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HomeMy WebLinkAboutAGENDA REPORT 1993 0908 CC SPC ITEM 08QTO: FROM: DATE: SUBJECT: Discussion ITEM 8• Agenda Report City of Moorpark Honorable City Council Richard Hare, Deputy City Managb 'f 1 August 25, 1993 (CC. Mtg. 9/8/93 C.�Y Council L;_ � of ' 8 19.3 Consider Proposal by KPMG Peat Marwick for Review of the City and Agency Financial Management System During the budget process the City Council /Agency discussed the review of the City's account structure for reporting purposes and to make the most efficient use of existing staff. To that end, the staff has requested a proposal from the independent auditors currently used by the City, KPMG Peat Marwick, to conduct a review. The attached proposal was submitted by KPMG Peat Marwick and includes a scope of work which was developed in cooperation with the staff. The proposal has been reviewed by the members of the Budget & Finance Committee (Mayor Paul Lawrason, Mayor Pro Tem Scott Montgomery) and the City Manager, Steven Kueny. Their comments have been incorporated into the proposal. Funding It is proposed by staff that the funding for this study be split between the Agency and the City. The total cost for the study will be between $8,000 and $11,000. Staff is recommending an appropriation of 50 percent of the cost to the Finance Department account #01.4.116.642, with the remaining 50 percent of the cost appropriated to the Redevelopment account #70.4.170.642. Recommendation Staff recommends approval of the proposal Marwick and appropriation of $11,000, 50 Redevelopment Agency and 50 percent from reserve. Attachment: Proposal from KPMG Peat Marwick AuqusC 24, :993c: \wp') t \c, .1�-1, n':% I,:" submitted by KPMG Peat percent from the the City General Fund OBi23i1993 1008 FROM 24TH FLOOR AUDJiiMC TO 918055298270 P.02 August 23, 1993 Mr. Richard Hare Deputy City Manager City of Moorpnrlc 799 Moorpark Avenue Moorpark, California 93021 Dear Richard: It was a pkasuro to speak with you the other day to discuss the financelaccounting function of the City of Moorpark ("City') and some of your concerns regarding that function and its ability to meet the needs of the City, the Redevelopment Agency of the City C Agency'j and the Special Assessment District ( "District') recently formed. We specifically discussed performing a limited study of the chart of accounts of the City, Agency and District, the number and type of funds in each of those entities, and a review of the current staffing level of the accounting function of the City and its adequacy to meet the current and expected short -term future needs of these entities. This letter will confirm our understanding of the engagement. KPMG Peat Marwick ("Peat Marrwicle) will conduct the limited study in accordance with professional standards established by the American Institute of Certified Public Accountants (AICPA) and will include the following procedures conceming the accounting function of the City: Chart of Accounts — we will review the current chart of accounts for adequacy of meeting the accounting, budgeting and reporting needs of the City. We will discuss the following with senior City management and senior accounting department management and specifically review: — The level of detail of the chart of accounts — The types of informational needs of both internal or external users •• the frequency with which certain types of information is requested •• the ability to download information from the accounting system to personal computers for preparation of special reports — The feasibility of condensing information currently reported in separate funds into separate line items within the general fund or single special revenue funds (see "number of funds" below). Al JG 23 '93 11:09 btli�Si199S 10:09 [-RUM 241H FLUUR HIJD! I /Ml. 10 918055298270 P.03 Mr. Richard Hare City of Moorpark, California August 23, 153 Page 2 The adequacy of the chart of accounts to meet minimal reporting requirements. — The different accounting needs of the City, Agency and District and level of detail required for both individual reporting (component unit financial reporting) as well as combined reporting (comprehensive annual financial reporting). Number of Funds — we will review the current number and type of funds used by the City, Agency and District for adequacy of meeting the accounting, budgeting and reporting needs of the City. We will discuss the following with senior City management and senior accounting department management and specifically review: — Those funds minimally required or usually recommended byy the State of California, City Charter, generally accepted accounting principles, regulatory bodies and/or debt compliance. Those activities of the City, Agency and District which require special reporting in specific funds will be identified (e.g., gas tax receipts and expenditures from the State of California are required to be reported in a separate Special Revenue Fund). The feasibility of condensing information currently reported in separate funds into separate line items within the general fund or single special revenue funds (see "chart of accounts" above). The reporting needs of the entities with specific attention to impknxntation of Government Accounting Standards Board Statement No. 14, "'Tree Financial Reporting Entity" ("GASH 14`), which is effective