CITY OF SIMI VALLEY
MEMORANDUM
June 9, 2025
TO: City Council
Board of Directors, Ventura County Waterworks District No. 8 Board of Directors, Simi Valley Public Facilities Financing Authority Board of Directors, Successor Agency to the Simi Valley Community Development Agency
Board of Trustees, Simi Valley Public Library
FROM: Department of Administrative Services
SUBJECT: APPROVAL OF A SECOND AMENDMENT TO THE CONTRACT WITH
VASQUEZ & COMPANY, LLP FOR PROFESSIONAL AUDITING
SERVICES
STAFF RECOMMENDATION
Staff recommends approving the second amendment (page 4) with Vasquez & Company, LLP for professional auditing services, to extend the term of services until June 30, 2027, and increase the total not-to-exceed to $426,808.
BACKGROUND AND OVERVIEW
An independent audit of the Annual Comprehensive Financial Report (ACFR) is a basic requirement of the Government Finance Officers Association (GFOA) for its annual certification program. The City has been awarded the GFOA Certificate of Achievement for Excellence in Financial Reporting for 44 consecutive years. In addition to this national certification program, audited financial statements are required whenever a public agency is a recipient of Federal grant funds, wishes to issue bonds, or obtain other debt financing.
The current contract with Vasquez & Company, LLP was awarded by City Council on July 25, 2022, this amendment would extend those services until June 30, 2027, as well as provide for an increased not-to-exceed amount to cover increased service needs.
The function of the independent audit is to provide an annual review of all City funds and financial transactions in accordance with generally accepted auditing standards, as established by the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA); Government Auditing Standards established by the Comptroller General of the United States; the Single Audit Act of 1984 and the Single Audit Act Amendments of 1996; and the U.S. Office of Management and Budget 2 CFR Part 200 Subpart F (Audit Requirements). Following the audit, the independent auditor issues an “opinion letter” and other reports to the City’s management, addressing the fair presentation of financial position of the financial statements, matters involving interna l controls over financial reporting, and compliance with applicable laws, regulations, contracts, and grants. Independent auditors perform a review of internal controls of all significant accounting procedures, report their observations concerning any significant deficiencies, and make recommendations to correct the identified weaknesses in a “management letter” issued to the City Council.
AGENDA ITEM NO.
Consent (7)
2 Additionally, the independent auditors remain available throughout the term of the contract to provide accounting recommendations and counsel on matters that would affect the City’s financial statements
FINDINGS AND ALTERNATIVES
The current contract is reaching the end of the initial term, City Council had authorized the City Manager to extend the agreement for one (1) additional two (2) year term, however, due to increased service needs, the not-to-exceed amount will also need to be increased beyond the City Manager’s authorization.
Due to pronouncements by the Governmental Accounting Standards Board (GASB) and audit requirements defined by the U.S. Office of Management and Budget ( 2 CFR Part 200 Subpart F ), the City has additional reporting and compliance requirements that require additional attention and review from the City’s professional auditors. Specifically, this includes additional requirements for the City’s Other Postemployment Benefits (OPEB) plans per GASB statement 74 , and the addition of a third major Single Audit program (annual federal award audit).
The amount required for this amendment is $195,084 inclusive of the additional services and the previously contracted services, for a total not -to-exceed of $ 426,808 for this agreement.
The following alternatives are available to the City Council / Board of Directors:
1. Approve the attached second amendment to the contract with Vasquez and Company, LLP extending the term of service until June 30, 2027, and increasing the consideration by $195,084 for total not-to-exceed amount of $426,808.
2. Do not approve the contract amendment and provide staff with further direction.
Staff recommends Alternative No. 1.
SUGGESTED CITY COUNCIL MOTION
I move to approve the second amendment with Vasquez & Company, LLP for professional auditing services, extending the term of services until June 30, 2027, and increase the total not-to-exceed to $426,808.
3 SUMMARY
The City’s current contract for professional auditing services is reaching the end of its initial term, so Staff recommends approving the second amendment with Vasquez & Company, LLP for professional auditing services to extend the term of services until June 30, 2027, and increasing the total not -to-exceed to $426,808, to allow for an increased scope of services.
