CITY OF REDONDO BEACH
AUDIT SERVICES
REQUEST FOR PROPOSALS
RFP #2324-007
FISCAL YEARS 2024-2026
with Optional Two Years
January 2024
2 CITY OF REDONDO BEACH
REQUESTS FOR PROPOSALS
TABLE OF CONTENTS
I. Introduction
A. General Information
B. Term of Engagement
II. Nature of Services Required
A. Scope of Work
B. Auditing Standards to be Followed
C. Reports to be Issued
D. Special Considerations
E. Working Papers Retention and Access to Working Papers III. Description of the Government
A. Name and Telephone Number of Contact Person
B. Background Information
C. Fund Structure
D. Budgetary Basis of Accounting
E. Component Units
F. Finance Operations
G. Computer System
IV. Estimated Time Requirements
A. Proposal Calendar
B. Notification and Contract Dates
C. Report Completion Dates
D. Other Important Dates
V. Assistance to be Provided to the Auditors and Report Preparation A. Financial Services Department
B. Schedules and Working Papers
C. Work Area, Telephones, Photocopying, and WI-FI Connection D. Report Preparation
3 VI. Proposal Requirements
A. General Requirements
B. Technical Qualifications
C. Price
VII. Evaluation Procedures
A. Review of Proposals
B. Evaluation Criteria
C. Oral Presentations
D. Final Selection
E. Right to Reject Proposals
Appendices
A. Organization Chart
B. Schedule of Professional Fees
C. Agreement for Consultant Services
Exhibit A: Project Description and/ or Scope of Services Exhibit B: Schedule for Completion
Exhibit C: Compensation
Exhibit D: Insurance Requirements for Consultants
4 CITY OF REDONDO BEACH
REQUEST FOR PROPOSALS
I. Introduction
A. General Information
The City of Redondo Beach (the City) requests proposals from qualified firms of certified public accountants to audit its financial statements in compliance with all GASB pronouncements for the fiscal years ending June 30, 2024, 2025, and 2026 with the option for two subsequent fiscal years. These audits are to be performed in accordance with generally accepted auditing standards and the provisions of the U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.
There is no expressed or implied obligation for the City to reimburse responding firms for any expenses incurred in preparing proposals in response to this request.
To be considered, firms must submit eleven (11) copies of a proposal to Wendy Collazo, City of Redondo Beach, 415 Diamond Street, Door 1, Redondo Beach, California 90277 on or before February 13, 2024 by 3:00pm. The City reserves the right to reject any or all proposals submitted.
During the evaluation process, the City reserves the right, where it may serve the City’s best interest, to request additional information or clarifications regarding proposals, or to allow corrections of errors or omissions. At the discretion of the City, staff may request firms submitting proposals to make oral presentations as part of the evaluation process.
The City reserves the right to retain all proposals submitted and to use any ideas in a proposal regardless of whether that proposal is selected or not. 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 and the selected firm.
The City anticipates selecting a firm in February 2024. Following notification of the selected firm, the City expects to execute an agreement for consultant services with Exhibits A – D (Appendix C) in March 2024, to allow for timely initiation of the FY 2023-24 audit.
Staff intends to present its recommendation of the selected firm to City Council at a meeting in March for their approval. The selected firm will be expected to attend the March council meeting to answer any questions related to the contract and/or audit services.
B. Term of Engagement
The City contemplates a five-year contract (three continuous years, with an option for two subsequent years). The contract is subject to approval by the City Council and will be reviewed annually for compliance.
5 II. Nature of Services Required
A. Scope of Work
The City’s goal is to provide the public and its constituents with financial statements that give complete, accurate and understandable information about the City’s financial condition.
The selected independent auditor will be required to perform the following tasks:
1. Audit the Basic Financial Statements of the City to obtain reasonable assurance about whether the financial statements are free of material misstatement. To express an opinion on the fair presentation of the City’s governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information in conformity with generally accepted accounting principles. The result of these tasks will be the development of the final annual comprehensive financial report (ACFR). The auditor will prepare and provide the City with thirty (30) printed versions and one (1) portable document format (PDF) file of the audited ACFR. The auditors are not required to audit the supporting schedules contained in the ACFR. However, the auditors must provide an “in-relation-to” report on the supporting schedules based on the auditing procedures applied during the audit of the basic financial statements and schedules. The auditors are not required to audit the statistical section of the report.
