^'^QNS af ^^d MISSISSIPPI INSTITUTIONS OF HIGHER LEARNING OFFICE OF FINANCE AND ADMINISTRATION. April 19, 2010

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1 ^'^QNS af ^^d MISSISSIPPI INSTITUTIONS OF HIGHER LEARNING OFFICE OF FINANCE AND ADMINISTRATION April 19, 2010 To: Potential Bidders for the Mississippi Board of Trustees of State Institutions of Higher Learning Audits for FY 2010 and FY 2011 The Mississippi Board of Trustees of State Institutions of Higher Learning (Board) is seeking proposals for fiscal years ending June 30, 2010 and 2011 for performing all procedures necessary to issue the following: 1. Independent Auditor's Report and information necessary for inclusion in the State of Mississippi Comprehensive Annual Financial Report (CAFR), 2. Independent Auditor's Report on the Financial Statements of the State of Mississippi IHL University System and an Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards, and 3. Independent Auditor's Report on the Schedule of Expenditures of Federal Awards, an Independent Auditor's Report on Compliance with Requirements Applicable to each Major Program, and an Independent Auditor's Report on Internal Control Over Compliance in accordance with OMB Circular A-133. Agreements entered into will be between the Board, the FIRM, and the State of Mississippi Office of the State Auditor (OSA). The financial audit for FY 2010 must be completed by December 6, 2010; however, preliminarily audited figures must be presented to the Mississippi Department of Finance and Administration by November 5, 2010 for its inclusion in the State of Mississippi's Comprehensive Annual Financial Report (CAFR). The Independent Auditor's Report on the Schedule of Expenditures of Federal Awards, as well as the Independent Auditor's report on Compliance with Requirements Applicable to each Major Program, and an Independent Auditor's Report on Internal Control over Compliance in accordance with OMB Circular A-133 must be complete by March 15, The address for meetings and responses to RFP is 3825 Ridgewood Road, Jackson, MS Critical deadlines are as follows: 3825 RIDGEWOOD ROAD JACKSON, Mississippi WMN.MISSISSIPPI.EDU FAx

2 Description Date Location Time Mandatory Preliminary Bidders Conference Aril 27, 2010 IHL Board Room 10:00 a.m. 10:00 a.m.; 11:00a.m.; Detail Bidders Conference (4 meeting times) April 28, 2010 IHL Board Room 1:00 p.m.; and 2:00 p.m. Bidders Due Date for RFP Submission May 14, Ridgewood Road 5:00 P.M. Contract Approval May 20, 2010 IHL Board Room N/A At the Mandatory Preliminary Bidders Conference representatives from IHL and/or the Office of the State Auditor will be in attendance to explain the university system audit process and there will be ample time for any questions regarding the process. IHL will make staff available at the Detail Bid Conference on April 28 at four separate times to answer specific questions proposers may have. If you have question or would like to register for the sessions, please do so by sending an to Chris Halliwell at challiwell a,mississippi.edu or ca All proposals must be received by the Mississippi Board of Trustees of State Institutions of Higher Learning no later than 5:00 p.m. on Friday, May 14, The FY 2009 audit may be found on our website at or the direct link is htt :1/ i.edulfinanceldownloads/ihl system a-133 audited financial statement pd The FY 2009 State of Mississippi Consolidated Financial Statement Report (CAFR) may be found at the following webpage: dfa.state. ms. us/of ces/ofm/bfr %20Files/CAFR %20Files/2009%20CAFR. pdf. We look forward to your participation in this process. Sincere)y, Hank M. Boutcds,Th.D. Commissioner

3 Mississippi Board of Trustees of State Institutions of Higher Learning Issued by: - June 30, 2010 and June 30, 2011 (with two one-year options to renew) For annual audit services to the Mississippi Institutions of Higher Learning University System for fiscal years ending: Request for Proposal

4 FROM: Board of Trustees - State of Mississippi Institutions of Higher Learning (Board) DATE: April 19, in showing your calculations for the bid scenario, please show the amounts proposed for the two fiscal years separately. A consolidated IHL System financial statement presentation will also be required. See the June 30, 2009 IHL System audit report (link below) for the required presentation format. httpalwww. mississippi.edu/flnanceldownloads/ih l_system_a-133 audited_financialstatement :p.df This contract will be for the A-133 audit services of the annual IHL System for fiscal years ending June 30, 2010 and June 30, For the purposes of the three deliverables of this RFP as indicated in the "Purpose" section of this document and further explained in "Attachment A - Audit Services Schedule" of this document, materiality shall be based upon the university system as a whole. In addition, please assume that the various deliverable due dates for the June 30, 2011 audit will be due on the same date and for the applicable fiscal year. All proposals must be received by the Board of Trustees of the State of Mississippi Institutions of Higher Learning no later than 5:00 pm, Friday, May 14, The Board holds the option to extend the submission deadline if necessary. If the deadline is extended, all bidders will be notified. Agreements entered into will be between the Board, the FIRM, and the Mississippi Office of the State Auditor (OSA). SUBJECT: Request for proposals for performing all procedures necessary to issue an Independent Auditor's Report on the Financial Statements, an Independent Auditor's Report on Compliance and Internal Controls Based on an Audit of Financial Statements Performed in accordance with Government Auditing Standards, and an Independent Auditor's report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB CircularA-133 for the fiscal years ending June 30, 2010 and June 30, 2011 financial statements of the State of Mississippi Institutions of Higher Learning (IHL). The Board of Trustees will consider extending the audits for two additional years each on an annual basis (annual terms to be negotiated at a future date). TO: Prospective Bidders

