Request for Proposal for Audit Services – TCOG
Texoma Council of Governments (TCOG) is soliciting proposals for audit services for the fiscal year ended April 30, 2017 with one year extensions possible through April 30, 2021, from interested firms with the requisite qualifications and experience to perform an audit of Texoma Council of Governments under the requirements of the Single Audit Act Amendments of 1996 and Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
This is a negotiated procurement under the “Professional Services Procurement Act” using the Request for Proposal (RFP) method. As such, the award will be made to the firm submitting the most responsive proposal satisfying TCOG’s requirements and demonstrating the highest competence and qualifications at a fair and reasonable fee estimate.
Submit proposals to
Dr. Randy McBroom
Deputy Executive Director
Texoma Council of Governments
1117 Gallagher Drive
Sherman, Texas 75090
Submission deadline: 10:00 a.m., Tuesday, February 7, 2017. Proposals should be clearly marked “Sealed proposal for audit services to be opened Tuesday, February 7, 2017, at 10:00 a.m.” Failure to respond to this solicitation with either a proposal or a formal “no response” letter may result in the removal of your firm from our proposer’s list. Proposals received after the submission deadline will be returned unopened if possible and will not be considered under any circumstance. Faxed and emailed proposals will not be considered. Two (2) complete copies of the proposal are required.
TCOG requests a not-to-exceed fee estimate proposal for each of the five (5) years indicated. TCOG contemplates awarding an initial one-year contract with annual option to extend for each of the four (4) remaining years subject to satisfactory performance and funding availability. TCOG reserves the right not to exercise the option to extend at any time during the contract term.
TCOG has a program with Housing and Urban Development (HUD) that has a December 31 year end. The REAC submission is due by September 30 based on that year end. TCOG would like for firms to bid the cost for a program specific audit for the HUD program to meet the December 31 year end filing requirements with REAC, in addition to, the overall audit of TCOG.
DESCRIPTION OF ENTITY AND RECORDS TO BE AUDITED
TCOG is a political subdivision of the State of Texas as authorized by Chapter 391 of Texas Local Government Code (formerly Article 1011m of Vernon’s Annotated Revised Civil Statutes (Texas)). Annual budget for the initial period of the audit is $10 million. This amount is comprised of approximately seventy (70) separate federal and state grants-in-aid. Accounting records are maintained on the modified accrual basis. TCOG maintains two bank accounts from which checks are issued and three additional special purpose bank accounts with limited activity. Revenues and expenses are recorded separately by grant fund in the accounting records. Appropriations are also recorded in the accounting records. TCOG employs approximately sixty-five (65) employees.
TCOG is currently revising its Generalized Accounting Procedures Manual and Personnel Policy Manual. Both are anticipated to be complete by April 30, 2017. The Generalized Accounting Procedures Manual covers all aspects of the accounting system including account coding, accounts payable, audit, bank reconciliation, cash disbursements, cash receipts, cost allocation, financial reporting, investments, journal entries, payroll, property control, purchasing, record keeping, and travel. The TCOG Personnel Manual covers all aspects of employment, employee benefits, equal employment opportunity, discipline, and a grievance procedure.
TCOG’s computerized records include:
- General Ledger with expanded detail
- (Grant/fund) Revenue & Expenditure Report
- General Journal detailed listing
- Cash Disbursements summary and detailed listing
- Check Register
- Cash Receipts summary and detailed listing
- Accounts Payable listing by type and status
- Trial Balance
- Staff Payroll
- Chart of Accounts
- Vendor Listings (by number and alphabetically)
And such other specialized reports that are within our capacity to provide
The latest completed copies of the above documents are available for inspection by appointment only during normal business hours. TCOG’s accounting records are maintained on an in-house server using Abila MIP Funding Accounting Software.
TCOG’s Finance Department is composed of three (3) individuals:
- Ms. Mindi Jones, Accounting Specialist, is responsible for staff payroll and related reporting, bank account reconciliation, fixed asset inventory maintenance, and provides backup support for other accounting activities.
