C7F-Accept Recommendation Auditing Services To Examine City�s Financial StatemenCOMMISSION ITEM SUMMARY
Condensed Title:
A Resolution Accepting The City Manager's Recommendation Pertaining To The Ranking Of Firms For
Auditing Services, Authorizing The Administration To Enter Into Negotiations With The Top-Ranked Firm,
McGiadrey, LLP, And If Unsuccessful, With The Second-Ranked Firm, Cherry, Bekaert & Holland, LLP,
And Authorizing The Mayor And City Clerk To Execute An Agreement For Auditing Services.
Ke Intended Outcome Su orted:
Improve the City's Overall Financial Health and Maintain Overall Bond Rating
Issue: I Shall the Commission Adopt the Resolution?
Item Summary/Recommendation:
The purpose of the audit is to examine the City's Basic Financial Statements included in the City's
Comprehensive Annual Financial Report (CAFR). The engagement shall also include the Single Audit,
PSF, VCA, Convention Center, BBC, CT, and SNP audits, for a term of up to five (5) years.
The engagement will be for five (5) fiscal years ending September 30, 2016. Additional years of the
engagement or additional auditing services would be subject to the approval of the Audit Committee and
confirmation by the City Commission annually.
On March 21, 2012, the City Commission authorized the issuance of an RFP to solicit proposals for
auditing services for the City of Miami Beach. RFP No. 34-11/12 was issued on April 20, 2012, with
notifications sent to over 35 firms. This outreach resulted in the receipt of five (5) proposals from Cherry,
Bekaert & Holland, LLP; Crowe Horwath, LLP.; Keefe, McCullough & Co., LLP; Marcum, LLP; and
McGiadrey, LLP.
A resolution was passed at the June 6, 2012, Commission meeting selecting Crowe Horwath, LLP to audit
the processes of certain regulatory departments and divisions in the City, and therefore could no longer be
considered for this project, as this would create a conflict of interest.
An Evaluation Committee appointed by the City Manager reviewed and discussed the proposals, then
scored and ranked the four (4) remaining proposals. Based on the published evaluation criteria, the
Committee unanimously ranked McGiadrey, LLP. as the top-ranked firm. The Committee further ranked
Cherry, Bekaert & Holland, LLP. as the second-ranked firm.
ADOPT THE RESOLUTION
19, 2012: Recommended the issuance of an RFP
Source of Amount Account Approved
Funds: Professional Services Accounts:
/1 1 $168,727.39 011.9310.000312
~ 2 18,550.30 440.0442.000312
I 3 20,867.80 168.1985.000312
4 20,867.80 480.0461.000312
5 18,550.30 160.4300.000312
OBPI Total $247,563.59
Financial Impact Summary: Amounts are included in the FY2012/2013 proposed operating budget.
City Clerk's Office Legislative Tracking:
jRJA __ _
Si n-Offs:
Department Director
GE POW
T:\AGENDA\2012\7 -18-12\Auditing Services Summary.doc
MtAMIBEACH 205
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AGENDA ITEM _C_· -'-7...;...j::,---
DATE 7-fff-/2-
MIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
TO:
FROM:
DATE:
SUBJECT
COMMISSION MEMORANDUM
Mayor Matti Herrera Bower and Members of the City Commis ·on
Kathie G. Brooks, Interim City Manager~ A
July18,2012 ~
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE
CITY MANAGER PERTAINING TO THE RANKING OF FIRMS, PURSUANT
TO REQUEST FOR PROPOSALS (RFP) NO. 34-11/12 FOR AUDITING
SERVICES TO EXAMINE THE CITY'S BASIC FINANCIAL STATEMENTS
INCLUDED IN THE CITY'S COMPREHENSIVE ANNUAL FINANCIAL
REPORT (CAFR), FEDERAL GRANT PROGRAMS AND STATE PROJECTS
(OMB A-133 SINGLE AUDIT), THE MIAMI BEACH REDEVELOPMENT
AGENCY'S BASIC FINANCIAL STATEMENTS (RDA), THE PARKING
SYSTEMS FUND'S (PSF) FINANCIAL STATEMENTS, THE MIAMI BEACH
VISITOR AND CONVENTION AUTHORITY'S (VCA) FINANCIAL
