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HomeMy WebLinkAboutItem 8.1 Audit Services (2) ';;' ":1, y l.;~ ,~ · CITY File # . AGENDA STATEMENT CITY COUNCIL MEETING DATE: (February 13, 1996) SUBJECT: Request For Proposal: Audit Services ~eport Prepared by: Paul S. Ran1c1Tl, Assistant City Manager Draft Request For Proposal ExmBITS AITACHED: RECOMMENDATION: ~eview the Request For Proposal and provide Staffwith input on , the following issues: 1) Any restrictions on the tinns to be included in the proposal process. 2) Selection of a City Council ad. hoc Subcommittee to assist with the selection process. FINANCIAL STATEMENT: The cost of the services will be more fully known following the conclusion of the RFP process. The costs in the previous agreement for the Basic Services were approxiInately $17)666. .' DESCRIPTION: The current agreement for audit services with Maze and Associates expired with their issuance of required reports for the period ending June 30, 1995. It is imporqmt to proceed at this time with the selection of an audit finn to prepare the necessary reports for the period ending June 30, 1996. Typically the audit firms began preliminary field work prior to the end of the Fiscal Year. Draft Request For Proposal (RFP) Attached to this Staff Report is a Draft Request for Proposals which has been developed'by City Staff. The proposal is stmctured to request services for a period of up to 5 years. The major reports to be issued have been divided into two categories. . t The first category consists of Basic Reports, which are anticipated to be necessary for each year of the engagement. These consist of the basic financial reports and a management letter. In addition Staffhas included the legally required review of the AppropriationsLimit calculation and a Measure B compliance letter. The firms will be requested to submit a not to exceed cost for all of the Basic Reports. The second category consists of reports which may be re<iuiredin some years and not in others. For example, the City may have a need for services preparing other reports such as the Single Audit. The . Single Audit is only required when spending pursuant to certain Federal Progxams meet a certain "+.~ _ ~ ________ , r I""l"""" ...___.....-.-..""" COPIES TO: ITEM.NO.~ ~~'1---- , , -i?, threshold. Therefore) this report may not be required each fiscal year. Other optional services reque~e~"~" include the preparation of reports required to be submitted to the State Controller. In the past the City Staff have prepared some reports and others were prepared by Maze & Associates. The Auditors are requested to identify separate costs for each of the supplemental reports. ." , . The proposed process would provide for a submittal deadline of March 11) 1996. Staffwould intend to have a recommendation and proposed agreement for services presented at the City Council meeting of April 9, 1996. Input From City Council Related To Distribution of RFP Although Staff must work closely with the Auditor's in preparing the Financial Reports) a significant purpose of the independent review is to provide information to the elected officials and the public related to City operations. In fact, the cost of these services are reported within the City Council operating budget. Given this philosophy Staff feels it is appropriate for the City Council to have a direct role in the selection of the independent auditors. In addition to any general input on the RFP, staff would request City Council direction on two specific issues. The first issue is the question as to whether there are any desired restrictions on the distribution of the RFP. Maze & Associates have examined the. City Finances and prepared the Audit for the past 9 consecutive fiscal years. When the City Council approved seeking proposals in 1991, the City Council subcommittee recommended that Maze & Associates be excluded from submitting a proposal. Among the intended goals was an interest to obtain a fresh independent opinion of the City's financial records) since Maze & Associates had already performed audits for the previous five fiscal years. When the selection committee returned to the City Council with a recommendation it was explained that Maze could meet the subcommittee goals and they were selected for an additional four year term. The subcommittee believed that the ability of the firm to rotate Staff assigned to an audit team, provided adequate oversight. In addition it was the subcommittee recommendation that the proposal from Maze & Associates best met their expectation of an independent auditor. Staff does not have any concerns with the quality of the reports or staffing provided by Maze and Associates in previous years. The fmn has had a practice of rotating personnel assigned to the City of Dublin audit team. .~,. ~.:. . :.