- Ms. Vicki Stover, Accounts Payable Bookkeeper/Receptionist, is responsible for initial processing of accounts payable (including employee travel, vendor and subcontractor invoices, and requests for cash disbursement), processing incoming and outgoing mail, general typing, maintaining supplies inventory, and grant file maintenance.
- Mr. Rodrigo Muyshondt, Aging Program Accountant, is responsible for the accounting and reporting for the Aging Programs that TCOG has.
Also available is Lori Ann Cannon, CPA, independent consultant to the Board of Directors, currently under contract with the Board to oversee certain aspects of the accounting system and the audit of TCOG.
A copy of the prior year audit report is attached. No sub-recipient entity records are contemplated to be audited under this agreement. Should an audit of sub-recipient entity records be required, a separate scope of work and appropriate fee will be negotiated.
NATURE OF SERVICES REQUIRED
The audit services required under this request for proposal will be performed under the Uniform Guidance, Audits of States, Local Governments, and Non-Profit Organizations, GASB 34 requirements, and such other specific agency/grant requirements as may be required. The audit shall include the entire operations of TCOG.
Consideration will need to be given to performing a program specific audit for the HUD program administered by TCOG. The year end for REAC reporting is December 31, whereas the TCOG year end is April 30. The bid should include the costs for a HUD program specific audit as well as the overall audit for TCOG taking into account the program specific audit if performed separately, and then a cost if performed at the same time of the entity audit.
MANDATORY QUALIFICATION OF THE AUDITOR
Each proposing firm must affirm that it is properly licensed for public practice as a certified public accountant or a public accountant, that it meets the independence requirements of the Standards for Audit of Governmental Organizations, Programs, Activities and Functions, latest revision, published by the U.S. General Accounting Office, and that it does not have a record of substandard audit work.
PERIOD OF THE AUDIT AND TERM OF ENGAGEMENT
The initial period to be audited is May 1, 2017, through April 30, 2021. The proposal should include an annual maximum not-to-exceed amount for each of four (4) succeeding years (i.e., period ended April 30, 2018, April 30, 2019, April 30, 2020 and April 30, 2021. TCOG reserves the right not to extend this agreement beyond the initial one-year term, and further reserves the right to terminate during the initial or any extended term in accordance with any termination clause(s) which may be contained in the engagement letter. The HUD program specific audit would be for the years ended December 31 for the same years.
ASSISTANCE AVAILABLE TO PROPOSERS
The firm of LaFollett and Abbott, PLLC, Tom Bean, Texas, performed the most recent single audit of TCOG’s operations. In accordance with the terms of the engagement letter between TCOG and LaFollett and Abbott, the working papers are available for inspection by appointment only. Please contact Mr. Rod Abbott for an appointment to review the working papers, if desired.
Finance personnel will provide statistical information for the audit report if specified in the proposal. In addition, TCOG Finance Department staff members are available to retrieve specified documents and reports from TCOG files if desired. During the term of the audit report preparation, TCOG will provide the successful auditing firm with access to office space and a copy machine. TCOG will provide the audit report covers and TCOG staff will arrange to print, bind and distribute the audit report. Other services may be available if specified in the audit proposal and agreed to in advance by TCOG.
TCOG does not anticipate holding a proposer’s conference. Questions may be directed in writing to Lori Ann Cannon, CPA, at 1117 Gallagher Drive, Suite 470, Sherman, Texas 75090. Written questions and written responses will be distributed to all firms on the proposer’s list. Questions must be received no later than January 10, 2017 in order to be adequately answered and distributed to all proposers.
REPORT REQUIREMENTS AND SCHEDULE
The audit reports shall state that the audit was made in accordance with accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, and Uniform Guidance.
TCOG management is not aware of any situations that could result in an opinion other than unqualified.
The accounting records will be available for the audit process to begin by the beginning of the first week of June. The draft of the proposed audit report shall be provided with sufficient notice to schedule an exit conference with TCOG officers at least ten (10) days prior to TCOG’s scheduled meeting of the Governing Board. The final resulting audit report shall be available in sufficient time to allow TCOG staff to copy, bind, and distribute it to all board members prior to the next scheduled meeting of the governing board.
