NOTICE OF REQUEST FOR
PROPOSALS
FOR
INDEPENDENT AUDITING SERVICES
FOR
THE CITY OF SANTA MARIA
For questions regarding this Request for Proposal (RFP), please contact: Rick Kirkwood, Finance Department
City of Santa Maria
Email: [email protected]
ATTACHMENT B
INTRODUCTION
The City of Santa Maria (“City”) is soliciting proposals from certified public accounting firms to audit its financial statements for the three fiscal years beginning with the fiscal year ending June 30, 20 24, 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 and the standards applicable to financial audits contained in Governmental Auditing Standards issued by the Comptroller General of the United States, the provisions of th e Federal Single Audit Act as amended in 1996, and 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 to reimburse responding firms for any expenses incurred in preparing proposals in response to this request.
During the evaluation process, the City reserves the right, where it may serve the City’s best interest, to request additional information or clarifications from proposers, to allow corrections of errors or omissions, and to amend this RFP as necessary.
All materials submitted to the City in response to this RFP shall remain the property of the City.
Submission of a proposal indicates acceptance by a firm of the conditions contained in this request for proposal, unless clearly and specifically noted in the proposal submitted and confirmed in the contract between the City and the selected firm.
To be considered, a proposal must be received by 5:00 p.m., Monday, April 1, 2024. The proposals will be evaluated and ranked according to the criteria provided in the “Evaluation Process” in this RFP. This RFP is not an offer by the City to contract with a selected auditing firm responding to this RFP. The City reserves the right to reject any and all bids, to waive minor irregularities in any proposal, to negotiate with qualified sources, or cancel this request in total or in part. Please see the Proposal Requirements in this document for further information.
CITY PROFILE
The City of Santa Maria was incorporated on September 12, 1905. The City is located in Santa Barbara County on the west coast of California in what is known as the Central Coast. Santa Maria is the largest City by population and geographic area in the County. The City provides a full range of municipal services including police and fire services, engineering and planning, street maintenance, parks and recreation services, water and wastewater utilities, solid waste collection and disposal, and general administrative activities. For the 2023-24 fiscal year, the City has 658 authorized full-time and part-time positions, an adopted General Fund Budget of approximately $126.9 million, and a total adopted budget of approximately $357.5 million.
The City is organized into 10 departments. The accounting and financial reporting functions of the City are centralized.
Funds: The City uses the following fund types in its financial reporting:
Governmental Funds:
General Fund (several funds are rolled into the General Fund) Special Revenue Funds (22 funds)
Debt Service Funds (1 fund)
Capital Projects Funds (2 funds)
Proprietary Funds:
Enterprise Funds (3 types of enterprises, several funds roll into these 3) Internal Service Funds (3 funds reported, several funds toll into these 3) Fiduciary Funds
Agency Funds (2 funds)
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 units (with fiscal year ending June 30) for inclusion in the City’s financial statements:
Santa Maria Public Financing Authority.
This component unit is to be audited as part of the audit of the City’s financial statements. The contact person and record location is the same as the primary unit.
Joint Ventures: The City participates in joint ventures with other governments:
Local Government Finance Joint Powers Authority; and
Central Coast Water Authority.
Finance Department Structure: The Finance Department is managed by Xenia Bradford, Interim Finance Director, and consists of 27 employees. The principal functions performed and the number of employees assigned to each are as follows:
Full-Time
Administration 3
Accounting 4
Accounts Payable 1
Budget 2
Grants 1
Payroll 5
Treasury 4
Utility Billing 7
The City is a long time recipient of GFOA’s Certificate of Achievement for Excellence in Financial Reporting.
The City desires to continue preparing reports which will merit receipt of these awards each year.
More detailed information on the government and its finances can be found in budget documents, official statements, annual financial reports, and policies and procedures manuals. These documents are available on the City’s website: www.cityofsantamaria.org .
Availability of Prior Reports and Work Papers
Moss, Levy, Hartzheim, CPA’s (ML&H) in Santa Maria, C alifornia 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 ML&H.
1. City of Santa Maria Comprehensive Annual Financial Report;
2. A Single Audit Report; and
3. City of Santa Maria Measure U Financial Statements.
SCOPE OF SERVICES
The City’s goal is to provide the public and its constituents with a comprehensive annual financial statement that provides 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 of the Basic Financial Statements of the City in conformity with generally accepted accounting principles and issue an opinion thereon. The auditor is not required to audit the combining and individual fund financial statements and supporting schedul es. However, the auditor is to provide an “in -relation-to” report on the combining and individual fund financial statements and supporting schedules based on the auditing procedures applied during the audit of the government-wide financial statements. The auditor is not required to audit the statistical section of the report.
