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HomeMy WebLinkAboutRes2021-066I Sponsored by: Bower CITY OF SEWARD, ALASKA RESOLUTION 2021-066 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO AN AGREEMENT WITH GREENE FORENSIC ACCOUNTING SOLUTIONS LLP FOR FORENSIC AUDITING SERVICES IN AN AMOUNT NOT TO EXCEED $278,125 PLUS A 10% CONTINGENCY, AND APPROPRIATING FUNDS WHEREAS, the City of Seward advertised for proposals from qualified companies for a 3-tier forensic audit of the City's utility billing; and WHEREAS, the forensic audit will focus on examining and investigating every City of Seward utility bill for 4 months: February and March 2019, and November and December, 2018; and WHEREAS, the City received three proposals, and Greene Forensic Accounting Solutions LLP received the highest score in the grading process based on price, experience, quality of work, qualifications, and references; and ' WHEREAS, administration requests council approve the contract with Greene Forensic Accounting Solutions LLP in the amount of $278,125, with an additional 10% contingency, for a period of four months to perform forensic auditing services for city utility billing. 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 enter into a contract with Greene Forensic Accounting Solutions LLP for an amount of $278,125, with an additional 10% contingency, to perform forensic auditing services for city utility billing in substantial form as attached hereto. Section 2. Funding in the amount of $305,937.50 is hereby appropriated from General Fund reserves account no. 01000-0000-3400 to contracted services account no. 01000-1110-7009. Section 3. This resolution shall take effect immediately upon adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 14`^ day of June, 2021. CITY OF SEWARD, ALASKA RESOLUTION 2021-066 AYES: Osenga, Seese, Baclaan, Casagranda, NOES: None ABSENT: None ABSTAIN: None ATTEST: (City • SEAL !• OF 7 j Council Agenda Statement Meeting Date: June 14, 2021 To: City Council From: Janette Bower, City Manager Agenda Item: Professional Services Agreement with Greene Forensic Accounting Solutions, LLP for Forensic Accounting Services BACKGROUND & JUSTIFICATION: Over the last few years, there has been discussion with the public and Council about potential issues and errors in the City's utility billings. As a result, City Council directed Administration to issue an RFP for forensic audit services to examine and investigate the utility billings of four specific months: November & December 2018 and February & March 2019. On April 7, the City of Seward issued a Request for Proposal for Forensic Audit Services. Three bids were received by the deadline of April 21. The following firms submitted bids: Marcum, LLP, Brandi Marsh, PC, and Green Forensic Accounting Solutions, LLP. The scoring team met and identified Green Forensic Accounting, LLP as the recommended bidder with an estimated cost of $278,125. The attached professional services agreement has been agreed upon by both parties and reviewed by the City Attorney. INTENT: The intent of this resolution is to authorize the City Manager to enter into a contract with Green Forensic Accounting Solutions, LLP for forensic auditing services of the City utility billings specified in the RFP. CONSISTENCY CHECKLIST: Yes No N/A 1. Comprehensive Plan (document source here): 2. Strategic Plan document source here): 3. Other (list):. FISCAL NOTE: Funding for this contract will be appropriated from General Fund reserves account no. 01000- 0000-3400 to Contracted Services account no 01000-1110-7009- A roved b Finance Department: Pp Y p ATTORNEY REVIEW: Yes X No RECOMMENDATION: Seward City Council approve Resolution 2021- 066to enter into a contract with Greene Forensic Accounting Services, LLP for forensic audit services. 66 CITY OF SEWARD PROFESSIONAL SERVICES AGREEMENT This Professional Services Agreement ("Agreement") is entered into and made effective this day of June 2021 by and between the City of Seward, Alaska ("City") and Greene Forensic Accounting Solutions, LLP ("GFAS") (collectively the "Parties"). WHEREAS, the City requested proposals for certain forensic accounting services pursuant to the "City of Seward Request for Proposals Forensic Audit Services," issued April 7, 2021 (the "RFP"); and WHEREAS, GFAS submitted a timely proposal dated April 16, 2021; and WHEREAS, the RFP scoring team recommended the GFAS proposal as the selected proposal; and WHEREAS, the City Council selected GFAS as the preferred service provider; and WHEREAS, the City Council has approved this Agreement pursuant to its Resolution No. 2021- ; NOW THEREFORE, in consideration of the mutual covenants and obligations contained herein, and for other good and valuable consideration, the receipt and sufficiency of which the Parties hereby acknowledge, the Parties memorialize their agreement, as follows. A. Scope of Work Pursuant to this Agreement, GFAS shall perform a forensic audit of the accounting records of the City for the four months of February and March 2019 and November and December 2018. This audit will be conducted in accordance with the Association of International Certified Professional Accountants' Statement on Standards for Forensic Services No. 1. GFAS agrees to have sufficient personnel and resources available during this engagement to assure task continuity. Pursuant to this engagement, GFAS shall: 1. Perform forensic accounting procedures that GFAS deems necessary to identify and quantify irregular procedures it observes, and policies and practices impacting the accuracy of invoices issued to customers of the City's water, sewer, and electric utilities during the agreed - upon four sample test months of November and December 2018 and February and March 2019. 