HomeMy WebLinkAbout151-07 RESOLUTIONRESOLUTION NO. 151-07
A RESOLUTION TO APPROVE AN ANNUALLY
RENEWABLE FIVE YEAR CONTRACT WITH BKD, LLP IN
THE AMOUNT OF $75,000.00 FOR THIS YEAR
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WHEREAS, the Accounting Division issued a Request for Qualifications for the outside,
independent accounting firm to perform an annual audit of the City's books and ledgers; and
WHEREAS, BKD, LLP was selected to continue as the City's independent auditor; and
WHEREAS, BKD,LLP agreed to the attached contract for its auditing services at a cost
of $75,000.00 for 2007.00.
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NOW, THEREFORE, 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
the selection of BKD, LLP and approves the Contract (attached as Exhibit A) with BKD, LLP in
the amount of $75,000.00 for 2007 audit and accounting work and advice pursuant to the
contract and authorizes Mayor Coody to execute the contract.
PASSED and APPROVED this 23rd day of August, 2007.
APPROVED
By:
DAN COODY, Mayor
Al PEST:
By
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S.•- ••G\SY O,r •."X• z
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:FAYETTEVILLE:
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SONDRA E .SMITH, City Clerk/Treasurer
CONTRACT
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This professional services contract is executed this aJ TAday of uti St,
2007 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 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, 2007 through December
31, 2011.
3. The professional accounting services shall be provided in accordance
with the terms and conditions set forth in the Request for Proposal, attached hereto
and m arked 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 terms 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".
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.
ATTEST:
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Sondra Smith, City Clerk
CITY 0 _ FAYETTEVILLE
Dan Coody, Mayor
BKD, LLP
By: ' •••- I ivr —
laKO
July 24, 2007
Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Paul Becker, Finance and Internal Services Director
Ms. Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
113 West Mountain
Fayetteville, AR 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 basic financial statements of the City of Fayetteville, Arkansas as of and for the
year ended December 31, 2007; 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
financial statements.
✓ 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.
5000 Rogers Avenue, Suite 700
Fort Smith, AR 72903-2079
479.452.1040 Fax 479.452.5549
bkd.com
400 W. Capitol Avenue, Suite 2500
P.O. Box 3667
Little Rock AR 72203-3667
501.372.1040 Fax 501.372.1250
Beyond Your Numbers.
200 E. 11th Avenue
P.O. Box 8306
Pine Bluff, AR 7161143306
870.5349172 Fax 870.534.2146
Praxity
MEMBER•
GLOBAL ALLIANCE OF
INDEPENDENT FIRMS
-2 -
Audit Committee and City Council July 24, 2007
Honorable Dan Coody, Mayor
Mr. Paul Becker, Finance and Intemal Services Director
Ms Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
✓ 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.
✓ Issuance of a report on your schedule of expenditures of federal awards.
We will also examine the written assertion about the compliance with certain Arkansas state acts
made by the management of City of Fayetteville, Arkansas as of and for the year ended
December 31, 2007, in accordance with attestation standards established by the American
Institute of Certified Public Accountants.
The objective of our examination is the expression of an opinion on the conformity of the subject
matter of the assertion in all material respects, with the applicable criteria against which it is
measured. Our report is intended solely for the information and use of the governing body,
management and the State of Arkansas and is not intended to be and should not be used by
anyone other than these specified parties.
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 perfoim:
✓ The audit of the financial statements to obtain reasonable rather than absolute assurance about
whether the fmancial 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 fmancial 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.
Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Paul Becker, Finance and Internal Services Director
Ms. Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
July 24, 2007
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 material weakness or significant
deficiency. 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 oven-ide the system.
We are available to perform additional procedures with regard to fraud detection and prevention
at your request, subject to completion of our normal engagement acceptance procedures. The
actual terms and fees of such an engagement would be documented in a separate letter to be
signed by you and BKD.
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
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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 written assertion
• 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
Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Paul Becker, Finance and Internal Services Director
Ms. Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
July 24, 2007
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 and setting the proper tone;
creating and maintaining a culture of honesty and high ethical standards; and establishing
appropriate controls to prevent, deter and detect 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
OTHER SERVICES
We may perform other services for you not covered by this engagement letter. You agree to
assume full responsibility for the substantive outcomes of those services, including any findings
that may result. You also acknowledge that those services are adequate for your purposes and
that you will establish and monitor the performance of those services to ensure that they meet
management's objectives Any and all decisions involving 'management functions related to
those services will be made by you, and you accept full responsibility for such decisions. We
understand that you will designate a management -level individual to be responsible and
accountable for overseeing the performance of those services, and that you will have determined
this individual is qualified to conduct such oversight.
ENGAGEMENT FEES
Our fees will be based on time expended plus charges for travel, long-distance telephone, copies,
etc. and will not exceed $75.000. 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:
• 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
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Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Paul Becker, Finance and Internal Services Director
Ms. Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
July 24, 2007
We will provide you with a detailed list of assistance needed before the audit begins.
Our timely completion of the audit depends on your timely and accurate schedule and analyses
preparation and on the availability of your personnel to provide other assistance. If there are
inaccuracies or delays in preparing this material, or if we experience other assistance difficulties
that add a significant amount of time to our work, our fees will increase. If these circumstances
occur, we will promptly notify you to discuss alternative solutions and the impact on our fees.
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.
The Auditing Standards Board of the American Institute of Certified Public Accountants, which
promulgates generally accepted auditing standards, has recently issued eight new standards
collectively known as the Risk Assessment Suite. The Risk Assessment Suite imposes new
requirements significantly expanding information to be gathered about the entity being audited,
its environment, risks it faces and how it controls those risks. The Suite also imposes new
requirements significantly enhancing the rigor and detail of the process of assessing and
developing responses to risks of material misstatement of the particular entity's financial
statements as well as documentation thereof.
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Our fees may also increase if ourduties or responsibilities are increased by rulemaking of any
regulatory body or any additional new accounting or auditing standards. We will consult with
you in the event any other regulations or standards are issued that may impact our fees.
If our invoices for this or any other engagement you may have with BKD are not paid within 30
days, 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.
Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Paul Becker, Finance and Internal Services Director
Ms. Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
July 24, 2007
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.
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 American Arbitration Association will administer
any such mediation in accordance with its Commercial Mediation Rules. 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.
This engagement letter represents the entire agreement regarding the services described herein
and supersedes all prior negotiations, proposals, representations or agreements, written or oral,
regarding these services It shall be binding on heirs, successors and assigns of you and BKD
We may from time to time use third -party service providers in serving your account. We may
share confidential information about you with these service providers, but remain committed to
maintaining the confidentiality and security of your information. Accordingly, we maintain
internal policies, procedures and safeguards to protect the confidentiality of your information In
addition, we will secure confidentiality agreementswith all service providers to maintain the
confidentiality of your information In the event that we are unable to secure an appropriate
confidentiality agreement, you will be asked to provide your consent prior to the sharing of your
confidential information with the third -party service provider.
We will, at our discretion or upon your request, deliver financial statements or similar documents
to you electronically via floppy disk, CD-ROM, e-mail or other mechanism. You recognize and
accept the risk involved, particularly in e-mail delivery as the Internet is not necessarily a secure
medium of communication as messages can be intercepted and read by those determined to do
so.
You agree you will not modify these documents for internal use or for distribution to third
parties. You also understand that we may on occasion send you documents marked as draft and
understand that those are for your review purpose only, should not be distributed in any way and
should be destroyed as soon as possible.
-7 -
Audit Committee and City Council July 24, 2007
Honorable Dan Coody, Mayor
Mr. Paul Becker, Finance and Internal Services Director
Ms. Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
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.
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.
HIPAA BUSINESS ASSOCIATE AGREEMENT
We agree not to use or disclose Protected Health Information of your employees (hereinafter
referred to as "PHI") obtained or produced in any form of media during the course of our work,
other than for purposes of (a) performing our engagement, (b) management and administration of
BKD, or (c) carrying out legal responsibilities of BKD We represent to you that we have
implemented what we consider to be appropriate administrative, physical and technical
safeguards to protect the confidentiality, integrity and availability of that PHI. With respect to
your PHI, we will report to you any material security incident or use or disclosure not authorized
by this agreement and, to the extent practical, assist you in mitigating any harmful effects caused
by material security incidents or unauthorized uses or disclosures of which we have knowledge.
We agree that any material violation of these confidentiality provisions entitles you to terminate
this engagement.
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Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Paul Becker, Finance and Internal Services Director
Ms Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
BKD agrees to:
July 24, 2007
1. Upon their request, make available to the Secretary of Health and Human Services our
internal practices and books and records relating to the use and disclosure of PHI for
purposes of determining your compliance with the Security and Privacy Rule, subject to
any applicable legal privileges.
To the extent we maintain information that is part of a Designated Record Set, make
available information necessary for you to make an accounting of disclosures of PHI about
an individual.
3. To the extent we maintain information that is part of a Designated Record Set, make
available information necessary for you to respond to requests by individuals for access to
PHI that is not in your possession but is considered part of a Designated Record Set.
4. Upon receipt of a written request from you, incorporate any amendments or corrections to
PHI contained in our workpapers in accordance with the Security and Privacy Rule to the
extent such PHI is considered part of a Designated Record Set.
For purposes of this agreement, the term "Security and Privacy Rule" refers to the final rules
published to implement the Administrative Simplification provisions of the Health Insurance
Portability and Accountability Act of 1996, specifically 45 CFR Parts 160 and 164. The terms
"Protected Health Information" and "Designated Record Set" have the same meaning as defined
in the Security and Privacy Rule.
