Consent Item 6
Consent Item 6
TO: Ava Community Energy Authority Board of Directors
FROM: Jason Bartlett, Senior Finance Manager
SUBJECT: Consulting Services Agreement for Auditor Services DATE: May 15, 2024
__________________________________________________________________ Recommendation
Approve a Resolution authorizing CEO, in consultation with Ava staff and legal counsel, to negotiate and execute a consulting services agreement with Pisenti & Brinker, LLP, to continue to provide financial audit services for a period of three years with an option to extend an additional three years, for a total period of six years.
Background and Discussion
All quarterly and annual financial statements are generated by our outsourced accounting firm, Maher Accountancy. In accordance with generally accepted accounting principles (GAAP), the annual financial statements undergo a third-party audit.
The audit is conducted after the close of the fiscal year on June 30th and typically ends with the October or November Board meeting, when the finalized Audited Financial Statements are presented by the auditors. Other related items are usually brought to the Board at this time as well, such as allocations to reserve funds and waterfall surplus allocations.
Led by lead audit partner. Brett Bradford, Pisenti & Brinker, LLP (“P&B”) has performed Ava’s annual financial audit for the last six years.
Consent Item 6
The State of California has specific requirements for auditor rotations. Specifically, Section 12410.6(b) of California Government Code states a local agency must change the lead audit partner at least once every six years1.
To this end, Ava staff issued a request for proposals (“RFP”) in February of 2024 to solicit bids for audit services from qualified CPA firms. Each proposal was reviewed by staff members and processed through a standardized rubric for ranking based on evaluation criteria.
Ava received two strong proposals: one from Baker Tilly and one from P&B. Both proposals scored very high with the evaluation criteria and so both teams were invited to interview with staff. Based on the proposal evaluation and the responses to interview questions, staff makes the recommendation to continue Ava’s engagement with P&B for financial audit services.
Ava’s legal counsel has reviewed the previously cited code and has confirmed Ava can continue to receive audit services with P&B provided there is a new lead audit partner to replace Brett Bradford. P&B is proposing to assign Kellin Gilbert to replace Brett Bradford as lead audit partner through the engagement. Brett Bradford shall not serve as lead audit partner, coordinating audit partner or review the audit(s).
P&B stood out above Baker Tilly for a number of reasons. • Depth of CCA experience. While both firms have ample experience in the public utility space, P&B has more specific experience in the CCA space. Aside from Ava, they currently provide audit services for PCE, SVCE, and Sonoma, and they have provided services for 3CE, Pioneer, San Diego Community Power, OCPA, MCE, and Clean Energy Alliance.
• Experience transitioning lead audit partners among multiple CCAs. They have experience in complying with the State code with the rotation of principal partners.
• Established systems and audit processes with Ava currently exist. The systems for establishing audits can be daunting to set up. P&B and Ava already have these in place and documentation trails of key practices, policies, and controls. • Administration of robust processes that include sampling of bills, not offered by others.
1 Government Code section 12410.6.(b) indicates that commencing with the 2013-14 fiscal year, a local agency shall not employ a public accounting firm to provide audit services to a local agency if the lead audit partner or coordinating audit partner having primary responsibility for the audit, or the audit partner responsible for reviewing the audit, has performed audit services for that local agency for six consecutive fiscal years. For purposes of calculating the six consecutive fiscal years, the local agency shall not take into account any time that a public accounting firm was employed by that local agency prior to the 2013- 14 fiscal year. The Controller may waive this requirement if he or she finds that another eligible public accounting firm is not available to perform the audit.
https://www.sco.ca.gov/aud_auditor_rotation_requirements.html Consent Item 6
• Most competitive fee arrangement. Both firms have modest increases with each year of engagement, P&B’s was slightly lower and did not include additional administrative fees.
• Familiarity with Ava’s finances. They have audited Ava’s transactions for the last six years and have worked with Maher Accountancy in an efficient manner. • P&B is located in Sonoma County and is owned and operated by its principal partners.
For these reasons, staff is recommending a continued engagement with P&B for an additional three years with the option for staff to renew the contract for up to an additional three years, for a total period not to exceed six years.
Fiscal Impact
The financial impact in each fiscal year is as follows:
• FY 2024-2025: $28,000
• FY 2025-2026: $29,000
• FY 2026-2027: $30,000
• FY 2027-2028: $32,500 (Optional)
• FY 2028-2029: $34,500 (Optional)
• FY 2029-2030: $37,000 (Optional)
For a total not to exceed of $191,000.
Committee Recommendation
The Finance, Administrative, & Procurement Subcommittee has reviewed this item and has approved this matter to come to the Board for a vote.
