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HomeMy Public PortalAbout2019.122 (09-17-19) RESOLUTION NO. 2019.122 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LYNWOOD AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT WITH LANCE, SOLL & LUNGHARD, LLP TO PROVIDE REVIEW AND ANALYZE THREE (3) YEARS OF PAYROLL DATA AND RELATED TAXES BASED ON THE AGREED UPON PROCEDURES ENGAGEMENT LETTER AND AUTHORIZING APPROPRIATION REQUESTS WHEREAS, the City implemented a new payroll program, ADP in April 2016. Since the go live date, the City has encountered significant problems with the program, resulting in erroneous payroll data including employee pay, pension information, leave accruals and taxes that has and continues to require an extensive amount of staff time to correct on an on-going basis; and WHEREAS, some of the City's significant issues with ADP have been 1) its inability to accurately calculate employee deductions (percentage contribution of "PERSable" earnings) for CaIPERS; 2) incorrectly turning off longevity calculations impacting full-time employees; 3) its inability to calculate longevity correctly for hourly employees and allocate to various departments (involves a system limitation in which ADP cannot calculate longevity for hourly employees when allocating employees to various departments); 4) Floating Holiday Leave Balance not visible to employees; and, 5) Secondary Vacation Leave Banks no visible to employees requested shift of hours from primary vacation leave bank; and WHEREAS, although these issues have been addressed over time, new challenges and issues are continuously occurring; and WHEREAS, ultimately, ADP does not have the capacity to handle complex municipal payroll. In in order to bring the process to good standing and aid the City with moving forward, over three years of payroll data for all full-time and part-time employees will need to be analyzed, reconciled and recomputed, due to the systemic problems associated with ADP and its implementation; and WHEREAS, the Finance Director has engaged the assistance of the Certified Public Accounting firm, Lance, Soli & Lunghard, LLP (LSL) to assist with the cleanup of historical payroll data; and WHEREAS, LSL is a known leader in providing internal audit services to clients. LSL provides outsourced and co-sourced internal audit services to Municipalities located in California. Their programs, tools and resources are constantly being enhanced to help ensure that they can address the most current regulatory focus areas and provide the most value-added perspective to their clients; and WHEREAS, LSL is a public accounting firm licensed by the State of California, Department of Consumer Affairs, as a Public Accounting Partnership. All of the partners and managers are Certified Public Accountants licensed by the State of California. As a firm, they are members of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants. The firm provides general tax, attest and advisory services and have proactively developed a full-service team to address industry-specific and organization challenges. Some specific services that LSL provides include financial auditing and CAFR preparation, internal auditing, program specific audits, performance audits, and compliance audits in programs such as Housing Authorities, Child Care, TDA, AQMD, Proposition A, Proposition C, Measure M, TOT, and various accounting procedures reviews; and WHEREAS, LSL provides internal audit services through the consulting practice. The consulting practice is structured around risk advisory services. Given the collaborative way in which they serve many municipal clients, LSL combines the internal audit practice with several other governance-related services—regulatory compliance and risk advisory. The risk-based internal audit methodology centers on building a sound understanding of the City of Lynwood, its departments, processes and cycles, organizational structure, and culture to create a first-class internal audit department; and WHEREAS, LSL has provided staff with an agreed upon engagement letter for said services. The task at hand requires high level accounting expertise. If approved by Council, the LSL team which will consist of four (4) high level skilled accountants, will be tasked with assisting Finance staff with recalculating payroll from March 1, 2016 to June 30, 2019. The task encompasses the following: 1) Reviewing payment stub and ensuring amount matches the amount on payroll registers and general ledger. 2) Reviewing W-4 forms and recalculating the tax withholding for Federal and State Income Tax purposes on the pay stubs to ensure calculations are correct and in accordance with the employee W-4 3) Recalculating all other Federal, State, and Local tax liabilities on the pay stub and ensuring they are in compliance with Federal, State and Local government tax laws. 4) Recalculating each employees' deferred compensation contributions. 5) Recalculating retirement employer percentage and ensuring it agrees to CaIPERS City's contribution percentage. 6) Obtaining and reviewing employee PAF forms and applicable MOU's and ensuring the salary amount approved agrees to the payroll register. 7) Reviewing and recalculating leave balances; and WHEREAS, this effort consists of an extensive amount of work and will take approximately six (6) months to complete; and WHEREAS, staff is requesting that the Mayor execute an agreement with Lance, Soli & Lunghard, LLP to provide payroll processing and reporting functions based on the agreed upon procedures engagement letter; and WHEREAS, pursuant to Section 6-3.13 (a)(3) of the Lynwood Municipal Code, the City may bypass a Request For Proposal (RFP) process provided that 4/5ths of the members of the Lynwood City Council find an alternative process is more economical and efficient than a RFP process. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LYNWOOD DOES HEREBY FIND, ORDER, AND RESOLVE AS FOLLOWS: Section 1. The City Council authorizes the Mayor to execute an agreement with Lance, Soil & Lunghard, LLP in the not to exceed amount of $106,000, based on the services provided by the certified public accounting firm to provide payroll processing and reporting functions based on the agreed upon procedures engagement letter, approved as to form by the City Attorney. Section 2. Consistent with Lynwood Municipal Code Section 6-3.13(a)(3) and by a vote of not less than four-fifths (4/5) of its members, the City Council finds that contracting directly with Lance, Soli & Lunghard, LLP is more efficient and economical than procuring the services via an RFP process due to the City's need to have a new system in place to ensure City employees are provided expedient verified information for their current year. Section 3. That the City Council approves the following appropriations: Fund Dept. Div. Object Description Amount 1011 Budgetary Fund Balance ($36,400) Professional/Contr. 1011 30 270 62015 Services $36,400 Fund Dept. Div. Object Description Amount 6051 Budgetary Fund Balance ($16,800) Professional/Contr. 6051 30 315 62015 Services $16,800 Fund Dept. Div. Object Description Amount 6401 Budgetary Fund Balance ($2,800) • Professional/Contr. 6401 30 315 62015 Services $2,800 Section 4. This resolution shall become effective immediately upon its adoption. PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of the City of Lynwood, California this 17th day of September 2019. Jo Luis Solache, Mayor ATTEST: 14 4AA 41LiIJ Maria Quinonez, Jos Ometeotl, City Clerk City-Manager APPROVED AS TO FORM: APPROVED AS TO CONTENT: A►2 . I Noel Tapia, •hn Dons, City Attorney / inance Director STATE OF CALIFORNIA ) ) § COUNTY OF LOS ANGELES ) I, the undersigned, City Clerk of the City of Lynwood, do hereby certify that the above and foregoing resolution was duly adopted by the City Council of said City at its regular meeting thereof held in the City Hall of the City on the 17th day of September, 2019 and passed by the following vote: AYES: COUNCIL MEMBERS ALATORRE, CASANOVA, SANTANA, MAYOR PRO TEM CASTRO, AND MAYOR SOLACHE NOES: NONE ABSTAIN: NONE ABSENT: NONE OiA Maria Quinonez, City Clerk STATE OF CALIFORNIA ) ) § COUNTY OF LOS ANGELES ) I, the undersigned City Clerk of the City of Lynwood, and Clerk of the City Council of said City, do hereby certify that the above and foregoing is a full, true and correct copy of Resolution No. 2019.122 on file in my office and that said resolution was adopted on the date and by the vote therein stated. Dated this 17th day of September, 2019. Maria Quinonez, City Clerk