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HomeMy WebLinkAbout91-81 RESOLUTION11 RESOLUTION NO. 9/4/ A RESOLUTION AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE AN AUDIT CONTRACT WITH RUSSELL BROWN & CO. FOR THE WATER AND SEWER FUND AND SANITATION FUND FOR FISCAL YEAR 1981. 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 an audit contract with Russell Brown & Co. for the Water and Sewer Fund and Sanitation Fund for fiscal year 1981. A copy of the contract authorized for execution hereby is attached hereto marked Exhibit "A" and made a part hereof. PASSED AND APPROVED this /5t% day of ATTEST*`, \ CITY iC-LERK , 1981. �s o� ° lG�SeS C. :yQ are Flo Wt111e4c-. p ' tpeneYe. etei. N V tot ty e ods; 9 la Ems' t{ 1Wtit°ems 6't �II ria tiAlt co MICROFILMED PAYETTEVILLE, ARKANSAS P.O. DRAWER F DEPARTMENT OF FINANCE 71701 (501)521-7700 TO: Fayetteville City Board of Directors FROM: Scott C. Linebaugh, Finance Director 5ct" SUBJECT: Other Business Agenda Item - 1980-81 Water and Sewer Fund and Sanitation Fund Audit contract DATE: September 14, 1981 At their September 9, 1981 meeting, the Finance Committee voted to have the city proceed toward a contract with Russell Brown and that the City Attorney involvchimself in terms of reviewing the situation. Jim McCord reviewed the situation and came to the conclusion that an implied liability existed, but that it was nominal. (i.e. It would cost as much or more to train the new auditors than we would be liable for). The Finance Committee members, City Manager, and Finance Director were notified of Jim's finding and decided to proceed with the contract. Russell Brown and Company has been notified of the decision and has agreed to sign a contract with a "maximum not to exceed" clause of $7,650 and with the following billing rates (proposal attached): Partner Manager Supervisor Senior Staff $60 per hour $50 per hour $40 per hour $30 per hour $20-25 per hour Russell Brown has also stated that use of Jack Frost's preliminary work will not prevent them from issuing a clean opinion. Jim McCord is in the process of drawing up a contract for this purpose. Jack Frost and Company has also been notified of the decision, understood and agreed with the decision for the reason of staff time to retrain a new audit team. Jack Frost and Company also agreed to open their work papers for Russell Brown and Company use. The action needed from the Board in its September 15 meeting is to adopt a resolution authorizing the Mayor and City Clerk to enter into a contract drawn up by the City Attorney. SCL/mmb attachment OFFICES IN LITTLE ROCK FORT SMITH FAYETTEVILLE SPRINGDALE RUSSELL BROWN 8 COMPANY CERTIFIED PUBLIC ACCOUNTANTS ONE Mc1LROY PLAZA SUITE 503 P. O. BOX 1187 FAYETTEVILLE. ARKANSAS 7270! (501) 4438426 September 4, 1981 Finance Committee City of Fayetteville Fayetteville, Arkansas 72701 Gentlemen: ASSOCIATES IN MAJOR U. S. CITIES. CANADA, MEXICO AND EUROPE Thank you for your letter of September 2, 1981 inviting us to submit a proposal to provide service as independent auditors for the City of Fayetteville Water and Sewer Audit for the year July 31, 1981. We submit the following proposal which we believe is responsive to your needs. Russell Brown & Company - A Profile Founded in December, 1923, Russell Brown & Company currently ranks among the top 10% by size of CPA firms in the United States and is the oldest and largest CPA firm based in the State of Arkansas. With a total active group of 134 professional accountants, including 88 CPA's, our firm provides services for more than 8,200 clients from offices in Little Rock, Fort Smith, Fayetteville, Springdale, Jonesboro, Pine Bluff, El Dorado, and Stuttgart, Arkansas. We provide services in the areas of auditing, income tax, estate planning, and various management advisory services. - The major goal of all CPA firms is to provide every client with the best service possible. With this goal in mind, our firm is committed to maintaining a staff of highly trained and experienced personnel. Russell Brown & Company's program for firmwide training and continuing education enables every professional in our firm to have a minimum of 40 hours of training each year in addition to continuous on-the-job training. Russell Brown & Company is a member of the SEC Practice Section of the AICPA Division of CPA firms and is a member of Associated Accounting Firms International. ri • Finance Committee City of Fayetteville Page 2 September 4, 1981 Experience in Examination of Municipal Organizations Within the past five years, Russell Brown & Company has had a substantial amount of experience in the auditing of municipal organizations as follows: City of Little Rock City of Fort Smith City of Pine Bluff City of Fayetteville City of Springdale Conway Corporation City of Eudora City of DeWitt City of El Dorado Little Rock Regional Airport Numerous Federal Grant Programs Personnel - The Audit Team We will strive to provide continuity of personnel assigned to the audit team, thus reflecting our commitment to provide the highest quality of service to you. Should changes in the audit team be required due to resignations or transfers, be assured that equally qualified personnel would be assigned to the -audit. Staff members with experience in the examination of municipal organizations will be utilized in the audit in order to complete the engagement in an efficient manner. A resume of the key members of the proposed audit team follows. Engagement Partner - James G. Sandlin The engagement partner has the overall responsibility of administration of the audit, including personnel assignments, review of the fieldwork, and ascertaining that the financial statements are in compliance with generally accepted accounting principles. Mr. Sandlin has been engagement partner assigned to audits of City of Fayetteville and City of Fort Smith. In addition, he has considerable experience in various capacities in the examination of other educational institutions and municipal governments. Mr. Sandlin ,joined the firm in 1965 after graduating from the University of Arkansas. He is a CPA,a member of the