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HomeMy WebLinkAbout9A - Financial Auditor .. DISCUSSION: STAFF AGENDA REPORT APRIL 2, 2001 9A RALPH TESCHNER, FINANCE DIRECTOR CONSIDER APPROVAL OF A RESOLUTION APPOINTING THE FIRM OF ABDO, EICK AND MEYERS TO PERFORM THE CITY'S FINANCIAL AUDITS FOR FISCAL YEARS 2001 AND 2002. The City's accounting firm of Abdo, Eick & Meyers has submitted a proposal to continue its audit services for the City of Prior Lake for the fiscal years of 200 1 and 2002. History In 1995 the City of Prior Lake solicited RFP's (Request for Proposal) for financial auditing services after having been associated with the George M. Hanson firm for a number of years. Professional auditing service proposals were requested from seven long term established accounting firms. Abdo, Eick & Meyers submitted the lowest aggregate bid for a six-year service period. On July 17, 1995 the City Council approved Resolution 95-61 that authorized the engagement of the Abdo, Eick and Meyers firm to provide auditing services for 1995, 1996 and 1997 plus an option for 1998-2000. The cost for their professional services to prepare the comprehensive annual financial reports for the past three years was $10,560, $10,885 and $11,215 respectively. Current Circumstances Attached to your agenda report is a proposal that sets forth the scope of their services according to GAAP (generally accepted auditing standards and the Government Auditing Standards. Their proposed fee schedule for the three-year period is outlined below: Year 2001 2002 General City Annual $ Annual % Audit Fee Increase Increase $11,495 $280 2.50% $11,700 $205 1.78% Fire Relief Annual $ Annual % Audit Fee Increase Increase $1,630 $75 4.82% $1,660 $30 1.84% Year 2001 2002 It is important to maintain a degree of continuity when selecting an accounting firm to prepare the financial audit because of the H: IAUDITlAuditproposal.doc 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER T- - T I . 1 -ill ALTERNATIVES: RECOMMENDED MOTION: REVIEWED BY: Attachments: H: IA UDITlAuditproposal.doc significant amount of time necessary for the firm to be brought up to speed on the internal operating procedures of the City and for them to become familiar as to the location of all the information i.e, files, contract documents, minutes, resolutions etc. necessary during the course of their examination of the City's transactions. As a result, the audit examination process these past few years has been considerably faster and more efficient from a time perspective than in the beginning. It is Staffs opinion that the firm has done a good job in putting together the financial report that has been in total compliance with State of Minnesota review qualifications. Gerry Eick and Steve McDonald have been very helpful in completing the TIF reporting forms that have become more and more complex and difficult to administer. Also, their continued accounting assistance will be important because of the national implementation requirement of GASB Statement 34 that will require new accounting formats and the capital cost preparation of major road infrastructure retroactively to January 1, 1980. There is a compliance time period of three years to accomplish these changes. The proposed cost for the upcoming two years is very reasonable and represents a total increase of $485.00 or 2.16% per year for the general city audit plus a total of $105.00 for the fire relief association's audits. As indicated within their proposal the City has the right to terminate services at any time for any reason. The following alternatives are available to the City Council: 1. Approve Resolution Appointing the Firm of Abdo, Eick and Meyers to Perform the City's Financial Audits for Fiscal Years 2001and 2002 and authorize the Mayor and City Manager to execute the agreement on behalf of the City. 2. Reject the proposal for a specific Council reason. Staff would recommend approval of Resolution Appointing the Firm of Abdo, Eick and Meyer 0 Perform the City's Financial Audits for Fiscal Ye rs 2001 20 2. 1. Resolut n oin . g the Firm of Abdo, Eick and Meyers to Perform the ity's Financial Audits for Fiscal Years 2001 and 2002. 2. Abdo, Eick & Meyers' Proposal for Audit Services for the City of Prior Lake for the Years Ending December 31,2001 and 2002. 