City of Oak Creek

Common Council Report

Meeting Date:  9/16/03

Item No.:         9

Recommendation:

That the Common Council adopt Resolution No. 10283-091603, Resolution to Authorize Retaining the Services of Virchow, Krause & Co. as the City’s Auditing Firm for the 2003-2004 Audit Years.

Background: 

The City engaged the services of Virchow, Krause & Co. for the audit years of 1996-1998 after a bidding process conducted in 1995.  The terms of the initial engagement agreement allowed for the option of renewal for two additional two-year periods, which the City has done. The contract may be further extended by mutual agreement.  Ordinarily, we would go through a complete bidding process at this point, but due to major changes in governmental accounting requirements through the federal Government Accounting Standards Board (GASB), we are recommending an additional two-year extension before going out for bid.

Virchow, Krause & Co. has also been engaged to provide GASB assistance during 2003 since the new law requires our financial reporting to meet the new GASB 34 format beginning with the 2003 audit year.  This new reporting system requires a substantial amount of research and preparation and will be time-consuming for personnel in Accounting and Engineering from now through 2004.  It would also be difficult to potentially engage a new auditing firm at this time, not only from the standpoint of the lengthy bid process, but from the changeover to GASB 34 rules.

Included with this report are renewal terms proposed by Virchow, Krause & Co.  As shown in the submittal, most of the increase in cost is due to GASB and new auditing standard (SAS No. 99) requirements.

Fiscal Impact: 

For the 2003 audit, $28,900 will be budgeted in the 2004 Clerk’s office Account #44-530,

For the 2004 audit, $29,700 will be budgeted in the 2005 Clerk’s office Account #44-530.

The proposed rates represent an increase of approximately 12.5% for 2003, of which 3% is for cost inflation and the remainder related to new requirements.  The increase for the following year is approximately 2.7%.  Costs for the separate additional services contract for GASB assistance, which was $7,000 in calendar year 2003, will no longer need to be paid.

The Water & Sewer Utility will pay their portion of the charges.

Prepared by and Fiscal Review by Beverly A. Buretta, CMC City Clerk

Respectfully submitted, Robert L. Kufrin City Administrator