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At the conclusion or termination of this engagement, any PHI retained by us will be subject to
the same safeguards as for active engagements.
We will obtain from any agents, including subcontractors, to whom we provide PHI received
from you, or created or received by us on behalf of you, an agreement to the same restrictions
and conditions that apply to us with respect to such PHI
To the extent that any relevant provision of HIPAA is eliminated or held to be invalid by a court
of competent jurisdiction, the corresponding portion of this agreement shall be deemed of no
force and effect for any purpose. To the extent that any relevant provision of HIPAA is
materially amended in a manner that changes the obligations of business associates or covered
entities that are embodied in term(s) of this engagement, the Parties agree to negotiate in good
faith appropriate amendment(s) to this engagement to give effect to such revised obligations In
addition, the terms of this engagement should be construed in light of any interpretation and/or
guidance on HIPAA issued by HHS from time to time.
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Audit Committee and City Council
Honorable Dan Coody, Mayor
Mr. Paul Becker, Finance and Internal Services Director
Ms Marsha Farthing, Accounting Manager
City of Fayetteville, Arkansas
July 24, 2007
If the above arrangements are acceptable to you, please sign the enclosed copy of this letter and
return it to us.
BKD, LLP
The services and arrangements described in this letter are in accordance with our understanding
and are acceptable to us.
CITY OF FAYET EVILLE, ARKANSAS
BY
TITLE
DATE
Marsha Farthing
Submitted By
City of Fayetteville Staff Review Form
City Council Agenda Items
and
Contracts, Leases or Agreements
8/21/2007
City Council Meeting Date
Agenda Items Only
Accounting and Audit
Division
Action Required:
Finance
Department
Approval of a five year contract with Baird, Kurtz & Dobson, LLP (BKD) for independent audit services and approval
of the 2007 year audit engagment letter.
$75,000
Cost of this request
allocated to various funds
Account Number
Project Number
Budgeted Item
x
Category / Project Budget
Funds Used to Date
Remaining Balance
Budget Adjustment Attached
Program Category / Project Name
Program / Project Category Name
Fund Name
Department Director
City omey
Y4inrnceDireorsi�
Mayor
E -7 —0 7
Date
ale/O1
Date
Date
Date
Previous Ordinance or Resolution #
Original Contract Date:
Original Contract Number:
Comments:
Revised April 16, 2007
WINK:le
THE CITY OF FAYETTEVILLE, ARKANSAS
To: Mayor Dan Coody and the Fayetteville City Council
Thru: Paul Becker, Finance Director
From: Marsha Farthing, Accounting Director
Date: Augusta, 2007
Subject: Annual Audit
Recommendation
Approval of a resolution approving a five year contract with Baird, Kurtz & Dobson
(BKD), LLP for independent audit services for 2007 through 2011 and approval of the
2007 year audit engagement.
Background
In August 2002 the City Council passed Resolution 124-02 approving a five year contract
with Baird, Kurtz & Dobson (BKD), LLP, to provide independent audit services for the
City. BKD was selected for another five years of audit services through the City's RFP
process on July 20, 2007.
Discussion
The City is required, under Arkansas statutes and applicable bond issues, to have an
annual financial audit conducted by either Legislative Audit or a Certified Public
Accounting firm licensed' in Arkansas: Because of the requirements of bond indentures,
the City has for the past thirty plus years utilized the services of a private CPA firm to
perform these mandated financial audits.
BKD was selected by the City following the applicable rules and regulations concerning
the procurement of auditing services. The City entered into a five-year agreement in
August 2002 and selected BKD for another five years through the RFP process in July
2007. Under thisdontract BKD"will provide an annual audit of the City's financial
statements and a review'of the City's internal control system as required by state law. In
addition to the financial audit, BKD also issues a report on internal control and
compliance requirements for major federal award programs as required by the Single
Audit Act. The single audit is the primary mechanism used by federal agencies to ensure
accountability for federal awards to non-federal entities.
113 WEST MOUNTAIN 72701 479-521-7700
FAX , 479-575-8257 •
Finally, BKD also provides technical assistance to the City in producing the
Comprehensive Annual Financial Report (CAFR). The CAFR includes the City's
financial statements as well as statistical information required by the City's bond
covenants.
Budget Impact
The cost of the 2007 audit is $75,000. The audit will be budgeted in General Fund but the
costs will be allocated to the various funds of the City.
RESOLUTION NO.
A RESOLUTION TO APPROVE AN ANNUALLY RENEWABLE
FIVE YEAR CONTRACT WITH BKD LLP IN THE AMOUNT OF
$75,000.00 FOR THIS YEAR
WHEREAS, the Accounting Division issued a Request for Qualifications for the outside,
independent accounting firm to perform an annual audit of the City's books and ledgers; and
WHEREAS, BKD, LLP was selected to continue as the City's independent auditor; and
WHEREAS, BKD,LLP agreed to the attached contract for its auditing services at a cost
of $75,000.00 for 2007.00.
NOW, THEREFORE, 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
the selection of BKD, LLP and approves the Contract (attached as Exhibit A) with BKD, LLP in
the amount of $75,000.00 for 2007 audit and accounting work and advice pursuant to the
contract and authorizes Mayor Coody to execute the contract.
PASSED and APPROVED this 21st day of August, 2007.
APPROVED: ATTEST:
•
By: By:
DAN COODY, Mayor SONDRA E SMITH, City Clerk/Treasurer
CONTRACT
4 /�
This professional services contract is executed this c(-- day of Ptui Si
2007 by and between the City of. Fayetteville, Arkansas, hereinafter called :i to City,
and BKD, LLP.
WHEREAS, the City has issued a Request for Proposal for Independent Audit;
and
WHEREAS, BKD, LLP has submitteda 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 allfunds 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 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, 2007 through. December
31,2011.
3. The professional accounting services shall be provided in accordance
with the terms -and conditions set 'forth in the:Request for Proposal, attached hereto.
and m arked Exhibit ."A; the: Proposal to Provide Services, attached hereto and
marked Exhibit "B,' and .the Engagement Letter, attached hereto arid marked -
Exhibit "C". Each of - these'Ezliibits are-hereby•incorporated by reference as if set
forth word for wordin their entirety:
4. BKD, LLP shall ,be compensated for services rendered under this
contract in accordance, with the. terms and conditions set forthin the Exhibits. No
work shall be performed beyond the present scope of this contract without express
prior approval bythe 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. hi the .event of a conflict between any terms 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 "Aft.
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. + itis 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 provisionsand conditions and 'shall not prevent theparties from zinvoking -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.
•
ATTEST:
CITY OF FAYE'11 EVILLE
Dan Coody, Mayor
•
Sondra Smith, City Clerk
dp
BKD, LLP
CONTRACT
aJ
This professional' seri/ices .contract is executed this day of flel & i' & ,
2007 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, LLPhas submitteda. 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 toauditall funds including those: which are covered under the provisions of
the Single Audit Act.
14,
2. The tern of the contract shall run from the date of execution and shall
automatically renew each year, subject to budget approval by the governing body of
the Cit}, for such'terms as are required to perform the contracted professional
auditing -services for the fiscalyears ending December 31, 2007 through December
31 2011:
3. The
With the terms and conditions set forth in the Request for Proposal, attached herete.
and marked Exhibit 'A;" ;the Proposal. to Provide Services, attached hereto arid
marked Exhibit "B;" and the Engagement_ Letter, attached hereto and marked:
Exhibit "C". Each of'these Ezlibits are hereby."incorporated by reference"as if set
forth word for word in thea entirety, ,
4. BKD,LLP shall be_compeinsated for services rendered under this
contract in accordance with.the terms aind conditions setforth in the Exhibits. .No
work shall-be'performed` beyond 11ie present scope of this contract without' express'"
prior approvalby thegoverning'body of the City.
5. The City or BKD, LLP shallhave the right toffterminate the Contract
upon 30 days written notice:, , -
6. .A- In the event of a conflict between any terms and conditions_. ofthis
Contract and the Exhibits, `thecterms and conditions of the 'Exhibits shall: take' F.
precedence iri the following order this- Contract, Exhibit. "C"; •Exhibit `B' and
Exhibit "A". - '
7. Neither party may assignany 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 andthe same instrument.
IN WITNESS WHEREOF,'.the:parties hereto have executed this professional
services contraction or as of the date first written above.
ATTEST:
Sondra Smith; Crty, Clerk
CITY OF FAYETTEVILLE
Dan Coody, Mayor
BKD, LLP
•
By:
AR'K,AISIS AS
I
CITY OF FAYETTEVILLE
113 W. Mountain St.
Fayetteville, AR 72701
REQUEST FOR PROPOSAL
RFP #07-10
Independent Financial Auditor
RFP #: 07-10
DATE ISSUED: Friday, June 22, 2007
DEADLINE: Friday, July 13, 2007 at 2:00 PM, Central Standard Time
PURCHASING AGENT: Andrea Foren, 479.575.8220, atoren@ci.fayetteville.ar.us
PROPOSAL DELIVERY ADDRESS: City of Fayetteville, Purchasing
Division — Room 306, 113 W. Mountain, Fayetteville, AR 72701
City of Fayetteville, Arkansas
RFP 07-10, Independent Financial Auditor
Page 1 of 10
City of Fayetteville
RFP 07-10, Independent Financial Auditor
Terms & Conditions
The City of Fayetteville will receive sealed technical and fee proposals until 2:00 PM, Central Standard
Time (CST), Friday July 13, 2007, for the above referenced services which are described in the schedules
attached hereto. Packaging and sealed envelopes shall be labeled "RFP 07-10, Independent Financial
Auditor" with the name of the submitting firm. .
