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HomeMy WebLinkAbout1988-03-22; City Council; 9346; City auditor selection for 1987-88 financial docs.. RECOMMENDED ACTION: Adopt Resolution No. fpyaaccepting the proposal of Peat Marwick Main & Co. for audit services for audit of the City’s 1987-88 financial statements and authorizing the Mayor to execute a contract for Audit Services through 1989-90. ITEM EXPLANATION: The City of Carlsbad annually prepares financial statements that must be audited by an independent certified public accountant. The City requests proposals from various qualified firms for the preparation of these statements and audit services every three to five years. During the past three years, the City has used the services of Deloitte Haskins & Sells, a CPA firm located in San Diego. This year, the City requested proposals from fourteen firms and received nine responses. These responses for three years of audit services are summarized bel ow: ComDanv AUDIT PRICE Arthur Young & Company Conrad & Associates Coopers & Lybrand Coradino, Hickey and Hanson Deloitte Haskins & Sells Diehl-Evans & Co. Morel and & Associates Peat Marwick Main & Co. Touche Ross Ernst & Whinney Ken E. Barackman & Co. Laventhol & Horwath Melvin D. Thomas Logan Throop & Co. $ 79,000 82 , 936 85 , 500 105,000 100,796 78,390 77 , 723 80 , 100 101,000 Decl i ned No Response No Response No Response No Response The proposals received were reviewed by the Assistant City Manager, the Finance Director and the Assistant Finance Director. Interviews were held with representatives of Arthur Young, Conrad & Associates, Diehl -Evans & Company, Moreland and Associates, and Peat Marwick Main & Co. The staff’s goal was to find a company capable of providing high quality audit services as well as management-re1 ated services. The staff is recommending that the City Council accept the proposal of Peat Marwick Main & Co.. All firms had very good qualifications. In the staff‘s opinion, the audit services could be performed well by all firms. We recommend that the Council select Peat Marwick Main & Co. because, in addition to their auditing skill, the firm has a strong local management support with expertise in areas of interest to the City. Also, the firm proposed an innovative and comprehensive audit approach that was not expressed by the other firms. Page 2 of AB# 9J& FISCAL IMPACT: The proposed price for the 1987-88 audit services is $25,000, which will be included in the 1988-89 operating budget for audit services. EXHIBITS : Resolution No. /&%7. . 5. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 88-92 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CERTIFIED PUBLIC ACCOUNTANTS, FOR THE AUDIT OF THE CITY’S 1987-88 FINANCIAL STATEMENTS AND AUTHORIZING THE MAYOR TO EXECUTE A CONTRACT FOR AUDIT SERVICES THROUGH 1989-90. CALIFORNIA, ACCEPTING THE PROPOSAL OF PEAT MARWICK MAINS 6r CO. 9 WHEREAS, the City annually contracts with a certified public accountant licensed in the State of California for the audit of the City’s annual financial statements; and WHEREAS, the City has requested proposals from fourteen qualified firms for such audit services; and WHEREAS, after reviewing proposals from nine firms, the City staff has recommended that the City Council accept the proposal of Peat Marwick Main & Co. and WHEREAS, funds for these services will be included in the 1988-89 Operating Budget. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad that the proposal of Peat Marwick Main & Co. is hereby accepted, and the Mayor is authorized to sign the contract for audit services shown in Exhibit A attached hereto. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad, California, held on the 22nd day of March 9 1988 by the following vote, to wit: AYES: Council Members Lewis, Kulchin, Pettine, Mamaux and Larson NOES: None ABSENT: None ATTEST : ALE* L. @ EN@NZ ,&ty Clerk &EN R. ZUNDTZ, Deputy City Clerk (SEAL) Exhibit "A" AGREEMENT FOR AUDIT SERVICES RELATED TO FOR THE FISCAL YEARS ENDING IN 1988, 1989 AND 1990 THE ANNUAL AUDIT OF THE CITY'S FINANCIAL REPORTS THIS AGREEMENT, made and entered into as of the day of 9 19-9 by and between the CITY OF CARLSBAD, a municipal corporation, hereinafter referred to as "City," and PEAT MARWICK MAIN AND CO. hereinafter referred to as "Auditor." RECITALS City requires the services of an independent certified pub1 ic accountant to perform the annual audit of the City's financial statements for the three (3) year period from July 1, 1987 to June 30, 1990; and The Auditor possesses the necessary skills and qualifications to provide the services required by City; NOW, THEREFORE, in consideration of these recitals and the mutual covenants contained herein, the City and Auditor agree as follows: (1) AUDITOR'S OBLIGATIONS A. SCOPE AND DURATION 1. The Auditor shall conduct an annual examination of the financial statements, accounts, records and procedures of all funds, agencies and/or subdivisions of the City of Carl sbad covering operations of the City during the period July 1, 1987 to June 30, 1990. 