HomeMy WebLinkAbout124-02 RESOLUTION• •
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RESOLUTION NO. 124-02
A RESOLUTION APPROVING A CONTRACT WITH BAIRD,
KURTZ & DOBSON (BKD), LLP, IN AN AMOUNT NOT TO
EXCEED FORTY-NINE THOUSAND NINE HUNDRED
DOLLARS ($49,900.00) FOR CALENDAR YEAR 2002, WITH ALL
SUBSEQUENT ANNUAL EXPENDITURES SUBJECT TO CITY
COUNCIL APPROVAL TO PROVIDE INDEPENDENT AUDIT
SERVICES TO THE CITY OF FAYE11EVILLE.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. That the City Council of Fayetteville, Arkansas hereby approves
a contract with Baird, Kurtz & Dobson (BKD), LLP, in an amount not to exceed
Forty -Nine Thousand Nine Hundred Dollars ($49,900.00) for calendar year 2002,
with all subsequent annual expenditures subject to City Council approval to
provide independent audit services to the City of Fayetteville. A copy of the
contract, marked Exhibit "A" is attached hereto, and made a part hereof.
PASSED and APPROVED this 20th day of August, 2002.
ER WOODRUFF, Vity Clerk
APPROVED:
By:
DAN COODY, Mayo
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NAME OF FILE:
CROSS REFERENCE.
Resolution No. 124-02
08/20/02
Resolution No. 124-02
08/20/02
Contract with Baird, Kurtz and Dobson
Exhibit "A" Request for Proposal for Independent Audit
Exhibit "B" Proposal to Provide Services for City of Fayetteville
Exhibit "C" Letter of Engagement
12/20/01
Letter to the Partners of BKD, LLP and the SEC Practice Section Peer
Review Committee
08/20/02
Staff Review Form
08/21/02
Memo to Marsha Farthing, Accounting & Audit, from Heather
Woodruff, City Clerk
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NOTES:
CONTRACT
Res /2* -oz
This professional services contract is executed this ,20 day of 4C/ff/si ,
2002 by and between the City of Fayetteville, Arkansas, hereinafter called the'City and
BKD, LLP.
WHEREAS, the City has issued a Request for Proposal for Independent Audit;
and
WHEREAS, BKD, LLP has submitted a proposal to provide such professional
services;
WITNESSETH: IN CONSIDERATION of mutual promises of the parties
contained herein and other good and valuable consideration, the parties agree as
follows:
1. BKD, LLP shall provide the City with the necessary professional services to
audit all funds including those which are covered under the provisions of the Single
Audit Act.
2. The term of the contract shall run from the date of execution until the 31st
day of December, 2002, and shall automatically renew each year, subject to budget
approval by the governing body of the City, for such terms as are required to perform the
contracted professional auditing services for the fiscal years ending December 31, 2002
through December 31, 2006.
3. The professional accounting services shall be provided in accordance with
the terms and conditions set forth in the Request for Proposal, with the exception of
§II.J.2., which is deleted entirely, attached hereto and marked Exhibit "A;" the Proposal
to Provide Services, attached hereto and marked Exhibit "B;" and the Engagement Letter,
attached hereto and marked Exhibit "C". Each of these Exhibits are hereby incorporated
by reference as if set forth word for word in their entirety.
4. BKD, LLP shall be compensated for services rendered under this contract
in accordance with the terms and conditions set forth in the Exhibits. No work shall be
performed beyond the present scope of this contract without express prior approval by the
governing body of the City.
5. The City or BKD, LLP shall have the right to terminate the contract upon
30 days written notice.
6. In the event of a conflict between any terns and conditions of this contract
and the Exhibits, the terms and conditions of the Exhibits shall take precedence in the
following order: this Contract, Exhibit "C", Exhibit "B" and Exhibit "A".
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7. Neither party may assign any of its rights or delegate any of its obligations
under this agreement, without the express written consent of the other.
8. It is agreed that the failure of any party to invoke any of the available
remedies under this agreement or under law in the event of one or more breaches or
defaults by any party under the agreement shall not be construed as a waiver of such
provisions and conditions and shall not prevent the parties from invoking such remedies
in the event of any future breach or default.
9. Each paragraph of this agreement is severable from all other paragraphs. In
the event any court of competent jurisdiction determines that any paragraph or
subparagraph is invalid or unenforceable for any reason, all remaining paragraphs and
subparagraphs shall remain in full force and effect.
10. This agreement shall be interpreted according to and enforced under the
laws of the State of Arkansas.
11. This agreement contains the entire agreement of both parties hereto, and no
other oral or written agreement shall be binding on the parties hereto. This agreement
supersedes all prior agreements, contracts and understandings of any kind between the
parties relating to the subject matter hereof. This agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this professional
services contract on or as of the date first written above.
enWoodruff, City C
S
CITY 0 FAYETTEVILLE
an Coody, Mayor
08/12/02 13:55 FAX 501 372 1250 •
BKD LLP
002
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CONTRACT
This professional servi4s contract is executed this j24 day of
2002 by•and between the Cat of Fayetteville, Arkansas, hereinafter calle�the City,
and BKD, LLP
WHEREAS, the City bac issued a Request for Proposal for Independent Audit
and
WHEREAS, BKD, LLP has submitted a proposal to provide such professional
services;
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WITNESSETH: ' IN CONSIDERATION of mutual promises of the parties
contained herein and other good and valuable consideration, the parties agree as
follows:
1. BICD, LLP shall provide the CIty with the necessary professional services to
audit all funds including those which are covered under the provisions of the Single
Audit Act
2. The term of the contract shall run from the date of execution until the 31" day
of December, 2002, and shall automatically' renew each year, subject to budget
approval by the governing body of the City, for such bents as are required to
perform the contracted professional auditing services for the fiscal yearn ending
December 31, 2002 through December 31, 2006.
3. The professional accounting services shall be provided in accordance with
the terms and conditions set forth in the Request for Proposal,. with the exception of
§II.J.2., which is deleted entirely, attached hereto and marked Exhibit "A;". the
Proposal • to Provide Services, attached hereto and marked Exhibit "B;". and the
Engagement Letter, attached hereto and marked Exhibit "C. Each of these Exhibits
are hereby incorporated by reference as if set forth word for word in their entirety.
4. BKD, LLP shall be compensated for 'services rendered under this contract in
accordance with the terns and conditions set forth in the Exhibits. No work shall be
performed beyond the present scope of this contract without express prior approval
by the governing body. of the City.
5. The City or BKD, LLP shall have the right to terminate the contract upon 30
days written notice.
6. In the event of a conflict between any terms and conditions of thiscontract
and the Exhibits, the terms and conditions of the Exhibits shall take precedence in
the following order: this Contract Exhibit "C", Exhibit"B" and Exhibit "A".
7. Neither party may assign any of its rights or delegate any of its obligations
under this agreement, without the express written consent of the other.
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BL285LSIDS 013 aJ2 A1I3 311IA3113AH3 WHET:iI 2002 21 Slit!
08/12/02 13:55 FAX 501 372 1250 • BKD LLP
ON XH/lI grfi'NOW 30A /90
8. .It is •agreed t the failure of any party to invoke any of the, available
remedies under this agreeme4 t or undertow in the event of one or more breaches or
defaults by any party undeijthe agreement shall•not be, construed as a waiver of
such provisions and conditions and shall not prevent the parties from invoking such
remedies in the event of any &store breach or default
9. Each paragraph of this agreement is severable from all other paragraphs.. In
the event any court of comjretert jurisdiction determines that any paragraph or
subparagraph is invalid or unenforceable for any reason, all remaining paragraphs
and subparagraphs shall remain in full force and effect.
.10. This agreement shall be interpreted according to and enforced underthe laws
of the State of Arkansas.
11. This agreement contains the entire agreement of both parties hereto, and no
other oral or written agreement shall be binding on the parties hereto This
agreement supersedes all prior agreements, contracts and understandings of any
kind between the parties relating to the subject matter hereof. This agreement may
be executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.'
