REQUEST FOR PROPOSALS
FOR AUDITOR SERVICES
Release Date: February 17, 2023Deadline for Submission: March 30, 2023Release Date: February 17, 2023Deadline for Submission: March 30, 2023 Release Date: February 17, 2023
Deadline for Submission: March 30, 2023
Release Date: February 17, 2023
Deadline for Submission: March 30, 2023
City of Commerce Attn: Josh Brooks,
Acting Director of Finance
2535 Commerce Way, Commerce, CA 90040
Telephone: (323) 722-4805
Email: [email protected]
CITY OF COMMERCE REQUEST FOR PROPOSALS
INTRODUCTION
General Information
The City of Commerce is requesting proposals from qualified firms of certified public accountant firms to audit its financial statements for the three fiscal years beginning with the fiscal year ending June 30, 2023, with the option of auditing its financial statements for each of the two (2) subsequent fiscal years. These audits are to be performed in accordance with auditing standards generally accepted in the United States of America, the standards set forth for financial audits contained in Government Auditing Standards (1994) issued by the Comptroller General of the United States, and the U.S. Office of Management and Budget (OMB) Circular A-133, Audits of State and Local Governments, and Non-Profit Organizations.
There is no expressed or implied obligation for the City of Commerce to reimburse responding firms for any expenses incurred in preparing proposals in response to this request. Materials submitted by respondents are subject to public inspection under the California Public Records Act (Government Code Sec. 6250 et seq.), unless exempt.
Proposal Submittal: Proposals must be submitted electronically via the City of Commerce Planetbids website system as set forth in this RFP document. (Proposals submitted by any other method such as hard copy or email will be disqualified.) Any requests for clarification or other questions concerning this RFP must be submitted electronically via City’s Planetbids website no later than March 23, 2023 at 4:00 pm. The City of Commerce reserves the right to reject any or all Proposals, to waive any informality in any Proposal, and to select the Proposal that best meets the City’s needs.
Only RFP documents downloaded from the City’s Planetbids website shall be considered official, as the City must track RFP holders in the event an addendum is issued. Failure to register on Planetbids and download the RFP document and any addendum from the website will result in disqualification of the proposal.
During the evaluation process, the City of Commerce reserves the right, where it may serve the City of Commerce’s best interest, to request additional information or clarifications from proposers, or to allow corrections of errors or omissions. At the discretion of the City of Commerce, firms submitting proposals may be requested to make oral presentations as part of the evaluation process.
The City of Commerce reserves the right to retain all proposals submitted and to use any idea(s) in a proposal regardless of whether that proposal is selected. Submission of a proposal indicates acceptance by the firm of the conditions contained in this request for proposals, unless clearly and specifically noted in the proposal submitted and confirmed in the contract between the City of Commerce and the firm selected.
Following notification of the selected firm, a recommendation and proposed contract will be prepared for review and approval by the City Council on TBD. The City reserves the right to reject any or all proposals, to waive any non-material irregularities or information in any proposal, and to accept or reject any items or combination of items.
Term of Engagement
It is the intent of the City to contract for the services presented herein for a term of three (3) years. The City of Commerce reserves the right to extend the term of this contract for two (2) additional one-year terms subject to the satisfactory negotiation of terms, including a price acceptable to both the City and the selected firm.
The proposal package shall present all-inclusive audit fees for each year of the contract term.
NATURE OF SERVICES REQUIRED
Scope of Work to be Performed
The City of Commerce desires a Comprehensive Annual Financial Report (CAFR) and its component unit financial statements for the City of Commerce to be prepared by the independent auditor and be fully compliant for GASB 34 for the fiscal year ended June 30, 2024 and each of the subsequent years, June 30, 2025 and 2026 of the audit firm’s contract with the City. The City will be planning to submit the CAFR to the California Society of Municipal Finance Officers (CSMFO) for review in their Certificate of Award for Outstanding Financial Reporting program and to the Government Finance Officers Association (GFOA) for review in their Certificate of Achievement for Excellence in Financial Reporting program.
The selected independent auditor will be required to perform the following tasks.
