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HomeMy WebLinkAbout16-Finance .. ORIGINAL 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 ~~L 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: ~. ;}.ll()~~7b Agenda Item No. JJ /!JjbS lID CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION --------------------------------------------------------------------.-.------------- 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 $56,880. Conrad and Associates proposed costs for the two-year extension appear to be reasonable. With this two-year contract extension, Conrad and Associates will audit the City for a total of seven (7) years, which is the same length of time as the previous audit firm contract. After this two-year extension the City will issue a new RFP in conjunction with the Agency and Water Department for audit services Recommendation: Adopt Resolution. .' ~ 1 2 3 4 5 6 7 8 9 10 11 12 13 RESOLUTION NO.~ (Q)JP 1f RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXTENSIOJ'l OF THE AGREEMENT BETWEEN THE CITY OF SAN BERNARDINO AND CONRAD AND ASSOCIATES, L.L.P. FOR A TWO YEAR PERIOD, FY 04-05 AND FY 0$-06, FOR THE PROVISION OF FINANCIAL AUDITING SERVICES. i BE IT RESOLVED BY THE MAYOR ANi/COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: " , I SECTION 1. The Mayor and the City of ~ ino is hereby authorized and I I , , 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 ! 1 14 15 16 17 18 19 1// 20 III / passage of this resolution. III 21 11/ 22 III I / l 23 11/ 24 III 25 26 1// 27 III 28 , i 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 , hOOS, by the following vote, to wit: AYES /INAYS 1 2 3 4 5 6 on the day of 7 8 9 10 LONGVILLE 11 12 13 14 15 16 17 18 19 20 21 22 23 Council Members: ESTRADA MCGINNIS DERRY KELLEY / 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 27 By: 28 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 .' 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. -" .' '. 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. /7..,. kLd-/' 1/ / ht-4.....f, , V ...~-I- - Michael A. Harrison, C.P.A. Partner MAH:dac Enclosure Accepted: CITY OF SAN BERNARDINO By: Title: Date: ,,' r 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 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. III III III III 22 III 23 III 24 11/ 25 III 26 27 11/ 28 " . , 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 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 - 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 26 ~MIIf~ 27 ByJ!!::i~tJ4oIttt 28 jn..A'j~ -0 ~ ~.