To: Sonoma County Board of Supervisors
Department or Agency Name(s): Auditor-Controller-Treasurer-Tax Collector
Staff Name and Phone Number: Jennifer Calderon, 707-565-3289
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
Third Amendment to Eide Bailly LLP Auditing Services Agreement for the audit of the Sonoma County Financial Statements
End
Recommended Action:
Recommended action
A) Delegate authority to the Auditor-Controller-Treasurer-Tax Collector to execute the Third Amendment, in form approved by County Counsel, to:
i. Increase the contract by $30,000 annually to expand the scope of work for FY 2021-22, FY 2022-23 and FY 2023-24 to include (3) additional major programs for the Single Audit, for a new not-to-exceed total of $990,369. The Single Audit is included in the Eide Bailly LLP Auditing Services Agreement and reports on the compliance on each of the major federal programs included in the County’s financial Statements.
ii. Delegate authority to Auditor-Controller-Treasurer-Tax Collector (ACTTC) to authorize future amendments for extra or changed work or other charges, up to 15% of the total contract amount, as amended by the First, Second and Third Amendments.
iii. Authorize the ACTTC to approve by written amendment to this agreement the two (2) one-year options for an additional not-to-exceed amount of $457,653.
end
Executive Summary:
California Government Code Sections 25250 and 25253 require the Board of Supervisors to provide for regular audits of County accounts and records, maintenance of financial transaction records in compliance with Generally Accepted Accounting Principles, and preparation and publishing of annual financial reports. In addition, Single Audit requirements for Federal Awards mandates reports on the compliance on each of the major federal programs included in the County’s financial statements and County submission of those audited statements.
The current audit services contract with Eide Bailly LLP, dated November 13, 2019, is for the audit of the financial statements of the Fiscal Years Ending June 30, 2020, 2021, 2022, 2023 and 2024 for a total amount of $828,289, and authorized the Auditor-Controller-Treasurer-Tax Collector (ACTTC) to approve amendments up to 10% of the contract amount for additional work resulting from any future changes in audit requirements. The contract includes two one-year extensions to audit the County’s financial statements for subsequent fiscal years ending June 30, 2025 and 2026.
The First Amendment, dated August 27, 2020 and approved by the ACTTC, authorized a maximum of $7,000 annually for extra work required for the agreed upon procedures related to the Ordinance No. 6238 (Parks Measure M Sales Tax Measure).
The Second Amendment, dated February 3, 2022 and approved by the ACTTC, authorized a maximum of $9,270 for each Fiscal Year Ending June 30, 2021, 2022, 2023, and 2024, for extra work, if required to test one additional major program for the Single Audit of the County of Sonoma.
The Third Amendment will increase the contract by $30,000 annually to expand the scope of work for the additional cost associated with auditing requirements of three additional major programs as part of the Single Audit, increase the ACTTC contingency authority to 15% of the contract, as amended, and delegate authority to the ACTTC to approve the two one-year extensions.
Discussion:
Staff is requesting your Board approve this Third Amendment due to the following:
1) Additional three (3) Major Programs
The Uniform Guidance for single audit requirements requires that a risk assessment be performed on each major federal program to ensure compliance with program requirements. This entails that an assessment of internal controls, testing of internal controls to determine that the controls are operating effectively and tests to validate compliance be performed for each compliance requirement that is direct and material to the major federal program. The audit requirement is triggered when a major program meets or exceeds a $3,000,000 expenditure threshold and each major program audit is a separate compliance audit. The County now requires eight (8) compliance audits for fiscal year 2021-22, up from five (5) previously: four (4) were authorized under the original contract, one (1) was authorized under the Second Amendment, and three (3) are to be authorized under this Proposed Third Amendment.
For the fiscal year ending June 30, 2022, the overall audit scope and related hours have increased due to the following:
• The County has obtained increased funding from federal agencies and the number of major federal programs required to be audited has increased.
• The new major programs, listed below, contain a “higher risk” designation by the Office of Management Budget, meaning they have inherently higher risk, and require more risk assessment procedures.
The following are the three additional programs that are required to undergo a single audit in FY 2021-22. These programs have not met the $3,000,000 expenditure threshold to require a single audit in the past.
1 Department of Health Services, Substance Abuse and Treatment Block Grant - $3,246,418
2 Human Services Department, Workforce Innovation and Opportunity Act - $3,428,138
3 Human Services Department, Aging Cluster - $3,866,937
2. Increase contingency to 15% of contract, as amended
Unforeseen circumstances have arisen during the term of this contract requiring the First, Second Amendment and proposed Third Amendment. These additional services, which cannot be predicted at the time of signing of the contract, arise due to required implementation of complex accounting and reporting standards. The ACTTC requests authorization to execute contract amendments up to 15% of the amended contract amount for additional work that may arise during the contract term due to changes in accounting and reporting requirements.
3. Authorize the ACTTC to approve the (2) one-year options to the base five-year contract
The ACTTC is also requesting delegated authority to approve the (2) one-year extension options to the base five-year agreement as originally intended for an additional not-to exceed amount of $457,653, (includes 3% CPI adjustment each year).
Strategic Plan:
N/A
Prior Board Actions:
11/19/2019. Board approved the execution of the five-year contract for audit services with Eide Bailly LLP for a total amount of $828,289 and amendments up to 10% of the contract amount for additional work resulting from any future changes in audit requirements.
Fiscal Summary
|
Expenditures |
FY 22-23 Adopted |
FY23-24 Projected |
FY 24-25 Projected |
|
Budgeted Expenses |
213,851 |
218,878 |
225,445 |
|
Additional Appropriation Requested |
|
|
|
|
Total Expenditures |
213,851 |
218,878 |
225,445 |
|
Funding Sources |
|
|
|
|
General Fund/WA GF |
213,851 |
218,878 |
225,445 |
|
State/Federal |
|
|
|
|
Fees/Other |
|
|
|
|
Use of Fund Balance |
|
|
|
|
Contingencies |
|
|
|
|
Total Sources |
213,581 |
218,878 |
225,445 |
Narrative Explanation of Fiscal Impacts:
For FY2022-23, the additional $30,000 will be covered by savings in other areas. The additional amount for FY2023-24 will be included in the Recommended Budget using existing net cost.
|
Staffing Impacts: None |
|
|
|
|
Position Title (Payroll Classification) |
Monthly Salary Range (A-I Step) |
Additions (Number) |
Deletions (Number) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Narrative Explanation of Staffing Impacts (If Required):
None
Attachments:
Attachment A: Third Amendment to Edie Bailly LLP Auditing Services Agreement
Related Items “On File” with the Clerk of the Board:
Original Services Agreement