Background
The City is required by State law to have its records and accounts audited annually by an independent professional auditor and shall have an annual financial statement prepared based on the audit. The audit shall be performed by a certified public accounting (CPA) firm licensed to practice in the State of Texas. The audit firm shall also provide a Single Audit of Federal and State grants when necessary.
The objective of the ordinary audit of financial statements by the independent auditor is the expression of an opinion on the fairness with which they present, in all material respects, financial position, results of operations, and its cash flows in conformity with generally accepted accounting principles. The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. The financial statements are management's responsibility; the auditor's responsibility is to express an opinion on the financial statements.
The Financial Management Policy Statements (FMPS) direct the City Council to designate a Finance/Audit Committee. The role of the Committee is to review and guide financial policy and strategic financial issues as needed and determined by the City Manager or City Council.
The Finance/Audit Committee responsibilities related to the audit will include but not be limited to:
- Recommendation to the City Council on selection of the independent audit firm through a Request for Proposal process.
- Overview of the planning and timeline of the audit and risk assessment.
- Final audit review, results, findings, management letter as well as major audit adjustments as identified under Sarbanes-Oxley Act of 2002.
- Meet as soon as practical and appropriate after the final audit review to assess the status of issues addressed in the management letter, if warranted.
- Meet during the course of the audit regarding any major issues/concerns/findings that may arise.
In accordance with the FMPS and best practices, the City is required to solicit proposals from qualified firms to select an independent firm of certified public accountants to perform an annual audit. In accordance with the City’s FMPS, the Council Finance/Audit Committee serves as the evaluation committee for the process, ultimately charged with making a recommendation to the City Council for award of the contract. After an RFP and interview process in the spring of 2020, the Council Finance/Audit Committee recommended that the City should enter into an engagement with Weaver and Tidwell, L.L.P. for the Fiscal Year 2020 to the Fiscal Year 2024 audit cycles.
The annual budget includes funding to cover the audit. The fee structure for the five-year engagement is shown below, with the FY21 fee request consistent with the proposal.
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FY20
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FY21
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FY22
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FY23
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FY24
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Financial Statement Audit
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$130,000.00
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$132,500.00
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$135,000.00
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$137,500.00
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$140,000.00
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Single Audit (one program)
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7,500.00
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7,500.00
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8,000.00
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8,000.00
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8,500.00
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Total
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$137,500.00
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$140,000.00
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$143,000.00
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$145,500.00
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$148,500.00
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Interim field work for the Fiscal Year 2021 audit is scheduled to begin in July 2021.
With the cancelation of the July 1st Finance/Audit Committee, this item was communicated to the Finance/Audit Committee via memorandum. Consistent with last year’s selection process, the Committee recommends the City Council approve the engagement with Weaver and Tidwell, L.L.P. for professional audit services for the Fiscal Year 2021.
Recommendation
The Council Finance/Audit Committee recommends the City enter into an engagement with Weaver and Tidwell, L.L.P. for professional audit services in an amount of $140,000.00 for the fiscal year 2021. Engagement letters for subsequent year audits will be considered by City Council annually for approval.