COUNCIL APPOINTED OFFICER COMMITTEE
Special Meeting
Wednesday, December 10, 2025
Council Chambers & Hybrid
4:30 PM
All
Council
Committee
meetings
will
be
held
as
“hybrid”
meetings
with
the
option
to
attend
by
teleconference/video
conference
or
in
person.
To
maximize
public
safety
while
still
maintaining
transparency
and
public
access,
members
of
the
public
can
choose
to
participate
from
home
or
attend
in
person.
Information
on
how
the
public
may
observe
and
participate
in
the
meeting
is
located
at
the
end
of
the
agenda.
Masks
are
strongly
encouraged
if
attending
in
person.
The
meeting
will
be
broadcast
live
on
Zoom
and
on
YouTube
at
https://www.youtube.com/c/cityofpaloalto
.
VIRTUAL PARTICIPATION
CLICK HERE TO JOIN
(
https://cityofpaloalto.zoom.us/j/89296018574
)
Meeting ID: 892 9601 8574 Phone: 1(669)900-6833
PUBLIC COMMENTS
General
Public
Comment
for
items
not
on
the
agenda
will
be
accepted
in
person
for
up
to
three
minutes
or
an
amount
of
time
determined
by
the
Chair.
General
public
comment
will
be
heard
for
30 minutes.
Additional
public
comments,
if
any,
will
be
heard
at
the
end
of
the
agenda.
Public
comments
for
agendized
items
will
be
accepted
both
in
person
and
via
Zoom
for
up
to
three
minutes
or
an
amount
of
time
determined
by
the
Chair.
Requests
to
speak
will
be
taken
until
5 minutes
after
the
staff’s
presentation
or
as
determined
by
the
Chair.
Written
public
comments
can
be
submitted
in
advance
to
a
nd
will
be
provided
to
the
Council
and
available
for
inspection
on
the
City’s
website.
Please
clearly
indicate
which
agenda item you are referencing in your subject line.
PowerPoints,
videos,
or
other
media
to
be
presented
during
public
comment
are
accepted
only
by
to
at
least
24 hours
prior
to
the
meeting.
Once
received,
the
Clerk
will
have
them
shared
at
public
comment
for
the
specified
item.
To
uphold
strong
cybersecurity
management
practices,
USB’s
or
other
physical
electronic
storage
devices
are
not
accepted.
Signs
and
symbolic
materials
less
than
2 feet
by
3 feet
are
permitted
provided
that:
(1)
sticks,
posts,
poles
or
similar/other
type
of
handle
objects
are
strictly
prohibited;
(2)
the
items
do
not
create
a
facility,
fire,
or
safety
hazard;
and
(3)
persons
with
such
items
remain
seated
when
displaying
them
and
must
not
raise
the
items
above
shoulder
level,
obstruct
the
view
or
passage
of other attendees, or otherwise disturb the business of the meeting.
1 December 10, 2025
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas
.
CALL TO ORDER
PUBLIC COMMENTS
Members of the public may speak in-person ONLY to any item NOT on the agenda. 1-3 minutes depending on number of speakers. Public Comment is limited to 30 minutes. Additional public comments, if any, will be heard at the end of the agenda.
ACTION ITEM
1. Discussion, Debrief and Recommendation to the City Council Regarding the Council Appointed Officer (CAO) Performance Evaluation Process; CEQA status – not a project
2. Discussion and Recommendation to the City Council on Next Steps for the Internal Audit Services Contract with Baker Tilly that ends June 2026; CEQA Status – Not a Project
FUTURE AGENDA ITEMS
Members of the public may not speak to the item(s)
ADJOURNMENT
2 December 10, 2025
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas
.
PUBLIC COMMENT INSTRUCTIONS
Members
of
the
Public
may
provide
public
comments
to
teleconference
meetings
via
email,
teleconference, or by phone.
1. Written public comments
may be submitted by email to
[email protected]
.
2. For
in
person
public
comments
please
complete
a
speaker
request
card
located
on
the
table
at
the
entrance
to
the
Council
Chambers
and
deliver
it
to
the
Clerk
prior
to
discussion of the item.
3. Spoken
public
comments
for
agendized
items
using
a
computer
or
smart
phone
will
be
accepted
through
the
teleconference
meeting.
To
address
the
Council,
click
on
the
link
below to access a Zoom-based meeting. Please read the following instructions carefully. ◦
You
may
download
the
Zoom
client
or
connect
to
the
meeting
in-
browser.
If
using
your
browser,
make
sure
you
are
using
a
current,
up-to-date
browser:
Chrome
30 ,
Firefox
27 ,
Microsoft
Edge
12 ,
Safari
7 .
Certain
functionality
may
be
disabled
in
older
browsers
including
Internet
Explorer.
Or
download
the
Zoom
application
onto
your
smart
phone
from
the
Apple
App
Store
or
Play
Store
and
enter
in
the
Meeting ID below.
◦
You
may
be
asked
to
enter
an
address
and
name.
We
request
that
you
identify
yourself
by
name
as
this
will
be
visible
online
and
will
be
used
to
notify
you
that it is your turn to speak.
◦
When
you
wish
to
speak
on
an
Agenda
Item,
click
on
“raise
hand.”
The
Clerk
will
activate
and
unmute
speakers
in
turn.
Speakers
will
be
notified
shortly
before
they
are called to speak.
◦
When
called,
please
limit
your
remarks
to
the
time
limit
allotted.
A
timer
will
be
shown on the computer to help keep track of your comments.
4. Spoken
public
comments
for
agendized
items
using
a
phone
use
the
telephone
number
listed
below.
