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Home My WebLink About183-02 RESOLUTIONRESOLUTION NO. 183-02 A RESOLUTION APPROVING A CONTRACT AMENDMENT WITH BAIRD, KURTZ & DOBSON (BKD), LLP, IN AN AMOUNT NOT TO EXCEED SIX THOUSAND DOLLARS ($6,000.00) FOR ADDITIONAL AUDIT SERVICES. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby approves a contract amendment with Baird, Kurtz & Dobson (BKD), LLP, in an amount not to exceed Six Thousand Dollars ($6,000.00) for additional audit services. A copy of the contract amendment, marked Exhibit "A" is attached hereto, and made a part hereof. PASSED and APPROVED this 3rd day of December, 2002. EATHER WOODRUFF, C Clerk APPROVED: By: DA OODY, Mayor NAME OF FILE: CROSS REFERENCE. Item # Date Resolution No.183-02 Document 1 12/03/02 Resolution # 183-02 2 11/15/02 Staff review form 3 12/09/02 Memo from Heather Woodruff, City Clerk to Marsha Farthing, Accounting and Audit NOTES: STAFF REVIEW FORM AGENDA REQUEST X CONTRACT REVIEW GRANT REVIEW For the Fayetteville City Council Meeting of: December3,2002 FROM: Marsha Farthing Name Accounting & Audit Administrative Services Division Department Approve a contract amendment of $6,000 to BKD,LLP for additional audit costs. COST TO CITY: $6,000.00 $ Cost of this request Account Number Project Number Category/Project Budget Program Category / Project Name Funds Used to Date Program / Project Category Name $ Remaining Balance Fund Name BUDGET REVIEW: X Budgeted Item Budget Adjustment Attached pe -/S -J2 Budget Mang CONTRACT/GRANT/LEASE REVIEW: ar- ; Date Administrative Services Director Date City Attorne Purchasing Manager Date Internal Auditor Date II/iSIJ2- Date ADA Coordinator Date 1111510 2— Date Grant Coordinator Date STAFF RECOMMENDATION: Approval of contract amendment. Division Head Departmen Director haat Adminrs tive S- vices Director Mayor Date ate 04.E D Date Cross Reference New Item: Yes No Previous Ord/Res#: Orig. Contract Date Orig. Contract Number Description • • Staff Review Form - Page 2 Comments: Budget Manager Accounting Manager City Attorney Purchasing Manager ADA Coordinator Internal Auditor Grants Coordinator Meeting Date December 3, 2002 Reference Comments: FAYETTEVIeLE THE CITY OF FAYETTEVILLE, ARKANSAS • To: Dan Coody and City Council Thru: Steve Davis, Administrative Services Director�j From: Marsha Farthing, Accounting Manager Subject: Annual Audit The City of Fayetteville contracted with new auditors for the annual audit in August of 2002. BKD, LLP was selected and the audit costs for the 2002 audit are $49,900. Since September we have been trying to secure working papers from the City's previous auditors, Arthur Andersen, for BKD. The Andersen Dallas office which performed our audit has been closed and our files have been moved to a storage facility. The persons who worked on our previous audit are no longer employed at Andersen and we have no one to contact with any knowledge of the City of Fayetteville audit. Arthur Andersen sent BKD a release authorization for the City to sign. The City Attorney advised against signing Arthur Andersen's release letter because of certain language in the letter (see attached) and the City submitted a substitute letter prepared by the City Attorney. Arthur Andersen has refused to release their working papers to BKD because we altered their original letter. BKD has estimated 30 to 60 additional audit hours if we are unable to secure the working papers from Andersen. BKD has had problems getting working papers from Andersen for clients who did sign Andersen's original letter, so I don't know if BKD would receive the papers even if we signed their letter. Therefore, we are requesting a contract amendment of $6,000 to allow for the increased costs of the audit. 113 WEST MOUNTAIN 72701 501 521-7700 FAX 501 575-8257 ICIKO Solutions for Success • 5000 Rogers Avenue, Suite 700 Fort Smith, AR 72903-2079 479 452-1040 Fax 479 452-5542 • 400 W. Capitol Avenue, Suite 2500 P.O. Box 3667 Little Rock, AR 72203-3667 501372-1040 Fax 501 372-1250 200 E. 11th Avenue P.O. Box 8306 Pine Bluff, AR 71611-8306 870 534-9172 Fax 870 534-2146 November 15, 2002 Audit Committee and City Council Honorable Dan Coody, Mayor Ms. Marsha Farthing, Accounting Manager 113 West Mountain Fayetteville, Arkansas 72701 bkd.com RECEIVED NOV 19 2002 ACCTG. DEPT: The following documents the nature of our services beyond those contemplated in our engagement letter dated August 7, 2002, with the CITY OF FAYETTEVILLE, ARKANSAS. ADDITIONAL PROCEDURES Performance of audit procedures on the beginning balances of the City as of January 1, 2002 due to the inability to gain access to Arthur Andersen's working papers for fiscal year ended December 31, 2001. ENGAGEMENT FEES Our fees related to these services will be based on time expended and will not exceed $6,000. These fees will be billed and are due on the same terms as those in our original engagement letter. OTHER ENGAGEMENT MATTERS AND LIMITATIONS This addendum to our original engagement letter serves to identify the additional services you have requested, but does not modify any other rights, restrictions or agreements contained in that letter. These services will be performed based on the terms of that original agreement, except as otherwise indicated herein. 