SR-11-14-1978-6QSanta Monica, California November 2, 1978
L P
TO: Mayor and City Council Nov 1 4 1978
FROM: City Staff
SUBJECT: Recommendation to accept proposal for annual audit
contract extension.
Introduction
This report concerns acceptance of a proposal to extend the
current three -year contract for annual audits for an additional
three year period, 1979 through 1981. Funds will be budgeted yearly
in account number 01- 700 - 274 - 000 -704.
Background
The City's current contract with Alexander Grant & Company will
expire with the completion of the 1978 audit. Council approved
the initial contract with this company in March, 1976, when bid
results were:
Elmer Fox, Westheimer & Co. $18,000.00
Alexander Grant & Co. 15,250.00
Touche, Ross & Co. 18,500.00
Ernst & Ernst 18,900.00
The Alexander Grant bid was subject to annual increases in
the Consumer Price Index -Los Angeles. The final audit under
the existing contract is now in progress and its cost is
estimated to be in the area of $18,000.00. This approximates
the second lowest bidder's price for 1977.
The initial $18,450.00 yearly charge in the attached proposal
from Alexander Grant & Company is substantially the original
$15,250.00 bid with adjustment made for Consumer Price Index
changes thereafter.
40
Nov 1 4 1978
Alexander Grant & Company were the City's auditors during the
transition between the previous and current accounting systems and
are aware of the peculiarities of interface between these two systems.
The Alexander Grant staff's familiarity with record locations and
with functions of the city departments will diminish the orientation
and escort requirements of the City Controller's office that could
be anticipated should a new auditing agency be employed.
Recommendation
It is recommended that the proposal by Alexander Grant & Company
to extend the existing three -year contract for an additional three
years, 1979 through 1981, inclusive, be accepted,
Prepared By: R.N. Aronoff,
Purchasing Agent
Alexendep Dan
8 COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
October 30, 1978
Honorable City Council
City of Santa Monica
1685 Main Street
Santa Monica, California 90401
Gentlemen:
INTERNATIONAL FIRM
ALEXANDER GRANT TANSLEY WITT
We are pleased to submit this letter to extend
our services for an additional three years as auditors for
the City of Santa Monica.
We will conduct the annual audit for the City of
Santa Monica for the fiscal years ending June 30, 1979
through 1981. Our annual examinations will include the
following financial statements for the respective fiscal
years ending June 30, 1979 through 1981:
(1) Combined balance sheet of all funds as at
the respective June 30,
(2) General government revenue, expenditures and
fund balances for the respective year ending
June 30,
(3) Balance sheet for each fund as at June 30.
(4) Statement of revenue, estimated and actual,
for each budgeted fund for the year ending
June 30.
(5) Statement of expenditures and encumbrances
compared with authorizationsfor each budgeted
fund for the year ending June 30.
(6) Statement of changes in fund balance for each
of the above funds for the year ending June 30.
(7) Statement of changes in financial position for
each enterprise fund for the year ending June 30.
6842 VAN NUYS BOULEVARD VAN NUYS, CA 91405 (213) 786 -3551
Honorable City Council
City of Santa Monica - 2 - October 30, 1978
We will also include financial statements for the
Parking Authority of the City of Santa Monica for each re-
spective year.
Our annual examination will be made in accordance
with the generally accepted auditing standards adopted by
the American Institute of Certified Public Accountants and
will include tests of accounting data and procedures we con-
sider necessary under the circumstances.
The objective of our engagement is the completion
of an examination of the financial statements referred to
above and, upon its completion and subject to its findings,
the expression of an opinion on such financial statements.
An examination made in accordance with generally accepted
auditing standards is subject to certain limitations and
the inherent risk that errors or irregularities, if they
exist, will not be detected. However, if during the course
of our examination, we become aware of such errors or irregu-
larities, we will bring them to your attention. Should you
then wish us to expand our normal auditing procedures, we
will be pleased to work with you on developing a separate
engagement for that purpose.
When the annual audit is complete, we will provide
a post -audit review for the Director of Finance and other
interested personnel of the City to discuss accounting pro-
cedures and to recommend measures that might be employed to
correct problems, if any, that we have observed during the
audit.
Our fee will be based upon our regular per diem
rates, and it is our expectation that our fee for the annual
audit of the City of Santa Monica for the fiscal year ending
June 30, 1979 will approximate $18,450, although circumstances
may arise which will require our services to be extended. How-
ever, we will not exceed the above fee estimate without your
approval and authorization to extend our services, except that,
in addition to our regular charges, our billings will include
any directly connected out -of- pocket expenses incurred on your
behalf to a maximum of $450. In arriving at our estimated fee,
we have taken into consideration the fact that the City's
accounting department will continue to cooperate with us, as
they have done for the past three years, by preparing data as
we request for use for our audit personnel.
Our fee estimate is contingent upon our being awarded
a three -year contract. Accordingly, our annual fee for the
three years will approximate $18,450 with the provision that
the second and third (fiscal years ending June 30, 1980 and
1981, respectively) are subject to cost of living increments
as determined by the percentage increase in the consumer price
index for Los Angeles, for the respective periods of July 1
through June 30, as published by the U. S. Department of Labor.
Honorable City Council
City of Santa Monica
Our billings are
that you may readily relate
This proposal includes only
scribed in this letter.
- 3 - October 30, 1978
rendered on a monthly basis so
our charges to the work performed.
those services specifically de-
If you are in agreement with the terms of this
letter, please sign one copy and return it for our files.
We appreciate the opportunity to work with you and continue
our pleasant association.
Very truly yours,
ALEXANDER GRANT & COMPANY
Daniel Matter
Partner
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Enc.
The foregoing letter fully describes the services
required and is accepted by us.
CITY OF SANTA MONICA
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Title
Date
Reference:
Contract No. 3128
(CCS)