When
you
wish
to
speak
on
an
agenda
item
hit
*9
on
your
phone
so
we
know
that
you
wish
to
speak.
You
will
be
asked
to
provide
your
first
and
last
name
before
addressing
the
Council.
You
will
be
advised
how
long
you
have
to
speak.
When
called
please limit your remarks to the agenda item and time limit allotted.
CLICK HERE TO JOIN
Meeting ID: 892 9601 8574 Phone: 1(669)900-6833
Americans
with
Disability
Act
(ADA)
It
is
the
policy
of
the
City
of
Palo
Alto
to
offer
its
public
programs,
services
and
meetings
in
a
manner
that
is
readily
accessible
to
all.
Persons
with
disabilities
who
require
materials
in
an
appropriate
alternative
format
or
who
require
auxiliary
aids
to
access
City
meetings,
programs,
or
services
may
contact
the
City’s
ADA
Coordinator
at
(650)
329-2550
(voice)
or
by
emailing
Requests
for
assistance
or
accommodations
must
be
submitted
at
least
24 hours
in
advance
of
the
meeting,
program,
or
service.
3 December 10, 2025
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas
.
California
Government
Code
§84308
,
commonly
referred
to
as
the
"Levine
Act,"
prohibits
an
elected
official
of
a
local
government
agency
from
participating
in
a
proceeding
involving
a
license,
permit,
or
other
entitlement
for
use
if
the
official
received
a
campaign
contribution
exceeding
$500
from
a
party
or
participant,
including
their
agents,
to
the
proceeding
within
the
last
12 months.
A
“license,
permit,
or
other
entitlement
for
use”
includes
most
land
use
and
planning
approvals
and
the
approval
of
contracts
that
are
not
subject
to
lowest
responsible
bid
procedures
and
have
a
value
over
$50,000.
A
“party”
is
a
person
who
files
an
application
for,
or
is
the
subject
of,
a
proceeding
involving
a
license,
permit,
or
other
entitlement
for
use.
A
“participant”
is
a
person
who
actively
supports
or
opposes
a
particular
decision
in
a
proceeding
involving
a
license,
permit,
or
other
entitlement
for
use,
and
has
a
financial
interest
in
the
decision.
The
Levine
Act
incorporates
the
definition
of
“financial
interest”
in
the
Political
Reform
Act,
which
encompasses
interests
in
business
entities,
real
property,
sources
of
income,
sources
of
gifts,
and
personal
finances
that
may
be
affected
by
the
Council’s
actions.
If
you
qualify
as
a
“party”
or
“participant”
to
a
proceeding,
and
you
have
made
a
campaign
contribution
to
a
Council
Member
exceeding
$500
made
within
the
last
12 months,
you
must
disclose
the
campaign contribution before making your comments.
4 December 10, 2025
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas
.
Council Appointed Officers Committee
Staff Report
Report Type: ACTION ITEM
Lead Department: Human Resources
Meeting Date: December 10, 2025
Report #:2511-5566
TITLE
Discussion, Debrief and Recommendation to the City Council Regarding the Council Appointed Officer (CAO) Performance Evaluation Process; CEQA status – not a project
RECOMMENDATION
Review and debrief on the CAO performance evaluation process during FY 2025 and potential recommendation to the City Council regarding changes prospectively.
DISCUSSION
The CAO Committee kicked off the FY25 annual performance evaluation process with an overview and goal setting discussion on May 12, 2025. The City Council has now completed the FY25 annual performance evaluation process to ensure that the Council Appointed Officers (CAO) are meeting City Council objectives and priorities. The purpose of this agenda item is to debrief on the process so that any desired adjustments for next year can be discussed and if needed, incorporated into next year’s CAO performance evaluation process.
A summary of the 24-25 CAO evaluation performance process was prepared by Daniel Rich, the Municipal Resources Group consultant who facilitated this year’s process. The summary memo and timeline are attached (Attachment A).
FISCAL/RESOURCE IMPACT
Funding for annual CAO performance evaluation facilitation services is budgeted in the Office of the City Clerk operating budget. Depending on the Committee’s recommendation, additional resources may be needed to support the process.
STAKEHOLDER ENGAGEMENT
This discussion item has been coordinated with the CAO Committee Chair, the professional services consultant and internal stakeholders. Public comment will be available during the Committee deliberations.
Item 1
Item 1 Staff Report
Item 1: Staff Report
Pg.
1 Packet Pg. 5 of 26
ENVIRONMENTAL REVIEW
Committee action on this item is not a project as defined by CEQA because direction on the CAO evaluation process is a continuing administrative or maintenance activity. CEQA Guidelines section 15378(b)(2)
ATTACHMENTS
Attachment A: MRG memo and timeline
APPROVED BY:
Sandra Blanch, Human Resources Director
Item 1
Item 1 Staff Report
Item 1: Staff Report
Pg.
2 Packet Pg. 6 of 26
P. O. Box 561, Wilton, CA 95693 916-261-7547 www.Solutions-MRG.com November 21, 2025
To: Palo Alto CAO Committee
From: Dan Rich, MRG Consultant
Re: Summary of 24-25 Performance Evaluation Process
It has been my pleasure to once again work with the CAO Committee, the full Council and the four CAO’s to facilitate the performance evaluation process this year. The purpose of this agenda item is to debrief on the process so that any desired adjustments for next year can be captured while still fresh.
As a reminder, attached is the final schedule for this year’s process, which changed somewhat from the original one shared with the Committee back in May.
The process was more or less the same as the previous year, but included the Auditor this year.
