5.1. ERMUSR 10-11-2016 Elk River ----
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
Elk River Municipal Utilities Commission Theresa Slominski—Finance & Office
John Dietz—Chair Manager
Al Nadeau—Vice Chair
Daryl Thompson—Trustee
MEETING DATE: AGENDA ITEM NUMBER:
October 11,2016 5.1
SUBJECT:
RFP Auditing Firm
BACKGROUND:
In 2011 the City of Elk River,the Elk River Fire Relief Association, and Elk River Municipal
Utilities issued a Request for Proposal (RFP) of auditing services for a five year term. At that
time the current auditors of Abdo, Eick and Meyers LLP had performed the Utility audit for
approximately 20 years, and the City had been using them long before that. It was agreed that
every five years we would conduct an RFP and perform an evaluation to exercise our fiduciary
responsibility to contract with a professional and responsible auditing firm. This process ensures
that we are working with qualified, competent firms that will provide an independent and
accurate assessment of our financial position. The three entities above issued a combined RFP
for 2016 through 2020 on August 1st, 2016.
DISCUSSION:
There were three RFPs received: Redpath & Co.(R), CliftonLarsonAllen LLP (CLA), and Abdo,
Eick, and Meyers LLP (AEM). All three were competent firms that submitted qualifying
proposals and interviewed well. In price,they were pretty comparable, and the summary of their
prices is attached. For the Utility, all submissions were a decrease to the current rate of$18,780.
After much discussion, it was decided that the City and Fire Relief wished to contract with
CliftonLarsonAllen LLP for the next five years,and the Utilities wishes to continue to contract
with Abdo,Eick, and Meyers LLP.
The Utility rationale for keeping the current auditors is largely dependent on the current
transactions that we are invested in,which our current auditors have been very involved in
helping us plan for the implementation of these transactions and the financial reporting of them.
The transactions I am referring to are the recent bonding for the MMPA buy-in, the territory
acquisition, and the sale of the security division. For these items,the auditor familiarity with our
processes and the specific details of these transactions provides a huge advantage.
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The transition in wholesale power provider, electric service territory acquisition, and the sale of a
department are significant transactions, all of which occur very infrequently in the municipal
world. In fact,most municipal utilities will never undergo all of these transactions within their
existence much less have all three occurring at the same time. This situation creates a significant
value add for AEM because of their involvement in the financial planning for these major
transactions.
While it is appropriate to evaluate a long standing relationship of an auditor and client,we have
had other auditors in the history of our organization and don't feel the need to make a change this
year, given our circumstances. And while we recognize the convenience of using the same
auditor as the City,we're confident that AEM would work diligently with a new auditor at the
City to ensure there is an appropriate transfer of information for the CAFR, especially knowing
firsthand the work that it takes to prepare the documents.
On October 3rd the City Council approved the five year contract with CLA. The City
Administrator informed the Council that if ERMU selects a different auditor that it would not be
a reporting issue for the City. Also, it should be noted that this would not have a negative
financial impact to the City. Taking all these things into consideration, staff recommends
retaining the auditing services of Abdo, Eick, and Meyers for the next five years.
ACTION REQUESTED:
Approve the staff recommendation of retaining the existing auditors for the next five years.
ATTACHMENTS:
• 2016 Audit Proposals Pricing
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2016 AUDIT PROPOSALS
Hours 2016 2017 2018 2019 2020 Total
abco"Eek& _
City 230 31,800 33,400 34,100 34,800 35,500 169,600
CAFR Preparation 3,600 3,700 3,800 3,900 4,000 19,000
Total City 35,400 37,100 37,900 38,700 39,500 188,600
Utilities 120 16,016 16,500 17,000 17,500 18,000 85,016
Report Preparation 2,300 2,400 2,500 2,600 2,700 12,500
Total Utilities 18,316 18,900 19,500 20,100 20,700 97,516
Fire Relief w/Report 34 4,404 4,500 4,630 4,775 4,900 23,209
State Reporting Forms 1,000 1,030 1,060 1,090 1,125 5,305
Total Fire Relief 5,404 5,530 5,690 5,865 6,025 28,514
IRS Form 990 1,150 1,185 1,220 1,260 1,290 6,105
Clifton La rsonAft_ ''
:
City 290 30,550 30,900 31,250 31,600 31,950 156,250
CAFR Preparation 4,000 3,500 3,600 3,700 3,800 18,600
Total City 34,550 34,400 34,850 35,300 35,750 174,850
Utilities 125 13,275 13,525 13,775 14,025 14,275 68,875
Report Preparation 1,900 1,950 2,000 2,050 2,100 10,000
Total Utilities 15,175 15,475 15,775 16,075 16,375 78,875
Fire Relief w/Report 35 4,545 4,700 4,850 4,950 5,100 24,145
State Reporting Forms 350 350 350 350 350 1,750
Total Fire Relief 4,895 5,050 5,200 5,300 5,450 25,895
Redpath&Compal '�aa,, *1 J.i _ " ,: _lrfr
City 295 33,025 33,600 34,300 34,900 35,600 171,425
CAFR Preparation 3,500 3,500 3,500 3,500 3,500 17,500
Total City 36,525 37,100 37,800 38,400 39,100 188,925
Utilities 115 14,000 14,200 14,500 14,800 15,000 72,500
Report Preparation 2,000 2,000 2,000 2,000 2,000 10,000
Total Utilities 16,000 16,200 16,500 16,800 17,000 82,500
Fire Relief w/Report 50 6,000 6,250 6,500 6,750 7,000 32,500
State Reporting Forms 500 500 500 500 500 2,500
Total Fire Relief 6,500 6,750 7,000 7,250 7,500 35,000
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