SR 12-12-2023 5C
City Council
Report
City Council Meeting: December 12, 2023
Agenda Item: 5.C
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Financial Operations
Subject: Award RFP and enter into Agreement with Lance Soll & Lunghard LLP for
Professional Auditing Services
Recommended Action
Staff recommends that the City Council:
1. Award RFP# 377 to Lance Soll & Lunghard LLP, a California-based company
for professional external auditing services; and
2. Authorize the City Manager to negotiate and execute a three-year agreement
with a two-year option with Lance Soll & Lunghard LLP, for a total amount not
to exceed $958,936 over a five-year period, with future year funding
contingent on Council budget approval. Costs for the first year of the
agreement will not exceed $180,620; each year thereafter contains an annual
increase of 3%.
Summary
The City is beginning the final year of a 3-year contract extension with independent
external auditors Lance, Soll & Lunghard (LSL) CPAs. In August 2023, staff issued a
Request for Proposals for professional auditing services for fiscal years 2023-24
through 2027-28. Following an evaluation process that included staff and a member of
the Audit Subcommittee (Subcommittee), staff is recommending that Council enter into
a contract with Lance Soll & Lunghard LLP (LSL) for a three-year agreement with a two-
year option. The Subcommittee approved the recommendation with a 4-0 vote.
Discussion
The City engages an independent auditing firm to perform an examination of the City’s
basic financial statements, Big Blue Bus Fund financial statements, Air Quality
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Improvement Program, and the City’s Schedule of Expenditures of Federal Awards
(Single Audit). The independent auditor also performs agreed-upon procedures to test
and report on the City’s GANN appropriation limit calculation.
On March 31, 2016, the City entered into a 5-year contract with independent audit firm
Lance, Soll & Lunghard (LSL) CPAs. On October 6, 2020, the contract was extended for
an additional 3 years. Fiscal year 2022-23 is the final year of the three-year extension.
As required by the City Charter, financial statements are prepared by the City and
audited by its independent auditors. The City selected its current independent auditor
through a competitive procurement process that included a member of the Audit
Subcommittee as part of the selection committee. On August 30, 2023, the City issued
a Request for Proposals for Professional Auditing Services on the City’s OpenGov
system for fiscal years 2023-24 through 2027-28. Eleven prospective vendors
downloaded the RFP, and eight auditing firms responded. LSL was selected by the
evaluation committee based on technical knowledge, emphasis on time management
and deadlines, and the ability to provide valuable insight related to best practices.
Established in 1929, LSL is a California-based certified public accounting firm that
specializes in government audits and is known as an industry expert at the local, state
and federal level.
Staff recommends awarding an agreement with LSL for auditing services. The first year
cost is anticipated at $180,620, with a 3% increase each year thereafter. The
agreement is for a not-to-exceed amount of $958,936 for five years, including a two-
year option. Costs will be allocated to various funds, where an audit is required.
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Vendor Selection
On August 30, 2023, staff issued a Request for Proposal (RFP) to seek qualified
certified public accounting (CPA) firms to audit its financial statements for the fiscal
years 2023-24 through 2027-28. The RFP was posted on the City’s on-line bidding site,
and it was posted on the California State Municipal Finance Officers portal. Eleven
prospective vendors downloaded the RFP, and eight firms submitted proposals.
Bidder Recommendation
Best Qualified Firm Lance Soll & Lunghard LLP
Evaluation Criteria
Interview, ability to meet project work plan / timelines, Experience,
Value added – breadth of service, Stability / references, Quality control,
Cost of services and cost control.
Municipal Code SMMC 2.24.190
RFPs Received
Badawi and Associates Clifton Larson Allen,
LLP
Eide Bailly, LLP Lance, Soll, &
Lunghard, LLP
Macias, Gini, &
O’Connell, LLP
The Pun Group, LLP Singer Lewak, LLP Vasquez & Company,
LLP
RFP Data
Posted On Posted On
Advertised In
(City Charter & SMMC)
Vendors
Downloaded
Date Publicly
Opened
8/30/2023 City's Online
Bidding Site Santa Monica Daily Press 23 10/3/2023
Justification to Award
Based on the initial review of proposals informed by the evaluation criteria described
above and criteria in SMMC 2.24.190, the evaluation committee selected three auditing
firms that were unfamiliar to the City as well as our current auditor, LSL, to interview in
October 2023. As a result of this process, the evaluation committee recommended to
the Audit Subcommittee Lance Soll & Lunghard, LLP (LSL), the current auditor, as the
best bidder to be retained to provide auditing services for the City of Santa Monica.
