Item 8CAGENDA ITEM #8C
APRIL 12, 2004
CITY OF ATLANTIC BEACH
~. CITY COMMISSION MEETING
STAFF REPORT
"' AGENDA ITEM: Request for proposal for audit services
SUBMITTED BY: Nelson Van Liere, Finance Director
DATE: March 17, 2004
BACKGROUND: Recently the City's auditors completed the second year of
their four-year contract with us. Attached for your review
is a letter from Suzanne E. Forbes of James Moore & Co.
requesting $10,000 in additional fees to be added to the
contract in order for their firm to continue to fulfill their
obligation. The primary reasons for this request are that the
audit was under bid and as per James Moore & Co., they
have had costs in excess of fees for the past two years.
Mrs. Forbes also explains that there are some new
accounting standards being implemented this year that will
further raise the cost of performing our audit. Mrs. Forbes
indicted that an additiona140 hours of work will be
required to continue to perform quality work.
Although I agree with Mrs. Forbes assessment of the
additional cost for up-coming engagements and the reasons
why, I do not recommend adding $10,000 to the contract to
go forward. One of the major reasons that this firm was
selected above others was price. Adding this amount to the
contract is a substantial increase in price. In my opinion, it
would be in the best interest of the City to advertise a
request for proposals and select the best firm at competitive
prices once again.
BUDGET: The budget for FY 2004 is $35,535 which includes some
miscellaneous other charges. I anticipate that the audit fees
will in fact increase roughly $10,000 and perhaps slightly
more.
RECOMMENDATIONS: 1.) Deny the James Moore & Co.'s request for
additional funds
2.) Authorize the Audit Selection Committee to
publicize a new request for proposals for audit services.
ATTACHMENT: February 24, 20041etter from James Moore& Co.
CITY MANAGER APPROVAL:
February 24, 2004
AGENDA ITEM #8C
APRIL 12, 2004
City Commissioners
City of Atlantic Beach
800 Seminole Road
'~' Atlantic Beach, Florida 32233-5445
To the Honorable Commissioners of the City of Atlantic Beach:
We are writing this letter to request an increase in our audit fee for the year ended September 30, 2004,
our third year as auditors of the City. We have recently completed our audit of the financial statements
for the year ended September 30, 2003 and have incurred substantial costs in excess of fees on this
engagement as we did in the previous year.
These losses are largely due to the implementation of various auditing standards that have been issued
since we originally proposed on this engagement. Statements on Auditing Standards (SAS) are issued by
"~" the American Institute of Certified Public Accountants and adherence to these standards are required.
The standards we have implemented in the last two years include SAS 94, The Effect of Information
Technology on the Auditor's Consideration of Internal Control in a Financial Statement Audit and SAS
,~,. 96, Audit Documentation.
For the year ended September 30, 2004, we will be required to implement SAS 99, The Consideration of
Fraud in a Financial Statement Audit. This involves a number of new requirements that we estimate will
!~' increase the number of hours spent on the audit by approximately 40 hours. This increase in time will
largely be for experienced audit team members due to the sensitivity of the issue.
~ After considering the above items, we have decided that we cannot perform future quality audits of the
City without incurring substantial losses. As we will perform nothing other than a quality audit, we
respectfully request an increase in the audit fee for the year ended September 30, 2004 in the amount of
$10,000 for an annual audit fee of $41,990.
Unfortunately, if this request is not granted, we regret we will Have to withdraw from this engagement
and the City will have to find another audit firm for the year ended September 30, 2004. We have
enjoyed working with the City and its staff for the past two years and hope that we can continue that
worlong relationship.
Thank you for your consideration in this matter. If you have any questions or need additional
information, please contact me at (386) 257-4100.
very truly yours,
JAMES MOORS & CO., P.L.
gy ~ .~~
Suz a E. Forbes
Members of the Private Curnpanies b20 N W t6th Avenue 2473 Care Drive
Practice Section and [he SEC P.O. Box 1616 Suite 2
Practice Section of the Division far Gainesville. FL 32602•!616 Tallahassee. FL 32308.4580
CPA r firms of the American Institute Telephone: 352/378-1331 Telephone: 850/38b/6184
f Certified Public Accountants
ax: 352/372-3741 121 Executive Circe
Daytona Beach. FL 32114-1180
Telephone: 386/257.4100
Fax: 386i?5"r32b1
Fax: 850/42-2074 dab@rjmco.com