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Auditing Services RFP's DU~~E ~ck~ MEMORANDUM January 21, 2006 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Request for Proposal (RFP) for Professional Auditing Services Finance Director Ken T eKippe recommends City Council approval of the issuance of a Request for Proposals for professional auditing services for fiscal years ending June 30, 2006 through June 30,2010. The City is required to have annual audits of its financial records by an independent public accounting firm. In 2001 the City issued an RFP for professional auditing services for the five fiscal years ended June 30, 2001 through June 30, 2005. Eide Bailly, LLP has performed auditing services for the City of Dubuque for the past five years based on the 2001 RFP. Recently the Comprehensive Annual Financial Report (CAFR) and other information for fiscal year ended June 30, 2005, was provided to the City Council. It is the appropriate time to select a firm for future years' audits to allow proper planning for the audit. I concur with the recommendation and respectfully request Mayor and City Council approval. ;LLJ ~jJJ1L- MicKael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager Ken TeKippe, Finance Director - " .) , L' ..j ',i_._' -' GiI Spence Chris Kohlmann Rick Till Leisure Services Manager Information Services Manager Financial Analyst The following local firms with the capacity to perform the audit have been identified to receive solicitation letters inviting proposals: Eide Bailly, LLP Honkamp Krueger & Co., CPA's McGladrey & Pullen, LLP O'Connor Brooks & Co., CPA's If additional firms contact the City after the RFP has been authorized for release, they will be allowed to submit a proposal. RECOMMENDED ACTION The recommended action at the February 6, 2006 meeting is for the City Council to authorize the release of the RFP to public accounting firms to receive proposals for auditing services for the City of Dubuque. KT/jg Enclosure City of Dubuque REQUEST FOR PROPOSAL FOR PROFESSIONAL AUDITING SERVICES February 7, 2006 Finance Department City Hall 50 West 13th Street Dubuque, Iowa 52001-4864 City of Dubuque Request for Proposal 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. General Description/Contact Person B. Fund Structure C. Budgetary Basis of Accounting D. Federal and State Financial Assistance E. Pension Plans F. Component Unit G. Joint Ventures H. Magnitude of Finance Operations I. Computer Systems J. Internal Audit Function K. Availability of Prior Audit Reports IV. TIME REQUIREMENTS A. Proposal Calendar B. Anticipated Notification and Contract Dates C. Schedule for the Fiscal Year 2006 Audit I. Detail Audit Plan 2. Fieldwork 3. Draft Reports 4. Final Reports 5. Conferences and Progress Reports V. ASSISTANCE TO BE PROVIDED TO THE AUDITOR AND REPORT PREPARATION A. Finance Department and Clerical Assistance B. Electronic Data Processing (EDP) Assistance C. Work Area, Telephone, Photocopying and FAX Machine D. Report Preparation VI. PROPOSAL REQUIREMENTS A. General Requirements I. Submission of Notification of Interest 2. Written Questions and Inquiries 3. Addendas 4. Submission of Proposals B. Technical Proposal 1. General Requirements 2. Independence 3. License to Practice in Iowa 4. Firm Qualifications and Experience 5. Partner, Supervisory and Staff Qualifications and Experience 6. Similar Engagements with Other Government Entities 7. Specific Audit Approach 8. Identification of Anticipated Potential Audit Problems C. Sealed Dollar Cost Bid 1. Total All-Inclusive Maximum Price 2. Rates by Partner, Specialist, Supervisory and Staff Level Times Hours Anticipated for Each. 3. Out-of-pocket Expenses Included in the Total All-inclusive Maximum Price and Reimbursement Rates. 4. Rates for Additional Professional Services 5. Manner of Payment VII. EV ALUA nON PROCEDURES A. Audit Committee B. Review of Proposals C. Evaluation Criteria 1. Mandatory Elements 2. Technical Qualifications 3. Price D. Oral Presentations E. Final Selection F. Right to Reject Proposals APPENDICES A. City Fund Structure B. Proposer Guarantee C. Proposer Warranties D. I. Format for Proposal for Audit Services All-Inclusive Maximum Price Summary 2. Format for Schedule of Professional Fees and Expenses to Support the Total All- Inclusive Maximum Price E. Anticipated Audit Service Agreement Reports Included: Comprehensive Annual Financial Report for FY 2005 Parking Facilities Financial Statements for FY 2005 Dubuque Metropolitan Area Solid Waste Agency (DMASW A) Financial Statements for FY 2005 Dubuque Regional Airport Passenger Facility Charges Audit for FY 2005 City of Dubuque REQUEST FOR PROPOSAL (RFP) I. INTRODUCTION A. General Information The City of Dubuque is requesting proposals from qualified firms of certified public accountants to audit its financial statements for five fiscal years ending June 30, 2006 through June 30, 2010. The annual audits are to be performed in accordance with generally accepted auditing standards, Chapter 11 of the Code of Iowa, and any other provisions applicable to audits of local government contained