5 PURPOSE GENERAL INFORMATION 3 PART VI - CONTRACT CLAUSES PART V - PROPOSAL FORM PART IV - PROJECT NEGOTIATIONS AND AWARD OF CONTRACT N. Proposal Requirements 0. Period of Contract P, Insurance Q. Payments PART II! - INSTRUCTIONS TO OFFERORS PART II - WORK STATEMENT A. Issuing Office B. Contract Type and Price C. Proposal Submission and Deadline D. Acceptance/Rejection of Proposals E. Proposal Preparation Expenses F. Withdrawal of Proposals G. Proposal Modifications H. Equal Opportunity 1. Effective Period of Proposal J. Amendments to Proposal Specifications K. Organizational Conflict of Interest L. Questions Concerning Proposals M. Award Announcement Date PART I - GENERAL TERMS AND CONDITIONS TABLE OF CONTENTS

6 4 ht tp:// state.ms. us/offices/ofm/bfr%2ofiles/cafr%20files/2009%20cafr.pdf The component unit statements referred to above can be found on numbered pages 46 and 47 of this report (numbered pages 49 and 50 of the document). The accompanying notes are on the pages immediately following. (Note: Appendix "A " to this document provides an example of the required information that will need to be prepared for inclusion in the Fiscal Year 2010 CAFR. An independent audit opinion upon this information must also be issued.) The purpose of the Request for Proposal is to obtain written proposals for the annual audits of the fiscal years ending June 30, 2010 and June 30, 2011 of the Board of Trustees of IHL University System financial statements and underlying records in accordance with government auditing standards generally accepted in the United States of America, and an audit of the applicable federal programs in accordance with the Office of Management and Budget's Circular A-133. The full financial statements for these accounts are scheduled to be available for testing on, or about September 15, There will be three deliverables regarding these audit services, each with different due dates as discussed in Attachment A - Audit Services Schedule of this Request for Proposal. Please refer to "Attachment A - Audit Services" Schedule for more detailed information regarding these items. The three deliverables are: 1. Independent Auditor's Report and information necessary for inclusion in the fiscal year ending June 30, 2010 State of Mississippi Comprehensive Annual Financial Report (CAFR) The IHL University System is included in the State of Mississippi CAFR as a major component unit of the State of Mississippi. The university information necessary for presentation in the CAFR will be due to the Mississippi Department of Finance and Administration on, or before November 5, The auditor will be required to issue an opinion on the Universities Statement of Net Assets and on the Universities Statement of Activities and related note disclosures as presented in the State of Mississippi's CAFR (see note below for additional information). This report must be dated prior to the issuance of the State of Mississippi CAFR. An approximate date of December 6, 2010 for the issuance of the CAFR should be anticipated. A copy of the State of Mississippi CAFR for Fiscal Year2009 can be found on the internet at the following address: PURPOSE

7 5 3. Independent Auditor's Report on the Schedule of Expenditures of Federal Awards, an Independent Auditor's report on Compliance with Requirements Applicable to Each Major Program and an Independent Auditor's Report on Internal Control Over Compliance in Accordance with OMB Circular A-133 These reports are necessary to satisfy the requirements of the Single Audit Act in accordance with OMB Circular A-133. This work must be completed and report issued no later than March 15, In addition, the FIRM must work with the IHL Board Office staff to ensure that the Data Collection Form required for submission to the Federal Audit Clearinghouse of the Office of Management and Budget is completed and submitted prior to the March 31, 2011 deadline for submission. The Schedule of Expenditures of Federal Awards for the Year Ended June 30, 2009, referred to in the deliverable document referenced above in number 2 (beginning on page 155 of this document.) These reports must be dated prior to the issuance of the State of Mississippi CAFR for the fiscal year ending June 30, The CAFR is typically issued during the first part of December for the current fiscal year end. An approximate date of December 6, 2010 for the issuance of the IHL University System Audit for the fiscal year ending June 30, 2010 should be anticipated. However, coordination with the Mississippi Department of Finance and Administration will be necessary to ensure that the Independent Auditor's Report for the 2010 IHL University System Audit precedes the 2010 CAFR Audit Opinion date. A copy of the State of Mississippi Institutions of Higher Learning Audited Financial Statements for the Year Ended June 30, 2009 can be found on the internet at the following address: m ississippi.edu/finance/downloads/ihl_system_a-133_audited_financial_statement_ pdf 2. Independent Auditor's Report on the Financial Statements of the State of Mississippi IHL University System for the fiscal year ending June 30, 2010 and an Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards

8 Audited financial statements of the university foundations that are necessary for inclusion in deliverables 1 and 2 above 6 This offer is issued by Board of Trustees of the State of Mississippi Institutions of Higher Learning. The Board reserves the right, without qualifications, to select any proposal as a basis for negotiation, to reject all proposals and to exercise its discretion and apply its judgment with respect to any proposal submitted. The Board reserves the right to recall and end or suspend this RFP at any time leading up to the time of final contract signing. A. ISSUING OFFICE PART I - GENERAL TERMS AND CONDITIONS The Mississippi Board of Trustees of State Institutions of Higher Learning (IHL) governs the public universities in Mississippi which make up the IHL University System, including Alcorn State University; Delta State University; Jackson State University; Mississippi State University; Mississippi University for Women; Mississippi Valley State University; University of Mississippi including the University of Mississippi Medical Center; and University of Southern Mississippi. The Southern Association of Colleges and Schools is the accrediting body for each of the public universities in Mississippi. The Board of Trustees is the constitutional governing body of the State Institutions of Higher Learning. GENERAL INFORMATION The University of Mississippi Medical Center Educational Building Corporation The State Institutions of Higher Learning Self-Insured Tort Claims Fund The State Institutions of Higher Learning Self-Insured Workers Compensation Fund The University of Mississippi Medical Center Tort Claims Fund The only portions of the three deliverables noted above that are separately contracted by other CPA firms and are not included in this RFP are as follows:

9 It is anticipated that any contract subsequent to this solicitation will be awarded on a cost reimbursement basis of an hourly rate. A Schedule of Professional Fees and Expenses should be submitted with the proposal. C. PROPOSAL SUBMISSION AND DEADLINE Receipt or acceptance of a submission does not imply commitment or obligation on the part of the Board to fund any proposal submitted. One (1) original and one (1) copy of the entire proposal shall be submitted. Proposals shall be submitted in sealed envelopes or packages addressed to the office specified above. All proposals received after the submission deadline will be returned to the bidder unopened. Submission Deadline: Friday May 14, 2010 by 5:00 pm Board of Trustees of the State of Mississippi Institutions of Higher Learning Attention: Chris Halliwell 3825 Ridgewood Road - Room 418 Jackson, MS It is suggested that mailed proposals be posted as certified mail with a return receipt guaranteed. The Board will not be responsible for mail delays or lost mail. Proposals must be mailed or delivered to: All bidders must attend a MANDATORY BIDDERS conference to be held on Tuesday April 27, 2010 at 10:00 am for the purpose of explaining the university system audit process and to provide ample opportunity for questions and answers regarding this process. The conference will be located in the conference room of the IHL Board of Trustees. All bidders must submit one (1) original and one (1) copy of the entire proposal. No ed proposals will be accepted. All proposals must be received by the Board of Trustees of the State of Mississippi Institutions of Higher Learning no later than 5:00 pm on Friday, May 14, B. CONTRACT TYPE AND PRICE

10 Failure to furnish all information or to follow the format identified in these guidelines may disqualify the proposals. It is important that each section of the proposal be submitted in the most complete manner possible. The Board reserves the right to consult with outside parties in evaluation of proposals. All proposals become the property of the Board upon receipt and will not be returned to the bidder. 8 The Board reserves the right to issue amendments to these guidelines. If it becomes necessary to amend said guidelines, the Board will provide copies of the amendments to all bidders having submitted proposals based on earlier guidelines. All proposals are required to remain in effect for at least one (1) month from the date submitted to the Board for review. J. AMENDMENTS TO PROPOSAL SPECIFICATIONS Contracts, purchases and other financial transactions are administered by the Board equally, without regard to race, color, creed, sex, national origin, disability or age. 1. EFFECTIVE PERIOD OF PROPOSAL Any requests to modify proposals must be submitted in writing by the Primary bidder. All requests for modifications must be submitted prior to the proposal submission deadline. The Board reserves the right to deny any requests for proposal modification. H. EQUAL OPPORTUNITY Proposals may be withdrawn by written notice received at any time before award. G. PROPOSAL MODIFICATIONS The Board will not pay any costs incurred in the preparation and submission of proposals. F. WITHDRAWAL OF PROPOSALS E. PROPOSAL PREPARATION EXPENSES D. ACCEPTANCE/REJECTION OF PROPOSALS

11 9 The work for this RFP includes performing all procedures necessary to issue an Independent Auditor's Report on the Financial Statements, an Independent Auditor's Report on Compliance and Internal Controls Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards, and an Independent Auditor's report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB CircularA-133 for the fiscal year endings June 30, 2010 and June 30, 2011 financial statements of the State of Mississippi Institutions of Higher Learning University System. PART Ii - WORK STATEMENT It is anticipated that final selection decisions will be made by the Board on May 20, Written questions concerning a proposal, prior to or after submission, will be answered as quickly as possible. Questions regarding proposal content, form or technical aspects will require a written request in order to properly document both request and response. A faxed or ed question will be accepted. Please address all inquiries to: Board of Trustees of the State of Mississippi Institutions of Higher Learning 3825 Ridgewood Road - Room 418 Jackson, MS Phone: Fax: mississippi.edu M. AWARD ANNOUNCEMENT DATE In the event that an organizational conflict of interest should arise concerning this procurement, the Board shall have the authority and responsibility to make the affirmative determination as to whether: (1) there would exist a conflict as a result of an award or (2) that such conflict would be avoided after appropriate conditions are included in the award instrument. In the event that the Board determines that a conflict of interest exists and that such conflict cannot be avoided by including appropriate conditions in the award instrument, the Board may nevertheless authorize the award, if a determination is made that it is in their best interest to make such award, and the award instrument includes appropriate conditions in such contract agreement, or arrangements to mitigate such conflict. L. QUESTIONS CONCERNING PROPOSALS K. ORGANIZATIONAL CONFLICT OF INTEREST

