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Audit Services Recommendation_Eide Bailly Copyrighted May 15, 2017 City of Dubuque Consent Items # 11. ITEM TITLE: Audit Services Recommendation SUMMARY: City Manager recommending the selection of Eide Bailly LLP, the City's current auditor, to provide the City's auditing services for the next five fiscal years and authorize the City Manager to sign the audit service agreement. SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Approve ATTACHMENTS: Description Type Audit Services Recommendation-MVM Memo City Manager Memo Staff Memo Staff Memo Bide Bailly Proposal Supporting Documentation Bide Bailly_Revised Maximum Price Summary Supporting Documentation THE CITY OF Dubuque DUB E i" Masterpiece on the Mississippi 2007.2012.2013 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Audit Services Recommendation DATE: May 8, 2017 Fiscal year ended June 30, 2016 was the final year of a five-year contract for providing audit services for the City of Dubuque. A Request for Proposal was released seeking a firm to provide the auditing services for the next five years. Five responses were received in response to the Request for Proposal and the RFP Review Committee selected two firms for an interview. Even though Eide Bailly LLP was not the lowest price, Finance Director Jean Nachtman recommends the selection of Eide Bailly LLP, the City's current auditor, to provide the City's auditing services for the next five fiscal years and authorize the City Manager to sign the audit service agreement. I concur with the recommendation and respectfully request Mayor and City Council approval. Mic ael C. Van Milligen MCVM:jh Attachment cc: Crenna Brumwell, City Attorney Cindy Steinhauser, Assistant City Manager Teri Goodmann, Assistant City Manager Jean M. Nachtman, Finance Director THE CITY OF Dubuque ---DU B E All-America City 1 Masterpiece on the Mississippi III I.r 2007 TO: Michael C. Van Milligen, City Manager FROM: Jean M. Nachtman, Finance Director SUBJECT: Audit Services Recommendation DATE: May 8, 2017 INTRODUCTION Fiscal year ended June 30, 2016 was the final year of a five-year contract for providing audit services for the City of Dubuque. An audit services review committee was established to review responses to a request for proposal (RFP) and recommend a firm to provide audit services to the City for the next five fiscal years (FY'17 — FY'21). Committee members included; Jean Nachtman, Finance Director; Tami Lansing, Assistant Finance Director; Jenny Larson, Budget Director; Alexis Steger, Senior Budget Analyst, and Erica Haugen, CDBG/HCV Supervisor. The committee developed an Audit Services Request for Proposal (RFP). The RFP was posted on the City of Dubuque website and notification was either given by USPS or electronically on March 7, 2017 to 15 CPA firms including the following: All current audit firms for 15 largest Iowa cities All certified Public Accounting Firms in Dubuque Two out of state firms that had expressed interest DISCUSSION Five firms submitted proposals: Baker Tilly Virchow Krause, LLP, Milwaukee, Wisconsin; Denman & Company, LLP, West Des Moines, Iowa; Eide Bailly, LLP, Dubuque, Iowa; Bohnsack & Frommelt, LLP, Moline, IL; and RSM US LLP, Davenport, Iowa. The audit services review committee reviewed the proposals. Two firms were selected for interviews: Eide Bailly, LLP and RSM US, LLP. The committee expressed concern that the same personnel with Eide Bailly have been conducting the audit for several years. Eide Bailly was contacted and agreed to rotate out both the partner and manager for the first two years of the contract. Even though Eide Bailly LLP was not the lowest price, the majority of the committee recommended retaining Eide Bailly LLP as the CPA firm for the next five years. Significant factors for selecting Eide Bailly LLP include; 1) their experience auditing other larger Iowa governmental clients including cities of West Des Moines, Cedar Falls, Iowa City and Urbandale and Dubuque County; 2) the high level of partner and manager involvement during audit work. Eide Bailly LLC proposed 80 hours of partner time and 140 hours of manager time, compared to 40 and 70 for RSM US LLC; 3) the level of service provided in the past; and 4) their use of local office staff. After the committee's selection, Eide Bailly LLC was contacted to renegotiate the final price. Eide Bailly LLC agreed to lower the total all-inclusive maximum price by $10,000. to $325,000, even though there will be additional expenses involved with partner and manager traveling from other locations. The RSM total all-inclusive maximum price was $307,840, with a clause "significant changes in the nature and scope of the business will result in annual professional fee increases". None of the other 4 firms submitting a proposal included that clause. I recommend seeking City Council approval to issue a contract. A copy of the Eide Bailly LLP proposal and dollar cost bid are enclosed. ACTION The audit services review committee requests your review and submission to the City Council for the approval of Eide Bailly, LLP to continue as the City's auditing firm for the next five fiscal years and subsequent authorization for you to sign the audit service agreement. If there are any questions on the process or recommendation, please feel free to contact me. Thank you for your consideration. Enclosures cc: Tami Lansing, Assistant Finance Director Jenny Larson, Budget Director Alexis Steger, Senior Budget Analyst Erica Haugen, CDBG/HCV Supervisor Original Experience the .