in the Code of Iowa, the standards set forth for financial audits in the General Accounting Office's (GAO) Government Auditina Standards, the Single Audit Act Amendments of 1996 and Office of Management and Budget (OMB) Circular A-133 Audits of States. Local Governments and Non-Profit Oraanizations. There is no expressed or implied obligation for the City of Dubuque to reimburse responding firms for any expenses incurred in preparing proposals or potential interviews in response to this request. Eight copies of the proposal must be received by Ken TeKippe, Finance Director, at City Hall, 50 West 13th Street, Dubuque, Iowa 52001 by 5:00 p.m. on March 6,2006. The City of Dubuque reserves the right to reject any or all proposals submitted. The proposals submitted will be evaluated by an eight member Audit Committee of City Employees. During the evaluation process, the Audit Committee and the City of Dubuque reserve the right, where it may serve the City of Dubuque's best interest, to request additional information or clarification from proposers, or to allow corrections of errors/omissions. At the discretion of the Audit Committee and City of Dubuque, firms submitting proposals may be requested to make oral presentations as part of the evaluation process. The City of Dubuque 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 Dubuque and the firm selected. It is anticipated the selection of a firm will be completed by early April, 2006. Following the notification of the selected firm it is expected a contract will be executed within three weeks of City Council approval. B. Term of Engagement A five-year contract is anticipated, subject to an annual review and annual availability of an appropriation. C. Subcontracting If subcontracting is anticipated, the name of the proposed subcontracting firm must be clearly identified in the proposal. Following the award of the audit contract, no additional subcontracting will be allowed without the prior written consent of the City of Dubuque. II. NATURE OF SERVICES REQUIRED A. General The City of Dubuque is soliciting the services of qualified firms of certified public accountants to audit its financial statements for the fiscal year ending June 30, 2006, and each of the four (4) subsequent fiscal years. These audits are to be performed in accordance with the provisions contained in this request for proposals. The auditor will also be required to convert the City's accounting information from a cash basis to a modified accrual/accrual basis as needed. The auditor will be required to prepare a Comprehensive Annual Financial Report (CAFR) that conforms to the format prescribed by the Government Finance Officers Association (GFOA) guidelines for obtaining the "Certificate of Achievement for Excellence in Financial Reporting." The CAFR shall be prepared on modified accrual/accrual methods of accounting and shall be completed and delivered to the City Finance Director by November 15th of each year unless another date is agreed to by the City of Dubuque. The audit shall include a separate management letter, if appropriate, which includes recommendations affecting the financial statements, internal control, accounting systems, and legality of actions. The City will be responsible for the Transmittal Letter, Management, Discussion and Analysis (MD&A), Statistical Section (excluding schedules directly related to financial statements prepared by auditors), and cover of the CAFR, as well as the reproduction and binding of the completed report. Separate Financial Statements are required for Parking Facilities (enterprise), Dubuque Metropolitan Area Solid Waste Agency (component unit), and Dubuque Regional Airport Passenger Facility Charges (PFC) audit. Financial reports for the above enterprise funds/component units must be prepared on an accrual basis. The City maintains accounting records for these activities on a cash basis and the audit firm is required to convert the records to accrual. If the City issues additional revenue bonds, a separate report may be required. The separate financial statements must be completed and delivered by September 30th of each fiscal year. Copying, assembling and binding of the separate reports are the responsibility of the auditor. B. Scope of Work to be Performed The City of Dubuque desires the auditor to express an opinion on the fair presentation of its general purpose financial statements in conformity with generally accepted accounting principles. 