CITY OF NEWPORT
REQUEST FOR PROPOSALS
MUNICIPAL AUDITING SERVICES
RFP Release February 19, 2013
Proposals Due March 18, 2013 at 4:00 p.m.
Selection of Finalists March 25, 2013
Interviews if Necessary March 27, 20123
Notice of Intent to Award April 1, 2013
Complete Contract Process April 12, 2013
City Council Approval April 15, 2013
TABLE OF CONTENTS
I. Description of the City of Newport, and Software Accounting System 1
II. General Instructions for Submission of Proposal 2
III. Audit Objectives and Scope of Services 3
IV. Evaluation Criteria 4
V. Proposal Requirements 5
VI. Technical Criteria and Price 6
City of Newport
REQUEST FOR PROPOSALS – MUNICIPAL AUDITING SERVICES
The City of Newport (City) invites proposals from qualified independent licensed municipal auditors (hereinafter called “auditor”) having sufficient governmental and auditing experience in performing an audit in accordance with the specifications outlined in this Request for Proposal (RFP).
I. DESCRIPTION OF THE CITY AND APPLICABLE ACCOUNTING SYSTEMS
The City of Newport is located in Lincoln County. The City serves an area of 10.7 square miles with a population of 10,500. The City provides a full range of municipal services to its citizens, including the administrative departments of airport, public works, police, fire, library, parks and recreation, community development, and Finance.
The City of Newport has a Council-Mayor form of government consisting of six Councilors, elected to four-year terms, and a Mayor, elected to a two-year term. At each biennial general election, the Mayor and three Councilors are elected. Please note that, at present, the City Manager is administering both City Administration and the Airport Departments. The City also has an Urban Renewal Agency.
Appropriations for fiscal year 2013 are $40.45 million and total requirements, or Uses of Funds (Unappropriated Ending Fund Balances and Reserves for Future Capital), bring that total to $43.47 million. The City has a total payroll of about $9.0 million and about 170 full- and part-time employees.
The City of Newport uses the following fund types and accounting groups in its financial reporting:\
1 – General Fund
3 – Debt Service Funds
8 – Special Revenue Funds
1 – Internal Service Fund
2 – Enterprise Funds
1 – Capital Projects Fund
1 – Urban Renewal Agency Fund
The City of Newport is presently converting to Caselle’s Clarity General Ledger, Accounts Payable, Accounts Receivable, Payroll, Cash Receipting, and Utility Billing modules. We have not yet completed the transition to all of the modules that we will be using, which will include Business Licenses, Purchase Orders, Human Resources, and Municipal Court.
A copy of the budgets and audits from the prior year are available on the City of Newport website www.newportoregon.gov.
II. GENERAL INSTRUCTIONS FOR SUBMISSION OF PROPOSALS
A. All proposals must be submitted not later than 4:00 p.m. March 18, 2013, to:
Mail or Deliver your Proposal to:
City of Newport
ATTN: Linda Brown, Assistant Finance Director
161 SW Coast Hwy
Newport, OR 97365
The outer envelope in which proposals are tendered should be marked “Audit Proposal”.
B. Six (6) copies of the proposal are required, not to be opened until after the final submission date and hour noted above. These submissions shall become the property of the City of Newport without obligation.
C. The selection of the external auditor will be based upon responses received to the criteria included in Part III of this proposal.
D. Any questions should be directed to Linda Brown, Assistant Finance Director, in writing at firstname.lastname@example.org. Written responses will be available to all interested parties.
E. Work under this municipal auditing services agreement shall begin with the fiscal year 2013 audit and shall commence with the adoption of the contract by City Council (anticipated to be issued April 15th, 2013). Any agreement initiated as a result of this RFP will be effective through June 30, 2013, with an option to renew annually up to a maximum of (4) four additional years unless otherwise terminated as provided for by the terms and conditions of the agreement.
F. We expect the selected firm to commence preliminary field work within four weeks of notification of award, to complete audit work no later than 31 October 2013, and deliver a completed audit to the City on 31 December 2013.
F. The City of Newport reserves the right to reject any and all proposals, and has the right, in its sole discretion, to accept the proposal it considers most favorable to the City’s interest and the right to waive minor irregularities in procedure.
