AGENDA #4c

 

MEMORANDUM

 

TO:

Mayor and Town Council

FROM:

Roger L. Stancil, Town Manager

SUBJECT:

Award of Bid for 2007-2008 Audit Contract

DATE:

May 5, 2008

 

 

The attached resolution would authorize the Mayor to sign a contract with the Certified Public Accounting firm of Martin Starnes & Associates, P.A. for conducting the annual audit for the 2007-08 fiscal year.  This recommendation is based on a comparison of the responses to the Town’s Request for Proposal for audit services for fiscal year 2007-08 and for the four succeeding years, contingent upon the selected firm’s satisfactory performance of the audit each year.

 

BACKGROUND

 

The Town’s independent audit has been performed by the firm of Dixon Hughes, PLLC for the past 3 years.  Our original intent was to retain Dixon Hughes for a five year period ending with the FY2008-09 audit, contingent on satisfactory performance and successful negotiation of each contract year.  The five-year period is consistent with the proposal received for the FY2004-05 audit.  Due to a proposed fee increase of approximately 70% we were unable to successfully negotiate a contract for the FY2007-08 audit with Dixon Hughes.  Therefore, we solicited proposals for future audits from qualified CPAs based on the guidelines established and recommended by the Local Government Commission.

 

DISCUSSION

 

The Town issued a Request for Proposal for audit services proposing a five-year relationship based on satisfactory performance by the audit firm each year and annual negotiation for each contract year.  We sent proposals to firms with area offices approved by the Local Government Commission to perform governmental audits. In addition, the Request for Proposals was posted on the Town’s web-site.

 

We received proposals from the following firms:

 

            Cherry Bekaert & Holland, LLP

Clifton Gunderson LLP

Dixon Hughes, PLLC

            Martin Starnes & Associates, P.A.

McGladrey & Pullen, LLP

 

All five firms are approved by the Local Government Commission to work on municipal audits. 

 

In order to evaluate the proposals, we used a two-step process as recommended by the Local Government Commission.  First we evaluated the firms for experience, qualifications and audit approach.  After completing that evaluation, we compared the firms on the basis of price.

 

In the first phase of the evaluation we were looking for a firm with experience and expertise in governmental accounting and specific related areas needed by the Town.  We evaluated firms in three areas:  1) Firm Experience and Capacity – specifically governmental experience in North Carolina with jurisdictions of similar size and financial characteristics, staffing levels of firm and audit team assigned to this engagement.  2) Audit Team Qualifications – Including relevant experience, continuing professional development and academic achievement of assigned supervisory and staff personnel. 3) Audit Approach – Timing and logistical considerations of the audit engagement, level of communications during the audit and structure and coordination of fieldwork and financial statement preparation and production were considered in this area.  Based on these criteria, the Firm of Martin Starnes Associates ranked first and McGladrey & Pullen ranked second. 

 

Next we looked at the second half of the proposals which contained the bid prices.  The bid prices were as follows:

 

Firm Name

FY2007-08

FY2008-09

FY2009-10

FY2010-11

FY2011-12

Cherry Bekaert

$ 60,600

$ 62,000

$ 65,000

$ 68,000

$ 71,000

Clifton Gunderson

65,000

70,000

75,000

80,000

85,000

Dixon Hughes

81,000

76,000

79,000

82,000

85,000

Martin Starnes

44,000

45,800

47,600

47,600

49,500

McGladrey Pullen

64,875

68,100

71,500

n/a  

n/a

 

RECOMMENDATION

 

That the Council adopt the attached resolution and award the audit services contract to Martin Starnes & Associates, P.A. in the amount of $44,000 for fiscal year 2007-08, with the option to renew the contract for each of the following four fiscal years based upon satisfactory performance each year.