2. The engagement shall include an annual audit of all federal program grant funds as required under the Single Audit Act of 1984. 1 3. The engagement shall include an annual review of the system of internal control and of compliance with budgetary and legal requirements by the City. B. AUDIT STANDARDS 1. The Auditor shall conduct the examination in accordance with generally accepted auditing standards and procedures appl icable to governmental units, as prescribed in the following documents: a. AICPA, Statements of Auditina Standards and Audits of State and Local Governmental Units. b. General Accounting Office, Standards of Audit Governmental Oraanizations. Proarams, Activities, and Functions. Statements of the Governmental Accounting Standards Board. c. 2. Should the Auditor encounter circumstances requiring an increase in the scope of the audit, or in the extent of detailed investigation, written notice to that effect will be given to the Finance Director, and this agreement will be modified by mutual agreement as to addi ti onal work and compensation. Such modifications must be in writing and approved by the Finance Director and/or City Manager. C. REPORTS AND OTHER COMMUNICATIONS The Auditor shall submit a written report on observed weaknesses in internal accounting controls. 1. 2. The Auditor shall submit a management letter on observed management weaknesses . 3. The Auditor shall submit a written report containing an expression of opinion that the financial statements are fairly 2 stated, or, if a qualified or adverse opinion or disclaimer of opinion is necessary, the reasons therefor. The Auditor shall submit a written report affirming that the City is in compliance with applicable legal provisions referred to in Section A-3 above or as required by the Single Audit Act of 1984. If The City was not in compliance with specific legal provisions, the Auditor shall so state in his written report. 4. 5. The Auditor shall assist the City in preparing final financial statements in compl iance with the standards set by Governmental Accountina. Auditina and Financial ReDortina (GAAFR). The Auditor shall prepare and submit to the City one final typed copy of the combined financial statements, notes to the financial statements and the supplemental data section of the annual financial report as defined in GAAFR. The Auditor shall provide one original of the auditor’s opinion on the combined financial statements. The Auditor shall provide 15 copies of the letters and reports as described in Sections l.C(l), l.C(2), l.C(4) and 1 .C(7). 6. 7. The Auditor shall prepare separate financial statements for the City Water Enterprise and Redevelopment Agency complete with separate opinions. The Auditor shall revise his written reports as may be required for their acceptance by federal grantor agencies. The Auditor shall make avai 1 ab1 e worki ng papers upon request, in accordance with federal and state grant provisions. The Auditor shall attend up to two (2) public meetings to be held after the submission of his written reports. 8. 9. 3 (2) CITY OBLIGATIONS A. The City shall have adjusted or closed all accounts and shall have them available for examination by the fourth Monday in August. 8. City staff shall render all feasible assistance to the Auditor, and shall respond promptly to requests for information, provide all necessary books and records, and provide physical facilities required by the Auditor for the expeditious conduct of the engagement. C. The City shall prepare all introductory and statistical sections to be included in the annual financial report, and shall submit all sections to the Auditor for review prior to September 30 each year. (3) PROGRESS AND COMPLETION The work under this contract will begin upon execution of this agreement and shall be completed by October 31 of each year for the Comprehensive Annual Report and December 31 of each year for the Single Audit, provided all other deadlines are met. Extensions of time may be granted by the Finance Director if requested by the Auditor and agreed to in writing by the Finance Director. (4) FEES TO BE PAID TO AUDITOR The City shall pay the Auditor a total fee of no more than $25,000 in 1988, $26,300 in 1989 and $28,800 in 1990 for auditing services. These fees shall cover the audits of the Comprehensive Annual Financial Report, the Redevelopment Agency, the Water Enterprise Fund, the Building Authority, the Parking Authority and the audit required by the Single Audit Act of 1984. The City shall compensate the Auditor for additional work agreed upon in writing and approved by both parties as allowed under Section 1.B.2 of this agreement. 