American Institute of CPA's and various other professional groups. • • Finance Committee City of Fayetteville Page 3 September 4, 1981 Engagement Audit Manager - Greg Moldenhauer It is the responsibility of the audit manager to assist the engagement partner in his areas of responsibility, to plan and coordinate the audit field work, and provide a comprehensive review of the audit workpapers and financial statements. Mr. Moldenhauer has been audit manager assigned to audits of City of Little Rock and City of Fayetteville. In addition, Mr. Moldenhauer has considerable experience in various capacities in the audit of other educational institutions, municipal governments and Federal Grant programs. Mr. Moldenhauer graduated from the University of Arkansas and ,joined the firm in 1981. He is a CPA, a member of the American Institute of CPA's and numerous other professional groups. - Our billing rates are as follows: Partner Manager Supervisor Senior Staff $60 per hour 50 per hour 40 per hour 30 per hour 20 - 25 per hour We estimate the out-of-pocket expenses (postage, etc.) would not exceed $200. Availability of Firm's Personnel and Ability to Meet the Due Date The firm's personnel will be available immediately to conduct the audit on a timely basis, and on a schedule that is acceptable to you. Russell Brown & Company will have no problem meeting the due date, October 31, 1981, for submission of the audit report to the Board of Directors. We will use client personnel to prepare data for audit use to the extent possible. In this way, audit fees are minimized. We will also plan and coordinate the examination so that there is minimal disruption of normal activities. Report on Internal Control We will issue a letter to the Board of Directors and management which will contain our observations, comments and suggestions regarding internal controls, operating and accounting procedures, and other matters worthy of attention. The primary purpose of management letters is to assist Board members and management in fulfilling their responsibilities for safeguarding assets and establishing and maintaining reliable financial records. We will meet with the Board and management to discuss the audit report and management letter if desired. • Finance Committee City of Fayetteville Page 4 September 4, 1981 Professional Fees Based upon information available, review of the prior year's financial statements and our experience in the audit of municipal organizations we estimate that the audit will require approximately 625 man-hours per year. 'We estimate our fees will not exceed $7,650 for the year ended July 31, 1981. We appreciate the opportunity to present this proposal and would be pleased to talk with you at your convenience regarding the contents of this proposal. Yours truly, RUSSELL BROWN & COMPANY aures G. Sandlin • CONTRACT FOR AUDIT OF ACCOUNTS AND RECORDS Agreement entered into on September /5 , 1981, between the City of Fayetteville, Arkansas, a municipal corporation, herein referred to as city, and Russell Brown & Company, certified public accountants, of Fayetteville, Arkansas, herein referred to as auditor. For and in consideration of the mutual covenants contained herein, the parties agree as follows: SECTION ONE SCOPE OF WORK Auditor shall perform an audit of the Water and Sewer Fund and Sanitation Fund accounts and records of city for the fiscal year ending July 31, 1981, as specified in auditor's proposal dated September 4, 1981, which proposal is attached hereto, marked Exhibit "A", and made a part hereof by reference. The audit shall be made in accordance with generally accepted municipal audit standards and shall include tests of the accounting records and procedures sufficient to express an informed opinion of city's financial statements. At the conclusion of the work auditor shall furnish the City Board of Directors its letter of opinion, together with a written management report, setting forth the results of the audit and auditor's recommendations. Auditor shall attend a reasonable number of City Board meetings for the purpose of discussing the audit and report. SECTION TWO COMPLETION Auditor shall complete the services to be performed under this contract on or before October 31, 1981, subject to availability of the records and documents that are subject to audit. • • • SECTION THREE PAYMENT In consideration of the work to be performed, city shall pay auditor a sum not to exceed $7,650.00. Such sum shall be payable on completion, and on delivery to and acceptance of the audit and report by the City Board and on the filing by auditor of a verified claim therefor. SECTION FOUR INTEREST OF AUDITOR Auditor covenants that it or any of its members presently has no interest and shall not acquire any interest, direct or indirect, financial or otherwise, that would conflict in any manner or degree with performance of services hereunder. Auditor certifies that no one who has or will have any financial interest under this agreement is an officer or employee of city. SECTION FIVE NONASSIGNABILITY Both parties recognize that this contract is one for personal services and cannot be transferred, assigned, or sublet by either party without prior written consent of the other. • t SECTION SIX WORKMEN'S COMPENSATION. By executing this agreement, auditor certifies that it is aware of the provisions of Ark. Stat. Ann. § 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 agreement. - 2 • SECTION SEVEN COMPLETENESS OF AGREEMENT This document contains all the terms and conditions of this agreement, and any alterations or variations of the terms of this agreement shall be invalid unless made in writing and signed by the parties. There are no other understandings, representations, or agreements., written or oral, not incorporated herein. IN WITNESS WHEREOF, the parties have executed this agreement on the day and year first above written. CITY OF FAYETTEVILLE, ARKANSAS ,r,,,r7-r=77..._. r' ..._.. aC i :9-. �" Y -t--" T EST: s r' ^4V '" . 14 ,say" u.. ATTEST: • .B , 2506.41.e,) !;Title: -n&&t, , -t • .ed a -a0-83 By: RUSSELL BROWN & COMPANY By: LiZsc. Title: V'L/444, 3