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HomeMy WebLinkAboutAgenda Report - May 7, 2003 E-03i COUNCILi i AGENDA ProposalAuditservices r-_ MEETING DATE: PREPARED Y. Finance Diirector RECOMMENDATION: motion, services as provided in the attached specifications. BACKGROUND-. KPMG LLP has been performing the City's a: solicitrenewal of their contract in 1998. Per Council's direction in January 2003, staff is submitting this request to +w .rsals for audit services for the fiscal year beginning 1i. Audit Spa -vices The City has used an independent audit firm to audit the City's financial statements for many years to assure the City Council and the citizens of Lodi that the City is maintaining its financial records and providing financial reports in accordance with "generally accepted accounting principles`$, in addition, ars 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 (FR) and compliance with Federal and Mate 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 Proposal (RFP) is based on two model RFPs suggested by the Government Finance Officers' Association. In addition, the RFP includes standard terata and conditions for professional services developed by the City of Lodi when requesting proposals. for services, The RFS' is divided into the following seven sections: CITY OF LODI 1 e Description of the Work 2, General Terms and Conditions Special Terms and Conditions . Description of the City . Agreement . Insurance Requirements ents 7. Proposal Submittal Forms COUNCIL COMMUNICATION Selection Process The evaluation of proposals and selection of the firm will be made by a panel of four people as discussed in detail on page 14. Two members of the panel will be appointed by the Mayor and will include one Council Member and finance professional from the community. The ifs' of Lodi Finance Director and;the Accounting Manager will be the third and fourth member of the: panel. Selection willbe based on the firm's general qualifications, technical experience and cast. The general qualifications arid technical experience of the firms Will be weighted more than the proposed cost as shown on the attached evaluation sheet. The firm selected will be responsible for the audit of financial records beginning with fiscal year 2002903 for fine years (0170A recommended). Accordingly, time is essential to ensure prosper coordination and planning prior to the beginning of the audit. Funding The funding for these services is included in the City of Lodi budget. The find cost will be based on biers received from audit liras and the level of services requested by the City of Lodi. Vicky Mc Athie Finance Director Attachment: Request For Proposal— Audit Services CITY OF LODI, CALIFORNIA REQUEST FOR PROPOSAL For Auditing Services 'P 031 Response eine by 2s00 .m., Tuesday, May 27, 2003 CITY OF LODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2003 TABLE OF CONTENTS A. Nature of Services Required I , General 3 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 -C Conditions 1. Proposal Requirements 5 2, Contract .ward and Execution 6 3, Contract Performance 7 C. Special Terms and Conditions I . Contract Term 9 2, Proposal Content 10 3, Proposal Evaluation and Selection 14 4. Proposal Review and Award. Schedule 16 5, Pre -proposal Conference 16 6, Ownership of Materials lC 7, Release of Reports and Information 16 8. Copies of Reports and l f'orz ation 16 9. Required Deliverable Products 16 10, Statement t, o Contract Disqualification 17 I I. Special CoiAsiderations 17 12. Working Paper Retention and Access to Working Papers 18 13. Assi.stance to be Provided to the Auditor by the City 18 14, Atte: dm ce at Meetings and Hearings 19 D. Description.of the City 1. , Auditor Contact 14 2. Background Information 1 3. Fund Structure 19 4, Budgetary Basis of Accounting 19 S, Federal and State Financial Assistance 19 6, Pension. Plans 19 7, Joint Ventures 19 8, Magnitude of Finance Operations 20 9. Computer Systems for Accounting Applications 20 l 0.eco nitiorrr of Financial Planning and Reporting Efforts 20 CITY CSI` x LD1 - REQUEST FOR PROPOSAL - AUDIT SERVICES 2003 E. Agreement 21 F, Insurance Requirements G. Proposal ,Submittal Forms 23 1, Statem. ent of Bidder's Pat Contyad Disquatification 25 2. references 26 2 CITY OF Ir OD] - REQUEST FOR PROPOSAL - AUDIT SURVICES 2003 A. NATURE OF SERVICESREQUIRED 1., general information The City of Lodi is requesting proposals from qualified firms of Certified. Public Accountants for a five-year contract to audit the City's fnancial statements and Perfo m, a Single Audit for the fiscal year ending June 30, 2003, with the option to renew for additional five fiscal years. These audits are to be performed in accordance with generally accepted auditing standards set forth for financial audits in. the General Accounting Office's (GAO) Government .Auditing Standards, the federal Single Audit .Act of` 1996 and US. Office of Management and Budget (OMB) Circular A-133, Audits of State and Local governments. Bcginnizng with the fiscal year ended June 30, 2003, the City of Lodi must implement the provisions related. to General Standards Board Statemem No. 34 (GASH 34). 