2. Any questions and/or specifications that may need clarification should be submitted in writing and
forwarded to the Purchasing Agent at the referenced contact information prior to this proposal opening
date. It shall be the Proposers' responsibility to seek clarification as early as possible prior to the opening
of proposals.
3. The person, firm, or corporation participating in this solicitation shall submit its technical and fee proposals
on or before the hour and day stated above. No proposal may be withdrawn or modified in any way after
the deadline for proposal openings.
4. The Proposers' response shall include a technical proposal and fee proposal with all other information
requested in this Request for Proposal (RFP). The fees listed in such fee proposal shall be the full cost to
the City of Fayetteville for the complete services listed in this request for proposal.
5. These instructions are an integral part of any proposal.
6. The City of Fayetteville reserves the right to reject any or all proposals, wave informalities, and make an
award, in the best interest of the City.
7. Proposers are advised to examine all documents and current parameters of the services in becoming fully
informed as to their conditions. This includes the conformity with specific standards and the character,
quality and quantity of the reports and services required. Failure to examine these areas will not relieve the
successful Proposer of his obligation to furnish all deliverables and• services necessary to carry out the
provisions of the contract. ,
8. This contract will be awarded, if awarded, to the most responsive and responsible Proposer according to
the criteria provided in this RFP. ,
9. The City of Fayetteville will consider the degree to which each Proposer has submitted a complete
Technical and Fee Proposal without irregularities, excisions, special conditions, or alternative proposals for
any item unless specifically requested in the RFP.
10. It is the responsibility of the Proposer to have its sealed proposal at the Purchasing Agents Office prior to
the time of opening; Proposals received after the scheduled deadline time and date will remain unopened
and will not be considered.
11. The following address should be used on the outside of the envelope containing the proposals:
CITY OF FAYETTEVILLE
Purchasing Division - Room 306
113 W. Mountain
Fayetteville, AR 72701
City of Fayetteville, Arkansas
RFP 07-10, Independent Financial Auditor
Page 2 of 10
12. Each Proposer shall submit one (1) original and seven (7) copies of its technical and fee proposal. An
electronic copy of all submitted documents shall be submitted on a properly labeled CD. The use of
documents formatted for Adobe (PDF) is highly recommended. '
City of Fayetteville, Arkansas
RFP 07-10, Independent Financial Auditor
Page 3 of 10
City of Fayetteville
RFP 07-10, Independent Financial Auditor
Project Information
The City of Fayetteville invites proposals to audit the financial statements of the City for fiscal years ended
December 31, 2007 to 2011, including all funds which are included under the provisions of the Single Audit
Act.
A. At any point in the selection process, the Proposer may be requested to submit information supplemental
to the proposal. Upon opening the proposals, the selection committee, which will be comprised of the
Audit Committee and various Finance staff, will convene to evaluate the proposals on the basis of the
criteria described below. Interviews maybe 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 selection committee. If the selection committee is unable to negotiate a satisfactory
contract with the top ranked firm, negotiations with that firm shall be terminated, and negotiations will
begin with the next highest ranked firm. Once a recommendation is reached by the selection committee,
the selection will be presented to the City Council for their approval.
The City's 2006 Comprehensive Annual Financial Report (CAFR) and 2007 Annual Budget and Work
Program are available on the City's website, as listed below. If you need assistance in retrieving the
CAFR or information on the City's Annual Budget & Work Program, please contact Andrea Foren at
479-575-8220 or aforen@ci.fayettevili.e.ar.us.
The documents can be found at the City's website of www.accessfayettevjlle.org.
CAFR: Documents (Accounting & Audit)
Annual Budget & Work Program: Documents (Budget & Research)
The following tentative timetable has been established for the completion of the award of an audit
contract:
Advertisement for Proposals
•
Deadline for Proposals
Selection Committee Meeting
Interviews with short listed firms
Deadline to City Clerk for Council
City Council Meeting
June 22"d
July 13th
July 20th (short list firms for interviews)
August 9th (afternoon) & 10th (morning)
August 17th
September 4th
•let ru City of Fayetteville, Arkansas
RFP 07-10, Independent Financial Auditor
Page 4 of 10
B. Mandatory requirement for each submitting firm:
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 US General Accounting Office's Government
Auditing Standards.
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.
C. Audit Contact
Any questions concerning this RFP should only be directed to:
Andrea Foren
Purchasing Agent
113 W. Mountain
Fayetteville, AR 72701
(479) 575-8220
aforen @ci.fayetteville.ar.us
D. 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 selection committee.
II. AUDIT OBJECTIVES AND SCOPE OF SERVICES
A. There are two objectives of the services covered by this RFP. Each responder must consider each of
these objectives separately and reflect such treatment in the proposal:
1. To express an opinion on the fair presentation of its basic financial statements in conformity with
generally accepted accounting principles.
2. To assist in the review 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 audit 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:
City of Fayetteville, Arkansas
RFP,07-10, Independent Financial Auditor
Page 5 of 10
1. AICPA Industry Audit and Accounting Guide - Audits of State and Local Governmental Units
2. US General Accounting Office's Government Auditing Standards
3. Audits of State and Local Governments and Non-`Profit'Oganizations-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 of Fayetteville
from the record keeping requirements of Act 159 of 1973.
C. The periods to be covered are the City's fiscal years ending December 31, 2007, 2008, 2009, 2010, and
2011. 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. 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.
m�
The CAFR will be published in final form and distributed to GFOA by June 30 of each year.
E. The auditor in charge shall conduct an entrance and an exit conference with the Audit Committee.
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.
F. 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.
G. 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.
City of Fayetteville, Arkansas
RFP 07-10, Independent Financial Auditor
Page 6 of 10
H. Worker's Compensation:
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 arising out of or in the course of employment and certifies that it will comply with such
provisions before commencing the performance of the work of this proposal.
I. 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 upon
delivery
of the completed audit.
The total progress billings must be itemized based on the amount of time expended on each fund.
2. 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, seven special revenue funds, three debt service
funds, five capital projects funds, four enterprise funds, one internal service fund, two trust funds, 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 thirteen full time employees: an
information technology manager, a senior programmer/analyst, a systems administrator, a network
engineer, a business systems analyst, a systems analyst, a database administrator, a GIS coordinator,
four GIS technicians, and a property location analyst. Assistance from this division in obtaining
necessary reports and data can be obtained on a scheduled basis.
2. Currently, the City is utilising the following New World Systems software modules on an IBM
iSeries AS/400 Model 720:
o. ,
City of Fayetteville, Arkansas
REP 07-10, Independent Financial Auditor
Page 7 of 10
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 automatic PC
meter read, and LogosNet.toGov utility web payment processing module.
d. Animal Licensing Software.
e. Parking Tickets Module.
3. The District Court utilizes Virtual Justice software developed by MSI Consulting Group, LLC. The
software is Microsoft Sequel based application running on an IBM xSeries server.
4. The Fleet Division uses FASTER software developed by CCG Systems, Inc. The system is
Microsoft Sequel based and is used to manage the majority of City vehicles and equipment.
5. The City utilizes software developed by Hansen Information Technologies, Inc., for management of
assets, work orders, customer service requests, building permits, building inspections, and code
enforcement. The software is Microsoft Sequel based application running on an IBM xSeries server.
6. The City has a LAN/WAN which connects all servers, personal computers, and peripheral devices
across twenty locations. "`
7: The City has personal computers, connected with the IBM iSeries AS/400 through 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
8. The Police, Fire and Central Dispatch divisions utilize an IBM iSeries AS/400 and New World
Systems Public Safety software.
E. Office space is available for audit staff use. Access is available to a telephone, the internet, and a copier.
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 15%
1. Describe the firm's strengths, audit philosophy, and strategy for the future.
City of Fayetteville, Arkansas
RFP 07-10, Independent Financial Auditor
Page 8 of 10
2. 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.
3. Describe the fine's affirmative action plan and how minorities are placed in the firm.
4. 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 30%
1. Qualifications of the Coordinating Office:
a. State whether the office is part of a national, regional, or local accounting firm.
b. List the number of partners, managers, supervisors, and staff located in the coordinating office in
the audit, tax, and management consulting divisions.
c. 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 electronic 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.
c. Address theavailability 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. Describe any disciplinary action imposed by the AICPA, State Boards of Public Accountancy,
State Societies of CPAs, or Securities and Exchange Commission during the past three years
indicating any involvement of the coordinating office.
c. Describe results of recent peer review and its status under the Peer Review Program.
City of Fayetteville, Arkansas
RFP 07-10, Independent Financial Auditor
Page 9 of 10
C. Proposed method of performing audit 20%
1. sDescribe the audit plan in general and specify areas that in your opinion may require particular
audit emphasis.
2. Explain the firm's understanding of the audit work that is to be performed for the City of
Fayetteville.
3. Describe
in
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.
4. 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 20%
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 15%
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 performing arbitrage
calculations.
V. PROPOSAL CONTENT
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. Please limit your
proposal to 25 pages or less.
City of Fayetteville, Arkansas
RFP 07-10,.Independent Financial Auditor
Page 10 of 10
City of Fayetteville, Arkansas
Technical Proposal for Audit Services
July 19, 2007
• AR'K-ANS-A5'
BD
LLP
The information in this proposal is proprietary and provided for the express purpose of evaluating BKD's capabilities. This
information is, not to be distributed to any third parties or used for any other purpose.
