FORENSIC ACCOUNTING INVESTIGATION IMPLEMENTATION REVIEW WORK PLAN FOR
WEST CONTRA COSTA UNIFIED SCHOOL DISTRICT
Peder Jensen, CCA, Senior Manager
Moss Adams LLP 101 Second Street, Suite 900 San Francisco, CA 94105 (415) 956-1500
Dear Mr. Johnston:
Thank you for the opportunity to present our approach for forensic accounting investigation implementation review services for the West Contra Costa Unified School District (the District). We understand you’re seeking a service provider with a depth of functional skills necessary to review the implementation of recommendations from the forensic accounting investigation performed by Vincenti, Lloyd & Stutzman LLP (VLS) in 2016.
Our team will consistently provide the District with the highest quality services. We bring experienced professionals with deep knowledge of the construction industry, as well as school district and bond program management and oversight. Our approach is collaborative, and we’ll include your team in every step of the review process to successfully deliver value-added results.
Our performance as construction auditors and business advisors will demonstrate our commitment to high-quality services that are consistent with our proven track record. August 8, 2017 We look forward to helping the District monitor the implementation of
David Johnston recommendations previously identified and improve the processes, procedures, and Executive Director management of the bond program. If you’ve questions regarding this work plan, General Services please don’t hesitate to contact me. West Contra Costa Unified School District 1400 Marina Way South Sincerely, Richmond, CA 94804
Peder Jensen, CCA Senior Manager (503) 478-2197 [email protected]
Table of Contents
| Firm Background and Experience 1 About Moss Adams 1 Construction Audit Practice 2
| Project Approach and Work Plan 3
| Key Personnel Resumes 4
| Fees 7
Firm Background and Experience
ABOUT MOSS ADAMS As a large, national professional services firm and your current service provider, we offer our clients a significant benefit: we’re large enough to have the resources you need, yet small enough to provide the personal, timely service you desire. Clients who’ve chosen our construction audit solutions have told us that they have benefited from the extensive industry experience of our engagement teams, regional professionals, staff continuity, and high level of senior team member attention.
Firm Background Moss Adams is a fully integrated professional services firm dedicated to growing, managing, and protecting prosperity. With over 2,600 professionals and staff across more than 20 locations in the market capitals of the West and beyond, we work with the world’s most innovative, dynamic, and promising clients and markets. Through a full spectrum of accounting, consulting, and wealth management services, we bring the deep industry specialization and inspired thinking our mid-market clients seek.
Since we put down roots in the Pacific Northwest more than 100 years ago, we’ve steadily expanded to serve clients not only in the West, but also across the nation and globally. Our full range of services includes accounting (assurance and tax), consulting (IT, strategy & operations, transactions, construction & forensic audits), as well as individual and institutional wealth management.
Moss Adams is one of the 15 largest US accounting and consulting firms and a founding member of Praxity, AISBL, a global alliance of independent accounting firms providing clients with local expertise in the major markets of North America, South America, Europe, and Asia.
Service Philosophy Our commitment to being highly responsive to our clients is a fundamental part of our service philosophy. Open and timely communication is key to successful relationships, and our clients contact us throughout the year to help them. We offer continual access to senior-level team members who have the knowledge and experience to consistently meet our clients’ needs.
Focus on Your Industry Moss Adams was one of the first accounting firms in the nation to organize its professionals into firmwide industry groups, each with its own distinct leadership team, strategic plan, continuing professional education, and service approach. This was a big change from the established accounting industry practice of setting up individual offices in different locations and populating them with generalists.
We did this because we felt partners with a high degree of specialization could provide greater value to our clients. Our people would gain a deep understanding of the challenges and opportunities in their clients’ industries, and clients would benefit from our partners’ industry-relevant experience and expertise.
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This approach has worked. We’ve been able to provide our clients with a superior level of service and tailor that service to their specific needs. To continue to provide the right level of knowledge, each of our professionals attends firm-organized training on issues specific to the industry they specialize in, and we expect our people to be active in industry associations to develop a strong background in, and understanding of, industry issues.
For these reasons, we’re confident our construction audit team is the best fit for the District.
