CITY OF SALINAS
COUNCIL STAFF REPORT
______________________________________________________________________________ DATE: JUNE 14, 2022
DEPARTMENT: FINANCE
FROM: MARK ROBERTS, DIRECTOR OF FINANCE
TITLE: PROFESSIONAL SERVICES AGREEMENT WITH THE PUN GROUP, LLP FOR AUDITING SERVICES RECOMMENDATION:
A motion to approve a resolution authorizing the Mayor to execute a professional services agreement with The Pun Group, LLP (“The Pun Group”) for independent auditing services for the period of June 15, 2022 through June 30, 2025, corresponding to the fiscal years ending June 30, 2022, to June 30, 2024, with the option to extend the agreement for each of the two (2) subsequent fiscal years.
BACKGROUND:
On March 4, 2022, the City and its previous independent auditor mutually agreed to end their audit services agreement following the conclusion of the audit for the fiscal year ending June 30, 2021. In accordance with Government Finance Officers Association best practices, a governmental entity should undertake a full-scale competitive process for the selection of independent auditors. On April 25, 2022, City staff released a request for proposal (“RfP”) soliciting the services of qualified firms of certified public accountants to perform independent auditing services.
REQUEST FOR PROPOSALS:
The RfP solicited responses from qualified firms to audit the City’s financial statements, as well as the financial statements of its component units, and to prepare an annual comprehensive financial report for the fiscal years ending June 30, 2022, 2023, and 2024. The specifications required that the audit be performed in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the provisions of the Single Audit Act Amendments of 1996, Uniform Guidance, and all applicable Governmental Accounting Standard Board statements.
REQUEST FOR PROPOSALS PROCESS:
As noted above, the City issued an RfP for audit services on April 25, 2022. The City posted the RfP on its website and the California Society of Municipal Finance Officers (CSMFO) website. Responses to the RfP were due by 4:00 pm on May 2, 2022.
The City received two responses to the RfP. The firms submitting proposals were:
Badawi & Associates, Certified Public Accountants and
The Pun Group, LLP.
City staff reviewed the proposals in strict accordance with the evaluation criteria set forth in the RfP, considering the following factors:
quality and responsiveness of the proposal;
relevant experience with similar engagements;
demonstrated knowledge of the work/services required;
staff qualifications and experience;
proposed audit approach; and
cost of services.
Staff interviewed and received a presentation from Badawi & Associates on May 11, 2022, and The Pun Group on May 12, 2022.
Based on a thorough evaluation of both proposals and firms, City staff selected The Pun Group to provide independent audit services to the City.
ABOUT THE PUN GROUP (FROM SUBMITTED PROPOSAL)
“The Pun Group, LLP, Certified Public Accountants and Business Advisors, founded in 2012, is a limited liability partnership. We are a full-service accounting firm that is comprised of forty-five professionals providing auditing, accounting, and advisory services to our clients. Our Governmental Division consists of forty full-time individuals. It’s comprised of seven (7) Partners, one (1) director, four (4) managers, one (1) Chief Operating Officer, two (2) Supervisors, four (4) Seniors, seventeen (17) Professional Staff, two (2) Word Processors, and two (2) Administrative Support Staff.
The Firm has become one of the “Top Accounting Firms” in Orange County according to the Orange County Business Journal and is also on the list of CalCPA Top 150 firms. The combination of our hands-on experience and practical knowledge exercised by our audit professionals makes the Firm unique in our field. Our technical expertise and thorough understanding of current regulations and issues—along with the Firm’s commitment to hard work, integrity, and teamwork in every engagement—enable us to help our clients succeed.
Our Partners’ Group—which includes Kenneth Pun, Frances Kuo, Coley Delaney, Vanessa Burke, John Georger Jr., and Gary Caporicci — provides auditing, accounting, and advisory services to numerous governmental entities throughout the United States. With more than two hundred years of combined experience in the industry, we have become a trusted business partner and are well-respected as leaders in the industry in one of the fastest-growing firms. With nearly 100 government and not-for-profit audit clients, our Partners have a real passion for the industry and believe we are unmatched in our municipal experience. The firm also meets professional standards generally accepted in the United States of America and the standards applicable to financial audits contained in ‘Government Auditing Standards’ issued by the Comptroller General of the United States.
The Firm’s headquarters are located in Orange County, California, with four branches in San Diego, Walnut Creek/Sacramento (California), Las Vegas (Nevada), and Phoenix (Arizona).” CEQA CONSIDERATION:
Not a Project. The City of Salinas has determined the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).
STRATEGIC PLAN INITIATIVE:
Given the transparency associated with audits conducted by an independent firm of certified public accountants and The Pun Group’s experience in this area, adoption of the recommended resolution achieves the Council 2022-2025 Strategic Goal of Effective Government.
DEPARTMENTAL COORDINATION:
Department of Finance staff received general assistance with the RfP process from the City Attorney’s Office.
FISCAL AND SUSTAINABILITY IMPACT:
The Pun Group’s maximum all-inclusive fees for the first year of the agreement (i.e., for services for the fiscal year ending June 30, 2022) total $95,000. If the City exercises both optional years of the agreement (five total years), the total cost will not exceed $504,366. These fees do not include costs for additional services outside of the scope of services of the agreement.
Appropriation(s) for independent auditing services expenses for the first year of the agreement will be included in the proposed fiscal year 2023 budget.
ATTACHMENTS:
Professional Services Agreement – The Pun Group, LLP
Resolution