Loading...
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