The audit firm will perform an audit of all funds of the City of Commerce. The audit will be conducted in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller of the United States. The City’s Comprehensive Annual Financial Report (CAFR) will be prepared and processed by the audit firm. The CAFR will be in full compliance with GASB 34 and 45. The audit firm will render their auditors’ report on the basic financial statements which will include both Government-Wide Financial Statements and Fund Financial Statements. The audit firm will also apply limited audit procedures to Management’s Discussion and Analysis (MD&A) and required supplementary information pertaining to the General Fund and each major fund of the City.
The audit firm will perform a single audit on the expenditures of federal grants in accordance with OMB Circular A-133 and render the appropriate audit reports on Internal Control over Financial Reporting based upon the audit of the City’s financial statements in accordance with Government Auditing Standards and the appropriate reports on compliance with Requirements Applicable to each Major Program, Internal Control over Compliance and on the Schedule of Expenditures of Federal Awards in Accordance with OMB Circular A-133. The single audit report will include appropriate schedule of expenditures of federal awards, footnotes, findings and questioned costs, including reportable conditions and material weaknesses, and follow up on prior audit findings where required.
The audit firm shall perform agreed-upon auditing procedures pertaining to the City’s GANN Limit (Appropriations Limit) and render a letter annually to the City regarding compliance.
The audit firm shall issue a separate “management letter” that includes recommendations for improvements in internal control, accounting procedures and other significant observations that are considered to be non-reportable conditions. Management letters shall be addressed to the City Administrator.
The audit firm shall prepare the Annual Street Report.
The audit firm shall prepare the Annual State Controller’s Report for the City, Special District, Transit Operators and Transit Operators Specialized Services.
Auditing Standards to be Followed
To meet the requirements of this Request for Proposal, the audit shall be performed in accordance with:
Generally accepted auditing standards as set forth by the American Institute of Certified Public Accounts; The standards applicable to financial audits contained in Government Auditing Standards (l994 Revision), issued by the Comptroller General of the United States; The provisions of the Single Audit Act as amended in 1996; and The provisions of U. S. Office of Management and Budget (OMB) Circular A-133, Audits of State and Local Governments and Non-Profit Organizations.
Working Paper Retention
All working papers and reports must be retained at the auditor's expense for a minimum of seven (7) years, unless the firm is notified in writing by the City of Commerce of the need to extend the retention period. The auditor will be required to make working papers available to the City of Commerce or any government agencies included in the audit of federal grants. In addition, the firm shall respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance.
Irregularities and Illegal Acts
Auditors shall be required to make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware to the following parties: City Administrator; City Attorney; and the Director of Finance/City Treasurer.
DESCRIPTION OF THE GOVERNMENT
Background Information
The City of Commerce is located in the southeast portion of Los Angeles County, approximately 9 miles southeast of Los Angeles and services an area of 6.6 square miles with a population of 13,439. The City’s fiscal year begins on July 1 and ends on June 30.
The City of Commerce was incorporated on January 28, 1960 as a general law city which operates under a council/administrator form of government. The city government provides a full range of municipal services either directly or through contracts. These include sheriff and fire protection (which are contracted for with Los Angeles County), planning, building, street maintenance, water, general administrative services, a fixed route bus and dial-a-ride- transit system, and a high level of recreation and social service programs. The City also operates four parks and community centers, four libraries, and a mountain camp. The City has a Joint Powers Financing Authority.
The City of Commerce’s operating budget for FY 2022-23 is approximately $110 million for all funds combined.
Fund Structure
The City of Commerce uses the following fund types and account groups in its financial reporting:
Number of
Fund Type/Account Group Individual City Funds
General Fund 1
Special Revenue Funds 9
Debt Service Funds 3
Capital Projects Funds 1
Enterprise Funds 3
Fiduciary Funds 2
Component Units
The City is defined, for financial reporting purposes, in conformity with the Governmental Accepting Standards Board’s Codification Governmental Accounting and Financial Reporting Standards, Section 2100. Using these criteria, component units are included in the City’s financial statements.
The management of the City identified the following component unit (with fiscal year ending June 30) for inclusion in the City’s financial statements: the City of Commerce Joint Powers Financing Authority. This component unit is to be audited as part of the audit of the City’s financial statement.
Finance Operations
The Finance Department is headed by the Director of Finance and consists of 10 full time and 2 part-time employees. The department is responsible for budgeting, financial reporting, financial audits, payroll, accounts payable, accounts receivable and treasury functions. The department is also responsible for purchasing, business license, central stores and the data processing functions.
