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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From: Barbara Pachon, Finance
Director
Subject: Financial Audit Services for
the City of San Bernardino for Fiscal
Years 2004-2005 and 2005.2006.
Dept: Finance
Date: 3/28/05
Synopsis of Previous Council Action:
June 19, 2000
Resolution 2000-184 awarding Conrad and Associates a
three year agreement with two (2) one-year extensions for
audit services for Fiscal years 1999-2000 to 2003-2004.
Recommended motion:
Adopt Resolution
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Contact person: Barbara Pachon, Director of Finance
Phone: 5242
Supporting data attached: Staff Report,
Ward: All
FUNDING REQUIREMENTS: Amount: $55.760 FY 04-05
$56,880 FY 05-06
Source: 001-092-5502
Finance:~4w(i4..
Council Notes:
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Agenda Item No.
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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
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STAFF REPORT
Subiect:
Financial audit services for the City of San Bernardino for Fiscal Years 2004-2005 and
2005-2006.
Backl!found:
In December 1992, for the first time, the Agency and the City jointly issued a Request for Proposals
(RFP) for financial audit services. The Agency and the City agreed to ajoint RFP to seek the same
audit firm for both entities for consistency and coordination concerning the Single Audit. As the four
(4) proposals received were reviewed, several factors were taken into consideration including:
experience with cities and redevelopment agencies; ability to meet deadlines; and, overall
qualifications of the firm and of the firm's staff members assigned to the audit. These factors were
taken into consideration before the overall cost of the audit was considered. Based upon interviews
and staff recommendations, the City and Commission approved a three (3) year audit service
agreement with Rogers, Anderson, Malody & Scott ("RAMS") at a cost of $31 ,500 per year for the
City.
On April 15, 1996, the City and Commission again approved a three (3) year agreement with RAMS
for City and Agency financial audit services for the fiscal years 1995-96, 1996-97 and 1997-98. The
cost for audit services was $38,225 per year for the City. On July 6, 1999, the City and Commission
approved a one (1) year extension with RAMS for the fiscal year ending June 30, 1999 at a cost of
$38,225 to the City bringing the total contract for audit services to seven (7) years with RAMS. It
was agreed that a RFP would be issued jointly in the following year for audit services for the City,
the Agency and the Water Department.
For the five-year period beginning with fiscal year 1999-2000, the Agency, the City and the Water
Department issued ajoint RFP for audit services. The RFP indicated that the Agency, the City and
the Water Department were interested in joint proposals for up to a five (5) year period. Each entity
could select a different audit firm during this process but the preference was to have the same audit
firm for all three entities if possible. An RFP was sent to ten (10) audit firms, the Chamber of
Commerce, and was advertised in the Sun Newspaper and on the City's Web site.
All proposals received were reviewed by the City, the Water Department, and the Agency taking into
consideration the firm's experience with cities, redevelopment agencies, and water departments.
Also considered were their ability to meet deadlines, their professional ability to guide and assist
staff with implementation in Government Accounting Standards Board major changes in accounting
procedures, the firm's overall qualifications and professional strengths, and the qualifications of the
firm's staff members assigned to the audit. Overall cost of the proposals was a factor, but not the
first consideration. After the initial review, three (3) firms were selected to be interviewed:
Moreland & Associates; Rogers, Anderson, Malody & Scott; and Conrad & Associates. Jointly,
based on the criteria mentioned above, the City, the Agency and the Water Department interviewed
each firm and jointly agreed to recommend that a three-year agreement be entered into with Conrad
& Associates, with the ability to enter into two (2) one-year extensions.
Current Issue:
The five (5) year agreement with Conrad & Associates has expired, and the time has come to solicit
an RFP or to extend the agreement with Conrad & Associates. Recently, Barbara Pachon, City
Director of Finance; Barbara Lindseth, Agency Administrative Services Director; and David
Erickson, Water's Administration and Finance Director discussed the two options. It was
determined to request a two-year extension with Conrad and Associates, with the intention of issuing
an RFP for audit services at the end of the proposed two (2) year extension period. From the City's
stand point there was concern with possibly changing auditors at this time because of the State's
budget crisis and the different items the City is involved with (triple-flip, VLF Loan to State, Pension
issues, etc.). From the Agency's stand point, the audit services of Conrad & Associates have been
very efficient and timely, especially since the Conrad staff members assigned to the Agency have
remained constant, so there is no retraining of auditors each year. Conrad & Associates have also
been of great assistance with the major change to the audit format to reflect Governmental
Accounting Standards Board Statement 34 requirements. Based upon all the concerns, the City
solicited a two (2) year proposal from Conrad & Associates. The total audit costs for all three
entities for the year ended June 30, 2005 will be $133,990 which is about a 2% increase over the
current contract costs for the year ended June 30, 2004. For the year ended June 30, 2006 the cost
will be $136,680 which is about 2% higher than June 30, 2005 audit costs.