3. Abdo, Eick & Meyers' Proposal for Audit Services for the Fire Relief Association for the Years Ending December 31, 2001 and 2002. RESOLUTION O~ '3 SOLUTION APPROVING THE FIRM OF ABDO, EICK AND MEYERS LLP TO PERFORM THE CITY'S FINANCIAL AUDITS FOR FISCAL YEARS 2001 AND 2002. MOTION BY: SECOND BY: WHEREAS, The certified public accountant firm of Abdo, Eick and Meyers LLP has been instrumental in improving the administrative controls of the City's financial operation; and WHEREAS, The City of Prior Lake has determined that continued accounting assistance will be important because of the national implementation requirement of GASB Statement 34 that will require new accounting formats and the capital cost preparation of major road infrastructure; and WHEREAS, The financial reports of the City of Prior Lake's fiscal condition has resulted in an unqualified opinion for the past three years; and WHEREAS, The proposed annual cost for such audit services over the next two years IS determined to be reasonable and cost effective. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, that the City of Prior Lake hereby exercises its option to engage Abdo, Eick and Meyers LLP to perform the audit services for the following years and cost: Fiscal Year 2001 2002 General Audit Fee $11,495.00 $11,700.00 Fire Relief Assn. Audit Fee $1,630.00 $1,660.00 FURTHER, the Mayor and City Manager are authorized to execute the agreement on behalf of the City. Passed and adopted this 2nd day of April, 2001. YES NO Mader Ericson Gundlach Petersen Zieska Mader Ericson Gundlach Petersen Zieska {Seal} City Manager City of Prior Lake 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER H: IAUDITlAuditresO I -xx.doc I Ii ---r----- I III -S:;;'l,,\7'C'ABDO ~. ~:^ \~: -' _.'.4., f. ~~::, r!~'~~ ~~-- i..';' h:,t~ l ABDO f {<,::~ :~; "4j't/ . '. EICK & ri;~le~rY::' MEYERS '. L,,-"'.. .', LLP Certified Public Accountants & Con.sultants February 23, 2001 7241 Ohms Lane Suite 200 Minneapolis, MN 55439 Mayor and Council Members City of Prior Lake 16200 Eagle Creek Avenue Southeast Prior Lake, MN 55372 The following sets forth the engagement of our services for the certified audit of the accounts of the City of Prior Lake. We will audit the general purpose financial statements of the City of Prior Lake for the years ending December 31, 2001 and 2002 in accordance with U.S. generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our audit will include tests of the accounting records and other procedures we consider necessary to enable us to express an opinion that the financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgement about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. Because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that a material misstatement may exist and not be detected by us. In addition, an audit is not designed to detect errors, fraud, or other illegal acts that are immaterial to the general purpose financial statements. However, we will inform you of any material errors and any fraud that comes to our attention. We will also inform you of any other illegal acts that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods of which we are not engaged as auditors. We will perform the auditing services discussed above for the calendar years 2001 and 2002. If at any time during this period the Council is dissatisfied with our services for any reason whatsoever, our services may be terminated by so informing us. Our firm, however, shall be obligated at your continuing discretion to perform the audit services for the three-year period at the following fees: Year Certified Audit 2001 2002 $ 11,495 $ 11,700 612.835.9090 . Fax 612.835.326] ~ r:.:fr~1:.... ~~t.. F~l City of Prior Lake February 23,2001 Page Two * Our fee for services quoted is a "not to exceed" fee. You will be billed at our normal per diem rates and in all cases will not exceed the schedule fees, which include out-of-pocket expenses. * Our fee is all-inclusive. That is, including the City audit, the Management Advisory Letter, and general consulting related to the audit. Other services beyond the scope ofthe basic audit service include preparation of the Office of the State Auditor TIP reporting forms. These forms can be completed for an additional cost of $800. It is our belief that the proposed three-year audit engagement is in the best interest of the City of Prior Lake. Our firm can provide the City with a fixed three-year fee schedule to facilitate the budgeting process. Further, our ability to provide meaningful assistance through our Management Advisory Letter will improve with each year of continued audit involvement. Abdo, Eick & Meyers, LLP maintains offices in Mankato, Edina, and St. Cloud with a total professional staff of 25 accountants. Our firm utilizes computer systems for fieldwork and serving client needs in the data processing field. These systems have improved our ability to audit clients