title
EXTERNAL AUDITING SERVICES
recommended action
RECOMMENDATION
Staff recommends that the Audit Committee forward a recommendation to the City Council to award a contract for external auditing services to The Pun Group LLP.
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Summary
Section 1910 (“Annual Audit") of the City Charter requires that an annual audit of all City accounts be conducted by certified public accountants selected by the City Council.
Annually, the Administrative Services Department prepares the City's Annual Comprehensive Financial Report ("ACFR") with the required assistance of an independent auditor who attests to the fair presentation of the information contained in the CAFR. Audit services include an assessment of the use of accounting principles, internal control and procedures, and testing of compliance with certain provisions of laws, regulations, contracts, and grants.
The City's three-year contract, that includes two one-year extensions for audit services with Pun Group, LLP., has expired. To ensure the independence of the audit process, the Government Finance Officers Association recommends that organizations evaluate auditors periodically. In January 2026, staff issued a Request for Proposals ("RFP") for professional auditing services. The Selection Committee reviewed the proposal based on criteria from the RFP including qualifications, professional experience with external audits, industry expertise, organization capacity to handle the City’s requirements, and the proponent’s cost/price proposals.
DISCUSSION
Background
Staff issued a Request for Proposals for Professional Auditing Services (PUR 20-034) with proposals due to the City by February 26, 2026. The RFP notice was published on the City's Bid Flash website, The Record, and Public Purchase website. The City received timely interest and response to the RFP from four proposers: The Pun Group, LLP, Badawi & Associates, Macias Gini and O'Connell (MGO), and Vasquez & Company. All four proposals were deemed responsive and responsible and advanced to the evaluation stage.
The selection committee met and evaluated the proposals submitted by the four firms against the required qualifications established in the RFP. The fee proposal was submitted under separate seal and was opened at the completion of the technical evaluation. The selection Page 2 of 4 committee used criteria outlined in the RFP that included professional experience, industry expertise, qualifications, and the capacity to perform audit functions associated with a complex organization such as the City of Stockton. The selection committee unanimously ranked The Pun Group, LLP highest on these criteria, specifically with regard to complex fund structures and Governmental Accounting Standards Board training and implementation. The Pun Group, LLP was determined to be the best qualified to provide independent professional auditing services for the City of Stockton and has committed the necessary resources to meet the City's requirement to ensure audits on a timely schedule by the end of this calendar year. The selection committee ratings as well as costs associated with a 5-year contract are as follows:
|
Proponent’s Name |
Final Combined Score |
Total Costs |
|
The Pun Group LLP |
85.97 |
$1,903,027.00 |
|
MGO |
77.14 |
$1,947,200.00 |
|
Badawi and Associates |
76.00 |
$1,325,856.00 |
|
Vasquez & Company |
67.41 |
$1,460,020.00 |
The scope of services will include audits of the City's annual financial statements (Comprehensive Annual Financial Report), audit of the City's federal financial assistance (Single Audit), and audit of the City's Measure W Public Safety Fund financial statements, Measure A, Measure M - Strong Communities. Additional audit services include the Downtown Marina, Cannabis Licenses as required, and Entertainment venues including the Arena, Events Center Common Areas, Oak Park Ice Arena, and the Bob Hope Theatre.
The Pun Group, LLP. not only provided high quality materials and references, but they are one of the few firms to have working knowledge of the Tyler Munis ERP (Enterprise Resource Program) that the City utilizes. The Pun Group, LLP. has broad experience in carrying out the specific role of External City Auditor for a number of other California cities and municipalities. These California cities and municipalities include:
- City of Santa Cruz
- City of Fairfield
- City of Santa Clarita
- Orange County Business Council
- South Bay Cities Council of Governments
MGO currently stands as the second highest scoring proponent when compared to The Pun Group, LLP. MGO provided a proposal with quality details and information. Plante Moran is a large firm comprised of highly qualified staff members. They have worked with six of the top ten largest California Cities and eight of the top 15 largest California counties. A short list of these clients in California is:
- City of Fremont
- City of Los Angeles
- City of Sacramento
- County of Sacramento
The estimated cost of a 5-year contract with The Pun Group, LLP. is $1,903,027. A proposed contract with MGO has an estimated cost of $1,947,200 through the course of a 5-year contract.