Staff Report.Auditor Contract
PREPARED BY: Stephen Conway
Finance Director
Reviewed by: Assistant Town Manager, and Town Attorney
110 E. Main Street Los Gatos, CA 95030 ● 406-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 12/21/2021 ITEM NO: 10
DATE: December 8, 2021
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Receive the Town Finance Commission Recommendation and Authorize the
Town Manager to Execute a Three-Year Agreement with Chavan &
Associates, LLP to Provide Auditing Services for the Town of Los Gatos in
Amount Not to Exceed $117,000
RECOMMENDATION:
Receive the Town Finance Commission recommendation and authorize the Town Manager to
execute a three-year agreement with Chavan & Associates, LLP to provide auditing services for
the Town of Los Gatos in Amount Not to Exceed $117,000.
BACKGROUND:
The Finance Commission was presented the Auditor Contract on December 6, 2021. With the
passage of Measure A, the Finance Commission has been tasked with several mandated duties
as described in the provisions of the adopted Ordinance. Section 2.50.225. – Duties states that:
(a) The Finance Commission shall:
(9} Provide written comments and recommendations regarding the selection of
auditors for the Comprehensive Annual Financial Report (now called the Annual
Comprehensive Financial Report).
For the past five years, the Town’s annual audits were completed by Badawi and Associates.
Consistent with Governmental Accounting Standards Board best practices and State law, it is
the Town’s practice to solicit audit proposals every five years to ensure audit independence and
competitive prices. If the Town is satisfied with the current audit firm’s work, then that firm
may submit a proposal but must propose with an alternate audit engagement partner.
PAGE 2 OF 2 SUBJECT: Authorize the Town Manager to Execute an Agreement with Chavan & Associates, LLP to provide auditing services for the Town of Los Gatos DATE: December 8, 2021
DISCUSSION:
The Town of Los Gatos sent Requests for Proposals (RFP) to qualified independent certified
public accounting firms to audit its financial statement for three fiscal years, with an option to
extend the agreement an additional two fiscal years with Town Council approval. The RFP was
sent to thirty-four qualified firms known to provide local government auditing services. Six
firms responded with proposals: Badawi & Associates, Chavan & Associates, Eadie & Payne,
Edie Baily, Maze & Associates, and R.J. Ricciardi.
A selection panel consisting of one Finance Commissioner, the Finance Director, Assistant Town
Manager, Finance and Budget Manager, and Finance Accountant reviewed and scored the six
proposals. The firms were evaluated based on their technical expertise with local government
audits, qualified personnel, and responsiveness to the RFP. These qualities were weighted at
seventy percent and proposed fees weighted at thirty percent. The cost for audit services were
submitted in sealed envelopes and not opened until after the proposals were scored based on
technical expertise, local government experience, and responsiveness. Based on this analysis,
three firms (Chavan & Associates, Edie Baily, and Maze & Associates) were selected to
participate in an interview.
Based upon the proposals, interviews and reference checks, Town staff in consultation with the
Finance Commission has selected the firm of Chavan & Associates. The managing partner is Mr.
Sheldon Chavan, who began his career in public accounting over 20 years ago. He is a CPA
licensed in California and a member of American Institute of Certified Public Accountants
(AICPA), California Society of Certified Public Accountants (CalCPA), California Society of
Municipal Finance Officers (CSMFO), Governmental Audit Quality Center (GAQC), and
Government Finance Officers Association (GFOA). He has also been a member of the GFOA
Special Review Committee, with responsibility for reviewing Annual Comprehensive Financial
Reports (ACFR) for award of the Certificate of Excellence in Financial Reporting. The firm’s
current audit client list includes City of Oroville, City of Saratoga, and the City of Pacific Grove
amongst a list of many other California cities that are audited by Chavan and Associates.
The firm will provide the following services for the Town:
• The annual audit of the basic financial statements in accordance with Governmental
Accounting Standards and preparation of the Town’s Annual Comprehensive Financial
Report;
• A report communicating information related to the audit to those in charge of
governance (Town Council) at the conclusion of the audit;
• A management letter containing any comments or recommendations resulting from
the review of systems of internal controls in connection with the financial audit;
• A Single Audit for grant funding if required under the Title 2 U.S. Code of Federal
Regulations;
PAGE 3 OF 2 SUBJECT: Authorize the Town Manager to Execute an Agreement with Chavan & Associates, LLP to provide auditing services for the Town of Los Gatos DATE: December 8, 2021
DISCUSSION (cont’d):
• Measure G district sales tax audit;
• Pension trust audit; and
• Optional services including the preparation of the annual report of financial
transactions to the State Controller.
CONCLUSION:
Receive the Town Finance Commission recommendation and authorize the Town Manager to
execute a three-year agreement with Chavan & Associates, LLP to provide auditing services for
the Town of Los Gatos in Amount Not to Exceed $117,000.
FISCAL IMPACT:
Sufficient funds for auditing services are included in the Town’s proposed FY 2021/22 Operating
and Capital Budget.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachment:
1. Agreement to provide auditing and optional services with Chavan & Associates, LLP.