Tillamook PUD Request for Proposal Audit Services

Transcription

1 Tillamook PUD Request for Proposal Audit Services To Prospective CPA Utility/Municipal Auditing Firms: Tillamook PUD, Tillamook, Oregon, is requesting proposals for the retaining of a Certified Public Accounting firm to conduct the Annual Financial Report and Single Audit (if required) of the District. Sealed Requests for Proposal - Audit Services will be accepted until 2:00 p.m. on Friday, October 18, 2013, at the Tillamook PUD Office, 1115 Pacific Avenue, Tillamook, Oregon at which time all Proposals will be opened and read. The appointment will be for an initial three-year period beginning with audit year 2013 and may be extended for an additional two years. Audit firm selection will be determined by the respondent's experience and services provided. Tillamook PUD reserves the right to accept or reject any or all bids, to waive minor irregularities or informalities, and has the right, in its sole discretion, to accept any bid deemed to be in the best interest of the public. All mailed bids should be addressed to the Tillamook People's Utility District, PO Box 433, Tillamook, Oregon, 97141, Attn: Nancy Dillard, Executive Assistant. Key Personnel The following are key contacts if you need information when preparing your proposal: Raymon Sieler General Manager (503) Jim Martin Finance Manager (503) Shirley Scott Accounting Supervisor (503) General Information Tillamook PUD invites qualified public accounting firms to submit proposals to examine Tillamook PUD's financial statements for three years beginning with the calendar year ending December 31, It is the intent of Tillamook PUD to negotiate a five-year contract, with the fourth and fifth year contingent upon successful completion of the first three years of the contract, as determined by the Board of Directors. These audits are to be performed in accordance with generally accepted auditing standards, the standards set forth for financial audits in the U.S. General Accounting Office's (GAO) Government Auditing Standards, the provisions of the Federal Single Audit Act and the U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and nonprofit organizations, and 7 CFR Part 1773, Policy on Audits of Rural Utilities Service (RUS) Borrowers, as applicable. Page 1 of 10

2 There is no expressed or implied obligation for Tillamook PUD to reimburse responding firms for any expenses incurred in preparing proposals to this request. District Overview The District is a municipal corporation authorized by Section 12, Article XI of the Constitution of the State of Oregon and organized under Chapter 261, Oregon Revised Statues. The District was created by vote in 1933, began operation in 1946, and has been the exclusive distributor of electric energy within its service area since 1961, when it purchased the facilities of Pacific Power and Light Company within Tillamook County. The District is governed by a Board, which has five directors elected by the voters of the District, who serve staggered four-year terms. The Board establishes the policies of the District. The Board is empowered and required by law to establish, maintain, and collect rates and charges for electric power which are fair and nondiscriminatory and adequate to provide revenues sufficient for the payment of the principal and interest on its debt obligations. The District has the exclusive authority to set rates and charges for electric energy and services and, by law, is not subject to the jurisdiction and control of the Public Utility Commission of the State of Oregon and/or any other federal, state or local agency having the authority to set rates and charges for electric energy and services. The District provides electric distribution service to about 20,600 customers. The District is a statutory preference customer of the Bonneville Power Administration (BPA) and purchases most of its power from BPA. The District finances its capital expenditures through a combination of long-term debt with Rural Utilities Service (RUS) and revenue bonds in the municipal bond market. The District is exempt from federal and state income tax and certain excise taxes. The District pays local government property taxes. Tillamook PUD employs approximately 82 full-time employees under the direction of the General Manager. The General Manager is appointed by the Board of Directors and is responsible for all PUD functions. Tillamook PUD s Finance Manager maintains all financial records. The total operating and capital budget for 2013 is $38,900,000. Purpose and Objective The purpose of this RFP is to obtain technical and cost proposals, covering the calendar years 2013, 2014 and 2015, from qualified public accounting firms. Our objective is to select the firm best qualified to: 1. Examine, audit and express an opinion on the District s annual financial statements. 2. Provide technical assistance to Tillamook PUD personnel on various accounting, auditing, and reporting questions. Page 2 of 10

3 The accounting firm, recommended by an Auditor Selection Committee, will be appointed by the Board of Directors. Auditing Standards To Be Followed The audit examination shall be made in accordance with generally accepted governmental procedures as prescribed in the AICPA Industry Audit Guide - Audits of State and Local Governmental Units and in GAAFR. The Annual Financial Report is to be prepared to conform fully with generally accepted accounting principles (GAAP) and to be in full compliance with the pronouncements of the Governmental Accounting Standards Board (GASB) and/or the Financial Accounting Standards Board (FASB), and 7 CFR Part 1773, Policy on Audits of Rural Utilities Service (RUS) Borrowers as appropriate. The auditor's opinion will be directed toward the fairness of presentation of the financial statements in accordance with GAAP. The auditor will also provide compliance reports as required by Federal and State laws. Scope of Work The scope of the audit should be planned so as to preclude the necessity of exceptions arising from scope limitations and should be sufficient to enable the auditor to issue management letters. The scope of the audit, as detailed in a formal Audit Plan, will be reviewed and approved by Tillamook PUD s Finance Manager. The audit shall lead to the expression of an unqualified opinion on the financial statements, unless the auditor justifies to the District, in advance, in writing, the reasons for an opinion that is less than unqualified. Year-end GAAP-based financial statements shall be the responsibility of the auditing firm and the cost of preparing such financial statements shall be included in the audit fee. Meetings and Progress Reports: Pre-audit conferences with Tillamook PUD's management and related entities staff will be held no later than November 15 of each year to discuss audit schedules and working paper requirements, as well as the audit program. Progress reports will be held with key audit firm personnel and Tillamook PUD s financial management staff at regular intervals mutually agreed upon. An exit conference is required of the auditing firm on completion of all fieldwork as to inform the General Manager and Finance Manager of pertinent findings. Audit firm management is requested to be present at any meetings of the Board of Directors when matters regarding the audit or related reports are discussed. Page 3 of 10

4 Tillamook PUD s staff is responsible for closing the books, preparing trial balances, reconciling bank and all other accounts and performing other accounting and management functions. The following information and work-papers will be furnished in conjunction with the audit engagement: 1. Expenditure and revenue reports with year-to-date totals summarizing all transactions for each line item; a year-to-date general ledger detailing all transactions for each fund. Detail, by source of transactions for each line item, is available on-line through the data processing system. 2. Bank reconciliation s for all checking accounts that are subject to this audit. 3. Detailed reconciling records or lists of: investment, interest income, utility billing, payroll, accounts payable and receivables, liabilities, work orders and fixed assets, and debt payments as of December 31 of each calendar year. A materials inventory will be conducted annually before year end. 4. All funds and accounts of the District are to be covered by the audit examination. Tillamook PUD s audited financial statements will be expected to be completed and presented to the Board of Directors no later than the April Board meeting. Reports Required Reports covering examinations of financial statements and management letters will be a matter of public record. The audited financial statements may appear in all official statements or other documents covering the sale of securities. The following reports are expected at the completion of the audit and in the quantities, form and times indicated. A. Annual Financial Report (AFR) of Tillamook PUD: Prior to March 15 of each year, a report on the examination of the combined financial statements and related notes thereto will be presented. These statements are to include the various operations of Tillamook PUD and auditor comments and disclosures required by the Minimum Standards for Audits of Oregon Municipal Corporations. The audit firm shall submit a preliminary draft of the AFR, including auditor comments and disclosures required by the Minimum Standards for Audits of Oregon Municipal Corporations for review. The auditor will print 50 copies and assemble the final AFR. Each year, the schedule will be reviewed and adjusted if appropriate. Page 4 of 10