who have computer systems and greatly extends our capacity for evaluating client computer programs and identifying new applications for computer service. It is the policy of our firm to issue a Management Advisory Letter. As independent auditors, we are in a position to acquire a detailed knowledge of client financial and administrative procedures; the Advisory Letter serves to summarize our recommendations toward improving the accounting and administrative controls, strengthening financial structure and developing a more efficient business operation. Abdo, Eick & Meyers, LLP recognizes that its most important product is prompt and effective service of the highest quality. We will serve the City to its complete satisfaction and will apply the highest level of skills available in our firm to that end. Sincerely, ABDO, EICK & MEYERS, LLP Certified Public Accountants ~Wd}J) Steven R. McDonald, CPA Edina Office I iI 'I 111 City of Prior Lake February 23,2001 Page Three RESPONSE: This letter correctly sets forth the understanding of the City of Prior Lake. Signature: Title: Date: Ii"~- ~ABDO ....1., ." ~ ~tABDO t . .'I';EICK& ~"r4l"~' L'L: r""~c.'#" ~'~. .' r..'~_ '-f': . ',,~ z, ~, k~'>~_~MEYERSLLP Certified Public Accountants & Consultants February 23, 2001 7241 Ohms Lane Suite 200 Minneapolis, MN 55439 Board and Members Prior Lake Fire Relief Association 16200 Eagle Creek Avenue Southeast Prior Lake, MN 55372 The following sets forth the engagement of our services for the certified audit of the accounts of the Prior Lake Fire Relief Association. We will audit the financial statements of the Prior Lake Fire Relief Association for the years ending December 31, 2001 and 2002 in accordance with U.S. generally accepted auditing standards. Our audit will include tests ofthe accounting records and other procedures we consider necessary to enable us to express an opinion that the financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgement about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. Because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that a material misstatement may exist and not be detected by us. In addition, an audit is not designed to detect errors, fraud, or other illegal acts that are immaterial to the general purpose financial statements. However, we will inform you of any material errors and any fraud that comes to our attention. We will also inform you of any other illegal acts that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods of which we are not engaged as auditors. We will perform the auditing services discussed above for the calendar years 2001 and 2002. If at any time during this period the Council is dissatisfied with our services for any reason whatsoever, our services may be terminated by so informing us. Our firm, however, shall be obligated at your continuing discretion to perform the audit services for the three-year period at the following fees: Year Certified Audit 2001 2002 $ 1,630 $ 1,660 612.835,9090 . Fax 612,835.3261 IH r I I 11 Prior Lake Fire Relief Association February 23,2001 Page Two * Our fee for services quoted is a "not to exceed" fee. You will be billed at our normal per diem rates and in all cases will not exceed the schedule fees, which include out-of-pocket expenses. * Our fee is all-inclusive. That is, including the Fire Relief audit, the reporting form attestation, and general consulting related to the audit. It is our belief that the proposed three-year audit engagement is in the best interest of the Prior Lake Fire Relief Association. Our firm can provide the Fire Relief Association with a fixed three-year fee schedule to facilitate the budgeting process. Abdo, Eick & Meyers, LLP maintains offices in Mankato, Edina, and St. Cloud with a total professional staff of 25 accountants. Our firm utilizes computer systems for fieldwork and serving client needs in the data processing field. These systems have improved our ability to audit clients who have computer systems and greatly extends our capacity for evaluating client computer programs and identifying new applications for computer service. Abdo, Eick & Meyers, LLP recognizes that its most important product is prompt and effective service of the highest quality. We will serve the Fire Relief Association to its complete satisfaction and will apply the highest level of skills available in our firm to that end. Sincerely, ABDO, EICK & MEYERS, LLP Certified Public Accountants ~ 'MJ)arJh Steven R. McDonald, CPA Edina Office RESPONSE: This letter correctly sets forth the understanding of the Prior Lake Fire Relief Association. Signature: Title: Date: