HomeMy WebLinkAbout#03 - RFP for Auditing Services
STAFF REPORT
DATE: October 2, 2018
REGULAR
ITEM #3 - Consent
MOTION
TO: City Council
FROM: Sue Iverson – Finance Director
AGENDA ITEM: Approve Request for Proposals (RFP) for Professional Auditing Services
REVIEWED BY: Kristina Handt, City Administrator
BACKGROUND:
The City has not been out for a competitive bid for Auditing Services since 2013.
ISSUE BEFORE THE CITY COUNCIL:
1) Should the City Council authorize the distribution of the Request for Proposals (RFP) for Auditing
Services?
DISCUSSION:
Attached is a draft RFP for Auditing Services. It is a best practice to periodically send out RFP’s for
contracted services to maintain due diligence. The City is not dissatisfied with our current auditor, Smith,
Schaffer & Associates, Ltd. Audit firms will be locking in their calendars for 2019 soon, so we hope to
complete this process by mid-November. The RFP will be posted to the League of Minnesota’s (LMC) site
for advertising.
FISCAL IMPACT:
To be determined.
OPTIONS:
1) Approve distribution of the Request for Proposals (RFP) for Professional Auditing Services.
2) Amend and then approve distribution of the Request for Proposals (RFP) for Professional Auditing
Services.
3) Do not approve distribution of the Request for Proposals (RFP) for Professional Auditing Services.
RECOMMENDATION:
If removed from the consent agenda:
Motion to approve distribution of the Request for Proposals (RFP) for Professional Auditing Services.
ATTACHMENTS:
1) Draft Request for Proposals for Auditing Services.
REQUEST FOR PROPOSALS
FOR
PROFESSIONAL AUDITING SERVICES
October 2018
CITY OF LAKE ELMO
FINANCE DEPARTMENT
3880 LAVERNE AVE. N.
SUITE 100
LAKE ELMO, MN 55042
WWW.LAKEELMO.ORG
TABLE OF CONTENTS
I. INTRODUCTION
A. General Information
B. Term of Engagement
C. Subcontracting
II. NATURE OF SERVICES REQUIRED
A. General
B. Scope of Work to be Performed
C. Auditing Standards to be Followed
D. Reports to be Issued
E. Special Considerations
F. Working Paper Retention and Access to Working Papers
III. DESCRIPTION OF THE GOVERNMENT
A. Principal Contacts
B. Background Information
C. Fund Structure
D. Federal and State Financial Assistance
E. Component Units
F. Finance Department Operations
G. Computer Systems
H. Availability of Prior Reports and Working Papers
IV. TIME REQUIREMENTS
A. Proposal Calendar
B. Date Audit May Commence
C. Schedule for the 2018 Fiscal Year Audit
1. Detailed Audit Plan
3. Fieldwork
4. Draft Reports
V. ASSISTANCE TO BE PROVIDED TO THE AUDITOR AND REPORT PREPARATION
A. Finance Department and Clerical Assistance
B. Work Area, Telephones, Copiers, and Fax Machines
VI. PROPOSAL REQUIREMENTS
A. Inquires
B. Submission of Proposals
VII. EVALUATION PROCEDURES
A. Review of Proposals
B. Oral Presentations
C. Final Selection
D. Right to Reject Proposals
APPENDICES
A. Proposer Guarantees and Warranties
B. Format for Schedule of Professional Fees and Expenses to Support the Total All-
Inclusive Maximum Price
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I. INTRODUCTION
A. General Information
The City of Lake Elmo is requesting proposals from qualified firms of certified public
accountants to audit its financial statements for the fiscal year ending December 31, 2018
with the option of auditing its financial statements for each of the four subsequent fiscal years.
These audits are to be performed in accordance with generally accepted auditing standards
and the standards for financial audits set forth in the U.S. General Accounting Office’s (GAO)
Government Auditing Standards, and, if applicable, the provisions of the federal Single Audit
Act of 1996 and Title 2 U.S. Code of Federal Regulations Part 200, and U.S. Office of
Management and Budget (OMB) Circular A-133, Audits of State and Local Governments as
well as all other Federal, State and local requirements in effect now or placed in effect during
the engagement.
