AGREEMENT FOR FINANCIAL AUDIT
AND OTHER
PROFESSIONAL ACCOUNTING SERVICES
for the
FISCAL YEAR 2001 - 2002
by and between
KPMG LLP, CPA's
and the
CITY OF PORTLAND, OREGON
HYDROELECTRIC POWER FUND
FIRE AND POLICE DISABILITY AND RETIREMENT FUNDS
TABLE OF CONTENTS
Page
RECITALS 3
AGREEMENT
SCOPE OF ACCOUNTANT SERVICES 4
SCOPE OF AUDITEE SERVICES 4
EFFECTIVE AND TERMINATION DATES 4
COMMENCEMENT OF WORK 4
AUDITEE PROJECT MANAGERS 4
PROGRESS REPORTS 4
COMPENSATION FOR CONTRACTED WORK 5
BILLING AND PAYMENT PROCEDURE 5
FUNDS AVAILABLE 5
MAINTENANCE OF RECORDS 5
AUDIT OF PAYMENTS 6
OWNERSHIP OF/ACCESS TO 6
INDEPENDENT CONTRACTOR STATUS 7
ACCOUNTANTS' PERSONNEL 7
ASSIGNMENT 7
SUBCONTRACTING 8
PAYMENTS TO SUBCONTRACTORS 8
INDEMNIFICATION 8
BUSINESS LICENSE 8
GENERAL LIABILITY INSURANCE 9
EARLY TERMINATION OF AGREEMENT 10
PAYMENT ON EARLY TERMINATION OF AGREEMENT 10
OREGON LAW AND FORUM 10
COMPLIANCE WITH LAWS 10
SEVERABILITY 10
BREACH OF CONTRACT 10
NON-WAIVER 11
REMEDIES 11
AMENDMENTS 12
NOTICE 12
PROHIBITED INTEREST 13
INTEGRATION 13
I. Notice and Change in Scope and Adjustment of Compensation
J. Compensation for Access to and/or Copies of Accountant’s Work Products Pursuant to Section 13 of the Agreement
THIS AGREEMENT, is reached this day of June 2002, according to City Charter Sections 5-205and 7-109; Section 10a of the Power Sales Agreement with Portland General Electric Company dated April 12, 1979; ORS 297.405 through 297.555 and ORS 297.990 (Oregon Municipal Audit Law); and the Single Audit Act of 1984 as amended and related OMB Circulars and Compliance Supplements, by and between KPMG LLP, Certified Public Accountants, called from now on "Accountants,” and the following entities collectively called from now on "Auditees":
CITY OF PORTLAND, OREGON,
HYDROELECTRIC POWER FUND, and
FIRE AND POLICE DISABILITY AND RETIREMENT FUND
RECITALS
1. WHEREAS, the Auditees want the Accountants to provide the services described herein relative to conducting audits of the accounts and fiscal affairs of the Auditees; and
2. WHEREAS, the Accountants have successfully completed a five-year period of service under the terms of the proposal and related contract approved by the Portland City Council, Ordinance 170217, and the independent governing board of the Fire and Police Disability and Retirement Fund, and
3. WHEREAS, the Auditees and City Council have deemed it advantageous to extend the period of service by the Accountants for two more years to facilitate the transition to the new reporting model as required by Governmental Accounting Standards Board (GASB) Statement 34, and
4. WHEREAS, the Accountants have successfully completed the first of the two-year extension,
5. NOW, THEREFORE, the parties mutually agree as follows:
AGREEMENT
1. SCOPE OF ACCOUNTANT SERVICES
Accountants agree to perform professionally and timely the services set forth in Exhibit A, attached.
2. SCOPE OF AUDITEE SERVICES
To help the Accountants carry out their obligations hereunder, the Auditees agree to prepare schedules, report drafts, and other services set forth in Exhibit B, attached.
3. EFFECTIVE AND TERMINATION DATES
This Agreement will be effective as of April 19, 2002 and will be for the audit periods described in Exhibit A, attached. Except for Sections 10 and 11 relating to audit of payments, and Section 12 relating to access to work products, this Agreement will terminate upon the earlier of (a) delivery of all the reports described in Exhibit A, or (b) April 30.
