SR 03-26-2019 3I
City Council
Report
City Council Meeting: March 26, 2019
Agenda Item: 3.I
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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
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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.
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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)