HomeMy WebLinkAbout#06 - RFP for Auditing Services STAFF REPORT
DATE: October 18, 2022
CONSENT
TO: Mayor and City Council
FROM: Kristina Handt, City Administrator
AGENDA ITEM: Auditing Services RFP
BACKGROUND: Last month Redpath notified us they would not be able to provide auditing services next year. In 2018
the council approved a 5 year engagement witgh them but due to staffing issues they are unable to fulfill the fifth year. ISSUE BEFORE COUNCIL: Should the Council authorize issuance of a Request for Proposals (RFP) for Auditing Services?
PROPOSAL DETAILS/ANALYSIS:
Our finance consultant, Kyle Sawyer at Ehlers, drafted the attached RFP. It is similar to the last one in that we are looking to engage with an auditing firm for the next five years. Proposals would be due November 10th with an anticipated contrct award at the December 6th city council meeting. FISCAL IMPACT: TBD
OPTIONS: 1) Authorize Issuane of RFP for Auditing Services 2) Amend and then Authorize Issuane of RFP for Auditing Services 3) Do not issue an RFP. RECOMMENDATION: If removed from consent agenda: “Move to authorize the issuance of the Audting Services Request for Proposals” ATTACHMENTS:
• Auditing Services RFP
3800 Laverne Ave. N.
Lake Elmo, Minnesota 55042
www.lakeelmo.org
Request for Proposals
Professional Auditing
Services Fiscal Years Ending
2022-2026
Kristina Handt
Administrator
651-747-3905
KHandt@lakeelmo.org
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CITY OF LAKE ELMO
REQUEST FOR
PROPOSALS
TABLE OF CONTENTS
I. Introduction A. General Information B. Term of Engagement C. Subcontracting
II. Nature of Services Required A. Scope of Work to be Performed B. Auditing Standards to be Followed
C. Reports to be Issued
D. Special Considerations
E. Retention of Workpapers and Access to Working Papers
III. Description of the City of Lake Elmo
IV. Time Requirements
A. Anticipated Proposal Calendar
B. Notification C. Schedule for Audit Completion
V. Assistance to be Provided to the Auditor and Report Preparation
A. Finance Department Assistance B. Report Preparation
VI. Proposal Requirements
A. General Requirements
B. Audit Proposal
C. Dollar Cost Proposal
VII. Evaluation Procedures
A. Selection Committee B. Evaluation Criteria C. Oral Presentations
D. Final Selection
E. Right to Reject Proposals
VII. Appendices
A. Proposer Guarantees and Warranties
B. Schedule of Professional Fees and Expenses
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CITY OF LAKE ELMO
REQUEST FOR PROPOSALS
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 years ending December 31, 2022,
2023, 2024, 2025, and 2026. These audits are to be performed in accordance with generally accepted auditing standards. The City may require a single audit in any year of the
engagement.
There is no expressed or implied obligation for the City to reimburse responding firms for any
expenses incurred in preparing proposals in response to this request. The City of Lake Elmo
shall not be liable for any expenses incurred by the applicant including but not limited to
expenses associated with the preparation of the proposal and preparation of a compensation
(fees) schedule or final contract negotiations.
To be considered, one master hard copy of the proposal must be mailed or delivered to the
contact listed below and received prior to the deadline. In addition, e-mail an electronic
version of the proposal to the contact below:
City of Lake Elmo Kristina Handt
Administrator
3800 Laverne Ave. N.
Lake Elmo, MN 55042 651-747-3905 (direct)
KHandt@lakeelmo.org
The proposal must be received no later than 4:00 PM on November 10, 2022.
The City reserves the right without prejudice to reject any or all proposals submitted. Inquiries
concerning the request for proposals and the subject of the request for proposals must be
made via email to Kristina Handt, Administrator. In the interest of fairness to all respondents,
do not contact other staff or elected or appointed officials.
During the evaluation process, the City reserves the right, where it may serve the City’s best
interest, to request additional information or clarifications from proposers, or to allow corrections of errors or omissions.
The City 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 and the firm selected.
It is anticipated the selection of a firm will be completed by December 6, 2022. Following the notification of the selected firm, it is expected a contract will be executed between both
parties immediately following the December 6, 2022 meeting of the City Council.