Similar to last year, the Committee developed specific “prompts” for each CAO to respond to in their self-evaluations (fine-tuned from the previous year). There were also changes to the questions posed to Council as part of the 1:1 interviews to better align with the prompts this year. At the closed sessions with each Appointee, the meetings were designed to be longer and have more dialogue.
At the December 10 meeting, the Committee can discuss what worked well this year and what changes might be appropriate for next year. Some possible topics to consider include:
Can the timeline be compressed more
Should the prompts for the CAOs be reduced or changed
Should the questions posed of Council be reduced or changed Should the structure of the closed session with the appointees be altered Should the Auditor be handled differently given the unique nature of the position Is there a way to better align calendar year Council priorities with FY CAO goals The CAOs will be at the meeting and might have thoughts on these or other topics.
Attachment - final process timeline
cc: CAOs
HR Director
Item 1
Attachment A - MRG memo
and timeline
Item 1: Staff Report
Pg.
3 Packet Pg. 7 of 26
P. O. Box 561, Wilton, CA 95693 916-261-7547 www.Solutions-MRG.com PALO ALTO 24-25 CAO EVALUATIONS – FINAL TIMELINE
Date Action
5/12
CAO Committee meeting to review/finalize process (timeline and questions for CAO’s and Council to respond to)
5/16 MRG (Dan) send CAO’s brief update on the tentative 2025 Evaluation process.
June Consent Item to CC on process/timeline
6/6 Process, timeline and self-evaluation prompts distributed to CAOs.
Sandra sends to Council.
7/17 CAO’s to provide Dan with self-evaluation.
7/21
Dan sends Mayor & City Council self-evaluations and interview questions in advance of individual meetings, along with most recent Citizen Survey, City Values, and current Council priorities.
7/28 – 8/19
Dan to conduct interviews with Mayor and Council Members in a manner that meets their time and location requirements to gather their input and experiences with the three appointees.
9/4
Dan distributes draft performance evaluations, goals, salary information to City Council (including CAOs salary “requests”).
9/12 Council comments on draft performance evaluation, goals, salary information due back to Dan.
9/18 Updated evaluations distributed to Council.
10/1 Final evaluations distributed to CAO’s (after first closed session).
Item 1
Attachment A - MRG memo
and timeline
Item 1: Staff Report
Pg.
4 Packet Pg. 8 of 26
P. O. Box 561, Wilton, CA 95693 916-261-7547 www.Solutions-MRG.com Date Action
Sept. – Nov.
Closed Sessions:
9/29 – Review of draft evaluations
11/3 – City Manager
11/10 – City Attorney, City Clerk, City Auditor and compensation Late Nov. Following approval from the CAO’s, MRG routes final docs via DocuSign for Mayor.
Late Nov. Schedule 30 min debrief conversation for MRG and CAO’s Council approval of Employment Agreements for CAOs
Dec 10 CAO Committee to meet and debrief on the process Item 1
Attachment A - MRG memo
and timeline
Item 1: Staff Report
Pg.
5 Packet Pg. 9 of 26
Council Appointed Officers Committee
Staff Report
Report Type: ACTION ITEM
Lead Department: Human Resources
Meeting Date: December 10, 2025
Report #:2511-5567
TITLE
Discussion and Recommendation to the City Council on Next Steps for the Internal Audit Services Contract with Baker Tilly that ends June 2026; CEQA Status – Not a Project
RECOMMENDATION
Recommend to the City Council next steps for internal audit services with the current contract ending June 2026.
EXECUTIVE SUMMARY
The CAO Committee will review and discuss next steps regarding the current contract ending June 20, 2026 and provide a recommendation to City Council. This report outlines the options available to the City Council in determining the future direction for these services. Next steps for consideration include extending the contract, renegotiating terms, and/or conduct a Request for Proposal (RFP) to explore alternative service providers. These are not mutually exclusive options.
BACKGROUND
The City Charter defines the City Auditor's role and furthers the City Council’s commitment to internal auditing, transparency, and accountability in government. The City Auditor is a City Council Appointee, meaning the City Council appoints this position. Per City Council direction on February 10, 2020 to consider outsourcing the Auditor function, the Council Appointed Officers (CAO) Committee, led by an independent procurement expert team, completed a request for proposals (RFP) process for outsourced internal auditing services, led a procurement process aligned with Council direction, and engaged in a transparent review of scope of work services, RFP evaluation, and a public interview process as part of the overall effort.
Through the procurement process, the Council selected Baker Tilly to lead the City’s internal audit services and the City’s contract with Baker Tilly specifies the designation of a City Auditor.
On May 6, 2024, the City Council formally appointed Kate Murdock as City Auditor.
Item 2
Item 2 Staff Report
Item 2: Staff Report
Pg.
1 Packet Pg. 10 of 26
ANALYSIS
On June 2, 20251, the City Council approved Contract Amendment No. 2 to the Baker Tilly US, LLP contract #C21179340 in the Amount of $2,126,250 and to extend the term of the contract to June 30, 2026, with an option to extend for two years. The revised total not to exceed contract authority was $5.55 million for the eight-year term should the additional two years of extension be authorized. As a result of this approval, audit services were authorized to continue through the scheduled review of the City Auditor through the annual CAO evaluation process prior to authorization of further extension beyond June 2026.
As an appointed role, this item is before the Committee for review and a recommendation to the City Council on next steps in light of the current contract term. The CAO Committee and City Council has the opportunity to direct staff to exercise the option to extend the contract up to two years; alternatively, the Committee could recommend to renegotiate terms, and/or seek to explore alternative service providers. These are not mutually exclusive options and staff as well as representative(s) from Baker Tilly will be available to address questions on options the committee may wish to explore during the discussion.
