HomeMy WebLinkAbout79-88 RESOLUTION •
RESOLUTION NO. 79-88 S _ ° 1 4 1
A RESOLUTION AUTHORIZING THE MAYOR AND CITY
CLERK TO EXECUTE A CONTRACT WITH COOPERS AND
LYBRAND FOR FINANCIAL AUDIT SERVICES FOR THE
YEARS 1988 THROUGH 1991 .
BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
That the Mayor and City Clerk are hereby authorized and
directed to execute a contract with Coopers and Lybrand for
financial audit services for the years 1988 through 1991. A copy
of said contract authorized for execution hereby is attached
hereto marked Exhibit "A" and made a part hereof.
PASSED AND APPROVED this 1st day of November , 1988.
APPROVED
BY: Y:Yalfolt: Atir )
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CONTRACT MICRO-6D+7(
This Contract executed this --)r'7 " day of b �
1989, by and between the City of Fayettevill , Arkansas,
hereinafter called the "City, " and Coopers & Lybrand, Certified
Public Accountants, hereinafter called the "Accountants. "
WHEREAS, the City is in need of a revised cost allocation
model, computer program to implement same, and must have personnel
trained in the use of said model; and
WHEREAS, the Accountants have submitted a proposal to provide
professional services dated June 21, 1989, a copy of which is
attached hereto, marked Exhibit "A, " and made a part hereof; and
have a contract with the City for accounting and related services
executed on November 28, 1988, a copy of which is attached hereto,
marked Exhibit "B, " and made a part hereof;
NOW, THEREFORE, the City and Accountants hereby mutually
agree:
1. The Accountants shall provide the City with the necessary
professional services to provide a computerized cost allocation
model which will incorporate the City's existing cost allocation
factors.
2 . The professional accounting services shall be provided
in accordance with the terms and conditions of Exhibit "A" herein
set forth, and this agreement.
3 . The Accountants shall be compensated for services
rendered under this contract in a sum not to exceed $9,500. 00 which
will be payable upon completion of the project. Completion shall
include prepared City staff personnel fully trained and practiced
on the use of the model.
IN WITNESS WHEREOF, the parties have executed this contract
on the date first written above.
CITY OF FAYETTEVILLE, ARKANSAS
1
Jame Penni on, City Man r
ATTEST:
Cit erk
COO ERS' & LYBRAN
By:
Tit AL)1X_.
Coo erS certified public accountants 1400 Mid-Continent Tower in principal areas of the world
401 South Boston
&Ly rand Tulsa,Oklahoma 74103
telephone(918)582-6404
cables Colybrand
August 7, 1989
Mr. Kevin D. Crosson
Assistant Administrative
Services Director
The City of Fayetteville
113 West Mountain
Fayetteville,Arkansas 72701
Dear Kevin:
Enclosed please fmd the signed original contract for your files.
Marilynn and Emma have been trained on the Cost Allocation Model and the Model has been loaded on your
machine. Because Marilynn's computer is tied to your System 36 and does not have expanded memory,to load the
Model on her machine you may want to consider expanding the memory for this and future needs.
I am currently finalizing the Users Manual for the Model. If you or any of the users have questions concerning the
Model, please do not hesitate to call me.
Sincerely,
4‘16r144 ----
Bryant Bynum
Management Consulting Services
/sc
Attachment
EXHIBIT "A"
Coo ers certified public accountants 140Q Mid-Continent lower in principal areas of the world
401 South Boston
&Lybrand Tulsa,Oklahoma 74103
telephone(918)582-6404
cables Colybrand
June 21, 1989
Mr. Kevin D. Crosson
Assistant Administrative
Services Director
City of Fayetteville
113 West Mountain
Fayetteville, AR 72701
Dear Mr. Crosson:
This letter sets forth our understanding of the nature and
scope of the services we will perform for the City of Fayetteville
and the related fee arrangements.
We will provide a copy of a computerized cost allocation
model to the City and modify the model as necessary to incorporate
the City' s existing cost allocation factors. Our work will involve
the following general tasks:
1 . Review the City' s existing allocation methods and
factors;
2 . Determine necessary changes to the model;
3 . Modify the model as necessary;
4 . Load sample data and test the model;
5 . Prepare procedures and documentation for the model;
and
• Mr. Kevin b. Crosson
City of Fayetteville - 2
June 21 , 1989
6 . Train designated staff on use of the model.
We estimate that this project will take approximately 3 to
4 weeks to complete and are prepared to begin work within 10 days
of your authorization to proceed.
Our fees for the services outlined herein will be $9,500,
payable upon completion of the project.
We appreciate this opportunity to serve the City of
Fayetteville and look forward to working with you on this project.
Please contact Jerry L. Parker or Phillip D. Morgan in our Tulsa
office if you should have questions.
Very truly yours,
MICROFILMED
CONTRACT
This CONTRACT executed this ow day of
1988 , by and between the City of Fayetteville, Arkansas , herein-
after called the "City" and Coopers & Lybrand, Certified Public
Accountants, hereinafter called the "Accountants" .
WHEREAS, the City has issued a Request for Proposal for
independent audit dated September 20 , 1988 , a copy of which is
attached hereto marked Exhibit "A" and made a part hereof; and
WHEREAS, the Accountant has submitted a proposal to provide
professional services dated October 12, 1988 , a copy of which is
attached hereto marked Exhibit "B" and made a part hereof ; and
WHEREAS, the Accountant' s proposal was submitted by a letter
dated October 12, 1988 , a copy of which is attached hereto marked
Exhibit "C" and made a part hereof.
NOW, THEREFORE, the City and Accountant hereby mutually
agree:
1 . The Accountant shall provide the City with the necessary
professional services to audit the financial statements of the
City for fiscal years ended December 31 , 1988 to December 31, 1991
for all funds which are included under the provisions of the
Single Audit Act of 1984 .
2 . The professional accounting services shall be provided
in accordance with the terms and conditions set forth in the
Request for Proposal attached hereto marked Exhibit "A" and in the
Proposal attached hereto marked Exhibit "B" .
3 . The Accountant shall be compensated for services
rendered under this contract in accordance with the terms and
conditions set forth in Exhibit "A" and Exhibit "C" attached
hereto.
IN WITNESS WHEREOF, the parties have executed this contract
on the date first above written.
CITY OF FAYETTEVILLE, ARKANSAS
By: 62f
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Mayo
ATTEST
By:
y lerk
COOPERS & LYBR:ND
Title: ?
ATTEST
By:
Title:
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4: tROF?FMED
REQUEST FOR PROPOSAL FOR INDEPENDENT AUDIT
CITY OF FAYETTEVILLE, ARKANSAS
September 20, 1988
The City of Fayetteville invites your proposal to audit the
financial statements of the City for fiscal years ended December
31, 1988 to 1991, including all funds which are included under the
provisions of the Single Audit Act of 1984.
I . PROCUREMENT PROCESS
A. One (1) signed original and nine (9) signed copies of
the proposal are to be delivered to the following
address in a sealed envelope with the outside clearly
marked with the name of the firm, address of the firm,
and the words "Independent Auditor Proposal" :
Gary Perry
Purchasing Agent
113 W. Mountain
Fayetteville, AR 72701
Proposals will be received at this address until
October 13, 10:30 a.m. . At that time they shall be
publicly opened and read in room 326 at the City
Administration building.
B. Upon opening the proposals, the Assistant City Manager
will convene the Auditor Selection Committee to evaluate
the proposals on the basis of the criteria described
below. Interviews will then be held with the three
firms deemed to be the most highly qualified to provide
the services required. The next step will be to
negotiate prices with the top ranked firm by the
selection committee. If the selection committee is
unable to negotiate a satisfactory contract with the top
ranked firm, negotiations with that firm shall be
terminated, and negotiations would begin with the next
highest ranked firm. Once a recommendation is reached
by the selection committee, the selection will be
presented to the City Manager and the Board of Directors
for their approval.
At any point in the selection process, the proposer may
be requested to submit information supplemental to the
proposal. Ten copies of last years CAFR are available
to be checked out from the Accounting Supervisor by the
audit firm. We request that these documents be sent
�� II
back with the audit proposal . In addition, the City' s
budget and prior year audit work papers are available
for review. The Accounting Supervisor will be available
to provide additional information up to the opening of
the proposals.
The following timetable has been tentatively established
for the completion of the award of an audit contract:
Advertisement for Proposals Sept 22
Opening of proposals Oct 13
Committee Review and Negotiations Oct 13-Oct 21
Presentation to Board of Directors Nov 1
C. Proposals will be evaluated on the following criteria:
MANDATORY
1 . The firm must be a Certified Public Accountant
properly licensed to practice in the State of
Arkansas.
2 . The firm must meet the independence standards of
the GAO Standards for Audit of Governmental
Organizations, Programs, Activities and Functions.
TECHNICAL
1. Qualifications of the firm and its coordinating
office in performing governmental audits.
2 . Experience, Competence, and Capacity for
Performance of the firm and its coordinating
office in governmental audits.
3 . Proposed method of performing audit.
4. Past performance of the firm and its coordinating
office in governmental audits.
D. Audit Contact
Any vendor contact concerning this RFP should only be
directed to:
Zelda Parson, C.P.A.
Accounting Supervisor
113 W. Mountain
Fayetteville, AR, 72701
(501) 575-8285
E. Reservation of Right of Rejection
The City of Fayetteville reserves the right to reject
any or all proposals when it is in the best interest of
the City.
II . AUDIT OBJECTIVES AND SCOPE OF SERVICES
A. There are two objectives of the services covered by this
RFP. Each responder must consider each of these
objectives separately and reflect such treatment in the
proposal:
1 . To render an unqualified opinion on the General
Purpose Financial Statements of the City of
Fayetteville, and to meet the audit requirements of
the laws of the State of Arkansas.
2 . To assist in the preparation of the Comprehensive
Annual Financial Report of the City of Fayetteville
in order for the City to receive the Certificate of
Achievement for Excellence in Financial Reporting
presented by the Government Finance Officers
Association.
The auditor will be expected to comply
substantially with GASB reporting standards in all
work associated with the production and submission
of the CAFR.
The CAFR will be prepared in such detail to provide
the City with useful information in regard to the
City' s organization and financial reporting
structure.
B. The audits will be conducted in accordance with
Generally Accepted Auditing Standards, as well as the
following guidelines and requirements:
1 . Standards for Audit of Governmental Organizations,
Programs, Activities and Functions (1987 Revision)
2 . Audits of State and Local Governments-OMB Circular
A-128
3 . Uniform Requirements for Assistance to State and
Local Governments-OMB Circular A-102
4. AICPA Industry Audit and Accounting Guide - Audits
of State and Local Governmental Units
5 . OMB Compliance Supplement for Single Audits of
State and Local Governments
6. Applicable laws of the State of Arkansas
The Arkansas Legislative Joint Auditing
Committee has exempted the City from the
record keeping requirements of Act 159 of
1973 .
In the event that there are conflicting or otherwise
inconsistent policies applicable to financial and
compliance audits of Federal awards, the following order
or precedence shall apply:
1. Single Audit Act of 1984 (Public Law 98-502)
2 . OMB Circular A-128
3 . Agency regulations implementing OMB Circular A-128
and the Single Audit Act
4. Agency program regulations
5 . Federal Financial Assistance Agreement
The City' s cognizant agency contact for Single Audit
purposes is:
EPA
Jack Carrington
Office of Inspector General
1100 Commerce Street
Room 2F50 Earlecabell Federal Bldg
Dallas, TX 75242
Phone: (214) 767-2854
C. The periods to be covered are the City' s fiscal years
ending December 31, 1988, 1989, 1990, and 1991. A
contract will be awarded for all four years upon
approval of the Board of Directors with the consent of
the proposer in accordance with the terms of the
proposal. Each year of the contract shall be contingent
upon funds being appropriated by the Board of Directors.
Should funds not be appropriated by the Board of
Directors, then the contract would be cancelled for any
remaining years.
D. All adjusting entries will be submitted to the City in
writing with sufficient explanation and detail, so that
they can be easily understood and properly posted to the
financial accounts.
The auditor shall make a draft of the General Purpose
Financial Statements available to the Assistant City
Manager by 15th of April each year, allowing him one
week to review and offer any changes.
The auditor shall submit 25 copies of the General
Purpose Financial Statements to the Accounting
Supervisor by May 1 of each year.
Prior to May 1, of each year the auditor will issue a
management letter directed to the Board of Directors
reflecting determinations subsequent to review of
procedures and controls. Where appropriate,
recommendations for system improvements are to be
included, and the Auditor may be requested to provide
assistance to implement recommendations and follow-up.
A draft of this letter should be submitted to the
Assistant City Manager his review and input before
final copies are prepared. The City will need
approximately 50 copies of this letter.
E. Auditor involvement in the preparation of the CAFR will
include the compilation and assimilation of the data
between the Letter of Transmittal and the Statistical
Section. City staff will produce the material contained
in the Letter of Transmittal and a major portion of the
Statistical Section. The auditor will be expected to
reproduce the City prepared data in the same format and
type style as the remainder of the CAFR before the CAFR
is printed.
The independent auditor is expected to provide
invaluable assistance in interpreting financial
reporting requirements. It will be the auditor' s
responsibility to proofread, cross check and critique
the entire CAFR document in addition to auditing the
numbers and disclosures contained therein.
The CAFR will be written, typed, printed and distributed
to GFOA by June 1 of each year. The City will provide
the covers, tabs, and spines to the auditors for binding
of 100 copies of the CAFR. The City will also specify
preferences in the format of the CAFR.
F. No services are contemplated outside of the normal audit
scope, however, the auditor may be called upon to
perform special services of an audit nature at the
billing rates quoted in the contract upon approval of
the City Manager. Meetings and consultations throughout
the year are included in the scope of the audit and base
fee.
If unusual circumstances are encountered making it
necessary for the Auditor to do added work, the auditor
shall immediately report such conditions to the
Assistant City Manager, and both parties may negotiate
such additional compensation as appears justified.
G. It will be expected that normally the audit work should
take approximately fifteen weeks. ,
The auditor in charge shall conduct an entrance
conference with the Assistant City Manager and the
Accounting Supervisor, and an exit conference with the
Assistant City Manager.