B. Term of Engagement
A five-year contract is proposed, subject to an annual review by the City. It is anticipated the City
will request proposals every five years. In the event of unsatisfactory performance, or when in
the best interest of the City, proposals may be solicited before the end of the five-year period.
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C. Subcontracting
No subcontracting will be allowed without the express prior written consent of the City.
II. NATURE OF SERVICES REQUIRED
A. Scope of Work to be Performed
A copy of the City’s 2021 Annual Comprehensive Financial Report is available on the City’s
website https://cms8.revize.com/revize/lakeelmomn/2021%20Audit%20Presentation.pdf.
The scope of work to be performed will be consistent with the audit performed in 2021.
The City desires the auditor to express an opinion on the fair presentation of its basic financial
statements in conformity with governmental accounting principles generally accepted in the
United States of America.
For the City of Lake Elmo, the auditor is required to audit the basic financial statements,
combining and individual fund statements. The auditor is not required to audit the statistical
section of the report.
If the City is required to have a Single Audit for any year covered by this proposal, the pricing
for the potential single audit should be reported separately on the fee structure schedule.
B. Auditing Standards to be Followed
To meet the requirements of this request for proposals, the audit shall be performed in
accordance with auditing standards generally accepted in the United States of America; the
standards set forth by the American Institute of Certified Public Accountants; the standards for
financial audits set forth in the U.S. Government Accountability Office’s (GAO) Government
Auditing Standards, the provisions of the federal Single Audit Act Amendments of 1996 and
U.S. Office of Management and Budget (OMB) Circular A-133, and the minimum procedures for
auditors of local governments prescribed by the Office of the State Auditor.
C. Reports to be Issued
The auditor shall prepare the following reports at the completion of the audit:
• Issue an opinion letter on the City’s basic financial statements in conformity
with accounting principles generally accepted in the United States of America.
• Issue a report on the consideration of the City’s internal controls over financial reporting.
• Issue a report on compliance with applicable laws and regulations. • Communicate in a letter to management any reportable conditions found during
the audit.
• If a single audit is needed, issue an auditor’s report on the internal control over
compliance for major federal programs, an opinion on compliance with
requirements applicable to each major federal program, and a summary of auditor’s results and a schedule of findings and questioned costs, if any, required
by OMB.
• Present opinion, procedures, and overview of the City’s financial condition to the City Council.
D. Special Considerations
The City of Lake Elmo will submit its annual comprehensive financial report to the GFOA for
review in their Certificate of Achievement for Excellence in Financial Reporting program. The City
has received the GFOA Certificate of Achievement for Excellence in Financial Reporting since
2013, and intends to continue to submit future reports for the award. It is anticipated that the
auditor may be required to provide assistance to continue to meet the requirements of this
program.
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Additional assistance regarding the specifics of the future implementation and compliance with
the reporting requirements mandated by GASB may be required.
E. Retention of Workpapers and Access to Working Papers
All working papers and reports must be retained, at the auditor's expense, for a minimum of six
(6) years, unless the firm is notified in writing by the City of the need to extend the retention period. The auditor will be required to make working papers available, upon request, to the
following parties or their designees: City of Lake Elmo, State Auditor’s Office, U.S. General
Accounting Office (GAO), Federal Cognizant Agency, and parties designated by the federal or state governments or by the City of Lake Elmo as part of an audit quality review process.
All data relating to the audit, including work papers, will be subject to the same data classifications that apply under Minn. Stat. § 6.715. The auditor conducting a City audit must
provide access to such data relating to the audit and is liable for unlawful disclosure of the
data as if it were a government entity under Minn. Stat. Ch. 13.
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 CITY OF LAKE ELMO
The City of Lake Elmo was incorporated in 1926 and is a statutory city in the State of Minnesota,
six miles east of St. Paul, Minnesota. Located in Washington County, it covers 25 square miles
and has an estimated 2020 population of 12,655, which represents 4,004 households.
Lake Elmo operates under the “Optional Plan A” form of government as defined in Minnesota
Statutes. Under this plan, the government of the city is directed by a city council composed of an elected mayor and four elected city council members. The city council exercises legislative
authority and determines all matters of policy. The city council appoints personnel responsible
for the proper administration of all affairs relating to the city. The Mayor and Council members serve four-year terms.
