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Home My WebLink About92-0513 McGladrey & Pullen - Auditing Services RESOLUTION APPROVING CHANGE ORDER NO. 1 IN THE CONTRACT WITH MCGLADREY & PULLEN FOR 1991 AUDIT WHEREAS, the City of Elgin has heretofore entered into a contract with McGladrey & Pullen for the 1991 audit; and WHEREAS, it is necessary and desirable to modify the terms of the contract as is described in Change Order No. 1, attached hereto. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that Larry L. Rice, City Manager, be and is hereby authorized and directed to execute Change Order No. 1, a copy of which is attached hereto and made a part hereof by reference. s/ George VanDeVoorde George VanDeVoorde, Mayor Presented: May 13, 1992 Adopted: May 13, 1992 Omnibus Vote: Yeas 6 Nays 0 Recorded: Attest: s/ Dolonna Mecum Dolonna Mecum, City Clerk • R CITY OF ELGIN AUDIT FEE CHANGE ORDER #1 SCOPE: This Change Order N. 1 covers additional work required by McGladrey and Pullen for the 1991 Audit. REASONS FOR CHANGE: This change order is required for the cost associated with the additional work required by the auditors. The audit specifications did not include all of the new 1991 water and sewer impact fees, Equipment Fund as revised in 1991, Sewer Fund as revised in 1991, Risk Management Fund as revised, Pace Transportation close down requiring several weeks of Financial staff to establish systems and work with Pace Auditors, and the number of HTE conversion hours by Finance staff. SUMMARY OF CHANGES IN CONTRACT AMOUNT: The amount of the contract will be revised as follows: Additional work required due to delays $ 5,000 New Sewer/Equipment Fund Audit 7 ,200 TOTAL ADDITIONAL COST $12,200 The present contract with McGladrey and Pullen is for $20,400. By reason of Change Order No. 1, the contract for the 1991 Audit will be increased in the amount of $12,200, thereby making the total contract $32,600. Additional work required due to delays $ 5,000 New Sewer/Equipment Fund Audit 7,200 1991 Audit Contract 20,400 TOTAL 1991 AUDIT COST $32,600 CHANGE ORDER NO. 1 Page 2 Agreed to this day of 1992. Recommended: FINANCF_DEPART/MENT By: � Date: Accepted: McGladrey & Pullen Certified Public Accounting and Consultants Party o the Second Part (Contractor) By 4"', Title: Date: X30��1� Approved: CITY OF ELGIN Party of the Fi a Owner) By: Title: Date: • in Agenda Item No. April 17 , 1992 To: Mayor and Members of the City Council FROM: Larry L. Rice, City Manager SUBJECT: Audit Fee Addition .PURPOSE: The purpose of this memorandum is to request adjustment of the audit fees for the 1991 Audit per the attached request from McGladrey & Pullen. SUBJECT: Audit specifications were revised in 1990 to include all compliance audits on Elgin TIF #1 and #2. The audit specifications did not, however, include all of the new 1991 water and sewer impact fees, Equipment Fund as revised in 1991, Sewer Fund as revised in 1991, Risk Management Fund as revised, Pace Transportation close down requiring several weeks of Financial staff to establish systems and work with Pace Auditors, and the number of HTE conversion hours by Finance staff. In addition, a number of other major work items impacted the audit process and the closing entries to get trial balances and supporting information to the auditors as specified. Because of workload, some departments were unable to furnish audit information on a timely basis this year, particularly the first time interceptor sewer inventory and establishing the new Equipment Fund. The City has received a favorable audit fee for many years because of the computer system and the staff assistance. This is partially demonstrated by some of the fees paid by other cities such as Naperville at $39,000, Aurora at $33,000, Highland Park at $32,000 to $33 ,000 and Joliet at $31,000 . McGLADREY&PULLEN Certified Public Accountants and Consultants April 6 , 1992 Mr. James Bolerjack City of Elgin 150 Dexter Court Elgin, Illinois 60120 Dear Mr. Bolerjack : The purpose of this letter is to recap the audit conference we had April 1st regarding delinquency of audit information and related additional audit hours performed and needed to be performed . As of today , April 3rd, our staff has not received any of the needed schedules or data discussed at that meeting . In order for us to complete this year ' s audit , we need each piece of data that we discussed . In addition, we need your decision as to the Risk Management Fund amount of interfund transfers and documentation as to the implementation of the Vehicle and Equipment and Sewer Funds and related asset valuations. As you are aware , the delinquency of the various financial statements and work schedules this .year has caused us considerable additional time spent during the conduct of our examination. We will not be able to finish the engagement next Friday as budgeted and planned . In line with our contract with you , we are requesting reimbursement over and above the original contracted amount to help defray our additional costs incurred due to the delinquency of financial data. In addition to this concern, we also discussed with you the need to audit the valuation of fixed assets and new fund structures related to the Sewer Fund and Vehicle and Equipment Replacement Fund. Regarding the newly created Sewer Fund, we have discussed with you the audit steps that need to be performed to value historical City sewer lines and verify and audit the new lines contributed by the Elgin Sanitary District . Our estimate , based on the understanding that the data is being prepared by your staff, would be five additional audit days. The majority of this work is historical valuation and the additional time needed to audit this fund in future years should be less than two days. 20280 Governors Highway, Suite 301, Olympia Fields, Illinois 60461 (708) 481-8100 FAX (708) 481-9365 Internationally Dunwoody Robson McGladrey & Pullen Mr . James Bolerjack. City of Elgin April 6 , 1992 Page Two Regarding the City ' s current year decision to transfer all vehicle and equipment to the Vehicle and Equipment Replacement Fund, again additional historical fixed asset and accumulated depreciation valuation will need to be verified and the current year interfund allocated overhead charges will need to be audited . This is for work that was not included in the engagement request for proposal two years ago . We estimate an additional five days of fieldwork will be necessary , and again this process in future audit years should more closely approximate one to two additional days of work. As you are aware , we have been receiving financial data on a piecemeal basis since we began the engagement , and this has caused additional time to be incurred by our staff. In addition, the following is a list of the data still needed to be received in order for us to complete this year 's engagement : 1 . Final Water Fund general ledger . 2 . Sewer Fund general ledger. 3 . Vehicle and Equipment Fund general ledger. 4. General fixed asset account group schedule including all additions and deletions for the year . 5. Water Fund fixed asset schedule including all additions and deletions for the year . 6 . Decision on whether risk management transfers made during the year were accurate as made or if interfund rebates will be needed. 7. Schedule of interfund debts for all funds including analytical analysis of same. B . Valuation of City Sewer Fund lines , valuation of donated Sanitary District lines and related deprecia- tion schedules . 9 . Valuation and accumulated depreciation schedules for all Vehicle and Equipment Fund transfers that need to be made per change in City policy placing all such items in this fund. 10 . Arbitrage rebate liabilities . Mr. James Bolerjack City of Elgin �+. April 6 , 1992 Page Three We will meet with you at the beginning of the week to attempt to set meaningful time frames in which this data can be submitted to us in order to complete the examination. It seems apparent that we will need to draw out of the field next Friday until we can receive the needed schedules and data and mutually agree upon the issues stated in this letter . It is our formal request that an additional $51000 be approved as a reimbursement for the additional work performed to date and still needed to be performed based on the delinquent timing of various financial data received to date and yet to be received . It is also our request that an additional $7,200 be approved for the auditing of the new Sewer Fund and Vehicle and Equipment Fund as these are significant changes in your fund structure not contained in the three year specifications we originally proposed upon. This data will need to be audited in order to complete the examination. It should be noted that the large majority of this $7 ,200 is a one time charge to audit the creation of the fund data and the attesting to the valuations involved . We acknowledge the time and effort spent to date and still to be incurred by your staff . It is not our intention to infer other- wise . As we discussed , however , due to the delinquency of data, we are incurring material overruns on our budget and in line with our contract we are requesting reimbursement for these costs as well as attempting to fix a mutually agreeable price for the work that will be needed in the new fund areas . In our ongoing discussions with you throughout the audit , you have been aware of the problems , but as our fourth week of fieldwork is about to begin, it is apparent that the engagement cannot be completed as planned. We would appreciate your prompt attention to these matters as scheduling the completion of the engagement is critical . If you feel that we should meet with the manager or other City officials regarding these issues , we would be happy to do so . Thank you for your attention. We hope that a mutually agreeable plan to complete the engagement can be quickly arranged . Very truly yours , McGLADREY & PULLEN Robert W. Thoma, C .P .A. Partner RWT :gb