- Bailly Difference �-- 'IMF' _ 1 IFfir..._ Blom— el 1 Fi;� March 24, 2017 Proposal for Audit Services City of Dubuque Eide Bailly LLP 1 545 Associates Drive, Suite 10 1 Dubuque, IA 52002-2299 Brian Unsen, Partner 563.557.6152 563.557.7842 (fax) bunsen@eidebailly.com Contents Contents Letter of Transmittal................................................................................1 Firm Qualifications and Experience.....................................................3 Partner, Supervisory and Staff Qualifications and Experience......9 Similar Engagements with Other Government Entities................... 12 AuditApproach.................................................................................... 13 Proposed Project Schedule................................................................. 17 Why Choose Eide Bailly ..................................................................... 18 Appendix A — Team Profiles.............................................................. 19 AppendixB — Peer Review................................................................ 22 Appendix C — Proposer Guarantee................................................. 23 Appendix D — Proposer Warranties ................................................ 25 Appendix E — Audit Services RFP Addendum Acknowledgement 27 n C Letter of Transmittal Thank you for giving Eide Bailly LLP the opportunity to propose on audit services. We believe Eide Bailly is the right firm for the City of Dubuque(City)for the following reasons: C Government Industry Experience We are confident the City will benefit from continuing to work with Eide Bailly. Our extensive government experience and knowledge positions us to be the right firm for you.Overall the firm services over 500 governmental clients,including 18 audits performed out of the Dubuque office. In Iowa, seven of the nine cities with a population between 40,000 and 75,000 have chosen Eide Bailly to be their auditors. ' Personal, Customized Service As accounting professionals,we offer vital services to organizations facing an ever- changing business environment. Delivering a high level of service to clients is a priority at Eide Bailly,and therefore,our staff members realize the importance of building strong business relationships and staying abreast of current issues impacting the government industry. During your engagement,we will work closely with your management team to identify issues and provide responsive solutions that are tailored to your organization. In addition,you will experience partner involvement during all phases of the engagement,as well as throughout the year.At Eide Bailly, we make it a priority to be accessible to our clients,which includes returning phone calls and emails in a timely manner. We realize other firms are knowledgeable as well;however,we believe what differentiates us is personal and attentive service from all members of our service ` team, including partners and senior-level staff. We know you and your staff and take the time to understand your specific challenges and opportunities. We pride jourselves on delivering honest and insightful advice beyond what is normally experienced in the public accounting industry. Technical Expertise l Brian Unsen,Partner, and Brad Theisen, Manager,who we propose to be a large part of your audit team have over 30 years combined audit experience in the governmental industry.Brian and Brad are currently members of the GFOA Special Review Committee. 1 1 www.eidebailly.com A a Timeliness We will meet your deadlines. Our professionals are trained to anticipate, identify and C respond to your needs in a timely manner. We will work closely with your management team to customize our audit services to your needs. We believe in clear, f� up-front and open communication with no surprises. We understand and will comply with the schedules and scope for the audit, as outlined in your Request for Proposal,and will perform all work within the timeframes outlined. Value for Fees You can expect quality service at reasonable fees. Eide Bailly has established a d reputation of providing quality work at a fair price. Our fees are based on the complexity of the issue and the experience level of the personnel necessary to address it. In the event you request additional services,Eide Bailly will obtain your agreement on fees before such work would commence. In f other words,there will be no hidden fees. I` We Want to Work with You The following pages highlight our firm's strengths and demonstrate why Eide Bailly merits serious consideration. Know that you will continue to be a highly valued client. Our people are proud to work with the City of Dubuque. Please contact me at 563.557.6152 and/or bunsen@eidebailly.com if you would like to discuss any aspect of this proposal. This proposal is a firm and irrevocable offer for 90 days. I Sincerely, II Eide Bailly LLP I� I Brian Unsen,CPA,Partner 1545 Associates Drive, Suite 101 Dubuque,IA 52002-2299 I 2 1 www.eidebailly.com Firm Qualifications and Experience At a Glance Eide Bailly Background Founded in 1917, Eide Bailly is a Top 25 CPA firm in the nation,with 29 offices in tap 25 CPA fine 13 states. The City of Dubuque will be served from our Dubuque, Iowa,office. � I in the nation You will find professionals at Eide Bailly who have a genuine interest in helping you 59,000 and your business grow and succeed. Our clients benefit from local,personal service and,at the same time,enjoy access to 1,700 professionals with diverse skill sets and Clients served experiences. The