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HomeMy WebLinkAbout#11 - Accounting ServicesSTAFF REPORT DATE: June 16, 2020 CONSENT AGENDA ITEM: Agreements with Clifton Larson Allen for Accounting Services TO: Mayor and City Council SUBMITTED BY: Kristina Handt, City Administrator BACKGROUND: Clifton Larson Allen (CLA) provided finance director and accounting services to the city during a time of position vacancies in 2017. Given that we will have those same positions vacant beginning June 19th, staff reached out to CLA to see if they could provide accounting services until a new accountant is on board. The finance director level work is being completed by our consultant and the city administrator. The payroll will be completed by the assistant administrator in the interim. ISSUE BEFORE COUNCIL: Should the Council conditionally approve the master service agreement and statement of work agreement with CLA? PROPOSAL: Drafts of the Master Service Agreement and Statement of Work are included in your packet. I received the drafts on June 11th and have been working with the city attorney to negotiate some changes similar to what we had in our previous agreement with CLA. Given the need to be able to pay bills after the accountant leave, I’m asking that the council approve these agreements provided they meet the satisfaction of the city attorney and city administrator. As the statement of work describes, CLA would provide accounting services to process accounts payable including issuance of checks, recording receivables, reconciling certain accounts monthly and prepare journal entries, as requested, and any additional services as requested by management. FISCAL IMPACT: The fee is $90/hour with a 5% technology fee. The 5 hour a week estimate may be high. Provided we are able to limit their work to just accounts payable it’s likely closer to 5 hours every other week (the week before council meetings). So overall estimate is about $2,500 assuming we have a new accountant or finance director on board in September. OPTIONS: 1) Approve settlement agreement 2) Amend and then approve the settlement agreement 3) Do not approve the settlement agreement RECOMMENDATION: If removed from the consent agenda: Motion to approve the Master Service Agreement and Statement of Work with CLA provided they meet the satisfaction of the city attorney and city administrator. ATTACHMENTS: • Master Service Agreement • Statement of Work June 10, 2020 Kristina Handt City of Lake Elmo 3800 Laverne Ave N Lake Elmo, MN 55042 Dear Kristina: This master service agreement (“MSA”) documents the terms, objectives, and the nature and limitations of the services CliftonLarsonAllen LLP (“CLA,” “we,” “us,” and “our”) will provide for City of Lake Elmo (“you,” “your,” or “the entity”). The terms of this MSA will apply to the initial and each subsequent statement of work (“SOW”), unless the MSA is changed in a communication that you and CLA both sign or is terminated as permitted herein. Scope of professional services CLA will provide services as described in one or more SOW that will reference this MSA. The SOW will describe the scope of professional services; the nature, limitations, and responsibilities related to the specific services CLA will provide; and the fees for such services. If modifications or changes are required during CLA’s performance of requested services, or if you request that we perform any additional services, we will provide you with a separate SOW for your signature. Such SOW will advise you of the additional fee and time required for such services to facilitate a clear understanding of the services. Our services cannot be relied upon to disclose errors, fraud, or noncompliance with laws and regulations. Except as described in the scope of professional services section of this MSA or any applicable SOW, we have no responsibility to identify and communicate deficiencies in your internal control as part of any services. Management responsibilities Management acknowledges and understands that our role is to provide the services identified in an SOW and that management has responsibilities that are fundamental to our undertaking to perform the identified services. Responsibilities and limitations related to nonattest services For all nonattest services we may provide to you, your management agrees to assume all management responsibilities; oversee the services; evaluate the adequacy and results of the services; ensure that your data and records are complete; and accept responsibility for the results of the services. Fees and terms See the applicable SOW for the fees for the services. Work may be suspended if your account becomes 60 days or more overdue and will not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagements will be deemed to CliftonLarsonAllen LLP 220 South Sixth Street, Suite 300 Minneapolis, MN 55402-1436 612-376-4500 | Fax 612-376-4850 CLAconnect.com June 10, 2020 City of Lake Elmo Page 2 have been completed even if we have not completed the services. You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket expenditures through the date of termination. Payments may be made utilizing checks, Bill.com, your online banking platform, CLA’s electronic payment platform, or any other client initiated payment method approved by CLA. CLA’s electronic online bill pay platform claconnect.com/billpay accepts credit card and Automated Clearing House (ACH) payments. Instructions for making direct bank to bank wire transfers or ACH payments will be provided upon request. Other fees You also agree to compensate us for any time and expenses, including time and expenses of legal counsel, we may incur in responding to discovery requests or participating as a witness or otherwise in any legal, regulatory, or other proceedings that we are asked to respond to on your behalf. Finance charges and collection expenses You agree that if any statement is not paid within 30 days from its billing date, the unpaid balance shall accrue interest at the monthly rate of one and one-quarter percent (1.25%), which is an annual percentage rate of 15%. In the event that any collection