19 Staff Report.ACFR Preparation Services
PREPARED BY: Gitta Ungvari
Finance Director
Reviewed by: Town Manager, Town Attorney, and Assistant Town Manager
110 E. Main Street Los Gatos, CA 95030 ● 406-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 4/16/2024
DATE: April 5, 2024
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Discuss and Provide Direction Regarding the Finance Commission
Recommendation to Issue a Request for Qualification (RFQ) for the
Preparation of the Annual Comprehensive Financial Report (ACFR).
RECOMMENDATION:
Discuss and provide direction regarding the Finance Commission recommendation to issue a
Request for Qualification (RFQ) for the preparation of the Annual Comprehensive Financial
Report (ACFR).
BACKGROUND:
At the December 11, 2023 Finance Commission meeting, the Commissioners passed a motion
to recommend that the Town Council adopt a practice to hire a separate entity to perform work
necessary for the preparation of the Town’s ACFR. The work includes preparing the financial
statements, notes disclosures, supplemental information, the Management Discussion and
Analysis (MD&A) template and tables, and statistical schedules that are derived from the
financial statements. Currently, this work is performed by the Town’s external auditor, Chavan
& Associates, LLP.
DISCUSSION:
Based on staff research, most municipalities within Santa Clara County, with the exception of
the City of San José, use their current audit firm to assist with compiling and preparing their
Annual Comprehensive Financial Report. While management is responsible for the financial
statements, the production of the Annual Comprehensive Financial Report involves the
synchronization of the actual financial statements with the footnotes, supporting statistical and
required supplementary data, Letter of transmittal, and the MD&A. This is a very time intensive
effort for staff and can be done more efficiently through the use of a third party who has
PAGE 2 OF 2 SUBJECT: ACFR Preparation Services DATE: April 5, 2024
DISCUSSION (continued):
software dedicated for this purpose and has expertise providing ACFR preparation service to
multiple local government clients. This approach is most time and cost efficient, taking
advantage of economies of scale, allowing for lower cost of production, and saving staff
resources for other Council and Finance Commission priorities.
If Council directs staff to hire a different firm to assist with the ACFR preparation, staff
recommends that Council authorize the Town Manager to prepare and issue a Request for
Qualifications (RFQ) for ACFR preparation. Staff anticipates the contract amount being within
Town Manager’s contract authority and would not need to return to Council to approve the
consultant selection.
CONCLUSION:
Discuss and provide direction regarding the Finance Commission’s recommendation to issue a
Request for Qualification (RFQ) for the preparation of the Annual Comprehensive Financial
Report (ACFR).
FISCAL IMPACT:
If Council approves the Finance Commission’s recommendation, any additional cost beyond
using our current external auditor (Chavan & Associates, LLP) will be included in the Proposed
FY 2024/25 Operating Budget. The potential cost of the additional services is estimated at
approximately $10,000 to $15,000 for the fiscal year FY 2023/24 ACFR, pending results of the
RFQ submittals.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.