Elgin's bid process for audits favors current firm

The city of Elgin issued a request for proposals for auditing services, and the way it evaluated the bids favored its long-standing relationship with the accounting firm Sikich.

The city council votes Wednesday on a new contract with Naperville-based Sikich, which Elgin has employed for 15 years.

Seven audit firms submitted proposals, ranging from a low bid of $371,590 over five years to a high bid of $397,400. Sikich's bid of $383,857 was in the middle of the pack, with a first-year cost of $74,199.

City Manager Rick Kozal and Chief Financial Officer Deb Nawrocki did not respond directly to requests for comment. Email replies came from Molly Center, the city's multimedia specialist, who said she could be quoted as the city's spokeswoman.

Sikich submitted an original bid of $79,784; six other accounting firms, which had requested information about the city's expiring $79,000 contract with Sikich, submitted lower bids, Center said.

As part of its bidding process, the city can negotiate compensation with the highest qualifying firm, and Elgin did so to obtain the final "favorable" proposal recommended for approval by the city council, Center said.

City officials scored the bids on cost and other criteria: prior auditing experience; a firm's organization, size and structure; qualifications of the staff to be assigned the audit; and the firm's "understanding of the work to be performed ... determined by the approach to the audit and ability to complete in a timely manner."

This latter criteria favored Sikich, the only firm with a perfect score in the category. Absent that, the firm Baker Tilly would have received the highest overall score, followed by Sikich.

"Any capably performing incumbent will always have an advantage when this criteria is being rated, but the request for proposals does not assume an incumbent will always be part of the consideration," Center said.

All seven firms got the same score for their expertise in auditing local governments, and three firms, including Sikich, got equally high marks for expertise in auditing cities, documents show.

"When reviewing the seven submitted RFPs, it quickly became apparent that Sikich and Baker Tilly are the firms best qualified to audit a government of Elgin's size. None of the other responding firms presented objective information demonstrating governmental auditing experience with a government as large as Elgin," Center said.

Auditing local government is a specialized field and Sikich is a "very major player" in Illinois, said Steven Solomon, deputy director of the technical services center of the Government Finance Officers Association.

Auditing firms ideally are replaced every five years, but the same "fresh set of eyes" goal is achieved if the firm rotates partners in charge of the audit, Solomon sad. "A new partner within a new firm is going to go through a very similar process as a new partner in a different firm," he said.

If Elgin were to switch firms, the first year would be very labor intensive for both parties, Solomon said. "It's a lot of work - you have to do flow charting, you have to do a lot of things to get to know the entity," he said.

Aurora, Naperville and Schaumburg have used Sikich for 27 years, 12 years and two years respectively. Arlington Heights employed Sikich for 10 years before switching to Lauterbach & Amen in 2014.

GFOA recommends requesting auditing proposals every five years. Elgin last did so in 2006.