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Agreement Terms KDV has agreed to provide audit services in the same manner and scope as the most recently completed audit for the City of Roseville as follows: Fiscal Year * Amount not to Exceed 2002 $ 181500 2003 19,150 2004 19X5 To be completed in the spring of the following year. Cost and Market Comparisons As noted by Staff in earlier presentations, the City recently adopted new industry reporting standards that have added complexities and costs to the audit process. Over time, these additional costs may be negated as the new standards become commonplace. However, for the next three years they will continue to play a factor in the overall audit costs. The Cities of Oakdale and Minnetonka are the only known metro-area cities that have recently adopted the same reporting standard. Their audit costs, independent of planning and training costs were $30,000 and $35,000 respectively in the most recent fiscal year. A survey of other metro-area cities of similar population found audit costs in the range of$22,000—35,000 annually. However, this does not included the added costs that will likely be incurred once they adopt the new standard. The survey results included cost information attributable to five separate audit firms. Based on these market comparisons, Staff believes the agreed upon pricing from KDV is lower than what could be obtained in a competitive bidding environment. This can be attributed in part to the City's continued practice of preparing audit schedules in advance, and presenting information that is "audit-ready". It also reflects KDV's familiarity of the City, and their internal efforts to keep the cost of the audit down. Recommendation For the reasons noted above, it is StafFs recommendation to approve a 3-year contract extension to KDV for audit services for the fiscal years 2002-2004 in the amount not-to-exceed as noted above. Council Action Requested Approve a 3-year contract extension to the audit firm of Kern, DeWenter, Viere, Ltd., for the purposes of performing audit services for the fiscal years 2002-2004 in an amount not-to-exceed $18,500, $19,150, and $19,825 respectively.