The City provides a full range of services to its citizens including fire protection services, construction and maintenance of streets and infrastructure, recreational facilities, and water,
sanitary sewer and storm water utility services. The City contracts with the Washington County
Sheriff’s Department for police services.
The City’s finance department is headed by the Finance Director (currently vacant) and consists
of an accountant and utility billing clerk. The City does not maintain an internal audit function
other than internal checks performed by the finance department.
The City uses Springbrook financial software with a range of fully integrated accounting and
human resource modules. The sole exception is utility billing which uses Banyon.
Interested proposers who wish to review prior years’ management letters should contact Kristina
Handt, Administrator. 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
proposal.
More detailed information on the government, fund structure and operations can be found in the
Budget Document and in the 2021 Annual Comprehensive Financial Report which can be found
on the City’s website at
https://www.lakeelmo.org/departments/administration/departments_administration_budget_and_finance.php.
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IV. TIME REQUIREMENTS
A. Anticipated Proposal Calendar
The following is a list of key dates regarding the selection process:
1. Due date for questions November 4th, 2022, by 4:00 p.m. 2. Due date for proposals November 10th, 2022
3. Proposal recommended for Council consideration December 6th, 2022
B. Notification
It is anticipated that the staff recommended firm will be notified prior to December 6, 2022. C. Schedule for Audit Completion
Entrance Conference (January 2023) – The purpose of this meeting will be to discuss prior
audit issues (if applicable) and the interim work to be performed. The auditor shall provide the City both a detailed audit plan and a list of all schedules to be prepared by the City.
Interim Work (February 2023) – The schedule for interim work will be determined upon
completion of the selection process. It is desirable to complete as much work as possible on
an interim basis.
Fieldwork (April 2023) – The auditor shall complete all fieldwork by the end of April. It is
desirable that fieldwork be completed in one block of time. The auditor will schedule progress
conferences as needed to discuss the status of fieldwork and any potential issues that arise.
Report Preparation (May 2023) – The auditor shall complete the draft audit report and
financials. The City will review the draft and will complete the management discussion and
analysis (MD&A). The auditor will make necessary updates after the City reviews and will
incorporate the MD&A to have a final draft completed by the end of May.
Exit Conference, Final Reports, and Council Presentation (June 2023) – The purpose of the
exit conference will be to summarize the results of fieldwork, review significant findings, and
review reports to be issued. Presentation to City Council at a regular council meeting by the end
of June with final reports to be delivered on the Wednesday prior to the meeting.
V. ASSISTANCE TO BE PROVIDED TO THE AUDITOR AND REPORT PREPARATION
A. Finance Department Assistance
Finance Department staff and responsible management personnel will prepare the necessary
workpapers and 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 as directed by the auditor.
B. Report Preparation
Report preparation, editing, and printing shall be the responsibility of the auditor. City staff will
be involved in reviewing the financial statements prior to final preparation by the auditor.
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VI. PROPOSAL REQUIREMENTS
A. General Requirements
1. Inquiries
Inquiries concerning the request for proposals and the subject of the request for
proposals must be addressed in writing to:
Kristina Handt
Administrator - City of Lake Elmo
KHandt@lakeelmo.org
3800 Laverne Ave. N.
Lake Elmo, MN 55042
All responses, questions, and correspondence should be directed to Kristina Handt. In the
interest of fairness to all respondents, do not contact other staff or elected or appointed
officials.
Written questions on the RFP will be accepted until Friday, November 4, 2022 at 4:00
p.m. to allow time for staff to respond in writing to all holders of this RFP. Written questions submitted after Friday, November 4, 2022 at 4:00 PM may go unanswered.
2. Submission of Proposals
The following material is required to be received by November 10, 2022 at 4:00 p.m. for a
proposing firm to be considered:
i. 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. ii. Table of Contents
iii. 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 the best qualified to
perform the engagement, and a statement that the proposal is a firm and
irrevocable offer for the five-year period.
iv. Detailed Proposal
The detailed proposal should follow the order set forth in Section VI.B. of this
request for proposals.
