The Houston-Galveston solicited proposals and selected BKD CPAs and Advisors in 2018 to perform the annual audit function for fiscal years 2019 -2021. The original solicitation envisioned a three-year engagement with an optional extension of two one-year engagements.

The scope of the engagement included an audit of H-GAC’s financial records and the H-GAC Retirement Plan.  Collectively, H-GAC has incurred the following cost in each year:

2019 $  99,000

2020 $137,500

2021 $123,954

2022 $127,000 (Proposed)

The audit performed on the 2020 fiscal activity was the first to be completed entirely in a remote environment. H-GAC requested that the auditors increase the programs scheduled for review. Additional audits were performed on Solid Waste, Water Quality, and TMDL programs.

The audit performed on the 2021 fiscal activity was again entirely remote.  The auditors expanded their scope of reviewed programs to include Homeland Security and Aging programs at the request of H-GAC

The finance staff would like to approach the audit in a new and more efficient manner.  In the past, the auditors would perform all testing after the fiscal year-end close.  We are proposing to engage the audit firm earlier in the year and work with them to complete interim testing on the first three quarters of the year before the books are closed.  Much of the required compliance testing and control testing will be substantially complete by the time the books are closed.

Finance staff believes this approach allows the auditors to dedicate the bulk of their work at the end of the year to reviewing the financial statements and they would only need to update the workpapers for compliance that were started in September and/or October. The ultimate goal of this approach is to provide more timely reporting to the Board of Directors, H-GAC’s grantors, and internal management.

The additional audit fees for the upcoming 2022 fiscal year include review of new compliance requirements contained in GASB 87 concerning accounting for leases and GASB 96 concerning accounting for subscription-based software.  Both pronouncements are required to be implemented in 2022.

Indirect Cost Funding

Yes

Request authorization to negotiate with BKD, now known as FORVIS for completion of the fiscal year 2022 audit; total contract amount is $127,000. (Staff Contact: Nancy Haussler)