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HomeMy WebLinkAboutAgenda Report - February 6, 2019 H-03CITY OF LODI COUNCIL COMMUNICATION AGENDA ITEM AGENDA TITLE: Provide Direction for Request for Proposal and Review Committee for Auditing services MEETING DATE: February 6, 2019 PREPARED BY: Deputy City Manager RECOMMENDED ACTION: BACKGROUND INFORMATION: Provide direction for Request for Proposal and review committee for auditing services In March 2018, staff went through the RFP process for the selection of new auditors, The Pun Group. The previous auditors, Macias Gini & O'Connell LLP, had been with the City under contract for 15 years. During the initial request for proposals, staff received responses from seven auditing firms. The proposals were independently reviewed by a team of five City staff members including the Deputy City Manager, Supervising Accountant, Accountant, Electric Utility Rates & Resources Manager and Parks, Recreation and Cultural Services Director. The proposals were evaluated on the following criteria: general qualifications, technical quality and price. Based upon the evaluation of the information supplied in the proposals, the panel ranked the proposal by the Pun Group, LLP as the most responsive and advantageous to the City. Staff initially recommended a three-year contract term with the Pun Group. Council expressed the concern that by not being included in the decision-making process on this contract, it was not fully exercising its fiduciary obligation. Council approved a one-year contract with the Pun Group and gave direction that Council have involvement in the subsequent RFP process. It is now time to begin that review process and Staff is requesting that council provide direction to issue an RFP on auditing services, and appoint the review committee of staff and Council members, with a new audit firm recommendation to follow. Staff does note that during the audit, The Pun Group performed exceptionally. Its substantial experience was brought to the forefront. The pointed, direct and probing questions asked by the Pun Group are what a City striving for transparency in financial reporting wants in its auditor. In addition, its staff was responsive, assisted staff with questions and assisted in the preparation of a newly formatted report. In addition to the audit services, Lodi accounting staff was provided with critical technical accounting assistance and training on new pronouncements and other requirements. The Pun Group has indicated it is willing to honor the proposal submitted in March 2018. FISCAL IMPACT Costs for the audit services are included in the City's proposed Fiscal Year 2019/20 budget and the General Fund Long Range Financial Plan. APPROVED: Stephe auer, City Manager FUNDING AVAILABLE: Not applicable. itY1 �rvtin7n Melissa Munoz, Aq unting Manager Andrew Keys, DepitC y Manager City of Lodi REQUEST FOR PROPOSALS AUDITING SERVICES SPECIFICATION NO. 19-01 CITY OF LODI 310 W. ELM ST. LODI, CALIFORNIA 95240 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 0 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 TABLE OF CONTENTS A. Nature of Services Required 1 General 3 2. Scope of Work to be Performed 3 3. Auditing Standards to be Followed 3 4. Reports to be Issued 4 5. Internal Control and Compliance Reports 4 B. General Terms and Conditions 1. Proposal Requirements 5 2. Contract Award and Execution 6 3. Contract Performance 7 C. Special Terms and Conditions 1. Contract Term 9 2. Proposal Content 9 3. Proposal Evaluation and Selection 14 4. Proposal Review and Award Schedule 15 5. Ownership of Materials 15 6. Release of Reports and Information 15 7. Copies of Reports and Information 15 8. Required Deliverable Products 16 9. Statement of Contract Disqualification 16 10. Special Considerations 16 11. Working Paper Retention and Access to Working Papers 17 12. Assistance to be Provided to the Auditor by the City 17 13. Attendance at Meetings and Hearings 18 D. Description of the City 1. Auditor Contact 18 2. Background Information 18 3. Fund Structure 18 4. Budgetary Basis of Accounting 18 5. Federal and State Financial Assistance 18 6. Pension Plans 19 7. Joint Ventures 19 8. Magnitude of Finance Operations 19 9. Computer Systems for Accounting Applications 19 10. Recognition of Financial Planning and Reporting Efforts 19 1 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 E. Agreement F. Insurance Requirements G. Proposal Submittal Forms 20 20 1. Statement of Bidder's Past Contract Disqualification 21 2. References 22 2 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 A. NATURE OF SERVICES REQUIRED 1. General Information 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 and perform a Single Audit beginning with the fiscal year ending June 30, 2019, with the option to renew for an additional two 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. 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 -relation -to" 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 and other federal grants 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 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 3 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 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. 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 g) 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. 4 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 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 or supplemental materials. Proposal documents will be enclosed in an envelope, which will be sealed and addressed to: 5 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 City of Lodi Accounting Manager 310 W. Elm Street 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 Accounting 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. Vendor Questions - Any questions about this RFP shall be submitted in writing to Melissa Munoz at mmunoz2@lodi.gov on or before February 15, 2019 at 3:00 P.M. PST. City will post written responses to questions no later than February 22, 2019. Any addenda necessary as a result of questions or clarifications will be posted no later than February 22, 2019. 