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HomeMy WebLinkAboutStaff Report 12340 City of Palo Alto (ID # 12340) Policy and Services Committee Staff Report Report Type: Action Items Meeting Date: 6/8/2021 City of Palo Alto Page 1 Summary Title: Approval of FY22 Task Orders for the Office of the City Auditor Title: Review and Approval of the Office of the City Auditor's Fiscal Year (FY) 2022 Task Orders From: City Manager Lead Department: City Auditor Recommendation The City Auditor recommends that the Policy & Services Committee take the following action and forward the corresponding report to City Council for consent: 1) Approve the following Task Orders, identified in the Audit Plan Report: o FY22-001 – Citywide Risk Assessment o FY22-002 – Annual Audit Plan o FY22-003 – Financial Audit o FY22-005 – Various Tasks (including periodic reporting, fraud/waste/abuse hotline, office administrative functions) Discussion In accordance with our agreement with the City, Baker Tilly is required to conduct recurring activities each year. Those recurring activities including the following tasks outlined in our agreement: o Task 1: Conduct a Citywide Risk Assessment o Task 2: Prepare an Annual Audit Plan o Task 3: Assist with Selection of a Financial Auditor and Assist in Managing the Financial Audit o Task 4: Various Tasks including periodic reporting, fraud/waste/abuse hotline, office administrative functions The Office of the City Auditor is seeking approval from the Policy & Services Committee of the Tasks Orders that correspond to the Tasks outlined above. The Task Orders provide the contractual authority to begin this work in the new Fiscal Year. An excerpt City of Palo Alto Page 2 from the contract outlining these tasks is below for ease of reference. Task 1. Citywide Risk Assessment: Beginning with year 1 and continuing at a minimum every other year thereafter, prepare a citywide risk assessment following the same review and approval requirements described in Task 2. The risk assessment process will be the primary determinant of subsequent audit activity. Task 2. Preparation of Annual Audit Plan: Prepare an annual audit plan for review by the City Manager and appropriate City Council committee(s), and approval by the City Council, that identifies preliminary objectives of each audit to be performed, the schedule for each audit, and the estimated not to exceed resources and costs for each audit. The City Auditor shall consult with the City Attorney as necessary when developing audit plans. The annual audit plan will be largely based on the risk assessment required in Task 1. Task 3. Selection of External Financial Auditor and Annual Audit Coordination: Coordinate the annual external financial audit in each year of the contract term. Pursuant to the City Charter, the City Auditor shall oversee the selection process for the annual external financial auditor. The City anticipates conducting a Request for Proposals for this purpose in early 2021. Task 4. Execute Annual Audit Plan: Conduct a minimum number of internal audits in accordance with each approved annual audit plan based on the risk assessments. Each internal audit will commence only upon the City’s approval of a Task Order (which may be at the task or sub-task level) as required by this Agreement. Each internal audit requires the preparation of a written report for review by the City Manager, City Attorney and appropriate Council committee, and review/approval by the City Council as required. Resource Impact Work recommended in these tasks is within both the approved scope and compensation of the contract with Baker Tilly and current proposed funding levels in the FY 2022 Proposed Operating Budget for the Office of the City Auditor. Environmental Impact This action is exempt from CEQA and requires no further environmental review. Attachments: • Office of the City Auditor - FY22 Task Orders PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY22-001 Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): 1B. TASK O RDER NO.: FY22-001 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: August 1, 2021 COMPLETION: November 30, 2021 4 TOTAL TASK ORDER PRICE: $20,000 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE:  SERVICES AND DELIVERABLES TO BE PROVIDED  SCHEDULE OF PERFORMANCE  MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to updating the Citywide Risk Assessment involves four (4) primary steps: • Step 1: Project Planning & Management • Step 2: Information Gathering • Step 3: Analysis • Step 4: Reporting Step 1 – Project Planning & Management This step includes those tasks necessary to solidify mutual understanding of the risk assessment scope, objectives, deliverables, and timing as well as ensuring that appropriate client and consultant resources are available and well-coordinated. Tasks include: • Finalize project design – The first project activities will be to: o Identify communication channels and reporting relationships and responsibilities of project staff o Review and confirm project timelines o Review and confirm deliverables • Arrange logistics/administrative support – Matters to be addressed include schedules for interviews and data collection, contact persons in the departments, any other logistical matters, etc. • Conduct kick-off meeting with key project stakeholders Step 2 – Information Gathering This step involves gathering information, through various means, that will enable the project team to understand the various risks facing the City. Tasks include: • Request and review background information – the project team will develop an information request(s) in order to obtain various background information from the City. The request will include, but not be limited to: o Strategic plan(s) o Financial reports, including the most recent