There is no expressed or implied obligation for the City of Lake Elmo to reimburse responding
firms for any expenses incurred in preparing proposals in response to this request.
To be considered, qualified firms bust submit five (5) copies of their proposal to Susan
Iverson, Finance Director, 3880 Laverne Ave, N., Suite 100, Lake Elmo, MN 55042 by 4:00
P.M. on Friday, November 2, 2018. The City of Lake Elmo reserves the right to reject any
and all proposals submitted.
The City of Lake Elmo reserves the right, where it may serve the City of Lake Elmo’s best
interest, to request additional information or clarifications from proposers, or to allow
corrections of errors or omissions. At the discretion of the City of Lake Elmo, firms submitting
proposals may be requested to make oral presentations as part of the evaluation process.
The City of Lake Elmo reserves the right to retain all proposals submitted and to use any
ideas in a proposal regardless of whether that proposal is selected. Submission of a proposal
indicates acceptance by the firm of the conditions contained in this request for proposals,
unless clearly and specifically noted in the proposal submitted and confirmed in the contract
between the City of Lake Elmo and the firm selected.
It is anticipated the selection of a firm will be made by mid November 2018. Following the
notification of the selected firm it is expected a contract will be executed between both parties
as soon as possible.
B. Term of Engagement
A five-year contract is contemplated, subject to an annual review. Based on satisfactory
performance, satisfactory negotiation of terms (including a price acceptable to both the City of
Lake Elmo and the selected firm), the concurrence of the City Council and Finance Director,
and the annual availability of an appropriation, the City may extend the agreement annually
without solicitations from other firms. In the event of unsatisfactory performance, or when in
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the best interest of the City, proposals may be solicited before the end of the five year period.
C. Subcontracting
Following the award of the audit contract, no subcontracting will be allowed without the
expressed prior written consent of the City of Lake Elmo.
II. NATURE OF SERVICES REQUIRED
A. General
The City of Lake Elmo is soliciting the services of qualified firms and certified public
accountants to audit its financial statements for the fiscal year ending December 31, 2018,
with the option to audit the City of Lake Elmo’s financial statements for each of the four
subsequent fiscal years. These audits are to be performed in accordance with the provisions
contained in this request for proposals.
B. Scope of Work to be Performed
The City of Lake Elmo desires the auditor to express an opinion on the fair presentation of its
financial information of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information in conformity with generally accepted
accounting principles.
The auditor shall also be responsible for performing certain limited procedures involving
required supplementary information required by the Governmental Accounting Standards
Board as mandated by generally accepted auditing standards. The City of Lake Elmo also
desires the firm to review the presentation of the statistical section of the financial statements
insofar as current generally accepted auditing standards require such review.
If the City is required to have a Single Audit for any year covered by this proposal, the auditor
would follow the provision of the federal Single Audit Act Amendments of 1996. The pricing
for the potential single audit should be reported separately on the fee structure schedule.
The auditor is not required to audit the schedule of federal financial assistance. However, the
auditor is to provide an “in-relation-to” report on that schedule based on the auditing
procedures applied during the audit of the financial statements.
An annual review of the Comprehensive Annual Financial Report shall be done to determine
necessary steps so that the City can continue to receive a Certificate of Achievement for
Excellence in Financial Reporting during this engagement.
C. Auditing Standards to Be Followed
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To meet the requirements of this request for proposals, the audit shall be performed in
accordance with generally accepted auditing standards as set forth by the American Institute
of Certified Public Accountants, the standards for financial audits set forth in the U.S. General
Accounting Office’s Government Auditing Standards, the provisions of the Single Audit Act of
1996 and Title 2 U.S. Code of Federal Regulations Part 200, the provision of U.S. Office of
Management and Budget (OMB) Circular A-133, Audits of State and Local Governments
Minnesota Legal Compliance for Local Governments, and any other Federal, State and local
requirements in effect now or placed in to effect during the engagements.
D. Reports to be Issued
Following the completion of the audit of the fiscal year’s financial information, the auditor shall
issue:
1. A report on the fair presentation of the financial statement in conformity with generally
accepted accounting principles, including, if applicable, an opinion of the fair
presentation of the supplementary schedule of expenditures of federal awards “in-
relation-to” the audited financial statements.
2. A report on compliance and internal control over financial reporting based on an audit
of the financial statements.
3. A report on compliance with applicable laws and regulations.
4. Communicate in a letter to management any reportable conditions found during the
audit. A reportable condition shall be defined as a significant deficiency in the design
or operation of the internal control structure, which could adversely affect the
organization’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 shall be identified as such
in the report.
5. Communicate non-reportable conditions discovered by the auditors in a separate
letter to management, which shall be referred to in the report on compliance and
internal controls.
The report on compliance and internal controls shall include all material instances of
noncompliance. All nonmaterial instances of noncompliance shall be reported in a separate
management letter, which shall be referred to in the report on compliance and internal
controls.
Irregularities and illegal acts: Auditors shall be required to make an immediate, written report
of all irregularities and illegal acts or indications of illegal acts of which they become aware to
the City Council, City Administrator and Finance Director.
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Reporting to the City Council: Auditors shall assure themselves that the City Council is
informed of each of the following:
1. The auditor’s responsibility under generally accepted auditing standards
2. Significant accounting policies
3. Management judgments and accounting estimates
4. Significant audit adjustments
5. Other information in documents containing audited financial statements
6. Disagreements with management
7. Management consultation with other accountants
8. Major issues discussed with management prior to retention
9. Difficulties encountered in performing the audit
10. Results and reports of the Single Audit, if required, to be performed.
E. Special Considerations
1. The City of Lake Elmo will send its comprehensive annual financial report to the
Government Finance Officer Association of the United States and Canada for review
in their Certificate of Achievement for Excellence in Financial Reporting program.
The city has received the certificate annually beginning with the annual financial
report for 2013. It is anticipated that the auditor will not be required to provide special
assistance to the City of Lake Elmo to meet the requirements of that program.
2. The City of Lake Elmo may prepare one or more official statements in connection
with the sale of debt securities which will contain the general purpose financial
statements and the auditor’s report thereon. The auditor shall be required, if
requested by the fiscal advisor and/or the underwriter, to issue a “consent and
citation of expertise” as the auditor and any necessary “comfort letters.”
3. The schedule of federal financial assistance and related auditor’s report (if required),
as well as the reports on the internal controls and compliance, are not to be included
in the CAFR, but are to be issued separately.
4. Additional assistance regarding the specifics of the future implementation and
compliance with the reporting requirements mandated by GASB may be required.
F. Working Paper Retention and Access to Working Papers
All working papers and reports must be retained, at the auditor's expense, for a minimum of
three (3) years, unless the firm is notified in writing by the City of Lake Elmo of the need to
extend the retention period. The auditor will be required to make working papers available,
upon request, to the following parties or their designees:
City of Lake Elmo
MN State Auditor’s Office
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U.S. General Accounting Office (GAO)
Parties designated by the federal or state governments or by the City of Lake Elmo
as part of an audit quality review process
Auditors of entities of which the City of Lake Elmo is a sub-recipient of grant funds
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.
III. DESCRIPTION OF THE GOVERNMENT
A. Principal Contacts
The auditor’s principal contact with the City of Lake Elmo will be Susan Iverson, Finance
Director, or a designated representative, who will coordinate the assistance to be provided by
the City of Lake Elmo to the auditor. The phone number for the Finance Director is 651-747-
3909.
B. Background Information
• The City of Lake Elmo is located in Washington County and serves an area of 32 square
miles with a population of 9,625.
• The City of Lake Elmo's fiscal year begins on January 1 and ends on December 31.
• The city of Lake Elmo operates under the Optional Plan A form of government. The City
Council consists of a mayor and four council members.
• More detailed information on the City and its finances can be found on the City’s website
at: http://www.lakeelmo.org/.
C. Fund Structure
Please refer to the City’s Comprehensive Annual Financial Report for the year ended
December 31, 2017, which can be found on our web site at www.lakeelmo.org, for a complete
description of the government and its financial operations. The City of Lake Elmo uses the
following fund types and account groups in its financial reporting:
General Fund 1
Special Revenue Funds 4 (includes 1 blended component unit)
Debt Service Funds 13
Capital Project Funds 7
Enterprise Funds 3
Internal Service Funds 3
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Agency Funds 1
D. Federal and State Financial Assistance
At the time of this RFP, it does not appear that a single audit will be required for 2018.
