HomeMy WebLinkAboutRes2020-012 Sponsored by: Meszaros
CITY OF SEWARD,ALASKA
RESOLUTION 2020-012
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, APPROVING A CONTRACT FOR EXTERNAL AUDIT
SERVICES WITH ALTMAN, ROGERS & CO. FOR THE YEARS 2019,
2020, AND 2021, AND EXTENDING THE DEADLINE FOR
COMPLETION
WHEREAS, the City of Seward issued a Request for Proposals (RFP) for external audit
services and advertised in newspapers of local circulation in Seward and Anchorage in
accordance with competitive sealed bid procedures; and
WHEREAS, in addition to newspaper advertising, the RFP was sent to four prospective
auditing firms doing business in Alaska; and
WHEREAS, three qualified and responsive proposals were received in response to the
request for proposals; and
WHEREAS, proposals were scored on the basis of four criteria with a total available
points of 100, including: 1) firm's expertise, qualifications, and technical proposal; 2)
organization experience and audit approach; 3) engagement personnel experience and
qualifications; and 4)bid price; and
WHEREAS, of the three proposals, Altman, Rogers & Co. received the highest overall
score, scoring 100 out of 100 available points; and
WHEREAS,the overall bid to conduct the City's audit was lower by Altman, Rogers &
Co. (three-year average cost of$96,078 vs. $142,733 for BDO and $112,044 for Elgee Rehfeld),
the hourly cost by Altman, Rogers & Co. was lower ($119/hour Altman, Rogers & Co. vs.
$164/hour BDO and $144/hour Elgee Rehfeld), and Altman, Rogers & Co. estimated 720 annual
hours, BDO estimated 1,377 annual hours and Elgee Rehfeld estimated 645 annual hours; and
WHEREAS, the finance department has experienced a significant number of vacant
positions during the five months,hindering the ability of City staff to prepare for the annual audit
in the usual timeframe.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF SEWARD,ALASKA that:
Section 1. The City Manager is hereby authorized and directed to execute an agreement
with Altman, Rogers &Co. in substantially the form as attached hereto, to provide external audit
services to the City of Seward for 2019, 2020 and 2021, with options to extend for up to two
additional years at the discretion of the city manager.
•
CITY OF SEWARD, ALASKA
RESOLUTION 2020-012
Section 2. Altman, Rogers & Co. three-year fee is $288,235 ($93,325 for 2019, $96,025
for 2020, and $98,885 for 2021).
Section 3. The council waives the requirement for the completion of the audit within 120
days following the close of the first year, with the understanding it will be completed within 160
days following the close of the first year end, and shall be presented to the council at a public
meeting within thirty(30) days after completion of the audit.
Section 4. The amount of$115,000 was previously appropriated for the audit of 2019 and
no further appropriation is required to audit services line item no. 01000-1110-7000.
Section 5. This resolution shall take effect immediately upon adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this
10`1' day of February, 2020.
T E I 0 EW
'sty Terry May
AYES: Butts, Baclaan, McClure, Osenga, Crites, Terry
NOES: None
ABSENT: Seese
ABSTAIN: None
ATTEST:
Brenda J. Baljp ■➢mic
City Cl a .�•l OF SFsy'•
(Cit};Sea ���'� rFa O
•
• SEAL '
ti•. F OF AV`S••°•
'••••.........
Council Agenda Statement
Meeting Date: February 10, 2020
Through: Scott Meszaros, City Manager
From: Tammy Stromberg, Finance Director 1
Agenda Item: External Audit Contract
BACKGROUND & JUSTIFICATION:
The City of Seward received three proposals for external audit services for years 2019,2020,and 2021
with options for up to two additional years. Proposals were received from Altman, Rogers & Co.
("Altman"), BDO and Elgee Rehfeld, and all proposals were found to be responsive.
A review committee of three members separately evaluated proposals based on criteria provided to the
City Council in advance of the solicitation of requests for proposal: 1)Firm Expertise,Qualifications
and Technical Proposal (25%); 2) Organization Experience and Audit Approach (25%); 3) Personnel
Experience and Qualifications (25°o); and 4)Fee Proposal (25%). The reviewers scored each criteria
for a total possible points of 100.
The firm of Altman,Rogers&Co.received the highest overall score of 100 points;BDO received 62.7
points and Elgee Rehfeld received 35.6 points. The scores below indicate Altman, Rogers & Co.
received the highest overall score on all criteria, BDO rated lowest on the fee.