STATEMENTS, THE MIAMI BEACH CONVENTION CENTER FINANCIAL
STATEMENTS, THE BUILDING BETTER COMMUNITIES BOND PROGRAM
(BBC) THE CHILDREN TRUST GRANT PROGRAM (CT), AND THE SAFE
NEIGHBORHOOD PARKS AND BOND PROGRAM (SNP); AUTHORIZING
THE ADMINISTRATION TO ENTER INTO NEGOTIATIONS WITH THE TOP-
RANKED FIRM, MCGLADREY, LLP., AND SHOULD THE ADMINISTRATION
NOT BE ABLE TO NEGOTIATE AN AGREEMENT WITH THE TOP-RANKED
FIRM, AUTHORIZING THE ADMINISTRATION TO NEGOTIATE WITH THE
SECOND-RANKED FIRM, CHERRY, BEKAERT & HOLLAND, LLP.; AND
FURTHER AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE AN
AGREEMENT UPON THE COMPLETION OF SUCCESSFUL NEGOTIATIONS
BY THE ADMINISTRATION, WITH SUCH AGREEMENT HAVING A FIVE (5)
YEAR TERM, THROUGH AND INCLUDING THE AUDIT OF FISCAL YEAR
ENDING SEPTEMBER 30, 2016, WITH ADDITIONAL YEARS OF THE
ENGAGEMENT TO BE SUBJECT TO THE AUDIT COMMITTEE AND
CONFIRMATION BY THE CITY COMMISSION ANNUALLY.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
KEY INTENDED OUTCOME
Improve the City's Overall Financial Health and Maintain Overall Bond Rating
FUNDING AND ESTIMATED AMOUNT
Fees are not to exceed $250,000 for 2012 audit fees to be paid in 2013.
Amounts are included in the FY2012/2013 proposed Operating Budget.
Estimated
206
City Commission Memorandum -Auditing Services
July 18, 2012
Page 2 of5
Service
Audit of City's Basic Financial Statement (CAFR)
OMB A-133 Single Audits
Management Letter in Accordance with the Rules of
the Auditor General of the State of Florida
Safe Neighborhood Parks Single Audit (SNP)
Building Better Communities
Children's Trust
Miami Beach Redevelopment Agency (RDA)
Miami Beach Parking Systems Funds (PSF)
Miami Beach Convention Center and Jackie
Gleason Theater of the Performing Arts, as
Managed by Global Spectrum
Miami Beach Visitor and Convention Authority (VCA)
ANALYSIS/BACKGROUND
Funding Source Expenditure
011.9310.000312 $115,927.53
011.9310.000312 23,185.30
011.9310.000312
011.9310.000312
011.9310.000312
011.9310.000312
168.1985.000312
480.0461.000312
440.0442.000312
160.4300.000312
2,319.56
9,270.00
8,240.00
9,785.00
20,867.80
20,867.80
18,550.30
18.550.30
$247,563.59
The purpose of the audit is to examine the City's Basic Financial Statements included in
the City's Comprehensive Annual Financial Report (CAFR). The engagement shall also
include the Single Audit, PSF, VCA, Convention Center, BBC, CT and SNP audits of the
year ended September 30, 2012, through and including the year ended September 30,
2016. Additional years of the engagement would be subject to the approval of the Audit
Committee and confirmation by the City Commission annually.
On July 12, 2006, the Mayor and City Commission authorized the Administration to
execute an Agreement, pursuant to RFP No. 23-05/06, with McGiadrey & Pullen for
Auditing Services. The Agreement term was for five (5) years, commencing from the City
Fiscal Year ending on September 30, 2006, and ending on September 30, 2010, with
renewal options for five (5) additional one (1) year terms, at the sole discretion of the City.
A resolution was approved by the Mayor and Commission at its September 14, 2011
meeting, to exercise the first year renewal option for the audit of fiscal ending on
September 30, 2011.
The Mayor and City Commission at its March 21, 2012, meeting authorized the
Administration to issue an RFP to examine the City's Basic Financial Statements included
in the City's Comprehensive Annual Financial Report (CAFR). The engagement shall also
include the Single Audit, PSF, VCA, Convention Center, BBC, CT, and SNP audits, for a
term of five (5) years with additional years subject to the approval of the Audit Committee
and confirmation by the City Commission.