Because LSL has already been performing this service for the City for eight years, the
selection team was concerned about not rotating auditors at this juncture. During their
presentation, LSL proposed changing the entire audit team except for the partner to give
them a new perspective on the City’s audit. The current partner would be replaced by a
different partner after three years due to the firm’s policy of rotating partners for client
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agencies every five years and the concurring partner would take their place.
The selection committee looked at best practices regarding the rotation of auditing firms.
Agencies contacted by staff noted that they rotated their auditors every 5 to 10 years.
Additionally, Assembly Bill 1345 requires the audit partner of a firm to rotate every 6
years. Finally, staff consulted the City’s internal auditor, Moss Adams, for its view on
awarding the contract to LSL. Moss Adams was comfortable with the retention of LSL
considering the change in audit personnel.
The selection committee suggested that a set of performance guidelines be issued by
the City for LSL and that an evaluation of the performance of the auditors be conducted
annually upon completion of the audit and feedback provided to LSL.
Environmental Review
The agreement is exempt from the California Environmental Quality Act (CEQA) pursuant to
Section 15061(b)(3) (Common Sense Exemption) of the CEQA Guidelines. The award
agreement is covered by the commonsense exemption which states that CEQA does
not apply, “where it can be seen with certainty that there is no possibility that the activity
in question may have a significant effect on the environment.” The award agreement will
provide audit services to the City. Therefore, it can be seen with certainty that the
agreement would not result in adverse physical impacts on the environment, and as
such, is exempt from CEQA.
Financial Impacts and Budget Actions
Staff seeks authority to approve available funding from various funds to award an
agreement with Lance Soll & Lunghard LLP for professional auditing services.
Agreement Request
FY 2023-24
Request Amount
Amount for
Future Years
FY 2023-24 Budget
Department Accounts #
Total Contract
Amount
$180,620 $778,316 Various accounts $958,936
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Future year funding is subject to Council budget approval.
Prepared By: Randy Chow, Financial Reporting Supervisor
Approved
Forwarded to Council
Attachments:
A. OAKS Initiative Form
B. Staff Report #7199 - February 23, 2016 Council Meeting
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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:
Lance, Soll & Lunghard, LLP
Name(s) of trustees, directors, partners, and officers:
Bryan Gruber, Dave Myers, Don Slater, Maria Arriola, Yana Weaver, Pam Bustos, Mike Agresti, Adam
Odom, Gail Gray, Brandon Young, Lisa Favor, Ryan Domino, Kelly Telford, Jeff Boxx, Jocelyn Potter
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 #
Bryan Gruber, Dave Myers, Maria Arriola, Yana Weaver, Pam Bustos, Mike Agresti
Brandon Young Partner
November 9, 2023
brandon.young@lslcpas.com (714)672-0022
5.C.a
Packet Pg. 102 Attachment: OAKS Initiative Form (5888 : Award Agreement to Lance Soll & Lunghard LLP RFP for Professional Auditing Services)
City Council
Report
City Council Meeting: February 23, 2016
Agenda Item: 3.F
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Financial Operations
Subject: Professional Auditing Services for the City of Santa Monica
Recommended Action
Staff recommends that the City Council:
1. Award RFP# 62 to Lance, Soll & Lunghard, LLC, a California -based company for
professional external auditing services; and
2. Authorize the City Manager to negotiate and execute a five -year agreement with
Lance, Soll & Lunghard, LLC, for a total amount not to exceed $779,175 over a
five-year period, with future year funding contingent on Council budget approval.
Costs for the first year of the agreement will not exceed $149,725; each year
thereafter contains an annual increase of 2%.
Executive Summary
According to the City Charter, the City is required to contract with an independent
qualified accountant to complete a year end audit. The contract with the City’s current
independent external auditor expires in May 2016. In October 2015, staff issued a
Request for Proposals for professional external auditing services for fiscal years 2015 -
16 through 2019-20. Following an evaluation process that included staff and members
of the Audit Subcommittee (Subcommittee), staff recommended Lance, Soll and
Lunghard, LLP (LSL) as the best proposal to the Subcommittee. The Subcommittee
approved the recommendation and authorized staff to present the recommendation to
Council with a 4-0 vote, with Committee Member Vasquez absent. Staff recommends
that the City pursue a five-year agreement with LSL, for a total amount not to exceed
$779,175.