City of Fayetteville,
Contents
Introduction
A. Qualifications of BKD
1
1
B. Experience, Competence and Capacity 7
C. Proposed Method of Performing Audit 15
D. Past Performance in Governmental Audits 16
Appendices
About BKD A
The BKD Audit B
Our Values C
BKD: Our Integrity, Quality & Stability D
Peer Review Letter E
A Proposal for Professional Services from-
City of Fayetteville, Arkansas
Introduction Thank you for the opportunity to continue to be a professional
services advisor to the City of Fayetteville. As you know,
BKD has the resources and technical expertise to meet your
needs and deadlines. Equally important, you know that our
client service standards and guidelines, detailed in our book,
The BKD Experience: Unmatched Client Service,
distinguish us from other professional services providers. We
are committed to delivering results with integrity: solutions
that are ethical while also practical; timely and affordable.
As requested in RFP 07=10, Section IV., our proposal is
intended to adhere to your general requirements outlined in
Section VI by responding to your specific areas of interest in
assessing our ability to meet your needs. Where appropriate,
we have added information we believe is helpful in your
assessment of our technical qualifications.
We are confident you will continue to find the BKD
Experience delivers the high -quality solutions you seek at a
fair price in the time frame you require.
Qualifications of BKD =
BKD is the accounting firm of choice for growing local and
state governments in the central United States. As one of the
10 largest CPA and advisory firms in the country, according to
Public Accounting Report and as the largest in our area, we
help clients go beyond their numbers by applying our technical
expertise, unmatched client service and disciplined delivery of
solutions to their management and financial needs.
BKD Arkansas
The largest number of professional staff available of any public
accounting firm in the state, according to the Arkansas
Business Journal, is at BKD. We currently have offices in Fort
Smith, Little Rock and Pine Bluff. Administration and
coordination of our audit services is centered in the Little Rock
office. We maintain a government audit services team based in
Fort Smith that will provide the majority of the professional
resources to meet the needs of the City.
A Proposal for Professional Services from
City of Fayetteville, Arkansas
Here's what you can count on from BKD:
✓ Our Commitment to Delivering Unmatched Client
Service
BKD has taken its commitment to delivering unmatched
client service so seriously that we have codified our
standards and supporting guidelines in The BKD
Experience: Unmatched Client Service, a book written
for our people that sets the firm's expectations for serving
clients. In the foreword to the book, David Maister, a well-
known consultant to accounting and law firms, writes,
"This book contains a great deal of wisdom about how to
work with (and for) clients.... All too often, clients report
that what is missing are professionals who are adept at
constructing a supportive, helpful, working
relationship... .the ideas in this book provide a great
launching pad for this essential skill.
Here in brief are our five client service standards:
At BKD, integrity trumps
economics —for us and for
you every time.
• Integrity First - For more than 80 years, BKD has been
• doing what's right and advising our clients accordingly.
Our Public Interest Council —one of the few in the
country —is a voluntary layer of ethics oversight we
have in place so that you can continue to trust in the
integrity of our advice. At BKD, integrity trumps
economics —for us and for you every time.
• True Expertise - We're proud of the intelligence,
credentials, experience and business savvy of our
people. The team behind your BKD advisor has a
broad base of skills and knowledge to evaluate, advise
and deliver solutions for you. You can count on BKD
to strive to get both the big and small things right.
• Professional Demeanor - You expect your professional
advisors to have or display a certain appearance,
attitude, character, communication skills and behavior.
You'll find your BKD advisors true professionals who
inspire your confidence and keep your respect.
Proposal for Professional Services from
City of Fayetteville,
• Responsive Reliability - Results you can count on:
that's what, you expect from your professional advisors.
You can count on BKD to do what we say we will do.
Though we cannot guarantee a certain outcome for you,
you can look at our record of consistently delivering
what our clients hired us to do.
• Principled Innovation - You expect from your advisor
creative, valuable advice that also is sound and ethical.
That's what you get from BKD as we share best
practices, ideas and alternative approaches that while
innovative also are principled.
✓ Large -firm Resources with Small -firm Values
As one of the largest CPA As one of the largest CPA and advisory firms in the
and advisory firms in the 'country, BKD has deep resources to deliver quality services
country, BKD has deep to state and local governments such as the City of
resources to deliver quality Fayetteville. Our geographic reach is matched by a breadth
services to local and state of expertise and a quality control system that can only be
governments such as the supported by firms of a certain size. Locally, we are
City of Fayetteville. ranked first in size among CPA and advisory firms.
Though we are a large firm, BKD has a dedication to
personal client service more typical of small firms. Our
PRIDE values of passion, respect, integrity, discipline and
excellence reflect the solid, middle-class backgrounds and
strong work ethic of our people. We were once a small
firm and have not forgotten that legacy of personal
attention to clients. You'll find our people care about you
and are committed to delivering results with integrity:
solutions that are unquestionably ethical while also
practical, timely and affordable.
We've found that by being ✓ Hands-on Partner/Manager Involvement
on Site with you, we get To deliver the BKD Experience of unmatched client
better information and service, BKD insists on the personal involvement of
perspective, resulting in partners and managers in serving clients. That means face
more on -point recommen- time with you. We have a client service guideline called
dations and solutions for "On Site = In Sight & Insight," which simply means get out
you. of your office and into the client's. We've found that by
being on site with you, we get better information and
A Proposal for Professional Services fromvD
City of Fayetteville, Arkansas
perspective, resulting in more on -point recommendations
and solutions for you.
We also have a low partner -to -staff ratio of one to five,
which allows us to leverage work to younger staff while
giving staff direct access to the partner or manager
overseeing your project. Our partners and managers are not
one step removed from an engagement team. They are
active members of the team.
✓ A Team Effort
At BKD, unmatched client service is a team effort. You
will be supported by a team of individuals with a mix of
skills and expertise. Beyond this immediate support team
is a far larger network of resources you can tap into.
Whenever possible, we keep a consistent client service
team working for you. This reduces the learning curve and
saves you the time, frustration and disruption of dealing
with -new advisors unfamiliar with your city. You will find
your BKD team well informed and readily accessible.
✓ Our. State and Local Government Expertise
BKD Not -for -Profit & Government Group works with
hundreds of governmental organizations, including -airports,
public colleges and universities, convention organizations,
municipalities, state utilities, state agencies and transporta-
tion authorities.
Our participation in such organizations as the Arkansas and
National Government Finance Officers Associations and
Association of Government Accountants helps keep us
abreast of issues and trends affecting governmental
organizations like yours.
:Governmental
i�Audit Quality Center
BKD is a member of the American Institute of Certified
Public Accountants' Governmental Audit Quality Center
whose members have demonstrated a commitment to
governmental audit quality and to raising awareness about
the importance of such audits.
A Proposal for Professional Services from B
City of Fayetteville, Arkansas
In addition to our core accounting and auditing services, we
help governmental organizations with:
Financial accountability - Including board and council
reporting packages, accounting standards, meaningful
financial statements, governing body fiduciary
education, internal controls, Comprehensive Annual
Financial Report preparation, process and operational
efficiency and payroll tax and benefit reporting.
Performance measurement - Including performance
measurement processes, outcomes measurement,
reliability of performance measures and report design.
Budgeting - Including budgets, cash flows, budgets and
gap analysis of NACSLB best practices.
Debt administration - Including financing alternatives,
feasibility studies, revenue projections, forecasts, trans-
lation of debt -related documents into practical
accounting steps, escrow verifications, arbitrage rebate
calculations, municipal leasing structures, privatization
options and performance -based contracts.
✓ Expertise in Auditing and Preparing Comprehensive
Annual Financial Report (CAFR) and the Certificate of
Achievement for Excellence in Financial Reporting
Program
Some of our clients engage us to prepare their CAFR, while
others ask us to review them. Our review includes an
evaluation of your reports using our independently
prepared checklists designed to provide assurance in
financial reporting and disclosure accuracy and
completeness. We will work with you to resolve any
identified discrepancies, the result of which should be
reports that contain minimal exceptions.
Currently, the Arkansas Practice Unit works with six
organizations that successfully apply for and receive the
GFOA Certificate of Achievement for Excellence in
Financial Reporting. ,
Proposal for Professional Services from A'
City of Fayetteville,
BKD Partner Jim Brown has firmwide responsibilities for
oversight of BKD's quality control for the firm's not -for-profit
and governmental practice and is a member of the City's audit
team. He is a liaison with the Governmental Accounting
Standards Board (GASB) and U.S. General Accounting Office
(GAO) and serves as a principal instructor for the firm's
government/not-for-profit accounting and auditing update. 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.
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 being knowledgeable of current legal
and regulatory developments in this area.
BKD has an impressive
80+ year record, free of
major litigation, penalties
and debt.
BKD has an impressive 80+ year record, free of major
litigation, penalties and debt. •We maintain high
professional practice standards as part of our BKD
Proposal for Professional Services from:RD
City of Fayetteville,
Experience, including a strong system of quality control
that emphasizes independence and objectivity and includes
many control features that exceed our profession's
requirements. See Appel.,. ndi for more specifics about
our litigation history and financial stability.
✓ High -quality Clients for a High -quality Firm
One of the reasons BKD
has always received a
clean peer review and why
litigation against us is so
infrequent is that we work
with high -quality clients.
Experience,
Competence and
Capacity
One of the reasons BKD has always received a clean peer
review and why litigation against us is so infrequent is that
we work with high -quality clients.
One of the guidelines under our Integrity First client
service standard is "Client Integrity Counts." Our client
acceptance standards are high. As a current client of BKD,
you are a part of a group of organizations that appreciate
our standards and share similar values to our own. Our
clients, like our people, have integrity, strong work ethics
and a focus on providing excellent products and services.
