CITY COUNCIL STAFF REPORT
July 16, 2024 {{section.number}}h
AUTHORIZATION FOR THE CITY MANAGER TO EXECUTE A MULTI-YEAR EXTENSION
AGREEMENT WITH DAVIS FARR, LLP, TO PROVIDE INDEPENDENT PROFESSIONAL
CERTIFIED PUBLIC ACCOUNTANT (CPA) SERVICES FOR THE FISCAL YEARS ENDING JUNE 30, 2024, 2025, 2026, AND 2027
RECOMMENDATION:
Authorize the City Manager to execute a multi-year extension agreement with Davis Farr, LLP, to provide independent professional CPA services for the fiscal years ending June 30, 2024, 2025, 2026, and 2027.
BACKGROUND:
On June 4, 2013, the City Council adopted the “Independent Auditor Rotation” Policy (the “Policy"). The Policy states, “The City shall enter into multi-year agreements of at least five years and no more than ten years when obtaining the services of an independent auditor.” Davis Farr, LLP, has been conducting audits and related services for the City since Fiscal Year (FY) 2017-18 and has provided excellent services for the audit of the City’s financial statements, Housing Successor Agency audits, single audit, Agreed Upon Procedures (AUP) for select hotels, AUP for Gann limit, AUP for select concessionaires, and preparation of the California State Controller’s Report.
The City and Davis Farr, LLP, recently negotiated a multi-year extension agreement for $88,570 in the first year and a 5% annual fee adjustment for subsequent years. With the extension, the multi-year contract exceeds $100,000 and requires City Council authorization.
ANALYSIS:
Davis Farr, LLP, is a regional public accounting firm specializing in providing audit, tax and consulting services for over 45 years. The professional CPA services provided to the City will be coordinated out of Davis Farr’s Carlsbad office. The firm currently serves 16 governmental entities in the San Diego County area. Davis Farr, LLP, and its Partners are members of the American Institute of Certified Public Accountants (AICPA) and member of the AICPA’s Government Audit Quality Center.
In light of the policy, the staff recommends that the City Council provide authority for the City Manager to enter into a multi-year extension agreement with Davis Farr, LLP for independent, professional, certified public accountant services. This will allow for greater continuity and minimize disruption with the annual audit.
FISCAL IMPACT:
The Fiscal Year 2024-25 budget unit 100-14401 includes funding for claims administration services. The term of the agreement is four years through March 31, 2028, with a not-to-exceed cost of $88,570 in the first year, and each subsequent year subject to 5% cost adjustments.
ALTERNATIVE:
The City Council could direct that staff execute an extension agreement with a term of less than four years or direct staff to take different actions.
CALIFORNIA ENVIRONMENTAL QUALITY ACT:
Not Applicable.
PUBLIC NOTICE:
No notice is required.
ATTACHMENTS:
1. Davis Farr Extension FY 2024-2027
Submitted By: Administrative Services Department / John Kim