City Council Memorandum
TO: HONORABLE CITY COUNCIL DATE: APRIL 16, 2024
FROM: FINANCE DEPARTMENT WARD: ALL
SUBJECT: APPROVE PROFESSIONAL CO NSULTANT SERVICES AGREEMENT FROM RFP 2290 FOR CERTIFIED PUBLIC ACCOUNTANT SERVICES WITH CLIFTON
LARSON ALLEN, LLP TO SERVE AS INDEPENDENT EXTERNAL AUDITOR FOR ANNUAL FINANCIAL STATEMENT A UDIT FOR A (5) FIVE-YEAR TERM BEGINNING IN 2024
ISSUES:
Approve a Professional Consultant Services Agreement for Certified Public Accountant Services to CliftonLarsonAllen LLP (CLA) to serve as t he City’s independent auditor for a five-year term, subject to annual renewals, for purposes of conduc ting the annual audit of the City of Riverside and its related entities’ financial statements beginning with the fiscal year ending June 30, 2024.
RECOMMENDATIONS:
That the City Council:
1. Approve a Professional Cons ultant Services Agreement from Request for Proposal (RFP) No. 2290 for Certified Public Accountant Se rvices to CLA to serve as the City’s independent auditor for a five-year term, subject to annual renewals;
2. Appoint CLA as the City’s independent exter nal auditor for a five-year term, subject to annual renewals; and
3. Authorize the City Manager, or designee, to execute the Professional Consultant Services Agreement for Certified Pub lic Accountant Services with CLA and any other documents necessary to effectuate the agreement including making minor and non-substantive changes and contract extensions for a total of $1,096,020 for a five-year term.
COMMITTEE RECOMMENDATION:
The Finance Committee met on March 13, 2024, with Chair Hemenway and Vice Chair Cervantes present, to consider appointing CLA to serv e as the City’s independent accountants. After discussion the Committee unanimously voted to recommend that the City Council appoint CLA to serve as the City’s independent accountants in accordance with its annual audit requirements for a five-year period, subject to annual reappointment, beginning with the fiscal year ending June 30, 2024.
Annual Audit Reports ● Page 2
BACKGROUND:
The issuance of the June 30, 2023, annual financial reports for t he City completed a five-year audit contract for external audit services with independent auditors Lance, Soll & Lunghard, LLP (LSL). An independent audit of the City’s financial statements is required by the Riverside City Charter. Additionally, per municipal code Section 1113:
“The City Council shall employ, at the beginn ing of each fiscal year, a qualified public accountant who shall, at such time or times as may be specified by the City Council, and at such times as such accountant shall determine, examine the books, records, inventories and reports of all officers and employees who receive, handle or disburse public funds and of such other officers, employees or departments as the City Council may direct. As soon as practicable after the end of the fiscal year, a final audit and report shall be submitted by such accountant to the City Council, with copies to be pl aced on file in the Office of the City Clerk and on the City's accessible website where they shall be available for inspection by the general public. At least every five year s, the City Council shall employ a qualified public accountant different from the qualified public accountant who submitted the immediately preceding year's audit report.”
As a result of Municipal Code Se ction 1113, the City is required to rotate external audit services every five years, and LSL, while a qualified audi t firm, is unable to continue on as the City’s external auditor.
DISCUSSION:
City Finance staff developed RFP No. 2290 using the prior 5-year professional consultant services agreement as a baseline. City Finance staff also collaborated with River side Public Utilities finance staff to prepare and finalize the RFP.
On August 11, 2023, RFP No. 2290 was posted on Pl anetBids to solicit proposals from qualified firms of certified public accountants to audit t he City’s financial statements for the fiscal year ending June 30, 2024, with the option of providing the same services for the four subsequent fiscal years. A total of 768 vendors were notified upon posting of the project, with 24 Prospective Bidders, 16 being listed as Prime Bidders.
On September 8, 2023, four (4) proposals were received from potential auditing firms. The proposals were evaluated by four (4) city staff members, consisting of two (2) members from City Finance and two (2) members from Riverside Public Utilities, based on firm qualifications, pricing, experience, professional references, and approach and methodology.
