HomeMy WebLinkAboutRes2009-068Sponsored by: Oates
CITY OF SEWARD, ALASKA
RESOLUTION 2009-068
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, EXERCISING THE OPTION TO EXTEND THE CONTRACT
FOR EXTERNAL AUDIT SERVICES WITH MIKUNDA, COTTRELL & CO.
FOR TWO YEARS
WHEREAS, the City of Seward issued a request for proposals ("RFP") for external audit
services in accordance with standard City bid procedures in January, 2007, and received two
responses; and
WHEREAS, the Seward City Council approved Resolution 2007-010 on February 26, 2007,
authorizing athree-year contract with Mikunda, Cottrell & Co. with options to extend for up to two
additional years, at the discretion of the City Council; and
WHEREAS, since the time of the RFP, Alaska's largest auditing firm of KPMG has
significantly reduced its client base of governmental entities in Alaska in order to focus on audits of
private sector firms, leaving only two Alaskan firms in the pool of qualified external audit fines,
both of which were the original respondents to the City's RFP; and
WHEREAS, it is highly unlikely that the City would obtain bids from additional
respondents, were it to advertise a new request for proposals, and the extension of the current
contract is considered appropriate and cost-effective, and is consistent with the City's positive
experience in working with this firm; and
WHEREAS, the firm conducting the annual audit of the City has experienced turnover of
key personnel participating in the audit of the City's accounting records, serving to provide a new set
of eyes conducting the review, which provides for some level of auditor rotation without the
disruption caused by a full-scale change in accounting firms.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA that:
Section 1. The City Manager is hereby authorized to extend the contract with Mikunda,
Cottrell & Co. for an additional two years, to include conducting the financial audits for 2009 and
2010, and to negotiate a cost for the audit not to exceed the current audit contract adjusted to reflect
changes in the annual consumer price index for Anchorage.
Section 2. Funding is included in the annual operating budget.
Section 3. This resolution shall take affect immediately upon its adoption.
CITY OF SEWARD, ALASKA
RESOLUTION 2009-068
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 27t" day of
July, 2009.
THE CITY OF SEWARD, ALASKA
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illard Dunham,lVice Mayor
AYES: Valdatta, Kellar, Smith, Dunham
NOES: None
ABSENT: Bardarson, Keil, Corbridge
ABSTAIN: None
ATTEST:
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Jean Lewis
City Clerk " a,t,u.ut~
(City Seal)
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Council Agenda Statement
Meeting Date: July 27, 2009
To: Phillip Oates, City Manager ~/~ld
From: Kristin Erchinger, Finance Director N~~
Agenda Item: Exercising Option to Extend Audit Contract
BACKGROUND & JUSTIFICATION:
The City of Seward issued a request for proposals for external audit services in 2007 and received
two responses. At that time, it was determined that there was a pool of only three qualified Alaskan
certified public accounting firms conducting audits of governmental entities in Alaska. A letter from
KPMG indicated that they were not interested in bidding on the proposal. This left two firms,
Mikunda, Cottrell & Co. and Altman Rogers. Since that time, it appears as though KPMG has
reduced its participation in the public sector auditing market, focusing instead, on the private sector.
The City switched accounting firms in 1997, from KPMG Peat Marwick, to Mikunda, Cottrell & Co.
Since that time, Mikunda has served as the City's external auditors, providing excellent audit
services to the City. The firm has provided consistency and cost-effective services, at a significantly
lower cost than the City previously paid for auditing services.
Generally speaking, it is important to consider rotating auditors on a periodic basis, to ensure a "fresh
look" at the financial records of the City. The need for auditor rotation should be balanced against
the likelihood of qualified competition, as well as efficiencies to be gained from auditors who have a
good grasp of an entity's business entities. In short, auditor consistency and auditor rotation both
have distinct advantages, assuming the existence of qualified competition.
Due to the lack of qualified competitors in Alaska, the City is not likely to see different respondents
vie to provide audit services. Rather than to consider rotation of the auditing firm at this time, the
administration recommends utilizing the same firm, but ensuring that different individuals are
assigned at both the lower and higher levels of the firm, to ensure a "fresh perspective". The current
contract allows for two one-year extensions to the existing contract.
INTENT:
Exercise the option to extend the existing audit contract for two additional years.
CONSISTENCY CHECKLIST:
Where applicable, this resolution/ordinance is consistent with the Seward City Code, Charter,
Comprehensive Plans, Land Use Plans, Strategic Plan and City Council Rules of Procedures.
Other:
FISCAL NOTE:
Funding is available in the operating budget. Approved by Finance Department: /~~
RECOMMENDATION:
City Council authorize an extension of the audit contract for two additional years.