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 fi narici.al statements with their supporting schedules. However, the auditor will provide an "in-relationAo" 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 tial assistance. However, the auditor will provide an "in -relation -to" report on the auditing procedures applied during the audit. Special Purpose Audits a The City receives funding under the Transportation Development .Act and Community Development Bloch Grant that require financial and compliance audit. e A dit1 t rn r s t be ollo ed 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 tlae U.S. General Accounting Office's Government nt Auditing Standards, the provisions of the Single Aijdit Act of 1996 and the provisions of U.S. Office of Management and Budget (OMB) CITE' OF L.ODI e REQUEST ICOR PROPOSAL - AUDIT SERVICES 2003 Circular A-133, Audits of States, Local Governments and Nonprofit Organizations, the standards for financial reporting provided by the Government Finance Officers Association, and the applicable laws, rales and regulations of the Transportation Development ,pct, 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 -gelation -to' report on the schedule of federal financial assistance. e) A report on the internal control structure used to administer federal financial assistance programs, report. on compliance with specific requirements applicable to major federal and state financial assistance programs. g) A report on compliance with specific requirements applicable to non -major federal financial assistance programs, h) A report on compliance with general requirements for bath major and non-mgjor federal financial assistance programs. D An agreed -u on -procedure report for GANN limitation verification, j) A report on compliance with general requirements for Program receipts Sale and Repurchase Agreements —Dodi Financing Corporation. In the report on internal controls, the auditor will communicate any reportable conditions found daring 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 maga ei-nent in the financial statements. Repoilable conditions that are also material weaknesses will be identified as such in the report, 4 CI'T`Y Off' ,ODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2003 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. editors will be required to make an U -n ediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware of to the following parties: City-Ma.nager �, Finance Director Coity Attorney Auditors will assure themselves that the City is informed of each of the following: 91 The auditors responsibility under generally accepted auditing standards 0 Significant accounting policies Management,;ndgments and accounting estimates 0 Significant audit adjustments x Other information in documents containing audited financial staternents 2 Disagreements with management N Management ment c onsultation with ether accountants 9 Major issues discussed With ma agcy .ent prior to retention 19 Difficulties encountered in performing the audit 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 (UP), By submitting a proposal, the bidder acknowledges agreement with and accepts all provisions in the specifications of the Request for Proposal, .repo Submittal a Each proposal must be submitted in the form provided in. the specifications and accompanied. by any other required information or supplemental. ental. materials. proposal documents will be enclosed in an envelope, which will be scaled said addressed to-- CITY OF L ODI _ REQUEST FOR. PROPOSAL - AUDIT SERVICES 2003 City of Lodi Finance Director 95241-191.0 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 Finaiice Director for its withdrawal, in which event the proposal will be retuined 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. de Submittal of One Proposal Only e No individual or business entity of any kind will be allowed to rnake or file, or to be interested in more than one proposal, crept an alternative proposal when specifically requested; however, on individual or business entity that has submitted a sub -proposal to a bidder submitting a proposal, or who has quoted prices orr materials to such bidder, is not thereby disqualified. from submitting a sib -proposal. or from quoting prices to other bidders submitting proposals. e. Communications - All timely requests for information submitted in writing would receive a written response from the City. Telephone communications with City staff are not encouraged, but will be permitted. however, any such oral communication will not be binding on the City. m Contract Award ad 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. . Competency and Responsibility oaf Bidder 4 The City reserves full discretion to determine the competence and responsibility, professionally and/or financially, of bidders. Bidders will provide, in a timely manner, any and all information that the City deems necessary to make such a decision. 6 C°ITY OFLORI - REQUEST FOR PROPOSAL - AI JDIT SERVIC: S 2003 c. Contract Requirement - The bidder to whore award is made will execute a written contract with the City within ten. (1 Q) calendar days after notice of the award has been mailed to address given in its proposal. d. Failure to Accept Contract - 'rhe following will occur if the bidder to whom the award is made (Auditor) fails to eater into the contract. The award will be amiulied; and an award may be made to the next bidder who will fulfill every stipulation as if it were the party to whore 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 tern (3 0) -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 cru icate prior to execution of the contract, Additional information regarding the City's business tax program may be obtained by calling (209) 333--673.7. 1 '€g tr°act Performance ao 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 cornpliance with any and all federal, state, county, city and special district laws, ordinances and regulations. b. 1aws 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 Dodi ordinances, regulations and adopted codes daring perforn ante of the work. c. Payment of Taxes - The contract price will include Ball 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. ca Public and Employee Safety - Whenever the Auditor's operations create a condition hazardous to the public or City empl€�yees, the Miditor will, at its expense and without cast to the City, take such protective measures as are necessary to prevent accidents or darna.ge or injury to the public and the employees. Preservation of City Property - The Auditor will provide and install suitable, safeguards, approved by the City, to protect City property fro. m injury or damage- If City property is injured or damaged as a result of the editor'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 where the Auditor began work. 7 CITY OF LORI - RUQU ST FOR PROPOSAL - AUDIT SERVU-,`S 2003 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 19$6 and other applicable laws will be employed in the performance of the work hereunder. . 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, 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 strifes, 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, theta 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 here 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, clue to any of the above, after hearing evidence as to the reasons for such delay, and making a finding as to the causes of sante, ePayment Terms - The City's payment terms are 30 days from the receipt of an ofiginal 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 thatt a calendar month. R 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 m The Auditor covenants that it presently lois no interest, mid will not acquire. any interest direct or indirect or otherwise, which world conflict in any mariner or degree with the performance of the work hereunder. The Auditor further eovenatats 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 perforating this work is an officer or employee of the Cite. 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 scald r fes and Jude ificatio m. The Audiwr agrees to defend, indemnity, protect and Bold the City and its agents, officers acid employees harmless from and against any and all claims asserted or liability established for damages or injuries to any persona or property, including 111jury to the Auditor's employees, agents, or 8 CI"T"Y OF LORI -- REQUEST FOR PROPOSAL - AUDIT SERVICES 2003 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 bold 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 a 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. € . Termination w If, durinia 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 Inas not performedthe 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 4nmediately 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 hall farce and effect, and will not be extinguished, reduced, or in any manner waived by the teat-iination 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, mirius 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 c on-iplete accouriting of costs. In no event, however, will the Auditor be entitled to receive in excess of the compensation quoted in its proposal. C. SPECIAL TERMS AND CONDITIONS 1, Contract Term A five-year contract is contemplated with art option to renew for an additional. five years. At the end of each year, the City reserves the right to terminate services for the subsequent year upon 90 days notification. Prre Ccaxit To be considered, the following materials must be received at the Finance Department by May 27, 2003 at 2:00 pout at its offices at the City Hall Annex at 212 W. Pine Street, Lodi, CA 95240. CITY OF L ODI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2003 w Four copies of the proposal to include the following: i, Table of Contents ii, Transmittal setter. A signed letter of transmittal briefly stating the bidder's un e standing of the work to be doge, the commitment to perforin the work within the time period, a statement why the thin 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 Staft anent of past contract disqualification iv. Detailed Proposal. The detailed proposal shoutd follow the order set forth in this request for proposals. b. General Requirements w The purpose of the proposal is to demonstrate the qua ifwations, competence mid capaeity 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 moot 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, iters (c) through. (o) below, must be inclraded, They represent the criteria against which the proposal will be evaluated, c, Independence - The bidder should provide an affirmative statement that lie/she is independent of the City of Lodz, California as defined by generally accepted auditing standards and the US. General AccoizntiDg Office's Government Auditing Standards. `rhe 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. Iii addition., the bidder will give the City w-ritteri notice of any professional relationships entered into daring the period of this agreement. 