Fiscal Impact:
For the current contract, for the year ended June 30, 2004, the City paid $54,680 for audit services.
The City's share of the costs of audit services for fiscal year ending June 30, 2005 will be $55,760,
and the cost of audit services for fiscal year ending June 30, 2006 will be $56,880. Conrad and
Associates proposed costs for the two-year extension appear to be reasonable. With this two-year
contract extension, Conrad and Associates will audit the City for a total of seven (7) years, which
is the same length of time as the previous audit firm contract. After this two-year extension the City
will issue a new RFP in conjunction with the Agency and Water Department for audit services
Recommendation:
Adopt Resolution.
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RESOLUTION NO.~ (Q)JP 1f
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AUTHORIZING THE EXTENSIOJ'l OF THE AGREEMENT
BETWEEN THE CITY OF SAN BERNARDINO AND CONRAD AND ASSOCIATES,
L.L.P. FOR A TWO YEAR PERIOD, FY 04-05 AND FY 0$-06, FOR THE PROVISION
OF FINANCIAL AUDITING SERVICES.
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BE IT RESOLVED BY THE MAYOR ANi/COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO AS FOLLOWS:
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SECTION 1. The Mayor and the City of ~ ino is hereby authorized and
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directed to execute on behalf of said City a,( a rieme ith Conrad and Associates,
L.L.P. relating to financial auditing service j '~o of 'i h is attached hereto as Exhibit
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passage of this resolution.
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AUTHORIZING THE EXTENSION OF THE AGREEMENT
BETWEEN THE CITY OF SAN BERNARDINO ~D CONRAD AND ASSOCIATES
L.L.P. FOR A TWO YEAR PERIOD, FY 04-05 AJlfD FY 05-06, FOR THE PROVISION
OF FINANCIAL AUDITING SERVICES. '
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
and Common Council of the City of San Bern~~no at a meeting thereof, held
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hOOS, by the following vote, to wit:
AYES /INAYS
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on the
day of
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Council Members:
ESTRADA
MCGINNIS
DERRY
KELLEY
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MCCAMMACK
ABSTAIN
ABSENT
Rachel G. Clark, City Clerk
2005.
The foregoing resolution is hereby approved this
Approved as to
24 Form and legal content:
25 JAMES F. PENMAN,
26 City Attorney
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By:
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day of
Judith Valles, Mayor
City of San Bernardino
CONRAD AND
ASSOCIATES, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
2301 DUPONT DRM, SUITE 200
IRVINE, CALIFORNIA 92612
1949) 474-2020
Fax 1949) 263-5520
January 24, 2005
Barbara Pachon, Finance Director
City of San Bernardino
300 North "D" Street
San Bernardino, California 92418
Dear Ms. Pachon:
Conrad and Associates, L.L.P. is desirous of an ongoing relationship in serving as independent
auditors for the City of San Bernardino (City), the Economic Development Agency (EDA) and
the Municipal Water Department (Water). For each of the years that we have served the City of
San Bernardino, we have provided experienced staffing and continuity of all key personnel. As
the City's independent auditors, we have provided constructive comments relating to
improvements in internal control and compliance with certain laws and regulations.
Weare proud of the excellent service our finn has provided to the City of San Bernardino, the
Economic Development Agency and the Municipal Water Department. We have a proven track
record in meeting deadlines. We have assisted the City in preparing its Comprehensive Annual
Financial Report (CAFR) and the 2004 CAFR was recently submitted under both the State and
National award programs. We have been flexible in our audit schedules to accommodate the
requests of the City, EDA and Water. We have made ourselves available (at no extra charge)
throughout the years the answer questions raised by Finance Staff that come up from time to
time.
As auditors of the City, EDA and Water, we were contracted to perfonn certain engagements in
addition to our audit contract. We were contracted to perfonn agreed-upon procedures of the
concessionaire operations at the City Soccer Complex. We were contracted to perfonn agreed-
upon procedures regarding the operations at the City's Pioneer Memorial Cemetery. We were
contracted to perfonn agreed-upon procedures of the management agreement between the EDA
and American Golf, Inc. in regard to the Shandin Hills Country Club. We were contracted to
perfonn agreed-upon procedures regarding the Lease Agreement between the City and San
Bernardino Stampede,. Inc. (San Bernardino 66ers ). We have also been contracted to prepare
certain state controller's reports.
