HomeMy WebLinkAboutR-2011-008 McGladrey and Pullen Resolution R-2011-008
A RESOLUTION AWARDING THE BID FOR AUDITING SERVICES AND AUTHORIZING THE
CITY OF RIVERSIDE TO ENTER INTO A CONTRACT WITH MCGLADREY AND PULLEN LLP
FOR SUCH PURPOSES
WHEREAS, the City issued a request for the submission of proposals for the purpose of
auditing services for the city finances; and
WHEREAS, the City received three responses to its request for proposals and the services
proposed by McGladrey and Pullen, LLP has been evaluated and recommended as the most
advantageous proposal for performance of such services; and
WHEREAS, the Board of Aldermen find it in the best interest of the City to enter into a
contract with McGladrey and Pullen, LLP to perform such services;
NOW, THEREFORE, BE IT RESOLVED, by the Board of Aldermen of the City of Riverside,
Missouri, as follows:
THAT the proposal of McGladrey and Pullen, LLP for auditing services in substantially the
same form attached hereto as Exhibit "A", is hereby authorized and approved;
FURTHER THAT the City Administrator, Mayor and/or Finance Director are hereby
authorized to execute all documents and agreements necessary or incidental to carry out the terms
and conditions of such bid award and the City Clerk is authorized to attest thereto.
PASSED AND ADOPTE b the Boar of Aldermen and APPROVED by the Mayor of the
City of Riverside, Missouri, the�day ofs .s�i A�s-�
i � ,,
% \tZ�� 4 .l�,�
Mayor Kathleen L. Rose `
ATTEST:
�=�'whtr- �=��.�i
Robin Littrell, ity Clerk
Approy . s Form:
/�" _ -
�
( a Th p n, City Attorney
cirt c��
����!�
tJpstream (rom ord7nary.
2950 NW Vivion Road
Riverside, Missouri 64150
AGENDA DATE: 2011-02-01
TO: Mayor and Board of Aldermen
FROM: Donna Resz, Finance Director
RE: Audit Contract for 2011, 2012 & 2013 audits with option for 2 additional years
BACKGROUND:
In November 2010, a request for proposals to conduct the City's annual audit for 3 years was sent to 18
accounting firms. In December 2010, the City received proposals from the following firms.
Cochran & Head
McGladrey
BKD
A committee consisting of Alderman Cope, Alderman Thatcher, the Finance Director, the City Administrator, a
law intern reviewed the proposals received. It was the unanimous recommendation of the commiYtee to
award the contract to McGladrey.
BUDGETARYIMPACT:
The contract with McGladrey for the fiscal year end 2011 audit is as follows:
City Audit $24,000
Single Audit of Federal Programs 4,500 (required due to receipt of CDBG funds)
Total $28,500
. .. McGiadrey & Pullen, LLP
Certified Public Acmun[ants
� 4801 Maln5t.,5te.400
Kansas Gty, MO 64712-2543
� n/���?I�„J��" 0816J533000F816J51.1890
� I1/1 \7 l,� )� www.mcgladrey.mm
January 27, 2011
City of Riverside, Missouri
City Hall
2950 N.W. Vivion Road
Rfverside, Missouri 64150
Attention: Donna Resz, Finance Ofiicer
This letter is to explain our understandfng of the arrangemenis for the services we are to perform for the
City of Riverside, Missouri for the year ending June 30, 2011. We ask that you either confirm or amend
this understanding.
AudN Services
We will perform an audit of fhe City ot Rlverside, Missouri's governmental activ(ties, each major fund, and
aggregate remaining fund information as of and for the year ended June 30, 2011 whfch collectively
comprise the Citys basic financial statements. We understand that the financial statements wlll be
prepared in accordance with accounting principles generally accepted in the United States of America.
The objective of an audlt of financial statements is to express an opinlon on those statements.
We are responsible for forming and expressing an opinion about whether the financial statements that
have been prepared by management with the oversight of the Board of Aldermen are presented tairly, in
all material respecis, in conformity with accounting principles generally acceptad in the United States of
America.