2. Upon request, prepare the following supplemental reports a. Separate financial statements for the City’s Internal Service Funds. b. Separate financial statements for the City’s Enterprise Funds. c. Financial statements for the City’s Housing Successor Fund (Low-Mod Income Housing Asset Fund).
d. Addendum to Annual Progress Report required by Senate Bill 341 (SB 341).
3. Test compliance with the Single Audit Act as amended in 1996 and U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and applicable laws and regulations. The City expects that the auditor will prepare and publish an audit report.
4. Perform tests of compliance and prepare and publish audit reports related to State funding, if any. The City has not received funding subject to this requirement for several years. However, past funding that the City has received included:
a. Spousal Abuser Prosecution Program - $20,000
b. State Transportation Improvement Program - $333,000
5. Audit the City’s Inmate Benefit Trust Fund. The City expects that the auditor will prepare and publish an audit report.
6. Test compliance with Proposition 111, Article XIII-B – Review of Appropriation Limit Calculations. The City expects that the auditor will prepare and publish an Independent Accountants’ Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets.
7. Prepare and publish a letter of recommendations to management on the City’s internal controls.
6 8. Assist in implementation of new GASB Pronouncements and examine other reports or perform other services as required.
B. Auditing Standards to be Followed
The audit shall be performed in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants and the provisions of the U.S.
Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.
C. Reports to be Issued
Following the completion of the audit of the fiscal year’s financial statements, the auditors shall issue the following:
1. City Annual Comprehensive Financial Report (ACFR) - Required
2. City Internal Service Funds Report - Upon Request
3. City Enterprise Funds Report - Upon Request
4. City Housing Successor Fund (Low-Mod Income Housing Asset Fund) Report - Required
5. Addendum to Annual Progress Report as required by Senate Bill 341 - Upon Request
6. Single Audit Report - Required
7. Report on the Inmate Benefit Trust Fund – Required
8. Report on the City’s calculation of the Appropriations Limit - Required
9. Recommendations to Management Letter - Required
D. Special Considerations
1. The City will continue to submit its ACFR to the Government Finance Officers Association of the United States and Canada for consideration in its Certificate of Achievement for Excellence in Financial Reporting program, and to the California Society of Municipal Finance Officers for consideration in its Award for Outstanding Financial Reporting program. City staff will require auditors to assist the City to meet the requirements of those programs.
2. The City desires an additional 40 hours of executive time for research and assistance concerning accounting and other technical matters each year. These hours are above and beyond the professional time associated with the audit.
3. Each year the City will ask the auditors to focus on a particular area regarding internal controls, e.g., petty cash, cash receipts on business licenses, leases relating to the enterprise funds.
E. Working Papers Retention and Access to Working Papers Auditors must retain all working papers and reports, at the auditors’ expense, for a minimum of three (3) years, unless the City notifies the firm in writing of the need to extend the retention period. Auditors must make working papers available, upon request, to the City. 7 In addition, the firm shall respond to reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance.
III. Description of the Government
A. Name and Telephone Number of Contact Person
The auditors’ principal contact with the City will be the Finance Director, or a designated representative, and will coordinate assistance to be provided by the City to the auditors. The Finance Director can be reached at (310) 697-3138.
B. Background Information
The City serves an area of 6.35 square miles with a population of 71,576 (2020 census). The City’s fiscal year begins on July 1 and ends on June 30.
The City provides a full range of municipal services. These services include public safety (Police and Fire), community services, public works, library, capital improvements, community development, waterfront and economic development and general government services.
The City’s estimated total payroll for FY 23-24 is approximately $70 million, covering 450 budgeted full time and approximately 400 part-time employees.
An organizational chart of the Financial Services Department (Appendix A) is attached.
C. Fund Structure
The City uses the following fund types in its financial reporting (including the fund of blended component units):
Number of
Fund Type/Account Group Individual Funds
General Fund 1
Special Revenue Funds 19
Debt Service Funds 5
Capital Projects Funds 3
Enterprise Funds 5
Internal Service Funds 6
Fiduciary Funds 1
In FY 21-22, the City presented four (4) major governmental funds in its ACFR as follows:
General Fund, two (2) Special Revenue Funds and one (1) Debt Service Fund.
D. Budgetary Basis of Accounting
The City prepares its budgets on a basis consistent with generally accepted accounting principles.
8 E. Component Units
The City is defined, for financial reporting purposes, in conformity with the Governmental Accounting Standards Board’s Codification of 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 has identified the Redondo Beach Housing Authority, the Redondo Beach Parking Authority and the Redondo Beach Public Financing Authority, as component units for inclusion in the City’s financial statements.
F. Finance Operations
The Financial Services Department is responsible for municipal accounting, financial reporting, payroll, budget preparation, procurement and revenue collection.
The Financial Services Department is headed by the Finance Director. The department is supported by the following staff: an Assistant Financial Services Director; a Payroll and Finance Manager; a Grants Financial Administrator, two Administrative Analysts; a Senior Accountant, two Accountants, two Payroll Technicians, four Accounting Technicians, a Senior Account Clerk, and a part-time Office Assistant.
G. Computer System
The City uses MUNIS by Tyler Technologies for its financial management.
IV. Estimated Time Requirements (may vary due to scheduling conflicts) A. Proposal Calendar
Request for Proposals Issued January 8, 2024
Deadline to submit written questions February 1, 2024
Due Date for Proposals (due by 3:00pm) February 13, 2024 Interview of Finalists February 2024 (date TBD)
B. Notification and Contract Dates
Selected Firm Notified February 2024 (date TBD)
Contract Date March 2024 (date TBD)
C. Estimated Report Completion Dates (Annually)
All electronic reports December 1
All printed reports December 8
(as outlined in Section II.-C. Reports to be Issued)
9 D. Other Important Dates (tentative)
Fiscal Year End June 30
Close of Accrual Period August 31
Trial Balance September 30
Presentation to Audit Committee Early December
Presentation to Budget and Finance Commission Early December Presentation to City Council Third Tuesday of December
V. Assistance to be Provided to the Auditors and Report Preparation A. Financial Services Department
The Financial Services Department staff and other responsible City personnel will be available during the audit to assist the firm by providing information, documentation and explanation.
The City will prepare the confirmation letters.
B. Schedules and Working Papers
The City’s Financial Services staff will prepare most of the schedules or working papers, as has been done in prior audits. The list of schedules required by the auditors shall be provided to the City no later than one (1) month prior to the interim audit.
The City encourages questions from the audit staff; however, audit staff should be sensitive to City staff’s working schedules and timelines in obtaining required information.
C. Work Area, Telephones, Photocopying and WI-FI Connection.
The City will provide the auditors with reasonable workspace. The auditors will also be provided access to telephones, photocopying and WI-FI connection.
D. Report Preparation
Report preparation, editing and typing of all reports shall be the responsibility of the auditors.
The auditor will also be responsible for printing 30 copies of the ACFR and all other reports.
VI. Proposal Requirements
A. General Requirements
1. Inquiries
Any inquiries concerning the request for proposals or additional information required by the respondent should be directed to:
Stephanie Meyer, Assistant Financial Services Director
City of Redondo Beach
415 Diamond St., Door 1
10 Redondo Beach, California 90277
[email protected] (preferred method)
Phone (310) 697-3134
If the proposer is in doubt as to the meaning of any part of the Request for Proposals, or discovers discrepancies in, or omissions from, the Request for Proposals, the proposer shall submit to the City a written request for an interpretation or clarification. All requests should be sent to the above email and/or address and must be received no later than February 1, 2024 by 5:00pm to enable the City to provide responses to all Proposers. The Proposer shall be responsible for the prompt delivery of the request. The City shall not be responsible for any explanation or interpretations of the Request for Proposals other than by written addendum delivered to each proposer. No oral interpretations of any provision in the Request for Proposals shall be binding upon the City.