12 1 0 Management at the various universities are responsible for making available to the FIRM, upon request, all original accounting records and related information, and personnel to whom the FIRM'S audit staff may direct inquiries. The FIRM will also consider universities' internal control over compliance with requirements that could have a direct and material effect on the federal programs in order to determine auditing procedures for the purpose of expressing an opinion on compliance for the programs and to conclude on the internal control over compliance in accordance with OMB Circular A-133. As a part of the FIRMS audit, it will audit the compliance of the IHL University System with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to the selected programs. The FIRM will conduct the audit in accordance with auditing standards specified herein. Accordingly, the FIRM will examine, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assess the accounting principles used and significant estimates made by management, and evaluate the overall financial presentation. 1. The standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards (2003) which includes generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants. 2. Statements of financial accounting standards as prescribed by the Governmental Accounting Standards Board. 3. Specific grant compliance matters in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement. The Single Audit 4. Act Amendments of 1996, and Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non - Profit Organizations. 5. Compliance with applicable state laws. 6. Special items or reports as set forth in the attached Audit Services Schedule. The auditing services will be made in conformity with the following guidelines and regulations:

13 11 A description of the FIRM's qualifications for performing professional auditing services. Experience and expertise of all key personnel who will be working on the engagement should be presented. In the event the FIRM proposes to subcontract with another CPA firm to perform a portion of the audit services necessary for the fulfillment of this contract, the personnel and experience level of the subcontractor firm must be disclosed, along with an explanation of the specific work to be performed by the subcontractor firm and an estimate of the hours necessary to complete the subcontracted work. The FIRM's proposal shall include the following: N. PROPOSAL REQUIREMENTS PART Ill - INSTRUCTIONS TO OFFERORS The FIRM acknowledges that the Board and the OSA are relying on the timely completion of this contract in its scheduling and budgeting and that time is of the essence. If the FIRM fails to meet the completion date prescribed herein, the Board and/or the OSA may, at their option, reduce the agreed compensation by an amount not to exceed ten percent (10%) of the total contract amount as liquidated damages for the failure to complete the contract by the completion date. The Board and the OSA are empowered to accept or reject the services furnished by the FIRM in compliance with the provisions of this RFP and the attached Audit Services Schedule. However, any rejection of services must be based solely on the FIRM's failure to comply with the terms of this RFP, and cannot be based on the nature of the FIRM's opinion on the financial status of IHL university system in its audit reports. The FIRM shall have a certified public accountant (CPA) as the certifying official of the Independent Auditor's reports. As required by applicable auditing standards, the FIRM will make specific inquiries of management and others about the representations embodied in the financial statements and the effectiveness of the internal controls. Generally accepted auditing standards also require that the FIRM obtain representation letters covering the financial statements from certain members of management. The results of the audit tests, the responses to the FIRM's inquiries, and the written representations comprise the evidential matter the FIRM will rely upon in forming an opinion on the financial statements of the university system as a whole.

14 12 The FIRM, as an independent contractor, shall provide proof of Comprehensive General Liability insurance including Professional Liability, Worker's Compensation insurance and Commercial Auto Liability Insurance. The FIRM must provide a Certificate of Coverage mailed to the Board of Trustees of State Institutions of Higher Learning, Office of Contracts and Grants Compliance, 3825 Ridgewood Road, Suite 417, Jackson, MS, The Certificate of Coverage should, at a minimum, contain the name of the carrier, effective and expiration dates of coverage, a description of the covered perils, the amount of coverage by peril, the name and mailing address of the insurance company, and the name and mailing address of the insurance agent. The Certificate of Coverage must name the Board of Trustees of State Institutions of Higher Learning as an additional insured. The Comprehensive General Liability coverage and the Commercial Auto Liability coverage shall be a minimum amount of Three Million Dollars ($3,000,000) per occurrence and Three Million Dollars ($3,000,000) annual aggregate through an insurance company with a Best rating of A- or higher and a P. INSURANCE The contract shall expire one hundred twenty (120) days after the delivery of the items listed in Attachment A, Audit Services Schedule of this document. 0. PERIOD OF CONTRACT 6. A Schedule of Professional Fees and Expenses. 4. An affirmative statement that it is independent of the Board and any of the entities governed by the Board as defined by generally accepted auditing standards and Government Auditing Standards (2003). This statement must also be obtained from any subcontractor CPA firm(s) that will be utilized by the FIRM. 5. A copy of the report of its most recent external quality review, including a statement indicating whether that quality review included a review of specific government engagements. This information must be supplied for any subcontractor CPA firm(s) that will be utilized by the FIRM. 3. The firm' s tax I.D. number. 2. The length of time the firm has been performing such services. A listing of current and previous Mississippi governmental services performed should be included in the proposal. If the firm has had previous specific audit or auditrelated experience in the college and/or university environment, a listing and brief explanation of such previous engagements should be presented. This information must be supplied for any subcontractor CPA firm(s) that will be utilized by the FIRM.

