City of Oak Creek

Common Council Report

Meeting Date:  07/17/07

Item No.:        

Recommendation:

That the Common Council adopt Resolution No. 10779-071707 , Resolution to Authorize Retaining the Services of Virchow, Krause & Co. as the City’s Auditing Firm for the 2007-2008 Audit Years.

Background: 

The terms of the City’s 1996 engagement agreement with Virchow, Krause & Co., allowed for the option of renewal for additional two-year periods by mutual agreement.  Ordinarily, we would consider a complete bidding process at this point, but due to additional major changes in governmental accounting requirements through the federal Government Accounting Standards Board (GASB), and the American Institute of Certified Public Accountants (AICPA), as well as the pending change of staff in the Accounting office, and potentially the Clerk’s office, we are recommending an additional two-year extension before going out for bid.

New standards required our financial reporting to comply with the revised GASB  format beginning in 2003, followed by more required segments in 2005 and 2006. New reporting requirements for reporting Post Employment Benefits begin for 2007, and require substantial research and preparation. Two other proposed GASB changes are expected to be issued this year.   In addition, the pending retirement of the Finance Manager will create transitional issues and adjustments.  It would be problematic to possibly begin working with a new auditing firm at this time.

Included with this report are renewal terms proposed by Virchow, Krause & Co.  As shown in the submittal, the increase in the City’s cost is 14.7% for 2007 and 5.1% in 2008, with the majority of the increase due to GASB and AICPA requirements.  Fees for the Utility’s audit will see the same increases. 

Fiscal Impact: 

2007 audit: $39,000 will be budgeted in the 2008 Clerk’s office Account #44-530,

2008 audit: $41,000 will be budgeted in the 2009 Clerk’s office Account #44-530.

The Water & Sewer Utility will pay their charges of $11,700 for 2007 and $12,300 for 2008.

                                                            Respectfully submitted,

Patrick DeGrave

                                                            City Administrator

Prepared by and fiscal review by:

Beverly A. Buretta, CMC