2. Design tests to address the following areas of concern for the City: a. Are invoices consistent with applicable tariff provisions? b. Are invoices consistent with meter reading records? c. Have the classifications of rate payers for billing purposes been correctly and consistently applied? Professional Services Agreement Page 1 67 d. Has the policy for placement of demand meters been correctly and consistently applied? e. Has the calculation of equivalent residential units ("ERUs") for purposes of invoicing for water and sewer services been consistently and correctly performed? f. Perform interviews, as needed. 3. Inspect and review documents, records and data provided by the City and perform interviews with City personnel, as GFAS deems appropriate to carry out its audit. 4. Perform a comprehensive review of every monthly invoice issued to residential, commercial, and industrial customers during November and December 2018 and February and March 2019. The Parties understand that the scope of work may be expanded or modified at the request of the City with GFAS' written acceptance, or at the recommendation of GFAS and upon written approval of the City Council. If the audit scope is expanded or modified, GFAS shall provide the City a revised estimate of hours and costs and, upon the City's written acceptance thereof, GFAS shall proceed to perform the additional work. GFAS will use information and records provided by the City and will use GFAS' professional judgment in preparing its findings and related schedules to be provided to the City. GFAS will document the results of its audit in a formal report. The report will include recommendations to assist the City in correcting any issues identified during the audit, including recommendations related to the City's invoicing, standard operating procedures for customer billing, and billing policies. GFAS will present its report of findings orally to the City Council either in person or via Zoom, as mutually agreed upon by the Parties. Due to the limited nature of this audit, the City understands and agrees that GFAS' audit may not disclose, and that GFAS shall not be expected or required to disclose all errors, irregularities, or illegal acts, including fraud or defalcations that may exist within the applicable departments or agencies of the City. GFAS does not assume responsibility for updating its report for any events or circumstances that may occur subsequent to the date the report is issued. If, for any reason, GFAS is unable to complete the audit, GFAS will not issue a report on the results of the audit. B. City Records and Cooperation with Forensic Audit The City shall be responsible for maintaining its accounting records and for establishing and maintaining effective internal controls over its financial reporting. The Parties understand and agree that GFAS is not being engaged to conduct and shall not conduct an audit of the City's financial statements, the objective of which would be the expression of an opinion on the records, controls and/or activities of the City. The City agrees to furnish GFAS, for inspection and copying, access to all documents, records and data that GFAS reasonably needs to carry out the subject audit, and to make available Professional Services Agreement Page 2 68 for interviews and to answer questions such personnel who GFAS reasonably needs to carry out subject audit. All working papers or other documents used by GFAS during this engagement will be maintained in segregated files. At the completion of this audit, the originals and all copies of such working papers and documents will be returned to the City. GFAS understands and agrees that all nonpublic information relating to this matter, shall be kept strictly confidential and shall not be disclosed to anyone without the City's written permission. Notwithstanding anything herein contained to the contrary, GFAS may disclose any such records or data that may be requested by a subpoena or order of a court or governmental entity; provided that GFAS shall make best efforts to notify the City of any such subpoena or order prior to making any such disclosure to allow the City to raise any objections with the requesting authority. C. GFAS Rates, Billing, Estimate & Not to Exceed Amount 1. Rates GFAS shall perform all work hereunder on an hourly basis at the rates set forth below: Hourly Rates Partners $275.00 Director $250.00 Senior Consultants 1 1 $200.00 2. Cost Estimate GFAS estimates the Scope of Work to be furnished according to the time and cost estimates set forth below: Phase Estimated Hours Engagement Organization and Planning 40 Fact Finding and Information Gathering 90 Analysis and Observations 1,000 Report of Findings and Conclusion of Engagement 120 Total 1,250 Personnel Hours Rate Total Estimate Managing Partner 75 $275 $20,625 Director 450 $250 112,500 Sr. Consultant(s) 725 $200 145,000 Total 1,250 $278,125 The City shall be responsible to pay at GFAS's actual cost all direct out of pocket expenses Professional Services Agreement Page 3 69 reasonably incurred by GFAS in the performance of its work. The City understands and acknowledges that the fees and costs to be charged hereunder will depend on a variety of factors including, but not limited to, the extent and nature of the documents and information provided, the adequacy and condition of the records, the developments that may occur as work progresses, the extent of the cooperation obtained from the City and others, and various other related factors, and that the fees and costs to complete the Scope of Work may exceed any estimates thereof that GFAS may have given or may give to the City. 3. Not to Exceed Amount Amounts due to GFAS under this Agreement for professional services rendered shall not exceed $278,125 ("Not -to -Exceed Amount") unless agreed to in writing by the City. GFAS shall provide the City with written notice if and when the total fees for work performed by GFAS exceeds 75% of the Not -to -Exceed Amount. If during the course of providing the services, GFAS reasonably believes, in its professional judgement, that the Scope of Work cannot be completed without exceeding the Not -to -Exceed Amount, GFAS shall give the City prompt notification of same and provide an updated cost estimate for the Scope of Work. The Parties shall confer in good faith to determine appropriate modifications to the Not -to -Exceed Amount and/or the Scope of Work. If the Scope of Work is expanded or modified by mutual Agreement of the Parties, the Not - to -Exceed Amount shall be adjusted accordingly. 4. Billing GFAS shall invoice the City on an interim basis as work progresses and expenses are incurred, and payment shall be due upon receipt. Billings, unless disputed in good faith, shall become delinquent if not paid within thirty (30) days of the invoice date. Delinquent billings shall incur interest at the rate of 10.5 percent per annum from the due date. If billings are past due in excess of thirty (30) days, GFAS reserves the right, in its sole discretion, to stop all work until the City's account is brought current or to withdraw from or terminate this Agreement upon notice to the City. The City acknowledges and agrees that in the event GFAS stops work or terminates this Agreement as a result of a failure to pay on a timely basis, GFAS shall not be liable to the City for any damages that may occur as a result of any such stoppage or termination. D. General Requirements and Conditions GFAS agrees to comply with the conditions and requirements set forth in Section 10 of the RFP, which consists of Subsection 10.1 "Insurance Indemnification;" and Subsection 10.2 "Conditions." E. Notices All notices pursuant to this Agreement shall be in writing and provided by overnight delivery or by certified US Mail return receipt requested or by email, as follows: Professional Services Agreement Page 4 70 To GFAS: Mr. Craig L. Greene, 200 W. Jackson Blvd., Chicago, IL 60606; with a copy to Steven H. Kuh, Esq., 345 W. Fullerton Parkway, Suite 906, Chicago, IL 60614 (which copy, by itself, shall not constitute notice hereunder). If to the City: Janette Bower, City Manager, PO Box 167, Seward, AK, 99664; with a copy to Brooks Chandler, Chandler, Falconer, Munson & Cacciola, LLP, 911 W. 8th Ave, STE 302, Anchorage, AK 99501. F. General Terms 1. Any amendment, modification, or change to this Agreement shall be effective only if made in writing and signed by an authorized agent of each Party. 2. This Agreement may be executed and delivered electronically and such signatures shall be legally binding as if originals. This Agreement may be executed in counterparts which, taken together, shall constitute one fully executed agreement. Each Party represents to the other that the person signing this Agreement is its agent of duly authorized to enter into this Agreement on its behalf. 3. This Agreement constitutes and represents the entire agreement between the parties with respect to the subject matter, and any and all prior and/or contemporaneous agreements, understandings, promises, and representations with respect to the subject matter are superseded hereby. 4. This Agreement respondent shall be governed by and construed in accordance with the laws of the State of Alaska and the ordinances of the City of Seward. IN WITNESS WHEREOF the Parties hereto have executed this Agreement, effective the day and year first above written GREENE FORENSIC ACCOUNTING CITY OF SEWARD, ALASKA SOLUTIONS LLP Craig L. Greene Managing Partner Janette Bower City Manager Date: June , 2021 Date: June , 2021 ATTEST: Brenda J. Ballou, MMC City Clerk Professional Services Agreement Page 5 71