Background
As required by Section 1516 of the City Charter, a year-end independent audit is
required by a qualified accountant to examine the City’s books, records, inventories and
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reports as directed by City Council. At the end of the year, a final audit and report shall
be submitted by such accountant to the City Council, City management, and the general
public.
Discussion
The City engages an independent auditing firm to perform an examination of the City’s
basic financial statements, Big Blue Bus Fund financial statements, Air Quality
Improvement Program, and the City’s Schedule of Expenditures of Federal Awards
(Single Audit). The independent auditor also performs agreed -upon procedures to test
and report on the City’s GANN appropriation limit calculation. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. The audit also includes evaluating the overall presentation of the
financial statements and evaluating the appropriateness of accounting policies used and
the reasonableness of significant accounting estimates made by management. The
objective of the audit is to express an opinion as to whether these f inancial statements
are fairly presented in all material respects in conformity with all applicable accounting
standards generally accepted in the United States of America and as promulgated by
the American Institute of Certified Public Accountants (AICPA), the standards applicable
to financial audits contained in Government Auditing Standards issued by the
Comptroller General of the United States, and the U.S. Office of Management and
Budget (OMB) Circular A-133, Audits of States, Local Governments and Non-Profit
Organizations.
The City’s contract with its current independent auditor, Macias, Gini and O’Connell,
LLP (MGO), ends in May 2016 for audit services related to FY 2014-15. Upon Council’s
approval, staff will work to execute a contract swiftly to initiate the strategic planning of
the audit to ensure reporting deadlines are met and the required auditor
communications with Council, the Audit Subcommittee, and management.
Staff anticipates that the selected auditor will be present at the April Audit
Subcommittee meeting to discuss planning and communication.
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Vendor/Consultant Selection
On October 29, 2015, staff issued a Request for Proposals to seek qualified certified
public accounting (CPA) firms to audit its financial statements for the fis cal years 2015-
16 through 2019-20. The RFP was posted on the City’s on-line bidding site, and notices
were advertised in the Santa Monica Daily Press in accordance with City Charter and
Municipal Code provisions. 245 vendors were notified, 25 prospective vendors
downloaded the RFP, and 6 firms submitted proposals.
Vendor
The Pun Group, LLP
Brown Armstrong Accountancy Corp
Vavrinek, Trine, Day & Co, LLP
Lance, Soll & Lunghard, LLP
Vasquez & Company LLP
Macias, Gini, & O’Connell, LLP
An evaluation committee, consisting of two financial experts from the Audit
Subcommittee and staff from the Finance, Big Blue Bus, and Housing and Economic
Development departments, reviewed and evaluated the six proposals. The evaluation
criteria, developed by staff with assistance from the City’s internal auditor, included
experience, ability to meet project work plan/timelines, quality control, cost of services,
stability/references, and value added, defined as the contractor’s ability to provide
insight and information related to new accounting standards or industry best practices
and ability to effectively communicate information to management and the Audit
Subcommittee, and provide technical training or resources.
Based on the initial review of proposals, the evaluation committee shortlisted four firms
and interviewed the three firms that were unfamiliar to the City on January 13, 2016. As
a result of this process, the evaluation committee recommended LSL to provide auditing
services for the City of Santa Monica. Staff presented the recommendation to the Audit
Subcommittee on January 19, 2016 (Attachment A). The Audit Subcommittee approved
the evaluation committee’s recommendation by a vote of 4 -0, with Committee Member
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Vasquez absent, and authorized staff to present its recommendation to the full Council
for award of contract.
Established in 1929, LSL is a California-based CPA firm that specializes in government
audits and is known as an industry expert at the state and federal level. LSL was
selected based on the technical knowledge of the partners and managers to be
assigned to the engagement; their emphasis on time management, planning, and
realizing deadlines; and their ability to provide valuable insight and information related
to new accounting standards, industry best practices, and unusual accounting
transactions throughout the process. They were the highest ranked proposal and on
average to the other proposals their cost is comparable.
Financial Impacts and Budget Actions
The total cost of auditing services is $149,725 per year with a 2% increase each year,
for a total not-to-exceed amount of $779,175 during the five-year term of the
professional services agreement from FY 2015-16 to FY 2019-20. Costs will be
allocated to the City’s General Fund, the Big Blue Bus Fund, the Air Quality
Management District (AQMD) Fund, and other programs where an audit is required for
funding. Future year funding is subject to Council budget approval.
Prepared By: Stephanie Manglaras, Accounting Manager
Approved
Forwarded to Council
Attachments:
A. January 19, 2016 Audit Committee Staff Report
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B. Public comments
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