following map identifies Eide Bailly's office locations and client 1,700 locations throughout the nation. talented professionals © 29 offices ;- I in 13 states � in business � � , •`i ° -�r, since 1917 l i {X Eide Bailly Offices • Government Clients 1 , 1 , 1 3 www.eidebailly.com I r 1 { I i 0 a Our Promise to Clients At Eide Bailly,we promise our clients an experience, second to none, where they feel understood,connected and confident. I What does this mean to you?You will: • Work with professionals who truly care about your business—and will take the time to get to know you and your organization. • Gain insights from our industry and service specialists to accomplish your objectives,address challenges and leverage new opportunities. • Make better business decisions knowing you are guided by trusted advisors ° who care about your success. t License to Practice Eide Bailly and each of the professional staff assigned to the City of Dubuque are properly registered and licensed to practice in the State of Iowa. Independence Eide Bailly and all personnel assigned to the engagement are independent of the City and its component units as defined by generally accepted auditing standards and the " U.S.General Accounting Office's Government Auditing Standards. The firm commits to maintaining an independent attitude and appearance through the full term of the engagement. Other than perfonning the audit of the City,the Dubuque Metropolitan Area Solid Waste Agency,and the Dubuque Area Convention and Visitors Bureau in the past, Eide Bailly has not had any professional relationships with the City or any of its component units or oversight units. Should Eide Bailly enter into any professional relationships deemed relevant during the course of this engagement,we will notify you in writing of such relationship. Governmental Experience The governmental industry represents Eide Bailly's third largest niche area—with 500 governmental clients' firmwide.These clients include various governmental entities,including cities,counties,fire relief agencies,school districts, state agencies, tribal entities and housing authorities. Through serving these clients,our professionals have gained focused expertise in the governmental industry and will provide you with insightful advice that aids in managing the finances of the City. 4 1 www.eidebailly.com y The firm has 130 full-time professionals who participate in our Governmental Services Group. These professionals share information, learn from others and stay up-to-date on industry developments.To gain the greatest benefit,the knowledge is shared with professionals across the firm. The Dubuque office has four audit partners,one tax partner,five managers, and nine professional staff. One partner is dedicated to audits perfonned under GASB standards, and two other audit partners also have experience working under GASB. One manager and five staff are dedicated to audits under GASB standards,while all I staff have experience in that area. Sixteen of these individuals are CPAs. We anticipate the engagement will utilize one governmental partner,one governmental manager,and two governmental associates on a full-time basis. Single Audit Experience Eide Bailly has experience providing single audits related to federal expenditures which ensure our clients remain compliant. Our single audits include an audit of both the financial statements and the federal awards. We also assist in the preparation of j the data collection form and prepare the reporting package for submission to the E federal clearinghouse. Eide Bailly audits more than$5 billion in federal expenditures,which provides us with extensive experience in single audits. Paired with our many years of experience, we are qualified to effectively work with your organization to ensure that federal requirements are met. In addition, Eide Bailly participates semi-annually in the I Single Audit Roundtable,which is a meeting of federal single audit coordinators and public accountants to discuss issues related to auditing federal dollars. We are involved first-hand as new items are discussed and clarifications are provided for i different areas. This involvement ensures our staff members are aware of regulation changes which reduces your staff's need to do so.Changes applicable to the City will be shared with your staff. 1 Implementation of New Standards In an industry where standards continually evolve and change,Eide Bailly makes it a priority to stay current and assist our clients with necessary changes. In addition to helping clients implement new standards, we also help them adapt to changes within the existing standards. I5 1 www.eideboilly.com R d i F Additionally,several Eide Bailly professionals are placed on committees that have input into how new standards are written. This enables us to be involved from the beginning and influence the final outcome. Our clients benefit from our strong understanding of the standards and how they may affect their organization. Continuing Education Because we are committed to the governmental industry,we provide our professionals with specific,ongoing training related to governmental issues. This investment ensures our people stay current on the unique challenges and opportunities within the government sector so they are in the best position to help clients address these issues. Firmwide,our continuing professional education program requires all professional staff obtain education that exceeds the requirements of the American Institute of Certified Public Accountants(AICPA)and where