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. A member of Moores Rowland Opt • • Audit Committee and City Council Honorable Dan Coody, Mayor Ms. Marsha Farthing, Accounting Manager November 15, 2002 Page 2 If the above arrangements are acceptable to you, please sign the enclosed copy of this letter and return it to us. B BK)), L. ?3D, )), LLP The services and arrangements described in this letter are in accordance with our understanding and are acceptable to us. CITY OF FAYETTEVILLE, ARKANSAS BY/LC.1/[ S4— 4 a e K (Name and Title) / U DATEJZ 5'4 kk/rp 2002C LI EN T/71997/E NG L2157 11/14/02 14:00 FAX 501 372 1250• 810 LLP lag) swims to Success 5000 Rogera Avenue. Bugs 700 Fort Smith, AR 72903-2070 479 452 1040 Fax 479 452-5542 • 400 W. Capild Avenue, Suite 2500 P.O. Box 3667 Utile Rock, AR 72203.3667 501 372-1040 Fax 501 372-1250 10002 200 E. 1101 Avenue P.O. Box 6306 Pine Nutt AFI 71611-6308 B70 534.9172 Fax 670 534.2146 November 13, 2002 Ms. Marsha Farthing, Accounting Manager City of Fayetteville, Arkansas 113 West Mountain Fayetteville, Arkansas 72701 Dear Marsha: bkd.com As we have previously discussed, if we do not gain access to Arthur Andersen's working papers for fiscal year ended December 31, 2001, we will need to perform additional audit procedures to ensure the beginning balances as of January 1, 2002 are proper in all material respects. A partial listing of items we will need to have access to include the following: • Adjusted trial balances as of December 31, 2001 that agree to the CAFR • December 31 bank reconciliations • December 31 investment summaries and supporting documentation such as trust statements • A detailed fixed asset listing, including accumulated depreciation when applicable • Summaries of year end accounts receivable, accounts payable and accrued liabilities • A reconciliation of outstanding long-term debt and maturity schedules Based on our discussions, it is my understanding that the City of Fayetteville prepares most of the audit schedules necessary to support the financial statements in the CAFR. Additionally, you and your staff will be available to assist us in determining the beginning balances as of January 1, 2001. Therefore, assuming we do not gain access to Andersen's working papers, we have estimated that it will take an additional 30 to 60 hours (53,000 to S6,000 in fees) to substantiate opening balance& lf you need additional information or have any questions, please call me at (501) 372-1040. We look forward to working with you in the near future. Sincerely, Kevin Kemp Senior Manager kk/vls 2002CLIENT/71997/LTRLI 145 Am0e4W a Mmne Rona.] WI hormonal FAYETTEVIa.E THE CITY OF FAYETTEVIIIE, ARKANSAS KIT WILLIAMS, CITY ATTORNEY DAVID WHITAKER, ASST CITY ATTORNEY DEPARTMENTAL CORRESPONDENCE LEGAL DEPARTMENT TO: Marsha Farthing, Accounting FROM: Kit Williams, City Attorney (4Th 7C - DATE: September 12, 2002 RE: Arthur Andersen LLP's 2001 Audit of City of Fayetteville We do not want to indemnify and hold harmless known felons like Arthur Andersen. The first two "sentences' in the proposed letter supplied by BKD were not sentences. The first lacked a subject; the second lacked a predicate. Attached is my proposed letter for the Mayor to sign FAYETTEVILtE THE CITY OF FAYETTEVILLE, ARKANSAS • Date : October 17, 2002 Arthur Andersen LLP 901 Main Street, Suite 5300 Dallas, Texas 75202 Re: Arthur Andersen's Audit Working Papers and Files— Client Authorization and Understandings Dear Arthur Andersen: Relating to Arthur Andersen's (AA) work on AA's audit, in accordance with generally accepted auditing standards, of the December 31, 2001 financial statements of the City of Fayetteville, Arkansas (Client) and AA's report issued thereon dated April 12, 2002 requests that AA, make its related working papers available for review by BKD, LLP, and that AA answer questions related to the working papers. The working papers prepared in connection with the Engagement contain, among other things, information about Client, the key audit areas and the results of AA's audit tests including conclusions reached. The purpose of this access to and review of AA's working papers and files is to enable BKD, LLP to consider the information contained therein in planning their 2002 audit of the Client. The Client acknowledges that upon receipt of the items specified in the last paragraph of this letter, AA will be