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GASB 34 Planning firmMEMORANDUM February 25, 2002 TO: FROM: SUBJECT: The Honorable Mayor and City Council Members Michael C. Van Milligen, City Manager GASB 34 Planning and Implementation Assistance A committee was formed to provide a recommendation for hiring a consultant to provide GASB 34 Planning and Implementation Assistance to the City of Dubuque. The committee consisted of Administrative Services Manager Pauline Joyce, Finance Director Ken TeKippe, Assistant Finance Director Dawn Lang, Information Services Manager Chris Kohlmann, Civil Engineer Mike Feldermann, Street/Sewer Maintenance Supervisor John Klosterman and Water Distribution Supervisor Mike Brekke. Six proposals were received, and after interviewing two firms, the committee recommends that that the firm of Virchow, Krause & Company be retained for GASB 34 planning and implementation assistance. I concur with the recommendation and respectfully request Mayor and City Council approval. MJchael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager Ken TeKippe, Finance Director CITY OF DUBUQUE, IOWA MEMORANDUM TO: FROM: SUBJECT: DATE: Michael Van Milligen, City Manager Ken TeKippe, Finance Director GASB 34 Planning and Implementation Assistance February 28, 2002 A Request for Proposal (RFP) was recently developed relative to providing GASB 34 Planning and Implementation Assistance to the City of Dubuque. The RFP was distributed to eight firms. Six firms submitted quality proposals in response to the invitation. The firms that submitted proposals included: American Appraisal Associates, Inc., Carter & Burgess, Eide Bailly LLP, MAXIMUS, Inc., RSM McGladrey, Inc., and Virchow, Krause & Co. The Valuation Advisory Group, inc. and CarteGraph Systems '' did not respond with a proposal. A committee was established to review the proposals, interview selected firms and provide a recommendation. The committee included Administrative Services Manager Pauline Joyce, Assistant Finance Director Dawn Lang, Information Services Manager Chris Kohlmann, Civil Engineer Mike Felderman, and myself. After reviewing the proposals, two firms were invited to Dubuque for interviews. The firms interviewed included MAXIMUS, Inc. and Virchow, Krause & Company. Both firms would be able to adequately serve as our GASB 34 advisor based on the interviews. John Klosterman, Street/Sewer Maintenance Supervisor and Mike Brekke, Water Distribution Supervisor were added to the interview team. The interviews were concluded on Tuesday, February 19. It was the consensus of the committee that Virchow, Krause & Company be retained for GASB 34 planning and implementation assistance. Phone reference checks were conducted on the firm. Factors that assisted in our selection included: * Size of firm with considerable staff experience assigned to team · Experience working with Government Accounting Standards Board (GASB) · Proximity to Dubuque (Madison office to provide service) · Quality of presentation and questions asked during the interview and clarification letter received subsequent to interview Perceived ease of working with primary individuals assigned to City · Number of their clients have already implemented GASB 34 Extensive experience in capital asset management · Proposal in line with RFP Copies of the RFP and Virchow, Krause & Company's proposal, their executive summary distributed at the interview, and their subsequent clarification letter are enclosed. It would be beneficial to notify the firm selected of the decision soon since work needs to begin on the project. If there are any questions on the process or recommendation, the committee and/or I would be available to review. Your approval to proceed would be appreciated. Thank you. KT/gm Enclosures CITY Of DUBUQUE, IOWA REQUEST FOR PROPOSAL January 11, 2002 GASB 34 PLANNING AND IMPLEMENTATION ASSISTANCE GENERAL The City of Dubuque is seeking proposals to provide GASB 34 planning and implementation assistance. Qualified firms are invited to submit a proposal in the format outlined in this Request for Proposal (RFP). The City of Dubuque is required to implement GASB 34 for the year ending June 30, 2003. THE CITY The City of Dubuque with a population of approximately 60,000 comprises an area of approximately 27 square miles in northeastern Iowa. The City's annual operating budget is approximately $65 million with the City providing a full range of services. Additional information on the government can be found in the enclosed Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2001 (letter of transmittal, pages 4-14, organizational chart, page 15 and note 1, page 29). BASIS OF AWARD A review committee of City staff will evaluate proposals based upon written responses to the RFP, the respondent's qualifications in serving governmental clients, past GASB 34 planning and implementation assistance, number of GASB 34 financial statements issued (if applicable) and proposed fees. Strategic planning is the immediate City need. The City may schedule interviews with prospective firms. The City may reject any or all proposals if, in the opinion of the City, they do not meet the City's requirements. SUBMISSION DEADLINE Five (5) copies of the written proposals must be received no later than 5:00 p.m., Friday, February 1,2002. The proposals should be addressed to: Mr. Ken TeKippe, Finance Director City of Dubuque 50 West 13th Street Dubuque, Iowa 52001-4864 The City of Dubuque anticipates award of the contract to the successful firm for the project by February 22, 2002. Questions concerning this RFP may be addressed to Ken TeKippe at 563-589-4133. City of Dubuque RFP for GASB 34 Planning and Implementation Assistance January 11, 2002 Description of Firm Please provide a description of your firm including, at a minimum the following: When the firm was established Location of the firm's main office and other offices and number of employees Name of project manager with qualifications and experience, as well as names, qualifications and experience of key personnel who would be associated with the project Statement of Qualifications Please provide a statement of your firm's qualifications, at a minimum the following: Experience in similar projects - minimum three references Firm's ability to integrate project into present workload Anticipated Timeline for Project February 2002 through June 2003 for scope of services detailed in RFP, with continued limited involvement through September 2003. Provide preliminary timeline based on services listed below. Project Team City of Dubuque employees in Finance, Information Services, and Public Works/Engineering Departments will work with representatives of firm retained. City staff will provide sufficient time to assist firm on the project. Key individuals will be: Ken TeKippe, Finance Director; Dawn Lang, Assistant Finance Director; Chris Kohlmann, Information Services Manager; Mike Felderman, Civil Engineer; and other Public Works/Engineering employees as deemed appropriate. Scope of Services Assist City with developing a strategic plan for meeting the variety of policy decisions and timelines necessary to comply with GASB 34 Meet with City project team as required Outline options and provide a written plan of key action steps Provide general oversight of the implementation process Meet with City audit firm to confirm the City's plan meets their needs Update the processes used to gather data and report on all fixed assets reportable under GASB 34 in the general fixed asset account group to include current depreciation expense as well as accumulated depreciation on those assets as of the beginning of the implementation year, June 30, 2002 and forward Work with the City to develop processes to be followed to accumulate necessary information for street infrastructure, which would include both streets and curb and gutter Work with the City to develop processes to be followed to accumulate necessary information for other infrastructure assets, including storm sewers, sidewalks, bridges, street lights, and other relevant categories. Meet with City engineers on the data required to develop infrastructure information and a determination if the current data sources (i.e. GIS) are adequate. Assist in developing methodology to assign useful lives, costs, and depreciation computations on all infrastructure assets reportable under GASB 34 Assist in determining if additional or alternative fixed asset accounting software is required by City to implement GASB 34 Assist in reviewing the potential need/desire to utilize an appraisal or valuation firm for aid in establishing historic cost Assist in evaluating potential need for utilizing an asset management company to create an accurate data base (assume 20 hours) INSURANCE Firm selected shall adhere to insurance requirements for professional services as detailed by the insurance schedule FEES Proposed fees (range acceptable) should be detailed by major segments of services OTHER The firm selected may be retained at a later date to provide additional assistance in areas such as (do not include in proposed fees at this time): > Provide advice and/or format for management discussion and analysis section of the new financial statement format > Assist in designing a system or process needed to convert government fund financial statements to the full accrual basis of accounting > Design and develop procedures and forms necessary for annual updates to the infrastructure asset information. > Make recommendations on how the current GIS could be integrated for long-term asset management. INSURANCE SCHEDULE C INSURANCE REQUIREMENTS FOR PROFESSIONAL SERVICES All policies of insurance required hereunder shall be with an insurer authorized to do business in Iowa. All insurers shall have a rating orA or better in the current A.M; Best Rating Guide. All policies of insurance required hereunder shall be endorsed to provide a thirty (30) day advanced notice to the City of Dubuque of any cancellation of the policy prior to its expiration date. This endorsement supersedes the standard cancellation statement on the Certificate of Insurance. shall furnish Certificates of Insurance to the City of Dubuque, Iowa for the coverage required in Paragraph 7. Such certificates shall include copies of the endorsements set forth in Paragraphs 2 and 5 to evidence inclusion in the policy, shall also be required to provide Certificates of Insurance of all subcontractors, and all sub-subcontractors who perform work or services pursuant to the provisions of this contract. Said certificates shall meet the same insurance requirements as are required of Each Certificate of Insurance shall be submitted to the contracting department of the City of Dubuque, Iowa prior to commencement of work/service, (The contracting department shall submit the certificates to the Finance Director.) All policies of insurance required in Paragraph 7 shall include the City of Dubuque, Iowa under the attached Additional Insured Endorsement (CG2026) and the attached Governmental immunities Endorsement. Failure to provide evidence of minimum coverage shall not be deemed a waiver of these requirements by the City of Dubuque. Failure to obtain or maintain the insurance required herein shall be considered a material breach of this agreement. , subcontractors, and all sub-subcontractors shall be required to carry the following minimum insurance coverages or greater if required by law or other legal agreement: PROFESSIONAL LIABILITY: $1,000,000 COMMERCIAL GENERAL LIABILITY: General Aggregate Limit Products-Completed Operation Aggregate Limit Personal and Advertising Injury Limit Each Occurrence Limit Fire Damage Limit (any one occurrence) Medical Payments $ 2,000,000 $1,000,000 $1,000,000 $1,000,000 $ 50,000 $ 5,000 INSURANCE SCHEDULE C INSURANCE REQUIREMENTS FOR PROFESSIONAL SERVICES All policies of insurance required hereunder shall be with an insurer authorized to do business in Iowa. All insurers shall have a rating of A or better in the current A.M. Best Rating Guide. All policies of insurance required hereunder shall be endorsed to provide a thirty (30) day advanced notice to the City of Dubuque of any cancellation of the policy prior to its expiration date. This endorsement supersedes the standard cancellation statement on the Certificate of Insurance. shall furnish Certificates of Insurance to the City of Dubuque, Iowa for the coverage required in Paragraph 7. Such certificates shall include copies of the endorsements set forth in Paragraphs 2 and 5 to evidence inclusion in the policy, shall also be required to provide Certificates of Insurance of all subcontractors, and all sub-subcontractors who perform work or services pursuant to the provisions of this contract. Said certificates shall meet the same insurance requirements as are required of Each Certificate of Insurance shall be submitted to the contracting department of the City of Dubuque, Iowa prior to commencement of work/service. (The contracting department shall submit the certificates to the Finance Director.) All policies of insurance required in Paragraph 7 shall include the City of Dubuque, Iowa under the attached Additional Insured Endorsement (CG2026) and the attached Governmental Immunities Endorsement. Failure to provide evidence of minimum coverage shall not be deemed a waiver of these requirements by the City of Dubuque. Failure to obtain or maintain the insurance required herein shall be considered a material breach of this agreement. ., subcontractors, and all sub-subcontractors shall be required to carry the following minimum insurance coverages or greater if required by law or other legal agreement: PROFESSIONAL LIABILITY: $1,000,000 COMMERCIAL GENERAL LIABILITY: General Aggregate Limit Products-Completed Operation Aggregate Limit Personal and Advertising Injury Limit Each Occurrence Limit Fire Damage Limit (any one occurrence) Medical Payments $ 2,000,000 $1,000,000 $1,000,000 $1,000,000 $ 50,000 $ 5,000 Commercial general liability shall be written on an occurrence form, not a claims made form. Coverage to include premises-operations-products-completed operations, independent contractors coverage, contractual liability, broad form property damage, and personal injury. UMBRELLA OR EXCESS LIABILITY: To include professional liability. $1,000,000 PO~JCY N~M~E~ COMMERCIAL GF-NERAL LiA~I~T~ TM~$ENOOE$£M£NT CHANGES THE ~OMCY. ~£~SE ~EAO IT CAE£~JLLY. ADD ONAL NSUEED - OE GNATED PERSON OE OEGANIZA ON This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART. SCHEDULE Name of Person er Organiz~'~on: The Cl~y of Dubuque, includin~ all its electe~ an~ appointed officials, all. los em~loTees and volunteers, all its boards, co~ssions anti/or auChorigles an~ Chair board members, e=ploTees, and volunteers. '.I (Il' no ent~7 appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement.) WHO IS AN INSURED (Section tl) is amended to include as an insured the person or organization shown in the Schedute as an insured but only with respect to liability arising out of your operations or premises owned by or rented to you. CG 20 21~ 11 8~ CITY OF DUBUQUE, IOWA GOVERNMENTAL IMMUNITIES ENDORSEMENT Nonwaiver of Governmental Immunity. The insurance carder expressly agrees and states that the purchase of this policy and the including of the City of Dubuque, Iowa as an Additional Insured does not waive any of the defenses of governmental immunity available to the City of Dubuque, Iowa under Code of Iowa Section 670.4 as it is now exists and as it may be amended form time to time. ~ The insurance carrier further agrees that this policy of insurance shall cover only those claims not subject to the defense of governmental immunity under the Code of Iowa Section 670.4 as it now exists and as it may be amended from time to time. Those claims not subject to Code of Iowa Section 670.4 shall be covered by the terms and conditions of this insurance policy. Assertion of Government Immunity.. The City of Dubuque, Iowa shall be responsible for asserting any defense of governmental immunity, and may do so at any time and shall do so upon the timely written request of the insurance carrier. Non-Denial of Coverage. The insurance carrier shall not deny coverage under this policy and the insurance carrier shall not deny any of the rights and benefits accruing to the City of Dubuque, Iowa under this policy for reasons of governmental immunity unless and until a court of competent jurisdiction has ruled in favor of the defense(s) of governmental immunity asserted by the City of Dubuque, Iowa. No Other Change in Policy. The above preservation of governmental immunities shall not otherwise change or alter the coverage available under the policy. Proposal for GASB 34 Strategic Planning Services City of Dubuque Virchow~ Krause ~tcompany Virchow, Krause & Company, LLP Ten Terrace Court P.O. Box 7398 Madison, Wisconsin 53707-7398 800.362.7301 Email: mlake@virchowkrause.com Internet: virchowkrause.com Michael D. Lake, CPA, Partner Proposal for GASB 34 Strategic Planning Services City of Dubuque V~rchowKrause ~c"o~panv Virchow, Krause & Company, LLP Ten Terrace Court P.O. Box 7398 Madison, Wisconsin 53707-7398 800.362.7301 Emaih mlake@virchowkrause.com Internet: virchowkrause.com Michael D. Lake, CPA, Partner January 30,2002 Table of Contents Transmittal Letter 1. Description of Firm 2. Project Team 3. Qualifications 4. References 5. Scope of Services 6. Project Timeline 7. Insurance 8. Project Investment 1 3 4 10 12 18 19 19 Appendix A. Resumes 20 January 29, 2002 V rchowKrause company Mr. Ken TeKippe, Finance Director City of Dubuque 50 West 13th Street Dubuque, IA 52001-4864 Dear Mr. TeKippe: We are pleased to have this opportunity to submit a proposal to provide GASB 34 planning and implementation assistance to the City of Dubuque. Our proposal is based on the Request for Proposal, our meeting with you and our prior experience in providing these services to other communities. GASB 34 has been called the largest change ever to take place in governmental accounting and reporting standards. At Virchow, Krause & Company, LLP, we have been actively involved with GASB 34 since its inception and have dedicated tremendous resources to helping our clients understand and implement this significant reporting change. Our efforts to date include: · Forming a task force prior to the release of GASB 34 to determine how to implement the statement in the most efficient manner. · Designing solutions to facilitate GASB 34 infrastructure reporting. · Planning and implementing GASB 34 for four clients in conjunction with their December 31, 2000 financial audits. · Providing planning and implementation assistance to cities including a large project with Saint Paul, Minnesota. Our extensive experience with GASB 34 uniquely positions Virchow, Krause & Company to help the City navigate the challenges associated with GASB 34, as well as to realize the strategic management benefits associated with improved financial information. As you evaluate our proposal, there are several important factors to consider which distinguish Virchow, Krause and Company, LLP from other firms: Commitment. Virchow, Krause & Company, LLP has a long-standing tradition and solid reputation for providing high quality consulting and accounting services to the public sector. To illustrate that commitment, our Public Sector Practice Group consists of over 100 professionals devoted entirely to serving public sector clients. Virchow, Krause & Company, LLP · Certified Public Accountants & Consultants Mr. Ken TeKippe, Finance Director City of Dubuque January 29, 2002 Page 2 Experience. We understand the needs and issues that local governments face. This comes from our continuing relationship with over 200 municipalities and 260 public utilities. We have performed the variety of services included in this proposal for many of our clients. This experience will allow us to bring insights to this engagement that will assist the City of Dubuque in