10 CITY OF L,ODI REQUEST FOR PROPOSAL AUDIT SERVICES 2003 d. License to Practice in California a- An affirmative statement will be included as to whether the firm and all assigned Ivey professional staff is properly licensed to practice in the State of California. . Firm Qualifications and Experience - The bidder should state the staffing sire 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 Rall -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 acrd 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 dui:ing the past three Years. Its 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. U 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 informations 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 member, 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 Dire 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 fiction. 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. CITY OF LOD1 - REQUEST FOR PROPOSAL - AUDITSERVICES 2003 Consultants and firan 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 R 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, a Similar Engagements With Either Government Entities - For the firm's office that will be assigned responsibility for the audit, list the most sigiaifi ant engagements (maximum um -5) performed in the last five years that are similar to the; engagement described iia this request for proposal. These engagements should be ranked on the basis of total staff hours, Indicate the scope of word:, 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 t in Financial Reporting during this timeframe. is 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 prograrns, and financial and other management information systems. Bidders will be required to provide the following information on their audit approach: 0 .proposed segmentation of the engagement Level of staff` and number of how's to be assigned to each proposed segmentof the engagement Sample size and the extent to which statistical sampling is to be used in the engagement 0 Extent of use: of on-site automated systems in the engagement a Type and extent of analytical procedures to be used in the engagement 1.2 CITY OF I ODI - REQUEST FOR PROPOSAL, - AUDIT SERVICES 2003 Approach to be taken to gain and docurnent an understanding of the City's internal control structure Approach to be taken in determining lavas and regulations that will be .inject to audit test work Approach to be taken in drawing audit sarrnptes for purposes of testing compliance 0 Approach to be men in establishing compliance with GASB 34. A list of schedules and tables that the auditor anticipates would normally be prepared by the City to assist in the conduct of fieldwork. a 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. s 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 pricy; 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 Rohr's Anticipated for Each - The bid should include a schedule of professional fees and expenses, which supports the total all-inclusive maximunn price. The cost of special services described in this request should be disclosed as separate components of the total all-inclusive maximum price.. mx Out-of-pocket Expenses Included in the Total All-inclusive Maximum Pr°iee 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 maximu n price submitted by the firm. n. dates 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 a CITY OF LORI - REQUEST FOIA. PROPOSAL - AUDIT SERVICES 200; 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. .. Review Committee m A committee of four people will evaluate the proposals, as follows: - Coity of Lodi Finance Director City of Lodi Accounting Manager one City of Lodi Council Member x one finance professional . Evaluation. of Proposals - A. point formulawill 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 fallowing represent the principal selection criteria that will be considered daring the evaluation process. General Qualifications (Maximum Points - 5) 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, 0 Technical Quality (Maximum Points w 60) Expertise and Experience (Maximum. Points - 30) 14 CITY OF LORI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2003 The bidder's past experience and performance On comparable government engagements (with special emphasis on city audits and the new reporting model -GASB 34) - 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 0 'race (Maximum Points - 2 ) The maximum score for price will be assigDed to the firm offering the lowest total all-inclusive n-aximurn price. Appropriate fractional scores will be assigned to other bidders. As refected above, the award of contract willnot be based solely oil price, but ort a eo bination 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/car method and amount of