Review of accounting systems, test of internal controls
and test of transactions should generally occur prior to
year end. A two week notice should be given to the
Accounting Supervisor before this work is scheduled to
begin.
A list of all work papers and schedules to be prepared
by the City staff should be presented by December 1 of
the preceding year. This list should include any
documents which will need to be pulled for auditor
review.
The general ledger will be closed by the second week of
February and the trial balance prepared.
Year end field work should normally be completed by
April 1.
H. Interest of Auditor:
Auditor covenants that neither it or any of its members
presently has any interest and shall not acquire any
interest, direct or indirect, financial or otherwise,
that would conflict in any manner or degree with
performance of service hereunder. Auditor certifies
that no one who has or will have, during the course of
the firm' s audit contract, any financial interest under
this agreement as an officer or employee of City.
I . Non-Assignability:
Both parties recognize that this proposal is one for
personal services and cannot be transferred, assigned,
or sublet by either party without prior written consent
of the other.
J. Workmen' s Compensation:
By executing an agreement, auditing firm certifies that
it is aware of the provision of Ark. Stat. Ann. Sec. 81-
1305, which requires every employer to pay or provide
compensation for an employee' s disability or death from
injury arising out of or in the course of employment
and certifies that it will comply with such provisions
before commencing the performance of the work of this
proposal.
K. Miscellaneous provisions:
1. Periodic progress billings may be submitted as work
progresses, but not more often than monthly and not
more than 75% of the estimated cost of audit
services will be paid during the yearly audit
period. The remaining 25% will be paid after total
yearly contract fulfillment.
The total progress billings must be itemized
based on the amount of time expended on each
fund (with the Water and Sewer fund broken
between water and sewer) .
2 . A copy of the audit work papers will be presented
to the City at the completion of the audit, and
prior to final payment. This copy of the audit
work papers shall become the property of the City
when final payment is made.
3 . The auditor shall keep the City advised of pending
and actual changes in financial disclosures,
accounting practices and reporting guidelines which
would impact the City and its financial records,
and shall be available for consultation and
clarification of such matters.
III . DESCRIPTION OF THE GOVERNMENTAL ENTITY AND ITS ACCOUNTING
SYSTEM
A. The City of Fayetteville is a municipality in the State
of Arkansas. The City currently has a General Fund
which is the main operating fund for the City, five
special revenue funds, two debt service funds, three
capital projects funds, six enterprise funds, three
internal service funds, three trust funds, and three
account groups.
B. All intergovernmental grants, entitlements and shared
revenues will be included under the single audit
concept.
C. The laws of the State of Arkansas require an operating
budget for the General Fund. This budget is disclosed
in the CAFR and reflects all approved amendments. All
other general fund type funds which have an adopted
budget shall be disclosed in the same manner with
appropriate disclosures for any general fund types
which do not have an adopted budget.
D. Description of the Automated Accounting Systems
1. The City has a data processing division which
consists of three full time employees, a data
processing supervisor, a programmer/analyst,
input/operator. Assistance from this division in
obtaining necessary reports and data can be
obtained on a scheduled basis.
2 . The City since 1987 has been converting to a new
computer system. This has been a gradual and
planned process. Currently, the City is utilizing
the following packages on an IBM system 36
mainframe (5360 Series, 3 megabyte memory, with
1,066 megabyte of disk space) .
a. Cameo Software Solutions, general ledger
package.
b. Cameo Software Solutions, purchase order
package which interfaces with general
ledger and inventory.
c . Cameo Software Solutions, accounts
receivable package which interfaces with
general ledger.
d. Cameo Software Solutions, payroll which
interfaces with general ledger.
e. Cameo Software Solutions, Utility billing
for water, sewer, and sanitation which
interfaces with the general ledger.
f. Cameo Software Solutions, Licensing and
Inspection package.
g. Cameo Software Solutions, Inventory
package for the City Shop and the Water
and Sewer Division which interfaces with
vehicle maintenance and general ledger.
This package should interface with the
work order package in the future.
h. Cameo Software Solutions, Vehicle/Equip
Maintenance which • interfaces with
inventory and general ledger.
i . Cameo Software Solutions, Budget package
which interfaces with general ledger.
j . Cameo Software Solutions, Cash Receipts
package, which interfaces with the
general ledger system.
k. Cameo Software Solutions, Personnel
package which will interface with the
payroll system in the future.
3 . The City currently has the following systems
which are run on a Microdata Reality 8000
mainframe (these systems will be phased out
during the next year) :
a. Investments package which will be
converted to the Cameo Software Solutions
package for the IBM system.
b. Municipal Court package which will be
converted to another package to be run on
the IBM system. This package has not
been selected at this time.
c. Work order package which will be
converted to the Cameo Software Solutions
package for the IBM system, and will
interface with general ledger and
inventory.
d. Fixed Asset package which will be
converted to the Cameo Software Solutions
package for the IBM, and will interface
with general ledger and purchasing.
4. The City has several personal computers which
are interfaced with the IBM system 36 and use
various different software packages,
including the following:
a. Lotus
b. Word Perfect
c . Harvard Graphics
d. Action Tracker
e. Fincalc
5 . The City also has an IBM system 36 which is
used for the Police, Fire, and Central
Dispatch. This system runs CHIEFS software
package by On-line Business Computer Systems,
Inc. , OBC Public Safety Division, an Ohio
corporation. This IBM system 36 will be
connected to the other IBM system 36 during
the 1989 fiscal year.
6. The Public Works Department is in the process
of utilizing a performance management system
designed by Burke, and Assoc . This system
will run primarily through personal computers,
but will also be interfaced with the IBM
system 36 workorder package, inventory
package, and the general ledger package.
E. Physical space is available to house audit staff.
Access is available to a telephone, and access can be
made available to a computer terminal connected to the
mainframe.
F. An organization chart for the City is attached.
VI . TECHNICAL QUALIFICATIONS AND APPROACH
The format of the proposal can be styled at your discretion.
However, all proposals will address each of the following
items in the order presented:
A. Qualifications of the firm and its coordinating office
in performing governmental audits
1 . Describe your firm' s strengths, audit philosophy
and strategy for the future.
2 . Describe you clientele: list major clients either
gained or lost firm wide and in the coordinating
office in the past three years with an
explanation.
3 . Describe what positions have been taken by the firm
with the AICPA, FASB or GASB which could be viewed
as controversial .
4. List any members of the firm which are nationally
recognized professionals in public finance or
government accounting, such as members of the
executive boards of committees of the GFOA or GASB.
5 . Describe your affirmative action plan and how you
place minorities in your firm.
B. Experience, Competence, and Capacity for Performance of
the firm and its coordinating office in governmental
audits
1. Qualifications of the Coordinating Office:
a. State whether the office is part of a
national, regional or local accounting firm.
b. List the number of partners, managers,
supervisors and staff located in the
coordinating office in the audit, tax and
management consulting divisions.
c. Describe the extent of statistical and
computer assisted audit techniques used in
governmental audits including the use of
microcomputers to generate work papers.
d. Describe the organization of the audit staff
and the assigned audit team.
2 . Availability and qualifications of the assigned
individuals:
a. List the partners, managers and supervisors
who will be assigned to the engagement.
Please provide specific qualifications of
these individuals in municipal accounting and
auditing. On your list include education,
position in the firm and years and types of
experience.
b. Describe specialized skills, training or
background in public finance and governmental
accounting of the assigned individual staff
members. Indicate which of the assigned staff
members have completed within the last two
years at least 80 credit. hours of continuing
education and training that contributes
directly to the auditor' s professional
proficiency to perform the audit, including
specifics on training in the governmental
accounting and auditing field.
c. Address the availability of staff members
both during the audit and throughout the year
for consultation. Include an explanation of
the plan your firm has to commit the necessary
resources to ensure completion of the audit
work by the due dates.
3 . Description of the firm' s internal quality control
procedures:
a. Describe the procedures in place in the
Coordinating Office to ensure marginal or
substandard work is identified and elevated to
an acceptable level.
b. Outline the levels of review to which work
papers are subjected.
c. Describe any disciplinary action imposed by
the AICPA, State Boards of Public Accountancy,
State Societies of CPAs, or Securities and
Exchange Commission during the past three
years indicating any involvement of the
coordinating office.
d. Describe results of recent peer review and its
status under the Peer Review Program.
C. Proposed method of performing audit
1. Describe how the firms overall philosophy applies
to this particular engagement.
2 . Describe the audit plan in general and specify
areas that in your opinion may require particular
audit emphasis.
3 . Explain your understanding of the audit work that
is to be performed for the City of Fayetteville.
4. State how the firm will relate to and interact with
the City' s administrative staff.
5 . Describe in detail the type of personnel assistance
that the City would be expected to provide and how
this would be coordinated by the auditors with the
City management.
6. Indicate in detail computer expertise which would
be expected from City staff or other resources
expected in order to complete the controls reviews.
D. Past performance of the firm and it coordinating office
in governmental audits.
1. List local government clients or other clients
which is felt to be relevant to this RFP served by
the firm and the coordinating office, indicating
those having a Certificate of Achievement for
Excellence in Financial Reporting awarded by GFOA.
2 . Provide names and telephone numbers of appropriate
officials for reference purposes.
E. Price Proposal .
1 . Basis for fee and not-to-exceed cost shall be
submitted to the Purchasing Officer in a separate
envelope, sealed to the outside of the larger,
proposal envelope . This proposal should include a
schedule for each of the four years in the
following format:
a. Billing rates per class of employee
b. Estimated number of hours per class of
employee
c. Maximum not to exceed cost per year
d. Any special provisions which would affect the
proposed fees
F. Noncollusion Affidavit of Prime Proposer
The attached Noncollusion Affidavit of Prime Proposer
must be submitted with the proposal .
VII . PROFESSIONAL POLICY
Attached is a copy of the City' s Professional Contract
Policy. Proposals should be prepared simply and
economically, providing a straight forward, concise
description of auditor' s ability to meet the
requirements for the project. Fancy bindings, colored
displays and promotional material are not required.
Emphasis should be on completeness and clarity of
content.
•
CITY OF FAYETTEVILLE. AEEENSAS
ORGANIZATIONAL STRUCTURE
CITIZENS OF FAYETTEVILLE
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MUNICIPAL JUDGE DIVISION
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BOARD OF DIRECTORS
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CITY MANAGER
JAMES PENNINGTON
LEGAL DIVISION 111
ECONOMIC DEVELOPMENT DIV 1
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ASSISTANT CITY MANAGER I PUBLIC SAFETY DIRECTOR PUBLIC WORKS DIRECTOR - PLANNING MCMT DIRECTOR
SCOTT C. LINEBAUGH 1 ( MARTY COATES Laugumcmc:KE
BATIK JOHN MERRELL III
ASSIT; CITY MANAGER DIV 1 PUBLIC SAFETY DIR. DIVISN 1 ( PUBLIC WORKS DIRECTOR DIV 1 I PLANNING MGMT DIR. DIV.
PERSONNEL DIVISION COMMUNICATIONS DIVISION AIRPORT DIVISION PLANNING DIVISION •
FINANCE DIVISION ANIMAL CONTROL DIVISION PUBLIC MAINT DIVISION INSPECTION DIVISION
BUILDING MAINT DIVISION POLICE DIVISION STREET DIVISION ENGINEERING DIVISION
CITY CLERK DIVISION I FIRE DIVISION WATER d SEWER DIVISION 1111112121
PURCHASING DIVISION TRAFFIC DIVISION SANITATION DIVISION
DATA PROCESSING DIVISION I I nn POLLUTION CONTROL PLANT
CUSTOMER ACCT. l COLLECT. ' PARKS DIVISION
SHOP DIVISION "_______udzammaammaneemaze,naae;j
MUNICIPAL COURT DIVISION
IFINANCE DIVISION 1
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A'CTG & AUDIT, PAYROLL BUDGET & RESEARCH I 1 INTERNAL AUDIT/GRANT ACCT 1 I UTIL BILL & REV COLLECT
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L__._._______i- SPECIAL PROJECTS OFFICER AUDITOR/GRANTS ACCT 1
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; ACCOUNTING SUPERVISOR 1 [ RESEARCH/PERFORM ANALYST I _ i BUSINESS OFFICE MANAGER
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1-1 BUDGET OFFICER ACCOUNT CLERK I
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ACCOUNT CLERK III
CLERK/TYPIST (3)
SNITCH BOARD OPERATOR
PART-TIME/WORKSTUDY
- ACCOUNT CLERK II (3)
- ACCOUNT CLERK I
PART-TIME/NORKSTUDY
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i CLERK/CASHIER (3)
- ACCOUNT CLERK I (3)
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- CLERK/TYPIST
CITY OF FAYETTEVILLE
PROFESSIONAL CONTRACT POLICY
(Adopted April 21 , 1931 )
The following are the guidelines to be followed it obtaining all
professional contracts over 55,000 (see note 1 ) for the City of Fayetteville
excluding Community Development. The City Board may waive submission of
proposals under this policy by a majority vote.
1 . Scooe of Work
The staff shall develop or procure professional help to develop the
scope of the project. The scope will be developed in such a manner that
proposals for the project may be requested from professional organizations .
If the City staff must procure professional help to develop the scope. the
involved City Department Head(s) and City Manager shall cnoose the most
advantageous professional firm after receiving rate quotations and
negotiations of the price. Contract will then be reviewed by the City Attorney
and Finance Director and recommended to the Board.
2. Proposals
Proposals shall be solicited from an adequate number of qualified
sources to permit reasonable competition. Proposals will be made only on the _
scope developed and shall include the following:
A. Qualifications in Relation to Specific Project to be Perforred -
Information reflecting qualifications of tne firm. indicate
specialized experience and technical competence of the firm
in connection with the type and complexity of the service required.-
Subcontractors, if used, must be listed with information on
their organization.
B. Experience, Competence. and Capacity for Performance - Information
reflecting tne names, titles, ana qualifications kintluding
experience and technical competence) of the major personnel
assigned to this specific project. Provide detailed breakdown
of subcontractor's staff to be used.and how they are to be used
to supplement your staff.