4 (5) PAYMENT OF FEES Periodic progress billings may be submitted for services rendered to date, but not more often than monthly. The final payment for any audit shall become due after the submission of all reports required by Section C and their acceptance by the City and federal grantor agencies. Invoices should be mailed to the attention of Finance Director, City of Carlsbad, 1200 Elm Avenue, Carlsbad, CA 92008-1989. The City shall retain 10% of the total fees paid until all reports have been received and accepted by the City or grantor agencies. PAYMENT OF FEES OR COMMISSIONS The Auditor warrants that their firm has not employed or retained any company or person, other than a bona fide employee working for the Auditor, to solicit or secure this agreement, and that Auditor has not paid or agreed to pay any company or person, other than a bona fide employee, any fee, comission, percentage, brokerage fee, gift, or any other consideration contingent upon, or resulting from, the award or making this agreement. For breach or violation of this warranty, the City shall have the right to annul this agreement without liability, or, in its discretion, to deduct from the agreement price or consideration, or otherwise recover, the full amount of such fee, commission, percentage, brokerage fee, gift or contingent fee. (6) (7) NONDISCRIMINATION CLAUSE The Consultant shall comply with applicable State and Federal laws regarding nondiscrimination. (8) TERMINATION OF CONTRACT In the event of the Auditor's failure to perform the work as provided for in this agreement, the City may terminate this agreement for nonperformance 5 by notifying the Auditor by certified mail of the termination of the agreement. The Auditor, thereupon, has five working days to deliver all documents owned by the City and copies of all work in progress to the Finance Director. The Finance Director shall make a determination of fact based upon the documents delivered to City of the percentage of work that the Auditor has performed that is usable and of worth to the City in having the audit completed. Based upon that finding as reported to the City Council, the Council shall determine the final payment of the agreement. Final payment shall be in compliance with the Code of Federal Regulations. The Auditor agrees to cooperate with the City and any subsequent audit firm employed by the City by providing access to and/or copies of any work papers associated with any City audit as needed. The Auditor's obligations under this Section shall be consistent with existing American Institute of Certified Public Accountant (AICPA) guide1 ines and standards. DISPUTES If a dispute should arise regarding the performance of work under this agreement, the following procedure shall be used to resolve any question of factor interpretation not otherwise settled by agreement between parties. Such questions, f they become identified as a part of a dispute among persons operating under the provisions of this agreement, shall be reduced to writing by the principal of the Auditor or the Finance Director. A copy of such documented dispute shall be forwarded to both parties involved along with recommended methods of resolution that would be of benefit to both parties. The Finance Director or principal receiving the letter shall reply to the letter along with a recommended method of resolution within ten calendar days. If the resolution thus obtained is unsatisfactory to the aggrieved party, a letter outlining the dispute shall be forwarded to 6 , the City Council for their resolution through the office of the City Manager. The City Council may then opt to consider the directed solution to the problem. In such cases, the action of the City Council shall be binding upon the parties involved, although nothing in this procedure shall prohibit the parties seeking remedies available to them at law. (10) SUSPENSION OR TERMINATION OF SERVICES This agreement may be terminated by either party upon