III. AUDIT OBJECTIVES AND SCOPE OF SERVICES
The City of Newport is requesting proposals for the services of a qualified Certified Public Accounting firm to conduct the Financial and Compliance Audit of the City’s operations. Services will include, but not limited to: Planning and Performing the audit; Performing tests of documentary evidence, Evaluation of internal controls; Review of Management Letter; Review of adjusting entries; Draft and final Audit Report (includes approximately six copies and an electronic copy); Preparation and filing of State Documents; Technical assistance throughout the fiscal year; and Review of Year End Financial reports.
A. The auditing services performed by the auditor shall allow the firm to:
Express an opinion on whether the financial statements of the City present fairly the financial position and results of financial operations in conformity with Generally Accepted Accounting Principles (GAAP);
Express an opinion on whether the City has complied with laws and regulations that may have a material effect on the audited financial statements; and
Issue a management letter.
B. A minimum standard for audits of Oregon Municipal Corporations, adopted by the Secretary of State and approved by the State Board of Accountancy, shall govern the audit.
C. The financial and compliance audit shall apply industry standards for auditing, and shall be made in accordance with all of the following:
Generally accepted governmental procedures as prescribed in the American Institute of CPAs (AICPA) Industry Audit Guide – Audits of State and Local Government Units and in Governmental Accounting, Auditing, and Financial Reporting (GAAFR);
Generally accepted auditing standards, Government auditing standards, and Oregon minimum standards;
The Single Audit Act and OMB A-133; and
Applicable laws and regulations.
D. The audit will be used as a single document which will contain the basic financial statements, notes, and as supplementary data, the Combining and Individual Fund Financial Statements and Schedules.
F. Recommendations based upon the auditing firm’s review of the adequacy of internal accounting controls and other audit investigations shall be made a part of a formal management report separate from the financial audit. Such associated costs shall be included in the audit fee. The discussion of these recommendations shall be with the City’s Audit Committee and Finance Director.
G. The auditor shall meet with the Finance Director prior to the commencement of each audit to discuss the planned approach to the audit work and to provide a list of schedules to be prepared by City personnel prior to the beginning of field work. An exit conference with the City’s Audit Committee is required of the auditing firm on completion of all field work. A summary presentation of the audit findings shall be made to the City Council; this presentation is normally made by the Audit Committee, but the Auditor may be asked to attend, or to present.
H. The City will make available the information and work papers necessary in conjunction with the financial and compliance audit engagement.
I. Expectation of services to be provided by auditors not already outlined above:
Provide the City with adjusting entries and a final trial balance upon completion of the field work.
Draft and prepare final audit report – Auditor will be expected to prepare the final audit report and provide 6 hard copies and an electronic copy to the City.
Prepare and file all required State Documents.
Prepare a report on compliance with specific requirements applicable to major federal financial assistance programs, if required. Please note that the City anticipates receiving several million dollars of federal grants over the next two years as part of it Airport Improvement Program.
As part of the overall audit contract, the City expects to receive from the audit firm a variety of technical assistance throughout the fiscal year, including answers to accounting, reporting, and/ or internal control questions.
All working papers and reports must be retained, at the auditor’s expense, for a minimum of ten (10) years, unless the firm is notified in writing by the City of Newport of the need to extend the retention period.
Audit of the Room Tax Fund
Possibly, depending upon the cost, audit of specific transactions, as provided by the Finance Director and “follow up” of those transactions with department heads and immediate subordinates.
J. Plan changes in reporting over the next two years: It is the intent of City Management that over the next two years to prepare and print a Government Finance Officers Associated (GFOA) certified Comprehensive Annual Financial Reports (CAFR).
IV. EVALUATION CRITERIA
Proposals will be evaluated based on technical responses and price with the following points:
Experience, Qualifications and References 50%
Audit Approach and Understanding of City’s auditing needs 30%
Cost Proposal 20%
The proposals will be reviewed by a selection committee comprised of members of the Audit Committee, and the Finance and Assistant Finance Directors. One or two other individuals may be selected to be part of this selection committee. The selection committee may elect to interview those candidates they deem most suitable to perform the audits.
Based upon this review, a recommendation will be made to the City Council as to award.
