HomeMy WebLinkAbout1984-05-21 - City Commission Special Meeting Minutes5811 NORTHWE�iT 88TH AVENUE TAMARAC, FLORIDA 33321
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May 16, 1984
NOTICE OF SPECIAL MEETING
CITY COUNCIL OF TAMARAC, FLORIDA
There will be a Special Meeting of the City Council on Monday,
May 21, 1984 at 1:00 P.M., in the Council Chambers of City
Hall, 581.1 N.W. 88 Avenue, Tamarac.
The purpose of the meeting is City Auditor selection process:
1) Final Interviews with:
a) Touche Ross & Co.
b) Feat, Marwick, Mitchell & Co.
c) Alexander Grant & Company
2) Ranking decisions
3) Negotiations
The Public is encouraged to attend.
Carol A. Evans
Assistant City Clerk
Pursuant to Section 286.0105, Florida Statutes
If a person decides to appeal any decision made by the city
Council with respoci., to any inatter considered at such meeting or
hearing, he wili nr:.4,xJ a rc,,ord of the proceedings and for such
purpose, he r;,uy need to ensure that a verbatim record includes
the testimony and evidence upon which the appeal is to be based.
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CITY OF TAMARAC, FLORIDA
SPECIAL CITY COUNCIL MEETING
May 21, 1984
Tape CALL TO ORDER: Mayor Kravitz called the meeting to order on
1 Monday, May 21, 1984 at 1:00 P.M. in the Council Chambers of City
Hall.
ROLL CALL: PRESENT: Mayor Philip B. Kravitz
Vice Mayor Sydney M. Stein
Councilman Jack Stelzer
Councilman Raymond J. Munitz
ABSENT AND EXCUSED: Councilman John J. Dunne
ALSO PRESENT: Laura Z. Stuurmans, City Manager
Patricia Marcurio, Secretary
Mayor Kravitz read the call of the meeting into the record which
stated that the purpose of the meeting is City Auditor selection
process. He said these are final interviews with:
a) Touche Ross & Co.
b) Peat, Marwick, Mitchell & Co.
c) Alexander Grant & Co.
C/M Munitz said there are 4 areas of concern which he intends to
refer to each of the 3 applicants:
1. the experience on municipal audits that the employees of each
firm has and the experience they have as far as their own employees
expenses.
2. there has been some publicity on a single audit requirement which
is before the Congress. He questioned whether Tamarac would come
under this requirement.
3. what effect, if any, would a change of auditor have with regard
to the City's bond issue.
4. fees
City Manager Stuurmans said she brought copies of the Florida
Statute regarding negotiations with auditors for reference purposes.
She said the agenda speaks for procedure that Council will employ
today. First, the firms will be interviewed by Council; second, a
final ranking decision will be made and; third, after the ranking
has been made pursuant to the Statute, Council will negotiate with
the first one and failing to reach a conclusion with the first one,
Council could proceed to the second and, if necessary, the third.
She said Council would still have the option,under this particular
Statute, to go back to speak to any of the previous ones that were
negotiated with. She requested permission to be excused because
she is working on the grant problem at this time.
V/M Stein said that Council has already completed the first step
of ranking the auditing firms.
a) Touche Ross & Co. - Steven Cohen, Partner and Jerry Simms, Manager
of Touche Ross & Co. introduced themselves to Council. Mr. Cohen
said the NFOA, the governing body for Finance Officers for which
Tamarac received a Certificate of Conformance, asked his company 2
years ago to write their bible for accounting firms to use in the
evaluation of internal control. He said the Institute of Internal
Auditors have consistently asked them to write a book called
Computer Auditing Control and this is the third update of this pub-
lication. He said when they are engaged they look at the prior
firm's reports, at questions by the City Manager, Finance Director,
and Council and find concerns of the past. He said the internal
controls are critical to establishing the audit program. He said
he is part of the firm's national resource program with the public
sector and is consulting partner to Orange County and to the City
and County of Jacksonville.
