4. Selection of 1996-98 Auditing Services Contract.0
MEMORANDUM .
CITY OF
CHANHASSEN
690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317
(612) 937 -1900 • FAX (612) 937 -5739
TO: Mayor and City Council
FROM: Don Ashworth, City Manager DAlk,
DATE: October 8, 1996
SUBJ: Interview Auditors and Selection of 1996 -98 Auditing Services Contract
Through correspondence received and personal contacts, five firms were identified to potentially
perform audit services for the City of Chanhassen. The city council authorized the solicitation of
RFPs approximately one month ago, including the RFP itself. A "briefing" meeting was held on
September 16, 1996. Four firms attended that meeting and subsequently submitted a proposal on
September 27, 1996. Roger Knutson, Dave MacGillivrary, Pam and I met earlier this week to
review the proposals as submitted. Surprisingly, the total cost was relatively similar between all
of the firms (copy of estimated costs for all four have been attached). The four firms submitting
RFPs were as follows:
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• Deloitte & Touche LLP
• KPMG Peat Marwick LLP
• Malloy Montague Karnowski Radosevich & Co.
• Tautges Redpath & Co. Ltd.
Governmental accounting experience and the experience of the "team" proposed to be serving
the City of Chanhassen was the primary criteria that reduced the list from four to two. Malloy
Montague Karnowski Radosevich & Co. primarily audits .school districts. Peat Marwick is a
prestigious national firm, but has very little presence within the State of Minnesota.
Accordingly, it was the unanimous position of the city attorney, financial advisor, and city staff
that the two firms that should be interviewed by the city council should be Deloitte & Touche
and Tautges Redpath & Co. (see attached RFPs).
Both Deloitte and Tautges will do an excellent job for the City of Chanhassen and staff can work
with either firm. We believe both firms have a strong commitment to preparation of
management reports to provide the city council with information as to the strengths and
Mayor and City Council
October S, 1996
Page 2
weaknesses of the city. Both have a very strong presence within the State of Minnesota and more
specifically in the metropolitan area. Both are considered leaders in terms of educational
opportunities and current insights into federal and state legislation affecting cities.
RECOMMENDATION
Again, staff is proposing that the city council interview both Deloitte and Tautges as a part of our
regular agenda Monday evening. [Note: The Board of Adjustments and Appeals meeting
scheduled for 6:30 p.m. Monday evening is anticipated to be controversial and setting an early
meeting time was not possible. By contrast, the regular city council agenda is relatively short and
we should be able to conduct interviews without going into a late hour.]
Although I have previously stated that either of the two firms would do an excellent job for the
city and that the final selection should be based on the city council's comfort with either of the
two firms, staff would recommend that the council consider awarding the contract to Tautges
Redpath. This recommendation is being made recognizing that Deloitte has had a very poor
track record of keeping key staff members servicing our account. Without question, Cliff
Hoffinan has been the official spokesman for Deloitte throughout the past eight years. However,
virtually every position from Cliff down has continuously changed almost every year. By
contrast, in checking with references, Tautges Redpath has had a much stronger consistency of
staff members. It is logical that you may lose one of three positions that actually carry out the
audit service contract; however, when you consistently lose two or all three, a significant
"retraining" effort is required by our. staff in terms of where to find and how to read development
contracts, HRA assistance packages, special assessment procedures, etc. Again, assuming that
the city council finds the presentations of both firms to be excellent, staff is in hopes that the
final nod will be given to Tautges Redpath.
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TAUTGES REDPATH & CO., LTD
RESPONSE FORM
Page 3
4 Fee Schedule - Please estimate the cos s associated with completing the
municipal audit. Proposed cost estimates should include printing of 50 copies
of the final report.
Position
1996
Hours Cost
1997
Hours Cost
1998
Hours Cost
Partners
45
$4,500
40
$4,120
$40
$4,244
Managers
30
1,860
40
3,708
40
3,819
Seniors
214
13,268
150
9,579
150
9,866
Juniors
158
6,478
140
5,912
140
6,089
Support Staff
39
1,092
40
1,154
40
1,188
Other Expenses
1,350
1,350
1,350
Total
456
26,688
410
25,823
410
26,556
Deduct Amount H
City prints Final
1,350
1,350
1,350
Not to Exceed
Amount
1 $25,338
t- 1$24,473
$25,206
Please estimate costs associated with arbitrage compliance.
Position
1996
Hours Cost
1997
Hours Cost
1998
Hours Cost
Partner
16
$1,600
16
$1,648
16
$1,697
Senior
30
1,860
30
1,916
30
1,973
Total
1 46
$3,460
46
$3,564
46
$3,670
The estimate associated with arbitrage compliance may be adjusted based on the
number of funds which do not meet exception criteria and the number of periods
requiring analysis. All such work is performed at our standard hourly rates.
5. Please explain your firm's billing policy for inquiries and assistance provided
throughout the year.
