City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: City Auditor
Meeting Date: March 24, 2025
Report #:2502-4132
TITLE
Approval of Contract Amendment Number 2 to Contract Number C22183462 with Macias Gini & O'Connell LLP (MGO) to Add $415,071 and Extend the Term for Two Years for External Financial Audit Services; CEQA Status -- Not a Project.
RECOMMENDATION
The Office of the City Auditor recommends that City Council approve and authorize the City Manager or their designee to execute Amendment Number 2 to Contract C22183462 with Macias Gini & O'Connell LLP (MGO) for external financial audit services, to add $415,071 and extend the term for two years. This amendment results in a revised total contract not to exceed amount of $1,014,390, for five years of services, from 2022 through March 31, 2027.
BACKGROUND
The City Charter requires the City Council, through the City Auditor, to engage an independent certified public accounting firm to conduct the annual external financial audit, and report the results of the audit, in writing, to the City Council. MGO has provided the city with external financial audit services since 2017. In October 2021, the City initiated a formal Request for Proposal (RFP) process that encouraged competition from all qualified firms, including MGO, and selected MGO’s proposal for continued services through March 31, 2025. The City Council approved the agreement with MGO on May 2, 20221.
Due to the recent appointment of the current City Auditor, and to ensure the City is not in the position of potentially replacing both the City Auditor and External Financial Auditor in the same year, the Office of the City Auditor proposes extending the contract with MGO through fiscal years 2025 and 2026, and conducting another formal Request for Proposal (RFP) process in 2026 for external financial auditing services to commence in FY2027. 1 City Council, May 2, 2022: https://portal.laserfiche.com/Portal/DocView.aspx?id=59469&repo=r- 704298fc&searchid=c93bca32-12fd-4626-8c17-0020136890ba
ANALYSIS
This recommendation does not present any changes to existing City policies and aligns with the City’s Charter requirements.
FISCAL/RESOURCE IMPACT
The total five-year cost not to exceed $1,019,556 is funded in the City Auditor’s Office operating budget beginning in Fiscal Year 2023 through March 31, 2027, subject to Council appropriation of funds for future fiscal year budgets. Funding for this agreement is included in the FY 2025 Adopted Budget. The payment per year for professional services and reimbursable expenses shall not exceed:
2022 – 2023 $176,270
2023 – 2024 $181,560
2024 – 2025 $187,005
2025 – 2026 $204,452
2026 – 2027 $210,619
Additional Services $54,484
STAKEHOLDER ENGAGEMENT
The Office of the City Auditor worked primarily with the Administrative Services Department in assessing contract amendment terms. The Office of the City Attorney assisted in review of the contract amendment.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA because the financial audit activities are an administrative activity that will not result in direct or indirect physical changes in the environment. CEQA Guidelines section 15378(b)(5).
ATTACHMENTS
Attachment A: Amendment No. 2 to Contract No. C22183462 with Macias Gini & O’Connell LLP APPROVED BY:
Kate Murdock, City Auditor