ALTMAN Boo ELGEE
REHFELD
Firm Expertise,Qualifications,Technical Proposal 25.0 16.7 2.5
Organization Experience,Audit Approach 25.0 16.7 1 2.5
Personnel Experience/Qualifications 25.0 1 12.5 9.2
Fee 25.0 16.8 21.4
Total Score: 100.0 62.7 35.6
BDO is the incumbent firm, having provided auditing services to the City for more than 10 years.
However, auditor independence may be diminished by extending the term of audit services by another
3-5 years. Their proposal was strong, comprehensive, and demonstrates considerable experience
auditing governmental entities similar in size and scope to the City of Seward. Comparables include
cities of Cordova and Sitka (both have city-owned hospital and clinic), Kenai (city and borough),
Palmer, Homer, and more complex entities such as the Municipality of Anchorage. BDO leads in the
utility and healthcare industries in Alaska.Altman's proposal was also strong with comparables such as
City of Kodiak and Kodiak Island Borough, the cities of Nome and Kotzebue as well as Metlakatla
Power and Light.Altman's experience with health entities includes Metlakatla Indian Community and
Tanana Chiefs Conference. Experience with hospitals is less of factor at this time because the Seward
Community Health Center has awarded their audit to Elgee Rehfeld. Elgee Rehfeld also submitted a
proposal. It has audited the City and Borough of Juneau for 20 years,audits the Haines Borough, some
state agencies and has deeper health-oriented experience than Altman but lacks a breadth of experience
with municipalities.Elgee Rehfeld also states it is their policy not to include their estimated initial audit
learning time in the proposal as they consider the hours incurred learning about the client's operations
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and controls as an investment in the future relationship. All firms prepare comprehensive annual
financial reports for their clients.
The BDO and Altman proposals detailed a more thorough understanding of the scope of work,
especially as it relates to the challenges associated with the City's use of multiple electronic systems as
well as the migration of data across systems. Both BDO and Altman have more experience with large
enterprise funds such as the harbor and utilities.
Following is a brief description of each frm's proposal:
Altman. Roizers & Co.
This firm is an Alaskan based Certified Public Accounting (CPA) firm which provides auditing and
accounting services to more than 70 governmental entities in Alaska.The firm employs 7 principals and
over 45 staff with branch offices in Anchorage, Soldotna and Juneau. The firm has been in practice in
Alaska for 29 years. Their clients include not-for-profit organizations, schools, and cities (Nome,
Kotzebue, Kodiak City and Borough, Bethel and Lake and Peninsula Borough). The principals in the
firm have experience auditing governmental entities.They have assisted clients in preparing their annual
CAFR and receiving their Certificate of Achievement in Excellence in Financial Reporting, and are
qualified to perform the City's audit. Altman's three-year fee is$288,235 ($93,325 for 20I9; $96,025
for 2020; and $98,885 for 2021). Their team raw average rate is $119 per hour.
BDO
This firm is a CPA firm with 40 years of local Alaska experience. It has 6 partners, 80 staff and is the
largest CPA firm in the State. BDO also has access to personnel and technical resources of the 5'
largest firm in the U.S. BDO serves more Alaska government entities than any other firm in Alaska.It
also serves 20 of Alaska's "Top 49ers", including auditing more than 50 government entities and
conducting roughly 75 single audits each year. Their clients include cities, boroughs,utilities,school
districts, state agencies, public utilities, health care organizations, and communities such as the
Municipality of Anchorage,Matanuska Borough, Kenai Peninsula Borough,City of Soldotna,Homer,
Palmer, and the City and Borough of Sitka, Wrangell and Yakutat. They have assisted clients in
preparing their annual CAFR and receiving their Certificate of Achievement in Excellence in Financial
Reporting, and are qualified to perform the City's audit. BDO's three-year fee is$428,200 ($139,500
for 2019,$143,200 for 2020,and$145,500 for 2021). Their team raw average rate is$164.20 per hour.