____________________________________
Carolyn Johnson
Administrative Services Director
Prepared by: Taylor Dacus, Senior Management Analyst
INDEX Page
Second Amendment – Vasquez………………………………………………………….4
Exhibit 1 - Staff Report and Agreement 3230017 with Vasquez & Company LLP….7 Exhibit 2 - Memo and First Amendment to Agreement 3230017……………………25
SECOND AMENDMENT TO
AGREEMENT NO. 3230017 BETWEEN
THE CITY OF SIMI VALLEY, VENTURA COUNTY WATERWORKS DISTRICT NO. 8,
SIMI VALLEY PUBLIC FACILITIES FINANCIAL AUTHORITY, SUCCESSOR AGENCY
TO THE SIMI VALLEY COMMUNITY DEVELOPMENT AGENCY, THE SIMI VALLEY
PUBLIC LIBRARY, AND VASQUEZ & COMPANY LLP
THIS SECOND AMENDMENT (“Amendment”) is made and entered into this 9th day of June 2025, by and between the CITY OF SIMI VALLEY, a general law city and municipal corporation (“CITY”), and VASQUEZ & COMPANY LLP, a certified public accounting firm and Limited Liability Partnership ("CONSULTANT").
1. Pursuant to Section 8of Agreement No. 3230017 (“Agreement”), Sections 2 and 4(A), along with Exhibit B, are amended to read as follows:
A. 2. Term. The term of this CONTRACT shall be from July 25, 2022 through June 30, 2027.
B. 4. Compensation and Payment.
A. The total compensation payable to CONSULTANT by CITY for services under this CONTRACT shall not exceed the sum of $426,808 (the “Not-To-Exceed Amount”), and shall be earned as the work progresses. Payment will be made based on the rates contained in the “Schedule of Fees” as set forth in Exhibit “B” attached hereto and incorporated herein.
CONSULTANT acknowledges that CONSULTANT is not guaranteed to receive the Not-To- Exceed Amount or any particular or minimum amount of compensation or work under this CONTRACT.
C. Exhibit “B” Schedule of Fees, is deleted in its entirety and replaced with the Exhibit “B” Schedule of Fees, attached hereto.
5. ELECTRONIC SIGNATURES. This Amendment may be executed by the Parties on any number of separate counterparts, and all such counterparts so executed constitute one Amendment binding on all the Parties notwithstanding that all the Parties are not signatories to the same counterpart. In accordance with Government Code §16.5, the Parties agree that this Amendment will be considered signed when the signature of a party is delivered by electronic transmission. Such electronic signature will be treated in all respects as having the same effect as an original signature.
6. This Amendment may be executed in any number or counterparts, each of which will be an original, but all of which together constitutes one instrument executed on the same date.
7. Except as modified by this Amendment, all other terms and conditions of Agreement No. 3230017 remain the same.
[SIGNATURES ON NEXT PAGE]
4 City of Simi Valley
Second Amendment to Agreement No. 3230017
Vasquez & Company LLP
IN WITNESS WHEREOF, the parties hereto have executed this contract the day and year first hereinabove written.
