92-0513 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