15 Q. PAYMENTS The Board shall pay, or make payments on, consideration in accordance with the following schedule or procedure: 13 PART IV - PROJECT NEGOTIATIONS AND AWARD OF CONTRACT It is the intent of the Board to conduct negotiations for award of a contract to the best offer as determined by the evaluation of competitive proposals, all relevant factors considered. A contract will be awarded only if it is within available funds and in the best interest of the Board. The Board will evaluate each proposal for completeness in accordance with Part Ili, Section N. Proposals will be ranked based on the technical qualifications and total price of the audit. The hourly rate may be computed for comparison purposes, in the event extreme deviations in cost or hours are noted. The Board's Request for Proposals and the FIRM's technical proposal for professional services shall be incorporated as part of the awarded contract. The Board reserves the right to seek outside technical analysis of any proposal. The FIRM shall submit monthly invoice(s) to the Board with supporting documentation of costs incurred. The invoices shall outline the work performed and number of hours worked. Audit hours specifically identifiable to each of the universities and the Board Office should be separately identified. The Board will pay such invoices in accordance with the law related to timely payment for purchases by public bodies (Miss Code Ann. Section et seq., Rev.1990). The final payment shall be made after completion and acceptance of the auditing services. In no instance will a payment be made that causes the total amounts paid to exceed the contract amount. financial size Class X or higher approved by the Mississippi Department of Insurance.

16 All proposals shall be prepared in accordance with this section. Although there are no specific length limitations, proposals should be concisely written, indexed (crossindexed as appropriate), and logically assembled. All pages of each part shall be appropriately identified. The proposal shall consist of one document, which shall address, at the minimum, the following items: 14 The personnel listed below are considered essential to the work being performed hereunder. Prior to removing, replacing, or diverting any of the specified individuals, the FIRM shall notify the Board reasonably in advance and shall submit justification, including proposed substitutions, in sufficient detail to permit evaluation of the impact on this contract. No replacement shall be made by the FIRM without the written consent of the Board or the Board staff. The Board or Board staff must ratify in writing the change. Key personnel for this contract includes: (Key Personnel are those persons assigned by the FIRM to perform services and are referred to in Part III, N.1). 1. Key Personnel PART VI - CONTRACT CLAUSES This section should contain at the minimum, all information requested in Part III - Instructions to bidders, Section N. Proposal Requirements. 4. PROPOSAL NARRATIVE A table of contents listing the major sections, subsections and appendices of the proposal must be included. 3. TABLE OF CONTENTS A brief letter formally submitting the project for consideration should be included. The transmittal letter should be signed by the individual bidder or authorized representative of the proposing organization. 2. TRANSMITTAL LETTER The cover page of this solicitation will be submitted with the proposal. The 'offer" portion of the document must be completed by the bidder. 1. SOLICITATION AND OFFER DOCUMENT PART V - PROPOSAL FORM

17 The FIRM shall, during the entire term of this contract, be construed to be an independent contractor. Nothing in this contract is intended to nor shall be construed to create an employer-employee relationship, or a joint venture relationship. 1 5 Audit working papers will also be made available upon request to the cognizant agency or oversight agency for audit or its designee, a Federal agency providing direct or indirect funding, or the General Accounting Office (GAO) at the completion of the audit, as part of a quality review, to resolve audit findings, or to carry out oversight responsibilities. The working papers prepared in conjunction with the services under this contract constitute confidential information and will be retained by the FIRM in accordance with its policies and procedures. The FIRM will provide the Board and OSA the right of access to the work papers as necessary. 3. Ownership of Documents and Work Products It is further understood that the consideration expressed herein constitutes full and complete compensation for all services and performances hereunder, and that any sum due and payable to the FIRM shall be paid as a gross sum with no withholdings or deductions being made by the Board for any purpose from said contract sum except as permitted in Paragraph 15, Termination and Part 11 Work Statement. The FIRM shall pay when due, all salaries and wages to any person(s) assigned by the FIRM to perform services. The FIRM accepts exclusive responsibility for the payment of federal income tax, state income tax, social security, unemployment compensation and any other withholdings that may be required. Neither the FIRM nor any person(s) assigned by the FIRM are entitled to state retirement or leave benefits. The FIRM represents that it is qualified to perform the duties to be performed under this contract and that it has, or will secure, if needed, at its own expense, applicable personnel who are qualified to perform the duties required under this contract. Such personnel shall not be deemed in any way, directly or indirectly, expressly or by implication, to be employees of the Board. The FIRM shall have the sole right to hire and discharge any person(s) assigned by the FIRM to perform services. 2. Employment Status