for years beginning after December 15, 1992 (i.e., the fiscal year beginning July 1, 1993). Staffing Level of the Accounting Department — we will review the current staffing of the accounting department of the City for adequacy of meeting the accounting, budgeting and reporting needs of the City, Agency and District. We will discuss the following with senior City management and senior accounting department management and specifically review: — The current organization of the department including lines of reporting and the responsibilities of the individual departmental personnel. — Identification of any significant areas where segregation of duties for purposes of internal accounting or administrative control is not adequate. — Identification of positions or individual staff members with sufficient training to assume responsibilities of other departmental personnel on a temporary basis (e.g., covering for other staff on vacation or ill). Further, identify those positions for which no adequate alternative is available when the employee is W or on vacation. — Identify those accounting functions replarly performed by the outside consultant. Determine the feasibility of bringing those functions "in- house." PUG 23 '93 11:10 PAGF,AAz VJt� �Ji 17'7 10. 10 FKIL," 241H FLOUR HUD1 i /MC: TO 9100552902?0 P.04 Mr. Richard Hare City of Moorpark, California August 23, 1993 Page 3 — Determine adequacy of current staffing levels taking into account the factors identified above and the expansion of services in the current and near -term future periods (e.g., beginning of operations of the Agency and District and the expected additional accounting and reporting needs of the these entities). The City, Agency and District agree that all records, documentation, and information we request in connection with our study will be made available to us, that appropriate management and accounting department personnel will be available for discussion with appropriate notice, and that we will have the full cooperation of the personnel of the City, Agency and District. Upon completion of our study, a written report will be submitted to the Deputy City Manager outlining the results of our study with our reconunendations concerning the items discussed above. If requested, we will meet with other City management or Members of the City Council to report orally on such matters. Because the procedures to be undertaken do not constitute an audit in accordance with generally accepted auditing standards, therefore, we will not express an opinion on the study. We shall attempt to complete the study within three weeks after the beginning of our study and will issue a draft report within two weeks after that date. We are prepared to undertake this work at fees discounted from our standard hourly rates, as follows: Based upon our discussions with you, we estimate that total fees for our professional services including performing the study, preparing the draft and final reports and any oral reports to City management or City Council Members will range from $8,000 to $10,000. In addition, expenses, including travel, telephone, postage and typing, printing and reproduction of the report, arc billed as incurred, and are estimated at $1,000. These estimates reflect our anticipation of the necessary partner, management and staff hours, along with related expenses. Circumstances encountered during the conduct of the engagement that warrant additional time or expense could cause us to be unable to complete the study within the above estimates. We will endeavor to notify you of any such circumstances as they are assessed. We will submit regular progress billings for services performed and expenses incurred since the last invoice, usually biweekly. " I(; ?I 1 9Z 11 : 11 1993 hourly rates Standard Quoted hourly hourly rates rates Partners $ 310 165 Managers 200 105 Senior Accountant 105 70 Staff s0 WEENEEMMOME&NO 50 Based upon our discussions with you, we estimate that total fees for our professional services including performing the study, preparing the draft and final reports and any oral reports to City management or City Council Members will range from $8,000 to $10,000. In addition, expenses, including travel, telephone, postage and typing, printing and reproduction of the report, arc billed as incurred, and are estimated at $1,000. These estimates reflect our anticipation of the necessary partner, management and staff hours, along with related expenses. Circumstances encountered during the conduct of the engagement that warrant additional time or expense could cause us to be unable to complete the study within the above estimates. We will endeavor to notify you of any such circumstances as they are assessed. We will submit regular progress billings for services performed and expenses incurred since the last invoice, usually biweekly. " I(; ?I 1 9Z 11 : 11 0812S11933 10: 11 FKON 24TH FLOOR AUDII /MC: TO 918055298270 P.05 Mr. RichW Hare City of Moorpark, California August 23, 1993 Page 4 We look forward to working with you, other City management and financelaccounting department personnel. For your convenience in confirrning these arrangements, we enclose a copy of this letter. Please sign and return it to me. Very truly yours, KPMG PEAT MARWICK Thomas W. Snow, Partner TWS:nst cx:: S. Smith ACCEPTED: By. Tide: Date: TOTAL P.05 elo yr 1� I0� 4 .•1.