Extend the Contract: Continue the current service arrangement with Baker Tilly. Some considerations may include: the performance of Baker Tilly and the effectiveness of the current contract terms; continuity of service; price and length of time for the renewed contract.
Renegotiate the Contract: If the CAO Committee has a desire to modify the terms and conditions of the existing contract, the contract would require renegotiation. Some considerations may include: potential impact on service delivery, assessing the feasibility of renegotiation and timeframe for this step; price; and, addressing any concerns or issues with current contract.
Explore Alternative Service Providers: Issue a Request for Proposals (RFP) to solicit bids from industry providers. Some considerations may include: the time and resources required for the procurement process, potential disruptions in service, access to new service options, and potential increase in cost. This step will require several CAO Committee meetings to complete the procurement process.
FISCAL/RESOURCE IMPACT
Funding for annual internal audit services is budgeted in the Office of the City Auditor in the operating budget. The option to extend reflects a contract amount of $708,750 annually, consistent with the current year contract compensation limit. Depending on the Committee’s recommendation, additional resources may be needed to support the process.
STAKEHOLDER ENGAGEMENT
Public comment will be available during the Committee deliberations. 1 City Council, June 2, 2025, Item #8, Staff Report #2410-3733:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16122 Item 2
Item 2 Staff Report
Item 2: Staff Report
Pg.
2 Packet Pg. 11 of 26
ENVIRONMENTAL REVIEW
Committee action on this item is not a project as defined by CEQA because direction on the City Auditor contract and alternative options is a continuing administrative or maintenance activity.
CEQA Guidelines section 15378(b)(2).
ATTACHMENTS
Attachment A: Baker Tilly US LLP Contract #C21179340
APPROVED BY:
Sandra Blanch, Human Resources Director
Item 2
Item 2 Staff Report
Item 2: Staff Report
Pg.
3 Packet Pg. 12 of 26
Vers.: Aug. 5, 2019
AMENDMENT NO. 2 TO CONTRACT NO. C21179340
BETWEEN THE CITY OF PALO ALTO AND
BAKER TILLY US, LLP
This Amendment No. 2 (this “Amendment”) to Contract No. C21179340 (the “Contract” as defined below ) is entered into as May 12, 2025 , by and between the CITY OF PALO ALTO, a California chartered municipal corporation ( “CITY”), and BAKER TILLY ADVISORY GROUP, LP, a Illinois Limited Liability Partnership, located at 205 Michigan Avenue, Suite 2800, Chicago, IL 60601 (“CONSULTANT”). CITY and CONSULTANT are referred to collectively as the “Parties” in this Amendment.
R E C I T A L S
A. The Contract (as defined below) was entered into by and between the P arties hereto for the provision of performing internal auditor services in accordance with City Charter and Municipal Code requirements, as detailed therein.
B. The Parties now wish to amend the Contract in order to extend by an additional One (1) year with an option to extend for an additional Two ( 2) years of the Contract term in which Services will be provided and, therefore, increase compensation by Two Million One Hundred Twenty Six Thousand Two Hundred Fifty Dollars ($2,126,250), from an amended not- to-exceed amount of Three Million Four Hundred Twenty Six Thousand Two Hundred Fifty Dollars ($3,426,250) to a new not -to-exceed amount of Five Million Five Hundred Fifty Two Thousand Five Hundred Dollars ($5,552,500), as detailed herein.
NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the Parties agree:
SECTION 1. Definitions. The following definitions shall apply to this Amendment:
a. Contract. The term “Contract” shall mean Contract No. C21179340 between CONSULTANT and CITY, dated October 1, 2020, as amended by:
Amendment No.1, dated April 18, 2022
b. Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract.
SECTION 2. Section 2, “TERM” of the Contract is hereby amended to read as follows:
Docusign Envelope ID: 761E5809-FF99-491D-9517-C5AE74986A46 Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
4 Packet Pg. 13 of 26
Vers.: Aug. 5, 2019
“The term of this Agreement shall be from October 1, 2020 through June 30, 2026 with the option to renew for an additional two (2) year extension, unless terminated earlier pursuant to Section 19 of this Agreement.”
SECTION 3. Section 4, “ NOT TO EXCEED COMPENSATION” of the Contract is hereby amended to read as follows:
“The total compensation to be paid to CONSULTANT for performance of the Services, including As Required Services (per Section 1) and any reimbursable expenses, shall not exceed Five Million Five Hundred Fifty-Two Thousand Five Hundred Dollars ($5,552,500), as detailed in Exhibit B (Compensation).
CONSULTANT agrees to complete all Services, including As Required Services and any reimbursable expenses, within this amount. The applicable rate schedule is set out at Exhibit “B-1”, entitled “SCHEDULE OF RATES,” which is attached to and made a part of this Agreement. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY.”
SECTION 4. Section 13, “PROJECT MANAGEMENT” of the Contract is hereby amended to read as follows:
“CONSULTANT will assign Chris Kalafatis, Email: [email protected], as the Project Manager to have supervisory responsibility for the performance , progress, and execution of the services and Kate Murdock, Email: [email protected], as the assigned City Auditor to represent CONSULTANT during day-to-day work on the P roject.
