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HomeMy WebLinkAbout2007-05-15 Workshop City Commission Meeting Agenda Packet AGENDA DANIA BEACH CITY COMMISSION WORKSHOP AUDITOR INTERVIEWS TUESDAY, MAY 15, 2007 - 6:00 P.M. ANY PERSON WHO DECIDES TO APPEAL ANY DECISION MADE WITH REGARD TO ANY MATTER CONSIDERED AT THIS MEETING OR HEARING WILL NEED A RECORD OF THE PROCEEDINGS,AND FOR SUCH PURPOSE MAY NEED TO ENSURE THAT A VERBATIM RECORD OF THE PROCEEDINGS IS MADE WHICH RECORD INCLUDES THE TESTIMONY AND EVIDENCE UPON WHICH THE APPEAL IS TO BE BASED. LOBBYIST REGISTRATION REQUIRED-REGISTRATION AS A LOBBYIST IN THE CITY OF DANIA BEACH IS REQUIRED IF ANY PERSON,FIRM OR CORPORATION IS BEING PAID TO LOBBY THE COMMISSION ON ANY PETITION OR ISSUE PURSUANT TO ORDINANCE NO. 01-93. REGISTRATION FORMS ARE AVAILABLE IN THE CITY CLERK'S OFFICE IN THE ADMINISTRATION CENTER. IN ACCORDANCE WITH THE AMERICANS WITH DISABILITIES ACT, PERSONS NEEDING ASSISTANCE TO PARTICIPATE IN ANY OF THESE PROCEEDINGS SHOULD CONTACT THE CITY CLERK'S OFFICE, 100 W. DANIA BEACH BLVD., DANIA BEACH, FL 33004,(954)924-3624,AT LEAST 48 HOURS PRIOR TO THE MEETING. IN CONSIDERATION OF OTHERS,WE ASK THAT YOU: A. PLEASE TURN CELL PHONES OFF,OR PLACE ON VIBRATE. IF YOU MUST MAKE A CALL,PLEASE STEP OUT INTO THE ATRIUM,IN ORDER NOT TO INTERRUPT THE MEETING. B. IF YOU MUST SPEAK TO SOMEONE IN THE AUDIENCE,PLEASE SPEAK SOFTLY OR GO OUT INTO THE ATRIUM,IN ORDER NOT TO INTERRUPT THE MEETING. 1. Call to Order 2. Roll Call 3. Auditor Interviews (15 minute presentation by the Auditors followed by 15 minutes of questions by the City Commission) 6:00 p.m. Rachlin Cohen& Holtz, LLP 6:30 p.m. Keefe, McCullough & Company, LLP 7:00 p.m. Alberni Caballero & Castellanos, LLP 4. Rankine of Firms by the City Commission 5. Adiournment CITY OF DANIA BEACH DEPARTMENT OF FINANCE MEMORANDUM TO: City Commission Memo: DFA-07-17 VIA: Ivan Pato City Manager FROM: Patricia Varney Director of Finance DATE: May 8, 2007 SUBJECT: Engagement of auditing services for FY 2007 to FY 2009 Issue To engage a certified public accounting firm to perform auditing services for the City for the fiscal years ending September 30, 2007, 2008 and 2009. Explanation A "Request for Proposals" was issued in April to seek a certified public accounting firm to perform auditing services for the City. The City advertised in a newspaper of general circulation, posted at the City's website, Demand Star and sent out 8 notices to different accounting firms inviting them to submit a proposal. Twelve firms availed themselves to proposals from Demand Star. The City received four responses. The Audit Committee consisted of the Assistant City Manager, the Assistant Finance Director, the Accountant and the Director of Finance. The Committee members independently reviewed the proposals and ranked each firm in accordance with the predetermined criteria stated in the RFP. That criteria being their experience with engagements similar to those needed by the City of Dania Beach, experience of the proposed audit team, and experience in Single Audit, the audit approach, references and cost. The top three firms ranked by the Committee are: Alberni Caballero & Castellanos, LLP, Keefe, McCullough& Co., LLP, and Rachlin Cohen & Holtz LLP. These three firms were then interviewed by the Committee on May 7, 2007. Recommendation After the interviews on May 7, the Committee ranked Alberni Caballero & Castellanos, LLP as the top firm, while Rachlin Cohen & Holtz came in second. The reasons Alberni, Caballero & Castellanos, LLP scored higher than Rachlin, Cohen & Holtz are as follows: 1 a) Alberni, Caballero & Castellanos has two partners assigned to the engagement that will be hands on throughout the City's engagement. This practice was also confirmed from one of the references obtained by staff. The engagement partner will be at the City to perform the audit for at least two to three days a week. b) Alberni, Caballero & Castellanos' proposal laid out precisely the audit plan for the single audit. c) The references we received from Alberni, Caballero & Castellanos were outstanding. The City performed references choosing one current client and one former client of each firm. d) The annual audit fee without single audit and the Fire and Police Pension Plan audit for a three year period is $138,000. Attached is