applicable,Government Auditing Standards. The firm places a strong emphasis on lifelong learning and recognizes the importance of developing our professionals to best serve our clients.This past year we provided our client service professionals with an average of 54 hours of professional education,compared with the 40 hour accounting industry requirement. In addition,we regularly share information among the audit teams in different offices to ensure we are providing clients with the latest thinking and best possible solutions. Eide Bailly Average Hours Education i1 I CPE HOURS Eide Badly FY 2016 Industry Standard: 40 6 1 www.eidebailly.com i f Our governmental professionals obtain continuing professional education through the following means: 1 • Government-specific seminars sponsored by the AICPA • Seminars sponsored by the Government Finance Officers Association (GFOA) • Involvement with local chapters of the GFOA Annual Governmental Join for Eide nta 's • Eide Bailly seminars specific to governmental issues which are taught by our l A&A Update to he held on experienced managers and partners. 1 Thursday, May 18, 2017. By expanding our knowledge of issues important to governmental organizations,we are able to provide more in-depth,knowledgeable solutions to our clients. Industry Involvement Eide Bailly governmental professionals are well-positioned in organizations associated with governmental entities. We are members of the AICPA Governmental l Audit Quality Center,whose primary purpose is to promote the importance of quality government audits. We have also held leadership roles in the GFOA at both the national and local levels. Several members of our finmwide government team, including Brian Unsen and Brad Theisen are members of the GFOA's Special Review Committee for the Certificate i of Excellence for Achievement in Financial Reporting. Because we know how important achieving the GFOA Certificate of Excellence for Achievement in Financial Reporting is to clients,we work with them to achieve this certification. Specific ways we have worked with our clients include the following: I • Review GFOA checklist as part of the audit process and ensure that all issues from the checklist have been addressed in the audit • Frame our audit report so that it is GFOA-compliant • Review any comments related to deficiencies and corrections received from the GFOA and help clients to make the necessary adjustments to fix the identified issues ` Through these involvements,we stay abreast of and have input into new issues in governmental accounting.Your service team is very knowledgeable in emerging 1 issues and how we can help the City with these issues. 7 1 www.eidebailly.com In addition, Eide Bailly conducts an annual 8 hour education session that relates only to governmental accounting that we invite clients and other governmental entities to attend.The session is led by Eric Berman,an Eide Bailly partner who is a nationally known speaker on governmental accounting topics and has been a member of several GASB and AICPA governmental task forces and committees. 1 1 Peer Review A copy of our firm's most recent peer review is included in Appendix B of this technical proposal. The quality review included several governmental engagements. Other Review j In addition,the audit is annually subject to an engagement quality review performed by an Eide Bailly partner or senior manager other than those assigned directly to the audit. There have been no federal or state desk reviews of the Dubuque office audits,nor any disciplinary action taken or pending with federal or state regulatory bodies or r professional organizations in the past three years. i 4 3 1 8 1 www.eidebailly.com I �I Partner, Supervisory and Staff Qualifications and Experience erience p We are passionate about our work—and your success. We have chosen professionals National Resources for your service team based on their knowledge and experience in the government industry. When you work with Eide Bailly,you have access to Service Team Members 1,700 talented staff Brian Unsen will lead the team and serve as Engagement Partner and Brad Theisen will serve as Manager. The remaining team members will be from the five members across the firm experienced staff members dedicated to governmental auditing.These professionals with diverse experiences, are licensed to practice in the State of Iowa and bring strong credentials and a desire skill sets and expertise. to work with the City. If awarded this engagement, Brian and Brad will serve as your primary contacts.Additional resources will support the project team as d necessary. I Brian Unsen Engagement Partner .. Theisen Manage - - ..- Your service team has extensive experience in the government industry. You will i find comprehensive profiles for each team member in Appendix A.The following information will provide an overview of your service team. i 9 1 www.eideboilly.com 4 1 1 I i Brian Unsen, CPA, Engagement Partner Brian has 18 years of public accounting experience,the vast majority of which has been spent serving governmental clients. He is currently serving on the Government Auditing and Accounting Committee of the Iowa Society of Certified Public Accountants. He is also active with the Government Finance Officers Association, serving on the Special Review Committee. Brian's continuing professional education focuses significantly on governmental entities;his coursework has included new GASB statement updates, local government audit updates put on by the Iowa State Auditor's office, and Yellow Book