CONTRACT FOR FINANCIAL AUDIT SERVICES FOR FY2018 AND FY2019

CONTRACT FOR FINANCIAL AUDIT SERVICES FOR FY2018 AND FY2019 - EIDE BAILLY, LLP Action: Adopt or Not Adopt Resolution Executive Summary The Council will consider a Resolution authorizing a contract with Eide Bailly, LLP for financial audit services for FY2018 and FY2019. Background February 19, 2013 The Audit Committee met to discuss the RFP Responses. Committee members include the following: Doug Stephens, Ogden City Council member Richard Hyer, Ogden City Council member Bill Cook, Executive Director, Ogden City Council Janene Eller-Smith, Policy Analyst, Ogden City Council Mark Johnson, CAO Shaun Choate, Interim Management Services Director Laurie Johnson, Finance Manager Lisa Stout, Assistant Finance Manager Mara Brown, Chief Deputy City Attorney February 28, 2013 The Audit Committee conducted interviews with five (5) firms. After careful consideration, the Committee is recommending that the City enter into a contract with Hansen, Barnett, & Maxwell, P.C. for financial audit services. May 14, 2013 The City Council approved a Resolution authorizing a five (5) year contract with Hansen, Barnett & Maxwell, P.C. to provide auditing services for Fiscal Years 2013 through 2017. Ogden City Council Meeting: June 26, 2018 Page 1 of 3

September 2013 Hansen, Barnett & Maxwell, P.C. was acquired by Eide Bailly, LLP and began operating under that name. February 2018 Eide Bailly competed and submitted the FY2017 Audit Report. Proposal The Administration and Council Staff are recommending entering into a new two-year contract with Eide Bailly, LLP for financial audit services. Terms of the proposed contract are as follows: Audit Service Provider: Eide Bailly, LLP (Salt Lake Office) Term: Two (2) years - FY2018 and FY2019 Services: Financial Audit Services in Compliance with Federal and State Requirements Amount: FY2018 - $52,500 FY2019 - $54,500 Normally, the City would issue an RFP and go through the selection process for a new auditor. However, the finance staff is currently carrying out the additional duties and responsibilities of implementing the Enterprise Resource Planning (ERP) software. A new auditing firm would require additional staff resources to train and orient the auditing staff to the City s processes and operations. This would be a draw over and above the normal draw on staff resources to complete the audit. Eide Bailly is familiar with the City s staff and processes and will not require additional training and orientation. Therefore, the Administration and Council staff feel it is appropriate to enter into a new contract with Eide Bailly for audit services for Fiscal Years 2018 and 2019. The ERP should be fully implemented in early 2020. An RFP will be issued and new auditor selected for the FY2020 audit and beyond. Ogden City Council Meeting: June 26, 2018 Page 2 of 3

Attachments Proposed Resolution and Contract Council Staff Contact: Janene Eller-Smith, (801)629-8165 Ogden City Council Meeting: June 26, 2018 Page 3 of 3

RESOLUTION NO. 2018-9 A RESOLUTION OF THE OGDEN CITY COUNCIL ADOPTING A CONTRACT WITH EIDE BAILLY, LLP, TO CONDUCT THE CITY S FINANCIAL AUDITS FOR FISCAL YEARS 2018 AND 2019. WHEREAS, the City is required by the Uniform Fiscal Procedures Act for Utah Cities, Utah Code Annotated 10-6-150, to present an annual financial report to the City Council within 180 days of the close of the fiscal year; and WHEREAS, the City is also required by Utah Code Annotated 10-6-150 to have an independent auditor review the City s basic financial statements and Comprehensive Annual Financial Report; and WHEREAS, the auditor s primary responsibility is to ascertain whether the City s financial reporting accurately reflects the financial condition of the City and is prepared in conformity with criteria established by Generally Accepted Audit Standards, Government Auditing Standards, the Single Audit Act Amendments of 1996, and General Guidance Audits of States, Local Governments, and Non-Profit Organizations; and WHEREAS, in 2013 the City Council conducted an open bid process which resulted in the selection of Hansen, Barnett & Maxwell, P.C. to conduct the City s financial audit for a five (5) year period covering fiscal years FY2013 though FY2018; and WHEREAS, Hansen Barnett & Maxwell, P.C. was acquired by Eide Bailly, LLP in 2013 and Eide Bailly, LLP assumed responsibility for the contract with Ogden City; and WHEREAS, considering Eide Bailly s familiarity with Ogden s new financial software, which will continue to be implemented over the next two years, and the transitional costs and impact on the finance staff of changing service providers, the Council has determined it is in the best interests of the City to extend the services of Eide Bailly through FY2019, during which time the Council will determine an appropriate process for procuring future auditing services; and 1

