FROM: Amy McInerny, Chief Financial Officer
SUBJECT: Selection of Accounting Firms to Perform Agreed Upon Procedures for FY 2025-26
RECOMMENDATION:
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Recommend that the Board approve the engagement of Brown Armstrong Accountancy Corporation in the sum of $33,350 for two agreed upon procedures reports.
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BACKGROUND:
On April 3, 2025, the Board approved an FY 2025-26 Audit Workplan with two specific areas for Agreed Upon Procedures reports to be prepared by an independent accounting firm or firms. Those reports cover the following areas:
1. Retiree Benefit Payments (Refunds)
SBCERA processes ongoing monthly benefit payments to more than 17,000 members and their beneficiaries using Pension Gold as the pension administration system. Payments are made via direct deposit and physical check. For members who terminate employment, they may select to refund their contributions and terminate their membership. SBCERA processes approximately 150 refunds each month. These refund payments are made via direct deposit and check.
• Audit the process for Retiree Benefit Payments (and Refunds), specifically, that entries are made timely, accurately, and proper procedures are followed.
• Make recommendations for internal control and process improvements.
2. Investment Program
SBCERA Investment Policy No. 001 (Investment Plan, Policy, and Guidelines) is approved by the Board of Retirement with the purpose of establishing sufficient flexibility in the management oversight process while setting forth reasonable parameters to ensure prudence and care in the execution of the investment program. As part of this policy, the Board delegates specific authority to Staff to assist the Investment Committee and Board in implementing the investment program.
• Audit the process for the investment program and ensure that proper procedures are in place and followed to ensure that the program is followed. This may include, but not be limited to, ensuring that contracts are properly executed, and capital calls are timely addressed.
• Audit the process to ensure that the assets are safeguarded.
• Make recommendations for internal control and process improvements.
On June 17, 2025, staff released a Request for Proposals for Agreed Upon Procedures Reports, which was posted on sbcera.org and publicized through social media. SBCERA received two proposals from qualified independent accounting firms - Brown Armstrong Accountancy Corporation (Brown Armstrong) and Macias Gini & O’Connell LLP (MGO).
A committee consisting of the Chief Financial Officer Amy McInerny, Chief Executive Officer Debby Cherney, and Accounting Manager Jayson Eaton reviewed and evaluated the proposals.
One firm stood out in terms of the thoroughness of their proposed procedures and fees, and staff recommends that the Committee recommend that the Board approves a contract with Brown Armstrong as follows:
1. Retiree Benefit Payments (Refunds), $18,450
2. Investment Program, $14,900
The following is a table of the total fees proposed by the two firms which submitted proposals:
|
Brown Armstrong - Retiree Benefit Payments (Refunds) |
$ 18,450 |
|
Brown Armstrong - Investment Program |
$ 14,900 |
|
MGO - Retiree Benefit Payments (Refunds) |
$ 29,008 |
|
MGO - Investment Program |
$ 23,226 |
Proposed Fees as recommended by Staff:
|
Brown Armstrong - Retiree Benefit Payments (Refunds) |
$ 18,450 |
|
Brown Armstrong - Investment Program |
$ 14,900 |
|
Total |
$ 33,350 |
Copies of both the Brown Armstrong and MGO proposals are attached as Exhibits A and B, respectively.
BUDGET IMPACT:
Costs for this item are included in the current year administrative budget.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Prudent Fiscal Management
STAFF CONTACT:
Amy McInerny
Debby Cherney
ATTACHMENTS:
Exhibit A: Brown Armstrong Accountancy Corporation Proposal
Exhibit B: Macias Gini & O’Connell LLP Proposal