and Single Audit updates. Brian is licensed to practice as a Certified Public Accountant in the State of Iowa. Brad Theisen, CPA, Manager Brad has 1 1 years of public accounting experience,the vast majority of which has been spent serving governmental clients. He is also active with the Government Finance Officers Association,serving on the Special Review Committee. Brad's continuing professional education focuses significantly on governmental entities;his coursework has included new GASB statement updates,local government audit updates put on by the Iowa State Auditor's office,and Yellow Book and Single Audit updates. Brad is licensed to practice as a Certified Public Accountant in the State of Iowa. For further information on auditing experience and continuing professional education,please see Team Profiles listed in Appendix A. Affirmative Action Eide Bailly adheres to the principles of Affirmative Action through our daily human resources and business operations practices.Members of your service team and all members of Eide Bailly operate within the Affirmative Action guidelines and value its objectives. 1 10 1 www.eidebailly.com i i Continuity of Staff To help ensure a strong business relationship and to minimize disruptions,we keep staffing changes to a minimum.Compared to the national average,Eide Bailly experiences a high retention rate which translates to providing our clients with consistent service teams. We will strive for continuity of staff for your engagement. F With this continuity comes quality, as team members' knowledge of your organization grows from year to year. I Eide Bailly Firmwide Staff Retention Rate ' 3 Year History Staff Retention 8 9% 6FY 8% 86% FY 2014 2015 FY 2016 l l Should the need arise to change any of the key engagement personnel, we will notify you in writing and provide the qualifications of the proposed replacement.Upon your approval,new engagement personnel will join your service team. In addition to the engagement team from the Dubuque office,there are numerous resources available throughout the firm with significant experience in governmental auditing and reporting. Several of those principal resources are listed below. Eric Berman—Partner,Boise, ID Brian Stavenger—Partner,Fargo,ND Lee Miller—Partner,Boise, ID J Kim Higgins—Partner, Denver,CO Scot Phillips—Partner, Boise, ID 11 1 www.eidebailly.com }':'!?='{•fi!'.1 to Similar Engagements a ements with Other Government Entities i As a top 25 CPA firm with 29 offices in 13 states, Eide Bailly is the firm of choice for 59,000 clients. We recently asked our clients what they valued most about their relationship with our firm. Industry knowledge,attentive service,genuine advice and friendly people were just a few of the responses we received.Our clients are truly the We asked our clients to best critics of our service. Listed below are several governmental clients who have describe Eide Bailly... similarities to the City as references. We encourage you to contact these clients to learn more about their Eide Bailly experiences. "... invaluable to our success Partn Hours Year leading-edge experts ... Client Name Scope of Work er I Contact resourceful in recommending City of Iowa Financial Statement Brian 450 2016 Nicole Davies strategies ... therefor us ... City, Iowa and A-133 Audit Unsen Controller 319-356-5085 q treats us as a valued customer Nicole-Davies@ ...passionate about helping iowa-city.org City of Financial Brian 430 2016 Nicci Lamb 'V clients ... valued business Urbandale, Iowa Statement,A-133, Unsen Finance Director advisors." and Water Utility 515.331.6701 Audit nlamb@ We encourage you to contact urbandale.org our clients so they can share City of West Des Financial Statement Brian 410 2016 Tim Stiles Moines,Iowa and A-133 Audit Unsen Finance Director their personal Eide Bailly 515.222.3611 experience with you. tim.stiles@ wdm.iowa.gov Dubuque County, Financial Statement Brian 375 2016 Denise Dolan Iowa and A-133 Audit Unsen County Auditor 563.589.4499 auditor@dbeco.org City of Cedar Financial Statement Brian 320 2016 Jennifer Rodenbeck Falls, Iowa and A-133 Audit Unsen Finance Manager 319.268.5108 jennifer.rodenbeck@ cedarfalls.com All of the above audits,except Dubuque County,and six additional Dubuque office clients were awarded the GFOA Certificate of Achievement. 12 1 www.eidebailly.com I Audit Approach All accounting firms have the appropriate tools,methodologies,and approach to perform an efficient and effective audit. However,one feature that sets Eide Bailly apart from other firms is the level and frequency of involvement our partners and senior level staff have with clients during the audit process. Both Brian and Brad have significant experience working with governmental organizations,and you can expect that experience to be brought to all interactions with the City's staff and r management.Both will spend time on-site during the audit process working with your team. 9 Your audit staff will do more than just look at the numbers during fieldwork. We use our experience to better understand the City, its internal controls,processes and programs so that we can give you extended value beyond the audit process. We bring leading technology, information and wisdom to our work. We will strive to support 9 successes of the City of Dubuque. i Eide Bailly's audit programs are designed to address each section of the audit separately, such as planning the audit;substantive and analytical procedures for each major classification of assets, liabilities,equity,revenues and expenditures/expenses; and