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Information |
TITLE: |
Consideration and Approval of Contract: Contract for Professional Audit Services with Heinfeld, Meech & Co., PC in the amount of $423,100.00 |
STAFF RECOMMENDED ACTION: |
- Approve a Contract for Professional Audit Services with Heinfeld, Meech & Co., PC to perform annual audits of the City's financial records for four (4) years. June 30, 2023 through June 30, 2026, with option to extend for three (3) one (1) year terms, at the annual fees as follows:
- June 30, 2023: $100,000
- June 30, 2024: $103,000
- June 30, 2025: $110,850
- June 30, 2026: $109,250
- Authorize the City Manager to execute all documents
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Executive Summary: |
An annual audit is statutorily required by A.R.S. 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 the prior auditor, Clifton Larson Allen, expired with the completion of the audit for the year ending June 30, 2022. No further extensions are available. Per the procurement process, Heinfeld, Meech & Co., PC was the highest scoring firm. |
Financial Impact: |
The proposed FY 2023-24 budget is $104,740 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 $112,940. |
Policy Impact: |
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Connection to PBB Priorities/Objectives, Carbon Neutrality Plan & Regional Plan: |
Priority Based Budget Key Community Priorities and Objectives
High Performing Governance
- Enhance the organization's fiscal stability and increase efficiency and effectiveness
- Encourage public trust through transparency, accessibility and use of the City’s public participation policy
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Has There Been Previous Council Decision on This: |
None. |
Options and Alternatives: |
- Approve the Contract for Professional Services with Heinfeld, Meech & Co., PC
- Choose one of the other proposals submitted for the RFP. Cons-potential higher costs associated with the contract and risk of a formal protest from Heinfeld, Meech & Co if we choose the other lower scoring proposal.
- Do not approve any contract and conduct a new RFP process. Cons-Potential delay in audit service for FY2022-23
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Background and 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:
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 Independent Review by Auditors) every three years beginning with fiscal year ending June 30, 2025.
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 2023-114. The RFP was posted on the City's PlanetBids solicitation platform on April 14, 2023, and advertised in the AZ Daily Sun on April 19th and 26th, 2023. The RFP closed as of 3:00pm May 3, 2023. There were a total of two (2) proposal responses. Based on the scoring results, additional questions were asked of both firms to clarify their proposals and for additional information related to firm and assigned staff's governmental, federal major program and housing authority audit experience. Heinfeld, Meech & Co., PC's aggregate score was the highest scoring Proposer with 488 total points out of 550 total possible points and the evaluation team which consisted of 5 members (4 City Employees and 1 Audit Committee member) determined Heinfeld, Meech & Co., PC 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:
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)
5. Overall Evaluation (10 Points) |
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