WHEREAS, Eide Bailly, LLP has agreed to provide auditing services to Ogden City for FY2018 and FY2019 under the terms and conditions outlined in the contract attached at Exhibit A. NOW, THEREFORE, be it resolved by the Ogden City Council that the Council hereby approves the contract with Eide Bailly, LLP attached at Exhibit A hereto for completion of the City s financial audits for Fiscal Years 2018 and 2019. PASSED AND ADOPTED by the Ogden City Council this day of June, 2018. Richard A. Hyer Council Chair ATTEST CITY RECORDER APPROVED AS TO FORM: MAB 6/4/18 LEGAL DATE 2

PROFESSIONAL SERVICES AGREEMENT THIS AGREEMENT, entered into as of the 1st day of June, 2018 ( Effective Date ), by and between OGDEN CITY CORPORATION, a municipal corporation of the State of Utah, hereinafter "City," and EIDE BAILLY, LLP, hereinafter "Contractor. W I T N E S S E T H: WHEREAS, City has established a need for certain professional services; and WHEREAS, Contractor has proposed to provide such professional services. NOW, THEREFORE, in consideration of the mutual covenants and agreements stated herein and of the payments for services hereinafter described, the parties hereto do mutually agree as follows: 1. Performance of Services. City hereby agrees to engage Contractor, and Contractor hereby agrees to perform the services set forth in Exhibit "A," incorporated herein by reference. Any services not specifically described therein but which may be fairly implied as required thereby or necessary to complete the work for the use or purpose intended, shall be within the scope of services to be provided hereunder. The City and the Auditor shall enter into an annual engagement letter prepared by the Auditor that includes the language and is in the form set forth on Exhibit C attached hereto and incorporated herein by reference (the Annual Engagement Letter. In addition, in the event the City agrees to exercise the optional extension, the City and the Auditor agree to enter into an Annual Engagement Letter for each of the years in the option period. The Annual Engagement Letter is included as one of the Auditor s annual audit papers and is supplemental to, and not a replacement of, the other terms of the

Agreement. Terms of the Annual Engagement Letter shall not conflict with the other terms of this Agreement. If the Annual Engagement Letter presented to the City for any subsequent year contains changed terms that the City deems material, the City shall have the right to terminate this Agreement for Cause as outlined in Paragraph 4 of this Agreement. 2. Time of Performance. This Agreement shall commence on the Effective Date entered above, and shall terminate on April 30, 2020, subject to budgetary appropriations by the Ogden City Council, unless sooner terminated as hereinafter set forth. 3. Compensation. Contractor shall be paid as specified under Exhibit B, Price Schedule, attached hereto and incorporated by this reference. 4. Termination of Agreement for Cause. If, through any cause, Contractor shall fail to fulfill, in a timely and proper manner, its obligations under this Agreement, or if Contractor shall violate any of the covenants, agreements or stipulations of this Agreement, City shall have the right to terminate this Agreement by giving written notice to Contractor of such termination and specifying the effective date thereof. In the event of termination for cause, Contractor shall be entitled to receive only the pro rata share of the total compensation which is equal to any satisfactory work completed as of the date of termination. Upon termination, Contractor shall reimburse the City for any prepaid payments received in excess of the pro rata share earned by Contractor. Notwithstanding the above, Contractor shall not be relieved of liability to City for damages sustained by City by virtue of any breach of the Agreement by Contractor, and City may withhold any payments to Contractor for the purpose of setoff until such time as the exact amount of damages due City from Contractor is determined. Page 1 of 16

5. Termination for Convenience. The City or Contractor may terminate the Agreement at any time by giving written notice to the other and specifying the effective date thereof. If the Agreement is terminated by City as provided herein, City shall pay Contractor a percentage of the established fee for work performed up to the time of such termination. Said percentage shall be based on the ratio of work completed to the total work required. 6. Non-assignability. Contractor shall not assign nor transfer any interest in this Agreement without the prior written consent of the City thereto. 7. Interest of Contractor. Contractor covenants that Contractor presently has no interest and shall not acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of the services hereunder. Contractor further covenants that in the performance of this Agreement no person having such interest shall be employed. 8. Indemnification. Contractor agrees to indemnify, and save harmless City and its authorized agents, officers and employees from and against any and all claims, damages, demands, actions, costs and charges arising out of or by reason of Contractor 's performance or failure to perform this agreement. 9. Attorney's Fees. In the event either party institutes litigation to enforce its rights under this Agreement, the prevailing party in such litigation shall be entitled to an award of its reasonable attorney's fees and costs. 10. Notice. Any notice, or notices, required or permitted to be given pursuant to this Agreement, may be personally served on the other party by the party giving such Page 2 of 16

