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HomeMy WebLinkAbout2007-05-15 Auditor Interviews City Commission Minutes MINUTES OF WORKSHOP DANIA BEACH CITY COMMISSION AUDITOR INTERVIEWS TUESDAY, MAY 15, 2007 — 6:00 P.M. 1. Call to Order Mayor Anton called the meeting to order at 6:00 p.m. 2. Roll Call Present: Mayor: Bob Anton Vice-Mayor: Albert Jones Commissioners: John Bertino Anne Castro Patricia Flury Assistant City Manager: Colin Donnelly City Attorney: Thomas Ansbro City Clerk: Louise Stilson Patricia Varney, Director of Finance, noted for the record that the firm Watson & Rice did not meet all the requirements of the bid. The Bid Committee rating of the firm was 61.88, which puts them in fourth place. She clarified that she did not disqualify the firm, they ranked fourth. City Attorney Ansbro summarized we sent Watson & Rice a letter notifying they ranked fourth, and would not qualify for an interview. 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 Jerry Chiocca, CPA, Audit Partner, Rachlin, Cohen & Holtz, advised that for more than 38 years his firm has provided professional services to governmental entities. He is a member of the American Institute of Certified Public Accountants (AICPA) Government Audit Quality Center. Mr. Chiocca noted that they have assembled an Audit Team whose skills and experience match the requirements of the City. This engagement would be primarily staffed from Rachlin's Fort Lauderdale and Miami Offices, but the resources of all their offices would be made available to the City. He indicated he would be in charge of all decisions that affect the planning, execution and completion of the proposed audit. Mr. Chiocca stated that for the past 12 years, they have presented an annual Governmental Symposium, which focuses on current developments in governmental affairs, including accounting, legal and operational topics. He introduced the Team Structure members: Michael D. Futterman, CPA, Technical Resource and Concurring Reviewer Duane A. Mathis, CPA, Audit Supervisor Arieh Davidoff, I.T. Auditor The members of the firm reviewed their experience, strategic planning and audit procedures. The audit process would include four phases: 1.) Strategic Planning (July); 2.) Execution of Audit Plan (September-December); 3.) Evaluation of Audit Results (December) and 4.) Completion and Delivery (January). Vice-Mayor Jones asked about their community involvement. Mr. Chiocca advised they are involved in several community activities throughout Broward County. They have recently created the Rachlin Foundation that provides assistance to various County agencies and charitable organizations. Vice-Mayor Jones asked if it was their policy to include the Commission in the interview process. Mr. Chiocca indicated that they would sit with all Commissioners when requested to do so. Commissioner Castro questioned if they were ever discharged from a municipal or private agency, and if so, why. Mr. Chiocca responded that they were only discharged through a normal rotation policy, not for performance. Commissioner Castro asked about I.T. audit frame standards. Arieh S. Davidoff, I.T. Auditor advised there were International standards for audit. He commented the City's I.T. infrastructure was fairly small and we have the advantage of using an application service provider for our financial accounting system. Mr. Davidoff responded for Commissioner Castro that when they were hired by the City three years ago, they communicated with SunGuard-HTE to find out about their back-up and security. Commissioner Castro asked if any members of the team had ever quit a job, and if so, why. Mr. Chiocca responded no. Commissioner Castro questioned if they would bring any disagreement they had with staff to the Commission. Minutes of Workshop 2 Dania Beach City Commission Auditor Interviews Tuesday, May 15,2007—6:00 p.m. Mr. Chiocca indicated they would proceed through the chain of command, the City Manager and then the City Commission. He advised that if a problem was identified, they would bring it up during the audit. Commissioner Castro wanted to know if they had any concerns about being too familiar with staff. Mr. Chiocca advised this does not cause any discomfort. He also noted they rotate their staff which creates a new look in their working environment. Commissioner Flury noted that the Auditors' experience in the governmental area was an important factor during the selection process. She added that their relationship with the Commission was even more important. Commissioner Flury confirmed with Finance Director Varney that all references obtained from other municipalities were good. Mr. Chiocca clarified for Commissioner Flury that Duane Mathis, CPA, would be the on-site auditor. The other members of the team would be available on a consulting basis. Mayor Anton emphasized that the Auditors work for the City Commission therefore any irregularities during the audit should be reported to them immediately. He thanked Rachlin Cohen & Holtz for their presentation. Mr. Chiocca acknowledged that they have worked with the City in the past and they understand the Commission responsibility relating to the correct administration of public funds. 