INI WITNESS WHEREOF, the parties hereto have executed this professional
services contract on orr as of the date first written above. •
ATTEST:
Heather Woodruff. City Clerk
CITY OF PAYETTEVILLE
Dan Coady, Mayor
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EL28SLSIOS O13 O142 A110 311IA3113AWJ WUBt:tt 2002 21 Ofld
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• • • OtXHIBIT A
REQUEST FOR PROPOSAL FOR INDEPENDENT AUDIT
CITY OF FAYETTEVILLE, ARKANSAS
02-102,
The City of Fayetteville invites proposals to audit the financial statements of the City for
fiscal years ended December 31, 2002 to 2006, including all funds which are included
under the provisions of the Single Audit Act.
I. PROCUREMENT PROCESS
A. One (1) signed original and seven (7) 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":
Peggy Vice
Purchasing Manager
113 W. Mountain
Fayetteville, AR 72701
Proposals will be received at this address until July 22, 9:00 a.m. CO IQh et'llme LQ
-lo ru y 2s , S'.OV PM \
B. Upon opening the proposals, the Audit Committee will convene to evaluate the
proposals on the basis of the cntena described below. Interviews may be held
with the three firms deemed to be the most highly qualified to provide the services
required. A contract will be negotiated with the firm ranked the best qualified by
the Audit Committee. If the Audit 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 Audit Committee, the selection will be
presented to the City Council for their approval.
At any point in the selection process, the proposer may be requested to submit
information supplemental to the proposal. Copies of the City's 2001
Comprehensive Annual Financial Report (CAFR) are available from the Internal
Auditor at 113 West Mountain, Fayetteville, AR 72701, phone number 479-575-
8261. In addition, the City's budget and prior year audit schedules are available
to provide additional information prior to the opening of the proposals from the
Internal Auditor.
The following tentative timetable has been established for the completion of the
award of an audit contract:
-Advertisement for Proposals June 30
Committee Review and Negotiations July 29 — August 9
Presentation to the City Council August 20
C. Proposals will be evaluated on the following criteria:
MANDATORY
1. The firm must be a Certified Public Accounting firm properly licensed to
practice in the State of Arkansas.
2. The firm must meet the independence standards of the General Accounting
Office Standards for Audit of Governmental Organizations, Programs,
Activities, and Functions.
3. The proposer shall procure, and shall maintain during the life of this contract,
professional liability insurance in the amount of $1,000,000 combined single
limit. Certificates of insurance stating coverage indicated above must be
delivered to the Purchasing Manager prior to issuance of Notice to Proceed
with this proposal.
TECHNICAL
1. Qualifications of the firm and its coordinating office in performing
governmental audits.
2. Experience, competence, and capacity for performance by the firm and its
coordinating office in governmental audits and GASB 34.
3. Proposed method of performing audit.
4. Past performance by the firm and its coordinating office in governmental
audits.
5. Puce Proposal
D. Audit Contact
Any vendor contact conceming this RFP should only be directed to:
Nancy Smith
Internal Auditor
113 W. Mountain
Fayetteville, AR 72701
(479) 575-8261
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 as determined by the Audit Committee.
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11. 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 CAFR 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 (GFOA).
The auditor will be expected to comply substantially with GASB reporting
standards in all work associated with the production and submission of the
CAFR.
B. The audits will be conducted in accordance with Generally Accepted Auditing
Standards, as well as the following guidelines and requirements:
1. AICPA Industry Audit and Accounting Guide — Audits of State and Local
Governmental Units
2. Standards for Audit of Governmental Organizations, Programs, Activities and
Functions
3. Audits of State and Local Governments and Non -Profit Organizations -OMB
Circular A-133
4. Grants and Cooperative Agreements with State and Local Governments -OMB
Circular A-102
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. Single Audit Act Amendments of 1996 (Public Law 104-156)
3. OMB Circular A-133
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4. Agency regulations implementing OMB Circular A-133 and the Single
Audit Act
5. Agency program regulations
6. Federal Financial Assistance Agreement
C. The periods to be covered are the City's fiscal years ending December 31, 2002,
2003, 2004, 2005, and 2006. A contract will be awarded for all five years upon
approval of the City Council with the consent of the proposer in accordance with
the terms of the proposal. Each year of the contract shall be contingent upon
satisfactory performance and funds being appropriated. Should funds not be
appropriated, the contract would be canceled for any remaining years.
D. Any 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.
E. The independent auditor is expected to provide 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 auditor shall provide all comments on the
CAFR to the City by May 15 of each year
The CAFR will be published in final form and distributed to GFOA by June 30 of
each year.
F. The auditor in charge shall conduct an entrance and an exit conference with the
Audit Committee.
Review of accounting systems, test of internal controls, and test of transactions
should occur prior to fiscal year end.
A list of all work papers and schedules to be prepared by the City staff should be
presented to the City by October 1 of the year under audit. This list should
include all documents which will need to be pulled for auditor review.
The general ledger will be closed by the third week of March and the trial balance
prepared.
Year end field work shall be completed by May 1.
Prior to June 15 of each year, the auditor will issue a management letter. Where
appropriate, recommendations for system improvements are to be included and
the Auditor may be requested to provide assistance to implement
recommendations. A draft of this letter should be submitted for review by the
City before final copies are prepared. The Auditor will provide 35 copies of this
letter.
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G. Interest of Auditor:
Auditor covenants that neither it nor any of its members 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 in their firm 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 the City.
H. 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.
I. Worker's Compensation:
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By executing an agreement, Auditor certifies that it is aware of the provision of
A.C.A. §11-9-401, which requires every employer to pay or provide
compensation for an employee's disability or death from injury ansrng 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.
J. 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.
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, one debt service fund, three capital projects funds, five
enterprise funds, one internal service fund, three trust funds, two agency funds,
two account groups, and two discretely presented component units.
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 governmental funds which have an adopted budget shall
be disclosed in the same manner with appropriate disclosures for any
governmental funds which do not have an adopted budget.
D. Description of the Automated Accounting Systems
1. The City has an Information Technology division which consists of nine full
time employees: an information technology manager, three
programmer/analysts, four GIS programmer/analysts, and a systems operator.
Assistance from this division in obtaining necessary reports and data can be
obtained on a scheduled basis
2. Currently, the City is utilizing the following New World Systems software
modules on an IBM AS/400 (Model 720, 1.28GB Ram, 60GB disk storage):
a. Financial Management Software: general ledger, budgetary accounting,
annual budget processing, accounts payable, purchasing and encumbrance
control, requisition processing, revenue accounting/cash receipts., billing
and receivable, fixed assets, integrated inventory/purchasing, and cash
register interface.
b. Human Resources Software: payroll with base personnel module and
advanced personnel module.
c. Utility Management Information System Software: water/sewer/other
module and automatic PC meter read.
d. Animal Licensing Software.
e. Public Works Software: equipment/vehicle maintenance and work order
processing. Public works information will be converted to Hansen
Technology Software at a future date.
f. Parking Tickets Module.
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3. Municipal Court is currently using a system which is run on Novadyn (486
PC) series 14-400 running Reality Operating System.
4. The City has a Novell LAN used primarily by the Planning, Engineering, and
Inspection Divisions for storage of AutoCad files, inspection and planning
data bases, and GIS information.
5. The City has personal computers which are interfaced with the IBM AS/400
and/or the LAN which use the standard Microsoft XP Office software and
various other software packages, including the following:
a. Microsoft Excel spreadsheet software
b. Microsoft Word word processing software
c. Paradox database software
d. Access database software
6. The Police, Fire and Central Dispatch divisions utilize the IBM AS/400 and
New World Systems Public Safety software.
E. Office space is available for audit staff use. Access is available to a telephone,
and access may be made available to a computer terminal.
IV. TECHNICAL QUALIFICATIONS AND APPROACH
The format of the proposal may be styled at the discretion of the auditor. 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 the firm's strengths, audit philosophy, and strategy for the future.