Proposals should include costs for these services as a separate item from the regular services
that are to be provided.
E. Component Units
The City has one blended component unit – the Lake Elmo Economic Development Authority
– and no discretely presented component units. Although the EDA is legally separate from
the City, the board has recommending authority only to the City Council and is reported as if it
were part of the primary government.
F. Finance Department Operations
The finance department has two full-time employees consisting of a Finance Director and an
Accountant. The department provides financial support services to the entire organization
that include accounts payable, accounts receivable, cash receipting, payroll processing,
investment and cash management, coordination of the annual audit, budget preparation, the
5-year CIP Plan preparation, and the 10-year Financial Forecast.
G. Computer Systems
The City uses Springbrook financial software and consists of the following integrated modules
that generate transactions for the financial system:
General Ledger
Accounts Payable
Account Receivable
Cash Receipts
Payroll
The City uses Banyon Data Systems for Utility Billing.
H. Availability of Prior Audit Reports and Working Papers
Interested proposers who wish to review prior years’ audit reports and management letters
should contact Susan Iverson at 651-747-3909. The City of Lake Elmo will use its best efforts
to make prior audit reports and supporting working papers available to proposers to aid their
response to this request for proposals.
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IV. TIME REQUIREMENTS
A. Proposal Calendar
The following is a list of key dates regarding the selection process:
Request for proposal completed October 2, 2018
Due date for proposals November 2, 2018
Interview dates (only if needed) November 12-14, 2018
City Council approval of auditor selection November 20, 2018
Selected firm notified November 21, 2018
B. Date Audit May Commence
The City of Lake Elmo will have all records ready for audit and all management personnel
available to meet with the firm’s personal at a date that is mutually convenient. The auditors
may elect to do preliminary fieldwork.
C. Schedule for 2018 Fiscal Year Audit (a similar time schedule will be developed for audits of
future fiscal years if the City of Lake Elmo exercises its option for additional audits).
Each of the following should be completed by the auditor no later than the dates indicated.
1. Detailed Audit Plan
The auditor shall provide the City of Lake Elmo by December 31, 2018 both a
detailed audit plan and a list of all schedules to be prepared by the City of Lake Elmo.
2. Fieldwork
The auditor shall complete all fieldwork by April 30, 2019. A schedule for interim
work, fieldwork and draft reports will be determined upon completion of the auditor
selection process.
3. Draft Reports
The auditor shall have reviewed drafts of the audit report(s) and completed auditor’s
reports for the CAFR (if applicable) by May 15, 2019.
4, Date Final Report is Due
The City shall prepare final financial statements, notes, required supplementary
schedule and statistical data by May 15, 2019. The auditor shall provide all
recommendations, revisions, and suggestions for improvement to the City by May 31,
2019.
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The final auditor reports and ten signed copies should be delivered to the Finance
Director at 3880 Laverne Ave. N., Suite 100, Lake Elmo, MN 55042 by June 13,
2019.
V. ASSISTANCE TO BE PROVIDED TO THE AUDITOR & REPORT PREPARATION
A. Finance Department and Clerical Assistance
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 of Lake Elmo under the direction of the auditor.
B. Work Area, Telephones, Copiers, Internet Connection
The City of Lake Elmo will provide the auditor with reasonable work space, tables and chairs. The auditor will
also be provided with access to telephone lines, photocopying facilities and wireless internet connectivity.
VI. PROPOSAL REQUIREMENTS
A. Inquiries
Inquiries concerning the request for proposals and the subject of the request for proposals
must be made to:
Susan Iverson, Finance Director
City of Lake Elmo
3880 Laverne Ave N.
Suite 100
Lake Elmo, MN 55042
651-747-3909
siverson@lakeelmo.org
B. Submission of Proposals
The following material is required to be received by November 2, 2018 for a proposing firm to
be considered:
1. Title Page
Title page showing the request for proposals subject; the firm’s name; the name,
address and telephone number of the contact person; and the date of the proposal.