2 The City of Dubuque also desires the auditor to express an opinion on the fair presentation of its combining and individual fund and account group financial statements and schedules in conformity with generally accepted accounting principles. The auditor is required to audit the schedule of expenditures of federal awards. The auditor is not required to audit the statistical section in the CAFR. C. Auditing Standards To Be Followed To meet the requirements of this RFP, the audit shall be performed in accordance with generally accepting auditing standards as set forth by the American Institute of Certified Public Accountants, Chapter 11 of the Code of Iowa, and any other provisions applicable to audits of local government contained in the Code of Iowa, the standards of financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards (1994 revision), the Single Audit Act Amendments of 1996 and OMB Circular A-133, Audits of State. Local Governments and Non-Profit Organizations. D. Reports to be Issued Following the completion of the audit of the fiscal year's financial statements, the auditor shall issue: 1. A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles. 2. A report on compliance and on internal control over financial reporting in accordance with Government Auditing Standards. 3. A report on compliance with requirements applicable to its major programs and internal control over compliance in accordance with OMB Circular A-133. The auditor shall identify reportable conditions that are also material weaknesses in the CAFR. In a letter to management the auditor shall communicate 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 would adversely affect the organization's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. 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 Michael C. Van Milligen, City Manager. . E. Special Considerations 1. The City of Dubuque will send its CAFR to the Government Finance Officers Association for review in their "Certificate of Achievement for Excellence in Financial Reporting" program. The auditor will be required to be familiar with the requirements of the program and provide special assistance when needed. 2. The City of Dubuque anticipates it will prepare one or more official statements annually in connection with the sale of debt securities (normally General Obligation Bonds) which will contain the general purpose financial statements 3 and the auditor's report thereon. The auditor shall be required, if requested by the financial advisor and/or the underwriter, to issue a "consent and citation of expertise" as the auditor and any necessary "comfort letters." 3. The City of Dubuque has determined that the United States Department of Interior will function as the cognizant agency in accordance with the provisions of the Single Audit Act Amendments of 1996 and U.S. Office of Management and Budget (OMB) Circular A-133, Audits of State. Local Governments. and Non- Profit OrQanizations. 4. The schedule of federal financial assistance and related auditor's report, as well as the reports on the internal controls and compliance, are to be issued as part of the CAFR. The City of Dubuque will require the auditor's assistance to comply with any new accounting principles that become effective during the period covered by this request for proposal. 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 five (5) years, unless the firm is notified in writing by the City of Dubuque 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 Dubuque, U.S. Department of Interior, Auditor of the State of Iowa, parties designated by the federal or state governments or by the City of Dubuque as part of an audit quality review process, auditors of entities of which the City of Dubuque is a subrecipient 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. General Description of Government/Contact Person A list of City offered services may be found in the Transmittal Letter of the ComprehenSive Annual Financial Report (available on the City website www.citvofdubuQue.ora). Lists of elected and appointed officials and department directors, and the City's organizational chart, are provided in the Introductory Section of the CAFR. Further information on the City is provided in the CAFR Management's Discussion and Analysis, and Statistical Sections. The auditor's principal contact with the Gity of Dubuque will be Ken TeKippe, Finance Director, (563) 589-4133, ktekippe@citvofdubuQue.orQ. 4 B. Fund Structure The City's current fund structure is provided in Appendix A. C. Budgetary Basis of Accounting The City of Dubuque prepares its budgets on a cash basis. Budgets are prepared for all of the City's governmental and proprietary funds. D. Federal and State Financial Assistance The City of Dubuque receives federal financial assistance from several federal programs; a listing of the programs and the Catalog of Federal Domestic Assistance numbers is included on pages 102-104 of the FY 2005 CAFR. The City does not anticipate major changes in the amount of Federal or State financial assistance over the five year period covered by the contract. E. Pension Plans The City of Dubuque participates in the Municipal Fire & Police Retirement System of Iowa (MFPRSI) and the Iowa Public Employees Retirement System (IPERS) pension plans. Both plans are defined benefit, cost-sharing, multiple-employer plans administered by state agencies. F. Component Unit The City of Dubuque is defined, for financial reporting purposes, in conformity with the Governmental Accounting Standards Board's Codification of Governmental Accountino and Financial Reportino Standards, Section 2100. Using these criteria, the Dubuque Metropolitan Area Solid Waste Agency (DMASWA) is a component unit for inclusion in