We plan to provide continuity of staffing. For the upcoming audit tenn, Conrad and Associates,
L.L.P. staff will be available to work with the fmance staff of the City, EDA and Water in areas
of technical accounting pronouncements, fringe benefits taxation issues as well as compliance
and internal control issues. Weare available for telephone consultation on various financial
matters throughout the year. All professional consultation throughout the year has been included
in the fixed fees.
MEMBERS OF ^ICPA ^ND C^L1FORNIA SOCIETY OF CERTIFIED PUBLIC ~COUNT~TS
MEMBER OF ~ERICN< INSTITUTE OF CERTIFIED PUBLIC ~COUNT~TS PRIV^TE CQMP^NIES PAACTICE SECTION
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Barbara Pachon, Finance Director
City of San Bernardino
Page two
We are proposing a two year extension to our contract for fiscal years ended June 30, 2005 and June
30, 2006 as follows:
DescriDtion
Estimated
Hours
Fiscal Year
Ended June 30
2005 2006
1. Audit of the City of San Bernardino,
Management Letter, GANN Limit Procedures,
A-B3 Single Audit of Federal Grant Programs,
ongoing GASB #34 procedures and preparation
of the fund financial statements
2. Financial and Compliance Audit of the
Economic Development Agency, Management
Letter, A-B3 Single Audit of Federal Grant
Programs, ongoing GASB #34 procedures and
preparation of the financial statements
3. Municipal Water Department Audit,
Management Letter, A-B3 Single Audit of
Federal Grant Programs, ongoing GASB #34
procedures and preparation of the fmancial
statements
660
$55,760 56,880
400
34,320 35,010
520
43,910 44,790
Hourly rates in effect for services which may be requested outside the scope of the fixed fee
engagement are as follows:
Classification
Hourly Rate
Fiscal Year Ended June 30
2005 2006
Partners
Senior Managers
Managers
Supervisors
Senior Auditors
Staff Accountants
$175
125
115
105
95
85
175
125
115
105
95
85
The City has insurance certificates on file for our firm and all such certificates will be maintained up
to date with each annual audit examination.
We value the City of San Bernardino, Economic Development Agency and the Municipal Water
Department as important clients of our firm and look forward to continuing our services for fiscal
years 2005-2006.
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Barbara Pachon, Finance Director
City of San Bernardino
Page three
If the foregoing terms meet with your understanding, you may sign and return the enclosed duplicate
of this letter. We will be pleased to execute a formal contract or contract extension for auditing
services.
Very truly yours,
CONRAD AND ASSOCIATES, L.L.P.
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1/ / ht-4.....f, , V ...~-I- -
Michael A. Harrison, C.P.A.
Partner
MAH:dac
Enclosure
Accepted:
CITY OF SAN BERNARDINO
By:
Title:
Date:
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RESOLUTION NO, 2005-76
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AUTHORIZING THE EXTENSION OF THE AGREEMENT
BETWEEN THE CITY OF SAN BERNARDINO AND CONRAD AND ASSOCIATES,
L.L.P. FOR A ONE YEAR PERIOD, FY 04-05, FOR THE PROVISION OF
FINANCIAL AUDITING SERVICES.
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO AS FOLLOWS:
SECTION I. The Mayor and the City of San Bernardino is hereby authorized and
directed to execute on behalf of said City an agreement with Conrad and Associates,
L.L.P. relating to financial auditing services, a copy of which is attached hereto as Exhibit
"A" and incorporated herein by reference.
SECTION 2. The authorization to execute the above referenced agreement is
rescinded if the parties to the agreement fail to execute it within sixty (60) days of the
passage of this resolution.
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RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AUTHORIZING THE EXTENSION OF THE AGREEMENT
BETWEEN THE CITY OF SAN BERNARDINO AND CONRAD AND ASSOCIATES
L.L.P. FOR A ONE YEAR PERIOD, FY 04-05, FOR THE PROVISION OF
FINANCIAL AUDITING SERVICES.
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
and Common Council of the City of San Bernardino at a joint regula:meeting thereof, held
on the 4th day of April
Council Members: AYES
ESTRADA X
LONGVILLE X
MCGINNIS X
DERRY X
KELLEY X
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JOHNSON -.-JL
MCCAMMACK X
, 2005, by the following vote, to wit:
NAYS
ABSTAIN ABSENT
~eW h. ClI~
Ra el G. Clark, City Clerk
The foregoing resolution is hereby approved tho ~\ A day of April
2005.
23 Approved as to
24 Form and legal content:
Gordon McGinnis, Mayor Pro Tern
City of San Bernardino
25 JAMES F. PENMAN,
City Attorney
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