TO:Andrew P. Powers, City Manager
FROM:Jaime Boscarino, Finance Director
DATE:April 9, 2024
SUBJECT: City External Financial Auditor Services Contract Amendment RECOMMENDATION:
1. Approve First Amendment to Contract No. 11747-2018 with Rogers, Anderson, Malody & Scott, LLP (RAMS) of San Bernardino, CA in the amount of $361,400 for Professional Financial Audit Services for a four-year extension to expire April 30, 2028, with a not-to-exceed amount of $924,190.
2. Authorize expenditure in the amount of $103,300 in FY 2024-25 as follows:
$96,300 ($81,300 for audit services and $15,000 for extra services) from A/C #001- 3110-612-5210 (General Fund Financial/Audit), $5,400 from A/C #001-4410-641- 5210 (General Fund Financial/Audit), and $1,600 from A/C #165-4630-644-5210 (Housing Successor Agency Fund Financial/Audit).
3. Authorize budget appropriation in the amount of $6,300 in FY 2024-25 from A/C #001-0000-311-1000 (General Fund – Fund Balance) to A/C #001-3110-612-5210 (General Fund Financial/Audit).
4. Find that this action is not a project as defined under section 15378(b)(5) of the California Environmental Quality Act.
FINANCIAL IMPACT:
$6,300 Increase to FY 2024-25 General Fund Budget. $6,300 increase to the Adopted FY 2024-25 General Fund Budget is requested to supplement the available budget, which covers FY 2023-24 extra audit services. The additional fiscal years will be requested during the upcoming biennial budget process.
BACKGROUND:
The City issues multiple audited financial statements and compliance reports annually to meet various federal, state, and other regulatory requirements, and also to report to City Council and the public on the City’s financial status. Auditing standards require the City’s external auditors to assess the financial statements,
City External Financial Auditor Services Contract Amendment April 9, 2024
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2 obtain reasonable assurance whether the financial statements prepared by management are “free of material misstatement”, and to report the results of the audit in the Independent Auditor’s Report.
The Finance Department issued a Request for Proposals (RFP) for audit services in December 2017 and RAMS was selected as the City’s external auditor due to their experience, qualifications, audit approach, and price. RAMS has consistently demonstrated their professional guidance, qualified staff, and fair pricing during the contract period expiring April 30, 2024.
DISCUSSION/ANALYSIS:
The RAMS contract provides the option to extend services for four additional years (Attachment #1). RAMS has successfully performed all related work and is familiar with the City’s processes, procedures, and all aspects related to the City’s various audits. In accordance with Assembly 1345, after five years a new audit partner must be assigned to provide a fresh perspective on reviewing the City’s financials.
In compliance, RAMS assigned a new audit partner to the City in January 2024, who will provide oversight of all audit work performed during the term of the extension. The amendment includes an annual fixed-fee escalation factor. Staff has reviewed the proposed increases and finds them reasonable and recommends extending the contract with RAMS as an efficient way to proceed to provide the City’s audit services. Table 1 provides a breakdown of the original contract, the amendment terms, and the total contract amounts.
Table 1: Summary of RAMS Contract and Amendment
The City has established the Audit Calendar presented in Table 2 to plan for the preparation of the FY 2023-24 financial reports. The calendar covers the interim and year-end audit fieldwork, completion and final review of the City’s financial statements, and delivery of the Auditor’s Opinion Letter. This timeline ensures that Original ContractFY 2023-24 Fees FY 2024-25 Fees FY 2025-26 Fees FY 2026-27 Fees Amendment Total Amended Contract Total
$310,000 54,600$ 54,600$ 56,200$ 57,900$ 223,300$ 533,300$ - 8,600 8,600 8,900 9,200 35,300 35,300
30,600 5,400 5,400 5,600 5,800 22,200 52,800
8,850 1,600 1,600 1,600 1,600 6,400 15,250
4,000 - - - - - 4,000
209,340 18,100 18,100 18,700 19,300 74,200 283,540Total Services Cost 562,790$ 88,300$ 88,300$ 91,000$ 93,800$ 361,400$ 924,190$ National Transit Database Audit (NTD) (every 10 years)
Extra/Additional Services
Description of Services:City Audit, including GANN, Management LetterSingle Audit (includes two programs)Conejo Open Space Conservancy Agency AuditHousing Successor Compliance Audit City External Financial Auditor Services Contract Amendment April 9, 2024
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2 the Annual Comprehensive Financial Report (ACFR) is published on time, the City’s year-end financial status is presented to City Council, and the submission deadline for the Government Finance Officers Association awards program is met.
Table 2: FY 2023-24 Year-End Audit Calendar
Interim Audit – Entrance Conference May 2024
Progress/Planning Conference June 2024
Year-End Fieldwork October 2024
Exit Conference – Draft Financials Completed October 2024 Auditor’s Comments on Draft Financials October - November 2024 Final Auditor’s Review (Opinion Letter Dated) December 2024 ACFR Submitted for Award Program by City December 2024
COUNCIL GOAL COMPLIANCE:
Meets the following City Council goal:
B. Provide municipal government leadership which is open and responsive to residents, and is characterized by ethical behavior, stability, promoting public trust, transparency, confidence in the future, and cooperative interaction among civic leaders, residents, business representatives, and staff, while recognizing and respecting legitimate differences of opinion on critical issues facing the City.
PREPARED BY: Elisa Magaña, Accounting Manager
Attachment:
Attachment #1 – First Amendment to Agreement with RAMS
FIN: 310-10\H:\COMMON\Council\2024\Accounting\040924 Audit Services Amendment Staff Report.docx