We are proud of our clients and believe they are equally
proud to be associated with BKD. Be assured the City is a
valued client.
BKD is a large regional accounting firm in the Central and
Southern United States. In Arkansas, there are 16 partners, 12
managers, 6 supervisors and approximately 50 staff located in
the Fort Smith, Little Rock and Pine Bluff offices providing
audit, tax and management consulting solutions to high -quality
clients.
V Use Statistical and Computer Assisted Audit
Techniques
BKD has found significant added value and increased
efficiency in the use of computer -assisted auditing
techniques (CAAT), including an automated audit program
system, a variety of electronic templates and ACL. ACL is
a powerful product that allows us to import electronic
information from clients in a variety of formats and
perform sophisticated analyses.
A Proposal for Professional Services from
City of Fayetteville, Arkansas
ACL is the worldwide industry leader in CAAT software.
. We have trained more than 80 individuals throughout our
firm to become software champions who can apply this
special expertise on your audit, if appropriate.
There are significant opportunities to use this software,
particularly on inventory and receivables, and the software
can provide useful information and reduce audit costs. We
anticipate your city would be a candidate for this approach.
Work papers are prepared electronically using sophisticated
audit trial balance software, audit program generator
applications, Microsoft Excel and Word. Our files are
reviewed, indexed and cross-referenced in a digital
paperless environment specifically designed for our audit
process and stored our servers. All audit staff are trained
on these software applications and are proficient in the use
of these time saving audit tools.
✓ Organization of Audit Staff
The BKD method of staffing audits and ensuring continuity
is a team approach. The City will be assigned an
engagement team that will consist of two or more partners
and/or senior 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 continues. 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
Proposal for Professional Services from AQ,
City of Fayetteville, Arkansas
community with the knowledge that they will be partners in
the future without being transferred to other cities.
BKD's #1 asset is our outstanding team of people who strive
daily to deliver on our commitment to unmatched client
service. They are the trusted advisors who put a face on the
BKD Experience and bring meaning to your numbers. You'll
find the following team of advisors personally committed to
delivering results that work for you. The BKD engagement
team members assigned to the City's engagement meet the
continuing education requirements of the Government
Accounting Office (GAO). They all attend our government
conference on an annual basis which includes audit training as
well as updates on new pronouncements issued by GASB and
other standard setting bodies applicable to governmental audit
and accounting.
Kevin L. Kemp, CPA
Engagement Partner
Little Rock
Kevin has more than 14 years of experience and is a member of
the BKD Not -for -Profit & Government Group providing audit
and management consulting services to a client base that
includes municipalities and their component units, utilities,
state agencies and numerous service related entities that receive
government assistance.
He has been a speaker at the State Government Finance
Officers' Association conference on GASB 34 and the
accounting challenges faced by municipalities. He has
responsibility for the government and not -for-profit entities
served by the Arkansas practice unit. In this role, he has served
as primary contact for numerous clients, provided review
services for audits subject to OMB Circular A-133 and
maintained contacts with regulatory agencies. Additionally, he
has recruiting and training responsibilities. Kevin serves the
Cities of Little Rock, Fort Smith, Fayetteville and Bentonville,
Arkansas as well as Lubbock, Texas.
Proposal for Professional Services from
e
City of Fayetteville, Arkansas
His professional affiliations include membership in the
Arkansas and Texas Government Finance Officers Association,
American Institute of Certified Public Accountants, Arkansas
Society of Certified Public Accountants and Texas Municipal
League. He serves on BKD's firmwide Government/Not-For-
Profit Niche Committee.
Kevin graduated in 1993 from the University of Central
Arkansas, Conway, with a BBA in accounting.
James E. Brown, CPA, CGFM
Accounting & Auditing Services
Quality Control Partner
Administration, Springfield, MO
Jim has more than 30 years of public accounting experience
and is widely known for his expertise in auditing and
attestation standards and accounting and auditing for
governmental and not -for-profit organizations. As quality
control partner in BKD's administration office, he consults
with other BKD offices on accounting and auditing matters
involving their not -for-profit and governmental organization
clients. He coordinates the firm's quality control with respect
to this industry and maintains liaison with the Governmental
Accounting Standards Board (GASB) and U.S. General
Accounting Office (GAO). He serves as a principal instructor
for the firm's annual auditing and accounting update,
government/not-for-profit accounting and auditing update and
health care accounting and"auditing update courses. In
addition, he is responsible for concurring review of many audit,
attestation, compilation and review engagements.
Jim is a frequent 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 University, Joplin, Jim
has served as an adjunct member of its accounting faculty. He
A Proposal for Professional Services from'
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10
City of Fayetteville, Arkansas
has served on the Auditing Standards Board and Board of
Examiners for the American Institute of Certified Public
Accountants (AICPA). He also served as the chair or a
member of various task forces and subcommittees for those
bodies. Jim has served on various GASB task forces, including
the new reporting model (GASB 34/35) task force. He is the
former accounting and auditing director for BKD's Southern
Missouri practice.
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, Missouri Society
of Certified Public Accountants and Springfield Police and Fire
Pension System Board of Trustees.
Andrew Richards, CPA
Senior Engagement Manager
Fort Smith
Andy is a member of BKDNot-for-Profit & Government
Group. With more than 10 years of experience at BKD, he
provides audit and advisory services to not -for-profit and
governmental entities, as well as employee benefit plans.
He has experience in working with not -for-profit and
governmental entities subject to OMB Circular A-133,
including school districts, municipalities, mental health
facilities and low-income housing projects. He also has been
trained in the laws and regulations of employee benefit plans,
including the requirements of the Employee Retirement
Income Security Act of 1974 and the Department of Labor.
Andy serves the Cities of Fayetteville, Fort Smith, Bentonville,
Arkansas as well as Norman, Stillwater and Tulsa, Oklahoma.
He is a member of the American Institute of Certified Public
Accountants and Arkansas Society of Certified Public
Accountants. He also is a committee member of the BKD
Foundation.
Proposal for Professional Services from
11
City of Fayetteville,
Andy is a 1996 graduate of the University of Arkansas,
Fayetteville, where he earned a B.S. degree in business
administration and accounting.
S. Joel Haaser, CPA
Senior In -charge Accountant
Fort Smith
Joel is a member of BKD's Arkansas Practice Unit. He has
over six years of experience in auditing not -for-profit
organizations and governmental entities. Along with auditing
experience, he also, has over five years of experience in
personal, corporate and not -for-profit taxation.
His experience has enabled him to become very knowledgeable
in organizations that must comply with OMB Circular A-133
standards including municipalities, school districts, and other
not -for-profit organizations. He served a key role in the 2005
and 2006 audits of Fort Smith and Fayetteville, Arkansas and
Stillwater and Norman, Oklahoma.
He graduated from Arkansas State University's Fort Smith
Campus in 1999 where he earned a Bachelor of Science degree
in Accounting. His professional memberships include the
American Institute of Certified Public Accountants and the
Arkansas Society of Certified Public Accountants.
Availability of Staff Members
All engagements are staffed with the expectation that our team
members will be available to assist throughout the year with
consultation as needed and permitted under the GAO
independence rules.
Your audit will be scheduled and personnel assigned to ensure
completion of the engagement by the due date of the audit.
Problems encountered during the engagement that might delay
completion will be discussed with appropriate City personnel at
the point they arise.
Proposal for Professional Services from'
12
City of Fayetteville, Arkansas
We propose the following staffing and work schedule for the
audit of your December 31, 2007 financial statements:
✓ Preliminary Fieldwork — December 2007
To complete the planning for the primary fieldwork and to
obtain some preliminary information from you and your
staff, we plan to be on -site at your offices for 4 or 5 days.
During our visit, we will complete our assessment of
internal control and visit with you about events that may
have occurred during the year affecting your audit.
✓ Final Fieldwork — April 2008
The bulk of the audit work will be performed during an
approximate 3 -week visit to your offices. Our staff,
including an experienced senior and 1 or 2 staff, will be on -
site to examine your records and inquire about issues that
will support our audit opinion. The engagement
partner/manager will be on -site at the end of final fieldwork
to assist in resolving particularly difficult matters, review
the work of the staff and meet with you about any reporting
or other audit matters as needed.
✓ Report Delivery — May 2008
After completing our fieldwork, we generally deliver your
audit report and our opinion within four -six weeks. The
process involves completing the documentation of our files,
following up on pending matters and submitting the work
of the engagement team to our quality control professionals
who further challenge the work performed.
We find delays in delivery of the final report are often the
result of not receiving timely information from third
parties. We will be proactive in keeping you informed
about issues remaining and may ask for your assistance in
receiving information from third parties to avoid delays in
issuing our report.
✓ Presentation to the Governing Body
For many clients, a presentation of the financial statements
and audit results to the governing body is the culmination
_A Proposal for Professional Services from
13
City of Fayetteville, Arkansas
of our effort. We are happy to spend time with your Audit
Committee, City Council, Mayor and management to
discuss the financial statements and identified opportunities
for improvement.
All audit work papers prepared by the engagement team is
reviewed the engagement partner/manager.
Following are some of the features of and additional reviews
required by our accounting quality control system:
• BKD's Public Interest Council exceeds the accounting
profession's standards by providing additional ethics
oversight of our professional and business practices
through an independent advisory body. We are one of two
CPA firms in the country that have taken this step.
•- All professional personnel are required to confirm their
independence with respect to the firm's assurance clients
annually.
