FINANCE AND HUMAN RESOURCES COMMITTEE. July 10, :30 PM Greenspot Road, Highland CA AGENDA

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1 CALL TO ORDER FINANCE AND HUMAN RESOURCES COMMITTEE PLEDGE OF ALLEGIANCE PUBLIC COMMENTS NEW BUSINESS July 10, :30 PM Greenspot Road, Highland CA AGENDA 1. Review Engagement Letter and Planning Document from CliftonLarsonAllen, LLP for Preparation of the District's FY Audit 2. Review Delinquent Water and Wastewater Charges to Tax Rolls Review Volunteer Program ADJOURN PLEASE NOTE: Pursuant to Government Code Section (a), any request for a disability-related modification or accommodation, including auxiliary aids or services, that is sought in order to participate in the aboveagendized public meeting should be directed to the District Clerk at (909) at least 72 hours prior to said meeting.

2 To: From: STAFF REPORT FINANCE AND HUMAN RESOURCES COMMITTEE Chief Financial Officer Agenda Item #1. Meeting Date: July 10, 2018 Discussion Item Subject: Review Engagement Letter and Planning Document from CliftonLarsonAllen, LLP for Preparation of the District's FY Audit RECOMMENDATION: Staff recommends that the Finance and Human Resources Standing Committee (Committee) review the Engagement Letter and planning document from CliftonLarsonAllen, LLP (CLA) for the preparation of the Audit of Financials for EVWD for the year ended June 30, BACKGROUND / ANALYSIS: Staff has placed this item on the Committee meeting agenda in order to reintroduce the principals from the District s audit firm. In addition, as auditing is a review of managements activities, best practices dictate that a line of communication be established between the District auditors and Governing Board. Therefore, attached for the Committee to review is the Engagement Letter from CLA to provide auditing services to EVWD for the fiscal year ended June 30, The Engagement Letter explains what the objectives of these services will be and describe the procedures that will be used to perform their work. Also attached is the firm s Overall Plan to Accomplish the Audit document which provides insight as to what audit services will be provided during the audit, in accordance with, generally accepted accounting principles (GAAP). Auditing Standards require for these documents to be communicated to those charged with Governance and CLA is present to answer any questions. AGENCY GOALS AND OBJECTIVES: Goal and Objectives II - Maintain a Commitment to Sustainability, Transparency, and Accountability a) Practice Transparent and Accountable Fiscal Management

3 REVIEW BY OTHERS: This agenda item has been reviewed by the Finance Department. FISCAL IMPACT There is no fiscal impact associated with this agenda item. ATTACHMENTS: Description EVWD Engagement Letter Planning Document Type Backup Material Backup Material

4 CliftonLarsonAllen LLP 2210 East Route 66 Glendora, CA fax CLAconnect.com May 1, 2018 Mr. Brian Tompkins East Valley Water District Greenspot Road Highland, CA Dear Mr. Tompkins: We are pleased to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the audit and nonaudit services CliftonLarsonAllen LLP ( CLA, we, us, and our ) will provide for East Valley Water District ( EVWD, you, your, or the entity ) for the year ended June 30, Renee Graves is responsible for the services provided to you. She will be assisted by Leslie Ward, who is responsible for the performance of the audit engagement. Audit services We will audit the basic financial statements included in the Comprehensive Annual Financial Report, as of and for the year ended June 30, 2018, and the related notes to the financial statements. The Governmental Accounting Standards Board (GASB) provides for certain required supplementary information (RSI) to accompany the entity s basic financial statements. The following RSI will be subjected to certain limited procedures, but will not be audited. 1. Management s discussion and analysis. 2. GASB required supplementary pension and OPEB information under modified reporting. We will also evaluate and report on the presentation of the supplementary information accompanying the financial statements in relation to the financial statements as a whole. Nonaudit services We will also provide the following nonaudit services: Preparation of adjusting journal entries. Preparation and transmission of the State Controller s Annual Financial Transaction Report for California Special Districts. Audit objectives The objective of our audit is the expression of an opinion about whether your basic financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the