C. Pr000sed Method of Doinn Work - A proposed work plan (description
of now the project wouid. oe conducted as well as other facts
concerning approach to scope you wish to present) indicating
metnods and schedules for accomplishing each .phase of the work.
Include with this the amount of work presently un. erway.
D. Past Performance - Previous evaluations (as set forth in nur..:er 5)
snail oe consicered a significant factor. If previous evaluations
with this ,City are not available, the professional firm's past
performance records with, City and others will be used. incluein;
quality of work, timely performance, diligence, acility to reet pas:
bucgets , and any other pertinent information. (Later inforr t1Cn to
be used only until evaluation system has had time to ee oevelored. )
Firm will provide list of similar jobs performed and ;arson Whoa
we can contact for information. -
If, after reasonable effort, a contract cannot be nee:tiated within
available funds, the negotiations with- the selected firm shall be
terminated. Tne firm will be requested to submit in writing a best
and final offer and the selection committee will move negotiations
to the next highest accumulated "total points" firm. This will
continue until a mutually satisfactory contract is achieved. At
this time the other two firms from Step B will be notified in
writing and thanked for their interest in the project.
The selection committee's membership will consist of the City
Manager (or representative) , the Finance Director, the involved department
heads, any board members wishing to serve, and any other cersons not
involved in any way with any organizations submitting prccosals (who
are appointed by the Board). The selection committee mem:ershi may be
changed by the Board of Directors.
4. Contract Award and Details :
The selection committee will recommend, after necttiations and
review by the City Attorney and Finance Director, the most advantageous
contract to the Board for awarding.
If the scope of the project is substantially chanced, a new
proposal will be solicited before any additional work is performed. The
"maximum not to exceed clause" will then be amended -on the contract after
approval by the Board.
5. Professional Project Evaluations:
Upon completion or termination of a contract, the department head
responsible for the project will submit a summary evaulation of the pro-
fessional firm's handling of the project to include the following data:
(a) name of professionai firm
(b) date of contract and date of completion
(c) cost as stated in initial contract, amount paid, and reason
for any difference
(d) -special strengths exhibited by professional firm
(e) problems or weaknesses in professional firm's handling of the project
- (f) adherence to time schedule by the,professional firm
(g) names of key personnel working on the project and comments
on their adequacy '
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The summery evaluation will be submitted to the City Vanzcer for review
and comments and tnen filed in the City Clerk's records. A copy will be
sent to the professional firm.-_ Written comments received from the professional
firm regarding the evaluation will be filed in the City Clerk's records.
•
3. Proposal Evaluation and t:ec:otiation
Proposal evaluation and negotiation shall consist of three steps:
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STEP A - Selection of too' oua l i fyi no f i rrrs :
• Description Maximum Points
A. Qualifications in relation to specific 25
project to be performed
B. Experience, competence, and capacity
for performance 20
C. Proposed method of doing work 10
D. Past Performance 10
•
Sub-total points 75
Proposals will be reviewed by the selection committee using the
above selection criteria. Each member of the committee will assign
points to each criteria based on the content of the proposal . The
three firms receiving the highest accumulated sub-total points, as
rated by the selection committee, will move on to step B. All other
firms submitting proposals will be notified in writing and thanked
• for their interest in the project.
STEP 8 -- Selection of the top rated firm:
The three firms receiving the highest accumulated sub-total points
will be asked for the following information:
Description Maximum Points
E. Price - Total estimated price of your
professional services for this project.
The total estimated price must be - •
reasonably accurate. Also, maximum cost
for "maximum not to exceeds clause and-
additional servic rates information shall 25
be given.
Total points 100
• The selection cocr. ,ittee will rate this criteria (as in Step A
•
above) awarding up to a maximum of-25 points. These points will be
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combined with the assioned points ir, Step A to arrive at "Total
P ir.ts" (maximum of 100). The firm receiving the highest accumulated
"total points" will move. into Step C.
•
STEP C - i;eoo=i a t i on
The selection committee will then necotiate to achieve the most
ac•:antaceous contract for the City starting with the seie:teh firm
(firm with the highest accumulated "total points" from Steo 2) .
•
NOTE 1 : Minor contracts , S5,000 and below, shall have the involved De:.artment
Head and City Manager choose the most advantageous organization
after receiving price quotations and negotiations of the price.
Contract will then be reviewed by City Attorney and Finance Director
and recommended to the Board.
RESOLUTION NO. 40- p/
A RESOLUTION APPROVING A PROFESSIONAL CONTRACT
POLICY FOR THE CITY OF FAYETTEVILLE, ARKANSAS.
BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF
FAYETTEVILLE, ARKANSAS : •
That the Board of Directors hereby approves the
Professional Contract Policy attached hereto marked Exhibit "A"
and made a part hereof.
PASSED AND APPROVED this a/af day of Q0 _IJ , 1981 .
APPROVED :
ATTEST:
a
CITY CLERK
CITY OF FAYETTEVILLE, ARKANSAS
NONCOLLUSION AFFIDAVIT OF PRIME PROPOSER
STATE OF
COUNTY OF
, being first duly sworn, deposes
and says that:
1. He (she) is of ,the
proposer that has submitted the attached proposal.
2. He (she) is fully informed respecting the preparation and contents
of the attached proposal and of all pertinent circumstances respecting
such proposal.
3. Such proposal is genuine and is not a collusive or sham proposal.
4. Neither the proposer nor any of his (her) officers, agents, repre-
sentatives, or employees, including this affiant , has in any
way colluded, conspired, connived, or agreed, directly or indirectly,
with any other proposer, firm, or person to submit a collusive
or sham proposal in connection with the contract for which the
attached proposal has been submitted or to refrain from proposing
in connection with such contract, or has in any manner, directly
or indirectly, sought by agreement or collusion or communication
or conference with any other proposer, firm, or person to fix
the price or prices in the attached proposal or of any other
proposal, or to fix overhead, profit, or cost element of the
proposal price or the proposal price of any other proposer, or
NONCOLLUSION AFFIDAVIT OF PRIME PROPOSER
PAGE TWO
to secure through any collusion, conspiracy, connivance, or unlawful
agreement any advantage against the City of Fayetteville, Arkansas
or any person interested in the proposed contract.
5. The price or prices quoted in the attached proposal are fair
and proper and are not tainted by any collusion, conspiracy,
connivance, or unlawful agreement on the part of the pr^poser
or any of his (her) agents, representatives, or employees.
Signature
Date
Coo erS certified public accountants 1400 Mid-Continent Tower in principal areas of the world
401 South Boston
&Ly rand Tulsa,Oklahoma 74103
telephone(918)582-6404 WIICROF!V`A�r)
cables Colybrand
October 12, 1988
The Honorable Mayor,
Members of the City Board of Directors
and City Manager
City of Fayetteville, Arkansas
Dear Sirs:
We are pleased to present our price proposal to provide
auditing services to the City of Fayetteville for the years
ending December 31, 1988, 1989, 1990, and 1991. The scope of the
work, as contemplated under our proposal, has been included at
your direction in a separate technical proposal volume which has
been submitted in a separate envelope along with the price
proposal.
We strive to provide high quality service to our client in
the most efficient manner possible, especially in today's
environment when our public sector clients are being required to
provide greater levels of service with diminishing resources.
We, at Coopers & Lybrand, are conscious of these budget
pressures. Our engagement proposal has been developed to provide
the City of Fayetteville with the highest quality service which
our Firm can offer and our fee proposal has been structured to
provide us with a fair, but not exorbitant compensation for our
work. It is our desire that our clients should be equally
satisfied with the level of our service and the fairness of our
fees.
Our not-to-exceed maximum fee for the fiscal year ending
December 31, 1988, will be $45,000. The information which you
requested concerning hours and rate per hour by staff
classification are included on the appended schedule. Our
not-to-exceed maximum price for 1989 is $47,000, for 1990 is
$49,000 and, for 1991 is $51,000.
11 G„ _.
City of Fayetteville
October 12, 1988
Page 2
We fully understand that no services outside the normal
audit scope are contemplated under this proposal. However, we
are aware that, during the course of the year, the City may
require consultation and discussion with its auditors. A certain
amount of meetings and consultation is anticipated within the
scope of the audit fee. If we believe that such consultations
are outside of the scope of those contemplated by the normal
audit examination, then we will discuss this with the Assistant
City Manager before we incur any additional costs.
Our policy is to bill for services on a progress basis
throughout the year as hours are incurred. We understand that we
will be able to submit progress billings, with appropriate detail
on hours expended by fund, up to 75 percent of our total fee
prior to completion of the engagement. We understand that the
remaining 25 percent will be paid after the completion of the
engagement.
We appreciate the opportunity to submit this proposal to
serve the City of Fayetteville. We will be happy to discuss this
proposal further with you at a convenient time.
Very truly yours,
Daniel E. Schultz, r.
Partner
pjd
CITY OF FAYETTEVILLE
Price Proposal
Hours Rate Price
Partner 75 $ 75 $ 5,625
Manager 125 50 6,250
Senior 300 40 12,000
Staff 375 35 13, 125
Administration 125 20 2,500
1,000 39,500
Out-of-Pocket Expenses 5,500
Not-to-Exceed Price for 1988 S45, 000
Not-to-Exceed Price for 1989 S47, 000
Not-to-Exceed Price for 1990 S49,000
Not-to-Exceed Price for 1991 S51,000
MICROFILMED
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City of Fayetteville, Arkansas
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Proposal to Provide Professional Services
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City of Fayetteville, Arkansas
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Proposal to Provide Professional Services
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Coopers
&Ly b rand
1400 Mid-Continent Tower
401 South Boston
Tulsa, Oklahoma 74103
Coopers certified public accountants Co 1400 Mid-Continent Tower
401 South Boston in principal areas of the world
o
&Lybrand Tulsa,Oklahoma 74103
telephone(918)582-6404
cables Colybrand
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October 12, 1988
' Honorable Mayor, Members of
the City Board of Directors
and City Manager
' City of Fayetteville, Arkansas
Dear Sirs:
We are pleased to present our proposal to become the inde-
pendent certified public accountants for the City of Fayetteville.
' We believe this proposal demonstrates our superior qualifications,
our thorough understanding of your requirements and our high degree
of commitment to our governmental clients.
The qualifications and experience of the engagement team
' members selected to serve the City of Fayetteville will be evident
in this proposal . However, we wish to highlight certain aspects of
that team which we believe place it in a uniquely qualified
position. Your Coopers & Lybrand engagement team has:
Extensive current experience in auditing cities and other
local governments.
• Experience on governmental engagements and is led by Dan
Schultz, a national governmental technical consulting
partner based in Tulsa.
▪ A member of the Special Review Committee of the Govern-
, mental Finance Officers Association Certificate of
Achievement Program who has assisted the Cities of Tulsa
and Oklahoma City and the Cherokee Nation in obtaining
' their Certificates.
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' . Experience in performing single audits and successfully
coordinating with several cognizant agencies.
A reputation for personalized service and a record for
' providing our clients with advice and consultation in all
areas of their operations. This is best exemplified by
contacting our current clients and City of Fayetteville
' staff who recently worked with our management consultants.
The engagement team who we are proposing to serve the City
of Fayetteville are selectively trained and experienced in serving
' municipal governments. This will permit us to complete your audit
on time and without disrupting your daily operations. We hope
' that you will check our references since they are the best way to
demonstrate how we will serve you.
' While we believe our Firm can bring an undeniably high
level of quality service to the City, we also believe that a
' business relationship with City officials and management will be
mutually beneficial. In structuring our audit approach, we have
' attempted to create an environment which will permit sharing of
professional knowledge and skills at staff and management levels
' alike.
We are delighted with the opportunity to become your
independent certified public accountants and view our proposed
association with the City as beneficial to our public image and
business growth. We sincerely believe that the City will realize
economic, operational and public relations benefits from its
' association with Coopers & Lybrand. We would be proud to have the
City of Fayetteville join the list of our Arkansas clients which
' includes Jones Truck Lines, Hudson Foods, Inc. and Scheduled
Truckways.
' It is our intention to provide quality service to the City
of Fayetteville at a competitive fee. We believe that our emphasis
on engagement planning, utilization of industry-experienced staff,
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' and significant partner and manager participation will allow us to
accomplish this. As you have requested, we have submitted our fee
' proposals in a separate letter which is included in the attached
envelope.
We hope that you will check our credentials and record of
high quality service. We are confident that you will find our
excellent reputation to be the best measure of our ability to serve
the City.
We will be pleased to have the opportunity to discuss this
proposal with you.
Very truly yours,
' Daniel E. Schultz, 1r.
Partner
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REASONS FOR SELECTING COOPERS & LYBRAND
City's Needs C&L Resources
Ability to meet established Large office to support engagement
deadlines team whose record on timeliness can
' be supported by their current
governmental clients
' Responsiveness to Management' s Engagement focus based on com-
munication, planning and coordina-
tion
' Understanding of local govern- Experienced engagement team
ment environment
' Understanding of current developments Engagement team with a National
resource person based in Tulsa
Ability to audit in the complex Experienced Information Technology
computer environment Audit Services Group
Quality audit Participation in peer review pro-
gram and continuing professional
education program as well as seven
years of quality verification by
' Federal Agency quality reviews
Ability to fulfill Management' s Management consultants who are a
special service needs part of the engagement team and who
have experience with the City of
Fayetteville
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CITY OF FAYETTEVILLE, ARKANSAS
NONCOLLUSION AFFIDAVIT OF PRIME PROPOSER
STATE OF OKLAHOMA
' COUNTY OF TULSA
' Daniel E. Schultz, Jr_ , being first duly sworn, deposes
and says that:
1. He (-she) is a partner of rnnpPrs £ T.yhrarlr3 ,the
proposer that has submitted the attached proposal.
' 2. He (she) is fully informed respecting the preparation and contents
of the attached proposal and of all pertinent circumstances respecting
such proposal.
' 3. Such proposal is genuine and is not a collusive or sham proposal.
