SR-040808-1B~;tYO, City Council Report
Santa Monica
City Council Meeting: April 8, 2008
Agenda Item: ~-g
To: Mayor and City Council
From: Carol Swindell, Director of Finance
Subject: Auditing Services for the City of Santa Monica
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a professional services agreement with the Conrad Government Services
Division of Mayer Hoffman McCann PC ("MHM") for auditing services for an amount not
to exceed- $600,000 for afive-year term.
Executive Summary
The City of Santa Monica engages an independent auditing firm to audit its financial
statements in accordance with generally accepted accounting principles and to perform
agreed-upon procedures in accordance with attestation standards established by the
American Institute of Certified Public Accountants. MHM was selected through a
competitive process to provide these services for afive-year term.
Discussion
The City engages an independent auditing firm to perform an examination of the City's
basic financial statements as well as an examination of the City's Redevelopment
Agency financial statements, the City's Big Blue Bus Fund financial statements, the
City's Air Quality- Improvement Program, and the City's Schedule of Expenditures of
Federal Awards. The auditing firm also performs agreed-upon procedures to test and
report on the City's GANN appropriation limit calculation. The audit firm is expected to
make immediate, written reports of irregularities and illegal .acts and is expected to
report on the City's internal control over financial reporting and report to management
any observations concerning significant deficiencies or material weaknesses.
1
Staff issued a request for proposal for auditing services in January 2008. Five firms
submitted proposals. A selection committee evaluated the proposals based upon each
firm's local government experience, the quality of the firm's professional personnel, the
firm's quality control standards, audit approach and fixed cost for the annual audit
services. As a result of this evaluation process, the selection committee recommends
that the MHM be retained to provide audit services for the City of Santa Monica in an
amount not to exceed $600,000 for the audits conducted for the fiscal years ending
June 30, 2008 through June 30, 2012, in an amount approximating $120,000 in each of
the five fiscal years. MHM is a national CPA firm with offices in Los Angeles, Oxnard,
Bakersfield, Irvine, San Diego and San Jose. The Conrad Government Services
Division currently serves as independent auditors for 46 California cities, including the
cities of Riverside, Burbank, Pasadena and Beverly Hills. Audit work for the five fiscal
years will begin in April 2008 and is expected to be completed in March 2013.
Financial Impacts & Budget Actions
The cost of audit services will be allocated based on anot-to-exceed fee schedule to
the City's General Fund, the Redevelopment. Agency, the Big Blue Bus Fund, the
AOMD program, and any other program where an audit is a requirement for funding.
The General Fund cost will be further allocated among the remaining City funds through
the City's annual administrative indirect cost allocation plan.
The total cost of auditing. services will not exceed $600,000 during the five-year term of
the professional services agreement and will approximate $120,000 in each of the five
fiscal years. Funds for these services will be budgeted in the various funds in the fiscal
years beginning with fiscal year 2008/09 through 2012/13.
2
Prepared by:
Candace Tysdal, Financial Operations Manager
Approved: Forwarded to Council:
1
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Carol Swin ell
Director of Finance
3
Reference Contract
No. 8911 (CCS).