2. Submission of Proposals
Eleven (11) copies of the proposal must be received no later than 3:00 pm on February 13, 2024, for a proposing firm to be considered and each proposal must include the following:
a. Title Page
Title page showing “Audit Services” as the subject; the firm’s name; the name, address and telephone number of a contact person; and the date of the proposal. b. Table of Contents
c. Transmittal Letter
A signed letter of transmittal briefly stating the following:
1. the proposer’s understanding of the work to be done;
2. the commitment to perform the work within the time period;
3. a statement why the firm believes itself to be best qualified to perform the engagement;
4. a statement committing that on-site audit staff will work the City’s hours during the interim and year-end fieldwork phases of the audit;
5. a statement committing that the “Prepared by Client” (PBC) list will be provided to the City no later than one (1) month before the beginning of both interim and year-end fieldwork;
6. a statement committing to perform all follow up necessary to collect all outstanding attorney confirmation letters to ensure audit is FINAL on date due; and
7. a statement that the proposal is a firm and irrevocable offer. d. Technical Qualifications
The technical qualifications information should follow the order set forth in Section VI-B of this request for proposals.
11 e. Bid Amount – Proposed Fees
The bid amount for the proposed fees should follow the order set forth in Section VIC of this request for proposals.
B. Technical Qualifications
1. General Requirements
The purpose of the technical aspect of the proposal is to demonstrate the qualifications, competence and capacity of the firms seeking to undertake an independent audit of the City. As such, the substance of the proposals will carry more weight than the form or manner of presentation. The technical aspect of the 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 requirements outlined in the request for proposals.
The technical portion of the proposal should address all the points outlined in the request for proposals. 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.
2. Independence
The firm should provide an affirmative statement that it is independent of the City and all of its component units as defined by the U.S. General Accounting Office’s Standards for Audit of Governmental Organizations, Programs, Activities and Functions (1988).
The firm should also list and describe the firm’s professional relationships involving the City or any of its component units for the past five (5) years, together with a statement explaining why such relationships do not constitute a conflict of interest relative to performing the proposed audit.
In addition, the firm shall give the City written notice of any professional relationships entered into during the period of this agreement.
3. License to Practice in California
An affirmative statement should be included indicating that the firm is licensed to practice in California.
4. Insurance
The selected firm will maintain the minimum insurance requirements during the entire term of its engagement and is required to provide the City with a Certificate of Insurance. Exhibit D of the Agreement for Consulting Services (Appendix C) lists the minimum insurance requirements, which includes an endorsement naming the City as additionally insured.
12 5. 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 Financial Statements in conformance with all GASB pronouncements, including GASB 34.
The proposal 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, 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.
The firm is also required to:
• Submit a copy of the report on its most recent external quality control review, with a statement on whether that quality control review incorporated a review of specific government engagements.
• Provide information on the results of any federal or state desk reviews or field reviews of its audits during the past three (3) years.
• 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.
6. Partner, Supervisory and Staff Qualifications and Experience The firm should identify the principal supervisory and management staff, including engagement partners, managers, other supervisors and specialists who would be assigned to the engagement and indicate whether each such person is licensed to practice as a certified public accountant in California. The firm should also provide information on the government auditing experience of each person.
The firm should provide as much information as possible regarding the number, qualifications, experience and training 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.
Engagement partners, managers, other supervisory staff and specialists may be changed only if those personnel leave the firm or are promoted. 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.
7. Similar Engagements with Other Government Entities
For the firm’s office that will be assigned responsibility for the audit, list the most significant engagements (maximum of 5) performed in the last five years that are similar to the engagement described in this request for proposals. 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. 13 8. 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.
Proposers will be required to provide the following information on their audit approach:
a. Proposed segmentation of the engagement.
b. Level of staff and number of hours to be assigned to each proposed segment of the engagement.
c. Sample sizes and the extent to which statistical sampling is to be used in the engagement.
d. Type and extent of analytical procedures to be used in the engagement. e. Approach to be taken to gain and document an understanding of the City’s internal controls structure.
f. Approach to be taken in determining laws and regulations that will be subject to audit test work
g. Approach to be taken in drawing audit samples for purposes of tests of compliance.
9. Identification of Anticipated Potential Audit Problems The proposal should identify and describe any anticipated potential audit problems, the method and timing of communicating these problems, the firm’s approach to resolving these problems and any special assistance that will be requested from the City.
C. Price
1. Total All-inclusive Maximum Price
The price should contain all information relative to performing the audit engagement as described in this request for proposals. The total all-inclusive maximum price in the proposal 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 proposal. Such costs should not be included in the proposal.
