TO: Honorable Mayor and Members of the City Council
THRU: Jarad Hildenbrand, City Manager
FROM: Trang Nguyen, Finance Director
1. Subject
title
Agreement with Lance, Soll & Lunghard, LLP for annual financial audit services for the City and the Successor Agency of the former Orange Redevelopment Agency for Fiscal Year 2025-2026 and 2026-2027 and an Agreed-Upon Procedures for Payroll.
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2. Summary
The proposed agreement with Lance, Soll & Lunghard, LLP would extend audit services for Fiscal Years ending June 30, 2026, and June 30, 2027, totaling $84,600 and $87,140, respectively. Additionally, the proposed agreement includes an Agreed-Upon Procedures for Payroll processing for a not-to-exceed amount of $13,500.
3. Recommended Action
recommendation
Approve the agreement with Lance, Soll & Lunghard, LLP in the amount of $185,240 for audit services and Agreed-Upon Procedures for Payroll; and authorize the Mayor and City Clerk to execute on behalf of the City.
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4. Fiscal Impact
The expense for this agreement is $185,240 and will be funded through:
|
Fund |
FY26 |
FY27 |
Total |
|
General Fund |
$74,555 |
$62,882 |
$137,437 |
|
AQMD Fund |
$1,540 |
$1,590 |
$3,130 |
|
CDBG Fund |
$1,441 |
$1,484 |
$2,925 |
|
Home Fund |
$37 |
$38 |
$75 |
|
Asset Forfeiture |
$1,582 |
$1,628 |
$3,210 |
|
Redevelopment Agency |
$2,857 |
$2,946 |
$5,803 |
|
Water Fund |
$13,605 |
$14,014 |
$27,619 |
|
Sanitation Fund |
$2,483 |
$2,558 |
$5,041 |
|
TOTAL |
$98,100 |
$87,140 |
$185,240 |
This agreement is for two years, totaling $185,240. Annual payments will be requested in conjunction with the annual operating budget.
5. Strategic Plan Goals
Goal 2: Enhance Economic Development and Achieve Fiscal Sustainability
6. Discussion and Background
The current agreement with Lance, Soll & Lunghard, LLP (LSL) expires upon completion of the Fiscal Year 2024-2025 audit. Per Government Code 12410.6(b), the City may retain LSL for an additional two years before issuing a new Request for Proposals (RFP), as the lead partner has served only four years which has not exceeded the six-year rotation limit. Staff are seeking authorization to exercise this option for the following reasons:
• Familiarity with City operations: LSL has extensive knowledge of the City’s financial processes, and with the recent changes to the financial software, it is more cost-effective to retain a firm that is already familiar with the City’s systems.
• Cost savings: The City currently receives a 20% discount from LSL’s standard hourly rates.
The proposed extension covers audit services for Fiscal Years ending June 30, 2026, and June 30, 2027, at costs of $84,600 and $87,140, respectively. Actual annual costs may vary depending on the number of major programs included in the federally required Single Audit and whether the Optional Service for Investment Portfolio is requested. Additional details on the scope of work and rates are provided in Attachment B.
In addition, to support the payroll system conversion and implementation, staff are requesting a one-time engagement for LSL to review the implementation of Memorandum of Understanding (MOU) provisions in the current payroll system. Details of the Agreed-Upon Procedures (AUP) are included in Attachment B. The cost for this engagement will not exceed $13,500.
The proposal was presented to the Audit Advisory Committee on February 12th. The committee reviewed the proposal and supported with staff’s recommendation.
7. ATTACHMENTS
• Professional Services Agreement with LSL, LLP
• Payroll Process Procedures