RFP PROCESS
RFP No. 34-11/12 was issued on April20, 2012, and the Procurement Division e-mailed,
as well as uploaded the RFP to Bid Net, sending notifications to over 35 firms. A non-
mandatory pre-proposal meeting to provide information and respond to questions from
prospective proposers was held on May 1, 2012. This outreach resulted in the receipt of
five (5) proposals on the due date of May 18, 2012, from the following firms:
• Cherry, Bekaert & Holland, LLP.
• Crowe Horwath, LLP.
• Keefe, McCullough & Co., LLP.
• Marcum, LLP.
• McGiadrey, LLP.
207
City Commission Memorandum -Auditing Services
July 18, 2012
Page3 of5
On June 7, 2012, the City Manager via Letter to Commission No. 154-2012 appointed an
Evaluation Committee (the "Committee"}, consisting of the following individuals:
Marcella Paz-Cohen
Larry Herrup
Kathaleen Smarsh
James Sutter
Allison Williams
Alternates:
Georgie Echert
Mark Coolidge
Melvin Brazer
Resident and Leadership Academy Graduate
Resident, CPA, and Budget Advisory Committee Member
Resident and Leadership Academy Graduate
Internal Auditor, CMB
Chief Accountant, CMB
Assistant Finance Director, CMB
Senior Auditor, CMB
Resident and Leadership Academy Graduate
The Committee convened on June 20, 2012, and was provided with an overview of the
project, information relative to the City's Cone of Silence Ordinance, and recent changes
to the Government in the Sunshine Law. Larry Herrup was nominated as the Committee
chairperson.
The chairperson requested Patricia D. Walker, Chief Financial Officer for the City, to
provide an overview to the Committee on the current relationship with McGiadrey, LLP,
and the perception of the strengths of other proposers. The overall feedback from the
Finance Department pursuant to McGiadrey's performance is positive.
The Committee was subsequently informed that a resolution was passed at the June 6,
2012, Commission meeting selecting Crowe Horwath, LLP, to audit the processes of
certain regulatory departments and divisions in the City, and therefore could no longer be
considered for this project, as this would create a conflict of interest.
The Committee was instructed to score and rank the remaining four (4) proposals
pursuant to the evaluation criteria established in the RFP, which was as follows, for a total
potential of 1 00 points:
• Firm's experience in Auditing Services-20 points
• Qualifications of Project Team-20 points
• Methodology and approach - 1 0 points
• Previous Similar Projects -15 points
• References Provided by Prior Clients -15 points
• Fees-20 points
Additional points were allocated, if applicable, pursuant to, the following ordinances:
LOCAL PREFERENCE: The Evaluation Committee will assign an additional five (5)
points to Proposers, which are, or include as part of their proposal team, a Miami Beach-
based vendor as defined in the City's Local Preference Ordinance.
VETERANS PREFERENCE: The Evaluation Committee will assign an additional five (5)
points to Proposers, which are, or include as part of their proposal team, a small business
concern owned and controlled by a veteran(s) or a service-disabled veteran business
enterprise, as defined in the City's Veterans Preference Ordinance.
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City Commission Memorandum -Auditing Services
July 18, 2012
Page4 of5
The Committee discussed the proposals and proceeded to score and rank as follows:
Herrup Smarsh Sutter Williams
Total
Ranking
of Firm
5
19
The Committee unanimously ranked McGiadrey, LLP as the top-ranked firm. Also,
although tied with Marcum, LLP for a total score of thirteen (13), Cherry, Bekaert &
Holland, LLP received the majority of second place scores, therefore the Committee
passed a motion to rank McGiadrey as the top-ranked and Cherry, Bekaert & Holland as
the second-ranked firms.
As Committee chairperson, Larry Herrup articulated that he would recommend changing
the Engagement Partner periodically for ongoing business between the City and
McGiadrey, so as to maintain objectivity.
McGiadrey has been the incumbent auditor for the City for the past six (6) years. There
have been no issues with the performance of the firm relative to audits performed for
Miami Beach. The references provided on behalf of the firm from their other clients were
very positive.
