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