Cotati City Council
Agenda Staff Report
Item type: CONSENT CALENDAR (ACTION)
To: City Council
Subject: AWARD CONTRACT FOR PROFESSIONAL AUDITING
SERVICES AGREEMENT FOR THE CITY OF COTATI
Date: September 10, 2024
Written by: Angela Courter, Director of Administrative Services Recommendation
It is recommended the City Council award the professional auditing services proposal to Chavan & Associates, LLP Certified Public Accountants and authorize the City Manager to negotiate and execute a three-year agreement, with two years of optional extensions and future year funding contingent on City Council budget approval in future fiscal years.
Background
Per Government Code section 12410.6.(b) “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.” The City of Cotati has engaged the services of Badawi & Associates since 2019-20 making the fiscal year 2023/24 the fifth year and the final year under the adopted contract with extensions.
The City engages an independent auditing firm to perform an examination of the City’s basic financial statements, evaluation of Revenues and Expenditures of Measure S sales tax receipts, and the City’s Schedule of Expenditures of Federal Awards (Single Audit) if required. The independent auditor also performs agreed-upon procedures to test and report on the City’s GANN appropriation limit calculation. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. The audit also includes evaluating the overall presentation of the financial statements and evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management. The objective of the audit is to express an opinion as to whether these financial statements are fairly presented in all material respects and in conformity with all applicable accounting standards generally accepted in the United States of America and as promulgated by the American Institute of Certified Public Accountants (AICPA), the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, and the U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments and Non-Profit Organizations.
Analysis/Discussion
On May 31, 2024, staff issued a Request for Proposals to seek qualified certified public accounting (CPA) firms to audit its financial statements for the fiscal years 2024/25 through 2026/27 with an option to extend the contract for fiscal years ending June 30, 2028 and 2029.
The RFP was e-mailed to firms recommended by the California Society of Municipal Finance Officers (CSMFO), posted on the CSMFO RFP portal and the GFOA RFP portal, and on the City’s online bidding site. The expiration date for submittal of the proposals was July 31, 2024.
The evaluation criteria included, responsiveness, experience with like cities, technical experience of the team, experience with government finance software, size and structure of firm, ability to provide technical support for implementation of new standards, cost, and firm compliance.
Chavan & Associates, LLP is a California-based CPA firm that specializes in government audits and provides a full range of accounting services to governmental agencies throughout California.
This firm was the sole responder, but was evaluated for technical knowledge and inquiries were made of their references. Staff believe the auditor firm meets the City's need for the highest standard of financial reporting.
If authorized by the City Council, staff will work to execute a contract to initiate the strategic planning of the audit to ensure reporting deadlines are met. Staff expects the selected auditor to perform the first part of the fiscal year 2024/25 audit in April 2025.
Financial Considerations
The total cost of auditing services is as follows:
Environmental Issues
The action of hiring a financial auditor does not constitute a project under the California Environmental Quality Act.