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HomeMy WebLinkAbout1997-03-24 97-164 ORDERw[ eIIngjW.T"v(G I Rem No. 97-164 Date 1-2d.w6 ItmAlublat Order, Selecting the Qty's Outside Auditors Responsible Deparlmeue Flamm the City orwady issued palmum fm proposal for audit services for a 3 -year turned, Respomea were sired town four firms. At its but meedog, the Flosnce Committee considered staffs raommmdation Nat Ne firm of Baker,Newman & Noyes be selected. The atmched mmormdm outlines this recommmdadm. After sigoificsat discussion and presentations by Jerry hbodesu of our current audit firm and Ron L. Beaulieu, representative of another pmlwser, the Finance Committee ruled 3-2 to continue Bummer, Hollingsworth Ja hibodnu as the City's outside au lmu. After additoual discussion, however, the Committee recommended fbat two firms be invited to make presemEons to the full Council at a wmkshap lamceediag the Coursed Mating_ ess aresult, laress anion have bee schexlWd for Worley from Bummer, Hollsupworth& T'bodean and Baker, Newman Se Noyes. Copies of took proposals are being provided N You miler separate cover. The attached mdu would select an auditing firm for the next three Years. As pudard, the Order does not include Ne name of the Ern to be selected and this must be s lld by mmdmem at Monday's meeting. Department Head Mauages Comments: ^ City Mmagu Aasuciatd Ivfmnation: Order,Memorandumfrom Ron Hellerand Bobbie Cyrofthe Fi m Depar[mmt. Budget Approval: FinanceD or Legal Approval: /f ImrmIjIFor,,,., Fi Fin Rating Page _of_ Ref 1 9J-164 A mpg to Coundlor Tyler March 24, 1997 v ? CITY OF BANGOR RITLEJ (®rber selecting d,e Cit yaommde wed rms By Bsefav Cfta efWOtycfBa .- OBDEREDr TUT the faro of is hereby selected asthe outside auditor for the City ofBsngor for a th ym period IN CITY COUNCIL 97-164 March 24, 1997 Jerry Thibodeau, BrantveyRollingevortb, 0 R D E R and Thibodaau. urged selection of his firm. David Giroux, taxpayer, questioned Title, Selecting the City's Outside the staff fee ommsatiation of outside Auditors auditor. AT Bonfield, 28 Newberry Street, felt it was a conflict of interest for ..... .....^ ^.. 4.........^••.••••4. the staff to mike recommendation of Outside Auditor. Motion to Amend by inserting the name .......................(..............�....... 'Braatmer, Hollingsworth, 6 Thibodeau" in the space provided. Asopm]to - `T passed vote: s yea, 3 no, ,�i/(�^ IMotion 1 absent Councilors voting yea. ......../�...........n Couneflrta be, Ba Aube, BaldaceL Leen, Sullivan, 6 Tyler' o voting n Blanchette, Soucy Soucy and absent: - Councilor absent: Farnham Motion to Pass as Amended Failed Passage Vote: you, 3 yes, t absent Councilors voting n Aube, Blanchette, Leen, Soucy 6 Woodcock -Councilors voting yea: Baldacci. Sullivan and Tyler Councilor absent: Farnham 88 13 MEMORANDUM 97-164 CITY OF � MAINE Ta HAAtoW STREET BANGOR, MAINE 04401 FINANCE DEPARTMENT TEL 20719Ae4400 Ronald 1, Haller France emctor To: Finance Committee Members From: Ron Heller0coric Cyr Date: March 11, 1997 Re: Staff recormnendation auditing services Page: Ir S As you may be a ears, staff mo nthissued a request for proposals (RFP) for auditing serf ices. The RFP was issued directly to sewn finds, two of which are in Bangor. Additionally, ratification ofthe UP's issuance were sent to die other firms within the state, including one in Bangor, end m ad was places in the Bangor Daily News. The RFP, notices and ed yielded four proposals: three from Portland, and one from Bangor. These Drum are Runyon, Karmen Callow; Baker Newman & Noyes; Ron L. Beaulieu & Company; and Branner, Hollingsworth & Thilsommu. The first three are located in Portland. Branner is a Bangor firm, and has been our auditor for He past five years. Five individuals participated in the selection process; David Little, Penelope Olson, Dick Unrvh and us. Bach of as reviewW the proposals and ranked them according to our individual preferences. Surprisingly, all five Dealings were identical. Theyaramfollocoo 1. Baker Newmann &Noyes 2. Runyon, Karmen Ouilem: 3. Branmer, Hollingsworth & notation 4 Ron L. Beaulieu & Company Our recommeadation, therefore. is to contact with Baker Newman & Noyes. for a variety of reasons, explained in some derail below. As preface, however, it is important to raise meinto most significant potential objections to His choice: firm location and roar. Firm location Not waning to unnecessarily "export" dollars, it is our personal preference