HomeMy WebLinkAboutAgenda Report - April 2, 2008 E-03AGENDA ITEM
-3
CITY OF LODI
%W COUNCIL COMMUNICATION
TM
AGENDA TITLE: Request for Proposal - Audit services
MEETING DATE: April 2,2008
PREPARED BY: Internal Services Director/Deputy City Manager
RECOMMENDEDACTION: Authorize staff to solicit proposals for audit services as
provided in the attached specifications.
BACKGROUND INFORMATION: Macias Gini & O'Connell LLP has been performing the City's
annual audit since their contract in 2003. Per Council's
direction in January 2008, staff is submitting this request to
solicit proposals for audit services for the fiscal year beginning 2007-08
Audit Services
The City has used an independent audit firm to audit the City's financial statements for many
years to assure the City Council and the citizens of Lodi that the City is maintaining its financial
records and providing financial reports in accordance with "generally accepted accounting
principles". In addition, an independent audit is required by several Federal and State grant
agreements and bond covenants entered into by the City to obtain funds through debt financing.
The focus of the audit is on the City's basic financial statements published in the Comprehensive
Annual Financial Report (CAFR) and compliance with Federal and State regulations to obtain
grants.
The Comprehensive Annual Financial Report is also used by financial institutions to evaluate the
Citys financial ability to incur additional debt and for conformance with existing covenants to
which the City agreed to obtain debt financing in past years.
The unique nature of government service as compared to the private sector requires the City to
be accountable to a wide range of interested parties with different needs and concerns.
Accordingly, public agencies have relied heavily on independent audits to meet these needs.
Request For Proposal
The attached Request For Proposals (RFP) is based on two model RFPs suggested by the
Government Finance Officers' Association. In addition, the RFP includes standard terms and
conditions for professional services developed by the City of Lodi when requesting proposals for
services.
APPROVED:
r King, City Manager
The RFP is divided into the following seven sections:
1. Description of the Work
2. General Terms and Conditions
3. Special Terms and Conditions
4. Description of the City
5. Agreement
6. Insurance Requirements
7. Proposal Submittal Forms
Selection Process
The evaluation of proposals and selection of the firm will be made by a panel of four people as
discussed in detail on page 14. Two members of the panel will be members of the Budget and
Finance Committee. The City of Lodi Internal Services Director/Deputy City Manager and the
Financial Services Manager will be the third and fourth member of the panel.
Selection will be based on the firm's general qualifications, technical experience and cost. The
general qualifications and technical experience of the firms will be weighted more than the
proposed cost as shown on the attached evaluation sheet.
The firm selected will be responsible for the audit of financial records beginning with fiscal year
2007-08 for five years (GFOA recommended). Accordingly, time is essential to ensure proper
coordination and planning prior to the beginning of the audit.
FISCAL IMPACT: It is anticipated that the annual cost will continue at the current level.
FUNDING AVAILABLE:
The funding for these services is included in the City of Lodi budget. However, the final cost will
be based on bids received from audit firms and the level of services requested by the City of
Lodi.
es R. Krueger
Deputy City Manager/Internal Services Director
R RP/rp
Prepared by: Ruby R. Paiste. Financial Services Manager
Attachments
Request For Proposal —Audit Services
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
TABLE OF CONTENTS
A. Nature of Services Required
1. General
2. Scope of Work to be Performed
3. Auditing Standards to be Followed
4. Reports to be Issued
5. Internal Control and Compliance Reports
B. General Terms and Conditions
1. Proposal Requirements
2. Contract Award and Execution
3. Contract Performance
C. Special Terms and Conditions
1. Contract Term
2. Proposal Content
3. Proposal Evaluation and Selection
4. Proposal Review and Award Schedule
5. Pre -proposal Conference
6. Ownership of Materials
7. Release of Reports and Information
8. Copies of Reports and Information
9. Required Deliverable Products
10. Statement of Contract Disqualification
11. Special Considerations
12. Working Paper Retention and Access to Working Papers
13. Assistance to be Provided to the Auditor by the City
14. Attendance at Meetings and Hearings
D. Description of the City
1. Auditor Contact
2. Background Information
3. Fund Structure
4. Budgetary Basis of Accounting
5. Federal and State Financial Assistance
6. Pension Plans
7. Joint Ventures
8. Magnitude of Finance Operations
9. Computer Systems for Accounting Applications
10. Recognition of Financial Planning and Reporting Efforts
3
3
3
4
4
5
6
7
9
10
14
16
16
16
16
16
16
17
17
18
18
18
18
19
19
19
19
19
19
20
20
20
1
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
E. Agreement
F. Insurance Requirements
G. Proposal Submittal Forms
21
23
1. Statement of Bidder's Past Contract Disqualification 25
2. References 26
2
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
A. NATURE OF SERVICES REQUIRED
1. General Information
The City of Lodi is requesting proposals from qualified firms of Certified Public
Accountants for a five-year contract to audit the City's financial statements and perform
a Single Audit beginning with the fiscal year ending June 30, 2008, with the option to
renew for an additional five fiscal years. These audits are to be performed in accordance
with generally accepted auditing standards set forth for financial audits in the General
Accounting Office's (GAO) Government Auditing Standards, the federal Single Audit
Act of 1996 and U.S. Office of Management and Budget (OMB) Circular A 133, Audits
of State and Local governments.
Beginning with the fiscal year ended June 30, 2003, the City of Lodi implemented the
provisions related to Governmental Accounting Standards Board Statement No. 34
(GASB 34).