5 May 1, 2018 East Valley Water District Page 2 United States of America (U.S. GAAP). Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America (U.S. GAAS) and the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and will include tests of your accounting records and other procedures we consider necessary to enable us to express such an opinion. We will apply certain limited procedures to the RSI in accordance with U.S. GAAS. However, we will not express an opinion or provide any assurance on the RSI because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. We will also perform procedures to enable us to express an opinion on whether the supplementary information other than RSI accompanying the financial statements is fairly stated, in all material respects, in relation to the financial statements as a whole. We will issue a written report upon completion of our audit of your financial statements. We cannot provide assurance that an unmodified opinion will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion, add an emphasis of matter or other matter paragraph(s), or withdraw from the engagement. If our opinion is other than unmodified, we will discuss the reasons with you in advance. If circumstances occur related to the condition of your records, the availability of sufficient, appropriate audit evidence, or the existence of a significant risk of material misstatement of the financial statements caused by error, fraudulent financial reporting, or misappropriation of assets, which in our professional judgment prevent us from completing the audit or forming opinions on the financial statements, we retain the right to take any course of action permitted by professional standards, including declining to express an opinion or issue a report, or withdrawing from the engagement. We will also provide a report (which does not include an opinion) on internal control related to the financial statements and on compliance with the provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a material effect on the financial statements, as required by Government Auditing Standards. The report on internal control over financial reporting and on compliance and other matters will include a paragraph that states (1) that the purpose of the report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance, and (2) that the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. The paragraph will also state that the report is not suitable for any other purpose. If during our audit we become aware that the entity is subject to an audit requirement that is not encompassed in the terms of this engagement, we will communicate to management and those charged with governance that an audit conducted in accordance with U.S. GAAS and the standards for financial audits contained in Government Auditing Standards may not satisfy the relevant legal, regulatory, or contractual requirements. Auditor responsibilities, procedures, and limitations We will conduct our audit in accordance with U.S. GAAS and the standards for financial audits contained in Government Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements as a whole are free from material misstatement, whether due to fraud or error. An audit involves performing procedures to obtain sufficient appropriate audit evidence about the amounts and disclosures in the basic financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the basic financial statements.

6 May 1, 2018 East Valley Water District Page 3 There is an unavoidable risk, because of the inherent limitations of an audit, together with the inherent limitations of internal control, that some material misstatements may not be detected, even though the audit is properly planned and performed in accordance with U.S. GAAS and Government Auditing Standards. Because we will not perform a detailed examination of all transactions, material misstatements, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity, may not be detected. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements. However, we will inform the appropriate level of management and those charged with governance of any material errors, fraudulent financial reporting, or misappropriation of assets that come to our attention. We will also inform the appropriate level of management and those charged with governance of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential, and of any material abuse that comes to our attention. In making our risk assessments, we consider internal control relevant to the entity s preparation and fair presentation of the basic financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting fraud or errors that are material to the financial statements and to preventing and detecting misstatements resulting from noncompliance with provisions of laws, regulations, contracts, and grant agreements that have a material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. An audit is not designed to provide assurance on internal control or to identify deficiencies, significant deficiencies, or material weaknesses in internal control. However, we will communicate to you in writing significant deficiencies or material weaknesses in internal control relevant to the audit of the basic financial statements that we identify during the audit that are required to be communicated under AICPA professional standards and Government Auditing Standards. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of the entity s compliance with the provisions of laws, regulations, contracts, and grant agreements that have a material effect on the financial statements. However, the objective of our audit will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. We will include in our report on internal control over financial reporting and compliance relevant information about any fraud; noncompliance with provisions of laws, regulations, contracts, or grant agreements; or abuse that may have occurred that are required to be communicated under Government Auditing Standards. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors.

7 May 1, 2018 East Valley Water District Page 4 Management responsibilities Our audit will be conducted on the basis that you (management and, when appropriate, those charged with governance) acknowledge and understand that you have certain responsibilities that are fundamental to the conduct of an audit. You are responsible for the preparation and fair presentation of the financial statements, RSI and statistical section in accordance with U.S. GAAP. Management s responsibilities include the selection and application of accounting principles; recording and reflecting all transactions in the financial statements; determining the reasonableness of significant accounting estimates included in the financial statements; adjusting the financial statements to correct material misstatements; and confirming to us in the management representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. You are responsible for the design, implementation, and maintenance of effective internal control, including evaluating and monitoring ongoing activities, to help ensure that appropriate goals and objectives are met relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. You are responsible for the design, implementation, and maintenance of internal controls to prevent and detect fraud; assessing the risk that the financial statements may be materially misstated as a result of fraud; and for informing us about all known or suspected fraud affecting the entity involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the entity received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for implementing systems designed to achieve compliance with applicable laws and regulations and the provisions of contracts and grant agreements; identifying and ensuring that the entity complies with applicable laws, regulations, contracts, and grant agreements; and informing us of all instances of identified or suspected noncompliance whose effects on the financial statements should be considered. You are responsible for taking timely and appropriate steps to remedy any fraud; noncompliance with provisions of laws, regulations, contracts, or grant agreements; or abuse that we may report. You are responsible for ensuring that management is reliable and for providing us with (1) access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters, and for the accuracy and completeness of that information, and for ensuring the information is reliable and properly reported; (2) additional information that we may request for the purpose of the audit; and (3) unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence. You agree to inform us of events occurring or facts discovered subsequent to the date of the financial statements that may affect the financial statements. Management is responsible for the preparation of the supplementary information in accordance with U.S. GAAP. You agree to include our report on the supplementary information in any document that contains, and indicates that we have reported on, the supplementary information. You also agree to include the audited financial statements with any presentation of the supplementary information that includes our report thereon or make the audited financial statements readily available to users of the supplementary information no later