to do business with Bangor -based firms. Unfortunately. in this case Bangor firms do not offer the more specialized Armory we seek. ]Tis is probabl} due to the relatively small number of similarly sized and complex governments located nearby. He presence of which would allow a Bangor firm to gain the expertise we feel we require. LAS Recognizing that one of the more martmorn factors in selecting a Flom is cost, it must be noted that the Baker Newman & Noyes proposal, at $130,915 for a three year engagement. is the second most costly of the fouroa reviewed. This represents a significant increase over our trent auditing costs. It also is significantly higher than the two lower cost proposals we eived. We would fuloyce,however, that Hese gross costs are not solely relayed. Rhari Deed an compare costs at some consistent level of service. A quick comparison of the four bids, the implied hourly rates and Heir "equalized" costs (at 750 hours per year) are presented immedimely below. MEMOR97-164 III ANDUM �i CITY OF VVI MAINE 73 HARLOW STREET SHOWN, MAINE soar FINANCE DEPANUIENT - TEL 207`945w00 Ronald 1. HeIMr Fmenea mramur _ To: FhMw Camay eglembrd From: Ron HellerMebbie Cyr Dau: March 11, 1997 Re: Staff remrnmendatiordaudinuic services Page: 2 of 3 \t Number Grass Out per "Equalized" Ei= ofHours 5.951 li= C= Baker Newman &Noyes 750 $130,915 $58.18 S130,915 Runyon Kemmen Oullette 748 138,950 61.92 139,322 Bowen, Hollingsworth&Thibodeau 600 99,000 55.00 123,750 Ron L. Beaulieu & Company 545 68,800 42.08 94,679 Thus, Baker Newman&Noyes bid is not chat much more costly, either by comparison to other credible bids or with respect to what we 9"r our money, as we explain below. While our experience with Branmer has been generally satisfactory, and they have basicalf. men Fir needs to this point, there are several reasons we felt it necessary to issue an RFP at this time. rst, we remmly finished the second of me contract extensions with the firm, and it was appropriate to -test the market for auditing services. Second, wesought the services ou Rim with greater resources and broader Experience in governmental accounting. Third, we believed re that a fsbper osmine on our accounting and fianncial practices was needed. Finally, we wanted of m assist us in issuing our first-ever Camprgherzslve Annual Financial Reporr (CAFR). Resources Bangor is an inveasingly complex financial entity, encompassing eight enterprise funds. a large umber ingest and agency funds and some fairly complicated financial relationships. At the me time, External funding sources require ever -greater levels of compliance meoni ra that are peculiar to a government of our size End nature. As we grow in complexity, it becomes insb important to have an auditor with the staff, resources and experience to address the issues we will face. We believe that. relative to the other Rims. Baker Newman &Noyes has such capabilities. Specifically: ♦ They audit fore governments of similar size and complexity than any of the other firms s ssued. Their client list includes the cities of Portland. South Portland and Auburn as cell tate entities such as the Maine Stare Housing Authority, Maine Bond Bank and nvenn' hospitals. ♦ With six audit principals and eight audit senior managers with extensive experience in - governmental and not-for-profit practice, they have the specialized staff capabilities that we require, MEMORANDUM 97-164 CIN OF 7 Amo MAINE FINANCE DEPARTMENT Tse 2071 mo Ronald 1. Hoban Finance Carter To: Finance Committee Members From: Ran Heller/Debbie Cyr Date: March 11. 1999 Re: Stall recommendation/audithm services page: 3 of 3 ♦ Their resources appear to most closely resemble those ofa^Big-6" firm. Infact,tmyha%e standing relationships with two such fims (i.e., KPMG Peat Marwick and Emu & Young) which allows them to draw upon nationally -based resources as well. Fecasidective We seem to have reached a point here we are doing most things extremely well. This has been confirmed by Bragner's comramrs in each of our last two audits. Having had the same auditor for the past five years, though, %,c feel that a new perspective would help us improve our oun[ing and financial pram[ices. We feel that any new firm, particularly one with a more global, industry -wide perspective. would occamplish this. Corporation ve Annual F'na cial Elders BEATH) The trend in state and local government over the past several years has been to issue CAFR's inrtead of she general Fortune