Attest: City of Simi Valley, A Municipal Corporation
By:
Lucy Blanco, City Clerk D ee Dee Cavanaugh, Mayor of the City of Simi Valley, California
Approved as to Form: VASQUEZ & COMPANY LLP
By:
Algeria R. Ford, City Attorney
Print Name: Linda A. Narciso
Approved as to Content: Title: Partner
By:
Samantha C. Argabrite, City Manager
Print Name: Gilbert R. Vasquez
Title: Managing Partner
Johanna Medrano,
Deputy Administrative Services Director/
Budget & Purchasing
Carolyn Johnson,
Administrative Services Director
5 City of Simi Valley
Second Amendment to Agreement No. 3230017
Vasquez & Company LLP
EXHIBIT “B”
SCHEDULE OF FEES
SECOND AMENDMENT TO CONTRACT BETWEEN CITY AND CONSULTANT
Exercised Option Years
(This Amendment)
Fiscal Year During
which Services
Occur
FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27
Nature of Service to
be Provided
FY 2022
Audit
FY 2023
Audit
FY 2024
Audit
FY 2025
Audit
FY 2026
Audit
City Audit & GANN $ 55,509 $ 67,174 $ 58,889 $ 60,656 $ 62,476 Single Audit $ 13,961 $ 21,380 $ 14,811 $ 15,256 $ 15,713 Additional Single
Audit Program $ 8,000 $ 8,400 $ 8,820 GASB 74 / OPEB $ 5,000 $ 5,250 $ 5,513 Subtotal $ 69,470 $ 88,554 $ 86,700 $ 89,562 $ 92,522
TOTAL ALL INCLUSIVE MAXIMUM PRICE
OF SERVICES FOR FY 2022-23 THROUGH FY 2026-27 $ 426,808
6 July 25, 20
22 TO: City Cou
ncil
Board of Directors, Ventura County Waterworks District No. 8 Board of Directors, Simi Valley Public Facilities Financing Authority Board of Directors, Successor Agency to the Simi Valley Community Development Agency
Board of Trustees, Simi Valley Public Library
FROM: Depar
tment of Administrative Services
SUBJECT: A
WARD CONTRACT FOR PROFESSIONAL AUDITING SERVICES
STAFF RECOMMENDATION
It is r
ecommended that the City Council, Boards of Directors/Trustees , hereinafter City Council:
1. Award the attached contract for audit services (page 6) to Vasquez & Company, LLP for a three -year period beginning with fiscal year ending June 30, 2022, with an option to renew for one additional two year term.
BACKGROUND AND OVERVIEW
An indepen
dent audit of the Annual Comprehensive Financial Report ( ACFR) is a basic requirement of the Government Finance Officers Association (GFOA) for its annual certification program. The City has been awarded the GFOA Certificate of Achievement for Excellence in Financial Reporting for 41 consecutive years. In addition to this national certification program, audited financial statements are required whenever a public agency wishes to issue bonds or obtain other debt financing, or when the agency is a recipient of Federal grant funds. Based on a previous competitive bid process, t he City has used the Certified Public Accountant (CPA) firm, Vasquez & Company, LLP, for the past eight years.
Following a recent competitive selection process, staff is recommending that the City Council award a contract for audit services t o Vasquez & Company, LLP, for a three-year period beginning with fiscal year ending June 30, 2022, with an option to renew for one additional two-year term.
The fu
nction of the independent audit is to provide an annual review of all City funds and financial transactions in accordance with generally accepted auditing standards , as established by the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA); Government Auditing Standards established by the Comptroller General of the United States; the Single Audit Act of 1984 and the Single Audit Act Amendments of 1996 ; and the U.S. Office of Management and Budget 2 CFR Part 200 Subpart F (Audit Requirements). Following the audit, the independent auditor issues an “opinion letter” and other reports to the City’s management, addressing the fair presentation AGENDA ITEM NO.
Consent (4) CITY OF SIMI VALLEY
MEMORANDUM
EXHIBIT 1
7 of financial position of the financial statements, matters involving internal controls over financial reporting, and compliance with applicable laws, regulations, contracts, and grants.
Independent auditors perform a review of internal controls of all significant accounting procedures, report their observations concerning any significant deficiencies , and make recommendations to correct the identified weaknesses in a “management letter” issued to the City Council.
Additionally, the independent auditors remain available throughout the term of the contract to provide financial advice and counsel on matters that would affect the City’s financial statements.
FINDINGS AND ALTERNATIVES
With the current professional auditing contract expiring, City staff determined it would be most appropriate to issue a Request for Proposal (RFP), a full -scale competitive process, to contract for professional auditing services. While serving as the City’s current auditor, Vasquez and Company, LLP (Vasquez) has delivered high quality audits for the past eight years. Going through the RFP process, however, will ensure that the City is receiving both competitive pricing and high audit quality, while also maintaining transparency about this process, i.e., the factors considered when selecting an auditor, and the rationale behind staff’s recommendation.
A Request for Proposals (RFP) was posted to the City website on April 22, 2022, with a submission deadline of May 25, 2022. In addition, the RFP was posted on two professional association web pages, the California Society of Municipal Finance Officers (CSMFO) and the California Association of Public Procurement Officials, Inc. (CAPPO).