Nationally, McGiadrey provides services to over 2, 700 public sector clients, including 600
government clients. Locally, the public sector is the largest industry group of the
Southeast practice, serving over 200 entities in Florida.
Cherry, Bekaert & Holland, LLP was established in 1947 and is one of the largest CPA
firms headquartered in the Southeast. The firm has offices in six states between Florida
and Virginia, with a staff of over 750 people. The references provided on behalf of the
firm from their clients were very positive.
CONCLUSION
The Administration recommends that the Mayor and City Commission approve the
attached resolution, which accepts the recommendation of the City Manager pertaining to
the ranking of firms pursuant to Request for Proposals (RFP) No. 34-10/11 for Auditing
Services To Examine The City's Basic Financial Statements Included In The City's
Comprehensive Annual Financial Report (CAFR), Federal Grant Programs And State
Projects (OMB A-133 Single Audit), The Miami Beach Redevelopment Agency's Basic
Financial Statements (RDA), The Parking Systems Fund's (PSF) Financial Statements,
The Miami Beach Visitor And Convention Authority's (VCA) Financial Statements, The
Miami Beach Convention Center Financial Statements, The Building Better Communities
Bond Program (BBC) The Children Trust Grant Program (CT), And The Safe
Neighborhood Parks And Bond Program (SNP), and authorizes the Administration to
enter into negotiations with the top-ranked firm, McGiadrey, LLP., and should the
Administration not be able to negotiate an agreement with the top-ranked firm, authorizing
209
City Commission Memorandum -Auditing Services
July 18, 2012
Page 5 of5
the Administration to negotiate with the second-ranked firm, Cherry, Bekaert & Holland,
LLP.; and further authorizes the Mayor and City Clerk to execute an agreement upon the
completion of successful negotiations by the Administration, with such agreement having
a five (5) year term, through and including the audit of fiscal year ending September 30,
2016 with additional years of the engagement subject to the approval of the Audit
Committee and confirmation by the City Commission annually.
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210
RESOLUTION NO.------
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE CITY MANAGER
PERTAINING TO THE RANKING OF FIRMS, PURSUANT TO REQUEST FOR
PROPOSALS (RFP) NO. 34-11/12 FOR AUDITING SERVICES TO EXAMINE THE
CITY'S BASIC FINANCIAL STATEMENTS INCLUDED IN THE CITY'S
COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR), FEDERAL GRANT
PROGRAMS AND STATE PROJECTS (OMB A-133 SINGLE AUDIT), THE MIAMI
BEACH REDEVELOPMENT AGENCY'S BASIC FINANCIAL STATEMENTS (RDA), THE
PARKING SYSTEMS FUND'S (PSF) FINANCIAL STATEMENTS, THE MIAMI BEACH
VISITOR AND CONVENTION AUTHORITY'S (VCA) FINANCIAL STATEMENTS, THE
MIAMI BEACH CONVENTION CENTER FINANCIAL STATEMENTS, THE BUILDING
BETTER COMMUNITIES BOND PROGRAM (BBC)1 THE CHILDREN TRUST GRANT
PROGRAM (CT), AND THE SAFE NEIGHBORHOOD PARKS AND BOND PROGRAM
(SNP); AUTHORIZING THE ADMINISTRATION TO ENTER INTO NEGOTIATIONS WITH
THE TOP-RANKED FIRM, MCGLADREY, LLP., AND SHOULD THE ADMINISTRATION
NOT BE ABLE TO NEGOTIATE AN AGREEMENT WITH THE TOP-RANKED FIRM,
AUTHORIZING THE ADMINISTRATION TO NEGOTIATE WITH THE SECOND-RANKED
FIRM, CHERRY, BEKAERT & HOLLAND, LLP.; AND FURTHER AUTHORIZING THE
MAYOR AND CITY CLERK TO EXECUTE AN AGREEMENT UPON THE COMPLETION
OF SUCCESSFUL NEGOTIATIONS BY THE ADMINISTRATION, WITH SUCH
AGREEMENT HAVING A FIVE (5) YEAR TERM, THROUGH AND INCLUDING THE
AUDIT OF FISCAL YEAR ENDING SEPTEMBER 30, 2016, WITH ADDITIONAL YEARS
OF THE ENGAGEMENT TO BE SUBJECT TO THE AUDIT COMMITTEE AND
CONFIRMATION BY THE CITY COMMISSION ANNUALLY.
WHEREAS, on March 21, 2012, the Mayor and City Commission at its March 21, 2012,
meeting authorized the Administration to issue an RFP to examine the City's Basic Financial
Statements included in the City's Comprehensive Annual Financial Report (CAFR), whereby the
engagement shall also include the Single Audit, PSF, VCA, Convention Center, BBC, CT, and SNP
audits, for a term of up to five (5) years (to be determined at the option of the City); and
WHEREAS, on April20, 2012, RFP No. 34-11/12 was issued and notices were sent to
over 35 firms; and
WHEREAS, on the specified due date of May 18,2012, the Procurement Division received
responses from Cherry, Bekaert & Holland, LLP.; Crowe Horwath, LLP.; Keefe, McCullough & Co.,
LLP.; Marcum, LLP.; and McGiadrey, LLP.; and
WHEREAS on June 7, 2012, the City Manager via Letter to Commission No. 154-2012
appointed an Evaluation Committee (the "Committee"), consisting of the following individuals:
Marcella Paz-Cohen, Resident and Leadership Academy Graduate;
Larry Herrup, Resident, CPA, and Budget Advisory Committee Member;
Kathaleen Smarsh, Resident and Leadership Academy Graduate;
James Sutter, Internal Auditor, CMB;
Allison Williams, Chief Accountant, CMB; and
WHEREAS, the Committee convened on June 20, 2012, and was provided with an
overview of the project, information relative to the City's Cone of Silence Ordinance, and recent
211
changes to the Government in the Sunshine Law; and
WHEREAS, the Committee was subsequently informed that a Resolution was passed at
the June 6, 2012, Commission meeting, selecting Crowe Horwath, LLP. to audit the processes of
certain regulatory departments and divisions in the City, and therefore could no longer be
considered for this project, as this would create a conflict of interest; and
WHEREAS, the Committee proceeded to score and rank the remaining four (4) proposals
pursuant to the evaluation criteria established in the RFP, which was as follows, for a total potential
of 1 00 points:
• Firm's experience in Auditing Services-20 points;
• Qualifications of Project Team-20 points;
• Methodology and approach - 1 0 points;
• Previous Similar Projects -15 points;
• References Provided by Prior Clients -15 points;
• Fees -20 points; and
WHEREAS, the Committee unanimously ranked McGiadrey, LLP. as the top-ranked firm,
and further agreed to the ranking of Cherry, Bekaert & Holland, LLP as the second-ranked firm; and
WHEREAS, the City Manager concurs with the recommendation.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND THE CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission
hereby accept the recommendation of the City Manager pertaining to the ranking of proposals
pursuant to Request for Proposals (RFP) No. 34-11/12 For Auditing Services To Examine The City's
Basic Financial Statements Included In The City's Comprehensive Annual Financial Report (CAFR),
Federal Grant Programs And State Projects (OMS A-133 Single Audit), The Miami Beach
Redevelopment Agency's Basic Financial Statements (RDA), The Parking Systems Fund's (PSF)
Financial Statements, The Miami Beach Visitor And Convention Authority's (VCA) Financial
Statements, The Miami Beach Convention Center Financial Statements, The Building Better
Communities Bond Program (BBC) The Children Trust Grant Program (CT), And The Safe
Neighborhood Parks And Bond Program (SNP); authorize the administration to enter into
negotiations with the top-ranked firm, McGiadrey, LLP .; and should the administration not be able to
negotiate an agreement with the top-ranked firm, authorize the administration to negotiate with the
second-ranked firm, Cherry, Bekaert & Holland, LLP.; and further authorize the Mayor and City Clerk
to execute an agreement upon the completion of successful negotiations by the Administration, with
such agreement having a five (5) year term, through and including the audit of fiscal year ending
2016, with additional years of the engagement to be subject to approval by the Audit Committee and
confirmation by the City Commission annually.
PASSED AND ADOPTED this ___ day of-------'' 2012.
ATTEST:
Rafael E. Granado, City Clerk
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212
Matti Herrera Bowe~~8VED AS TO
FORM & LANGUAGE
& Ffl~ E CUTION