City of Santa Monica

Staff Report

First Modification to Agreement #9956 with Moss Adams for Internal Audit Services


Department:Finance DepartmentSponsors:
Category:03. Consent Calendar

Recommended Action

Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and execute a first modification to agreement #9956 in the amount of $210,000 with Moss Adams, LLP, a Washington-based company, for internal audit services for the Finance Department. This will result in a five-year amended agreement with a new total amount not to exceed $1,135,000, with future year funding contingent on Council budget approval.

Staff Report Body


Since 2014, Moss Adams has performed a variety of internal audit tasks for the City including assessing and identifying risks; assessing internal controls and compliance with laws, regulations and contractual agreements; and reviews and training on preventing and detecting fraud to ensure the safeguarding of public assets.  In 2017, at the direction of the Audit Subcommittee of the City Council, Moss Adams conducted a Compensation and Staffing Review at a cost of $210,000.  Staff did not account for this task in the original project budget.  To proceed with regular and ongoing audit services, staff proposes increasing contract authority by $210,000, with the five-year term unchanged.



In 2017, the City of Santa Monica scheduled a review of staff compensation and public safety overtime to be conducted by the City’s internal auditor, Moss Adams.  The review was conducted in response to public scrutiny raised by media reports related to City staff compensation and public safety overtime.  The final report (Attachment A), represented one of the most comprehensive local government analyses of compensation practices done in recent years in Southern California.  The resulting implementation plan included adopting the City’s Compensation Philosophy, which sets forth a consistent methodology for determining whether the City’s processes to recruit and retain highly qualified staff are consistent with the City’s overarching goal of being an “employer of choice” while maintaining fiscal responsibility.


The review was completed within existing contract authority.  However, since this work was unanticipated, it was not accounted for in staff’s initial estimate of budgetary need.  The original contract was to be for a term of three-years with two one-year renewal options; however, at the time of execution, the City decided to exercise the full five-years in order to maintain consistency in the auditing work to be completed.  The contract expires in August 2019.  To maintain ongoing internal audit functions through the remainder of the contract, staff recommends increasing the contract authority in an amount equal to the cost of the Compensation and Staffing Review.  Staff is preparing to release an updated RFP for internal audit services in anticipation of the contract’s expiration.


Past Council Actions

Meeting Date


08/26/14 (attachment A)

Award RFP for internal audit services to Moss Adams, LLP

05/08/18 (attachment B)

Receive the Compensation and Staffing Review and Approve Implementation Plan Responding to Recommendations


Financial Impacts and Budget Actions

Staff seeks authority to increase the amount of contract #9956 with Moss Adams, LLP for internal audit services. 

Contract Modification Request


Agreement #

Current Authorized Amount

Modified Request Amount

FY 2018-19 Budget

Dept/CIP Account #

Total Revised Contract Amount











Future year funding is contingent on Council budget approval.

Meeting History

Mar 26, 2019 5:30 PM  City Council Regular Meeting
draft Draft