If circumstances cause the substitution of the Project Manager as designated City Auditor or any other key personnel for any reason the appointment of a substitute beyond a period of 90 days will be subject to the prior written approval of the CITY’s Project Manager. F urther, the City Council will interview and approve by resolution the appointment of any substitute City Auditor as specified here in E xhibit A (S cope of Services). CONSULTANT at the CITY’s request shall promptly remove personnel who CITY finds does not perform the Services in acceptable manner, are uncooperative, or present a threat to the adequate or timely completion of the P roject or a threat to the safety of persons or property
CITY’s Project Manager is the Chair of the City Council's Policy and Services Committee or other City Council designee as identified to CONSULTANT in writing, The CITY’s Project Manager will be CONSULTANT ’s point of contact with respect to performance , progress Docusign Envelope ID: 761E5809-FF99-491D-9517-C5AE74986A46 Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
5 Packet Pg. 14 of 26
Vers.: Aug. 5, 2019
and execution of S ervices under this A greement. City Council may designate an alternative CITY Project Manager upon approval of the A nnual Audit Plan described in Exhibit A (Scope of Services), approval of City Council appointments, or any other time it is so acted upon by City Council.”
SECTION 5. The following exhibit(s) to the Contract is/are hereby amended or added, as indicated below, to read as set forth in the attachment(s) to this Amendment, which is/are hereby incorporated in full into this Amendment and into the Contract by this reference:
a. Exhibit “A” entitled “SCOPE OF SERVICES, AMENDED, REPLACES PREVIOUS.
b. Exhibit “B” entitled “COMPENSATION”, AMENDED, REPLACES PREVIOUS.
c. Exhibit “ B-1” entitled “ SCHEDULE OF RATES ”, AMENDED, REPLACES PREVIOUS.
SECTION6. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect.
SECTION7. Incorporation of Recitals . The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference.
(SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.)
Docusign Envelope ID: 761E5809-FF99-491D-9517-C5AE74986A46 Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
6 Packet Pg. 15 of 26
Vers.: Aug. 5, 2019
SIGNATURES OF THE PARTIES
IN WITNESS WHEREOF, the P arties have by their duly authorized representatives executed this Amendment effective as of the date first above written.
CITY OF PALO ALTO
_____________________________________
City Manager
APPROVED AS TO FORM:
_____________________________________
City Attorney or Designee
BAKER TILLY US, LLP
Officer 1
By: ____________________________
Name: _________________________
Title: __________________________
Officer 2 (Required for Corp. or LLC)
By: ____________________________
Name: _________________________
Title: __________________________
Attachments:
- EXHIBIT A: SCOPE OF SERVICES, AMENDMENT NO.2 (AMENDED, REPLACES
PREVIOUS)
- EXHIBIT B: COMPENSATION, AMENDMENT NO.2 (AMENDED, REPLACES PREVIOUS) - EXHIBIT B-1: SCHEDULE OF RATES, AMENDMENT NO.2 (AMENDED, REPLACES
PREVIOUS)
Docusign Envelope ID: 761E5809-FF99-491D-9517-C5AE74986A46 Ashley Deihr
Principal
Risk Advisory Public Sector Leader
Chris Kalafatis
Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
7 Packet Pg. 16 of 26
Vers.: Aug. 5, 2019
EXHIBIT “A”
SCOPE OF SERVICES, AMENDMENT NO.2
(AMENDED, REPLACES PREVIOUS)
Background
In accordance with City Charter and Municipal Code requirements, the Palo Alto City Council must appoint a City Auditor who serves at the will of the Council, and who executes annual Council-approved internal audit plans through the Office of the City Auditor.
Mission of the Office of the City Auditor
The mission of the office of the city auditor is to promote honest, efficient, effective, economical, and fully accountable and transparent city government. This mission is fulfilled by conducting annual performance audits and financial/operational analyses of city departments, programs, services or activities.
These audits are intended to ensure that city management is using its financial, physical, and informational resources effectively, efficiently, economically, ethically, and equitably, and in compliance with laws, regulations, contract and grant requirements, and city policies and procedures.
Internal Auditor Scope of Services
This section contains the scope of internal audit services to be performed by CONSULTANT as required by the City Charter and Municipal Code, including the required duties of, and audit tasks performed by, the CONSULTANT’S City Auditor.
Service Requirements of the City Auditor
The City Auditor shall:
• Ensure that city departments and officers responsible for accounting and financial management activities comply with statutory requirements and accounting standards. • Perform internal audits of all the fiscal transactions and operations of the City, in accordance with annual audit plans approved and directed by the City Council, that include:
• Conducting performance audits of city departments, programs, services or activities, • Examination and analysis of fiscal procedures and expenditures, • Provision of other analyses of financial and operational data, and • Periodic unscheduled audits.
As Required Internal Audit Tasks
The following 6 tasks represent the core services to be provided by CONSULTANT. These As Required Services must be authorized by CITY’s representative through the approval of Task Orders prepared by CONSULTANT, in further accordance with Section 4 of this Agreement (Not To Exceed Compensation) and Exhibit A-1 thereto (Professional Services Task Order).
Docusign Envelope ID: 761E5809-FF99-491D-9517-C5AE74986A46 Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
8 Packet Pg. 17 of 26
Vers.: Aug. 5, 2019
Task 1. Citywide Risk Assessment:
Beginning with year 1 and continuing at a minimum every other year thereafter, prepare a citywide risk assessment following the same review and approval requirements described in Task 2. The risk assessment process will be the primary determinant of subsequent audit activity.
Task 2. Preparation of Annual Audit Plan:
Prepare an annual audit plan for review by the City Manager and appropriate City Council committee(s), and approval by the City Council, that identifies preliminary objectives of each audit to be performed, the schedule for each audit, and the estimated not to exceed resources and costs for each audit. The City Auditor shall consult with the City Attorney as necessary when developing audit plans. The annual audit plan will be largely based on the risk assessment required in Task 1.
Task 3. Selection of External Financial Auditor and Annual Audit Coordination (Amendment No.2): Coordinate the annual external financial audit in each year of the contract term.