2. Scope of Work
Basic Financial Statements - The auditor will be required to express an opinion on
the fair presentation of the basic financial statements and notes as to conformity with
generally accepted accounting principles. The auditor will not be required to audit the
combining, individual fund and account group financial statements with their supporting
schedules. However, the auditor will provide an "in-relatiorrto" report on the combining
and individual fund statements and supporting schedules based on the auditing
procedures applied during the audit of the basic financial statements. The auditor will
not be required to audit the statistical section of the report. The auditor will be
responsible for performing certain limited procedures on supplementary information
required by the Governmental Accounting Standards Board as required by accepted
auditing standards.
Single Audit Act Report - The City receives federal funds that are governed under the
provisions of the Single Audit Act. The auditor is not required to audit the schedule of
federal financial assistance. However, the auditor will provide an "in -relation -to" report
on the auditing procedures applied during the audit.
Special Purpose Audits - The City receives funding under the Federal Transit
Administration and Community Development Block Grant/Home Funds that require
financial and compliance audit.
3. Auditing Standards to be Followed
To meet the requirements of this request, the audit will be performed in accordance with
generally accepted auditing standards provided by the American Institute of Certified
Public Accountants, the standards for financial audits provided in the U.S. General
Accounting Office's Government Auditing Standards, the provisions of the Single Audit
3
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
Act of 1996 and the provisions of U.S. Office of Management and Budget (OMB)
Circular A 133, Audits of States, Local Governments and Nonprofit Organizations, the
standards for financial reporting provided by the Government Finance Officers
Association, and the applicable laws, rules and regulations of the Federal Transit
Administration.
4. Reports to be Issued
Following the completion of the audit, the auditor will issue the following reports:
a) A report on the fair presentation of the financial statements in conformity with
generally accepted accounting principles
b) A management letter describing suggested improvements to internal controls and
operations observed during the audit.
c) A report on compliance with applicable laws and regulations.
d) An `in relation -to' report on the schedule of federal financial assistance.
e) A report on the internal control structure used to administer federal financial
assistance programs.
f) A report on compliance with specific requirements applicable to major federal and
state financial assistance programs.
g) A report on compliance with specific requirements applicable to mn-major federal
financial assistance programs.
h) A report on compliance with general requirements for both major and norl-major
federal financial assistance programs.
i) An agreed -upon -procedure report for GANN limitation verification.
j) An agreed-upon procedure report for Investment report verification
5. Internal Control and Compliance Reports
In the report on internal controls, the auditor will communicate any reportable
conditions found during the audit. A reportable condition will 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.
Reportable conditions that are also material weaknesses will be identified as such in the
report.
4
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
Non -reportable conditions discovered by the auditors will be reported in a separate letter
to management, which will be referred to in the report on internal controls.
The report on compliance will include all instances of noncompliance. Auditors will be
required to make an immediate, written report of all irregularities and illegal acts or
indications of illegal acts of which they become aware of to the following parties:
➢ City Manager
➢ Internal Services Director/Deputy City Manager
➢ City Attorney
Auditors will assure themselves that the City is informed of each of the following:
■ The auditors responsibility under generally accepted auditing standards
■ Significant accounting policies
■ Management judgments and accounting estimates
■ Significant audit adjustments
■ Other information in documents containing audited financial statements
■ Disagreements with management
■ Management consultation with other accountants
■ Major issues discussed with management prior to retention
■ Difficulties encountered in performing the audit
B. GENERAL TERMS AND CONDITIONS
1. Proposal Requirements
a. Requirement to Meet All Provisions - Each individual or firm submitting a
proposal (bidder) will meet all of the terms and conditions of the specifications in the
Request for Proposals (RFP). By submitting a proposal, the bidder acknowledges
agreement with and accepts all provisions in the specifications of the Request for
Proposal.
b. Proposal Submittal - Each proposal must be submitted in the form provided in
the specifications and accompanied by any other required information of
supplemental materials. Proposal documents will be enclosed in an envelope, which
will be sealed and addressed to:
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
City of Lodi
Financial Services Manager
P.O. Box 3006
Lodi, CA, 95241-1910
In order to guard against premature opening, the proposal should be clearly labeled
with the RFP title, name of bidder, and date and time of proposal opening. No
FAX submittals will be accepted.
c. Proposal Withdrawal and Opening - A bidder may withdraw a proposal,
without prejudice prior to the time specified for opening by submitting a written
request to the Financial Services Manager for its withdrawal, in which event the
proposal will be returned to the bidder unopened. No proposal received after the
time specified or at any place other than that stated in the "Notice Inviting
Bids/Requesting Proposals" will be considered.
d. Submittal of One Proposal Only - No individual or business entity of any kind
will be allowed to make or file, or to be interested in more than one proposal, except
an alternative proposal when specifically requested; however, an individual or
business entity that has submitted a sub -proposal to a bidder submitting a proposal,
or who has quoted prices on materials to such bidder, is not thereby disqualified
from submitting a sub -proposal or from quoting prices to other bidders submitting
proposals.
e. Communications - All timely requests for information submitted in writing
would receive a written response from the City. Telephone communications with
City staff are not encouraged, but will be permitted. However, any such oral
communication will not be binding on the City.
2. Contract Award and Execution
a. Proposal Retention and Award - The City reserves the right to retain all
proposals for a period of 60 days for examination and comparison. The City also
reserves the right to waive non -substantial irregularities in any proposal, to reject
any or all proposals, to reject or delete one part of a proposal and accept the other,
except to the extent that proposals are qualified by specific limitations as the interest
of the City may require. See the Special Terms and Conditions for any other
proposal evaluation and award criteria.
b. Competency and Responsibility of Bidder - The City reserves full discretion to
determine the competence and responsibility, professionally and/or financially, of
bidders. Bidders will provide, in a timely manner, any and all information that the
City deems necessary to make such a decision.