the review and wrap up stage. During the planning stage risk is assessed for each l class of assets, liabilities,equity,revenues,and expenditures/expenses in order to determine the audit procedures we deem necessary to satisfy ourselves that amounts 1 reported in the financial statements are materially correct. Based on this risk assessment the audit programs are appropriately tailored to include those procedures necessary to accomplish this. The risk for each audit area is continually re-assessed o throughout the audit,and the program can be changed as needed to address any changes in risk that may occur. Sampling may be performed for tests of controls,compliance testing,and substantive tests of certain accounts and transactions. In our audit of the basic financial statements,we will also select various transactions for testing based on materiality I assessed at the appropriate level.These transactions may include such items as capital asset additions,subsequent disbursements,and subsequent receipts. We will be pleased to discuss specific sample sizes and selection methods when they are determined,either during audit planning or during fieldwork. We will use confirmations in the areas of cash and investments, intergovernmental revenues,and other areas deemed necessary. 13 1 www.eidebailly.com We will perform tests of the City's compliance with certain provisions of laws, regulations,contracts,and grants. We will assess the risk of material misstatement resulting from violations of laws and regulations having a direct and material effect on the determination of financial statement amounts. These laws and regulations can relate to items such as budgetary compliance,purchasing compliance,and cash and investment compliance. We will utilize checklists provided by the Iowa State Auditor's office to help us determine the City's compliance with Iowa Regulations. We will combine compliance tests of laws and regulations that involve the inspection of documentation supporting transactions with substantive tests of transactions and tests of control procedures. a The sample size will be the largest sample size necessary to support our conclusions in compliance with laws and regulations. Analytical procedures will be used in general planning to improve our understanding of the City's operations and to identify audit areas for increased attention and will be applied to assist in planning the nature,timing, and extent of other procedures.They will be applied to all balance sheet,revenue/receipt and expense/expenditure areas. These procedures will include,but not be limited to,the comparison of current year to prior year and budget amounts,as well as discussion with management regarding current operations and changes from prior periods.Areas that show results different E from those anticipated or planned will be further investigated to determine the validity of the variance. I Eide Bailly software will be used to the fullest extent possible in the analytical review,sampling,and account analysis. We may ask the City staff to provide certain electronic data files on which we will use our data extraction software. i The approach we will take to gain an understanding of the City's internal controls includes the following: • Interview City personnel • Review of organizational charts, accounting and procedure manuals,and programs • System narrative write-ups • Evaluation of the items selected for testing • Review of controls over financial information systems l 14 1 www.eidebailly.com d Timing of fieldwork would be discussed with City personnel. Based on our discussion with City personnel our schedule would be set in order to allow us to deliver draft and final audit reports,recommendations and management letters in compliance with the dates set forth in the request for proposal. Our audit approach is designed to collaborate with the City and achieve optimal C results.The approach consists of six major components: Planning,Pre-Work, Interim, Fieldwork, Reporting,and Ongoing Communication.The objectives and timing of each component are described in the following: Planning: • Gain knowledge of organization and environment • Perform analytical procedures to identify audit risk areas • Consider fraud through inquiry and brainstorming Pre-Work: • Determine audit procedures by area,based on results of audit planning • Determine confirmation needs • Prepare listing of audit information requested from the City Interim Work: • Review internal controls • Review minutes,resolutions and ordinances • Perform tests of legal compliance Fieldwork: • Audit areas based on risk assessment • Obtain and prepare schedules and analyses supporting the financial information • Discuss findings with management, if applicable • Discuss proposed journal entries with management, if applicable Reporting: • Prepare draft of financial report and management letter I • Provide report to management for review and comment Ongoing Communication: Throughout the year • Analyze significant changes and identify areas to further tailor our audit plan and to keep us up-to-date with continuing changes • Communicate with management regarding any issues that may come up and new accounting pronouncements that are issued 15 1 www.eidebailly.com i 8 f f Assistance from City staff would consist of preparation of confirmations,pulling of documentation,such as invoices and receipts,and preparation of trial balances, f schedules and analyses of accounts to support all balance sheet and selected revenue and expense amounts reported in the financial