2. Schedule of Professional Fees and Expenses
The price should include a schedule of professional fees and expenses for each of the three (3) years, plus the optional two years, presented in the format provided in the attachment (Appendix B), that supports the total all-inclusive maximum price. The cost of special services described in Section II-D of this request for proposals should be disclosed as separate components of the total all-inclusive maximum price.
3. Out-of-Pocket Expenses Included in the Total All-inclusive Maximum Price Out-of-pocket expenses for firm personnel should be presented in the format provided in the attachment (Appendix B). All expense reimbursements will be charged against the total all-inclusive maximum price submitted by the firm. 14 4. Rates for Additional Professional Services
If it becomes necessary for the City to request the auditors to render any additional services, then such additional work shall be performed only if set forth in a written agreement signed by both the City and the firm. Any such additional work agreed to between the City and the firm shall be performed at the same rates set forth in the schedule of fees and expenses included in the proposal amount.
5. Manner of Payment
Progress payments 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 bid amount. Interim billings shall cover a period of not less than a calendar month. Ten percent (10%) will be withheld from each billing pending delivery of the firm’s final reports.
VII. Evaluation Procedures
A. Review of Proposals
The City will use a competitive process based upon the three sets of criteria in Section VII-B below. The City recognizes that if a firm fails to meet expectations during any part of the process, the City reserves the right to proceed with the remaining firms or to elevate a firm that was not elevated before.
B. Evaluation Criteria
Proposals will be evaluated using three (3) sets of criteria. Firms meeting the mandatory criteria will have their proposals evaluated for both technical qualifications and price. The following represent the principal selection criteria which will be considered during the evaluation process.
1. Mandatory Elements
a. The audit firm is independent and licensed to practice in California b. The firm has no conflict of interest with regard to any other work performed by the firm for the City.
c. The firm submits a copy of its most recent external quality control review report, and the firm has a record of quality audit work.
d. The firm adheres to the instructions in this request for proposals on preparing and submitting the proposal.
2. Technical Qualifications:
a. Expertise and Experience
i. The firm’s experience and performance on comparable government engagements.
15 ii. 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.
iii. The firm’s experience and performance with all GASB pronouncements, including GASB 34.
iv. The firm’s quality of recommendations.
b. Audit Approach
i. Adequacy of proposed staffing plan for various segments of the engagement. ii. Adequacy of sampling techniques.
iii. Adequacy of analytical procedures.
3. Price
Cost will not be the primary factor in the selection of an audit firm.
C. Oral Presentations
During the evaluation process, the City may, at its discretion, request any one or all firms to make oral presentations. Such presentations will provide firms with an opportunity to answer any questions the City may have on a firm’s proposal. Not all firms may be asked to make such oral presentations.
D. Final Selection
It is anticipated that a firm will be selected in February 2024, with the specific date to be determined during the review process. Following notification of the firm selected, it is expected a contract will be executed between both parties promptly in March 2024. Staff intends to present its recommendation of the selected firm to City Council at a meeting in March for their approval. The selected firm will be expected to attend the March council meeting to answer any questions related to the contract and/or audit services.
E. Right to Reject Proposals
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 and the firm selected.
The City reserves the right to reject any or all proposals.
C ITY OF
REDONDO BEACH FY 2023-24
Financial Services Administration
Financial Services
Finance Director (1)
Assistant Financial Services Director (1)
Payroll and Finance Manager (1)
Grants Financial Administrator (1)
Senior Accountant (1)
Administrative Analyst (2)
Accountant (2)
Payroll Technician (2)
Accounting Technician (4)
Senior Account Clerk (1)
APPENDIX A
APPENDIX B
SCHEDULE OF PROFESSIONAL FEES AND EXPENSES
FOR THE AUDIT OF THE (YEAR) FINANCIAL STATEMENTS
Staff Type Hours
Standard
Hourly
Rates
Quoted
Hourly
Rates Total
Partners
Managers
Supervisory Staff
Staff
Other (specify)
Subtotal Staff
Total for services described in Section
II-A of the request for proposals.
Out-of-pocket expenses
Meals and lodging
Transportation
Other (specify)
Subtotal Out-of-pocket
Executive Time for Research and
Assistance
Total all-inclusive maximum price
(YEAR) audit
Note: The rate quoted should not be presented as a general percentage of the standard hourly rate or as a gross deduction from the total all-inclusive maximum price.
APPENDIX C