To: Board of Supervisors
From: Monica Nino, County Administrator
Report Title: APPROVE and AUTHORIZE the County Administrator and Auditor-Controller, or designees, to execute an amended engagement letter and contract amendment with Macias Gini & O'Connell, LLP, increasing the payment limit by $250,000 from $2,579,811 to $2,829,811 for professional auditing services related to conducting financial compliance audits, with no change to the contract term ending May 31, 2028; and APPROVE a budget amendment authorizing the transfer of $250,000 in appropriations from Appropriations for Contingencies (0990) to General Administration (1200). (100% General Fund)
Recommendation: Recommendation of the County Administrator
RECOMMENDATIONS:
APPROVE and AUTHORIZE the County Administrator and Auditor-Controller, or designees, to execute an amended engagement letter and contract amendment with Macias Gini & O'Connell, LLP, increasing the payment limit by $250,000 from $2,579,811 to $2,829,811 for professional auditing services related to conducting financial compliance audits, with no change to the contract term ending May 31, 2028; and APPROVE a budget amendment authorizing the transfer of $250,000 in appropriations from Appropriations for Contingencies (0990) to General Administration (1200). (100% General Fund)
FISCAL IMPACT:
Approval of the contract amendment and budget amendment would have no net fiscal impact to general fund expenditures for the year, but it would transfer $250,000 from Appropriations for Contingencies to a general fund operating account after fiscal year-end close in September.
BACKGROUND:
On April 24, 2023, the County issued a Request for Proposals (RFP) for professional auditing services, including annual external audits of the County, In-Home Supportive Services (IHSS) Public Authority, and the County of Contra Costa Public Financing Authority. In addition, the RFP scope includes the annual Single Audit required of all entities receiving over $750,000 (now $1,000,000) from the federal government. The external audit of the County's financial statements is separate from the Single Audit of the County's federal expenditures.
Proposals were due from interested firms on May 12, 2023, and the County received two proposals from qualified, public-sector accounting firms; Macias Gini & O'Connell, LLP and Eide Bailly, LLP. Following receipt of the proposals, the County convened a review panel on May 17, 2023 to review each proposal and make a recommendation for contract award to the Board of Supervisors. The review panel used a consensus based, forced ranking approach to evaluate the proposals and ultimately recommend Macias Gini & O'Connell, LLP (MGO) to be granted the contract.
On May 23, 2023, the Board of Supervisors authorized a three-year contract period with two optional one-year extensions. At that time, staff pre-negotiated the potential year 4 and 5 fees to lock in predictable rates should the Board authorize a future extension of the contract. On June 25, 2024, the Board amended the contract to add an engagement related to an external audit of Measure X program funds, which also included pre-negotiated rates through year 5.
On April 28, 2026, the Board extended the contract for two additional years through May 31, 2028 and increased the contract payment limit by $1,089,364 reflecting the rates for the two additional years of the engagement.
Since the execution of the original audit engagement letter, MGO has become aware of increased audit risk in the County, including publicly reported information regarding an ongoing federal investigation involving a County elected official, as well as additional information concerning functions within that office that may be relevant to an assessment of audit risk. Today’s action requests that the Board increase the payment limit by $250,000 from $2,579,811 to $2,829,811 to conduct additional financial compliance audits related to the increased audit risk, with no change to the contract term ending May 31, 2028.
CONSEQUENCE OF NEGATIVE ACTION:
The County will be unable to adequately assess audit risk and comply with the California Government Code and the Single Audit Act.