8 May 1, 2018 East Valley Water District Page 5 than the date the supplementary information is issued with our report thereon. You agree to provide us written representations related to the presentation of the supplementary information. Management is responsible for providing us with a written confirmation concerning representations made by you and your staff to us in connection with the audit and the presentation of the basic financial statements and RSI. During our engagement, we will request information and explanations from you regarding, among other matters, the entity s activities, internal control, future plans, specific transactions, and accounting systems and procedures. The procedures we will perform during our engagement and the conclusions we reach as a basis for our report will be heavily influenced by the representations that we receive in the representation letter and otherwise from you. Accordingly, inaccurate, incomplete, or false representations could cause us to expend unnecessary effort or could cause a material fraud or error to go undetected by our procedures. In view of the foregoing, you agree that we shall not be responsible for any misstatements in the entity s financial statements that we may fail to detect as a result of misrepresentations made to us by you. Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying for us previous financial audits, attestation engagements, performance audits, or other studies related to the objectives discussed in the Audit objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or other engagements or studies. You are also responsible for providing management s views on our current findings, conclusions, and recommendations, as well as your planned corrective actions for the report, and for the timing and format for providing that information. Responsibilities and limitations related to nonaudit services For all nonaudit services we may provide to you, management agrees to assume all management responsibilities; oversee the services by designating an individual, preferably within senior management, who possesses suitable skill, knowledge, and/or experience to understand and oversee the services; evaluate the adequacy and results of the services; and accept responsibility for the results of the services. The responsibilities and limitations related to the nonaudit services performed as part of this engagement are as follows: We will propose adjusting journal entries as needed. You will be required to review and approve those entries and to understand the nature of the changes and their impact on the financial statements. We will prepare the Annual Financial Transactions Report for California Special Districts as required by the State Controller s Office. You will be required to review and approve the report prior to its transmission to the State Controller s Office. These nonaudit services do not constitute an audit under Government Auditing Standards and such services will not be conducted in accordance with Government Auditing Standards. Use of financial statements The financial statements and our report thereon are for management s use. If you intend to reproduce and publish the financial statements and our report thereon, they must be reproduced in their entirety. Inclusion of

9 May 1, 2018 East Valley Water District Page 6 the audited financial statements in a document, such as an annual report or an offering document, should be done only with our prior approval of the document. You are responsible to provide us the opportunity to review such documents before issuance. If the parties (i.e., you and CLA) agree that CLA will not be involved with your official statements related to municipal securities filings or other offering documents, we will require that any official statements or other offering documents issued by you with which we are not involved clearly indicate that CLA is not involved with the contents of such documents. Such disclosure should read as follows: CliftonLarsonAllen LLP, our independent auditor, has not been engaged to perform and has not performed, since the date of its report included herein, any procedures on the financial statements addressed in that report. CliftonLarsonAllen LLP also has not performed any procedures relating to this offering document. With regard to the electronic dissemination of audited financial statements, including financial statements published electronically on your website or submitted on a regulator website, you understand that electronic sites are a means to distribute information and, therefore, we are not required to read the information contained in those sites or to consider the consistency of other information in the electronic site with the original document. We may issue preliminary draft financial statements to you for your review. Any preliminary draft financial statements should not be relied on or distributed. Engagement administration and other matters We expect to begin our audit interim work in May 2018 and our final field work in September We understand that your employees will prepare all confirmations, account analyses, and audit schedules we request and will locate any documents or invoices selected by us for testing. A list of information we expect to need for our audit and the dates required will be provided in a separate communication. We will provide copies of our reports to the entity; however, management is responsible for distribution of the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information, copies of our reports are to be made available for public inspection. The audit documentation for this engagement is the sole and exclusive property of CLA and constitutes confidential and proprietary information. However, subject to applicable laws and regulations, audit documentation and appropriate individuals will be made available upon request and in a timely manner to a regulator or its designee, the U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify you of any such request. If requested, access to such audit documentation will be provided under the supervision of CLA personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to others, including other governmental agencies. The audit documentation for this engagement will be retained for a minimum of seven years after the report release date or for any additional period requested by the regulator.

10 May 1, 2018 East Valley Water District Page 7 CLA will not disclose any confidential, proprietary, or privileged information of the entity to any persons without the authorization of entity management or unless required by law. This confidentiality provision does not prohibit us from disclosing your information to one or more of our affiliated companies in order to provide services that you have requested from us or from any such affiliated company. Any such affiliated company shall be subject to the same restrictions on the use and disclosure of your information as apply to us. Our engagement and responsibility end on delivery of our signed report. Any additional services that might be requested will be a separate, new engagement. The terms and conditions of that new engagement will be governed by a new, specific engagement letter for that service. Government Auditing Standards require that we make our most recent external peer review report publicly available. The report is posted on our website at Mediation Any disagreement, controversy, or claim ( Dispute ) that may arise out of any aspect of our services or relationship with you, including this engagement, shall be submitted to non binding mediation by written notice ( Mediation Notice ) to the other party. In mediation, we will work with you to resolve any differences voluntarily with the aid of an impartial mediator. The mediation will be conducted as specified by the mediator and agreed upon by the parties. The parties agree to discuss their differences in good faith and to attempt, with the assistance of the mediator, to reach an amicable resolution of the Dispute. Each party will bear its own costs in the mediation. The fees and expenses of the mediator will be shared equally by the parties. Any Dispute will be governed by the laws of the state of California, without giving effect to choice of law principles. Time limitation The nature of our services makes it difficult, with the passage of time, to gather and present evidence that fully and fairly establishes the facts underlying any Dispute that may arise between the parties. The parties agree that, notwithstanding any statute or law of limitations that might otherwise apply to a Dispute, including one arising out of this agreement or the services performed under this agreement, for breach of contract or fiduciary duty, tort, fraud, misrepresentation or any other cause of action or remedy, any action or legal proceeding by you against us must be commenced within twenty four (24) months ( Limitation Period ) after the date when we deliver our final audit report under this agreement to you, regardless of whether we do other services for you relating to the audit report, or you shall be forever barred from commencing a lawsuit or obtaining any legal or equitable relief or recovery. The Limitation Period applies and begins to run even if you have not suffered any damage or loss, or have not become aware of the existence or possible existence of a Dispute.

