HomeMy WebLinkAboutRes2007-010
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Sponsored by: Yoder
Motion to Reconsider 2/13/2007
Reconsidered, Amended and Approved 2/26/07
CITY OF SEWARD, ALASKA
RESOLUTION 2007-010
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, APPROVING A CONTRACT FOR EXTERNAL AUDIT
SERVICES FOR THE YEARS 2006, 2007, AND 2008
WHEREAS, the City of Seward issued a request for proposals for external audit services in
accordance with standard City bid procedures; and
WHEREAS, two qualified and responsive proposals were received in response to the request
for proposals; and
WHEREAS, proposals were scored on the basis of four basic criteria (worth 100 points) and
price (worth 60 points) for a total of 160 available points, where basic criteria included: 1)
understanding the scope of work; 2) firm's size and evidence of adequate planning and labor hours
required to complete the work; 3) firm's experience with similar engagements; and 4) firm's and
audit staffs technical qualifications; and
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WHEREAS, Mikunda, Cottrell & Co. ("Mikunda") received the highest overall score,
scoring 153.54 points out of 160 total points available, with Altman, Rogers & Co. ("Altman")
receiving 148 total points, with Mikunda scoring the highest on each of the four basic criteria and
Altman scoring the highest on the price criteria; and
WHEREAS, cost is not the sole factor in the selection of the City's external audit firm,
which is the reason that the four basic criteria listed above are assigned 100 of the 160 available
points.
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
Mikunda, Cottrell & Co. in substantially the form as attached hereto, to provide external audit
services to the City of Seward for 2006, 2007 and 2008, with two one-year options to extend at the
sole discretion of the city council.
Section 2. This resolution shall take effect immediately upon its adoption.
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CITY OF SEWARD, ALASKA
RESOLUTION 2007-010
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PASSED AND APPROVED by the City Council ofthe City of Seward, Alaska this 26th day
of February, 2007.
THE CITY OF SEWARD, ALASKA
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Vanta Shafer, Mayor
AYES:
NOES:
ABSENT:
ABSTAIN:
Valdatta, Thomas, Shafer, Bardarson
Dunham, Amberg, Schafer
None
None
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Council Agenda Statement
Meeting Date: February 12, 2007
From: Kristin Erchinger, Finance Director
Through: Marvin Yoder, Interim City Manager
Agenda Item: External Audit Proposals
BACKGROUND & JUSTIFICATION:
The City of Seward received two proposals for external audit services for years 2006, 2007, and 2008,
with two one-year options to renew. Proposals were received from Altman, Rogers & Co. (“Altman”)
and Mikunda, Cottrell & Co. (“Mikunda”), and both proposals were found to be responsive and
qualified. One additional firm, KPMG LLP, declined to submit a proposal based on insufficient
resources to assume additional client workloads at this time.
The proposals were reviewed by a committee of four, including: Marvin Yoder, Interim City Manager;
David Squires, Fire Chief; Christy Terry, Executive Liaison; and Scott Ransom, Harbormaster. The
review committee reviewed and scored the proposals on four basic criteria: 1) understanding of the
scope of work; 2) firm’s size and evidence of adequate planning regarding labor-hours required to
complete the work; 3) firm’s experience with similar engagements; 4) firm’s technical qualifications and
qualifications of individuals assigned to the audit. The reviewers awarded up to 25 points for each of the
four criteria, for a total possible “criteria” points of 100.
After scoring the proposals, the fee proposals were opened separately. There were a total of 60 “fee”
points available, with the lowest-bidding firm receiving all 60 points. The other firm’s score was based
on a ratio of their fee to the lowest fee, multiplied by 60. This methodology was used in order to score
the more subjective portion of the proposals without knowledge of the bid price, to provide a more fair
scoring process. There were 160 total points available in the scoring process. Mikunda received the
highest overall score with 153.54 points, while Altman received 148 points out of a total possible 160
points.
