City Council approves five year contract for new auditing firm

July 21, 2000
Santa Paula City Council
In the wake of returning $2 million in Redevelopment Agency bonds and a cold cash shortfall of about $1 million in the agency’s budget, ongoing budget problems that city staff said should have been uncovered by the city’s checks and balances consultant, the City Council agreed to hire a new firm at the July 3 meeting. The city had contracted with Moss, Levy & Hartzheim, CPA, to perform the annual financial audit for almost two decades, since 1982, but the firm came under fire after the city discovered shortfalls in the Redevelopment Agency.The council awarded the contract for auditing services at the July 3 meeting.The present budget contains $17,000 for the city’s audit including the annually required Gann Law review and preparation of the State Controller’s Annual report of financial transactions, according to the staff report by Financial Director Glenda Jay. The staff report did not address the accusations that the budget problems of the Redevelopment Agency - made public in May - were overlooked by Moss, Levy & Hartzheim. City officials said a number of factors were responsible for the mistake, including misallocations of RDA money starting in about 1996.Come budget year 2000-01 the auditing cost will be $19,500, including preparation of the single audit and auditing the Finance Authority, a committee comprised of City Council members.The list of those interested in bidding for the contract shrunk considerably when only four firms contacted via city request for proposal agreed to attend a pre-proposal meeting on May 22. Thereafter, only three submitted proposals.The firms bid to prepare to prepare the city’s audit and the Redevelopment Agency’s financial and compliance audit, the State Controller’s reports for both agencies, preparation of the statement of indebtedness for the agency, review of the annual calculation of the Gann appropriation limit, the single audit and a management letter.
Moreland & Associates was recommended by Jay although their cost - $25,000 to start and escalating to $29,000 for fiscal year 2003-04, was higher than Thomas, Higbie & Smith. A third proposal was rejected outright due to the costs for the five-year contract starting at $39,630 the first year.City Councilwoman Laura Flores Espinosa questioned why Jay was recommending a five year contract and why Moreland & Associates was recommended, although the firm’s price was not the lowest bid.Jay said a five year contract represented a cost and time savings as the city would not have to reembark on the bid process in a shorter period of time.Councilman Jim Garfield wanted assurance that Moreland & Associates has errors and omissions insurance and Jay said staff will “make sure. . .”Moreland & Associates currently audit 30 California cities and 27 Redevelopment Agencies, “significantly more than” the low bidder, noted Jay’s report.



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