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 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 2019 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 party 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 2019 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 8 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 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 - If, 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 party 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 three-year contract is contemplated with an option to renew for an additional two 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 March 1, 2019 at 11:00 a.m. at its offices at the Finance Department at 310 W. Elm Street, Lodi, CA 95240. 9 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 a. Five 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 2019 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 2019 g. 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. 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 12 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 J. • Approach to be taken to gain and document an understanding of the City's internal control structure • 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. • The audit firm will provide the electronic data used to prepare the CAFR, word-processing services and the use of the City's worksheets to prepare the CAFR. City staff will assist with the preparation of statistical information and continuing disclosures, where appropriate. The CAFR should be prepared in the format recommended by the GFOA, in accordance with City standards and with website -compatibility. 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. 13 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 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. 3. Proposal Evaluation and Selection Review Committee - A committee of five people will evaluate the proposals, which will include elected officials. a. 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 - 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. • Technical Quality (Maximum Points - 60) > Expertise and Experience (Maximum Points - 30) 14 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 - The bidder's past experience government engagements and performance on comparable - 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 • 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. b. 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: Distribution of RFP February 7, 2019 Deadline for submissions of questions February 15, 2019 Responses to vendor questions provided February 22, 2019 Proposals submission March 1, 2019 Oral presentations, as needed (Week of) March 18, 2019 Staff recommendation April 17, 2019 Expected signing of contract April 22, 2019 5. 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 2019 become the permanent property of the City and shall be delivered to the City upon demand. 6. 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. 7. 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 of duplicating of such copies. 8. 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 page 4 under "Reports to be Issued". 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. 9. 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. 10. 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. 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 16 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 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 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. 11. 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. 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. 12. Assistance to be provided to the Auditor by the City a. Finance Department and Clerical Assistance - The City 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 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. Public parking is available at the Finance area. 17 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 13. 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 Andrew Keys, Deputy City 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 65,884 covering 13.98 square miles, the City provides a broad range of municipal services, including: police and fire protection, parks, recreation and cultural services, 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 $58.8 million covering 393 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 2018-19 Budget and the Comprehensive Annual Financial Report for the year ended June 30, 2018, which is available online at www.lodi.gov. 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 6 Debt Service Funds 1 Capital Projects Funds 5 Enterprise Funds 4 Internal Service Funds 3 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 three- year contract, the City expects to receive the following financial assistance: Federal Transit Assistance Community Development Block Grant $ 1,350,000 1,044,000 18 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 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 11 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 9. Computer Systems for Accounting Applications - The Tyler Munis ERP System was implemented in fiscal year 2015. 10. Recognition for Financial Planning and Reporting Efforts - The City has received national recognition for its efforts in financial reporting from GFOA. The City is committed to maintain a high standard of reporting and fund management through its use of quality financial management tools. 19 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 E. AGREEMENT - Selected vendor will be required to execute an agreement substantially in the format attached. F. INSURANCE REQUIREMENTS: See attachment 20 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 G. Proposal Submittal Forms 1. 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. 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. 21 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 Signature of Authorized Bidder Representative 2. 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. Customer Name: Contact Individual: Address: Reference No. 1 Phone No: Contract Amount: Description of Services Provided: Year: Customer Name: Contact Individual: Address: Reference No. 2 Phone No: Contract Amount: Description of Services Provided: Year: Customer Name: Contact Individual: Address: Reference No. 3 Phone No: 22 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2019 Contract Amount: Year: Description of Services Provided: 23