tendering 30 days written notice to the other party. In the event of such suspension or termination, upon request of the City, the Auditor shall assemble the work product and put same in order for proper filing and closing and deliver one copy of said product to City. In the event of termination, the Auditor shall be paid for work performed to the termination date; however, the total shall not exceed the guaranteed total maximum. The City shall make the final determination as to the portions of tasks completed and the compensation to be made. Compensation is to be made in compliance with the Code of Federal Regulations. The Auditor shall make any work papers or files available to the City or its representatives consistent with the AICPA guide1 ines and standards. (11) STATUS OF THE AUDITOR The Auditor shall perform the services provided for herein in Auditor’s own way as an independent certified public accountant and not as an employee of the City only as to the the City. The Auditor shall be under control of completion date of work and the personnel assigned (12) HOLD HARMLESS AGREEMENT The City, its agents, officers and employees sha 1 not be liable for any claims, liabilities, penalties, fines, or any damage to goods, properties, or effects of any person whatever, nor for personal injuries or death 7 ! caused by, or resulting from, or claimed to have been caused by, or resulting from, any act or omission of Auditor or Auditor’s agents, employees or representatives. Auditor agrees to defend, indemnify and save free and harmless the City and its authorized agents, officers, and employees against any of the foregoing liabilities or claims of any kind and any cost and expense that is incurred by the City on account of any of the foregoing liabilities. This Section does not apply to the Auditor’s opinion or other products described within this agreement. (13) ASSIGNMENT OF CONTRACT The Auditor shall not assign this contract or any part thereof or any monies due thereunder without the prior written consent of the City. (14) SUBCONTRACTING The Auditor shall not subcontract any of the work to be performed under this contract by the Auditor unless approved by the City in writing. The Auditor shall be fully responsible to the City for the acts and omissions of Auditor’s subcontractor and of the persons either directly or indirectly employed by the subcontractor, as the Auditor is for the acts and omissions of persons directly employed by Auditor. Nothing contained in this contract shall create any contractual relationship between any subcontractor of the Auditor and the City. The Auditor shall bind every subcontractor and every subcontractor of a subcontractor by the terms of this contract applicable to Auditor‘s work unless specifically noted to the contrary in the subcontract in question approved in writing by the City. (15) PROHIBITED INTEREST No official of the City who is authorized in such capacity on behalf of the City to negotiate, make, accept, or approve, or take part in negotiating, making, accepting, or approving of any agreement, shall become directly or 8 indirectly interested personally in this agreement or in any part thereof. No officer, employee, or attorney, of or for the City who is authorized in such capacity and on behalf of the City to exercise any executive, supervisory, or other similar functions in connection with the performance of this agreement shall become directly or indirectly interested personally in this agreement or any part thereof. (16) VERBAL AGREEMENT OR CONVERSATION No verbal agreement or conversation with any officer, agent, or employee of the City, either before, during, or after the execution of this agreement, shall affect or modify any of the terms or obligations herein contained nor such verbal agreement or conversation entitle the Auditor to any additional payment whatsoever under the terms of this agreement. (17) SUCCESSORS OR ASSIGNS Subject to the provisions of paragraph (IZ), Hold Harmless Agreement, all terms, conditions, and provisions hereof shall insure to and shall bind each of the parties hereto, and each of their respective heirs, executors, administrators, successors and assigns. (18) EFFECTIVE DATE This agreement shall be effective on and from the day and year first above written. 9 (19) CONTRACT RENEWAL This contract may be renewed by the City Council and Peat Marwick Main and co . IN WITNESS WHEREOF, we have hereunto set our hands and seals. CITY OF CARLSBAD BY Title CLAUDE A. LEWIS, Mayor ---- ATTEST: APPROVED AS TO FORM: City Clerk City Attorney 10