SR 08-27-2019 3H
City Council
Report
City Council Meeting: August 27, 2019
Agenda Item: 3.H
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department
Subject: Award Request for Proposal and enter into agreement with Moss Adams, LLP
to provide Internal Audit Services
Recommended Action
Staff recommends that the City Council:
1. Award RFP# 231 to Moss Adams, LLP, a Washington -based company, to provide
internal audit services for the Finance Department;
2. Authorize the City Manager to negotiate and execute an agreement with Moss
Adams, LLP, in an amount not to exceed $150,000 for one year, with four additional
one-year renewal option(s) on the same terms and conditions, for a total amount not
to exceed $750,000 over a five-year period with future year funding contingent on
Council budget approval.
Summary
The City of Santa Monica uses an internal audit firm to conduct regular reviews of City
operations to identify weaknesses in processes and procedures, internal controls, and/
or other operational or system vulnerabilities that could lead to increased financial and
other risk to the City. Common areas of study for internal audit include cash handling,
billing, accounts receivable and payroll functions; individual department operations; and
information technology functions and systems. Using an internal audit firm is a best
practice to ensure independence of the internal audit function and to maximize city
resources spent on internal audit. This practice supports the City’s guiding values of
stewardship and accountability through increased transparency and operational
efficiency. Following a competitive process, staff recommends the City partner with
Moss Adams for internal audit services.
Discussion
In 2014, the City of Santa Monica transitioned from conducting internal audits with City
staff to partnering with a third party. The City has employed Moss Adams, LLP in this
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capacity since August 2014, with one modification in March 2019 to increase contract
authority. Since that time, Moss Adams has worked with City staff to complete an
organization-wide risk assessment, eight audits, an internal controls review, and an
additional comprehensive compensation study. The City’s existing agreement with
Moss Adams expired August 23, 2019.
Vendor Selection
The City issued a request for proposals for internal audit services on May 16, 2019. In
addition to vendors notified through PlanetBids and ProcureNow, the City’s online
bidding systems, City staff reached out to vendors that participated in the previous
solicitation and to large firms providing audit services to notify t hem of the opportunity.
The City received four submissions and shortlisted the two top proposers. A team
consisting of representatives from the Finance Department, Human Resources, the City
Attorney’s Office, City Manager’s Office, and two Audit Subcommittee members
reviewed the top proposals. Following this review, staff recommends Moss Adams as
the City’s internal audit services provider over the next five years.
Bidder Recommendation
Best Qualified Person/Firm Best Qualified Firm
Evaluation Criteria Knowledge and Prior Experience; Capacity and Technical Resources;
Audit Approach and Work Plan; Costs; References; Presentation
Municipal Code SMMC 2.24.190
RFPs Received
Clifton Larson Allen Eide Bailly Lotus, Inc. Moss Adams, LLP
RFP Data
Posted On Posted On
Advertised In
(City Charter & SMMC)
Vendors
Downloaded
Date Publicly
Opened
5/16/19 City's Online
Bidding Sites Santa Monica Daily Press 16 6/12/19
Justification to Award
Staff shortlisted and then interviewed the top two firms. Based on this criteria and
criteria in SMMC 2.24.190, staff recommends Moss Adams as the best qualified person
or firm to provide Internal Audit Services based on personnel background and expertise,
audit approach and understanding of the City’s needs, capacity, and experience with
similar projects, and the ability to meet the City’s cost requirements. Moss Adams stood
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out from the other firms in its similar experience with related work in other California
cities, including some with which Santa Monica commonly draws comparisons. The
firm also demonstrated expertise in key areas in which the City has interests and needs.
Past Council Actions
Meeting Date Description
August 26, 2014
(Attachment A)
Internal Audit Services for the City of Santa Monica
March 26, 2019
(Attachment B)
First Modification to Agreement #9956 with Moss Adams for
Internal Audit Services
Financial Impacts and Budget Actions
Staff seeks authority to approve funding from the General Fund to award an agreement
with $150,000 for internal audit services.
Agreement Request
Request
Amount
FY 2019-20 Budget
Department Account #
Total Contract
Amount
$150,000 01200001.552010 $750,000
Funds are available in the FY 2019-20 budget. Future year funding is contingent on
Council budget approval.
Prepared By: Alicia Endo, Administrative Staff Assistant
Approved
Forwarded to Council
Attachments:
A. Attachment A-August 26, 2014 (weblink)
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B. Attachment B-March 26, 2019 (weblink)
REFERENCE:
Agreement No. 10929
(CCS)