the combined evaluation form and references staff obtained from each of the top three ranking firms. In 2005, the Florida Legislature amended Florida Statute Chapter 218 with regard to auditor selection procedures. Chapter 218.3 (a) "Establish factors to use for the evaluation of audit services" and 3(d) stated "If compensation is one of the factors established pursuant to paragraph (a), it shall not be the sole or predominant factor used to evaluate proposals." The criteria that the Audit Committee established for the City's audit services are 25% for compensation and 65% for technical qualifications and 10% for references. The Statute further states that "If compensation is one of the factors established pursuant to paragraph (3)(a) and used in the evaluation of proposals pursuant to paragraph 3(b), the governing body shall select the highest-ranked qualified firm or must document in its public records the reason for not selecting the highest-ranked qualified firm." Based on the above, the Committee is recommending Alberni, Caballero & Castellanos, LLP as the audit firm for a three year period beginning fiscal year 2007. 2 Alberni Caballero Keefe, McCullough Rachlin,Cohen Points Technical Qualifications 65 points Allocated Expertise and Experience Maximum 45 points Past experience and performance for government engagements 20 16 17.25 18 of comparable size and complexity Quality and experience of firm's professional auditing personnel 15 12.5 11.75 12.75 Quality and experience of firm's auditing personnel to be assigned to Single Audit 5 4 3.25 4 Quality and experience of firm's management support personnel to be available for technical consultation 5 3.5 3,75 4.75 Audit Approach Maximum 20 points Adequacy of proposed staffing plan for various segments 5 4.5 3.5 4 Adequacy of general audit plan for overall engagement 5 4.25 4.25 4.5 Adequacy of audit plan utlizing EDP software 5 4.5 3.5 4.75 Adequacy of the audit plan for Single Audit 5 4.75 3.5 4 Response of References 10 points 10 9.25 8 7.25 Cost 25 ponts 25 23.5 13.5 20.75 Total 100 86.75 72.25 84.75 Cost Annual Audit 44,000/46,000/48,000 75,000/77,500/80,000 48,500/50,000/53,000 Three Years cost of Annual Audit 138,000 232,500 151,500 Single Audit-Federal 2,500/3,000/3,500 5000/5000/5000 5,000/6,00017,000 Single Audit-State 5,000/5,500/6,000 Police&Fire Pension Audit 5,000/5,50016,000 500015000/5000 7,500/7,500/8,000 Rachlin, Cohen & Holtz, LLP Audit Reference Questions: Lauderdale by the,Sea: Eather Colon,Director of Finance 954-776-0576 Has the firm complied with the initial audit schedules as proposed in their original RFPIContract? If not, how much additional time was needed to complete the audit? The firm is wonderful. They had no issues with the timeliness of the audit. Usually, if there is a delay it is because of the City. Was the knowledge of the field auditors adequate to perform the services required or did they require signficant or repeated guidance? The filed auditor were knowledgeable and adequate. Throughout the course of the audit year did you have any occasion to contact the firm for their"expert" opinion on accounting/financial matters? If so,where they reachable, knowledgable, and responsive in a timely manner? "I could call them right now if I wanted to." They are always responsive. Did the firm complete financial schedules and if so where they accurate? They did not draft financial schedules. OTHER COMMENTS: Reference information was very short. Did not expand on answers or give any extra information freely. Audit Reference Questions: City of Tamarac: Bill Nealon, Controller 954-697-3658 Has the firm complied with the initial audit schedules as proposed in their original RFPIContract? If not, how much additional time was needed to complete the audit? Yes, The firm worked with them approximately 4 years ago. The timeliness of the audit was met. Was the knowledge of the field auditors adequate to perform the services required or did they require signficant or repeated guidance? Field auditors were fairly knowledgable however, the Audit Managers were very experienced in their work. Throughout the course of the audit year did you have any occasion to contact the firm for their"expert" opinion on accounting/financial matters? If so,where they reachable, knowledgable, and responsive in a timely manner? Yes. The