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Audit Committee
Draft Minutes
Council Chambers
Committee members Christensen, Lemhouse, Levine, Morrison and Nutter were present.
STAFF PRESENT: LEE TUNEBERG, ADMINISTRATIVE SERVICES AND FINANCE DIRECTOR
BRYN MORRISON, ACCOUNT REPRESENTATIVE
Christensen/Morrison ms to approve minutes as submitted. All Ayes.
Mr. Tuneberg spoke to the previous auditor Request for Proposal (RFP). He stated that the current auditor is Pauly Rogers and Co., P.C. He pointed to the RFP for the new audit. He explained that there will be a rating process of received proposals and interviews of qualified interested parties. The Committee questioned the evaluation process on page 14. They would like the Audit Committee to be named as the evaluation committee. Staff will make this change to the RFP.
Mr. Tuneberg spoke to the need for the hotel/motel and food and beverage tax audit. He added that in the past staff has completed the audits of establishments, but in recent years, there has not been staff available to complete these audits. He gave an example of a restaurant that has asked for a refund due to overpayment. The City will need to audit the establishment before any refund is sent. The Committee asked what the time period was for allowing refunds and if that happened very often. Mr. Tuneberg responded that it did not happen very often and they have a one year window. The Committee questioned why the word select was used rather than random for selecting the establishments to audit. Mr. Tuneberg responded that the City may want to look at a large and a small establishment and it may be based on knowledge that the City has or questions the returns have risen. The Committee decided to change the RFP to state that a random, rather than selected, out of a selection of establishments.
The Committee asked about additional audits that could be requested from the audit firm. One example mentioned was the franchise fees that the City receives and with the cable television conversion, the fees Ashland Home Net will be accountable for. The Committee questioned what franchise fees were. It was discussed that franchise fees are payment for example from a utility for having equipment in the City’s right of way, telephone poles in right of way, undo wear and tear on streets, curbs, etc. Mr. Tuneberg added that the problem with including additional audits is that the City must be able to provide the firm with the scope to accurately tell them what they will be doing.
It was discussed by the Committee that there is no longer available staff to complete the audits for food and beverage and hotel/motel tax and only those establishments that raised questions or if there has been complaints against, are audited now. The Committee discussed if it would be cheaper to have someone internally audit rather than include it in the contract and if it is the Finance Directors right to hire someone outside the City to do the audits, or if the City Administrator or City Council determines that. Resolution 2003-07 was read aloud to the Committee.
Mr. Tuneberg explained that the charge for the audit committee is to select the auditor and that the final contract will go before Council for approval. It was mentioned that the costs for the additional audit may be determined more than the City is willing to pay. The Committee discussed how auditing the establishments is of value to the community and will make the restaurants and hotels/motels aware that they need to be careful in completing their returns. It was discussed that the Committee appreciated this approach compared to staff asking for another employee to be hired to complete the audits. This portion could be removed from the contract and the firm would still meet the requirements from the state on the remaining audit of the City and Parks.
The duration of the contract was discussed and Mr. Tuneberg explained that it would be through fiscal year 2009. There is the option to extend it two more years though if the City sees the need. It was discussed that the food and beverage tax ends 12/31/2010.
It was discussed that in the past the Audit Committee had asked for special reviews such as an ambulance and AFN review and Mr. Tuneberg sees the food and beverage
and hotel/motel audit falling into the same category as a role of the Committee. It was discussed that the municipal code will be reviewed to who specifically is responsible for performing the audits and if it does not specifically say the Finance Department must perform the audits, then the audit can be performed by the audit firm.
The Committee asked what the general insurance requirements were. Mr. Tuneberg explained that the City uses the wording general insurance on all personal services contracts and the requirements vary depending on the nature of the contract. The Committee would like staff to provide the guidelines. The Committee questioned if the insurance is given by the firm when the proposal is submitted or with the signing of the contract. Mr. Tuneberg responded it is given with the contract.
The Committee discussed if the services requested could be separated out so that accounting firms in
Mr. Nutter asked for the previous RFP that was done for the current auditor. Staff will provide.
The Committee discussed the evaluation criteria within the RFP. The Committee asked if all questions the bidders ask and responses provided by staff, be sent to the Audit Committee members. It was explained that staff will identify those bidders who comply with the requirements, then distribute those proposals to the Committee, then the Committee will meet to discuss the proposals and then may choose to interview the top candidate(s).
The Committee discussed the fee arrangement and Mr. Nutter felt the amount allocated to the fee should be higher. Mr. Tuneberg explained that the lowest bidder is not always the best choice and the City needs the experience and ability to do the job. It was discussed that it is a competitive bidding process and the bidders will try to price their services to be as competitive as possible. Mr. Nutter added that from a taxpayers view, they should evaluate the fee at a higher level. The Committee discussed that they would not like to leave the impression that the City weighs the fee higher than experience. Mr. Tuneberg offered changing the fee to 35 points, the qualification to 35 and removing the points for the interview. The Committee agreed and stated that it should be noted in the RFP that the bidders are required to be available for and interview if chosen. Mr. Tuneberg added that the Committee could judge the bidders performance in the interview as part of the Introduction points.
The Committee asked if they were not available for either the discussion of the proposals or interview meetings, if they could respond by proxy. Mr. Tuneberg responded that would be acceptable. The next meeting to discuss the proposals was set for February 5 at 9:00 am in Council Chambers and the meeting to interview the bidders for February 9 at 8:00 am in Council Chambers.
Adjournment
The meeting was adjourned at 3:20 p.m.
Respectfully Submitted,
Bryn Morrison
Account Representative