Fremont City Council Meeting: 07/09/24 07:00 PM
3300 Capitol Avenue Div/Dept: Finance Department
Fremont, CA 94538 Category: Agreements and Contracts
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5202) DOC ID: 5202
Updated: 6/26/2024 2:16 PM by Dina Lewis Page 1
FINANCIAL AUDIT SERVICES – Authorization to Execute Agreement for Financial Audit Services with Macias Gini & O’Connell LLP
Contact Persons:
Name: Hein Hein Myat David Persselin
Title: Accounting Manager Finance Director
Div/Dept: Finance Department Finance Department
Phone: 510-494-4602 510-494-4631
E-Mail: [email protected] [email protected]
Executive Summary: The City engages a firm of certified public accountants to audit the City’s financial statements and issue reports related to the City’s internal controls, expenditure of grant funds, and compliance with grant requirements.
Staff recently conducted a request for proposals (RFP) process to solicit proposals from qualified firms. Having reviewed and evaluated the proposals based on criteria outlined in the RFP, staff recommends that the City Council authorize the City Manager or her designee to execute a financial audit services agreement with Macias Gini & O’Connell LLP (MGO).
BACKGROUND: The City engages a firm of certified public accountants to annually audit the City’s financial statements and issue reports related to the City’s internal controls, expenditure of grant funds, and compliance with grant requirements. The annual audit and the various reports are required by the City’s financing and grant agreements.
The auditor expresses an opinion on the fair presentation of the City’s basic financial statements in conformity with generally accepted accounting principles and provides an “in- relation-to” report on the supplementary information accompanying the basic financial statements, as well as performing certain limited procedures involving required supplementary information required by the Governmental Accounting Standards Board (GASB). The audits will be performed in accordance with generally accepted auditing standards.
The auditor also issues separate financial and/or compliance reports on the following:
Comprehensive Annual Financial Report, Federal Financial Assistance Programs - Single Audit including a report on the internal control over financial reporting based on the auditors’ understanding of the control structure and assessment of control risk, Agreed Upon Procedures Related to the Article XIII-B Appropriations Limit (Gann Limit), Transportation Development Act Program – Article III, and separate Alameda County Transportation Commission reports on Measure B, Measure BB and Measure F funds.
In addition to the audit-related services, the audit firm’s staff is available throughout the year, as needed, to provide training and consultation on various accounting and financial reporting matters, including implementation of new GASB requirements.
MGO has most recently audited the City’s financial statements and issued the required reports for fiscal years ended June 30, 2019, through June 30, 2023.
Council Staff Report (ID # 5202) Meeting of July 9, 2024 Updated: 6/26/2024 2:16 PM by Dina Lewis Page 2
DISCUSSION/ANALYSIS: As the current financial audit services agreement with MGO ended on June 30, 2023, staff issued an RFP for Financial Audit Services in March 2024 and received responses in March 2024 from four firms.
Staff reviewed the proposals based on criteria outlined in the RFP and has determined that continuing with MGO as the City’s auditor best meets the City’s needs. Accordingly, staff recommends that the City Council authorize the City Manager or his designee to execute an agreement with MGO to provide financial audit services for fiscal years ended June 30, 2024, 2025, 2026, 2027 and 2028 for a term beginning in fiscal year 2023/24 and ending on June 30, 2029.
FISCAL IMPACT: MGO has proposed a cost of $138,450 for the first year, increasing each year by up to 4% depending on changes in the consumer price index. The City anticipates it is likely that additional single audit programs will be required, and the Agreement includes a total of $81,245 for two additional programs per year, at an assumed inflation rate of 4%, for the five-year term. Consequently, the total not-to-exceed amount over the five-year term of the agreement is $831,075. The cost of the audit services for the fiscal year ended June 30, 2024, was included in the FY 2024/25 Adopted Operating Budget.
ENVIRONMENTAL REVIEW: Action on this item represents a fiscal, organizational, and/or administrative governmental activity that will not result in physical changes in the environment. Therefore, it is not a project subject to review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378.
ATTACHMENTS: None.
RECOMMENDATION: Authorize the City Manager or her designee to execute an agreement with MGO to provide financial audit services for fiscal years ending June 30, 2024, 2025, 2026, 2027 and 2028 at a total not-to-exceed amount of $831,075 for a term beginning in fiscal year 2023/24 and ending on June 30, 2029.