2. Describe the firm's clientele.
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 the firm's affirmative action plan and how minorities are placed in
the firm. •
6. Disclose material lawsuits in progress (or in the past) against the firm;
disclose any indictments, criminal penalties, sanctions, etc.
B. Experience, competence, and capacity for performance of the firm and its
coordinating office in governmental audits
1. Qualifications of the Coordinating Office:
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a. State whether the office is part of a national, regional, or local accounting
fine.
b. List the number of partners, managers, supervisors, and staff located in the
coordinating office in the audit, tax, and management consulting divisions.
c. List the address of the firm and any coordinating offices that will be
working on the audit.
d. Describe the extent of statistical and computer assisted audit techniques
used in governmental audits including the use of microcomputers to
generate work papers.
e. Describe the organization of the audit staff.
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 governmental
accounting and auditing and GASB 34.
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. Outline the levels of review to which work papers are subjected.
b. Descnbe any disciplinary action imposed by the AICPA, State Boards of
Public Accountancy, State Societies of CPAs, or Securities and Exchange
Commission dunng the past three years indicating any involvement of the
coordinating office.
c. Describe results of recent peer review and its status under the Peer Review
Program.
C. Proposed method of performing audit
1. Describe how the firm's 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.
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3. Explain the firm's understanding of the audit work that is to be performed for
the City of Fayetteville.
4. Describe m detail the type of personnel assistance ( hours, level of staff, etc.)
that the City would be expected to provide and how this would be coordinated
by the auditors with the City management.
5. Indicate in detail computer expertise which would be expected from City staff
or other resources expected in order to complete the control reviews.
D. Past performance of the firm and its coordinating office in governmental audits
1. List local government clients or other clients which are felt to be relevant to
this RFP which are currently or have been 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
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1. Basis for fee and not -to -exceed cost shall be submitted to the Purchasing
Officer in the sealed proposal envelope. This proposal should include a
schedule for each of the five 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 such as
preparing the total CAFR, preparing only the notes to the financial
statements and performing arbitrage calculations.
V. 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.
lac
Solutions
tor
Success
•
July 22, 2002
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5000 Rogers Avenue, Suite 700
Fort Smith, AR 72903-2079
479 452-1040 Fax 479 452-5542
• ig$XXHIBIT t
400 W. Capitol Avenue, Suite 2500
P.O. Box 3667
Utile Rock AR 72203-3667
501 372-1040 Fax 501 372-1250
200 E. 11th Avenue
P.O. Box 8306
Pine Bluff, AR 71611.8306
870 534-9172 Fax 870 534-2146
City of Fayetteville
Ms..Peggy Vice, Purchasing Manager
113 West Mountain
Fayetteville, Arkansas 72701
Dear Ms. Vice:
bkd.com
Thank you for considering BKD, LLP to perform professional services for the City of Fayetteville.
We are excited about the prospect of providing audit and other services to your city, and we are
confident that we can sufficiently meet your needs.
Attached you will find our proposal for services as per your request.
have any questions or need further information.
Thanks for your time and consideration.
21-P
BKD, LLP
Please let us know if you
AmRci d / P
Moans Amend mil
ntememW
City of Fayetteville
Proposal to
Provide Services
for
City of Fayetteville
City of Fa etteville
Table Of Contents
• Proposal Highlights
• What You Can Expect from BKD 5
• Qualifications 6
• Experience, Competence and Capacity 9
• Key Personnel 12
• Efficient and Effective Audit Approach 15
• Client References 20
• •BKD Quality Profile 21
• BKD Office Locations 22
• Peer Review Letter Appendix
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City of Fayetteville
Proposal Highlights
One of our largest practice specialties at BKD, LLP is accounting and financial
reporting for governmental and nonprofit organizations. The following highlights our
qualifications and experience as further explained in the proposal:
• BKD, with over 100 Arkansas personnel to serve you, has the largest accounting
practice in the state. Ten BKD personnel in Arkansas spend 100% of their time
providing services to our govemmental and nonprofit clients. This team, we
believe, can provide you with the highest quality service in Arkansas.
• We have developed an efficient audit approach which involves your accounting
personnel and our staff in a team approach. As such, we avoid wasted time in
non -risk areas and concentrate on areas of importance during our audit.
• In Arkansas, our commitment to local govemment, nonprofit organizations and
govemmental funded entities and utilities is particularly strong. Services to these
entities comprise approximately 18% of our practice's clientele.
• The Arkansas practice performs over 100 audits per year in accordance with
GAGAS and OMB A-133 guidelines.
• Your service team will be lead by Wm. Mike King and Kevin Kemp who specialize
in govemmental accounting.
3"
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access_
City of Fayetteville
Proposal Highlight
• BKD Arkansas is the current auditor of two of the largest municipalities within
Arkansas.
• BKD's team of skilled governmental audit specialists have assisted several
municipalities in eaming and keeping the GFOA Certificate of Achievement for
Financial Reporting from the Govemment Finance Officers Association. We
also have the resources available to assist in the implementation of
Govemmental Accounting Standards Board Statement (GASBS) No. 34, Basic
Financial Statements — and Management's Discussion and Analysis — for State
and Local Govemments.
• At BKD, we recognize the complexities of modem business, which often
require a thorough knowledge of specific industries. We have developed •
specialized knowledge of various industries and specialties including electric
utilities, municipalities and water and wastewater utilities, employee benefit
plans and arbitrage calculations.
• We will open and close our engagement with a meeting with you and any other
officials or committees deemed necessary in order to maintain lines of
communication and open disclosure of all areas of the audit process and
results of our findings. We will also provide you with a draft of our report to
review before we release our opinion on the financial statements.
At BKD our audit teams have two primary objectives: First is to provide you
with the most effective and efficient client service possible. Second is to
provide evaluation and comments on your intemal control structure and
operating procedures in order to recommend ways to possibly enhance them.
lap
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What You Can Expect from BKD
..............................................................................................
• Team approach to service
• Value
• Trust
•, Integrity
• Experience
• Quality
• Stability
• Quick responses
• Working chemistry
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Qualifications
I •...•...•,.•.••..•...•..•.•.....••.....••.•. General and Mandatory Items ..•.... BKD, LLP, created from the June 1, 2001 merger of Baird, Kurtz & Dobson and Olive LLP is the
dominant regional professional services firm in the Heartland of America. With revenues of
approximately $200 million, the firm ranks 8th in size among CPA and consulting firms in the United
States. The firm's 1,500 personnel, including nearly 200 partners, are located in 26 offices in
Arkansas, Colorado, Illinois, Indiana, Kansas, Kentucky, Missouri, Nebraska, Ohio, Oklahoma and
Texas. BKD is headquartered in Springfield, Missouri, where William E. Fingland Jr., the managing
partner is based.
The firm is properly licensed to practice public accounting in the State of Arkansas and currently
meets the newly issued independence standards of the General Accounting Office. We will provide
the requested certificates of insurance prior to issuance of notice to proceed with the engagement.
Scope of Services
We understand that you require audits of the City's financial statements for years ending December
31. We also understand the audits should be conducted in accordance with Government Auditing
Standards, AICPA Industry Audit and Accounting Guide - Audits of State and Local Government
Units, OMB Circular A-133, OMB Circular A-102, OMB Compliance Supplement for Single Audits of
State and Local Government and applicable laws of the State of Arkansas. Our professionals are
fully qualified and experienced in performing governmental audits in accordance with generally
accepted auditing standards and other required auditing procedures as necessary for your
organization.
Relationships
Your service team, consisting of local government specialists, will communicate with you throughout
• the year and will be responsive to your needs. Our goal will always be to bring value beyond our
compliance services —this being the hallmark of our client -centered service approach. Continuity of
the professionals serving you will be a priority. Our focus, as part of serving you, will be to address
' issues that will help your City achieve your goals. It's our goal to serve you with quality services that
are idea -driven and that provide you with greater satisfaction than you might think possible.