Attached is a spreadsheet summarizing the analysis of each firm’s proposal. The score sheet indicates
that Mikunda received the highest overall score, rating highest on the four basic criteria and lowest on
the fee rating. Altman received the highest fee rating (coming in $2,000 to $2,500 lower cost per year)
but scored lower on each of the other four criteria.
The primary difference in the cost proposals appears to be the number of hours estimated to perform the
audit. Altman’s proposal estimates 369 total hours to complete the audit, reflecting an hourly rate of
$116.53. Mikunda’s proposal estimates 450 total hours, reflecting an hourly rate of $100.00. Given
Mikunda’s recent experience with the City’s audit, it would appear that they have a better understanding
of the time required to complete the audit, thus resulting in a higher estimate of hours. Following is an
analysis of each firm’s proposal:
RESOLUTION 2007-
Page Two
_______________________
Altman, Rogers & Co.
This firm is an Alaskan based Certified Public Accounting (CPA) firm which performs more than 90
governmental and non-profit audits, representing 69% of their practice. The bulk of their governmental
clients are smaller school districts and communities such as Kodiak, Bethel, Pelican, Hoonah, and
Unalaska. The firm employs more than 35 people and has branch offices in Anchorage, Kodiak, Juneau,
and Soldotna. The principals in the firm have experience auditing governmental entities, serve on the
national Government Finance Officer’s Association (“GFOA”) review committees, and are qualified to
perform the City’s audit. Altman’s three-year fee is $135,000, representing $43,000 for 2006 audit,
$45,000 for 2007, and $47,000 for 2008.
Mikunda, Cottrell & Co.
This firm is an Alaskan based CPA firm which audits approximately 100 governmental and utility entities
in Alaska including 9 of the 12 home rule cities (Seward is a home rule City). Mikunda is the only CPA
accounting firm with a local Seward office. The bulk of their clients are school districts, utilities, and
communities such as Soldotna, Kenai, Kotzebue, Homer, and Wasilla. They also audit the Kenai
Peninsula Borough and KPB School District. The firm has eight partners and employs more than 50
people. Mikunda joined the McGladrey Network in 1997, becoming part of the fifth largest accounting
and consulting firm in the United States. Mikunda’s principals have experience auditing governments,
serve on national GFOA review committees, and are qualified to perform the City’s audit. Mikunda’s
three-year fee is $142,000 ($45,000 for 2006, $47,500 for 2007, and $49,500 for 2008).
It is our opinion that Mikunda, Cottrell & Co. is the most qualified firm to perform the City’s audit based
on the outcome of the RFP process, their extensive list of larger governmental clients, and their
familiarity and positive history with the City of Seward. This firm’s experience with the City is expected
to reduce the amount of staff time required to commit to the audit, especially in a year of anticipated
critical staff turnover. While Mikunda’s annual audit bid is slightly higher than Altman’s, Mikunda is a
local firm subject to “local preference” and their cost estimates are based on historical experience
auditing the City. Thus, their bid includes 81 additional audit hours over Altman’s. Mikunda’s bid for
2007 is $45,000, and the 2007 Budget includes $48,000 to complete the audit.
The auditors work for the city council rather than management. There are advantages to retaining a firm
with significant Seward experience, and advantages to having a perspective from other experienced
firms. Management believes that we can work well with either firm.
CONSISTENCY CHECKLIST: Where applicable, this agenda statement is consistent with the Seward
City Code, Charter, Comprehensive Plans, Land Use Plans, Strategic Plan and City Council Rules of
Procedures. Other: _________________________________________________________
FISCAL NOTE:
The 2007 Budget includes $48,000 for the audit, and both of these proposals come in under budget.
Approved by Finance Department: ___________________________
RECOMMENDATION:
Approve Resolution 2007- awarding a contract for external audit services to the firm of
______________________ for the 2006, 2007, and 2008 annual audits, with two one year options to
extend at the sole discretion of the city manager.