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HomeMy WebLinkAbout1981-093-07/07/1981-MAKING FINDINGS RELATIVE TO AN ENGAGEMENT FOR THE PERFORMANCE OF THE 1981 AUDIT BY CLIFTON, GUNDERSO RESOLUTION 81-93 OF THE COUNCIL OF THE CITY OF FORT COLLINS MAKING FINDINGS RELATIVE TO AN ENGAGEMENT FOR THE PERFORMANCE OF THE 1981 AUDIT BY CLIFTON, GUNDERSON & COMPANY AND AUTHORIZING THE CITY TO SOLICIT PROPOSALS FROM AUDITING FIRMS FOR SUCH AUDIT WHEREAS, on August 30, 1979, the City solicited information from various auditing firms relative to a proposed three year auditing engage- ment for performance of the 1979, 1980 and 1981 audits, and WHEREAS, on September 27, 1979, the City selected six firms to present a more detailed proposal for audit services and a proposal was submitted to the City on October 12, 1979, by Clifton, Gunderson & Company which contained a proposed fee schedule for the three year period and further contained the following language on page 4 thereof "In your consideration of the proposed fees, remember that problems arise in making these estimates First, our economy is currently faced with double-digit inflation which must be considered a factor in such a proposal Secondly, the City of Fort Collins is recognized as one of the fastest growing and progres- sive cities in the nation It is only reasonable to assume that the audit will become larger and more complex in the future It should also be agreed that if at any point during our three year contract period, changes in the structure, systems or operations of the City occur which are so significant that the afore- mentioned fees become unrealistic, we will maintain the right to renegotiate the contracted fee Should the negotiation process indicate that no agreement can be reached , we will maintain the right to cancel the contract We submit these statements both for our own protection and for the protection of the City Further, it should be noted that the renegotiation process can and will work both ways Should the City feel that the contract is unfair, any reasonable changes will be considered This is especially important when one considers that the quoted fees are based on our concept of the scope of the audit and this concept may well change in subsequent years " , and WHEREAS, on November 6th, the Council adopted on final reading Ordi- nance No 142, 1979, a copy of which is attached and incorporated herein by reference, said ordinance appointing Clifton , Gunderson & Company to perform the independent annual audit of the books and accounts of the City for the years 1979, 1980 and 1981 and establishing a sum of Thirty Nine Thousand Two Hundred and Fifty Dollars ($39,250 ) as the fee for per- formance of the 1979 audit and further specifying that fees for the 1980 and 1981 audits should be subject to negotiation and ratification by the City Council no later than July 1st of each year, and WHEREAS, on October 30, 1979, Mayor Bowling, by letter to Clifton, Gunderson & Company, requested that an engagement letter for the per- formance of the 1979 audit be sent to the City which engagement letter was sent to the City on November 26th and signed by the City An engagement letter process was similarly established and used for the 1981 audit, and WHEREAS, on May 4, 1981 , Clifton, Gunderson & Company sent an engage- ment letter to the City indicating its intent to continue the engagement for a third year and setting a fee of Forty Five Thousand Six Hundred and Twenty Five Dollars ($45,625 ) for performance of the 1981 audit, and WHEREAS, the City, on June 16, 1981 , sent a letter to Clifton, Gunder- son & Company advising the firm of its disagreement with the figure presented in the proposal and inviting Clifton, Gunderson & Company to submit a new proposal by June 30th, taking into account the revised scope of work required for the audit, and WHEREAS, on June 30th, the City received a letter from Clifton, Gunderson & Company which did not submit a new proposal , and WHEREAS, on June 30th at an adjourned meeting , the City Council considered the engagement for the 1981 audit NOW, THEREFORE, by and in consideration of the above premises, the Council finds as follows Section 1 That Clifton, Gunderson & Company, by Ordinance No 142, 1979, was appointed to perform the independent annual audit of the books and accounts of the City for the years 1979, 1980, and 1981 Section 2 That in accordance with such ordinance, the fees for performance of the 1980 and 1981 audits were to be subject to negotiation and ratification by the City Council no later than July 1st of each of those years -2- Section 3 That the engagement letter submitted by Clifton, Gunderson & Company on May 4, 1981 , establishing a $45,625 00 fee is not reasonable or acceptable as compensation for performance of the 1981 audit based upon the scope of work that the Council reasonably believes will be necessary to perform the 1981 audit taking into account revamped financial systems and additional financial personnel hired since 1979 Section 4 That the City informed Clifton, Gunderson & Company that its proposal for the 1981 audit was unacceptable and of the Council 's rationale therefore, and further invited Clifton, Gunderson & Company to submit a new proposal no later than June 30th Section 5 That Clifton, Gunderson & Company has not submitted a proposal for performance of the 1981 audit which is reasonable or accept- able to the City Council or attempted to negotiate such a reasonable and acceptable proposal and further that Clifton, Gunderson & Company has been given a reasonable time within which to submit a new proposal or negotiate a new fee and that no request for an extension of time to submit a revised fee or to negotiate a new fee was made by Clifton, Gunderson & Company Section 6 That in accordance with Ordinance No 142, 1979, which requires that the fee for the 1981 audit shall be subject to negotiation and ratification by the City Council no later than July 1 , 1981 , the engagement of Clifton, Gunderson & Company not be continued for performance of the 1981 audit Section 7 That the Finance Department of the City be, and it hereby is, authorized to begin a process of soliciting proposals from auditing firms for performance of the 1981 annual audit Passed and adopted at a regular meeting of the Council of the City of Fort Collins held this 7th day of July 1981 ayor ATTEST A��Y� 1��" ity Clerk -3-