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Qualifications
BKD Strengths,. Audit Philosophy and Strategy
BKD of Arkansas has the largest number of professional staff available of any
Certified Public Accounting Firm within the state. We currently have locations in Fort
.1 Smith, Little Rock and Pine Bluff. Administration and coordination of our audit
services is centered in the Little Rock location. We currently maintain a government
audit service team based in the Little Rock location that will be assigned to meet the
needs of the City of Fayetteville. Additional information regarding the members of this
group and their backgrounds is included in the experience section of this proposal.
Services to state and local government and government funded not -for-profit entities
constitute approximately eighteen percent of our practice. This is one of our largest
service niches. We intend to continue expansion of our practice in the Heartland of
America with a commitment to long term quality service.
BKD Clientele
The firm's clientele is very diversified with the Arkansas practice consistent with the
firm in total. We maintain specialty service groups for each of the following industries:
Government and Government Funded Not -for-profit Entities
Healthcare Organizations including City and County Hospitals
Financial Institutions
Manufacturing and Distribution
Individual Services
A list of selected clients to serve as references is included on page 20 of this
• proposal.
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Qualifications
..............................................................................................
Controversial Positions Taken
BKD has not taken any recent positions as a firm with the AICPA, FASB or GASB which
are viewed as being controversial. Our firm has a very conservative quality oriented
philosophy directed at providing quality service to quality clients on a timely basis at an
economic price.
Nationally Recognized Individuals
The following individuals are nationally recognized in the government audit and accounting
field and are available for consultation and assistance with the City of Fayetteville audit
engagement. James E. Brown, the BKD partner responsible for technical assistance has
served on the GASB Task Force on Accounting and Reporting by Business Type
Enterprises and the GASB Task Force on the financial reporting model that resulted in the
issuance of GASB 34 and 35.
Experience
Your service team includes local
government specialists. The members
of your client service team have chosen
to specialize in this area. The three primary
members of your team are: Mike King,
Kevin Kemp, and Andy Richards. These
professionals will spend a significant
amount of their time in your office serving
you.
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Experience, Competence
t and Capacity
Affirmative Action & Equal Employment Opportunity
BKD prohibits discrimination in employment on the basis of an individual's race,
creed, color, sex, sexual orientation, age, religion, disability or national origin. This
policy is designed to ensure equal employment opportunities, including but not
limited to employee selection, promotion, training and development, compensation,
• termination and disciplinary action.
We monitor this program to make sure it complies with federal, state and local
regulations and guidelines and develops employment programs at all levels. All
management and supervisory personnel are responsible for enforcing the firm's
AA/EEO policies and practices and being knowledgeable of current legal and
t regulatory developments in this area.
Qualifications of the coordinating office
The Arkansas offices of BKD maintain a group of professionals dedicated to
it providing audit services to state and local government. This client service team is
currently providing services to several State Agencies as well as two of the largest
municipal governments within Arkansas. Both of these municipalities receive the
Certificate of Excellence in Financial Reporting from the Government Finance
Officers Association. We currently have a partner, a senior manager, a manager
and multiple individuals from supervisor through staff level who dedicate all of their
time to serving government and government funded not -for-profit entities. Over one
hundred entities are currently engaging the Arkansas practice of BKD for audit
services in accordance with Government Auditing Standards, the Single Audit Act
and/or Office of Management and Budget Circular A-133.
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Experience, Competence
and Capacity
Litigation, Indictments, Penalties, Sanctions, etc.
BKD currently has no material lawsuits, indictments, criminal penalties, sanctions
etc. in progress (or in the past) against the firm.
Status of BKD
BKD is a regional accounting firm with offices located in eleven states within the
Heartland of America. The separately displayed map presented later in this
proposal details the office locations from which we operate. We are currently ranked
eighth nationally with almost fifteen percent of our practice for government and
government funded not -for-profit organizations.
Personnel Levels (Coordinating Office)
Compilations, Reviews
Audit Tax & Consulting
Partners 8 3 7
Managers 7 4 4
Supervisors 8 1
Staff 27 14 20
Total 50 21 32
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Firm and Coordinating Office Locations
Firm Administration:
901 East St. Louis, Suite 1800
Springfield, MO 65806
Coordinating Office:
400 West Capital Avenue, Suite 2500
Little Rock, AR 72203
Statistical and Computer Assisted Audit Technique
BKD staff are assigned their own individual computer for use during audit engagements.
Workpapers are prepared utilizing Audit Software, spreadsheets and other applications as
needed. All staff are proficient in the use of computer applications. Statistical sampling
applications are used whenever they provide the most efficient and effective audit results.
Each audit application is evaluated in the planning process to determine both its efficiency
and effectiveness in obtaining desired results.
Audit Staff Organization
The BKD method of staffing audits and ensuring continuity is a team approach. The City of
Fayetteville will be assigned an engagement team that will consist of two or more partners
and/or managers to serve as primary or secondary contacts. These individuals are long-
term members of BKD and will provide continuing service as long as our relationship exists.
The expected turnover within this group is virtually none. This team will be assisted by an
audit in -charge and such other staff as necessary to meet the needs of the City. Continuity
of staffing will be maintained to the maximum extent possible given turnover rates within our
industry.
The continuity of service by BKD is provided at the manager, senior manager and partner
levels. Unlike the large international firms, the vast majority of our partners developed from
the staff level within the community where they practice. Our turnover ratios at the manager
level and above are extremely low. Accordingly, the senior members of your service team
rarely change. BKD staff are encouraged to grow and develop within the local community
with the knowledge that they will be partners in the future without being transferred to other
cities.
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Key Personnel
,••••...••.....
Mike King, CPA - Engagement Partner•..•.•••....•..,..•••••.•.•,•,••.....
Mike joined BKD in 1971 as a staff accountant and has been with the firm continuously since that date. He practiced
in general service to our client base from 1971 through 1985 providing audit, tax and consulting services to a wide
range of clients including government, hospitals, banks, individuals, manufacturing and not -for-profit entities. In
1985, he assumed responsibility for not -for-profit and government organizations served by the Arkansas Practice
$ Unit of BKD. In this role, he has served as primary contact for numerous clients, provided review services for all
audits subject to OMB Circular A-1 33 and maintained contacts with regulatory agencies. Mike has also been
involved with numerous client's tax exempt financing arrangements. He was admitted to the BKD partnership in
1981 and is currently in his twenty-first year as a partner.
James Brown, CPA - Partner
Jim Brown is a partner in BKD's Springfield office. He has more than 20 years of public accounting experience and
( is widely known for his expertise in the areas of auditing standards, and accounting and auditing for governmental
and nonprofit organizations. He is a certified public accountant in Missouri. Kansas and Oklahoma. He is the firm's
coordinator of nonprofit and government organizations services and the director of accounting and auditing for
BKD's Southern Missouri practice. Firmwide, he is responsible for consulting with other offices on accounting and
auditing matters involving their nonprofit and governmental organization clients. He coordinates the firm's quality
control with respect to such clients and maintains liaison with the Governmental Accounting Standards Board and
GAO. In addition, he is responsible for concurring review of many audit, attestation, compilation and review
engagements.
Jim is in frequent demand as a speaker on auditing and accounting matters, and has served as a consultant to
various governmental agencies on these subjects. He has addressed numerous national and state conferences on
the subjects of auditing standards and auditing federal assistance programs. He has co-authored articles on
various auditing topics published in the Journal of Accountancy and The Practical Accountant.
A graduate of Missouri Southern State College, Joplin, Jim has served as an adjunct member of its accounting
faculty. In 1991 he completed seven years of involvement with the preparation and grading of the Uniform CPA
Examination, including chairing the Auditing Examination and Grading Subcommittees.
Jim was a member of the Auditing Standards Board for the American Institute of Certified Public Accountants
(AICPA) from 1992 through 1995. He served on its Audit Issues, Compliance Attestation, Quality Control
Standards, Agreed -Upon Procedures Engagements, Electronic Evidence and Auditor Communications Task
Forces. He also served on the GASB Task Force on Accounting and Reporting by Business Type Enterprises and
the GASB Task force on the Financial Reporting Model resulting in the issuance of GASB 34 and 35.