5 B. Report on the Single Audit (Only If Required): If a Single Audit report is required, the audit firm shall submit a preliminary draft of the single audit report for review and comment. The audit firm will prepare and deliver copies of the final report, with management's proposals to the findings and recommendations, along with the AFR. If the audit firm finds indications of fraud, waste, or illegal acts, or questioned costs, a separate written report to the funding agency is required. C. Management Letter per Financial Report The audit should include recommendations to management, prepared by the audit firm in letter form, addressed to the Board of Directors, which include any findings, observations, opinions, comments or recommendations relating to internal control, accounting systems, data processing, compliance with laws, rules and regulations, or any other matters that come to the attention of the auditor during the course of the examination. Such recommendations shall not be constructed as special or additional studies, but shall be limited to those usually associated with the study of internal control systems and procedures as a part of an examination of financial statements. The firm shall assist management in advice and counsel in implementing those recommendations as required. The recommendations will be discussed with appropriate Tillamook PUD staff prior to publication where deemed appropriate. If the audit firm finds indications of fraud, illegal acts, and/or questioned costs or procedures, immediate direct discussions with the board president is required followed up with a separate written report to the entire Board. The Management Letter will also serve as the letter to RUS. 7 CFR requires comments on specific aspects of the internal control over financial reporting, compliance with specific RUS loan and security instrument provisions, and other additional matters. Technical Assistance As part of the overall audit contract, Tillamook PUD expects to receive from the audit firm a variety of technical assistance throughout the year. This assistance would include answers to accounting, reporting, or internal control questions. Additional Services Proposals should contain provisions for dealing with extraordinary circumstances discovered during the audit that may require an expansion of audit work beyond that which was originally planned. In addition, the audit firm may be requested to perform special projects for Tillamook PUD during the year. Because of variations in the demand for additional services, such work will be contracted for, provided, and billed separately to Tillamook PUD on an hourly basis. Proposals should describe the types of services available from the firm, the professionals who would provide them and the standard hourly fees to be charged. Page 5 of 10

6 Any unusual conditions encountered during the course of the audit where services of the auditing firm must be extended beyond the normal work anticipated would require written notification to the Finance Manager, who will respond in writing concerning the additional services. Evaluation of Proposals Proposals will be evaluated to determine which one best meets the needs of Tillamook PUD. After meeting the mandatory requirements, the proposals will be evaluated on both their technical and cost aspects. Heavy weighting will be given to utility-related experience. This will include the firm's direct experience in similar sized electric utilities in Oregon and AFR experience. In addition, the direct experience of the audit team members in the above areas will also be heavily weighted. Tillamook PUD feels that audit staff continuity is of considerable benefit. The lowest cost proposal will not necessarily receive the contract if experience is weak. Mandatory Requirements There are requirements that the audit firm must meet to enable the proposal to be evaluated further: 1. The audit firm must be properly licensed for public practice as an independent auditor and qualified as a municipal auditor in the State of Oregon; and 2. The audit firm must be qualified to perform the audit to RUS guidelines as indicated in CFR, Part Qualifications of CPA. 3. The audit firm must meet the independence standards of the GAO Governmental Auditing Standards. Auditor Criteria Evaluation consideration will include the following: 1. The ability to understand the District s auditing needs. 2. The audit approach of the firm - is it thorough, original, comprehensive, and tailored to the needs of Tillamook PUD? Are the time estimates to perform each section clearly identified? 3. Qualification of supervising staff assigned to the audit including the on-site supervisor; education, position in firm, years of utility and governmental auditing. 4. Prior PUD utility and governmental auditing experience of the firm. 5. Expertise outside the traditional financial audit functions (i.e., performance auditing, rate structure development, etc.) Page 6 of 10

7 6. Cost, although a significant factor, may not be a dominant factor. Cost is particularly important when all of the other evaluation criteria are relatively equal. Selection Procedure An Auditor Selection Committee shall screen all written proposals. An Auditor Selection Committee will interview the finalists. An Auditor Selection Committee recommendation will be made to the full Board at their November 12, 2013 regularly scheduled board meeting. Audit Schedule The audit contract may start as soon after the contract document is executed as is agreeable to both parties. The field audit work shall be completed no later than three months after the close of the audit period ending December 31, 2013, and the draft Annual Financial Report shall be available for presentation at the April Board meeting. Periods to be Audited 1. The proposal is for three (3) years with separate audits each year. The periods to be audited are the calendar years ending December 31, 2013, 2014 and If the contract is satisfactorily carried through for three (3) years, the engagement may be renewed for another two (2) years at the option of the Board. Page 7 of 10