6
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
c. Contract Requirement - The bidder to whom award is made will execute a
written contract with the City within ten (10) calendar days after notice of the award
has been mailed to address given in its proposal.
d. Failure to Accept Contract - The following will occur if the bidder to whom the
award is made (Auditor) fails to enter into the contract: The award will be annulled;
and an award may be made to the next bidder who will fulfill every stipulation as if
it were the parry to whom the first award was made.
e. Insurance Requirements - Auditor will provide proof of insurance in the form,
coverage, and amounts specified in these specifications within ten (10}calendar
days after notice of contract award as a precondition to contract execution.
f. Business Tax - The Auditor must have a valid City of Lodi business tax
certificate prior to execution of the contract. Additional information regarding the
City's business tax program may be obtained by calling (209) 333-6717.
3. Contract Performance
a. Ability to Perform - The Auditor warrants that it possesses, all capital and other
equipment, labor, materials, and licenses necessary to carry out and complete the
work hereunder in compliance with any and all federal, state, county, city and
special district laws, ordinances and regulations.
b. Laws to be Observed - The Auditor will keep itself fully informed of and will
observe and comply with all applicable state and federal laws and county and City of
Lodi ordinances, regulations and adopted codes during performance of the work.
c. Payment of Taxes - The contract price will include full compensation for all
taxes, which the Auditor is required to pay.
d. Safety Provisions - The Auditor will conform to the rules and regulations
pertaining to safety established by OSHA and the California Division of Industrial
Safety.
e. Public and Employee Safety - Whenever the Auditor's operations create a
condition hazardous to the public or City employees, the Auditor will, at its expense
and without cost to the City, take such protective measures as are necessary to
prevent accidents or damage or injury to the public and the employees.
f. Preservation of City Property - The Auditor will provide and install suitable
safeguards, approved by the City, to protect City property from injury or damage. If
City property is injured or damaged as a result of the Auditor's operations, it will be
replaced or restored at the Auditor's expense. The facilities will be replaced or
restored to a condition as good as when the Auditor began work.
7
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
g. Immigration Act of 1986 - The Auditor warrants on behalf of itself that only
persons authorized to work in the United States pursuant to the Immigration Reform
and Control Act of 1986 and other applicable laws will be employed in the
performance of the work hereunder.
h. Auditor Non -Discrimination - In the performance of this work, the Auditor agrees
that it will not engage in discrimination in employment of persons because of age,
race, color, sex, national origin or ancestry, sexual orientation, or religion of such
persons.
i. Work Delays - Should the Auditor be obstructed or delayed in the work required to
be done hereunder by changes in the work or by any default, act, or omission of the
City, or by strikes, fire, earthquake, or any other Act of God, or by the inability to
obtain materials, equipment, or labor due to federal government restrictions arising
out of defense or war programs, then the time of completion may, at the City's sole
option, be extended for such periods as may be agreed upon by the City and Auditor.
In the event that there is insufficient time to grant such extensions prior to the
completion date of the contract, the City may, at the time of acceptance of the work,
waive liquidated damages which may have accrued for failure to complete on time,
due to any of the above, after hearing evidence as to the reasons for such delay, and
making a finding as to the causes of same.
j. Payment Terms - The City's payment terms are 30 days from the receipt of an
original invoice. Progress payments will be made on the basis of hours of work
completed during the course of the engagement and out-of-pocket expenses incurred
in accordance with the Auditor's dollar cost bid proposal. Interim billing shall cover
a period of not less than a calendar month.
k. Audit - The City will have the option of inspecting and/or auditing all records and
other written materials used by the Auditor in preparing its invoices to the City as a
condition precedent to any payment to Auditor.
1. Interests of Auditor - The Auditor covenants that it presently has no interest, and
will not acquire any interest direct or indirect or otherwise, which would conflict in
any manner or degree with the performance of the work hereunder. The Auditor
further covenants that, in the performance of this work, no subcontractor or person
having such an interest will be employed. The Auditor certifies that no one who has
or will have any financial interest in performing this work is an officer or employee
of the City. It is hereby expressly agreed that, in the performance of the work
hereunder, the Auditor will at all times be deemed an independent contractor and not
an agent or employee of the City.
m. Hold Harmless and Indemnification - The Auditor agrees to defend, indemnify,
protect and hold the City and its agents, officers and employees harmless from and
against any and all claims asserted or liability established for damages or injuries to
any person or property, including injury to the Auditor's employees, agents or
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
officers which arise from or are connected with or are caused or claimed to be
caused by the acts or omissions of the Auditor, and its agents, officers or employees,
in performing the work or services herein, and all expenses of investigating and
defending against the same; provided, however, that the Auditor's duty to indemnify
and hold harmless shall not include any claims or liability arising from the
established sole negligence or willful misconduct of the City, its agents, officers or
employees.
n. Contract Assignment - The Auditor will not assign, transfer, convey or otherwise
dispose of the contract, or its right, title or interest, or its power to execute such a
contract to any individual or business entity of any kind without the previous written
consent of the City.
o. Termination - Ii; during the term of the contract, the City determines that the
Auditor is not faithfully abiding by any term or condition contained herein, the City
may notify the Auditor in writing of such defect or failure to perform; which notice
must give the Auditor a ten calendar day notice of time thereafter in which to
perform said work or cure the deficiency. If the Auditor has not performed the work
or cured the deficiency within the ten (10) days specified in the notice, such action
shall constitute a breach of the contract and the City may terminate the contract
immediately by written notice to the Auditor. Thereafter, neither parry will have any
further duties, obligations, responsibilities, or rights under the contract except,
however, any and all obligations of the Auditor's surety will remain in full force and
effect, and will not be extinguished, reduced, or in any manner waived by the
termination thereof. In said event, the Auditor will be entitled to the reasonable value
of its services performed from the beginning date in which the breach occurs up to
the day it received the City's Notice of Termination, minus any offset from such
payment representing the City's damages from such breach. The City reserves the
right to delay any such payment until completion or confirmed abandonment of the
project, as may be determined at the City's sole discretion, so as to permit a full and
complete accounting of costs. In no event, however, will the Auditor be entitled to
receive in excess of the compensation quoted in its proposal.
C. SPECIAL TERMS AND CONDITIONS
1. Contract Term
A five-year contract is contemplated with an option to renew for an additional five
years. At the end of each year, the City reserves the right to terminate services for
the subsequent year upon 90 days notification.
2. Proposal Content
To be considered, the following materials must be received at the Finance
Department by April 23, 2008 at 2:00 p.m. at its offices at the Finance Department
at 300 W. Pine Street, Lodi, CA 95240.
9
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
a. Four copies of the proposal to include the following:
i Table of Contents
ii. Transmittal Letter. A signed letter of transmittal briefly stating the bidder's
understanding of the work to be done, the commitment to perform the work
within the time period, a statement why the firm believes itself to be best
qualified to perform the engagement and a statement that the proposal is a
firm and irrevocable offer for sixty days.
iii. Required Submittal Forms:
■ Proposal submittal summary
■ Schedule of professional fees and expenses
■ Statement of past contract disqualification
iv. Detailed Proposal. The detailed proposal should follow the order set forth in
this request for proposals.
b. General Requirements - The purpose of the proposal is to demonstrate the
qualifications, competence and capacity of the firm seeking to undertake an
independent audit of the City of Lodi in conformity with the requirements of this
request. As such, the substance of the proposal will carry more weight than the
form or manner of presentation. The proposal should demonstrate the
qualifications of the firm and of the particular staff to be assigned to this
engagement. The proposal should also specify an audit approach that will meet
the requirements of this request. The proposal should address all the points
outlined. The proposal should be prepared simply and economically, providing a
straightforward, concise description of the bidder's capabilities to satisfy the
requirements of the request. While additional information may be presented, the
following subjects, item (c) through (o) below, must be included. They represent
the criteria against which the proposal will be evaluated.
c. Independence - The bidder should provide an affirmative statement that
he/she is independent of the City of Lodi, California as defined by generally
accepted auditing standards and the U.S. General Accounting Office's
Government Auditing Standards.
The bidder should also list and describe the firm's professional relationships
involving the City for the past five years, together with a statement explaining
why this relationship does not constitute a conflict of interest relative to
performing an audit of the City.
In addition, the bidder will give the City written notice of any professional
relationships entered into during the period of this agreement.
10
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
d. License to Practice in California - An affirmative statement will be included
as to whether the firm and all assigned key professional staff is properly licensed
to practice in the State of California.
e. Firm Qualifications and Experience - The bidder should state the staffing
size of the firm, the size of the firm's governmental audit staff, the number that
are certified, the location of the office from which the work on this engagement
is to be performed and the number and nature of the professional staff to be
employed in this engagement on a full-time basis and the number and nature of
the staff to be so employed on a part-time basis. If the bidder is a joint venture
or consortium, the qualifications of each firm comprising the joint venture or
consortium should be separately identified and the firm that is to serve, as the
principal auditor should be noted. The bidder is also required to submit a copy
of the report on its most recent external quality control review with a statement
whether that quality control review included a review of specific government
engagements. The bidder will also provide information on the results of any
federal or state desk reviews or field reviews of its audits during the past three
years. In addition, the firm will provide information on the circumstances and
status of any disciplinary action taken or pending against the firm during the past
three years with state regulatory bodies or professional organizations.
f. Partner, Supervisory and Staff Qualifications and Experience - The bidder
should identify the principal supervisory and management staff, including
engagement partners, managers, other supervisors and specialists, who would be
assigned to the engagement. Indicate whether each person is licensed to practice
as a Certified Public Accountant in California. Provide information on the
government auditing experience of each person, including information on
relevant local government auditing continuing professional education for the past
three years and membership in professional organizations relevant to the
performance of this audit.
Provide as much information as possible regarding the number, qualifications,
experience and training, including relevant continuing professional education, of
the specific staff to be assigned to this engagement. Indicate how the quality of
staff over the term of the agreement will be assured. Indicate the number of
additional staff the firm would have to hire if awarded this contract.
The bidder should identify the extent to which staff to be assigned to the audit
reflect the City's commitment to Affirmative Action.
Engagement partners, managers, other supervisory staff and specialists may be
changed if those personnel leave the firm, are promoted or are assigned to
another office. These personnel may also be changed for other reasons with the
express prior written permission of the City. However, in either case, the City
retains the right to approve or reject replacements.
11
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
Consultants and firm specialists mentioned in response to this request for
proposal can only be changed with the express prior written permission of the
City, which retains the right to approve or reject replacements.
Other audit personnel may be changed at the discretion of the bidder provided
that replacements have substantially the same or better qualifications or
experience.
g. Resources - The bidder should describe its ability to provide the City with
qualified, trained staff if it is awarded this contract, in light of current client
obligations.
h. Similar Engagements With Other Government Entities - For the firm's
office that will be assigned responsibility for the audit, list the most significant
engagements (maximum -5) performed in the last five years that are similar to
the engagement described in this request for proposal. These engagements
should be ranked on the basis of total staff hours. Indicate the scope of work,
date, engagement partners, total hours, and the name and telephone number of
the principal client contact. Also indicate if any of these agencies has received
the Government Finance Officers Association's (GFOA) Certificate of
Achievement in Financial Reporting during this timeframe.
i. Specific Audit Approach - The proposal should set forth a work plan,
including an explanation of the audit methodology and time frames before and
after the close of the fiscal year to be followed, to perform the services required
in this request for proposal. In developing the work plan, reference should be
made to such sources of information as the City's budget and related materials,
organization charts, manuals and programs, and financial and other management
information systems.
Bidders will be required to provide the following information on their audit
approach:
oo Proposed segmentation of the engagement
oo Level of staff and number of hours to be assigned to each proposed
segment of the engagement
oo Sample size and the extent to which statistical sampling is to be used in
the engagement
oo Extent of use of onsite automated systems in the engagement
oo Type and extent of analytical procedures to be used in the engagement
12
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
oo Approach to be taken to gain and document an understanding of the
City's internal control structure
oo Approach to be taken in determining laws and regulations that will be
subject to audit test work
oo Approach to be taken in drawing audit samples for purposes of testing
compliance
oo A list of schedules and tables that the auditor anticipates would normally
be prepared by the City to assist in the conduct of fieldwork.
j. Identification of Anticipated Potential Audit Problems - The proposal
should identify and describe any anticipated potential audit problems, the
bidder's approach to resolving these problems and any special assistance that will
be requested from the City.
k. Total All -Inclusive Maximum Price - The proposal should contain all
pricing information relative to performing the audit engagement as described in
this request. The total all-inclusive maximum price to be presented in the
proposal summary, which will include all direct and indirect costs and all out-of-
pocket expenses.
The City will not be responsible for expenses incurred in preparing and
submitting the proposal. Such costs should not be included in the proposal.
1. Rates by Partner, Specialist, Supervisory and Staff Level Times Hours
Anticipated for Each - The bid should include a schedule of professional fees and
expenses, which supports the total all-inclusive maximum price. The cost of special
services described in this request should be disclosed as separate components of the total
all-inclusive maximum price.
m. Out-of-pocket Expenses Included in the Total All-inclusive Maximum Price and
Reimbursement Rates - All estimated out-of-pocket expenses to be reimbursed
should be presented in the format provided in the attachment. All expense
reimbursements will be charged against the total all- inclusive maximum price
submitted by the firm
n. Rates for Additional Professional Services - If it should become necessary for
the City to request the auditor to render any additional services, to either supplement
the services requested in this RFP or to perform additional work, as a result of the
specific recommendations included in any report issued on this engagement, such
additional work will be performed only if set forth in an addendum to the contract
between the City and the firm. Any such additional work agreed to between the City
and the firm will be performed at the same rates set forth in the schedule of fees and
expenses included in the proposal.
13
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
o. Proposal Length and Copies - Proposals should not exceed 30 pages, including
required attachments and supplemental materials.
3. Proposal Evaluation and Selection
a. Review Committee - A committee of four people will evaluate the proposals,
as follows:
- City of Lodi Internal Services Director
- City of Lodi Financial Services Manager
- two Budget and Finance Committee member
b. Evaluation of Proposals - A point formula will be used during the review
process to score proposals. The City reserves the rights to retain all proposals
submitted and use any idea in a proposal regardless of whether that proposal is
selected. Proposals will be evaluated using three sets of criteria. The following
represent the principal selection criteria that will be considered during the
evaluation process.
oo General Qualifications (Maximum Points - 15)
➢ The audit firm is independent and licensed to practice in California
➢ The audit firm's professional personnel have received adequate
continuing professional education within the preceding two years
➢ The bidder has no conflict of interest with regard to any other work
performed by the finance for the City
➢ The bidder's responsiveness to the instructions in this request for
proposal in preparing and submitting the proposal
➢ The bidder submits a copy of its last external quality control review
report and the firm has a record of quality audit work.
oo Technical Quality (Maximum Points - 60)
➢ Expertise and Experience (Maximum Points - 30)
- The bidder's past experience and performance on comparable
government engagements
14
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
- The quality of the firm's professional personnel to be assigned to
the engagement and the quality of the firm's management support
personnel to be available for technical consultation
➢ Audit Approach (Maximum Points - 30)
- Adequacy of proposed staffing plan for various segments of the
engagement
- Adequacy of sampling techniques
- Adequacy of analytical procedures
oo Price (Maximum Points - 25)
The maximum score for price will be assigned to the firm offering the lowest
total all-inclusive maximum price. Appropriate fractional scores will be
assigned to other bidders. As reflected above, the award of contract will not
be based solely on price, but on a combination of factors as determined to be
in the best interest of the City. After evaluating the proposals and discussing
them further with the finalists or the tentatively selected contractor, the City
reserves the right to further negotiate the proposed work and/or method and
amount of compensation.
c. Oral Presentation - During the evaluation process, City staff may, at its
discretion, request any one or all bidders to make oral presentation. Such
presentations will provide firms with an opportunity to answer any questions the
staff may have on a bidder's proposal. Not all firms may be asked to make such oral
presentations.
4. Proposal Review and Award Schedule - The following is an outline of the
anticipated schedule for proposal review and contract award:
Issue RFP
4/3
Conduct pre -proposal conference
4/9
Receive proposals
4/23
Conduct finalist interviews
4/30
Finalize staff recommendation
5/9
Award contract
5/21
5. Pre -proposal Conference - A pre -proposal conference will be held on April 9, 2008,
at 2:00 p.m., at the Finance Department, 300 West Pine Street to answer any questions
that prospective bidders may have regarding this Request for Proposal (RFP).
6. Ownership of Materials - All documents and other materials prepared by or in
possession of the Auditor as part of the work or services under these specifications shall
15
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
become the permanent property of the City and shall be delivered b the City upon
demand.
7. Release of Reports and Information - Any reports, information, data, or other
material given to, prepared by or assembled by the Auditor as part of the work or
services under these specifications shall be the property of City and shall not be made
available to any individual or organization by the Auditor without the prior written
approval of the City.
8. Copies of Reports and Information - If the City requests additional copies of
reports, specifications, or any other material in addition to what the auditor is required to
furnish in limited quantities as part of the work or services under these specifications,
the auditor shall provide such additional copies as requested, and City shall compensate
the auditor for the costs ofduplicating of such copies.
9. Required Deliverable Products - The Auditor will be required to provide the
following no later than November 15th of each year:
a. One copy of each report listed in paragraph 4, page I under "Description of
Work". City staff will review any documents or materials provided by the
Auditor, and where necessary, the Auditor will be required to respond to staff
comments and make such changes as deemed appropriate.
b. One copy of the letter to management on the adequacy of internal Controls and
recommendations for improvement.
c. When computers have been used to produce materials submitted to the City as a
part of the work scope, the Auditor must provide the corresponding computer
files to the City, compatible with the following programs unless otherwise
directed by the Financial Services Manager:
Word Processing Word for Windows 2003
Spreadsheets
Excel Release 2003
Computer files must be on media formatted for use on IBM-compatible
systems. Each file must be clearly labeled and have a printed copy of the
directory.
10. Statement of Contract Disqualification - Each bidder shall submit a statement
regarding any past governmental agency contract disqualification on the form provided
in the RFP package.
16
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
11. Special Considerations
a. The City will submit its comprehensive annual financial report to the
Government Finance Officers Association of the United States and Canada for
review in their Certificate of Achievement for Excellence in Financial Reporting
program and to the California Society of Municipal Finance Officers for their
Certificate of Award of Outstanding Financial Reporting program. It is
anticipated that the auditor will not be required to provide special assistance to
the City to meet the requirements of that program. Final audit reports MUST be
completed by November 15th in order to meet the deadlines for the filing for the
awards. If there is a delay, any additional costs the City incurs, (i.e., staff
overtime, additional printing costs, etc.) will be the Auditor's responsibility.
b. The City currently anticipates it will prepare one or more official statements in
connection with the sale of debt securities that will contain the basic financial
statements and the auditor's report thereon. The auditor shall be required, if
requested by the fiscal advisor and/or the underwriter, to issue a "consent and
citation of expertise" as the auditor and any necessary "comfort letters."
c. The City has determined that the State Controller's Office of the State of
California will f nic tion as the cognizant agency in accordance with the
provisions of the Single Audit Act of 1996 and U.S. Office of Management and
Budget (OMB) Circular A-133, Audits of States, Local Governments and
Nonprofit Organizations.
d. The schedule of federal financial assistance and related auditor's report, as well
as the reports on the internal controls and compliance are to be issued as part of
the comprehensive annual financial report.
12. Working Paper Retention and Access to Working Papers - All working papers and
reports must be retained, at the auditor's expense, for a minimum of three years, unless
the firm is notified in writing by the City of the need to extend the retention period. The
auditor will be required to make working papers available to third parties only upon
written request by the City's Financial Services Manager.
In addition, the firm shall respond to the reasonable inquiries of successor auditors and
allow successor auditors to review working papers relating to matters of continuing
accounting significance.
13. Assistance to be provided to the Auditor by the City
a. Finance Department and Clerical Assistance - Preparation and printing of
the Comprehensive Annual Financial Report (including Single Audit Act
section) shall be the responsibility of the City. The auditor will be responsible
for reviewing, as well as editing and proofing the final draft. Preparation and
printing of the FTA & CDBG/Home Funds compliance reports are the
17
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
responsibility of the auditor. The finance department staff and responsible
management personnel will be available during the audit to assist the firm by
providing information, documentation and explanations. The preparation of
confirmations will be the responsibility of the City.
b. Information System Assistance - The information system staff, equipment,
and generalized user software have been used extensively in the past for auditing
purposes. The City will provide a general ledger password to the auditors for use
in performing tests of accounting transactions. Information Systems personnel
will be available to provide systems documentation and explanations.
c. Work area, telephones, photocopying, FAX machines, and parking - The
City will provide the auditor with reasonable workspace, and access to a
telephone, photocopying facilities and FAX machine. All long distance phone
and fax transmissions are to be reimbursed to the City. Parking is available at
City Hall.
14. Attendance at Meeting and Hearings - As part of the work scope and included in
the maximum contract price is attendance at up to three governing body meetings
annually to present and discuss audit findings and recommendations. Auditor shall
attend as many `working meetings' with staff as necessary in performing audit tasks.
D. DESCRIPTION OF THE CITY
1. Auditor Contact - The auditor's principal contact with the City will be Ruby Paiste,
Accounting Manager, who will coordinate the assistance to be provided by the City to
the auditor.
2. Background Information - Lodi is a general law City, incorporated on December 6,
1906, and is organized in accordance with the Council -City Manager form of
government. With a population of approximately 63,395 covering 13.92 square miles,
the City provides a broad range of municipal services, including: police and fire
protection, parks and recreation, electric, water and sewer utilities, street maintenance,
public transportation, planning, building and safety, and other general government
services. The City has a total payroll of $26.6 million covering 458 full-time equivalent
employees. The accounting and financial reporting functions of the City are centralized.
More detailed information on the government and its finances can be found in the 2007-
08 Budget and the Comprehensive Annual Financial Report for the year ended June 30,
2007, which is available upon request.
18
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
3. Fund Structure - The City uses the following fund types in its financial reporting:
Number of
Individual
Funds
Fund Type
General Fund 1
Special Revenue Funds 5
Debt Service Funds 1
Capital Projects Funds 6
Enterprise Funds 4
Internal Service Funds 2
Fiduciary Funds 2
4. Budgetary Basis of Accounting - The City prepares its annual budget on a basis
consistent with generally accepted accounting principles.
5. Federal and State Financial Assistance - During the first fiscal year of the five-year
contract, the City expects to receive the following financial assistance:
Federal Transit Assistance $ 1,100,000
Community Development Block Grant 1,055,000
6. Pension Plans - The City participates in the California Public Employees Retirement
System (PERS), an agent multiple -employer public employee retirement system. The
City also offers a deferred compensation plan to its employees created in accordance
with the Internal Revenue Code Section 457.
7. Joint Ventures - The City participates in four joint ventures:
- California Joint Powers Risk Management Association
- Local Agency Workers' Compensation Excess Joint Powers Authority
- California Transit Insurance Pool
- Northern California Power Agency
8. Magnitude of Finance Operations - The Financial Services Department consists of
three activities:
Finance Administration 2 employees
Revenue Billing and Collections 13 employees
performing electric, water and sewer billing, general accounts receivable,
cashiering and cash management duties
Accounting 8 employees
performing payroll, accounts payable, general ledger and financial reporting
duties
19
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
9. Computer Systems for Accounting Applications
➢ Hardware
Type of Equipment Number Make of Equipment
Mid -Range Computer 1 IBM AS 400 RISC
➢ Software World Software - JD Edwards
10. Recognition for Financial Planning and Reporting Efforts - The City has received
national recognition for its efforts in financial reporting from GFOA and CSMFO. The
City is committed to maintain a high standard of reporting and fund management
through its use of quality financial management tools.
20
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
E. AGREEMENT
THIS AGREEMENT is made and entered into in the City of Lodi on this day of I
by and between the CITY OF LODI, a municipal corporation, hereinafter referred to as
City, and ...................................................... hereinafter referred to as Auditor.
WITNESS:
WHEREAS, on April 3, 2008, the City requested proposals for auditing services per
Specification No. 08-01.
WHEREAS, pursuant to said request, Auditor submitted a proposal that was
accepted by the City for said services.
NOW THEREFORE, in consideration of their mutual promises, obligations and
covenants hereinafter contained, the parties hereto agree as follows:
1. TERM. The term of this Agreement shall be from the date this Agreement is made and
entered, as first written above, until acceptance or completion of the annual audit for the
fiscal year ended June 30, 2012.
2. INCORPORATION BY REFERENCE. City Specification No. 08-01 and Auditor's
proposal dated April 3, 2008, are hereby incorporated in and made a part of this
Agreement.
3. CITY'S OBLIGATIONS. For providing auditing services as specified in this
Agreement, City will pay and Auditor shall receive the amounts stated in the proposal
hereto and incorporated into this Agreement.
4. AUDITOR'S OBLIGATIONS. For and in consideration of the payments and
agreements herein before mentioned to be made and performed by City, Auditor agrees
with City to do everything required by this Agreement and said specifications.
5. AMENDMENTS. Any amendment, modification, or variation from the terms of this
Agreement shall be in writing and shall be effective only upon approval by the City
Manager of the City.
6. COMPLETE AGREEMENT. This written Agreement, including all writings
specifically incorporated herein by reference, shall constitute the complete agreement
between the parties hereto. No oral agreement, understanding, or representation not
reduced to writing and specifically incorporated herein shall be of any force or effect,
nor shall any such oral agreement, understanding, or representation be binding upon the
parties hereto.
21
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
7. NOTICE. All written notices to the parties hereto shall be sent by United States mail,
postage prepaid by registered or certified mail addressed as follows:
City Financial Services Manager
City of Lodi
P.O. Box 3006
Lodi, CA 95241-1910
Auditor
8. AUTHORITY TO EXECUTE AGREEMENT. Both City and Auditor do covenant
that each individual executing this agreement on behalf of each party is a person duly
authorized and empowered to execute Agreements for such party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed the day and year first above written.
ATTEST:
Randi Johl, City Clerk
APPROVED AS TO FORM:
Steve Ncnwanauer, ulty Attorney
Un
AUDITOR
L'In
CITY OF LODI
A Municipal Corporation
Blair King, City Manager
22
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
F. INSURANCE REQUIREMENTS:
Consultant Services
The Auditor shall procure and maintain for the duration of the contract insurance
against claims for injuries to persons or damages to property which may arise from
or in connection with the performance of the work hereunder by the Auditor, its
agents, representatives, employees, or subcontractors.
Minimum Scope of Insurance - Coverage shall be at least as broad as:
1. Insurance Services Office Commercial General Liability coverage (occurrence form CG
0001).
2. Insurance Services Office form number CA 000 I (Ed. 1/87) covering Automobile
Liability, code I (any auto).
3. Workers' Compensation insurance as required by the State of California and Employer's
Liability Insurance.
4. Errors and Omissions Liability insurance as appropriate to the consultant's profession.
Minimum Limits of Insurance - Auditor shall maintain limits no less than:
1. General Liability: $1,000,000 per occurrence for bodily injury, personal injury and
property damage. If Commercial General Liability or other form with a general
aggregate limit is used, either the general aggregate limit shall apply separately to this
project/location or the general aggregate limit shall be twice the required occurrence
limit.
2. Automobile Liability: $1,000,000 per accident for bodily injury and property damage
3. Employer's Liability: $ 1,000,000 per accident for bodily injury or disease
4. Errors and Omissions Liability: $1,000,000 per occurrence
Deductibles and Self -Insured Retention - Any deductibles or self-insured retention
must be declared to and approved by the City. At the option of the City, either: the insurer
shall reduce or eliminate such deductibles or self-insured retention's as respects the City, its
officers, officials, employees and volunteers; or the Auditor shall procure a bond
guaranteeing payment of losses and related investigations, claim administration and defense
expenses.
Other Insurance Provisions - The general liability and automobile liability policies are
to contain, or be endorsed to contain, the following provisions:
23
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
1. The City, its officers, officials, employees, agents and volunteers are to be covered as
insured as respects: liability arising out of activities performed by or on behalf of the
Auditor; products and completed operations of the Auditor; premises owned, occupied
or used by the Auditor; or automobiles owned, leased, hired or borrowed by the Auditor.
The coverage shall contain no special limitations on the scope of protection afforded to
the City, its officers, official, employees, agents or volunteers.
2. For any claims related to this project, the Auditor's insurance coverage shall be primary
insurance as respects the City, its officers, officials, employees, agents and volunteers.
Any insurance or self-insurance maintained by the City, its officers, officials,
employees, agents or volunteers shall be in excess of the Auditor's insurance and shall
not contribute to it.
3. Any failure to comply with reporting or other provisions of the policies including breach
of warranties shall not affect coverage provided to the City, its officers, officials,
employees, agents or volunteers.
4. The Auditor's insurance shall apply separately to each insured against whom claim is
made or suit is brought, except with respect to the limits of the insurer's liability.
5. Each insurance policy required by this clause shall be endorsed to state that coverage
shall not be suspended, voided, cancelled by either party, reduced in coverage or in
limits except after thirty days'prior written notice by certified mail, return receipt
requested, has been given to the City.
Acceptability of Insurers - Insurance is to be placed with insurers with a current A.M.
Best's rating of no less than A: VII.
Verification of Coverage - Auditor shall furnish the City with a certificate of insurance
showing maintenance of the required insurance coverage. Original endorsements effecting
general liability and automobile liability coverage required by this clause must also be
provided. The endorsements are to be signed by a person authorized by that insurer to bind
coverage on its behalf. All endorsements are to be received and approved by the City before
work commences.
24
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
Statement of Bidder's Past Contract Disqualifications
The bidder shall state whether it or any of its officers or employees who have a proprietary
interest in it, has ever been disqualified, removed, or otherwise prevented from bidding on,
or completing a federal, state, or local government project because of the violation of law, a
safety regulation, or for any other reason, including but not limited to financial difficulties,
project delays, or disputes regarding work or productquality, and if so, to explain the
circumstances.
Do you have any disqualification as described in the above paragraph to declare?
Yes No
2. If yes, explain the circumstances.
Executed on
at
I declare, under penalty of perjury of the laws of the State of California, that the foregoing is
true and correct.
Signature of Authorized Bidder Representative
25
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
REFERENCES
Number of years engaged in providing the services included within the scope of the
specifications under the present business name:
List and describe fully the last three contracts performed by your firm, which demonstrate
your ability to provide the services included with the scope of the specifications. Attach
additional pages if required. The City reserves the right to contact each of the references
listed for additional information regarding your firm's qualifications.
Reference No. I
Customer Name:
Contact Individual:
Address:
Contract Amount:
Description of Services Provided:
Reference No. 2
Customer Name:
Contact Individual:
Address:
Contract Amount:
Description of Services Provided:
Reference No. 3
Customer Name:
Contact Individual:
Address:
Contract Amount:
Description of Services Provided:
Year:
Year:
Year:
Phone No:
Phone No:
Phone No:
26
CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES
2008
Letterhead
DATE: April 2, 2008
TO: Invited Parties
FROM: James R. Krueger, Internal Services Director/Deputy City Manager
SUBJECT: Professional Auditing Services
The City of Lodi is soliciting proposals from qualified firms of certified public accountants
for a five-year contract to audit the financial statements of the following entities beginning
with the fiscal year ending June 30, 2008, with the option of renewing the contract for five
subsequent fiscal years:
City of Lodi, Comprehensive Annual Financial Report and Single Audit.
City of Lodi, Federal Transit Assistance (Section IX) Funds
City of Lodi, Community Development Block Grant Funds/Home Funds
Audit firms expressing interest will be provided with a copy of a request for proposal (RFP)
document.
Please indicate your interest in receiving a copy of the RFP by making a request in writing
by April 11, 2008.
All questions and correspondence should be directed to Ruby Paiste, Financial Services
Manager at the above address or by calling (209) 333 — 6800 x2591.
27