Title
Recommendation to Award a Three-Year Contract to Maze & Associates Accountancy Corporation (Maze) for an Amount Not to Exceed $437,023, including Contingency, with the Option of Two One-Year Extensions, for a Total Five-Year Expenditure Not to Exceed $737,877, including Contingency, for Independent Auditing Services. (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
From: Elizabeth D. Warmerdam, Acting City Manager
Re: Recommendation to Award a Three-Year Contract to Maze & Associates Accountancy Corporation (Maze) for an Amount Not to Exceed $437,023, including Contingency, with the Option of Two One-Year Extensions, for a Total Five-Year Expenditure Not to Exceed $737,877, including Contingency, for Independent Auditing Services
BACKGROUND
Vavrinek, Trine, Day and Co., LLP (VTD), the City’s current independent auditors have been the City’s Independent Auditors for the past three years. They have just completed the most recent two-year audit engagement with an additional one-year extension. Although the City and VTD have no disagreements over the audits performed for the City, it is good practice to periodically re-bid these types of contracts to provide fresh perspective on the City’s financial statements and practices.
DISCUSSION
In March 2018, staff issued a Request for Proposal for audit services, which was circulated to 20 firms in California with experience in auditing municipal governments. Seven proposals were received and evaluated by a selection panel consisting of City staff, an external consultant and the City Auditor Kevin Kearney with emphasis in the areas of comparable governmental auditing experience, the quality of the firm’s personnel to be assigned to the City’s engagement, the adequacy of the proposed staffing plan, and the firm’s approach to the audit and review of the City’s financial statements.
After a thorough review of the proposals, three firms were invited to oral interviews in April 2018, conducted by the selection panel. Based upon the results of these interviews as well as proposed pricing, City Auditor Kevin Kearney and staff are recommending the selection of Maze & Associates (Maze) for the Fiscal Years ending June 30, 2018, June 30, 2019 and June 30, 2020 with an option for two additional one-year extensions through the Fiscal Year ending June 30, 2022.
Maze have been independent auditors for the City in the past and are very familiar with the City and its operations. Maze is a regional firm located in Pleasant Hill servicing about 100 municipal agencies in California. They perform 30-40 audits of Federal Awards on an annual basis.
Staff and the City Auditor recommend awarding a contract to Maze in the amount of $437,023, which includes a 10% contingency which would cover additional work that may arise during the scope and course of the contract. The contract is attached as Exhibit 1. The contract also permits two one-year extensions and up to $737,877 total compensation for the contract including a 10% contingency, at the sole discretion of the Finance Director with consultation with the elected City Auditor, based upon satisfactory performance of all aspects of the contract and subject to budgetary approval. The consultant is not guaranteed any of the contingency and its use will be at the sole discretion of the Finance Director for work not originally anticipated in the scope of services.
FINANCIAL IMPACT
The Fiscal Year 2016-17 annual cost of the auditing services provided was $147,875. The price being proposed under the new contract with a 10% contingency is as follows:
|
Fiscal Year: |
Contract Amount |
|
FY 2017-18 |
$140,971 |
|
FY 2018-19 |
$145,625 |
|
FY 2019-20 |
$150,427 |
|
FY 2020-21 (optional) |
$150,427 |
|
FY 2021-22 (optional) |
$150,427 |
|
Total |
$737,877 |
Fees for these services are charged 84% to the General Fund, where the majority of the work occurs, and are further allocated to all programs in the City through the cost allocation plan. The remaining 16% are charged directly to other funds.
Sufficient budget for the contract is provided within the General Fund Finance Department and other funds. Future year’s funding remains at Council’s discretion through the biennial budget process.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
While the Municipal Code is silent on this issue, the Charter states that the elected auditor recommends the selection of an independent audit firm and the City Council contracts for the services of said firm.
ENVIRONMENTAL REVIEW
This activity is not a project and is exempt from the California Environmental Quality Act (CEQA) pursuant to section 15378 (b)(4) of the CEQA Guidelines, because it involves governmental fiscal activities, which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
RECOMMENDATION
Award a three-year contract, to Maze for an amount not to exceed $437,023, including contingency, with the option of two one-year extensions, for a total five-year expenditure not to exceed $737,877, including contingency, for independent auditing services.
Respectfully submitted,
Elena Adair, Finance Director
Exhibits:
1. Professional Services Agreement
2. Proposed Fee Schedule