the City of Dubuque's financial statements. The City provides for the operation and management of the DMASWA sanitary landfill. This component unit is to be audited as part of the audit of the City of Dubuque's financial statements and the cost included in base audit cost. G. Joint Ventures The City of Dubuque does not currently participate in joint ventures with other governments. H. Magnitude of Finance Operations The financial activities are performed by the City of Dubuque finance department. The principal functions performed and the number of employees assigned to each are as follows: Function Number of Emplovees AccountingfT reasury /Pu rchasing/Payroll Utility Billing/Parking Ticket Collection Meter Service 6 FT, 2 PT 7 FT, 1 PT 1 FT, 1 PT 5 I. Computer Systems Hardware The City of Dubuque currently uses IBM RS 6000 server for all payroll, general ledger and several sub-ledger systems including utility billing. The landfill and parking tickets accounts receivable systems are operated on stand-alone PCs. Software The City of Dubuque utilizes an integrated financial software system developed by Sungard Pentamation Inc. J. Internal Audit Function The City of Dubuque does not maintain an internal audit function. K. Availability of Prior Audit Reports and Working Papers Interested proposers who wish to review prior years' audit reports and management letters should contact Ken TeKippe, Finance Director, at (563) 589-4133. The City of Dubuque will use its best efforts to make prior audit reports and supporting working papers available to proposers to aid their response to this RFP. IV. TIME REQUIREMENTS A. Proposal Calendar The following is a list of key dates pertinent to the submission of proposals: Solicitation for proposals issued Due date for notification of interest Due date for submitting proposals February 7, 2006 February 17, 2006 (5:00 p.m.) March 6, 2006 (5:00 p.m.) B. Anticipated Notification and Contract Dates Firms notified of selection Contract date April 4, 2006 April 25, 2006 C. Schedule for the Fiscal Year 2006 Audit 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 Dubuque, by June 1, 2006, a detailed audit plan and a list of all schedules and information to be provided by the City of Dubuque. 6 2. Fieldwork The auditor shall complete all fieldwork by October 31, 2006. Assistance on the HUD Section 8 Annual Settlement Statement will be required in late July and early August, since this report is due on August 15. 3. Draft Reports The auditor shall prepare draft financial statements, notes and all required supplementary schedules and statistical data. The auditor shall have drafts of the audit reports and recommendations to management available for review by the Finance Department by November 15,2006. 4. Final Reports The Finance Department will complete a review of the draft report as expeditiously as possible. It is not expected that this process should exceed one week. During that period, the auditor should be available for any meetings that may be necessary to discuss the audit reports. Once all issues for discussion are resolved, the final signed report, arranged in a format suitable for reproduction, shall be delivered to Ken TeKippe, Finance Director, by November 30, 2006. 5. Conferences and progress reports. Informal conferences and progress reports may be requested occasionally throughout the audit process. The auditor must be prepared to provide information at mutually agreeable meeting times. A presentation of the CAFR subsequent to its completion may be requested. Attendance by the auditor at the City Council meeting when the CAFR and management letter are approved is required. (Similar time schedules will be developed for audits of future fiscal years if the City of Dubuque exercises its option for additional audits). V. ASSISTANCE TO BE PROVIDED TO THE AUDITOR AND 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. In addition, clerical support will be made available to the audit firm for the preparation of routine letters and memoranda. B. Electronic Data Processing (EDI-') Assistance EDP personnel will be available to provide systems documentation and explanations. The auditor will be provided access to the City of Dubuque's computer hardware and financial system software for inquiries and reports. 7 C. Work Area, Telephones, Photocopying and FAX Machine The City of Dubuque will provide the auditor adequate workspace and access to necessary telephone lines, copy machine and a FAX machine. D. Report Preparation Converting the City's cash-basis financial statements to GAAP basis is the responsibility of the audit firm. CAFR preparation, editing and a final signed report, arranged in a format suitable for reproduction, shall be the responsibility of the auditor. (City responsible for printing and binding CAFR.) Special reports preparation, editing and printing shall be the responsibility of the auditor. VI. PROPOSAL REQUIREMENTS A. General Requirements 1. Submission of Notification of Interest Firms interested in submitting a proposal must submit by February 17, 2006 (5:00 p.m.) their "Notification of Interest" in the prescribed format. Failure to return a "Notification of Interest" will disqualify firms from submitting a proposal. 