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Home My WebLink About06/07/2005, C7 - AWARD OF AUDIT SERVICES CONTRACT council Mm*D.x June 7,2005 j acjenaa nEpont CITY O F SAN LUIS OBISPO FROM: Bill Statler,Director of Finance & Information Technology Carolyn Dominguez, Finance Manager SUBJECT: AWARD OF AUDIT SERVICES CONTRACT CAO RECOMMENDATION Award the contract for auditing services to Glenn, Burdette, Phillips & Bryson, Certified Public Accountants (GBPB), for a term of three years with an option to renew for another three years.. DISCUSSION Background. On April 19, 2005, the Council authorized issuing a request for proposals (RFP) for auditing services. The RFP was posted on the City's website and forwarded directly to twelve California firms with experience in local government auditing. Five of those firms joined in a pre- proposal teleconference on May 3, 2005 to discuss the RFP. On May 11, the City received proposals from two central coast auditing firms: Moss, Levy & Hartzheim (MLH), with offices in Santa Maria; and GBPB (the City's auditors for the past ten years), with offices in San Luis Obispo. Why only two proposing firms? We followed-up with several firms as to why they did not submit a proposal. Based on their responses, there are two reasons: their workloads at this time and recognition that given the travel and lodging costs of staffing a remote engagement, their fees were unlikely to be competitive. Proposal Evaluation. An interdepartmental review team evaluated the proposals and rated the firms on experience, approach to completing the work, understanding of the workscope and proposed compensation. Both proposals were financially similar: on average over the three-year term for all services, GBPB proposed fees of$53,775 annually compared with $51,467 by MLH, a difference of only $2,308 (4%) per year. As reflected below, the difference is even narrower ($1,350) for the City's general audit services (including Gann limit and federal single audit act reports) versus those paid by special funds: Fee Pro osal Summa Funding Source:Three Year Annual . GBPB MLH Variance - General audit services 45,000 43,650 1,350 Transportation Development Act financial and compliance report 4,900 4,117 783 Whale Rock Commission financial report3,875 3,700 175 Total $53,775 $51,467 $2,308 On the other hand, there is no compelling reason to consider changing auditors at this time, especially in light of the excellent services provided by GBPB in the past at very competitive rates, and the significant City staff resources that would be required in changing auditors. Accordingly, it was the unanimous conclusion of the review team to award the contract to GBPB. C1 - ( Award of Audit Services Contract Page 2 CONCURRENCES The review team concurs with the CAO recommendation. Its members include: Sue Baasch, Senior Administrative Analyst, Utilities Carolyn Dominguez, Finance Manager Brigitte Elke, Customer Services Supervisor Betsy Kiser, Principal Administrative Analyst, Administration Debbie Malicoat, Accounting Supervisor Austin O'Dell, Transit Manager, Public Works Bill Statler, Director of Finance & Information Technology FISCAL IMPACT The fees for the three-year contract proposed by GBPB are as follows: 2004-05 2005-06 2006-07 City's basic financial statements and Gann limit compliance letter 29,000 29,000 29,000 Transportation Development Act financial and compliance report 4,900 4,900 4,900 Single Audit Act report 16,000 16,000 16,000 Whale Rock Commission financial report_ 3,875 3,875 3,875 Total $53,775 $53,775 1 $53,775 As reflected above, GBPB proposed level fees for each year, which reflect a 2.6% savings from their 2003-04 fees. The Preliminary 2005-07 Financial Plan includes adequate resources to fund audit services at this level. CONCLUSION Staff is very satisfied with the quality of service provided by our current auditor, but from time to time it is prudent to seek formal audit proposals in order to ensure competitive pricing and services. This process has confirmed that the City is receiving excellent service at a competitive rate. ALTERNATIVES Change audit fn-ms. Given the excellent service by GBPB in the past, their competitive fees and the increased staff workload in changing auditors, we do not recommend this option. ATTACHMENT Auditor Agreement AVAILABLE FOR REVIEW IN THE COUNCIL OFFICE Proposal for auditing services from Glenn, Burdette, Phillips & Bryson G:Audit Folders/Auditing Services RFP 2005/Contract Award 6-7-05 CAR c� - a AUDITOR AGREEMENT THIS AGREEMENT is made and entered into in the City of San Luis Obispo on June 7, 2005 by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, hereinafter referred to as City, and Glenn, Burdette, Phillips & Bryson, Certified Public Accountants, a Professional Corporation, hereinafter referred to as Auditor. WITNESSETH: WHEREAS,on April 20,2005,City requested proposals for auditing services per Specification No.90524. WHEREAS, pursuant to said request, Auditor submitted a proposal that was accepted by City for said auditing services. NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained,the parties hereto agree as follows: I. TERM. The term of this Agreement shall be from the date this Agreement is made and entered, as first written above,until acceptance or completion of said audit services. 2. INCORPORATION BY REFERENCE. City Specification No. 90524 and Auditor's proposal dated April 11,2005,are hereby incorporated in and made a part of this Agreement. 3. CITY'S OBLIGATIONS. For providing auditing services as specified in this Agreement, City will pay and Auditorsshall therefore compensation as stated in Auditor's proposal. 4. AUDITORS' OBLIGATIONS. For and in consideration of the payments and agreements hereinbefore mentioned to be made and performed by City, Auditor agrees with City to do everything required by this Agreement and the said specifications 5. AMENDMENTS. Any amendment, modification or variation from the terms of this Agreement shall be in writing and shall be effective only upon approval by the City Administrative Officer of the City. 6. COMPLETE AGREEMENT. This written Agreement, including all writings specifically incorporated herein by reference, shall constitute the complete agreement between the parties hereto. No oral agreement, understanding or representation not reduced to writing and specifically incorporated herein shall be of any force or effect, nor shall any such oral agreement, understanding or representation be binding upon the parties hereto. 7. NOTICE. All written notices to the parties hereto shall be sent by United States mail, postage prepaid by registered or certified mail addressed as follows: City City Clerk City of San Luis Obispo 990 Palm Street San Luis Obispo,CA 93401 Auditor Glenn,Burdette,Phillips&Bryson Certified Public Accountants A Professional Corporation 1150 Palm Street San Luis Obispo,CA 93401 8. AUTHORITY TO EXECUTE AGREEMENT. Both City and Auditor do covenant that each individual executing this agreement on behalf of each party is a person duly authorized and empowered to execute Agreements for such party. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year first above written. ATTEST: CITY OF SAN LUIS OBISPO By City Clerk Mayor APPROVED AS TO FORM: AUDITOR f By City omey