BOARD MEETING DATE: NOVEMBER 3, 2006
AGENDA NO. 4

PROPOSAL:

Execute Contract for Biennial Audit of Motor Vehicle Registration Revenues for FYs 2003-04 and 2004-05

SYNOPSIS:

Health and Safety Code Section 44244.1 requires any agency receiving fee revenues to be subject to an audit of each program or project funded at least once every two years.  On July 7, 2006, the Board approved release of an RFP to select an auditor to perform the biennial audit for FYs 2003-04 and 2004-05.  An evaluation panel of representatives from local governments, MSRC and AQMD staff evaluated the proposals.  This action is to award a contract to the firm of Simpson & Simpson, Certified Public Accountants.  Local governments, the MSRC and AQMD will pay the cost of their own audits in the amounts of $87,540, $7,200, and $5,200 respectively.

COMMITTEE:

Administrative, October 13, 2006, Recommended for Approval

RECOMMENDED ACTION:

Authorize the Chairman to execute a contract with Simpson & Simpson Certified Public Accountants for performance of the biennial audit of Motor Vehicle Registration revenues for FYs 2003-04 and 2004-05 at a total cost not to exceed $99,940.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

AB 2766, chaptered into law as Health and Safety Code Sections 44220-44247, was enacted to authorize air pollution control districts to impose fees on motor vehicles.  Fees are expended on mobile source air pollution reduction measures pursuant to the California Clean Air Act of 1988 or the AQMD’s AQMP pursuant to Article 5 of Chapter 5.5 of Part 3 of the Health and Safety Code.  Health and Safety Code Section 44244.1(a) states that any agency receiving fee revenues pursuant to Section 44243 or 44244 shall, at least once every two years, be subject to an audit of each program or project funded.  The audit is to be conducted by an independent auditor selected by the AQMD in accordance with Division 2 (commencing with Section 1100) of the Public Contract Code.  Audit program guidelines for local government recipients of fee revenues under Health and Safety Code Sections 44220-44247 were prepared by the AQMD with input from the Technical Advisory Committee Audit Subcommittee of the Interagency AQMP Implementation Committee (IAIC), representatives of the Finance Committee of the League of California Cities and with CPA firms whose clients include local governments.  These audit guidelines were approved by the IAIC, MSRC and by the Board on December 4, 1992 and further revised and approved in January 1995, and again in August 2003.  This is the seventh biennial audit of these fee revenues and covers FYs 2003-04 and 2004-05.

Proposal

On July 7, 2006, the Board approved an RFP to conduct the biennial audit of recipients of AB 2766 fee revenues.  The audit will cover recipients in all three segments of the AB 2766 fee distribution to determine whether the fee revenues collected in FYs 2003-04 and 2004-05 were spent on the reduction of pollution from motor vehicles as described above.  The primary purpose of the audit is to set forth an opinion regarding the propriety of the expenditures incurred, not the degree of efficacy in reducing air pollution.

Outreach

In accordance with AQMD’s Procurement Policy and Procedure, a public notice advertising the RFP/RFQ and inviting bids was published in the Los Angeles Times, the Orange County Register, the San Bernardino Sun, and Riverside County Press Enterprise newspapers to leverage the most cost-effective method of outreach to the entire South Coast Basin.

Additionally, potential bidders may have been notified utilizing AQMD’s own electronic listing of certified minority vendors.  Notice of the RFP/RFQ have been mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations, the State of California Contracts Register website, and placed on the Internet at AQMD’s Web site (http://www.aqmd.gov/ where it can be viewed by making menu selections “Inside AQMD”/“Employment and Business Opportunities”/“Business Opportunities” or by going directly to http://www.aqmd.gov/rfp/index.html).  Information is also available on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.

Bid Evaluation

The AQMD received a total of three proposals by the 1:00 p.m., September 1, 2006 deadline that were evaluated by a technically qualified panel in accordance with criteria contained in the RFP.

Panel Composition

An evaluation panel was convened to evaluate the three proposals and consisted of: an Accounting Supervisor representing local governments; a Director of Air Quality and Mobility Programs representing the MSRC; three AQMD staff; a Senior Deputy District Counsel; and two Financial Analysts.  Of the five panelists that scored the proposals, five are Caucasian; three female, two male.

Of the three proposals received, two were rated technically qualified and were scored for cost.  The evaluation results for the two proposals are:

The selection criteria used to rank the proposals included responsiveness to the RFP; technical expertise; qualifications and experience; past performance; cost; and SB/SBJV/DVBE/DVBEJV/DVBE/SB subcontractors/local business designation (non-EPA).  Since the panel’s assessment of the criteria resulted in only 0.2 of a point difference, the Executive Officer is recommending Simpson & Simpson, Certified Public Accountants to the full Board.  In the past, both of the technically qualified firms have successfully conducted the AB 2766 Biennial Audit, with Thompson, Cobb, Bazilio & Associates, PC conducting the last biennial audit engagement. The recommendation of Simpson & Simpson, Certified Public Accountants is within good internal control practice to rotate auditors whenever possible and will result in a cost savings of $7,260.

Resource Impacts:

The maximum audit cost is $99,940.  The total audit costs will be borne by the entities being audited as follows:

• The cost of the audit of the AQMD's portion of motor vehicle registration revenues is $5,200.  Sufficient funds are included in the FY 2006-07 Budget;
   

• The cost of the audit of ten projects of the Mobile Source Air Pollution Reduction Trust Fund is $7,200 and shall be deducted from the FY 2006-07 revenues subvened to the Mobile Source Air Pollution Reduction Review Committee; and
   

• The total cost of the audit of local governments is up to a maximum of $87,540. The average cost for a non-compliant local government is $781 and the average cost for a compliant local government is $159  This cost will be borne by the entities being audited in the manner set forth in the audit program guidelines and will be deducted from quarterly fee revenues prior to distribution.