AGENDA #4d
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Amendment to Audit Contract for Fiscal Year 2002-2003
DATE: September 8, 2003
The attached resolution would authorize the Mayor to sign an amended contract with the Certified Public Accounting firm of McGladrey and Pullen, LLP, for conducting the annual audit for the 2002-2003 fiscal year. The amendment would authorize McGladrey and Pullen, LLP, to assist in preparing audit schedules in accordance with new financial statement reporting requirements for an additional fee of $7,500.
The Council approved the annual independent audit contract with McGladrey and Pullen, LLP, on April 14, 2003. Because of new financial statement reporting requirements for this year, we need to amend the contract to provide $7,500 for McGladrey and Pullen to assist in preparing the Town’s financial statements in the new required formats.
The revised contract with McGladrey and Pullen, LLP, would add $7,500 to the contract fee to cover additional audit work to assist in preparing the formats for the additional reports required this year for the Town of Chapel Hill in accord with the requirements of the Government Accounting Standards Board’s New Financial Reporting Model. The new model requires full accrual reports for combined Town funds and a new presentation of fund groupings as well as a new section for Management Discussion and Analysis. These changes are extensive and will require additional staff work even with assistance from the Town’s external auditors. Because of an offsetting cost reduction in the Finance Department, the Finance Department can pay the cost of the fee increase without an additional budget allocation.
Attached is a copy of the proposed amended Engagement Letter and the proposed amended contract for the audit. The contract is in the standard form required by the Local Government Commission. The contract must also be approved by the Secretary of the Commission.
That the Council adopt the attached resolution authorizing the Mayor to sign the proposed amended audit contract for 2002-2003 with McGladrey and Pullen, LLP, which includes an additional $7,500 fee for assisting staff in preparation of the Town’s financial statements.
ATTACHMENTS
1. June 18, 2003 Engagement Letter (p. 4).
2. Contract to Audit Accounts (p. 8).
A RESOLUTION AUTHORIZING THE MAYOR TO SIGN THE AMENDED ANNUAL AUDIT CONTRACT FOR FISCAL YEAR 2003-2004 (2003-09-08/R-6)
BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council hereby authorizes the Mayor to sign an amended contract with the Certified Public Accounting firm of McGladrey and Pullen, LLP, with a fee increase of $7,500 for assistance in preparation of Town financial statements for fiscal year 2002-2003.
This the 8th day of September, 2003.