HomeMy WebLinkAboutRes1993-055
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Sponsored by: Tones
CITY OF SEWARD, ALASKA
RESOLUTION NO. 93-055
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, APPROVING A 2-YEAR EXTENSION
TO THE KPMG PEAT MARWICK CONTRACT TO PROVIDE
AUDIT SERVICES TO THE CITY AND THE HOSPITAL
WHEREAS, on May 29, 1990, the city approved a 3-year professional services
agreement with KPMG Peat Marwick to provide external audit services; and
WHEREAS, this agreement allows for an extension of up to two years; and
WHEREAS, the contractor has proposed to provide auditing services for both the
city and Seward General Hospital for a total annual fee of $50,575; and
WHEREAS, this proposed fee includes a $13,375 increase over the current contract
to reflect the actual time and out-of-pocket costs incurred by the contractor; and
WHEREAS, this proposed fee is in line with what other cities are currently being
charged for external audits;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, that:
Section 1. The KPMG Peat Marwick contract to provide external auditing services
for the city and the hospital is hereby extended for a 2-year period beginning June 30,
1993, in accordance with the proposal attached and incorporated herein by reference.
Section 2. This resolution shall take effect immediately upon its adoption.
PASSED AND APPROVED by the City Council of the city of Seward, Alaska, this
10th day of May, 1993.
THE CITY OF SEWARD, ALASKA
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Dave W. Crane, Mayor
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CITY OF SEWARD, ALASKA
RESOLUTION NO. 93-055
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
Bencardino, Crane, Darling, Krasnansky, Sieminski, Swartz, White
None
None
None
APPROVED AS TO FORM:
Wohlforth, Argetsinger, Johnson &
Brecht, Attorneys for the city of Seward,
Alaska
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City Attorney
(City Seal)
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Peat Marwick
Certified Public Accountants
601 West Filth Avenue
Suite 700
Anchorage, AK 99501-2258
Telephone 907 276 7401
Telelax 907 274 4953
April 28,1993
RECEJVE~
MAY 3 1993
Mr. Rick Gifford
Finance Director
City of Seward
P. O. Box 167
Seward, Alaska 99664
CITY OF SEWARD
Dear Mr. Gifford:
This will confmn our telephone conversation of April 27, 1993 in which we discussed the
audit requirements of the City of Seward and Seward General Hospital for the years ending
June 30, 1993 and 1994.
Our fee and out-of-pocket expense structure for Seward General Hospital has been
satisfactory and our fee and out-of-pocket expense structure for the City of Seward has been
unsatisfactory .
The hours KPMG Peat Marwick has incurred providing accounting and audit services to the
City have averaged 768 hours each year over the past three years. Had we billed the City at
our standard billing rates, the resulting annual professional fee would have been $72,679.
Our actual annual out-of-pocket expenses averaged $7,253. We have billed the City $24,600
annually as provided by our contract with the City. As you can readily see this arrangement
resulted in only providing $17,347 ($24,600 - $7,253 = $17,347) to cover our professional
fee. This was an average billed rate of $22.59 per professional hour ($17,347 divided by 768
= $22.59). The fact is we have not even covered our payroll costs.
Our discussions with you indicate that the hours required to provide the City and Hospital
with accounting and audit services for the years ending June 30, 1993 and 1994 will be the
same as those we have experienced in the past three years. Therefore, we calculate our
annual professional fee and out-of-pocket expenses for 1993 and 1994 as fellows:
City of Seward:
Professional fee 768 hours @ $40 per hour =
Out-of-pocket expenses
Total for City of Seward
$ 30,720
7.255
37,975
Seward General Hospital:
Professional fee and out-of-pocket expenses
will remain the same as in our existing contract
Add drafting of Hospital fmancial statement as
requested by the Hospital
Total for Seward General Hospital
11,100
1.500
12,600
$ 50,575
COMBINED ANNUAL TOTAL
1-1- MembecF>cm01
' [!!II f;m Klynveld Peal Marwd: Goerdeler
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"Peat Marwick
Mr. Rick Gifford
City of Seward
April 28, 1993
Page 2
If our total actual hours for both the City and Hospital at $40 per hour plus actual out-of-
pocket expenses results in an amount less than $50,575 we will bill you the lesser amount.
We believe the above calculation results in a professional fee and out-of-pockets expenses
that are equitable to the City, Hospital and KPMG Peat Marwick.
The above calculations are based upon t!le same general conditions as contained in our last
contract with the City, except as modified for the Hospital above. Those conditions are:
. The accounts of the City and Hospital will be in guud order wilh all adjustments made
prior to the start of the audit.
. The audits will begin at a time to be mutually agreed upon.
. The City and Hospital will provide work space for KPMG Peat Marwick personnel to
perform the audits.
. The City and Hospital will provide staff assistance to prepare trial balances, account
analyses, type confIrmations, locate, pull and refile requested documents such as
invoices, canceled checks, contracts, personnel files, etc.
. City personnel will provide KPMG Peat Marwick the City's transmittal letter, the listing
of principal City officials, the City organization chart and the statistical section of
the financial report
. KPMG Peat Marwick will draft and type the City's financial statements.
. The City of Seward will print its financial statements.
. KPMG Peat Marwick will draft, type and print the Hospital's financial statements.
Should you desire to discuss this proposal, please feel free to call me. If this proposal is
acceptable to you, please sign the copy of this letter in the space provided and return it to me.
We look forward to continue to seIVe as the City's and Hospital's auditors.
Very truly yours,
KPMG PEAT MARWICK
M~ ~74-
Mickael A. Flaa, Partner