Pursuant to the City Charter, the City Auditor shall oversee the selection process for the annual external financial auditor. The City anticipates conducting a Request for Proposals for this purpose in 2026 (during contract year FY 2027).
Task 4. Execute Annual Audit Plan:
Conduct a minimum number of internal audits in accordance with each approved annual audit plan based on the risk assessments. Each internal audit will commence only upon the City’s approval of a Task Order (which may be at the task or sub-task level) as required by this Agreement. Each internal audit requires the preparation of a written report for review by the City Manager, City Attorney and appropriate Council committee, and review/approval by the City Council as required.
Task 5. Preparation of Quarterly Reports, Annual Status Report, Provision of City Hotline, and Other Ongoing Office Administrative Functions:
Prepare and issue quarterly reports describing the status and progress toward audit completion, to be provided as information reports to the City Council and reviewed by the appropriate committee, unless other reporting methods are directed by Council.
Prepare and issue an annual report in the first quarter of each fiscal year on the status of recommendations made in completed audits, to be provided as an information report to the City Council and reviewed by the appropriate committee, unless other reporting methods are directed by Council.
Maintain and respond to the City’s employee “hotline” function provided through voicemail, email or written submissions. Coordinate referrals as appropriate to other City offices, Docusign Envelope ID: 761E5809-FF99-491D-9517-C5AE74986A46 Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
9 Packet Pg. 18 of 26
Vers.: Aug. 5, 2019
departments or divisions and incorporate relevant referrals into future risk assessments, audit plans or audit activity as appropriate.
Task 6. Evaluation and Benchmarking (Amendment No.2)
Undergo a peer evaluation following the guidelines of the Association of Local Government Auditors or the Institute of Internal Auditors (IIA) every three years (i.e., at the beginning of the initial contract term, then every three years thereafter throughout the contract term), or as required by the City Council, so that performance of the internal audit function can be objectively assessed.
Prepare a cost per audit analysis following the first completed fiscal year, to be submitted at the beginning of the second fiscal year and every other year thereafter throughout the contract term.
The cost per audit analysis will be used to evaluate the cost effectiveness of services provided by the CONSULTANT. This evaluation will be incorporated into ongoing performance assessments as required and will help ensure that fees for service provision throughout the duration of the Agreement are objectively determined and mutually agreed upon.
Last, the City Council will perform periodic Closed Session performance evaluations with the designated City Auditor as allowed by law and performed with the other City Council appointees (the City Manager, City Attorney and City Clerk). The appointed City Auditor will have a 6-month evaluation, and then annually thereafter throughout the initial contract term and any extensions granted by the City Council.
Internal Auditor Services – Designation of City Auditor, Minimum Experience Requirements and Auditing Standards
Consistent with City Charter and Municipal Code provisions, the City Council must appoint a City Auditor who serves at the will of the Council, and who executes annual Council-approved internal audit plans through the Office of the City auditor.
Designation of City Auditor
The CONSULTANT has designated Kyle O’Rourke to fulfil the role of City Auditor, whose designation received City Council approval and appointment, and whose appointment is subject to at-will modification by the Council.
In accepting this appointment and its associated responsibilities and requirements, the CONSULTANT agrees to the following stipulations and reserved rights of the CITY in the event the City Auditor vacates the appointment for whatever reason:
• CONSULTANT must designate a temporary replacement not to exceed 3 months if the City Auditor vacates the appointment without enough time for Council to appoint a replacement.
Docusign Envelope ID: 761E5809-FF99-491D-9517-C5AE74986A46 Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
10 Packet Pg. 19 of 26
Vers.: Aug. 5, 2019
• Any subsequent appointment of a City Auditor be conducted in the manner specified by the City Council, subject to applicable laws.
• Continued appointment of the City Auditor is based on and subject to acceptable performance.
During the term of this Agreement, CONSULTANT may propose an alternative City Auditor for Council consideration should it become necessary to do so.
Minimum Experience Requirements
The CONSULTANT and City Auditor must have at least 5 years of experience performing internal audit services to local, state, federal or quasi-public entities, with a focus on performance auditing.
Auditing Standards
The appointed City Auditor must be a Certified Public Accountant (CPA) or Certified Internal Auditor (CIA) in good standing and must maintain such certification at all time during the term of the Agreement.
All staff members of CONSULTANT assigned to internal auditor services under this Agreement must be able to conduct or assist in conducting internal audits in accordance with Government Accounting Standards, as established by the Comptroller General of the United States, Governmental Accountability Office.
Maintenance of Independent Contractor Status
Proposers must maintain independent contractor status at all times during the Agreement term.
Best Value Service Provision
The City Council has awarded this contract to the CONSULTANT based on its ability to deliver cost effective and efficient internal auditor services that represent the best possible value in exchange for public funds. Continued service provision is dependent on a number of evaluative factors to help determine that the CITY receives the best possible value for internal audit services during the term of this Agreement. These include, but are not limited to, acceptable pricing; cost effective and service provision provided by the City Auditor and CONSULTANT; and favorable City Auditor performance evaluations.
Additionally, budget constraints and economic conditions are factors that shall be considered in determining acceptable pricing and funding.
Docusign Envelope ID: 761E5809-FF99-491D-9517-C5AE74986A46 Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
11 Packet Pg. 20 of 26
Vers.: Aug. 5, 2019
EXHIBIT “B”
COMPENSATION, AMENDMENT NO.2
(AMENDED, REPLACES PREVIOUS)
The CITY agrees to compensate the CONSULTANT for the Services (including As Required Services) performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the hourly rate schedule attached as Exhibit B-1 up to the not to exceed budget amount for each task set forth below.
CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below.
The CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for Services, including As Required Services and any reimbursable expenses do not exceed the amounts set forth in Section 4 of this Agreement.
Budget Schedule for FY 2021 and FY 2022
Ta s k FY 2021 FY 2022
Subtotal -
Orig Contract
T ask 1: City w ide R isk A ssessment $65,000.00 $25,000.00 $90,000.00 T ask 2: Preparation of A nnual A udit Plan $15,000.00 $15,000.00 $30,000.00 Ta s k 3 : Selection of E x ternal Financial
A uditor and A nnual A udit Coordination $30,000.00 $20,000.00 $50,000.00 T ask 4: E x ecute A nnual A udit Plan $390,000.00 $600,000.00 $990,000.00 T ask 5: Preparation of Quarterly R eports,
A nnual Status Report, Provision of City
Hotline, and Other Ongoing Office
A dministrative Functions $50,000.00 $50,000.00 $100,000.00 T ask 6: E v aluation and B enchmarking $0.00 $40,000.00 $40,000.00
Subtotals $550,000.00 $750,000.00 $1,300,000.00
Docusign Envelope ID: 761E5809-FF99-491D-9517-C5AE74986A46 Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
12 Packet Pg. 21 of 26
Vers.: Aug. 5, 2019
Budget Schedule for FY 2023, FY 2024 and FY 2025, Amendment No.1 Ta s k FY 2023 FY 2024 FY 2025
Subtotal -
A mend No. 1
T ask 1: City w ide R isk A ssessment $55,000.00 $35,000.00 $55,000.00 $145,000.00 T ask 2: Preparation of A nnual A udit
Plan $10,500.00 $10,500.00 $10,500.00 $31,500.00
T ask 3: Selection of E x ternal
Financial A uditor and A nnual A udit
Coordination $15,000.00 $15,000.00 $25,000.00 $55,000.00 T ask 4: E x ecute A nnual A udit Plan $547,250.00 $582,250.00 $537,250.00 $1,666,750.00 T ask 5: Preparation of Quarterly
R eports, A nnual Status R eport,
Provision of City Hotline, and Other
Ongoing Office A dministrative
Functions $60,000.00 $60,000.00 $60,000.00 $180,000.00 T ask 6: Evaluation and
B enchmarking $21,000.00 $6,000.00 $21,000.00 $48,000.00
Subtotals $708,750.00 $708,750.00 $708,750.00 $2,126,250.00
Budget Schedule for FY 2026, FY 2027 and FY 2028, Amendment No.2 Ta s k FY 2026
FY 2027
(optional)
FY 2028
(optional)
Subtotal -
A mend No. 2
T ask 1: City w ide R isk A ssessment $56,650.00 $37,132.00 $60,100.00 $153,882.00 T ask 2: Preparation of A nnual A udit
Plan $10,815.00 $11,139.00 $11,474.00 $33,428.00
T ask 3: Selection of E x ternal
Financial A uditor and A nnual A udit
Coordination $10,300.00 $26,523.00 $10,927.00 $47,750.00 T ask 4: E x ecute A nnual A udit Plan $472,235.00 $517,257.00 $489,658.00 $1,479,150.00 T ask 5: Preparation of Quarterly
R eports, A nnual Status R eport,
Provision of City Hotline, and Other
Ongoing Office A dministrative
Functions $113,300.00 $116,699.00 $120,200.00 $350,199.00 T ask 6: Evaluation and
B enchmarking $45,450.00 $0.00 $16,391.00 $61,841.00
Subtotals $708,750.00 $708,750.00 $708,750.00 $2,126,250.00
Docusign Envelope ID: 761E5809-FF99-491D-9517-C5AE74986A46 Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
13 Packet Pg. 22 of 26
Vers.: Aug. 5, 2019
Total Not-to-Exceed Amount Across All Fiscal Years
Ta s k
Subtotal -
Orig Contract
Subtotal -
A mend No. 1
Subtotal -
A mend No. 2 To t a l
T ask 1: City w ide R isk A ssessment $90,000.00 $145,000.00 $153,882.00 $388,882.00 T ask 2: Preparation of A nnual A udit
Plan $30,000.00 $31,500.00 $33,428.00 $94,928.00
T ask 3: Selection of E x ternal
Financial A uditor and A nnual A udit
Coordination $50,000.00 $55,000.00 $47,750.00 $152,750.00 Ta s k 4 : E x ecute A nnual A udit Plan $990,000.00 $1,666,750.00 $1,479,150.00 $4,135,900.00 T ask 5: Preparation of Quarterly
R eports, A nnual Status R eport,
Provision of City Hotline, and Other
Ongoing Office A dministrative
Functions $100,000.00 $180,000.00 $350,199.00 $630,199.00 T ask 6: Evaluation and
B enchmarking $40,000.00 $48,000.00 $61,841.00 $149,841.00
Subtotals $1,300,000.00 $2,126,250.00 $2,126,250.00 $5,552,500.00
REIMBURSEABLE EXPENSES
The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, computing, telecommunications, insurance other ordinary business expenses are included within the scope of payment for Services and are not reimbursable expenses.
CITY shall reimburse CONSULTANT at cost for travel to or from the San Francisco Bay Area and shall be identified by CONSULTANT as separate line items on the applicable Task Order.
CONSULTANT travel and meal expenses are subject to the City’s Travel Policy. CONSULTANT shall identify a fixed “not to exceed” figure for anticipated reimbursable expenses, subject to the City of Palo Alto’s approval of such Task Order.
