Report to: General Committee Date Report Authored: September 7, 2010
RECOMMENDATION:
THAT the report entitled “Contract Extension 051-R-07 External Audit Services” be received;
AND THAT the contract for External Audit Services, RFP 051-R-07 be extended for an additional three year fiscal period (2010 – 2012) in the annual amount of $87,217.00 and the total award amount of $261,641.00 inclusive of HST;
AND THAT
the contract for External Audit Services include examination and review of the
records and financial statements for Unionville Business Improvement Area
(BIA), Markham Village BIA, Innovation Synergy Centre in Markham (ISCM), National
Centre for Medical Device Developments (NCMDD), Markham District Energy,
Markham Enterprises Corporation, Varley Art Foundation and Museum Foundation;
AND THAT THAT the tendering process be
waived in accordance with
AND THAT the award for the 2010 audit be funded from the respective 2010 operating budgets and with the 2011 to 2012 operating budgets be adjusted as approved through Council during each year;
AND THAT Staff be authorized and directed to do all things necessary to give effect to this resolution.
PURPOSE:
The purpose of this report is to obtain
approval to extend contract 051-R-07 “External Audit
Services” for an additional three (3) years at the same 2009 itemized
pricing.
BACKGROUND:
This contract is for an external Auditor
to carry out examinations of the records and financial statements of the Town
and its affiliates. The audit includes
the examination of the records and financial statements of the Town of Markham
as per the following.
· The Corporation of the Town of
Markham (Including Trust funds)
· Gas Tax Fund
· Town of Markham Public Library
Board
In addition to the above the contract
extension includes the examination and review of the records and financial
statements for the following:
· Unionville Business Improvement
Area (BIA)
· Markham Village BIA
· Innovation Synergy Centre in
Markham (ISCM)
· National Centre for Medical Device
Developments (NCMDD)
· Markham District Energy
· Markham Enterprises Corporation
· Varley Art Foundation
· Museum Foundation
The costs associated with the examination and
review of records and financial statements is included in the respective
budgets.
OPTIONS/ DISCUSSION:
In October 2007 a RFP was circulated to
obtain proposals to provide Audit Services for the Town and its associated
companies. While the RFP document included the term of contract for a five (5)
year (audit of 2007 – 2011 financial statements) period subject to Council
approval of the annual operating budgets, the contract was awarded to KPMG for
a three (3) year term ending 2009 that would enable the incumbent to review the
2009 financial statements that included the audit of Tangible Capital Assets
(TCA) as mandated by Public Sector Accounting Board (PSAB). The contract award
included a provision of 165 hours of free consulting relating to the recording
of TCA in conformance to PSAB legislation in 2007 (KPMG was the only bidder to
provided this added service).
KPMG has provided valuable consulting
services relating to PSAB conformance, methodologies and recording of TCA in
the financial statements in addition to the restatement of the 2008 financial
statements. The Town has been one of the few municipalities that completed the
financial statements verification process within 90 days of the year end
despite the 2009 TCA requirements (the transition to TCA was one of the most
significant changes to municipal accounting in a long period).
While the audit of the 2009 financial
statements including the transition to TCA has been completed, Staff recommends
an extension of the contract with KPMG.
This will provide the much needed continuity when the TCA principles for
recording are applied after the transition year and will enable the efficient
compilation of financial statements for audit.
In addition to auditing the year end financial statements KPMG also
provided valuable consulting services related to tax issues and have also
provided opinions to queries on the implementation of HST and its applicability
on fees levied on developer’s agreements.
As TCA accounting is in its initial stages
of implementation, it is critical that audit continuity be maintained. Otherwise, several months of extra time and
effort would be required to introduce the new audit firm to our policies and
procedures and in many instances the work that has already been done would be
repeated (inefficient).
Based on the above staff is recommending
extending the contract with KPMG for the three (3) additional years (2010-2012
year end audits) at the same 2009 itemized pricing. In addition, KPMG will be waiving the
additional cost of $12,000 (over the
165 hours of free consulting) for their 2009 year end audit. As well, KMPG will not be charging for
reviewing the PSAB compliance of the financial statements for the years
2010-2012.
The last time (2007) the Town closed the
audit services contract the awarded contract was a 12% increase over the
previous contractual term. Since this
date (2007), the yearly increase has been 2% per year as approved by Council in
2007. The extension of the contract at
the itemized 2009 pricing will enable the Town to hold the budget for audit
services for another 3 years with no further increases.
KPMG has significant experience providing audit services to Ontario Municipalities and Municipal Organizations. The Regional Municipality of York recently (June 2010) received a similar contract extension approval for a three year extension with KPMG to ensure their continuity of audit services are maintained during the initial years of Tangible Capital Asset Accounting.
FINANCIAL CONSIDERATIONS AND TEMPLATE:
The remaining 2010 budget amount will be used for
any other accounting audits required in 2010.
HUMAN RESOURCES CONSIDERATIONS:
Not Applicable
ALIGNMENT WITH STRATEGIC PRIORITIES:
Not Applicable
BUSINESS UNITS CONSULTED AND AFFECTED:
Finance department have been kept apprised of the contract negotiations and extension request.
RECOMMENDED
BY:
