HomeMy WebLinkAboutRES NO 040-05RESOLUTION NO. 040-05
A RESOLUTION OF THE COUNCIL OF THE CITY OF
BAKERSFIELD ADOPTING COUNCIL POLICY ON AUDIT
REPORTING PRACTICES AND ROTATION OF AUDIT
FIRMS.
WHEREAS, the Budget and Finance Committee of the Bakersfield City Council
has met and considered the City's policy on outside auditing firms; and
WHEREAS, the Government Finance Officers' Association (GFOA) is a
nationally recognized association of cities and counties throughout the United States;
and
WHEREAS, GFOA has long recommended that state and local government
entities obtain independent audits of their financial statements performed in accordance
with appropriate professional auditing standards; and
WHEREAS, GFOA believes it is a good practice to rotate auditors approximately
every five (5) years; and
WHEREAS, the City of Bakersfield wishes to guarantee that future audits
continue to reflect audits of the highest professional quality.
NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of
Bakersfield as follows:
The foregoing recitals are true and correct and incorporated herein by
reference.
The attached "Council Policy StatementJlndependent Auditing Services for
Annual Financial Audit," attached hereto as Exhibit "A," is incorporated
by reference herein as the City's Policy on audit reporting practices and
rotation of audit firms.
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I HEREBY CERTIFY that the foregoing Resolution was passed and adopted by
the Council of the City of Bakersfield at a regular meeting thereof held on FFR ~ ~ ?_00§
by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
COUNCILMEMBER COUCH, CARSON, BENHAM, MAGGARD, HANSON, SULLIVAN, SCRIVNER
COUNCILMEMBER
COUNCILMEMBER
APPROVED
FEB 2 3 2OO5
CITY CLERK and Ex Officio ~lerk of the
Council of the City of Bakersfield
APPROVED AS TO FORM:
VIRGINIA GENNARO
City Attorney
By
ROBERT M, SHER~-~
Deputy City Attorney
February 14, 2005
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Council Policy Statement
Independent Auditing Services for Annual Financial Audit
Background - The Government Finance Officers Association (GFOA) has long
recommended that state and local governmental entities obtain independent
audits of their financial statements performed in accordance with the appropriate
professional auditing standards. Properly performed audits play a vital role in the
public sector by helping to preserve the integrity of the public finance functions
and by maintaining citizens' confidence in their elected leaders.
It is the City Council's desire to incorporate the recommendations of GFOA into a
Council Policy regarding procurement of annual financial auditing services.
Recommendations - The City Council makes the following policy statements
recommendations regarding the selection of auditing services:
The scope of the independent audit should encompass not only the fair
presentation of the basic financial statements, but also the fair
presentation of the financial statements of individual funds and
component units. The cost of extending full audit coverage to the
financial statements of individual funds and component units can be
justified by the additional degree of assurance provided.
The City of Bakersfield shall require in their audit contracts that the
auditors of their financial statements conform to the independence
standard promulgated in the General Accounting Office's Government
Auditing Standards even for audit engagements that are not otherwise
subject to generally accepted government auditing standards.
The City of Bakersfield shall enter into multiyear agreements not to
exceed five years in duration when obtaining the services of
independent auditors. Such multiyear agreements can take a variety of
different forms (e.g., a series of single-year contracts), consistent with
applicable legal requirements. Such agreements allow for greater
continuity and help to minimize the potential for disruption in
connection with the independent audit. Multiyear agreements can also
help to reduce audit costs by allowing auditors to recover certain
"startup" costs over several years, rather than over a single year.
The City of Bakersfield shall undertake a full-scale competitive process
for the selection of independent auditors at the end of the term of each
audit contract, consistent with applicable legal requirements. In order
to enhance auditor independence, the City shall require a change in
auditors no less than once every five years. The current auditor shall
be excluded from the competitive process for the upcoming audit term.
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The City may desire on occasion to hire an independent auditor to
perform certain types of non-audit services for the City. Any non-audit
services that require Council approval per Bakersfield Municipal Code
section 3.20.105 C (which currently reads "amounts over $25,000)
should first be reviewed by the budget and finance committee.
Furthermore, The City should routinely explore the possibility of
alternative service providers before making a decision to engage their
independent auditors to perform significant non-audit services.
The audit procurement process should be structured so that the
principal factor in the selection of an independent auditor is the
auditor's ability to perform a quality audit. In no case should price be
allowed to serve as the sole criterion for the selection of an
independent auditor.
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