18 4. Record Retention and Access to Records 16 Failure of either party hereto to insist upon strict compliance with any of the terms, covenants and conditions hereof shall not be deemed a waiver or relinquishment of any similar right or power hereunder at any subsequent time or of any other provision hereof, nor shall it be construed to be a modification of the terms of this contract. 7. Waiver The FIRM shall not assign or otherwise transfer the obligations incurred on its part pursuant to the terms of this contract without the prior written consent of the Board and OSA. Any attempted assignment or transfer of its obligations without such consent shall be null and void. All obligations and duties of either party under this contract shall be binding on all successors in interest or assigns of such party. 6. Assignment The Board and OSA may, from time to time, request changes in the scope of services of the FIRM to be performed. Such changes, including any increase or decrease in the amount of the FIRM'S compensation, which are mutually agreed upon by and between the Board and the FIRM shall be included in written amendments to this contract signed by all parties prior to the work being performed. 5. Modification or Amendment At the conclusion of the audit, the FIRM will maintain possession and make available to the Board any financial records, supporting documents, statistical records and all other records pertinent to the services performed by the FIRM under this contract in accordance with the policies and procedures or professional regulatory requirements. These records will be maintained for at least five (5) years; however, if any litigation or other legal action, by or on behalf of the State has begun that is not completed at the end of the five (5) year period, or if audit findings, litigation or other legal action has not been resolved at the end of the five (5) year period, the records shall be retained until resolution. The FIRM is prohibited from use of the above described information and/or materials without the express written approval of the Board.

19 The FIRM agrees to indemnify, defend, save and hold harmless, the Board from and against all claims, demands, liabilities, suits, damages and costs of every kind and nature whatsoever, including court costs and attorney fees, arising out of or caused by a negligent or wrongful act of the FIRM, its officers, employees and subcontractors in the performance of services under this contract. 17 The FIRM shall comply in all material respects, with all applicable laws, regulations, policies, and procedures of the United States of America or any agency thereof, the State of Mississippi or any agency thereof and any local governments or political subdivision that may affect the performance of services under this contract. Specifically, but not limited to, the FIRM shall not illegally discriminate against any employee nor shall any party be subject to illegal discrimination in the performance of this contract because of race, creed, color, sex, age, national origin or disability. 12. Compliance with Laws If any term or provision of this contract is prohibited by the laws of the State of Mississippi or declared invalid or void by a court of competent jurisdiction, the remainder of the contract shall not be affected thereby and each term and provision of the contract(s) shall be valid and enforceable to the fullest extent permitted by law. 11. Severability This contract shall be construed and governed in accordance with the laws of the State of Mississippi and venue for the resolution of any dispute shall be Jackson, MS in Hinds County, Mississippi. The FIRM expressly agrees that under no circumstances shall the Board be obligated to pay an attorney's fee or the cost of legal action to the FIRM. 10. Governing Law The FIRM represents that it will maintain workers' compensation insurance as prescribed by law which shall inure to the benefit of the FIRM'S personnel, as well as comprehensive general liability, or professional liability insurance and, where applicable, employee fidelity bond insurance. The FIRM will, upon request, furnish the Board with a certificate of conformity providing the aforesaid coverage. Insurance Indemnification

20 18 The Board may terminate this contract with or without cause, by providing a fifteen (15) day written notice of termination to the FIRM; b. Termination for Convenience: This contract may be terminated in whole or in part by the Board upon written notice to the FIRM, if the FIRM should become the subject of bankruptcy or receivership proceedings, whether voluntary or involuntary, or upon the execution by the FIRM of an assignment for the benefit of its creditors. In the event of such termination, the FIRM shall be paid an amount for all services actually performed pursuant to this contract, but in no case shall said compensation exceed the total contract price; or a. Termination Upon Bankruptcy: This contract may be terminated as follows: 14. Termination For OSA: Bill Doss, CPA Director, Financial and Audit Compliance Division State Auditor's Office 801 Woolfolk Building 501 North West St. Jackson, MS For the Board: Dr. Hank M. Bounds, Commissioner of Higher Education Board of Trustees of the State of Mississippi Institutions of Higher Learning 3825 Ridgewood Road Jackson, MS Any notices required or authorized to be given under this contract shall be in writing and sent by certified United States mail, postage prepaid, return receipt requested, to the addresses designated in this paragraph. Each party may change the person and address designated by delivering written notice to the other party. Any notice shall be effective when actually delivered to the designated address. 13. Notice

