I. Purpose REQUEST FOR PROPOSAL (RFP) FOR AUDIT SERVICES February 25, 2015 The purpose of this RFP is to obtain the services of a public accounting firm, whose principal officers are independent Certified Public Accountants (CPAs), who are licensed by the Texas State Board of Public Accountancy to perform a financial and compliance audit. The contract issued will be for a threeyear contract with options for two (2) additional one-year periods. Financial statement audits determine (1) whether the financial statements of an audited entity present fairly the financial position in accordance with generally accepted accounting principles, and (2) whether the entity has complied with laws and regulations for those transactions and events that may have a material effect on the financial statements. The audit is to be performed in accordance with generally accepted auditing standards, Government Auditing Standards, and Texas Commission on Environmental Quality audit rules. The District currently has outstanding bonds of $20,515,000. As a part of the audit of the general purpose financial statements, the auditor should obtain an understanding of the District s internal control structure and report any reportable conditions relating to the internal control structure to the Board of Directors. II. Description of Entity Trophy Club Municipal Utility District No. 1 (the District ) is a public water system serving over 4,000 connections in the Town of Trophy Club and the Town of Westlake within Denton and Tarrant Counties, Texas. The District is governed by a five (5) member Board, whose members are elected to four (4) year terms. The day to day operations of the District are handled by the District s General Manager, appointed by the Board. The District provides water, wastewater treatment, and fire protection to the area within its boundaries. The District is approximately 85% developed, with the exception of the undeveloped land in the Solana complex and has a valuation in excess of $1,176 billion. The Solana complex, located south of 114, was annexed into the District in the 1980's and provides a significant portion of the valuation. There are approximately 1,000 acres of land within the Town of Trophy Club that is being developed that is not within the District s boundaries. However, water, wastewater, and fire services are provided to the area, known as the Town of Trophy Club Public Improvement District, through interlocal cooperative agreements with the Town. Operational costs, with the exception of the Fire Department and a minimal water and sewer O&M tax, are paid by water and sewer revenues. The fiscal year 2015 operational budget is $9,862,873 million dollars including $1,383,940 dollars for the Fire Department. The capital facilities include a wastewater treatment plant, ten sewage lift stations, four water wells, two ground storage tanks (3 million gallons each), an elevated water storage tank, a water plant, numerous miles of underground piping, and a $3.1 million Fire Station. The District issued $5.765 million tax bonds in December 2014 and issued $9.23 million revenue bonds in February 2015 to fund major improvements to the District s wastewater treatment plant. The District s 2015 annual bond payments total $860,971.60. Fire protection is fully tax supported with 14 paid firefighter/paramedics and a paid Fire Chief.
Current staffing level for water, wastewater, and administration includes 19 full-time employees. The District employs an Administration Manager that is a registered CPA with the State of Texas and a Finance Manager with over 20 years of experience with the District. The District participates in the Texas County & District Retirement System. III. Financial Status and Operations The District s fiscal year is from October 1 st through September 30 th each year. The Fiscal Year 2015 Budget is over $9 million. The District adopted water conservation rates for gallons used and the rate/fee structure for both water and wastewater is included as Appendix A. Appendix B includes the FY 2015 tax rates for O&M, Fire, and I&S. A copy of the District s FY 2015 budget and other District information is available on the website at www.tcmud.org. The District has 9 bank accounts. The District s depository bank is First Financial Bank in Trophy Club, Texas. The District also has a collateral agreement with Bank of the West in Grapevine, Texas. Daily deposits are made through the Remit Scanner System or in person by either the Administration Manager or the Finance Manager. On a monthly basis, an average of 100 checks are disbursed from the operating account. The financial records are maintained at the District office at 100 Municipal Drive, Trophy Club, Texas 76262. The District uses STW software for the general ledger, payroll operations, utility billing, fixed assets and accounts payable/receivable functions. The District s financial information is developed using STW software and will be provided in that format downloaded into Excel as applicable. An example of the STW format is attached in Appendix C. Meters are read using an automated meter reading system and downloaded into STW from which customers are billed on a monthly basis. District investments are coordinated by the District s Investment Officer and the Treasurer appointed by the Board and are made in accordance with the District s adopted Investment Policy. Currently investments are in a money market account and the TexPool Investment Pool. IV. Scope of Work The selected CPA Firm shall determine whether: The financial statements of the District fairly present its financial position and the results of its financial operations are in accordance with generally accepted accounting principles; The District has internal accounting and other control systems to provide reasonable assurance that it is managing funds in compliance with applicable laws and regulations; and The organization has complied with laws and regulations that may have material effect on its financial statements. A pre-audit meeting and an exit conference with the District Audit and Finance Committee and the selected CPA Firm s representatives will be held prior to the audit and at the conclusion of the fieldwork. Observations and recommendations must be summarized and discussed with the committee. It should include internal control and program compliance observations and recommendations.
