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HomeMy WebLinkAboutOrdinance 7901 a ORDINANCE NO. AN ORDINANCE APPROPRIATING REVENUE OF THE CITY IN EXCESS OF ITS TOTAL ESTIMATED INCOME AS SET FORTH IN THE ANNUAL BUDGET FROM ADDITIONAL REVENUES INCREASING THE THE APPROPRIATION IN THE ANNUAL AUDIT ACCOUNT OF THE GENERAL FUND BY $14,500; PROVIDING A SEVERABILITY CLAUSE; MAKING THIS ORDINANCE CUMULATIVE OF PRIOR APPROPRIATION ORDINANCES; REPEALING ORDINANCES IN CONFLICT HEREWITH; AND PROVIDING AN EFFECTIVE DATE. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS: SECTION 1. That the City Manager of the City of Fort Worth shall be provided with such revenue as may be secured from the various sources included in Ordinance No. 7787, and in the Budget of the City Manager; and, in addition thereto there is hereby appropriated the additional sum of Fourteen Thousand Five Hundred and No/100 Dollars from additional revenues and unappropriated surplus to the account of the General Fund for the payment of additional expenses incurred in the Annual Audit. SECTION 2. Should any part, portion, section or part of a section of this ordinance be declared invalid or inoperative or void for any reason by a court of competent jurisdiction, such decision, opinion or judgment shall in no way affect the remaining portions, parts, sections or parts of sections of this ordinance, which provisions shall be, remain and continue to be in full force and effect. SECTION 3. That this ordinance shall be cumulative of Ordinance No. 7787, but all other ordinances and appropriations for which provision has been heretofore made are hereby expressly repealed if in conflict with the provisions of this ordinance. SECTION 4. That this ordinance shall take effect and be in full force and effect from and after the date of its passage, and it is so ordained. AS0F 4 AND LEGALITY: qROV .����y Att ney ADOPTED: El Pe -c t l [��_�Ci % EFFECTIVE: l —, PLO City of Fort Worth, Texas FIERCHERTi Mayor and Council Communication BAILIFF ISMITH DATE REFERENCE SUBJECT:Audit Contract Fee With Arthur PAGE NUMBER VORY 4/10/79 C-4609 Young & Company l of 3 On May 3, 1976 (M&C C-3399), the City Council approved a five year contract with Arthur Young & Company for an annual independent audit of the City's financial records. The terms of this agreement provide for payment by the City of $38,000 for the first year (1975-76) audit, $39,000 for the second year (1976-77) audit, $40,000 for the third year (1977-78) audit and for the fee to be negotiated for the last two years. The proposed fee was calculated based on the standard rates of Arthur Young & Company as applied to commercial and industrial customers and based on the number of estimated hours compatible with the performance of an adequate and professional engagement. On August 2, 1977 (M&C C-3862) , the City Council authorized an additional $9,000 for audit services for the 1976-77 fiscal year which made the fee for that year $47,000. This increase was recommended by the City Council's Audit Committee and the staff based on a significant increase in the volume of work necessary to audit for compliance in the various grant programs of the City as well as an increase in the extent of review which must be given by an accounting firm to assure that expanded criteria for adequate disclosure have been met. In addition to the scope of audit services cited in the preceding paragraph an additional factor has increased both the audit hours and level of staff involve- ment required for Arthur Young & Company to perform an adequate and professional engagement for the 1977-78 fiscal year. 1977-78 is the first fiscal year in which the City used the new FAMIS accounting system. One of the features of this system is that many entries entered manually in the traditional debit/credit Journal entry method are now generated within the computer based on pre-programmed criteria. While there are many advantages to this new method it does require specialized audit skills and programs to extract the information necessary to perform an adequate audit. For this reason Arthur Young & Company utilized significant staff time of their computer auditor which was not anticipated by them in the original estimate of staff time upon which their fee was based. Negotiations between the Audit Committee, the City staff and Arthur Young & Company have resulted in the conclusion that an additional $9,600 is adequate compensation for these additional audit services. Beyond the audit services provided by Arthur Young & Company, either within the scope of the original agreement or the additional audit services previously described, staffing problems within the Accounting Division created a situation wherein it was necessary that the auditors assist the staff in various account- ing functions which had to be completed before actual audit work could begin. The volume of work, in relation to the staffing ]Level, required of the Account- ing staff to make closing and adjusting entries, prepare work papers and