2. Perform certain limited procedures involving management’s discussion and analysis (MD&A) and required supplementary information (RSI) required by the Governmental Accounting Standards Board as mandated by generally accepted auditing standards.
3. Audit of the financial statements of the Measure U Fund of the City of Santa Maria in accordance with the generally accepted accounting principles and issue an opinion thereon.
4. Test compliance with the Single Audit Act as amended in 1996, and applicable laws and regulations. It is expected that the auditor will prepare , publish, and submit an audit report to federal and state agencies as required.
5. Prepare a Memorandum on Internal Control Structure and Management Letter.
6. Test compliance with Proposition 111, Article XIII.B – Review of Appropriations Limit Calculations.
7. Examine other reports or perform other services as required.
The firm shall comply with all insurance requirements of the City of Santa Maria, included in the Professional Services Agreement, attached as Attachment A.
AUDITING STANDARDS TO BE FOLLOWED
To meet the requirements of this request for proposal, the audit shall be performed in accordance with:
1. Generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants;
2. The standards applicable to financial audits contained in Government Auditing Standards (2018 Revision), issued by the Comptroller General of the United States;
3. The provisions of the Single Audit Act as amended in 1996; and
4. The provisions of U. S. Office of Management and Budget (OMB) Circular A -133, Audits of State and Local Governments and Non-Profit Organizations.
5. The independence standard promulgated in the General Accounting Offices Government Auditing Standards.
REPORTS TO BE ISSUED
Following completion of the audit and preparation of the fiscal year’s comprehensive financial and special purpose audits, the auditor shall issue:
1. Reports on the fair presentation of the financial statements in conformity with generally accepted accounting principles as listed below:
a. Basic Financial Statements for the City;
b. Financial Statements for the City’s Measure U Fund;
c. Audit Report for the City of Santa Maria Single Audit Act.
2. A report based on the auditor’s understanding of the internal control structure and assessment of control risk. In this report, the auditor will communicate any reportable conditions found during the audit and indicate whether those conditions are material weaknesses.
3. A separate report on the auditor’s analysis of the internal control structure used in the administration of federal financial assistance program.
4. A report on the City’s compliance with laws and regulations related to “major” federal awards including an opinion on compliance with specific requirements applicable to “major” federal programs. The report on compliance shall include instances of non-compliance.
5. A Management Letter addressed to the City Council of the City of Santa Maria setting forth recommendations (as applicable) for improvements in the City’s accounting systems.
6. A letter to the City Manager and Finance Director including any reportable conditions found during the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of the internal control structure, which could adversely affect the organization’s ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. “Non -reportable conditions” discovered by the auditor shall be communicated in the “Management Letter.”
7. A report on the City’s compliance with Proposition 111, Article XIII.B of the California State Constitution and Government Code 7900 (et seq.) in its calculation of the “Gann Limit”.
In addition, the auditors shall be required to make an immediate, written notification of all irregularities and illegal acts or indications of illegal acts of which they become aware to the following parties:
a. The City Council of the City of Santa Maria;
b. The City Manager of the City of Santa Maria; and
c. The Finance Director of the City of Santa Maria.
The Finance Department shall prepare draft financial statements, notes and all required supplementary schedules and statistical data by November 15
th of each year. The auditor shall provide all
recommendations, revisions, and suggestions for improvements to the Finance Director by November 30th.
The Finance Director will complete their review of the draft report as expeditiously possible. This process is not expected to exceed one week. During that period, the auditor should be available for any meetings that may be necessary to discuss the audit reports. Once all issues of discussion are resolved, the final signed audit opinion shall be delivered to the Finance Director within seven (7) working days for inclusion in the ACFR. It is anticipated that this process will be completed and the final report delivered by December 15 th annually.
SPECIAL CONSIDERATIONS
The City will send its Annual Comprehensive Financial Report (ACFR) to the Government Finance Officers’ Association (GFOA) of the United States and Canada each year for review in GFOA’s Certificate of Achievement for Excellence in Financial Reporting program. It is anticipated that the auditor may be required to provide special assistance to the City to meet the requirements of that program and the auditing standards as set forth in this RFP.
Currently, the City does not anticipate having to prepare one or more official statements in connection with the sale of debt securities that will contain the basic financial statements and the auditor’s report thereon.
However, the auditor shall be required, if requested by the fiscal advisor and/or the underwriter, to issue a “consent and citation of expertise” as the auditor and any necessary “comfort letters.”
All working papers and reports must be retained at the auditor’s expense, for a minimum of seven (7) years (or the retention timeframe established by the professional standards, whichever is longer), unless the firm is notified in writing by the City that there is a need to extend the retention period. The auditor will be required to make working papers available, upon request.