- 1 - 5/21/84
/pm
C/M Munitz asked Mr. Cohen for an idea as to the experience of his
firm with municipal audits and Mr. Cohen said he is a Partner with
the firm of 20 years experience, 13 years in the public sector
and he is the firm's resource. He said they are currently the
auditors to 6 municipalities and Mr. Simms has 20 years of ex-
perience with 15 in the public sector. He said the Consulting
Partner they have is Ivan Blum who has 13 years experience, 10
in the public sector. He said the audit supervisors are all
experienced in public sector work and they do not put inexper-
ienced people on an engagement, especially in the first year.
C/M Munitz asked about the accountants under the supervisors and
Mr. Cohen said Mark Wilson is the audit supervisor for 4 munici-
palities, Russell Brown handles 2 municipalities and past that
level it would depend on when the scheduling comes up but they
have at least 10 people at the senior/junior level that are
experienced with public sector auditing. Mr. Simms said they
have a training session that takes place in the summer months
in the public sector area and all their people handling munici-
palities go to that training session.
C/M Munitz asked --about the single audit requirements of the Federal
government and whether this would affect Tamarac and Mr. Cohen
said this concept is under the direction of the Office of Manage-
ment and Budget which is a Division of the Executive Office of
the President. He said in 1978 he worked for the Executive
Office of the President and one of the things he did while in
that office was to develop the single audit guidelines. He said
the purpose was to prevent several auditors from
entering a public sector as well as universities and non-profit
organizations. He said, basically, this provides that the Federal
government will accept one audit from an independent or State
auditor provided that their audit approach is designed to deal
with all the ramifications of Federal grants and programs.
He said, in addition, they want the auditor to look at the
financial management system to make sure they had a system that
adequately captured the cost and expenditures of all programs in
a comprehensive manner. He said they want the auditor to look
at the compliance side of all grant programs and internal control
and evaluate that in their audit report so that the audit report
now has a financial statement which has an opinion, an auditor's
letter and is adequate to control the recording of revenue and
disbursement information.
C/M Munitz asked how different this is from the way it was and
Mr. Cohen said in the past an auditor would only audit
the City's accounts and if there were off-line situations, such
as grants that came from the Federal government directly to a
contractor for the Water and Sewer Program, these were not audited.
He said this prevented any other government unit from imposing a
greater audit requirement. C/M Munitz asked if there were any
limits or controls as to population, amount of budget, etc. and
would this apply to Tamarac and Mr. Cohen said if Tamarac were
not receiving any Federal funds directly or indirectly, it would
not apply. C/M Munitz asked if Mr. Cohen has ever. encountered
a situation as a successor auditor when a bond issue prevailed
dating back 2 to 5 years. Mr. Cohen said this is not unique.
Mr. Cohen said it is commonplace for firms to place reliance on
other firms' work,and the bond counsel sets the scope for what
is included in the offering document and the underwriter. He
said a standard comfort letter would cover this.
C/M Munitz asked if Mr. Cohen would give the guidelines generally
set with the firm's employees for expense approval and Mr. Cohen
said it is determined by the scope of the audit, which is not a
unilateral decision. He said it is a decision reached with the
City Manager, the Finance Director and, sometimes, with an audit
committee.
- 2 - 5/21/84
/pm
Mayor Kravitz referred to Page 18 of the Expression of Interest
booklet, related to government experience and he questioned if
Mr. Cohen's firm is currently auditing the Cities of Miami
Beach, Hialeah, South Miami, North Bay Village, West Miami,
Or-ange- C(Dunty and Jacksonville. Mr. Cohen said they are currently
auditing these aforementioned municipalities. V/M Stein asked if
it is normal to charge municipalities based upon an hourly or
flat rate for the year and Mr.Cohen said their intention is to
negotiate a fee since there are sometimes hourly fees with an
upside cap and sometimes there are flat fees.
V/M Stein asked if their firm would be willing to audit one depart-
ment per year at no additional cost and give Council a full report.
