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HomeMy WebLinkAbout07-30-07 Item 4D, MMKR Payment for 2006 Auditing Services ~ ~HILLS Request for Council Action Prepared By: Oept.: Council Mtg. Date: Final Action Needed By: Sue Iverson Finance ~ Agenda Item: 40 . ~ul)'.30,2007 July 30, 2007 . "...""" """ "" "Sudg-e;tiiCi 'AmolinF~:-"--"--------""--- "'-"""-"-$24:750- Actual Amount: ".." . ".. ....""."""."$.2"s:rj!jif General Fund $1,400, Water $1,400, Sewer $1,400 Funding Source: ~9JJ!}:CjE~<i1'ii~Q~~@jjR:.g&~4!&dk'iliffu~1ffi_______________________________________________________________________________________________________________________________ ! Motion to approve payment to MMKR for $11,550.00 for final payment for auditing services for 2006. ~~J:I~~mIi~~_il~i'iiE1]ldJi]f~~ts"[_____________________________________________.________"___..________.._"_"_________"__"_._"_m__.___._._".........._......."......................................................."...."."....".."__.""."."________________"_________ [ Staff recommends payment of $11,550.00 for final payment for auditing services for the 2006 audit and financial statements. The additional! jamountwill be funded with $1,400 to come from the General Fund, $1,400 to come from the Water Fund, and $1,400 to come from the Sewer! [Fund. This is consistent with the allocation for the budgeted amount of the audit. ' x !,,^ ..,,, ^H^ Memo dated July 24. 2007 : R~.nl"Hnn No: No.: II~ Recommendation: Recommendation: X I Other: Invoice from MMKR dated June 30, 2007 Additional costs of $4,200 with $1,400 "'aflocated to the General Fund, $1,400 allocated to the Water Fund:-.i'nd $1,400 allocated to the Sewer i Fund. The auditors did discount the services by $4,050. ' ~"Sffimr~lf@1"tWlSfirff~lfflfjmiJ!1{~~!~.........................................".....,.........................."........................."....,",.....""'""'"",,.,,,,",__,,____"____________n________________n__n____________________n_____n________n_"__n"""............n.............. i Staff feels that we have an exceptional Financial Statement document and that the auditors did a thorough job. ! working with them next year. , , "We"'are"TookIng"-forwarcf to--- .._"...J ~ ~~HILLS MEMORANDUM DATE: July 24,2007 AGENDA ITEM 4D TO: Honorable Mayor and City Council Michelle Wolfe, City Administrator FROM: Sue Iverson, Finance Director SUBJECT: Final Payment to MMKR for 2006 Audit BACKGROUND At the November 27, 2006 meeting, the City Council approved a contract with Malloy, Montague, Kamowski, Radosevich, Co., P.A. for auditing services for 2006 at a cost of $24,750.00. This bid was put together assuming that the current City staff at the time would be the personnel the auditors were working with, and that the department would be fully staffed. DISCUSSION As you know, the Finance Director left in August of2006 and the Accounting Analyst left in December of 2006. When the auditors came to do the first part of the audit work, there was no one in the Finance Department except the utility billing clerk. The City had no work papers or any items ready for the auditors when they arrived. When they arrived for their "planned" final visit, I had only been here for two weeks and had not yet had a chance to work on any audit work papers or files. This added considerable cost to the audit and would be in addition to the bid price of the audit as stated in the proposal. Further, the auditors did not realize that the previous auditors did all the financial statement reconciliations and adjusting entries, except those that were disclosed in the Management Report for 2005 as a reporting deficiency. This would also add considerable cost to the audit and would be in addition to the bid price. The preparation of the financial statements had been included in the bid price accepted by the council, but only in the format previously done in prior years. This was not in the form of a Comprehensive Annual Financial Report (CAFR) as recommended by the Government Finance Officers Association (GFOA), thus the cost is greater. Once I evaluated the situation, I suggested to the auditors that I prepare the financial statements and in exchange I asked if we could convert them to the CAFR form. This was acceptable to the auditors. However, due to the amount of correcting entries, personnel shortages in the Finance Memo City Council Final Payment for 2006 Audit 2 Department, and the time involved in finishing the audit, considerable time was spent in repeated visits by the auditors. FINANCIAL IMPLICATIONS The auditor communicated with me that the total billable costs for the audit equaled $33,000, which is $8,250 over the original proposal. The auditor is pleased with the outcome of the audit, the City's response and the final CAFR document which is a much better product than was planned. They have decided to split the difference between the original bid and the actual cost and only charge the City an additional $4,200. Part ofthe cost, was from turning the document into the CAFR and is estimated to be about $2, I 00 for printing, tabs, and review of the checklist. The remaining cost is due to the problems and issues associated with year-end and the shortage of personnel the City experienced. We have a much higher quality document as a result, and staff can find ways to cut some of the costs next year for the document, such as printing the tabs, bindings, etc. I am confident that next year's audit will come in at or below the bid price, as we now have audit work papers set up and a stable staff. CITY STAFF RECOMMENDATION Motion to approve payment to MMKR for $11,550.00 for final payment for auditing services for 2006. M KR MALLOY MONTAGUE KARNOWSKl RADOSEVICH & CO., PA. R\8~2;ived CERTIFIED PUBLIC ACCOUNTANTS JUL 1 6 Z007 53'} W'y"'" Boulevard' Sui<< 41fi . Minnnpnli" MN 55416 T<kphnn",9S2.545-0424 Fa: 952-545-0569 City of .,",rde!l Hills Ms. Michelle Wolfe City of Arden Hills 1245 West Highway 96 Arden Hills, MN 55112 Invoice No. 20032 Date Client No. 06/30/2007 6115 FOR PROFESSIONAL SERVICES Final billing for completion of audit of [maneial statements for the year ended 12/31/2006. $ 24,750.00 Preparation and assistance with fInancial statement for snbmission of CAFR award, assistance with prior period adjustment reporting, and other accounting issues as discussed. 4,200.00 Progress applied 117.400.00) $ II 550.00 A service charge will be added to any balance not paid within one month.