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Date
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May 5, 2008
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Agenda
Item No. 23 Roll
Call No. 08- Communication No. 08-244 Submitted by: Allen McKinley, Finance Director/Treasurer |
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AGENDA HEADING:
Contract renewal for one year with McGladrey &
Pullen, LLP for independent auditing services.
SYNOPSIS:
Recommend
approval to exercise the City’s option for the second of two one-year contract
renewals with McGladrey & Pullen,
LLP as the city’s independent auditor.
FISCAL IMPACT:
Amount:
$127,863
Funding
Source: 2008-2009 Operating Budget under:
- $78,600 GE001 FIN070000 – Finance Accounting
- $21,794 SP350
HSG040000 – Housing Services Accounting
- $13,734 EN002
AIR010100 – Airport Administration
- $13,735 AG251
WRA770166 – WRA Management
ADDITIONAL INFORMATION:
This year’s contract price is $127,863 or 2.2% higher than the contract
price for the 2007 audit. Since this is
the last renewal option, the City will initiate a new RFP process in January,
2009. The contract for the 2007 audit
included a $20,000 fee for expanded scope of services related to expanded
review from 20% to 50% of the Schedule of Expenditures on Federal Awards
(SEFA). This was a result of the
qualified opinion received in 2004.
The 2008 audit will no longer require this expanded review, however, the
American Institute of CPAs (the body that establishes standards for audits of
nonpublic entities) approved a sweeping set of new standards that revised many
fundamental auditing principles. Though
less in scope than the rules for public company audits, these new standards
parallel many of the key themes of Sabanes-Oxely, including new requirements
that auditors:
- Obtain a
more robust understanding about their clients’ operations, their business
objectives and strategies, and their process for identifying and managing
risks to achieving objectives
- Gain a
deeper understanding of their clients’ internal controls
- Perform a
more rigorous assessment of risks of material misstatement of the
financial statements, whether due to error or fraud, with clearly
documented linkage of the risks of material misstatement to the audit work
performed
When new standards are initiated beyond what was known when the initial
contract was awarded the contract allows for an adjustment in the audit
fee. The cost related to the change in
standards is offsetting the reduction of the expanded SEFA review. A table detailing changes from last year’s
contract pricing follows:
2007 New
Contract SEFA Standards CPI Final Price
General Audit $ 76,845 ($20,000) $20,000 $1,755 $
78,600
WRA 13,426
- - 309 13,735
Airport 13,425
- - 309 13,734
Housing 21,794
- - 490 21,794
Total $125,000 ($20,000) $20,000 $2,863 $127,863
PREVIOUS COUNCIL ACTIONS:
Date: May 7, 2007
Roll Call Number: 07-881
Action: One-year
renewal of contract for independent auditing services with McGladrey &
Pullen, LLP. (Council
Communication No. 07-281) Moved by Vlassis to adopt.
Motion Carried 7-0.
Date: May 17, 2004
Roll Call Number: 04-1033
Action:
Selection of McGladrey & Pullen, LLP as the City’s independent
financial auditor and directing negotiation and execution of a contract for
fiscal years ending June 30, 2004, 2005 and 2006, with the option of two
one-year renewals. Moved by Brooks to adopt. Motion
Carried 7-0.
BOARD/COMMISSION ACTION(S): NONE
ANTICIPATED ACTIONS AND FUTURE COMMITMENTS: NONE
For more information on this and other agenda items,
please call the City Clerk’s Office at 515-283-4209 or visit the Clerk’s Office
on the second floor of City Hall,