achievin9 a GASI3 Statement 34 implementation that meets your strategic needs. Effectiveness. Our experience allows us to serve you in a cost effective and timely fashion. We are committed to completing this project in an efficient manner, so you will have the information needed to make critical decisions and achieve timely compliance. Depth of Resources. Members of the proposed project team have extensive prior public sector accounting and consulting experience, including implementation assistance. Our team brings the wealth of financial, technical and management experience required by this project. As a team, we will provide you with critical information and recommendations necessary to achieve implementation objectives. Independence. We are required to maintain independence in our evaJuations, analysis and reporting. Further, we have no provider relations that could impede our ability to provide independent analysis. This is a critical component that separates us from other firms and will assure management that we will identify all pertinent issues in an unbiased manner. We appreciate the opportunity to submit this proposal and would welcome the opportunity to discuss specific aspects of it If you have any questions or need additional information, please contact me at 800.362.7301, ext. 2351. We look forward to working with you on this important project. Sincerely, VIRCHOW, KRAUSE & COMPANY, LLP Michael D. Lake, CPA, Partner MDL/dh Enclosure Section 1: Description of Firm The City of Dubuque is wise to seek assistance implementing GASB Statement 34. The qualifications of the firm you select will be a critical factor in achieving successful implementation. At Virchow, Krause & Company, we have extensive experience with GASB Statement 34, having been actively involved with GASB Statement 34 since its inception and having dedicated tremendous resources to helping our clients understand and implement this significant reporting change. This experience, coupled with the depth of resources we bring to this engagement, will directly benefit the City of Dubuque. We will lead an implementation effort designed not only to achieve compliance, but also designed to capitalize on strategic benefits and address the challenges associated with GASB Statement 34. As a licensed certified public accounting firm, our goal at Virchow, Krause & Company, LLP is to help our clients succeed. As one of the Midwest's oldest and largest regional certified public accounting and consulting firms, we have a long history of commitment to ensuring our clients' complete satisfaction. Founded in 1931, the firm now includes 900 total associates, including 105 partners/principals and 640 professionals in offices throughout Minnesota and Wisconsin. We are ranked as the 14th largest consulting and accounting firm in the United States, and the largest in Wisconsin according to the 2001 Public Accounting Report's "Top 100." One cornerstone of our success has been our commitment to delivering the highest quality services to our extensive list of public sector clients. To best serve the City of Dubuque, we will staff this project from our public sector practice group based in Madison, Wisconsin. Our commitment to helping our clients succeed is reflected in this specialized public sector practice group. Our public sector group consists of over 100 professionals dedicated entirely to serving public sector clients. Created in 1969, the public sector group provides various consulting, auditing, implementation and accounting services to approximately 600 clients, including 200 municipalities, 25 counties, 260 municipal utilities, 75 school districts, several state agencies, and 34 colleges and universities. As a result of our specialized focus, our staff understands the unique issues public sector agencies face and has the experience to find effective solutions. Included in the proposed project team are: 2 partners, 1 manager and 1 senior accountant. All team members are certified public accountants. The range of services we provide to our public sector clients is as varied and extensive as our clients' needs. As you will see detailed with our experience and knowledge discussed in Section 3, we provide public sector financial and accounting services ranging from financial audits to policy and procedure development and GASB Implementation Assistance. Our consulting and technology services are equally varied, and include management reviews, hardware and software selection implementation and training. Our public sector focus allows us to achieve a breadth and depth of service that meets our clients' varied accounting, consulting, and systems service needs. We have the blend of accounting, consulting, and technology experience necessary to assist the City in achieving compliance with GASB 34 that meets strategic objectives. Proposal For City of Dubuque -1- As a large regional firm with an extensive public sector accounting and consulting practice, we can provide a project team that meets all the requirements of the request for proposals. Virchow, Krause & Company, LLP has been providing public sector accounting and financial services for over thirty years. The professionals in our public sector practice group are focused entirely on the public sector and are extremely involved in providing GASB 34 assistance to our clients. The people included on your project team all have extensive public sector and GASB 34 experience. In the final analysis, our philosophy and reputation for providing quality service should be a major contributing factor in your evaluation of our proposal. We think our reputation and public sector commitment, coupled with the strategic advantages of our approach outlined in Section 5, position us to successfully provide GASB 34 Implementation Consulting to the City of Dubuque. As outlined in more detail in Section 3, there are several qualities of Virchow, Krause & Company, LLP that we feel uniquely qualify us to assist the City in achieving its strategic objectives in implementing GASB Statement 34: · We are leaders in local government accounting and financial reporting with a solid reputation for delivering high quality public sector consulting and accounting services. · We offer a project team whose members have extensive experience with GASB Statements, and specifically, GASB 34. · We have extensive experience with financial accounting systems, ad- hoc report writer software, and analysis/spreadsheet applications. We offer a project team with significant experience delivering training and implementation assistance in new accounting programs. We are independent and have no provider relations that could impede our independence. The City will directly benefit from the experience and knowledge that Virchow, Krause & Company, LLP brings to the engagement. Our expertise and our integrated approach will address the City's needs to achieve compliance with GASB 34 and to maximize the value of implementation. Proposal For City of Dubuque -2- Section 2: Project Team In developing our project team we have included teaders within our firm in the area of GASB 34 services and governmental financial reporting. The team leaders identified will have hands-on project involvement and be on-site at the City as we provide our services. The members of our project Team are all members of the Public Sector Services Group of Virchow, Krause and Company, LLP. These people have specialized throughout their careers in providing accounting, auditing and consulting services to municipal governments. In addition the team leaders are members of the VK GASB 34 Task Force and have been involved in research, presentations and implementation projects. We are confident that this team will provide high quality GASB 34 implementation assistance and solutions to the City. Following are the team leaders who will provide services to the City. More detailed resumes are provided in Appendix A. Michael D. Lake, CPA, Partner Mr. Lake has been with VK for 16 years and has specialized in providing audit and consulting services to municipal governments throughout his career. He is a member of the VK GASB 34 Task Force and has done numerous presentations on the effects of GASB 34. He is a team leader that is providing GASB 34 implementation services to the City of Saint Paul and has been involved in the issuance of 2 GASB 34 early implementation financial statements. Mr. Lake is licensed as a CPA in the states of iowa and Wisconsin. successful completion. Mr. Lake will also be the team leader for the strategic planning aspect of this project. Carla A. Ballweg, CPA, Manager Ms. Ballweg has 9 years of experience in the VK Public Sector Services Group. She is responsible for the annual audits of several large cities and counties. She is a member of the VK GASB 34 Task Force and is our firm leader in the area of capital asset and infrastructure issues. Carla has provided GASB 34 implementation strategic planning services to governments including Dane County, Baraboo, and Stevens Point, Wisconsin. She is currently working with the City of Saint Paul to develop GASB 34 capital asset and infrastructure solutions. Ms. Ballweg will be the team leader providing capital asset and infrastructure gap analysis and implementation recommendations for this project. Donald L. Rahn, CPA, Partner Mr. Rahn has over 25 years of governmental accounting experience. He is a long-time Government Finance Officer's Association CAFR review committee member and is the leader of the VK Public Sector Accounting and Auditing Committee, as well as serving on the VK GASB 34 Task Force. Mr. Rahn's technical expertise and experience will benefit the City and this project as a colleague partner who will provide technical advice and guidance. Mr. Lake will be the Partner-In-Charge of this project and will have overall responsibility for the project's Proposal For City of Dubuque -3- Section 3: Qualifications GASB 34 has been called the largest change ever to take place in governmental accounting