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HomeMy WebLinkAbout9.d. 2015 Audit Changes EXECUTIVE SUMMARY City Council Meeting Date: November 17, 2015 AGENDA ITEM: 2015 Audit Changes AGENDA SECTION: New Business PREPARED BY: Jeff May, Finance Director AGENDA NO. 9.d. ATTACHMENTS: None APPROVED BY: ddj RECOMMENDED ACTION: Motion to select Baker Tilly Virchow Krause to assist in the preparation of our Comprehensive Annual Financial Report (CAFR) and to select Malloy, Montague, Karnowski, Radosevich & Co., P.A. (MMKR) to complete the audit of our CAFR for the next three years. ISSUE Approve a new firm to conduct the audit of our CAFR. BACKGROUND At the conclusion of our 2014 audit it was determined that we would be changing firms that conduct the audit of our CAFR. Our audit firm, Baker Tilly Virchow Krause, LLP, has been assisting us with the preparation of our CAFR and auditing the CAFR since 2000 and it was decided to bring in a new firm to complete the audit. In the past Baker Tilly assisted us in the preparation of the CAFR as well as auditing the CAFR. We decided to get quotes for the actual audit of the CAFR only. This covered the important request that we have a new firm actually reviewing the financial statements. After researching audit firms I submitted requests for quotes to 4 other firms in the metro area. We received quotes from all 4 of the firms that we had sent requests to for the audit of our CAFR covering a 3-year period. They are summarized below: 2015 2016 2017 Total MMKR $27,175 $27,175 $27,750 $ 82,100 Redpath $33,500 $34,000 $34,500 $102,000 Abdo $34,500 $35,300 $36,200 $106,000 KDV $39,500 $40,600 $41,800 $121,900 I met with all 4 firms and checked references. I feel that all 4 firms would do an excellent job but based on the quotes feel that it is clearly in our best interests to select MMKR for the audit of our CAFR. In discussions with Baker Tilly representatives and in subsequent discussions with the 4 firms that we received quotes from it was determined that by having one firm assist us with the preparation of the CAFR and another firm auditing the CAFR we would be able to eliminate the “material weakness” that has been reported for the last 2 or 3 decades. Because we don’t have enough staff people and staff people who have the technical expertise to actually independently prepare our financial statements it must be reported that we have this weakness. But by having one firm help us prepare the CAFR and another audit that CAFR we will no longer have to have that weakness reported. We spoke with representatives from Baker Tilly who supplied us with a quote to assist us in preparing the financial statements. It was felt that 2 with their knowledge of our City’s organization and their past working papers that it would make the most sense – financially and in ease of transition- for them to work with us in that part of the process. The quote we received for their services was $19,500 plus out of pocket expenses. We are excited to be able to continue to produce an excellent CAFR and to eliminate the material weakness that seemed unachievable even a year ago at this time. The added benefit is that we should be able to save money long-term by separating the process. We are hopeful that the total will be in the $5,000 - $10,000 range in annual savings. SUMMARY Recommend the above motion.