REPORT TO THE CITY COUNCIL FROM: SANTINO DANISI, MBA, City Controller/Finance Director Finance Department BY: KALEB NEUFELD, MBA, Assistant Controller/Assistant Director Finance Department SUBJECT ..Title Approve the Third Amendment to the Service Agreement with The Pun Group, LLP, for independent outside auditing services related to Fiscal Year 2025-26, to increase the total contract by $263,000, for a revised total fee amount not to exceed $1,057,635 ..Body RECOMMENDATION Staff recommends that the City Council approve the Third Amendment to the service agreement and exercise a one-year contract extension for work to be conducted in Fiscal Year 2026-27, pertaining to Fiscal Year 2025-26 (Year Five) of the existing contract, for an additional amount not to exceed $263,000, resulting in a revised total fee amount not to exceed $1,057,635. EXECUTIVE SUMMARY Section 1216 of the City of Fresno's Charter requires the City to employ a Certified Public Accountant to perform an independent audit of the City's books, public records, inventories, and reports. Independent financial audits are a critical component of the City's financial oversight framework, supporting transparency, accountability, and compliance with state and federal reporting requirements. To maintain continuity in audit services and ensure the timely completion of the City's Annual Comprehensive Financial Report (ACFR) and other required audits, staff recommends exercising a one-year contract extension and approving a contract amendment for work to be completed for Fiscal Year 2025-26. BACKGROUND The Pun Group has served as the City's independent outside auditor since 2022 and completed the final year (Year Four) of the agreement in Fiscal Year 2025-26. The contract allows for up to three one-year extensions. Under the current contract scope, The Pun Group is responsible for performing an independent audit of the City's books, public records, inventories, and reports. Their work includes auditing services for the Annual Comprehensive Financial Report (ACFR), Single Audit, National Transit Database (NTD - Transit), Employees Health & Welfare Trust, Gann Limit Appropriations Letter, Wage Theft Audit, CalVIP Grant Audit, and the Passenger Facility Charges (PFC - Airports) report. Additionally, The Pun Group will provide financial statement drafting and preparation support for the Fiscal Year 2025-26 ACFR. Their services will include comprehensive assistance in drafting the ACFR, preparing the financial statements, ensuring accurate financial disclosures, enhancing clarity in the statistical section, and ensuring full compliance with Government Finance Officers Association (GFOA) and Government Accounting Standards Board (GASB) requirements. ENVIRONMENTAL FINDINGS By the definition provided in the California Environmental Quality Act Guidelines Section 15378 this item does not qualify as a "project" and is therefore exempt from the California Environmental Quality Act requirements. LOCAL PREFERENCE Local preference was not considered because this is an amendment to an existing service agreement. FISCAL IMPACT The proposed amendment to the contract with The Pun Group, including the exercise of a one-year extension for auditing services, will result in an additional cost of up to $263,000 for Fiscal Year 2025-26. This amount is included in the Finance Department's proposed Fiscal Year 2026-27 budget and will increase the total contract amount to not to exceed $1,057,635. Attachment: Third Amendment Service Agreement