HomeMy WebLinkAboutItem 1b: Agreement with Caporicci & Larson for ARA Auditing ServicesDate: May 18, 2010
To: Chairperson and Agency Board
STAFF REPORT
Arcadia Redevelopment Agency
From: Hue C. Quach, Administrative Services Director
Shannon Huang, Financial Services Manager /City Treasurer
Subject: Authorize the Executive Director to enter into a Professional Services
Agreement in the amount of $6,770 with Caporicci & Larson for the
Agency's financial auditing services.
Recommendation: Approve
SUMMARY
In February of 2005, staff solicited proposals from qualified certified public accounting
firms to audit the City's financial statements for the fiscal year ending June 30, 2005
through June 30, 2009. Caporicci & Larson was selected and had provided the
auditing services to the City and the Agency for the past five fiscal years. Staff felt it is
prudent to once again solicit proposals from qualified certified public accountant firms
for the audit of the Agency's financial statements for the fiscal year ending June 30,
2010.
After an extensive review of proposals from nine auditing firms, Staff recommends
extending the agreement with Caporicci & Larson for fiscal year 2009 -10 with the option
to renew for four subsequent fiscal years.
DISCUSSION
In March 2010, staff sent a Request for proposal (RFP) to qualified audit firms and
solicited proposals for the financial auditing services for fiscal year ending June 30,
2010. The scope of the City's and the Agency's auditing services include:
• A financial audit of the basic financial statements of all funds of the City of
Arcadia in accordance with auditing standards generally accepted in the United
States of America and Government Auditing Standards, issued by the
Comptroller of the United States.
• A financial and compliance audit of the Arcadia Redevelopment Agency in
compliance with the Guidelines for Compliance Audits of California
Redevelopment Agencies, issued by the State Controller.
1
• A single audit on the expenditures of federal grants in accordance with U.S.
Office of Management and Budget (OMB) Circular A -133.
• Preparation or assist in preparation of the City and the Agency's annual financial
statements including the City's Comprehensive Annual Financial Report (CAFR),
the Agency's Audited Financial Statement, an Audited Financial Report for the
Arcadia Transit and Financial Transactions Reports for the State Controller.
• Agreed -upon auditing procedures pertaining to the City's GANN Limit
(Appropriations Limit).
• A report in writing to the City Council for any control deficiencies found during the
audit that are considered significant deficiencies and /or material weaknesses
based on the standards and guideline established by Statement on Auditing
Standards (SAS) No. 115, Communicating Internal Control Related Matters
Identified in an Audit.
• Communicate to the City Council matters related to the financial statement audit,
in the auditor's professional judgment, significant and relevant to the governing
body, according to the standards and guideline established by Statement on
Auditing Standard (SAS) No. 114, The Auditor's Communication With Those
Charged With Governance
• The audit firm may be consulted throughout the year as an information resource
and may be asked to provide guidance on implementing Federal and State
regulations as they may affect local government accounting.
There were nine auditing firms that responded to the RFP. Staff reviewed and
evaluated each firm's proposal based on technical qualifications individually using the
following criteria:
SELECTION CRITERIA
1 Capability of handling all aspects of the engagement, provide ongoing 35%
support, technical assistance, and continuity of staff throughout the year.
2 Professional qualifications of the key members of the engagement team 30%
and the firm.
3 Knowledge, experience and approach on Government Audits and Laws. 15%
4 Clearly defined schedule of the audit engagement plan and completion 15%
dates for key parts of the audit
5 Thoroughness of the auditor's proposed scope of services 5%
TOTAL
WEIGHT
100%
2
All nine auditing firms would satisfy the City /Agency's auditing and financial
responsibilities. They all appear to have the professional qualification and experience
on government audits and laws. Staff then review the costs proposed by the firms and
listed the five -year total and first year costs in the table below:
AUDITING FIRMS
Five -year
costs
First -year
costs
1 ! Caporicci & Larson, CPA $189,600 $37,600
2 Moss, Levy & Hartzheim, LLP $192,375 $38,475
3 Lance, Soli & Lunghard, LLP $212,259 $41,694
4 Rogers, Anderson, Malody & Scott $214,300 $42,200
5 Diehl, Evans & Company, LLP $220,370 $42,650
6 Brown Armstrong Accountancy Corp. $226,500 $45,300
7 Mayer, Hoffman & McCann P.C. $233,530 $44,900
8 Vasquez & Company LLP $248,654 $45,000
9 Vavrinek, Trine, Day & Co., LLP $248,736 $47,985
Staff recommends extending the agreement with Caporicci & Larson which is the lowest
bidder in this RFP process. The firm has met all the auditing and reporting requirements
during the past five years and the staff has not experienced any problems working with
them. Furthermore, with the assistance from Caporicci & Larson, the City's
Comprehensive Annual Financial Report has received a Certificate of Achievement for
Excellence in Financial Reporting from the Government Finance Officers Association
(GFOA) for the fiscal year ended June 30, 2008. Staff has submitted the City's FY2008-
09 CAFR for the award again and is waiting for the result from GFOA.
Caporicci & Larson has provided auditing and accounting services to numerous
governmental agencies in California since 1989. It has offices located in Irvine, Century
City, San Diego, San Jose, Walnut Creek, San Francisco, and Hong Kong with 165
professional staff members. The Irvine office, which has 40 professional staff, will
perform the requested services. The firm proposes a new engagement team with a new
engagement partner, a new auditing manager and new senior auditing staff, so that a
"fresh set of eyes" will be applied to the City's financial operation. The previous
engagement partner will serve as technical partner, and this will allow for a smooth
transition and reduce any disruptions.
FISCAL IMPACT
Caporicci and Larson has reduced the audit fees, and the new agreement will result in a
total saving of $8,070 for fiscal year 2009 -10 for the City and the Redevelopment
Agency. Funds for the annual auditing services are included in the budget.
3
RECOMMENDATION
It is recommended the City Council:
Authorize the Executive Director to enter into a Professional Services Agreement
in the amount of $6,770 with Caporicci & Larson for the Agency's financial
auditing services.
Approved: . ?'a+ —�
Donald Penman, City Manager
4