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HomeMy WebLinkAboutStaff Report 14695 City of Palo Alto (ID # 14695) City Council Staff Report Meeting Date: 8/22/2022 Report Type: Action Items City of Palo Alto Page 1 Title: City Auditor Vacancy: Council Direction on Next Steps From: City Manager Lead Department: City Clerk RECOMMENDATION Provide direction on next steps regarding the City Auditor function. BACKGROUND The Palo Alto Charter provides that the City Council appoint an Auditor who serves at the Council’s will. The Charter describes the Auditor’s key duties. (See Charter, Art. IV, sections 1 and 12.) In February 2020, the Council directed the Council Appointed Officers (CAO) Committee to conduct a solicitation for outsourced internal auditing services. After an extensive procurement process, including public input, the CAO Committee recommended finalists to for Council consideration. On September 28, 2020, the Council appointed Kyle O’Rourke, MPA, CAI, CGAP, CRMA, Senior Consulting Manager with Baker Tilly US, LLP, as Palo Alto’s City Auditor. The Council executed a contract with Baker Tilly for the services of Mr. O’Rourke and other supporting personnel, effective October 1, 2020 through June 30, 2022, for a not-to-exceed amount of $1,300,000. On May 9, 2022, the CAO Committee recommended and the Council approved an amendment to the contract to extend the term to June 30, 20225, revise the project scope, and increase the contract amount by $2,126,250 to a not-to-exceed amount of $3,426,250 over five years. Background materials, including the City’s original contract with Baker Tilly and Amendment 1, and additional information about the procurement process, can be found at Item 7 of the Council’s May 9, 2022 agenda. On August 17, 2022, the City received the attached letter from Baker Tilly Managing Partner Vicki Hellenbrand informing the City that Mr. O’Rourke resigned from Baker Tilly on August 15, 2022, and will no longer serve as Palo Alto’s City Auditor. TIMELINE City of Palo Alto Page 2 The term of the City’s contract with Baker Tilly is through June 30, 2025. The City, at its discretion, may terminate the contract with ten (10) days written notice. The contract provides for Baker Tilly to designate a temporary replacement for 90 days if the office of Auditor becomes vacant without sufficient time for the Council to appointment a replacement. RESOURCE IMPACT The City’s contract allocates $708,750 per year for audit services. Council approved funding for the audit function in its FY 2023 budget. ENVIRONMENTAL REVIEW This activity is not a project under California Environmental Quality Act (CEQA) as defined in CEQA Guidelines, section 15378, because it has no potential for resulting in either a direct or reasonably foreseeable indirect physical change in the environment Attachments: • Palo Alto City Auditor Resignation 8-15-2022 Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2022 Baker Tilly US, LLP Baker Tilly US, LLP 4807 Innovate Lane, PO Box 7398 Madison, WI, 53707-7398 United States of America T: +1 (608) 249 6622 F: +1 (608) 249 8532 bakertilly.com August 17, 2022 Via email and certified mail Lesley Milton Office of the City Clerk City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 94301 Dear Madame Clerk, This correspondence provides the City of Palo Alto formal notice that Kyle O’Rourke resigned from Baker Tilly US LLP on August 15, 2022 and will no longer serve as the City Auditor. We are prepared to provide the City ongoing assistance in fulfilling the City Auditor functions, including, but not limited to, assisting in identifying a successor City Auditor. Regards, BAKER TILLY US, LLP Vicki Hellenbrand, CPA Managing Partner, Public Sector cc: Ed Shikada, City of Palo Alto Jodi Dobson, Baker Tilly US, LLP