Update
x Taxation of Partnership
x Taxation of Entity Choice
x Nonprofit Taxation Classes
14
ATTACHMENT B
REFERENCES
REFERENCES
Given our professional relationship with the League, you will be the best judge of our ability to meet your
needs. However, the following are names of several current clients whom you may contact regarding our
services. They will be pleased to discuss our relationship and the quality of services they have received from
our firm.
CONTACT
ORGANIZATION
Mercy Foundation
Ms. Trisha Pena
Accounting Manager
(916) 851-2708
Pacific Legal Foundation
Ms. Kim DeVincenzi
Chief Financial Officer
(916) 419-7111
Foundation for California Community
Colleges
Ms. Keetha Mills
Vice President of Finance and Chief
Financial Officer
(916) 498-6718
San Francisco Zoological Society
Mr. Wayne Reading
(415) 753-7175
Sierra Health Foundation
Mr. Gil Alvarado
(916) 922-4755
15
ATTACHMENT C
PEER REVIEW REPORT
PEER REVIEW REPORT
16
ATTACHMENT D
NEWSLETTER
nonprofit agendas
FEBRUARY/MARCH 2011
Status quo
How to keep your
“public charity” designation
Matching gift programs
Double your treasure
Finding more
ways to cut costs
News for Nonprofits
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The region’s premier provider of services to associations and not-for-profit organizations.
Status quo
How to keep your “public charity” designation
If your organization is a public charity,
retaining its 501(c)(3) tax-exempt status in
future years is no sure thing. To keep that
desirable classification, there are specific
actions you must take — and even more
activities you must avoid. Foremost, after
the first five years of existence, you must
demonstrate through Schedule A of Form
990 that your organization meets the support test qualifying it as a public charity.
SCHEDULE A REQUIREMENTS
All public charities, with the exception of
supporting organizations, must initially —
and annually — complete Schedule A, Part I
(“Reason for Public Charity Status”) of Form
990 to identify why they aren’t private foundations. An organization should check the
box that coincides with its IRS Determination
Letter that defines under which statute the IRS
has granted exemption.
An organization that is currently tax-exempt
under Internal Revenue Code (IRC) Section
170(b)(1)(A)(vi) (Box 7 on Schedule A, Part I)
needs to pass the public support test on
Part II of Schedule A each year. An organization that’s exempt under IRC Sec. 509(a)(2)
needs to pass the public support test on
Part III of Schedule A each year.
“OFF-LIMITS” ACTIVITIES
Simply passing the appropriate public support
test doesn’t guarantee that you’ll maintain
your tax-exempt status as a public charity,
however. Broadly speaking, there are five
types of activities that can jeopardize your
exempt status:
1. Operating for the benefit of private
interests. No part of a 501(c)(3) organization’s
net earnings may inure to the private benefit of individuals, such as the organization’s
founders, executives or board members — or
their family members.
These types of activities
are banned because they
have no public benefit.
And providing a public
benefit is the reason why
your organization was
granted tax-exempt
status in the first place.
2. Substantial lobbying.
Two factors determine
whether lobbying activities are “substantial.”
One considers the time
spent by compensated
employees and volunteers on lobbying
activities. The other, the
2
Start me up
So, how does a new organization obtain
public charity status? If your nonprofit is a
start-up, you must apply for an employer
identification number (EIN) using application Form SS-4. You and the other founders will want to talk to an attorney early
on to assist with preparing the organizing
documents and writing the bylaws. These
documents will need to be attached to
Form 1023, “Application for Recognition of
Exemption under Section 501(c)(3),” when
filing with the IRS.
more UBI than program expenses, the IRS likely
will consider terminating its exempt status. But
courts have considered an organization spending even as little as 10% of its total efforts on a
UBI activity to be too much.
5. Failing to comply with reporting obligations. Although your organization might be
tax-exempt, you’re still required to file Form
990, Form 990-EZ or Form 990-N. You also
must withhold employment taxes, excise taxes
and state and local taxes, where applicable. If
your organization fails to file some type of 990
for three consecutive years, your tax-exempt
status will be revoked.
