Administrative
Report
H.16., File # 24-0680 Meeting Date: 5/7/2024
To: MAYOR AND CITY COUNCIL
From: WENDY COLLAZO, FINANCE DIRECTOR
TITLE
APPROVE AN AGREEMENT WITH CLIFTONLARSONALLEN LLP TO PERFORM INDEPENDENT
AUDIT SERVICES FOR THE CITY FOR A FIVE-YEAR TOTAL AMOUNT NOT TO EXCEED $511,513 AND THE TERM MAY 7, 2024 TO MAY 6, 2027, WITH AN OPTION TO RENEW FOR TWO
ADDITIONAL YEARS
EXECUTIVE SUMMARY
The City's Statements of Financial Principles mandate that the City routinely bid for audit services, at a minimum, every five years. Audit contracts shall not exceed five years at a time, and the Budget and Finance Commission shall participate in the selection process of the City's independent auditor.
In connection with this mandate, the Financial Services Department issued a request for proposals (RFP) on January 8, 2024. The City received a total of five proposals in response to the RFP as of the February 13, 2024 submission deadline.
Financial Services Department staff reviewed the proposals and selected three firms that best met the evaluation criteria established in the RFP to participate in the oral interview process. On March 26, 2024, the three firms selected as finalists were interviewed by a panel consisting of City Council Audit Subcommittee Member Nils Nehrenheim, City Treasurer Eugene Solomon, Budget and Finance Commission Chair Chadwick Castle, and Financial Services Department staff.
Following the interview process, the review panel unanimously agreed to recommend that City Council award the agreement for independent audit services to CliftonLarsonAllen, LLP (CLA).
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 to be performed in accordance with generally accepted auditing standards and the provisions of the U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. The same Financial Principles set the requirement to routinely bid audit services and obtain proposals from qualified firms of certified public accountants, at a minimum, every five years.
The City last awarded an RFP for audit services on April 18, 2017 for an initial term of three years.
The City exercised the additional two-year renewal option, and Council approved two additional oneyear extensions to the contract due to the timing of Financial Services Department staff turnover.
H.16., File # 24-0680 Meeting Date: 5/7/2024
year extensions to the contract due to the timing of Financial Services Department staff turnover.
The current contract expires June 30, 2024, following completion of the Fiscal Year 2022-23 audit.
On January 8, 2024, Financial Services staff issued an RFP and solicited qualified auditing firms through OpenGov, the City’s procurement portal, and posted the RFP on the City’s website. The City received a total of five proposals by the RFP deadline which was set for February 13, 2024.
Financial Services Department staff reviewed the five proposals and selected the three most well qualified firms to participate as finalists in the City's oral interview process. These firms were (alphabetical order): CliftonLarsonAllen, LLP, Lance, Soll, & Lunghard, LLP., and The Pun Group, LLP.
Each firm was evaluated based on the criteria established in the RFP, highlighted below:
· Independent and licensed to practice in California
· No conflict of interest
· External quality control review report
· Expertise and experience
· Audit approach
· Price
On March 26, 2024 a panel consisting of City Council Audit Subcommittee Member Nils Nehrenheim, City Treasurer Eugene Solomon, Budget and Finance Commission Chair Chadwick Castle, and Financial Services Department staff interviewed the selected firms. Following the interview process, panel members individually scored firms and unanimously agreed to recommend the City Council award the agreement for independent audit services to CliftonLarsonAllen, LLP (CLA).
CLA is a limited liability partnership, licensed to practice public accountancy in California. With a virtual headquarters, CLA’s state and local government practice includes over 550 professionals, making it one of the largest governmental audit and consulting practices in the country. CLA’s Irvine, California office currently serves 43 similar governmental clients in Southern California, including the cities of El Segundo, Long Beach, Rancho Palos Verdes, Burbank, Glendale, and Pasadena. CLA stood out from the other finalists due to its depth and breadth of staff expertise; approach, including use of technology for client interaction and data analysis; and demonstrated strong like for like experience performing audits and single audits for similar clients. CLA’s pricing is comparable to that of the other proposers.
The review panel, following the interviews, unanimously recommended the City Council award an agreement for independent audit services to CliftonLarsonAllen, LLP.
COORDINATION
The staff report and audit contract recommendation was coordinated with the identified review panel.
The City Attorney's Office approved the contract as to form.
FISCAL IMPACT
The costs of audit services over the next five-years (the initial three-year term, plus the optional twoyear period) is for an amount not to exceed $511,513, including $487,155 in fees and a five percent contingency of $24,358. A cost breakdown by year is provided in the table below:
H.16., File # 24-0680 Meeting Date: 5/7/2024
Year 1 Year 2 Year 3 Year 4 Year 5 5-Year Total
5%
Contingency
Total Not to
Exceed
FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28
$ 90,807 $ 94,180 $ 97,215 $ 100,624 $ 104,328 $ 487,155 $ 24,358 $ 511,513 Funding for audit services is included in the Financial Services Department annual operating budget.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Agmt - CliftonLarsonAllen LLP
· RFP #2324-007 Audit Services Fiscal Years 2024-2026 with Optional Two Years · Proposal Submitted by CliftonLarsonAllen LLP