We will also perform the audit of the City of Riverside, Missouri as of June 30, 2011 so as to satisfy the
audit requirements imposed bythe Single Audit Act and the U.S. Office of Management and Budget
(OMB) Circular No. A-133.
We will conduct the audit in accordance with auditing standards generally accepted in the United States
of America and Government Auditing Standards issued by the Comptroller General of the United States;
and the provisions of the Single Audit Act, OMB Circular A-133, and OMB's Compliance Supplement.
Those standards, circulars, supplements, or guides require that we plan and perform the audit to obtain
reasonable, rather than absolute, assurance about whether ihe financial statements are iree of material
misstatement whether caused by error or iraud. Accordingly, a material misstatement, may remain
undetected. Also, an audit is not designed to detect errors or fraud that are immaterial to the financial
statements. The determination of abuse is subjective; therefore, Government Auditi�g Standards do not
expect us to provide reasonable assurance of detecting abuse.
An audit ot financial statements also includes obtaining an understanding of the City and its environment,
including its internal control, sufficient to assess the risks of materfal misstatement of the financiai
statements, and to design the nature, timing, and exient of further audit procedures. An audit is not
designed to provide assurance on internal control or to identity significant deficiencies or material
McGlsdreylsthebrandunderv�hkhA5M1dcGladrey,IncandMcGfadrey&Fullen,LlPservedleMYbusinessneeds. Mem6erotNSMlncematlonalnetwork,anetworkol
The two firms opeote as sepaou legal enti�ies In an allemaHVe pmcUa<stmRUre. Independent amomHnq, tax and aansultlng firms.
City oi Riverside, Missouri
January 27, 2011
Page 2 of 6
weaknesses. However, we will communicate to management and the Board of Aldermen any slgnificant
deficiencies or material weaknesses that become known to us during the course of the audit.
We will also communicate to the Board of Aldermen (a) any fraud involving senior management and fraud
(whether caused by senior management or other employees) that causes a material misstatement of the
tinancial statements, (b) any illegal acts, violations of provisions of contracts or grant agreements, and
abuse that come to our attention•(unless they are clearly inconsequential), (c) should a�y arise, any
disagreements with management and other serious difficulties encountered in performing the audit, and
(d) various matters related to the City's accounting policles and financial statements.
In addition to our reports on the City's financial statements, we will also issue the following reports or
types of reports:
• A report on the falrness of the presentation of the City's schedule of expenditures of federal
awards for the year ending June 30, 2011.
• Reports on internal controi related to the financial statements and major programs. These reports
will describe the scope of testing of internal control and the results of our tests of internal controls.
• Reports on compliance with laws, regulations, and the provision of contracts or grant agreements.
We will report on any noncomptiance which could have a material eifect on the financial
statements and any noncompliance which could have a direct and material effect on each major
program.
• A schedule of findings and questioned costs.
The funds that you have told us are maintained by the City and that are to be included as part of our audit
are Iisted in the 2010 Comprehensive Annual Financial Report (CAFR).
The blended component units whose financlal statements you have told us are to be included as part of
the Citys basic financial statements are the Tax Increment Financing Commission and the Riverside
Indusirial Development Authority.
The federal financial assistance programs that you have told us that the City participates in and that are
to be included as part of the.singie audit are the U.S. Department of Housing and Urban Development
Community Development elock Grant Program.
Our reports on internal control will include any signiticani deficiencies and material weaknesses in
controls of which we become aware as a result of obtalning an understanding ot internal control and
performing tests of internal control consistent with requlrements of the standards and circulars identffied
above. Our reports on compliance will address material errors, fraud, abuse, violations ot complfance
requirements, and oiher responsibilities imposed by state and federal statutes and regulations and
assumed by contracts; and any state or federal grant, entitlement of loan program questioned costs ot
which we become aware, consistent with requirements oi the standards and circulars identified above.