~ .'''' . .... It is important for the City Council to address this policy at this time. If the City Council believes that a review by a different firm would be beneficial over the next five years, then it would be appropriate to exclude Maze & Associates from participating in the RFP process. . The second area of input is in the assignment of an ad.hoc City Council Subcommittee to assist with the selection of the Auditors. It is anticipated that Staff will review the written proposals and present to the '. subcommittee a recommended list of finalists to be invited to an interview. The interviews would be conducted by Staff and the City Council subcommittee. Staff recommends that the City Council authorize the circulation of the Request For Proposal for Audit Services. It is also requested that the City Council provide direction as to any restrictions on the distribution of the RFP as well as identification of a City Council subcommittee. ... 1:, . .' . v--.;'" CITY OF DUBLIN DRAFT " PO Box 2340, Dublin, California 94568 City Offices, 100 Civic Plaza, Dublin, California 94568 . REQUEST FOR PROPOSAL AUDITING SERVICES I. General Description The City of Dublin is seeking proposals for the preparation of both financial and compliance audit reports covering the City and its related operations. A complete description of services to be provided is described later in this document. The first reporting period to be audited is July 1, 1995 through June 30, 19%, with the option to audit the City of Dublin financial statements for each ofthe four subsequent fiscal years. This IU'P consists of: Request For Proposal- 3 Pages Scope of Auditor Services - 4 Pages City Background Information - 2 pages II. Contact Person .' .' NOTE: . Questions regarding this RFP may be directed to the following person: Paul S. Rankin Assistant City Manager / Administrative Services Director Telephone: (510) 833-6640 Fax: (510) 833-6651 If Attending Informational Session Wednesday, February 28, 10:00 a.m. Dublin Civic Center 100 Civic Plaza - Regional Meeting Room - First Floor Lobby Please confirm with Teresa at (510) 833-6640 " III. GENERAL INFORMA TrON FOR RESPONDING TO THE AUDIT RFP 1. Five Copies of the Responses are to be received by, Monday, March 11, 1996 at 2:00 p.m. NO FAXED INFORMATION CAN BE CONSIDERED. . PROPOSALS SHOULD BE DELIVERED TO: Attention: Paul S. Rankin, Assistant City Manager City of Dublin 100 Civic Plaza Finance Department - Second Floor (Post Office Box 2340) Dublin, California 94568 ,I 2. The Response should address at a minimum the information requested in the following section (" Minimum Content of Responses"). The format should follow the same sequence as the "Minimum Content" section and should be based upon the attached Auditor Scope of Work. Respondents may include relevant attachments or exhibits. Responses should be presented in a clear and concise format. 3. The City of Dublin reserves the right to accept or reject any and all p'roposals. AdministraTion (510) 833-6650. City Councii(510) 833-6605. Finance (510f833-6640. Buitding Inspection (510) 833-6620 Code Enforcement (510) 633-6620 . Engineering (510) 833-6630 · Planning (510) 633-6610 Police (510) 633-6670 . Public WorkS (510) 633-6630 . Recreation (510) 633-6645 . ~ ...,;~ 4. A City Council subcommittee with Management Staff representatives will be involved in the proposal review process and interviews. The subcommittee will consider a variety of factors in recommending the selected firm to the City Council. The following are several criteria to be used, . the relative importance of each is not determined by the order shown: ' a. Understanding of the engagement and the City's needs. b. Experience with performing audits of governmental agencies, which are similar in scope. c. Experience of individuals proposed to be assigned to the audit. d. Resources available for the timely completion of the audit and scheduling of the work. e. References from similar engagements. f. The cost of services. 5. The Consultants Response may be included as an Exhibit to an Agreement For Services. IV. MINIMUM CONTENT OF RESPONSES All participating Consultants are requested to provide the following information in their response. A. Describe the Firms experience With public sector audits of a similar nature and scope. Emphasis should be placed on assignments undertaken within the past three years and on engagements undertaken by the personnel proposed to be assigned to this agreement. B. e) Identify all personnel who will be assigned to work on this project. Include brief summaries of their background and experience as well as the assigned responsibilities under the proposal. e. The proposal should set forth an audit approach and methodology to be used to perform the services. This may include a discussion of: approach