Report to: General Committee                                               Report Date: September 17, 2007

 

 

SUBJECT:                          External Audit Services, RFP 051-R-07

PREPARED BY:               Steven Sydij, Senior Construction Buyer

                                            Raj Raman, Manager of Accounting and Expenditure Control

 

RECOMMENDATION:

THAT the report entitled “External Audit Services, RFP 051-R-07” be received;

 

AND THAT the contract for External Audit Services, RFP 051-R-07 be awarded to the highest ranked, third lowest priced proponent KPMG LLP Chartered Accountants for a five year period, commencing with the 2007 fiscal year end, for a total award of $682,000 exclusive of GST and disbursements;

 

AND THAT Staff be authorized to increase the contract value for years 2, 3, 4 & 5 up to a maximum of 2% per year;

 

AND THAT Council request that Markham District Energy (MDE), Markham Energy Corporation, Varley-McKay Art Foundation of Markham and Innovation Synergy Centre in Markham (ISCM) award their audit services to KPMG as provided for within the proposal;

 

AND THAT the award for the 2007 audit be funded from the respective 2007 Operating budgets, with any shortfall being absorbed in 2007

 

AND THAT the 2008 to 2011 operating budgets be adjusted if required to include the increases as reflected in the KPMG proposal;

 

AND THAT Staff be authorized and directed to do all things necessary to give effect to this resolution.

 

EXECUTIVE SUMMARY:

Not applicable

 

1. Purpose                     2. Background                      3. Discussion                        4. Financial        

 

5. Others (Environmental, Accessibility, Engage 21st, Affected Units)             6. Attachment(s)

 

PURPOSE:

The purpose of this report is to award the contract for External Auditing Services RFP 051-R-07.

 

BACKGROUND:

On June 27, 2006 Council directed staff to initiate an RFP in 2007 to award a five year contract for External Auditing Services. On May 16, 2007 a Request for Proposal (RFP) 051-R-07 was issued in accordance with Purchasing By-Law 2004-341 for External Audit Services. Subsequently 2 addenda were issued (one pre & one post closing) and the RFP closed on May 30, 2007. The submissions were evaluated by an Evaluation Team consisting of 3 staff from Corporate Services Commission with Purchasing staff acting as facilitator and verifying for accuracy and process compliance. Team members first reviewed the submissions independently and then met as a group and scoring points were assigned in accordance with pre-established criteria. After the initial evaluation stage, there was less than three points separating the top three ranked proponents (Grant Thornton, Deloitte and KPMG) and they were invited for an interview.

 

The three highest ranked proponents were asked to prepare and make presentation on two topics which were distributed the week of July 23, 2007. Additional pre-planned questions were asked at the interviews which took place on July 31, 2007.

 

Mayor Frank Scarpitti, Deputy Mayor Jim Jones, Chair of the Finance Committee, Councillor Joe Virgilio and the CAO, John Livey were invited to attend and participate in the interview process but they were not involved in any of the scoring.

 

The evaluation team has met on several occasions and came to a unanimous decision at the end of the interview process.

 

BID INFORMATION:

 

Advertised

ETN

Bids closed on

May 16,2007

Number picking up bid documents

6

Number responding to bid

4

 

SCORING INFORMATION:

 

Bidders

Total 5 Year Pricing

Rank

Scoring

KPMG

$682,000

1

111.59  *

Deloitte

$657,000

2

109.97  *

Grant Thornton

$525,000

3

108.75  *

BDO

$907,010

4

63.00

* Scores include the additional interview marks.

 

 

KPMG PRICING – 2006 Price Comparison;

 

Item

RFP – 2007 Pricing

2006 Pricing

1)      The Corporation of the Town of Markham – consolidated including

2)      The Corporation of the Town of Markham Trust Fund and the

3)      Gas Tax Audit.

$80,800

$79,300

4)      Town of Markham Public Library Board

$8,500

$8,500

5)      Old Markham Village and

6)      Unionville Business Improvement Areas

$3,600

$2,600

7)      Markham Enterprises Corporation and

8)      Markham District Energy (MDE)

$31,500

$24,800

9)      Varley-McKay Art Foundation of Markham

$3,500

$4,000

10)   Innovation Synergy Centre in Markham  (ISCM)

$5,000

$2,000

11)   Don Cousens Charitable Trust

$0

$0

12)   Museum Foundation

$3,500

$0

 

 

OPTIONS/ DISCUSSION:

The Request for Proposal (RFP) for External Auditing Services was issued in accordance with the Purchasing By-Law 2004-341. The document was picked up by 6 proponents and 4 proponents submitted bids. The top three proponents were invited for an interview and were asked to make a presentation that included the following topics:

  1. The firms knowledge and experience
  2. Value added services
  3. Community involvement

They were further requested to provide clarification on the firms’ expertise and experience in the Public Sector Accounting Board (PSAB) mandated Tangible Capital Assets (TCA) reporting and how they intended to assist the Town in the process of achieving the mandated requirement. Further a set of questions relating to audit staff continuity, flexibility in audit planning, value added services and experience in TCA were asked. Finally a discussion on the proponents’ intended process in assisting the Town to comply with the requirements of PSAB was held.

 

While there were less than three points separating the proponents at the initial evaluation stage, the scoring after the interview stage revealed that KPMG was the highest rank proponent. KPMG’s proposal included 150 hours of “no-additional-charge” consulting services over a three year period for the PSAB Tangible Capital Asset implementation process, a value add equivalent of between $50,000 to $70,000 (based on a range from Manager to Partner rates for 150 hours). The submissions from BDO, Grant Thornton and Deloitte did not include “no-additional-charge” hours.

 

FINANCIAL CONSIDERATIONS AND TEMPLATE:

Over the term of the five year contract KPMG submitted the lowest maximum fixed yearly price increase of 2% with Grant Thornton submitting 3% and Deloitte submission was based on yearly CPI increase as published by Stats Canada.

 

ENVIRONMENTAL CONSIDERATIONS: Not Applicable

 

ACCESSIBILITY CONSIDERATIONS: Not Applicable.

 

ENGAGE 21ST CONSIDERATIONS: Not Applicable

 

BUSINESS UNITS CONSULTED AND AFFECTED: Not Applicable.

 

 

RECOMMENDED

                            BY:    ________________________          ________________________

                                      Barb Cribbett,                                    Andy Taylor,

                                      Treasurer                                            Commissioner Corporate Services

 

ATTACHMENTS:

Not Applicable