In addition, the firm shall respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers.
CITY ASSISTANCE PROVIDED TO THE AUDITOR
The Finance Department’s staff and responsible management personnel will be available during the audit to assist the firm by providing information, documentation, and explanations. Rick Kirkwood, Interim Assistant Finance Director, will be responsible for acting as the liaison between the audit firm and the accounting personnel.
The City will provide the auditor with reasonable workspace, desks, and chairs. The auditor will also be provided with access to a telephone, laptop, internet, photocopying, and FAX machines.
Annual Comprehensive Financial Report: City personnel are currently responsible for compiling the financial statements and providing this information to the auditor either electronically or in hard copy. The auditor is responsible for assisting City staff in the preparation of the statements, footnotes, required supplementary information, and the final check of the statement presentation.
Single Audit Report: Auditor prepares, prints, and binds the documents.
Measure U Fund Financial Statements: Auditor prepares, prints, and binds the documents.
Optional Service – Preparation of the Annual Comprehensive Financial Report Document (ACFR). The City would like to solicit proposals to transition preparation of the entire ACFR including preparation of financial statements for the report and producing an electronic copy of the final report.
The City is open to discussion regarding the division of these activities in order to produce the most cost- effective product for both the City and the auditor.
PROPOSED CONTRACT TERM
The proposed term of this contract is three years, including the audit of the June 30, 2024, June 30, 2025, and June 30, 2026, financial statements. The City may extend this agreement for up to an additional two years. The contract may be terminated or suspended by the City as provided in the Professional Services Agreement (Attachment A).
CONTRACT AGREEMENT
The City’s standard professional services agreement shall be used (Attachment A). The auditing firm shall meet the requirements of this agreement; and auditing firm shall submit with the proposal a specific list of any concerns with the City’s Agreement.
NON-DISCRIMINATION REQUIREMENT
By submitting a proposal, the respondent represents that it and its subsidiaries do not and will not discriminate against any employee or applicant for employment on the basis of race, religion, sex, color, national origin, sexual orientation, ancestry, marital status, physical condition, pregnancy or pregnancy- related conditions, political affiliations or opinion, age, or medical condition.
RFP SCHEDULE
Event Date and time
RFP Issuance December 1, 2023
Due date for Request for Information January 15, 2024
Response to Request for Information (no later than) January 31, 2024 Proposals due
Tentative Finalist Interviews (if necessary)
March 1, 2024 no later than 5:00 p.m.
March 20, 2024
Tentative Award agreement April 15, 2024
PROPOSAL REQUIREMENTS
The proposal must be concise, well organized, and demonstrate the actuarial firm’s qualifications.
Responses shall follow the format outlined below. Proposals must be received prior to 5:00 p.m. on March 1, 2024. The proposals shall also include the information listed below:
1. Cover Page. Indicate the request for proposals subject; the firm’s name; the name, address, email address, and telephone number of the contact person; and the date of the proposal.
2. Affirmative statements indicating:
a. The firm and all assigned key professional staff are properly licensed to practice in California.
b. The firm is independent of the City of Santa Maria as defined by generally accepted auditing standards/the U. S. General Accepting Office’s Government Auditing Standards. c. The independent auditor possesses (or will possess) a City of Santa Maria Business License while conducting all work under the agreement.
3. Description of the firm including governmental experience. a. The Proposer should state the size of the firm, the size of the firm’s governmental audit staff, the location of the office, 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 employed on a part -
time basis. Staff consistency is an important consideration. b. The Proposer is required to submit a copy of a report on its most recent external quality control review (peer review), with a statement whether that quality control included a review of specific government engagements.
c. The Proposer shall 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 Proposer 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.
4. Partner, Supervisory and Staff Qualifications and Experience. a. Identify the principal supervisory and management staff, including engagement partners, managers, other supervisors, and specialists who would be assigned to this engagement.
Indicate whether each person is registered or licensed to practice as a certified public account 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.
b. Provide as much information as possible regarding the number, qualifications, experience, and training, including relevant continuing professional education of the specific staff to be assigned to this engagement. Indicate how the quality of staff over the term of the agreement will be assured.
c. 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 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.
d. Other audit personnel may be changed at the discretion of the Proposer provided that replacements have substantially the same or better qualifications or experience.
5. 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 proposal. In developing the work plan, reference should be made to such sources of information as the City of Santa Maria’s budget and related materials, organizational charts, manuals, programs, and financial and other management information systems.
