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Home My WebLink AboutCC AG PKT 2003-04-14 #M AGENDA REPORT / 2/0 DATE April 14, 2003 a l TO Honorable Mayor and City Council THRU John B Bahorski, City Manager FROM Pamela Arends -King Director of Administrative Services /Treasurer SUBJECT Adjustment to Annual Audit Contract for the Implementation of GASB 34 SUMMARY OF REQUEST Staff requests Council approve FY 2003/2004 budget amendment 04 -04 increasing the cost of the annual audit contract due to the implementation of Governmental Accounting Standards Board (GASB) 34 BACKGROUND Effective with the 2002 -2003 fiscal year the City and the Redevelopment Agency will be required to implement the new reporting requirements of GASB 34 This implementation will require a significant increase in the amount of time the audit firm Lance Soll & Lunghard will spend to complete the mandatory work needed to issue an opinion The increase in fees based on implementation of GASB 34 for other municipalities Total increase in the annual contract is $5,000 FISCAL IMPACT The increase fees for the annual audit will be applied to the General Fund and the Redevelopment Agency Total increase to the General Fund will be $4 000, which will decrease the estimated FY 2003/04 ending undesignated general fund balance from $4,424,387 to $4,420,387 Total increase to the Redevelopment Agency Riverfront Project fund will be $1,000, which will decrease the estimated FY 2003/04 ending undesignated Riverfront Project undesignated fund balance from $19 096 to $18 096 RECOMMENDATION Staff recommends Council approve FY 2003/04 budget amendment (04 -04) increasing the annual audit fees Agenda Item / 4Z4 mela Arend -King �` Director of • oili, :f inistrativ Services /Treasurer John B R ahorski City M..'lager 2 03 North Brea Boulevard La n ce Suite 203 (f SO�� & Brea CA 9 2821 4056 Lunghard (714) 672 0022 LLP Fax (714) 672 0331 1 � CERTIFIED PUBLIC ACCOUNTANTS www Islcpas coin A 1949 -1999 Brandon W Burrows Donald L Parker Michael K Chu David E Hale A Profession 1 Corporation Donald G Slater Richard K Kikuchi February 6, 2003 Retired Robert C Lance 1914 -1994 Richard C Soli Fred J Lunghard Jr 192 &1999 Ms Pam King City of Seal Beach 211 Eight Street Seal Beach, CA 90740 -6379 Regarding Proposed Fees for Conversion of Financial Statements to GASB 34 Format Dear Ms King Effective with the 2002 -2003 reporting year, the City and redevelopment agency will be required to implement the new reporting requirements of the Governmental Accounting Standards Board Statement Number 34 The terms of our contract specify that we are to prepare the annual financial statements, however, the conversion of the existing financial statements to the new format was not contemplated in our onginal contact Based upon our experience with existing clients that have converted to the new financial statement formats, our time at current contract rates would be approximately $8,000 - $9,000 to complete this conversion Additionally, future costs of approximately $2,000 for updating disclosures, etc have also been required To aid our existing clientele in accomplishing this conversion, we are suggesting increases to our fees of $3,500 - $4,000 with additional future costs of $1,000 for additional continuing disclosure work I sincerely hope that this increase will be acceptable to the City As you know, we do not increase our fees unless mayor unanticipated work is required Unfortunately, the implementation of GASB Statement 34 does fall into this category If this proposal is acceptable to the City, please sign and return a copy of this letter to acknowledge your agreement with this change Very truly yours, --/cW6 IGP41. DONALD L P A R, CPA PARTNER MEMBER CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS Lance Soil s Lunghard LLP CERTIFIED PUBLIC ACCOUNTANTS Ms Pamela King City of Seal Beach Amendment to Contract — GASB 34 Conversion February 6, 2003 Page 2 RESPONSE The amendment of fees specified m the letter above is accepted by the City of Seal Beach This acceptance modifies only fees due ACCOUNTANTS ander our agreement with Lance, Soll & Lunghard, CPAs All other sections of our agreement shall remain in force By Title Date