Item 19 - Agreement for Indirect Cost Allocation Plan and Internal Service Fund Cost Allocation Methodology

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Finance and Management Services www.santa-ana.org/finance Item # 19 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report August 20, 2024 TOPIC: Indirect Cost Allocation Plan and Internal Service Fund Cost Allocation Methodology Services AGENDA TITLE Agreement with Cherry Bekaert Advisory LLC for Indirect Cost Allocation Plan and Internal Service Fund Cost Allocation Methodology Services RECOMMENDED ACTION Authorize the City Manager to execute an agreement with Cherry Bekaert Advisory LLC for Indirect Cost Allocation Plan and Internal Service Fund Cost Allocation Methodology Services for a total aggregate amount not to exceed $150,000 for a three-year term beginning August 20, 2024 and expiring August 19, 2027, with a provision for a two- year extension (Agreement No. A-2024-XXX). GOVERNMENT CODE §84308 APPLIES: Yes DISCUSSION The Finance and Management Services Agency (FMSA) oversees the comprehensive cost allocation process, which includes the Indirect Cost Allocation Plan and Internal Service Fund Cost Allocation. The primary purpose of these cost allocation plans is to ensure that the City's method of identifying and distributing indirect costs and internal service costs is fair, comprehensive, well -documented, and defensible. These cost allocation plans are used for the budget development process and to recover costs through charges to restricted funding sources. In addition, due to the increased scrutiny from state and federal agencies, staff recommends to continue using experienced firms for these services to remain compliant with applicable laws and regulations. The proposed services include two primary components: an Indirect Cost Allocation Plan (Indirect Costs) and an Internal Service Funds Cost Allocation Methodology. The Indirect Cost Allocation Plan aims to recover the General Fund's overhead costs of providing indirect support services to operating departments and programs. The Internal Service Funds Cost Allocation Methodology aims to develop a full cost allocation methodology to recover annual operating costs of internal service funds from inter- agency customers.