Report to: General Committee                                                    Report Date: October 1, 2007

 

 

SUBJECT:                          External Audit Services, RFP 051-R-07

PREPARED BY:               Steven Sydij, Senior Construction Buyer

                                            Raj Raman, Manager of Accounting and Expenditure Control

 

RECOMMENDATION:

THAT the report entitled “External Audit Services, RFP 051-R-07” be received;

 

AND THAT the contract for External Audit Services, RFP 051-R-07 be awarded to the highest ranked, second lowest priced proponent KPMG LLP Chartered Accountants for a three year period, commencing with the 2007 fiscal year end, for a total award of $383,400 exclusive of GST and disbursements;

 

AND THAT Staff be authorized to increase the contract value for years 2 & 3 up to a maximum of 2% per year;

 

AND THAT Council request that Markham District Energy (MDE), Markham Energy Corporation, Varley-McKay Art Foundation of Markham and Innovation Synergy Centre in Markham (ISCM) award their audit services to KPMG as provided for within the proposal;

 

AND THAT the award for the 2007 audit be funded from the respective 2007 Operating budgets, with any shortfall being absorbed in 2007

 

AND THAT the 2008 to 2009 operating budgets be adjusted if required to include the increases as reflected in the KPMG proposal;

 

AND THAT Staff be authorized and directed to do all things necessary to give effect to this resolution.

 

EXECUTIVE SUMMARY:

Not Applicable

 

1. Purpose                     2. Background                      3. Discussion                        4. Financial        

 

5. Others (Environmental, Accessibility, Engage 21st, Affected Units)             6. Attachment(s)

 

PURPOSE:

The purpose of this report is to award the contract for External Auditing Services RFP 051-R-07.

 

BACKGROUND:

On September 24, 2007 General Committee directed staff to meet with the highest ranked proponent KPMG and negotiate a reduction in the over all costs for their proposed services and to asses the feasibility and implications of only awarding a contract for a (3) three period.

 

BID INFORMATION:

Not Applicable

 

SCORING INFORMATION:

 

Bidders

Total 3 Year Pricing

Rank

Scoring

KPMG

$383,400

1

113.15  *

Deloitte

$394,200

2

109.97  *

Grant Thornton

$315,000

3

108.75  *

BDO

$544,206

4

63.00

* Scores include the additional interview marks.

 

OPTIONS/ DISCUSSION:

Staff met with KPMG on Wednesday September 26, 2007 to discuss the feasibility and implications of reducing the contract term from 5 to 3 years and negotiated an overall reduction in their fee schedule. On Thursday September 27 KPMG submitted a revised fees schedule which reflected a reduction of $25,800 over three years and provided us an additional 5 hours per year (50 to 55 hours) for value added services with respect to tangible capital assets with a total estimated value of between $50,000 to $78,000. They have also indicated that their yearly increase would be the lesser of 2% or the consumer price index.

 

KPMG PRICING – 2006 Price Comparison;

 

Item

KPMG Revised 2007 RFP

Pricing

KPMG Original 2007 RFP

Pricing

KPMG Actual

2006

Pricing

1)      The Corp. of the Town of Markham – consolidated including

2)      The Corp. of the Town of Markham Trust Fund and the

3)      Gas Tax Audit.

$78,800

 

 

$80,800

$79,300

4)      Town of Markham Public Library Board

$8,500

$8,500

$8,500

5)      Old Markham Village and

6)      Unionville Business Improvement Areas

$3,600

 

$3,600

$3,600

7)      Markham Enterprises Corporation and

8)      Markham District Energy (MDE)

$31,500

$31,500

$23,500

9)      Varley-McKay Art Foundation of Markham

$1,800

$3,500

$3,500

10)   Innovation Synergy Centre in Markham  (ISCM)

$1,800

$5,000

**   $2,000

11)    Don Cousens Charitable Trust

$0

$0

$0

12)   Museum Foundation

$1,800

$3,500

$0

13)    

 

 

 

One year TOTAL

$127,800

$136,400

$120,400

 

 

 

 

Three year TOTAL

$383,400

$409,200

 

 

 

 

 

** This is the budget amount because the actual invoice has not yet been received.

 

FINANCIAL CONSIDERATIONS AND TEMPLATE:

The audit prices for the next three years will be as set out in the proposal from KPMG.  It was noted during the interview process that all the proponents, including KPMG, will charge an additional amount for auditing the “opening balances” for the tangible capital assets on the Town’s 2009 financial statements. None of the proponents would provide pricing for the tangible capital asset audit at this time, however, it is anticipated that the “value added” hours proposed by KPMG will minimize these costs due to their familiarity with the Town’s approach during the data gathering and policy development stages.

 

ENVIRONMENTAL CONSIDERATIONS: Not Applicable

 

ACCESSIBILITY CONSIDERATIONS: Not Applicable.

 

ENGAGE 21ST CONSIDERATIONS: Not Applicable

 

BUSINESS UNITS CONSULTED AND AFFECTED: Not Applicable.

 

 

RECOMMENDED

                            BY:    ________________________          ________________________

                                      Barb Cribbett,                                    Andy Taylor,

                                      Treasurer                                            Commissioner Corporate Services

 

ATTACHMENTS:

Not Applicable