Jim has participated in numerous peer reviews of the quality control systems of other CPA firms and served as an
investigative consultant for the Missouri State Board of Accountancy. He is a member of the AICPA and Missouri
Society of Certified Public Accountants.
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Key Personnel
Kevin Kemp, CPA - Engagement Senior Manager
• Kevin joined BKD in 1993 and has been with the firm in Little Rock continuously
since that date. He was assigned immediately to the not-for-profit/government
service team and accordingly has nine years providing audit and consulting
services to organizations such as yours within the State of Arkansas. Kevin has
been a speaker to the State GFOA conference each of the last two years on
GASB 34 implementation issues He has extensive experience in the direct
supervision and performance of audit engagements subject to OMB Circular A-
133. As a senior audit manager, he.has audit review and training responsibilities
y for our staff. Kevin will be present in your offices for a substantial portion of your
engagements.
s
Andy Richards, CPA - Engagement Supervisor
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Andy, a supervisor, is a member of BKD's Arkansas Practice Unit. With over five
years experience with the firm, he provides audit services to employee benefit
plans, not -for-profit and governmental entities. He has experience working with
numerous employee benefit plans including 401(k), health and welfare, money
purchase pensions and various other defined benefit and defined contribution
plans. He has been trained in the complex laws and regulations of employee
benefit plans including the requirements of the Employee Retirement Income
Security Act of 1974 and the Department of Labor. He also has experience in the
in -charge role of audit engagements subject to OMB Circular A-133 including
municipalities, school districts, mental health facilities and HUD -backed housing
projects.
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BKD staff assigned to the engagement meet the continuing education
requirements of at least 80 hours every two years. They all attend our
government conference on an annual basis which includes audit training as well
as updates on new pronouncements such as GASB 34..
All engagements are staffed with the expectations that personnel will be made
available.to assist throughout the year with consultation as needed and
permitted under the new GAO Independence rules.
Your audit will be scheduled and personnel assigned to ensure completion of
the engagement by the due date of the engagement. Problems encountered
during the engagement that might delay completion will be discussed with
appropriate City personnel at the point they arise.
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Efficient and Effective
Audit Approach
...................................................
As part of building our relationship, our team will:
— Meet periodically with you to understand the status of your organization
and operational issues. Often we attend management or council
meetings for this purpose.
Request that you send us your monthly or quarterly financial statements
to keep us up to date on your operations throughout the year.
— Respond to your calls within 24 hours.
— The City of Fayetteville and
certain finance personnel are on
our mailing list for relevant BKD
publications.
— Invite your personnel to attend BKD
sponsored seminars and workshops
covering employee benefits and other
topics.
— Provide timely e-mail communications on hot topics for governmental
entities, including relevant accounting and tax -related matters.
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Soli ���t�onsfo� Success`
City of Fayetteville
Efficient and Effective
Audit Approach
..............................................................................................
• We understand the importance of staffing continuity to your organization. Lack
of continuity can result in disruption to your daily work schedules due to
unnecessary questions by inexperienced auditors. It also can lead to
inefficiencies by the auditor due to being unfamiliar with your financial records
and your people.
• BKD strives to keep staff turnover low through:
Formal staff counseling
Timely job performance evaluations
Direct supervision by experienced professionals
Client comments and feedback
— Our personal service philosophy
• Staff to partner ratios (according to Accounting Today):
BKD: 5:1
— Other regional firms and national firms: anywhere from 10:1 to 23:1
• Benefits for the City of Fayetteville:
- Our most experienced professionals are more involved in serving you
Our staff receives proper supervision from our most experienced
professionals
- Faster service, better service, smarter service
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Solu� 'ions ' o�� Success
City of'Fayetteville
Efficient and Effective
Audit .A,PI Approach ..................... .
A change in any member of your financial management team brings with it a perceived disruption
to your daily operations. Because this is not a new situation to BKD, we place a great deal of
emphasis on becoming a part of your team quickly, efficiently, and with minimal disruption to your day-to-
day operations. Our approach is to:
— Meet with key management personnel soon after being engaged to continue to develop
additional rapport and to gather further initial information to plan our work.
— Coordinate the effort in familiarizing
ourselves with your personnel so they
feel comfortable with us and understand
our procedures.
— Review the prior firm's work papers to
enhance our understanding of your
unique accounting, auditing and tax
issues, to minimize questions, and to
accelerate our understanding of your
operations.
Schedule an early planning session
with appropriate personnel to obtain
their input and develop an acceptable
audit plan and timetable.
Develop the maximum level of assistance your staff can provide.
Develop appropriate timetables for performing our services, reviewing and approving our
deliverables, meeting with the Council, etc.
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Efficient and Effective
Audit Approach
..............................................:.0.....0.............................................
Proper planning with you is the key. Our planning includes:
— The "no surprises" approach. We are quite sensitive to your desire to avoid last
minute "surprises". Our interim fieldwork is designed to facilitate discussion and
resolution of any significant issues with you well before the end of your fiscal year.
— Pre -acceptance review of financial statements.
Determining the timing of services and deadlines for reports.
— Identifying major areas of audit concern early.
— Defining the major audit objectives.
Agreeing on your level of assistance.
— Scheduling entrance and exit conferences, with interim status meetings as necessary.
— Maximizing use of your existing financial accounting system.
— Using laptops and field audit software which include authoritative literature and
guidance.
— Audit programs tailored to the City of Fayetteville.
— An experienced, industry -specific client service team.
Completing the audit work with minimal disruption to you and your personnel
schedules.
Our locations in Fort Smith and Little Rock allow us to quickly be in your office when we're needed,
to avoid travel related expenses, and to comfortably be available for periodically
scheduled meetings with you.
At the conclusion of each audit, we will discuss with you practical recommendations
geared toward:
— Minimizing costs
Improving financial controls
Strategies for operating efficiencies
Practical advice on business opportunities
— Regulatory compliance
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Efficient and Effective
Audit Approach
Audit Assistance from City Personnel
BKD, LLP utilizes a team approach to auditing wherein we involve your staff to the
greatest extent possible. This gives the staff a sense of pride in being a part of the
process, and results in a savings to you in professional fees. We expect•items, such
as the following, to be completed prior to the commencement of the engagement.
t • Completed internal control questionnaires
• Access to the City's trial balance from computer system
• Printed copy of General ledger and trial balance
• Final adjusting entries
• Copies of council meeting minutes
• Bank reconciliations
• Detail of yearly activity in investment accounts
• Reconciling workpapers for inter -fund accounts
• Workpapers to support selected revenue and expense accounts
• Detail listing of selected receivable/payable accounts
• Schedule of fixed asset additions and deletions
• Trial balances and summaries of annual activity in the City's pension plans
' Items will be requested prior to October 1 of the year under audit. We will also
•f request assistance in obtaining documentation to support audit procedures. We
anticipate that assistance of this type as well as account analysis work performed by
the City's accounting staff and management will range between 60 and 80 hours. We
also anticipate that we need approximately 8 hours of assistance from your
Information Technology Division.
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Client References
........................................ *City of Little Rock, Arkansas...............................
Ms. Shirley Manning. Controller
500 West Markham Street, Suite 300
Little Rock, Arkansas 72201-1492
501-371-6806
*City of Pine Bluff, Arkansas
Mr. Ed Bogy, Director of Finance
Pine Bluff, Arkansas
870-543-1835
• North Little Rock Electric Department
North Little Rock Utilities Accounting Department
Ms. Jennifer Heustis
2400 Willow Street
1 North Little Rock, Arkansas 72114
501-340-5311
Pine Bluff Wastewater Utility
Ms. Deena Coston, Chief Financial Officer
ii 1520 South Ohio Street
Pine Bluff, Arkansas 71601
870-535-6603
Arkansas Employment Security Department
Mr. Pat Hamilton, Assistant Director
#2 State Capitol Mall, P.O. Box 2981
Little Rock, Arkansas 72203
501-682-2033
Community Resource Group, Inc.