8 Selection Process and Schedule Request for Proposal: Audit Services Tillamook PUD invites proposals from qualified Certified Public Accountants to serve as Tillamook PUD's Independent External Auditor. The appointment will be for an initial three-year period beginning with Audit year 2013 and may be extended for up to a total of five years. Appointment will be determined by the respondent's experience, services provided, and the cost for such services. Sealed Requests for Proposals - Audit Services will be received by Tillamook PUD, until 2:00 p.m. Friday, October 18, 2013, at which time all proposals will be opened and read. For additional information or questions regarding this Request for Proposal, please contact any of the following: Raymon Sieler General Manager (503) Jim Martin Finance Manager (503) Shirley Scott Accounting Supervisor (503) September 10, 2013 Public Notice of Intent October 18, 2013 ** Proposal Due Date ** October 28, 2013 Interview of Finalists by an Audit Selection Committee November 12, 2013 Contract awarded by Tillamook PUD Board ** Two copies of the Proposal, clearly marked "REQUEST FOR PROPOSAL- AUDIT SERVICES" must be delivered to Tillamook PUD no later than 2:00 p.m., Friday, October 18, 2013, in the two-envelope format. One envelope shall contain the proposal and shall be so marked. The second envelope shall contain the audit fees and shall be so marked. All envelopes should be sealed. An Audit Selection Committee will evaluate the written proposals. The audit contract will be awarded by the Tillamook PUD Board of Directors at the Tuesday, November 12, 2013 meeting. Tillamook PUD reserves the right to accept or reject any or all bids, to waive minor irregularities or informalities and has the right, in its sole discretion, to accept any bid deemed to be in the best interest of the Public. All mailed bids should be addressed to the Tillamook People's Utility District, PO Box 433, Tillamook, Oregon, 97141, Attn: Nancy Dillard, Executive Assistant. Proposals received after this time will not be accepted and will be returned unopened. Page 8 of 10

9 Considerations in the Selection of Independent Public Accountants Your proposal should provide the following information for consideration by the Tillamook PUD Audit Selection Committee: 1. Describe how you would approach the audit, including the manner in which you intend to use computer-assisted auditing procedures, statistical sampling techniques and specialized utility/governmental audit programs. 2. Describe the procedures followed in the technical review of audit reports prior to their issuance by qualified personnel independent of the audit engagement personnel. 3. Identify the local office partners, manager and key staff members who would be assigned to the audit. Describe their roles and provide a brief description of their professional experience, including experience in utility and governmental auditing. Specifically address the level of audit field staff, review staff and management continuity that Tillamook PUD may reasonably expect. 4. Explain how you would propose to use Tillamook PUD personnel, if at all, to assist you during the audit, and indicate the approximate time requirement. 5. Describe your firm's personnel development program and your continuing professional educational requirements. Identify specialized programs in the area of utility and municipal accounting and auditing. 6. Briefly describe the experience and knowledge, which your firm and local office have in performing examinations in accordance with the provisions of the Single Audit Act. 7. Describe your firm's capability and experience in providing management consulting services to local government units, and identify your local office consultants who would provide such services. 8. Comment on your firm's ability to provide constructive suggestions for improving the District s internal accounting controls and administrative procedures. 9. Identify your firm's current utility and municipal auditing engagements and indicate which accounts have been served within the last five years. Page 9 of 10

10 10. Estimate the hours associated with your primary requirement to perform an examination of the financial statements and supplemental information included in the District s Annual Financial Report for the year ending December 31, Also estimate the percentage of this work that will be performed on-site. 11. Estimate the maximum fee associated with your examination and project a maximum annual percentage of increase, which can be expected for the next four calendar years. Indicate the method to be used each year to adjust the audit fee. Include your firm's billing rates for all applicable classifications of professional personnel, as the District may require additional billable services. 12. Estimate the maximum fee associated with your examination for each of the three years for the single audit (if required) and project a maximum annual percentage of increase which can be expected for the remaining two calendar years. 13. Describe the method you would use in charging for any special requests, reports or broadening of the scope i.e., how such a request would be handled, rates, etc. 14. Submit two samples of management reports that you have lately issued covering an audit, preferably of an Oregon utility and municipality, which have similar services and comparative size of Tillamook PUD. 15. Provide any other information which you believe will assist Tillamook PUD in making its selection. Page 10 of 10