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HomeMy WebLinkAboutItem 4.3 Audit Services RFP CITY OF DUBLIN AGENDA STATEMENT CITY COUNCIL MEETING DATE: April 8, 1991 SUBJECT: Request For Proposal for City Audit Services (Prepared by: Phillip Molina, Finance Director) EXHIBITS ATTACHED: Draft Request For Proposal RECOMMENDATION: kuthorize Staff to issue Request For Proposal for Audit OServices. FINANCIAL STATEMENT: DESCRIPTION: The City's current auditor is the firm of Maze and Associates. The City's Audit includes all the tests determined by the auditor to be necessary to issue an opinion on the reliability of the Finance Statements for the City of Dublin. After Fiscal Year 1990-91 , the City will have used the services of Maze and Associates for five years (1986-87 through 1990-91 ) . During the first ' year, Maze and Associates completed the audit work from the City's previous auditor. During each of the years that Maze and Associates audited the City, Dublin received an unqualified audit opinion, which is the highest level report that an auditor can issue. The City Council and City Staff have enjoyed a good and professional working relationship with the staff of Maze and Associates. The Audit Committee recommends that the City Council authorize the issuance of the Request For Proposals for a new City Auditor in order to obtain a fresh independent opinion of the City's financial records. The proposal provides for the use of the auditor for a period of four years. The Committee also recommends that the firm of Maze and Associates Accountancy Corporation be excluded from submitting a proposal. a:s48audit.doc.agenda#4 ---------------------------------------------------------------------- COPIES TO:\ ITEM NO. `-� 1 . INFORMATION FOR PROPOSERS A. Purpose The purpose of this Request for Proposal (RFP) is to solicit proposals to audit all funds and account groups of the City of Dublin. The objective of the RFP process is to obtain the audit services of a public accounting firm, whose principle officers are independent certified public accountants, who are certified or licensed by a regulatory authority of California. B. Contact Person Requests for information about this solicitation or requests for access to fiscal records, prior audits and other public documents should be referred to the Finance Director by calling telephone number 415 833-6644. C. Proposal Submission To be considered, proposals must be received by: Finance Department City of Dublin 100 Civic Plaza P.O. Box 2340 Dublin, Ca. 94568 not later than 5:00 p.m. Monday May 13, 1991. Proposals received after the date or time specified will not be considered. Five copies of the proposal must be submitted. Once submitted, proposals become the property of the City of Dublin. D. Nature of Services Required The scope of the audit will include: 1. The examination of financial statements of all funds and account groups over which the City has direct or maintenance responsibility, including Dublin Information Incorporated, which is used for booking specific postage costs and for handling the debt service of the Certificates of Participation. The examination will be made in accordance with generally accepted auditing standards as included in the Statement of Auditing Standards published by the American Institute of Certified Public Accountants. 2. Examination for compliance with procedures established by Ordinance or, where applicable, State And Federal laws and regulations, which are to be examined in accordance with the GAO Standards for Audit of Governmental Organizations, Programs, Activities, and functions (revised 1982), the GAO (Guidelines for Financial and Compliance Audits of Federally Assisted Programs, and Attachment P of OMB Circular No. A-102, Uniform Administrative Requirements for Grants-In-Aid to State and Local Governments. The period to be audited shall be the City's four fiscal years ending June 30, 1992, 1993, 1994, 1995. E. Description of Entity and Records to be Audited. 1. Background The City of Dublin is located on the north side of Highway 580, where it intersects with Highway 680. The City has a General Revenue Fund, Special Revenue Funds, Capitol Projects Fund, Debt Service Fund, Trust Fund, and an Enterprise Fund. The Combined 1990191 budget for all funds is $22,493,447.00. The City is administered by a Council - Manager form of government. The City employs 34 full time employees and up to 35 part time employees at any one time. The City also contracts for a number of municipal functions including: police, public works, engineering, etc. The City's fire service is provided by an joint powers authority. The City is not responsible for water or sewer utility services. -2- 2. Basis of Accounting The modified accrual and accrual basis of accounting, as appropriate, are utilized in measuring financial position and operating results as follows: a. Governmental fund revenues and expenditures are recognized on the modified accrual basis. Revenues are recognized in the accounting period in which they become available and measurable. Expenditures are recognized in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest on general long term debt, which is recognized when due. b. Proprietary fund revenues and expenses are recognized on the accrual basis. Revenues are recognized in the accounting period in which they are earned and become measurable, expenses are recognized the period incurred. C. Fiduciary fund revenues and expenses or expenditures (as appropriate) are recognized on the basis consistent with the fund's accounting measurement objective. Nonexpendable Trust Funds are accounted for on the accrual basis; Expendable Trust Funds are accounted for on the modified accrual basis. Revenue from grants-In-Aid is generally recognized as eligible expenditures are made. Agency Fund assets and liabilities are accounted for on the modified accrual basis. 3. Budget The City Manager submits to the City Council a proposed operating budget for the fiscal year beginning July 1. The adopted operating budget is legally enacted through passage of a resolution and represents the proposed fund appropriations. Subsequent supplemental appropriations must be approved by the City Council . Unencumbered appropriations lapse at the end of the year. -3- Budgeted amounts may be transferred within departments within any fund; however, any revisions that increase the total expenditures of any fund and transfers between departments must be approved by Council . 4. Accounting Systems Financial/accounting records are maintained on an IBM System 36 Computer. Purchase orders, encumbrances, accounts payable, check and revenue recording are prepared using manual procedures kept and recorded using automated records and procedures. Specific procedures and nature of tasks will be given in detail on request. The Director of Finance is the chief accounting officer of the City. As such he has the responsibility for establishing and maintaining all accounting records and the preparation of accounting reports. 5. Exceptions to GAAP The General Fund budget is adopted on a basis which is not consistent with generally accepted accounting principles. The City budgets as an expenditure the amounts that are capitalized at year end: i.e. Internal Service fund asset acquisition, principal payments on long term debt, and certain interest expenditures which are capitalized. Additionally, the City posts into the fund balance those items that are prior period adjustments. 6. Annual Report and Budget Copies Copies of the Annual Financial Report for the fiscal year ending June 30, 1990 and the 1990-91 Annual Budget will be made available upon request. -4- F. Assistance Available to Proposer 1. Prior Audit The annual audit for the fiscal year ending June, 1990 resulted in an unqualified opinion on the combined financial statements. Maze and Associates Certified Public Accountants, performed the audit. The work papers will be made available to the successor auditor. 2. City Staff The accounting staff will provide the proposer with information and explanations requested through the Finance Director. City Staff will be able to provide minimal backup and support. However, files for invoices are alphabetical and revenue files are in account number sequence and are located in the Finance Department. The City Attorney's staff will be available to provide legal counsel pertinent to the audit. 3. Printing of Report The Auditor is required to print and bind fifteen copies of the report. 4. Work Area A separate work space is available for the use of the City's auditors which is in close proximity to the accounting records. The space available is sufficient for all audit personnel . -5- G. Report Requirements 1. Audit Reports Audit reports are to be addressed to the City Council . The reports will be reviewed by the City Manager, the Finance Director and the Council 's Audit Committee prior to presentation to the City Council . Reports of examination of the financial statements must (a) state the scope of the examination and that the audit was performed in accordance with generally accepted auditing standards and (b) must include an opinion as to whether the statements conform to generally accepted accounting principles. Reports of compliance examinations must include a statement that the examination was conducted in accordance with applicable auditing standards. The audit report must state whether the examination disclosed instances of significant non-compliance with laws and regulations. Findings of noncompliance of ineligible expenditures must be presented in sufficient detail for management to clearly understand them. A Separate management letter is required which should include a statement of audit findings and recommendations affecting the financial statements, internal control accounting, legality of actions, other instances of noncompliance with laws and regulations, and any other material matters. Suggestions concerning ways in which to make the City's accounting process more efficient will be welcomed. Each year the Council 's Audit Committee may direct the auditor to perform special or additional reviews of the internal control in specific areas, such as cash management, payroll , departmental cash receipts, etc. An estimate of the cost to perform this extra work will be required at that time. This special work should conclude with an expanded written report identifying the documents reviewed, the operating procedures used, your findings, and recommendations. -6- H. Time Considerations and Requirements The following dates are to be considered firm unless waived in writing by City Officials. 1. Proposal Submission The deadline for submission of all proposals is 5:00 p.m. on May 13, 1991. 2. Interview The three proposers receiving the highest evaluations will be interviewed by the City Council Audit Committee on a date to be determined. 3. Contract Award The Date of the final award will be on or before June 28, 1991. 4. The City wishes to meet the assigned partner, manager and senior-in-charge of each firm that makes an oral presentation to the City Council 's Audit Committee. Physical presence of the assigned partner, manager and senior-in-charge is requested as well as oral participation in the presentation by each person. I. Contractual Arrangements 1. The contract to be awarded by the City for audit services, as identified in this RFP, will be for a period of four years. The fee for each of the four years will be identified in the contract. 2. The City shall agree to make interim payments on the annual fee based on percentage of completion. 3. The City may terminate the agreement for incompetence, or for failure to perform according to the standards of the AICPA after providing a written notice 30 days before the termination date. -7- 4. The audit will be completed within 90 days from the date the City provides the trail balance and the reconciling reports are completed. The auditors will work with the Finance Department to assure that any special reconciliations are completed within the necessary time frame. J. Work Papers and Journal Entries 1. All work papers will be retained by the auditors for a period of not less that five years. 2. The auditor shall give copies of specific work papers to the City as requested. 3. The auditor shall make all original work papers available for examination by authorized representatives of federal and state agencies and of the City. 4. All adjusting journal entries made by the auditors will be given to the City at the lowest level of posting detail needed for inclusion in the general ledger accounting system. 5. Lead schedules, by fund, will be given to the City. These schedules shall show unadjusted numbers, adjustments, reclassified entries and final audit balances. These leads will be prepared at the City posting level . K. Right to Reject The City reserves the right to reject any and all proposals submitted and to request additional information from all proposers. The award of any contract will be made to the firm, which in the opinion of the City, is best qualified. 17. INFORMATION TO BE PROVIDED BY PROPOSER -8- In order to simplify the review process and obtain the maximum degree of comparison, proposals are to be outlined in the manner described below: A. Title Page Show the RFP subject, the name of the proposer's firm, local address, telephone number, name of the contact person, and the date. B. Table of Contents Include a clear identification of the material by section and by page number. C. Letter of Transmittal Limit to two pages. 1. Briefly state the proposer's understanding of the work to be accomplished and make a commitment to perform all work by November 30th of the fiscal year under audit. 2. State the all-inclusive fee for which the work will be done for each of the four years of the contract. 3. State the names of the persons who will be authorized to make representations for the proposer, their titles, addresses and telephone numbers. 4. State that the person signing the letter has been authorize to bind the proposer. D. Profile of the Proposer 1. State whether the firm is local , regional , national or international . 2. State the location of the office that will have primary responsibility for the audit as we11 as the number of partners, managers, supervisors, seniors, and other professional staff employed at that office. -9- 3. Describe the range of activities performed by the local office such as auditing, accounting, tax service, or management services. E. Mandatory Criteria 1. Affirm that the proposer is a properly licensed certified public accountant. 2. Affirm that the proposer meets the independence standards. 3. The Auditing firm shall show proof of professional liability insurance, the coverage and the amount. 4. The Auditing firm shall show proof of workers compensation insurance coverage for all the auditor's staff performing the City audit. F. Summate of Proposer's Qualifications 1. Identify the supervisors who will work on the audit. 2. Describe recent audit experience of the supervisors who will work on the City audit, which were similar to the type of audit being requested. Give the names and telephone numbers of client-officials responsible for three of the audits listed. G. Proposer's Approach to the Examination Submit a work plan that will accomplish the scope as defined in these guidelines. The work plan would include time estimates for each significant segment of the audit and staff size and levels) to be assigned. Where possible, individual staff members should be named. The planned use of specialists should be specifically addressed by type and audit role. -10- 1. Financial Audit a. State that the examination will be made in accordance with generally accepted auditing standards. b. State that the primary purpose of the examination is to express an opinion on the financial statements. State that if conditions are discovered which lead to the belief that material errors, defalcations, or other irregularities may exist, or if any other circumstances are encountered that require extended services, the auditor will promptly advise the City. 2. Compliance Audit State that in accordance with the auditing standards of the cognizant State and Federal agencies or in accordance with other applicable standards, the proposer will select the necessary procedures to test compliance and to disclose noncompliance with specified laws, regulations and contracts. H. Compensation State the total hours required and the hourly rates by staff classification and the resulting all inclusive maximum fee for which the requested work will be done. 1. Additional Data Since the preceding sections are to contain only data that is specifically requested, any additional information that is considered essential to the proposal should be included in this section. The proposer's general information publications, such as directories should not be included. -I1- III. EVALUATION The proposals submitted will first be evaluated based upon the written proposals. The top three firms may be invited for an oral interview by the City Council 's Audit Committee. The selection criteria shall be the following: * understanding of the engagement * acceptability of the audit approach * qualification of the firm * overall fees A recommendation shall be made to the entire City Council of the Firm to be selected as the City's external auditor. -12-