V. PROPOSAL REQUIREMENTS
In order to achieve a uniform review process and to obtain the maximum degree of comparability, it is required that proposals be organized in the manner specified in this part.
A. Title Page – The name of the proposal’s firm, firm address, telephone number, name of contact person, email address, and the date.
B. Table of Contents – Include a clear identification of the material by section and by page number.
C. A list of partners, managers and other key staff persons who will be assigned to the City’s engagement. Provide resumes and indicate their experience in auditing governmental jurisdictions, specifically municipalities.
D. Describe staffing level that will be assigned to the City of Newport field work. Outline a work plan and related time schedule for each significant segment of the work.
E. Describe how you would propose to use City personnel, if at all, to assist you during the audit and indicate the approximate time requirement.
VI. TECHNICAL CRITERIA AND PRICE
Your proposal must clearly respond to the following:
A. Organization/Local Office Technical Qualifications and Approach.
1. State whether your audit organization is national, regional, or local.
2. Indicate the number of people (by level) located within the local office that will handle the audit.
3. Provide a list of the local office’s current and prior government audit clients indicating the type(s) of services performed and the number of years served for each.
4. Indicate the local office’s experience in providing additional services to government clients by listing the name of each government, the type(s) of service performed, and the year(s) of engagement.
5. Describe your audit organization’s participation in AICPA-sponsored or comparable quality control programs. Include a copy of your most recent peer inspection report.
6. Disclose any and all judgments, pending or expected litigation, or other real or potential financial reversals that might materially affect the viability or stability of the proposing organization, or warrant that no such condition is known to exist. If the proposer is a national firm, it must disclose the above information for its region and all material judgments and pending or expected litigation on a nation-wide basis.
7. If the proposer has had a contract terminated for default during the past five (5) years, all such incidents must be described. The audit firm must not have a record of substandard work. The City will verify this requirement by communication with the Oregon State Board of Accountancy.
8. The proposer must state if subcontractors will be used, and provide the above information for each subcontractor.
9. Describe your approach to the examination: This should include at least the following points:
a. Description of audit approach.
b. Use of statistical sampling.
c. The firm’s knowledge and use of computer and programs to assist in the audit process.
d. Organization of audit team and approximate percentage of time spent on audit.
B. Individual Audit Staff Technical Qualifications
1. Describe the experience in government audits, specifically each senior and higher level person assigned to the audit, including years on each job and their position while on the audit. Indicate the percentage of the time the senior will be on-site.
2. Describe the relevant educational background of each individual assigned to the audit.
3. Describe experience of assigned individuals in auditing relevant government organizations, programs, activities and functions (e.g. general government, special revenue, and enterprise programs).
C. Price Quote
Provide the firm’s proposed all-inclusive audit fee and a statement regarding determination of increases in succeeding years should the contract be extended. Include the hourly rates for each staff employee classification, and any other fees associated with the completion of the audit. Break out separately the costs associated with single audit and any changes in pricing structure that may result with changes highlighted in section II J above. Please state if there are any opportunities to reduce audit fees should the City institute additional procedures such as an internal audit function, provision of additional schedules, or other recommended procedures.
In addition, please provide a supplement list of services your firm could provide with applicable pricing schedule and /or pricing strategy to reflect costs for additional services. City may request additional services that would be outside the normal course of the requested annual audit services such as technical assistance on developing supplemental statistical schedules, specialized internal control reviews (i.e. red flags, IT security, etc.), audit review for energy credit programs and/or other specialized state/federal programs, and other opportunities that may arise (assessment of specific operations, organizational/efficiency studies, cost recovery, etc.).
Ownership of the audit reports shall belong to the City of Newport and it is expressly understood that publication of the audit report (in whole or in part) or reference for such audit report shall be at the sole discretion of the City of Newport.
Any unusual conditions encountered during the course of the audit where services of the auditing firm must be extended beyond the normal work anticipated will require written notification to the Finance Director who will respond in writing concerning the additional services. Additional fees must be approved by the City Council.
e. Management letter (provide a sample letter).
f. Typical assistance expected from City staff.
g. Tentative schedule for completing audit.
h. Policy on rotation of personnel to be assigned to the City the first year and each year thereafter.