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City of Missoula, Montana Item to be Referred to City Council Committee Committee: A & F Item: Extend the audit of the City of Missoula with Anderson ZurMuehlen for two years to encompass the FY 10 & FY 11 audits. Date: April 15, 2010 Prepared by: Brentt Ramharter Initiated by: Brentt Ramharter Action Required: Authorize the mayor to extend the contract with Anderson ZurMuehlen for two more years to encompass the audit of the city for FY 10 and FY 11. Recommended Motion: Authorize the mayor to sign an extension of the city's present contract with Anderson ZurMuehlen for two more years to encompass the audit of the city for fiscal years 2010 and 2011. Timeline: Referral to committee: April 15, 2010 Committee discussion: April 21, 2010 Background and Alternatives Explored: Annually, we contract with independent auditors to audit the basic financial statements (represented in our most recent 2009 Comprehensive Annual Financial Report). The independent auditors are expected to obtain reasonable assurance that the financial statements are free from material misstatement and are fairly presented in accordance with generally accepted accounting principles. The process of preparing for the City’s audit begins July and August after the fiscal year closes in June. Financial statements and supporting schedules are prepared by the City’s Finance department and submitted to the auditors October 1st. The process of auditing our records takes approximately 4 to 6 weeks. The auditors also schedule engagements with the City’s component units, MPC, MRA and BID to perform an audit of their transactions separately. When all of the audit engagements are complete, the City finalizes all of the information into the City’s CAFR and presents it to the Government Finance Officers Association for consideration for their Excellence in Financial Reporting program. The proposed fees for the City's portion of the audit are $68,100 for 2010 and $70,100 for 2011. This compares to the most recent audit contract for FY 2009 of $63,700. This contract will have an expanded scope addressing the significant increase in federal grant funds awarded to the city this past year. The contract will not be effective until it is also approved and signed by the State of Montana. ---PAGE BREAK--- MRA's contract with Anderson ZurMuehlen was extended at their March board meeting. The Parking Commission is getting their audit extension in place also. The reason for the extension request is multifold for the city. There are a significant number of new grants this year (FY 10) and next (FY 11) that will come under extensive review in the federal single audit component of the audit. Having good familiarity with the city’s accounting system will be paramount in the next two audits, as the reviews will be more intensive and exhausting. I also have quite a few new staff involved in the audit which makes a switch in auditors a poor choice in terms of staff impact for us. There is no real compelling reason to switch auditors at this time. The last time we switched all firms virtually bid the same price within a few hundred dollars Financial Implications: Increased audit fees of $4,400 for FY 2010. Attachments: 2010 Audit Contract