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HomeMy WebLinkAboutAGENDA REPORT 2019 0403 REG CCSA ITEM 10F CITY OF MOORPARK, CALIFORNIA City Council Meeting Item: 1O.F. of April 3, 2019 ACTION Approved staff recommendation. BY B.Garza. F. Consider Amendment No. 1 to the Agreement with Lance, Soll & Lunghard, LLP for Professional Auditing Services. Staff Recommendation: Approve Amendment No. 1 to the Agreement with Lance, Soll & Lunghard; and authorize the City Manager to execute the Amendment, subject to the final language approval by the City Manager and City Attorney. (Staff: Irmina Lumbad) Item: 10.F. MOORPARK CITY COUNCIL AGENDA REPORT TO: Honorable City Council FROM: Irmina Lumbad, Interim Director of Finance DATE: 04/03/2019 Regular Meeting SUBJECT: Consider Amendment No. 1 to the Agreement with Lance, Soil & Lunghard, LLP for Professional Auditing Services BACKGROUND On February 7, 2018 City Council approved the solicitation of proposals from qualified certified public accounting (CPA) firms to provide the following basic services: a) perform the City's annual audit; b) prepare CAFR; c) complete Single Audit and related reports, if applicable; d) Housing Successor Fund Financials; and e) Housing Addendum to Annual Progress Report. On April 4, 2018 City Council awarded a five- year agreement with Lance, Soil & Lunghard, LLP (LSL) for total payment of $230,450. Staff is proposing to expand LSL scope of services to include the completion of the Federal Transit Administration Independent Auditor Statement for Financial Data and Transportation Development Act (TDA) financial statement audit for reports for all TDA funds including Proposition 1B funds. The expanded service will increase the agreement compensation by $64,250 to $294,700. DISCUSSION Title 49 of the United States Constitution Section 5335(a) requires recipients of grants from the Federal Transit Administration (FTA) to submit data to the National Transit Database (NTD) using the Uniform System of Accounts. Beginning with fiscal year 2018, all urban Full and Reduced Reporters are required to submit an Independent Auditor's Statement for Financial Data (IAS-FD) every ten years. Accordingly on September 10, 2018, the City's NTD Analyst notified us to complete and submit the IAS- FD. As requested by the Finance Director, LSL performed this work for a total cost of $2,750 for fiscal year (FY) 2017/18 and $14,250 for FY 2017/18 thru FY 2021/22. In addition, the City issues four separate audited financial statements for the Transportation Development Act (TDA) funds including Proposition 1B funds. These audits are performed by Ventura County Transportation Commission's independent auditors and the City staff prepares the schedules and complies with audit requests. Over the years, this arrangement has not been optimal because staff has provided similar data to our City auditors and then again to VCTC auditors. Staff also spends 2-3 51 Honorable City Council 04/03/2019 Regular Meeting Page 2 days for VCTC auditor’s final field work where they request for source documents to perform transaction sampling. In order to improve workload and achieve more efficiency, staff will expand LSL’s agreement to perform the TDA audits for FY 2018/19 to 2021/22 along with the City’s Comprehensive Annual Financial Report. This will cost an additional $50,000 that will be paid using TDA funds. FISCAL IMPACT There will be no fiscal impact in the current year. The additional total cost for IAS-FD and TDA audits will be included during the budget development for FY 2019/20. STAFF RECOMMENDATION Approve Amendment No. 1 to the Agreement with Lance, Soll & Lunghard; and authorize the City Manager to execute the Amendment, subject to the final language approval by the City Manager and City Attorney. Attachment: Agreement 52 AMENDMENT NO. 1 TO AGREEMENT BETWEEN THE CITY OF MOORPARK AND LANCE, SOLL & LUNGHARD, LLP FOR PROFESSIONAL AUDITING SERVICES This Amendment No. 1 to the Agreement between the City of Moorpark, a municipal corporation (“City”), and Lance, Soll & Lunghard, a limited liability partnership (“Contractor”), for professional auditing services (“Agreement”), is made and entered into on this ___ day of ____________________, 201__. RECITALS WHEREAS, on August 3, 2018 the City and Contractor entered into an Agreement to have the Contractor provide professional auditing services; and WHEREAS, at the public meeting held on March 20, 2019, the City Council of the City of Moorpark approved the staff recommendation to enlist the Contractor to perform the National Transit Database (NTD) independent auditor’s Statement for Financial Data beginning fiscal year 2017/2018 through fiscal year 2021/2022 and the annual Transportation Development Act (TDA) Financial and Compliance Audit services beginning fiscal year 2018/2019 through fiscal year 2021/2022; and increased the all- inclusive audit fees by sixty-four thousand two hundred and fifty dollars ($64,250.00) for the additional services; and authorized the City Manager to execute the First Amendment; and WHEREAS, the City and Contractor now desire to amend the Agreement to increase the compensation for services to be performed by Contractor from two hundred thirty thousand four hundred and fifty dollars ($230,450.00) by a value of sixty- four thousand two hundred and fifty dollars ($64,250.00) for a total contract value of two hundred ninety-four thousand seven hundred dollars ($294,700.00), and document said agreement to amend by jointly