REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on an Agreement with The Pun Group, LLP for Auditing Services for the Santa Clara Stadium Authority for the 2019 College Football Playoff National Championship [Board Pillar: Ensure Compliance with Measure J and Manage Levi’s Stadium]
Report
BACKGROUND
The Bay Area Host Committee (“the Committee”) is a nonprofit corporation founded to serve as the local organizing committee focused on bringing large scale events to the Bay Area that drive economic vitality. Through an Assignment and Assumption Agreement, the Committee managed the College Football Playoff (“CFP”) to promote, organize, and execute the 2019 College Football Playoff National Championship and its related events. In July 2018, the Committee entered into an Assignment and Assumption Agreement with the Forty Niners Stadium Management Company, LLP to host the January 7, 2019 CFP National Championship Game (“the Game”) and ancillary events associated with it at Levi’s Stadium. The Assignment and Assumption Agreements contained the following record rights for the Santa Clara Stadium Authority:
“Assignee agrees to provide an accounting of the Game as follows: (1) Assignee shall provide to the Stadium Authority Executive Director an Initial Accounting to be completed by June 30, 2019 consisting of a profit and loss statement of the Game and possession of all hardcopy and softcopy supporting documentation and such additional information as may be necessary to confirm the information set forth in such profit and loss statement; (2) Assignee shall provide the Stadium Authority Executive Director with an annual audit of its financial statements by a recognized third-party accounting firm and it shall provide a copy of the audited financial statement for the fiscal years that include Stadium Authority related activity.”
The Committee provided a copy of the audited financial statements and all the supporting documents relating to the Game to the Stadium Executive Director at the conclusion of reconciling the financial data for the Game.
The Stadium Authority (“Authority”) desires to hire a qualified accounting firm, The Pun Group, LLP (“the Pun Group”), to perform a review of the completeness of the supporting documents for the Game and provide the Authority an analysis of the revenue and expense classifications to ensure proper classification.
DISCUSSION
The Authority solicited five Certified Public Accountant (CPA) firms to perform the requested Agreed Upon Procedures for the College Football National Championship. Only one proposal was received from The Pun Group.
The proposed project plan includes five milestones: Initiation and Planning, Data Gathering, Execution and Analysis, Reporting, and Closure; and is expected to be completed within three months once work begins. However, due to the pandemic health restrictions, there may be yet unknown delays.
The Initiation and Planning milestone will include contract commencement and kickoff meeting, finalizing the project plan, deliverables and timing and preparing the initial document request list.
The Data Gathering milestone includes obtaining relevant information and documentation; conducting review and analysis of information gathered; obtaining and reading available contracts, policies, procedures and workflow on event setup and take down and other internal control documentation for significant transactions; interviewing key personnel responsible for tasks related to accounting, financial reporting, sales, procurement, disbursement and parking operations; and developing an overall familiarity with the Authority and the Authority’s operations related to the Game.
The Execution and Analysis phase will be the most complex and time-consuming milestone. Twenty-five revenue transactions, twenty from ticket sales and five from sponsorship and suite rentals, will be selected to perform various agreed upon procedures. The procedures include, but are not limited to, agreeing the amount, customer, and date to the deposit detail and posting to the bank statements and general ledger. In addition, twenty-five non-payroll expenditure samples will be chosen, and the amount, payee, date and description will be agreed against the supporting documentation. For Game day concession sales, the concession report for food and beverage sales will be compared against the invoice from the concessionaire and the revenue shared will be recomputed against the terms of the contract. The payroll expenditure and supporting documentation will be reviewed for accuracy and completeness.
The Reporting milestone will include drafting key findings and recommendations for management discussion and review. The consultant will obtain input and feedback on the findings and recommendations to include in the final report prepared during the Closure milestone.
The Pun Group has a team of experts in the fields of finance, internal controls, accounting and auditing and has worked locally with government and not-for-profit sectors. The Pun Group has the capacity and expertise to perform the requested services and objectives. The Stadium Authority is recommending the Proposal provided by the Pun Group.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of a California Environmental Quality Act (“CEQA”) pursuant to the CEQA Guidelines section 15378(a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. Furthermore, the action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
Based upon the Proposal to Perform Agreed Upon Procedures, the total costs of the services will not exceed $23,650. Sufficient funding is available in the Stadium Authority’s FY 2020/21 Budget.
COORDINATION
This report has been coordinated with the Stadium Authority Counsel’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220 or email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov>.
RECOMMENDATION
Recommendation
Approve and authorize the Executive Director to execute an agreement with the Pun Group to provide auditing services for a twelve-month period for a total maximum not-to-exceed amount of $23,650.
Staff
Reviewed by: Kenn Lee, Treasurer
Approved by: Deanna J. Santana, Executive Director
ATTACHMENTS
1. Professional Services Agreement with The Pun Group, LLP