4. COMMENCMENT OF WORK
Accountants agree that work to be done pursuant to this Agreement will not commence until after:
(a) Workers' compensation insurance is obtained, as outlined in Section 21 below; and the earlier of
(1) This Agreement is signed by the Accountants and approved by the City Attorney's Office and City Council, or
(2) The effective date of this Agreement as specified in Section 3, EFFECTIVE AND TERMINATION DATES.
5. AUDITEE PROJECT MANAGERS
(a) Auditee Project Managers are listed on Exhibit C, attached.
(b) Project Managers are authorized to: approve work and billings, give notices, terminate this Agreement, and carry out any other Auditee actions referred to herein.
6. PROGRESS REPORTS
Accountants will submit progress reports with each interim and final billing. Progress reports will contain the information shown on Exhibit D, attached.
7. COMPENSATION FOR CONTRACTED WORK
(a) Auditees will pay the Accountants for all work done under this Agreement after the effective date set forth in Section 3 herein. Except as set forth in subparagraphs 7(b) and 7(c), payments totaling up to $333,000 as listed in Exhibit E, attached, will be full compensation for work performed and for all labor, materials, supplies, equipment, and incidentals necessary to perform the work under this agreement.
(b) The parties agree that should the Accountants fail to deliver the number of reports on the due dates specified in Exhibit A, attached, such delays will be subject to the procedures and payment adjustments described in Exhibit A.
(c) It is further agreed that (1) should unusual conditions occur, or (2) an Auditee fails to provide necessary services or timely schedules, statements or report drafts described in Exhibit B, attached, whereby the services of the Accountants are required beyond the extent and timing of work contemplated, such changes in the scope of work will be subject to the procedures and payment adjustments described in Exhibit B.
8. BILLING AND PAYMENT PROCEDURE
Accountants will submit bills for contracted work in the format of Exhibit D, attached. All bills will be sent to the Contract Manager, Audit Services Division, Office of the City Auditor, 1221 SW 4th Avenue, Room 310, Portland, Oregon 97204-1907.
The Contract Manager will forward the bills to the appropriate Auditees/Project Managers for approval and payment. Any questions concerning billings or payment should be directed to the Contract Manager.
Bills forwarded to the City's Fire and Police Disability and Retirement Fund will be paid only after review and approval by the governing board at a regularly-scheduled meeting.
9. FUNDS AVAILABLE
Auditees certify that sufficient funds are appropriated and available to finance their portion of the cost of this Agreement.
10. MAINTENANCE OF RECORDS
The Accountants will maintain records on a current basis to support billings to the Auditees. The Accountants will retain these records for inspection, audit, and copying for three (3) years from the date of completion or termination of this Agreement.
11. AUDIT OF PAYMENTS
(a) Auditees, either directly or through designated representatives, may inspect, audit and copy, on reasonable notice and from time to time, the records of the Accountants supporting billings for work done under this Agreement at any time during the three (3) year period established by Section 10.
(b) If an audit discloses that payments to the Accountants under Section 7 were over the amount to which the Accountants were entitled, then the Accountants will repay the excess to the Auditees.
12. OWNERSHIP OF/ACCESS TO WORK PRODUCTS
(a) All work materials and documents pertaining to the services described in this Agreement will be considered work for hire, but, except for the reports described in Exhibit A, will be the property of the Accountants. The Accountants will consider their work confidential and, except as provided in subparagraph (b) of this section, will not divulge or release any information, reports or recommendations developed or outlined in connection with performance under this Agreement except to Project Managers or upon prior written approval of the Project Managers except as required by law.
(b) Accountants will make available for inspection, at any time within three years from the date of the audit reports, all work papers, documents or other materials produced by the Accountants in connection with this Agreement, to authorized representatives of bona fide "peer review" firms; the cognizant Federal audit agency; the U.S. General Accounting Office; the State of Oregon, Secretary of State, Division of Audits; and Auditees.
(c) In the event of early termination or contract non-renewal, except for proprietary and certain general administrative work papers, Accountants will make their work products available to Auditees and successor Accountants. Accountants will make such documents available for a period of one year from the earlier of the date of non-renewal or termination under Sections 3 or 22 of this Agreement. Accountants will provide such work products in a form and manner that fosters efficient, cost effective, and timely completion of audit work by successor Accountants.
(d) Any use the Auditees make of the materials referred to in subparagraph (a), except for purposes of the work contemplated by this Agreement, will be subject to prior written permission from the Accountants and will be at the Auditees' own risk.