financial merchants (GPFS) that we currently publish. CAFR's contain more information than GPFS's, indicate a certain level of financial sophistication on the part of the issuing government, and lend a good measure of credibility. This is particularly true if the CAFR is awarded a Certificate of Achievement for Excellence in Financial Reporting from the Government Finance OfiiceaAssociation. Presently, only five local Maine governments aoe CAFR's. Baker Newman and Noyes audits four ofthese. WithBaker Newman&Naves as their auditor, one issued their firmever CAFR and throe received the GFOA'a Certificate for the first time. This isprecisely the assistance we will need. Also in this du rest, it should be nored that Moodrs Investors' Service has recently begun splitting its "Ae' category into upper and lower tiers of"Aa?" and "AO ", respectively. As you knmv, we arc currently aced As b> Moodv's, although they have indicana on several occasions that we are asveak'Ad because of our economic and population characteristics. This leads us to believe that our next review', in August, may cell result in our being rated "Arai While this is merely a further refinemmn and not a downgrade, we intend to do all we can to be rated -A , Having a CAFR in the works will strengthen our hand in this effort. We hope we have made the case for choosing Baker Newman and Noyes successfully. If )'ou have any questions, or would like to discuss this matter further, please feel free to contact ither of us. We will both be in attendance at the Finance Committee meeting on the 17th. I� e��` e?, "•, CITY OF BANGOR 97-164 AWARD RECOMMENDATTON PROPOSAL FEEM(S): Bandung Services DEPARTMENT: Finance BUDGET REFERENCE: Requisition No.: None Account Number: N/A Budgeted Amount: SN/A Available Balance: 5N/A Tamil Amount of Award Recommended: 520M 00 Vendor Recommended: Peoples Hedrage Number of Requests Seat: 6 Number of Proposals Received: 4 Date Advertised fasuary S. 1997 Proposal Opening Date: February 12. 1997 Past Experlencewith Vendon Excellent—Good Fair No prior experience If no experience, references checked or other method of vendor reliability established _ X OTHER CONIMENTS: Award the three year contract to Peoples Heritage Band: ofBangorNordand the most competitive proposer for the services requested. See allached memorandum from Ronald L Heller, Finance Director. NoGinaing A APPROVALS CRY COLNCIL FINANCE CONSETTEE: Date: March 17 1997 MEMORANDUM 9] 164 li CITU OF � MAINE 73 HamOwmnEET aoa. MAINE Oor FINANCE DEPARTMENT TEL 207NO-4400 PwWd I. Heller Fitmnea Dasalor _ To: Finance Committee Members From: Ron Heller Date: March 12, 1997 Re:Staff recornmendatioNbaNtinn services Page: 1 of t As you may be aware, staff recently issued a request for proposals (RFP) for banking services. The RFP wet issued directly to six banks, three of which are headquartered in Bangor. Four Proposals were received in response. Six individuals participated in the selection prncess; Debbie Cyr, Sharon Ge igham David Little, Penelope Olson, Dick Omuh and mvmlf. Each of us reviewed the proposals Bud rankedthem cording to our individual preferences. The respondents, their proposed casts and consensus rankings are BE follows: Bank Snnt 1. Peoples Heritage 320,738 2, Key 17,291 3. Fleet 28,626' 4, Bangor Savings 25,350' Our reconunrndation is to award the banking contract to Peoples Heritage for a number of prins. They offer the services we require, they are Maim -based and they are competitively ced. We also find attractive the fact that they are small and thus highly motivated to earn and maintain our business. This seems to make Nem very accommodating to our needs. We've dome business with Key for the past several years, after it acquired Casco, with which we'd originally contracted for banking services. Despite their low bid, our experience with Kev has not been par-iculariv good. Sprincally, we found unsatisfactory their customer service and their recovery firm mistakes. Fnrtheq their on-line system seemed to be down an inordinate amount Of time. As to the other also-rans. Bangor Savings Bank does not presently have on on-line system, which we consider indispensable. Flee:. on the other hand, was our immediately preceame lead bank, and there was a good deal of dissatisfaction with their service as well. Further, they were the most Expensive of the four proposers m.adoes not Achud,sooner ela,..nlm read wa neeen6,500 to Wecom mtv imnl as H atNt bw®W+m cemmw:..w