On January 16, 2024, six (6) city staff members, consisting of three (3) members from City Finance and three (3) members from Riverside Pub lic Utilities, interviewed the three (3) top- ranked firms and were evaluated on the basis of the following criteria:
a. Qualifications (25%)
b. Pricing (20%)
c. Experience (Projects of similar size and scope) (35%) d. Professional References (10%)
e. Approach and Methodology (10%)
Annual Audit Reports ● Page 3
The below table illustrates the overall rank and original proposal amounts:
Ranking Company RFP Proposal Amount (5-year total)
1 CLA $1,167,670
2 VASQUEZ & COMPANY $1,094,220
3 THE PUN GROUP $1,102,223
4 SINGERLEWAK LLP $1,035,411
CLA received the highest scores and was chosen to be the most qualified. Although CLA’s pricing was not the lowest, the combinat ion of the weight factor for pricing and the higher scores in qualifications, experience, professional references, and approach and methodology established them as the most qualified fi rm of certified public accountant s to audit the City’s financial statements.
CLA is a nationwide firm with over 8,500 employ ees and nearly 130 U.S. locations. Their local office is located in Irvine, California. CLA has one of the largest governmental audit and consulting practices in the county; serving more than 4,200 governmental clients nationwide and more than 600 within California. CLA has performed external audits of similar full-service cities, such as the City of Glendale (including Electric and Water funds ), City of Burbank (including Electric and Water funds), City of Colton (inc luding Electric and Water funds), City of Pico Rivera (including Electric and Water funds), and City of Santa Ana (including their Water fund).
On February 20, 2024, City Finance staff held cost negotiations with CLA and were able to negotiate a $71,650 price reduction from the original RFP cost proposal as illustrated below:
Firm 2024 2025 2026 2027 2028 Total
CLA 198,360$ 208,260 $ 218,680 $ 229,620 $ 241,100 $ 1,096,020$ All-Inclusive Maximum Fee for FYE June 30,
The Purchasing Manager concurs that th e recommended action complies with Purchasing Resolution No. 24101.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 5 – High Performing Government and Goal No. 5.2, Utilize technology, data, and proce ss improvement strategies to increase efficiencies, guide decision making, and ensure services are acce ssible and distributed equi tably throughout all geographic areas of the City.
The item aligns with each of the five Cross-Cutting Threads as follows:
1. Community Trust – The RFP was posted and proce ssed through the City’s open bid portal. The financial audit prepared by independent financial auditors enhances transparency and accuracy regarding the financial information of the City.
2. Equity – This report is neutral towards this cross-cutting thread.
Annual Audit Reports ● Page 4
3. Fiscal Responsibility – The financial audit provides fiscal responsibility and accountability to ensure financial information is complete and accurate in accordance with Generally Accepted Accounting Principles and the Governmental Accounting Standards Board.
4. Innovation – This report is neutral towards this cross-cutting thread.
5. Sustainability & Resiliency – The financial audit provided by the independent financial auditor will ensure accurate financial information and internal controls which will assist with the financial sustainability of the city.
FISCAL IMPACT:
The total fiscal impact of the action is $1,096,020 over the five-year term of the agreement. The funds for FY 2023/24 are budgeted av ailable in the General Fund , N/D-FN-Citywide Financial Mgmt-Professional Services account 7223700-421000. Appropriations for future fiscal years will be included in the department’s budget submissions for those fiscal years to be presented to the City Council for approval.
Prepared by: Ryan Carter, Assistant Controller
Approved by: Kristie Thomas, Finance Dir ector/Assistant Chief Financial Officer Certified as to
availability of funds: Kristie Thomas, Finance Director/Assistant Chief Financial Officer Approved by: Edward Enriquez, Assi stant City Manager/Chief Financial Officer/Treasurer
Approved as to form: Phaedra A. Norton, City Attorney
Concurs with:
___________________________
Steve Hemenway, Chair
Finance Committee
Attachments:
1. Professional Services Agreement
2. RFP Award Recommendation