compensation. eOral Presentation A luring the evaluation process, City staff may, at its discretion, request any one or all bidders to maize oral presentation. Such presentations will provide Cirrus with ars 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, sal l v w Mrd c - The following is ars outline of the anticipated scheul for proposal review and contract award - issue RFP 5/7 Conduct pre -proposal conference, 5/14 Receive proposals 5/27 Conduct finalist interviews 5/30 Finalize staff recommendation 6/11 Award contract 6/18 15 CITY OFLON .. REQUEST FOR PROPOSAL - AUDIT SF-RVICES 2003 , A pre -proposal conference will be held on May 14, 2003, at 2.00 p.m., at City Hall Aiinex, 212 West Pine Street to answer any questions that prospective bidders may have regarding this Request for Proposal (.RFP). .raer° brio M3 of Materi s _ .All documents and other materials prepared by or in possession sof the Auditor as part of the work or sendees under these specifications shall become the permaarent property of the City and shall be delivered to the City upon. demand. Re se of lie rt re r ict Any reports, information, data, or other material given to, prepared by or assombled 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 writt--n approval of the City, cr ie �f e tarts rz l r i� If the City requests additional copies of reports, specifications, of 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. . it elide rills m The Auditor will be required to provide the following no later than November lst of each. year; a. One copy of each report listed in paragraph 4, page I under "Description of Work, City staff will review any documents or materials provided by the Auditor, and where necessary, the Auditor will be required to respond to staff comments and make such changes as deemed appropriate. IOW One copy of the letter to management on the adequacy of internal controls and recommendations for improvement. c. When computers have been used to produce materials submitted to the Ci.ty as a part (.if the work scope, the .Auditor rust provide the corresponding c or pater files to the City, compatible with the following programs unless otherwise directed by the Finance Director: Word processing Word for Windows 6.0 Spreadsheets Exsel 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. 16 CITY OF LORI a REQUEST FOR PROPOSAL - AUDIT SERVICES 2003 10. Statement of Contract Disqualification - Each bidder shall submit a statement regarding any past governmental agency contract disqualification oil the forma provided in the RFP package. 11. Special Considerations erattions 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 programa. 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 Ist 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 overtimes, additional printing costs, etc.) will be the Auditor's responsibility. b� The City currently anticipates it will prepare one or i ore official statements in Connection with the sale of debt securities Haat 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 lctters." c. The: City has determined that the State Controller's Office of the Stater of California will function as the cogalizazat 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 Ton rofit Cirgglffllizations. 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.. 1All working papers and reports mut be retained, at the auditor's expense for a minimum of three years, unless the fired is notified in writing by the City of the meed to extend the retention period, The auditor AW he required to make working papers available to third parties only capon 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. 17 CITE` OF LOCM. w REQUEST FOR PROPOSAL - .AUDIT SERVICES 2603 as Finance Department and Clerical Assistance - Preparation and printing of the Comprehensive Annual Financial Report (including Single Audit Act sect=ion) 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 TINA & CDBG compliance reports are the responsibility of the auditor. The finance department staff and responsible mana cment 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, ba Information System assistance - The information system staff, equipment, and generalized riser 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. perforraing 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 m -id fax transmissions are to be reimbursed to the City. Parking is available at City Ball. 14. attendance of Meeting and Hearings - As part of the work scope and included in the maximum contract price is afiendance at up to three governing body inecti gs annually to present and discuss audit findings and recommendations. Auditor shall attend as .many `working meetings' with staff as necessary in performing audit tasks. D. DESCRIPTION OF THE CITY 1. Auditor Contact - The auditor's principal contact with the City will be Ruby Paiste, Accounting Manager, who will coordinate the assistance to be provided by the City to the auditor. 2. Background Information - Lodi is a general law City, incorporated on December 6, 1906, and is organized in accordance with the Council -City Manager form of governr enta With a population of approximately 59,500. covering 12.6 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. Tb, City has a. total payroll of $2.3x4 million covering 479 full -tine 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 2001 1.8 CITY OF I,0131 - REQUEST FOR PROPOSAL - AUDIT SERVICES 2003 02 Financial Plan. and the Comprehensive Annual Financial Report for the year ended June 30, 2002, which is available upon request. 