21 19 The parties expressly understand that the fulfillment of the payment obligations of the Board under this agreement is conditioned upon the availability and receipt of State and Federal funds. In the event that funds are insufficient or otherwise unavailable to satisfy payments due under this agreement, the Board shall not be obligated to make such payments, and all further obligations of the Board and the FIRM under this agreement shall cease immediately, without penalty, cost or expense to the Board or the FIRM of any kind whatsoever. In the event or such insufficiency or unavailability of funding, the Board shall promptly notify the FIRM in writing, of such event. The FIRM shall be entitled to payment for services in the amount determined under paragraph 15 or the amount of available funds, whichever is less. 15. Funding Notwithstanding the above, the FIRM shall not be relieved of liability to the Board for damages sustained by the Board by virtue of any breach of this contract by the FIRM, and the Board may withhold any payments to the FIRM for the purpose of set off until such time as the exact amount of damages due the Board from the FIRM are determined. The Board may also pursue any remedy available to it in law or in equity. In the event of termination, the FIRM will be entitled to payment for services in an amount which bears the same ratio to the total compensation as the services actually performed bear to the total services of the FIRM covered by the contract, less payments previously made. In no instance will a payment be made in excess of the contact amount. In addition, all finished or unfinished tests, surveys, checklists, forms, manuals, reports or other material prepared by the FIRM under this contract shall become the property of the Board. If, through any cause, the FIRM shall fail to fulfill in a timely and proper manner, as determined by the Board, its obligations under this contract, or if the FIRM shall violate any of the terms or conditions of this contract, and that breach continues for ten (10) days after the FIRM receives written notice from the Board, then the Board shall thereupon have the right to terminate this contract. In the event of termination for cause by the Board, in addition to other remedies provided herein or available at law or in equity, the FIRM shall bear all cost associated with the issuance of a new contract for audit services, including, but not limited to, the costs of reissuing another request for proposals and additional costs resulting from an acceleration of services necessary for the timely completion of such auditing services. c. Termination for Cause:

22 This contract, including the request for proposal and the FIRM'S technical proposal, and the Audit Services Schedule, constitutes the entire agreement of the parties with respect to the subject matter contained herein and supersedes and replaces any and all prior negotiations, understandings and agreements, written or oral, between the parties relating thereto. 20

23 The following audit work must be performed and applicable reports issued by the FIRM within the time frame listed below after a contract has been awarded: Independent 1. Auditor's Report and Information necessary for inclusion in the fiscal year ending June 30, 2010 State of Mississippi Combined Annual Financial Reports (CAFR? 21 Perform the audit services necessary to issue an Independent Auditor's Report on the Financial Statements in accordance with applicable guidelines and regulations as listed in Part 11-- Work Statement of this document for the fiscal year ending June 30, 2010 financial statements of Board of Trustees of the State of Mississippi Institutions of Higher Learning. These reports must be dated prior to the issuance of the State of Mississippi CAFR for the same fiscal years ending. The CAFR is typically issued during the first part of December for the The IHL University System is a major component unit of the State of Mississippi. Because the university system is presented as a component unit of the State of Mississippi, any material affiliated organizations of the universities must be combined into a single column presentation for inclusion in the CAFR. For the fiscal year ended June 30, 2009, the affiliated organizations that were determined to be material to the presentation and were included in the CAFR, were the Mississippi State University Foundation, Inc., University of Mississippi Foundation, and University of Southern Mississippi Foundation. These organizations are separately audited by other CPA firms. It is anticipated that these same organizations will be the only affiliated organizations that will be material to the university as a whole for the fiscal years ending June 30, However, materiality determinations will need to be made based upon actual June 30th figures for each fiscal year. The IHL University System information necessary for presentation in the CAFR will be due to the Mississippi Department of Finance and Administration on, or before November 5, Adjustments, if any, that are necessary after this date but prior to the date of the issuance of the IHL University System Audit report (see 2 below) should be communicated to the Mississippi Department of Finance and Administration immediately so that those adjustments are reflected in the State of Mississippi CAFR. ndependent 2. Auditor's Report on the financial statements of the State of Mississippi IHL University System for the fiscal year ended June 30, 2010 and, an Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards ATTACHMENT A - AUDIT SERVICES SCHEDULE

24 22 The State Institutions of Higher Learning Self Insured Tort Claims Fund The University of Mississippi Medical Center Educational Building Corporation Audited financial statements of the university foundations that are necessary for inclusion in deliverables I and 2 above. c. an Independent Auditor's Report on Internal Control Over Compliance in Accordance with OMB CircularA-133. These are the reports necessary to satisfy the requirements of the Single Audit Act Amendments of 1996 in accordance with OMB Circular A-133. This work will need to be completed and the annual reports issued no later than March 15th The only portions of the three deliverables noted above that are separately audited by other CPA firms and are not included in this RFP are as follows: b. an Independent Auditor's report on Compliance with Requirements Applicable to Each Major Program and, a. an Independent Auditor's Report on the Schedule of Expenditures of Federal Awards, Perform the audit services necessary and in accordance with applicable guidelines and regulations as listed in Part II - Work Statement of this document for the fiscal year 2010 financial statements of the IHL University System in order to issue: 3. Independent Auditor's Report on the Schedule of Expenditures of Federal Awards, an Independent Auditor's report on Compliance with Requirements Applicable to Each Major Program and, an Independent Auditor's Report on Internal Control Over Compliance in Accordance with OMB Circular A-133 current fiscal year end. An approximate date of December 6, 2010 for the issuance of the IHL University System Audit for the fiscal year ending June 30, 2010 should be anticipated. However, coordination with the Mississippi Department of Finance and Administration will be necessary to ensure that the date of the Independent Auditor's Report for the 2010 IHL University System Audit precedes the 2010 CAFR Audit Opinion date.