6:30 p.m. Keefe, McCullough& Company, LLP William G. Benson, CPA, was pleased to be given the opportunity to perform auditing services for the City. He noted that their firm has existed for over thirty-five years and they are located in Fort Lauderdale. Their office consists of nine partners, with approximately fifty professional accounting staff and administrative support personnel. Mr. Benson indicated that their practice includes audit engagements, management advisory services, tax planning and tax return preparation as well as consulting services. They would have an experienced CPA working on site. Cindy L. Calvert, CPA, advised that their firm currently provides auditing services for over 125 non-profit and governmental entities. They are very familiar with compliance of auditing in accordance with the Government Auditing Standards. She indicated that they have many clients with substantial grant revenue, such as FRDAP and LLEBG, who are satisfied with their service. Mr. Benson questioned how his firm could have rated third when they perform auditing services for nine of the thirty-one cities in Broward County. He felt their firm would be the best qualified to perform the City's audit engagement based on substantial governmental experience and their absolute dedication to quality in their practice. Minutes of Workshop 3 Dania Beach City Commission Auditor Interviews Tuesday,May 15,2007—6:00 p.m. Commissioner Flury asked Mr. Benson to review the team that would be working in the City. Mr. Benson advised that Cindy Calvert would be the field leader and both she and Steve Akins would be working on site. Kenneth Smith would be the review partner. He noted that their entire professional accounting staff was part of their governmental staff. Vice-Mayor Jones questioned their community involvement. Mr. Benson indicated they have worked with the Red Cross, the United Way, Junior Achievement, and others. They are in favor of fundraisers and getting involved with the community. Vice-Mayor Jones asked if they have been involved in any lawsuits during the past three years. Mr. Benson indicated they have never been involved in any lawsuits. Vice-Mayor Jones questioned their policy in meeting with the Commissioners. Mr. Benson advised they will meet with the Commissioners when requested, and discuss any issues they may find. Commissioner Castro asked why they were replaced in the City of Margate after working for them for thirty-five years. Mr. Benson advised they were faced with a lot of pressure for rotation. He responded for Commissioner Castro that they have never been discharged or quit a job. Commissioner Castro wanted to know what type of Information Technology audit they perform. Mr. Benson indicated they have certified network engineers who can work around each city's needs. Commissioner Bertino confirmed with Mr. Benson that they would be willing to negotiate on their fee structure. Mr. Benson confirmed for Commissioner Flury that they are currently working on audits for the Cities of Lighthouse Point, Plantation, Weston, Parkland, Wilton Manors, Hillsboro Beach, Pembroke Park, Southwest Ranches and Sea Ranch Lakes. Mayor Anton asked about their policy with regards to familiarity with staff. Mr. Benson stated they are aware they work for the Commission and if they identify any issues they would report directly to them. Minutes of Workshop 4 Dania Beach City Commission Auditor Interviews Tuesday,May 15, 2007—6:00 p.m. 7:00 p.m. Alberni Caballero & Castellanos, LLP Nelson Caballero introduced Nestor Caballero, CPA, Engagement Partner, and Yannick Ngendahayo, Senior Accountant, to the Commission. Nelson Caballero indicated he is a partner in the firm, however he would not be one of the key members on this engagement. He was representing Elias Castellanos, Quality Control Partner and Martha Romero, Senior Accountant, who were both unable to attend tonight's meeting because they are currently out of state. Mr. Caballero reconfirmed their commitment to the City and stated that all their resources and staff would be available to make sure that the engagement is completed in a timely and efficient manner. He advised that two firms merged together to become Alberni Caballero & Castellanos. They have been providing professional CPA services throughout Florida for the past thirty years. They consist of five partners and over twenty professionals who specialize solely in serving the public sector. Nestor Caballero advised they are strong partners throughout the engagement providing the City with a high level of service. Their fees are all-inclusive, and there would not be any additional charge for any meeting they have with the Commission. He noted that Elias Castellanos once worked on the auditing team for the City of Dania Beach. Mr. Caballero indicated that everyone on the team has experience with governmental audits. They would bring experience, quality, efficiency, and cost savings to the City. Yannick Ngendahayo and Nelson Caballero gave a brief overview of their previous experience and their professional practice with government entities. Vice-Mayor Jones questioned the firm's community involvement. Nestor Caballero advised that they have been involved with Johnson& Wales, as well as several non-profit organizations. He