Proposers will be required to provide the following information on their audit approach:
a. Proposed segmentation for the engagement;
b. Level of staff and number of hours to be assigned to each proposed segment of the engagement;
c. Sample size and the extent to which statistical sampling is to be used in this engagement; d. Type and extent of analytical procedures to be used in this engagement; e. Approach to be taken to gain and document an understanding of the City’s internal control structure;
f. Approach to be taken in determining laws and regulations that will be subject to audit test work; and
g. Approach to be taken in drawing audit samples for purposes of tests of compliance.
6. Similar Engagements with Other Government Entities. A list of municipal government references where the firm has provided auditing services within the preceding thirty-six (36) months. The list shall include a minimum of three references with a maximum of five and should include the names and contact information of finance officers in the municipality. The
City reserves the right to contact any or all of the listed references regarding the audit services performed by the Proposer.
7. Identification 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.
8. Cost of Services. The proposal should contain all pricing information relative to performing the audit engagement as described in this request for proposal. The total all- inclusive maximum fee to be proposed is to contain all direct and indirect costs including all out -of- pocket expenses. This information is required to be shown for each year to be audited (including the two optional extension years) and in total.
REQUEST FOR INFORMATION
Interested auditing firms are encouraged to promptly notify the City in writing of any questions, apparent major inconsistencies, pr oblems, or ambiguities in the Scope of Services or this RFP. Any questions and requests for clarification/additional information shall be submitted by email to Rick Kirkwood, Finance Department, at [email protected] no later than January 15, 2024 at 5:00 p.m. All questions will be responded to no later than January 31, 2024 at 5:00 p.m. If deemed necessary, the City will provide copies of the questions and answers to all prospective proposers.
EVALUATION PROCESS
The City will select an auditing firm based on the demonstrated competence and on the professional qualifications necessary for satisfactory performance of the services required. When selecting the firm, the skill and ability of the entity or person performing the services is a key component of the selection criteria. Cost will be only one factor in determining the selection. The contract may not be awarded to the lowest bidder and therefore, the City will undertake the following evaluation process:
1. The City will review and evaluate all submitted documents received per this RFP.
2. Submittals will be reviewed for responsiveness and evaluated based on the factors in the table below.
Evaluation Criteria Points
Firm credentials – The firm’s past practice and performance on comparable government engagements.
25 Staff credentials – 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.
15 Audit approach – The quality of the proposed approach including documenting and understanding the internal control structure, drawing audit samples, and preliminary schedule for performing key phases of the audit. 25 Cost – Competitive cost of services. 25
Responsiveness to RFP – The firm’s adherence to the terms set forth in the RFP.
Inclusion of all required elements listed in the RFP.
10 Total 100
3. After the submittals are evaluated and ranked, the City may elect to contact references of the
top respondents. Responses from those references regarding client relationship, delivery of services, quality and budget will be considered and may change the ranking of proposals.
4. After the submittals are evaluated and ranked, the City, at its sole discretion, may elect to interview one or more finalist respondents. Note, respondents may be asked to submit additional documentation. Additionally, the City reserves the right to select a proposal without conducting interviews.
5. If a commitment is made, it will be to the most qualified respondent with whom the City is able to successfully negotiate the compensation and terms and conditions of any and all agreements.
6. Final selection of an auditing firm, terms and conditions of any and all agreements, and authority to proceed with these services, shall be at the sole discretion of the City.
7. If the City is unable to negotiate a satisfactory agreement, with terms and conditions the City determines to be fair and reasonable, the City may then commence negotiations with the next most qualified auditing firm in sequence, until an agreement is reached, or determination is made to reject all submittals.
INSTRUCTIONS TO SUBMITTING FIRMS
By submitting a proposal, the prospective firm represents that it has thoroughly examined and become familiar with the services required under this RFP, and that it is capable of delivering quality services to the City.
Any questions related to this RFP shall be directed to Rick Kirkwood, Interim Assistant Finance Director, via email at [email protected]
pursuant to the Request for Information section above.
Four (4) paper copies and one (1) electronic copy (thumb drive) of the complete written proposal must be received by the Finance Department no later than 5:00 p.m. on March 1, 2024. Proposals will not be accepted after this deadline. Faxed or emailed proposals will not be accepted. Proposals must be sealed and clearly state, “Proposal for Auditing Services” on the outside of the package or envelope. The Proposal should be addressed as follows:
City of Santa Maria
Finance Department
Attn: Rick Kirkwood, Interim Assistant Finance Director 206 East Cook Street,
Santa Maria, CA 93454
A firm may withdraw its proposal at any time before the due date for submission of the proposals as provided in the RFP by delivering a written request for withdrawal signed by, or on behalf, of the prospective firms.