REQUEST FOR PROPOSAL FOR AUDIT SERVICES 11/29/2017 City of Roy, Utah The City of Roy, acting through its Management Services Department, invites the submission of Proposals from qualified firms of certified public accountants to conduct an examination and render an opinion on the City s financial statements.
Request for Proposal for Audit Services CITY OF ROY, UTAH GENERAL INFORMATION The City of Roy ( the City ) is a community of approximately 38,000 residents which was incorporated in 1937. The City operates under a Six Member Council form of government with five Council Members and the Mayor serving staggered four-year terms. Currently, the City has 150 fulltime employees and can have as many as 300 part-time and seasonal employees. The City provides a full range of services normally associated with a municipality, including administration, police and fire protection, ambulance services, engineering, public works, parks, recreation, planning and zoning, water and sewer, wastewater, and solid waste collections. The City is comprised of the following funds and account groups: General Fund, Capital Projects Fund (3), Enterprise Funds (3), Special Revenue Funds (3), and Internal Service Funds (2). In additional to the funds mentioned, the City has one blended component unit that is part of the reporting entity. Although it is a separate legal entity, the Redevelopment Agency of Roy Utah is reported as part of the primary governmental unit and does not issue separate financial statements. Total revenue from the City s Statement of Activities was $29,435,903 for the fiscal year ended June 30, 2017. The most recent audit of the City was performed in 2016-2017 for the period ending June 30, 2017 by Litz & Company. The type of opinion given was unqualified on the general purpose financial statements. A copy of the Comprehensive Annual Financial Report for Roy City Corporation is available on the web site www.royutah.org. All governmental funds of the City are accounted for using the modified accrual basis of accounting. All proprietary funds are accounted for using the accrual basis of accountings. Roy City uses Caselle software for all of its accounting, financial, and payroll applications. PURPOSE OF REQUEST The City of Roy is requesting proposals ( RFP ) from interested certified public accounting firms to perform an annual audit as required by law. This invitation is extended to all firms and organizations licensed in the State of Utah; with proven experience in providing the services specified herein; and with an interest in offering their services to the City of Roy. For the purpose of this RFP, Respondents means the organizations or individuals that submit proposals in response to this RFP. The documents submitted will be referred to as Proposals. Page 1
The City s goal is to enter into an agreement for the fiscal year 2018 financial audit with the anticipation of continuing on for the succeeding three years. It is important to note that selection of an auditing firm will not be based solely on cost. AUDIT OBJECTIVES AND SCOPE OF SERVICES Roy City is required by State law to have an annual audit of its financial statements by a Certified Public Accountant. The audit report must be submitted to the State Auditor s Office within six months of the end of the fiscal year. To meet the requirements of this request for proposal, the audit shall be performed in accordance with auditing standards generally accepted in the United States of America as promulgated by the American Institute of Certified Public Accountants (AICPA); the standards for financial audits set forth in the U. S. Comptroller General s Government Auditing Standards; the provisions of the Federal Single Audit Act, as amended; the provisions of the U. S. Office of Management and Budget (OMB) Circular A-133, Audits of State and Local Governments, and Non-Profit Organizations; and in conjunction with the State of Utah Legal Compliance Audit Guide. Services will include, but not be limited to; planning and performing the audit; performing tests of documentary evidence; evaluation of internal controls; communicating findings; issuing reports; and presentation of the financial statements to the governing board. Although a single audit is not anticipated for the fiscal year ending June 30, 2018, respondent should include separate procedures and cost estimates for a single audit should it be necessary during the term for which the accounting firm is engaged. The auditor will be involved in reviewing the financial statements and will assist management s efforts to obtain the Government Finance Officer s Certificate of Achievement in Excellence in Financial Reporting. While the City has prepared the Comprehensive Annual Financial Statements internally for more than twenty years, it reserves the right to request the report be prepared by the independent auditor. As with the single audit, the accounting firm should include an addendum to the audit fee for preparation of the report. The auditor shall meet with the Management Services Director prior to the commencement of each audit to discuss the planned approach to the audit work and to provide a list of schedules to be prepared by City personnel prior to the beginning of field work. Roy City will prepare a year-end trial balance including all year-end journal entries. The staff will also provide documentation to reconcile amounts on the balance sheet and provide assistance to the auditor as needed. Recommendations based upon the auditing firm s review of the adequacy of internal controls and other such audit investigations shall be communicated to the Management Services Director for discussion and consensus prior to being made a part of a formal management letter. Page 2
At the conclusion of the audit, a representative of the accounting firm will be expected to appear before the City s Audit Committee to discuss findings resulting from the audit. In addition, the representative will make a formal presentation of the audit report to the Mayor and City Council during a regularly scheduled City Council meeting. The audit shall be completed and the report presentation made to the Roy City Council by November 20, 2018. Roy City will be responsible for preparing the comprehensive annual financial report and submitting copies to the appropriate entities. It is the City s preference that audit field work be conducted during mid to late August. REPORT REQUIREMENTS The auditor shall examine the financial statements and records of the City and shall express an opinion on the fair presentation of the governmental activities, the business-type activities, each major funds, and the aggregate remaining fund information and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparisons for the general fund and the special revenue funds in accordance with accounting principles generally accepted in the United States of America. In addition, the auditor shall express an in-relation-to opinion on the required pension schedules, the combining and individual fund financial statements and budgetary comparisons schedules, and the capital asset schedules. The auditor shall issue a report and express an opinion on internal controls over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards. The auditor shall issue a report and express an opinion on compliance and on internal controls over compliance in accordance with the State of Utah Legal Compliance Audit Guide. If and when required, the auditor will issue a report and express an opinion on other financial issues, compliance, and internal controls related to the expenditures of funds received from Federal, State and local governments. The auditor shall communicate in a letter to the Roy City Council, any reportable conditions found during the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of the internal control structure, which could adversely affect the City s ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. The auditor shall include the written responses from the City for each recommendation included in the state legal compliance letter and the management letter required by the State Legal Compliance Audit Guide. AUDIT TERM Page 3
If the selected certified public accounting firm performs satisfactorily for the June 30, 2018 audit, it is anticipated that the same firm will be engaged to perform the audit for the succeeding three years, subject to an annual evaluation and Roy City Council appropriation. PROPOSAL PROCESS The City has made every effort to include enough information in this RFP for an accounting firm to prepare a responsive proposal. Respondents are encouraged to submit the most comprehensive and competitive proposal possible. The City reserves the right to retain all proposals submitted and to use any ideas in a proposal, unless protected by copyright, regardless of whether the proposal is selected. Submission of a proposal indicates acceptance by the respondent of the conditions contained in the RFP, unless clearly and specifically noted in the proposal submitted, and confirmed in the contract between the City of Roy and the accounting firm selected. The City reserves the right to reject any and all proposals, cancel all or part of this RFP, waive any minor irregularities and request additional information from respondents. The City will not reimburse the respondents to this RFP for any expenses incurred in preparing the proposals, or for the attendance at any meetings related to the proposal process. This RFP does not obligate the City to accept or contract for any services. TIME TABLE Distribution of RFP December 6, 2017 Submit names of representatives and questions December 18, 2017 Response to questions December 21, 2017 Proposal submission January 15, 2018 The City will respond individually to firms seeking additional information about the proposal process and the RFP. Any firm requiring additional information shall provide the names of the representatives and all inquiries in writing to the Management Services Director by 4:30 p.m. on December 18, 2017. Questions can be delivered to the Finance Department, faxed (801.774.1030), or emailed (cspencer@royutah.org). INSTRUCTIONS TO PROPOSERS The intent of this RFP is to select one firm to provide audit services for the City. Proposals are due in the Finance Office no later than January 15, 2018 at 4:00 p.m. It is the responsibility of the respondent to ensure that the proposal arrives on time and at the right location. Late proposals will not be considered. A. Proposals shall be prepared simply and economically, providing a straightforward concise description of respondent s capabilities to satisfy the requirements of the request. Special Page 4
bindings, colored displays, promotional materials, etc. are not required. Emphasis should be placed on completeness and clarity of content. B. All proposals shall include the following: Profile of the Independent Auditor the profile of the respondent should provide general background information. This should include: 1. A company overview, with a brief history of the firm and number of audit clients currently being served. Describe what differentiates your firm from your competitors; and whether it is local, regional, national, or international in operations. 2. Describe your firm s corporate structure. 3. Provide the address of the firm s corporate office and address of the office that will service Roy City s account. 4. A statement on the respondent s staff s ability to audit computerized systems. 5. A positive statement that the following mandatory criteria are satisfied: a. An affirmation that the respondent is property licensed for practice as a certified public accountant in the State of Utah b. An affirmation that the respondent meets the independence requirement of the American Institute of Certified Public Accountants and the Government Auditing Standards published by the U. S. General Accounting Office. c. An affirmation that the respondent meets the continuing education and external quality control review requirements contained in the General Auditing Standards published by the U. S. General Accounting Office. 6. Identify any services within this proposal that you cannot provide. 7. A copy of the independent auditor s most recent peer review. Respondent s Qualifications 1. Identify the audit partners, audit managers, field supervisors and other staff who will work on the audit, including staff from other than the local office. Resumes including relevant experience and continuing education for the staff auditors up to the individual with final responsibility for the engagement should be included. 2. State whether any personnel from an outside accounting firm will be assigned to participate in the audit. Such personnel should be required to provide similar background information. 3. Describe the team s experience with similar work performed for other local governments. Provide a list of governmental clients for which your firm provides audit services. 4. Discuss the ways your firm manages growth, including any limits to the client/consultant ratio; and your firms back-up plan in the event key personnel assigned to this account should leave your firm. Respondent s Approach to the Audit Submit a general audit work plan to accomplish the scope defined in these guidelines. The audit work plan should demonstrate the firm s understanding of the audit requirements and Page 5
the audit test and procedures to be applied. The plan should detail the expected number of hours by staff level and should specify the use of any specialists. Timeline Requirements Detail how the reporting deadline requirement will be met. Include pre-audit and post-audit conferences with the audit committee, internal control evaluation, compliance testing, field work, reporting, and presentation. The timeline should identify specific dates for each of the major audit elements mentioned above. An alternate timeline should be presented under which the independent auditor is responsible for preparing the Comprehensive Annual Financial Report. Fees Provide the billing rates, estimated number of billable hours, other billable expenses and not-to-exceed fees for the audit, inclusive of travel, per diem and all other out-of-pocket expenses. Estimated billable hours should be broken down into planning, field work, review, and reporting segments. As noted above, it is expected that if the selected certified public accounting firm performs satisfactorily for the June 30, 2018 audit, it will be engaged to perform the audit for the succeeding three years. Therefore, the not-to-exceed fee information requested above should be provided on an annual basis for four years. Roy City s audit fees for FY 2017 and FY 2016 were $12,150 and $11,650, respectively. In the event that Federal funding is sufficient to receive a single audit, include a separate fee proposal for performing such. And, include a separate fee for the drafting of the Comprehensive Annual Financial Report should Roy City decides to have that done by the auditing firm. From time to time, Roy City may need consulting services, be it in person or by telephone. The final bid proposal should include the hourly rates the respondent charges for this type of service and the minimum amount of time/money that would be charged. The City reserves the right to select a consulting firm separate and apart from the firm selected to perform the financial audit. Additional Information 1. Respondent shall complete the Auditor s Proposal Form and submit it with their completed proposal. 2. If the respondent has had a contract terminated for default during the past five (5) years, all such incidents shall be described. The audit firm must not have a record of substandard work. 3. Disclose any and all judgments, pending or expected litigation, or other real or potential financial reversals that might materially affect the viability or stability of the proposing organization, or warrant that no such condition is known to exist. If the Page 6
respondent is a national firm, it must disclose the above information for its region and all material judgments and pending or expected litigation on a nation-wide basis. Submission of Proposal Proposals may be emailed, mailed, or delivered to: Cathy A. Spencer, Management Services Director Roy City Corporation Finance Office 5051 South 1900 West Roy, Utah 84067 cspencer@royutah.org Emailed proposals shall be submitted as an attachment in MS Word or PDF format. Please do not submit proposals as a Zip file. The proposer shall return six (6) bound copies if mailed or hand delivered. All submitted proposals and information included therein or attached thereto shall become public record upon their delivery to the Finance Office. CONTRACTUAL ARRANGEMENTS A. Payment for the audit will be made upon receipt of the audit reports required herewith. B. Audit programs, work papers, and reports must be retained for a period of three years after the completion of the audit and made available for inspection by Roy City if requested. In accordance with requirements of Government Auditing Standards and of the Single Audit Act, the auditor is required to provide access to the working papers and photocopies thereof to a federal agency or the Comptroller General of the United States upon their requires for their regulatory oversight purposed. If such a request is made, the auditor will inform the Management Services Director prior to providing such access. C. The firm selected shall respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers related to matters of continuing accounting significance. D. All services not specifically mentioned in the request for proposal that are necessary for the auditor to perform to complete the audit shall be included in the scope of services. Break out separately the cost associated with a single audit and/or the auditor preparing the Comprehensive Annual Financial Report. EVALUATION OF PROPOSALS Page 7
Proposals will be evaluated by a committee of City staff. Evaluations will be based on criteria outlined herein which may be weighted by the City in a manner it deems appropriate. All proposals will be evaluated using the same criteria. The criteria used will be: A. Responsiveness to the RFP. The City will consider all the material submitted to determine whether the accounting firm s proposal is in compliance with the RFP document. The proposal shall demonstrate a method of approach that fully meets all terms, conditions, and scope of services including reasonableness of time estimates and total audit hours. B. Ability to perform required services. The City will consider all the relevant material submitted by each accounting firm, and other relevant material it may otherwise obtain, to determine whether the respondent is capable of providing services of the type and scope specific to the RFP including the qualifications of staff, appropriateness of assigned staff levels, geographic location of key personnel and the responsible office, and the size and structure of the firm considering the scope of the audit. C. Related experience. The City will consider the accounting firm s technical experience and the performance of similar services for other governmental entities. D. Fees. The City will consider the fee structure for the audit services and the rates or charges for additional services, if applicable. E. References. F. Interviews. G. Other factors. Any factors that the City believes would be in their best interest to consider which were not previously described. Each committee member will review the proposals and summarizes their findings. The committee will then convene to discuss the individual analysis and select firms for interviews if it is deemed necessary. The award of the contract will be made to the firm that demonstrates technical capability while most closely meeting the City s needs according to the evaluation criteria and factors designated in the RFP. The final selection will be made and the firm notified in February 2018. IMPLEMENTATION The City staff will make every effort to administer the proposal process in accordance with the terms and dates discussed in this RFP. However, the City reserves the right to modify the proposal process and dates as deemed necessary. Page 8
AUDITOR S PROPOSAL FORM Name of Firm: Address: Name of Individual Submitting Proposal: Signature of Individual: 1. Firm Staffing: Certified Public Accountants Partners: Managers: Other Staff: Sub-total: Non-certified Staff Technicians: Secretaries: Other: Sub-total: Total: 2. Partner in Charge of the Audit Name: Years of Experience: 3. Manager Assigned to the Audit Name: Years of Experience: Estimated percentage of hours the manager will spend In relation to the total estimated audit hours 4. Date of last Peer Review: (Please attach a copy of the opinion including any letter of comments on the last review.) Page 9
5. Estimate of fees for the next four years: 2018 2020 2019 2021 6. Briefly explain why your firm should be considered for the appointment: 7. List governmental audits completed during the past three years (attach additional sheets if necessary). Agency Fiscal Year End Date Completed Total Assets Agency Revenue 8. Governmental audit revenue as a percentage of total audit revenue: Page 10