Title
Recommendation to Authorize the City Manager to Execute a Professional Services Agreement between the City and Vavrinek, Trine, Day and Co., LLP (VTD) for Two Years with Three - One Year Extensions for a Total Amount Not to Exceed $703,460 for Independent Auditing Services. (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
From: John A. Russo, City Manager
Re: Recommendation to Authorize the City Manager to Execute a Professional Services Agreement between the City and Vavrinek, Trine, Day and Co., LLP in an amount not to exceed $703,460 for Independent Auditing Services (Finance 2410)
BACKGROUND
Maze & Associates Inc. (Maze), the City's current independent auditors have been the City's Independent Auditors for 24 consecutive years. They have just completed the most recent three-year audit engagement with an additional two-year extension. Although the City and Maze 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 November 2014, staff issued a Request for Proposal for audit services circulated to over 100 regional firms in California with experience auditing municipal governments. Eight proposals were received and evaluated by staff 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, the firm's approach to the audit and review of the City's financial statements, and the results obtained from reference checks of their nearby municipal clients.
After a thorough review of the proposals, three firms were invited to oral interviews in December, conducted by City Finance Department staff and the City Auditor, Kevin Kearney. Based upon the results of these interviews as well as proposed pricing, City Auditor Kevin Kearney and staff are recommending the selection of Vavrinek, Trine, Day and Company, LLP (VTD) for the fiscal years ending June 30, 2015 and June 30, 2016 with an option for three additional one-year extensions through the fiscal year ending June 30, 2019.
VTD places within the top 90 public accounting firms in the United States, servicing over 300 governmental agencies in California. VTD employs over 200 professionals in seven offices located throughout California. In addition, its Bay Area municipal clients provided positive references related to the quality of their work and the experience and professionalism of their staff.
FINANCIAL IMPACT
The current annual cost of the auditing services being provided is $171,000. The price being proposed by VTD is as follows:
Fees for these services are charged 85% to the General Fund, where the majority of the work occurs, and 15% to other funds. The net impact to the General Fund would be a savings of $32,725 over a five year period, compared to previous fees charged by Maze and Associates.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
While the Muni Code is silent on this issue, the Charter states that the elected auditor recommends the selection of an independent audit firm and the 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
Authorize the City Manager to execute a Professional Services Agreement between the City and Vavrinek, Trine, Day and Co., LLP for two years with three - one year extensions for a total amount not to exceed $703,460 for independent auditing services.
Respectfully submitted,
Juelle-Ann Boyer, Interim Finance Director
By,
Brad Farmer, Finance Supervisor
Exhibit:
1. VTD Consultant Agreement