5.4. ERMUSR 11-15-2016 '>iL-4
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 5.4
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. We do recognize that it is very convenient to utilize the same
auditors at the City and ERMU, and feel 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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