11 May 1, 2018 East Valley Water District Page 8 Fees Our fees for these services will not exceed $18,800, including out of pocket expenses for travel. Our fees for preparation and transmission of the State Controller s Annual Financial Transaction Report for California Special Districts will not exceed $750. The fee estimate is based on anticipated cooperation from your personnel and their assistance with preparing confirmations and requested schedules. If the requested items are not available on the dates required or are not accurate, the estimated fee for services will likely be higher. If unexpected circumstances require significant additional time, we will advise you before undertaking work that would require a substantial increase in the fee estimate. Our invoices for these fees will be rendered as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 30 days or more overdue and will not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed even if we have not issued our reports. You will be obligated to compensate us for all time expended and to reimburse us for all out of pocket expenditures through the date of termination. Other fees You also agree to compensate us for any time and expenses, including time and expenses of legal counsel, we may incur in responding to discovery requests or participating as a witness or otherwise in any legal, regulatory, or other proceedings that we are asked to respond to on your behalf. Subcontractors CLA may, at times, use subcontractors to perform services under this agreement, and they may have access to your information and records. Any such subcontractors will be subject to the same restrictions on the use of such information and records as apply to CLA under this agreement. Agreement We appreciate the opportunity to be of service to you and believe this letter accurately summarizes the significant terms of our engagement. This letter constitutes the entire agreement regarding these services and supersedes all prior agreements (whether oral or written), understandings, negotiations, and discussions between you and CLA. If you have any questions, please let us know. Please sign, date, and return a copy of this letter to us to indicate your acknowledgment and understanding of, and agreement with, the arrangements for our audit of your financial statements including the terms of our engagement and the parties respective responsibilities. Sincerely, CliftonLarsonAllen LLP Renee S. Graves, CPA, CGFM Principal Renee.graves@CLAconnect.com

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13 CliftonLarsonAllen LLP 2210 East Route 66 Glendora, CA fax CLAconnect.com EAST VALLEY WATER DISTRICT OVERALL PLAN TO ACCOMPLISH THE AUDIT For the Year Ended June 30, 2018 Presented by CliftonLarsonAllen LLP Renee Graves, CPA, CGFM Leslie Ward, CPA July 10, 2018 Finance Committee East Valley Water District Highland, California AUDIT SERVICES/OBJECTIVES Our audit will be made in accordance with auditing standards generally accepted in the United States of America and the Standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. The audit will include such tests of the accounting records and other auditing procedures as we consider necessary to enable us to express our professional opinion whether the financial statements are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. The audit of the financial statements does not relieve management or those charged with governance of their responsibilities. An essential feature of our audit is to gain an understanding of your system of internal controls upon which the scope and extent of our audit tests will be determined. Such an audit is not intended to be sufficiently conclusive to assure the discovery of errors, fraudulent financial reporting, misappropriation of assets, or violations of laws or governmental regulations, although their discovery may result. However, we feel that it offers an acceptable balance between conclusive reliability and reasonable audit costs. It provides for inquiries and selective tests of your operating procedures, including those designed to safeguard property and the accuracy and timeliness of cash disbursements. It gives reasonable assurance that the overall financial position and the results of operations are fairly presented on the basis indicated. It should be recognized, however, that it gives less assurance as to the accuracy of the individual items appearing in the financial statements since the tests are directed toward forming an opinion on the financial statements taken as a whole.

14 CliftonLarsonAllen LLP 2210 East Route 66 Glendora, CA fax CLAconnect.com EAST VALLEY WATER DISTRICT OVERALL PLAN TO ACCOMPLISH THE AUDIT For the Year Ended June 30, 2018