Form 1023 needs to be filed with the IRS
within 27 months from the end of the
month in which the organization was legally
formed. After approving your application,
the agency will send you a determination
letter confirming your organization’s taxexempt status. The organization must make
Form 1023 and all support documents available for public inspection if anyone requests
to see them.
In fact, according to GuideStar, hundreds of
thousands of nonprofits will receive revocation
letters in 2011, after failing to have met an Oct.
15, 2010, one-time filing extension for small
organizations that previously weren’t required
to file any type of 990. If your nonprofit faces
this risk, start preparing for the reinstatement
process now.
expenditure test, is a more objective
factor. Your nonprofit can elect to use this
option — called a 501(h) election — by
using Form 5768. (Churches are ineligible.)
The 501(h) election sets a defined limit on
the amount of lobbying an organization can
undertake before losing its exempt status.
If you’re unsure whether an activity your public
charity sponsors or participates in is permissible, take an IRS EO Mini-Course or Interactive
Workshop on the topic. You’ll find these tools
at stayexempt.irs.gov.
3. Any political campaign activities. These
include making contributions to a political
campaign fund or making public statements
for or against a candidate for public office.
4. Generating excessive unrelated business
income (UBI). UBI is income from a trade or
business activity that is regularly carried on
and not related to your exempt mission. The
Internal Revenue Code is silent as to what is
too much.
Excessive UBI has been interpreted as spending
a “significant” amount of time on the unrelated
activity. For example, if an organization has
ONGOING ATTENTION
Excessive UBI has been
interpreted as spending a
“significant” amount of time
on the unrelated activity.
You also should work with your financial
advisor on an ongoing basis to ensure that
you meet the Schedule A public support test.
Finally, it’s a good idea to review your activities annually to make sure you aren’t involved
in any of the “off-limits” activities. N
3
Matching gift programs
Double your treasure
Corporate matching funds, while not
always as hefty as in prerecession years,
continue to be a viable gifting source. Of
companies responding to an annual study
by the Committee Encouraging Corporate
Philanthropy, for example, 54% decreased
their matching program funds from 2008 to
2009. But nearly half (46%) stepped up their
contributions, according to results of the
study, Giving in Numbers: 2010 Edition, with
median matching from those firms reaching
$3.69 million.
HOW DO THEY WORK?
Most matching gift programs are managed
by HR departments, which provide employees with matching gift forms. Typically, the
employer sends the completed forms, along
with the matched donations, to the charity the
employee has chosen.
The forms generally provide step-by-step
instructions for securing the matching funds
from your donor’s employer. The information
usually includes deadlines, required support
documents and where to submit the forms.
Dollar-for-dollar matching is most common
among participating corporations, but some
companies may offer more, others less. Many
companies match donations to any nonprofit,
but some are more restrictive and won’t
match donations to potentially controversial
organizations.
While you may be familiar with how matching
funds work, your staff may not be. Be sure to
train all employees and volunteers who open
donor mail in procedures for handling matching gift forms.
4
HOW CAN YOU BUMP UP FUNDING?
Aside from making sure that you handle the
forms properly, you can take other simple
steps to increase the amount of matching funds you receive. One often-successful
approach is to draw up a list of employers in
your area that offer matching funds. Typically,
you can find this information in annual reports,
on company websites or by calling companies’
HR, PR or community relations departments. If
the company operates a foundation, its matching program may run through that entity.
Once you have a comprehensive and accurate
list, post it on your website’s donation page.
And use it to reach out to existing donors you
know work for those companies.
Another strategy: Include a matching funds
message in all of your solicitations. Letters
might get a P.S. reminding potential donors to
check with their HR departments on matching
funds availability.
WHAT ABOUT SHRINKING PROGRAMS?
In response to the struggling economy, some
companies have trimmed or eliminated their
matching gift programs. But don’t despair —
will be matched, they might even bump up
the amount of their donation — particularly
if you have a minimum amount eligible for
the match.
corporate programs represent only one opportunity to raise more cash for your organization
through matching. Another is to create your
own matching funds pool.