approving Amendment No. 1 to the Agreement. NOW, THEREFORE, it is mutually agreed by and between the parties to the Agreement as follows: I. Section 2, SCOPE OF SERVICES, is amended by replacing this section in its entirety as follows: “City does hereby retain Consultant, as an independent contractor, in a contractual capacity to provide professional auditing services, as set forth in Exhibits C, D and E. In the event there is a conflict between the provisions of Exhibits C, D and E and this Agreement, the language contained in this Agreement shall take precedence. Consultant shall perform the tasks described and set forth in Exhibits C, D and E. Consultant shall complete the tasks according to the schedule of performance which is also set forth in Exhibits C, D and E. 53 Compensation for the services to be performed by Consultant shall be in accordance with Exhibits C, D and E. Compensation shall not exceed the rates as stated in Exhibits C, D and E or total contract value two hundred ninety-four thousand seven hundred dollars ($294,700.00), without a written Amendment to the Agreement executed by both parties. Payment by City to Consultant shall be in accordance with the provisions of this Agreement.” II. Section 5, Payment is amended by replacing the second paragraph in its entirety as follows: “The City agrees to pay Consultant monthly, in accordance with the payment rates and terms and the schedule of payment as set forth in Exhibits C, D and E, based upon actual time spent on the above tasks. This amount shall not exceed two hundred ninety-four thousand seven hundred dollars ($294,700.00) for the total term of the Agreement unless additional payment is approved as provided in this Agreement.” III. Remaining Provisions: Except as revised by this Amendment No. 1, all of the provisions of the Agreement shall remain in full force and effect. In W itness W hereof, the parties hereto have caused this Amendment to be executed the day and year first above written. CITY OF MOORPARK LANCE, SOLL & LUNGHARD, LLP _______________________________ _______________________________ Troy Brown City Manager Bryan S. Gruber, CPA Partner Attest: _______________________________ Maureen Benson, City Clerk Amendment No. 1 to Agreement between City of Moorpark and Lance, Soll & Lunghard, LLP Page 2 of 2 54   March 12, 2019 Ron Ahlers Finance Director City of Moorpark Dear Mr. Ahlers, Lance, Soll & Lunghard, LLP (LSL) is pleased to provide agreed upon procedures on the application of the requirements of the Federal Transit Administration (FTA) as set forth in its National Transit Database (NTD) Uniform System of Accounts (USOA) by the City for the fiscal years ended June 30, 2018 through 2022. The procedures are included in the attached schedule (Appendix B) and do not constitute an examination or review, we will not express an opinion or conclusion on the application of the requirements of the FTA as set forth in its applicable NTD USOA. In addition, we have no obligation to perform any procedures beyond those listed in the attached schedule. We will issue a written report that lists the procedures performed and our findings. Our report will be addressed to the City Council of the City of Moorpark and the Federal Transit Administration. If, for any reason, we are unable to complete any of the procedures, we will describe in our report any restrictions on the performance of the procedures, or not issue a report and withdraw from this engagement. You understand that the report is intended solely for the information and use of the management of the City and the FTA and should not be used by anyone other than these specified parties. Our report will contain a paragraph indicating that had we performed additional procedures, other matters might have come to our attention that would have been reported to you. An agreed-upon procedures engagement is not designed to detect instances of fraud or noncompliance with laws or regulations; however, we will communicate to you any known and suspected fraud and noncompliance with laws or regulations affecting the application of the requirements of the FTA as set forth in its applicable NTD USOA that come to our attention. In addition, if, in connection with this engagement, matters come to our attention that contradict the application of the requirements of the FTA as set forth in its applicable NTD USOA, we will disclose those matters in our report. You are responsible for the application of the requirements of the FTA as set forth in its applicable NTD USOA and that it is in accordance with the National Transit Database’s 2018 Policy Manual for Reduced Reporters; and for selecting the criteria and procedures and determining that such criteria and procedures are appropriate for your purposes. You are also responsible for, and agree to provide us with, a written assertion about the application of the requirements of the FTA as set forth in its applicable NTD USOA. In addition, you are responsible for providing us with (1) access to all information of which you are aware that is relevant to the performance of the agreed-upon procedures on the subject matter, (2) additional information that we may request for the purpose of performing the agreed-upon procedures, and (3) unrestricted access to persons within the entity from whom we determine it necessary to obtain evidence relating to performing those procedures. 