confirmed for Vice-Mayor Jones that they have never walked off a job or failed to meet their deadlines. Vice-Mayor Jones confirmed with Mr. Caballero that they have not had any lawsuits and they would meet with the Commissioners before the audit as part of their planning. Commissioner Castro asked about the 2006 merger of the two firms. Nestor Caballero indicated that Caballero & Castellanos started their practice in May 2004, and Alberni, Caballero & Alberni had been in business since 1972. He stated that none of the partners have been fired from a job. Mr. Caballero advised that the I.T. audit standards involve the same tests that the City would perform. They have previously worked with HTE/Sungard and are familiar with the program. Nelson Caballero emphasized that all the partners will meet before they bid on a project to insure they have the ability to perform the work. Minutes of Workshop 5 Dania Beach City Commission Auditor Interviews Tuesday,May 15,2007—6:00 p.m. Nestor Caballero clarified for Commissioner Flury that he, Martha Romero and Yannick Ngendahayo would be working on-site. 4. Ranking of Firms by the Citv Commission City Attorney Ansbro advised that we are not here to negotiate the fee structure, only to rank the firms. He read a recent Amendment to the Florida Statutes governing the selection of municipal auditors which establishes that the City Commission should select the highest ranked qualified firm and if they decide not to do this, they must document the reasons for not selecting that specific firm. Commissioner Bertino asked Director Varney how often we utilize the hourly rate above the basic service offered in the proposal. Finance Director Varney advised that this only happens if the City is not ready when the auditors come, and that she has never experienced this in her 20 years of government employment. Commissioner Flury indicated she will rank Alberni Caballero & Castellanos, as #3, because Martha Romero, who would probably be the key person on this engagement, was not here tonight and she and Yannick Ngendahayo have only audited small cities. She thought Keefe, McCullough was focused on small cities and ranked #2. Commissioner Flury ranked Rachlin Cohen & Holtz #1. Commissioner Bertino thought rotating the auditors was a good thing for the City, because they bring fresh ideas. He was concerned about Alberni, Caballero & Castellanos because they do not have enough experience. He finally ranked Keefe, McCullough #1, Alberni, Caballero & Castellanos #2, and Rahlin Cohen & Holtz#3. Vice-Mayor Jones thought Alberni, Caballero & Castellanos was a young firm and might not have the experience we want. He was uncertain about the experience Keefe, McCullough might have, but ranked them #1, Rachlin Cohen & Holtz 92, and Alberni, Caballero & Castellanos #3. Commissioner Castro agreed with the rest of the Commission regarding Alberni, Caballero & Castellanos. She thought they were a young and inexperienced firm and have only worked with small cities. Also the fact that one of the key personnel was not present at this meeting was not a good start. Commissioner Castro was also concerned with the software they use. She believed in changing auditors therefore she ranked Keefe, McCullough#1, Rachlin Cohen& Holtz#2 and Alberni, Caballero & Castellanos #3. Commissioner Castro further commented that she was impressed with Keefe, McCullough because of their experience and partners. Mayor Anton agreed that Alberni, Caballero & Castellanos was inexperienced and the key person was not here tonight. He was concerned with the high cost presented by Keefe, McCullough, but was very impressed with Cindy Calvert and the frrm's experience. Mayor Anton had no problem with Rachlin, Cohen & Holtz continuing as auditors for the City for Minutes of Workshop 6 Dania Beach City Commission Auditor Interviews Tuesday, May 15,2007—6:00 p.m. another term. He ranked Rachlin, Cohen & Holtz #1, Keefe, McCullough #2 and Alberni, Caballero & Castellanos #3. Bertino Castro Flury Jones Anton Alberni Caballero & 2 3 3 3 3 Castellanos, LLP Keefe, McCullough & 1 1 2 1 2 Company, LLP Rachlin Cohen & Holtz, 3 2 1 2 1 LLP The results of the combined ranking by the Commission are as follows: 3. Alberni Caballero & Castellanos, LLP 2. Rachlin Cohen & Holtz, LLP 1. Keefe, McCullough & Company, LLP predicated upon negotiation of a reasonable fee with Keefe, McCullough & Company, LLP. Finance Director Varney suggested the Commission set up parameters which would make negotiations easier. Mayor Anton advised Finance Director Varney to call the Commissioners individually during negotiations, if she so wished. Mayor Anton announced the City Commission ranking and explained that Alberni was ranked low due to their experience and the cities served, and that a key principle was not present tonight. City Attorney Ansbro clarified for the record that the fee submitted by Keefe, McCullough & Company would be negotiated because it was unacceptable. 5. Adjournment Mayor Anton adjourned the meeting at 7:39 p.m. ATTEST: CITY Of D NIA BEACH LOUISE STILSON, CIVIC OB AUTO)( CITY CLERK MAYOR-COMMISSIONER Approved: June 12,2007 Minutes of Workshop 7 Dania Beach City Commission Auditor Interviews Tuesday,May 15,2007—6:00 p.m.