• The director of accounting and auditing services, a partner
independent of client duties, is responsible for overseeing
this process and making any judgments on application of
the independence rules. _
• We, have rigid standards for acceptance of new
engagements. Unusually large or complex new
engagements require the approval of the professional
practices partner.
• All assurance engagements are reviewed by a second
partner or manager who is not involved in providing
services to the client.
• We require consultation with accountants well versed in
difficult accounting or auditing issues.
• We conduct our own internal peer reviews regularly.
• Our training programs provide substantially more training
than required by professional standards. Our professionals
average more than 60 hours of training annually.
® Cefrte� for`
PUblid ( 0f466 BKD is a member of the American Institute of Certified Public
Audit Firm S Accountants' (AICPA) Center for Public Company Audit
Q°°`"@'Sy Firms. The Center's member firms have demonstrated a
A Proposal for Professional Services from
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City of Fayetteville,
commitment to public company audit quality. As a member,
BKD makes the firm's peer review report findings publicly
available.
The peer review process is an integral component of our
overall quality control program. An independent CPA firm
regularly reviews our work, and we have always received a
"clean" opinion in these reviews. BKD, in fact, was repre-
sented on the original AICPA quality review committee that
developed the national peer review program in the mid -1970s,
and our own quality control program dates from. 1974. See
Appr"" e d zSF for a copy of our most recent peer review report.
Proposed Method of
Performing the Audit
Audit Plan in General
Our audit focuses on the likelihood of a material misstatement
in the financial statements. We direct our audit emphasis to the
areas of higher risk, focusing on the unique characteristics of
the operating environment, the effectiveness of your internal
•
control'and your financial statement amounts and disclosures.
See Appel dfor a detailed description of our audit philos-
ophy and general approach.
Scope of Audit Services
We understand that you require the following:
✓ Audit of the City's financial statements as of December 31,
in accordance with auditing standards generally accepted in
the United States of America and Government Auditing
Standards.
✓ An audit and accompanying report on the City's
compliance with the provisions of OMB Circular A-133,
Audits of States, Local Governments, and Non -Profit
Organizations
✓ Report on the City's compliance with certain state
municipal accounting laws.
Proposal for Professional Services from
ti
15
City of Fayetteville, Arkansas
BKD 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.
✓ 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 the minutes from City Council meetings
V Bank reconciliations
✓ Detail of yearly activity in investment accounts
✓ Reconciling work papers for inter -fund accounts
✓ Work papers to support selected revenue and expense
accounts
✓ Detail listing of selected receivable/payable accounts
✓ Schedules of fixes asset additions and deletions
Items will be requested during the preliminary fieldwork and
well before the final fieldwork begins. We will also request
assistance in obtaining documentation to support audit
procedures. We anticipate that assistance of this type as well
as account analysis work performed 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.
Past Performance in
Governmental Audits
Our clients are our greatest ambassadors, and we're proud to
let them speak for us. Below is a select list of clients with
operations or needs similar to yours whom you may wish to
contact about their BKD Experience. A representative list of
clients also is provided.
A Proposal for Professional Services fromRIjD
16
City of Fayetteville, Arkansas
Client References
*City of Little Rock
Bob Biles, Director of Finance
\ (501) 371-4806
*City of Fort Smith
Kara Bushkuhl, Director of Finance
(479) 484-2285
City of Bentonville
Denise Land, Finance Director
(479) 271-3118
*City of Norman, Oklahoma
Clint Mercer, Chief Accountant
(405) 217-7720
s,
*City of Stillwater, Oklahoma
Marcy Alexander, Finance Director
(405) 271-3118
Representative List of Clients (local and firmwide)
* - Currently receives the
GFOA "Excellence and
Financial Reporting"
award on annual basis
with the assistance of
BKD.
✓ *City of Lubbock, Texas
✓ *City of Tulsa, Oklahoma
✓ City of Stuttgart, Arkansas
✓ Fort Smith Regional Airport Commission
✓ North Little Rock Electric Department
✓ Mena Water & Sewer Department
✓ *City of Lincoln, Nebraska
V *City of Denver, Colorado
✓ Cherokee Nation
✓ *City of Aurora, Colorado
Our. Commitment to You
Our clients deserve and to the best of our ability receive
unmatched client service. We welcome the opportunity for you
to continue to experience the same as we deliver the solutions
to your needs outlined in this proposal.
Proposal for Professional Services from
114
City of Fayetteville, Arkansas
'The client is our reason
for being here."
—A BKD Employee
Our goal is to deliver results with integrity: solutions that are
ethical while also practical, timely and affordable. If you select
us as your CPAs and advisors, you will find your BKD
advisors personally committed to taking you beyond your
numbers to meet your financial and management goals. We
look forward to introducing you to the BKD Experience.
Proposal for Professional Services from(_R1j0
iE:
City of Fayetteville,
Appendix A
About BKD
The mission of BKD is to
always strive for
excellence in providing
services to clients, create
rewarding career -
opportunities and maintain
sound professional,
business and financial
standards.
BKD, LLP is the CPA and advisory firm of choice for growing
entities and high net -worth individuals. We help entities and
individuals go beyond their numbers by applying our technical
expertise, unmatched client service and disciplined delivery of
solutions to their management and financial needs.
The mission of BKD is to always strive for excellence in
providing services to clients, create rewarding career
opportunities and maintain sound professional, business and
financial standards. Together, our mission; our PRIDE values
of passion, respect, integrity, discipline and excellence; and our
commitment to unmatched client service guide our professional
advisors in delivering results with integrity: solutions that are
ethical while also practical, timely and affordable.
With revenues of $330 million, BKD is one of the 10 largest
CPA and advisory firms in the country. The firm's 1,600
personnel, including approximately 220 partners, are located in
27 offices in Arkansas, Colorado, Illinois, Indiana, Kansas,
Kentucky, Missouri, Nebraska, Ohio, Oklahoma and Texas.
BKD is headquartered in Springfield, Missouri, where
Managing Partner Neal Spencer is based.
BKD delivers the BKD Experience of unmatched client
service to thousands of individuals; closely held and publicly
traded businesses in the health care, manufacturing,
distribution, financial services, construction, real estate and
other industries; not -for-profit organizations; and governmental
entities. The firm also has service niches in:
✓ SOX 404
✓ Business succession planning
✓ Forensic accounting and dispute consulting
✓ International tax
✓ Research and development tax credits
✓ Wealth management (WealthPlan)
✓ Employee benefit plans
✓ Fraud investigations
✓ Information technology
✓ Real estate cost segregation
✓ State and local tax
Statement of Qualifications for Auditing Services from,RD D
City of Fayetteville, Arkansas
Our wholly owned subsidiaries and foundation are:
BKD Corporate Finance, LLC assists companies with
corporate finance services, including mergers, acquisitions,
sales, management buyouts, recapitalizations, ESOPs,
financing and initial public offering advisory services.
Member,NASD and SIPC.
BKD Foundation helps enrich BKD communities with
financial support and a commitment of time.
BKD Insurance, LLC, a NASD -registered broker -dealer,
facilitates the delivery of BKD's WealthPlan insurance
solutions through a professional relationship with an
independent insurance company.
Equal Opportunity
BKD is committed to equal
opportunity. We recruit,
employ, compensate and
promote without regard to
race, creed, color, sex,
sexual orientation, age,
religion, disability or
national origin.
BKD Wealth Advisors, LLC is an investment advisory firm
registered with the Securities and Exchange Commission
(SEC), providing the WealthPlan services of investment
management, personal wealth planning and estate planning.
BKD is registered with the Public Company Accounting
Oversight Board (PCAOB), which is required to serve as an
independent auditor of public companies. BKD audits more
than 80 Securities and Exchange Commission registrants,
including more than 20 benefit plan audits.
As a member of the American Institute of Certified Public
Accountants (AICPA), BKD also is a member of its Private
Companies Practice Section (PCPS), the AICPA Alliance for
CPA Firms; and its three quality centers: Center for Public
Company Audit Firms, Employee Benefit Plan Audit Quality
Center and Governmental Audit Quality Center.
Statement of Qualifications for Auditing Services from�Y"
a
City of Fayetteville, Arkansas
Appendix B
The BKD Audit
vn.
Our Audit Approach
We assess the City's inherent risk, its internal control over
financial reporting and the likelihood a material misstatement
may occur. We direct our audit emphasis to the areas of higher
risk, focusing on the unique characteristics of the operating
environment, the effectiveness of your internal control and
your financial statement amounts and disclosures.
In addition to the importance of compliance with professional
standards, BKD's approach to auditing emphasizes the need to
be practical.
It is important to realize that financial information is most
valuable when it is accurate, timely and obtainable at a
reasonable cost.
✓ Assess Your City
Our audit approach begins with an assessment of your
internal control activities in an effort to determine the
extent to which they can be relied on when designing our
audit tests. That process is managed either through a series
of internal control questionnaires on their own or in
combination with internal control documentation that you
may already have in place.
Depending on the complexity of the internal control and the
extent to which we intend to rely upon it, various tests or
walkthroughs will generally be performed to provide us
evidence regarding the operating effectiveness of your
internal control activities. Further evaluation may be
performed as part of the primary audit tests.
V Develop Audit Plan and Preliminary Procedures
Based on our understanding of your entity and our
assessment of your internal control, we plan our audit to
achieve the appropriate level of assurance regarding
material misstatements.
Statement of Qualifications for Auditing Services from
City of Fayetteville, Arkansas
As part of our preliminary work, we will perform certain
procedures, including conducting interviews of certain
personnel, to identify risks of material misstatement due to
fraud within your entity.