statements. Prior to year-end,we would supply the City with a list of items to have prepared for the audit. We have not identified any anticipated potential audit problems. Estimated hours for each segment of the engagement are as follows: Hours o Control system review, planning,analytical review, and testing 10 20 20 50 Minutes,contracts,and ordinance review 5 10 15 30 Cash and investments - - 30 30 Receivables and revenues 5 25 20 50 Property and equipment 5 5 40 50 Accounts payable and expenditures 30 30 Payroll 30 30 Debt and debt service 5 10 25 40 State compliance review 5 10 35 50 Federal programs 20 30 20 70 Review, report writing, and other non-field work time 25 30 65 120 Typing/Clerical - - 20 20 Total 80 1401 350 1 570 16 1 www.eidebailly.com 4 I Proposed Project Schedule p The following is a proposed time schedule to meet the City's time requirements included in the request for proposal for audit services. Planning and Pre-work • May-June. Interim Work • June-July. Includes approximately three days on-site. Fieldwork • September-October. Includes two on-site visits of approximately three days each. J Reporting • October-November. Includes office review. Draft reports will be issued by November 22°d.Final reports will be issued by December. 15`h. r I E 17 1 www.eidebailly.com t Why Choose Eide Bailly Our work with clients is more than an engagement. It's a relationship,built on value and trust—and results. When working with Eide Bailly,you will be: Understood The Eide Bailly You have goals and dreams. We listen carefully to learn how we can help you now Difference and in the future. By applying our technical and industry knowledge,we make the complex simple. If it's important to you,it's important to us. Many people ask what the "Eide Bailly Difference" is. Connected Our professionals bring their expertise and thought leadership to every interaction The difference is the client with you.You will benefit from new ideas,opportunities and solutions as they experience.At Eide Bailly,we happen. We'll connect you with the right resources and deliver comprehensive promise our clients an solutions in a respectful,peer-to-peer approach. We keep the answers within your reach. experience,second to none, I where they feel understood, Confident connected and confident. With Eide Bailly beside you,you'll feel confident addressing challenges and 1 embracing opportunities as they arise. We go the extra mile to deliver unmatched l solutions. Success is demanding. Our people are excited about the opportunity to continue to work with you and strengthen the relationships with your team. y u { r Ir 4 I 18 www.eideboilly.com Appendix A — Team Profiles 19 1 www.eidebailly.com Rr; rin AA• I Inion SPH Partner _J7t 563.557.6152 1 bunsen@eidebailly.com Knowledge and Experience • Eighteen years public accounting experience. • Conducts audits of governmental entities and non-profit organizations. • Governmental audit experience includes Cities of Dubuque,Ames,Davenport, Cedar Falls, Council Bluffs,Burlington,Marshalltown,Urbandale, West Des Moines,and Iowa City, Iowa; Rock Island, Illinois;White Bear Lake, Minnesota;Counties of Linn, Benton, Dubuque,and Louisa,Iowa;Cedar Falls Utilities;and Davenport Community School District. Professional Memberships • American Institute of Certified Public Accountants • Iowa Society of Certified Public Accountants,Governmental Auditing and Accounting Committee • Government Finance Officers Association Special Review Committee Designations & Licensures • Certified Public Accountant, Iowa Education • Bachelor of Arts,Accounting—Loras College,Dubuque, Iowa k • Completed 197 hours of continuing professional education in the past three years, including 115 hours of governmental accounting and auditing education • Annually attends the Iowa State Auditor's governmental update and the governmental roundtable presented by the Iowa Society of CPAs Independence • Mr. Unsen is independent of the City of Dubuque,as defined by generally accepted auditing standards and Government Auditing Standards. I 20 1 www.eidebailiy.com Brad J . Theisen, CPA Manager 563.557.6168 1 bitheisen@eidebailly.com Knowledge and Experience • Eleven years of public accounting experience. Responsible for audits of governmental entities and non-profit organizations. • Governmental audit experience includes Cities of Dubuque, Ames, Davenport, Cedar Falls,Council Bluffs, Burlington, Marshalltown,Muscatine,Urbandale, West Des Moines,and Iowa City,Iowa; Rock Island,Illinois;White Bear Lake f and Maple Grove, Minnesota; Counties of Linn and Johnson, Iowa;Cedar Falls Utilities;and Davenport Community School District. ` Professional Memberships • American Institute of Certified Public Accountants • Iowa Society of Certified Public Accountants • Government Finance Officers Association Special Review Committee Designations & Licensures • Certified Public Accountant, Iowa Education • Bachelor of Arts,Accounting and Economics-Loras College,Dubuque, Iowa • Completed 175 hours of continuing professional education during the past three years, including 92 hours of governmental accounting and auditing education • Annually attends the Iowa State Auditor's governmental update and the governmental roundtable presented by the Iowa Society of CPAs Independence • Mr.Theisen is independent of the City of Dubuque,as defined by generally accepted auditing standards and Government Auditing Standards. 