Consider approaching your board and major
supporters about matching
donations during a certain time
period, from certain populations or for a minimum donation
amount. Countless parameters
are possible. You may want your
board, for example, to agree to
match all donations from new
contributors in a particular month
or ask other major supporters to
commit to match donations made at your next
fundraising event.
The advantage to creating your own matching
funds pool is twofold:
1. You make donating more attractive because
donors get to enjoy helping to make a
larger contribution than they’d have been
able to manage on their own. Knowing it
2. You receive the match — a donation that the
board or other major supporter may
not have otherwise made.
Also keep in mind that some charitable foundations will match gifts to
jump-start a fundraising effort
or major campaign. This might be
easier to arrange than securing a
large employer to donate to your
organization.
BE PERSISTENT
Whether you compete for corporate matching funds or sponsor your own matching program, using strategies like those mentioned
above is likely to improve your odds as you vie
with other charities. And in an economy that’s
running at less than full steam, such revenue
sources are worth pursuing. N
Finding more
ways to cut costs
You’ve heard the varying views on how
long it will take for the economy to recover.
Whatever your take is, your nonprofit likely
is still looking for ways to reduce expenses.
Where should you begin?
CUT THE FAT
Take a close look at your organization’s current
expenditures for all its goods and services. Are
all your “necessities” truly necessities? There
are always expenses that can be eliminated. For
example, consider your phone and Internet service. Do you have features, such as conference
calling, that aren’t being used? If so, cancel
these features immediately. You may even find
that you have too many phone lines for the size
of your organization.
And what about those magazine subscriptions
you provide as reading material in your lobby?
Consider cutting down your subscription list
to one or two periodicals or eliminating them
altogether.
5
a small price reduction. You likely can find
better prices for almost everything, from your
Internet service to your printing jobs to your
cleaning service.
You can reduce your vendor services as well.
Perhaps you use a cleaning service five days a
week. Consider cutting down to three or four
days and asking the service to provide a new
fee quote.
Buying in bulk is another opportunity for savings, and it doesn’t apply just to supplies. If
you don’t have long-term contracts with your
building lessor, for example, you may be
able to negotiate a lower rent by agreeing to
extend your lease another five years.
Also, when you place your next office supply
order, consider whether you really need to
stock up on several sizes of sticky notes. Take
a poll — do your employees even use them all?
Even if you can eliminate only one or two
small monthly expenditures, the savings can
add up in your annual budget. Then calculate
the savings over a five-year period to confirm
that this exercise was well worth your while.
GET CREATIVE
Next comes the fun part — ask yourself how
you can accomplish the same goals without
spending the cash. For instance, consider
eliminating postage for bill and vendor payment by paying online or via telephone. You
may even be able to hand-deliver payments
to certain vendors.
What about the coffee that you provide for
your employees? Think about asking the coffee
drinkers to donate a small amount to cover the
beans, cream, sugar and cups.
And instead of shelling out cash for event
signage, find an employee (or volunteer) with
calligraphy skills and have him or her print the
signs by hand. Or, ask a sign company for a
product-service donation.
Additionally, consider bidding out all of your
vendor services — or asking your vendors for
6
GO GREEN
Employees usually respond well to environmentally friendly ways of cutting expenses.
For example:
N Install a water filter in your break room
kitchen sink and stop buying bottled water
or paying for a water service,
N Educate your employees on the importance
of turning off overhead, cubicle, under-theshelf, and other desk lights and lamps to
save energy — and cut utility costs, and
N Re-use office supplies — ask employees
to look through their “stuff” and put pens,
pencils and pads of paper they don’t use in
one area to be redistributed to co-workers.
Even simple steps such as having employees
turn off their computer stations every night
can add up in savings and create some ecological goodwill.
AN EYE ON RESULTS
As you revisit your expenses, keep in mind
that it may be easier to reduce all — or
almost all — expenses a little than to eliminate the larger costs altogether. And for any
cost reductions you make, monitor the results.
