HomeMy WebLinkAboutIV. COW Agenda Item Proposals/ Recommendationis for Auditing Services 10/13/2009
INTEROFFICE MEMORANDUM
Mount Prospect
Village of Mount Prospect
Mount Prospect, Illinois
TO:
MICHAEL E. JANONIS, VILLAGE MANAGER
FROM:
FINANCE DIRECTOR
DATE:
OCTOBER 8, 2009
SUBJECT:
PROPOSALS FOR AUDITING SERVICES
PURPOSE:
Present to the Village Board a recommendation to accept a proposal for auditing services for the
five-year period beginning 2009-2013.
BACKGROUND:
The Village last sent out a Request for Proposal (RFP) in the Fall of 2004. At that time the Village
Board accepted the proposal from Sikich LLP to perform the annual audit and prepare the
Comprehensive Annual Financial Report (CAFR). The original agreement was to cover four years
(2004-2007). The agreement was subsequently extended for one additional year to be consistent
with our Audit Policy which requires a turnover in auditors every five years. The five-year service
limit was reached with the December 31,2008 audit.
DISCUSSION:
On August 31,2009 the Finance Department, in conjunction with the Audit Committee, mailed a
RFP for Auditing Services to six regional and national accounting firms that specialize in
governmental auditing. The firms were: Baker Tilly Virchow Krause, Crowe Horwath, Lauterbach &
Amen, McGladrey & Pullen, Miller Cooper, and Wolf & Company. The above firms were selected
and mailed RFP's based on their participation in the IGFOA, knowledge and experience in
municipal and governmental auditing, expertise with Governmental Accounting Standards Board
pronouncements, and experience in ensuring that the CAFR conform to the standards required by
the Government Finance Officers Association.
The scope of services to be performed, as outlined in the RFP, include auditing the financial
statements of the Village as well as performing the Single Audit on federal assistance and the TIF
audit. In addition, we asked for a fee for performing an audit on the Library's financial statements.
As in the past, the Village has incorporated the Library's audit into our RFP process as a means of
keeping the Library's costs down. The Library does pay its own auditing fees however.
Included in the scope of services for the first time is the review of the Forest River Fire Protection
District. Our Intergovernmental Agreement with them requires that an annual audit be done by the
Fire District. By including the Fire District review along with the Village audit we will be able to save
close to $1,500 annually over having an audit done separately.
Audit Proposal Recommendation
October 8, 2009
Page 2
In addition to the basic required auditing services, we asked each audit firm to present a fee
quotation to perform certain optional services. These services include typing and preparing the
comprehensive annual financial report, preparing the Comptrollers Annual Report, and preparing
the Illinois Department of Insurance Reports for the Police and Firefighters' Pension Funds.
The RFP asked firms to provide a fee quotation for auditing services for the fiscal years ending
December 31, 2009 through 2013. Multi-year proposals are usually requested due to the fact an
audit firm makes a substantial investment of time during the first year of an audit and the fee is
usually more reasonable if the first-year costs can be amortized over a multi-year period.
Of the six RFP's distributed, five were received. Only Miller Cooper declined to submit a proposal,
stating that they would not be able to direct adequate staff to our audit. Upon receipt of the
proposals, each was reviewed to ensure they were able to meet the requirements of the
engagement as outlined in the specifications. In consultation with the Audit Committee Chair, three
firms were selected to be interviewed. The three firms were Baker Tilly Virchow Krause,
Lauterbach & Amen and McGladrey & Pullen. Interview questions were prepared and an interview
team was assembled. The interview team consisted of the Audit Committee Chair, Finance
Commission Chair and Deputy Finance Director. Attachment I is the recommendation from the
interview team along with the agenda and questions used for the interviews. Attachment II is a
summary of the fee quotations as submitted by each of the five audit firms.
