Administrative
Report
H.14., File # 23-5841 Meeting Date: 4/18/2023
To: MAYOR AND CITY COUNCIL
From: WENDY COLLAZO, FINANCE DIRECTOR
TITLE
APPROVE A SIXTH AMENDMENT TO THE AGREEMENT WITH LANCE, SOLL AND LUNGHARD, LLP FOR AUDITING SERVICES IN THE AMOUNT OF $71,751 EXTENDING THE TERM TO JUNE 30, 2024
EXECUTIVE SUMMARY
Staff changes in the Financial Services Department and new Governmental Accounting Standards Board (GASB) requirements have significantly impacted Department operations. In an effort to assist the new Finance Director’s transition and reduce Department workload, staff is recommending the retention of Lance, Soll and Lunghard, LLP (LSL), the City’s independent auditing firm, for one additional year to provide continuity of support and to complete the City’s Fiscal Year 2022-23 audit.
LSL’s proposed fee of $71,751 for next year’s audit includes a five-percent (5%) increase from the previous year’s fee of $68,336.
On February 9, 2023, this item was brought to the Budget Finance Commission for review and discussion. The Budget Finance Commission unanimously supported staff’s recommendation to extend the contract with LSL, with the commitment that Financial Services issue an RFP for auditing services upon the completion of the one-year term.
BACKGROUND
Section 11(d) of the City's Statements of Financial Principles requires the City to retain the services of an independent auditor to perform annual financial audits of its financial statements in compliance with all GASB pronouncements and in accordance with generally accepted auditing standards and the provisions of the U.S. Office of Management and Budget (0MB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.
On January 19, 2017 Financial Services staff issued an RFP and solicited qualified auditing firms through the California Society of Municipal Finance Officers (CSMFO) and DemandStar websites.
The City received a total of eight proposals by the RFP deadline on February 16, 2017.
Financial Services Department staff reviewed the eight proposals and selected the three most well qualified firms to participate as finalists in the City's oral interview process.
Each firm was evaluated based on the criteria established in the RFP, highlighted below:
H.14., File # 23-5841 Meeting Date: 4/18/2023
• Independent and licensed to practice in California
• No conflict of interest
• External quality control review report
• Expertise and experience
• Audit approach
• Price
On February 28, 2017, an interview panel consisting of the City's Audit Committee, the Chairman of the Budget and Finance Commission and Financial Services Department Staff conducted interviews of the three finalists. At the conclusion of the interviews, the Audit Committee determined that Lance, Soll & Lunghard, LLP (LSL) was the most qualified firm that best met the evaluation criteria in the RFP. The Audit Committee, by unanimous vote, recommended that the City Council award an agreement for independent audit services to LSL.
LSL is a public accounting firm located in Brea, which has been providing services since 1929 and has demonstrated extensive experience with city government audits. LSL is currently auditing nearly 60 government entities (cities, districts, and authorities) throughout California.
COORDINATION
The City Attorney’s Office has reviewed and approved the amendment as to form.
FISCAL IMPACT
Funding for the cost of annual auditing services is available in the Financial Services Department operating budget.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
Lance, Soll and Lunghard, LLP - Sixth Amendment
Lance, Soll and Lunghard, LLP - Amendments 1-5 and Agreement Lance, Soll and Lunghard, LLP - Insurance