firm partners and managers were always accessible within a reasonable time frame. Did the firm complete financial schedules and if so where they accurate? The firm did not complete the financial schedules, but was helpful in the consolidation when the City had to comply with GASB 34. Rachlin, Cohen & Holtz, LLP OTHER COMMENTS: I originally contacted Steven Champman, Finance Director but since he has only been with the City for 2 years he deferred me to his Controller. They are currently coming to and end in their 5 year contract with BKR. He suggested questioningly thoroughly about the upcoming changes especially regarding the internal controls. This is going to probably require more hours and he indicated to make sure the hours quoted to us with the related cost encompass these changes. He did have an issue in the past with Rachlin, where the City had forgotten some entries, and Rachlin tried to state it was not part of their original contract hours and therefore wanted more money. He did not elaborate further. Keefe, McCullough & Co., LLP Audit Reference Questions: City of Margate:Gail Gargano, Director of Finance 954-972-6454 or 954-935-5200 Has the firm complied with the initial audit schedules as proposed in their original RFPIContract? If not, how much additional time was needed to complete the audit? Firm was with the City from 1979-2005. The City never experienced any delay in their reporting. Time schedules were met an no additional time was need. Was the knowledge of the field auditors adequate to perform the services required or did they require signficant or repeated guidance? The field leader was always the same but they did experience new staff accountants each year. There was always some"learning curve"with the new people but nothing that was a detrimant to the audit. i nrougnout the course or me auait year oia you nave any occasion to contact the Timm Tor tneir .,expert" opinion on accounting/financial matters? If so,where they reachable, knowledgable, and responsive in a timely manner? The firm partners and staff were extrememly available. Calls were returned immediately. If they were out of town calls were returned either after 5:00 pm or the following day. Did the firm complete financial schedules and if so where they accurate? Prior to GASB 34 the Finance Director drafted the schedules, but after the implementation, the firm took this over. In particular Cynthia Calvert was instrumental in drafting the conversion to GASB 34. The fund statements were still provided by the Director to the firm. OTHER COMMENTS: In particular Gail worked with Cindy Calvert, Bill Benson, David Williams, and a few others. She had nothing but glowing recommendations and couldn't say enough. The words she used were "Good People" and "Phenomenal" They even worked on Sundays. They are currently under a five year contract with another firm BKR Garcia. Due to Keefe, McCullough long history with the City the governing body felt it necessary to forgoe signing another contract and rebid in 2006. Audit Reference Questions: City of Parkland:Judith Kilgore, Director of Finance 964-753-6040 Has the firm complied with the initial audit schedules as proposed in their original RFPIContract? If not, how much additional time was needed to complete the audit? Keefe, McCullough was under contract with City of Parkland from 1995-2006. They are presently going out for RFP as well. During their time as auditors they always met their time schedules. Any delay that occurred was due to the Cities problem with their own staffing. Was the knowledge of the field auditors adequate to perform the services required or did they require signficant or repeated guidance? The filed auditors were very knowledgeable. As with most there are questions but she stated "at no time did we have to go back to Accounting 101." Keefe, McCullough & Co., LLP Throughout the course of the audit year did you have any occasion to contact the firm for their .,expert" opinion on accounting/financial matters? If so,where they reachable, knowledgable, and responsive in a timely manner? The firm was excellent in working with the City in answering questions and other issues. In fact, approximately 3 years ago Parkland switched from a city Police Department to BSO. Keefe, McCullough was very helpful in a situation that was considered a "hot