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REQUEST FOR COUNCIL ACTION Date: 1111$12002 Item No: VIII. B. Department Approval: Manager Approved: Agenda Section: (00 Reports & Recommendations Item Description: Consideration of Extending the Audit Services Contract to Kern, DeWenter, Viere, Ltd. Background At the October 2 1, 2002 Council Meeting, the City Council directed Staff to negotiate a contract extension with the audit firm of Kern, DeWenter, Viere, Ltd. (KDV) for the purposes of awarding a 3-year contract for audit services for the fiscal years 2002-2004. KDV served as the City's auditors the past three years. As the Council may recall, It's was Staff s recommendation to negotiate a contract extension rather than seek proposals from various firms for the following reasons: ❑ The level of changes in the City's finance and accounting operations has placed an unusually high amount of strain against the finance, accounting, and audit functions. Maintaining continuity with respect to the City's auditors will help facilitate the remaining transition issues, and allow for a more effective audit process over the next few years. d Given the relative few CPA firms that have proven expertise in auditing financial statements under the new industry standards, Staff estimates that very few firms will be in a position to provide a competitive bid for a new contract, and a strong likelihood exists that KDV will indeed be the lowest bidder. ❑ By negotiating a contract extension, the City will be in a better position to select a timeframe for the audit that is more timely and more balanced with respect to our current fiscal calendar. It may also increase the likelihood of experienced personnel being assigned by the audit firm. Over the past several weeks, Staff has been negotiating a contract extension with KDV and believes a fair agreement has been reached. The terms of the agreement are summarized below.