Ms. Kimberly Horton, Chief Financial Officer
P. O. Box 1543
Fayetteville, Arkansas 72702
501-443-2700
- Recipients of the Certificate of Achievement for Excellence in Financial Reporting awarded by the
Government Finance Officers Association
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City of Fayetteville
CRK0 Quality Profile
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Quality Control
Our quality control procedures meet the standards of the SEC and Private Companies Practice
Sections of the AICPA. We are required to have a regular Peer Review by another CPA firm every
three years. Our most recent peer review was completed as of May 31, 2001, a copy of which is
included with this proposal. A strong commitment to quality control results in efficiency and
maximum assurance for you. BKD has voluntarily undergone a peer review of its system of quality
control over its accounting and auditing practice for many years. Our quality control system has
always passed this test with a "clean" opinion.
Audit workpapers are subjected to multiple levels of review. The work performed by staff is reviewed
by the in -charge accountant. All workpapers are reviewed by the engagement partner or manager
with critical areas and the financial statements reviewed further by an independent technical review
partner.
We are also subject to periodic oversight by state and federal regulatory bodies, such as:
• Federal Quality Control Reviews (QCRs)
• Federal Desk Review
No disciplinary actions have ever been taken or are pending against BKD.
BKD Accomplishments
Two partners have served as President of the American Institute of Certified Public Accountants
(AICPA). Numerous other partners have served the profession as follows:
• Accounting Standards Executive Committee
• Financial Accounting Standards Board's (FASB) Emerging Issues Task Force
• AICPA's Government Technical Standards Committee
• Many other state CPA Society committees
A partner within our firm currently serves on the Emerging Issues Task Force which provides us
early access to proposed accounting standards.
BKD has developed close public sector ties with:
• Financial Accounting Standards Board (FASB)
• Governmental Accounting Standards Board (GASB)
• Government Finance Officers Associations (GFOA)
All of these relationships are invaluable when it comes to promoting
our clients' interests and interpreting regulatory guidance.
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Certified Public Accountants & Consultants
To the Partners of BKD, LLP and the SEC Practice Section Peer Review Committee
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We have reviewed the design of the system of quality control for the accounting and auditing practice of BKD,
LLP (the "Firm") in effect as of May 31, 2001. A system of quality control encompasses the Firm's
organizational structure and the policies adopted and procedures established to provide it with reasonable
assurance of complying with professional standards. The elements of quality control are described in
Statements on Quality Control Standards issued by the American Institute of Certified Public Accountants (the
"AICPA"). We also reviewed the design of the Firm's policies and procedures pertaining to the membership
requirements of the SEC Practice Section of the AICPA Division for CPA Firms (the "Section"). The design
of the system of quality control and the policies and procedures pertaining to the membership requirements of
the Section, and compliance with them, are the responsibilities of the Firm. Our responsibility is to express an
opinion on the design of the system of quality control and the policies and procedures pertaining to the
membership requirements of the Section based on our review. We were not engaged to review compliance
with the Firm's system of quality control for its accounting and auditing practice as of May 31, 2001 or for any
period, or compliance with its policies and procedures pertaining to the membership requirements of the
Section. Accordingly, we express no opinion on the Firm's compliance with such system or policies and
procedures pertaining to the membership requirements of the Section as of any date or for any period.
Our review of the design of the Firm's system of quality control and the Firm's policies and procedures
pertaining to the membership requirements of the Section was conducted in accordance with guidelines
established by the Peer Review Committee of the Section. In performing our review, we obtained an
understanding of the system of quality control for the Firm's accounting and auditing practice and the policies
and procedures pertaining to the membership requirements of the Section. Because our review included
procedures performed on a selective basis and did not include tests of compliance, it would not necessarily
disclose all weaknesses in the design of the system of quality control or the policies and procedures pertaining
to the membership requirements of the Section.
Because there are inherent limitations in the effectiveness of any system of quality control and established firm
policies and procedures, deficiencies in the system, or in the firm's policies and procedures or in the firm's
compliance with its system or policies and procedures, may exist or occur and not be detected. Also,
projection of any evaluation of the design of a system of quality control, or of a firm's policies and procedures,
to future periods is subject to the risk that the system of quality control or the policies and procedures may
become inadequate because of changes in conditions. Additionally, weaknesses in the design of a system or in
a firm's policies and procedures, not previously identified, may be revealed by the implementation, actual
operation and testing of the system or an element of the system or the policies and procedures.
In our opinion, the system of quality control for the accounting and auditing practice of BKD, LLP has been
designed to meet the requirements of quality control standards for an accounting and auditing practice
established by the AICPA and the Finn's policies and procedures have been designed to meet the membership
requirements of the Section as of May 31, 2001.
December 20, 2001
( )Oleo in 13 states and Washington, IX
IntniatIOfleI
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0
0
C3y of Fayetteville, Arkansas
Price Proposal
For the Years Ending December 31, 2002, 2003, 2004, 2005 and 2006
Our fees are based on the complexity of the work undertaken and on the amount of time required to perform it. Based
on the present understanding of the work to be performed in auditing the financial statements of the City of Fayetteville,
Arkansas, the fees for the audits are as follows:
Employee Hourly Estimated For the Year Ending December 31
Class Rates Hours 2002 2003 2004 2005 2006
Partner $ 200-280 30 $ 6,120 $ 6,350 $ 6,575 $ 6,800 $ 7,075
Senior Manager
140-190
50
7,000
7,250
7,500
7,800
8,125
Supervisor
100-130
140
14,280
14,775
15,300
15,900
16,500
Staff
75-95
240
18,375
19,000
19,575
20,275
21,000
Clerical 50-70 40 2,125 2,200 2,275 2,375 2,475
500 47,900 49,575 51,225 53,150 55,175
GASB Statement No. 34 adoption ' 7,500
Direct expenses (travel, copying, telephone, etc.) 2,000 2,250 2,475 2,600 2,750
Total not -to -exceed cost $ 49,900 $ 59,325 $ 53,700 $ 55,750 $ 57,925
' - Includes determination of opinion units and major programs, auditing prior period restatements, and review of the
Comprehensive Annual Financial Report for conformity with the new standards. Any assistance with implementation
and/or training as it relates to this statement will be billed separately at our hourly rates if we can provide this service
without violating the Audit Independence Standards of the U. S. General Accounting Office.
Should any additional services not related to the audit (preparation of the Comprehensive Annual Financial Report,
preparation of notes to the financial statements, performance of arbitrage calculations, etc.) be required, additional
fees will be negotiated at that time. However, to facilitate the City's evaluation of the proposals we have estimated
our fees for certain additional services as follows:
Preparation of the CAFR $ 15,000 $ 27,000 # $ 16,100 $ 16,700 $ 17,300
Preparation of notes to the financial statements $. 3,500 $ 6,300 # $ 3,750 $ 3,900 $ 4,050
Performance of arbitrage calculations - $1,800 to $3,000 per year per outstanding bond issue.
# - Significant increase in fees for additional services for the fiscal year ending December 31, 2003, is due to the adoption
of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - And Management's
Discussion and Analysis - for State and Local Governments.
0
0
City of Fayetteville, Arkansas
Price Proposal (Continued)
For the Years Ending December 31, 2002, 2003, 2004, 2005 and 2006
Start-up Costs
Because of our desire to establish a long-term relationship with the City, we will absorb our significant transition and
start-up costs. These costs are our investment in a relationship we expect will be mutually beneficial for many years.
Such costs are for us to become familiar with your personnel, assemble historical audit information, document our
initial understanding of your internal control and develop audit programs tailored specifically to the City.
Other Matters
Our acceptance of this engagement is subject to completion of our normal client acceptance procedures. Upon
acceptance, the actual terms of our engagement will be documented in a separate letter to be signed by the City
and BKD, LLP.
S •
EXHIBIT C
(PAQ P.O W Box 366ol Avenue Suite 2500 200 E. Box 11th Avenue
5000 Rogers Avenue, Suite 700 P.O. 3667 P.O. 8306
Fort Smith, AR 72903-2079 little Rock, AR 72203-3667 Pine Bluf, AR 71611-8306
479 452-1040 Fax 479 452-5542 501 372.1040 Fax 501 372-1250 870 534-9172 Fax 870 534-2146
bkd.eom
August 7, 2002
Audit Committee and City Council
Honorable Dan Coody, Mayor
Ms. Marsha Farthing, Accounting Manager
Ms. Peggy Vice, Purchasing Manager
113 West Mountain
Fayetteville, Arkansas 72701
We
are pleased
to
confirm the arrangements of our engagement and the nature of the services we
will
provide to
the
CITY OF FAYETTEVILLE, ARKANSAS.
ENGAGEMENT OBJECTIVES
We will audit the general purpose financial statements of the CITY OF FAYETTEVILLE,
ARKANSAS as of and for the year ended December 31, 2002 in accordance with auditing
standards generally accepted in the United States of America, the standards applicable to
financial audits contained in Government Auditing Standards issued by the Comptroller General
of the United States and U.S. Office of Management and Budget (OMB) Circular A-133, Audits
of States, Local Governments and Nonprofit Organizations.
The objectives of our audit are:
✓ Expression of an opinion on the conformity of your financial statements, in all material
respects, with accounting principles generally accepted in the United States of America.
✓ Issuance of a report on your compliance based on the audit of your financial statements.
✓ Issuance of a report on your internal control over financial reporting based on the audit of your
Solutions financial statements.
for
Success ✓ Expression of an opinion on your compliance, in all material respects, with the types of
compliance requirements described in the U. S. Office of Management and Budget Circular A-
133 Compliance Supplement that are applicable to each of your major federal award programs.
✓ Issuance of a report on your internal control over compliance based on the audit of your
compliance with the types of compliance requirements that are applicable to each of your major
federal award programs.
A membe, of
4Mo+as Rao mn
m bmal
Audit Committee and City Council
Honorable Dan Coody, Mayor
Ms. Marsha Farthing, Accounting Manager
Ms. Peggy Vice, Purchasing Manager
August 7, 2002
Page 2
✓ Issuance of a report on your schedule of expenditures of federal awards.
OUR RESPONSIBILITIES
Auditing standards generally accepted in the United States of America, Government Auditing
Standards and OMB Circular A-133 require that we plan and perform:
✓ The audit of the financial statements to obtain reasonable rather than absolute assurance about
whether the financial statements are free of material misstatement, whether caused by error or
fraud.
✓ The audit of compliance with the types of compliance requirements described in the OMB
Circular A-133 Compliance Supplement applicable to each major federal award program to
obtain reasonable rather than absolute assurance about whether noncompliance having a direct
and material effect on a major federal award program occurred.
Accordingly, a material misstatement or noncompliance having a direct and material effect may
remain undetected.
Our audit of the financial statements is designed to detect misstatements and noncompliance that, in
our judgment, could have a material effect on the financial statements taken as a whole.
Consequently, our audit will not necessarily detect errors or fraud resulting in an immaterial
misstatement of the financial statements.
Likewise, our audit of compliance with the types of compliance requirements applicable to each
major federal award program is designed to detect noncompliance having a direct and material
effect on a major program. Consequently, our audit will not necessarily detect noncompliance
having an indirect and material or an immaterial effect on any program.
An audit also includes obtaining an understanding of internal control sufficient to plan the audit
and to determine the nature, timing and extent of audit procedures to be performed. An audit is
not designed to provide assurance on internal control over financial reporting or on internal
control over compliance or to identify reportable conditions. However, we will communicate to
you any matter that comes to our attention that we consider a reportable condition. Because of
the limits in any internal control structure, errors, fraud, illegal acts or instances of
noncompliance may occur and not be detected. Also, in the future, procedures could become
inadequate because of changes in conditions or deterioration in design or operation. Two or
more people may also circumvent controls, or management may override the system.
Audit Committee and City Council
Honorable Dan Coody, Mayor
Ms. Marsha Farthing, Accounting Manager
Ms. Peggy Vice, Purchasing Manager
August 7, 2002
Page 3
If, for any reason, we are unable to complete our audit of the financial statements or our audit of
compliance with the types of compliance requirements applicable to each major federal award
program or are unable to form or have not formed an opinion, we may decline to express an
opinion or decline to issue a report as a result of this engagement. If we discover conditions that
may prohibit us from issuing a standard report, we will notify you as well. In such
circumstances, further arrangements may be necessary to continue our engagement.
YOUR RESPONSIBILITIES
To facilitate our audit, management is responsible for making all financial records
documentation and other financial and compliance related information available to us. At the
conclusion of our engagement, management will provide to us a letter acknowledging certain
responsibilities outlined in this engagement letter and confirming:
• The availability of this information
• Certain representations made during the audits for all periods presented
• The effects of any uncorrected misstatements, if any, resulting from errors or fraud
aggregated by us during the current engagement and pertaining to the latest period
presented are immaterial, both individually and in the aggregate, to the financial
statements taken as a whole
Management is responsible for fair presentation of the financial statements in accordance with
accounting principles generally accepted in the United States of America, for adjusting the
financial statements to correct material misstatements and for identifying and ensuring
compliance with the laws, regulations, contracts and grants applicable to your activities including
your federal award programs. Management is also responsible for establishing and maintaining
effective internal control over financial reporting and compliance, which is the best means of
preventing and detecting errors, fraud, illegal acts, and instances of noncompliance.
The results of our tests of compliance and internal control over financial reporting performed in
connection with our audit of the financial statements may not fully meet the reasonable needs of
report users. Management is responsible for obtaining audits, examinations, agreed -upon
procedures or other engagements that satisfy relevant legal, regulatory or contractual
requirements or fully meet other reasonable user needs.
Audit Committee and City Council
Honorable Dan Coody, Mayor
Ms. Marsha Farthing, Accounting Manager
Ms. Peggy Vice, Purchasing Manager
August 7, 2002
Page 4
ENGAGEMENT FEES
Our fees will be based on time expended plus travel, postage and other out-of-pocket expenses
and will not exceed $49,900. We will issue progress billings during the course of our
engagement and our statements are due when received.
Our fees are based upon the understanding that your personnel will be available to assist us.
Assistance from your personnel is expected to include, but is not limited to, the following:
• preparing audit schedules to support all significant balance sheet and certain other
accounts,
• responding to auditor inquiries,
• preparing confirmation and other letters,
• pulling selected invoices and other documents from files,
• helping to resolve any differences or exceptions noted, and
• prepare and print the Comprehensive Annual Financial Report, including related
footnotes and schedules, and provide necessary documentation to support disclosures.
Our engagement fee does not include any time for post -engagement consultation with your
personnel or third parties, consent letters and related procedures for the use of our reports in
offering documents, inquiries from regulators or testimony or deposition regarding any
subpoena. Charges for such services will be billed separately.
Our invoices are due upon receipt. If our invoices for this or any other engagement you may
have with BKD are not paid when due, we may suspend or terminate our services for this or any
other engagement. In the event our work is suspended or terminated as a result of nonpayment,
you agree we will not be responsible for any consequences to you.
OTHER ENGAGEMENT MATTERS AND LIMITATIONS
Our workpapers and documentation retained in any form of media for this engagement are the
property of BKD. We can be compelled to provide information under legal process. In addition,
we may be requested by regulatory or enforcement bodies to make certain workpapers available
to them pursuant to authority granted by law or regulation. You agree that we have no legal
responsibility to you in the event we provide such documents or information.