Timing of the audit report presentation to the Board of Directors will be determined annually. If a program audit is performed for the HUD grant and presented to allow for the REAC filing by September 30, the timing of the TCOG audit will not be crucial. Otherwise, the entire audit has to be presented by the September finance committee meeting in order to meet the September 30 REAC submission requirement.
An engagement letter will be negotiated with the successful proposer. Such engagement letter will incorporate this RFP and the successful proposal by reference. Under the terms of the engagement letter contemplated, TCOG will make monthly payments to the audit firm upon submission of invoice containing appropriate detail to be mutually agreed upon. TCOG will withhold the final five percent (5%) of the annual fee amount until such time as the audit report is accepted by our federal cognizant audit agency, U.S. Department of Commerce, and our state coordinating agency, Texas Department of Housing and Community Affairs.
REPORT REVIEW AND EXIT CONFERENCE
An exposure draft of the audit report will be submitted to TCOG’s executive director and CPA for review prior to the exit conference. TCOG does require that an exit conference be conducted prior to formal submission of the audit report. At a minimum, attendees at the exit conference should include the audit firm principals, TCOG Executive Director, TCOG CPA, and TCOG’s finance committee. In addition, any of the TCOG Governing Board members may participate at their discretion. Subsequent to the exit conference, the draft audit report may be submitted to TCOG’s federal and state cognizant audit agencies, if requested by those agencies.
If instances of fraud, waste, or illegal acts, or indications of such are discovered by the auditors, a separate report will be immediately made directly to the President of TCOG’s Governing Board.
The audit working papers generated by the auditors under any contract resulting from the audit of TCOG’s operations will belong to the audit firm. However, the audit firm agrees to make such audit papers available upon reasonable notice during normal business hours to representatives of TCOG, any and all TCOG funding agencies, and such other individuals as TCOG may from time to time specify. Such working papers will be maintained by the auditors for a period not less than three (3) years after acceptance of the audit report by TCOG’s cognizant audit agencies or three (3) years after resolution of any questioned costs, whichever is later.
RIGHT TO REJECT
TCOG reserves the right to accept or reject any and all proposals submitted in response to this request and to request additional information from any and all proposers. The contract awarded will be made to the independent audit firm who, based on evaluation of all responses, applying all criteria and oral interviews, if necessary, is determined to be the best qualified to perform the audit. Such determination will be the sole responsibility of TCOG’s Governing Board.
EVALUATION OF PROPOSALS
TCOG’s Deputy Director will conduct the formal proposal opening at TCOG’s offices at 1117 Gallagher Drive, Suite 470, Sherman, Texas, at 10:00 a.m. on Tuesday, February 7, 2017. The public is invited to attend. The Deputy Director will perform an initial review of each proposal package in order to assure compliance with these specifications. The Executive Director, assisted by the CPA, will prepare a summary of the responsive proposals and submit TCOG’s Governing Board for selection of the audit firm. The Governing Board will consider the following factors in evaluating the responsive proposals:
- Appropriateness and adequacy of proposed procedures
- Necessity of procedures
- Reasonableness of time estimates
- Appropriateness of assigned staff levels
- Timeliness of expected completion
- Technical experience of the firm
- Qualifications of the audit staff
- Size and structure of the firm
- Fee estimate
If there is reason to believe that an unreasonably low fee estimate has been submitted, the Governing Board will reject the proposal. Based on the proposals received in response to this RFP, and the evaluation of those proposals, the Governing Board will select the audit firm to perform TCOG’s annual audit. The Deputy Director will notify proposers of the Governing Board’s decision.
FORMAT OF THE RFP RESPONSE
To simplify and expedite the review process and obtain the maximum degree of information from proposers for evaluation purposes, respondents are required to submit proposals in the manner and order specified below.