to selection of sample size; use of specialized software; analytical procedures; approach to internal control structure; approach to determining laws / regulations subject to audit test work; identification of any anticipated problems, or, special assistance required from City Staff; and the format of the report. D. Provide an indication of the time required for the completion of each major phase of the project. Any assumptions regarding turnaround time for City Staff or City Council review should be clearly noted. Also provide anticipated calendar as to when firm will commit to completing work. Please note that Auditor is responsible to identify required review times for City input and must account for printing and distribution within any timelines identified in the Scope of Work. E. Provide three references for your most representative projects including the following: 1) Name of Public Agency 2) Name and Title of contact person. 3) Telephone Number of contact person. 4) Size of General Fund Budget for the year most recently audited. 5) Size of Agency Finance Department Staff 6) Brief description of the scope of the audit performed. CITY OF DUBLIN RFP PAGE 2 .. v- . . F. e. Provide fee information, regarding the total estimated fee to complete the project as described in the Scope of Services. For the "Basic Reports" identified in Section II include the estimated time and a not to exceed cost for all basic services. For each of the separate "Additional Reports", identified in Section III of the Scope of Services, include the estimated time and a not to exceed cost for each report. Include an hourly fee quotation for all positions to be assigned. Identify an estimate of any reimbursable or non direct costs, which would be applicable to the completion of the work. Identify proposed method of adjustment, if any, in the cost of services through subsequent years of the engagement. V. Tentative Schedule For Selection Process Issuance of RFP Authorized By City Council Informational Session Provided By Staff (10:00 a.m. Dublin Civic Center 100 Civic Plaza Please Confirm Attendance (510) 833-6640) Submittal Deadline Screening of Submittals Finalist Interviews Recommendation To City Council With Agreement The schedule and its components are subject to change. . February 13, 1996 February 28, 1996 March 11, 19962:00 p.m. March 12 - March 20 Week of March 25th April 9, 1996 . CITY OF DUBLIN RFP PAGE 3 SCOPE OF AUDITOR SERVICES . . ..~ I. General .' The City of Dublin is soliciting the services of qualified firms of certified public accountants to audit its fmandal statements for the fiscal year ending June 30, 1996, with the option to audit the City of Dublin's financial statements for each of the four subsequent fiscal years. These audits are to be performed in accordance with the provisions contained in this request for proposals. The City of Dublin desires the auditor to express an opinion on the fair presentation of its general purpose fmandal statements in conformity with generally accepted accounting principles. The audit shall include an examination of all funds and account groups of the City of Dublin by Certified Public Accountants duly authorized to practice as such by the State of California. The auditor shall also be responsible for performing certain limited procedures involving required supplementary information required by the Governmental Accounting Standards Board, as mandated by generally accepted auditing standards. Auditor shall prepare all trial balance worksheets and summary schedules including balance sheets, revenues, expenditures, and changes in fund balance for each fund of the City. Data source for the schedules will be the computerized fmancial statements supplied by the City. Report preparation and necessary edIting shall be the responsibility of the Auditor. Reproduction of reports is discussed in Section V below. Auditor shall submit for management review a Draft of all reports. The final reports are subject to .:':\ review by an ad-hoc City Council subcommittee. Auditor shall incorporate as part of the basic .' proposal meeting time with Staff and the committee for the purpose of discussing the audit or management letter and its conclusions. II. Basic Reports To Be Issued Following the completion of the audit of the fiscal year's fmancial statements, the auditor shall issue the following: A. Independent Auditor's Report - A report on the fair presentation of the fmancial statements in conformity with generally accepted accounting principles, based upon an audit of-the General Purpose Financial Statements. The combining fund statements and schedules are not a required part of the General Purpose Financial Statements. However, the auditor is to provide an "in-relation-to" report on the combining and individual fund fmandaI statements and supporting schedules. The information presented shall be based on the auditing procedures applied during the audit of the General Purpose Financial Statements. The auditor is not required to audit the statistical section of the report. B. A Management Letter which includes fmdings, statements, observations, opinions, comments, .', ',',' or recommendations related to: 1. Systems of internal control based upon the auditors' understanding of the control structure and assessment of control risk. CITY OF DUBLIN RFP - SCOPE OF SERVICES ~ . . 