11-19-2002 CC RPT 36 - Laserfiche WebLink

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People Serving People CITY OF RIVERSIDE CITY COUNCIL MEMORANDUM Rive~rside 1998 HONORABLE MAYOR AND CITY COUNCIL SUBJECT: AGREEMENT FOR BUSINESS TAX AUDIT SERVICES DATE: November 19, 2002 ITEH Iq0. : 36 BACKGROUND: In an effort to enforce compliance with Chapter 5.04 of the Riverside Municipal Code, as it relates to business taxes, and to enhance collection efforts, the Finance Department is proposing to contract with Municipal Auditing Services (MAS). Chapter 5.04.130 of the Riverside Municipal Code provides that all persons required to obtain a business tax certificate shall keep and retain, for a period of at least three years, complete records of business transactions, including sales, receipts, purchases, and other expenditures, and shall not refuse to allow author/zed representatives of the City to examine such records at reasonable times and places. To perform these audits the Finance Department requires the services of a consultant that is experienced in auditing such records. MAS has performed these services in a number of other cities with results consistent with expectations. Audits will only be performed on businesses pre-approved by the Finance Director or his designee. When performing audits, MAS will identify itself in writing as an authorized representative of the City of Riverside, and will restrict the audit to records identified in Riverside Municipal Code Section 5.04.130. If issues are identified, City personnel will initiate collection efforts and receive any monies or penalties from the affected businesses. ALTERNATIVES: 1. Hire full-time staff in the Business Tax office to perform audits. This is not recommended because we do not have sufficient information available to be assured that the benefits would exceed the costs. 2. Retain an independent accountant on a per diem basis. We believe it is to the City's benefit to hire the auditor on a contingency basis. FISCAL IMPACT: MAS will receive 50% of any monies collected as a result of audits performed under this agreement. MAS will not be entitled to compensation if the City independently becomes aware of any actions violating Riverside Municipal Code Section 5.04. COMMITTEE RECOMMENDATION: This item was presented to the Finance Committee on October 28, 2002. Councilman Schiavone voted against the recommendations, stating that a City employee should perfomi any auditing procedures considered necessary. Councilwoman Defenbaugh supported the recommendations. Councilman Beaty was absent. 36-1