November 19, 2024
Finance Department
DATE: November 19, 2024
TO: Mayor Martinez and Members of the City Council
FROM:
Andrea Miller, Director of Finance
Mubeen Qader, Deputy Director of Finance
Jerry Chak, Accounting Manager
Subject:
Badawi & Associates Contract Amendment #3
FINANCIAL IMPACT: The total cost of this amendment is not to exceed $1,005,783. This includes $318,930 for fiscal year 2024- 25, $328,499 for fiscal year 2025-26, $338,354 for fiscal year 2026-27, and $20,000 for Richmond Housing
Authority Capital Grant Audits covering fiscal years 2013- 14 through 2020-21.
The cost for fiscal year 2024-25 audit service will be
budgeted in fiscal year 2025-26 budget for Finance
Department. Subsequent payments will be budgeted
annually in the subsequent fiscal year budgets.
(01172015-400215)
The cost of $20,000 for Richmond Housing Authority
Capital Grant Audits will be budgeted in future year
budgets as required. (42141191-400828)
PREVIOUS COUNCIL
ACTION:
March 17, 2020 – initial contract approved.
July 11, 2023 – first contract amendment approved.
September 12, 2023 – second contract amendment
approved.
AGENDA
REPORT
November 19, 2024
STATEMENT OF THE
ISSUE:
City staff is seeking approval to amend its contract with Badawi & Associates to provide auditing services for the City’s financial statements for three more fiscal years and to perform capital grant audits for the Richmond Housing Authority covering eight fiscal years.
RECOMMENDED ACTION:
APPROVE the third amendment to the sole-source
contract with Badawi and Associates for auditing services to the City and its related entities for three more fiscal years and adding an additional scope of work for capital grant audits for the Richmond Housing Authority
($20,000) covering eight fiscal years, for an amount not to exceed $1,005,783 – Finance Department (Andrea
Miller 510-620-6790/Mubeen Qader 510-412-2077).
DISCUSSION:
City staff is requesting a sole source contract amendment with Badawi & Associates. As the City’s external auditor for the past five years, Badawi & Associates has consistently delivered high-quality service, leveraging their deep understanding of the City’s financial operations to effectively conduct audits. They have been diligent in identifying material concerns within the City’s internal control structure and overall financial position.
Transitioning to a new auditor at this time would introduce significant risks, especially given the existing backlog of financial audits for the Richmond Housing Authority caused by poor transition in prior years. A new auditor would require considerable time to become familiar with the City’s financial processes, potentially adding further delays.
Additionally, the current auditor might reallocate resources away from the City. This is particularly impactful for critical functions like auditing, where full engagement is essential to maintaining high standards of accuracy and accountability. Badawi & Associates is best positioned to commit the necessary resources to clear all backlogs and complete our audits by the end of the contract June 30, 2028, thereby ensuring continuity, maintaining performance standards, and minimizing risks to the City’s financial accountability.
In summary, City staff is seeking a contract amendment for Badawi and Associates extending for three more fiscal years (Fiscal Years 2024-25, 2025-26, 2026-27). The amendment extends the contract period through June 30, 2028, and increases the contract amount by $1,005,783 from $1,530,370 to $2,536,153. The increase includes additional scope of work in the amount of $20,000 for capital grant audits for eight fiscal years for the Richmond Housing Authority. The Department of Housing and Urban Development recently informed the City that these capital grant audits are required to close out the grants.
November 19, 2024
DOCUMENTS ATTACHED:
Attachment 1 – Badawi & Associates’ Proposal
Attachment 2 – Contract Amendment #3
Attachment 3 – Contract Amendment #2
Attachment 4 – Contract Amendment #1
Attachment 5 – Original Contract
Attachment 6 – Sole Source Justification