1. Executed copy of the Proposer Guarantees and Warranties (attached to
this request for proposal – Appendix A)
2. Schedule of Professional Fees and Expenses for the Audit (attached to
this request for proposal – Appendix B)
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B. Audit Proposal
1. General Requirements
The purpose of the proposal is to demonstrate the qualifications, competence and capacity
of the firms seeking to undertake an independent audit of the City in conformity with the
requirements of this request for proposals. As such, the substance of proposals will carry more weight than their form or manner of presentation. The proposal should demonstrate
the qualifications of the firm and of the staff to be assigned to the engagement. It should
also specify an audit approach that will meet the request for proposals requirement.
The proposal should address all the points outlined in the request for proposal. The
proposal should be prepared simply and economically, providing a straightforward, concise description of the proposer’s capabilities to satisfy the requirements of the request for
proposal. While additional data may be presented, the following subjects, items 2 through
9, must be included. They represent the criteria upon which the proposal will be
evaluated.
2. Independence
The firm should provide an affirmative statement that it is independent of the City as
defined by the generally accepted auditing standards.
3. License to Practice in Minnesota
An affirmative statement should be included that the firm and all assigned key
professional staff are properly licensed to practice in Minnesota.
4. Firm Qualifications and Experience
The proposal should state the size of the firm, the size of the firm’s governmental audit
staff, the location of the office from which the work on this engagement is to be performed, and the number and nature of the professional staff to be employed in this
engagement on a full-time basis and on a part-time basis.
The firm 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 firm shall also provide information on the results of any federal or state desk reviews
or field reviews of its audits during the past three (3) years. In addition, the firm shall
provide information on the circumstances and status of any disciplinary action taken or
pending against the firm during the past three (3) years with state regulatory bodies or
professional organizations.
5. Partner, Supervisory, and Staff Qualifications and Experience
The proposal 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 such person is registered or
licensed to practice as a certified public accountant in Minnesota. Provide information
on the government auditing experience of each person, including information on relevant continuing professional education for the past three (3) years and membership
in professional organizations relevant to the performance of this audit.
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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. Other audit personnel may be changed at the discretion of the firm
provided that replacements have substantially the same or better qualifications or
experience. 6. Similar Engagements with Other Government Entities
Describe the firm’s experience with local government audits and audits of federal
programs. For the firm’s office that will be assigned responsibility for the audit, list the
most significant engagements performed in the last three years that are similar to the
engagement described in this request for proposal and are cities awarded the GFOA
Certificate of Achievement for Excellence in Financial Reporting. Indicate the scope of
work, date, engagement partners, total hours, and the name and telephone number of
the principal client contact. Specifically identify those engagements at which the
managers and other supervisors who will be assigned to this engagement have worked.
7. Specific Audit Approach
The proposal should set forth a work plan, including an explanation of the audit methodology to be followed. Firms should provide the following information on their audit
approach:
a. Proposed timing and segmentation of the engagement
b. Level of staff and number of hours to be assigned to each proposed segment of
the engagement
c. Sample sizes and to the extent to which statistical sampling is to be used in
the engagement
d. Extent of use of computer software in the engagement
e. Type and extent of analytical procedures to be used in the engagement f. Approach to be taken to gain and document an understanding of the City’s
internal control over financial reporting and internal control structure g. Approach to be taken in determining laws and regulations that will be subject to compliance test work
h. Approach to be taken in drawing audit samples for purposes of tests of compliance
8. Identification of Anticipated Potential Audit Problems
The proposal should identify and describe any anticipated potential audit problems, the
firm’s approach to resolving these problems, and any special assistance that will be
requested from the City.
Specifically include firm’s response to the pandemic and changes in data security protocols.
Please address remote workforce collaboration with clients during fieldwork.
9. The proposal should include acknowledgement of the required audit schedule and
a statement as to the firm’s ability to meet the schedule.
C. Dollar Cost Proposal (Appendix B)
1. Total All-inclusive Maximum Price
The City will not be responsible for expenses incurred in preparing and submitting the
proposal. Such costs should not be included in the proposal.
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The dollar cost proposal should specify all pricing information relative to performing the
audit engagement as described in this request for proposal. The total all-inclusive
maximum price is to include all direct and indirect costs, including all out-of-pocket
expenses for each of the years ending 2022-2026.
2. Rates by Partner, Specialist, Supervisory and Staff Level Times Hours Anticipated for Each
The dollar cost bid should include a schedule of professional fees and expenses, presented in the format provided in the attachment (Appendix B) that supports the total
all-inclusive maximum price.