If a cost reduction reduces the quality of your
services, it’s probably not worth doing. N
NEWS FOR NONPROFITS
TIME FOR A PERK?
HEALTH CARE CREDIT
If your nonprofit is unable to give pay raises
this year, you can find other ways to reward
employees for their hard work. Trying to
help them achieve better work/life balance
is one way.
As a tax-exempt organization, you may be
eligible for a new health care credit provided
under the Patient Protection and Affordable
Care Act. To qualify, your organization must:
Based on the 2010
Compensation
Data survey questionnaire for nonprofits, published
by Compdata
Surveys, more
than half of the
nonprofits offering
paid vacations use
years of service
to determine the
number of vacation
days (not including
personal and sick
days) an employee
can receive each year. But you can use time
off more creatively. For example:
N Consider having half workdays on Fridays,
saving energy (and other) costs as you build
employee morale.
N For organizations serving clients, divide the
office into two groups — each group gets
half a day off every other Friday, allowing
one group to be in the office at all times.
N Think about giving those four hours to
employees as flex time, which could simply
be extra vacation time for employees to
use as they please.
The idea is to reward your employees in some
fashion as the economy tries to bounce back.
Just make sure that your charitable mission
doesn’t suffer from the new perk. N
N Have fewer than 25 full-time equivalent
employees (FTEs) for the tax year with
average annual wages less than $50,000
per FTE, and
N Pay at least 50% of the premium for
single (employee-only) coverage for
each employee enrolled in your health
insurance plan.
The maximum credit for a qualifying organization in the first year is 25% of your premium
expenses that count toward the credit. However,
the credit can’t exceed the total amount of
income and Medicare tax you’re required to
withhold from employees’ wages.
If you have more than 10 FTEs, or if
the average annual wages exceed
$25,000, the amount of the credit
is reduced. Also, because the
credit is based on the number
of FTEs, you could still qualify
for the credit if you have more
than 25 employees — some
of them could be part-time
employees.
The credit is refundable and will
be calculated using Form 8941,
“Credit for Small Employer Health
Insurance Premiums.” Attach
Form 8941 to Form 990-T,
“Exempt Organization Business
Income Tax Return” — even if
your nonprofit has no taxable income — to claim
the credit. N
This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other
professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. ©2011 NPAfm11
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David Ljung, CPA — With over 30 years of experience, Dave is
the shareholder in charge of the Not-for-Profit Industry team.
He provides financial management, strategic planning, and
operational advice to the management and boards of directors
for dozens of trade and professional associations and other
not-for-profit organizations.
Darla Colson, MST, CPA — With more than 20 years of
experience, Darla is a shareholder on our Not-for-Profit
Industry team. She specializes in tax-exempt issues and
advises clients on matters such as unrelated business income,
lobbying, IRS examinations, and for-profit subsidiaries.
Gilbert Associates, Inc. is the
region’s premier provider of services
to the not-for-profit and association
community. Our services include:
N Auditing
N Tax preparation and consulting
N O
utsourced accounting
N Best practices guidance
N IRS and FTB representation
Bobbie Hales, CPA — With more than 13 years of experience,
Bobbie is also a shareholder on our Not-for-Profit Industry team.
Bobbie specializes in auditing and consulting for a wide variety
of not-for-profit entities. She advises clients on how to improve
internal financial controls, management and personnel procedures,
and operational efficiency. Bobbie is active in the community and
has served on a number of not-for-profit boards.
Rosina Bugarin, CPA
Camille Bailey, CPA
N Educational seminars
N Board presentations and counsel
N Financial advice
N S
urveys
Matt Krehe, CPA
Rosina, Camille and Matt are all managers, overseeing our audit services to
not-for-profit organizations. They are each responsible for the planning and
execution of audit engagements and rendering advice to clients regarding
nonprofit specific matters.
Check out our website, www.gilbertcpa.com for more information about our Industry Team.

COMMUNITY COLLEGE LEAGUE BOARD OF DIRECTORS Hotel

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