Attachments
A. Resolution to Authorize the CEO to Negotiate and Execute a Consulting Services Agreement with Pisenti & Brinker for Auditor Services
B. Presentation
Attachment Consent Item 6A
RESOLUTION NO. R-2024-XX
A RESOLUTION OF THE BOARD OF DIRECTORS
OF AVA COMMUNITY ENERGY AUTHORITY TO AUTHORIZE THE CEO TO
NEGOTIATE AND EXECUTE A CONSULTING SERVICES AGREEMENT WITH
PISENTI & BRINKER FOR AUDITOR SERVICES
WHEREAS The Ava Community Energy Authority (“Ava”) was formed as a community choice aggregation agency (“CCA”) on December 1, 2016, Under the Joint Exercise of Power Act, California Government Code sections 6500 et seq., among the County of Alameda, and the Cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, and Union City to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The cities of Newark and Pleasanton, located in Alameda County, along with the City of Tracy, located in San Joaquin County, were added as members of Ava and parties to the JPA in March of 2020. The city of Stockton, located in San Joaquin County was added as a member of Ava and party to the JPA in September of 2022. The city of Lathrop, located in San Joaquin County, was added as a member to Ava and party to the JPA in October of 2023. On October 24, 2023, the Authority legally adopted the name Ava Community Energy Authority, where it had previously used the name East Bay Community Energy Authority since its inception.
WHEREAS Ava Community Energy (“Ava”) has contracted with Pisenti & Brinker, LLP (“P&B”) for financial auditor services for the past six consecutive years, with Brett Bradford as the lead audit partner.
WHEREAS in February of 2024, Ava conducted a request for proposals (“RFP”) for financial auditor services and selected P&B as the highest scoring applicant for auditor services.
WHEREAS Section 12410.6(b) of California Government Code requires local agencies to rotate lead or coordinating audit partners every six consecutive years by either hiring a new firm or selecting a different lead audit partner from the firm to provide current services.
WHEREAS P&B’s response to the RFP proposed Kellin Gilbert as lead audit partner to replace Brett Bradford and Brett Bradford shall not serve as lead audit partner, coordinating audit partner or review the audit(s).
WHEREAS Ava wishes to engage with P&B, with Kellin Gilbert as lead audit partner, for financial auditor services for three years, with the option for Ava staff to renew for up to an additional three years, for a period not to exceed six consecutive years.
Attachment Consent Item 6A
NOW, THEREFORE, THE BOARD OF DIRECTORS OF AVA COMMUNITY ENERGY AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. In consultation with legal counsel and staff, the CEO is hereby authorized to negotiate and execute a Consulting Services Agreement with Pisenti & Brinker for three years for financial audit services with the option for Ava staff to renew the engagement for up to an additional three years for a period not to exceed six consecutive years.
Section 2. Compensation under this Consulting Services Agreement will be $28,000 for the fiscal year 2023-2024 audit, $29,000 for the fiscal year 2024-2025 audit, $30,000 for the fiscal year 2025-2026 audit, $32,500 for the fiscal year 2026-2027 audit, $34,500 for the fiscal year 2027-2028 audit, and $37,000 for the fiscal year 2028-2029 audit, for a total compensation not to exceed $191,000.
ADOPTED AND APPROVED this 15th day of May, 2024.
Jack Balch, Chair
ATTEST:
Adrian Bankhead, Clerk of the Board
Auditor Consulting
Services Agreement
Board of Directors
May 15, 2024
Attachment Consent Item 6B
Background & Discussion
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Attachment Consent Item 6B
California Government Code
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Attachment Consent Item 6B
Audit Services Request for Proposals
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PCE, Sonoma Clean Power, and SVCE, among
many other public utility entities in California
• The top two firms were interviewed, and Staff convened to evaluate responses • Based on the evaluation of the proposals and the responses to interview questions, Staff makes the recommendation to proceed with engaging audit services from Pisenti & Brinker.
Attachment Consent Item 6B
Pisenti & Brinker Recommendation
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• Depth of CCA experience
• P&B provides audit services to the largest number of CCAs. In addition to Ava, this includes Peninsula Clean Energy, Sonoma Clean Power, Silicon Valley Clean Energy, 3CE, Pioneer Community Energy, San Diego Community Power, OCPA, and Clean Energy Alliance. P&B has experience transitioning lead audit partners among multiple CCAs as well.
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• Familiarity with Ava’s finances
• P&B has audited Ava’s financial transactions for the last six years and has worked with Maher Accountancy in an efficient manner
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Attachment Consent Item 6B
Recommendation & Committee Guidance
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Attachment Consent Item 6B
Thank you!
Attachment Consent Item 6B