All requests for reimbursement of expenses, if any are specified as reimbursable under this section, shall be accompanied by appropriate supporting documentation and information for mileage, airfare, and lodging.
Should CONSULTANT’s actual incurred expense exceed the “not-to-exceed” figure, CONSULTANT and the CITY shall meet in good faith to determine the extent to which CONSULTANT shall be reimbursed by the CITY for the excess.
Docusign Envelope ID: 761E5809-FF99-491D-9517-C5AE74986A46 Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
14 Packet Pg. 23 of 26
Vers.: Aug. 5, 2019
EXHIBIT “B-1”
SCHEDULE OF RATES, AMENDMENT NO.2
(AMENDED, REPLACES PREVIOUS)
Compensation for services rendered under this agreement shall be calculated based on the following hourly rate schedule for the fiscal year in which the services are rendered, which shall remain fixed during the applicable period of fiscal years specified below.
Hourly rates for any subsequent renewal term or terms shall be negotiated to the mutual agreement of the parties.
Schedule of Rates (Hourly):
Staff L evel
FY 2021 &
FY 2022
FY 2023,
FY 2024, &
FY 2025 FY 2026 FY 2027 FY 2028
Partner/Director $345.00 $362.00 $373.00 $384.00 $396.00 City A uditor/Senior M anager $245.00 $257.00 $265.00 $273.00 $281.00 M anager $210.00 $220.00 $227.00 $233.00 $240.00
Senior Consultant $185.00 $194.00 $200.00 $206.00 $212.00 Consultant $130.00 $136.00 $140.00 $144.00 $149.00
Docusign Envelope ID: 761E5809-FF99-491D-9517-C5AE74986A46 Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
15 Packet Pg. 24 of 26
Certificate Of Completion
Envelope Id: 761E5809-FF99-491D-9517-C5AE74986A46
Status: Completed
Subject: Docusign: C21179340 Baker Tilly Amendment No. 2_FINAL.pdf Source Envelope:
Document Pages: 12
Signatures: 4
Envelope Originator:
Certificate Pages: 2
Initials: 0
Mai, Philip
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
250 Hamilton Ave
Palo Alto , CA 94301
[email protected]
IP Address: 165.225.242.85
Record Tracking
Status: Original
5/8/2025 4:44:14 PM
Holder: Mai, Philip
[email protected]
Location: DocuSign
Security Appliance Status: Connected
Pool: StateLocal
Storage Appliance Status: Connected
Pool: City of Palo Alto
Location: Docusign
Signer Events
Signature
Timestamp
Ashley Deihr
[email protected]
Principal
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 73.87.238.232
Sent: 5/8/2025 5:00:51 PM
Viewed: 5/12/2025 7:20:35 AM
Signed: 5/12/2025 7:21:14 AM
Electronic Record and Signature Disclosure:
Not Offered via Docusign
Chris Kalafatis
[email protected]
Risk Advisory Public Sector Leader
Baker Tilly Advisory Group, LP
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 99.196.128.113
Sent: 5/12/2025 7:21:15 AM
Viewed: 5/13/2025 7:26:53 AM
Signed: 5/13/2025 7:28:36 AM
Electronic Record and Signature Disclosure:
Not Offered via Docusign
Mark Vanni
[email protected]
Assistant City Attorney
COPA
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 73.231.240.255
Sent: 5/13/2025 7:28:37 AM
Resent: 6/3/2025 5:23:55 PM
Viewed: 6/4/2025 4:43:08 PM
Signed: 6/4/2025 4:43:16 PM
Electronic Record and Signature Disclosure:
Not Offered via Docusign
Ed Shikada
[email protected]
Ed Shikada
City of Palo Alto
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 199.33.32.254
Sent: 6/4/2025 4:43:18 PM
Viewed: 6/4/2025 11:54:50 PM
Signed: 6/4/2025 11:54:59 PM
Electronic Record and Signature Disclosure:
Not Offered via Docusign
In Person Signer Events
Signature
Timestamp
Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
16 Packet Pg. 25 of 26
Editor Delivery Events
Status
Timestamp
Agent Delivery Events
Status
Timestamp
Intermediary Delivery Events
Status
Timestamp
Certified Delivery Events
Status
Timestamp
Carbon Copy Events
Status
Timestamp
Clerks's Office of Palo Alto
[email protected]
Security Level: Email, Account Authentication
(None)
Sent: 6/4/2025 11:55:00 PM
Electronic Record and Signature Disclosure:
Not Offered via Docusign
Christine Paras
[email protected]
Security Level: Email, Account Authentication
(None)
Sent: 6/4/2025 11:55:01 PM
Electronic Record and Signature Disclosure:
Not Offered via Docusign
Josh Martinez
[email protected]
Security Level: Email, Account Authentication
(None)
Sent: 6/4/2025 11:55:02 PM
Electronic Record and Signature Disclosure:
Not Offered via Docusign
Witness Events
Signature
Timestamp
Notary Events
Signature
Timestamp
Envelope Summary Events
Status
Timestamps
Envelope Sent
Hashed/Encrypted
5/8/2025 5:00:51 PM
Envelope Updated
Security Checked
6/3/2025 5:23:54 PM
Envelope Updated
Security Checked
6/3/2025 5:23:54 PM
Certified Delivered
Security Checked
6/4/2025 11:54:50 PM
Signing Complete
Security Checked
6/4/2025 11:54:59 PM
Completed
Security Checked
6/4/2025 11:55:02 PM
Payment Events
Status
Timestamps
Item 2
Attachment A - Baker Tilly
US LLP Contract
#C21179340A
Item 2: Staff Report
Pg.
17 Packet Pg. 26 of 26