It is recommended that the Village Board accept the proposal from Lauterbach & Amen based on
their municipal experience and experience with other units of government, flexibility in timing of
work, thoroughness of process for conducting the audit and competitiveness of their bid for
services. The first year cost of the audit (excluding the Library) is $33,300. The amount paid to our
auditor last year was $33,050. We have $40,500 included in the 2010 budget
RECOMMENDATION:
It is recommended the Village Board accept the proposal from Lauterbach & Amen for auditing
services for the fiscal years ending December 31, 2009 through 2013.
lj~/.~
DAVID O. ERB
FINANCE DIRECTOR
DOE/
H:\ACCT\AUDIT\2009 Audit RFP\Board Memo - Auditor Recommendation.doc
Attachment I
Recommendation of External Auditors for Village of Mount Prospect
September 25,2009
Background:
The Village received five responses for the Request for Proposal (RFP) to provide audit
services. The audit firms were asked to make proposals for a five year period. On
September 25 the Chair of the Village Audit Committee Tom Munz, Chair of the Village
Finance Commission Vince Grochocinski, and Deputy Finance Director Lynn Jarog met
to interview perspective firms. Previously the decision was made to seek the services of
a different audit firm. Although the accounting firm used in the past had successfully
performed the services, it was decided (as a best practice) to rotate the firm providing
those services.
In consultation with Tom Munz, Finance Director David Erb and Lynn Jarog screened
the five applicants and selected three firms to interview as best qualified. The three firms
were Lauterbach & Amen, Baker Tilly and McGladrey & Pullen.
Interview Process:
Each of the representatives presented an overview of their firms. The interview team
asked a series of questions (attached is a copy of the agenda and questions). The results
of the interview coupled with the costs associated with the proposals were the basis for
the recommendation of a firm to perform audit services for the Village.
Following the interviews the panel discussed the firms to reach a consensus as to the firm
for consideration as the Village auditors. The Finance Department followed up with
telephone calls to references. All references provided by Lauterbach & Amen, LLP were
asked the same series of questions in regards to the engagement, the audit process, and
the consistency of staff from year to year. They were also asked to provide information
about any problems and to provide any additional comments. Lauterbach & Amen,
LLP's references checked out favorably with high regards. All references spoke fondly
of Ron Amen, Sherri Lauterbach, and the staff. All mentioned how easy they are to work
with and that they are always available if questions arise. The audit process is thorough
and runs smoothly, the schedule is adhered to, and no problems were mentioned.
Recommendation:
Based on the interviews, the written proposals, and the information received from
references, the Auditor interview team is recommending the Firm of Lauterbach, &
Amen, LLP of Warrenville, IL be selected to provide audit service for the Village of
Mount Prospect.
Several factors lead to this recommendation:
. Experience with other municipalities
. Flexibility in timing of work
. Process for working with Village in making changes and implementing the
ongoing changes in accounting standards
. Competiveness of their bid for services
Audit Firm Search
Interview Agenda and Questions
September 2009
Agenda for meeting:
I. Introductions
II. Opening Remarks (Village)
III. Firm Overview (Audit Firm)
IV. Evaluation Questions (Village)
V. Closing Comments (Audit Firm)
5min
5min
10 min
30 min
5min
Questions:
1. Please provide overview of the staff that would be assigned to the audits.
2. Give rough breakdown of how you would spend the hours assigned to the audit.
. Planning
· Review of prior work
· Meetings with village staff
· On-site audit time
· Statement preparation
· Presentation time
. Etc
3. Explain how you approach the first year of the audit and transition from the work
done by the prior auditor.
4. How would you differentiate your firm from your competitors? Anything included
beyond the basics, for the time spent during this audit?
5. Without naming clients, can you please describe two or three of the most
negative findings you have had from performing village audits?
6. Give examples where through the audit process you discovered deficiencies in
the internal control and were able to provide suggestions for improvement.
7. The proposal included the concept of performing specific more in depth
audit/control reviews. How do you see performing this type of work?
8. Describe some other value added services your firm could provide the Village
that might distinguish your firm from another?
H:\ACCT\AUDIT\2009 Audit RFP\Auditor Interview Questions 9-25-09.doc
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