Report Prepared by: Kuljit Singh, Deputy Finance Officer
Title
SUBJECT: Approval of a Design Professional Services Agreement for a Term of Five (5) Years with Vasquez & Company LLP for Professional Auditing and Related Services in the not to Exceed Amount of $300,000
REPORT IN BRIEF
Considers approving a Design Professional Services Agreement for annual audit and related professional services with Vasquez & Company LLP.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving the Professional Services Agreement with Vasquez & Company LLP in the not to exceed amount of $300,000; and,
B. Authorizing the City Manager to execute all necessary documents.
Body
ALTERNATIVES
1. Adopt the motion as recommended by staff; or
2. Modify the action (specify in motion); or
3. Deny the action
AUTHORITY
Section 1118 of Article XI of the Charter of the City of Merced
CITY COUNCIL PRIORITIES
As provided for in the 2025-26 Adopted Budget
DISCUSSION
The City Charter requires an annual audit to be performed on the City of Merced’s financial records by an independent auditor selected by the City Council. An independent audit is also required by Federal and State agencies, due to the receipt of grant funding, and to comply with covenants of several outstanding bond issues.
The five-year auditing contract with Eide Bailly LLP will be expiring 06/30/2026 for the 06/30/2025 audit. The Finance Department solicited proposals from independent audit firms to perform the work. The work includes auditing the financial statements; and performing additional auditing and related services for the fiscal year ended June 30, 2026, with four subsequent fiscal year options.
Three firms submitted proposals for the engagement. The proposals were analyzed and ranked according to the evaluation criteria, which included mandatory elements, technical qualifications, and cost/hours. The technical qualifications, which include expertise, experience, and audit approach, have a maximum of 60 points. The cost/hours have a maximum of 40 points. The proposals have been evaluated and scored for both technical qualifications and cost/hours, as follows:
|
Firm |
Technical Qualifications Score |
Cost/Hours Score |
Total Score |
5 Year Cost |
|
Vasquez & Company LLP |
51 |
35 |
87 |
$300,000 |
|
Harshwall & Company LLP |
49 |
30 |
79 |
$189,400 |
|
Badawi & Associates |
51 |
29 |
80 |
$408,580 |
Based on technical qualifications and cost/hours, Vasquez & Company LLP has the highest score.
Vasquez & Company LLP’s office is located in Glendale. The firm provides a full range of accounting services, including financial and compliance auditing services to governmental agencies throughout California.
Vasquez & Company LLP’s fee to perform the engagement is $57,000, $56,400, $61,000, $60,400, and $65,200 per year for the years ending June 30, 2026, through June 30, 2030. The services include the financial audit, single audit, and biennial compliance report on the Abandoned Vehicle program. Funds will be allocated for the engagement in the annual budgets.
The audit fee for the fiscal year ended June 30, 2025, is $42,070.
IMPACT ON CITY RESOURCES
No additional appropriation is needed. There are sufficient funds within the adopted Fiscal Year 2025-26 budget. All future year engagement fees will be included in the annual budget process.
ATTACHMENTS
1. Design Professional Services Agreement