Computer Systems
The City of Commerce has two full-time Information Technology Specialists that supports over two hundred computers, twenty servers, one mini-computer and many mission critical programs. The Finance System and Payroll System are run on a browser based system by New World Systems. Microsoft Office Professional 2010 is the standard office suite. Outlook 2010 is the standard e-mail and calendar program. Windows 10 is used for staff’s computers.
Availability of Prior Year Reports and Work Papers
Davis Farr, LLP conducted the City’s most recent audit. The work papers of the previous audits are the property of the previous auditor and can be reviewed by the successful Proposer. The following financial statements were prepared or audited by Davis Farr, LLP.
City of Commerce Comprehensive Annual Financial Report; A Single Audit Report; and
In addition, interested proposers who wish to review prior year audit reports have the option of contacting Josh Brooks, Director of Finance at 2535 Commerce Way, Commerce, CA 90040; (323) 722-4805. The City of Commerce will use its best efforts to make prior audit reports available to proposers to aid their response to this request for proposal.
TIME REQUIREMENTS
Proposal Calendar
Request for Proposal Issued February 17, 2023
Date for Proposals (due by 6:00 p.m.) March 30, 2023 Due Oral Interviews TBD
Contract Awarded by City Council TBD
Date Audit May Commence
The City of Commerce will have all records ready for audit and all management personnel available to meet with the firm’s audit personnel the first week of October of each year of the audit.
ASSISTANCE TO BE PROVIDED TO THE AUDITORS AND REPORT PREPARATION Finance Department and Clerical Assistance
The Finance Department staff and responsible management personnel will be available during the audit to assist the firm by providing information, documentation and explanations. Josh Brooks, Director of Finance and selected Finance staff will be responsible for acting as liaisons between the audit firm and the accounting personnel.
Work Area, Telephones, and Office Equipment
The City will provide the auditor with reasonable work space, desk and chairs. The auditor will also be provided with access to a telephone line, photocopying facilities and a desk.
PROPOSAL REQUIREMENTS
General Requirements
Inquiries concerning the Request for Proposal and the subject of the Request for Proposal must be made to on Planetbids Q&A section.
Josh Brooks
Director of Finance 2535 Commerce Way
Commerce, CA 90040
(323) 722-4805
[email protected]
CONTACT WITH PERSONNEL OF THE CITY OTHER THAN THE ABOVE REGARDING THIS REQUEST FOR PROPOSAL MAY BE GROUNDS FOR ELIMINATION FROM THE SELECTION PROCESS.
Submission of Proposal: Only RFP documents downloaded from the City’s Planetbids website shall be considered official, as the City must track RFP holders in the event an addendum is issued. Failure to register on Planetbids and download the RFP document and any addendum from the website will result in disqualification of the proposal.
No Later than March 30, 2023 at 4:00 pmNo Later than March 30, 2023 at 4:00 pm No Later than March 30, 2023 at 4:00 pm
No Later than March 30, 2023 at 4:00 pm
Due Date and Time:
NO LATE PROPOSALS WILL BE ACCEPTED.
Proposal Submittal: Proposals must be submitted electronically via the City of Commerce Planetbids website system as set forth in this RFP document. (Proposals submitted by any other method such as hard copy or email will be disqualified.) Any requests for clarification or other questions concerning this RFP must be submitted electronically via City’s Planetbids website no later than March 23, 2023 at 4:00 pm.
The City of Commerce reserves the right to reject any or all Proposals, to waive any informality in any Proposal, and to select the Proposal that best meets the City’s needs.
The Proposal should address the items listed in sections C and D below.
The Proposal should be addressed as follows:
City of Commerce Josh Brooks Director of Finance 2535 Commerce Way Commerce, CA 90040
Format for Technical Proposal
Title Page showing the request for proposal’s subject; the firm’s name; the name, address and telephone number of a contact person; and the date of the proposal.
Table of Contents identifying the materials submitted by section and page number. Cross- referencing to section and page number in the RFP would be helpful.
Signed Transmittal Letter briefly stating the Proposer’s understanding of the work to be done, the commitment to perform the work within the time period, and the name(s) of the person(s) authorized to represent the Proposer, title, address, and telephone number.
Contents of Technical Proposal
The purpose of the Technical Proposal is to demonstrate the qualifications, competence and capacity of the firms seeking to undertake an independent audit of the City in conformity with the requirements of this request for proposals. As such, the substance of proposals will carry more weight than the form or manner of presentation. The Technical Proposal should demonstrate the qualifications of the firm and of the particular staff to be assigned to the engagement. It should also specify an audit approach that will meet the request for proposals requirements.
The Technical Proposal should address all the points outlined in the request for proposal (excluding any cost information which should only be included in the Sealed Dollar Cost Bid). The proposal should be prepared simply and economically, providing a straightforward, concise description of the proposer’s capabilities to satisfy the requirements of the request for proposals. While additional data may be presented, the following subjects must be included. They represent the criteria against which the proposal will be evaluated.
License to Practice in California
An affirmative statement should be included verifying the firm and all assigned key professional staff are properly licensed to practice in California.
Independence
The firm should provide an affirmative statement that it is independent of the City of Commerce as defined by auditing standards generally accepted in the United States of America and the General Accounting Office’s Governmental Auditing Standards.
Firm’s Qualifications and Experience
To qualify, the firm must have extensive experience in audits of local governments as well as experience with preparation of Comprehensive Annual Financial Statements in GASB 34 format. The Proposer should state the size of the firm, the size of the firm’s governmental audit staff, the location of the office from which the work on this engagement is to be performed, and the number and nature of the professional staff to be employed in this engagement on a full-time basis and the number and nature of the staff to be so employed on a part-time basis. Staff consistency is an important consideration.
The Proposer should provide the range of activities performed by the local office (e.g., audit, accounting, tax service and/or management consulting services).
The Proposer should provide a list of all current municipal clients.
The Proposer is also required to submit a copy of a report on its most recent external quality control review, with a statement whether that quality control review included a review of specific government engagements (required by Government Audit Standards (1994).
The Proposer shall also provide information on the results of any Federal or State desk reviews or field reviews of its audits during the past three (3) years. In addition, the firm shall provide information on the circumstances and status of any disciplinary action taken or pending against the firm during the past three (3) years with State regulatory bodies or professional organizations.
Partner, Supervisory and Staff Qualifications and Experience Identify the principal supervisory and management staff, including engagement partners, managers, other supervisors and specialists, who would be assigned to the engagement. Include resumes, indicating whether each such person is registered or licensed to practice as a certified public accountant in California. Provide information on the government auditing experience of each person, including information on relevant continuing professional education for the past three (3) years and membership in professional organizations relevant to the performance of this audit.
The firm should provide as much information as possible regarding the number, qualifications, experience and training, including relevant continuing professional education, of the specific staff assigned to the engagement. The firm also should indicate how the quality of staff over the term of the agreement will be assured.
Provide as much information as possible regarding the number, qualifications, experience and training, including relevant continuing professional education, of the specific staff to be assigned to this engagement. Indicate how the quality of staff to be assigned to this engagement. Indicate how the quality of staff over the term of the agreement will be assured.
Engagement partners, managers, other supervisory staff and specialists may be changed if those personnel leave the firm, are promoted or are assigned to another office. These personnel may also be changed for other reasons with the express prior written permission of the City. However, in either case, the City retains the right to approve or reject replacements.
Other audit personnel may be changed at the discretion of the Proposer provided that replacements have substantially the same or better qualifications or experience.
Similar Engagements with Other Government Entities
For the firm’s office that will be assigned responsibility for the audit, list the most significant engagements (maxiumum – 5) performed in the last three (3) years that are similar to the engagement described in this request for proposal. These engagements should be ranked on the basis of total staff hours. Indicate the scope of work, date, engagement partners, total hours, and the name and telephone number of the principal client contact. Also please indicate whether the audit was part of a Comprehensive Annual Financial Report prepared in conformance with the GASB 34 requirements. Information should be provided regarding clients that the firm serves that have received the CSMFO and GFOA awards.
Please provide a list of not less than five client references for whom services similar to those outlined in the RFP are currently being provided. For each reference listed provide the name of the organization, dates for which the service(s) are being provided, type of service(s) being provided and the name, address and telephone number of the responsible person within the references regarding the audit services performed by the Proposer.
Specific Audit Approach
The proposal should set forth a work plan, including an explanation of the audit methodology to be followed, to perform the services required in Section II of this request for proposals. In developing the work plan, reference should be made to such sources of information as the City of Commerce’s budget and related materials, organizational charts, manuals and programs, and financial and other management information systems.
