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Item 5A- Creation of an Independent Audit Selection CommitteeCITY OF ATLANTIC BEACH CITY COMMISSION MEETING STAFF REPORT AGENDA ITEM SA JULY 11, 2016 AGENDA ITEM: Creation of an Independent Audit Selection Committee Russell Caffey, Director of Finance Q--,_..... SUBMITTED BY: DATE: June 23, 2 016 BACKGROUND: With the delivery of the September 30, 20 15 Annual Audit Report, tho cuncnt contract with Purvis Gray & Company ended. Pursuant to the cuncnt "Audit Procurement Pol icy''. the City must now initiate a Request fo r Proposal (RFP) to enter into a new contract. The procurement policy dictates that the eva lu ation of the proposals wi ll be performed by an Aud itor Selection Committee created by the City Commission. Th is Committee has traditionally been made up of a City Com mi ssioner, the City Manager and the Finance Director. This committee is ta s ked with the eva lu ati on of the RFP s received for auditing services and with making a recommendation to the City Commission. The RFP represents the desire to contract with an a udit finn for an initial four year tenn and then allows for two, one year extensions. This allows the firms to recover the startup costs over the contrac t tcnn , enablin g th em the option of proposing a fee structure that is somewhat consistent over th e four years. The top three tim1s , based on estab lished evaluation cliteria, wi ll be selected to give presentations to th e comm ittee; the committee wi ll th en rank the finns and make a recommendation to the City Commission. The City Commission may then approve the recommendation of the Committee or reject the recommendation and proceed with the second or third choice in order. Staff agrees wit h the AJ CPA ~ GFOA and the GOA th at the exclusion of the current firm may lead to the City denying one of the most qualified and po ss ibly least expensive options from contracting wi th the City. At th e very least, that fitm should be considered for, and given an equa l opportunity to continue perfonning audits for the City, considering the excellent work they hav e done over the last co ntract period. BUDGET: The atmua l budget for auditi ng services has ranged from $34,000 to $45,000, depending on s pecial audit requirements in the fiscal year. RECOMMENDATION: AGEN DA ITEM SA JULY 11, 2016 1.) To select one City Commissioner to be on an aud it selection commi ttee with the City Manager and the Finance Director for the purpose of mak ing a recommendation to the Ci ty Commission of an accounting firm to enter into a multiyear contract for annual auditing services. ATTACHMENT: 1. Audit Procurement Policy CITYMANAGERAPPROVAL: "'1f. t/~ ~ City of Atlantic Beach AUDIT PROCUREMENT POLICY AGENDA ITEM SA JULY 11, 2016 The City of Atlantic Beach will periodically unde1iake a full scale competitive process for the selection of independent auditors, consistent with legal requirements. The competitive auditor selection process will be similar to that which is described in Fl. Statutes sec 11.45. The procedures to be followed will promote competition among qualified films taking into account their capabilities, adequacy of available personnel, past record, and experience with governmental audits. The City of Atlantic Beach will award a multi-year contract of 4 years with two one year options · to extend. The City Commission will be required to approve each extension. The multi-year contract will enable audit firms to spread the initial start up costs over a longer period thus helping to reduce fees and provide continuity of the audit process for both the audit firm and the City. The City will appoint an Audit Selection Committee to make a selection of the top three qualified audit fi1ms using a competitive selection process. The Audit Selection Committee shall adopt procedures for evaluating the various fi1ms; they shall have discussions with those firms, and may require public presentations to the City Commission by no fewer than three firms regarding the qualifications, approach to the audit and the ability to furnish the required services. If fewer than three films desire to perform the services, the audit selection committee shall recommend to the City Commission such films as it dete1mines to be qualified. If the City Commission receives more than one proposal for the engagement from the committee, the City Commission may rank, in order of preference, the fi1ms to perfmm the engagement. The fi1m ranked first may then negotiate a contract with the City Commission giving, among other things, a basis for its fees for the engagement. If negotiations with the fi1m ranked first fail, negotiations with that fi1m shall be te1minated and the City Commission shall then undertake negotiations with the second ranked fi1m. This process shall continue until a contract is negotiated. The City may not conduct negotiations with more than one fi1m at a time. If the City is unable to negotiate a successful contract with any of the selected firms, the Audit Selection Committee shall select additional firms, and the City Commission shall continue negotiations in accordance with the preceding process until an agreement is reached.