9.B.
City Council Meeting - FINAL
- Meeting Date:
- 04/19/2016
- Co-Submitter:
- Damian Gallegos
- From:
- Brandi Suda, Finance Director
Information
TITLE:
Consideration and Approval of Contract: Audit Services Contract with Clifton Larson Allen.
RECOMMENDED ACTION:
Approve contract with Clifton Larson Allen for Professional Audit Services to perform annual audits of the City's financial records for the years ended June 30, 2016 through June 30, 2019 at the annual fees as follows:
- June 30, 2016: $77,910
- June 30, 2017: $80,410
- June 30, 2018: $81,560
- June 30, 2019: $82,300
Executive Summary:
An annual audit is statutorily required by ARS 9-481. In addition, City Charter (Article VI, Section 5) requires that the City perform an annual financial audit each year. Furthermore, there is a Federal requirement to complete a Single Audit report if a non-federal entity expends $750,000 of more in federal financial assistance, which the City has received.
Our contract with Eide Bailly expired with the completion of the audit for the year ending June 30, 2015. No further extensions are available. Per the procurement process, Clifton Larson Allen is not only the highest scoring firm, it also has the best pricing of all three of the short listed firms.
Our contract with Eide Bailly expired with the completion of the audit for the year ending June 30, 2015. No further extensions are available. Per the procurement process, Clifton Larson Allen is not only the highest scoring firm, it also has the best pricing of all three of the short listed firms.
Financial Impact:
The proposal FY2017 budget is $73,240 for audit services fees in the General Fund in account 001-09-402-1314-1-4203 and an additional $8,200 in the Flagstaff Housing Authority accounts for total of $81,440.
Connection to Council Goal and/or Regional Plan:
Financial audit services does not fit in a specific Council or Regional Plan goal, but allows for overall support of the organization. This item is required by City Charter.
Has There Been Previous Council Decision on This:
None.
Options and Alternatives:
1) Approve the contract with Clifton Larson Allen
2) Choose one of the other five proposals submitted for the RFP. Cons-potential higher costs associated with the contract and risk of a formal protest from Clifton Larson Allen if we choose one of the other lower scoring proposals.
3) Do not approve any contract and conduct a new RFP process. Cons-Potential delay in audit service for FY2016.
2) Choose one of the other five proposals submitted for the RFP. Cons-potential higher costs associated with the contract and risk of a formal protest from Clifton Larson Allen if we choose one of the other lower scoring proposals.
3) Do not approve any contract and conduct a new RFP process. Cons-Potential delay in audit service for FY2016.
Background/History:
An annual audit is statutorily required by ARS 9-481. In addition, the City is required to perform an independent annual financial audit per City Charter Article VI, Section 5 which states:
"Prior to the end of each fiscal year, the Council shall designate an independent Certified Public Accountant, who, as of the end of the fiscal year, shall make up an audit of accounts and other evidence of financial transactions of the City government, and shall submit a long-form report, including recommendations concerning policy and fiscal procedures, to the Council, and to the City Manager. Such accountant shall have no personal interest, direct or indirect, in the fiscal affairs of the City government or of any of its officers. The accountant shall, within specifications approved by the Council, post-audit the books and documents kept by the City, and any separate or subordinate accounts kept by any other office, department, or agency of the City government."
In addition to financial audit, the City is Federally required to complete a Single Audit based on Federal standards. The City meets this requirement because it expends more than $750,000 in federal financial assistance.
The City's Finance Section invited CPA firms to submit a written proposal in response to Request for Proposals (RFP) to provide audit services to perform annual audits of the City's financial records.
The City is requiring CPA firms to perform an annual audit in accordance with:
"Prior to the end of each fiscal year, the Council shall designate an independent Certified Public Accountant, who, as of the end of the fiscal year, shall make up an audit of accounts and other evidence of financial transactions of the City government, and shall submit a long-form report, including recommendations concerning policy and fiscal procedures, to the Council, and to the City Manager. Such accountant shall have no personal interest, direct or indirect, in the fiscal affairs of the City government or of any of its officers. The accountant shall, within specifications approved by the Council, post-audit the books and documents kept by the City, and any separate or subordinate accounts kept by any other office, department, or agency of the City government."
