TO: CITY COUNCIL
VIA: CITY ADMINISTRATOR
FROM: DIRECTOR OF FINANCE
DATE: JULY 19, 2022
Placentia City Council
AGENDA REPORT
SUBJECT: PROFESSIONAL SERVICES AGREEMENT WITH CLIFTONLARSONALLEN LLP FOR FINANCIAL AUDITING SERVICES FOR FISCAL YEARS 2021-22, 2022-23 AND 2023-24
FISCAL
IMPACT: EXPENSE: $ 68,251 FISCAL YEAR 2021-22 (102020-6010) $ 70,303 FISCAL YEAR 2022-23
$ 72,410 FISCAL YEAR 2023-24
SUMMARY:
The City issued a Request for Proposals (RFP) to obtain Auditing Services for the City and the Successor Agency. An Evaluation Committee consisting of three (3) Staff members with input from members of the Financial Audit Oversight Committee evaluated all three (3) proposals received and is recommending the City Council award a contract to CliftonLarsonAllen (CLA) LLP to provide auditing services to the City for an initial term of three (3) years with two (2) additional one-year extensions.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Approve a Professional Services Agreement with CliftonLarsonAllen (CLA) LLP for Auditing Services for Fiscal Years 2021-22, 2022-23 and 2023-24 with the option for two additional one-year term extensions at the discretion of the City Council; and
2. Authorize the City Administrator to execute all necessary documents, in a form approved by the City Attorney.
DISCUSSION:
The City Council contracts with certified public accountants to examine the City's records, books, inventories, and assets. It has been the practice of the City of Placentia to open the auditing services to competitive bids every three (3) to five (5) years and include in the RFP the following additional criteria to the requested services:
1.m.
July 19, 2022
City Council Agenda
July 19, 2022
1. Audit sample to be increased beyond those required by professional audit standards and include each of the City's funds.
2. Disclosure of methods for testing each of the City's funds.
3. Review of employee compensation for the City Administrator and all members of the Executive Team.
4. A list of agreed-upon procedures from which two (2) will be randomly selected each year:
a. Review of investment transactions - To determine that the investments made by staff are in compliance with the City's applicable Investment Policy. b. Review of financial institution wire transfers - To ensure that all transfers out of financial institutions as reported on bank or investment statements are properly authorized and accounted for.
c. Review of Journal Entries - To ensure that journal entries (including budget entries) are made with adequate support, proper approval, and are correctly recorded to the general ledger.
d. Review of Check Stock Sequence and Cancelled Checks - To verify the sequence of check stock, including unused checks, voided checks, and cancelled checks that all checks cleared through the City's financial institutions are presented to City Council in the warrant registers and are properly accounted for within the accounting records of the City. e. Review of Cash Receipts - To ensure that the amounts collected from all locations accepting revenues are properly reflected on receipt documentation that agrees with the amount in the revenue tracking software (if applicable), to the general ledger, and the amount reflected on the bank statement. f. Preparation of the annual Cities Financial Transactions Report for the State Controller's Office per Government Code Section 53891.
g.
Preparation of the Annual Street Report for the State Controller's Office per California Streets and Highways Code Section 2151.
The RFP was published on the City's website and sent directly to ten (10) accounting firms on April 18, 2022, published on the California Society of Municipal Finance Officers' website, and also placed on the City's website. Three (3) proposals and their proposed fees were received from the firms listed below:
City Council Agenda
July 19, 2022
FY 2021-22 FY 2022-23 FY 2023-24
CliftonLarsonAllen (CLA) $68,251 $70,303 $72,410
The Pun Group $76,500 $78,800 $81,150
Badawi & Associates $61,355 $63,230 $65,125
Each firm that submitted proposals was evaluated based on a competitive selection process, in which the evaluation of proposals was not limited to price alone. Technical merit and firm expertise were also given significant consideration in the selection process.
CLA has one of the largest governmental audit and consulting practices in the country and brings extensive experience providing a variety of such services to state and local entities. The City will be served with staff out of CLA's Irvine office who have many years of experience in agencies either similar sized or larger, including many within Orange County. CLA is licensed to practice public accounting in California, and all assigned professional staff are licensed certified public accountants.
In addition to their traditional review and preparation of the City's financial statements, CLA is also offering the value-added service of auditing and reviewing the City's information systems controls to conclude whether they are properly designed and operating effectively. For any controls found to be ineffectively designed, CLA will communicate their findings and provide recommendations to improve internal controls.
Staff and members of the Financial Audit Oversight Committee recommend the City Council approve the professional services agreement with CliftonLarsonAllen (CLA), LLP for auditing services for three (3) years, with the option for two (2) one-year extensions at the discretion of the City.
Prepared by:
Jenn er Lampman
Director of Finance
Review: ct = d A..+ roved:
Damien R. Arrula
City Administrator
Attachments:
1. Request for Proposals for Professional Auditing Services
2. Proposal from CLA (Cost & Technical)
3. Professional Services Agreement with CLA