3. Fund Structure - The City uses the following fund types and account groups in its i� nwiciai reporting. Number of Individual Funds Find Type/Accoun GLoup General Fund 1 Special Revenue Funds 6 Debt Service Funds 1 Capital Prgjects Funds 6 1 me pr se Funds 4 Internal Service Fund l Expendable Trust Funds 3 Agency Funds l General Fixed Assets Account Group 1 General::L,ongat rm Debt Account Group 1 4, Budgetary. Basis of Accounting - The City prepares its 2 -year budgets on a basis consistent with generally accepted accounting principles. 5. Federal and State.Financial Assistance - During the first fiscal year of the five-year contract, the City expects to receive the fallowing financial assistance: Transportation Development .Act Funds Community Development Block Grant $ 2,000,000 1,950,000 6. Pension Pleas A The City participates in the California Public, Employees Retirement System (PERS), an agent multiplememployer public employee retirement system. The City also afters a deferred compensation play to its employees created in accordance with the Internal Revenue Code Section 457, 7. Taint e ures - The City participates in four joint ventures: California Joint Powers Risk Management. Association Local AgencyWorkers' Compensation Excess Joint Powers Authority California Transit Insurance Pool Northern California Power Agency Magnitude of Finance Operations e The Finance Department consists of five activities: Finance Administration i employee Revenue Billing and Collections 15 employees 19 CITY OF LORI - REQUEST FOR PROPOSAL - AUDIT SERVICES 2003 performing electric, water and sewer billing; general accounts receivable, cash ering and cash management duties Accounting 10 employees perfort-ning payroll, accounts payable, general ledger and financial reporting duties Purchasing 5 employees Field Services 7 employees performing meter reading andutility collection. services. 9. Computer Systews for Accounting Applications Hardware 'ry- � o fui in(Lnt Number Make oil €ti rnent Mid -Range Computer i Software IBM AS 400 RISC World Software _, JD Edwards 10. Recognition for Financial Planning and Reporting Efforts - The City has received national recognition for its efforts in financial reporting from GFOA and CSM `O. The City is committed to maintain a high slat-idard of reporting and fund management, ent, through its use of € alit, fiDancial management tools. 20 CITY OF LODI s REQUESTFOR PROPOSAL - AUDIT SERVICES 2003 &AGREEMENT THIS AGREEMENT is made and entered into in the City of Lodi on this day of I by and between the CITY OF LODI, a municipal corporation, hereinafter referred to as City, a -id-......... -.-.- n . ......... .... -- ...... herein fter referred to as Auditor, WHEREAS, oral May 7, 2003, the City requested proposals for auditing services per specification No.03-01. WHEREAS, pursuant to said request, Auditor submitted a proposal that was accepted by the City for said services. NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained, the parties hereto agree as follows: TERM. The grin 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 .lune 30, 2007, 2. INCORPORATION BY REFERE NCE. City Specification No. 03-01 and Auditor's proposal dated 7, 2003, are hereby incorporated in and made a pay: of this Agreement. 3. CITY'S OBLIGATIONS. For providing auditing services as specified in this Agreement:, City will pay and Auditor shall receive the amounts stated in the proposal hereto and incorporated into this Agreement. 4. AUDITOR'S OBLIGATIONS. IONS. F'or and in consideration of the payments and agreements herein before mentioned to be made and performed by City, Auditor agrees with City; to do everything required by this Agreement and said specifications. 5e AMENDMENTS. Any amendment, modification, or variation. from. the terms. of this Agreement shall be in writing and shall be effective only upon approval by the City Manager of the City. . C L TEAGI+:E+ STENT. This written Agreement, including all writings specifically incorporated herein by reference, shall constitute the complete agreement between the parties hereto. No oral agreement, understmAding, 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. 0 C11A OF ..ODI - REQUEST ST" FO PROPOSAL - AUDIT SERVICES 203 7, NO`T`ICE® All written notices to the parties hereto shalt be: seat by United States rail, postage; prepaid by registered or certified mail addressed as follows: City Finance Director City of Lodi P,O. Box 3006 Lodi, CA 95241-1910 Auditor . AUTHORITY TO EXECUTE AGREEMENT. Both City and Auditor do covenant t that each individual executing this agreement on behalf of each party is a person duly authorized and empowered to exec We Agreements for such party. N WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year first above written. CITY OF LODI A Municipal Corporation By: Susan Blacksxon, City Clerk Cite Manager APPROVED AS TO FORM - Randall flays, City A.ttor ey By-, In 22 CITY OF LORI w REQUEST FOR PROPOSAL, - AUDIT SERVICES 2003 REQUIREMENTS - Consultant Services The, Auditor shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by the Auditor, its agents, representatives, employees, or subcontractors. Minimum Scoe o ns rance - Coverage shall be at least as broad as: 1. Insurance Services Office Cryominercial General Liability coverage (occurrence form CG 000 1. ). . Insurance Services. Office form number CA 000 I (Ed. 1/87) covering Automobile Liability, code I (any auto). 