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Proposal Letter <br />City of Santa Ana <br />1 -Yr. AT &T and 3- Yr.Time Warner Review <br />Communications Support Group, Inc. <br />SECTION C <br />METHODOLOGY <br />1. Nature of Engagement: <br />This will be an agreed -upon procedures engagement conducted in accordance with the <br />provisions of AICPA Statement on Standards for Attestation Engagements No. 10. <br />2. Agreed -Upon Procedures for Franchise fee and PEG fee payment Review: <br />In connection with this engagement, we propose to review AT &T and Time Warner's <br />books and records to assist the City in determining whether the companies have paid <br />the City the appropriate franchise fees and PEG fees during the three year period <br />ending December 31, 2010. We will also estimate a date of amortization forAdelphia's <br />initial PEG grant. Our review will consist of the following procedures: <br />Phase 1 <br />a. Shortly after we receive a signed engagement letter or contract, we will send a <br />document request to the City. The letter will include a request for the following <br />documents: <br />• Copies payments made by AT &T and Time Warner for any quarters <br />that were not collected during the "cursory review ". <br />• Rate and Channel Information for any months and quarters that were <br />not collected during the "cursory review ". <br />b. We will prepare and forward addenda to the general questionnaires previously <br />sent to AT &T and Time Warner with questions related to utility taxes, franchise <br />fees, and PEG fees paid by AT &T and Time Warner to the City for the period. <br />c. We will further review the CPUC Codes, Cable Television Franchise Agreements, <br />any Renewal or Transfer Agreements between City and AT &T and City and Time <br />Warner to identify definitions of "gross revenues ", late payment provisions, PEG <br />fee terms, etc. <br />d. We will request that copies of certain books and records of AT &T and Time <br />Warner be forwarded to our office in Newport Beach. In connection with the <br />review of these records: <br />e. We will identify AT &T and Time Warner's method for backing out non - specific <br />revenues between franchise areas (such as Home Shopping revenues). <br />f. We will review AT &T and Time Warner's method for identifying subscribers to the <br />proper franchise area. <br />©2011 Communications Support Group, Inc. Page 6 of 9 <br />25F -11 <br />