15 EAST VALLEY WATER DISTRICT OVERALL PLAN TO ACCOMPLISH THE AUDIT For the Year Ended June 30, AUDIT REQUIREMENTS We will audit the Comprehensive Annual Financial Report (CAFR) that includes statement of net position, statement of activities, governmental funds balance sheet and statement of revenues, expenditures and changes in fund balance enterprise funds statement of net position, statement of revenues, expenses and changes in net position and statement of cash flows, and fiduciary net position for the year ended June 30, The financial statements referred to above will include all supplementary schedules required by generally accepted accounting standards. We have not been engaged to report on any other statements, reports or forms that require an auditors opinion. With respect to the required supplementary information (RSI) accompanying the financial statements, we will make certain inquiries of management about the methods of preparing the RSI, including whether the RSI has been measured and presented in accordance with prescribed guidelines, whether the methods of measurement and preparation have been changed from the prior period and the reasons for any such changes, and whether there were any significant assumptions or interpretations underlying the measurement or presentation of the RSI. We will compare the RSI for consistency with management s responses to the foregoing inquiries, the basic financial statements, and other knowledge obtained during the audit of the basic financial statements. Because these limited procedures do not provide sufficient evidence, we will not express an opinion or provide any assurance on the RSI. Management will prepare the financial statements, including footnotes, supplementary schedules, and the statistical section in compliance with the reporting format required by Governmental Accounting Standards Board (GASB) No. 34; this includes financial reporting and disclosures for GASB No. 68 Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27 and GASB No. 75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (OPEB). The audit referred to above also includes reporting on internal control related to the financial statements and compliance with the provisions of applicable laws, regulations, contracts, agreements, and grants, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards. COMMUNICATIONS ARISING FROM THE AUDIT We will communicate to the audit sub-committee certain other matters related to the conduct of our audit, in accordance with, generally accepted auditing standards on The Auditor s Communication with Those Charged with Governance, this communication will include: The Auditor s Responsibilities with Regard to the Financial Statement Audit Planned Scope and Timing of the Audit Significant Findings from the Audit: Qualitative aspects of significant accounting practices of the District such as

16 EAST VALLEY WATER DISTRICT OVERALL PLAN TO ACCOMPLISH THE AUDIT For the Year Ended June 30, 2018 accounting policies, accounting estimates and financial statement disclosures Significant difficulties, if any, encountered in performing the audit Uncorrected misstatements Disagreements with management Material, corrected misstatements as a result of audit procedures Representations the auditor has requested from management Significant issues such as business conditions affecting the District or the application of accounting principles and auditing standards especially if discussed prior to our retention as the auditor Other findings or issues that we believe to be significant and relevant to those responsible for the financial reporting process Independence communication of any non-audit services performed or expected to be performed As part of the required communications, we will communicate to the extent that they come to our attention, material errors, fraud or other illegal acts that are clearly not inconsequential, and any control deficiencies. Any internal control or compliance related matters that are required to be communicated under professional standards or Federal and State agencies will be included in our audit report. We may also have other comments for management on matters we have observed and possible ways to improve the efficiency of your operations, or other recommendations concerning the internal control structure. With respect to these other communications, it is our normal practice to discuss comments, if appropriate, with the level of management responsible for the matters prior to their communication to senior management and/or the Finance Committee. Before our reports are issued, draft copies are reviewed with management and Finance Committee. These reports are also subjected to firm technical review procedures by an independent partner. ORGANIZATION AND STAFF Our staffing has been planned to obtain the optimum blend of efficiency and quality. The partner, manager and in-charge with significant industry knowledge are assigned to your engagement. The senior in-charge will have responsibility for coordinating all of the audit areas on the 2018 engagement. Renee Graves, CPA, Principal renee.graves@claconnect.com; (626) Leslie Ward, CPA, Director leslie.ward@claconnect.com; (626)

17 EAST VALLEY WATER DISTRICT OVERALL PLAN TO ACCOMPLISH THE AUDIT For the Year Ended June 30, 2018 TIMING OF THE AUDIT Our audit of the financial statements will be performed in three phases: (1) planning, (2) test of controls and risk assessment, and (3) account balance procedures. We will maintain regular contact with appropriate members of management to ensure all due dates will be met. Our audit work will be scheduled to meet the following timetable: Audit Planning April - May Additional planning and risk assessment, including testing of internal controls Week of April 30 th, 2018 Pre-audit meeting with management May 1, 2018 Pre-audit Finance Committee presentation July 10, 2018 Commencement of year-end work August 27, 2018 Meet with management to review draft of financial statements September 25, 2018 Present final draft report to Finance Committee October 9, 2018 Finalize audit report signed and delivered October 12, 2018 Present final signed report to Board of Directors October 24, 2018 ITEMS OF CONSIDERATION FOR THE 2018 AUDIT Litigation Review We are required to circulate letters to various attorneys handling any significant legal matters and discuss these issues with management in consideration of the appropriate recording and disclosure of contingencies. Consideration of Fraud in a Financial Statement Audit Generally accepted auditing standards requires auditors to assess and identify the risk of fraud in an organization that could be material to the financial statements. We will make inquiries of management and others, including a board member, regarding their knowledge of fraud and known allegations of fraud. We will evaluate the entity s programs and controls in place to mitigate risks of fraud and how the organization s business practices and ethical standards are communicated to employees.

