CITY OF SIGNAL HILL
STAFF REPORT
2175 Cherry Avenue • Signal
Hill, California 90755-3799
4/11/2023
AGENDA ITEM
TO:
HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM:
SHARON DEL ROSARIO
ADMINISTRATIVE SERVICES OFFICER/FINANCE DIRECTOR
SUBJECT:
CONTRACT SERVICES AGREEMENT WITH ROGERS ANDERSON MALODY &
SCOTT, LLP (RAMS) FOR PROFESSIONAL INDEPENDENT AUDITING SERVICES Summary:
The City Council will consider approving a Contract Services Agreement with Rogers Anderson Malody & Scott, LLP (RAMS) for professional independent auditing services.
Recommendation:
Authorize the City Manager to enter into a Contract Services Agreement with RAMS as the independent certified public accounting firm to audit the financial statements of the City of Signal Hill and its component units, in the amount of $154,810, for an initial three-year term with an option to extend the term for two additional one-year terms, in a form approved by the City Attorney.
Fiscal Impact:
The not-to-exceed amounts for performing the annual independent audit for Fiscal Years (FYs) 2022- 23, 2023-24, and 2024-25 are listed below, for a proposed total not-to-exceed amount of $154,810 over a three-year term.
Table 1. Compensation
FY2022-23 FY2023-24 FY2024-25
Audit Services $51,000 $51,000 $52,810
The FY 2023-24 Operating Budget includes funds for independent audit services (Account No. 100- 53-5430); funding for future years will be budgeted accordingly.
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Strategic Plan Objectives:
Goal No. 1: Ensure long-term fiscal stability.
Goal No. 6: Promote a transparent and open government.
Background and Analysis:
The current auditing services contract will expire on June 30, 2023. With the expiration of the current contract, the City recently solicited responses through a Request for Proposals (RFP) for professional auditing services on February 3, 2023 (Attachment A). The Scope of Work in the RFP included the following tasks:
· The auditor shall perform an audit of all funds of the City. The audit shall be conducted in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller of the United States. The City's Annual Comprehensive Financial Report (ACFR), Notes to the Financial Statements, and Required Supplementary Information, will be prepared, word processed, printed and bound by the audit firm. The ACFR will be in full compliance with GASB 34 and all applicable GASB pronouncements.
· The audit firm will render their auditor's report on the basic financial statements which will include both Government-Wide Financial Statements and Fund Financial Statements. The audit firm will also apply limited audit procedures to Management's Discussion and Analysis (MD&A) and required supplementary information pertaining to the General Fund and each major fund of the City.
· The auditor is expected to express an opinion on the fair presentation of the financial statements of the Successor Agency to the former Redevelopment Agency of Signal Hill and report on compliance with applicable laws, regulations, and administrative requirements governing its activities. The auditor shall prepare GASB 34 compliant financial statements for the Successor Agency to the former Redevelopment Agency of Signal Hill. · The auditor shall perform a single audit on the expenditures of federal grants in accordance with OMB Circular A-133 and render the appropriate audit reports on Internal Control over Financial Reporting based upon the audit of the City's financial statements in accordance with Government Auditing Standards and the appropriate reports on compliance with Requirements Applicable to each Major Program, Internal Control over Compliance and on the Schedule of Expenditures of Federal Awards in Accordance with OMB Circular A-133. The single audit report will include appropriate schedule of expenditures of federal awards, footnotes, findings and questioned costs, including reportable conditions and material weaknesses, and follow up on prior findings where required. · The auditor shall perform agreed-upon auditing procedures pertaining to the City's GANN Limit (Appropriations Limit) and render a letter annually to the City regarding compliance. · The auditor will examine the City's internal accounting controls and accounting procedures and render written reports of their findings and recommendations to the Administrative CITY OF SIGNAL HILL Page 2 of 5 Printed on 4/7/2023
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and render written reports of their findings and recommendations to the Administrative Services Officer/Finance Director and Accounting Manager. The auditor shall communicate to the Administrative Services Officer/Finance Director and Accounting Manager any reportable conditions found during the audit that can be defined as either a significant or material weakness in the design or operation of the internal control structure, which could adversely affect the organization's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statement. · The auditors shall be required to make an immediate written report of all irregularities and illegal acts or indications of illegal acts of which they become aware, to the City Manager, Deputy City Manager, Administrative Services Officer/Finance Director and Accounting Manager.
· The auditor shall issue a separate "management letter" that includes recommendations for improvements in internal control, accounting procedures and other significant observations that are considered to be non-reportable conditions. Management letter shall be addressed to the Administrative Services Officer/Finance Director.