25 The University of Mississippi Medical Center Tort Claims Fund 23 The State Institutions of Higher Learning Self -Insured Workers Compensation Fund

26 Component, Unit Additional Information For Inclusion In The State of Mississippi Comprehensive Annual Financial Report Appen=dix A

27 Mailing Address: P.D. Bflx2418 Bidgeland, Mlssissipp) ) (601) )4x) Ridgeland, Mississippi December 19, 2008 Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the IHL System's basic financial statements. The accompanying additional information, financial statements and schedules are presented forthe purpose of additional analysis in order to present the J HL System and its discretely presented component units as a major component unit in the State of Mississippi Comprehensive Annual Financial Report for the year ended June 30, 2008 and are not a required part of the basic financial statements. This additional information has been subjected to the auditing procedures applied by us and the other auditors in the audit of the basic financial statements of the 1HL System and, in our opinion, based on our audit and the reports of the other auditors, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Board of Trustees State of Mississippi Institutions of Higher Learning 3825 Ridgewood Road Jackson, MS independentauditors' REPORT ON ADDITIONAL INFORMATION C A f I G GS R.C 1R INGRAM Carr Aiggs & fngreri, LLC 2B2 Commerne Park Drive Ridgefand, Mississippi 34157

28 State of Mississippi Institutions of Higher Learning Component Unit Additional Information Combining Statement of Net Assets June 30, 2008 IHL System DFA Reclass MSU UM USM Total Only Entry Foundation Foundation Foundation Universities Assets Current Assets: Equity in internal investment pool Cash and cash equivalents Short-term investments Accounts receivable, net Notes and pledges receivable, net Due from other governments Inventories Prepaid expenses Other current assets $ 16,370,856 $ 16,370,856 $ 298,676,728 $ 3,243,092 $ 8,778,262 $ 14,913, ,612, ,722,484 2,719,419 14,211, ,653, ,498,708 (34,992,911) 227,505,797 10,216,021 5,504,769 5,540,523 3,650,446 24,911,759 20,122,055 20,122,055 20,821,910 20,821,910 7,973,026 7,973,026 78,667, , ,143 79,831,975 Total Current Assets 784,676,242 1,500,000 12,278,747 28,530,127 18,917, ,802,679 Noncurrent Assets: Investments 213,804,913 59,603, ,408,260 Notes and pledges receivable, net 109,333,751 11,969,150 17,342, 408 4,416, ,061,748 Restricted assets, Cash and cash equivalents 121,148, ,148,911 Short term investments 8,965,197 8,965,197 Investments 179,379, ,688, ,590,236 54,440, , 099,207 Capital assets, net of accumulated depreciation 2,346,635,978 13,306,918 2,944,831 22,511 2,362,810,038 Other noncurrent assets 2,030,926 44,400 4,948,728 1,936,266 8,960,320 Total Noncurrent Assets 2, , , ,826,003 60,815,988 3,632,453,681 Total Assets $ 3,765,775$131 $ 1500,000 $ 299,891,548 $ 331,356,130 $ 79,733,551 $ 4,478,256,360 (continued)

29 Total Current Liabilities 271,578,358 1,500, ,037 5,698, , ,284,942 State of Mississippi Institutions of Nigher Learning Component Unit Additional Information Combining Statement of Net Assets June 30, 2008 Liabilities and Net Assets Il-IL System DFA Reclass MSU UM USM Total Only Entry Foundation Foundation Foundation Universities Liabilities Current Liabilities: Warrants payable $ 1,600,000 $ 1,500,000 Accounts payable and accrued liabilities $ 143,917,252 (698,751) $ 2,771,447 $ 652, ,642,369 Due to primary government 698, ,751 Deferred revenues 51,584,166 51,584,166 Bonds and notes payable 19,899,549 2,411,790 22,311,339 Lease obligations payable 9,670, ,205 10,001,218 Current portion of noncurrent liabilities 17,873, ,934 54,315 18,361,025 Other current liabilities 28,633,602 5,251,595 5,265, , Noncurrent liabilities: Deposits 2,355,429 2,355,429 Funds held in trust for others 15,849,434 15,849,434 Bonds and notes payable 542,20!,371 1,780, , Lease obligations payable 21,439,786 3,178,894 24,618,680 Other noncurrent liabilities 180,422,264 5,978, , ,768,437 Total Noncurrent Liabilities 746,418,850-4,959,694 21,828, , ,574,151 Total Liabilities 1,017,997,208' 1,500,000 15,725,731 27,527, ,109,138 1,063,859,093 Net Assets Invested in capital assets, net of related debt 1,769,506,600 5,604,229 2,944,631 22,511 1,768,077,971 Restricted for: Other purposes 321,473,439 Permanent endowments: Nonexpendabie 102, Unrestricted 563,822,084 Total Net Assets 2,747,777,923 45,474, ,793,676 29,612, ,354, ,226, ,843,127 44,964, ,009,825 15,860, ,680 4,024, ,954, ,165, ,829,114 78,624,413 3,414, 397,267 Total Liabilities and Net Assets $ 3,765, $ 1,500,000 $ 299,891,548 $ 331,366,130 $ 79,733,551 $ 4,478,256,360 (concluded) -132-