action is required to collect unpaid balances due us, reasonable attorney fees and expenses shall be recoverable. Mediation These mediation provisions are applicable to any audit, examination, or agreed-upon procedures services provided to you. Such provisions are also applicable to forecast or projection services and buy-side due diligence consulting services. Any disagreement, controversy, or claim (“Dispute”) that may arise out of any aspect of our services or relationship with you shall be submitted to non-binding mediation by written notice (“Mediation Notice”) to the other party. In mediation, we will work with you to resolve any differences voluntarily with the aid of an impartial mediator. The mediation will be conducted as specified by the mediator and agreed upon by the parties (i.e., you and CLA). The parties agree to discuss their differences in good faith and to attempt, with the assistance of the mediator, to reach an amicable resolution of the Dispute. Each party will bear its own costs in the mediation. The fees and expenses of the mediator will be shared equally by the parties. Any Dispute will be governed by the laws of the state of Minnesota, without giving effect to choice of law principles. Limitation of remedies These limitation of remedies provisions are not applicable for any audit, examination, or agreed-upon procedures services provided to you. Our role is strictly limited to the services described in an SOW, and we offer no assurance as to the results or ultimate outcomes of any services or of any decisions that you may make based on our communications with June 10, 2020 City of Lake Elmo Page 3 you. You agree that it is appropriate to limit the liability of CLA, its partners, principals, directors, officers, employees, and agents (each a “CLA party”) and that this limitation of remedies provision is governed by the laws of the state of Minnesota, without giving effect to choice of law principles. You further agree that you will not hold CLA or any other CLA party liable for any claim, cost, or damage, whether based on warranty, tort, contract, or other law, arising from or related to this MSA, the services provided under an SOW, the work product, or for any plans, actions, or results of an SOW, except to the extent authorized by this MSA. In no event shall any CLA party be liable to you for any indirect, special, incidental, consequential, punitive, or exemplary damages, or for loss of profits or loss of goodwill, costs, or attorney fees. The exclusive remedy available to you shall be the right to pursue claims for actual damages that are directly caused by acts or omissions that are breaches by a CLA party of our duties owed under this MSA and the specific SOW thereunder, but any recovery on any such claims shall not exceed the fees actually paid by you to CLA pursuant to the SOW that gives rise to the claim. Indemnity You agree to indemnify and hold harmless CLA, its successors and affiliates, officers, employees, and agents from any claims brought or asserted by any other person, third party, or governmental body for any loss, damages, liabilities, remedies, or cause of action, and from any reasonable expenses incurred in defending against any such claims or actions (including attorney fees) arising from or relating to the services performed by any CLA party. Time limitation The nature of our services makes it difficult, with the passage of time, to gather and present evidence that fully and fairly establishes the facts underlying any dispute that may arise between you and any CLA party. The parties (you and CLA) agree that, notwithstanding any statute or law of limitations that might otherwise apply to a dispute, including one arising out of this MSA or the services performed under an SOW, for breach of contract or fiduciary duty, tort, fraud, misrepresentation or any other cause of action or remedy, any action or legal proceeding by you against any CLA party must be commenced as provided below, or you shall be forever barred from commencing a lawsuit or obtaining any legal or equitable relief or recovery. An action to recover on a dispute shall be commenced within the shorter of these periods (“Limitation Period”): Consulting services • For each service pursuant to an SOW, separately within twelve (12) months after the date we deliver the services or work product pursuant to the SOW on which the dispute is based, regardless of whether any CLA party provides other services for you under this MSA or other SOW. • Within twelve (12) months from the date of our last billing for services performed pursuant to the SOW on which the dispute is based. • Within twelve (12) months after the termination by either party of either this MSA or the entity’s ongoing relationship with CLA. June 10, 2020 City of Lake Elmo Page 4 Tax services • For tax return preparation, separately within thirty-six (36) months after the date when we deliver any final tax return(s) pursuant to the SOW on which the dispute is based, regardless of whether any CLA party provides other services for you under this MSA or other SOW relating to said return(s). • For tax consulting engagements, separately within thirty-six (36) months from the date of our last billing for services pursuant to the SOW on which the dispute is based. • For all tax return and tax consulting engagements, within twelve (12) months from the date when you terminate this MSA or the entity’s ongoing relationship with CLA. Examination, compilation, and preparation services related to prospective financial information • For examination, compilation, and preparation services related to prospective financial information (i.e., forecasts and projections), separately within twelve (12) months after the dates when we deliver the work product pursuant to the SOW on which the dispute is based, regardless of whether any CLA party provides other services for you relating to the work product. Audit, review, examination, agreed-upon procedures, compilation, and preparation services other than those related to prospective financial information • For audit, review, examination, agreed-upon