CONSTRUCTION AUDIT PRACTICE Our team has significant experience in performing construction cost and compliance audits. We’ve audited numerous large-scale public and private construction programs valued between $10 million and $3.5 billion, including public construction programs funded by state and federal funds, grants, and other funding sources. We complete many construction projects each year, ranging from full program reviews to close-out audits. In these engagements, we’ve acted as the principal auditor.
We bring the requisite understanding and knowledge of construction management methods, contracting strategies, project controls, and engineering to conduct successful construction internal controls assessments. This team—consisting of skilled professionals and performance auditors—has completed multiple construction program audits and is familiar with different types of construction contracts and project delivery methodologies. We’ve worked directly with general contractors and/or construction managers on issues arising out of schedule delays, construction quality, change orders, excess charges, and project progress reporting. We understand site requirements as well as local and state regulation compliance issues. Our team includes professionals who have outstanding credentials, capabilities, and knowledge of the construction industry along with the skills and capabilities of certified construction auditors (CCAs) needed for the engagement. Our combined professional accounting, engineering, and construction program expertise will be of specific value to the District.
Construction audit services are only as effective as the people performing the services, which is why the partners and managers at Moss Adams play such a significant role in our engagements. The partners and managers serving the District will work closely with you and be highly involved in all phases of the relationship, from planning and preparation to fieldwork and review. Our senior-level involvement will provide efficient job management, close supervision, timely resolution of issues, and expeditious reviews of work performed.
We understand that the bond program is important to the District, external stakeholders, and surrounding communities. A significant capital investment has been made and our team possesses the knowledge and experience necessary to assist the District in determining whether its policies, procedures, and implementation of prior recommendations are thorough and consistently being practiced district-wide. Through our significant bond program and school district experience, we understand that many areas such as procurement, contracts, budgeting and financial reporting, approvals, training, master planning, and invoice and change order approval are vital to the success of the District’s bond program. We’ll combine our knowledge of school districts, industry standard practices, and recommendations provided by VLS to provide an accurate assessment of the District’s implementation progress.
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Project Approach and Work Plan
The objective of this assessment is to provide the District with a review of the implementation progress of VLS’s forensic accounting investigation recommendations. The District’s forensic accounting investigation report dated September 16, 2016, and the District’s implementation matrix currently shows that 62 of the 112 recommendations have been implemented as of June 30, 2017.
Our team will review and verify each recommendation and their current implementation status. We’ll provide you with a document request list to gather information on the construction program. Samples will be selected, as needed, to review specific recommendations and evaluate whether or not the suggested processes/procedures have been implemented. Specific areas of review and tasks we’ll perform include, but aren’t limited to, the following:
• Reviewing recommendations provided by VLS and confirmed by the District • Reviewing the District’s implementation plan and subsequent updates as provided to the facilities subcommittee • Reviewing additions and modifications made to policies and procedures to verify they meet the objectives identified as a result of the forensic accounting investigation • Where necessary, sampling documents to confirm policies and procedures have been put into practice • Validating the roles and responsibilities of relevant District staff and conducting interviews, as needed
This engagement is a two-part process. The initial review will start in August 2017, and covers the first 62 recommendations that the District has implemented through June 30, 2017. The final review will take place in 2018 once the District has finished implementing all of the recommendations from the forensic accounting investigation report. The original 62 items will not be reverified in the final review unless the District makes additional requests or items did not initially meet the objective of the recommendation and required additional implementation steps.
Deliverables The District will receive a report that includes an executive summary, a detailed table of current implementation results, and a detailed scope of how each recommendation was evaluated. We’ll prepare a draft report for the District’s review, make revisions based on the District’s comments, and prepare the final report.
Moss Adams will update the report in 2018 once the implementation of all recommendations are complete and verified. The updated report will show all items that have been completed and verified.
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Key Personnel Resumes
Our strength is in our team. The personnel assigned to this project will collaborate effectively during each phase of the engagement to complete audit fieldwork. Each team member is highly qualified, as demonstrated by the detailed resumes listed below.
Peder Jensen, CCA, Senior Manager
Professional Experience
Peder leads our construction audit and advisory services group with a focus on performing construction contract compliance and construction performance audits for clients in various industries. He’s worked on a wide range of construction projects of varying size and contract type, and has performed efficient audits based on detailed planning and effective risk assessment. Prior to joining Moss Adams, Peder served as senior business manager with Kiewit Infrastructure Co. and managed cost accounting, financial reporting, contract administration, and regulatory compliance for several projects. He served as a district controller and was responsible for more than 15 projects with revenue in excess of $300 million. Peder has worked extensively with corporate assessment teams, regularly visiting project sites, evaluating internal controls, and assisting with large contract changes. Peder has experience working on several international projects, including projects in Canada, South America, and Southeast Asia.