and reporting standards. You can assure yourself and the City of a smooth transition to the new standards by relying on our GASB 34 team for assistance. We are and will continue to be leaders on GASB 34 related issues. With our substantial client base of governments, we are doing everything we can to meet their needs. Our initial response to GASB 34 was to set up a task force within our Public Sector Group. The members of this task force are very active in dealing with the many issues and challenges GASB 34 provides. Early on, we reviewed the exposure draft of GASB 34 and raised numerous issues to GASB staff for consideration. Later, we were involved with reviewing the eaHy drafts of the implementation guide and provided questions to GASB which are included in the final document. in the summer of 2000, our task force went through a prototype conversion of actual client financial statements from 1999 to the GASB 34 format. In addition, we developed the templates to complete several client conversion projects as of December 31, 2000. This resulted in several client financial statements issued in 2001 which are GASB 34 compliant. Working on this project with us were Terry and Suesan Patton, former staff members of GASB. Terry was responsible for the infrastructure section of 34, and Suesan was in charge of the MD&A section. We worked directly with them to assist VK in understanding the GASB's thinking and goals in these important areas: By the time the City of Dubuque converts to GASB 34, we will have gained further experience. In addition to the 4 Iocat governments converted as of December 31, 2000, we also expect several clients to implement for December 31, 2001. In addition, our conversions planned for December 31, 2002 include four Phase 1 counties and one Phase 1 city. This kind of hands-on experience with similar units of government will make your learning cu[ve that much shorter, saving you time and money compared to other firms. We were selected to assist the City of Saint Paul, Minnesota with its GASB 34 implementation. This project includes a customized, detailed implementation manual and implementation assistance. We have provided on-site training sessions for City staff and developed a matrix prioritizing critical implementation issues. We are currently starting a project with the City to develop infrastructure records. One of the results of our efforts has been ongoing communication. We have written numerous articles about GASB 34 in our public sector newsletter. We have a GASB 34 section on our web site which has links to those newsletters as well as a question and answer section. We invite anyone to submit their questions to our web site where they will be handled by our task force. Our goal is to provide as much helpful information as possible to those who can use it. Several of our articles have been published on a national level. In addition to newsletters, our task force has been very active with speaking on GASB 34. In just the past 18 months, we have been asked to speak at over 25 engagements. These include numerous engagements in the Midwest as well as several national seminars. Proposal For City of Dubuque -4- How do we stay on the teading edge of these issues? We seek out every available source of information which might benefit you. For example, at the AICPA National Governmental Conference in October 2000, we attended 24 hours of GASB 34 training. This included personal discussions with Guyman, Oklahoma which implemented GASB 34 for 1999. We also benefited from discussions with their auditor who was present. Another approach we used was to have two employees of the Department of Transportation visit our task force to educate us on the technical aspects of infrastructure construction and costing. Our ongoing work with Terry and Suesan Patton has added a lot of insight into GASB'S reasoning when the rules where developed, which helps us all to implement the ru~es properly. Another source of assistance is the GASB board itself. We have had a long on-going relationship with GASB board member Paul Reil~y ever since we started auditing the City of Madison in 1988 where Mr. Reilly was the controller. That relationship continues today, and gives us the unique ability to calt Mr. Reilly and gain further insights into the GASB's logic and discussion on some of the specific rules. In fact, Paul ReiHy recently completed a training seminar for Virchow Krause public sector employees. The new rules not only impact your financial statements, they also pose challenges for the audit opinion. The American Institute of CPA's (AICPA) has a group designated to design and enforce proper opinion language to be used by auditors. That group is headed by Mary Foelster of the AICPA in Washington, DC. We have enjoyed working with Ms. Foelster on these issues. She was especially helpfu~ in educating us on the variety of possibilities for opinion language during the Y2K phase of disclosures. Proposal For City of Dubuque You can be sure of top level advice should any interesting issues come up affecting the auditors' opinion in any way. In conclusion, we have had a strong and continuous effort in staying on top of GASB 34 issues as they emerge. We believe we are a leading authority in this regard. Not just one expert, but several are available to you on a daily basis, and we're not located far away, but nearby in Madison to serve you better. Whether it's a phone call, an e-mail, or a face-to-face meeting, we can meet your needs with fast and accurate guidance on GASB 34 issues. Project Integration Due to the large size of our firm and public sector practice, we are able to provide a project team that will complete this engagement in a timely manner. Currently, our public sector department annually provides approximately 150,000 hours of professional services covering the range of services noted above. Each team member has ongoing responsibility for a number of recurring services such as annual audits. Each member also provides significant services on specialized projects such as those requested by the City. Based on the expected scope and staffing, we anticipate that this project will require approximately 200 hours of professional time over a four to six month period. While each team member will be affected differently, their schedules will be adjusted as required to meet your needs. As a regional firm, we understand that the cornerstone of our success has been our reputation for delivering the highest quality services. We are committed to maintaining this reputation by providing responsive, timely and quality services that will assist the City of Dubuque to successfully implement GASB 34. -5- GASB 34 Strategic Planning Assistance: We are fortunate to have specific experience in providing GASB 34 strategic planning assistance that will be an excellent fit for the needs of the City. We are currently involved in several projects that are very similar to the engagement described in your RFP. We have worked with four of our clients to implement GASB 34 for the 12/31/00 year end. We also conducted a prototype conversion for the 12/31/9g financial statements. In assisting with implementation, we have had numerous planning meetings with our clients to ensure that strategic considerations attendant to GASB 34 implementation are addressed. As a result, we have developed GASB 34 implementation work plans to address each client's unique situation. These clients include: · City of Grafton · City of Beaver Dam · Village of Pleasant Prairie · Green Bay Metropolitan Sewerage District In addition, we are also currently in the process of developing GASB 34 implementation strategic plans for the City of Stevens Point, Rock County, the City of Baraboo and Dane County. Additional GASB 34 Implementation Assistance: We are providing GASB 34 implementation assistance for several units of government. These projects include all conversion entries, system adaptations, and production of pro forma financial statements compliant with GASB 34. Our experience identifying financial system and reporting requirements associated with GASB is coupled with experience developing, implementing, and installing adaptations to a windows based software to meet those requirements. One of these adaptations included development of a fully integrated asset and project management module with capabilities of integrating with a Geographic Information System. These projects are reflective of our commitment to becoming a leading authority on GASB 34 implementation. Our position on the leading edge of GASB 34 is reflected in the extensive array of speaking engagements we have completed. Speaking engagements relative to GASB 34: · Wisconsin County Finance Officers Association: December 2001 · Wisconsin Municipal Clerks' and Treasurers' Institute: July 2001 · Wisconsin Counties Association: May 2001 · WI County Human Services Financial Managers Conference: May 2001 · IL State Treasurers' Association: April 2001 · University of Wisconsin Extension ETN: March 2001 · WI Public Works Association: November 2000 · Caselle: National Software Users Conference: October 2000 and October 2001 · WI Towns Conference: October 2000 · Municipal Treasurers' Association: March 2000 Our commitment to the public sector is evidenced in our regular delivery of specialized training seminars in timely topics. We have provided GASB 34 training at multiple seminars sponsored or co-sponsored by Virchow, Krause & Company, LLP. Proposal For City of Dubuque Seminars in GASB 34: Virchow Krause/Robert W. Baird School Seminar: October 2000 * Virchow Krause Fall Municipal Seminar: October 2000 · Virchow Krause Utility Seminar: May 2000 · Virchow Krause Fall Tools Seminar: November 1999 The wide circulation of articles we have written on GASB Statement 34 further evidences our expertise. Articles on GASB 34: · The Municipality**: January 2002 Choosing the Modified Approach or Depreciation Method · The Municipality**: January 2002 Understanding the GASB 34 Modified Approach · WRWA Journal: Winter 2002 GASB 34 Strategic Planning · The Municipality**: April 2001 Capital Asset Reporting · ' The Municipality: September 2000 Requirements of Government Wide Financial Statements · The Municipality: May 2000 Management Discussion and Analysis · idaho Municipal News: January 2000 Overview and Timetable of GASB 34 · The Municipality: December 1999 Overview and Timetable of GASB 34 ** The Municipality is a publication of the Wisconsin League of Municipalities. These articles were reprinted from quarterly newsletters, Utility Lines and Muncipal Lines, we provide our clients, reflecting our commitment to training and educating our clients' in financial reporting requirements. Articles we have produced for these newsletters include: · Utility Lines: Fall/Winter 2001 GASB 34 Modified Approach for Utilities · Municipal Lines: Spring/Fall 2001 GASB 34 Strategic Planning · Utility Lines: Spring/Summer 2001 GASB 33 and 34 · Municipal Lines: Winter/Spring 2001 GASB 34 Capital Asset Reporting · MunicipalLines: Summer/Fall 2000 Requirements of Government Wide Financial Statements · UtilityLines: Spring/Summer 2000 The Effects of GASB 34 on Utilities · Municipal Lines: Winter/Spring 2000 Requirements of the MD&A · MunicipalLines: Summer/Fall 1999 Overview and Timetable for GASB 34. · We also have an area of our web site dedicated to informing and instructing our clients on GASB 34 issues. The range of services we provide our public sector clients reflects our mission of serving as our public sector clients' most valued advisor, and is as varied and extensive as our clients. Our specialized public sector focus allows us to achieve a breadth and depth of service that meets our clients' Proposa~ For City of Dubuque -7- varied accounting, consulting, and technology needs. These services include the following: Accounting Services: · Financial Audits and Accounting · Compliance Audits · Long-Range Planning · Accounting Systems Evaluation · Policy and Procedure Development · GASB' Statement 34 Implementation Assistance · Budgeting Assistance · Financing Assistance · Compilations and Reviews · Fraud Auditing · Treasury and Cash Management Operational Services: · Management Reviews · Organizational Studies · Fiscal Impact Analysis · Strategic Planning · Workflow Analysis · Performance Measurement · Executive Recruitment Technology Services: · Feasibility Studies and Needs · Assessment · Hardware and Software Selection, Implementation, and Training · Long-Range Systems Planning · Management Information Systems Development At Virchow, Krause & Company, LLP, we recognize that a highly knowledgeable and experienced project team is critical to the success of an engagement such as that requested by the City of Dubuque. Our specialized public sector focus allows us to propose a project team with a wealth of experience applying generally accepted accounting principles for governmental entities. Our client list of over 200 municipalities and 260 municipal utilities includes audit services to many of the largest municipalities in Wisconsin. These include the cities of: Appleton Janesville Sheboygan Beloit Kenosha Stevens Point Brookfield Madison Waukesha Eau Claire Neenah Wauwatosa Fond du Lac New Berlin West Bend Franklin Qak Creek Greenfield Racine Aisc included in our public sector audit experiences are services to several clients in Iowa and Minnesota. Our experience also includes 25 Wisconsin counties, including Dane, Waukesha, Eau Claire; and Fond du Lac counties. Our vast experience delivering quality audit services is reflected in the Government Finance Officers' Association reliance on us to review applications for the award for excellence in financial reporting. Our firm has been supporting the GFOA effort for many years, reviewing CAFRS and assessing the extent to which financial reporting standards are met. Don Rahn has reviewed over 200 CAFR's during the last 20 years. Thus, we are not only actively engaged in applying GAAP standards for local governments, but we also assist the GFOA to evaluate others' achievement of those standards. Proposal For City of Dubuque -8- In the past year, we have also assisted our clients with making their CAFR's available on their web sites. To demonstrate our ability to assist our clients in achieving the highest standards in financial reporting, following is a list of current clients who received the GFOA certificate of achievement during the years that Virchow, Krause & Company, LLP conducted the audit: Clients Who Received the GFOA Certificate of Achievement Client Name Waukesha County Winnebago County City of Appleton City of Janesville City of Neenah City of Eau Claire Village of Howard Village of Germantown City of Kenosha Oak Creek Water & Sewer Utilities Village of Grafton Green Bay Metropolitan Sewerage District City of Brookfield City of Franklin Village of Little Chute City of Fond du Lac Waukesha County Technical College Years Receiving Award 9 6 4 6 5 6 2 12 4 5 7 3 3 7 5 5 1 Our expertise in the standards is fostered by our public sector focus. Every public sector staff member works with 15-30 local governments annually, developing an in-depth understanding of the range of issues important to our clients. For the City of Dubuque, we can deliver a project team with competent staff, depth of experience, and substantial expertise in all financial areas of the City. We understand the complexity of financial accounting and reporting in a municipal environment; our employees work year round in this highly technical area and do not work in other areas such as commercial audits or tax return preparation. Proposal For City of Dubuque -9- Section 4: References This section of our proposal presents a listing of references for whom Virchow, Krause & Company, LLP has performed GASB 34 services. Client: Project Team Leaders: Project Title: Project Description: Contact: Client: Project Team Leaders: Project Title: Project Description: Contact: Client: Project Team Leaders: Project Title: Project Description: Contact: Cfient: Project Team Leaders: Project Title: Project Description: Contact: Village of Pleasant Prairie, Wisconsin Mike Lake, Calla Ballweg GASB 34 Implementation Implementation assistance to achieve GASB 34 compliance, including system adaptations, production of financial statements, and conversion entries. Early implemented 12/31/00 Ms. Kathy M. Goessl, Finance Director 262.694.1400 City of Beaver Dam, Wisconsin Mike Lake, Carla Ballweg GASB 34 Implementation Implementation assistance to achieve GASB 34 compliance, including system adaptations, production of financial statements, and conversion entries. Developed infrastructure process and records. Early implemented 12/31/00. Mr. John Somers, Finance Director 920.887.4606 City of Saint Paul, Minnesota Don Rahn, Mike Lake, Carla Ballweg, Vicki Hellenbrand GASB 34 Implementation Services Developed comprehensive implementation manual. Provided training sessions to City staff. Developed matrix of strategic issues and action steps. Will be providing capital asset solutions and actual implementation assistance. George Splichal, Financial Services Accountant 651.266.8819 Village of Grafton, Wisconsin Don Rahn, Klm Tredinnick GASB 34 Implementation, CAFR implementation assistance to achieve GASB 34 compliance including conversion adjustments and financial statement assistance. Early implemented 12/31/00. Shirley Ritger, Finance Director 262.375.5300 Proposal For City of Dubuque -10- Client: Project Team Leaders: Project Tit/e: Project Description: Contact: Green Bay Metropolitan Sewerage District Vicki Hellenbrand GASB 34 Implementation Implementation assistance to achieve GASB 34 compliance including conversion adjustments and financial statement assistance. Early iml: 12/31/00. Tim Woodworth, Accounting Supervisor 920.438.1054 Client: Project Team Leaders: Project Title: Project Description: Contact: Client: Project Team Leaders: Project Title: Project Description: Contact: Client: Project Team Leaders: Project Tit/e: Project Description: Contact: Client: Project Team Leaders: Project Tit/e: Project Description: Contact: Rock County, Wisconsin Mike Lake GASB 34 Strategic Planning Services Developed plan identifying strategic issues and action steps. Provided informational orientation session to governing finance committee. Jeff Smith, Finance Director 608.757.5534 Stevens Point, Wisconsin Carla Ballweg GASB 34 infrastructure Strategic Planning Services Developed matrix of strategic issues and action steps related to capital asset issues. John Schlice, Comptroller 715.346.1574 Dane County, Wisconsin Carla Ballweg GASB 34 Strategic Planning Services Developed GASB 34 strategic plan and action steps. Charles Hicklin, Controller 608.266.4109 Baraboo, Wisconsin Carla Ballweg GASB 34 Strategic Planning Services Developed GASB 34 strategic plan and action steps. Cheryl Giese 608.355.2700 Proposal For City of Dubuque -11- Section 5: Scope of Services Project Overview GASB 34 represents the first time financial statements will be designed to enable users to determine whether the government's overall financial position improved or deteriorated from year to year, and whether revenues were sufficient to cover the cost of providing services each year. The far-reaching changes associated with GASB 34 affect not only how governments account for their activity, but also the degree of accountability to their citizens. GASB Statement 34 is designed to increase accountability by providing more useful and easily understandable information to a more divergent group of users of financial statements. The City's implementation of the new standards will not only significantly change financial reporting, but could also fundamentally change the way citizen's perceive the City's financial status. Our experience has shown that the nature of the GASB 34 reporting changes necessitate implementation that achieves more than compliance with the standard; successful implementation of GASB 34 requires strategic positioning to address the challenges and benefits that come with those changes. Our significant experience with GASB 34, coupled with our extensive knowledge of municipal financial reporting, will enable us to successfully assist the City in managing the risks and achieving the benefits of GASB 34 implementation. GASB 34 implementation will require a substantial commitment of the City's resources. We can help you ensure that this dedication of resources yields maximum benefit to the City, not only by facilitating an efficient implementation to minimize costs, but also by identifying strategic uses for the additional information captured, and navigating potential challenges and risks of implementation. The City can realize many benefits from implementing GASB 34. We can help identify strategic uses for the new information maintained to meet the requirements of the standard, such as: · Demonstrating accountability to your citizens · Providing justification for resources dedicated to infrastructure maintenance and construction · Identifying management information to promote enhanced organizational efficiency and effectiveness. While there are many benefits of the standard, there are also challenges of which the City will need to be aware. We can identify those areas that pose the greatest challenge to the City in obtaining compliance with the standard. In addition, our experience with GASB 34 and its effects will allow us to identify potential areas for risk, identify and advise the City of options to mitigate that risk, and develop an implementation plan that addresses those risks where possible. For example, our extensive knowledge of GASB 34 will facilitate early identification of potential risks such as: Potential effects on the perceived overall financial position of the City (such as a reduced equity position). Risks and implications of policy decisions associated with GASB 34 (such as depreciation vs. the modified approach for reporting infrastructure). Proposal For City of Dubuque -12- In areas where you have policy options in implementation, we will identify those options and provide recommendations as to how to limit the associated risks to the City. While some components of GASB Statement 34 may expose the City to a risk but offer no latitude in implementation, we can help you minimize potential ramifications through early identification of these items. This early identification will allow the City to manage these risks through such steps as identification of communication requirements for the investors who purchase your bonds, as well as educational needs of other external users of your statements such as your policymakers and citizens. We can provide a range of educational assistance - from guidance in crafting narrative portions of your financial report to actual GASB 34 information sessions for City Council members. We therefore broadly define the City's goal in obtaining assistance with planning and implementation as follows: To plan for the efficient transition to financial statements consistent with GASB 34 in a manner that positions the City to realize the strategic/ management advantages and minimize the risks attendant to implementation, The ability of the City to accomplish this goal will depend partially on factors such as the City's current political environment, financial position, and infrastructure condition. However, if selected for this project, we can leverage our extensive knowled9e of both GASB Statement 34 and municipal finance to: · Position the City to realize benefits of implementation · Minimize the risks associated with implementation · Minimize costs associated with implementation without jeopardizing compliance or capability to capture value added improvements Our approach is designed to provide implementation services that will have long-lasting benefits, providing value to the City long beyond the conclusion of this engagement. Because we work with so many units of government, we are very aware of the many concerns and hurdles that can occur in this process. Our ability to draw on our practical experience with other governments will help you avoid the significant time and effort of "reinventing the wheel". Our specialized public sector focus and ongoing relationships with GASB staff provide the broad perspective necessary to ensure successful achievement of project objectives. Overall Approach and Rationale From a planning perspective, the GASB 34 effort may be one of the single largest projects to impact your Finance Department. The City is wise to consider an outside consultant in implementing GASB 34. Our aggressive approach to understanding GASB 34 has rapidly made us an industry leader in educating local governments regarding the intent, implications and requirements of the Statement, and in assisting to implement GASB 34. We feel that Proposal For City of Dubuque -13- this understanding, coupled with our hands-on experience with similar projects and dedication of senior staff to this engagement positions Virchow, Krause & Company to successfully assist the City with strategic implementation of GASB 34. Our understanding of the Statement is reflected in our project approach, which will ensure that our efforts are coordinated and demands on City staff time are minimized. We balance the need to analyze the City's strategic position from a broad perspective with a need to analyze and develop specific procedures and processes. This approach is based on years of experience providing accounting and consulting services to a wide range of municipal governments and utilities. Our proposed project workplan includes a preliminary fact-finding or diagnostic phase that will allow us to identify the specific needs of the City of Dubuque. The first component of this fact-finding phase will focus on the City's readiness from a central perspective. This component will focus on the finance department, and will provide an overview of the City's current practices, policies and procedures, and assess the impact of any decentralized record-keeping on GASB 34 implementation. The second diagnostic component, a global department readiness assessment, will allow us to evaluate various departments' current capital, financial and technology issues, policies, procedures, and needs as they relate to GASB 34 implementation. Our approach is comprised of various phases and tasks we believe provide the foundation for meeting your needs and implementation objectives. However, our approach is flexible. During the initial project planning: we may determine, in conjunction with the City, that modifications to this approach may be necessary. Our intent is to work with the City to solidify the most desirable approach, prior to initiating the engagement, to ensure the highest quality service. We have prepared a high-level workplan to address the scope of services identified in the City's Request For Proposals: The approach detailed below will allow us to achieve the following components requested in the scope: Overall Strategic Planning Services Assist City with developing a strategic plan for meeting the variety of policy decisions and timelines necessary to comply with GASB 34 ,/ Meet with City project team as required · / Outline options and provide a written plan of key action steps ,/ Provide general oversight of the implementation process v' Meet with City audit firm to confirm the City's plan meets their needs Capital Asset Process Recommendations Update the processes used to gather data and report on all fixed assets reportable under GASB 34 in the general fixed asset account group to include current depreciation expense as well as accumulated depreciation on those assets as of the beginning of the implementation year, June 30, 2002 and forward Proposal For City of Dubuque -14- '/ Work with the City to develop processes to be followed to accumulate necessary information for street infrastructure~ which would include both streets and curb and gutter ~' Work with the City to develop processes to be followed to accumulate necessary information for other infrastructure assets, including storm sewers, sidewalks, bridges, street lights, and other relevant categories v' Meet with City engineers on the data required to develop infrastructure information and a determination if the current data sources (i.e. GIS) are adequate ~ Assist in developing methodology to assign useful lives, costs, and depreciation computations on all infrastructure assets reportable under GASB 34 · / Assist in determining if additional or alternative fixed asset accounting software is required by City to implement GASB 34 ,/ Assist in reviewing the potential need/desire to utilize an appraisal or valuation firm for aid in establishing historic cost '/ Assist in evaluating potential need for utilizing an asset management company to create an accurate data base (assumes 20 hours) Project Work Plan I. Project Planning Our experience has shown that careful planning and needs definition is critical to ensuring that client expectations are met. Accordingly, we will begin the Proposal For City of Dubuque -15- project with a planning phase, during which we will: · Gather relevant background materials and data for preliminary review · Finalize a list of persons to be interviewed · Meet with the City's project liaison to finalize the workplan We will work with the City's appointed implementation steering committee. Our experience with similar implementations indicates that a steering committee is a powerful tool for communication and sharing lessons learned. We recommend that this committee, to be comprised of the project liaison, representatives of departments and the VK project manager, meet to discuss the status of the project and assist in early identification of implementation barriers. II. Fact-Finding and Diagnostic Review During this component of the project, we will gain an understanding of the City's current processes, policies, procedures and technology. We will review background information including documents such as: · CAFR · Budget documents · Capital improvement plan · Fixed asset reports · Sampling of accounting system reports · Current auditors' workpapers · Year-end reconciliations performed by the City · Policy and procedural memoranda · Position descriptions for financial services and agency financial/accounting staff · Organization chart for financial services · Current chart of accounts A. Central Finance Department Assessment In this assessment, we will evaluate the City's readiness to implement GASB 34 from a central finance department perspective. We will evaluate those areas common to all agencies by reviewing: · Current fund structure · Current budget structure · Centralized processes and procedures · Central financial reporting and accounting systems · Fixed asset system The purpose of this review will be to analyze, from a central perspective, the City's current accounting structure (information that is tracked, individuals who track the information, etc) to identify gaps between the current and desired (i.e., GASB 34 compliant) states. B. Global Department Assessment We will also conduct a global department assessment. In this phase we will build on the central finance department assessment, identifying specific department issues related to the technical, capital, and financial components of GASB 34 implementation. III. GAP Analysis We will conduct a gap analysis to determine specifically what the City requires to implement GASB 34. This analysis will identify implementation requirements or changes to your current systems and processes. We will leverage our extensive knowledge of the Statement and financial Proposal For City of Dubuque -16- reporting requirements to identify gaps between GASB 34 requirements and your current systems, policies, processes, and information tracking. During this phase, we will determine the method in which the City can move to the new reporting model. We will identify required projects that the City will need to complete and will provide recommendations to guide the City in navigating policy issues. For all relevant changes in procedure, we will maintain communication with the City's auditor to ensure their acceptance of the proposed changes. Deliverable for Task II1: Strategic plan identifying policy decisions, action steps and timelines necessary to comply with GASB 34. IV. Capital Asset Process Development In order to meet the new financial reporting requirements of GASB 34, the City will be required to report the balances and related depreciation on capital assets including infrastructure. As part of the Gap Analysis described in Task III we will identify the current processes and information available for capital assets. This will include a review of current data sources (including GIS records). We will work with the City and provide recommendations to update processes related to general fixed assets and the requirement to report current and accumulated depreciation. We will work with the City and provide recommendations for the development of new processes related to street and other infrastructure records (such as storm sewers, sidewalks, bridges, streetlights and curb and gutter). Our recommendations will include assisting in the development of methodology to assign useful lives, costs and depreciation for infrastructure assets. We will also provide recommendations regarding additional or alternative fixed asset accounting software needs. We will assist the City in reviewing the need or desire by the City to utilize an appraisal or valuation firm for assistance in establishing capital asset historic cost records. We will also assist the City in evaluating the potential need for utilizing an asset management company to create a capital asset database (we have assumed 20 hours for this task as stated in the RFP). Deliverables for Task IV: Report of detailed recommendations for capital asset processes and solutions to comply with GASB 34. V. Optional Add-On Phase The City's Request for Proposals identified additional GASB 34 assistance that may be requested in the future. This assistance included: · Provide advice and/or format for management discussion and analysis section of the new financial statement format · Assist in designing a system or process needed to convert government fund financial statements to the full accrual basis of accounting · Design and develop procedures and forms necessary for annual updates to the infrastructure asset information · Make recommendations on how the current GIS could be integrated for long-term asset management We have performed these services for other cities and are well prepared to perform them for the City of Dubuque. These services are not included in the proposed fees included in this proposal. Performance of these additional services would be covered by an addendum to the agreement for the currently proposed project. VI. Presentation of Work Product From Phase I We will make a presentation to City staff on the Strategic Plan, its impact on the City, and implementation requirements. Proposal For City of Dubuque -17- Section 6: Project Timeline Following is a timeline for completion of the tasks we have identified in our approach and workplan: X =roject Planning =act-Finding and X X ~)iagnostic Review X X Sap Analysis ,~apital Asset X Recommendations Meeting with City to X Review Strategic Plan General implementation oversight (as needed Proposal For City of Dubuque -18- Section 7: Insurance Virchow, Krause & Company, LLP shall adhere to insurance requirements for professional services as detailed by the insurance schedule provided with the RFP by the City. Section 8: Project Investment We will provide assistance to the City in GASB Statement 34 strategic planning and capital asset process development. The estimated fee for the project will be: GASB 34 Strategic Plan development Capital asset process review and recommendations Assistance reviewing the City's need or desire to use an appraisal firm for capital asset records Assistance evaluating the City's need for utilizing an asset management company to create capital asset records Clerical time and out of pocket expenses Estimated Fees $12,000 - 15,000 10,000 - 12,500 2,000 - 3,000 2,000 - 3,000 3,000 - 4,000 The project fee is a not-to-exceed amount. We will only bill the City for actual hours and expenses incurred. This not-to-exceed fee is based on the project scope as outlined in this proposal and in the request for proposal. Should the project scope change, we will discuss the effect on the above quoted price before proceeding with additional services. Out-of-pocket expenses are based on our anticipated costs for clerical time, travel, copies and telephone. Estimated engagement costs are based on the following hourly rates: Partner: $215 Manager: $165 Senior Accountant: $115 Proposal For City of Dubuque -19- Proposal For City of Dubuque APPENDIX A Michael D. Lake, CPA Mr. Lake is a partner in the Public Sector Practice Group of our Madison office. Mr. Lake has been associated with Virchow, Krause & Company, LLP since 1985. SPECIFIC EXPERIENCE: · Coordinating and conducting annual auditing and accounting services for more than 20 Wisconsin municipalities. · Responsible for coordinating and conducting the annual audits of two counties. · CPA licensed in Iowa. · Providing auditing and accounting services for 2 private colleges and 1 city in Iowa. · Member of the Virchow, Krause & Co. LLP GASB 34 task force which is studying the impacts and implementation of this new reporting standard. · Participated in completion of 2 GASB 34 financial statement early implementation projects. · Team leader for City of Saint Paul, Minnesota GASB 34 implementation planning project. · Providing consulting and auditing services for tax incremental financing districts including completion of compliance and financial audits, projections of future financial results and implementation of TID accounting systems. · Preparation of annual regulatory reports for Wisconsin municipalities. · Analyzing governmental budgets and developing strategies to improve budget information and presentation. · Assisting in the development of fund accounting systems. · Providing governmental accounting training to governmental units. · Developing long-range financial projections for municipalities. · Completing audits of state and federal aid programs. · Assisting governmental units with understanding state aid programs and preparing strategies to maximize aid received. · Reviewing and preparing Comprehensive Annual Financial Reports which have been awarded a Certificate of Achievement for Excellence in Financial Reporting. INDUSTRY INVOLVEMENT: · Member of the American Institute of Certified Public Accountants and the Wisconsin Institute of Certified Public Accountants. · Speaker on accounting and financial reporting topics including GASB 34. EDUCATION: · Bachelor of business administration degree from the University of Wisconsin-Madison. Proposal For City of Dubuque -20- Carla A. Ballweg, CPA Ms. Ballweg is a manager in the Public Sector Practice Group of Virchow, Krause & Company, LLP. Ms. Baltweg has over nine years of experience in governmental accounting, auditing and consulting. SPECIFIC EXPERIENCE: ,, Managing annual audit engagements of numerous cities, villages, towns and municipal electric, water and sewer utilities in Wisconsin. · Manager-in-charge of the accounting and consulting services to the Southeast Wisconsin Professional Baseball Park District (Miller Park) since 1996 · Member of the Virchow, Krause & Company, LLP GASB #34 task force. · Involved in 2 GASB 34 early implementation projects. · Providing GASB 34 planning and infrastructure consulting to several governments. · Developing accounting policies and procedures manuals for municipalities and utilities. · Performing compliance and financial audits of Tax Incremental Financing Districts. · Providing long-range financial forecasts and budgeting assistance to municipalities. · Reviewing and providing recommendations for municipal court operations. · Designing the methodology and rate structure for municipal and utility impact fees. · Assisting municipalities with implementing various Governmental Standards Board Pronouncements. PROFESSIONAL DEVELOPMENT: · Member of the American Institute of Certified Public Accountants and a member of the Wisconsin Institute of Certified Public Accountants. · GFOA Certificate of Achievement Review Committee Speaker on accounting and financial reporting topics, including GASB 34, to a variety of organizations including the Municipal Treasurer's Association of Wisconsin, University of Wisconsin-Extension, and various Virchow, Krause & Company, LLP sponsored presentations. · Author of municipal and GASB #34 articles. INDUSTRY INVOLVEMENT: · Member of the Wisconsin institute of Certified Public Accountants and the American Institute of Certified Public Accountants. EDUCATION: · Graduated with a bachelor of business administration degree from the University of Wisconsin-Madison. Proposal For City of Dubuque -21- Donald L. Rahn, CPA Mr. Rahn is a partner in the Public Sector Practice Group in Madison. He has over twenty-six years of governmental accounting experience with Virchow, Krause & Company, LLP. SPECIFIC EXPERIENCE AND PARTNER IN CHARGE OF: · Audits of numerous counties, cities, villages, towns, and non-profit organizations in the State of Wisconsin and Illinois. · Developing formal budget procedures, preparing annual budgets, and the designing and implementing of financial systems. · TIF compliance audits including questions on allowable costs, long- range planning and bond proceeds consulting. · GASB 34 task force, including strategic planning for client implementation. · Special cash audits for municipalities. · Assisting municipalities in developing long-range cash and debt management programs, including multi-year capital planning and fiscal impact analysis of annexation proposals. · Audits of federal and state aid programs. INDUSTRY INVOLVEMENT: · Member of the American Institute of Certified Public Accountants, Wisconsin Institute of Certified Public Accountants, Government Finance Officers Association · GFOA Certificate of Achievement Review Committee · WICP^: Government Subcommittee - Chairman, Transportation/Revenue Committee - Chairman, Ad Hoc Committee Chairman - Security Registration, Legislative Audit Bureau Committee - Chairman, Public Interest Committee - Chairman, Competence Review Committee, and Competence Aid Committee · G.R.A.T.E. - Review Committee, Technical Standards Committee, Board of Directors · Wisconsin Governors TIF task force and Tax 16 task force · Speaker on accounting and financial reporting to Wisconsin Department of Revenue - GAAP Reporting Advisory Committee, Wisconsin Clerk, Treasurers and Finance Officers Institute, Wisconsin Municipal Clerks Association - various districts, Various WICPA Seminars, UW-Green Bay Clerk-Treasurers Certification Program, Southwest Wisconsin and Gateway VTAE Instructor, Wisconsin Counties Association and numerous Virchow, Krause & Company, LLP sponsored presentations · Board of Directors/Treasurer - Wisconsin Chamber Orchestra EDUCATION: Bachelor of business administration and a masters of business administration degree in accounting from the University of Wisconsin- Madison. Proposal For City of Dubuque -22- CitY of Dubuque GASB 34 Planning and Implementation Assistance Executive Summary since GASB 34's initial inception, Virchow, Krause & Company, LLP has been actively involved in learning, understanding and helping clients implement the new reporting standard. We feel our public sector and GASB 34 experience will benefit the City of Dubuque as you implement this important change. The following outlines significant factors about our firm, our GASB 34 experience, and our approach to your project: OUR FIRM Large regional firm with prominent, well-respected public sector practice team · 14th largest* CPA and consulting firm in the United States. · Public sector practice group includes over 100 professionaIs focused entirely on serving public sector clients. · Solid reputation for delivering high quality public sector consulting and accounting services. · Senior, knowledgeable personnel with hands-on experience selected for this project. · Experienced firm offering accounting, auditing, and a variety of consulting services. · Extensive public sector client list-- nearly 600 including: 200 municipalities, 260 utilities, 75 school districts, 34 colleges & universities, and 26 counties · Leaders in local government accounting and financial reporting. · [ndepth knowledge ~f Comprehensive Annual Financial' Report preparation. 17 current clients receive GFOA Certificate of Achievement. Lor~g-time CAFR review committee participation. · Independent-- no provider relations to impede.our review of alternatives. · Our mission is to serve as your most valued advisor. *According to the 2001 Public Accounting Report's "Top 100". OUR EXPERIENCE Committed GASB 34 leadership · Dedicated to helping clients understand and effectively implement the new standard. · Early, aggressive approach to learning and understanding GASB 34. · Requested to speak at many association seminars on GASB 34 due to our expertise. · Hosted our own seminars discussing GASB 34. · Authored several articles that have been published locally, regionally and nationally. · Dedicated GASB 34 web site section linked to GASB's own web site. · Strong relationships with GASB staff. Project team with actual, hands-on GASB 34 experience · Four December 31, 2000 financial audit early implementations completed. · Green Bay Metropolitan Sewerage District · City of Beaver Dam, WI · Village of Grafton, WI · Village of Pleasant Prairie, WI · Significant GASB 34 implementation project with Saint Paul, MN. · Established work papers and systems providing efficiency. · Serve five phase 1 government clients who will implement December 31, 2002. · Personnel who truly care about the business of government. OUR APPROACH · Careful up front planning to ensure your needs are met. · Input from city personnel who know your systems and processes best. · Use a ~gap analysis" to identify current status and areas to address. · Use previous experience as a guideline, but tailor to your needs. · Analyze risks and implications of policy decisions associated with GASB 34. · Identify potential effects on the perceived overall financial position of the city. · Make recommendations for processes and methodologies to comply with GASB 34. · Experienced CPAs will help you achieve GASB 34 compliance. THE RESULTS · Comprehensive, well thought out planning. · Logical and practical solutions to your unique needs. · A decision process focused on the strategic benefits of each issue, not just compliance. · You save internal time and money leveraging our experience. VirchowKrause company February 22, 2002 Mr. Ken TeKippe, CPA, Finance Director City of Dubuque City Hall 50 West 13th Street Dubuque, IA 52001-4864 Dear Mr. TeKippe: This letter is to clarify our proposal for GASB #34 services, specifically the area of deliverables. Both the RFP and our proposal had a lot of information on the strategic planning process, and little emphasis on the final report. Our proposal describes the deliverables in two major areas: Central Finance/Global Department assessment with related GAP analysis, and Capital Asset Process Development. Page 16 indicates that the deliverable for the GAP analysis is a "strategic plan". The deliverable for the Capital Asset Section (page 17) is a "report of detailed recommendations". What these reports will contain is explained in the following sections. The strategic plan is the result of the process referenced on pages 15 and 16 of our proposal. That process includes data gathering, interviews, discussion of solutions and recommendation of action steps. A typical strategic plan would include a summary of the findings, an outline of goals, a listing of actions to be taken, and a timeline for completion of these actions. In essence, this document will be a workplan for the city to be ready for GASB #34. In addition, we will provide a matrix listing the various decision items. This matdx will also include the city's decisions as they are made throughout the process. Our services also include general oversight of the implementation process, so that we will be there for you as questions arise. The other deliverable relates to the capital asset section. Our work in that area includes building on our GAP analysis referred to above, and working with city personnel to develop policies and procedures needed to inventory, cost, depreciate and report on capital assets of the city. Our report would include analysis of options and recommendations of policy decisions, followed by the processes and procedures to prepare the city for the recording of the capital asset information for June 30, 2003 as well as actual decisions made. As requested, our report will also provide recommendations regarding fixed asset software needs, appraisal firm options, and assistance with evaluating the need for a capital asset database. Ten Terrace Court · PO Box 7398 ,, Madison, VVI 53707-7398 - Tel 608.249.6622 o Fax 608.249.8532 e www.virchowkrause.com Virchow, Krause & Company, LLP Cer[ified Public Accountants & Co~sultants · Member of Summit International Associates, Mr. Ken TeKippe, CPA, Finance Director City of Dubuque February 22, 2002 Page 2 I hope that this provides a better description of our deliverables. Strategic planning really focuses a lot of effort on the process. Many times, by the time the report is issued, people have understood the action steps and have begun implementation efforts. In any case, we expect our reports to be valuable tools to guide the city through a successful GASB #34 implementation process. If you need any further information, please give me a call. Sincerely, VIRCHOW, KRAUSE & COMPANY, LLP Donald L Rahn, CPA, Partner DLR/jj