2017.08.21 CC Packet - Laserfiche WebLink

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CITY OF EST. 1906 6�� 14669 Fitzgerald Avenue North, Hugo, MN55038 • (651) 762-6300 • www.ci.hugo.mn.us TO: Bryan Bear, City Administrator FROM: Ron Otkin, Finance Director SUBJECT: Five- Year Audit Contract Extension DATE: For the City Council Meeting of August 21, 2017 In the fall of 2001, the City Council appointed the independent accounting firm of Smith Schafer & Associates as the City Auditors for a three-year engagement beginning with the audit of the 2002 financial statements. The Finance Department was pleased with their work product and professionalism. Thus the City Council has authorized three-year extensions of their contract since then. The audit process is particularly taxing on the Finance Department in terms of staff time spent assembling work papers, accumulating data and quantifying depreciable infrastructure and other assets, and completing the Comprehensive Annual Financial Reports. In addition, the Governmental Accounting Standards Board (GASB) keeps issuing new pronouncements that continually change the required format of our financial reports and the disclosures contained therein. However, the thorough knowledge of GASB pronouncements exhibited by the staff of Smith Schafer & Associates has made these tasks more bearable. The Finance Department would like the City Council to consider reappointing Smith Schafer & Associates for an additional five-year term. Attached hereto is their proposal for conducting the 2017 thru 2021 audits and preparation of the City's Comprehensive Annual Financial Reports. The following is a comparison of their proposed fees for the next five audits and how it compares to fees charged in the last five years: 2017 Audit - $15,750 2018 Audit - $16,225 2019 Audit - $16,750 2020 Audit - $17,250 2021 Audit - $17,775 2012 Audit - $13,400 2013 Audit - $13,850 2014 Audit - $14,275 2015 Audit - $14,700 2016 Audit - $15,300 It is important to note that their proposal is for audit and CAFR preparation only. Fees to provide consulting related to the continued implementation of GASB pronouncements will be billed as follows: 2017 GASB Related Fees — Not to Exceed $4,950 2018 GASB Related Fees — Not to Exceed $5,100 2019 GASB Related Fees — Not to Exceed $5,250 2020 GASB Related Fees — Not to Exceed $5,400 2021 GASB Related Fees — Not to Exceed $5,575 Staff recommends the appointment of Smith Schafer and Associates as the auditors for 2017 — 2021 subject to the terms outlined in their proposal based on the following: 1. The Finance Department is exceptionally pleased with the services provided by Smith Schafer and Associates over the last fifteen years.