That the City Council authorize the City Manager to execute an agreement for Audit and Financial Reporting Services with Clifton Larson Allen LLP (CLA) in an amount not to exceed $85,439 in the first of an initial three-year term, with two additional years at the City’s option.

The City is mandated by Federal and State law to prepare numerous monthly, quarterly and annual financial reports, statements and analysis in conformance with specific audit requirements and Generally Accepted Accounting Principles (GAAP). Financial statements are structured to confirm to Governmental Accounting Standards Board (GASB) pronouncements and recommended practices.

To ensure compliance with legislative mandates, prudent fiscal oversight, and a proper accounting of taxpayer funds, the City contracts with an independent accounting firm to conduct comprehensive annual audits of the City's financial transactions, fiscal statements, revenue receipts, debt payments, enterprise fund activities, grant program administration, fraud or loss prevention measures and internal controls. The City’s current audit firm, CLA, provides full audit services that include the review and production of the Annual Comprehensive Financial Report (ACFR), federally required Single Audit reports, City Authority and Agency reports, and other required audit reports and financial statements, as needed.

CLA is one of the nation’s top 10 accounting firms with more than 60 years of experience. The firm currently serves more than 4,100 governmental organizations nationally and has a strong regional presence with an office located in the City of Irvine. It is currently serving several cities in Southern California, including the cities of Irvine, Pasadena, Rancho Palos Verdes, Signal Hill, and La Palma.

CLA has demonstrated their qualifications, capabilities, and responsiveness through their services provided to the City since 2020. Therefore, staff proposes that the City enter into an agreement with CLA under the Purchasing Policy Section G.3 that allows for the procurement of goods and services through another governmental agency’s recently successful bid award, which is conducted on a negotiated or competitive basis. The City of Placentia recently completed a competitive procurement, and their City Council awarded a three-year agreement to CLA on July 19, 2022.

If approved by Council, the agreement with CLA will cost $85,439 in the first year of the contract, with approximately $64,449 allocated to the General Fund. The remaining cost of $20,990 will be allocated to the Water Utility Fund, Successor Agency Fund, and Child Development Special Revenue Funds. These costs are already included in the fiscal year 2022-2023 adopted budget. The annual auditing cost will increase by 4% in year two and 3% in each of the final three years of the agreement.

General Plan Relevance: D 9 Fiscal Strength-Stability

City Council Goals & Objectives:Goal 2-Management of Public Revenues and Fiscal Assets, Objective G-OMB Uniform Guidance provides a government-wide framework for federal grants management.