Mr. Cohen said with an internal control report, they can give
negative assurance but without a complete audit of the department
there is no way to give positive assurance. V/M Stein asked what
their anticipated maximum fee would be to the City for a one year
audit and Mr. Cohen said $17,800, and he would be willing to state
for the record that for at least a 3 year period they would limit
those increases to CPI -type increases. He said that would limit
it to approximately 4% per year. Mayor Kravitz asked if this
price would include the follow-up report at the end of 6 months
and Mr. Cohen said yes.
Tape C/M Munitz asked the standard billing rates and Mr. Cohen said it
2 varies by person since their staff engagement for an audit averages
$54 per hour across the board. Mayor Kravitz thanked Messrs. Cohen
and Simms for their input.
b) Peat, Marwick, Mitchell & Co. - Chris Davell, Senior Manager with
Peat, Marwick, Mitchell & Co. introduced himself to Council. C/M
Munitz asked Mr. Davell how they go about internal control auditing
and Mr. Davell said they first spend a significant amount of time
evaluating the internal control) secondly, they document the system
of the City, revenues, receipts, purchases, etc. and; thirdly, they
analyze the City's different sources of revenues, expenses and
disbursements and they thoroughly document the system of internal
control. Mr. Davell said they use a system called CDOC which is
documenting a system basically emphasizing control points and the
documents that will give rise to information in the financial
statements. He said they test the controls to see if they can be
relied upon. C/M Munitz asked if this were limited to financial
items or also procedural and Mr. Davell said it is procedural as
far as they generally relate to the accounting system but not
directly in the flow of a cash receipt or disbursement.
Mr. Davell said one of the by-products of their analysis of the
internal controls is the Management Letter which does address
material weaknesses as well as other areas that might be improved.
He said this is not specifically control oriented but is also for
improving operations and increasing revenue. V/M Stein asked if
his firm would do an internal review of a specific department if
requested to do so and Mr. Davell said they could do that but this
would not be part of the overall audit. He said it could be in
the normal fee estimate if this is what Council wishes. C/M Munitz
asked about the experience of the accountants to be used in the
audit and Mr. Davell said in -charge auditors would be taken from
the 8 in their office that are experienced in municipal accounts.
C/M Munitz asked Mr. Davell if they have experienced any problems
as a successor auditor when a bond issue is involved and Mr. Davell
said he has personally not had experience when there has been a
predecessor auditor but Keith Cobb has. He said generally the bond
counsel and the underwriters make the determination of what is
required. C/M Munitz asked Mr. Davell about the single audit
requirement from the Federal government and Mr. Davell said for
a City that has a significant amount of grants or other sources of
revenue other than the normal governmental property taxes, etc.,
it has its merits.
- 3 - 5/21/84
/pm
Mr. Davell said there is a threshold beyond which the single
audit is not cost beneficial. Mayor Kravitz said he noted in
the proposal of Peat, Marwick, Mitchell & Co., that there were
only 2 cities audited by them and Mr. Davell said as a Manager,
that is correct, however, as a firm, they audit 6 cities. Mayor
Kravitz asked what the function would be of the CPA firm in pre-
paring the official statements and Mr. Davell said this varies
but on the average, it is reviewing the document, suggesting
wording, meeting with bond counsel and underwriters in early and
development stages of the document to determine what should be
included.
Mayor Kravitz asked if they are still auditing the Cities of
Fort Lauderdale, Coral Springs, Wilton Manors, Dania, Davie, and
Highland Beach. Mr. Davell said yes. V/M Stein said according
to the Letter of Engagement, they will be billed as work progresses.
He said Tamarac usually enters into an agreement with a maximum
fee for the year and he asked if Mr. Davell could give the figure
for this. Mr. Davell said the fee would be $27,500 without the
single department control check. He said their typical increases
are no more than standard rate changes or cost of living increases.