0 i 21 1 www.eidebailly.com Peer Review `0% Cherry Bekaert CVAs&Advisors System Review Report To the Partners of Eide Bailly LLP and the AICPA National Peer Review Committee We have reviewed the system of quality control for the accounting and auditing practice of Eide Bailly LLP(the "firm")applicable to engagements not subject to PCAOB permanent inspection in effect for the year ended July 31, 2014. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants. As a part of our peer review, we considered reviews by regulatory entities, if applicable, in determining the nature and extent of our procedures. The firm is responsible for designing a system of quality control and complying with it to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Our responsibility is to express an opinion on the design of the system of quality control and the firm's compliance therewith based on our review. The nature, objectives, scope, limitations of, and the procedures performed in a System Review are described in the standards at www.aicpa.org/prsummary. f As required by the standards, engagements selected for review included engagements performed under Government Auditing Standards, audits of employee benefit plans, audits performed under FDICIA, and examinations of service organizations[Service Organizations Control(SOC) 1 and 2 engagements]. In our opinion,the system of quality control for the accounting and auditing practice of Eide Bailly LLP applicable { to engagements not subject to PCAOB permanent inspection in effect for the year ended July 31, 2014, has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass,pass with deficiency(ies)or fail. Eide Bailly LLP has received a peer review rating of pass. LLP Cherry Bekaert LLP December 12,2014 I I 22 www.eidebailly.com I f Appendix C — Proposer Guarantee I 23 1 www.eidebailly.com I u J I PROPOSER GUARANTEE The proposer certifies it can and will provide and make available,at the minimum, all services set forth in Section 11,Nature of Services Required. i Signature of Official: Name(typed): Brian Unsen Title: Partner Firm: Eide Bailly LLP Date: March 24. 2017 24 www.eidebailly.com f I Appendix D — Proposer Warranties 25 www.eidebailly.com ! P PROPOSER WARRANTIES ` A. Proposer warrants that it is willing and able to comply with State of Iowa laws with respect to foreign (non-state of Iowa)corporations. B. Proposer warrants that it has and will maintain 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. i C. Proposer warrants that it will not delegate or subcontract its responsibilities under an agreement without the prior written permission of the City of Dubuque. D. Proposer warrants that all information provided by it in connection with this proposal is utile and accurate. i y Signature of Official: F Name(typed): Brian Unsen Title: Partner I ` Firm: Eide Bailly LLP Date: March 24, 2017 i 1 I 26 www.eideboilly.com Appendix E — Audit Services RFP Addendum Acknowledgement 27 1 www.eidebailly.com bUj--BOE OF Master piece on the Mississippi Audit Services RFP ADDENDUM ACKNOWLEDGEMENT (Faxed or e-mailed proposals will not be accepted.) Deadline Date for City posting Addendum(s): Monday, March 20, 2017 RFP Proposal Due: Tuesday, March 28, 2017 by 2:00 p.m. Questions submitted in regard to the Audit Services RFP and responses to the submitted inquiries have been posted to the City of Dubuque website as of March 20, 2017. This form acknowledges receipt of all addendum(s) and is not valid unless signed below by an authorized representative of firm AND included with proposal submission documents. The City of Dubuque reserves the right to reject any or all proposals. Jean Nachtman Finance Director 563-589-4133 *********************************************************************************************** I acknowledge receipt of this addendum and will include this form with submitted proposal documents. Firm Name Authorized Signature and Position Held in Firm Eide Bailly LLP Address Print Name 1545 Associates Drive, Suite 101 Brian Unsen City State Zip Phone Fax Dubuque IA 52002-2299 563-556-1790 563-557-7842 28 1 www.eidebailly.com [u CULTURE The Foundation of Success R� Caring for our external and internal clients � with a passion to go the extra mile. Respecting our peers and their L� individual contributions. e Conducting ourselves with the highest level d of integrity at all times. f Trusting and supporting one another. Being accountable for the overall success of the firm, not just individual or office success. y Stretching ourselves to be innovative and creative,while managing the related risks. Recognizing the importance of maintaining 'r a balance between work and home life. Promoting positive working relationships. And,most of all,enjoying our jobs ... and having fun! j ..0O»` EideBaffly l� F www. idebailly.com PROPOSAL FOR AUDIT SERVCES ALL-INCLUSIVE MAXIMUM PRICE SUMMARY FOR THE CITY OF DUBUQUE Fee for each Revised Additional Major Proposal for Audit Services: Price Program (over 4) Price of First Year of Engagement (FY17) $ 61,000 $ 3,100 Price of Second Year of Engagement (FY18) $ 63,000 $ 3,200 Price of Third Year of Engagement (FY19) $ 65,000 $ 3,300 Price of Fourth Year of Engagement (FY20) $ 67,000 $ 3,400 Price of Fifth Year of Engagement (FY21) $ 69,000 $ 3,500 Total All-Inclusive Maximum Price $ 325,000 Represents a 3% decrease from the original proposal. Proposal of Eide Bailly Address 1545 Associates Drive, Suite 101, Dubuque, Iowa 52002-2299 Authorized Signer Brian Unsen Date April 26, 2017 Brian Unsen is entitled to represent the firm, empowered to submit the bid, and authorized to sign a contract with the City of Dubuque. Fees will be billed monthly as work progresses.