HomeMy WebLinkAbout03.c. Review draft Position Paper to authorize the General Manager to enter into a three-year professional services agreement with Maze & Associates, Certified Public Accountants, to perform financial audit services for Fiscal Years (FY) 2017-18 through Page 1 of 2
Item 3.c.
CENTRAL SAN BOARD OF DIRECTORS
POSITION PAPER
DRAFT
MEETING DATE: JUNE 26, 2018
SUBJECT: REVIEW DRAFT POSITION PAPER TO AUTHORIZE THE GENERAL
MANAGER TO ENTER INTO A THREE-YEAR PROFESSIONAL SERVICES
AGREEMENT WITH MAZE &ASSOCIATES, CERTIFIED PUBLIC
ACCOUNTANTS, TO PERFORM FINANCIAL AUDIT SERVICES FOR
FISCAL YEARS (FY)2017-18 THROUGH 2019-20, WITH THE OPTION TO
EXTEND FOR TWO ADDITIONAL YEARS
SUBMITTED BY: INITIATING DEPARTMENT:
CHRIS THOMAS, FINANCE ADMINISTRATOR ADMINISTRATION-FINANCE
REVIEWED BY: THEAVASSALLO, FINANCE MANAGER
PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
ANN SASAKI, DEPUTY GENERAL MANAGER
ISSUE
The Board of Directors is required to appoint an independent auditor to examine the District's financial
statements.
BACKGROUND
The District received and reviewed eight requests for proposals (RFPs)from various firms and staff interviewed
the top three: Maze &Associates; Uavrinek, Trine, Day& Co.; and Brown &Armstrong.After completing the
proposal review and interview process, the Central San panel determined that Maze &Associates scored the
highest based on the following criteria: qualifications and experience, approach, references, and pricing. Maze
&Associates has also served as Central San's incumbent auditor since FY 2012-13.
The Board has historically mandated rotation of audit firms in the past, after every five years, to ensure a
fresh audit team and maintain independence from the audit firm. However, the Government Finance
Officers Association (G FOA) has recently published articles and guidelines which encourage local
municipal entities to strive for the highest quality service, even if it is with the same audit firm. Since most
audit firms do not specialize in the government sector, mandatory rotation of firms can prevent agencies
from obtaining the best services. However, in order to maintain independence, it is recommended that the
leading audit partner be rotated after five years.
June 26, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 86 of 156
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As Maze has served as the District's auditor for the past five audits, Maze intends to rotate the principal
partner on the engagement. Vikki Rodriguez, Certified Public Accountant(CPA), has served as principal
partner for all five audits under the current contract. David Alvey, CPA, has been proposed as the new
principal partner for this engagement.
Additionally, other factors support continuing with Maze &Associates at this time: (1)the retirement of
Central San's Finance Manager this August, enhancing the value of continuity and knowledge that Maze &
Associates provides; (2)staff work on the new Enterprise Resource Planning project that heightens the
value of continuing work with a firm that knows Central San and has minimal ramp-up and learning
requirements; and (3)the high level of support that Maze has provided in construction of the financial
statements for Central San.
Based on the results of the RPF process, the GFOA guidance, and the factors noted above, continuation
with Maze &Associates with the principal partner transition proposed is recommended.
ALT ERNAT IVES/CONSIDERATIONS
The Board could extend the current contract with Maze for another year and issue another RFP at a later
date; this is not recommended.
FINANCIAL IMPACTS
The audit fee for Maze for FY 2016-17 was $32,010. Maze has proposed a fee of$31,141 for FY 2017-
18, a$869 decrease from the prior year. The total for the three-year contract with the optional two-year
extension shall not exceed $155,705. Additional fees are charged for work requested by the District which
is outside the scope of the annual financial statement audit. Such additional work could include work in
support of Central San's internal audit program, as was the case with purchasing card program transaction
review during FY 2017-18.
Staff recommends entering into the three-year contract with a two-year extension.
COMMITTEE RECOMMENDATION
On June 26, 2018, the Finance Committee reviewed this matter, including staff's recommendation to enter
into a professional services contract with Maze for FYs 2017-18 through 2019-20 with the option of a two-
year extension. The Committee recommended Board approval.
RECOMMENDED BOARD ACTION
Authorize the General Manager to enter into a professional services agreement with Maze &Associates,
Certified Public Accountants, to perform the District's independent financial audits for FYs 2017-18
through 2019-20, with the option to extend for two additional years and a cost ceiling, including two
extensions, not to exceed $155,705.
Strategic Plan Tie-In
GOAL THREE:Be a Fiscally Sound and Effective Water Sector Utility
Strategy 2- Manage costs
June 26, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 87 of 156