He said the average hourly billing would be approximately $50 per
hour. C/M Munitz asked if the 6 month follow-up report is included
in the total price and Mr. Davell said yes. Mayor Kravitz thanked
Mr. Davell for his input.
c) Alexander Grant & Co. - Burt Emmer', Partner of Alexander Grant
& Co. was asked by C/M Munitz if, based on the evaluation of
internal control procedures, his attitude concerning internal
control evaluations prior to setting up auditing procedures has
been changed. Mr. Emmer said they are required to do an evalu-
ation and study of internal control and this will be done but
there will not be a separate report under a normal type of
financial audit engagement. He said in their Engagement Letter
they have indicated that they would extend that to one operating
department to actually view the internal control there. He said
that department would be selected by the City. C/M Munitz asked
if anything has happened, as a result of the internal control
evaluation, to change their procedures of internal control prior
to the audit. Mr. Emmer said the one area where work was done
as a result of that was in the Public Works Department
because of inventory problems. Mr. Emmer said there were no
other significant areas that have come up in the past where the
procedures were extended or modified.
C/M Stelzer asked how far they check in the Building Department
concerning building permit fees charged, etc. Mr. Emmer, said
as a part of their audit program they take a sample of building
permits and look back to the original documentation and track it
to its full collection. He said this is done on a sample basis.
V/M Stein asked if there is any additional type of audit Mr.
Emmer would recommend to prevent the problem that occurred in
Public Works. Mr. Emmer.. said there was a great deal of collusion
involved in the problems in the Public Works Department which made
it difficult for control. He said there are certain things that
they recommended in terms of tighter controls which would give
the City more accountability. C/M Munitz asked if Mr. Emmer did
a follow-up to see if his recommendations were followed to correct
any problems. Mr. Emmer:- said they rendered a written report to
the Council as to what, if anything, had been done in connection
with their recommendations. He said in their year-end Management
Letter there is always a section which says "Responses to Prior
Year's Recommendations" in which they state whether anything has
been done to correct problems.
C/M Munitz asked the experience of the workers for Alexander Grant
that would be doing the audit and Mr. Emmer; said Kenneth Meuser is
one of their best Senior Accountants who has a great deal of
experience in this field. He was the in -charge auditor last year
for Tamarac.
- 4 - 5/21/84
/pm
Mr. Emmer said Mr. Meuser is experienced in auditing the Cities
of Tamarac, Sunrise, Lighthouse Point and Hialeah Gardens. C/M
Munitz asked if there is normally a problem with a successor
auditing firm handling a bond issue and Mr. Emmer said there is
always some additional work involved. Mr. Emmer:, said from the
investment community's prospective, a question arises when there
is a change of auditor. C/M Munitz asked Mr. Emmer's opinion of
the single audit requirement and Mr. Emmer r said it has absolutely
no applicability to Tamarac. C/M Stelzer asked how much the City
must receive in Federal funds before it is required and Mr. Emmer,
said the City would have to receive over $100,000 but this only
comes into play when there is multiple funding sources. He said
Alexander Grant & Co. has done the Federal revenue sharing audit
every year on every City whereas many auditors wait until every
third year.
C/M Munitz said there have been some problems in the past on a
pre -report conference and he questioned why. Mr. Emmer, said
they have always had pre -report conference's with the staff as well
as the Mayor, City Manager and the Finance Director. Mr. Emmer,
.
said these are called Exit conferences and there was one in
December and the Mayor wanted to have weekly informal progress
meetings. Mr. Emmer- said he suggested that unless there is
something important to be discussed weekly, he would suggest these
meetings be stopped. C/M Munitz asked if the City is due for a
6 month follow-up and Mr. Emmer. said yes, they will review the
recommendations contained in their Management Letter, render a
written report to Council indicating what their recommendations
are, and what the response of the staff is if, for any reason,
the recommendation is not moving along.
'ape V/M Stein asked if a single audit report were required, would this
3 be done at the same basic fee or require an additional cost. Mr.
Emmer said it would be an additional cost. V/M Stein asked what
the anticipated fee for the 1984 audit would be and Mr. Emmer• said
he would have to render this in writing (See Attachment 1). Mr.