13. COMPENSATION FOR ACCESS TO WORK PRODUCTS
(a) For access to work products under Subsection 12(b), Accountants may charge Auditees up to $120 per hour for services provided to the Auditees or such agencies under this subsection, up to a maximum of 16 hours. Accountants may also charge for time in excess of 16 hours, provided the Auditee has agreed in advance to such additional charges. Services provided to another professional accounting or peer review firm, in connection with a peer review of the Accountants’ work, shall be provided as deemed necessary and at no cost to the Auditees.
(b) For access to work products under Subsection 12(c), or under Subsections 22, or 27(a) where the Auditees have breached this Agreement, the Accountants may charge the affected Auditees or successor Accountants up to $120 per hour, up to the maximums set forth in Exhibit J attached, for providing access to and/or copies of their work products. For early termination under Subsection 27(a) where the Accountants have breached the Agreement, access to and/or copies of work products will be provided to the successor Accountants at no cost to either the Auditees or successor Accountants.
14. INDEPENDENT CONTRACTOR STATUS
(a) Accountants are engaged as independent contractors and will be responsible for any federal, state, and local taxes and fees applicable to payments hereunder.
(b) Accountants and their subcontractors and employees are not employees of the Auditees and are not eligible for any benefits through the Auditees, including without limitation federal social security, health benefits, workers' compensation, unemployment compensation, and retirement benefits.
15. ACCOUNTANTS' PERSONNEL
Accountants will assign the personnel to do the work in the capacities designated in Exhibit F, attached.
Accountants will not change these personnel assignments without the consent of the applicable Project Manager(s), which consent will not be unreasonably withheld.
16. ASSIGNMENT
Accountants will not assign this Agreement, in whole or in part, or any right or obligation hereunder, without the prior written approval of the Auditees.
17. SUBCONTRACTING
Accountants will not subcontract their work under this Agreement, in whole or in part, without the prior written approval of the Auditees. Accountants will require any approved subcontractor to agree, as to the portion subcontracted, to fulfill all obligations of the Accountants as specified in this Agreement. Notwithstanding Auditees' approval of a subcontractor, Accountants will remain obligated for full performance hereunder, and the Auditees will incur no obligation other than their obligations to the Accountants hereunder. Accountants agree that if subcontractors are employed in the performance of this Agreement, that they are subject to the requirements and sanctions of ORS Chapter 656, Workers' Compensation.
18. PAYMENTS TO SUBCONTRACTORS
Accountants will pay timely all suppliers, lessors, and contractors providing them services, materials or equipment for carrying out their obligations under this Agreement. Accountants will not take or fail to take any action in a manner that causes the Auditees, or any services that the Accountants provide hereunder, to be subject to any claim or lien of any person without the Auditees' prior written consent.
19. INDEMNIFICATION
(a) FOR PUBLIC LIABILITY AND PROPERTY DAMAGE
Accountants will hold harmless, defend, and indemnify Auditees and any Auditee officers, agents, and employees against all third party claims, demands, actions, and suits (including all attorney fees and costs), for bodily injury, death to persons, and damage to physical property to the extent directly and proximately arising from the Accountant's work or any subcontractor's work under this Agreement.
(b) FOR PROFESSIONAL LIABILITY
Accountants will hold harmless, defend, and indemnify the Auditees and any Auditee officers, agents, and employees against all claims, demands, actions, or suits (including all attorney fees and costs), for failure to comply with auditing standards generally accepted in the United States of America, brought against any of them arising from the Accountants' gross negligent errors or gross negligent omissions under this agreement.
20. BUSINESS LICENSE
Accountants will obtain a City of Portland business license as required by Portland City Code Section 7.02.300 prior to beginning work under this Agreement. Accountants will provide their business license number in the space provided at the end of this Agreement.
21. INSURANCE AND WORKERS’ COMPENSATION
(a) Accountants will maintain the kinds and limits of insurance required by Exhibit G. The limits of the insurance will be subject to statutory changes as to maximum limits of liability imposed on municipalities of the State of Oregon during the term of this Agreement. The insurance will be without prejudice to coverage otherwise existing and will name as additional insureds the Auditees and their officers, agents, and employees. Notwithstanding the naming of additional insureds, the insurance will protect each insured in the same manner as though a separate policy had been issued to each, but nothing herein will operate to increase the insurer's liability as set forth elsewhere in the policy beyond the amount or amounts for which the insurer would have been liable if only one person or interest had been named as insured. The coverage must apply to claims between insureds on the policy. The policies will provide that insurance will not terminate or be canceled without 30 days written notice first being given to the City Auditor. If the insurance is canceled or terminated prior to completion of this Agreement, Accountants will provide a new policy with the same terms. Accountants agree to maintain continuous uninterrupted coverage, for the duration of the Agreement.
