HomeMy WebLinkAbout04. Authorize 3-year agreement with Maze & Associates for financial audit services Page 1 of 3
Item 4.
CENTRAL SAN CENTRAL SAN BOARD OF DIRECTORS
POSITION PAPER
MEETING DATE: JULY5, 2018
SUBJECT: AUTHORIZE THE GENERAL MANAGER TO ENTER I NTO A THREE-YEAR
PROFESSIONAL SERVICES AGREEMENT WITH MAZE &ASSOCIATES,
CERTIFIED PUBLIC ACCOUNTANTS, TO PERFORM FINANCIALAUDIT
SERVICES FOR FISCAL YEARS 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: THEA VASSALLO, FINANCE MANAGER
PHILIP R. LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
ANN SASAKI, DEPUTY GENERAL MANAGER
Roger S. Bailey
General Manager
ISSUE
The Board of Directors is required to appoint an independent auditor to examine Central San's financial
statements.
BACKGROUND
Central San received and reviewed eight Requests for Proposals (RFPs)from various firms and staff
interviewed the top three: Maze &Associates; Vavrinek, Trine, Day& Co.; and Brown &Armstrong. After
completing the proposal review and interview process, the Central San review 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
July 5, 2018 Regular Board Meeting Agenda Packet- Page 51 of 195
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Fiscal Year(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 (GFOA) 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.
As Maze &Associates has served as Central San's auditor for the past five audits, the firm 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 &Associates 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.
ALTERNATIVES/CONSIDERATIONS
The Board could extend the current contract with Maze &Associates for another year and issue another
RFP at a later date; this is not recommended.
FINANCIAL IMPACTS
The audit fee for Maze &Associates for FY 2016-17 was $32,010. Maze &Associates has proposed a
fee of $31,141 for FY 2017-18, a $869 decrease from 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 Central San which is outside the scope of the annual audit. 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 &Associates 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 Central San'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
July 5, 2018 Regular Board Meeting Agenda Packet- Page 52 of 195
Page 3 of 3
GOAL TWO: Strive to Meet Regulatory Requirements
Strategy 1 - Strive to achieve 100%permit compliance in air, water, land, and other regulations
GOAL THREE: Be a Fiscally Sound and Effective Water Sector Utility
Strategy 2- Manage Costs
July 5, 2018 Regular Board Meeting Agenda Packet- Page 53 of 195