0
Audit Committee and City Council
Honorable Dan Coody, Mayor
Ms. Marsha Farthing, Accounting Manager
Ms. Peggy Vice, Purchasing Manager
August 7, 2002
Page 5
To the extent permitted by the laws of the State of Arkansas, you agree to indemnify and hold
harmless BKD and its personnel from any claims, liabilities, costs, and expenses relating to our
services under this agreement attributable to false or incomplete representations by management,
except to the extent determined to have resulted from the intentional or deliberate misconduct of
BKD personnel.
To the extent permitted by the laws of the State of Arkansas, you agree that any dispute
regarding this engagement will, prior to resorting to litigation, be submitted to mediation upon
written request by either party. Both parties agree to try in good faith to settle the dispute in
mediation. The results of the mediation proceeding shall be binding only if each of us agrees to
be bound. We will share any costs of mediation proceedings equally.
If any provision of this agreement is declared
invalid
or
unenforceable, no other provision of this
agreement is affected and all other provisions
remain
in
full force and effect.
If you intend to include these financial statements and our report in an offering document at
some future date, you agree to seek our permission to do so at that time. You agree to provide
reasonable notice to allow sufficient time for us to perform certain additional procedures. Any
time you intend to publish or otherwise reproduce these financial statements and our report and
make reference to our firm name in any manner in connection therewith, you agree to provide us
with printers' proofs or masters for our review and approval before printing or other
reproduction. You will also provide us with a copy of the final reproduced material for our
approval before it is distributed. Our fees for such services are in addition to those discussed
elsewhere in this letter.
You agree to
notify us
if you desire to place these financial statements
or our report thereon on
an electronic
site, such
as the World Wide Web. You recognize that we
have no responsibility as
auditors to review information contained in electronic sites.
Audit Committee and City Council
Honorable Dan Coody, Mayor
Ms. Marsha Farthing, Accounting Manager
Ms. Peggy Vice, Purchasing Manager
August 7, 2002
Page 6
BKD is a registered limited liability partnership under Missouri law. Under applicable
professional standards, partners of BKD, LLP have the same responsibilities as do partners in a
general accounting and consulting partnership with respect to conformance by themselves and
other professionals in BKD with their professional and ethical obligations. However, unlike the
partners in a general partnership, the partners in a registered limited liability partnership do not
have individual civil liability, directly or indirectly, including by way of indemnification,
contribution, assessment or otherwise, for any debts, obligations or liabilities of or chargeable to
the registered limited liability partnership or each other, whether arising in tort, contract or
otherwise.
If the
above arrangements
are acceptable to
you, please sign the enclosed copy of this letter and
return
it to us.
BKD, LLP
The The services and arrangements described in this letter are in accordance with our understanding
and are acceptable to us.
CITY OF FAYETTEVILLE, ARKANSAS
BY 4
(Name & Title)
kk/tj
2002CI icnV71997/EN G L 1463
rjg GClifton
LLP
Certified Public Accountants & Consultants
To the Partners of SIC!), LLP and the SEC Practice Section Peer Review Committee
We have reviewed the design of the system of quality control for the accounting and auditing practice of BKD,
LLP (the "Firm") in effect as of May 31, 2001. A system of quality control encompasses the Firm's
organizational structure and the policies adopted and procedures established to provide it with reasonable
assurance of complying with professional standards. The elements of quality control are described in
Statements on Quality Control Standards issued by the American Institute of Certified Public Accountants (the
"AICPA"). We also reviewed the design of the Finn's policies and procedures pertaining to the membership
requirements of the SEC Practice Section of the AICPA Division for CPA Finns (the "Section"). The design
of the system of quality control and the policies and procedures pertaining to the membership requirements of
the Section, and compliance with them, are the responsibilities of the Firm. Our responsibility is to express an
opinion on the design of the system of quality control and the policies and procedures pertaining to the
membership requirements of the Section based on our review. We were not engaged to review compliance
with the Firm's system of quality control for its accounting and auditing practice as of May 31, 2001 or for any
period, or compliance with its policies and procedures pertaining to the membership requirements of the
Section. Accordingly, we express no opinion on the Finn's compliance with such system or policies and
procedures pertaining to the membership requirements of the Section as of any date or for any period.
Our review of the design of the Finn's system of quality control and the Finn's policies and procedures
pertaining to the membership requirements of the Section was conducted in accordance with guidelines
established by the Peer Review Committee of the Section. In performing our review, we obtained an
understanding of the system of quality control for the Finn's accounting and auditing practice and the policies
and procedures pertaining to the membership requirements of the Section. Because our review included
procedures performed on a selective basis and did not include tests of compliance, it would not necessarily
disclose all weaknesses in the design of the system of quality control or the policies and procedures pertaining
to the membership requirements of the Section.
Because there are inherent limitations in the effectiveness of any system of quality control and established firm
policies and procedures, deficiencies in the system, or in the firm's policies and procedures or in the fin's
compliance with its system or policies and procedures, may exist or occur and not be detected. Also,
projection of any evaluation of the design of a system of quality control, or of a fin's policies and procedures,
to future periods is subject to the risk that the system of quality control or the policies and procedures may
become inadequate because of changes in conditions. Additionally, weaknesses in the design of a system or in
a fin's policies and procedures, not previously identified, may be revealed by the implementation, actual
operation and testing of the system or an element of the system or the policies and procedures.
In our opinion, the system of quality control for the accounting and auditing practice of BKD, LLP has been
designed to meet the requirements of quality control standards for an accounting and auditing practice
established by the AICPA and the Fin's policies and procedures have been designed to meet the membership
requirements of the Section as of May 31, 2001.
December 20, 2001
1 )I l iro. in 1 3 .cues and \Vashington. IX.
S International
0 STAFF REVIEW FORM 0
XX AGENDA REQUEST
CONTRACT REVIEW
GRANT REVIEW
For the Fayetteville City Council meeting of August 20, 2002
FROM:
Marsha Farthing Accounting & Audit Admin Services.
Name Division Department
ACTION REQUIRED: Approval of an agreement with Baird, Kurtz & Dobson (BKD)
to provide the City of Fayetteville with independent audit services for calendar
years 2002-2006.
COST TO CITY:
$49,900 (2002)
Cost of this Request
1010-6600-5307-00
Account Number
Project Number
/LEASE REVIEW:
r. i
Accounting Manager J
VC" y AttoVey
U%
Purchasing Officer
250,748.00
Category/Project Budget
97,124.00
Funds Used To Date
153,624.00
Remaining Balance
9geted Item _ Budget
Services & Charges
Category! Project Name
Miscellaneous
Program Name
General
Fund
ustment Attached
Administrative Services Director
ADA Coordinator
Grant Coordinator
m
Date
Date
II'
STAFF RECOMMENDATION: The City Audit Committee and Staff recommend approval oft'
agre ent. If
Division Head Cross Reference •�•
Date
$1/oz
���{Oja�t�e�
Gjj�I,/ Date
New
Item:
Ye
No
Prev Ord/Res #:
Orig Contract Date:
Orig Contract Number:
AFF REVIEW FORM - Page 2�
Description
Comments:
Budget Manager
Accounting Manager
City Attorney
Purchasing Officer
ADA Coordinator
Internal Auditor
Grants Coordinator
Meeting Date
Reference Comments:
FAYETTEVILLE
THE CITY OF FAYETTEVILLE. ARKANSAS
DEPARTMENTAL CORRESPONDENCE
To: Marsha Farthing, Accounting & Audit
From: Heather Woodruff, City Clerk
Date: August 21, 2002
Please find attached a copy of Resolution No.124-02 approving a contract with Baird, Kurtz &
Dobson, LLP, to provide independent audit services to the City of Fayetteville. The original will
be microfilmed and filed with the City Clerk
cc: Nancy Smith, Internal Audit
010 03
update
Document
City of.Fayetteville
• ex Maintenance
Item. Action
11
8/23/2002
16:46:51
Reference
Date
Ret.
Taken Briet Description
RES
8202002
124
INDEPENDENT
AUDIT SERVICES TO CITY
Enter Keywords........:
File Reference #......:
Security class........:
Expiration Date.......:
Date for Cont/Referred:
Name Referred to......:
MICROFILM
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