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Staff Report
City Council
Item No. 6.G
Meeting Date: March 27, 2024
From: Kevin Biersack, Financial Services Director
Title: Contract to Perform the Annual Comprehensive Financial Report (ACFR) Audit Activities
City Council
RECOMMENDATION:
To authorize the City Manager to enter into an agreement with Lance, Soll & Lunghard, LLP to perform the annual financial audit activities for the next three (3) fiscal years with the option to extend up to three (3) additional fiscal years.
BACKGROUND:
Audit services were provided by Lance, Soll & Lunghard (LSL), LLP for Fiscal Years Ending (FYE) 2017 -2023. In the past, w e have competitively procur ed audit services every six (6) years, coinciding with the California State Controller’s Office (SCO) requirement for partner rotation to occur at least every six (6) years.
DISCUSSION:
On January 5, 2024, the Financ ial Services department sent a request for proposal (RFP) to ten (10) audit firms and posted the request for proposal on the city’s website.
The listing of all ten (10) firms is attached for review. By the closing date on January 29, 2024, we received five (5) responses comprised of:
• three (3) responses, with two (2) responses received on time,
• one (1) vendor response stating they were not accepting new clients at this time , and
• one (1) vendor response stating they ran out of time and would not be able to submit a response by the deadline.
Per the RFP, the scope of the audit proposal included the following:
• City Audit, including the independent auditors’ various report(s) • GANN Limit Review
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• Single Audit (Federal Grants) and related reporting , normally one (1) major program; however, the city has had two (2) major programs in some previous fiscal years
The audit proposal review team consisted of the city’s two (2) Senior Accountants and the Financial Services Director. The team conducted independent reviews of all technical proposals based upon the following elements:
• Firm’s expertise in audits of this type,
• Firm’s experience in auditing governments,
• Firm’s size, structure and resources,
• Qualifications of audit team – partner,
• Qualifications of audit team – manager,
• Qualifications of audit team – senior,
• General direction/supervision,
• Adequacy of proposed staffing plan,
• Thoroughness of approach to audit,
• Adequacy of sampling techniques, and
• Commitment to timeliness.
The audit proposal review team determined both firms were technically compliant. The technical review scoring sheet is attached. The primary differences in the scoring between the two (2) firms were in these three elements:
• Firm size, structure and resources,
• Qualifications of audit team, and
• Adequacy of proposed staffing plan/hours.
Oral interviews were conducted and client references were checked. After the oral interviews were conducted, the purchasing agent asked the two vendors to provide their best and final price proposal, whether the cost needed to increase, stay the same, or decrease.
This process resulted in the following overall technical ranking with:
• First, Lance, Soll & Lunghard, LLP, and
• Second CliftonLarsenAllen LLP
Subsequently and separately, the sealed cost proposals were reviewed. For the two (2) firms, the annual cost, number of hours and average hourly rates (including the audit cost for one major Single Audit Program) are listed below:
• Lance, Soll & Lunghard, LLP
o $68,758
o 425 hours
o $161.79/hour average
• CliftonLarsenAllen LLP
o $53,140
o 291 hours
o $182.61/hour average
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Per the city’s Municipal Code, Chapter 3, Section 12, Paragraph 180. Best Value Criteria, the review team determined LSL effectively demonstrated they would be more thorough with their audit processes and provided a clearer understanding of our city- prepared financial statement(s) . LSL was more effective in communicating their ability, capacity and skill to perform the services requested in a prompt manner and be able to provide dedicated resources.
FISCAL IMPACT:
The General Fund account for this engagement is 100 -100-140-141-8600-8601 for Finance Professional Services. We will not need additional budget authorization in FY 2024/2025, year one of this contract.
FIVE-YEAR STRATEGIC PLAN:
Goal C: FISCAL STABILITY and SUSTAINABILITY
Objective: Cathedral City has economically prospered by facilitating investment of private dollars in high quality development which benefits the community. We remain financially solvent by instituting prudent fiscal policies and transparent financial practices.
ATTACHMENTS:
Audit Firms List Final
2024 Proposal Score Sheet CLA vs LSL
Services Agreement - LSL 04.01.2024_Final