CSMFO is a widely known association including members from most, if not all, CPA firms that audit local governments. By posting the RFP to CSMFO, staff ensured maximum visibility to the various CPA firms that may be able to provide audit services within the scope of the RFP. CAPPO is the oldest public procurement association in the United States, and provides procurement resources to assist governments with improving the procurement process. While CAPPO is not strictly an accounting association, it was determined that posting the RFP to this website would only increase potential visibility of the RFP.
Subsequently, two CPA firms submitted proposals by the deadline of May 25, 2022.
The proposals were evaluated by an Audit Services Proposal Review Committee (Review Committee) comprised of the Deputy Administrative Services Director (Fiscal Services) and the Senior Accountant. The City used an audit proposal evaluation matrix published by the AICPA, which includes the following five categories:
1. A
pproach to audit quality
2. Team knowledge and experience
3. Unique qualifications
4. Value added services
5. Scope and pricing of the engagement
8 The Review Committee members independently evaluated each of the two proposals. The members then convened, compared their ratings, and ranked the firms based on these elements. The table below lists the average points rating and audit costs quoted by the two firms.
(option) (option) (w/option)
Firm Name Rating Year 1 Year 2 Year 3 Year 4 Year 5 Total Vasquez and Co. LLP
(Vasquez)
92 $69,470 $71,554 $73,700 $75,912 $78,189 $368,825
CliftonLarsenAllen LLP
(CLA)
89 $66,840 $70,180 $73,690 $77,375 $81,240 $369,325
A
s summarized above, both audit firms scored similarly and had competitive pricing. The firms both have extensive experience auditing local governments, have an internal control based audit approach (more efficient) providing basis to limit substantive testing, utilize technology to streamline the audit process, and are members of the AICPA Governmental Audit Quality Center. In addition, both lead engagement partners are reviewers for the GFOA award program, evidencing their technical accounting and reporting knowledge.
Overall, the proposals were professional, concise, and contained the requested information per the RFP. Vasquez did score higher by including more specific information about the City’s engagement, such as compliance with budgetary requirements, investments, bond covenants, and grant agreements, all items relevant to the City’s operation.
T
he primary difference between Vasquez and CLA, is that Vasquez has been the City’s auditor for the last eight years, while CLA does not have any experience with the City.
During this time, Vasquez has established extensive knowledge about the City, which facilitates a more efficient and effective audit each year. This level of efficiency will allow Vasquez to better use their time to focus in on the audit issues that hold more importance, rather than spending time during the audit building a basic understanding of City operations.
In addition, Vasquez has performed well during their time with the City, and staff has had positive experiences working with Vasquez through each year’s financial audit.
D
uring the review process, staff considered potential downsides of retaining an existing auditor. Specifically, there is perception that rotating auditors creates increased audit independence (objectivity) and enables a “fresh look” into the auditee, which results in higher audit quality. However, independence concerns are mitigated by applicable laws and regulations. For example, California Government Code section 12410.6(b) requires that CPA firms rotate the lead engagement audit partner every six years. Additionally, each year the audit undergoes a quality control (QC) review, which is performed by a separate audit partner from the firm that was not involved in the engagement, beyond performing his or her QC review. The various staff members of the engagement team also rotate, as existing staff members get promoted, reassigned, or leave the firm. These components, collectively, result in auditor independence. Throughout the last eight years, the City’s audit engagement team has seen two different lead engagement partners, three different QC partners, three different lead managers, four different in charge seniors, and four different lead IT auditors.
9 In addition to considering auditor independence, staff also assess ed the impact of audit quality while retaining Vasquez. As mentioned above, Vasquez has a deep understanding of our organization, including the City’s organizational structu re, financial process knowledge, internal control framework, and ERP knowledge and use. This existing extensive knowledge will provide the foundation for the audit team to provide a higher quality audit, as audit resources and City staff will be able to focus on high audit risk areas, rather than focusing efforts towards building this foundational understanding of the City.