3. Workers'Compensation insurance as required by the State of Californiaand Employer's Liability Insurance. 4. Errors and Omissions Liability insurance as appropriate to the consultant's profession: Aji:uimum Limits of Insurance -p .editor shall maintain limits no less than: 1. General Liability: $1,00U00 per occurrence for bodily injury, personal ipjury and propsity 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, liz�ait. . 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 Red tibl s sand. Seif sure a ntlaon - Any deductibles or self-insured retention must be declared to. md 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 C ity� its officers, officials, employees and volunteers; or the .Auditor shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. Qt r° lusurance Provisions a The general liability and automobile liability policies are to contain, or be endorsed. to contain, the following provisions: 23 CITY OF t OD] - REQUEST FOR PROPOSAL, - AUDIT SERVICES 2003 1. The City, its officers, officials, employees, agents and volunteers are to be covered as insured as respects: liability arising out of activities performed by or oto behalf of the Auditor; products acid completed operations of the Auditor; premises awned, occupied or used by the Auditor; or automobiles owned, leased, hired or borrowed by the Auditor. 'I"he coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, official, employees, agents or volunteers, For any claims related to this project, the Auditor's insurance coverage shall be primary insurance as respects the City, its officers, officials, employees, agents and volunteers. Any insurance or self-insurance maintained by the City, its officers, offiei'als, employees, agents or volunteers shall be in excess of the Auditor's insurance and shall not contribute to it. 3. Any failure to comply with reporting or other provisions of the policies including broach of warranties shall not affect coverage provided to the City, its officers, officials, employees, agents or volunteers. . The Auditor's insurance shall apply separately to each insured against whom claire is made or snit is brought, except with respect to the limits of the insurer's liability. 5, Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, cancelled by either party, reduced in coverage or in limits except after thirty days'prior written notice by certified mail., return receipt requested; has been given to the City, qc tabilkt f Insurers m Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A: VII. ri i �tic� tib r Auditor shall furnish the City with a certificate of insurance showing moult nance 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 eudorsements are to be received and approved by the City before work commences. 24 CITY OF LORI - REQUEST FOR PROPOSAL, - AUDITSERVICES 2003 t4 a€c� s �t 3is% Pions The bidder shall state whether it or any of its officers or etatployees who have a proprietary interest in it, has ever been disqualified, removed, or otherwise prevented from bidding oil, or completing a federal, state, or local goverrinicnt project because of the violation of la -vv, a safety regulation, or for any other reason, including but not limited to financial difficulties, prop}ect delays, or disputes regarding; work or productcluality, and of so, to explain the circumstances. Do you have: any disqualification as described in the above paragraph to declare? Yes No 2. If yes, explain the circumstances, Executed on at I declare, under penalty of perjury of the laws of the State of California, that the foregoing is true and correct. Signature of Authorized :bidder Representative 25 C.J' Y OF DODO - REQUEST S`r FOR PROPOSAL - ALJDI'r SERVICES ?003 REFERENCES Number of years engaged in providing the services included within the scope of the specification-, under the present business name: List and describe filly the last gree contracts performed by your firm, that 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. l Customer Naxe; Contact lndividua.l;_..__._�_._____ Address, Contract Amount. Description of Services Provided-. Reference No. 2 Customer Name: Year: Contact lndivi ml; Address: Contract Amonte__-___ Year: Description. of Services provided: Reference No. 3 Customer Name: IWA" M Phone No: Contact Individual:Phone No. - Address: ontract Ata -fount: Year; reser ption of Services Provided: 26 CITY OF LORI - REQUEST FOR PROPOSAL - AUDIT SERVICES 200' Letterhead DATE: May 7, 2003 T. invited Parties FROM, Vicky Me Athie, Finance Director SUBJECT: Professional Auditing Services The City of Lodi is .soliciting proposals from qualified firms of certified public accountants for a five-year contract to audit the financial statements of the following entities beginning with the fiscal year ending Jane 303, 2003, with the option of renewing the contract for five subsequent fiscal years: City of Lodi, Comprehensive annual Financial. Report and Single audit. City of Lodi, Transpot°tatron. Development Act Funds City of Lodi, Federal Transit assistance (Section IX) Funds City of Lodi, Community Development Block Grant ends Audit firins expressing interest will be provided with a copy of a request for proposal (RTP) document. Please indicate your interest in receiving a copy of the RFP by making a request in writing - by May 16, 2003. All questions and correspondence should be, directed. to Ruby= Paiste, Accounting Manager at the above addressor by calling (209) 333 _6761. 