18 EAST VALLEY WATER DISTRICT OVERALL PLAN TO ACCOMPLISH THE AUDIT For the Year Ended June 30, 2018 NEW GOVERNMENTAL ACCOUNTING STANDARDS As deemed necessary, the Governmental Accounting Standard Board (GASB) will issue new accounting standards that may impact financial presentations. It is management s responsibility to implement the appropriate GASB Statement as they pertain to District operations. We can provide assistance to the District with implementation of a new standard under a separate agreement. Statement No. 75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions This statement was issued in June 2015 and establishes standards for governmental employer recognition, measurement, and presentation of information about OPEB. The statement also establishes requirements for reporting information about financial support provided by certain non employer entities for OPEB that is provided to the employees of other entities. This statement is closely related in some areas to Statement No. 74. The statement is effective for the fiscal year Governmental Accounting Standards Board Statement No. 81 In March 2016, the GASB issued Statement No. 81 Irrevocable Split-Interest Agreements. This statement establishes guidance in order to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. This Statement requires that a government that receives resources pursuant to an irrevocable split-interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of the agreement. Furthermore, this statement requires that a government recognize assets representing its beneficial interests in irrevocable split-interest agreements that are administered by a third party, if the government controls the present service capacity of the beneficial interests. This Statement requires that a government recognize revenue when the resources become applicable to the reporting period. The statement is effective for the fiscal year Governmental Accounting Standards Board Statement No. 85 In March 2017, the GASB issued Statement No. 85 Omnibus The objective of the statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. Specific topics addressed in this statement are related to blended component units, goodwill, fair value measurement and application, and postemployment benefits (OPEB). The statement is effective for the fiscal year

19 EAST VALLEY WATER DISTRICT OVERALL PLAN TO ACCOMPLISH THE AUDIT For the Year Ended June 30, 2018 NEW GOVERNMENTAL ACCOUNTING STANDARDS (continue) Statement No. 86 Certain Debt Extinguishment Issues This statement was issued in May 2017 and addresses accounting and financial reporting for insubstance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources resource other than the proceeds of refunding debt are placed in an irrevocable trust for the sole purpose of extinguishing debt. This statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. The statement is effective for the fiscal year NEW GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENTS, NOT EFFECTIVE Governmental Accounting Standards Board Statement No. 83 In November 2016, the GASB issued Statement No. 83 Certain Asset Retirement Obligations. This statement addresses accounting and financial reporting for certain asset retirement obligations when a legally enforceable liability is associated with the retirement of a tangible capital asset. The statement establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources. The statement is effective for the fiscal year Governmental Accounting Standards Board Statement No. 84 In January 2017, the GASB issued Statement No. 84 Fiduciary Activities. The objective of the statement is to improve guidance regarding the recognition of fiduciary activities for accounting and financial reporting purposes by establishing criteria for identifying fiduciary activities of all state and local governments. The statement is effective for the fiscal year Governmental Accounting Standards Board Statement No. 87 This statement was issued in June 2017 and addresses accounting and financial reporting for leases by governments. This statement requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this statement, lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. The statement is effective for the fiscal year

20 EAST VALLEY WATER DISTRICT OVERALL PLAN TO ACCOMPLISH THE AUDIT For the Year Ended June 30, 2018 NEW GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENTS, NOT EFFECTIVE (continued) Governmental Accounting Standards Board Statement No. 88 In March 2018, the GASB issued Statement No. 88 Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. The objective of this Statement is to improve consistency in the information that is disclosed in notes to the government financial statements related to debt, including direct borrowings (for example, a government entering into a loan agreement with a lender) and direct placements (for example, a government issuing a debt security directly to an investor), and to provide financial statement users with additional essential information about debt. This Statement requires that additional essential information related to debt be disclosed in notes to financial statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant events of default with finance-related consequences, significant termination events with finance-related consequences, and significant subjective acceleration clauses. The statement is effective for the fiscal year Future GASB Statements In addition, to the GASB Statements noted above, there are several exposure drafts with implementation dates in future years. We will provide ongoing communication to the District as new standards are released.

21 To: From: STAFF REPORT FINANCE AND HUMAN RESOURCES COMMITTEE Chief Financial Officer Agenda Item #2. Meeting Date: July 10, 2018 Discussion Item Subject: Review Delinquent Water and Wastewater Charges to Tax Rolls RECOMMENDATION: Staff recommends that the Finance and Human Resource Committee (Committee) review Resolution authorizing the placement of delinquent, unpaid water and wastewater charges on the County of San Bernardino s tax rolls. BACKGROUND / ANALYSIS: California Water Code Section authorizes the District to place liens on real property for delinquent water and wastewater charges, and to roll unpaid delinquent charge amounts and unpaid lien amounts over to the San Bernardino County property tax bill. This authority gives the District a method to recover unpaid charges and fees related to utility services rendered. Delinquent charges that are subject to be rolled onto the property tax bill include, but are not limited to, water consumption and related charges, wastewater collection and treatment services, late fees, interest, and penalties. Every July, the District determines which liens have not been paid and prepares the appropriate materials to send to the San Bernardino County for recovery of delinquent service charges to the property owner s tax bill. In doing so, the District greatly enhances its ability to recover unpaid charges in the upcoming fiscal year. AGENCY GOALS AND OBJECTIVES: Goal and Objectives II - Maintain a Commitment to Sustainability, Transparency, and Accountability a) Practice Transparent and Accountable Fiscal Management REVIEW BY OTHERS: This agenda item has been reviewed by the Finance Department.