City Budget and Comprehensive Annual Financial Report (CAFR) o Operational policies and procedures o Municipal code o Consulting reports o Other relevant information and reports • Conduct interviews with City Council and management o Risk assessment interviews, aimed at understanding new or emerging risks and updates to City functions. • Conduct research into key risks in order to identify relevant information to assess risks Step 3 – Risk Analysis In Step 3, the project team will develop a risk matrix consisting of auditable areas (also referred to as an audit or risk universe). The risk matrix will include the following risk categories: • Environment, Strategy, and Governance – risks that have an organization wide impact and are not subject to a specific department or function (e.g., ethics) • Significant Projects and Initiatives – risks associated with large projects (e.g., capital projects, technology implementation) or City initiatives (e.g., employee engagement initiative). • Function Specific Risks – risks associated with a specific department or function (e.g., procurement policy compliance) After assembling a risk matrix, the project team will assess the likelihood and impact of potential adverse events in order to quantitatively score each auditable area for purposes of prioritizing audit activities. Step 4 – Reporting In Step 4, the project team will update the FY21 Risk Matrix and prepare a draft Risk Assessment Report. The project team will ask for input (general completeness, risk scoring) on the Risk Matrix from key project stakeholders. Upon finalization of the Risk Matrix, the project team will finalize the Risk Assessment Report. Deliverables: The following deliverables will be prepared as part of this engagement: • Risk Matrix • Risk Assessment Report • Presentation of Results to City Council (note that this may be combined with presentation of the Task 2 Annual Audit Plan) Schedule of Performance Anticipated Start Date: August 1, 2021 Anticipated End Date: November 30, 2021 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $20,000. The not-to-exceed budget is based on an estimate of 100 total project hours, of which 30 are estimated to be completed by the City Auditor. Reimbursable Expenses If circumstances allow, Baker Tilly anticipates planning one on-site fieldwork week. Given this possibility, Baker Tilly could incur reimbursable expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $1,800. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $400 • Rental Car - $400 • Hotel accommodation - $700 (3 nights) • Food and incidentals – $300 Note that, if current restrictions associated with COVID-19 continue, an on-site visit may not be possible. The project team will work with the City to consider circumstances at the time. PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY22-002 Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): 1B. TASK O RDER NO.: FY22-002 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: August 1, 2021 COMPLETION: November 30, 2021 4 TOTAL TASK ORDER PRICE: $12,000 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE:  SERVICES AND DELIVERABLES TO BE PROVIDED  SCHEDULE OF PERFORMANCE  MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to preparing the Annual Audit Plan involves two (2) primary steps: • Step 1: Consultation with City Council and Management • Step 2: Reporting Step 1 – Consultation with City Council and Management The Risk Matrix and Risk Assessment Report will serve as the primary drivers of the Annual Audit Plan. The project team will initiate discussions over Risk Assessment results, potential audit activities, and audit coverage with City Council and Management. The purpose of those conversations will be to understand the priorities of City Council, and to develop a Draft Annual Audit Plan. The Draft Annual Audit Plan will identify the following components for each audit activity: • Audit activity type – audit or consulting activity • Audit objectives and scope • Anticipated budget – both in terms of hours and budget • Anticipated timeline Step 2 – Reporting The project team will present the Draft Annual Audit Plan to the City Council in order to obtain input on each potential audit activity. Upon refining the plan, the project team will finalize the Annual Audit Plan for presentation to City Council. Deliverables: The following deliverable will be prepared as part of this engagement: • Annual Audit Plan Schedule of Performance Anticipated Start Date: August 1, 2021 Anticipated End Date: November 30, 2021 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $15,000. The not-to-exceed budget is based on an estimate of 75 total project hours, of which 15 are estimated to be completed by the City Auditor. Reimbursable Expenses If circumstances allow, Baker Tilly anticipates planning one on-site fieldwork week. Given this possibility, Baker Tilly could incur reimbursable expenses for this Task. The not-to-exceed maximum for reimbursable expenses for this Task is $1,600. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $400 • Rental Car - $400 • Hotel accommodation - $500 (2 nights) • Food and incidentals – $300 Note that, if current restrictions associated with COVID-19 continue, an on-site visit may not be possible. The project team will work with the City to consider circumstances at the time. PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY22-003 Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): 1B. TASK O RDER NO.: FY22-003 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: July 1, 2021 COMPLETION: June 30, 2022 4 TOTAL TASK ORDER PRICE: $20,000 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE:  SERVICES AND DELIVERABLES TO BE PROVIDED  SCHEDULE OF PERFORMANCE  MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly’s approach to the Office of the City Auditor’s role on the financial audit involves two (2) primary step in FY22. • Step 1: Selection of the Financial Auditor • Step 2: Assistance in Managing the Financial Audit Step 1 – Selection of the Financial Auditor In FY22, the project team will assist in the selection of the Financial Auditor. In order to accomplish this task, the project team will: • Meet with management to understand the nature of the existing agreement with the Financial Auditors • Work with the Purchasing Department to develop a strategy for selection, including developing the solicitation, formulating the selection committee, evaluating proposals, finalizing selection, and developing a contract document • Review the prior solicitation materials with the Purchasing Department, Administrative Services Department, and Legal Department to identify necessary updates and other considerations • Assist the Purchasing Department in finalizing the solicitation materials • Assist in coordinating activities of the selection committee • Assist in coordinating contract review between the selected vendor and the Legal Department • Periodically report on the status of the selection to the City Council • Assist, as needed and required, in City Council presentations related to the selection Step 2 – Role in Managing the Financial Audit In FY22, the project team will assist in managing the financial audit and presenting financial audit results to the Finance Committee and to the City Council, in accordance with municipal code. Deliverables: The final deliverable associated with this Task consists of a final contract with the selected Financial Audit vendor. Schedule of Performance Anticipated Start Date: July 1, 2021 Anticipated End Date: June 30, 2022 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $20,000. The not-to-exceed budget is based on an estimate of 100 total project hours, of which 20 are estimated to be completed by the City Auditor. Reimbursable Expenses Baker Tilly anticipates incurring reimbursable expenses for this Task. The expenses will be incurred to attend the City Council meeting for final selection of the Financial Auditor. The not-to-exceed maximum for reimbursable expenses for this Task is $2,600. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $800 (est. 2 round trip flights) • Rental Car - $500 • Hotel accommodation - $900 (4 nights) • Food and incidentals – $400 Note that, if current restrictions associated with COVID-19 continue, the final presentation may take place virtually. The project team will work with the City to consider circumstances at the time. PROFESSIONAL SERVICES TASK ORDER TASK ORDER FY22-005 Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required by this Task Order as described below. CONTRACT NO. C21179340 OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE) 1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): 1B. TASK O RDER NO.: FY21-005 2. CONSULTANT NAME: Baker Tilly US, LLP 3. PERIOD OF PERFORMANCE: START: July 1, 2021 COMPLETION: June 30, 2022 4 TOTAL TASK ORDER PRICE: $50,000 BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD 5. BUDGET CODE_______________ COST CENTER________________ COST ELEMENT______________ WBS/CIP__________ PHASE__________ 6. CITY PROJECT MANAGER’S NAME & DEPARTMENT: Lydia Kou, Chair of the City Council’s Policy and Services Committee 7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A) MUST INCLUDE:  SERVICES AND DELIVERABLES TO BE PROVIDED  SCHEDULE OF PERFORMANCE  MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)  REIMBURSABLE EXPENSES, if any (with “not to exceed” amount) 8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A I hereby authorize the performance of the work described in this Task Order. APPROVED: CITY OF PALO ALTO BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ I hereby acknowledge receipt and acceptance of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: COMPANY NAME: ______________________ BY:____________________________________ Name __________________________________ Title___________________________________ Date ___________________________________ Attachment A DESCRIPTION OF SCOPE OF SERVICES Introduction Attachment A, the Description of Scope of Services, contains the following four (4) elements: • Services and Deliverables To Be Provided • Schedule of Performance • Maximum Compensation Amount and Rate Schedule (As Applicable) • Reimbursable Expenses, if any (With “Not To Exceed” Amount) Services & Deliverables Baker Tilly will provide the following services in Task 5: • Quarterly Reports • Annual Status Report • Provision of the City Hotline • Office Administrative Functions Deliverables: The following deliverable will be prepared as part of this engagement: • Quarterly Reports (4 in FY22) • Annual Status Report Schedule of Performance Anticipated Start Date: July 1, 2021 Anticipated End Date: June 30, 2022 Maximum Compensation Amount and Rate Schedule The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $50,000 The not-to-exceed budget is based on an estimate of 250 total project hours, of which 80 are estimated to be completed by the City Auditor. Reimbursable Expenses Baker Tilly anticipates incurring reimbursable expenses for this Task. The expenses will be incurred to present Quarterly Reports to City Council. The not-to-exceed maximum for reimbursable expenses for this Task is $2,800. The following summarizes anticipated reimbursable expenses: • Round-trip Airfare – $1800 (est. 4 round trip flights) • Rental Car – $1000 • Hotel accommodation - $1800 (8 nights) • Food and incidentals – $1000 Note that, if current restrictions associated with COVID-19 continue, the final presentation may take place virtually. The project team will work with the City to consider circumstances at the time.