Clty of Riverside, Mlasouri's Responsibil(ties
Management is responsible for the financiai statements, including the selection and application of
accounting policies, adjusting the financial statements to correct material misstatements, and for making
aii financial records and related information avaflable to us. Management is responsible for providing us
with a written management representailon letter confirming certafn representatfons made during the
course of our audlt of the financial statements and affirming to us that it believes the effects of any
uncorrected misstatements aggregated by us during the current engagement and pertaining to ihe latest
City of Riverside, Missouri
Ja�uary 27, 2011
Page 3 of 6
perlod presented are immaterial, both individually and in the aggregate, to the financial statements taken
as a whole and to the opinion units of ihe financfal statements.
Management is responsible for establishing and maintaining effective internal control over financial
reporling and for informing us of all significant deficiencies and material weaknesses in the design or
operation of such controls of which it has knowledge.
Management Is responsible for identifying and ensuring that ihe City canplies with the laws and
regulations applicable to its activities, and for informing us about all known material violations of such
laws or regulations. In addition, management is responsible for the design and implementation of
programs and controls to prevent and detact fraud, and for informing us about ail known or suspected
fraud affecting the City invoivfng management, employees who have significant roles in internal control,
and others where the fraud could have a material e(fect on the financial statements. Management is also
responsible for informing us of its knowledge of any allegations of fraud or suspected fraud affecting the
City raceived in communications from employees, former employees, analysts, reguiators, or others.
Management is also responsible for (a) making us aware of significant vendor relationships where the
vendor is responsible for program compliance, (b) foilowing up and taking correcGve actbn on audit
findings, fncluding the preparation of a summary schedule of prior audit findings, and a corrective action
plan, and (c) report distrlbution including submitting the reporting packages.
The Board of Aldarmen is responsible for informing us of its views about the risks of fraud within the City
and its knowledge of any fraud or suspected fraud affecting the City.
The Ciiy agrees ihat it will not associate us with any public or private securities oifering without first
obtaining our conseni. Therefore, the City agrees to contact us before it includes our reports or otherwise
makes reference to us, in any public or private securities offering. We may conclude that we are not
otherwise associated with the proposed oHering and that our association with the proposed offering is not
necessary, providing the City agrees to clearly indicate ihat we are not associated with the contents of the
officfal statement. The City agrees that the following disclosure will be prominently displayed in the
official statement:
McGladrey & Pullen, LLP, our independent auditor, has not been engaged to per/orm, and has
not performed, since the date ot its report included herein, any procedures on the financlal
statements addressed in that report. McGladrey & Pullen, LlP, also has not performed any
procedures relafing to this olficial statement
Our assocfation with an official statement is a matter for which separate arrangements will be necessary.
The Ci1y agrees to provide us with printer's proofs or masters of such offering documents for our review
and approval before printing, and with a copy of the final reproduced material for our approval before it is
dlstributed.
Because McGladrey & Pullen, LLP will rely on the City of Riverside, Missouri and its management and
governing body to discharge the forgoing responsibilities, the City of Riverslde, Missouri holds harmless
and releases McGladrey & Pullen, LLP, its partners, and employees from ali claims, liabiiities, losses, and
costs arising in circumstances where there has been a knowing misrepresentation by a member of the
City of Riverside, Missouri's management which has caused, in any respact, McGladrey & Pulien, LLP's
breach of contract or negligence. This provislon shall survive the termination of this arrangement for
services.
City of Riverside, Missouri
January 27, 2011
Page 4 of 6
City of Riverside, Misaourl's Records and Assistance
If circumstances arise relating to the condiBon of your records, the availabllity of appropriate audit
evidence, or indications of a significant risk of material misstatement of the financial statements because
of error, fraudulent financial reporting, or misappropriation of assets whlch in our professional Judgment
prevent us from completing the audit or forming a� opinion, we retain the unilateral right to taka any
course oi action permitted by professional standards, including declining to express an opinion or issue a
report, or withdrawai from the engagement.
