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HomeMy WebLinkAboutH- 4 Audit Services for the upcoming four years filli;1.11 y � q The City of Azusa • "4141mo Finance Department • 213 E. Foothill Blvd. • P.O. Box 1395 • Azusa, CA 91702-1395 Tel : (626) 812-5203 ■ FAX (626)334-6358 AGENDA ITEM TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL ,, FROM: GEOFF CRAIG, DIRECTOR OF FINANC ,4 I VIA: RICK COLE, CITY MANAGER �c DATE: JUNE 20, 1998 SUBJECT: AUDIT SERVICES FOR THE UPCOMING FOUR YEARS Background The City has completed the interview phase and evaluated the qualifications of the four firms that submitted proposals to provide auditing services for four (4) years. This report recommends that Council appoint the firm of Lance, Soll & Lunghard Certified Public Accountants. Findings In March, staff prepared and distributed to 14 firms Requests for Proposals (RFPs) to provide auditing services at firm prices for four years. The firms ranged in size from major international firms to local sole practitioners. Ten firms declined or did not respond and four firms submitted proposals. A committee comprised of the Accounting Services Supervisor, Senior Accountant, Accountant and an Account Specialist III reviewed the proposals and conducted oral interviews. Councilman Stanford observed two interviews. The interviews consisted of 11 questions and each firm had 45 minutes in which to present its staffing, professional development, expertise in specialized accounting issues and policy towards assistance to City staff. The maximum score per question was five points. A perfect score would have been 55. The proposals and the rating sheets are available for perusal in the Finance Department. d)/diala' 7/6Or Firm Average Score Quotation Conrad & Associates, L.L.P. 50.3 $ 56,985 Lance, Soil & Lunghard 47.3 51,252 Vasquez Farukhi & Co. 36.8 40,000 Diehl, Evans & Co., L.L.P. 35.3 67,785 The following is a brief discussion of the oral interviews: Diehl, Evans & Co. has vast experience in redevelopment agency accounting but less in Community Development Block Grant accounting. This firm did not have a clear implementation plan for accounting pronouncement GASB 31 (an important and significant change to cash and investments reporting). The firm partners are active in professional organizations such as the American Institute of Certified Public Accountants (AICPA), the Governmental Finance Officers Association (GFOA) and the California Society of Municipal Finance Officers (CSMFO). This firm said it will provide limited client assistance; it expects City staff to prepare all pre-audit schedules and it carefully limits the scope of its work to the audit. This would not be very workable for Azusa. Vasquez Farukhi & Co. have less governmental auditing experience than any of the other three firms. This firm was unprepared to discuss an implementation plan for GASB 31. Only the senior partner gets professional development through active participation in organizations such as AICPA, GFOA and CSMFO. The firm relies on sub-contracting with other firms and consultants for special expertise. For example, the firm has little first-hand electric utility experience and, for the Azusa audit, proposed to contract with a consultant. It is questionable whether this firm has adequate staff to serve the City of Azusa. Lance, Soil & Lunghard has 20 active local government clients. The firm has extensive experience with redevelopment accounting as well as CDBG accounting. All three partners at the presentation are active in AICPA, GFOA and CSMFO and serve on various committees in those organizations. This firm stated that it will assist City staff in the preparation of reports and schedules for the audit. While this firm earned a slightly lower average total score than Conrad & Associates, a fresh viewpoint may be beneficial to the City. Conrad & Associates has 34 active local government clients. Conrad's practice is to assist clients with limited resources like Azusa; the employees help prepare schedules and reports, and schedule their time in the field to accommodate City staff requirements. Both firm partners are very active in AICPA, GFOA and CSMFO; Mr. Al-Imam presented the annual accounting update to members of CSMFO at the 1998 annual conference. At the interview he presented a clear plan to implement GASB 31. Conrad does not charge for services such as phone consultations and special meetings, while most professional firms charge for such "extra" services. This effectively negates the difference between the cost of the two top firms. Finance has planned fiscal year 1998-99 to be the last one to be accounted for on the City's old computer system. Changing auditors will necessitate a training period during which the new firm will learn Azusa's contracts, policies, work load, etc. However, by making the change now, the new firm will now have one year to learn these things before having to learn the City's new software as well. Recommendation Staff recommends that the Council: 1. Appoint the firm of Lance, Soll & Lunghard Certified Public Accountants for audit services for the next four years, and 2. Authorize the Mayor to sign the four year contract. Respectfully submitted, Steve Brisco Accounting Services Supervisor SLB/ts P:\COUNCIL AIIDSVCV2.WPD