procedures, compilation, and preparation services, separately within twenty-four (24) months after the dates when we deliver the work product pursuant to the SOW on which the dispute is based, regardless of whether any CLA party provides other services for you relating to the work product. The applicable Limitation Period applies and begins to run even if you have not suffered any damage or loss, or have not become aware of the existence or possible existence of a dispute. Other provisions Except as permitted by the “Consent” section of this agreement, CLA will not disclose any confidential, proprietary, or privileged information of the entity to any person or party, unless the entity authorizes us to do so, it is published or released by the entity, it becomes publicly known or available other than through disclosure by us, or disclosure is required by law. This confidentiality provision does not prohibit us from disclosing your information to one or more of our affiliated companies in order to provide services that you have requested from us or from any such affiliated company. Any such affiliated company shall be subject to the same restrictions on the use and disclosure of your information as apply to us. Pursuant to authority given by law or regulation, we may be requested to make certain workpapers available to a regulator for its regulatory oversight purposes. We will notify you of any such request, if permitted by law. Access to the requested workpapers will be provided to the regulator under the supervision of CLA personnel and at a location designated by our firm. Furthermore, upon request, we may provide copies of selected workpapers to such regulator. The regulator may intend, or decide, to distribute the copies or information contained therein to others, including other governmental agencies. June 10, 2020 City of Lake Elmo Page 5 You acknowledge and agree that this agreement and the pricing structure and billing rates of CLA are sensitive information which you shall not furnish or otherwise disclose to any third party without the prior written consent of CLA or as required by law. We will be responsible for our own property and casualty, general liability, and workers compensation insurance, taxes, professional training, and other personnel costs related to the operation of our business. When performing the services identified in applicable SOWs, we will utilize the resources available at the entity to the extent practical to continue development of your personnel. During a portion of our work, we may require the use of your computers. We will try to give you advance notice and coordinate our use so it does not interfere with your employees. The relationship of CLA with the entity shall be solely that of an independent contractor and nothing in this agreement shall be construed to create or imply any relationship of employment, agency, partnership, or any relationship other than an independent contractor. If applicable, accounting standards and procedures will be suggested that are consistent with those normally utilized in an entity of your size and nature. Internal controls may be recommended relating to the safeguarding of the entity’s assets. If fraud is initiated by your employees or other service providers, your insurance is responsible for covering any losses. The entity agrees that CLA will not be assuming any fiduciary responsibility on your behalf during the course of this agreement, except as may be assumed in a SOW. CLA may, at times, utilize external web applications to receive and process information from our clients; however, it is not appropriate for you to upload protected health information using such applications. All protected health information contained in a document or file that you plan to transmit to us via a web application must be redacted by you to the maximum extent possible prior to uploading the document or file. In the event that you are unable to remove or obscure all protected health information, please contact us to discuss other potential options for transmitting the document or file. Employment provision You agree that during the term of this agreement and for a period of one year after the expiration or termination date of this agreement, you will not solicit, hire, contract with, or engage the services of any person providing services to you on behalf of CLA without the prior written consent of CLA. You acknowledge that: 1. CLA personnel may be subject to agreements restricting their right to contract with or solicit business from you other than their service through CLA, and 2. If you breach this non-solicitation provision, you shall pay $100,000 to CLA as liquidated damages within two weeks of the date on which the former CLA employee or consultant begins his or her new employment with you. June 10, 2020 City of Lake Elmo Page 6 You acknowledge and agree that CLA’s damages resulting from violation of this section are difficult or impossible to estimate and that the sum stipulated above is a reasonable pre-estimate of the probable loss that CLA would incur based on the cost of replacement, training, lost resources for projects, and other factors and is not a penalty. Liquidated damages under this paragraph shall not limit or impair any other remedies CLA may seek for breach of this paragraph or this MSA. Technology CLA may, at times, use third-party software applications to perform services under this agreement. You authorize CLA to sign on your behalf any vendor agreements applicable to such software applications. CLA can provide a copy of the application agreement at your request. You acknowledge the software vendor may have access to your data. We regularly aggregate anonymized client data and perform a variety of analyses using that aggregated data. Some of these analyses are published to clients or released publicly. However, we are always careful to preserve the confidentiality of the separate information that we obtain from each client, as required by the AICPA Code of Professional Conduct and various laws. Your acceptance of this engagement letter will serve as your consent to our use of City of