Proposers will be required to provide the following information on their audit approach:
Proposed segmentation of the engagement;
Level of staff and number of hours to be assigned to each proposed segment of the engagement; Sample size and the extent to which statistical sampling is to be used in the engagement; Extent of use of EDP software in the engagement;
Type and extent of analytical procedures to be used in the engagement; Approach to be taken to gain and document an understanding of the City’s internal controls structure; Approach to be taken in determining laws and regulations that will be subject to audit test work; and Approach to be taken in drawing audit samples for purposes of tests of compliance.
Identification of Anticipated Potential Audit Problems
The proposal should identify and describe any anticipated potential audit problems, the firm’s approach to resolving these problems and any special assistance that will be requested from the City.
NO DOLLARS SHOULD BE INCLUDED IN THE TECHNICAL PROPOSAL Contents of Cost Proposal
Total All-inclusive Maximum Price
The cost proposal should contain all pricing information relative to performing the audit engagement as described in this request for proposals. The total all-inclusive maximum price to be bid is to contain all direct and indirect costs including all out-of-pocket expenses.
The City will not be responsible for expenses incurred in preparing and submitting the technical proposal or the sealed dollar cost bid. Such costs should not be included in the proposal.
The cost proposal should be submitted in the format provided in Attachment A, “AUDIT WORK COST PROPOSAL FORM” and Attachment B, “ESTIMATE OF COST.” Consideration of Adjustment of Compensation Rates
After one (1) year of satisfactory service, the Audit firm may submit to the Director of Finance no later than the first day of July of each year, requests for adjustments in the compensation rates.
During the term of the Agreement rate adjustments may be authorized as follows:
On July 1 of each year, the contract price may be adjusted upward or downward according to the amount of the percentage change to the nearest 1/10th of a percent in the Consumer’s Price Index of the Bureau of Labor Statistics, U.S. Department of Labor, Los Angeles – Long Beach metropolitan area for the most recently reported adjustment. Said adjustments shall become effective on the first day of July following receipt of the request and approval by the City Council. All requests for price adjustments shall be approved by the City Council.
Manner of Payment
Progress payment will be made on the basis of hours of work completed during the course of the engagement and out-of-pocket expenses incurred in accordance with the firm’s proposal. Interim billings shall cover a period of not less than a calendar month.
EVALUATION PROCEDURES
Review of Proposals
City staff will evaluate submitted proposals.
Evaluation Criteria
Proposals will be evaluated using three (3) sets of criteria. Firms meeting the mandatory criteria will have their proposals evaluated and scored for both technical qualifications and price. Although price is a very important consideration for the City, the City will consider all criteria during the evaluation process and may or may not select the lowest priced proposal. The following represent the principal selection criteria, which will be considered during the evaluation process.
Mandatory Elements
The audit firm is independent and licensed to practice in California.
The firm has no conflict of interest with regard to any other work performed by the firm for the City.
The firm adheres to the instructions in this request for proposals on preparing and submitting the proposal.
The firm submits a copy of its most recent external quality control review report and the firm has a record of quality audit work.
The firm’s past experience and performance on comparable government engagements.
The quality of the firm’s professional personnel to be assigned to the engagement and the quality of the firm’s management support personnel to be available for technical consultation.
Adequacy of proposed staffing plan for various segments of the engagement.
Thoroughness of approach to conducting the audit of the City and demonstration of understanding of the objectives and scope of the audit.
Commitment to timeliness in the conduct of the audit.
Maximum fees to conduct the audit.
ATTACHMENT A
AUDIT WORK COST PROPOSAL FORM
Service
2023/24
2024/25
2025/26
City Audit and Related Reports
$
$
$
GANN Limit Review Report
$
$
$
Single Audit and Related Reports
$
$
$
Total for Fiscal Year (not- to-exceed)
$
$
$
APPENDIX B ESTIMATE OF COST
Name of Firm:
Address:
Contact Name:
Contact Phone #: Fax#:
Contact Email:
1. Auditor’s Standard Billing Rates
POSITION
2023/24
2024/25
2025/26
Partner
$
$
$
Manager
$
$
$
Senior Accountant
$
$
$
Staff Accountant
$
$
$
Clerical
$
$
$
22 2
2