3DISCUSSION:
One of the adopted recommendations was for staff to select an audit team composed of highly qualified
individuals to conduct business license audits, The Finance Department prepared a Request for
Proposal (RFP) to select an audit firm through a formal bid process.
RFP's were mailed to six audit firms on April 27, 1999 The Finance Department received only one
proposal The firm that submitted a proposal, Diehl Evans and Company, LLP is highly qualified and has
performed over 50 revenue compliance reviews The proposed audit team has a combined 60 years of
experience
Costs that will be incurred in FY 1998 -99 include $6,250 to evaluate the City's business license
operations and develop an internal audit program and $2,100 to develop a self -audit program for a total
of $8,350 A description of costs is included in 'Exhibit B' of the proposed professional services
agreement attached. The budget is included in Finance Administration Professional/Technical services
Each audit will take place in FY 1999 -2000 at an average cost of $1,900 per audit The audit firm will
complete an estimated 30 in FY 1999 -2000 and $60,000 will be included in the FY 1999 -2000 budget
There will be four levels of audit
• Businesses generating business license taxes over $100,000 (approximately 12)
• A random sample of businesses generating business license taxes between $5,000 and $100,000
(approximately 10)
• Unlicensed businesses that did not participate in the amnesty program (approximately 5 to 10)
• A random sample of businesses with gross business license fees under $5,000 to be audited in-
house by Finance Department staff (Approximately 5 to 10)
If the professional services agreement is approved, staff will contact the consultant to begin the work
plan, as described in `Exhibit A' of the proposed professional services agreement attached, on July 1,
1999
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