REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Travis Hopkins, City Manager
VIA: Robert Torrez, Interim Chief Financial Officer
PREPARED BY: Zack Zithisakthanakul, Finance Manager
Subject:
title
Approve and authorize a three year Professional Services Contract with Davis Farr LLP in the amount of $224,820 to perform financial audit services
body
Statement of Issue:
City Council approval is requested to approve and authorize a three-year professional services contract with Davis Farr LLP in the amount of $224,820 to perform financial audit services.
Financial Impact:
Sufficient appropriation will be budgeted in the Finance Department ($62,440 in business unit 10035205) and West Orange County Water Board Fund ($12,500 in business unit 50885101) for year one (Fiscal Year 2024/25) of the contract. Fiscal Years 2025/26 ($62,440) and 2026/27 ($62,440) will be budgeted accordingly to cover the cost of year two and three of the audit services contract. Contract amount includes auditing service for three additional major programs.
Recommended Action:
recommendation
Approve and authorize the Mayor and City Clerk to execute the “Professional Services Contract between the City of Huntington Beach and Davis Farr LLP for Financial Audit Services.”
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Alternative Action(s):
Do not approve the recommended action and direct staff accordingly.
Analysis:
The City of Huntington Beach is required by Charter Section 616 to arrange for an independent audit of its financial statements each year. This contract is for a financial audit of all funds of the City’s reporting entity, a Single Audit Report of the City’s federal grant programs, an AB 2766 Audit relating to the City’s Air Quality Fund, and an audit of the West Orange County Water Board (WOCWB), a fiduciary fund of the City of Huntington Beach. The City Council will also receive a management letter that will detail recommendations to improve the City’s control and financial management. The audit is to be performed with auditing standards generally accepted in the United States and Government Auditing Standards issued by the Comptroller of the United States.
Staff sent out Request for Proposals (RFPs) for audit services to prospective independent auditors who had requested to be on a bidders’ list or were listed on the California Society of Municipal Officers’ website. In addition, the RFP was posted on the City’s website. Three proposals were received. Staff analyzed and reviewed all three proposals based on a variety of factors including the firm’s references, responsiveness to the RFP, qualifications in performing audits for governmental entities of similar size and scope, other relevant experience, and resumes of key staff to be assigned on the engagement.
Staff is recommending Davis Farr LLP as the most qualified firm to perform auditing services for the City of Huntington Beach given the size and complexity of the City’s finances including its enterprise funds and operations, fiduciary activities, federal grants and related programs, outstanding bond debt, and overall financial structure.
Below is a summary of the total base fee for the three years:
* Cost proposals include the audit of four major federal grant programs in total.
The following is a summary of Davis Farr’s cost proposal and the accounts in which the amounts are proposed to be charged:
|
Account |
Year 1 |
Year 2 |
Year 3 |
Total* |
|
Finance Department (10035205.69365) |
$62,440.00 |
$62,440.00 |
$62,440.00 |
$187,320.00 |
|
West Orange County Water Board (50885101.69345) |
$12,500.00 |
$12,500.00 |
$12,500.00 |
$ 37,500.00 |
|
Total |
$74,940.00 |
$74,940.00 |
$74,940.00 |
$224,820.00 |
Environmental Status:
Not applicable.
Strategic Plan Goal:
Choose an item.
Strengthen Economic and Financial Sustainability
Attachment(s):
1. Professional Service Agreement with Davis Farr LLP to perform an audit of all funds of the City’s reporting entity
2. Rating Sheet
3. Power Point Presentation - Audit Services