4. Neither the proposer nor any of his (-ke ) officers, agents, repre-
sentatives, or employees, including this affiant, has in any
way colluded, conspired, connived, or agreed, directly or indirectly,
with any other proposer, firm, or person to submit a collusive
' or sham proposal in connection with the contract for which the
attached proposal has been submitted or to refrain from proposing
' in connection with such contract, or has in any manner, directly
or indirectly, sought by agreement or collusion or communication
or conference with any other proposer, firm, or person to fix
' the price or prices in the attached proposal or of any other
proposal, or to fix overhead, profit, or cost element of the
' proposal price or the proposal price of any other proposer, or
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' NONCOLLUSION AFFIDAVIT OF PRIME PROPOSER
PAGE TWO
' to secure through any collusion, conspiracy, connivance, or unlawful
agreement any advantage against the City of Fayetteville, Arkansas
or any person interested in the proposed contract.
5. The price or prices quoted in the attached proposal are fair
and proper and are not tainted by any collusion, conspiracy,
' connivance, or unlawful agreement on the part of the pr^poser
or any of his (her) agents, representatives, or employees.
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iSignature
' October 12 , 1988
Date
ACKNOWLEDGMENTS
STATE OF OKLAHOMA )
' ) ss.
COUNTY OF TULSA )
Before me the undersigned, a notary public in and for said
county and state, on this 12th day of October, 1988, personally
appeared Daniel E. Schultz, to me known to be -the identical
person who executed the within and foregoing instrument, and
' acknowledged to me that he executed the same as his free and
voluntary act and deed for the uses and purposes therein set
forth.
In witness whereof I have hereunto set my hand and official
seal the day and year last above written.
My Commission Expires: Notary lic
August 18, 1990
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TABLE OF CONTENTS
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QUALIFICATIONS OF COOPERS & LYBRAND 1
EXPERIENCE 12
PROPOSED AUDIT METHODOLOGY 35
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PAST PERFORMANCE ON SIMILAR ENGAGEMENTS 45
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APPENDIX A - OUR ENGAGEMENT PLAN A-1
IAPPENDIX B - MANAGEMENT CONSULTING SERVICES B-1
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I Qualifications of
Coopers & Lybrand
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QUALIFICATIONS OF COOPERS & LYBRAND
' Coopers & Lybrand is one of the largest internationally
recognized accounting and consulting firms. We have earned our
' reputation through our ability to consistently deliver high qual-
ity, broad-based service which is responsive to the needs of our
clients. The quality of our service has been built based on our
firm' s strengths which complement the needs of our clients.
' Experienced Local Engagement Team
' Locally, we are the leading firm in delivering accounting
and auditing services to municipalities. Based on our experience
' with the City of Tulsa and others, we have developed a strong team
of individuals who are knowledgeable in the areas of fund account-
ing, grant compliance, Certificate of Achievement requirements,
' GASB pronouncements, and other issues which affect you. Because of
our familiarity with these reporting requirements, we will be able
tto perform up-front planning with you to facilitate a smooth
transition and a timely audit. Furthermore, should the need arise
' to increase the size of the engagement team due either to expanded
work or a shorter time frame, we have over 20 people with experi-
ence on governmental clients who would be available to assist.
Our government staff in Tulsa is led by Dan Schultz, a
' member of our National government technical committee and a Cer-
tificate of Achievement reviewer. Dan is supported by over 20
' staff. The following section "Past Performance on Similar Engage-
ments" lists the number of governmental clients served by the Tulsa
' office.
Leaders in Technology
As a service firm, Coopers & Lybrand recognizes that we
must do more than observe the explosive impact of technology.
Throughout our history we have been responding to this explosion by
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applying technology to meet client needs. We believe the C&L
difference is a demonstrated commitment to finding and developing
' applications of technology - EDP auditing, the systems audit,
artificial intelligence and others - that help us serve clients
better.
' • We pioneered the systems audit approach which focuses on
internal controls and virtually mandates the use of
automated techniques.
. We were the first firm to dedicate a professional unit of
' EDP auditors.
' . We were the first firm to bring expert systems/decision
support skills on board.
' Strong Market Focus
We place a strong focus on developing resources, services
and tools to better serve our clients in industry specialization
areas such as state and local government. Being market-focused has
also led us to develop innovative services as new needs have arisen
in the marketplace.
' ▪ Our services to internal auditors provide support to this
increasingly important discipline. Services are coordi-
nated by a high-level national unit and include training,
' external reviews and participation in the development of
professional standards.
' • Our ten-person consulting
g staff in Tulsa specializes in
' working with governmental groups and has performed many
engagements for audit clients and nonclients including the
City of Fayetteville.
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I . We were the profession' s first firm to develop a benefits
and compensation unit to provide a full range of actu-
' arial, benefits and compensation advisory services.
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Service Approach
I Our service approach vests responsibility and authority
for the engagement in one person--your engagement partner. Our
objective is to assign full accountability. Further, we stress a
I "shirt sleeves" approach which means that Dan Schultz and David
Sparkman will be actively involved in planning and field work.
IThis use of our most experienced staff has resulted in a smooth
transition on new clients and a more effective use of everyone' s
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I Our people--their professional expertise, their business
sense, their leadership skills--are responsible for our outstanding
record of anticipating problems, responding to needs and achieving
Iprofessionally excellent results.
IAudit Philosophy
IOur philosophy is to add value to our clients in the audit
process. What constitutes "value" in an audit? The auditor' s
I opinion on the financial statements is evidence that an examination
has been conducted, but in itself has only compliance value. Added
value from audit services comes from the information developed in
Ithe audit process. The better the process, the better the informa-
tion management gets.
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There are several key elements to our philosophy:
IWe understand the business and industry• environment within
I which the City operates. As a result, our engagement
partners can and do function as business advisors.
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We select and train our staff to serve designated
industries as specialists. This provides them with an
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appreciation of your business and allows them to do more
than just an audit.
We use a systems-based approach for the technical aspects
' of maintaining and enhancing a control environment and
ensuring a quality auditing process.
We seek appropriate senior management involvement on both
the City and our own part to ensure a quality process and
' audit comfort.
' . We vest decision-making authority in the local engagement
partner. A concurring partner performs a review function,
' and our national, regional and local technical resources
are on call; but the basic engagement responsibility
remains with the engagement partner.
. We use a judgment-based, qualitative approach in which our
' professionals are called on to use their knowledge and
experience to decide issues such as materiality. This
contrasts with some firms ' more quantitative or statisti-
cal approaches in which numbers make the decisions.
Strategy for the Future
' At Coopers & Lybrand, our future strategy and its related
investments are driven by our Firm' s objectives. These objectives
are:
To enhance C&L' s reputation as a broad-based firm;
' . . On the leading edge of technology.
. . With in-depth functional and industry expertise.
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' . To serve an expanding client base as business advisors and
auditors.
. To continue to meet our responsibilities to the communi-
ties where we live and work.
' To achieve those objectives, our strategy is to invest in
(1) human resources and training; (2 ) technology; and (3 ) our com-
munities.
Significant Client Gains and Losses
Coopers & Lybrand clientele represent a broad range of
industry types and are companies of all sizes.
' Following is a list of our major client gains and losses
in the past three years:
' Audit Client Gains
Firmwide Tulsa Office
General Foods Corporation Tulsa Port of Catoosa
' Peter Kiewit Sons, Inc. Cherokee Nation (second 5-year
City of Chicago - Single Audit contract)
City of Cleveland Creek Nation
' City of Austin City of Tulsa (second 5-year
Montgomery County, Maryland contract)
AT&T Technologies Cheyenne and Arapaho Nation
Smithkline Beckman Corp. Facet Enterprises, Inc.
' Sanyo Fisher Corp. Barton Industries, Inc.
Unilever Hawkins Oil & Gas
CIS Technologies
' Scheduled Truckways
Kinark Corporation
Hudson Foods, Inc.
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IAudit Client Losses
Client Reason
IFirmwide:
Crum & Forster Nonclient acquisition
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Gulf Corp.Nabisco Brands Nonclient acquisition
Nonclient acquisition
Pan American World Airways Management change
Royal Crown Companies Nonclient merger
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Tulsa Office:
Telex Corporation Nonclient acquisition
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Utica Bankshares C&L Resignation
Tulsa Psychiatric Center Management change
IITechnical Positions Before Standard Setting Bodies
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Coopers & Lybrand has been an active and major participant
in the evolution of accounting, auditing and financial reporting
I standards since the early days of our profession. Montgomery' s
Auditing, the first and still leading auditing text, is one of the
II best examples of our contribution. As a matter of policy and
professional responsibility, we address major issues proposed by
professional and regulatory agencies and industry associations. By
Itheir very nature, major proposals to add to or change existing
practices are "controversial" and require thoughtful deliberation
Iand constructive airing of opposing views. Our positions on issues
are arrived at after due consideration of all relevant points, and
I are intended to contribute constructively to the standard setting
process.
1 Coopers & Lybrand' s partners are key participants in the
standard setting process, as illustrated below:
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. Jerry Sullivan (C&L Director of Audit Policy) - Chairman,
IAuditing Standards Board, AICPA.
I . Jim Quinn (C&L National Director of Accounting & SEC) -
Member, Emerging Issues Task Force, FASB.
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. Harry Becker - Chairman, Technical Standards Subcommittee,
AICPA.
Joe DeCaminada - Chairman, Tax Administration Subcom-
mittee,• AICPA.
. Dan Schultz (Engagement Partner) - Member, Special Review
' Committee for Certificate of Achievement Program, GFOA and
Member, National State and Local Government Technical Com-
mittee.
I TO provide the City of Fayetteville with representative
examples of our positions on major issues, following is a brief dis-
cussion of three of the more significant accounting issues recently
addressed by the accounting profession.
Accounting for Income Taxes
In general, Coopers & Lybrand supports the proposed con-
cept of utilizing the liability method of accounting for income
taxes. We believe the deferred method is unduly complex. We also
feel, however, that the FASB should determine whether the approach
under consideration will be easier to understand and apply than the
deferred method. For example, the complexities of applying the
proposed approach are compounded by the Alternative Minimum Tax
' provisions of the Tax Reform Act of 1986.
We believe that the FASB' s proposed approach to recogniz-
ing carryforwards and deferred tax assets may be too restrictive.
The Board concluded that tax prepayments resulting from book/tax
differences should not be recognized because realization depends on
' future earnings. In our opinion, this position contradicts the
going concern concept. We also believe that such prepayments meet
the definition of assets within the FASB "Conceptual Framework. "
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11 The proposed standard would eliminate the indefinite
reversal criteria for undistributed earnings of subsidiaries and
corporate joint ventures and require companies to provide deferred
tax liabilities on these earnings. We disagree with the FASB' s
position, as it may not reflect the underlying economics from a
practical perspective. When management has the ability to control
whether, not just when, a tax will be paid, a liability should not
be recorded. If the FASB persists in eliminating the indefinite
reversal criteria despite convincing arguments to the contrary, we
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recommend that the change be applied prospectively rather than
retroactively.
We support the FASB' s recognize to deferred taxes
proposal
' for book/tax basis differences in business combinations accounted
for as purchases. We believe the current net-of-tax method is
inconsistent with other aspects of accounting for taxes. This
proposal also would eliminate one of the significant causes of
disproportionate relationships between tax provisions and pretax
income.
Employers ' Accounting for Pensions
' SFAS No. 87, issued in December 1985, significantly
changed existing practices for determining pension costs for
defined-benefit pension plans. We had expressed our disagreement
' with the basic concepts of the Exposure Draft of this statement.
In our view, existing rules for determining pension costs had
' generally served us well. We argued that periodic pension expense
should be determined in a way that reflects the long-term, ongoing
nature of pension arrangements. Thus, we believe the new pension
accounting rules represent unnecessary changes to sound financial
reporting and actuarial practices.
' We opposed the requirement of a single actuarial cost
method, since, in our view, there is no one definitive cost method
that can best allocate pension expense from year to year under all
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facts and circumstances. We also opposed the requirement to change
the interest rate assumption each year because of the substantial
and unwarranted degree of volatility introduced into the measure-
ment of pension expense.
We favored retaining most of the provisions of APB 8 and
improving disclosure. In our view, the amount of unfunded prior
service costs, the policy for amortizing and funding those costs,
and the amount of unamortized actuarial gains and losses could best
be communicated through footnote disclosure.
Proposed Consolidation Rules
' The proposed consolidation rules would substantially
change the accounting and reporting for existing unconsolidated
subsidiaries. Currently allowed exceptions to consolidation of
majority-owned subsidiaries would be largely eliminated, and any
remaining allowable unconsolidated subsidiaries would have to be
' accounted for under the cost method. The proposed rules would also
require that financial information continue to be provided on
' previously unconsolidated subsidiaries that are consolidated under
the proposal, while companies that had consolidated such sub-
sidiaries in the past would be exempt from this requirement.
We oppose the adoption of this proposed statement for
several practical reasons; namely, we believe that:
. Current disclosure requirements for unconsolidated
subsidiaries are adequate and there is no evidence that
investors are being misled under the current rules.
. Consolidation of subsidiaries with dissimilar operating
activities, business cycles, leverage characteristics or
' performance measures may obscure important information
about such subsidiaries and may result in a meaningless
combination of financial information.
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' . The new rules will not make financial statements more
useful or meaningful and, as a result, are not cost
' justifiable.
. The new rules inequitably burden some companies with
additional disclosures merely because of past accounting
practices.
Affirmative Action Plan
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Coopers & Lybrand confirms its policy of Equal Employment
IOpportunity to all qualified persons regardless of their race,
color, sex, religion, age, national origin, physical or mental
handicap/condition, or Vietnam-era veteran status or marital
status. The Firm' s positive commitment to this policy covers all
current or prospective employees and will continue to be imple-
mented through ongoing Affirmative Action/Equal Employment Opportu-
nity Programs.
The policy covers all matters affecting employees and
' applicants for employment and all aspects of the employment
relationship, including recruitment, employment, scheduling,
' training, promotion, transfer, layoff, termination, compensation
and benefits. All Coopers & Lybrand policies and procedures are
covered by this policy and are reviewed periodically to assure that
rthe employment relationship is administered without discrimination.
In order to enhance our efforts towards the requirement of
persons qualified for positions at all levels and from all applic-
able sources, the following actions are conducted on an ongoing
basis:
. Prominent national and local organizations and agencies
' concerned with equal employment opportunity matters are
contacted in concert with our policy dissemination and
recruitment practices.
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1 . Student organizations are identified and contacted at
applicable colleges and universities in concert with our
1 recruitment program.
. The office supports internship programs, and educational
programs designed to acquaint, recruit and promote
minorities and women in the Firm.
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I Experience
EXPERIENCE
Coopers & Lybrand is one of the largest and fastest
growing public accounting firms in the world. We have achieved
' this position by providing our clients with consistently high
levels of service on a timely basis. Our reputation for auditing
federal and state grants, governmental units, as well as private
' sector companies is best evidenced by our distinguished clientele
and their willingness to recommend us to others.
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Coopers & Lybrand has offices in 100 countries worldwide.
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In the United States we have over 96 offices, with more than 14, 000
partners and staff. Coopers & Lybrand in the United States
' operates under one partnership in which all partners are general
partners. An Executive Committee of nine partners is responsible
for providing leadership in the formulation and interpretation of
the Firm' s policies and for monitoring firmwide compliance.
' Tulsa Office
Our audit of the City will be performed by the Tulsa
office. The Tulsa office has more than doubled in size over the
past five years. In addition to our governmental clients, we serve
a variety of clients in such diversified industries as health care,
oil and gas and related services, banking, nonprofit entities,
manufacturing and utilities. We have the resident capability to
provide a broad range of accounting, auditing and consulting
services to meet your needs. A summary of our staff by service
area is included in the table on the following page.
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I Information
Technology
Audit Management
IAudit Tax Services Consulting Total
Partners 4 2 - 1 7
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Managers 9 4 2 1 16
Supervisors 4 4 1 3 12
Seniors 10 2 1 3 16
Staff 32 5 - 1 38
IAdministrative support 13 2 -_ 1 16
I72 19 4 10 105
IIEDP Audit Capability
The City of Fayetteville' s computerized accounting systems
Irequire computer audit expertise; nothing less gives you the assur-
ance that your auditors can effectively review computer-processed
II transactions.
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We recognized this client need early, and in 1974 we estab-
lished our computer audit unit--a body of EDP professionals who
I understand auditing procedures and spend full time in the computer
audit environment. We were the first firm to include audit-trained
computer professionals in our engagement teams and are still one of
Ionly a few that dedicate them 100 percent to auditing.
Our approach gives us--and the City of Fayetteville-- sub-
stantial advantages over firms that try to make and keep their
Iauditors technically proficient in EDP or use management consult-
ants to perform audits. We do not believe either of these
I approaches fosters audit effectiveness. Under our approach, we
focus first on the audit ' s purpose--what happens to the computer-
ized information and what the audit requirements are. Our computer
Uauditors then help decide how the audit objectives can best be
achieved. This approach enables us to deal more efficiently with
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your EDP staff.
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Our EDP auditors function as an integral part of the audit
team. This teamwork yields greater efficiency and wider audit
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coverage--and gives both the audit team and client management sharp
insight into the effectiveness and consistency of computer-based
information systems. Our computer audit activities will encompass
the following, as appropriate to the City of Fayetteville:
. Pre-Implementation System Reviews -- Evaluation of con-
trols such as completeness, accuracy, authorization and
maintenance during the design phase of the systems
development process. This review may be especially
' effective, in that this timing allows cost effective
design changes to be made.
• Evaluation of general EDP controls -- We will reviewthe t e
overall computer environment controls under which each of
the individual applications functions. Our review of
1 these controls gives us assurance of the consistent and
proper operation of the individual systems generating
financial data and reports and gives you assurance that
your systems are working as designed.
. Compliance testing of general EDP controls -- We will per-
form compliance tests on the information we obtain about
' the total data processing environment. This testing will
be accomplished partly through the use of our customized
software. When possible, we will achieve cost and time
savings by using software which we have developed for our
audits of other governmental clients.
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. Review of application controls -- The quality of general
' EDP controls over data processing installations will
affect the depth of our reviews of application controls.
' If those controls are in place and ensuring the effective-
ness of application controls, we will reduce our level of
' testing in the various application areas accordingly. A
review of controls in the individual application systems
will also be conducted.
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' . Compliance testing of application controls -- We will
evaluate the system of internal controls and select the
' most efficient method of performing our compliance tests.
Computer auditing procedures which might be used include
' reviewing key computer programs and related documentation,
and monitoring program use.
111 The Coopers & Lybrand audit approach emphasizes the use of
computer audit techniques and the evaluation, testing and reliance
on computer-based controls whenever audit efficiencies can be
obtained. We recognize that the various systems of control within
' the City are highly computerized and sophisticated in nature and
accordingly anticipate that our computer audit professionals will
' be involved in almost every area of the engagement, from planning
the effort through completion of the work.
Nicole and Leanne are computer professionals with exten-
sive experience on governmental engagements. These people have
both government computer audit experience and the requisite tech-
nical knowledge of the IBM hardware and the financial application
systems used by the City since another of our governmental clients
uses similar hardware and software.
Coopers & Lybrand PRE-AUDIT Software
Pre-Audit is the hub of a network of microcomputer-based
software programs that assist in the audit. These systems are
' widely used throughout the world and can quickly be interfaced --
or customized -- for use on the City' s audit. Our use of this
' software helps us to produce financial statements and working
papers, prepare combinations and develop other audit information
' with higher efficiencies than are possible manually. This software
facilitates changes, enhances productivity and introduces addi-
tional functions such as analytical review. All of our audit staff
are proficient in using Pre-Audit and use their own personal
computers.
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Coo ers Microcomputer Audit Tools
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&L brand
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IChart of Lead
Accounts Schedules
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Standard or
Non-Standard
I Individual Fund
Financial
Statements
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Financial
Statements
I Trial
Balances PRE-AUDIT
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Journal
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Proposed
('Scoresheet')
Journal Entries
IFinancial
Posting
I Summaries Analy tical
Ratios
SAVEWORK PREAUDfT BUDGETS
I (Automated Workpapers) GRAPHICS AND PRO-
JECTIONS
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Our Tulsa office Microcomputer Advisory Services group is
available to provide assistance to help address our clients'
' needs. We have been particularly effective in guiding a number of
our clients through the selection and implementation process as
' regards hardware, software (accounting and operational) and human
resource needs. Some of the particular services this group can
provide are:
. Justification - Assist in determining the benefits a
microcomputer can provide -- such as improved efficiency
and increased productivity.
▪ Requirements Definition - Assist in definingbusiness s
requirements and relating them to microcomputer solutions.
. Software Evaluation - Once a requirements definition is
' complete we can survey the software packages on the market
and check their features against the client ' s requirements
' thus identifying the software package that best meets the
most important criteria.
' • Hardware Evaluation - We can help select hardware that is
' compatible with the software owned or intended to pur-
chase, assuring that the hardware has all the features
needed for the particular application including memory
' size, storage capacity, printing features and communica-
tions capabilities. We can also help determine the
quality of the documentation and service agreement that
comes with the equipment.
▪ Education and Training - We can train client staffin the t e
' use of the microcomputer, the operating systems, the
applications software and general purpose software (spread-
sheets, word processing, etc. ) .
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. Procedures and Controls - Since equipment and data are
vulnerable, it is very important to control the physical
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security of hardware and software assets, as well as the
integrity of data and applications. We can provide
guidance on effective procedures and controls for micro-
computers.
' Engagement Team
' The complexity and magnitude of audit services to be
provided the City necessitate a well-organized, experienced multi-
disciplined engagement team. The team must be large enough and
have the flexibility not only to meet the specified work load, but
' also to deal with unusual and nonrecurring items as they arise. In
our engagement team for the City, we have assembled a group of
people exceptionally well suited to the engagement for the follow-
' ing reasons:
' . Their prior experience in working with cities and
governments, completing prior audits in a timely fashion
' without disrupting normal operations.
. A team of experienced personnel who are currently resident
in Tulsa and available to serve you.
' . The experience of several members of the team in perform-
ing single audits and dealing with granting agencies.
. Significant experience in drafting quality financial
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reports and in meeting GFOA Certificate of Achievement
requirements.
A nationally recognized leader in governmental accounting
and consulting who is resident in Tulsa.
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The engagement team will be led by Dan Schultz, a general
practice partner in our Tulsa office. Dan will be primarily respon-
sible for all services contemplated by this proposal. He has full
decision-making authority for all work we perform for the City and
will be the City's key contact in the event questions or needs
should arise. Dan will be available to answer any questions you
may have concerning our proposal and can be contacted in our Tulsa
office at (918) 582-6404.
Dan will assume technical leadership in planning our audit
approach and monitoring its progress. Because of his extensive
government experience, he will review all major technical issues
and have responsibility for resolving technical accounting and
financial reporting problems. Dan will review all engagement
reports and participate in all meetings involving the City' s
management.
It is the policy of our Firm to assign a second partner to
each engagement to become familiar with the engagement, consult
with the principal partner on important engagement issues as the
need arises, and serve as backup in the absence of the principal
partner. Darryl Spurlock will fill this role and serve as the
quality review partner. In this capacity, he will be responsible
for reviewing all financial statements and compliance reports,
consulting with Dan on technical issues as required, attending
meetings with City officials and insuring that our audit scope and
services are of the highest quality.
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The role of engagement manager for the overall engagement
' will be filled by David Sparkman. In this capacity, he will work
with Dan in developing the audit approach. He will also direct the
work of the engagement staff, research technical issues, review all
audit work and reports, and coordinate our daily activities with
' the City.
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Nicole Crawford will work with Dan and David to develop
the computer audit techniques required in the audit. Nicole is
responsible for managing our Information Technology Audit Services
in Tulsa. She also was directly involved in implementing our
computer audit procedures at the Cherokee Nation and the City of
Tulsa. Leanne Lawrence, a computer audit senior, will assist
11 Nicole on this engagement.
1 Also working with Dan and David will be senior accountant,
Danette Tegtmeier, who will function as senior accountant. Her
role will be to monitor the audit plan, supervise the staff account-
!' ant, and report progress to the audit manager. Her experience with
government clients such as the City of Tulsa makes her a valuable
resource which will insure that we perform an efficient and effec-
tive audit.
Jerry Parker, management consulting partner, will serve in
an advisory capacity. He will also coordinate our Firm' s efforts
in connection with any consulting service the City might require.
Jerry has over 17 years of consulting experience serving a wide
' variety of governmental agencies and municipalities, including the
Cities of Tulsa and Oklahoma City.
Continuing Professional Education
All members of the professional staff of Coopers & Lybrand
are required to obtain a minimum of 40 hours of approved continuing
' professional education credits each year. All members of the
engagement team have exceeded their minimum over the last two
' years. Their training has included a variety of accounting,
auditing and computer courses.
All of our staff assigned to the City' s
g y s audit will have
attended our local seminar on governmental accounting and financial
reporting. This course also includes an update on current develop-
ments in the governmental industry and a section on the single
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audit, and will help them to better understand and discharge their
areas of responsibility. We believe that such a course is also
beneficial to the City because our staff members are better able to
accomplish their assignments without taking an extraordinary amount
of your time to train them.
In addition, our partners, managers and senior staff
actively participate in the local and national seminars sponsored
by the Government Finance Officers Association, Oklahoma Government
' Finance Officers Association, the Oklahoma Clerks and Treasurers
Association, and the Oklahoma Society of Certified Public Account-
"' ants. They also serve in leadership positions in these organiza-
tions and serve as speakers at their local conferences.
Staff Availability
Our office has two partners and over 20 staff with current
experience on governmental clients. This will provide us with the
11 number of staff and needed flexibility to ensure that we meet your
deadlines. Our current clients can confirm our record for meeting
deadlines.
We encourage our clients to consult with us during the
year and use us as a resource to solve problems. One of our
greatest assets is the responsiveness of partners and managers to
' client needs.
1 Internal Quality Control
' Annually the Tulsa office participates in a local quality
review to ensure that engagements are conducted in accordance with
Firm and professional standards and that marginal or substandard
work is identified and elevated to the appropriate level.
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Results of the local review which is conducted by inde-
pendent local partners and managers are presented to the office
managing partner. An action plan is then developed to correct
identified deficiencies (if any) noted during the review. The
action plan is submitted to the regional office and progress
reports are then prepared and monitored on a quarterly basis.
In addition to the local quarterly review, a national
review is performed annually whereby reviewers from other offices
participate in the process. Offices are selected for review on a
periodic basis. Results of all recent Tulsa reviews, both local
Iand national, have resulted in outstanding results.
Working Paper Review
Coopers & Lybrand policy states that generally two types
of review of working papers and procedures are necessary for audit
engagements. The first type is a review of completed working
papers by the fieldwork in-charge. This evaluates the results of
the examination and ascertains that all appropriate procedures have
been applied (similarly, the working papers prepared by the in-
charge are reviewed by the manager) .
The second type is an independent review of audit
procedures by a competent person or persons who did not actually
participate in the fieldwork. This adds benefit of an independent
assessment of the procedures applied and the results thereof, which
' form the basis of our opinion. Ordinarily, this independent review
is a joint responsibility of the manager and engagement partner,
' since they exercise overall supervision but do not usually perform
the detailed auditing procedures.
The engagement partner, Dan Schultz, has the ultimate
responsibility for satisfying himself that the engagement has been
' planned and conducted in accordance with Firm and professional
standards and that issued reports comply with these standards.
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' A concurring partner has been assigned to your engagement
to enhance quality assurance. The concurring partner is appointed
based on his practical experience, general technical proficiency,
and specialized industry knowledge. He provides ongoing consulta-
tion to the engagement partner on technical matters that require a
high degree of judgment. In his review, the concurring partner is
responsible for indicating his satisfaction that matters of impor-
tance have been appropriately dealt with and that the financial
statements and our report on them comply with professional and Firm
' standards.
Disciplinary Action
No disciplinary actions have been imposed by the AICPA,
any state boards, any state societies or the Securities and
Exchange Commission on the Tulsa office during the past three
years.
Peer Review
1 Coopers & Lybrand has enthusiastically participated in the
AICPA' s voluntary peer review program since its inception. Without
1 exception, we have received highly favorable reviews. A copy of
our most recent report is on the following page.
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Sra A MEMBER OF ARTHUR YOUNG$NTERNAT1ONAL
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Arthur Young 277 Park Avenue
New York,New York 10172
Telephone (212)407.1500
Telex TRT•177704
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' January 28, 1986
' To the Partners
Coopers & Lybrand
We have reviewed the system of quality control for the accounting
and auditing practice of Coopers & Lybrand in effect for the year
ended June 30, 1985. Our review was conducted in conformity with
standards for peer reviews promulgated by the peer review
committee of the SEC practice section of the AICPA Division for
CPA Firms (the section) . We tested compliance with the firm's
quality control policies and procedures at the firm's National
Office and at selected practice offices in the United States and
with the membership requirements of the section to the extent we
considered appropriate. These tests included the application of
the firm's policies and procedures on selected accounting and
auditing engagements. We tested the supervision and control of
portions of engagements performed outside the United States.
In performing our review, we have given consideration to the
general characteristics of a system of quality control as
described in quality control standards issued by the AICPA. Sucb
a system should be appropriately comprehensive and suitably
designed in relation to the firm's organizational structure, its
policies, and the nature of its practice. Variance in individual
performance can affect the degree of compliance with a firm's
prescribed quality control policies and procedures. Therefore,
adherence to all policies and procedures in every case may not be
possible, but compliance does require adherence to prescribed
policies and procedures in a substantial majority of situations.
11 In our opinion, the system of quality control for the accounting
and auditing practice of Coopers & Lybrand in effect for the year
ended June 30, 1985, met the objectives of quality control
standards established by the AICPA and was being complied with
during the year then ended to provide the firm with reasonable
assurance of conforming with professional standards. Also, in
our opinion , the firm was in conformity with the membership
requirements of the section in all material respects.
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DANIEL E. SCHULTZ, JR. , CPA
Engagement Partner
Position
General Practice Partner, Tulsa
Professional Experience
• Has devoted a significant portion of the last 18 years to
managing engagements in the government industry.
' Member of his firm' s national government industry
technical group including their single audit steering
committee.
• Member of the Special Review Committee for the GFOA
Certificate of Achievement Program.
Frequent speaker at state and national governmental
conferences.
' Has developed and instructed several governmental
accounting and financial reporting training seminars.
1 Engagement partner on the 1983 to 1988 audit engagements
of the Cities of Tulsa and McAlester, Oklahoma.
' Engagement partner on the 1983 to 1988 audits of the
Cherokee Nation.
Engagement partner on Cheyenne and Arapaho Tribes of
Oklahoma engagement for 1985, 1986 and 1987.
Acting as technical services partner for the 1983, 1984,
1985, 1986 and 1987 audits of the City of Oklahoma City.
• Managed consulting engagements in such areas as produc-
tivity improvement, revenue collection and systems
evaluation.
Served as engagement partner for the installation of a
computerized financial accounting and management systems.
• From 1978 through 1980, was responsible for a significant
portion of the audit of the State of Maryland for fiscal
years 1979 and 1980 (first independent audit of the
State' s financial records) . In addition, he was respon-
sible for developing a computerized system to convert the
State' s budgetary financial records to a GAAP basis.
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' Professional Experience, Continued
• Significant government clients served:
. . City of Tulsa, Oklahoma
. . City of McAlester, Oklahoma
. . City of Oklahoma City, Oklahoma
. . City of Louisville, Kentucky
. . City of Broken Arrow, Oklahoma
. . City of Baltimore, Maryland
. . Cherokee Nation, Oklahoma
. . Cheyenne and Arapaho Tribes of Oklahoma
. . Creek Nation
. . Metropolitan Tulsa Transit Authority
. . Tulsa Public Schools
. . Tulsa International Airport Authority
. . Tulsa Urban Renewal Authority
. . Tulsa Parking Authority
. . Tulsa Public Facilities Authority
. . Tri-County Employment and Training Agency
. . Tulsa Community Action Agency
. . Howard County, Maryland
Harford County, Maryland
. . State of Maryland
. . State of Oklahoma
. . Union Public Schools
. . Jenks Public Schools
. . Tulsa/Rogers County Port of Catoosa
Education
Loyola College, B.A. in Accounting
Professional and Community Affiliations
• American Institute of Certified Public Accountants
Government Finance Officers Association
Member of Executive Committee, Government Finance
Officers Association of Oklahoma
• Oklahoma Society of Certified Public Accountants
1 Member of Board of Directors for Tulsa Boys' Home
Member of the Board for Tulsa Area United Way
• Chairman of Board of Operation Aware
Member of Oklahoma Society of Certified Public
Accountants, Governmental Accounting Committee
• CPA licensed in Oklahoma, Arkansas and Maryland
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DARRYL C. SPDRLOCR, CPA
Quality Assurance Partner
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Position
General Practice Partner, Tulsa
Professional Experience
Darryl has over 20 years of experience on a wide variety of
' clients which include:
City of Tulsa
Creek Nation Hospital
Tulsa Airport Authority
Tulsa Public Facilities Authority
Tulsa Metropolitan Water Authority
▪ Tulsa Authority for Recovery of Energy
Oral Roberts University
▪ Reading & Bates Corporation
Education
Indiana University, B.S. in Accounting
tProfessional and Community Activities
Institute of Internal Auditors
Member of Board, Tulsa Council on Alcoholism
▪ CPA licensed to practice in Oklahoma, Arkansas and
Indiana
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JERRY L. PARKER
MCS Partner
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Position
( Management Consulting Partner, Tulsa
Professional Experience
Joined firm in 1983, became Partner in 1987 . Has held
several senior management level positions in industry
' (including Director of MIS) prior to joining Coopers &
Lybrand and has over 20 years of experience in management
consulting.
1 Significant clients served:
. . City of Tulsa
. . City of Oklahoma City
. . City of Fayetteville
. . Cherokee Nation of Oklahoma
11 . . City of Muskogee
. . City of Ponca City
. . Tulsa Public Schools
. . Oklahoma City Airport Authority
11 . . Tulsa County
. . Reading & Bates Corporation
▪ Transok
I . . Telex
▪ Jones Truck Lines
Education
University of Arkansas, B.A. Mathematics, 1965
M.S. Mathematics, 1966
Professional and Community Activities
▪ Director of Consulting for State of Oklahoma
Member Tulsa Office Financial Services Group
▪ Member Tulsa Office Energy Group
' Data Processing Management Association
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National Association of Accountants
• Institute of Management Sciences
• Cabinet Member, Tulsa Area United Way
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DAVID W. SPARKMAN, CPA
Engagement Manager
Position
General Practice Manager, Tulsa
Professional Experience
Joined the Firm in 1979 ; promoted to manager in 1983 .
rSignificant clients served:
I . . City of Tulsa (1982-1988)
Tulsa Metropolitan Water Authority (1982-1988)
. . Tulsa City/County Library (1982)
. . Regional Metropolitan Utility Authority (1984-1986)
1 . . Tulsa Parking Authority (1984-1986)
. . Tulsa Public Facilities Authority (1984-1986)
. . Tulsa City/County Health Department (1984)
. . Crane Carrier Corporation
CCI Corporation
. . Utica Bankshares
11 . . UBT Bancorp, Inc.
. . Oral Roberts University
. . Fenix & Scisson, Inc.
. . First Broken Arrow Corporation
( Education
University of Arkansas, BSBA Degree in Accounting
Professional and Community Activities
Oklahoma Society of Certified Public Accountants -
Governmental Accounting Committee
• Oklahoma and Arkansas Societies of Certified Public
1 Accountants
American Institute of Certified Public Accountants
▪ Instructor at Firm sponsored training courses
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NICOLE CRAWFORD
Computer Audit Manager
Position
• Information Technology Assistance Group Manager
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Professional Experience
▪ Joined the Firm in 1985.
' Thirteen years ' prior work experience as programmer,
systems analyst, project manager, government regulation
analyst and EDP auditor.
• Significant clients served:
. . City of Tulsa (1986 to 1988)
. . City of Oklahoma City (1986 and 1987)
. . AT&T Communications
. . AT&T Technologies
. . Telex
. . Reading & Bates
11 . . Parker Drilling
. . City of Faith
Bovaird Supply
Education
University of Texas, at Austin, BA Degree in Business
Management & Government
Professional and Community Activities
Association for Systems Management
▪ Leadership Tulsa Alumni
▪ Chairman, Ways & Means, Society for the Welfare of Abused
Kids
Ballet Guild
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1 DANETTE F. TEGTMEIER
Senior Accountant
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▪ General Practice Senior, Tulsa
Professional Experience
• Two years in public accounting
Five years as a loan administration officer for a bank
One and one-half years as a deputy court clerk for the
Tulsa County Court Clerk
• Significant clients served:
1 . . City of Tulsa (1987 and 1988)
. . Tulsa Metropolitan Water Authority
1 . . River Parks Authority
. . Regional Metropolitan Utility Authority
. . T.D. Williamson, Inc.
Bovaird Supply Company
. . Telex Corporation
Education
University of Tulsa, BSBA in Accounting
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LEANNE LAWRENCE
Computer Audit Senior
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IPosition
Information Technology Audit Services Group, Senior
Professional Experience
Four years of EDP audit experience in private sector
with extensive experience with IBM Model 36 and 4381
Systems
' Significant clients served:
. . City of Tulsa (1988)
. . Creek Nation (1988)
' . . Cherokee Nation (1988)
. . Parker Drilling Company
. . City of Faith Hospital
' Education
Oklahoma State University, BS in Management Informa-
tion Systems
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DAVID A. CARROWAY, CPA
Staff Accountant
Position
▪ General Practice Staff, Tulsa
Professional Experience
• Six months in public accounting
Significant clients served:
' . . Tulsa Public Facilities Authority
. . Tulsa Parking Authority
. . Tulsa Authority for Recovery of Energy
. . Tulsa Performing Arts Center Trust
Education
' ▪ Oklahoma State University, BSBA in Accounting
Professional and Community Activities
Attended local office PRE-AUDIT computer training
• Student Government Association - Oklahoma State
University
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Proposed Audit Methodology
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' PROPOSED AUDIT METHODOLOGY
Overall Philosophy
An audit can have value beyond that of presenting your
financial statements in accordance with generally accepted
accounting principles -- but first, that requirement must be met.
11 Our audit of the City must meet your own high standards and those
of the rulemakers.
Coopers & Lybrand' s audit approach guarantees getting the
basics right. It is a technologically advanced approach we
pioneered some years ago -- other firms have since followed our
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lead -- that focuses on key accounting systems to bring you an
audit of the highest quality and maximum economy, delivered on
time.
It is also an approach that makes full use of your
11 computers -- and of our advanced computer auditing capabilities.
We recognize that the City' s automated accounting systems require
' EDP skills; nothing less gives you assurance that your auditors can
effectively review computer-processed transactions.
' The key characteristics -- "givens" on all our engagements
-- are:
. Government experience -- We come to the engagement with a
' solid understanding of the City' s financial and accounting
environment. We have it because we choose people with the
right experience for the engagement -- people like Dan
Schultz and David Sparkman, your engagement partner and
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manager -- and because our Firmwide government specializa-
tion program backs up the engagement team with training
and continual updates on emerging national issues and
' trends.
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. Timeliness -- We take deadlines, both yours and ours,
seriously. Our reports are delivered on schedule and this
1 can be verified by speaking with those clients who we have
included in the section entitled "Past Performance on
Similar Engagements" as references.
. Cost-effectiveness -- By focusing on controls, we reduce
time spent verifying data. This cuts your cost and
ensures compliance with the Single Audit Act. Further, by
' focusing on areas of greatest audit risk, we spend more of
our time on your most significant issues.
. Full service approach -- Our auditors have an understand-
ing of the issues facing management which will allow them
to identify opportunities for enhancing operational and
financial effectiveness. The resulting recommendations,
' which will be based on our practical experience, will be
promptly communicated to you.
Partner-manager involvement -- Because deciding on audit
' strategies requires seasoned judgment, our partners and
managers are continuously involved in the engagement. You
will be dealing with our senior people who will ensure
' that all of your concerns are appropriately met.
Specifics of the Approach
The audit of the City of Fayetteville will encompass the
fiscal year ending December 31, 1988 and will be conducted in
' accordance with generally accepted auditing standards and the
following guidelines:
' 1) Standards for Audit of Governmental Organizations,
Programs, Activities and Functions (1987 revision) .
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2) Audits of State and Local Governments--OMB Circular A-128.
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3) Uniform Requirements for Assistance to State and Local
Governments--OMB Circular A-102.
4) AICPA Industry Audit and Accounting Guide--Audit of State
' and Local Governments.
5) OMB Compliance Supplemental for Single Audits for State
and Local Governments.
6) Various applicable laws of the State of Arkansas.
The Coopers & Lybrand audit approach is flexible so that
it can be tailored to each engagement. However, every audit is
conducted in the following phases:
. Planning - a process that also involves client personnel.
. Obtaining an understanding of the current accounting
procedures and management information systems.
Recording our understanding.
. Confirming our understanding and evaluating the system of
internal controls. This phase of the audit serves the
dual purposes of meeting single audit requirements and
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reducing year-end substantive procedures.
' . Performing substantive tests of account balances and other
related auditing procedures.
▪ Preparing Reports to Management covering matters identi-
fied during all phases of the audit.
. Reviewing and discussing financial statements.
. Meeting with management to discuss the results of the
' audit.
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' The chart that follows is a general depiction of the C&L
Audit Approach. It highlights the critical decisions that are made
' during the course of the engagement.
1 Appendix A has a more detailed description of our audit
approach on the City.
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Coopers Our Audit Approach
&L brand
Y
Ascertain nature of business and
related risk areas,nature and
significance of account balances.
Obtain and document preliminary
understanding of principal features
' of accounting system
' TO RELY ON SOME Select and document the appropri• NOT TO RELY
• OR ALL CONTROLS ate audit strategy.For each account ON CONTROLS
balance or group of account
' balances determine whether...
' Complete detailed docu• Review adequacy for
mentation and evaluation substantive test purposes
Imaa, of internal controls on of preliminary systems
which reliance is planned documentation
Is reliance on NO
' systems still
appropriate?
YES �.
a' Compliance tests Revise audit strategy Substantive tests
Is reliance on
system still NO
' appropriate?
YES
Limited substantive tests 01 Audit report
OIManagement letter
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Our Understanding of the City's Critical Objectives
1 As your auditors, it will be our responsibility to
recognize and respond effectively to the City' s objectives and
requirements, carefully considering each one in planning and
1 executing the audit. The following are some of these objectives
and requirements, as we perceive them.
Examination and Compliance Review of the
' City' s Comprehensive Annual Financial Report
1 The City wants to ensure that its financial reporting
practices are in accordance with the requirements of the Govern-
mental Accounting Standards Board and the standards of the Govern-
ment1 Finance Officers Association Certificate of Achievement for
Excellence in Financial Reporting Program. Accordingly, our work
1 plan includes the review of all financial statements and other
materials included in the City' s Comprehensive Annual Financial
Report to determine the extent of their conformance.
Quality Management Letters
The City wants a report to management containing comments
1 and recommendations to improve its accounting and operational con-
trols. Our objectives are to offer substantive observations and
1 recommendations relating to accounting and operating controls and
to identify opportunities for increased efficiency and cost sav-
ings. Our audit approach ensures that our findings are brought to
management' s attention quickly. To do this, Dan Schultz, your
' engagement partner, and David Sparkman, your engagement manager,
will bring our findings to you throughout the engagement to facili-
tate prompt resolution. Our intent is to help you address impor-
tant issues, not serve as a roadblock to progress.
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' Single Audit of Federal/State Financial Assistance Programs
The City wants assurance that its financial and compliance
systems adequately comply with the applicable laws and regulations
11 governing expenditures of federal and state grant funds. Our
examination and report must also be acceptable to the City' s
cognizant audit agency. Our Firm pioneered the single audit
' approach and your engagement team has extensive experience in
implementing this program for federal and state grants.
Meeting Your Critical Deadlines
Critical dates have been established by the City staff for
' the work defined in the Request for Proposals. We understand the
importance of established deadlines as a demonstration of a strong
and efficient financial management system. Meeting your deadlines,
11 which we believe to be realistic and achievable, will require
effective planning and management in accordance with a well-
developed, detailed work plan. We are committed to working with
the City staff to see that all such deadlines are achieved or
1 surpassed.
11 Resolving Accounting Issues
Throughout the year, the City must deal with a number of
' major accounting and operating issues. Your people need access to
a strong and consistent resource that can be relied on for prompt,
tinformed and consistent answers to technical questions. At
Coopers & Lybrand, we've been highly successful in maintaining
' strong and long-lasting relationships with our governmental clients
because of the importance we place on year-round service -- ensur-
ing the availability of experienced people to consult with and meet
our clients' needs.
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' Meeting Your Special Service Needs
' We understand that these are challenging times for man-
agers of local governments. Our auditors will approach the engage-
ment from a broad perspective which will allow them to identify
11 opportunities for enhancing revenue, improving operational effec-
tiveness, reducing costs or addressing other financial management
1 issues. This approach to your engagement will enhance the value of
your audit without increasing its cost.
Management can also turn directly to our consultants who
' understand the governmental environment. Coopers & Lybrand offers
a wide array of consulting services that can be applied to your
specific needs.
Communication and Coordination
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Our engagement focus exemplifies this philosophy of
' frequent, planned communication. Our engagement team consists of
people who are experienced in governmental auditing and are active
' in the government financial community. Coopers & Lybrand has a
proven track record with the City as evidenced by our involvement
as consultants to the City on a recent consulting project. We
' anticipate that our professional relationship with City officials
will be responsive to your needs in the following ways:
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. Our engagement calls for us to establish contact with City
management and the accounting staff as soon as we are
selected as your auditors and to maintain a close relation-
' ship with you throughout the audit. We will manage the
daily progress of the engagement pursuant to the detailed
' audit plan.
. We will meet with representatives from the Accounting
Department to review the detailed audit plan before its
implementation, periodically review progress of the
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tengagement, discuss issues immediately as they arise,
review all draft reports before their issuance, and meet
with City representatives whenever else it is believed
appropriate.
The key members of our engagement team will be available
' to consult with City officials as the need arises
concerning governmental accounting and auditing issues.
In addition, we' ll be coming to you with information on
' current national developments and keep City officials
informed of their possible impact on the City.
. We would ask the City to prepare certain audit schedules
' and provide copies of accounting records like trial
balances, accounts payable listings, etc. , and documents
like grant contracts. These items will be identified
' during our planning process and discussed with you by
December 1. We do not use pre-formated working papers so
' that many of the records which you normally use in your
accounting process can be used for the audit. In any
case, we will make sure that our requests are not
burdensome, prepared in advance, and mutually agreeable.
We will need to have access to the City' s data processing
staff to answer questions and provide information on
systems and procedures. We would also ask that approxi-
mately 50 hours of programmer time be made available to
' assist our staff. Our staff generally uses their own
personal computer to execute our audit software but may
' request a limited amount of processing time from the City.
Timing and Report Delivery
' We will begin our work as early in November 1988 as we are
permitted and it is convenient with an entrance conference with the
Assistant City Manager and Accounting Supervisor. In subsequent
' years, we will begin in early October. During November, we will
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' prepare our engagement plan and audit schedule request so that we
can discuss them with the Accounting Supervisor and Assistant City
Manager by December 1.
' We understand that the general ledger will be closed and
appropriate audit schedules completed around the second week in
February. We will begin our final field work in early February and
' seek to complete it by April 1 with a closing conference with the
Assistant City Manager.
Coopers & Lybrand will prepare the CAFR and GPFS with
' limited assistance from the City and be responsible for typing and
printing. Final draft copies of the GPFS and Management Letter and
' Compliance Reports will be forwarded to the Assistant City Manager
and Accounting Supervisor for their review by April 15, allowing
them one week for comments. Thereafter, we will process 25 final
' copies of the GPFS and 50 final copies of the Management Letter and
Compliance Reports by May 1. Then, we will process 100 final
copies of the CAFR by June 1.
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Similar Engagements
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PAST PERFORMANCE ON SIMILAR ENGAGEMENTS
Tulsa Office
The Tulsa office of Coopers & Lybrand has the largest
governmental public accounting practice in the State of Oklahoma
and has made a commitment to serve its clients in the best and most
' cost-effective manner possible. Its government practice is
directed by Dan Schultz, a member of the Firm' s national government
industry technical group. Dan is recognized in Oklahoma and nation-
ally for his expertise in the government field. He is a frequent
' speaker and author, and is active in many National and State govern-
mental organizations, not just as a participant, but in leadership
positions. Dan is assisted by a local group which consists of two
' other partners, three managers and approximately 20 other staff who
serve public sector and nonprofit clients.
Over the last five years, Dan has assisted the Cherokee
' Nation, and the Cities of Tulsa and Oklahoma City in attaining the
GFOA Certificate of Achievement for Excellence in Financial Report-
ing. Dan currently serves on the program' s Special Review Com-
mittee.
' Sample List of Tulsa Government Clients
' Coopers & Lybrand has an extensive National list of state
and local government clients. However, our Tulsa office clients
reflect the experience that is most relevant to the City.
' The following listing summarizes some of our recent local
clients for which we have performed accounting, auditing, and con-
sulting services:
. City of Tulsa*
Cherokee Nation of Oklahoma*
. Cheyenne and Arapaho Tribes of Oklahoma
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' . Creek Nation*
. City of McAlester
' . City of Oklahoma City
. City of Broken Arrow
. Jenks Public Schools
. Tulsa/Rogers County Port of Catoosa
. Tulsa Public School System
. Tulsa County
. Metropolitan Tulsa Transit Authority
' . Tulsa International Airport Authority
. Tulsa Urban Renewal Authority
t Tulsa Parking Authority
• Tulsa Public Facilities Authority
. Tulsa Metropolitan Utility Authority
. Regional Metropolitan Water Authority
. Union Public School System
*Current holders of Certificate of Achievement
Single Audit
The 1982 to 1988 audits of the Cities of Tulsa and
McAlester were "Single Audits" performed in accordance with applic-
able OMB guidelines (OMB Circular A-102 in 1982 to 1985 and OMB Cir-
cular A-128 from 1986 to present) . We have also performed "Single
' Audits" for the Cherokee Nation of Oklahoma from 1982 to 1988, the
Cheyenne and Arapaho Tribes of Oklahoma from 1985 to 1988, and
' agencies of other local governments like Tulsa County, Union Public
Schools, Creek County and the City of Broken Arrow. These engage-
ments were successfully completed working closely with several
different cognizant audit agencies. The relationship which we have
' developed with these officials and their recognition of the out-
standing quality of our work during their monitoring reviews of our
audit files will continue to enable us to perform audits of the
grant programs in an efficient and effective manner.
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References
I Our current clients are the best source of confirming our
philosophy of offering personalized service by senior members of
' our Firm. We are pleased to provide the following references and
we encourage you to call them to discuss the quality of our ser-
vice.
Mr. Ronald Payne Mr. Tommy Thompson Mr. Myrle Horner
' Controller City of Tulsa Cherokee Nation of Controller
Oklahoma Tulsa Port of Catoosa
200 Civic Center P.O. Box 948 5350 Cimarron Road
Tulsa, OK Tahlequah, OK 74474 Catoosa, OK 74015
' (918) 592-7522 (918) 456-0671 (918) 266-2291
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IAPPENDIX A
' OUR ENGAGEMENT PLAN
Work Plan - Financial Audit
Our work plan for the audit of the City' s financial state-
ments will be more fully developed after we have completed our
analysis of the City' s accounting operations. At that time, our
detailed audit plan will be completed and presented to you for
review and comment. Throughout the audit, we will constantly moni-
tor the engagement' s progress in relation to this detailed plan and
meet with the Assistant City Manager and the Accounting Supervisor
' to discuss progress. These regular meetings will also serve to
highlight accounting and financial reporting issues as they become
' known and provide for their timely resolution. Our emphasis on
early identification, communication and resolution of problems
' requires the immediate involvement of our most experienced per-
sonnel, partners and managers. Their thorough knowledge of govern-
mental accounting and auditing standards is essential to the effec-
tive execution of the engagement. Our commitment to the City is
demonstrated by the high level of partner and manager time we will
devote to this engagement.
The significant work steps are presented below in their
chronological sequence.
' Review and Analyze the 1987 Annual Financial
Reports and Predecessor Auditors ' Workpapers
' We will begin developing the detailed audit plan after
reviewing the City' s last Annual Financial Reports ( "CAFR") and
tpredecessor' s workpapers. This analysis will highlight potential
financial reporting and auditing issues. Our review will have the
1 following objectives:
' . Assess the financial transactions and activities included
in each individual fund in the City' s CAFR under NCGA
Statement No. 3.
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1 . Review the accounting principles and methods utilized in
preparing the Annual Financial Reports.
. Identify the grouping methodology between the Annual Finan-
1 cial Reports and the general ledger.
. Identify the source of the financial information in the
' various general ledger accounts and the financial systems,
manual or automated, which summarize financial trans-
actions into the general ledger.
1 Gather Information on City' s Finances
1 We will begin our planning and information gathering phase
immediately upon our selection as the City' s auditors and antici-
pate that the following activities will be completed almost
simultaneously:
1 . Gather necessary information about the City, its component
units and their operations.
• Meet with members of the Accounting Department.
. Meet with other members of management to identify special
concerns that should be addressed during the audit.
During this phase of our examination, we will assess the
1 possibility that factors external and internal to the organization
create a risk of error in the preparation of the City' s financial
1 statements. This assessment will enable us to better focus our
audit efforts.
1 Obtain and Analyze Documentation of Systems
' The development of an effective detailed audit approach
for the City depends on gaining a complete understanding of how
' your financial systems operate, what level of information is
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produced and when such information is available. Our objectives in
reviewing and documentation of accounting systems are to:
. Develop familiarity with the systems which we will be
auditing.
. Identify information which is produced by the financial
and accounting systems and information not produced that
will be required to complete the audit.
• Developa summarylevelunderstanding of the accounting
and operating controls currently in effect.
. Identify possible accounting, financial reporting and
auditing scope issues.
' . Develop recommendations for changes to the closing process
and financial summarization procedures.
Develop a Detailed Audit Plan
After completing our initial information gathering phase
and the analysis of the City' s systems, we will prepare a detailed
audit plan. We would expect the plan to include:
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. A prioritized detailed listing of each task necessary to
' review the City' s Annual Financial Reports including
completing deadlines and assigned responsibilities.
A timetable for the completion of schedules, analyses and
information necessary to complete the audit, with assigned
responsibility for completion.
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1 . A schedule of audit tasks to be completed jointly by our
staff and the City' s Accounting Department. These tasks
' will be prioritized based on significance, and due dates
will be assigned based on the financial reports and audit
deadlines.
We believe that the detailed audit plan will provide the
mechanism to control the performance of the audit, monitor its
progress and coordinate available resources. Upon its completion,
' meetings will be scheduled periodically to review progress in
relation to the project plan. We will also keep the Assistant City
Manager and the Accounting Supervisor apprised of significant audit-
ing and reporting issues, their potential impact, and possible
solutions.
Engagement Team Orientation
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An engagement orientation meeting for all C&L engagement
1 staff and City accounting staff will be held before we begin the
actual field work. At this meeting, the engagement team will:
1 Review the City' s financial and accounting systems.
. Define issue identification and progress reporting
procedures.
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. Describe special concerns of management that should be
addressed during the audit.
. Review the scope, nature, timing and interrelationship of
all audit areas.
' . Provide each audit team member detailed instructions and
information necessary to complete his/her assigned area of
responsibility.
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' Audit team members will then be prepared to begin work in
their assigned areas according to the engagement schedule.
Confirm Our Understanding of Internal Controls
Based on the knowledge gained in previous steps, we will
confirm our understanding of significant internal control systems.
We will :
' . Identify and select key accounting controls for testing to
evaluate the effectiveness of the controls.
• Select representative accounting transactions (statisti-
cally and judgmentally) and follow the processing of
' transactions from the point of origin in the system,
through each accounting control, to its ultimate
disposition.
' . Use computer audit testing procedures to provide the most
effective and efficient way to audit complex, critical
' systems.
Perform Substantive Tests of Account Balances
Considering the results of the tests of controls and other
data gathered in other phases of the audit, we will :
' . Test a sample of transactions making up significant
account balances.