2. Inquiries Inquiries concerning the RFP must be made to: Ken TeKippe, Finance Director City of Dubuque 50 West 13th Street Dubuque, Iowa 52001-4864 Office (563) 589-4133 Fax (563) 589-0890 E-mail: ktekiDDe@citvofdubuaue.ora 3. Submission of Proposals The following material is required to be received March 6, 2006 (5:00 p.m.), for a proposing firm to be considered: a. A master copy (so marked) of a Technical Proposal and seven (7) copies to include the following: 8 i. Title Paae Title page showing the RFP 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 best qualified to perform the engagement and a statement that the proposal is a firm and irrevocable offer for 90 days. iv. Detailed Proposal The detailed proposal should follow the order set forth in Section VI. B. of this RFP. v. Appendices Executed copies of "Proposer Guarantee" and "Proposer Warranties," attached to this request for proposal (Appendix B and Appendix C). b. The proposer shall submit an original and three (3) copies of a dollar cost bid in a separate sealed envelope marked as follows: SEALED DOLLAR COST BID PROPOSAL FOR City of Dubuque FOR PROFESSIONAL AUDITING SERVICES COMMENCING JUNE 30, 2006 c. Proposers should provide the completed proposal consisting of the two separate envelopes to the following address: Ken TeKippe, Finance Director City of Dubuque 50 West 13th Street Dubuque, IA 52001-4864 B. Technical Proposal 1. General Requirements 9 The purpose of the Technical Proposal is to demonstrate the qualifications, competence and capacity of the firms seeking to undertake an independent audit of the City of Dubuque in conformity with the requirements of this RFP. As such, the substance of proposals will carry more weight than their form or manner of presentation. The Technical Proposal should demonstrate the qualifications of the firm and of the particular staff to be assigned to this engagement. It should also specify an audit approach that will meet the RFP requirements. THERE SHOULD BE NO COSTS INCLUDED IN THE TECHNICAL PROPOSAL DOCUMENT. The Technical Proposal should address all the points outlined in the RFP (excluding any cost information which should only be included in the sealed dollar cost bid). The proposal should be prepared simply and economically, providing a straightforward, concise description of the proposer's capabilities to satisfy the requirements of the RFP. While additional data may be presented, the following subjects, items Nos. 2 through 10, must be included. They represent the criteria against which the proposal will be evaluated. 2. Independence The firm should provide an affirmative statement that it is independent of the City of Dubuque as defined by generally accepted auditing standards/the U.S. General Accounting Office's Government AuditinQ Standards (1994 revision). The firm also should provide an affirmative statement that it is independent of all of the component units of the City of Dubuque as defined by those same standards. The firm should also list and describe the firm's (or proposed subcontractors) professional relationships involving the City of Dubuque (or any of its component units or oversight units) for the past five (5) years, together with a statement explaining why such relationships do not constitute a conflict of interest relative to performing the proposed audit. In addition, the firm shall provide the City of Dubuque written notice of any professional relationships entered into during the period of this agreement. 3. License to Practice in Iowa An affirmative statement should be included that the firm and all assigned key professional staff are properly registeredllicensed to practice in the state of Iowa. 4. Firm Qualifications and Experience The proposer should state the size of the firm, the size of the firm's governmental audit staff, and the location of the office from which the work on this engagement is to be performed. Also, state the number and nature of the professional staff to be employed in this engagement on a full-time basis and a part-time basis. 10 If the proposer is a joint venture or consortium, the qualifications of each firm comprising the joint venture or consortium should be separately identified and the firm that is to serve as the principal auditor should be noted, if applicable. 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 federal or state regulatory bodies or professional organizations. Highlight activities in the governmental sector, including Special Designations, consulting, membership in government organizations and sponsorship of governmental CPEs. 5. Partner, Supervisory and Staff Qualifications and Experience 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 Iowa. Provide information on the government auditing experience of each person, including information on relevant continuing professional education for the past three (3) years, listing courses completed and membership in professional organizations relevant to the performance of this audit. Provide as much information as possible regarding the number, qualifications, experience and training, including relevant continuing professional education, of the specific staff to be assigned to this engagement. Indicate how the quality of staff over the term of the agreement will be assured. 