SUBJECT: REQUEST FOR PROPOSALS FOR FINANCIAL AUDIT SERVICES

Transcription

1 DATE: April 28, 2016 SUBJECT: REQUEST FOR PROPOSALS FOR FINANCIAL AUDIT SERVICES Pursuant to the Financial Audit Services Request for Proposals (RFP), all proposers were to submit any questions regarding this RFP no later than Wednesday, April 20, Questions were to be addressed in writing and all questions and responses were to be posted on the Department s website. Below is a list of questions received from proposers and the Department s response: 1. Q: I will not be available for the pre-proposal meeting on April 13, Can I still submit a proposal? A: Yes. The meeting was not mandatory. 2. Q: How long has the current auditors been performing the audit for the Harbor Department? A: July 1, 2013 through June 30, Q: How many auditors and how many weeks were the auditors on site for both interim and year end field work? A: Ranged from 3-4 auditors doing fieldwork for approximately 5-6 weeks in total. 4. Q: What is the desired timeline for: Interim: Year-End: Draft Reports: Final Reports: A: Interim: Subject to discussion with Accounting management but not mandatory and not performed in prior years. Year-End: Fieldwork to start on or about August 15, each fiscal year. Draft Reports: September 30 each year. Final Reports: October 31 each year. 5. Q: What were the prior audit fees?

2 A: $334,641 for the 3-Year contract or $111,547 per year. 6. Q: Will there be a single audit? A: Yes. 7. Q: Are there any new services requested in this Request for Proposals that were not included in the prior year audit fee? 8. Q: How many journal entries were proposed by the auditors? Were there any findings? A: There were no proposed audit adjustments (journal entries) in FY There were two audit findings in the Single Audit in FY Q: Were there any material adjustments made by the auditors in connection with the examination of the prior year financial statements? A: There were no material audit adjustments in FY Q: Has the Harbor Department entered into any major contracts, studies and/or started any projects in the current fiscal year that would not be reflected in the prior year financial statements? A: The Harbor Department enters into numerous contracts each year that could be maintenance or capital in nature. The Harbor Department is a major port that has many on-going construction and engineering contracts and some new ones are entered into each fiscal year. Any such new contracts would not necessarily be reflected in the prior year financial statements. 11. Q: Any new debt issuances in the current fiscal year? 12. Q: Is the Harbor Department involved in any litigation not included in the prior year financial statements? A: Litigation matters are handled by the City Attorney s Office and, as such, these matters are deemed privileged information. 13. Q: Any other major changes in the current fiscal year that would affect the operations of the Harbor Department? A: Not currently known. 14. Q: How did you measure the quality of the audit performed? A: Many factors go into measuring the quality of the audit performed, including timeliness of audit report, compliance with all applicable federal, state and local laws and regulations and compliance with AICPA guidelines, GAAP and GAAS and GASB issued standards. Additionally, responsiveness of the selected firm s partners and staff in keeping management informed of

3 progress of audit and matters of concern in a timely manner. 15. Q: What audit areas, in your opinion, were cumbersome? A: Implementation of new GASB standards always present challenges and requires the selected audit firm to provide guidance to staff to correctly implement those standards in accordance with GASB implementation guidelines. 16. Q: What efficiencies would you like to see in the audit of the Harbor Department s financials? A: The timeline for completing and issuance of final audited financial statements needs to be shortened. Issuance of the PBC list ahead of fieldwork and an entrance conference that covers expectations could be better managed. Timely meetings between the Audit Manager and the Accounting Director to discuss issues/concerns as they arise should be considered. There should be no surprises in the Management Letter that catches Harbor Department management by surprise. 17. Q: If I am awarded a contract, which documents will I need to provide to show that I am a SBE/VSBE? A: We will require a letter from your Certified Public Accountant (CPA) to confirm your firm s annual average gross revenue over the prior three years. If you do not have a CPA, we will request your prior three tax filings. 18. Q: I would like to obtain a copy of the LAHIC 2015 audit report and the prior audit fee for the engagement. You mentioned a public records request. Is this a formal process? Do we need to obtain and fill out forms? Please advise. A: The audited financial statements for LAHIC for fiscal year ended June 30, 2015 has been posted on the Harbor Department s website. 19. Q: Please provide the most recent available copies of all deliverables included in the RFP for PY Single Audit Report and LAHIC financial statements. A: Please review the RFP for details and response provided to similar question Q: How many major programs for single audit does the Harbor Department anticipate having in FY 2016? Would they be the same as in PYs? A: There were three major programs identified in FY ended June 30, Cannot predict how many there will be in 2016 as the Harbor Department receives federal and state grants in an on-going basis. 21. Q: Are there any anticipated changes in the Harbor Department s operations, systems, personnel in the upcoming years that might impact the scope of the audit?

4 22. Q: How long has the current auditor been under contract? Does the Harbor Department have a policy requiring auditor rotation? A: Three years. No current written policy on auditor rotation. 23. Q: What is your relationship with the current auditor? If you desire any changes/enhancements/improvements to the services, what would those be? A: Good professional relationship with current auditors. Also, see answer to Q Q: What were the audit fees for the past year? A: See answer to Q Q: How many hours, if known, were incurred on past audit? A: Total hours actually incurred is not known. Total hours billed were hours. 26. Q: How many audit adjustments were posted in prior audit? A: See answer to Q Q: Please confirm that both SBE and VSBE are required to use by a non- SBE firm. A: Yes, that is correct. If you are not a SBE/VSBE firm, you are required to subcontract 25% to a SBE, and 5% to a VSBE firm. 28. Q: Please describe the preferred timeline and project schedule for all the different deliverables. A: See answer to Q Q: What was the reason for issuing an RFP? A: The three year contract with the current audit firm is expiring on June 30, Q: Is there a mandatory rotation requirement? 31. Q: Are the current auditors eligible to submit a proposal? A: Yes. 32. Q: How many auditors were in the field, and for what length of time were they in the field for interim and final fieldwork? A: See answer to Q.3.

5 33. Q: What were the comprehensive hours for the FY 2014 and 2015 audits? A: See answer to Q.25. Hours billed were similar for FY Q: What were the comprehensive audit fees for FY 2014 and 2015? Does the audit fee amount include any overrun billings? A: See answer to Q.5. The contract is a fixed price contract and does not allow for overrun billings. 35. Q: With regard to the Small business requirement, pg. 14 states that there is a mandatory Small Business Enterprise (SBE) participation of 25%, including a 5% Very Small Business Enterprise (VSBE) participation. Proposers who fail to demonstrate that they will meet or exceed the SBE requirements will be deemed non-responsive. However, pg. 16 states consultant shall assist the City in implementing this policy and shall use its best efforts to afford the opportunity for SBEs, VSBEs, and MBEs which we interpret as if it is not required. Please clarify if a SBE is a mandatory requirement. A: Yes, this is a mandatory requirement. Please see response to Q Q: A copy of the most recent Communication with Those Charged with Governance letter for the financial audit. A: This shall be posted on the Harbor Department s website. 37. Q: The RFP indicates "The Board of Harbor Commissioners, the Executive Director, the Deputy Executive Director of Finance & Administration and Chief Financial Officer may require additional work by the consultant in relation to the performance of the audit(s)." What additional work has the auditor/consultant performed in prior year contracts? A: None. However, this should not be taken as indicative of future requests as indicated in the RFP. 38. Q: The RFP indicates "the Harbor Department anticipates that it may prepare one or more official statements in connection with the sale of debt securities that will contain the BFS and the auditors report...in the event a 'consent' or 'comfort"' letter is required, the consultant shall perform a review of the Harbor Department s interim financial statements and obtain a representation letter from the financial advisor and/or underwriter." Do you anticipate issuing debt during the contract period under this RFP? If so, what procedures does the Harbor Department use in order to ensure its "interim financial statements" are properly closed and the accounting and disclosures are consistent with the year-end audited financial statements. What type of representations do you anticipate obtaining from the FA and/or underwriter? A: It is possible that debt may be issued if deemed appropriate by Harbor

6 Department management to either refund existing debt or issue new debt to finance capital projects. There is currently no plan to issue or refund debt in FY The need to issue debt or refund existing debt is reviewed periodically by management and is on-going. The preparation of the interim financial statements follows a month-end close procedure that is independent of the issuance of new debt or refunding of existing debt. The accounting close occurs at each month end based on a written procedure followed by the Accounting Division which is consistent with the year-end procedure. It should be noted that the practice of issuance of consent and comfort letters is not common and has not been required of the selected audit firm in the past several years. 39. Q: In the audit for the Fiscal Year that ended June 30, 2015, how many audit adjustments were identified and posted by the auditor? What was the nature of those adjustments? Can you provide a copy of the proposed but un-posted audit adjustments? A: See answer to Q Q: If the Harbor Department selects a different auditor under this RFP, does it anticipate that it will issue comparative audited financial statements in the first year of the RFP? A: Yes. 41. Q: Does the Harbor Accounting Division or the auditor prepare the basic financial statements and note disclosures? A: The Harbor Department Accounting Division will prepare the financial statements and related notes to the financial statements. 42. Q: Does the Harbor Department operate on its own standalone financial system? Or, is it part of the City of Los Angeles system? If part of the City, please briefly describe what processes the City perform for the Harbor Department (i.e. Payroll, Disbursements, Procurement, Cashiering, etc.). A: The Harbor Department is a proprietary, enterprise fund department of the City of Los Angeles. However, the Harbor Department prepares its own financial statements and is subject to an independent audit by its own separate auditors. The City of Los Angeles administers the payroll for the Harbor Department employees. However, the Harbor Department maintains its own Payroll section that is essentially responsible for timekeeping and compliance with multiple MOU requirements which specify benefit entitlements for employees based on the MOU they fall under. Disbursements, Procurement, Cashiering are all independent functions of the Harbor Department. 43. Q: What was the Audit Fee by deliverables for PY? A: See answer to Q.5.

7 44. Q: What accounting system has the Harbor Department utilized? Is there any plan to upgrade within the terms of the contract? A: The Harbor Department utilizes Oracle Electronic Business Suites. The Release number is There is a plan to upgrade the system in FY Q: Any major capital projects or debt issuance for the year ended June 30, 2016? A: See answers to Q.10 and Q: As noted in the Single Audit Report, there were two Finding noted as non-compliance relating to the major Federal Programs. One appears to be an isolated issue but the other one with IT equipment management requirements of the PGSP programs. Has the Harbor Department made any adjustments to the process to make sure that the equipment inventory list is completed and updated? If not, what is the corrective action plan to address these findings? A: The Harbor Department has implemented corrective actions to address these two findings. See corrective action plans on Pages 13 and 16 of the Single Audit report for FY Q: Does the Harbor Department plan to apply any other Federal grants other than those that listed on the SEFA? A: The process of applying for federal and state and pass-through grants is ongoing based on needs of the Harbor Department and the availability of grants and the ability to qualify for these grants. 48. Q: For the JPAs, does the RFP contemplate performing a group audit or reliance on the work of the other auditors? A: The Intermodal Container Transfer Facility JPA is the subject of a separate RFP process and is not being addressed in this RFP.