Confirm significant account balances with third parties.
Perform such analytical procedures as ratio and trend
analysis.
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Our philosophy dictates that the audit approach is based
on an understanding and analysis of the City' s systems and related
' internal accounting controls, and that our procedures are concen-
trated in areas where the risk of possible misstatement, errors and
t problems are greatest. Responsibilities will be assigned either on
a functional basis (i.e. , cash, investments, purchases/accounts
payable, billings/collections, long-term debt) , for all funds, or
on a fund basis. Our efforts will be concentrated on accounts and
amounts which are significant to each individual fund and account
group and the component unit financial statements.
Communicate Our Findings
Our audit approach is structured to enable us to identify
' issues as early as possible in our work schedule. We can then
present our findings to the Accounting Supervisor and/or Assistant
' City Manager on a regularly scheduled basis in order to allow time
to evaluate the ramifications on a timely basis. The results of
' these discussions will lead to the drafting of the actual Manage-
ment Letter and Compliance Report.
Review and Discuss the Financial Statements
' We will review the financial statements and accompanying
note disclosures and prepare our report thereon. In so doing, we
will address the statements ' fair presentation of the financial
position and results of operations of the City.
Work Plan - Single Audit
The single audit procedures will be integrated with other
financial audit procedures to achieve the most efficient approach
' to this work. We have separated our discussion of the single audit
work plan to highlight our approach to implementing and executing a
' single audit of the City' s federal and state grants.
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The work to be performed in a single audit includes deter-
mining the type and amount of grant awards, identifying all sub-
recipient organizations, resolving methods of application of the
various technical requirements of OMB Circular A-128, and meeting
' aggressive reporting deadlines. The single audit engagement is a
significant undertaking, requiring comprehensive engagement plan-
ning as well as experience in managing single audit engagements and
dealing with your cognizant agency.
' Summary of Single Audit Procedures
' The single audit approach provides for financial audits of
municipalities, including compliance with certain federal and state
' laws and regulations, on an organization-wide basis, under the
supervision of federal and state cognizant agencies.
' Our audit will include an examination of the systems of
internal control, systems established to ensure compliance with
' laws and regulations affecting the expenditure of federal funds,
and financial transactions, accounts, financial statements and
reports of recipient organizations.
These examinations are to determine whether:
. There is effective control over and proper accounting for
' revenues, expenditures, assets and liabilities.
' . The financial statements are presented fairly in accor-
dance with generally accepted accounting principles.
▪ The federal and state financial reports including finan-
cial status reports, cash reports and claims for advances
and reimbursement contain accurate and reliable financial
data and are presented in accordance with the terms of
' applicable agreements, and in accordance with Attachment H
to OMB Circular A-102.
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. Federal and state funds are being expended in accordance
with the terms of applicable agreements and those provi-
sions of federal and state law or regulations that could
have a material effect on the financial statements or on
the awards tested.
In order to accomplish the purposes set forth above, a
representative number or charges to federal and state awards will
be tested. The sample tested will be representative of the uni-
verse of federal and state awards received, and all cost categories
that materially affect the award. The objectives of these audit
- ' tests are to determine whether the charges:
. Are necessary and reasonable to the proper administration
' of the program.
' . Conform to any limitations or exclusions in the award.
. Were given consistent accounting treatment and applied
uniformly to federally assisted, state assisted and other
activities of the recipient.
Were net of applicable credits.
. Did not include costs properly chargeable to other feder-
ally assisted or state assisted programs.
' . Were properly recorded (that is, correct amount, date) and
supported by source documentation.
. Were approved in advance, if subject to prior approval in
accordance with OMB Circular A-87 .
. Were incurred in accordance with competitive purchasing
procedures, if covered by Attachment 0 of OMB Circular
A-102 (Purchasing Procedures) .
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. Were allocated equitably to benefiting activities,
including nonfederal activities.
OMB Circular A-128 also requires that we review grant
reports filed with federal and state agencies and determine that
the information contained therein is accurate and reliable and has
been prepared in accordance with applicable federal and state
' regulations and Attachment H to OMB Circular A-102 .
The reports we will issue in conjunction with the single
audit include:
• Report on the City' s Schedule of Federal Financial
Assistance,
. Reports on internal accounting and administrative controls
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. Reports on compliance with laws and regulations.
' Our engagement plan calls for delivering these reports to
the City at the same time as we deliver the General Purpose
1 Financial Statements on May 1. As a result, all reports can be
discussed in the context of the audit as a whole.
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IAPPENDIX B
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1 MANAGEMENT CONSULTING SERVICES
We recognize that these are challenging times for managers
of local governmental units. You must simultaneously deal with an
increasing number of complex fiscal and operating issues. Federal
revenue is decreasing and taxpayer resistance to additional local
tax is increasing. At the same time, operating costs are increas-
ing, the infrastructure requires attention, and social service
needs are growing.
As a result of working with state and local governmental
units for many years, Coopers & Lybrand has developed a wide range
of management consulting services that are available to assist you
in managing your government effectively and efficiently. We under-
stand that your needs differ from those of the commercial sector --
we find government solutions to government problems. In addition,
our broad experience and personnel resources enable us to stay
current with today' s rapidly changing technology -- so we can
respond to your requirements with proven leading-edge solutions.
A brief description of our services follows:
Strategic Planning
Managers of governmental units are under continuous pres-
sure to increase services at the same time revenues are declining
and costs are increasing. Strategic planning is, therefore, very
important. Our approach includes:
. A thorough situational analysis:
. . identifying goals and evaluating trade offs;
. . assessing the institution -- its organization, its
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. . assessing the industry -- positive and negative
factors affecting service delivery; and
. . evaluatingthe market -- assessing i g the community's
' needs.
. Identification of issues and strategy development:
. . identifying opportunities to expand services;
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. . determining needed skills and resources; and
. . identifying risks.
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. Providing specific recommendations and implementation
steps.
Financial Diagnostic
In these times, it is appropriate for management to
evaluate a governmental unit' s overall financial health. In a
financial diagnostic review, we assess:
. the City' s existing financial situation;
. the adequacy of the City' s revenue stream and the
possibility of using new sources of revenue;
. the City' s debt structure and debt management practices;
and
the strength of the City' s financial management system.
Using this analysis, we can assist in the development of
strategies to maintain the City' s long-term financial health.
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Overhead Budget Management
In both the commercial and governmental sectors, we have
found that overhead costs can be reduced 15% to 30% with little or
1 no impact on organizational effectiveness. Our approach to over-
head budget management includes the following:
' . Documentation of organizational unit activities.
. Analysis of functions and their cost/benefits.
. Analysis of reporting costs.
. Analysis of controllable expenses.
. Identification of cost control improvements.
Organizational Development
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An effective organization, be it the City as a whole or an
' individual department, operates as a single cohesive unit with
everyone working toward common goals. Goals are typically estab-
lished for all levels within an organization with each higher level
tbuilding on the goals of the lower levels.
1 Coopers & Lybrand can assist in:
' . establishing goals at all organizational levels;
' . developing means of measuring performance or progress
against the goals; and
. developing incentives to enhance performance.
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1 Economic Development Strategies
Coopers & Lybrand can assist the City in determining the
location and extent of economic development activities and in
selecting targeted industries for economic development initia-
tives. We can also assist in conceptualizing and quantifying the
incentives to be used.
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Our Tax Policy Analysis Group understands the relationship
between taxes and economic development. They can assist the City
in analyzing its tax structure to make certain that it remains
competitive and does not act as a deterrent to development.
Economic Development Projects
We can provide assistance to the City on individual eco-
nomic development projects whether the City acts as the developer
or deals with private developers. By drawing on the experience of
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our consultants in government, financial, and real estate disci-
plines, we can act as advisor on negotiation strategies, project
viability, and financial alternatives. We also recognize that
economic development goes beyond "bricks and mortar. " We can
assist in planning employment programs and incentives for small
businesses.
' Grants Management
We can assist grant managers in accumulating data for
grant applications, designing or updating a cost allocation plan,
and negotiating settlements covering costs that have been
questioned or disallowed by federal auditors.
Risk Management
' Insurance coverage of all types is less available and more
costly than ever before. We can help the City face this issue by:
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I . evaluating an existing insurance program; and
I . formulating a more aggressive posture for the City in the
brokered market.
' If self insurance or participation in a loss pool is more
advantageous for the City, we can assist your staff in:
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. evaluating prior loss experience;
▪ projecting losses in coming years;
11 developing actuarially sound funding levels;
. developing formulas for actuarially-based cost
allocations; and
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. forming an excess loss pool.
We have developed software called EXHIBITMAKER PLUS to
assist in the loss projection process.
Productivity
From performance measurement reports of more than 100
municipalities, we developed a Municipal Performance Measures
Matrix. With the matrix, we can compare the productivity of your
department with that of other cities or counties. Using this data,
we can help:
. analyze variances and set goals;
j . interpret trends in productivity;
I . revise operating procedures to improve performance;
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' . establish staffing levels; and
. train supervisors to use the data to direct and motivate
staff.
Privatization of Services
' Many municipalities are searching for ways to cut service
delivery costs because of state and federal funding reductions.
' One way to trim costs is to contract out the service. A 1984 study
financed by the U.S. Department of Housing and Urban Development
showed savings ranging from 37% to 96%.
1 Our Municipal Performance Measures Matrix can be used to
help identify services that would be operated more efficiently if
contracted out. We can also assist the City in:
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. performing feasibility studies;
. attracting and evaluating proposals;
• making cost comparisons; and
. monitoring contract performance.
' Work Planning and Control
Systematic work planning and control can greatly enhance a
maintenance function. Our consultants can develop a system for
. planning
11 scheduling
▪ controlling
. evaluating
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individual and group performance by using continually updated
productivity standards, work load volumes, and operations lists.
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Inventory Control
Coopers & Lybrand consultants have considerable experience
in designing governmental inventory control systems, using skills
initially developed in the commercial sector. We can assist in:
. developing a perpetual system that includes:
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. . summarization and pricing and
. . reorder points;
. determining type, location, and optimum levels of stock;
. establishing, receiving and issuing procedures that also
result in data input for the perpetual system; and
. designing physical control.
Treasury and Cash Management Services
' In a time of rising operating costs and declining reve-
nues, aggressive management of municipal cash flow is likely to pay
substantial dividends. Use of treasury work stations and other
automation tools can reduce personnel costs and accelerate invest-
ment opportunities. To assist you in identifying these opportuni-
ties, Coopers & Lybrand can perform a cash management diagnostic
review of your overall treasury operation. Such a review can also
look into the arrangements the City has with the banking community
to obtain maximum service at a competitive price.
Debt Management
11 The Tax Reform Act of 1986 has significantly changed the
issuance of debt by state and local governmental units. Our con-
sultants understand the changes and can assist in planning the
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City' s debt issuances in relation to volume caps and other limita-
tions, including those relating to private financing. We can
assist the City in developing debt management strategies to enhance
your debt rating. We also have experience in planning, coordinat-
ing, and participating in presentations to debt rating agencies.
Preemptive Auditing/Controlling Construction Costs
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Several years ago, Coopers & Lybrand developed the
11 preemptive auditing service to assist our clients in controlling
construction costs by altering them to potential causes of cost
overruns and construction delays. During the design and engineer-
ing phase, we specify the controls needed to keep costs in line.
In the construction phase, we monitor costs, delivery, and quality
11 to identify unfavorable variances from plans and budgets.
Information Systems
Our principal services relating to information systems are
categorized into three major areas:
Strategic Systems Services
. . systems planning,
. . systems development, and
. . systems implementation;
Operations Management Services
I . . operations review,
security review and planning,
. . contingency planning,
. . facilities evaluation and planning, and
. . operations improvement; and
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' . Technical Support Services
' . . data base management systems,
. . conversion and migration management,
I . . telecommunications,
. . office automation, and
. . technical education.
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Our information systems consultants have considerable
experience in the state and local government sector - they recog-
nize that a government' s needs and concerns are different from
those in the commercial sector.
Telecommunications
An effective telecommunications network must provide for
. cost-effective operations,
. overall management controls and
▪ staff efficiency.
Coopers & Lybrand' s telecommunications consultants can
help ensure that the network meets those goals. Specifically, we
' can assist in
j . long-range telecommunications planning
I/ . system evaluation to determine the need for improvement or
replacement
systems design
. cost containment programs
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11 . identification of resale-of-service opportunities
system implementation
Computer-Aided Dispatch
Coopers & Lybrand has assisted police and fire departments
' from Orange County, California to Boston, Massachusetts, in imple-
menting computer-aided dispatch systems. Our consultants can help
. define systems requirement, which include reporting
requirements,
▪ define hardware requirements and
. establish operating procedures.
The systems can be relatively rudimentary, or they can
provide for data transmission to the individual cruiser or fire
vehicle.
Municipal Utilities
' Members of our Municipal Utilities Group specialize in
providing consulting services to water, waste water, and electric
tpower utilities. They are based in Washington, D.C. and they can
assist management in:
' • strategic planning;
. rate studies;
' . organizational development;
' computer hardware implementation; and
financial systems software.
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A crucial Coopers & Lybrand difference in managing consult-
ing services is that we are implementation-oriented. Our consult-
!! ants know their goal is to create a benefit for the client -- not
just put together a thick report of "findings" and leave. What we
do is work very hard to help you implement our recommendations.
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I The Coopers & Lybrand Commitment
IOur first commitment is to consistently maintain the high level
of quality service our clients expect:
I • Anticipating clients' needs, being responsive when they call on us
and promptly dealing with their concerns.
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• Bringing integrity and judgement to all our efforts.
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We are committed to developing individual initiative and to
helping our people fulfill their potential:
• Encouraging them to look at each situation from a fresh
perspective.
• Providing an environment where new ideas can flourish.
I • Stimulating them to bring intelligence, creativity and current
technology to deal effectively with change.
Finally, we are committed to fostering a sense of teamwork
Iamong our people and with our communities:
• Building a cooperative effort within the Firm where each of us
I draws on our individual talents to support shared goals.
• Becoming involved with the communities where we live and
work, contributing our knowledge and experience to help
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maintain their continued health and prosperity.
IAll of which makes for good service—
and good business sense.
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