(b) Accountants will maintain on file with the City Auditor certificates of insurance certifying the coverage required by Exhibit G. The adequacy of the insurance will be subject to approval by the City Attorney. Failure to maintain liability insurance will be cause for immediate termination of the Agreement by any of the Auditees.
(c) Accountants agree to properly complete the City of Portland's Workers' Compensation Questionnaire prior to commencing work under this Agreement. The questionnaire will be attached to this Agreement as Exhibit H and shall remain attached and become a part thereof as if fully copied herein. Any misrepresentation of information on the Questionnaire by the Accountants shall constitute a breach of this Agreement. In the event of breach pursuant to this subsection, any Auditee may terminate the Agreement immediately for all Auditees and the notice of requirement contained in Section 22, EARLY TERMINATION OF AGREEMENT, will not apply.
22. EARLY TERMINATION OF AGREEMENT
(a) Mutual termination. The Auditees and Accountants may mutually agree in writing to terminate this Agreement at any time.
(b) Unilateral termination by any Auditee. Any Auditee, on 30 days written notice to the Accountants, may terminate this Agreement for any reason deemed appropriate in its sole discretion. Such termination will only apply to the portion of this Agreement pertaining to the Auditee and will not affect this Agreement between the remaining Auditees and the Accountants.
23. PAYMENT ON EARLY TERMINATION OF AGREEMENT
In the event of termination under Section 22 hereof, the Auditee will pay the Accountants for work performed in accordance with the Agreement prior to the termination date.
24. OREGON LAW AND FORUM
(a) This Agreement will be construed according to the laws of the State of Oregon.
(b) Any litigation between the Auditees and the Accountants arising under this Agreement or out of work performed under this Agreement will be tried, if in the state courts, in the Multnomah County Court having jurisdic-tion thereof; and if in the federal courts, in the United States District Court for the District of Oregon.
25. COMPLIANCE WITH LAWS
(a) In connection with their activities under this Agreement, the Accountants will comply with all applicable federal, state, and local laws and regulations.
(b) The Accountants agree they have complied with the City's Equal Employment Opportunity certification process.
26. SEVERABILITY
If any provision of this Agreement is found to be illegal or unenforceable, this Agreement nevertheless will remain in full force and effect and the provision will be stricken or amended as provided for in Section 30 herein.
27. BREACH OF CONTRACT
(a) Either the Auditees collectively or the Accountants may terminate this Agreement in the event of a breach of this Agreement by the other. Prior to such termination; however, the party seeking termination shall give the other party written notice of the breach and the party's intent to terminate. If the offending party has not entirely cured the breach within fifteen (15) days of the notice, then the party giving notice may terminate the Agreement at any time thereafter by giving a written notice of termination.
(b) The Auditees or Accountants will breach this Agreement if either fails to perform any substantial obligation under the Agreement, except as provided in subsection (c).
(c) Neither the Auditees nor the Accountants will have breached this Agreement by reason of any failure to perform a substantial obligation under this Agreement if the failure arises out of causes beyond their control and without their fault or negligence. Such causes may include, without limitation, acts of God, a public enemy, acts of the federal, state, or local governments including property tax limitation measures, fires, floods, epidemics, volcanic eruptions, earthquakes, quarantine restrictions, strikes, freight embargoes, and unusually severe weather. Should either the Auditees or the Accountants fail to perform because of a cause described in this subsection, the Auditees and the Accountants will make a mutually acceptable revision in the Scope of Accountants Services and Compensation.
28. NON-WAIVER
Each Auditee and the Accountants will not be deemed to have waived any breach of this Agreement by the other party except by an express waiver in writing. An express written waiver as to one breach will not be deemed a waiver of any other breach not expressly identified, even though the other breach be of the same nature as that waived.