In addition to financial audit, the City is Federally required to complete a Single Audit based on Federal standards. The City meets this requirement because it expends more than $750,000 in federal financial assistance.
The City's Finance Section invited CPA firms to submit a written proposal in response to Request for Proposals (RFP) to provide audit services to perform annual audits of the City's financial records.
The City is requiring CPA firms to perform an annual audit in accordance with:
1. Generally accepted auditing standards set forth by the American Institute of Certified Public Accountants (AICPA), and the standards for financial audits set forth by the U. S. Government Accountability Office's (GAO) Government Auditing Standards (GAS).
2. The provisions of the Single Audit Act of 1984 and subsequent amendments, and the provisions of U.S. Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Code of Federal Regulations (CFR) Title 2, Part 200, Subpart F - Audit Requirements.
3. United States Housing and Urban Development (HUD) Uniform Financial Reporting Standards (UFRS) Rule implementing requirements of United States 24 CFR part 5, subpart H.
4. State of Arizona Uniform Expenditure Reporting System (UERS) requirements mandated by A.R.S. §41-1279.07, with guidelines set forth by the Arizona Auditor General.
5. State of Arizona Highway User Revenue Fund (HURF) Expenditure requirements pursuant to A.R.S. §9-481.
6. State of Arizona Department of Environmental Quality Local Government Financial Test, 40CFR 258.74.
7. Minimum Accounting Standards for Arizona Courts (Part III, Guide for External Review by Auditors) every three years beginning with fiscal year ending June 30, 2016.
8. Federal Aviation Administration Passenger Facility Charge Audit Guide for Public Agencies.
6. State of Arizona Department of Environmental Quality Local Government Financial Test, 40CFR 258.74.
7. Minimum Accounting Standards for Arizona Courts (Part III, Guide for External Review by Auditors) every three years beginning with fiscal year ending June 30, 2016.
8. Federal Aviation Administration Passenger Facility Charge Audit Guide for Public Agencies.
Key Considerations:
The City's Purchasing Section conducted a formal competitive Request for Proposals (RFP) for solicitation number 2016-42, which was advertised on January 24, 2016. The RFP closed as of 3:00pm February 12, 2016. There were a total of seven (7) proposal responses. Based on the scoring results, a decision was made to "short-list" and advance the three (3) highest scoring Proposers (Clifton Larson Allen, Eide Bailly and Heinfeld Meech) to phase two (2) of the RFP process, which involved interview questions/presentations. Clifton Larson Allen aggregate score, which included Phase One (1)--written proposal response and phase two (2)--interview questions/presentation, was the highest scoring Proposer with 747 total points out of 840 total possible points and the evaluation team which consisted of 6 members (4 City Employees and 2 Audit Committee members) determined Clifton Larson Allen to be the most responsible and responsive Proposer whose offer is the most satisfactory and advantageous to the City based on the evaluation criteria outlined in the RFP document as follows:
Phase 1
1. Firm Expertise and Key Staff Experience (35 Points)
2. Specific Audit Approach (35 Points)
3. Pricing (20 Points)
4. Other Services, Exceptions and References (10 Points)
Phase 2
1. Interview Questions/Presentations (40 Points)
Phase 1
1. Firm Expertise and Key Staff Experience (35 Points)
2. Specific Audit Approach (35 Points)
3. Pricing (20 Points)
4. Other Services, Exceptions and References (10 Points)
Phase 2
1. Interview Questions/Presentations (40 Points)
Community Involvement:
Involve: There were two members of the community involved in the RFP for Audit Services. They are also members of our Audit Committee.
Inform
Inform
Expanded Options and Alternatives:
Options would be to approve contract as it stands or not approve it.
Alternatives would be to go with one of the other six firms.
Final alternative would be to not approve highest scoring firm and begin another new RFP process to select another firm which would cause delays for the current audit year.
Alternatives would be to go with one of the other six firms.
Final alternative would be to not approve highest scoring firm and begin another new RFP process to select another firm which would cause delays for the current audit year.