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 of Dubuque. However, in either case, the City of Dubuque retains the right to approve or reject replacements. Consultants and firm specialists mentioned in response to this RFP can only be changed with the express prior written permission of the City of Dubuque, which retains the right to approve or reject replacements. Other audit personnel may be changed at the discretion of the proposer provided that replacements have substantially the same or better qualifications or experience. 6. Similar Engagements With Other Government Entities 11 For the firm's office that will be assigned responsibility for the audit, list the most significant engagements (maximum - 5) performed in the last three years that are similar to the engagement described in this RFP. These engagements should be ranked on the basis of total staff hours. Indicate the scope of work, date, engagement partners, total hours, and the name and telephone number of the principal client contact. 7. Specific Audit Approach The proposal should set forth a work plan, including an explanation of the audit methodology to be followed, to perform the services required in Section 11 of this RFP. In developing the work plan, reference should be made to such sources of information as City of Dubuque's budget and related materials, the organizational chart, manuals and programs, and financial and other management information systems. Proposers will be required to provide the following information on their audit approach: a. Proposed segmentation of the engagement b. Level of staff and number of hours to be assigned to each proposed segment of the engagement c. Sample size and the extent to which statistical sampling is to be used in the engagement d. Extent of use of EDP 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 of Dubuque's internal control structure g. Approach to be taken in determining laws and regulations that will be subject to audit 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 of Dubuque. C. Sealed Dollar Cost Bid 1. Total All-Inclusive Maximum Price 12 The sealed dollar cost bid should contain all pricing information relative to performing the audit engagement as described in this RFP. The total all-inclusive maximum price to be bid is to contain all direct and indirect costs including all out-of-pocket expenses. The City of Dubuque will not be responsible for expenses incurred in preparing and submitting the technical proposal or the sealed dollar cost bid. Such costs should not be included in the proposal. The first page of the sealed dollar cost bid should include the following information (See Appendix D, page 1): a. Name of Firm b. Certification that the person signing the proposal is entitled to represent the firm, empowered to submit the bid, and authorized to sign a contract with the City of Dubuque. c. A summary of all-inclusive price for each individual year of the engagement. d. A total all-inclusive maximum price for the five (5) year engagement. 2. Rates by Partner, Specialist, Supervisory and Staff Level Times Hours Anticipated for Each. Pages two (2) through six (6) of the sealed dollar cost bid should include a schedule of professional fees and expenses that supports the total all-inclusive price for the 2006 fiscal year of the engagement and each of the four (4) subsequent fiscal years, presented in a format similar to Appendix D, page 2. For Section liE 5., disclose the cost of services to be provided. 3. Out-of-pocket Expenses Included in the Total All-inclusive Maximum Price and Reimbursement Rates. Out-of-pocket expenses (Le. travel, lodging, etc.) for firm personnel will be reimbursed. All estimated out-of-pocket expenses to be reimbursed should be presented in the sealed dollar cost bid in a format similar to Appendix D, page 2. All expense reimbursements will be charged against the total all-inclusive maximum price submitted by the firm. 4. Rates for Additional Professional Services If it should become necessary for the City of Dubuque 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 resuit 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 City of Dubuque and the firm. Any such additional work agreed to between City of Dubuque and the firm shall be performed at the same rates set forth in the schedule of fees and expenses included in the sealed dollar cost bid. 13 5. Manner of Payment Progress payments will be made on the basis of requests of the audit firm. Interim billings shall cover periods of not less than a calendar month. The City will not pay more than ninety percent (90%) of a single year's fees before the delivery of the final auditors opinion and reports requested by the Request for Proposal. VII. EVALUATION PROCEDURES A. Audit Committee Proposals submitted will be evaluated by an eight-member