2. Table of Contents
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3. Transmittal Letter
A signed letter of transmittal briefly stating the proposer’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 60 days.
4. General Information
a. Firm qualifications and experience
b. An affirmative statement that the firm is independent from the City of Lake
Elmo
c. License to practice in MN
d. Partner, supervisor and staff qualifications and experience
e. Prior engagement with the City of Lake Elmo
f. Similar engagement with other governmental entities – reference with phone
numbers
g. Specific audit approach
h. Identification of anticipated potential audit problems
i. Report format
5. Executed copies of Proposer Guarantees and Proposer Warranties, attached to this
request for proposal (Appendix A)
6. Schedule of Professional Fees and Expenses (Appendix B)
Proposers should send the completed proposal to the following address:
Susan Iverson, Finance Director
City of Lake Elmo
3880 Laverne Ave N.
Suite 100
Lake Elmo, MN 55042
VII. Evaluation Procedures
A. Review of Proposals
The City will review and discuss each proposal and may request oral presentations from one
or more firms selected for further consideration.
The City of Lake Elmo reserves the right to retain all proposals submitted and use any idea in
a proposal regardless of whether that proposal is selected.
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B. Oral Presentations
During the evaluation process, the City may, at its discretion, request any one or all firms to
make oral presentation. Such presentations will provide firms with an opportunity to answer
any questions that City may have on a firm’s proposal. Not all firms may be asked to make
such oral presentations.
C. Final Selection
It is anticipated that a firm will be selected by the City Council during its regularly scheduled
meeting on November 20, 2018.
D. Right to Reject Proposals
Submission of a proposal indicates acceptance by the firm of the conditions contained in this
request for proposal unless clearly and specifically noted in the proposal submitted and
confirmed in the contract between the City of Lake Elmo and the firm selected.
The City of Lake Elmo reserves the right without prejudice to reject any or all proposals.
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APPENDIX A
PROPOSER GUARANTIES
The proposer certifies it can and will provide and make available, as a minimum, all services set
forth in Section II, Nature of Service Required.
PROPOSER WARRANTIES
1. Proposer warrants that it is willing and able to comply with State of Minnesota laws with
respect to foreign (non-State of Minnesota) corporations.
2. Proposer warrants that it is willing and able to obtain an errors and omissions insurance policy
providing a prudent amount of coverage for the willful or negligent acts, or omissions of any
officers, employees or agents thereof.
3. Proposer warrants that it will not delegate or subcontract its responsibilities under an
agreement without the prior written permission of the City of Lake Elmo.
4. Proposer warrants that all information provided by it in connection with this proposal is true
and accurate.
Signature of Official: ______________________________________________________
Name (typed): ___________________________________________________________
Title ___________________________________________________________________
Firm: __________________________________________________________________
Date: ___________________________________________________________________
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APPENDIX B
SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR
THE AUDIT OF THE 2018 FINANCIAL STATEMENTS
STANDARD QUOTED
HOURLY HOURLY
HOURS RATES RATES TOTAL
Partners _________ _________ _________ _________
Managers _________ _________ _________ _________
Supervisory Staff _________ _________ _________ _________
Staff _________ _________ _________ _________
Other (specify) _________ _________ _________ _________
Subtotal _________
Total for services described
In Section II E of the RFP
(Detail on subsequent pages)
Out-of-pocket expenses _________
Meals and lodging _________
Transportation _________
Preparation of the CAFR _________
Other
(Specify): _________________________________ _________
Total all-inclusive maximum price for 2018 audit (not including single audit) _________
Note: The rate quoted should not be presented as a general percentage of the standard hourly rate or as
a gross deduction from the total all-inclusive maximum price.
Single Audit (if needed) maximum price for 2018 _________
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APPENDIX B
Page 2 of 2
SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR
THE AUDIT OF THE 2018 FINANCIAL STATEMENTS
Total all-inclusive (not including single audit) maximum price for:
2019 ________________
2020 ________________
2021 ________________
2022 ________________
Total Single Audit (if needed) maximum price for:
2019 ________________
2020 ________________
2021 ________________
2022 ________________