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Chief Administrative Office recommending the Board:
1) Approve and authorize the Chair to sign retroactive Amendment I to Agreement 8966 with LSL LPP, formerly Lance, Soll & Lunghard, LLP, to update the vendor’s name and address, to remove progress reporting requirements, and to increase compensation by $185,000;
2) Authorize the Purchasing Agent to execute any necessary amendments to said agreement, excluding term extensions and increases to compensation, contingent upon approval by County Counsel and Risk Management.
FUNDING: General Fund.
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DISCUSSION / BACKGROUND
The County adheres to the accounting principles, standards and procedures prescribed by the State Controller’s Office as set forth in its manual Accounting Standards and Procedures for Counties, which adheres to Generally Accepted Accounting Principles (GAAP).
Pursuant to Government Code section 25250, the Board of Supervisors is required by law to at least biennially “examine and audit, or cause to be audited, the financial accounts and records of all officers having responsibility for the care, management, collection or disbursement of money belonging to the county or money received or disbursed by them under the authority of law.” The Board may employ the services of an independent certified public accountant or licensed public accountant to perform this examination in accordance with generally accepted auditing principles.
As a result of Request for Proposal (RFP) 24-0058, on September 17, 2024, the Board authorized Agreement 8966 with Lance, Soll, & Lunghard, LLP for financial auditing services. Agreement 8966 has a term of three years, with the option to extend by one additional two-year period. The Chief Administrative Office is requesting retroactive Amendment I to Agreement 8966, effective as of the original contract execution date, September 20, 2024, to update the vendor’s name and address, remove all language which requires the vendor to submit progress reports, and to increase compensation by $185,000, for a total amount of $625,300, to allow for additional required auditing services.
The Board is being asked to approve this amendment retroactively due to the out-of-scope work being a necessary part of the auditing services. Had the vendor waited for the amendment before completing the out-of-scope work, the annual audits would not have been completed timely.
Updates to the Vendor’s Information
The vendor’s name was legally changed from Lance, Soll, & Lunghard, LLP, to LSL, LLP. Additionally, the vendor’s local address and headquarters location have changed. The proposed amendment reflects these changes.
Progress Reporting Requirements
The proposed amendment removes boilerplate language which requires the vendor to provide progress reporting. Progress reports are not a standard part of the audit management process, but the standard county boilerplate template includes this language. Removing this requirement aligns the contract with typical audit processes. The department has agreed to the vendor’s request as progress reporting does not provide additional value to the County but requires additional tracking and review without benefit.
Changes to Scope and Not-to-Exceed Amount
The proposed amendment increases the compensation by $185,000 to allow for additional required auditing services under Agreement 8966. The additional services include additional single audits and annual testing related to Mello Roos disclosures.
During the vendor’s audits for the year ending June 30, 2024, it was determined that additional program single audits and annual testing related to the Mello Roos disclosures were required to maintain compliance with auditing requirements. To ensure compliance throughout the contract term, the requested amendment adds annual testing for the Mello Roos disclosures and includes the option for six additional program single audits per fiscal year, including the optional two-year extension period. The final costs are dependent upon how many programs require a single audit each fiscal year and whether the department extends the agreement for the optional two-year period.
ALTERNATIVES
Should the Board choose not to approve the removal of the progress reporting requirement language, the County will require that the vendor produce progress reports.
Should the Board choose not to approve the increase in the vendor’s compensation of $185,000 for the program single audits and Mello Roos disclosures, the County will be unable to maintain compliance with auditing requirements.
PRIOR BOARD ACTION
On September 17, 2024, the Board approved Agreement 8966 with Lance, Soll, & Lunghard LLP (Legistar File 24-0976).
OTHER DEPARTMENT / AGENCY INVOLVEMENT
County Counsel and Risk Management have reviewed and approved the proposed Amendment.
The Auditor-Controller has been notified in compliance with Board Policy B-12 Fiscal Review Process.
CAO RECOMMENDATION / COMMENTS
[This section is completed by the CAO's Office. This section is required]
FINANCIAL IMPACT
If approved, the total General Fund impact will be up to $185,000 over the term of the agreement. The final costs are dependent upon how many programs require a single audit each fiscal year and whether the department extends the agreement for the optional two-year period.
CLERK OF THE BOARD FOLLOW UP ACTIONS
Obtain Board Chair signature on one copy of Amendment I to Agreement 8966 and send to Chief Administrative Office, Central Fiscal, Attn: Serena Lemmons.
STRATEGIC PLAN COMPONENT
N/A
CONTACT
Alison Winter, Principal Management Analyst