Audit Committee of City employees. B. Review of Proposals The Audit Committee will use a point formula during the review process to score proposals. Each member of the Audit Committee will first score each technical proposal by each of the criteria described in Section VII.C. below. The Audit Committee will determine a composite technical score for each firm, based on a combination of the individual scores. At this point, firms with an unacceptably low technical score will be eliminated from further consideration. After the composite technical score for each firm has been established, the sealed dollar cost bid will be opened and additional points will be added to the technical score based on the price bid. The maximum score for price will be assigned to the firm offering the lowest total all-inclusive maximum price. Appropriate fractional scores will be assigned to other proposers. The City of Dubuque reserves the right to retain all proposals submitted and use any idea in a proposal regardless of whether that proposal is selected. C. 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 which will be considered during the evaluation process. 1. Mandatory Elements a. The audit firm is independent and licensed to practice in the state of Iowa. b. The firm has no conflict of interest with regard to any other work performed by the firm for the City of Dubuque. 14 c. The firm adheres to the instructions in this RFP on preparing and submitting the proposal. d. The firm submits a copy of its last external quality control review report and the firm has a record of quality audit work. 2. Technical Qualiifications: (Maximum Points - 75) a. Expertise and Experience 1. The firm's past experience and performance on comparable government engagements 2. 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 3. The firm's experience with federal and state financial assistance programs. b. Audit Approach 1. Adequacy of proposed staffing plan for various segments of the engagement 2. Adequacy of sampling techniques 3. Adequacy of analytical procedures 3. Price: (Maximum Points - 25) D. Oral Presentations During the evaluation process, the Audit Committee may request one or more firms to make oral presentations. Such presentations will provide firms with an opportunity to answer any questions the Audit Committee may have on a firm's proposal. All firms may not be asked to make oral presentations. E. Final Selection The City of Dubuque will select a firm based upon the recommendation of the Audit Committee. The recommendation of the committee will be subject to approval of the City Manager and City Council. It is anticipated that a firm will be selected by April 4, 2006. Following notification of the firm selected, it is expected a contract will be executed between both parties by April 25, 2006. 15 F. 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 Dubuque and the firm selected. The City of Dubuque reserves the right without prejudice to reject any or all proposals. Thank you for your firm's interest in providing audit services to the City of Dubuque. 16 FUND APPENDIX A CITY OF DUBUQUE FUNDS AND FUND GROUPS FUND DESCRIPTION FUND FUND DESCRIPTION GENERAL 100 GENERAL 101 DRA GAMING 102 DRA DISTRIBUTION DEBT SERVICE 400 DEBT SERVICE 440 GO BOND PROCEEDS SPECIAL 200 205 210 212 220 222 230 232 240 241 242 249 250 255 260 262 265 270 271 275 280 290 295 CAPITAL 300 350 360 370 380 . 390 391 395 TORT L1ABILllY TRUST & AGENCY TIF-METRIXlNORDSTROM TIF-QUEBECOR TIF ADV DATA COMM TECH PK TIF - CARTEGRAPH TIF - E. 7TH STREET TIF - KERPER BLVD TIF-DOWNTOWN TIF-DOWNTOWN LOAN POOL TIF-ICE HARBOR TIF-SWlSS VALLEY ECON DEV ROAD USE TAX SPECIAL ASSESSMENT COMMUNllY DEVELOPMENT COMM DEV DISCRETION UDAG REPAYMENTS STATE RENTAL REHAB STATE HOME PROGRAM LEAD PAINT GRANT SECTION 8 HOUSING CABLE TV EXPEND LIBRARY GIFTS TRST PERMENANT 500 LYONS PEONY TRUST 550 LIBRARY GIFTS TRUST ENTERPRISE 600 TRANSIT 610 SEWAGE UTI LIlY OPERATION 620 STORM WATER UTI LIlY O&M 630 PARKING OPERATIONS 640 WATER UTI LIlY OPERATION 670 REFUSE COLLECTION 700 AMERICA'S RIVER PROJECT 710 SANITARY SEWER CONST 720 STORM WATER CONSTRUCTION 730 PARKING FACILllY CONST 740 WATER CONSTRUCTION INTERNAL SERVICE 800 ENGINEERING SERVICE 810 GARAGE SERVICE 820 GENERAL SERVICE 830 STORES/PRINTING 860 HEALTH INS RESERVE 880 WORKERS' COMP RESERVE STREET CONSTRUCTION SALES TAX CONSTRUCTION GENERAL CONSTRUCTION GOLF CONSTRUCTION DOG TRACK CONSTRUCTION AIRPORT CONSTRUCTION PASSENGER FACILllY PARKING-DOCK FACIL DEPR AGENCY 910 DOG TRACK DEPRECIATION COMPONET UNIT 940 DMASWA-GENERAL 941 DMASWA-DNR PLANNING 17 APPENDIX B PROPOSER GUARANTEE The proposer certifies it can and will provide and make available, as a minimum, all services set forth in Section II, Nature of Services Required. Signature of Official: Name (typed): Title: Firm: Date: 18 APPENDIX C 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. 