TO:
Honorable Mayor and Members of the City Council
THROUGH:
Talyn Mirzakhanian, City Manager
FROM:
Libby Bretthauer, Finance Director
Julie Bondarchuk, Financial Controller
Amira Khodari, Accounting Supervisor
SUBJECT:Title
Consideration of a Resolution Approving a Three-Year Agreement with CliftonLarsonAllen LLP for Financial Audit Services in an Amount Not-to-Exceed $186,900 with an Optional Two-Year Extension in an Additional Amount Not-To-Exceed $143,100 (Budgeted) (Finance Director Bretthauer).
A) ADOPT RESOLUTION NO. 25-0106
B) AUTHORIZE THE CITY MANAGER TO EXECUTE AN OPTIONAL TWO-YEAR EXTENSION
Body
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RECOMMENDATION:
Staff recommends that the City Council adopt Resolution No. 25-0106 approving a three-year agreement with CliftonLarsonAllen LLP (CLA) for audit services in an amount not-to-exceed $186,900 and authorize the City Manager to execute an optional two-year extension for an additional $143,100.
FISCAL IMPLICATIONS:
Funds in the amount of $75,000 are currently budgeted within the General Fund Finance Department budget for audit services. Subsequent years will be budgeted accordingly.
BACKGROUND:
The City’s financial policies and best practices require the performance of an annual audit. The purpose of an audit is to provide stakeholders with an independent auditor’s opinion on whether the financial statements of an entity are presented fairly in all material respects. Additionally, the Uniform Guidance (2 CFR Part 200) issued by the Office of Management and Budget (OMB) specifies that any non-federal agencies spending more than $1 million in federal awards during a fiscal year are required to conduct an audit.
These audits are conducted in conformance with Generally Accepted Government Auditing Standards (GAGAS) by a licensed independent public accounting firm. The City’s current agreement with Lance Soll Lunghard (LSL) is set to expire at the conclusion of the FY 2024-2025 audit. In accordance with the City’s policies, staff issued a Request for Proposal (RFP) for financial auditing services.
DISCUSSION:
Staff issued RFP 1333-25 for audit services on February 20, 2025, and received five proposals from the following firms:
Baker Tilly
CliftonLarsonAllen LLP
Lance Soll & Lunghard LLP
MGO
The Pun Group LLP
After reviewing the content of the proposals, the City Treasurer and staff narrowed the field down to three firms (CLA, Pun Group, and LSL) who were invited for in-person interviews on July 9 and 10, 2025. The City’s interview team consisted of the City Treasurer, Finance Director, Financial Controller, and Accounting Supervisor.
The firms were evaluated based on the following criteria, which were provided as part of the RFP:
Criteria Points
Understanding of Scope of Work 10
Qualifications and Experience 12
Proposed Staff Qualifications and Experience 12
References 12
Proven Experience with Stakeholder Engagement 12
Proposed Methodology 12
Cost 10
Oral Interview 20
Total 100
The interview team selected CLA as the City’s audit firm for the FY 2026 audit. Reference checks confirmed other similar clients were satisfied with CLA’s performance and services. CLA also has a National Assurance Technical Group (NATG) that clients may use to work out compliance for the implementation of new accounting standards. Although cost is not a primary factor in the selection of an audit firm, CLA was the lowest bidder and about $200,000 lower than the highest bidder.
Staff presented a report to the Finance Subcommittee on July 28, 2025, with a recommendation to award the RFP to CLA. Staff recommends that City Council adopt Resolution No. 25-0106 approving a three-year agreement with CLA for financial audit services in an amount not-to-exceed $186,900 and authorizing the City Manager to extend the term of the agreement for an additional two-year period, if deemed in the City’s best interest. If the term is extended, the compensation shall not exceed $78,600 during FY 2028-2029 and $64,500 in FY 2029-2030. FY 2028-2029 is anticipated to be more costly due to periodic audits for Measure W and National Transit Database procedures, which are required at certain intervals. The City may cancel the agreement at any time without cause.
PUBLIC OUTREACH:
After analysis, staff determined that public outreach was not required for this issue.
ENVIRONMENTAL REVIEW:
The City has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary.
LEGAL REVIEW:
The City Attorney has approved the agreement as to form.
ATTACHMENTS:
1. Resolution No. 25-0106
2. Agreement - CliftonLarsonAllen LLP