22 FISCAL IMPACT Collections of $31, in delinquent water and wastewater charges. ATTACHMENTS: Description Resolution List of Delinquent Water and Wastewater Accounts Type Resolution Letter Backup Material

23 RESOLUTION A RESOLUTION OF THE BOARD OF DIRECTORS OF THE EAST VALLEY WATER DISTRICT, SAN BERNARDINO COUNTY, STATE OF CALIFORNIA, ADDING DELINQUENT NON-PAID CHARGES TO ANNUAL TAXES LEVIED UPON THE PROPERTY FOR WHICH THE CHARGES ARE DELINQUENT AND UNPAID WHEREAS, the Board of Directors of the East Valley Water District (the District ) has prepared a report and statement of those delinquent non-paid charges for water and other services within the District which were delinquent and unpaid for sixty days or more on July 1, 2018; and WHEREAS, the Board of Directors of the District has decided that said delinquent and unpaid charges are to be included in the property tax levied on said property pursuant to California Water Code Sections (e) and et seq.; and THEREFORE, the Board of Directors of the District does hereby resolve, determine and order as follows: Section 1. That the report of the District s delinquent and unpaid charges for water and other services within the District which remain unpaid and delinquent for sixty days or more on July 1, 2018 is hereby adopted and approved by said Board. Section 2. That the unpaid and delinquent charges listed in said report for each parcel of property are fixed at the amount listed in said report. Section 3. That the Secretary shall file with the County Auditor of the County of San Bernardino and the Board of Supervisors of the County of San Bernardino, in the time and manner specified by the County Auditor and Board of Supervisors, a copy of such written report with a statement endorsed hereon over the signature of the Secretary, that such a report has been finally adopted and approved by the Board of Directors, and that the County Auditor shall enter the amount of such charges against the respective lots of parcels of land as they appear on the current assessment roll. Section 4. That the County Tax Collector shall include the amount of charges on bills for taxes levied against their respective lots and parcels of land and, therefore, the amount of such unpaid and delinquent charges shall be collected at the same time and in the same manner by the same person as, together with and not separately from, the general taxes, if any, for the District or the County of San Bernardino and shall be delinquent at the same time, and thereafter be subject to the same delinquency penalties. East Valley Water District Resolution Page 1 of 2

24 The foregoing Resolution was duly adopted at a regular meeting of the Board of Directors of the East Valley Water District by motion made, duly seconded, and carried on July 25, ROLL CALL: Ayes: Noes: Absent: Abstain: July 25, 2018 This Resolution shall take effect as of the 25 th day of July ADOPTED this 25 th day of July Chris Carrillo Board President I HEREBY CERTIFY that the foregoing is a full, true and correct copy of Resolution adopted by the Board of Directors of East Valley Water District at its Regular Meeting held July 25, ATTEST: John Mura Board Secretary East Valley Water District Resolution Page 2 of 2

25 The following properties all have recorded liens in the amount of the delinquencies shown and are to be turned over to the Office of the Tax Collector, County of San Bernardino, to be added to the Respective Property Tax Bills * County Tax Rolls* Account No. APN Original Amount Page 1 of 4

26 The following properties all have recorded liens in the amount of the delinquencies shown and are to be turned over to the Office of the Tax Collector, County of San Bernardino, to be added to the Respective Property Tax Bills * County Tax Rolls* Account No. APN Original Amount Page 2 of 4

27 The following properties all have recorded liens in the amount of the delinquencies shown and are to be turned over to the Office of the Tax Collector, County of San Bernardino, to be added to the Respective Property Tax Bills * County Tax Rolls* Account No. APN Original Amount , Page 3 of 4

28 The following properties all have recorded liens in the amount of the delinquencies shown and are to be turned over to the Office of the Tax Collector, County of San Bernardino, to be added to the Respective Property Tax Bills * County Tax Rolls* Account No. APN Original Amount , Total Amount $ 31, Page 4 of 4

29 To: From: STAFF REPORT FINANCE AND HUMAN RESOURCES COMMITTEE HR/Risk & Safety Manager Agenda Item #3. Meeting Date: July 10, 2018 Discussion Item Subject: Review Volunteer Program RECOMMENDATION: This report is provided to the Finance and Human Resources Committee for review and information only. BACKGROUND / ANALYSIS: As the Agency Goals and Objectives demonstrate, East Valley Water District is committed to promoting community involvement and embracing an environment of active learning and knowledge sharing. As part of this commitment, staff plans on initiating a District Volunteer Program (Program). Similar to our new-hire process, volunteers will participate in an orientation program designed to inform them about the District, its policies, procedures, programs, and expectations. The duration of volunteer assignments will vary with each assignment and may depend on the needs of the department, the requirements of a specific project or event, or the specific outcome the volunteer wishes to gain from the Program. Staff is very excited about this Program and the opportunities and benefits it will provide to the community as well as the District. The purpose of this Program is to provide community members an opportunity to learn about District operations, gain valuable work experience, meet new people, and form mutually rewarding partnerships. Studies show that skills-based volunteer partnerships also present an opportunity for employees to develop and share their professional skills, resulting in increased productivity, and ultimately increased employee retention. Implementing this Program may also result in an experienced talent pool to select from when recruiting for vacant District positions. Volunteer opportunities will be posted through various channels including the District s website, social media, local community centers, and local educational institutions. To be considered for a volunteer position, applicants must be sixteen (16) years of age or older, complete the District s Volunteer Application, and consent to a background screening and pre-volunteer assignment physical if offered the position.