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 true and accurate. Signature of Official: Name (typed): Title: Firm: Date: 19 APPENDIX D Page 1 PROPOSAL FOR AUDIT SERVICES ALL-INCLUSIVE MAXIMUM PRICE SUMMARY FOR THE CITY OF DUBUQUE Proposal for Audit Services: Price of First Year of Engagement (FY06) $ Price of Second Year of Engagement (FY07) $ Price of Third Year of Engagement (FY08) $ Price of Forth Year of Engagement (FY09) $ Price of Fifth Year of Engagement (FY10) $ Total All-Inclusive Maximum Price $ Proposal of Address Authorized Signer Date 20 APPENDIX D Page 2 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE [YEAR] FINANCIAL STATEMENTS FOR THE CITY OF DUBUQUE Employee Classification Hours Hourly Rates Total Partners Managers Supervisory Staff Staff Clerical Other (specify): Subtotal Out-of-Pocket Expenses: Meals and lodging Transportation Other (detail): Adjustment to Maximum Price Total all-inclusive maximum price for FY 2006 audit engagement $ (Schedule Must Be Completed for Each of Five Audit Years) 21 APPENDIX E Page 1 AUDIT SERVICE AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND [CPA FIRM] This Agreement is entered into this _ day of April, 2006, between the City of Dubuque (City) and [CPA Firm]. RECITALS WHEREAS, City desires to obtain the services of [CPA Firm] to perform the annual audit as required by Iowa Code Section 11.6 for the five years ending June 30, 2006; June 30, 2007; June 30, 2008; June 30, 2009; and June 30, 2010; and WHEREAS, [CPA Firm] desires to perform the audit services for City with the terms and conditions set forth in this Agreement; and WHEREAS, this Agreement is in the public interest in fulfilling the requirements of Iowa Code Chapter 11. NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and conditions set forth in this Agreement, the parties agree as follows: 1. Services: [CPA Firm] shall provide audit and financial reporting services to City as specified in attached Proposal dated , 2006 and the attached Request for Proposal for Professional Auditing Services dated February 7,2006. 2. Reauirements: [CPA Firm] agrees to all representations, commitments, and warranties presented in their proposal. Exceptions to any part of the requirements must be clearly identified. The order of precedence shall be: [CPA Firm's] signed Audit Service Agreement, proposal, and the RFP. 3. Insurance: 22 APPENDIX E Page 2 [CPA Firm] shall provide information on current insurance coverage for professional liability (minimum of $1 ,000,000) and any changes during the term of this agreement. 4. Conditions of Pavment: City agrees to pay fees for services as stated in the attached Schedule of Professional Fees and Expenses (see appendix D of RFP). The annual audit shall be paid as earned on a monthly billing cycle. Ten percent of the earned fee may be retained until completion of the audit and financial reports issued. Payment shall be made within 30 days of receipt of invoice. [CPA Firm] agrees to provide an itemized statement of total audit expenses at completion of the audit in the format required by the Auditor of the State of Iowa. 5. Termination of AQreement: City may terminate this Agreement at any time by giving written notice to [CPA Firm] if City determines in its sole judgment that [CPA Firm] fails to perform the covenants or agreements contained herein. City may also cancel the audit services for any specific Fiscal Year if City is advised by the Auditor of the State of the Auditor's intent to conduct the audit. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. CITY [CPA FIRM] By By Name (Print) Name (Print) Title Title Date Date 23 February 7, 2006 Firm Name Address City, State, Zip Dear: The City of Dubuque is soliciting proposals from qualified firms of Certified Public Accountants to audit the City of Dubuque's financial statements for the fiscal year ending June 30, 2006, with the option of auditing the City of Dubuque's financial statements for the four subsequent fiscal years. Audit firms expressing interest will be provided with the City of Dubuque Request For Proposal (RFP) and related financial reports. To be considered for this engagement, your firm must meet the qualifications and satisfy the requirements set forth in the RFP. Please indicate your interest in receiving a copy of the RFP by using the format of the enclosed Notification of Interest and returning to the address listed below no later that February 17, 2006. Ken TeKippe City of Dubuque City Hall 50 West 13th Street Dubuque, Iowa 52001-4864 Questions can be directed to Ken TeKippe in writing, bye-mail (ktekiooe@citvofdubuque.orq), or by calling (563) 589-4133. Contact with other City of Dubuque personnel regarding this RFP may be grounds for elimination from the selection process. Sincerely, Kenneth J. TeKippe Finance Director KT/jg Enclosure [ACCOUNTING FIRM'S LETTERHEAD] Date Ken TeKippe, Finance Director City of Dubuque City Hall 50 West 13th Street Dubuque, Iowa 52001 NOTIFICATION OF INTEREST Dear Mr. TeKippe: Our firm is interested in submitting a proposal to audit the City of Dubuque's financial statements for the fiscal year ending June 30, 2006, with the option of auditing the City of Dubuque's financial statements for the four subsequent fiscal years. Please supply a copy of the Request for Proposal to our firm. [AUDIT FIRM]