by Mike Sharkey
Staff Writer
City Council Auditor Kirk Sherman asked the Council Finance Committee to consider renewing the contract with outside auditor Ernst & Young for another two years. Although the Committee can’t officially approve the request — that requires full Council approval, something Sherman will seek on an emergency basis Tuesday — the Finance Committee did question several aspects of the last-second measure.
According to Sherman, the first three years of the five-year deal with Ernst & Young is about to expire. Those first three years were locked in at an annual increase of 3 percent. However, according to Sherman, if the City went year-to-year the last two, Ernst & Young wanted to increase the contract fee by 5 percent. If the Council will approve the extension Tuesday, Sherman said the contract increase will remain at 3 percent.
Sherman said the City had no choice but to hire the firm three years ago, since it was the only respondent. To put the process out to bid right now would be time-consuming and would come at a bad time since the City’s department heads are in the process of finalizing their 2008-09 budgets.
“Three years ago, we put out an RFP (request for proposal) and got one respondent,” said Sherman, adding his office and the City’s Finance Department are both happy with the work Ernst & Young is performing.
Sherman said a couple of factors played a role in Ernst & Young being the sole respondents to the RFP. He said mergers within the accounting profession have created either very large or very small firms and many of the firms didn’t believe the City wanted their business. He said next time the contract goes to bid, his office will do a better job of informing all qualified firms that the City is seeking an outside accounting firm. The City requires that a new firm be used at least every five years.
“We will do everything we can to bring in several firms,” said Sherman, adding part of the evaluation process could be whether the firm has worked for the City before or not. “That could be a negative.”
Committee member Art Graham wanted to know why there was such a rush to extend the current contract.
“Are we under some kind of time crunch?” he said. “If we knew this was coming, why did we wait until now?”
Sherman took the blame for the urgency of the legislation that would approve Ernst & Young for another two years. He said the manager that handled the outside auditor left and he “dropped the ball.”
Sherman said the Jacksonville Port Authority, Jacksonville Aviation Authority and JTA are all using mid-sized accounting firms as independent auditors.
“That shows us that the business is out there,” he said.
Committee member Richard Clark isn’t sold on Ernst & Young. He said every time a representative addresses Council or the Finance Committee, they bring documents and make presentations that have little substance. Clark said often the 25-page or so documents only have a few pages of actual information while most is devoted to the firm itself.
“For 40-45 minutes they talk about their standard operating procedures and don’t get into the audit. There is only four or five pages of real work done,” said Clark. “The rest is cookie-cutter that is what they think the world looks like. Would it really hurt if we put this out to market?”
The Committee did not take any kind of action on the proposal and will leave the decision up to the full Council.
Monday’s meeting also marked the last for Art Shad as Finance chair.
“It’s been a long year and there’s been a lot of challenging stuff,” said Shad, who’s also a member of the Land Use & Zoning Committee. “I hope we can take all the good work we did this year and pass it on to the next Finance Committee.”
Shad said the year proved especially challenging given the budget issues and the three fees Council passed.
“I think we handled it well,” said Shad. “We had a good committee. We compromised when we had to compromise and we put our foot down when we had to put our foot down.”