2. Compliance with applicable laws and regulations. .'.: 3. Accounting systems, functions, procedures and processes especially with regard to cost effectiveness. C. Alameda County Transportation Authority - Measure B Local Distribution Compliance Audit. D. Agreed Upon Procedures Performed Related to the calculation of the Gann Appropriations Limitation. III. Additional Reports To Be Requested At City Option Due to the fluctuation in the receipt of special grant funds the need for some reports will be based upon whether the City meets the audit threshold for the specific program, and/or whether the City received any funds under the program. Also, depending on Staff availability the City may elect to prepare the State Controllers Report of Financial Transactions and/or Annual Street Report. A. Single Audit Report of Federal Financial Assistance (Note: Based upon receipt of ISTEA Funds in Fiscal Year 1995/96 this report will be included with the initial audit.) B. Metropolitan Transportation Commission (MTC) Bicycle / Pedestrian Projects in accordance with the Transportation Development Act (TDA). . C. State-Local Transportation Partnership Program as administered by the State of California Department of Transportation. D. Annual Report of Financial Transactions to State Controller, must be prepared and available for City Staff review 5 days prior to the statutory submittal deadline. E. Annual Street Report to the State Controller, must be prepared and available for City Staff review 5 days prior to the statutory submittal deadline. IV. Supplemental Reports I Studies Reports on such other audits or agreed-upon procedures as may be agreed to in writing and as stated in a supplemental audit agreement. The scope of the study and associated costs shall be approved by City prior to beginning work. v. Number of Copies of Report To Be Produced . A) Annual Financial Report - Unless otherwise directed by the City at the time of issuance of the Final Report, City shall be responsible for reproduction of Final Report and its incorporation in the CAFR. City may request firm letterhead to incorporate Independent Auditor's Report. Auditor to provide: 1 Unbound Master and 3 bound reports. CITY OF DUBLIN RFP - SCOPE OF SERVICES PAGE 2 . . '~ B) Management Letter ~ 15 bound copies C) Measure B Compliance Audit - 10 original copies . D) Gann Limit - 10 original copies E) Single Audit, if applicable 15 bound reports. F) MTC Audit, if applicable 15 bound reports. G) SL TPP, if applicable 15 bound reports. VI. Auditing Standards To Be Followed To meet the requirements of this request for proposals, the audit shall be performed in accordance with generally accepted auditing standards as set forth by the AICP A "Audits of State and Local Governmental Units" and publications of the Governmental Accounting Standards Board. As applicable, the provisions of the Single Audit Act of 1984 and the provisions of U. S. Office of Management and Budget (OMB) Circular A-128, Audits of State and Local Governments shall also be addressed. VIT. Special Considerations 1. The City of Dublin has been awarded the Government Finance Officers Association of the .--:,.,. United States and Canada (GFOA) Certificate of Achievement for Excellence in Financial : Reporting for five years. Although the report was submitted, the City has not received the results of the review of the report for the period ending June 30, 1995. The City of Dublin anticipates that it will send its comprehensive annual financial report to the Government Finance Officers Association of the United States and Canada (GFOA) for review in their Certificate of Achievement for Excellence in Financial Reporting program. The format of reports shall allow the City to meet the requirements of that program. This also requires that the Auditor ensure that the audit report and financial statements are complete in time for submission to GFOA. The Auditor shall also assist with developing responses to any comments or deficiencies noted by GFOA. 2. The schedule of federal financial assistance and related auditor's report, as well as the reports on the internal controls and compliance, are not to be included in the comprehensive annual fmancial report, but are to be issued separately. 