· Review the City's ACFR for conformance with the Government Finance Officers Association financial reporting award program.
· Attendance by a Principal of the audit firm at a minimum of one City Council meeting per calendar year.
· The firm selected may also be asked to examine other reports or perform other services as required.
In response to the RFP, the City received five proposals by the deadline date of March 3, 2023, from the following firms: Badawi and Associates LLC; Moss, Levy & Hartzheim LLP; Clifton Larson Allen LLC; The PUN Group LLP; and RAMS.
The City’s selection committee evaluated the proposals on responsiveness to the RFP using the below listed criteria to determine whether the proposer possesses the qualifications necessary for the satisfactory performance of the services required. The selection committee consisted of the Administrative Services Officer/Finance Director and Accounting Manager.
Evaluation Criteria for Audit Services Proposals
· Understanding of the work to be performed and demonstrating the intention and ability to perform the work.
· The firm's licensing, independence with respect to the City of Signal Hill and results of most recent peer review. This should include any disciplinary actions taken or pending against the firm.
· Qualifications, size, and related experience of the audit team who will be actually working on and coordinating the City's audit (i.e., Partner, Manager and Senior Auditors), including the firm's on-going efforts to keep its staff current and knowledgeable in governmental accounting CITY OF SIGNAL HILL Page 3 of 5 Printed on 4/7/2023
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firm's on-going efforts to keep its staff current and knowledgeable in governmental accounting practices.
· Experience of the firm auditing California cities, redevelopment agencies, and successor agencies of similar nature, size, and complexity, and the auditor's commitment to maintaining technical expertise in the municipal financial environment. · Local government client references.
· Commitment to timeliness and meeting City set deadlines in the conduct of the audit. · Thoroughness of approach to conducting the audit.
· Demonstration of the understanding of the objectives and scope of the audit. · Maximum fees to conduct the audit. Although a significant factor, cost will not be the primary factor in the selection of an audit firm.
Following the selection committee’s initial evaluation of the written proposals, the City invited the top three firms to an interview. The committee conducted the interviews and evaluated each firm based on the following criteria:
· The audit firm’s presentation of competency and availability of experienced senior level staff. · Timeliness in meeting the deadline schedule outlined in the RFP. · Experience with similarly sized cities (including reference checks).
The final scores for each firm following the RFP evaluation process are displayed below in Table 2.
Table 2. Evaluation Scores for Audit Services Proposals RAMS Moss, Levy Badawi Maximum
WRITTEN PROPOSAL
SUBTOTAL 85.5 87.0 85.5 90
ORAL INTERVIEW
SUBTOTAL 95 75 80 100
REFERENCE CHECKS
SUBTOTAL 10 8 0 10
TOTAL 190.5 170 165.5 200
As a result of the evaluation process, staff recommends RAMS as the firm most responsive to the City’s needs. RAMS has extensive experience providing auditing, accounting, and consulting services in the governmental sector. RAMS is one of the oldest, most trusted, and respected CPA firms in Southern California, with over 74 years of public practice experience, specializing in governmental agency and not-for-profit organization auditing, accounting, and management advisory services. Over 16,000 hours per year are devoted to their practice, including cities, redevelopment successor agencies, water districts, other special districts, not-for-profit corporations, and joint power CITY OF SIGNAL HILL Page 4 of 5 Printed on 4/7/2023
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successor agencies, water districts, other special districts, not-for-profit corporations, and joint power authorities. Current clients include several Los Angeles County cities including Hawthorne, Lawndale, Rolling Hills, Rolling Hills Estates, San Dimas, and West Covina, as well as other municipalities that include La Mesa, Loma Linda, San Bernardino, and San Marcos, to name a few.
Services to the City will be provided out of RAMS San Bernardino office. The proposed project team assigned to the City includes Mr. Terry Shea, CPA, to serve as the engagement partner with over 40 years of experience; Ms. Gardenya Duran, CPA, CGMA, to serve as concurring partner with over 12 years of experience; Mr. Scott Manno, CPA, CGMA to serve as quality control reviewer with over 25 years of experience; Evelyn Morentin-Barcena, CPA to serve as audit manager with over 7 years of experience; and Ms. Demi Hite, CPA, to serve as the senior auditor with over four years of experience.
Staff respectfully requests authorization for the City Manager to enter into a Contract Services Agreement for professional independent auditing services, subject to City Attorney approval as to form, with RAMS in the amount of $154,810 for the initial three-year term with an option to extend the term for two additional years for a maximum of five years.
Approved:
_________________________
Carlo Tomaino
Attachments:
A. RFP
B. Agreement
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