Emmer, read this letter into the record stating their fee would
be $28,000. He said this was the fee for the past 3 years. C/M
Stelzer asked what extra things would have to be done for a single
audit that are not done now. He said they would have to review
EEO compliance as well as many other areas and a separate report
would have to be prepared on the grants themselves. He said he
has seen single audit reports run from $2,500 to $75,000 depending
upon the nature of the grant. Mayor Kravitz thanked Mr. Emmer:.
for his input to Council. C/M Stelzer questioned Mr. Emmer as
to the source that stipulated that the fee must be submitted in
writing. Mr. Emmer said it was from Chapter 473 Florida. Rules
of the Board of Accountants.
V/M Stein said Touche Ross is the first ranked firm as well as the
lowest bidder by $10,000 with a maximum price that included the
single audit concept. He said he feels a new set of auditors
would be good for the City and he recommended acceptance of Touche
Ross as the City's choice. Mayor Kravitz noted that the average
hourly rate for Touche Ross accountants is $54 totalling a maximum
quoted price of $17,800; however, Peat, Marwick, Mitchell & Co.,
working at a lower rate of approximately $50 per hour totalled
$27,500. He questioned how they could do this for.that amount.
C/M Munitz said they are only estimating the amount of hours they
will need and he was warned that they might be less expensive than
the other 2 ranked firms. He said rather than being impressed with
the amount of $17,800, however, he is disturbed by it. He said
he does not understand how they can do a proper job for this amount
and C/M Stelzer concurred. V/M Stein said he does not understand
how Council can ignore the saving of almost $10,000 since this
price was quoted from the top ranked firm.
5 - 5/21/84
/pm
C/M Munitz said he had a question of Touche Ross concerning the
prereport conference and Mayor Kravitz requested the secretary
call Mr. Cohen of Touch Ross into the Chambers. C/M Munitz
questioned Mr. Cohen about the prereport conference and Mr. Cohen
said normal procedure dictates 2 exit conferences, first, for
recommendations from the Management Letter, which takes place
with the City Manager and the Finance Director. He said the
second conference takes place near the conclusion of the fin-
ancial segments with the Council and before they publish anything.
V/M Stein MOVED that in consideration of the fact that Touche
Ross & Co. was one of the 3 top ranked companies and that all 3
companies have agreed to do substantially the same type of audit,
and Touche Ross was the lowest bidder, they should be engaged as
the City's auditors for the year starting September, 1984. He
said this should be subject to approval of a formal contract
enumerating the amounts as quoted. SECONDED by C/M Munitz.
(the total amount quoted was $17 800, the inclusion of a one -
departmental audit at.Council's discretion at no additional cost,
cost increases for a 3-year period,only to CPI type increases of
approximately 4% per year and a follow-up report at the end of
6 months.)
VOTE: C/M Munitz Aye
C/M Stelzer Nay
V/M Stein Aye
Mayor Kravitz Nay
Mayor Kravitz said he voted Nay so that this item could be brought
up at a meeting when all 5 Council people are present. V/M
Stein said this would be unfair since C/M Dunne has not been
present to review the 3 companies and he MOVED to reconsider the
original Motion, SECONDED by C/M Munitz.
VOTE: ALL VOTED AYE
V/M Stein MOVED APPROVAL of the original MOTION, SECONDED
by C/M Munitz.
VOTE:
ALL VOTED AYE
Mayor Kravitz told Mr. Cohen that, based upon receipt of a Letter
of Engagement including all of the items stipulated to today,
Council has approved awarding Touche Ross & Co. the audit for
1984.
The meeting was adjourned at 3:10 P.M.
MAYOR
ATTEST:
ASSISTANT CITY CLERK
This public document was promulgated at
$ PZ, v/ per copy to inform the general
and employees about recent opinions and
Council of the City of Tamarac.
- 6 -
a cost of $ 7..Z. 60 or
public and public officers
considerations by the
5/21/84
/pm
CITY OF TAMARAC
APP (o VED AT MEETING OF � 8
%�42
ATTACHMENT 1
Special City Council Muting May 21, 1984