The response should identify the RFP subject, the name of the independent auditor, local address, telephone number, name and title of contact person, and date of submission. The proposal shall contain a statement that the proposal is valid for a period not less than sixty (60) days from submission. The proposal must be signed by a person having authority to bind the proposer firm.
TABLE OF CONTENTS
The table of contents of the proposal should include a clear and complete identification of the materials submitted by section and page number.
LETTER OF TRANSMITTAL
The letter of transmittal should include at least the following information:
- A brief understanding of the audit service to be performed.
- A positive commitment to perform the service within the time period specified.
- The names of persons authorized to represent the respondent, their title, address and telephone number.
- Reference to a sealed envelope that contains the all-inclusive fee for which the audit work will be done.
THE TRANSMITTAL LETTER SHOULD NOT STATE THE FEE FOR THE AUDIT SERVICE.
PROFILE OF THE INDEPENDENT AUDITOR
The profile of the respondents should include:
- The organization and size of the respondent organization, whether it is local, national or international in operations.
- The location of the office from which the work is to be done and the number of professional staff by staff level employed at that office.
- A description of the range of activities performed by the local office such as auditing, accounting, tax service, or management services.
- A statement on the respondent’s staff capability to audit computerized systems, including the number and classifications of personnel skilled in computer sciences who will work on the audit, if required to.
- A positive statement that the following mandatory criteria are satisfied:
- An affirmation that the proposer is properly licensed for practice as a certified public accountant or a public accountant. According to generally accepted governmental auditing standards (GAGAS), public accountants must be licensed on or before December 30, 1970, or working for a CPA firm to be eligible for engagement.
- An affirmation that the proposer meets the independent requirements of the Standards for Audit of Governmental Organizations, Programs, Activities and Functions, latest revision, published by the U.S. General Accounting Office.
- An affirmation that the respondent does not have a record of substandard work.
- An affirmation that respondent meets all specific requirements imposed by state or local law or rules and regulations.
- An affirmation that the respondent will follow the American Institute of Certified Public Accountants’ “Interpretation 501-3, Failure to Follow Standards and/or Procedures or other Requirements in Governmental Audits.”
- An affirmation that the respondent will follow the requirements of Uniform Guidance and GASB 34 in the preparation of the audit report.
- A statement that the audit firm is not currently debarred from performing services by the U.S. Government or the State of Texas.
SUMMARY OF THE PROPOSER’S QUALIFICATIONS
- Identify the audit manager and filed supervisor and other staff who will work on the audit, including staff from other than the local office. Resumes including relevant experience and continuing education for auditor in charge up to the individual with final responsibility for the engagement should be included. (The resumes may be included as an appendix.)
- Describe the recent local and regional office auditing experience similar to the type of audit requested, and give the name and telephone numbers of client officials responsible for three of the audits listed. Proposals should list specific audits performed under the Uniform Guidance and Governmental Auditing Standards.
PROPOSER’S APPROACH TO THE EXAMINATION
Submit a work plan to accomplish the scope defined in the REQUEST FOR PROPOSAL FOR AUDIT SERVICES. The work plan should include time estimates for each significant segment of the work and an estimate of hours by staff level position. Where possible, individual staff members should be named and their titles provided. The planned use of specialists should be specified.
The audit work plan should demonstrate the auditor’s understanding of the audit requirements of a single audit as specified in the Uniform Guidance and the audit tests and procedures to be applied in completing the audit plan.
Information concerning the fee estimate for the contemplated services being proposed should be submitted in a sealed envelope separate from but together with the proposal.
The proposal should include a cost estimate for each of the following:
- A program specific audit for the HUD program to be completed for the year ended December 31 each year, and to be completed to enable timely submission of required reports to REAC each year.
- The financial audit of TCOG as prescribed in the proposal.
- The fees should the firm be awarded both of the above. It is possible that TCOG could award each piece separately, depending on firm qualifications and ability. A firm can bid on any of the combination of the above.
Respondents may submit such additional data as is deemed appropriate to aid in the determination of qualifications and responsiveness to this request for proposal for audit services.