55   Please see the attached Appendix A for our proposed fees for the fiscal year ended June 30, 2018 through 2022. LSL CPAs looks forward to the opportunity to provide quality services to the City of Moorpark. Should you or another representative of the City have any questions regarding this quote, feel free to contact Bryan Gruber, Partner at (714) 672-0022. Thank you again for opportunity. Sincerely, Bryan S. Gruber, Partner Lance, Soll & Lunghard, LLP   56   FEES 2017–18 2018–19 2019–20 2020–21 2021-2022 Agreed – Upon Procedures - NTD $2,750 $2,750 $2,750 $3,000 $3,000 THE CITY OF MOORPARK LSL CPAs – Quote for Agreed Upon Procedures for NTD Appendix A 57   SCHEDULE OF PROCEDURES – Appendix B 1. Procedure: NTD Crosswalk a. Obtain the Reduced Reporter Form RR-20 prepared by management for the fiscal year ended June 30, 2018. b. Obtain the reconciliation documentation management prepares (referred to as “the crosswalk” throughout this report) to reconcile the chart of accounts, general ledger, and/or trial balance and other supporting documents such as Excel spreadsheets (collectively referred to as the accounting system) to Form RR-20. c. Inquire of management as to whether the crosswalk obtained in procedure 1.b is supported by the accounting system. d. For a transit agency that is part of a larger reporting entity, inquire of management as to whether the crosswalk includes the full cost of providing transit service, including costs incurred by the larger reporting entity to specifically support the agency’s transit service. e. Inspect the crosswalk to determine that it incorporates NTD reporting using the applicable mode(s) and types of service identified in Form RR-20. 2. Procedure: Accrual Accounting a. Obtain the most recent audited financial statements that include the transit agency and inspect the notes to the financial statements to determine whether the accrual basis of accounting was used. b. Inquire of management as to whether the accrual basis of accounting has continued to be used since the last audited reporting period and that it is used for NTD reporting in the current period. c. If the notes to the financial statements indicate that an accrual basis of accounting is not being used, or the results of the inquiry to management in procedure 2.b indicate the accrual basis of accounting is not being used in the current period, inspect the crosswalk to determine that the transit agency made adjustments to convert to an accrual basis for NTD reporting. 3. Procedure: Sources of Revenue Expended a. Trace and agree the two largest directly generated fund passenger fare revenue modes (all service types) from Form RR-20 to the accounting system. b. Trace and agree the largest source of funds expended (other than passenger fares) in the following major categories of funds from Form RR-20 to the accounting system: (1) Other Directly Generated Funds; (2) Revenue Accrued Through a PT Agreement; (3) Non-Federal Funds; and (4) Federal Funds. c. For each of the largest source of funds expended in 3b, inspect the crosswalk to determine that it identifies, evaluates, and classifies financial transactions into categories of funds expended on operations and funds expended on capital (USOA Section 2) for the reporting year. 58   4. Procedure: Funds Expended a. Trace and agree the aggregate of total funds expended for operations and total funds expended for capital from Form RR-20 to the accounting system using the crosswalk or other written expense documentation. b. For the two largest modes/type of services, trace and agree funds expended on operations and funds expended on capital from Form RR-20 to the crosswalk or other written documentation of functional expenses. 59   January 28, 2019 Ron Ahlers Finance Director City of Moorpark Dear Mr. Ahlers, Lance, Soll & Lunghard, LLP (LSL) is pleased to provide financial and compliance auditing services for the City of Moorpark Transportation Development Act (TDA) audits for the fiscal years ended June 30, 2019 through 2022. The services will include a financial statement audit of the fund financial statements for TDA funds and Prop 1B funds in accordance with Government Auditing Standards and a compliance audit in accordance with the TDA statutes and California Code of Regulations §6666 of Part 21. We will express an opinion on the fair presentation of the fund financial statements in all material respects in accordance with generally accepted accounting principles. The reports shall include Prop 1B fund and TDA article 3 and 8 funds and other funds as applicable and subject to audit with standards as mentioned above. The audit will include obtaining an understanding of internal controls over financial reporting and over compliance with applicable standards. Please see the attached Appendix A for our proposed fees for the fiscal year ended June 30, 2019 through 2022. LSL CPAs looks forward to the opportunity to provide quality services to the City of Moorpark. Should you or another representative of the City have any questions regarding this quote, feel free to contact Bryan Gruber, Partner at (714) 672-0022. Thank you again for opportunity. Sincerely, Bryan S. Gruber, Partner Lance, Soll & Lunghard, LLP   60   FEES 2018–19 2019–20 2020–21 2021–22 Fund Financial and Compliance Audit (per report) $3,000 $3,000 $3,250 $3,250 Note: 2018 audits included Prop 1B, TDA article 3, 8(a), and 8(c) which would total $12,000 ($3,000 each times 4 reports) for 2019 should all four funds be required to be audited. THE CITY OF MOORPARK LSL CPAs – Quote for TDA Financial and Compliance Audit Services Appendix A 61