We provide clients with a
checklist of items needed
to complete the audit, thus
facilitating its timely
completion.
The planning process includes preliminary analytical
procedures on current and prior years' financial data
combined with assessing other risks facing your entity in
order to establish a planned level of materiality.
The planning process also includes the design of the
specific audit tests and a determination of the extent that
analytical procedures can efficiently and effectively replace
or supplement other substantive procedures. We provide
clients with a checklist of items needed to complete the
audit, thus facilitating its timely completion.
✓ Perform Audit Tests, Including Analytics and Sampling
Based on our preliminary analysis and audit plan, we will
design audit tests that take advantage of strengths in your
internal control system. In most cases, we would not need
to examine 100% of your activity in order to issue our
opinion.
Typically, a BKD audit would encompass various strategy
alternatives, including:
• Key item testing
• Sampling
• Analytical procedures
• A combination of the strategy alternatives
Some items within an account may be large enough by
themselves to involve significant risk of material
misstatement separately or when added to other known
misstatements. These key items are audited individually.
Analytical procedures involve auditing a material
population by investigating the relationship of the
population balance or distribution to an expectation such as
other accounts, historical trends or other related measures.
Statement of Qualifications for Auditing Services from o
City of Fayetteville, Arkansas
✓ More About Analytical Procedures
BKD recognizes that stronger analytical procedures can
reduce or eliminate other substantive procedures that are
usually more time consuming. We would typically
consider analysis such as:
Ratio analysis — comparing relationships among account
balances, ratios, nonfinancial data, budgets or industry
averages.
Reasonableness tests — using financial and/or nonfinancial
data to develop an expectation of an account balance.
Successfully using analytical procedures requires auditors
to ask the questions:
• What is the risk of material misstatement?
• How would we find those misstatements?
• Have I gathered enough audit evidence?
When analytical procedures provide sufficient evidence,
other substantive audit procedures should not be necessary.
If analytical procedures are not sufficient, some
combination of analytical and substantive procedures is
likely to be the preferred approach.
✓ Complete the Audit
We bring greater value
and quality to our audits by
asking another member of
our assurance team who
has otherwise not been
involved in the
engagement to review the
financial statements and
workpapers before issuing
in order to challenge the
judgments of all parties
involved.
A cornerstone of the quality of our audits is the use of a
concurring reviewer before the issuance of any reports. We
bring greater value and quality to our audits by asking
another member of our assurance team who has otherwise
not been involved in the engagement to review the financial
statements and workpapers before issuing in order to
challenge the judgments of all parties involved.
As needed, our firmwide technical resources also provide
highly specialized expertise to deal with particularly
challenging or unique situations that may arise in the
course of your audit.
Statement of Qualifications for Auditing Services from
e
City of Fayetteville,
✓ General Logistics
We work with your people to avoid unnecessary
disruptions to normal operations. We also strive to make
good use of your internal resources, including existing
schedules, reconciliations, management reports and other
accounting records.
✓ Benefits of a BKD Audit
The benefits of a BKD
audit extend far beyond
compliance requirements.
Our team also provides
comments that are
operational in nature.
Audited financial statements the centerpiece of BKD's
assurance services —have added benefits for clients far
beyond their immediate compliance function. A BKD
audit will:
Provide assurance on the fairness of your financial
statements for creditors, vendors, regulators and
investors
• Evaluate consistency of application of your accounting
principles and procedures from period to period
In addition, with the knowledge of your business gained
through the performance of the audit coupled with our
experience in your industry, BKD may:
• Provide insights to help you improve your business
Suggest ways you might strengthen your internal
control over financial reporting, including safeguarding
of assets
✓ Communicate the Results of Our Audit
Management letters were originally required to
communicate to managers, audit committees and council
members any internal control features the auditors
considered a material weakness or reportable condition;
This is an important feature. We also may include
comments on other aspects of your operations that come to
our attention.
A Statement of Qualifications for Auditing Services from
City of Fayetteville, Arkansas
We prepare management letters for many of the audits we
undertake and review drafts with management before
finalizing.
✓ Our. Expectations of You
Your staff can help
improve the audit's
efficiency and reduce
costs.
In working with the City of Fayetteville, we have
developed an efficient approach that avoids wasted effort.
We also plan our work to facilitate client participation to
help control costs and meet deadlines.
The City can continue to play a major role in timely
completion of the audit. We will need your staff to
maintain records in good condition, provide the necessary
schedules and cooperate with our audit team.
We will provide a list of the needed schedules well in
advance of any deadlines as well as spreadsheet templates
for many of these schedules. We also will meet with your
staff as needed to help ensure they clearly understand what
we need.
✓ Other Assurance Services
You also may benefit from our other assurance services,
including:
• Industry -specific financial reporting services
• Performance of agreed -upon procedures
• Other regulatory filings and government reports
• Due diligence/special investigations
• Projected and forecasted financial statements
Statement of Qualifications for
Auditing Services from .V"''
City of Fayetteville, Arkansas
Appendix C
Our Values
Clients like you care about what we stand for as a firm. BKD's
most valuable asset is our people, and their collective values of
passion, respect, integrity, discipline and excellence have
become the firm's values of PRIDE. You see our partners and
employees "living the PRIDE" everyday as they provide
solutions to your business and financial needs. PRIDE defines
the way BKD does business and is the foundation for the BKD
Experience of unmatched client service.
Following are the five BKD PRIDE values and what they
mean for you.
V Passion
• Passion for service to others
• Passion for making tomorrow better than today
BKD's mission is to first "strive for excellence in providing
services to clients." This commitment drives our practice
and accounts for the dedication of our partners and staff to
meeting your deadlines and needs. Consistent with our
values, we are enthusiastically committed to making
tomorrow better than today by helping you make informed
decisions to improve business and financial outcomes.
V Respect
Respect for
the
differences
that make our team strong
Respect for
our
legacy and
the benefits
of change
BKD respects diversity. You benefit from our diverse
client service teams, which bring a broad mix of skills and
approaches to bear on your needs. We treat our clients with
respect and proactively embrace change. While respecting
the lessons of our legacy and yours, we seek the
opportunities change inevitably offers.
✓ Integrity
• Integrity to do the right thing
• Integrity to be objective and independent
Statement of Qualifications for Auditing Services from
City of Fayetteville, Arkansas
"Do the right thing" has been the tone from the top of BKD
since our founding in 1923. You and your stakeholders and
customers rely on our integrity and objectivity to help you
make smart business decisions. We are committed to
telling you what you need to know vs. what you want to
hear. That's what you expect from one of the nation's 10
largest CPA and advisory firms.
✓ Discipline
• Discipline in process and innovation
• Discipline to balance professional and personal
commitments
Discipline is a hallmark of BKD, and as a client, you
benefit from our well -established and successful protocols,
standards and processes. In addition, by maintaining an
appropriate balance in our professional and personal
commitments, we are fresh and energized when engaged in
helping you resolve issues and advance your goals.
V Excellence
• Excellence in skills and competencies
• Excellence in our quest to be the best
We are committed to lifelong learning to continually
improve the technical and analytical skills we apply to your
needs. Our aggressive ambition to "be the best" means we
seek to consistently surpass your expectations.
Statement of Qualifications for Auditing Services tromjfl
City of Fayetteville, Arkansas
Appendix D With the enactment of the Sarbanes-Oxley Act of 2002 and
related regulations, both public and nonpublic entities are
BKD: Our Integrity, asking more questions to qualify their current or prospective
auditors. The following information addresses questions
Quality & Stability boards of directors and audit committees are asking related to
financial stability, insurance, corporate governance issues and
independence.
Financial Stability
V Our Financial House
BKD's capital structure is 100% partner financed. Our
partnership agreement requires partners to maintain capital
accounts, which are reviewed annually to ensure the firm
has sufficient capital to finance operations, capital
expenditures, expansion, etc. BKD is debt free.
Our pension plan is a defined contribution plan, funded as
benefits are earned. Retirement payments to partners are
fixed, limited under our partnership agreement to a low
percentage of firm net income and partially pre -funded by
significant investments in life insurance.
Our system of financial and budgetary controls provides for
timely monthly financial statements. Each month
management compares actual financial data to the current
year's budget and to the previous year's figures. On a daily
basis, management can monitor the firm's financial
• performance and adopt appropriate strategies to meet
changing conditions.
We are confident our financial house is in order, and our
partners are committed to keeping it that way.
V Insurance Coverage
BKD maintains professional liability insurance coverage to
protect us in the unlikely event substantial litigation would
ever threaten our financial stability. The firm's
management committee determines the appropriate amount
of coverage, giving consideration to the nature of our
clientele, the services we perform and other factors. Our
A Statement of Qualifications for Auditing Services from.
A
City of Fayetteville, Arkansas
coverage exceeds $40 million, and we believe it is
comparable to other firms our size and what you would
expect of a firm of our size and nature.
We also maintain adequate commercial insurance coverage,
which includes general liability, excess general liability,
auto liability and worker's compensation.
Litigation History
BKD's emphasis on quality has rewarded the firm with an
excellent track record regarding claims related to professional
services. Underwriters of professional liability insurance for
accounting firms have informed us that we have one of the best
litigation histories in the accounting profession.. To avoid
litigation, BKD maintains an extensive risk management
program addressing a multitude of issues ranging from client
acceptance to final working paper and financial statement
review.
Regulatory Sanctions & Investigations
BKD has no sanctions or restrictions imposed by professional
organizations, regulatory authorities or other government ,
institutions.
