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SR 03-26-2019 3I City Council Report City Council Meeting: March 26, 2019 Agenda Item: 3.I 1 of 3 To: Mayor and City Council From: Gigi Decavalles-Hughes, Director, Finance Department Subject: First Modification to Agreement #9956 with Moss Adams for Internal Audit Services Recommended Action Staff recommends that the City Council authorize the City Manager to negotiate and execute a first modification to agreement #9956 in the amount of $210,000 with Moss Adams, LLP, a Washington-based company, for internal audit services for the Finance Department. This will result in a five-year amended agreement with a new total amount not to exceed $1,135,000, with future year funding contingent on Council budget approval. Summary Since 2014, Moss Adams has performed a variety of internal audit tasks for the City including assessing and identifying risks; assessing internal controls and compliance with laws, regulations and contractual agreements; and reviews and training on preventing and detecting fraud to ensure the safeguarding of public assets. In 2017, at the direction of the Audit Subcommittee of the City Council, Moss Adams conducted a Compensation and Staffing Review at a cost of $210,000. Staff did not account for this task in the original project budget. To proceed with regular and ongoing audit services , staff proposes increasing contract authority by $210,000, with the five-year term unchanged. Discussion In 2017, the City of Santa Monica scheduled a review of staff compensation and public safety overtime to be conducted by the City’s internal auditor, Moss Adams. The review was conducted in response to public scrutiny raised by media reports related to City staff compensation and public safety overtime. The final report (Attachment A), represented one of the most comprehensive local government analyses of 2 of 3 compensation practices done in recent years in Southern California. The resulting implementation plan included adopting the City’s Compensation Philosophy, which sets forth a consistent methodology for determining whether the City’s processes to recruit and retain highly qualified staff are consistent with the City’s overarching goal of being an “employer of choice” while maintaining fiscal responsibility. The review was completed within existing contract authority. However, since this work was unanticipated, it was not accounted for in staff’s initial estimate of budgetary need. The original contract was to be for a term of three-years with two one-year renewal options; however, at the time of execution, the City decided to exercise the full five- years in order to maintain consistency in the auditing work to be completed. The contract expires in August 2019. To maintain ongoing internal audit functions through the remainder of the contract, staff recommends increasing the contract authority in an amount equal to the cost of the Compensation a nd Staffing Review. Staff is preparing to release an updated RFP for internal audit services in anticipation of the contract’s expiration. Past Council Actions Meeting Date Description 08/26/14 (attachment A) Award RFP for internal audit services to Moss Adams, LLP 05/08/18 (attachment B) Receive the Compensation and Staffing Review and Approve Implementation Plan Responding to Recommendations Financial Impacts and Budget Actions Staff seeks authority to increase the amount of contract #9956 with Moss Adams, LLP for internal audit services. Contract Modification Request Agreement # Current Authorized Amount Modified Request Amount FY 2018-19 Budget Dept/CIP Account # Total Revised Contract Amount 9956 $935,000 $210,000 01200001.552010 $1,145,000 Future year funding is contingent on Council budget approval. 3 of 3 Prepared By: Natalie Acosta, Executive Administrative Assistant Approved Forwarded to Council Attachments: A. August 6, 2014 Staff Report (Weblink) B. May 8, 2018 Staff Report (Weblink) C. Oaks Initiative Form CITY OF SANTA MONICA OAKS INITI ATIVE NOTICE NOTICE TO APPLICANTS, BIDDERS, PROPOSERS AND OTHERS SEEKING DISCRETIONARY PERMITS, CONTRACTS, OR OTHER BENEFITS FROM THE CITY OF SANTA MONICA Santa Monica’s voters adopted a City Charter amendment commonly known as the Oaks Initiative. The Oaks Initiative requires the City to provide this notice and information about the Initiative’s requirements. You may obtain a full copy of the Initiative’s text from the City Clerk. This information is required by City Charter Article XXII—Taxpayer Protection. It prohibits a public off icial from receiving, and a person or entity from conferring, specified personal benef its or campaign advantages from a person or entity after the official votes, or otherwise takes official action, to award a “public benefit” to that person or entity. The prohibition applies within and outside of the geographical boundaries of Santa Monica. All persons or entities applying or receiving public benefits from the City of Santa Monica shall provide the names of trustees, directors, partners, and officers, and names of persons with more than a 10% equity, participation or revenue interest. An exception exists f or persons serving in those capacities as volunteers, without compensation, for organizations exempt from income taxes under Section 501(c)(3), (4), or (6), of the Internal Revenue Code. However, this exception does not apply if the organization is a political committee or controls political committees. Examples of a “public benefit” include public contracts to provide goods or services worth more than $25,000 or a land use approval worth more than $25,000 over a 12-month period. In order to facilitate compliance with the requirements of the Oaks Initiative, the City compiles and maintains certain information. That information includes the name of any person or persons who is seeking a “public benefit.” If the “public benefit” is sought by an entity, rather than an individual person, the information includes the name of every person who is: (a) trustee, (b) director, (c) partner, (d) officer, or has (e) more than a ten percent interest in the entity. Therefore, if you are seeking a “public benefit” covered by the Oaks Initiative, you must supply that information on the Oaks Initiative Disclosure Form. This inf ormation must be updated and supplied every 12 months. CITY OF SANTA MONICA OAKS INITIATIVE DISCLOSURE FORM In order to facilitate compliance with the requirements of the Oaks Initiative, the City compiles and maintains certain information. That information includes the name of any person or persons who is seeking a “public benefit.” If the “public benefit” is sought by an entity, rather than an individual person, the information includes the name of every person who is: (a) trustee, (b) director, (c) partner, (d) officer, or has (e) more than a ten percent interest in the entity. Public benefits include: 1. Personal services contracts in excess of $25,000 over any 12-month period; 2. Sale of material, equipment or supplies to the City in excess of $25,000 over a 12- month period; 3. Purchase, sale or lease of real property to or from the City in excess of $25,000 over a 12- month period; 4. Non-competitive franchise awards with gross revenue of $50,000 or more in any 12-month period; 5. Land use variance, special use permit, or other exception to an established land use plan, where the decision has a value in excess of $25,000; 6. Tax “abatement, exception, or benefit” of a value in excess of $5,000 in any 12- month period; or 7. Payment of “cash or specie” of a net value to the recipient of $10,000 in any 12- month period. Name(s) of persons or entities receiving public benefit: Name(s) of trustees, directors, partners, and officers: Name(s) of persons with more than a 10% equity, participation, or revenue interest: Prepared by: ____________________________Title: __________________________ Signature: ______________________________________ Date: ________________ Email: ____________________________________ Phone: ____________________ FOR CITY USE ONLY: Bid/PO/Contract # ____________________________ Permit # ___________________________ REFERENCE: Modified Agreement No. 9956 (CCS)