During the course of our engagement, we may accumulate records contafning data that should be
reflected in the City's books and records. The City wili determine that all such data, ff necessary, will be
so reflected. Accordingly, the City wili not expect us to mafntain copies of such records in our
possession.
The assistance to be supplied by City personnel, including Ihe preparation o( schedules and analyses of
accounts, has been discussed and coordinated with you. The timely and accurate completion of ihis work
is an essential condition to our completion of the audit and issuance of our audit report.
IT, in connection with our audit, you request us to perform accouniing services necessary for the
preparation of the financial statements (such as maintaining depreciation schedules, draiting the financial
statements, etc.) you agree to designate an appropriate Individuai to oversee the services, make ali
management decisions Involved in those services, evaluate the adequacy and results of the services, and
accept responsibility for the results of the services.
From time to time and depending upon the circumstances, we may use third-party service provfders to
assist us in providing professional services to you. In such circumstances, it may be necessary for us to
disclose confidential client Information to them. We enter into confidentialfty agreements with ail third-
party service providers and we are satisiied that they have appropriate procedures in place to prevent ihe
unauthorized release of your confidentiai information to oihers.
Other Terms of our Engagement
Our fees for the audit and accounting services described above are based upon the time required by the
individuals assigned to the engagement, plus direct expenses. Interim billings will be submitted as work
progresses and as expenses are incurred. Blilings are due upon submission. Our fee for the services
described in the letter will not exceed $24,000 for the financial statement audit and $4,500 per major
program tested under the Single Audit Act. This fee estimate will be subject to adjustments based on
unanticipated changes in the scope of our work and/or the incomplete or untimely receipt by us of the
information on the client participation list, in which case we wili discuss the situaiion with you before
proceeding. All other provisions of this letter will survive any fee adjustment.
Our professional standards require that we perform certain additional procedures, on current and
previous years' engagements, whenever a partner or professional employee leaves the firm and is
subsequently employed by or associated with a client. Accordingly, the City agrees it will compensate
McGladrey & Puilen, LLP tor any additional costs incurred as a result of the City's employment of a
pariner or professional employee of McGladrey & Pulien, LLP.
In the event we are requested or authorized by the City of Riverside, Missouri or are required by
government ragulation, subpoena, or other legal process to produce our documents or our personnel as
witnesses with respect to our engagements for the City of Riverside, Missouri, the Clty of Riverside,
Missouri wili, so long as we are not a party to the proceeding in which the information is sought,
reimburse us tor our professional time and expenses, as well as the fees and expenses of our counsel,
incurred In responding to such requests.
City of Riverside, Missouri
January 27, 2011
Paqe5of6
The worWng papers for this engagement are the property of McGladrey & Pullen, LLP. However, you
acknowledge and grant your assent that representat(ves of the cognizant or oversight agency or their
designee, other government audit staffs, and the U.S. Government Accountability Office shall have
access to ihe audit workfng papers upon their request; and that we shall maintain the working papers for
a period of at least three years after the date of the report, or for a longer period if we are requested to do
so by the cognizant or oversight agency. Access to requested workpapers will be provided under the
supervision of McGladrey & Pullen, LLP audit personnel and at a location designated by our Firm.
You have informed us that you intend to prepare a CAFR and submit it for evaluation by the Government
Finance Oificers Associatfon's Certificate of Achfevement for Excellence in Financial Reporting Program.
Our participation in the preparalion of the CAFR is to consist of technical assistance.
We will propose adjusting journal entrfes.
The two overarching principles of the independence standards of the Government Auditing Standards
issued by the Comptroller General of the United States provide that management is responsible for the
substantive outcomes of the works, and therefore, has a responsibility and is able to make any informed
judgment on the results of the services described above. Accordingly, the City ot Riverside, Missouri
agrees to the following:
• Donna Resz, Finance Officer will be accountabie and responsible for overseeing the proposal of
journal entries.