Large Client Dependency
BKD's $330 million in revenues is made up of assurance
services 46%, tax 32% and consulting 22%. No single client
comprises even 1% of BKD's revenues. As such, none of our
clients are large enough to even imply our judgment could be
impaired by the threat of lost revenues. Nevertheless, BKD has
implemented a policy to ensure objectivity in the review of
certain larger engagements, both private and public. For these
engagements, the firm's director of accounting and auditing
services and the managing partner assign a partner in a.
different office from the engagement partner to review the
engagement and advise quality control personnel of any•
concerns or potential problems.
Statement of Qualifications for Auditing Services from
City of Fayetteville, Arkansas
Appendix E
fl Gunderson UP
Cudifed Nbllr Armunlanls & CunsAwa
September 7, 2005
To the Partners of
BKD LLP
and the Center for Public. Company Audit Firms Peer Review Committee
'We have reviewed the system'of quality control for, the accounting and auditing practice of BKD
LLP (the, firm):applicable to non -SEC issuers in effect for the year ended May 31, 2005. The
firm's accounting and.auditing practice: applicable to SEC issuers was hot reviewed by us since
the Public Company Accounting Oversight Board (PCAOB) is responsible. for inspecting that
portion of the firm's accounting andauditing practice in accordance with PCAOB'requirements.
A system of quality control encompasses. the firm's :organizational structure and the policies
:adopted land procedures established to provide it with reasonable, assurance of complying 'with
professional standards. The elenients of quality control are described in the Statements on
Quality .Control Standards issued by the American Institute of Certified Public Accountants (the
A CPA). The design of the system, and compliance with it, are the responsibilities of the firm.
Our responsibility is to express an opinion on the design of the system, and the firm's
compliance with that system based on. our review.
Our review was conducted in accordance with standards established by the Peer Review
Committee of the Center ,for;Public Company Audit Finns and included procedures to plan and
perform the review that are summarized in the attached description of thepeer review process.
Our review would not necessarily disclose all weaknesses in the system.of quality control. or all
instances oflack of compliance with, it singe it was based on selective tests. .Because -,there are
inherent limitations inthe effectiveness of any system of quality control, departures from the
system may occur and:not be detected. Also, projection of any evaluation of a system of quality
control to future periods: is subject to the risk'that the system of quality control may become
inadequate because of changes• in conditions, or that, the degree of:compliance. with the policies
or procedures may deteriorate.
In our opinion, the system of quality control for the accounting and auditing practice applicable
to the non -SEC issuers of BKD LLP in effect for the year ended Ma"y' 31, 2005, has been
designed to meet the requirements oPthe quality control standards for an accounting and auditing
practice established by the AICPA, and was complied with during the year then ended to provide'
the firm with reasonable assurance of complying with professional standards.
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irk 41l.j7Glb%II
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Auditing Services from
City of Fayetteville,
Attachment to theleer Report of BKD i tP'
Description of'the Peer Review Process
Overview
Firms enrolled in the AICPA, Center for Public Company. Audit Firms (the Center) Peer:Review
Program have their system':of quality control; periodically reviewed by'independent peers. These
reviews are system and'!compliance oriented with the objective of:ev,atuatingwhethcr:
The :reviewed firm's system of quality control for'its accounting and auditing practice
applicable to'non-SEC .issuers :has been designed to meet the requirements of the. Quality
Control. Standards established by the AICPA:.
The reviewed :firm's quality control policies and procedures applicable to non -SEC
issuers were being complied with to provide the firm with .reasonable assurance of
complying with professional standards.
A peer review is based on selective tests and. directed .at assessing whether the design of and
compliance with the .firm's system Hof _quality control. for its accounting and auditing practice
applicable to :non -SEC issuers provides the firm"with Treasonable,. not absolute, assurance :of
complying with professional; standards. Consequently a peer ;review on the firm's system of
quality control is not intended to, and does not, provide assurance 'with respect to any individual
,engagement conducted by' the firm or that none of the', financial statements audited by thefirm
should:beaestated..
'The Center's PeerReview Committee (PRC),establishes and maintains peer review standards. At
'regular meetings and through report evaluation task forces, the PRC considers each peer review,
evaluates. the. ,reviewer's competence and performance, and examines .every reports 'letter of
commle'nts; and accompanying response from the feviewed'firm that states its corrective action
plan before the peer review is finalized. The Center's tstaff plays a key role in overseeing the
performance of peer reviews working closely with the peer review teams. and the PRC.
Once the, PRC accepts the peer review reports, letters of conunents, and :reviewed firms'
responses, .theyart maintained in afile available to the public. In, some situations, the public -file
also includes a signed undertaking by the firm agreeing to specific follow-up action requested by
the PRC:
Firms that perform audits or _play asubstantial ,role in the audit of one ormore. SEC issuers, as
•defined bth y e Public Company Accounting Oversight Board, (PGA0B), are required to be
-registered with ;and have their accounting and auditing practice applicable to SEC issuers
inspected by the PCA0B. Therefore, we did not review the firm's accounting and auditing
practice! applicable to! SEC. issuers.
Statement of Qualifications for Auditing Services froml
e
City of Fayetteville, Arkansas
-Planning, the Review for the Firrn's Accounting and Auditing Pfactice Applicable. to Non-
SEC.I.ssuers;
'To plan. the'. review of BED.. LLP, we obtained an understanding of (1) the nature and extent of
the fir's.: accounting and auditing ,practice; and (2) the design of the firms system. of :quality
control sufficient'to assess the .inherent and control risks implicit in its practice. Inherent risks
were assessed'by obtaining an understanding of, the firm's practice, such as the; industries of its
clients and other factors of complexity in serving those clients, and the organization of the firm's
personnel 'into practice units. Control risks were, assessed by obtaining an understanding of the
design of the firm's: system of quality control, including its audit methodology, and .monitoring
procedures. Assessing control risk is the process of,evaluating 'the effectiveness of the reviewed
firm's system of quality control in preventing the performance of engagements that °do not
comply'with:professional standards:
Performing.'the Review of the .Ffrn'sl Accounting,and Auditirig,Practice Applicable to. Non-
SEC'Isgriers:
Based konour assessment of the combined level of inherent and control risks, we identified
practice units and .selected engagements within those. units'to test for compliance; with the: firm's
system of quality control.. The engagements selected for review included engagements
performed under the Government Auditing Standards, audits performed under FDICIA, a multi -
office audit, and audits of 'Employee Benefit Plans. The: engagements selected for review
represented :a cross-section of the .firm's accounting and auditing practice with emphasis on
liigber-risk: engagements: The engagement reviews included examining working paper filesand
reports 'and interviewingengagcment.personnel.
the: scope: of the peer review. alsoincluded examining' selected administrative. and personnel: files
to -detemune compliance with the :firm's policies .and procedures for the elements of quality
control pertaining to independence; integrity; and :objectivity; personnel management; and
acceptance and continuance of clients' and engagements. Prior to concluding the review, we
reassessed theadequacy' of scope, and conducted a.meeting. with firm. management to discuss our
findings and recommendations.
Proposal for Professional Services from(BKJI
City of Fayetteville, Arkansas
Fee Proposal
For the Years Ending December 31, 2007, 2008, 2009, 2010, and 2011
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
Class
Rates
Hours
2007
2008
2009
2010
2011
Partner
$255
to
$300
20
$ 5,100
$ 5,300
$ 5,500
$ 5,700
$ 5,900
Senior Manager
187
to
220
60
11,200
11,600
12,100
12,600
13,100
Senior
113
to
134
190
21,500
22,400
23,300
24,200
25,200
Staff
90
to
107
365
33,700
35,000
36,400
37,900
39,400
Clerical
65
to
70
15
1,000
1,000
1,000
1,000
1,000
Total
650
72,500
75,300
78,300
81,400
84,600
Direct Expenses (travel, copying, telephone, etc)
Total not -to -exceed
2,500 2,600 2,700. 2,800 2,900
$ 75000 $ 77,900 $ 81,000 $ 84,200 $ 87,500
Statements on Auditing Standards Nos. 104-111 (SAS 104-111), The Risk Assessment Suite
The Auditing Standards Board of the American Institute of Certified Public Accountants, which promulgates generally
accepted auditing standards, has recently issued eight new standards collectively known as the Risk Assessment Suite.
The Risk Assessment Suite imposes new requirements significantly expanding information to be gathered about the entity
being audited, its environment, risks it faces and how it controls those risks. The Suite also imposes new requirements
significantly enhancing the rigor and detail of the process of assessing and developing responses to risks of material
misstatement of the particular entity's financial statements as well as documentation thereof. Our fees specified above
include the increase that will result from the additional time and effort necessary to perform your audit because of the Risk
Assessment Suite.
Additional Services
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 proposal we have estimated our fees for
certain services as follows:
Preparation of the CAFR
$ 18,000 $ 18,600 $ 19,300 $ 20,000 $ 20,700
Preparation of notes to the financial statements $ 4,250 $ 4,400 $ 4,600 $ 4,800 $ 5,000
Performance of arbitrage calculations - $2,250 to $4,000 per year per outstanding bond issue.
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.
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From: Clarice Pearman
To: Farthing, Marsha
Date: 9.7.07 3:07 PM
Subject: Res. 151-07
Attachments:. 151-07 BKD LLP 2007.pdf
CC: Audit; Vice, Peggy
Marsha,
Attached is a copy of the resolution passed by City Council, August 23, 2007. I forward to you an signed contract and letter
agreement via interoffice mail. I will also forward your original purchase requisition to Purchasing. Please let me know if anything
else is needed for this item.
Have a good day.
Thanks.
Clarice