Elgee Rehfeld
This firm is the largest firm in Southeast Alaska. It has 5 partners, over 17 staff. It has over 900 clients
including non-profits,state agencies,local governments,small and mid-size businesses and individuals
in wide-ranging industries. Since 1992 their audit and other attestation service department has grown
over 1,100%. They have audited the City and Borough of Juneau for over 20 years. In addition, they
audit regional and local healthcare organizations such as Norton Sound Health Corporation and
Southeast Alaska Regional Health Corporation.Elgee Rehfeld also states it is their policy not to include
their estimated initial audit learning time in the proposal as they consider the hours incurred in learning
about client's operations and controls as an investment in the future relationship. They have assisted
clients in preparing their annual CAFR and receiving their Certificate of Achievement in Excellence in
Financial Reporting. They are qualified to perform the City's audit. Elgee Rehfeld's three-year fee is
$336,134($111,153 for 2019,$I 1 I,022 for 2020,and$113,959 for 2021). Their team raw average rate
is $144.00 per hour.
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It is our opinion that Altman, Rogers &Co. should perform the City's audit. Based on the outcome of
the RFP process,their experience with similar governmental clients and ability to audit the City from a
fresh perspective will be of benefit to the Council, staff and other readers of the report.
BDO and Elgee Rehfeld are also qualified to perform the audit. However, BDO's hourly rate is the
highest of the three proposals and Elgee Rehfeld's smaller staff size and Iimited breadth of experience
with cities of our size is concerning.
The auditors work for the city council rather than management.There are advantages to retaining a firm
for a significant period of time. There are also advantages to gaining a fresh perspective and ensuring
auditor independence. Management believes that we can work well with all firms that submitted
proposals.
INTENT:
To award a contract for independent audit services for a three-year period,with options to extend for up
to two additional years.
CONSISTENCY CHECKLIST: Yes No NA
1. Comprehensive Plan docunzent source here):
2. Strategic Plan document source here):
3. 1 Other flist : X
ATTORNEY REVIEW: Yes No
FISCAL NOTE:
The 2020 Budget includes $115,000 for the annual audit. No additional appropriation is required.
Approved by Finance Department:
RECOMMENDATION:
Council approve Resolution 2020-012awarding a contract for external audit services to the firm of
Altman, Rogers & Co. for the 2019, 2020 and 2021 annual audits, with an option to extend for an
additional two years at the discretion of the city manager.
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THIS AGREEMENT is made and entered into this February 11,2020 between the CITY OF
SEWARD(hereinafter called "CITY")and Altman, Rogers&Co. (hereinafter called
"CONTRACTOR"):
WITNESSETH:
WHEREAS,pursuant to the provisions of Seward City Code Chapter 6,the CITY may contract for
such professional services as may be required; and
WHEREAS, the City Charter requires an independent audit of all accounts of the CITY at least
annually, and the audit is required to be made by certified public accountants; and
WHEREAS, CONTRACTOR works for the Seward City Council and their services will be of
benefit to the citizens of the City of Seward.
NOW,THEREFORE,the CITY and CONTRACTOR mutually agree as follows:
A. Employment of Contractor: The CITY agrees to engage the CONTRACTOR and the
CONTRACTOR hereby agrees to perform external audit services for the calendar years ending
December 2019,December 2020,and December,2021. This Agreement may be extended for one
two-year period upon mutual agreement of terms,and approval of the City Council.
B. Scope of services: The CONTRACTOR shall do,perform,and carry out in a professional manner,
the services described in the City of Seward's Audit RFP No. 2020-001.
C. Time of Performance: The services to be performed hereunder by the CONTRACTOR shall be
undertaken and completed in such sequence as to assure their expeditious completion to best carry
out the purposes of this Agreement. The CITY requires that the external auditors coordinate their
work with CITY personnel as follows:
1. All work will be coordinated with the Finance Director, who is primarily responsible for
working with the external field auditors. Further coordination as necessary with the
Accounting Supervisor,who monitors the day-to-day workflow of the department.
2. The Finance Director will work with the auditors to coordinate scheduling and identify the
work required to complete the audit.
3. Verbal progress reports will be provided to the Finance Director on a weekly basis during
the conduct of the audit. All adjusting journal entries suggested by the auditors are to be
discussed with the CITY Finance Director.
D. Compensation: Compensation is to be computed separately for each year for which audit services
are provided. The total compensation due to the CONTRACTOR during each year of this contract
is as follows: 1) 2019 audit= $93,325; 2) 2020 audit— $96,025; 3) 2021 audit = $98,885, where
compensation includes professional fees and actual out-of-pocket expenses, such as airfare,
lodging,per diem and report production. The total compensation due the CONTRACTOR for any
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Professional Scr%,ices Agi-eemcnl
For Ilxternal Indcpciident Audit Seniors
extensions of this contract will be mutually negotiated prior to commencement of additional audit
work beyond the initial three-year contract term.