Lake Elmo’s anonymized data in performing and reporting on these cost comparison, performance indicator and/or benchmarking analyses. Termination of MSA Either party may terminate this MSA at any time by giving 30 days written notice to the other party. In that event, the provisions of this MSA shall continue to apply to all services rendered prior to termination. Agreement We appreciate the opportunity to be of service to you and believe this MSA accurately summarizes the significant terms of our relationship. This MSA, along with the applicable SOW(s), constitute the entire agreement regarding services to be performed and supersedes all prior agreements (whether oral or written), understandings, negotiations, and discussions between you and CLA. If you have any questions, please let us know. If you agree with the terms of our relationship as described in this MSA, please sign, date, and return. Sincerely, CliftonLarsonAllen LLP ICLM_IntSignature:1 Chris Knopik Principal 612-397-3266 christopher.knopik@claconnect.com ICLM_IntSignature:2 June 10, 2020 City of Lake Elmo Page 7 Response: This agreement correctly sets forth the understanding of City of Lake Elmo. ICLM_ExtSignature:1 Signature:___________________________________ Name:______________________________________ Date:_______________________________________ ExtDate1 ICLM_ExtSignature:2 ExtDate2 CliftonLarsonAllen LLP 220 South Sixth Street, Suite 300 Minneapolis, MN 55402-1436 612-376-4500 | Fax 612-376-4850 CLAconnect.com Special Services SOW This agreement constitutes a Statement of Work (“SOW”) to the Master Service Agreement (“MSA”) made by and between CliftonLarsonAllen LLP (“CLA,” “we,” “us,” and “our”) and City of Lake Elmo (“you” and “your”) dated June 10, 2020. The purpose of this SOW is to outline certain services you wish us to perform in connection with that agreement. Scope of professional services Chris Knopik is responsible for the performance of the services identified in this agreement. Jesse Dorn is responsible for the daily activities of the engagement. For all services we may provide to you, your management agrees to assume all management responsibilities; oversee the services; evaluate the adequacy and results of the services; and accept responsibility for the results of the services. Ongoing normal accounting services: • Outsourced accounting functions − Process accounts payable including the preparation and issuance of checks − Record accounts receivable − Reconcile certain accounts monthly and prepare journal entries, as requested − Perform additional accounting services as requested by management Engagement objectives, limitations, and responsibilities We will comply with the AICPA's Code of Professional Conduct, including the ethical principles of integrity, objectivity, professional competence, and due care. Our engagement cannot be relied upon to identify or disclose any financial statement misstatements, including those caused by fraud or error, or to identify or disclose any wrongdoing within the entity or noncompliance with laws and regulations. We have no responsibility to identify and communicate deficiencies in your internal control as part of this engagement. You agree that we shall not be responsible for any misstatements in the entity’s financial statements that may not be identified as a result of misrepresentations made to us by you. Management responsibilities relevant to CLA’s access to your cash Someone with management authority is responsible for the processes below. All approvals listed must be documented in writing, either electronically or manually: • Approve all invoices and check payments. • Approve all new vendors and customers added to the accounting system. • Approve all wire transfers to external parties. June 10, 2020 City of Lake Elmo Page 2 • Approve all credit card statements prior to those expenses being processed in the accounting system and subsequently paid. • Approve (or delegate to the CLA controller if applicable) all customer and vendor credit memos and accounts receivable amounts written off. • Review and approve (or delegate to the CLA controller if applicable) all bank statements and affiliated monthly reconciliations. Fees, time estimates, and terms Billing rates guaranteed through December 31, 2020: • Services performed by consultant $90 per hour Subsequent to the billing rate guarantee date, the rates may be adjusted as agreed between you and CLA through an addendum to this SOW. Time estimates: Ongoing normal accounting services: • Services performed by consultant Estimated 5 hours per week Our professional fees will be billed based on the time involved and the degree of responsibility and skills required. We will also bill for, expenses (including internal and administrative charges) plus a technology and client support fee of five percent (5%) of all professional fees billed. The time estimate is based on anticipated cooperation from your personnel and their assistance with preparing requested schedules. If the requested items are not available on the dates required or are not accurate, the estimated fees will likely be higher. If unexpected circumstances require significant additional time, we will advise you before undertaking work that would require a substantial increase in the fee estimate. Agreement We appreciate the opportunity to provide the services described in this SOW related to the MSA. All terms and provisions of the MSA shall apply to these services. If you agree with the terms of this SOW, please sign below and return a signed copy to us by email or U.S. mail to indicate your acknowledgment and understanding of, and agreement with, this SOW. Sincerely, CliftonLarsonAllen LLP ICLM_IntSignature:1 Chris Knopik Principal 612-397-3266 christopher.knopik@claconnect.com June 10, 2020 City of Lake Elmo Page 3 ICLM_IntSignature:2 Response: This letter correctly sets forth the understanding of City of Lake Elmo. ICLM_ExtSignature:1 Signature:________________________________________ Name:___________________________________________ Date:____________________________________________ ExtDate1 ICLM_ExtSignature:2 ExtDate2