29. REMEDIES
(a) Breach by any Auditee. In the event of termination under Section 27 by the Accountants due to a breach by any Auditee, then the Accountants' remedy will be limited to termination of the Agreement and receipt of payment by the Auditee for work performed in accordance with this Agreement prior to the termination date.
(b) Breach by the Accountants. In the event of termination under Section 27 by the Auditees due to a breach by the Accountants, the Auditees will pay the Accountants for work performed in accordance with this Agreement prior to the termination date, subject to set-off of excess costs as provided for in subparagraph (c) below.
(c) Work Completed by Successor Accountants. In the event of a termination under Section 27 by the Auditees due to a breach by the Accountants, the Auditees may have the work completed by agreement with another Accountant. If the cost of completing the work exceeds the remaining unpaid balance of the compensation provided under attached Exhibit E, then the Accountants shall pay to the Auditees any excess up to a total of 33% of the total amount set forth in Exhibit E.
(d) The remedies provided to the Auditees under Subparagraphs 29(b) and 29(c) hereof for a breach by the Accountants are not exclusive. The Auditees will also be entitled to any other equitable and legal remedies that are available.
30. AMENDMENTS
(a) This Agreement may be modified by written amendment executed by the Auditee(s), the Accountants and the City Auditor in the form set forth in Exhibit I, attached.
(b) Unless otherwise provided, any amendment that increases the amount of compensation payable to the Accountants up to twenty five percent (25%) of an Auditee's basic contract amount set forth in Exhibit E, attached, may be approved by the Auditee Project Manager and the City Auditor. Any amendment that increases the amount of compensation payable to the Accountants by more than twenty five (25%) percent of an Auditee's basic contract amount, must be approved by the applicable governing board and by ordinance of the City Council. Any amendment that decreases the amount of compensation payable to the Accountants, up to the full amount of the Auditee's basic contract amount, including allocated out-of-pocket costs, may be approved by the Auditee Project Manager and the City Auditor.
(c) An Auditee or Accountants may amend the scope, implementation and/or delivery of Accountants' services described in Exhibit A, attached, if the amendment does not change the amount of compensation. Such changes in the Scope of Accountants' Services will be mutually agreed to by an Auditee, Accountants, and City Auditor.
(d) An Auditee or Accountants may amend the scope, implementation and/or delivery of Auditee services described in Exhibit B, attached, if the amendment does not change the amount of compensation. Such changes in the Scope of Auditee Services will be mutually agreed to by the Auditee, Accountants, and City Auditor.
31. NOTICE
Any notice provided for under this Agreement will be sufficient if in writing and delivered personally to the following addressee or deposited in the United States Mail, postage prepaid, certified mail, return receipt requested, addressed as follows, or to such other address as the receiving party hereafter shall specify in writing:
If to the Auditees: Eric Hofeld, CPA, Contract Manager
Audit Services Division
City of Portland, Oregon
1221 SW Fourth Avenue, Room 310
Portland, Oregon 97204
If to the Accountants: Timothy McCann, CPA, Partner
KPMG LLP
1211 SW Fifth Avenue, Suite 2000
Portland, Oregon 97204
32. PROHIBITED INTEREST
(a) No Auditee officer or employee, during his or her tenure or for one year thereafter, can have any interest, direct or indirect in this Agreement or the proceeds thereof.
(b) No Auditee officer or employee who participated as part of the Auditor Selection Committee will be employed by the Accountants during the period of the Agreement.
33. INTEGRATION
This Agreement contains the entire agreement between the Auditees and the Accountants. Except for provisions in prior agreements similar to Sections 10 and 11 relating to audit of payments and Section 13 relating to subsequent access to workpapers, this agreement supersedes all prior written or oral discussions or agreements for audit services.
IN WITNESS WHEREOF, Accountants have executed this agreement in three (3) copies through Robert Henarie, a resident partner of KPMG LLP, and the Auditees, all on the day first above written and pursuant to City Ordinance No. .
AUDITEES ACCOUNTANTS
CITY OF PORTLAND KPMG LLP
By: By:
Vera Katz, Mayor Robert Henarie, Partner
By: Federal EIN: 13-5565207 Gary Blackmer, City Auditor
Business License No. 166146
FIRE AND POLICE DISABILITY AND
RETIREMENT FUND
By:
Babette Heeftle, Fund Administrator
APPROVED AS TO FORM:
By:
Deputy City Attorney