We are available for consultation throughout the year. It is our normal operating
procedure to field questions and perform brief research projects for our audit clients
free of charge. We expect to follow this procedure for the City of Chanhassen.
These calls tend to keep us informed of current and contemplated actions of the
City. Our involvement throughout the year better prepares us to perform the annual
audit.
If, however, you are requesting service outside the scope of the audit and for which
we estimate we will spend more than one half hour to one hour, we will discuss the
potential for additional fees. Additionally, in the case of major consulting projects,
such as debt studies or tax increment projections, we will prepare an engagement
letter which outlines our approach to the engagement and anticipated fees. We
would not proceed with any major project without prior approval.
DELDITTE & TOUCHE LLP
3. Staff Experience - Identify the personnel who will be assigned to the City's audit.
4 Fee Schedule - Please estimate the costs associated with completing the municipal audit. Proposed
cost estimates should include printing of 50 copies of the final report.
* The City will consider adjustments to costs for 1997 and 1998 should the firm selected
demonstrate that estimates were significantly different than anticipated.
* Assumes no A -128 audit for Fiscal 1997 and 1998, since Federal Funds are expected to be less
than $300,000.
Please estimate costs associated with arbitrage compliance.
4
Position
`Hours :
...
Cost
Hours.
+Cost .
Hours..
host
Managers
48
$
4,400
48
$ 4,400
48
$ 4,400
Partners
8
1,600
8
1,600
8
1,600
Total
56
6.000
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KPMG PEAT MARWICK LLP
' RESPONSE FORM
Page 2
3. Staff Experience - Identify the personnel who will be assigned to the City's audit.
Name
Position
Years with
Firm
Total
years in
Auditing
Cities
Now Auditing
Prior
Cities
Audited
Steven Laible
Partner
25
25
5
15+
far fvbinar
Partner
22
22
11
15+
Jeffrey Mrr i s
Sr. Mmagei
7
7
3
4
Pay Cohen
In-0targe
1
3
2
9
170
7
Support Staff
--
--
--
Other Expenses
1000
1000
1000
Total
520
4. Fee Schedule - Please estimate the costs associated with completing the municipal
' audit. Proposed cost estimates should include printing of 50 copies of the final report.
Position
1996
Hours Cost
1997 * -
Hours Cost
1998'
Hours Cost
Partners
24
2400
20
2000
20
9"
Managers
120
9000
100
7500
100
8000
Seniors
176
8800
156
7800
156
7
Juniors
200
8000
170
6800
170
7
Support Staff
--
--
--
Other Expenses
1000
1000
1000
Total
520
29200
446
25100
446
26100
Deduct Amount if
City prints Final
1
500
500
Not to Exceed
Amount
28700
24600
25600
The City will consider adjustments to costs for 1997 & 1998 should the firm selected
demonstrate that estimates were significantly different than anticipated.
' Please estimate costs associated with arbitrage compliance.
Position
1996
Hours Cost
1997
Hours Cost
1998
Hours Cost
Total
' * Costs associated with arbitrage compliance would be billed at rates commensurate with
those for audit services as outlined above.
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MALLOY, MONTAGUE, KARNOWSKI, RADOSEVICH & CO., PA
RESPONSE FORM
Page 2
3. Staff Experience - Identify the personnel who will be assigned to the City's audit.
Name
Position
Years with
Firm
Total
years in
Auditing
Cities *
Now Auditing
Prior
Cities
Audited
Bill Lauer
Principal
11
11
1, 4, 5, 6, 13
Managers
Ken
Consulting
Prinnipal
1Q
19
2, 3, 7, 8, 9,
In- 11 19
3,900
enni
Hoo eveen
Mana er
7
7
1 2 9 10 13
170
Kelly Benusa
Senior
4
4
1, 5, 9
8
190
8,550
Support Staff
60
1,500
50
1,250
50
1,250
Other Expenses
500
500
500
Total
550
* Numbers refer to the cities listed in question 2.
A. Fee Schedule - Please estimate the costs associated with completing the municipal
audiL Proposed cost estimates should include printing of 50 copies of the final report.
Position
1996
Hours Cost
1997"
Hours Cost
1998'
Hours Cost
Partners
35
2,625
35
2,695
30
2,400
Managers
70
4,200
65
4,0301
60
3,900
Seniors
175
8.750
170
9,840
170
9,350
Juniors
210
8,400
200
8
190
8,550
Support Staff
60
1,500
50
1,250
50
1,250
Other Expenses
500
500
500
Total
550
25.975
520
2 5,715
Deduct Amount if
City Tints Final
<500>
<500A
<500>
Not to Exceed
Amount
j
25,475
25 215
25 450
The City will consider adjustments to costs Tor i tits i & 1touc snouia ine rnrm seiemeo
demonstrate that estimates were significantly different than anticipated.
Please estimate costs associated with arbitrage compliance.
Position
1996
Hours Cost
1997
Hours Cost
1998
Hours Cost
Partners
2
150
2
155
2
160
Seniors
10
500
10
520
10
550
Total
12
650
12
675
12
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