The District will require ten (10) bound and one (1) unbound copies of the final audit report and an electronic copy of the final audit report. The District will also utilize the selected firm for general accounting support for District staff and to assist in ensuring that the District s financial accounts are in compliance with GASB. V. Anticipated Timeline The following set dates are firm and shall not be waived unless specified in writing by the General Manager: Deadline April 9 th, 2015 May 19th, 2015 November 9th, 2015 January 4th, 2016 January 19th, 2016 Activity Proposals must be received at the District office no later than 2:00 p.m. Firm selected by staff and the Audit Committee will give a presentation to the entire Board at their Board Meeting. The Board will have final approval of the selected firm. Earliest possible start date of fieldwork by selected CPA Firm for Financial Audit. Draft Audit submitted to General Manager and set date for Audit Committee meeting. Final audit is submitted to the District Board of Directors. The audit report may be submitted earlier than the above schedule. However, if the selected CPA Firm fails to make delivery of the audit report within the time schedule specified herein, or if the selected CPA Firm delivers the audit report which does not conform to all of the provisions of the contract, the District may, by written notice of default to the selected CPA Firm, terminate the whole or any part of the contract. Under certain extenuating circumstances the District may extend this schedule upon written request of the selected CPA Firm with sufficient justification. VI. Proposal Instructions Two (2) copies of the proposal (at least one unbound) must be submitted no later than 2:00 p.m. on April 9th, 2015. Proposals should be addressed as follows: Jennifer McKnight General Manager Trophy Club Municipal Utility District No. 1 100 Municipal Drive Trophy Club, TX 76262 Proposals must be submitted in a sealed envelope, clearly marked in the lower left-hand corner with the following information: SEALED PROPOSAL For Audit Services Proposals submitted via fax or email will NOT be considered.
It is the responsibility of the CPA Firm to ensure that the proposal is received by the District by the date and the time specified in this RFP. Late proposals will not be considered. All costs incurred in the preparation of a proposal responding to this RFP will be the responsibility of the CPA Firm and will not be reimbursed by the District. At a minimum, proposals must include: Description of the services to be provided, including the approaches and methods to be used, audit procedures, estimated hours, and other pertinent information. The CPA Firm should include the type of assistance that will be required from District staff as well as the anticipated hours of assistance; Description of prior auditing experience, including the names, addresses, contact persons, and telephone numbers of prior organizations audited. Experience should include the following categories: (a) prior experience auditing water districts; (b) prior experience auditing similar governmental districts; and (c) prior experience auditing non-profit organizations; Description of the CPA Firm s organization, size and structure. Copy of most recent peer review. Description of the qualifications of principal staff to be assigned to the audit, including (a) audit team makeup; (b) overall supervision to be exercised; and (c) prior experience of the individual audit team members, such as education, position in firm, years and types of experience, continuing professional education, etc.; Statement of the availability of auditors necessary to conduct the audit and proposed schedule; Statement of price for producing the audit report, including how the price was determined, estimated number of hours by staff level, hourly rates by staff level and total cost. Any out of pocket or travel expenses should also be indicated. Certification provided in Appendix D of this RFP. Proposer warranties provided in Appendix E of this RFP.
VII. Evaluation and Review of Proposals Evaluation of each proposal will be based on the following criteria: Factors Max Points Prior experience auditing water districts. 15 Prior experience auditing similar governmental entities. 15 Prior experience auditing similar nonprofit entities. 5 Adequate size of the CPA Firm. 10 Audit team qualifications. 10 Overall supervision to be exercised. 5 Prior experience of audit team. 10 Presentation of work to be performed. 5 Realistic time estimates of each audit step. 5 Ability to provide general accounting support. 10 Rates 10 Maximum Points 100 The District may at its discretion, request presentations by or meetings with any or all CPA Firms, to clarify or negotiate modifications to the CPA Firms proposals. The District reserves the right to make an award without further discussion of the proposals submitted. Therefore, proposals should be submitted initially on the most favorable terms which the CPA Firm can propose. The District anticipates awarding the contract to the CPA Firm with the highest total points. VIII. Non-responsive Proposals Proposals may be judged non-responsive and removed from further consideration if any of the following occur: The proposal is not received timely in accordance with the terms of this RFP; The proposal does not follow the specified format; The proposal is submitted by fax or email; The proposal does not include Appendix C and Appendix D included with this RFP; The proposal is not adequate to form a judgment by the reviewers that the proposed undertaking would comply with the Government Auditing Standards of the U.S. Comptroller General. IX. Right To Reject The District reserves the right to reject any and all proposals received in response to this RFP. A contract for the accepted proposal will be based upon the factors described in this RFP.
X. Notification of Award Upon conclusion of final negotiations with the successful audit firm, all CPA Firms submitting proposals in response to this RFP will be informed, in writing, of the name of the successful audit firm. XI. Terms of Engagement A five (5) year contract is contemplated, subject to the following: 1. An annual review and recommendation by the Board of Directors Audit Committee. 2. The satisfactory negotiation of contract terms (including a price acceptable to both the District and the selected auditor). 3. The annual availability of an appropriation approved by the District Board of Directors. Upon request, the selected CPA Firm will provide a copy of all work papers pertaining to the audit, including questioned costs. The work papers must be concise and provide the basis for the questioned costs as well as an analysis of the problem. The work papers will be retained for at least three years from the end of the audit period. The work papers will be available for examination by authorized representatives of federal, state, and private funding entities, the State Auditor s office, and the District. XII. Remuneration of Audit Services Payment will be made within 20 days of receipt of an invoice and when the District has determined that the total work effort has been satisfactorily completed and copies of the final audit report have been delivered to and accepted by the District. Should the District reject a report, the District s General Manager will notify the selected CPA Firm in writing of such rejection giving the reason(s) for the rejection. The right to reject a report shall extend throughout the term of the contract and for ninety (90) days thereafter. XIII. Questions Inquiries concerning this RFP should be directed to Renae Gonzales, Finance Manager at (682) 831-4611.
APPENDIX A WATER AND SEWER RATES FOR FY 2015 WATER BASE RATES: METER SIZE MONTHLY BASE RATE 5/8" & 3/4" $12.71 1" $16.71 1.5" $26.42 2" $38.06 3" $65.23 4" $104.04 6" $201.06 WATER VOLUMETRIC RATES: Gallons Used Rate per 1000 gallons 0 to 6,000 $2.70 6,001 to 17,000 $3.14 17,001 to 25,000 $3.64 25,001 to 50,000 $4.23 50,001 + $4.91 Residential Sewer Rates: Base Rate: $14.58 0-18,000 gallons per month $2.50/1,000 gallons *Residential sewer usage is capped at 18,000 gallons per month Commercial Sewer Rates: Base Rate: $14.58 Volumetric Rate: $2.50/1,000 gallons *Commercial sewer usage is billed based on actual water usage per month
APPENDIX B TAX RATE SUMMARY FOR FY 2015 2014 2015 O&M (General Fund) Tax 0.00935 0.01486 I & S (Debt Service) Tax 0.03666 0.04126 Fire Tax 0.08738 0.07727 Total Tax Rate: 0.13339 0.13339 Increase/Decrease: 0.00000 PID Fire Assessment Rate 0.08738 0.07727 Reduction: -0.01011
APPENDIX C STW SAMPLE FINANCIAL INFORMATION Account Number Description Debit Credit 507-10250-000-000 Cash -Texpool-CP 23,704.05 507-20070-000-000 Accounts Payable-Retainage - 13,430.90 507-20300-000-000 Due to MUD 1-2,100.00 507-31100-000-000 Assigned Fund Balance - 10,268.16 507-49010-000-000 Interest Income - 4.99 507-69280-010-003 Capital Rep/Ind Crk Waterline 2,100.00
APPENDIX D CERTIFICATION On behalf of the CPA Firm: The individual signing certifies that he/she is authorized to contract on behalf of the CPA Firm. The individual signing certifies that the CPA Firm is not involved in any agreement to pay money or other consideration for the execution of this agreement, other than to an employee of the CPA Firm. The individual signing certifies that this proposal has been arrived at independently, without consultation, communication, or agreement, for the purpose of restricting competition. The individual signing certifies that there has been no attempt by the CPA Firm to discourage any potential CPA Firm from submitting a proposal. The individual signing certifies that the audit will be supervised by an individual who is a Certified Public Accountant, licensed by the Texas State Board of Public Accountancy. The individual signing certifies that the CPA Firm meets all of the general standards concerning qualifications, independence, due professional care and quality control as required by Government Auditing Standards, including the requirements for continuing professional education and external peer reviews. The individual signing certifies that he/she has read and understands the following publications relative to the proposed audit: Government Auditing Standards, issued by the Comptroller General of the United States; AICPA s Audit Guides for State & Local Governmental Units or Non-for-Profit Organizations; AICPA s Audit Risk Alerts State and Local Governmental Developments; The individual signing certifies that he/she has read and understands all of the information in this Request for Proposal. The individual signing certifies that the CPA Firm, and any individuals to be assigned to the audit, does not have a record of substandard audit work and has not been debarred or suspended from doing work with any federal, state or local government. (If the CPA Firm or any individual to be assigned to the audit has been found in violation of any state of AICPA professional standards, this information must be disclosed.) Dated this day of, 2015. CPA Firm s Name Signature of CPA Firm s Representative Printed Name and Title of Individual Signing
APPENDIX E PROPOSER WARRANTIES A. Proposer warrants that is willing and able to obtain an error and omissions insurance policy providing a prudent amount of coverage for the willful or negligent acts, or omissions of any officers, employees or agents thereof. B. Proposer warrants that it will not delegate or subcontract its responsibilities under an agreement without the prior written approval from Trophy Club Municipal Utility District No. 1. C. Proposer warrants that all information provided by it in connection with this proposal is true and accurate. Signature of Official: Name (typed): Title: Firm: Date:
Name of Audit Firm: Date: Evaluation of each proposal will be based on the following criteria: Factors Point Range Prior experience auditing water districts. 15 Prior experience auditing similar governmental entities. 15 Prior experience auditing similar nonprofit entities. 5 Adequate size of the CPA Firm. 10 Audit team qualifications. 10 Overall supervision to be exercised. 5 Prior experience of audit team. 10 Presentation of work to be performed. 5 Realistic time estimates of each audit step. 5 Ability to provide general accounting support. 10 Rates 10 Maximum Points 100 Points Awarded Evaluation conducted by: Date: