TITLE
Title
APPROVE EXTERNAL AUDIT CONTRACTS - CHERRY BEKAERT, LLP
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SPONSOR
Sponsor
Harley Will
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BACKGROUND
Background
As a result of a request for proposals (RFP) process, Cherry Bekaert, LLP. was awarded the external audit contract by the Board of County Commissioners on April 3, 2008 for Guilford County. The RFP process was for fiscal years 2008 through 2010 at costs ranging from $80,750 to $89,250 with a provision to extend the term of engagement to cover additional fiscal years. The Board approved a three-year extension for fiscal years 2011 - 2013, at a cost of $84,000 each year with an additional two-year option at the base amount, plus the lessor of 1% or the consumer price index rate (CPI), as approved by the Audit Committee on 1/13/11. On 2/20/14, the Audit Committee approved exercising the two-year option for fiscal years 2014 and 2015 in the amounts of $84,840 and $85,519, respectively. On January 21, 2016, the Board approved a three-year extension of the contract with Cherry Bekaert, LLP for fiscal years 2016 - 2018 with the FY2016 base amount of $85,500 and annual increases of the lesser of the CPI (Consumer Price Index) increase, or 1%.
However, due to changes in audit requirements recently put forward by the Office of the State Auditor (OSA), Cherry Bekeart, LLP. has proposed an annual audit fee of $91,000 to complete the County’s annual financial statement audit. One change will include an increase in the number of programs that will be need to be audited to meet the requirement to test programs that represent 50% of the federal funds received by the county. In previous audits major Federal programs were defined as those with of $3,000,000 or more. The changes made by the OSA will now lower the County’s threshold defining major Federal programs to approximately $750,000. This means that more programs will now have to be audited as major Federal program to meet the County’s Single Audit requirements.
In addition to the annual audit services covered under the regular contract we have been informed that there will need to be two additional engagement letters to complete all of the required reporting for FY 2018.
The Office of the State Auditor notified our auditors that the direct benefit payments paid by the State would no longer be included in the County's federal single audit report. However, our auditors would still have to perform audit procedures on County records under the direction of the Office of the State Auditor so that the requirements for the federal single audit would be satisfied as part of the State's single audit reporting. The cost of these procedures will have to be paid by the County as part of its annual audit costs in addition to the annual external audit contract. Our auditor, Cherry Bekaert, LLP, has agreed to provide these services for a lump sum of $10,000 which will be covered under a discrete contract and a separate engagement letter.
The Local Government Commission has notified the Finance Department that we are one of 48 entities that were selected for special audit procedures to ensure that the Local Government Employee's Retirement System pension census data can be relied on by actuaries in preparing pension calculations. These procedures are performed once every four years and are covered under a separate contract and engagement letter with our auditor, Cherry Bekaert, LLP. The Finance Department has anticipate this cyclical audit funding need in its Fiscal Year 2018 budget. The cost to perform these separate agreed upon procedures is being offered by our auditor at $6,000.
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BUDGET IMPACT
Budget Impact
Funds for the FY2018 proposed amount are included in the FY2018 budget. NO ADDITIONAL COUNTY FUNDS REQUIRED.
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REQUESTED ACTION
Requested Action
Approve the annual FY 2018 external audit contract, in substantial form, with Cherry Bekaert, LLP in the amount of $91,000 as required by the Local Government Commission; AND Approve, in substantial form, the contract with Cherry Bekaert, LLP to perform the Office of State Auditor directed procedures on direct benefit payment programs for FY 2018 state single audit reporting in the amount of $10,000; AND Approve, in substantial for the contract with Cherry Bekaert, LLP to perform the Local Government Commission's defined agreed upon procedures on pensions data for FY 2018 in the amount of $6,000
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