3. Single Audit
Since the Single Audit work is based on the requirements of individual grants which may
vary, the cost of the Single Audit may be stated separately and may be based on an
hourly rate and estimated minimum hours needed to complete a basic Single Audit.
4. Rates for Additional Professional Services
If it should become necessary for the City to request the auditor to render any additional
services to either supplement the services requested in this RFP or to perform additional
work as a result of the specific recommendations included in any report issued on this
engagement, then such additional work shall be performed only if set forth in an addendum to the contract between the City and the firm. Any such additional work
agreed to between the City and the firm shall be performed at the same rates set forth in
the schedule of fees and expenses included in the dollar cost bid.
5. Manner of Payment
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 firm’s dollar cost proposal. Interim billings shall cover a period of not less than one
calendar month.
VII. EVALUATION PROCEDURES
A. Selection Committee
Proposals submitted will be evaluated by a two-member Selection Committee consisting of the
City Administrator and Senior Fiscal Consultant from Ehlers.
B. Evaluation Criteria
Proposals will be evaluated using three sets of criteria. Firms meeting the mandatory criteria will
have their proposals evaluated and scored for both technical qualifications and price. The
following represent the principal selection criteria that will be considered during the evaluation process:
1. Mandatory Elements a. The audit firm is independent and licensed to practice in Minnesota.
b. The audit firm’s professional personnel have received adequate continuing professional
education within the preceding three years.
c. The firm has no conflict of interest with regard to any other work performed by the firm
for the City.
d. The firm adheres to the instructions in this request for proposal on preparing and
submitting the proposal.
e. The firm submits a copy of its last external quality control review report, including any
letter of comments. The firm must have a record of quality work.
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2. Technical Qualifications
a. Expertise and Experience
i. The firm exhibits expertise based on past experience and performance on
comparable government engagements.
ii. The firm has demonstrated an ability to assist its governmental clients in
attaining and retaining the GFOA Certificate of Achievement in Financial Reporting.
iii. 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.
iv. Location of the offices performing the work and availability/responsiveness of
staff, as derived from the written proposal.
b. Audit Approach
i. Adequacy of proposed staffing plan for various segments of the engagement ii. Adequacy of analytical procedures and sampling techniques
iii. Ability to meet desired timing of engagement and scheduled deadlines
3. Price Consideration
The cost of the audit for the years 2022-2026 should be calculated on the “Schedule of
Professional Fees and Expenses” (Appendix B). Cost will not be the only factor the review
committee will use to evaluate proposing firms.
C. Oral Presentations
During the evaluation process, the Selection Committee may, at its discretion, request any one
or all firms to make oral presentations. Such presentations will provide firms with an
opportunity to answer any questions the Selection Committee may have on a firm’s proposal.
Not all firms may be asked to make such oral presentations.
D. Final Selection
The City intends to select a firm based upon the recommendation of the Selection Committee.
It is anticipated that the Council will approve the recommended firm on December 6, 2022.
E. 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 and the firm selected. The City reserves the right,
without prejudice, to reject any or all proposals.
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APPENDIX A
PROPOSER GUARANTEES AND WARRANTIES
1. The proposer certifies it can and will provide, as a minimum, all services set forth in the proposal.
2. Proposer warrants that it does not have any conflicts of interest with the City of Lake Elmo, its
management staff, or its elected officials. 3. Proposer warrants that the firm and all assigned key professional staff are properly licensed to practice
in the state of Minnesota.
4. Proposer warrants that it is willing to 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.
5. 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.
6. 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 AUDITS OF 2022-2026 FINANCIAL STATEMENTS
CITY OF LAKE ELMO
Position Hours
Standard Hourly
Rates
Proposed Hourly
Rates Total
Partners $ $ $
Managers
Supervisory Staff
Staff
Other People
Expenses
Other Costs
Subtotal - City Audit $
Hours Average Rate Total
Single Audit $ $
Summary Schedule
Year Audit Fee
Total All-Inclusive
Maximum Price
ACFR Preparation
Maximum Price
Single Audit Cost, if
Required
Total All-Inclusive Cost
2022 $ $ $ $
2023 $ $ $ $
2024 $ $ $ $
2025 $ $ $ $
2026 $ $ $ $