Vasquez has also demonstrated positive prior performance. For example, the firm has provided perpetual support to the City. We receive timely and accurate guidance from them about technical accounting issues both during and outside of the audit period. They have accommodated delays when City staff has been unable provide deliverables per the audit schedule. The firm has obtained knowledge about how to use our financial system, which allows them to independently research and obtain transaction backup with very little assistance from staff. Lastly, they host training events that City employees can attend and provide continuing professional education (CPE credits) for those trainings. Overall, V
asquez has been a valuable partner to the City during the time they have provided service, and we expect their audit quality and value to the City to continue to increase as additional years go by.
The following alternatives are available to the City Council/Boards:
1. Awar
d the attached contract for audit services (page 6) to Vasquez & Company LLP for a three -year period beginning with fiscal year ending June 30, 2022, with an option to renew for one additional two-year term.
2. Do not aw
ard the attached contract, and provide staff with further direction regarding the selection of audit services.
Sta
ff recommends Alternative No. 1.
SUGGESTED CITY COUNCIL MOTION
I move to award the attached contract for audit services to Vasquez & Company, LLP for a three-year
period beginning with fiscal year ending June 30, 2022, with an option to renew for one additional two
-year term.
SUMMARY
The City’s contract for audit services has expired. Proposals for audit services have been solicited and evaluated. Vasquez & Company LLP has been recommended by staff from a pool of two CPA firms that submitted proposals as the firm best suited to meet the City's auditing and accounting needs. It is recommended that the City Council award a contract for audit services to Vasquez & Company LLP for fiscal years ending June 30, 2022 through 2024.
___________
________________________
Carolyn Johnson
Administrative Services Director
10 Prepared by: Marvin Lopez, Deputy Administrative Services Director/(Fiscal Services) INDEX Page
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24 DATE: March 5, 2024
TO: Brian P. Gabler, City Manager
FROM: Carolyn Johnson, Administrative Services Director SUBJECT: First Amendment to the Contract with Vasquez & Company LLP for Professional Auditing Services
On July 26, 2022, City Council approved a contract with Vasquez & Company LLP for professional auditing services. The initial term of the contrac t i s f r o m J u l y 2 5 , 2 0 2 2 through June 30, 2025 with authorization for the City Manager t o renew the contract for one additional two-year term. Compensation is not-to-exceed $214,724.
This year the auditors are requiring additional audit services be yond what was initially included in the contract. These additional services consist of an additional Single Audit of the Schedule of Expenditures of Federal Awards (SEFA). The ARPA grant is classified as a high-risk program which required them to perform additional procedures this year. In the prior year, we reported the $10M standard allowance amount on the SEFA, and as such, the audit procedures were very limited. This year we are c laiming the rest of the grant as revenue loss, which required them to perform more audit testing than in the prior year.
In addition, GASB 84-Fiduciary Activity brought about an additional audit, which is of the City’s Other Post-Employment Benefits (OPEB) plan. Vasquez & C ompany will now do an additional annual audit of the OPEB and the cost is included in this request.
This First Amendment to the contract increases the not-to-excee d amount by $17,000, which will cover these services. This brings the total not-to-exceed amount to $231,724.
Per the Simi Valley Municipal Code, the City Manager has authority to approve up to 10% or $100,000 of the original contract amount, whichever is less. This amount is within the City Manager’s authority to approve.
If you have any questions, please contact me at extension 6328.
Johanna Medrano Date Brian Paul Gabler Date
Deputy Administrative Services Director/ City Manager
Budget & Purchasing
Prepared by: Taylor Dacus, Senior Management Analyst
Attachments:
1) First Amendment to the Contract
2) Original Contract
3) Staff Report dated July 25, 2022, Agenda Item No. Consent (4) Carolyn
Johnson
Digitally signed by Carolyn
Johnson
Date: 2024.03.05 08:49:13
-08'00'Johanna M.
Medrano
Digitally signed by Johanna M.
Medrano
Date: 2024.03.05 10:43:40 -08'00'
Brian Paul Gabler
Digitally signed by Brian Paul
Gabler
Date: 2024.03.08 15:24:54 -08'00'
CITY OF SIMI VALLEY xx MEMORANDUM
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