Agenda - Council - 09/13/2016 - Laserfiche WebLink

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CC Regular Session Meeting Date: 09/13/2016 By: Diana Lund, Finance 4. 7. Information Title Approve Extension of Audit Contract with MMKR for Years 2016-2018 Purpose/Background: The City Council adopted the city's purchasing policy on November 24, 2009. Section 4.5 Request for Proposal (RFP) states that an RFP will be solicited every three years (unless specifically extended by City Council) for such services as auditing. It should be noted that cities are not required to follow the competitive bidding process (RFP's) for professional services such as those provided by engineers, lawyers, and accountants. The city issued an RFP in 2011 for auditing services for years 2011 through 2015. The firm of MMKR was selected to perform the city's annual audit for these respective years. As year ending 2016 is not far away, the city needs to obtain auditing services for 2016 and forward. The city is required by statute to have an annual audit of its financial records. The position of the Assistant Finance Director is the position that most closely works with the auditing firm in preparing workpapers and assisting them during their fieldwork. In the past six years, three different people have filled this position, with the current employee having been here less than one year. Year 2015 was also the year that new Comprehensive Annual Financial Reporting (CAFR) standards were implemented related to the city's retirement plan known as PERA. In short, the finance department would like to ask for an extension to the current auditing contract with MMKR to allow the current Assistant Finance Director the opportunity to work with the current auditing firm for at least a reasonable period of time. MMKR has submitted a three-year proposal, which is attached for your review. The first year (2016) fee of $29,175 is the same rate that MMKR charged the city for year 2015 services. The next two years would be an inflationary charge of 3% which would bring the 2017 fee to $30,050 and 2018 at $30,950. Staff did contact neighboring cities in regards to their current audit fees (the same auditing standards have to be followed for each city). The fees charged to these cities for 2015 auditing services were $34,200, $35,200 and $39,500. MMKR has helped the city obtain its Certificate of Achievement in Financial Reporting over the past several years. Having a clean report which relates to obtaining this award also factors into the city's bond rating. Observations/Alternatives: # 1 - Accept three year extension with MMKR with the stated annual fees. #2 - Accept one-year extension and seek further direction in 2017 for auditing services. #3 - Direct staff to begin an RFP process for auditing services for years 2016-2020. Funding Source: Auditing services is included in the General Fund Budget under the Finance Department.