E. Payment to Contractor: The CONTRACTOR will bill the CITY monthly for services rendered.
The CITY agrees to make payment to the CONTRACTOR within 30 days of receipt and agreement
with the CONTRACTOR's bill. Final payment will be made after presentation of the audit report
to the City Council, and in the case of the "conversion period," within 30 days of receipt and
agreement with the CONTRACTOR's bill.
F. Changes: The City may, from time to time, require changes to the scope of services of the
CONTRACTOR to be performed hereunder. Such changes, which are mutually agreed upon by
and between the CITY and the CONTRACTOR, shall be incorporated by written amendment to
the Agreement, subject to approval of the Finance Director. For any additional fee/costs so
authorized, the CITY requires that the fees for additional financial work be expressed as a fixed
hourly rate for each period subject to audit, quoted for each staff category (e.g. partner,manager,
senior), and that the detail of the costs be disclosed.
G. Services and Materials to be Furnished by the CITY: The City shall provide assistance in the
accumulation of data and records to facilitate the audit for the City of Seward.
H. Termination of Agreement: If,through any cause,the CONTRACTOR shall fail to fulfill in timely
and proper manner its obligation under this Agreement,the CITY shall thereupon have the right to
terminate this Agreement by giving written notice to the CONTRACTOR of such termination at
least ten (10) business days before the effective date of such termination, and specifying the
effective date of termination.
1. Information and Reports: The CONTRACTOR shall, at such time and in such form as the CITY
may require, furnish periodic reports concerning the status of the project. The CONTRACTOR
shall furnish the CITY, upon request, copies of all documents and other materials prepared or
developed in relation to,or as part of,the project,including copies of all year-end work papers.
J. Records and Inspections:The CONTRACTOR shall maintain full and accurate records with respect
to all matters covered under this Agreement. The CITY shall have free access at all reasonable
times to such records, and the right to examine and audit the same and to make transcripts
therefrom, and to inspect all program data, documents,proceedings,and activities.
K. Accomplishment of Project: The CONTRACTOR shall commence, carry on, and complete the
project with all practicable dispatch, in a sound, economical, and efficient manner, in accordance
with the provisions of this Agreement and all applicable laws. In accomplishing the project, the
CONTRACTOR shall take such steps as are appropriate to ensure that the work is properly
coordinated with related work being carried out by the CITY.
L. Matters to be Disre ar The titles of the several sections, subsections,and paragraphs set forth
in this Agreement are inserted for convenience of reference only and shall be disregarded in
construing or interpreting any of the provisions of the Agreement.
M. Completeness of Agreement: This Agreement and any additional or supplementary document or
documents incorporated herein by specific reference contain all the terms and conditions agreed
upon by the parties hereto,and no other agreements,oral or otherwise,regarding the subject matter
of this agreement or any part thereof shall have any validity or bind any of the parties hereto.
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Professional SciAliccs Agreement
For External Independent Audit Services
N. City Not Obligated to Third Parties: The CITY shall not be obligated or liable hereunder to any
party other than the CONTRACTOR.
O. When Rights and Remedies Not Waived: In no event shall the making by the CITY of any payment
to the CONTRACTOR constitute or be construed as a waiver by the CITY of any breach of
covenant, or any default which may then exist on the part of the CONTRACTOR,and the making
of any such payment by the CITY while any such breach or default shall exist, shall in no way
impair or prejudice any right or remedy available to the CITY with respect to such breach or default.
P. Personnel: The CONTRACTOR represents that it has, or will, secure at its own expense, all
personnel required to perform the services under this Agreement. All of the services required
hereunder will be performed by the CONTRACTOR or under its supervision, and all personnel
engaged in work shall be fully qualified to perform such services. The personnel assigned to the
CITY shall be mutually agreed upon by the CONTRACTOR and Finance Director. All subsequent
staffing changes will be reviewed with, and agreed to,by the Finance Director prior to assigning
personnel. The CONTRACTOR shall make every effort practicable to ensure continuity of
personnel from year to year with respect to performance of the audit.
Q. Independent Contractor: The parties intend that the CONTRACTOR, in performing the services
specified in the Agreement,shall act as an independent contractor and shall have full control of the
work and the manner in which it is performed. The CONTRACTOR and CONTRACTOR's
employees are not to be considered agents or employees of the CITY for any purpose.