notice, or may be served by certified mail, return receipt requested, to the following addresses: City: Contractor: Janene Eller-Smith Council Executive Director Ogden City Council Office 2549 Washington Boulevard, Suite 320 Ogden, Utah 84401 Paul O. Skeen, CPA Partner Eide Bailly, LLP. 5 Triad, Suite 750 Salt Lake City, Utah 84108 11. Independent Contractor. Contractor is independent of the City and shall perform all services according to its own methods without being subject to the control of the City except as to the results obtained. The City shall not carry Worker s Compensation insurance or any health or accident insurance to cover Contractor. The City shall not pay nor be responsible for any contribution to Social Security, unemployment insurance, federal or state withholding taxes, nor provide any other contributions or benefits which might be expected in an employer-employee relationship. Contractor, as an independent contractor, shall provide and be responsible for any and all of Contractor, and its employees or agents, Worker s Compensation contributions, federal and state withholding, unemployment compensation contributions and social security tax withholding, etc. Contractor agrees to report and pay any contributions for taxes, unemployment insurance, Social Security and other benefits. 12. When Rights and Remedies Not Waived. In no event shall any payment by City hereunder constitute or be construed to be a waiver by City of any breach of Page 3 of 16

conditions or any default which may then exist, or while any such breach or default shall exist, in no way impair or prejudice any right or remedy available to City with respect to such breach or default. 13. Integrated Document. This Agreement embodies the entire agreement between City and Contractor for the scope of services and the terms and conditions. No verbal agreements or conversations with any officer, agent or employee of City prior to the execution of this Agreement shall affect or modify any of the terms or obligations contained in any documents comprising this Agreement. Any such verbal agreement shall be considered as unofficial information and in no way binding upon City. 14. Compliance with Laws. Contractor shall comply with all laws, ordinances, regulations, rules, etc., of the federal, state and local governments in connection with the performance of this Agreement. 15. Furnishing of W-9. Payment under this Agreement is contingent upon Contractor furnishing City with a completed W-9 IRS tax form, which shall be attached hereto and incorporated herein. Contractor shall cooperate with City in furnishing any additional information City may need to comply with rules and regulations of the Internal Revenue Service. 16. Employment Status Verification. Contractor shall register and participate in the Status Verification System and comply with Utah Code Ann. 63G-12-302 of the Utah Identity Document and Verification Act. 17. Severability of Provisions. If any provisions of this Agreement are held invalid, the remainder of this Agreement shall not be affected thereby if such remainder would then continue to conform to the terms and requirements of applicable law. Page 4 of 16

18. Modifications. No oral modifications or amendments to this Agreement shall be effective, but this Agreement may be modified or amended by written agreement. 19. Governing Law. This Agreement, its terms and conditions, shall be governed by Utah law. The forum or venue for litigation of any dispute arising from or related to this agreement shall be the courts of the State of Utah. IN WITNESS WHEREOF, the parties hereto execute the foregoing instrument as of the day and year first above written. OGDEN CITY CORPORATION ATTEST: City Recorder By: Richard Hyer Chair, Ogden City Council Approved as to Form: City Attorney Date Eide Bailly By: Paul O. Skeen, CPA Partner Page 5 of 16

EXHIBIT A SCOPE OF SERVICES I. GENERAL a. Auditor, if doing business under an assumed name, i.e. an individual, association, partnership, corporation, or otherwise, shall be registered with the Utah State Division of Corporations and Commercial Code. b. Auditor shall assume full responsibility for damage to City property caused by the Auditor s employees or equipment as determined by designated City personnel. c. Auditor shall be solely responsible for the safety of the Auditor s employees and others relative to the Auditor s work, work procedures, material, equipment transportation, signage, and related activities and equipment. d. Auditor shall possess and keep in force all licenses and permits required to perform the services of this Agreement. II. RESPONSIBILITIES OF THE AUDITOR The responsibilities of the Auditor include, but shall not be limited to, the following. a. The City is required by State law to provide an annual audit of its financial statements by a Certified Public Accountant in accordance with generally accepted auditing standards. An annual audit shall be performed for each of the fiscal years ending June 30, 2018 and June 30, 2019. Each audit shall include an audit of the Comprehensive Annual Financial Report ( CAFR ) prepared by the City, audits and preparation of separate annual reports for the City s Major Funds, and the A-144 Single Audit each year of grants is as required under the Single Audit Act and shall be provided by Auditor hereunder. b. The audits shall be performed in accordance with auditing standards generally accepted in the United States of America (hereinafter referred to as generally accepted accounting principles), as promulgated by the Page 6 of 16

American Institute of Certified Public Accountants (AICPA); the AICPA Audits of State and Local Governmental Units audit and accounting guide; and standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and published by the U.S. General Accounting Office. Federal compliance test work and reporting shall be done in accordance with Office of Management and Budget (OMB) Circular A-133. Auditor shall express an appropriate opinion on the CAFR; and all federal grants, and entitlements for the years ending June 30, 2013-2017, unless Agreement is terminated. Auditor shall assist the City s efforts to obtain the Governmental Finance Officers Associations Certificate of Achievement of Excellence in Financial Report. c. Reports, letters, statements and additional audit work shall include the following: i. The Comprehensive Annual Financial Report ( CAFR ) shall be prepared, generated, and printed by the City, unless the City enters into a separate contract with Contractor for preparation, generation and printing. During the months of October through December, the Auditor shall be available to review drafts of the Comprehensive Annual Financial Report and provide input to the City. This audit report, including auditor s opinion, shall be submitted to the State Auditor s Office within six months after the end of the fiscal year. ii. The City s annual single audit under OMB Circular A-133, including all Federal grants, entitlements, or shared revenue, shall be performed in accordance with generally accepted auditing standards and auditor s reports shall be rendered in conformity with Chapter 2a, Title 51, Utah Code Annotated, as amended. The examination and report thereon shall also be carried out in accordance with generally accepted government auditing standards and applicable federal circulars or regulations. A Single Audit Report shall be prepared typed and printed by auditor. Twenty (20) copies of this report shall be furnished to the Finance Manager s Office prior to December 15 of each year. Additionally, five (5) copies shall be delivered to the City Council and two copies to the City Recorder prior to December 30 of each year. Page 7 of 16

In addition to the printed copies, Auditor shall provide a textsearchable, unlocked, and unencrypted PDF to the Finance Manager, the City Council Office, and the Recorder. iii. Auditor shall examine the financial systems and records as they relate to the various federal grants and agreements and shall issue Auditor s reports on internal and administrative control and on compliance with federal and state laws and regulations as required by generally accepted auditing standards promulgated by the AICPA. Twenty (20) copies of the report shall be furnished to the Finance Manager s office prior to December 15 of each year. d. Auditor shall meet at least twice annually with the City Council to present the audit reports and management letters after holding an exit conference with the Audit Committee. e. Auditor shall give duly authorized representatives of the City access to, and the right to examine, any notes, working papers, statements and other documentation prepared in connection with Auditor s actual performance. Auditor shall answer requests for information from duly authorized representatives of the City. f. Audit programs, work papers and reports shall be retained for a period of five (5) years after the completion of the audit and made available for inspection by the City or government auditors if requested. g. Auditor shall provide regular updates to the Council staff throughout the audit process. III. RESPONSIBILITIES OF THE CITY a. City staff shall be available to prepare schedules, trial balances, and provide documentation to assist Auditor as their schedules permit during the course of the audit. Computerized financial information is available upon request. b. Work area shall be made available to auditor to accommodate audit staff. Auditors shall have access to telephones, photocopying machines, FAX machines, and access to the City s computerized accounting systems. Page 8 of 16

IV. REPORT REQUIREMENTS a. For financial audits, Auditor shall issue an auditor s opinion on the entity s financial statements with an in-relation-to opinion on combining and supplementary information, if any. Such financial statements shall be prepared in conformity with generally accepted accounting principles. b. Auditor shall issue a report on compliance and on internal control over financial reporting based on an audit of general purpose or basic financial statements in accordance with Government Auditing Standards and OMB Circular A-133. c. Auditor shall issue a report on compliance and on internal control over compliance applicable to each major federal award program as required by OMB Circular A-133. d. Auditor shall prepare a report on compliance with State fiscal laws and other financial issues related to the expenditures of funds received from Federal, State, or local governments identified by the state auditor in the State of Utah Legal Compliance Audit Guide (This statement is in addition to the compliance opinion required as part of a single audit.) e. Auditor shall include the written responses from Ogden City for each recommendation included in the state compliance report required by the State of Utah Legal Compliance Audit Guide. V. DISCLOSURE OF CITY RECORDS a. Auditor agrees that it shall not, without written approval by the City, disclose public records related to work performed under this Agreement. Page 9 of 16

EXHIBIT B COMPENSATION Contractor shall be compensated as follows: o Fiscal Year Ending June 30, 2018 - Not to exceed $52,500 o Fiscal Year Ending June 30, 2019 - Not to exceed $54,500 Compensation for FY2016 and FY2017 services may be renegotiated if Auditor and City determine there is a material change in the scope of work. Said compensation shall constitute full payment for services rendered and costs incurred by Contractor in performing this Agreement. For services provided which are not within the scope of this Agreement, Contractor shall be compensated at the following hourly rates: o Partner $ o Manager $ o Senior $ o Team Member $ Page 10 of 16

EXHIBIT C SAMPLE ENGAGEMENT LETTER Page 11 of 16