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AA V E N U Itl SIGHTS & ANA LVT I C S UTILITY USERS TAX CONSULTANT RFP #20-137 Pre -Audit Planning To initiate the project, once a contract is in place, we recommend scheduling an introductory meeting with designated City management, to: 1. identify the population of utilities to be considered for examination, 2. obtain copies of the ordinances and agreements governing each utility, 3. review with the City any known compliance issues or previous compliance activity, and any other factors, for example, any recent boundary changes, annexations, or rate changes, that might impact compliance, 4. identify relevant payment records available from the City, Schedule and Complete Audit Engagements Based on the list of approved engagements, we will proceed to contact those utilities for which the City has approved audits. In preparing for and conducting its review of each utility, Avenu will employ the following procedures: 1. Obtain a letter of authorization from the City, copies of franchise agreements and any correspondence with the providers, and a history of franchise payments. 2. Obtain and review available documents, reports, work papers, and any prior reports prepared by the internal or external auditors, which concern the computation or methodologies for computing the franchise fee paid. Review franchise agreements and all ordinances and governing regulations relating to taxes to ensure compliance with all Federal, State and Local laws, and correspondence relating to the City's franchise fees. 4. Submit a Request for Information to each utility to obtain the information needed to complete our review and negotiate any necessary confidentiality and non -disclosure agreement related to the audit. 5. Review the work papers and supporting documentation used in the computation of the franchise fee payments. 6. Review and analyze each utility's general ledger and financial statements. Compare and analyze the data for reasonableness, completeness, and accuracy as related to the franchise fee. 7. Identify any revenues excluded from the franchise fee calculation. 8. Review and analyze all the utility's revenue accounts in detail to: determine revenues that are to be included or excluded from the franchise fee computations; review the revenues excluded from the computations, if any, and determine if they are permitted by the City's franchise agreement, or relevant state law. 9. Determine if utility or any of its subsidiaries receives any revenues from customers or third parties for the use of utility's facilities located on City's right of way authorized by the franchise agreement that are not included in the franchise fee calculation used to determine the payment to the City. 10. Review the process used to compute franchise fees on meter diversion revenue for gas, electric, water or other providers. CITY OF SANTA ANA, CA 11