30 AGENCY GOALS AND OBJECTIVES: Goal and Objectives III - Deliver Public Service with Purpose While Embracing Continuous Growth d) Embrace an Environment of Active Learning and Knowledge Sharing REVIEW BY OTHERS: This agenda item has been reviewed by the Administration department. FISCAL IMPACT The fiscal impact associated with this item is included in the FY budget. ATTACHMENTS: Description Volunteer Program Policy Document Volunteer Program Flyer Volunteer Program Website Content Volunteer Program Social Media Post Type Backup Material Backup Material Backup Material Backup Material

31 EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Volunteer Program Original Approval Date: Last Revised: Policy No: 5. Page 1 of 3 Purpose East Valley Water District is committed to promoting community involvement and embracing an environment of active learning and knowledge sharing. As such, the purpose of the Volunteer Program (Program) is to provide community members an opportunity to learn about District operations, gain valuable work experience, meet new people, and form mutually rewarding partnerships. Program The Program will match volunteer applicants with available opportunities within the District s various departments. Individuals may volunteer for a one-time project or event, or a long-term assignment. Assignments will vary and offer a wide selection of working environments. Recruitment Volunteers will be recruited by the District with the intent of broadening community involvement and providing an environment of active learning and knowledge sharing. Volunteers may be recruited through an interest in a specific department or event, or solely through a general interest in volunteering. Volunteer opportunities will be posted through various channels including the District s website, social media, local community centers and local educational institutions. Eligibility To be considered for a volunteer position, applicants must be sixteen (16) years of age or older and consent to a background screening and pre-volunteer assignment physical.

32 EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Volunteer Program Original Approval Date: Last Revised: Policy No: 5. Page 2 of 3 Application Those interested in available volunteer positions are to complete and submit the Volunteer Application through the District s website to be considered. On the occasion that an application is received when a volunteer position is not available, the application will be kept on file for one (1) year and considered for future opportunities. Human Resources will process all volunteer applications and applicants may refer to Human Resources as a point of contact. Interview Brief interviews will be conducted of volunteer applicants to assess their interest and suitability for volunteer opportunities. The interview will determine the interests of the applicant, any experience or qualifications, his or her commitment to fulfill the requirements of the volunteer position, and provide an opportunity for the applicant to ask questions. Screening Selected volunteer applicants will undergo a criminal background screening process as well as a pre-volunteer assignment physical and drug screening. The screening process will be considered complete once the background check and physical have been completed and approved by Human Resources. The individual may begin volunteering once this process is complete and they attend the volunteer orientation. Available Opportunities The Program will offer a variety of ways to engage with the District and in the community. Volunteer opportunities will be listed under Volunteer Program or the District s Human Resources webpage. In placing a volunteer, consideration will be paid to the interests and capabilities of the volunteer as well as the requirements of the volunteer position. Assignments will vary and offer a variety of work experience among the various District departments.

33 EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Volunteer Program Original Approval Date: Last Revised: Policy No: 5. Page 3 of 3 Volunteer Schedules Volunteer schedules are flexible and may vary depending on the needs of the assignment and the volunteers availability. Orientation Once a volunteer is selected and given an assignment, they will participate in an orientation program designed to inform volunteers about East Valley Water District as an organization, its policies, procedures, and programs. This session is designed to assist volunteers in their new role within the District. Additionally, volunteers will engage in an on-the-job orientation and training by their designated supervisor. Duration The duration of volunteer assignments will vary with each assignment and may depend on the needs of the department, the requirements of a specific project or event, or the specific outcome the volunteer wishes to gain from the Program. The volunteer relationship may be terminated by either party at any time.

34 EAST VALLEY WATER DISTRICT VOLUNTEER PROGRAM THE PROGRAM OFFERS FLEXIBLE HOURS AND A VARIETY OF WAYS TO GET INVOLVED Learn about East Valley Water District s operations, gain valuable work experience, meet new people, and form mutually rewarding partnerships by participating in the District s Volunteer Program. Whether you volunteer for a one-time project or long-term assignment, your contributions will be valuable to our community! VOLUNTEER OPPORTUNITIES IN Customer Service General Administration Clerical Support Operations Special Events Facilities Maintenance Finance Engineering Make a difference in your community Learn new skills Opportunity to gain valuable work experience Meet new people WHO CAN PARTICIPATE To be considered for a volunteer position, applicants must: Be sixteen (16) years of age or older Consent to a background screening Complete and pass a pre-volunteer assignment physical READY TO GET INVOLVED? Complete and submit the Volunteer Interest Application through the District s website at Human Resources will contact you with status of your application Greenspot Road, Highland, CA (909)