HomeMy WebLinkAboutItem 4.3 Audit Services RFP (2) 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.
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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.
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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.
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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.
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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 .
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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.
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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.
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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
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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.
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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.
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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.
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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.
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