Peder’s specific experience includes:
• Identifying significant cost savings in the areas of labor, insurance duplication, fringe benefits, cost allocation, and many other instances of contract noncompliance, such as: o Identifying $1.6 million of duplicated and unallowable labor charges in change orders o Finding $200,000 of excessive equipment charges over the course of a project o Identifying $1.1 million of unallowable subcontractor labor burden charges passed on to the owner in the construction of a new hospital project • Detecting weaknesses in construction manager oversight controls for change orders. The resulting controls improvements resulted in significant cost recovery of previously submitted overstated subcontractor markups and ongoing savings due to increased scrutiny of cost estimates by the construction manager.
Professional Affiliations and Certifications
• Certified Construction Auditor (CCA) • Member, Institute of Internal Auditors
Education
• BS, business management, Montana State University
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Mark Steranka, Partner
Professional Experience
Mark offers 30 years of experience in internal and performance audits for government and nonprofit organizations. He serves as project manager for internal audit engagements for Carson City, Modesto, and Stockton, and has managed assignments ranging in size from $25,000 to $1 million. Mark has worked extensively with local and state governments throughout the western United States to evaluate risks, operational efficiency and effectiveness, internal controls, and compliance with requirements. He’s provided relevant consulting services for clients such as:
• States: Alaska, California, Idaho, Oregon, and Washington • Counties: King County, Pierce County, San Juan County, and County of Sonoma • Cities: Anacortes, Burien, Carson City, Culver City, Edmonds, Lynnwood, Issaquah, Modesto, Portland, Redondo Beach, San Jose, Santa Monica, Santa Rosa, Stockton, and West Richland • Special Purpose Districts: Community Transit, Lake Stevens Sewer District, North Perry Water District, Richland School District; Santa Clara Valley Water District, Snohomish County PUD No. 1, and Tacoma Department of Public Utilities
Mark is experienced in reporting to boards, commissions, committees, councils, and executive management, and working with citizen committees and stakeholder groups. He’s also well versed in designing and facilitating meetings, focus groups, and customer surveys.
Professional Affiliations and Certifications
• Certified in GAGAS performance audits
Education
• Executive management program, University of Washington • BS, mechanical engineering, University of Notre Dame
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Charnee Foston, CFE, Manager
Professional Experience
Charnee provides construction audit services for capital projects ranging from $5 million to $3.5 billion in the education, health care, infrastructure, and commercial real estate industries. She brings over five years of relevant experience and has successfully performed initial, interim, and close-out construction audits and bond performance audits. Her audits provide useful information to construction project owners and related benefits that have significantly exceeded project fees.
Prior to joining Moss Adams, Charnee was a senior associate consultant at Talson Solutions LLC in Philadelphia. In this capacity, she conducted construction cost audits and other compliance-related reviews for major capital programs.
Professional Affiliations and Certifications
• Certified Fraud Examiner (CFE) • Member, Association of Certified Fraud Examiners • Member, Institute of Internal Auditors
Education
• BS, business administration, finance (minor in accounting), La Salle University
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Fees
We’re committed to fees that are fair and commensurate with the experience and level of service described in this work plan. We’ve prepared the following fee estimate based on our understanding of your current service needs. The table below provides a detailed breakdown of our estimated not-to- exceed (NTE) fees by service. Expenses will be billed separately at cost.
The ranges below for each review are based in part on our ability to repurpose a portion of the documents provided by the District for the bond performance audit we’re currently performing. These are separate engagements and will be treated independently, but we anticipate a significant overlap in the documentation provided by the District for both.
Audit Estimated Hours Estimated NTE Fees
Review No. 1 – Through June 30, 2017 205–230 $43,000–$48,000
Review No. 2 – All remaining items (2018) 215–240 $45,000–$50,000
Assurance, tax, and consulting offered through Moss Adams LLP. Wealth management provided by Moss Adams Wealth Advisors LLC. Investment banking offered through Moss Adams Capital LLC.
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