The purpose of the City’s annual audit is to obtain an opinion from an independent firm of the City’s financial management practices, and to verify conformance with generally accepted accounting principles and related Government Accounting Standards. The City, as a matter of accounting and financial prudence, periodically re-examines the independent financial audit relationship and contract.  The City has been audited by Macias, Gini & O’Connell, LLP, and their contract has expired upon completion of the audit for the FY 2014-15; therefore staff issued and advertised RFP No. S-1176 on August 26, 2015, to solicit proposals for auditing services. A mandatory pre-proposal meeting was held on September 11, 2015, to allow all interested proposers to interact with City staff and ask any questions to clarify the City’s auditing requirements. Seven proposals were received and opened on September 25, 2015.

A Source Selection Committee (SSC) comprised of two staff and one outside participant analyzed and scored the proposals. The proposals were evaluated based on Technical Qualifications, Engagement Team Qualifications, and Pricing. The analysis below indicates the Proposal Pricing and the SSC scores of the top three firms:

Each of the firms had excellent qualifications, and all proposers had experience in conducting audits of government and non-profit entities. All seven firms demonstrated their understanding of the project plan of the City Audit.  The significant difference among the proposals was in the proposed pricing. 

Davis Farr LLP is a well-qualified regional CPA Firm with significant presence in California.  Their government services headquarters is located in Irvine, California, making them easily accessible to their clients.  The Davis Farr LLP engagement team has vast experience in governmental accounting and auditing and has provided one of the lower priced proposal of those qualified to conduct the City’s annual audit.  Davis Farr LLP engagement team has provided auditing services for many cities including the following cities in Orange County: Costa Mesa, Huntington Beach, and Villa Park. Based on the proposal evaluation results, it is recommended that the City award a contract to Davis Farr LLP as the City’s independent auditing firm for the next five fiscal years with two additional option years. 

Total cost for the City’s auditing services will be $397,041 for the next five fiscal years: 2015-16, $78,450; 2016-17, $78,450; 2017-18, $78,450; 2018-19, $80,101; 2019-20, $81,590.  The requisite funds will be appropriated annually and attributed to the City’s audit entities and component units.  These fees are based on the City and its component units as currently constituted. Any changes in the future will result in reductions or increases in the annual fees which include additional services based on the standard personnel fees outlined in the proposal.

It is recommended that City Council:

• Award a contract to the highest scoring proposer, Davis Farr LLP, as the City’s Independent Auditor for Fiscal Years 2015-16 through 2019-20, including two additional option years for audit and other additional services as outlined in the proposal from Davis Farr LLP, and to appropriate necessary funds including additional option years; and

• Authorize the City Manager or his designee to execute the agreement, making minor modifications as necessary, and approve two additional option years for audit and other additional services as outlined in the proposal.