authorized to provide copies of these working papers and all other written materials pertaining to the Engagement (collectively, the "Work Files") to BKD Client acknowledges and agrees that it acquires no new rights against AA as a result of BKD's review with respect to the completed audit. Regarding AA's cooperation and other participation in this matter, neither AA, its affiliated firms nor any of AA's nor such affiliated firms' respective directors, officers, managers, partners, participating principals, national directors, employees, representatives or similar persons will have any liability of any kind, and shall have no liability for any consequential, special, incidental or exemplary damages; the foregoing shall apply regardless of the theory of relief asserted (including negligence of AA or others) and even if AA is advised of the possibility of such damage or loss. Client also acknowledges that it (and not AA) is solely responsible for determining the applicability of any tax advisor privilege, attorney-client privilege or other privilege or similar rule (e.g., the work product rules) to the above-mentioned working papers and for otherwise managing the establishment and maintenance of any such privilege or protection and for considering possible waiver thereof (and for involving legal counsel as necessary). And Client further acknowledges that AA reserves the right to withhold from disclosure any of its Work Files that AA in its discretion determines contain information proprietary or confidential to AA and to limit access to review only and not permit copying. AA will be entitled to retain in full the originals of its Work Files. Client also agrees to pay AA upon invoicing (or immediately if already invoiced) all fees and expenses incurred to date in connection with AA's services provided to Client as of the date of this letter, in accordance with such invoice(s). 113 WEST MOUNTAIN 72701 501 521-7700 FAX 501 575-8257 • • • • Client shall upon the receipt of written notice from AA indemnify and hold harmless AA, its affiliates and their respective partners, principals and personnel against all costs, fees, expense, damages and liabilities (including defense costs) associated with any claim arising from or relating to any access to or use of AA's Work Files or related consultations hereunder. This indemnity is intended to apply to the extent not contrary to applicable law, regardless of the grounds or nature of any claim asserted (including contract, statute, any form of negligence whether of client, AA or others, tort, strict liability or otherwise) and whether or not AA was advised or aware of the possibility of the.damage or loss asserted. Such indemnity obligation shall also continue to apply after any termination of this agreement or the activities hereunder and during any dispute that might arise between the parties. Upon the receipt by AA of an access letter in the form approved by AA and executed by BKD, LLP, and AA's receipt of any outstanding fees owed by Client to AA in connection with the Engagement, AA will provide its assistance in this matter at the earliest mutually convenient time. Very truly yours, City of Fayetteville, Arkansas "Client" By: Stephen Davis (Authonzed Officer) Interim Administrative Services Director 10/17/02 Title Date FAYETTEVIIPLE • THE CRY OF FAYETTEVILLE. ARKANSAS September 12, 2002 Arthur Andersen LLP 901 Main Street, Suite 5300 Dallas, Texas 75202 RE: Arthur Andersen LLP's 2001 Audit of City of Fayetteville Dear Arthur Andersen LLP: The City of Fayetteville, Arkansas, hereby requests that Arthur Andersen LLP provide its working papers related to its audit of the December 31, 2001 financial statements of the City of Fayetteville, Arkansas and its report issued thereon dated April 12, 2002, to the City of Fayetteville's new outside accounting firm, Baird, Kurtz and Dobson, LLP. The City of Fayetteville, Arkansas, expressly waives any client privilege regarding Arthur Andersen LLP's 2001 audit and authorizes the release of all relevant documents including key audit areas, audit tests and all associated working papers and all other written materials pertaining to the Engagement, contract, or 2001 audit of the City of Fayetteville, Arkansas by Arthur Andersen LLP. 113 WEST MOUNTAIN 72701 479621-7700 FAX 4796758257 Sincerely, Dan Coody, May City of Fayetteville, Arkansas FAYETTEVI&E THE CITY OF FAYETTEVIIIE, ARKANSAS DEPARTMENTAL CORRESPONDENCE • To: Marsha Farthing, Accounting & Audit From: Heather Woodruff, City Clerk Date: December 9, 2002 Attached is a copy of Resolution No. 183-02 approving a contract amendment with Baird, Kurtz & Dobson (BKD), LLP, in an amount not to exceed $6,000.00 for additional audit services. The original resolution will be microfilmed and filed with the City Clerk. cc: Nancy Smith, Internal Auditor