August 23, 2005
SUBJECT: Award of Contract to Conduct Performance Audits of Various City Programs (F0507-02)
REPORT IN BRIEF
Approval is requested for the award of a one-year contract to Katherine F. Murdock of East Palo Alto to conduct performance audits of various City programs for the Department of Finance.
BACKGROUND
The Department of Finance is responsible for conducting performance audits of City programs on a regular basis. Performance audits provide an opportunity, based upon an objective and systematic examination of data, for an independent assessment of the performance of a program and the extent to which the program is achieving its goals and objectives. Performance audits are conducted of each City program over an eight year cycle. The budget for the various audit activities includes hours for a Senior Internal Auditor and an Internal Auditor within the Financial Management and Analysis program in the Department of Finance.
Over the past year, Finance has been unable to conduct new audits or implement recommendations from previous audits in a timely manner due to Internal Audit staff vacancies and recruitment difficulties. Audit duties have been performed using part-time and contract staff as available. In November 2004 staff contracted with Katherine Murdock to assist in conducting performance audits. Ms. Murdock was recommended to the City by the Internal Auditor of the City of Palo Alto, in whose office she was previously employed. The performance of Ms. Murdock has been outstanding. She was instrumental in completing an audit of the Development Services program and is currently completing the audit of the Water Supply and Distribution program. Recruitment efforts for an Internal Auditor over the last several months have not resulted in any candidates that could perform the job duties, and information from the National Association of Local Government Auditors (NALGA) is that individuals skilled in this area are in very short supply. Staff is therefore recommending that we enter into a contract with Katherine Murdock for continuing performance audit services.
DISCUSSION
Katherine Murdock has experience conducting performance audits, both in the Cities of Sunnyvale and Palo Alto. Since November 2004 Ms. Murdock has worked with Finance staff to perform and complete various performance audits, including the Development Services program and the Water Supply and Distribution program. Staff has attempted over the last year to recruit for the two positions in the Internal Audit division of the Finance Department. While we have successfully hired a Senior Internal Auditor who started work in July 2005, we have not had any suitable candidates for the Internal Auditor position. Staff is therefore recommending that the City enter into a contract with Ms. Murdock to fulfill this critical audit function on a continuing basis.
Section 2.08.070(b) of the Sunnyvale Municipal Code exempts professional services from competitive bidding.
FISCAL IMPACT
Services will be performed on a time and expenses basis at the hourly rate of $70.00. Expenses will be paid by the contractor as part of the contract up to a total of $9,200. Expenses in excess $9,200 will be reimbursed at actual cost. Total compensation, including expenses, will not exceed $128,800.
RECOMMENDATION
It is recommended that Council award a one-year contract, in substantially the same form as the attached draft and in an amount not to exceed $128,800, to Katherine F. Murdock to conduct performance audits of various City programs under the direction of the Department of Finance and approve delegation of authority to City Manager or her designee to execute an option to extend the contract for four additional years over the life of the agreement.
Prepared by:
Elaine Wesely
Purchasing Officer
Reviewed by:
Mary J Bradley
Director of Finance
Approved by:
Amy Chan
City Manager
Attachment
Draft Service Agreement (pdf)