R. Insurance: Without limiting the Contractor's indemnification,the CONTRACTOR shall provide at
its own expense, and maintain at all times, the following insurance with insurance companies
licensed in the State of Alaska and shall provide evidence of such insurance to the CITY as may be
required. The policies or certificates thereof shall provide that,thirty(30)days prior to cancellation
or material changes in the policy,notices of same shall be given to the CITY for all of the following
stated insurance policies:
1. Worker's Compensation—in compliance with the statutes of the State of Alaska
2. Comprehensive General Liability—insurance in the amount of$300,000 combined single
limit to include:
a. Premises Operations
b. Products/Completed Operations
c. Blanket Contractual
d. Broad Form Property Damage
e. Independent Contractors
f. Personal Injury
3. Comprehensive Automobile Liability — insurance with a minimum limit of liability per
occurrence of $300,000 combined single limit per occurrence to include owned.
automobiles,hired and non-owned automobiles.
4. Professional Liability—insurance in the amount of$300,000.
If at any time, any of said policies shall be unsatisfactory to the CITY, as to form or
substance, or if a company issuing such policy shall be unsatisfactory to the CITY, the
CONTRACTOR shall promptly obtain a new policy and a certificate thereof as herein
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I
Prolesslolal Servims Agreement
For Extcrnal Independent Audit Sci-%,iccs
above provided. Upon failure of the CONTRACTOR to furnish, deliver or maintain such
insurance and certificates as above provided, the Agreement, at the election of the CITY,
may be forthwith declared suspended, or terminated. Failure of the CONTRACTOR to
obtain and/or maintain any required insurance shall not relieve the CONTRACTOR from
any liability under this Agreement, nor shall the insurance requirements be construed to
conflict with or otherwise limit the obligations of the CONTRACTOR concerning
indemnification. The CITY, its officials, agents and employees shall be named as
additional insured on all insurance policies required herein. The CONTRACTOR's
insurance policies shall include a provision that the coverage is primary as respects to the
CITY; shall include no special limitations to coverage provided to additional insured; and,
shall be placed with the insurer(s)with acceptable Best's rating of A:VII or with approval
of the Finance Director,
S. Ownership of Work Products: Work products produced under this Agreement,except items which
have preexisting copyrights, are the property of the CITY. Payments to the CONTRACTOR for
services hereunder include full compensation for all work products and other materials produced
by the CONTRACTOR pertaining to this Agreement.
T. Claims and Disputes: If the CONTRACTOR becomes aware of any act or occurrence which may
form the basis of a claim, the CONTRACTOR shall immediately inform the Finance Director. If
the matter cannot be resolved within seven (7) days, the CONTRACTOR shall, within the next
fourteen(14)days,submit written notice of the facts which may form the basis of the claim.
In presenting any claims, the CONTRACTOR shall specifically include the provisions of this
Agreement which apply, the specific relief requested, including any additional compensation
claimed, and the basis upon which it was calculated and/or the additional time requested and the
basis upon which it was calculated.
U. Governing Laws: This Agreement is governed by the laws of the State of Alaska and such federal
and local laws and ordinances as applicable to the work performed. CONTRACTOR is required to
have a current City business license prior to commencement of Agreement.
V. Hold Harmless: The CONTRACTOR shall hold the CITY, its agents, officers, employees and
volunteers,harmless from,save,defend and indemnify the same against,any and all claims,losses,
and damages for every cause, including but not limited to injury to person or property, and related
costs and expenses,including reasonable attorney fees,arising directly or indirectly out of any act
or omission of CONTRACTOR, its agents, officers, employees, or volunteers, during the
performance of its obligations under this Agreement.
W. Notices:Any notices,bills,invoices,or reports required by the Agreement shall be sufficient if sent
by the parties in the United States mail,postage paid, to the addresses noted below:
Tammy Stromberg
Finance Director
City of Seward
P.O. Box 167
Seward,Alaska 99664-0167
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Professional Ser 6ces Agrecancnt
For Eternal Independent Audit Senices
IN WITNESS WHEREOF,the CITY and the CONTRACTOR have executed this Agreement as
of the date first written above.
Altman,Rogers&Co. CITY OF SEWARD
Grant R.Todd,CPA Scott Meszaros
Principal City Manager
ATTEST:
Brenda Ballou
City Clerk
(City Seal)
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