• The City of Riverside, Missourl wili establish and monitor the performance of the proposal oi
Journal entries to ensure that ihey meet management's objectives.
• The City of Riverside, Missouri will make any decisions that Involve management tunctlons related
to ihe proposal of journal entries and accepts tull responsibility for such decisions.
• The City of Riverside, Missouri will evaluate the adequacy of services performed and any findings
ihat result.
Claim Resolution
The City of Riverside, Missouri and McGladrey & Pullen, LLP agree that no claim arising out of services
rendered pursuant to this agreement shall be filed more than two years after the date of the audit report
issued by McGiadrey & Pullen, LLP or the date of this arrangement letter if no report has been issued.
The City of Riverside, Missourl waives any claim for punitive damages. McGladrey & Pullen, LLP's
Iiablllty for all claims, damages and costs of the Clty of Riverside, Missouri arising from this engagement
is Ifmited to the amount of fees paid by ihe City of Riverside, Missouri to McGladrey & Pullen, LLP for the
services rendered under thfs arrangement letter.
This letter constitutes the complete and exclusive statement of agreement beiween McGladrey & Pullen,
LLP and the City of Riverside, Missouri, superseding all proposals, oral or written, and all other
communications, with respect to the terms of the engagement between the parties.
In accordance with Government Audlfing Standards, a copy of our most recent peer review report is
enclosed, for your information.
City of Riverside, Missouri
January 27, 2011
Page 6 of 6
if this letter detines ihe arrangements as the City understands them, please sign and date the enclosed
copy and return tt to us.
McGladrey & Pullen, LLP
/
Kevin Smith, Director
Confirmed on behalf of the Cit of Rive ide, Miss uri:
� — \ �
i
Ila.-, n �In��'J,,,.�,�,� - C_;{� �d -
F�. 3� _,2011
vw e. s�. iwh s�.h, s���. zoo
g Po.�x„�
W SpiMyfiaid, MA 65801-f 190
CPAs & AdVlaore an.ess.e�oi c�av.e65.aex www.bkd.com
System Review Report
To tha Paztnars of
Mcdladray & Pullen, LLP
and tha National Pear Reviaw Committee
of the American Instituta of Cartifiad
Public Accoantanta Pear Revi�w $oard
We have roviewed the system of qusiity control for the accounting and auditing practica of Medledrey 8c
Pullen, LLP (tha firm) spplicabla to non-SEC issuers in offect for tha year endad Aprll 30, 2010. Our
peor reviaw was conducted in accordance with tha Standerds for Perfomting and Reporiing on Par
Raviaws estebHshed by tha Peer Raviaw Board of tha Amaricen institute of Cmtified Public Accountents.
1'he firm ie rasponsible for desi�ing a syetem of quality control and complying with it to provida the
firm with reasonable asswance of perfotming end raporting ip confomuty with applicabte professiona!
atandsrds in all materiet respects. Our rasponaibility is to axprese an opinioe on the design of tha syatem
of quality control and the firm's compliance therewith basad on our c�aview, Tha nature, objectives,
acope, limitaGons of and tha procedures performed in a System Roview ara described in tha standerds at
www.aic a.o rsummarv.
As required by the standarcis, engagements selected for reviaw included engagamentv paformed undu
Government Audrting Stmrdards, audits of amployea benafit plens and audits performed under FDICIA.
In our opinion, tha system of quelity control for the accounting and auditing practica of Mc(iladrey &
Pullan, LLP eppUceble to non-SEC ieaums in effect for tha year anded Apri130, 2010, has beon suitebty
dasigned and complied with to provide the firm with reasonable asaurance of perForming and raporting in
conforniity with applicable profesaional atandards in all materisl respects. Firms can receive a rating of
pass, pass wtth deJlclency(les) or fatl. Mcdladrey & Pullen, LLP has received a pear roview rating of
pass.
,���� �-P
December 2, 2010
Praxity�:
p 9 MENBEA
experience B INOEIENDE�XiN