state- ments, etc., in preparation for the annual audit and annual financial report demands full involvement of the accounting staff resulting in many hours of overtime work. This demand was especially heavy this year in comparison with previous fiscal years due to the change in accounting systems which required extra staff training and development of more sophisticated techniques of DATE REFERENCE SUBJECT: Audit Contract Fee With Arthur PAGE NUMBER 4/10/79 C-4609 Young & Company 2 of 3 statement preparation. Additionally there were a number of invalid conditions which were created in the system during the initial stages of operation. These conditions had to be completely resolved prior to the audit. During the time when this staff involvement was most critical to a timely completion of the audit and preparation of the annual financial report; the Assistant Commissioner of Accounts was absent from work for two months due to a personal injury, one accountant position was vacant due to termination and a second accountant position was vacant due to the encumbent's transferring to another city division. This situation reduced the staff strength below that point where it was possible to both provide day-to-day accounting services necessary to the operation of the City and to perform that work necessary to the audit and the preparation of the annual report. Upon their arrival at the City to begin scheduled audit services for the 1977-78 fiscal year, Arthur Young & Company together with City staff evaluated the work remaining to be done against the available staff resources. Arthur Young then applied their resources assisting the City staff in finalizing all work which had to be completed prior to the actual. audit The documented hours applied to this effort by Arthur Young & Company have been thoroughly reviewed and verified by the City staff. It is the opinion of the Audit Committee and the staff that Arthur Young & Company should receive additional compensation in the amount of $27,500 for their providing basic accounting staff assistance to the City due to the absence of City staff during the time period the work was required to be accomplished. On July 18, 1978 (M&C C-4254) , the City Council authorized the award of a supplemental $25,000 contract with Peat, Marwick, Mitchell & Co. (the con- sulting firm on installation of the new accounting system) to provide tech- nical assistance to the City in reconciling and correcting the invalid con- ditions which had been created in the system during the initial periods of operation. After the more technically difficult portions of this work had been completed at a cost of $10,500, the staff evaluated the remaining work and concluded that it would be possible for the staff to finish the tasks and not expend the remaining portion of the contract. The success of this decision was dependent on the staff remaining at full strength. A signifi- cant portion of the work which was to be completed by staff is included in the accounting services which were later provided by Arthur Young & Company. Financing The $9,600 required to compensate Arthur Young & Company for additional audit services was anticipated in the adopted Annual Budget for 1978-79 and is available in the various departmental accounts which shaze in the cost of the annual audit. The cancellation of the Peat,Marwick, Mitchell & Co. contract has resulted in an increased current year revenue of $14,500 to the General Fund. It is proposed that these funds be reappropriated by means of a supplemental appropriation from increased revenues which will increase the appropriations to the General Fund non-departmental Annual Audit account by $14,500. DATE REFERENCE SUBJECT: Audit Contract Fee With Arthur PAGE NUMBER 4110179 C-4609 young & Company or 3 The remaining $13,000 required to compensate Arthur young & Company for their services is available in the Finance Department as a result of a salary savings from vacant positicnso Recommendation The Audit Committee and the staff make the following recommendations: to The City Council authorize the City Manager to pay Arthur young & Company an additional $9,600 for audit services covering the 1977-78 fiscal year; 2, The City Council authorize the City Manager to pay Arthur young & Company an additional $27,500 for the assistance provided the accounting staff in reconciling and closing the accounting records of the City for 1977-78; 3. The City Council adopt a supplemental appropriation from additional revenues increasing the appropriation in the Annual Audit account of the General Fund by $14,500; and 4. The City Council approve a $13,000 transfer of budgeted appropriations from the 1977-78 Finance Department budget to the General Fund non- departmental Annual Audit account. MCMojc SUBMITTED FOR Tj:! , , CITY MANAGER'S DISPOSITIQ Y COUNCIL: PROCESSED BY OFFICE BY: APPROVED ORIGINATING RTM NT HEAD: Judson Bailiff ADOPTED ORDINAN ` �cRIBE) DEPARTMENT CITY SECRETARY FOR ADDITIONAL INFOR ON CONTACT: YYT son Bailiff, ext. 8330 DATE