For City Council Meeting [August 10, 2021]
TO: Honorable Mayor and City Council
APPROVAL: Marcus Fuller, City Manager
FROM: Stephen Erlandson, Deputy City Manager
Title
Request City Council to Approve a Three-Year Professional Services Agreement for Independent Audit Services to Lance, Soll & Lunghard LLP in the Amount of $217,534 with Optional Extension of Two Years.
(ACTION)
Body
BACKGROUND:
Each year the City requires an independent audit of its financial records. Recently, the City used the services of Teaman, Ramirez and Smith, Inc. (TRS) to perform the annual audit of the City’s financial statements for the last three Fiscal Years 2017-2018, 2018-2019, and 2019-2020. The contract with TRS has ended, and staff initiated a Request for Proposals (RFP) process in March 2021 to select a new auditing firm commencing with the Fiscal Year 2020-2021 annual audit.
ANALYSIS/DISCUSSION:
The City released RFP No. 21-034 on March 11, 2021. The City published the Notice Inviting Proposals on the City of Rialto’s website and the PlanetBids website. The City received five proposals in response to the RFP from the following Firms (in alphabetical order):
1. Badawi & Associates
2. Lance, Soll & Lunghard
3. Moss, Levy & Hartzheim
4. Teaman, Ramirez and Smith, Inc.
5. Van Lant & Fankhanel
Finance Department staff evaluated the proposals and rated the firms based on technical qualifications, experience, customer service focus, price, and references from similar engagements, and concluded that all of the applicants were qualified firms and eligible to be included in the City’s panel interview process for the engagement. However, prior to the commencement of the City’s interview process, the City’s prior auditing firm TRS withdrew its proposal. The remaining four firms were interviewed by the Economic Development Committee (Mayor and Mayor Pro Tem), the City Manager and Deputy City Manager on August 3, 2021.
The panel reviewed the proposals based on the following criteria:
• Proposer’s understanding of the RFP and ability to meet the scope of work.
• Proposer’s ability to meet City deadlines for transition from the current Auditors.
• Proposer’s ability to provide pre-audit and post-audit support.
• Proposer’s fees.
Based on its evaluation, the panel recommends the City Council select the auditing firm of Lance, Soll & Lunghard (LSL) as the most responsive proposal, and concluded that LSL was the most knowledgeable, the best qualified and in possession of the greatest understanding of the most recent regulatory and industry changes. LSL staff members are involved with the California Society of Certified Public Accountants (CalCPA), Government Auditing and Accounting Committee (GAAC), and California Municipal Finance Officers Association (CSMFO). GAAC is involved in preparing position papers on governmental accounting matters. This expertise will benefit the City in its implementation of changes to reporting requirements.
The proposed total fee of $217,534 for the annual audit over a three year period proposed by LSL were generally consistent with fees proposed by the other auditing firms that ranged from $182,850 to $206,880 with LSL’s the highest fee. However, based on the panel’s determination that LSL is the most qualified firm, it is Staff’s recommendation that an agreement with LSL be awarded pursuant to RMC 2.48.440.
Staff recommends that the City Council approve the Professional Services Agreement with LSL for an initial three year term with a two-year renewal option based on satisfactory performance and approve a contract for the Fiscal Year 2020-2021, 2021-2022, and 2022-2023 annual audits in the total amount of $217,534. At the conclusion of the audit for the fiscal year ending June 30, 2023, the City Manager may exercise the option to extend based on satisfactory performance and direction given by the City Council at that time.
ENVIRONMENTAL IMPACT:
The request is not a “Project” as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a “Project” means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. According to Section 15378(b), a Project does not include: (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.
GENERAL PLAN CONSISTENCY:
The request is consistent with Guiding Principle 3A of the Rialto General Plan:
Our City government will lead by example, and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do business.
LEGAL REVIEW:
The City Attorney has reviewed and approved this staff report and contract.
FINANCIAL IMPACT:
Operating Budget Impact
Audit services are paid in the year subsequent to the year being audited. Therefore, the first budget year of the contract will be in fiscal year 2021-2022 for audit services related to the fiscal year ending June 30, 2021. Funds are budgeted and available in General Fund Account No. 010-500-2150-2011.
Capital Improvement Budget Impact
The proposed action will not affect the Capital Improvement Budget.
Licensing
Prior to execution of the Professional Service Agreement LSL shall submit a business license application and pay a Business License tax at the applicable rate, as well as Administration and State fees.
RECOMMENDATION:
Staff recommends that the City Council:
1. Approve a Professional Services Agreement with Lance, Soll & Lunghard, a Limited Partnership in the amount of $217,534 for an initial term of three years, with the option to renew for an additional two years based on satisfactory performance; and
2. Authorize the City Manager to execute all documents.