27 General Qualifications I. A statement that the firin is independent and licensed to practice in California Z_ The iriri`s professional personnel have received adequate continuing education within the preceding two years, focusing on local government auditing. +. The, bidder has .no conflict of interest with regard to ally ether work performed by the lien for the Cater_ 4, The bidder included a copy of its Last external quality control reg,iew report, ,. The bidderfollowed the instructions to the RFP Limited the proposal to 30 pages * Ii1Ouded the'Proposal Submittal Summary form * Included one Scl-wdule of Professional .Fees and Expenses for each Financial Deport required Total Score - General Qualifications Expertise and Experience 6� Thebidder .demonstrates recent experif ce and performance on comparable govermlient engagements (instructions limited to 5 engagernents) l i.ddcr should have included audits conducted within the last 5 years Paewnt experience performing city audits Recent experience performing; audits of self insurwice pools OPA`s) Recent experience per forming TDA , FTA and CDBG audits Recent experience: performing Single Audits For each engagement bi.dde. r should have included: Total. staff hours Total Partner boors Date. of engagement Soope of word Contact name and phone iiumber i. %ite.nients supporting the quality of the professional personnel assigned to this engagement, (Fear each indivi aial indicate if licensed to praeiac�, as a CPA. iTi. California, government auditing experience, local government continuing education, and membership in professional organization relavant to the performance of this iitzdt. 8. A statement on the duality of the firm's inanagement support personnel available for technical consultation. 9. A statement itidicaating hoer the firm will assure the quality of the staff over the terra of the contract. Tectal Scare - Expertise and Experience Ttitl Score Possible I 3 1 2 I 2 5 2 i � � 3 2 l [ 1. 1 l 4 1. 2 :'. Firm Name, Audit Approach 10. 'Thi. laid should contain the foil owing iiaformat.ion on audit approacia: (is the item included ( I point m if the approach. reasonable; 2 points - if the approad « Proposed segmentation of the engagement * Le -Vol of staff and number of fours assigned to each segment * Extent of statistical sampling Proposed use of ora -site automated systems • Typo and extent of analytical procedures • Approach to. ocu of and undersWd the City's internal control structure (preferred approach is prior to .lune 30, 1€ 95, not during fieldwork) • Approach takers to determine laws and regulations that will be subject to audit test work • Approach taken to draw samples for tests of compliance. • A statement indicating how the firm will be able; to staff and service the City in ligh their other client obligations • An i dicatiata that:tl-,zy can meet our c,ampletion date of November Ist each year Total l Score m Audit Approach am 11. The maximum score for price will be assumed to the €"irni offering the lowest total all-inclusive maximum price, oyes the three yew contract. Appropriate fractional scores will be assig tied to other proposers. (ic. If the bice is 10% higher than the lowest proposal, the firm would receive a scare 10% lower than 25, or a 22) TOTAL CUMULATIVE SCCA. CITY COUNCIL SUSAN HITCHCOCK, Mayor EMILY HOWARD Mayor Pro Tompore JOHN BECKMAN LARRY D. HANSEN KEITH LAND DATE: T ff FROM: SUBJECT. . C: TY MALL, 221 WEST PINE STREET P.O.. BOX 3006 LORI, CALIFORNIA 95241-1910 (209) 333-6762 FAX (209) 333-.6607 cityclrk@loch.gov May 7, 2003 Invited Parties Vicky Mle Athie, inw—ice Director Professional Auditing Services 1 H. DIXON FLYNN City Manager SUSAN J. BLAGKSTON City cierk RANDALL A. FLAYS City Attorney The City of Lodi is soliciting proposals from qualified firms of certified public accountants for a five -yeas contract to audit the financial statements of the following entities beginning with the fiscal year ending June 30, 2003, with the option of renewing the contract For five subsequent :discal years: City of Lodi, Comprehensive Annual Financial Report aid Single Audit. City of Lodi, Transportation Development Act Funds City of Lodi, Federal Transit Assistance (Section fX) Frauds City of Lodi, Community Development Block Grant Funds Audit firnis expressing interest will be.. provided with a copy of a request for proposal (RFP) doe -Lu ent. Please indicate icat:e your interest iri receiving a copy of the RFP by making a request in writing by may 16, 2003, All questions and correspondence should be directed to Ruby Paiste, Accounting Manager. at the above address or by calling (204) 333 - 6 76 1.