3. Due to potential development projects, the City of Dublin currently anticipates that during the term of this agreement, it may prepare one or more official statements in connection with the sale of debt securities. The Financing documents may contain the general purpose financial statements and the auditor's report thereon. The auditor shall be required, if requested by the fiscal advisor and/or the underwriter, to issue a "consent and citation of expertise" as the ."" auditor and any necessary "comfort letters." CITY OF DUBLIN RFP - SCOPE OF SERVICES PAGE 3 vJ.' · VII. Working Paper Retention and Access to Working Papers .' All working papers and reports must be retained, at the auditor's expense, for a minimum of three (3) years following completion of the audit, unless the firm is notified in writing by the City of Dublin of the need to extend the retention period. The auditor will be required to make working papers available, upon request, to the following parties or their designees: · City of Dublin . Parties designated by the federal or state governments or by the City of Dublin as part of an audit quality review process · Auditors of entities of which the City of Dublin is a subrecipient of grant funds · State of California, Office of the State Controller In addition, the firm shall respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance. IX. Assistance To Be Provided By The City A. City Staff will be available during the audit to assist the auditor by providing information, documentation and explanations. :. B. City Staffwill type the necessary confirmation letters prepared by the Auditor. C. City will provide the auditor with reasonable work space. Auditor will also be provided reasonable access to telephone line, photocopier, and Fax machine. g:1ji1JCl1lCe1audi1~f"'.dtx .-. CITY OF DUBLIN RFP - SCOPE OF SERVICES PAGE 4 CITY OF DUBLIN AUDIT RFP BACKGROUND INFORMATION . . ..:- General Information About the City . The City of Dublin is a General Law city, incorporated in 1982. The City operates under the Council _ Manager form of government. The Mayor is directly elected and serves a two year term. The four City Councilmembers serve staggered four year terms. Citizens of the City of Dublin also assist the City Council in forming government policy. The City Council appoints members of commissions and committees such as: Planning Commission, Parks & Community Services Commission, Senior Center Advisory Committee, and Heritage Center Advisory Committee. The basic structure for City operations is commonly referred to as a "contract city." Many of the typical municipal services are provided through a contract with public or private entities. For example, Police Services are provided by the Alameda County Sheriff. Street and Park and Building Maintenance Services are provided by MCE Corporation and other private contractors. For Fiscal Year 1994-95 the City had a total of 36 Full Time positions which provide services as City employees. An additional 46 positions were employees of the City's Contractors and were assigned to work solely within the City of Dublin operations. Fire Suppression and Prevention Services are provided by the Dougherty Regional Fire Authority. This is a Joint Powers Authority, which is a legally distinct entity, formed by the cities of Dublin and San Ramon. Each City makes payments for its pro-rata share of the annual costs associated with the independent Authority. The City of San Ramon maintains and processes all financial records related to the operation of the JPA. The City of Dublin is located at the intersection of Intestates 580 and 680 approximately 35 miles east of San Francisco. The City has a wide range of housing types available to meet the demands of various employers througho~t the regio~: The City has a large retail base which serves local residents as well as those iJI.':. surroundIng communIties. _.-.'- The largest employers include: public agencies such as; County of Alameda Correctional Facility, Dublin Unified School District and United States Department of Justice Correctional Facility; corporate offices such as Great Western Bank regional office; and retailers such as; Montgomery Wards, Toys R Us, Target Stores, Home Express, and Mervyns. The future economic outlook for the City is geared towards enhancing the City's existing economic base, while providing opportunity for further expansion. There is the ability to accommodate significant new development projects in the City's Eastern Dublin Specific Plan Area. In Fiscal Year 1994/95 the City completed the rezoning of the first major parcel in the Specific Plan Area, which will provide additional retail opportunities. Although opportunities exist for additional retail based revenues, it has also been noted that competitive pressures from projects developed in surrounding jurisdictions will impact the ability for continued growth in retail sales. In May of 1993, the City completed and adopted a major General Plan Amendment covering approximately 10.8 square miles of largely undeveloped land. Approximately one half of the Planning Area was covered by a Specific Plan, which was processed concurrently. The adopted plans provide for a fully integrated community including residential sites, commercial and employment generating properties, schools, public buildings, parks and open space. The outcome of lawsuits challenging the plans were known in the final quarter of Fiscal Year 1993/94. The legal ruling was favorable to the City and allowed for proceeding with the implementation of the Plan in Fiscal Year 1994/95. ' Recently, approximately 1,530 acres adjacent to the eastern City Limit was annexed. This property was in the Eastern Dublin Specific Plan Area and it is currently largely undeveloped. The effective date for the annexatio.,: was October 1, 1995, when the City became responsible for providing municipal services to the area. A _ development occurs the City will playa primary role in the evaluation of public financing necessary to support the public infrastructure required to support these plans. CITY OF DUBLIN RFP - BACKGROUND PAGE 1 '. \..:--- h ~ GENERAL FINANCIAL INFORMATION The City's total operating budget for Fiscal Year 1995/96 is approximately $16.5 million and total revenue is ..oproximately $21.1million. The 1995/96 Capital Improvement Budget is approximately $4.3 million. The ...ity currently administers one 1915 act Assessment District. In addition to reporting directly for the City operations, Dublin Information Inc., a separate legal entity is included in the primary reporting entity. This is a non profit corporation originally formed by the City to reduce the cost of producing and distributing public information throughout the conununity. The functions were expanded in 1985 to include financing for the construction of a new Civic Center. The project was completed and occupied in 1989. The City receives various grants from programs which may impose specific audit requirements. The City participates in the Conununity Development Block Grant Urban Counties program. Alameda County is the recipient agency and the funds are passed through to the City of Dublin. In 1995/96 $54,402 in revenue was budgeted under the CDBG Program. The City has had several projects funded through the Federal Intermodal Surface Transportation Efficiency Act (ISTEA). In Fiscal Year 1995/96 $2,492,000 in ISTEA Revenue was budgeted. The City has been granted approval for $75,000 in Transportation Development Act Funding in Fiscal Year 1995/96 for a joint agency bicycle path project being constructed under the auspices of the City of Pleasant on. In Fiscal Year 1995/96 the City received $15,912 in FEMA/OES Disaster reimbursements related to response costs associated with 1995 Winter Storm damage. The City receives an annual allocation of Alameda County Transportation Authority (Measure B) Sales Tax revenue. The use of these monies are restricted to transportation related improvements. In Fiscal Year 1995/96 $126,000 in Measure B revenue was anticipated. The City invested portfolio as of 12/31/95 was approximately $24.198 million. This excludes reserve funds .. vested in accordance with the COP or Assessment District Financing Documents. A copy of the All securities held by a third party custodian (Bank of California). STAFFING / OPERATIONS Currently City Office hours are Monday through Friday from 8:00 a.m. to 5:00 p.m. The Finance Division is staffed with a minimum number of personnel given the size and scope of the operation. The 1995/96 Budget included an appropriation for supplemental accounting services on an as needed basis. The Departmental Services Summary attached in the Appendix may assist with understanding the organizational structure. The following are assigned as regular Finance Department staff. Assistant City Manager - Administrative Services Director (Serves as Finance Director and City Treasurer) Finance Technician II (Accounts Payable) (Purchasing) Finance Technician II (Accounts Receivable) (payroll) (Business License Administration) Office Assistant II (Clerical Support) (Business License Processing) Financial Records have been maintained on an IBM System 36 since Fiscal Year 1987/1988. The primary software package used is the DLH Municipal Accounting System, which was subsequently purchased by .iness Records Corporation (BRC). The payroll system is the BRC Paymate System. CITY OF DUBLIN RFP - BACKGROUND PAGE 2 -<, ,~..."......\ "'..'JIL_....~"*IIf, :r."'.~"'._,""'~"".._~\"..- .~"L...,,_'" 1"'''''1'.,. ~.~.,....'"...."~~. ,,,,.~~, _~. '," "'~_'." ""~'.... ,.."...~'....\.. ,. '", .~ .' '''''L~ . e:. e: