HomeMy WebLinkAboutAgenda Report - February 18, 1998 E-10AGENDA TITLE: Request for Proposal - Audit services
MEETING DATE: February 18, 1998
PREPARED BY: Finance Director
RECOMMENDATION: By motion, authorize staff to solicit proposals for audit services as
provided in the attached specifications.
BACKGROUND: The City Council selected the firm of KPMG Peat Marwick LLP on April
5, 1995 to provide audit services for the City beginning in fiscal year
1994-95. The contract was awarded for three years and expired upon
completion of the annual audit for the fiscal year ending June 30,
1997.
Audit Services
The City has used an independent audit firm to audit the City's financial statements for many
years. This has been done to ensure 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 the several
Federal and State grant agreements and bond covenants entered into by the City to obtain funds
and debt financing. The focus of the audit is on the City's principal 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
City's financial ability to incur additional debt financing 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 models RFPs suggested by the
Government Finance Officers' Association. In addition, the RFP includes standard terms and
conditions for professional services developed by the City when requesting proposals for
services.
APPROVED: ! /�
H. Dixon Flynn — City lianager
The RFP is divided into the following seven (7) sections:
• Description of the Work
• Special Terms and Conditions
• Agreement
• Proposal Submittal Forms
Selection Process
• General Terms and Conditions
• Description of the City
• Insurance Requirements
The evaluation of proposals and selection of the firm will be made by a panel of three people as discussed
in detail on page 11. Two members of the panel will be appointed by the Mayor and will include a
Councilmember and finance professional from the community. The Finance Director will be the third
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.
The staff anticipates that the firm selected will be responsible for the audit of financial records beginning
with fiscal year 1997-98. Accordingly, time is essential to ensure proper coordination and planning prior
to the beginning of the audit.
Funding
The funding for these services is included in the City budget and is estimated to be approximately $35,000
per year. The final cost will be based on bids received from audit firms and the level of services requested
by the City.
Vicky Mc Athie
Finance Director
Attachment
Request For Proposal
City of Lodi
TABLE OF CONTENTS
A. Description of Work
General.....................................................................................................................................
Scopeof Work to be Performed..............................................................................................
Auditing Standards to be Followed.........................................................................................
Reportsto be Issued.................................................................................................................
B. General Terms and Conditions
Proposal Requirements............................................................................................................ 4
Contract Award and Execution................................................................................................ 4
Contract Performance............................................................................................................... 5
C. Special Terms and Conditions
ContractTerm........................................................................................................................... 8
ProposalContent....................................................................................................................... 8
Proposal Evaluation and Selection.........................................................................................
11
Proposal Review and Award Schedule..................................................................................13
Pre -proposal Conference........................................................................................................13
Ownershipof Materials..........................................................................................................13
Release of Reports and Information......................................................................................13
Copies of Reports and Information........................................................................................13
Required Deliverable Products..............................................................................................14
Statement of Contract Disqualification..................................................................................
14
SpecialConsiderations...........................................................................................................14
Working Paper Retention and Access...................................................................................15
Assistance to be provided to the Auditor by the City ..................................... ................15
Attendance at Meetings and Hearings.......................................................... ..............15
D. Description of the City
AuditorContact......................................................................................................................16
Background Information........................................................................................................16
FundStructure........................................................................................................................16
BudgetaryBasis of Accounting.............................................................................................16
Federal and State Financial Assistance..................................................................................16
PensionPlans..........................................................................................................................16
JointVentures.........................................................................................................................17
Magnitude of Finance Operations..........................................................................................17
Computer Systems for Accounting Applications..................................................................17
E. Agreement...........................................................................................................................................18
F. Insurance Requirements .................................... .................20
..............................................................
G. Proposal Submittal Forms
ProposalSubmittal Summary .................................................................................................22
Schedule of Professional Fees and Expenses........................................................................ 23
Statement of Bidder's Past Contract Disqualification ........................................................... 24
References............................................................................................................................... 25
City of Lodi
DESCRIPTION OF WORK (Specifications No 98-01)
1. General
The City of Lodi is requesting proposals from qualified firms of Certified Public Accountants for a
three-year contract to audit the City's financial statements beginning with the fiscal year ending
June 30, 1998, with an option to renew for additional three fiscal years. These audits are to be
performed in accordance with the provisions contained in this request
2. Scope of Work
General purpose financial statements. The auditor will be required to express an opinion on the
fair presentation of general-purpose 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 -relation -to" report on the combining and individual fund statements and
supporting schedules based on the auditing procedures applied during the audit of the general-
purpose 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 Transportation Development Act and
Community Development Block Grant 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 (1988), the provisions of the Single Audit Act of 1984 and the provisions of
U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local
Governments and NonRrofit Organizations, the standards for financial reporting provided by the
Government Finance Officers Association, and the applicable laws, rules and regulations of the
Transportation Development Act.
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.
City of Lodi
DESCRIPTION OF WORK (Specifications No 98-01)
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 financial
assistance programs.
g. A report on compliance with specific requirements applicable to non -major federal
financial assistance programs.
h. A report on compliance with general requirements for both major and non -major federal
financial assistance programs.
i. An agreed -upon -procedure report for GANN limitation 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.
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
Finance Director
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
K
City of Lodi
DESCRIPTION OF WORK (Specifications No 98-01)
■ 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
City of Lodi
GENERAL TERMS AND CONDITIONS (Specifications No 98-01)
PROPOSAL REQUIREMENTS
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.
2. Proposal Submittal. Each proposal must be submitted in the form provided in the specifications
and accompanied by any other required information or supplemental materials. Proposal
documents will be enclosed in an envelope, which will be sealed and addressed to the Finance
Director, City of Lodi, 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.
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 Finance Director 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.
4. 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.
5. 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.
CONTRACT AWARD AND EXECUTION
6. 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, and to
make award to the lowest responsible, responsive bidder as the interest of the City may require.
See the Special Terms and Conditions for any other proposal evaluation and award criteria.
7. 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.
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City of Lodi
GENERAL TERMS AND CONDITIONS (Specifications No 98-01)
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. The contract will be made in the form adopted by the City and incorporated in these
specifications.
9. Failure to Accept Contract. The following will occur if the bidder to whom the award is made
(Contractor) fails to enter into the contract: The award will be annulled; any bid security will be
forfeited in accordance with the Special Terms and Conditions if a bidder's bond or security is
required; and an award may be made to the next lowest responsible, responsive bidder who will
fulfill every stipulation as if it were the parry to whom the first award was made.
10. Insurance Requirements. Contractor will provide proof of insurance in the form, coverage, and
amounts specified in these specifications within 10 (ten) -calendar days after notice of contract
award as a precondition to contract execution.
11. Business Tax. The Contractor 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.
CONTRACT PERFORMANCE
12. Ability to Perform. The Contractor warrants that it possesses, or has arranged through
subcontracts, 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.
13. Laws to be Observed. The Contractor 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.
14. Payment of Taxes. The contract price will include full compensation for all taxes, which the
Contractor is required to pay.
15. Permits and Licenses. The Contractor will procure all permits and licenses, pay all charges and
fees, and give all notices necessary.
16. Safety Provisions. The Contractor will conform to the rules and regulations pertaining to safety
established by OSHA and the California Division of Industrial Safety.
17. Public and Employee Safety. Whenever the Contractor's operations create a condition hazardous
to the public or City employees, the Contractor 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.
City of Lodi
GENERAL TERMS AND CONDITIONS (Specifications No. 98-01)
18. Preservation of City Property. The Contractor 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 Contractor's operations, it will be replaced or restored at the Contractor's
expense. The facilities will be replaced or restored to a condition as good as when the Contractor
began work.
19. Immigration Act of 1986. The Contractor warrants on behalf of itself and all subcontractors
engaged for the performance of this work 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.
20. Contractor Non -Discrimination. In the performance of this work, the Contractor agrees that it
will not engage in, nor permit such subcontractors as it may employ, to engage in discrimination in
employment of persons because of age, race, color, sex, national origin or ancestry, sexual
orientation, or religion of such persons.
21. Work Delays. Should the Contractor 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 Contractor. 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.
22. 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 Contractor's dollar cost bid
proposal. Interim billing shall cover a period of not less than a calendar month.
23. Inspection. The Contractor shall furnish the City with every reasonable opportunity to ascertain
that the services of the Contractor are being performed in accordance with the requirements and
intentions of the contract. All work done and all materials furnished, if any shall be subject to the
City's inspection and approval. The inspection of such work shall not relieve the Contractor of any
of its obligations to fulfill its contract requirements.
24. Audit. The City will have the option of inspecting and/or auditing all records and other written
materials used by the Contractor in preparing its invoices to the City as a condition precedent to any
payment to Contractor.
R,
City of Lodi
GENERAL TERMS AND CONDITIONS (Specifications No. 98-01)
25. Interests of Contractor. The Contractor 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 Contractor further covenants that, in the
performance of this work, no subcontractor or person having such an interest will be employed.
The Contractor 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 Contractor will at all times be deemed an independent contractor and not
an agent or employee of the City.
26, Hold Harmless and Indemnification. The Contractor 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 Contractor's employees, agents or officers which arise from or are connected with or are
caused or claimed to be caused by the acts or omissions of the Contractor, 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 Contractor'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.
27. Contract Assignment. The Contractor 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.
28. Termination. If, during the term of the contract, the City determines that the Contractor is not
faithfully abiding by any term or condition contained herein, the City may notify the Contractor in
writing of such defect or failure to perform; which notice must give the Contractor a 10 (ten)
calendar day notice of time thereafter in which to perform said work or cure the deficiency. If the
Contractor has not performed the work or cured the deficiency within the ten 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 Contractor. Thereafter, neither party will have any further
duties, obligations, responsibilities, or rights under the contract except, however, any and all
obligations of the Contractor'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
Contractor 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 Contractor be entitled to receive in excess of the compensation
quoted in its proposal.
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City of Lodi
SPECIAL TERMS AND CONDITIONS (Specifications No 98-01)
Contract Term. A three-year contract is contemplated with an option to renew for an additional
three 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. The following material is required to be received at the Finance Department by
March 10, 1998, at 2:00 p.m. for a proposing firm to be considered:
a. Four copies of the proposal to include the following:
Table of Contents
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 (60) 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
(1988).
The bidder should also list and describe the firm's professional relationships involving the
City for the past five (5) years, together with a statement explaining why this relationship
does not constitute a conflict of interest relative to performing an audit of the City.
City of Lodi
SPECIAL TERMS AND CONDITIONS (Specifications No 98-01)
In addition, the bidder will give the City written notice of any professional relationships
entered into during the period of this agreement.
d. License to Practice in California. An affirmative statement will be included as to whether
the firm and all assigned key professional staff are properly licensed to practice in
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 (3) 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 (3) years with state regulatory bodies or
professional organizations.
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 (3) 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.
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City of Lodi
SPECIAL TERMS AND CONDITIONS (Specifications No 98-01)
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.
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:
• Proposed segmentation of the engagement
• Level of staff and number of hours to be assigned to each proposed segment of the
engagement
• Sample size and the extent to which statistical sampling is to be used in the
engagement
• Extent of use of on-site automated systems in the engagement
• Type and extent of analytical procedures to be used in the engagement
• Approach to be taken to gain and document an understanding of the City's internal
control structure
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City of Lodi
SPECIAL TERMS AND CONDITIONS (Specifications No 98-01)
Approach to be taken in determining laws and regulations that will be subject to
audit test work
• Approach to be taken in drawing audit samples for purposes of testing compliance
A list of schedules and tables that the auditor anticipates would normally be
prepared by the City to assist in the conduct of fieldwork.
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.
Rates by Partner, Specialist, Supervisory and Staff Level Times Hours Anticipated
for Each. The bid should include a schedule of professional fees and expenses, presented
in the format provided in the attachment, 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.
o. Proposal Length and Copies. Proposals should not exceed 30 pages, including required
attachments and supplemental materials.
Proposal Evaluation and Selection.
a. Review Committee. A committee of 4 people (a Councilmember, finance professional, the
City's Finance Director and Accounting Manager), will evaluate proposals.
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City of Lodi
SPECIAL TERMS AND CONDITIONS (Specifications No 98-01)
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.
• General Qualifications (Maximum Points -1 S)
1) The audit firm is independent and licensed to practice in California
2) The audit firm's professional personnel have received adequate continuing
professional education within the preceding two years
3) The bidder has no conflict of interest with regard to any other work performed
by the firm for the City
4) The bidder's responsiveness to the instructions in this request for proposal in
preparing and submitting the proposal
5) The bidder submits a copy of its last external quality control review report and
the firm has a record of quality audit work.
• Technical Quality (Maximum Points - 60)
1) Expertise and Experience (Maximum Points - 30)
• The bidder's past experience and performance on comparable government
engagements (with special emphasis on city audits)
• 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
2) Audit Approach (Maximum Points - 30)
• Adequacy of proposed staffing plan for various segments of the engagement
• Adequacy of sampling techniques
• Adequacy of analytical procedures
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City of Lodi
SPECIAL TERMS AND CONDITIONS (Specifications No 98-01)
a Price (Maximum Points - 2S)
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
2/18
Conduct pre -proposal conference
2/23
Receive proposals
3/10
Conduct finalist interviews
3/25
Finalize staff recommendation
416
Award contract
4/15
5. Pre -proposal Conference. A pre -proposal conference will be held on February 23, 1998 at 2:00
p.m., at City Hall, 212 West Pine Street to answer any questions that prospective bidders may have
regarding this Request for Proposal (RFP).
6. Ownership of Materials. All original drawings, plan documents and other materials prepared by
or in possession of the Contractor as part of the work or services under these specifications shall
become the permanent property of the City and shall be delivered to the City upon demand.
Release of Reports and Information. Any reports, information, data, or other material given to,
prepared by or assembled by the Contractor 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 Contractor without the prior written approval of the City.
Copies of Reports and Information. If the City requests additional copies of reports, drawings,
specifications, or any other material in addition to what the Contractor is required to furnish in
limited quantities as part of the work or services under these specifications, the Contractor shall
provide such additional copies as requested, and City shall compensate the Contractor for the costs
of duplicating of such copies.
13
City of Lodi
SPECIAL TERMS AND CONDITIONS (Specifications No 98-01)
9. Required Deliverable Products. The contractor will be required to provide the following no later
than November 1 of each year:
a. One (1) copy of each report listed in paragraph 4, page 1 under "Description of Work".
City staff will review any documents or materials provided by the Contractor, and where
necessary, the Contractor 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.
When computers have been used to produce materials submitted to the City as a part of the
work scope, the Contractor must provide the corresponding computer files to the City,
compatible with the following programs unless otherwise directed by the Finance Director:
Word Processing Word for Windows 6.0
Spreadsheets Excel Release 5.0
Computer files must be on 3-1/2", high-density, write -protected diskettes, formatted for use
on IBM-compatible systems. Each diskette 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.
it. 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 1st 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 Contractor'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 general-purpose 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
function as the cognizant agency in accordance with the provisions of the Single Audit Act
of 1984 and U.S. Office of Management and Budget (OMB) Circular A-133, Audits of
States . Local Governments and Nonprofit Organizations.
14
City of Lodi
SPECIAL TERMS AND CONDITIONS (Specifications No 98-01)
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 (3) 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 Finance Director.
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 TDA & CDBG compliance
reports are the 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 not 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. Date Processing 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. Contractor shall attend as many "working meetings" with
staff as necessary in performing audit tasks.
15
City of Lodi
DESCRIPTION OF THE GOVERNMENT
3.
4.
5.
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.
Background Information. Lodi is a general law City, incorporated on December 6, 1906, and is
organized in accordance with the Council -Mayor -City Manager form of government. With a
population of approximately 54,800, covering 12 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 $19.3 million covering 409 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 1997-99
Financial Plan and the Comprehensive Annual Financial Report for the year ended June 30, 1997,
which is available upon request.
Fund Structure. The City uses the following fund types and account groups in its financial
reporting:
Number of
Individual
Fund Tvae/Account Group
Funds
General fund
1
Special revenue funds
6
Debt service funds
1
Capital projects funds
6
Enterprise funds
5
Internal Service Fund
_1
Expendable trust funds
_3
Agency funds
_2
General fixed assets account group
_1
General long-term debt account group
_1
Budgetary Basis of Accounting. The City prepares its budgets on a basis consistent with generally
accepted accounting principles.
Federal and State Financial Assistance. During the first fiscal year of the three-year contract,
the City expects to receive the following financial assistance:
Transportation Development Act Funds $ 1,215,400
Transit Section 9 1,223,200
Community Development Block Grant 943,306
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 two
deferred compensation plans to its employees created in accordance with the Internal Revenue
Code Section 457.
16
City of Lodi
DESCRIPTION OF THE GOVERNMENT
7. Joint Ventures. The City participates in four joint ventures: (1) the California Joint Powers Risk
Management Association; (2) the Local Agency Workers' Compensation Excess Joint Powers
Authority; (3) the California Transit Insurance Pool; and, (4) the Northern California Power
Agency.
$. Magnitude of Finance Operations. The finance department consists of seven activities, Finance
Director, 1 employee: Support Services, 2 employees; Revenue Management, 9 employees
performing electric, water and sewer billing, general accounts receivable, cashiering and cash
management duties; Accounting, 7 employees, performing payroll, accounts payable, general
ledger and financial reporting duties; Data Processing, 3 employees, performing departmental data
processing; Purchasing, 5 employees; and Field Services, 6 employees performing meter reading
and utility collection services.
Computer Systems for Accounting Applications
Hardware
Tempe of Equipment Number Make of Equipment
Mid -Range Computer 1 IBM AS 400 RISC
Software World Software — JD Edwards
The City recently procured JD Edwards Financial Systems and should be up and running
by the close of the current fiscal year.
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
maintaining a high standard of reporting and fund management through its use of quality financial
management tools.
17
AGREEMENT
THIS AGREEMENT is made and entered into in the City of Lodi on this day of
, by and between the CITY OF LODI, a municipal corporation, hereinafter referred to as City,
and ...................................................... hereinafter referred to as Contractor.
WITNESS:
WHEREAS, on February 18, 1998, the City requested proposals for auditing services per
Specification No. 98-01.
WHEREAS, pursuant to said request, Contractor 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, 1998.
2. INCORPORATION BY REFERENCE. City Specification No. 98-01 and Contractor's
proposal dated February 18, 1998, 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 Contractor shall receive the amounts stated in the proposal hereto and incorporated into
this Agreement.
4. CONTRACTOR'S OBLIGATIONS. For and in consideration of the payments and
agreements herein before mentioned to be made and performed by City, Contractor 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 Council 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.
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 Finance Director
City of Lodi
P.O. Box 3006
Lodi, CA 95241
18
Contractor.....................................
.....................................
8. AUTHORITY TO EXECUTE AGREEMENT. Both City and Contractor 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:
Alice Reimche, City Clerk
APPROVED AS TO FORM:
Randall Hays, City Attorney
CITY OF LODI
A Municipal Corporation
By:
CONTRACTOR
By:
By:
19
Mayor
City of Lodi
INSURANCE REQUIREMENTS: Consultant Services
The Contractor 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 Contractor, 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 0001 (Ed. 1/87) covering Automobile Liability, code 1
(any auto).
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. Contractor shall maintain limits no less than:
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 Contractor 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:
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 Contractor; products and
completed operations of the Contractor; premises owned, occupied or used by the Contractor; or
automobiles owned, leased, hired or borrowed by the Contractor. The coverage shall contain no
special limitations on the scope of protection afforded to the City, its officers, official, employees,
agents or volunteers.
20
City of Lodi
INSURANCE REQUIREMENTS: Consultant Services
2. For any claims related to this project, the Contractor'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 Contractor'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 Contractor'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
(30) 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 Coveraee. Contractor 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.
21
City of Lodi
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 product_
quality, and if so, to explain the circumstances.
1. 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
24
City of Lodi
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 (3) to (5) 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. 1
Customer Name:
Contact Individual:
Address:
Phone No:
Contract Amount: Year:
Description of Supplies, Equipment, or Services Provided:
Reference No. 2
Customer Name:
Contact Individual:
Address:
Phone No:
Contract Amount: Year:
Description of Supplies, Equipment, or Services Provided:
Reference No. 3
Customer Name:
Contact Individual:
Address:
Contract Amount:
Phone No:
Year:
Description of Supplies, Equipment, or Services Provided:
25
CITY COUNCIL
JACK A. SIEGLOCK, Mayor
KEITH LAND
Mayor Pro Tempore
STEPHEN J. MANN
PHILLIP A. PENNINO
DAVID WARNER
DATE: February 18, 1998
TO: Invited Parties
CITY OF LODI
CITY HALL, 221 WEST PINE STREET
P.O. BOX 3006
LODI, CALIFORNIA 95241-1910
(209)334-5634
FAX (209) 333-6795
FROM: Vicky Mc Athie, Finance Director
SUBJECT: Professional Auditing Services
DIXON FLYNN
City Manager
ALICE REIMCHE
City Clerk
RANDALL HAYS
City Attorney
The City of Lodi is soliciting proposals from qualified firms of certified public accountants for a three-year
contract to audit the financial statements of the following entities beginning with the fiscal year ending
June 30, 1998, with the option of renewing the contract for three subsequent fiscal years:
• City of Lodi, Comprehensive Annual Financial Report and Single Audit.
• City of Lodi, Transportation Development Act Funds
• City of Lodi, Federal Transit Assistance (Section IX) Funds
• City of Lodi, Community Development Block Grant 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 FebruM 23,
1998.
All questions and correspondence should be directed to Vicky McAthie, Finance Director, or Ruby Paiste,
Accounting Manager at the above address or by calling (209) 333-6761.
26