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  • Los Angeles County O n e Gateway Plaza 213.922.2000 Tel Metropolitan Transportation Authority Los Angeies, CA 90012-2952 met ro .net

    Metro EXECUTIVE MANAGEMENT AND AUDlT COMMITTEE

    JUNE 16,2011

    SUBJECT: CONSOLlDATED AUDIT FOR FISCAL YEARS 201 1-15

    ACTION: AWARD CONTRACT TO SIMPSON & SIMPSON AND VASQUEZ & COMPANY

    RECOMMENDATION

    Authorize the Chief Executive Officer to award:

    A. a one-year, firm fixed price contract, Contract PS2510-2731A, to Simpson & Simpson to perform Package A of the fiscal year (FY) 201 1 Consolidated Financial and Compliance Audit of the programs, jurisdictions and agencies listed in Attachment B inclusive of Option 6 to perform audits of Transit System Operators Transit Funds for an amount not to exceed $2,374,375, inclusive of four one-year options for fiscal years 201 2 through 201 5, effective July 1, 201 1 ; and

    B. a one-year, firm fixed price contract, Contract PS2510-2731 B, to Vasquez & Company to perform Package B of the FY 201 1 Consolidated Financial and Compliance Audit of the programs, jurisdictions and agencies listed in Attachment C inclusive of Option 5 to perform Los Angeles Department of Transportation (LADOT) National Transit Database Audits and Option 6 to perform audits of City of Los Angeles Transit System Funds for an amount not to exceed $2,137,000, inclusive of four one-year options for fiscal years 201 2 through 201 5, effective July 1, 201 1.

    As the Regional Transportation Planner for Los Angeles County, we are responsible for planning, programming and allocating transportation funding to Los Angeles County jurisdictions, transit operators and other transportation programs. We have the fiduciary responsibility to help ensure jurisdictions; operators and program administrators receiving funds for transportation related projects are in compliance with the applicable rules, regulations, policies and guidelines.

  • The Consolidated Audit process includes financial and compliance audits of the following programs:

    Measure R Local Return Program; Proposition 1 B funds; Transportation Development Act (TDA) Article 3 and Article 8 Programs; Proposition A and Proposition C Local Return Programs;

    0 Proposition A Discretionary Incentive Program; 0 Regional Transit Systems Operating funds and Measure R Operating and Clean

    Fuel Bus funds for the cities of Commerce, Redondo Beach and Torrance; 0 Metrolink Program;

    EZ Transit Pass Program; Immediate Needs Transportation Program (INTP); Riders Relief Transportation Program (RRTP); and

    0 Support for Homeless on Re-Entry Program (SHORE).

    We allocate over $420 million annually to these programs and distribute them to 88 cities in Los Angeles County, the County of Los Angeles and other agencies. Audits of these programs are needed to ensure that the agencies comply with the applicable rules, regulations, policies, guidelines and executed Memorandums of Understanding (MOU). The audits also serve as a program management tool for effectively managing and administering these programs.

    Simpson & Simpson and Vasquez & Company, the independent CPA Firms, will perform financial and compliance audits to assure management that recipients of subsidies included in the Consolidated Audit are adhering to the statutes of each applicable funding source and that operations data used to allocate funds is fair and in accordance with Federal Transportation Administration (FTA) guidelines. The audits will be conducted in accordance with generally accepted government auditing standards and will meet the American Institute of Certified Public Accountants' Standards. In performing these audits, Simpson & Simpson and Vasquez & Company will report on management deficiencies where noted and on findings that may result in funds being returned to Metro based on trades or exchange of funds, unused and lapsed funds, and disallowable expenditures.

    DISCUSSION

    This year the Consolidated Audit Project was divided into two separate packages (package A and B) based primarily on their District geographic location. This change was necessary to develop a more efficient audit process by streamlining the amount of audits required from one firm. In addition, this new process provides firms with increased contracting opportunities.

    Option 5 is a priced option in the contract to conduct financial and compliance audits of LADOT annual operating data, ridership data and operating expenditures as required by the FTA. LADOT currently operates the second largest fleet in Los Angeles County consisting of nearly 400 vehicles, which operate over 800,000 revenue hours and serve

    FY 20 1 1 - 15 Consolidated Audits 2

  • approximately 30 million boardings per year. LADOT is allocated Proposition A Discretionary funds based on pre-determined ridership and operating data formula.

    Option 6 serves to conduct financial and compliance audits of various Transit System Operators' operating data and Measure R funds.

    Exercising each year of Option 5 and/or 6 will be at the discretion of the Project Manager.

    FINANCIAL IMPACT

    Funds of $600,000 for year one of these contracts are included in the FYI2 budget in Cost Center 251 0, Management Audit under projects 40551 0 and 100055, account 50316 Services Professional and Technical. Cost of EZ Pass audit is included in FYI2 budget under Cost Center 051 1, project 30001 5. FY 12 budget will be amended accordingly if additional funds are needed to exercise any or all options. Since this is a multi-year contract, the Project Manager and cost center managers will be responsible for ensuring that funds are budgeted in subsequent years.

    Impacts to Bus and Rail Enterprise Fund Operating and Capital Budgets

    Since the source of funds for the $600,000 referenced above is Proposition A and C administration and Measure R administration funds, there is no impact.

    ALTERNATIVES CONSIDERED

    The Board of Directors may choose not to award the contracts to Simpson & Simpson and Vasquez & Company however, this is not recommended since Proposition A and Proposition C Guidelines, Measure R Guidelines, state laws and federal provisions require that audits be conducted on funds allocated. The Consolidated Audit process addresses these requirements and plays a major part in the continued implementation, management and administration of the covered funding programs.

    NEXT STEPS

    With Board approval, we will award the contracts to Simpson & Simpson and Vasquez & Company. In addition, Simpson & Simpson and Vasquez & Company will conduct Consolidated Audit kickoff workshops with the auditees to provide insight into the audit process, documentation requirements and audit due dates. The CPA firms will also conduct an Entrance Conference with our program managers and audit staff to discuss the audit process, timetable and documentation requirements.

    FY 20 1 1 - 15 Consolidated Audits

  • ATTACHMENTS

    A. Procurement Summary B. FY 201 1 List of Funded Projects and Programs to be audited for Package A C. FY 201 1 List of Funded Projects and Programs to be audited for Package B

    Prepared by: Kathy Knox, Director of Audit

    FY 20 1 1 - 15 Consolidated Audits

  • Chief Auditor

    Arthur T. Leahy Chief Executive Officer

    FY 20 1 1 - 15 Consolidated Audits

  • ATTACHMENT A

    PROCUREMENT SUMMARY

    CONSOLIDATED AUDIT PROGRAMS - FY2011 THRU FY2015

    A. Procurement Background

    1. 2.

    3.

    4.

    5.

    6.

    7.

    The purpose of this Request for Proposal (RFP) is to select two (2) Certified Public Accounting firms to conduct audit services for the Consolidated Audit Program FY2011 through FY2015. The scope of services required under this contract is divided into two separate packages (Package A and B). These packages were constructed primarily based on the geographical locations of the agencies to be audited and to assist each of the firms in meeting strict audit schedules; and to streamline the audit processes for each of these projects. This is a standard negotiated competitive procurement. Firm-Fixed Price contracts will be issued to each firm selected.

    Seven proposals were received on May 11,201 1, (4 for Package A and 3 for package B). The solicitation was issued in accordance with the Procurement Policy Manual.

    Contract Number: PS2510-2731 - Package A & Package B Recommended Vendor: Simpson and Simpson CPA - Package A

    Vasquez and Company, LLP - Package B Type of Procurement (check one) : IFB RFP RFP - A&E

    Non-Competitive Modification Task Order Procurement Dates: A. Issued: 04-08-201 1 B. AdvertisedIPublicized: 04-08-201 1 C. Pre-proposal1Pre-Bid Conference: 04-1 8-201 1 D. ProposalsIBids Due: 05-1 1-201 1 E. Pre-Qualification Completed: In Process F. Conflict of Interest Form Submitted to Ethics: In Process G. Protest Period End Date: 06-20-201 1

    Six amendments were issued during the solicitation phase of this RFP. Amendment No. 1 issued on April 12, 201 1, added and deleted cities to be audited under the program. Amendment No. 2 issued on April 15, 201 1, added and deleted cities scheduled for audit under the program, identified all transit agencies that receive funds from Metro under the Consolidated audit program, added a pricing sheet

    Solicitations Picked up1Downloaded: 26

    Contract Administrator: Barbara A. Gatewood Project Manager: Kathy Knox

    FY 20 1 1 - 15 Collsolidated Audits 6

    Bids/Proposals Received: Package A - 4 Proposals Package B - 3 Proposals Telephone Number: (2 1 3) 922-731 7 Telephone Number: (21 3) 922-3663

  • breakdown, and changed the evaluation criteria. Amendment No. 3 issued on