potatoe." They were helpful in analyzing the numbers presented by the commission. Did the firm complete financial schedules and if so where they accurate? Keefe, McCullough financial schedules were very accurate and contained few errors. OTHER COMMENTS: In particular she worked with Ken Smith as the Partner in Charge. The Senior was Ross Gossheimer. Both were very knowledgable, helpful, and always available. Alberni Caballero & Castellanos, LLP Audit Reference Questions: Village of Biscayne Park: Holly Hughtlaht, Director of Finance 306-899-8000 Has the firm complied with the initial audit schedules as proposed in their original RFP/Contract? If not, how much additional time was needed to complete the audit? She has worked with Alberni, Caballero and Castellanos for the past two years. Their schedules were always met. Last year they came in November and were done with the financials in December. They resented to the commission b 1 st of February. P Y ry Was the knowledge of the field auditors adequate to perform the services required or did they require signficant or repeated guidance? Field auditors were very knowledgable. The one thing she liked the most is that the partners are very hands on. Nestor Caballero, was actually on sight most of the time in addition to the senior and audit staff. The hands on approach works well because the partners were very familiar with the financial statements. Throughout the course of the audit year did you have any occasion to contact the firm for their"expert" opinion on accounting/financial matters? If so, where they reachable, knowledgable, and responsive in a timely manner? The responsiveness of the team is wonderful. She felt very comfortable with their knowledge. In particular, Elias Castellanos. She said his background with Rachlin, Grau and his work in Washington D.C. was apparent and she always found his information reliable. The firm is extremely accessible and easy to get ahold of if needed. Did the firm complete financial schedules and if so where they accurate? The schedules prepared by the firm were top notch. She like the fact they they worked with you as a team. If there was an issue in the financials to be resolved they helped to determine what the problem was and tried to resolve it. OTHER COMMENTS: Holly Hughdahl is on contract with the Village of Biscayne Park. She is a financial consultant and as such has and is working with many different auditing firms. If she could pick, she said the top three firms she would work with would be Alberni, Rachlin, and BKR. While she could not pick a favorite and stated either Rachlin or Alberni would be a good choice, she repeatedly expressed her likeness with Alberni and the fact they were"very hands on and very knowledgable and easy to work with." She spoke very highly of them. Audit Reference Questions: Village of South Miami: Eliza Rassi,Finance Director 305=805-5000 Has the firm complied with the initial audit schedules as proposed in their original RFPIContract? If not, how much additional time was needed to complete the audit? No additional time was need on the part of the firm. Any delays were due to the City. They had an turnover in their finance department. She is the 3rd director in 1 1/2 years. During this time the firm was helpful with any questions. She also had the experience of working with them in the past with the City of Hialeah as their Budget Director. Alberni Caballero & Castellanos, LLP Was the knowledge of the field auditors adequate to perform the services required or did they require signficant or repeated guidance? The field auditors were very familiar with the city when she came on board. They were knowledgable with regards to accounting standards and knew the city systems well. i have an occasion to contact the firm for their"expert" Throughout the course of the audit year did you a e y p opinion on accounting/financial matters? If so,where they reachable, knowledgable, and responsive in a timely manner? The firm is extremely availabe at all times. In fact, "I have Nestor's cell phone number and if I call him he always returns my calls immediately." I also found Elias Castellanos to be very bright and knowledgeable in his field. Did the firm complete financial schedules and if so where they accurate? The schedules completed by the firm were very accurate. OTHER COMMENTS: