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HomeMy WebLinkAboutResolution - 2011-R0244 - Agreement - BKD LLP - Audit Of Annual Financial Statements - 06_09_2011Resolution No. 2011-RO244 June 9, 2011 Item No. 5.4 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock is hereby authorized and directed to execute for and on behalf of the City of Lubbock, an Agreement for an audit of annual financial statements by and between the City of Lubbock and BKD, LLP of Dallas, Texas, which Agreement and any associated documents are attached hereto as Exhibit "A" and made a part hereof for all intents and purposes. In addition thereto, the City Manager or a designated representative may execute engagement letters or other associated documents as required during the term of the Agreement. Passed by the City Council this June 9 , 2011. TOM MARTIN, MAYOR ATTEST: Cos Rebe ca Garza, City Secretai APPROVED AS TO CONTENT: ubvxt�� Andy B rcham, Chief Financial Officer APPROVED AS TO FORM: C ad Weaver, Assistant City Attorney Res-Contract-BKD,LLP 5.6.11 Contract: 10072 Resolution No. 2011-RO244 CONTRACT This professional services contract is executed this 9th day of June, 2011 by and between the City of Lubbock, Texas, hereinafter called the City, and BKD, LLP. WHEREAS, the City has issued a Request for Proposal (RFP 11-10072-DT) for Audit of Annual Financial Statements; and WHEREAS, the proposal submitted by BKD, LLP has been selected as the proposal which best meets the needs of the City to provide such professional services; WITNESSETH: IN CONSIDERATION of mutual promises of the parties contained herein and other good and valuable consideration, the parties agree as follows: 1. BKD, LLP shall provide the City with the necessary professional services to audit all funds including those which are covered under the provisions of the Single Audit Act. 2. The term of the contract shall run from the date of execution and shall automatically renew each year, subject to budget approval by the governing body of the City, for such terms as are required to perform the contracted professional auditing services for the fiscal years ending September 30, 2011 through September 30, 2015. 3. The professional accounting services shall be provided in accordance with the terms and conditions set forth in the Request for Proposal, attached hereto. An engagement letter will be executed each year by authorized representatives of both parties. 4. BKD, LLP shall be compensated for services rendered under this contract in accordance with the terms and conditions set forth in the Exhibits. No work shall be performed beyond the present scope of this contract without express prior approval by the governing body of the City. 5. The City or BKD, LLP shall have the right to terminate the contract upon 30 days written notice. 6. In the event of a conflict between any terms and conditions of this contract and the Exhibit, the terms and conditions of the Exhibit shall take precedence. 7. Neither party may assign any of its rights or delegate any of its obligations under this agreement, without the express written consent of the other. 8. It is agreed that the failure of any party to invoke any of the available remedies under this agreement or under law in the event of one or more breaches or defaults by any party under the agreement shall not be construed as a waiver of such provisions and conditions and shall not prevent the parties from invoking such remedies in the event of any future breach or default. 9. Each paragraph of this agreement is severable from all other paragraphs. In the event any court of competent jurisdiction determines that any paragraph or subparagraph is invalid or unenforceable for any reason, all remaining paragraphs and subparagraphs shall remain in full force and effect. 10. This agreement shall be interpreted according to and enforced under the laws of the State of Texas. 11. This agreement contains the entire agreement of both parties hereto, and no other oral or written agreement shall be binding on the parties hereto. This agreement supersedes all prior agreements, contracts and understandings of any kind between the parties relating to the subject matter hereof. This agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this professional services contract on or as of the date first written above. CITY OF LUBBOCK BKD, LLP i�►�� By: tll�d Torn Martin, Mayor Title: PckrC.- ATTEST: Rebe ca Garza, City Secret y APPROVED AS TO CONTENT: — A\dmbv-�'� Andy Burcham, Chief Financial Officer APPR ED S TO FORM: Assistant City Attorney Resolution No. 2011-RO244 BKDLP CPAs & Advisors May 26, 2011 Honorable Tom Martin, Mayor Members of the City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas P.O. Box 2000 Lubbock, Texas 79457 14241 Gal a Parkway, Suite 1100 Dallas, TX 75254-2961 972 702.8262 Fax 972.702.0673 www.bkd.com EXHIBIT A We are pleased to confirm the arrangements of our engagement and the nature of the services we will provide to City of Lubbock, Texas. ENGAGEMENT OBJECTIVES We will audit the basic financial statements of City of Lubbock, Texas and Lubbock Power and Light as of and for the year ending September 30, 201 I, in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the State of Texas Uniform Grant Management Standards, issued by the Governor's office of Budget and Planning, U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations and the Passenger Facility Charge Audit Guide for Public Agencies, issued by the Federal Aviation Administration (PFC Guide). We will also perform agreed upon procedures related to the City of Lubbock's report to the Texas Commission on Environmental Quality (TCEQ). The objectives of our audit are: ✓ Expression of an opinion on the conformity of your financial statements, in all material respects, with accounting principles generally accepted in the United States of America. ✓ Issuance of a report on your compliance based on the audit of your financial statements. ✓ Issuance of a report on your internal control over financial reporting based on the audit of your financial statements. ✓ Expression of an opinion on your compliance, in all material respects, with the types of compliance requirements described in the U. S. Office of Management and Budget Circular A-133 Compliance Supplement that are applicable to each of your major federal award programs. ✓ Issuance of a report on your internal control over compliance based on the audit of your compliance with the types of compliance requirements that are applicable to each of your major federal and state award programs. ✓ issuance of a report on your schedule of expenditures of federal and state awards. ✓ Expression of an opinion on your compliance, in all material respects, with the types of compliance requirements described in the State of Texas Uniform Grant Management Standards, issued by the Governor's Office of Budget and Planning that are applicable to each of your major state award programs. experience ND Praxity�: MEMBER ' L ,;,. n rx [. n rn + i ; r,t Honorable Tom Martin, Mayor Members of the City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas Page 2 ✓ Issuance of a report on agreed upon procedures related to the City of Lubbock's report to the TCEQ. ✓ Expression of an opinion on your compliance, in all material respects, with the types of compliance requirements described in the PFC Guide that are applicable to your passenger facility charge program (PFC Program). ✓ Issuance of a report on your internal control over compliance based on the audit of your compliance with the types of compliance requirements that are applicable to the PFC program. ✓ Issuance of a report on your schedule of PFC Program Revenues and Disbursements. ✓ Issuance of a report on adherence to the City's investment policies as required by the Public Funds Investment, Act Chapter 2256 of the Texas Government Code. OUR RESPONSIBILITIES Auditing standards generally accepted in the United States of America, Government Auditing Standards and OMB Circular A-133 require that we plan and perform: ✓ The audit of the financial statements to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. ✓ The audit of compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement applicable to each major federal award program to obtain reasonable rather than absolute assurance about whether noncompliance having a direct and material effect on a major federal award program occurred. ✓ The audit of compliance with the types of compliance requirements described in the PFC Guide applicable to the PFC program to obtain reasonable rather than absolute assurance about whether noncompliance having a direct and material effect on the PFC program occurred. Accordingly, a material misstatement or noncompliance having a direct and material effect may remain undetected. Our audit of the financial statements is designed to detect misstatements and noncompliance that, in ourjudgment, could have a material effect on the financial statements taken as a whole. Consequently, our audit will not necessarily detect errors or fraud resulting in an immaterial misstatement of the financial statements. Likewise, our audit of compliance with the types of compliance requirements applicable to each major federal and state award program and with the PFC program is designed to detect noncompliance having a direct and material effect on a major program or the PFC program. Consequently, our audit will not necessarily detect noncompliance having an indirect and material or an immaterial effect on any program. An audit also includes obtaining an understanding of the entity and its environment, including internal controls, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing and extent of further audit procedures to be performed. An audit is not designed to provide assurance on internal control over financial reporting or on internal control over compliance or to identify material weaknesses or significant deficiencies. However, we will communicate to you any matter that comes to our attention that we consider a material weakness or significant deficiency. Because of the limits of internal control, errors, fraud, illegal acts or instances of noncompliance may occur and not be detected. Also, in the future, procedures could become inadequate because of changes in conditions or deterioration in design or operation. Two or more people may also circumvent controls, or management may override the system. We are available to perform additional procedures Honorable Tom Martin, Mayor Members of the City Council Ms_ Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas Page 3 with regard to fraud detection and prevention at your request, subject to completion of our normal engagement acceptance procedures. The actual terms and fees of such an engagement would be documented in a separate letter to be signed by you and BKD. Kevin Kemp, CPA is responsible for supervising the engagement and authorizing the signing of the report or reports. If, for any reason, we are unable to complete our audit of the financial statements or our audit of compliance with the types of compliance requirements applicable to each major federal award program or are unable to form or have not formed an opinion, we may decline to express an opinion or decline to issue a report as a result of this engagement. if we discover conditions that may prohibit us from issuing a standard report, we will notify you as well. In such circumstances, further arrangements may be necessary to continue our engagement. YOUR RESPONSIBILITIES To facilitate our audit, management is responsible for making all financial records documentation and other financial and compliance related information available to us. At the conclusion of our engagement, management will provide to us a letter acknowledging certain responsibilities outlined in this engagement letter and confirming: • The availability of this information • Certain representations made during the audits for all periods presented • The effects of any uncorrected misstatements, if any, resulting from errors or fraud aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole Management is responsible for the fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, for adjusting the financial statements to correct material misstatements and for identifying and ensuring compliance with the laws, regulations, contracts and grants applicable to your activities including your federal award programs. Management is also responsible for establishing and maintaining effective internal control over financial reporting and compliance and setting the proper tone; creating and maintaining a culture of honesty and high ethical standards; and establishing appropriate controls to prevent, deter and detect fraud, illegal acts and instances of noncompliance. The results of our tests of compliance and internal control over financial reporting performed in connection with our audit of the financial statements may not fully meet the reasonable needs of report users. Management is responsible for obtaining audits, examinations, agreed -upon procedures or other engagements that satisfy relevant legal, regulatory or contractual requirements or fully meet other reasonable user needs. OTHER SERVICES We may perform other services for you not covered by this engagement letter. You agree to assume full responsibility for the substantive outcomes of those services, including any findings that may result. You also acknowledge that those services are adequate for your purposes and that you will establish and monitor the performance of those services to ensure that they meet management's objectives. Any and all decisions involving management functions related to those services will be made by you, and you accept full responsibility for such decisions. We understand that you will designate a management -level individual to be responsible and accountable for overseeing the performance of those services, and that you will have determined this individual is qualified to conduct such oversight. Honorable Tom Martin, Mayor Members of the City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas Page 4 ENGAGEMENT FEES Our fees will be $220,000, which includes time expended and charges for travel, long-distance telephone, copies, etc. Our pricing for this engagement and our fee structure is based upon the expectation that our invoices will be paid promptly. We will issue progress billings during the course of our engagement, and payment of our invoices is due upon receipt. Interest will be charged on any unpaid balance after 60 days at the rate of 10% per annum. Our engagement fee does not include any time for post -engagement consultation with your personnel or third parties, consent letters and related procedures for the use of our reports in offering documents, inquiries from regulators or testimony or deposition regarding any subpoena. Charges for such services will be billed separately. Our fees may also increase if our duties or responsibilities are increased by rulemaking of any regulatory body or any additional new accounting or auditing standards. We will consult with you in the event any other regulations or standards are issued that may impact our fees. If our invoices for this or any other engagement you may have with BKD are not paid within 30 days, we may suspend or terminate our services for this or any other engagement. In the event our work is suspended or terminated as a result of nonpayment, you agree we will not be responsible for any consequences to you. OTHER ENGAGEMENT MATTERS AND LIMITATIONS Our workpapers and documentation retained in any form of media for this engagement are the property of BKD. BKD will be required to make working papers available to the City upon request and to respond to reasonable inquiries of successor auditors and to allow successor auditors to review working papers relating to matters of continuing audit significance. In addition, we may be requested by regulatory or enforcement bodies to make certain workpapers available to them pursuant to authority granted by law or regulation. You agree that we have no legal responsibility to you in the event we provide such documents or information. During the course of BKD's engagement, BKD may accumulate records containing data, which should be reflected in the City's books and records. The City will determine that all such data, if necessary, will be reflected. Accordingly, the City will not expect BKD to maintain copies of such records in BKD's possession. You agree that any dispute regarding this engagement will, prior to resorting to litigation, be submitted to mediation upon written request by either party. Both parties agree to try in good faith to settle the dispute in mediation. The American Arbitration Association will administer any such mediation in accordance with its Commercial Mediation Rules. The results of the mediation proceeding shall be binding only if each of us agrees to be bound. We will share any costs of mediation proceedings equally. No amendment, modification, or alteration of the terms of this engagement shall be binding unless such amendments, modifications, or alterations are in writing, dated subsequent to this agreement, and duly executed by BKD and the City. If any provision of this agreement is declared invalid or unenforceable, no other provision of this agreement is affected and all other provisions remain in full force and effect. This engagement letter represents the entire agreement regarding the services described herein and supersedes all prior negotiations, proposals, representations or agreements, written or oral, regarding these services. It shall be binding on successors and assigns of you and BKD. Honorable Tom Martin, Mayor Members of the City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas Page S We may from time to time utilize third -party service providers, e.g., domestic software processors or legal counsel, or disclose confidential information about you to third -party service providers in serving your account. We remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures and safeguards to protect the confidentiality of your information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information. In the event we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third -party service provider. We will, at our discretion or upon your request, deliver financial or other confidential information to you electronically via email or other mechanism. You recognize and accept the risk involved, particularly in email delivery as the Internet is not necessarily a secure medium of communication as messages can be intercepted and read by those determined to do so. You agree you will not modify these documents for internal use or for distribution to third parties. You also understand that we may on occasion send you documents marked as draft and understand that those are for your review purpose only, should not be distributed in any way and should be destroyed as soon as possible. If you intend to include these financial statements and our report in an offering document at some future date, you agree to seek our permission to do so at that time. You agree to provide reasonable notice to allow sufficient time for us to perform certain additional procedures. Any time you intend to publish or otherwise reproduce these financial statements and our report and make reference to our firm name in any manner in connection therewith, you agree to provide us with printers' proofs or masters for our review and approval before printing or other reproduction. You will also provide us with a copy of the final reproduced material for our approval before it is distributed. Our fees for such services are in addition to those discussed elsewhere in this letter. You agree to notify us if you desire to place these financial statements or our report thereon on an electronic site. You recognize that we have no responsibility as auditors to review information contained in electronic sites. Any time you intend to reference our firm name in any manner in any published materials, including on an electronic site, you agree to provide us with draft materials for our review and approval before publishing or posting such information. BKD is a registered limited liability partnership under Missouri law. Under applicable professional standards, partners of BKD, LLP have the same responsibilities as do partners in a general accounting and consulting partnership with respect to conformance by themselves and other professionals in BKD with their professional and ethical obligations. However, unlike the partners in a general partnership, the partners in a registered limited liability partnership do not have individual civil liability, directly or indirectly, including by way of indemnification, contribution, assessment or otherwise, for any debts, obligations or liabilities of or chargeable to the registered limited liability partnership or each other, whether arising in tort, contract or otherwise. HIPAA BUSINESS ASSOCIATE AGREEMENT We agree not to use or disclose Protected Health Information of your employees (hereinafter referred to as "PHI") obtained or produced in any form of media during the course of our work in a manner prohibited by HIPAA, as amended. We may use or disclose PHI for purposes of (a) performing our engagement, (b) management and administration of BKD, or (c) carrying out legal responsibilities of BKD. We represent to you that we have implemented what we consider to be appropriate administrative, physical and technical safeguards to protect the confidentiality, integrity and availability of your PHI. Honorable Tom Martin, Mayor Members of the City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas Page 6 With respect to your PHI, we will report to you any breach (as defined in 45 CFR 164.402), material security incident or use or disclosure not authorized by this agreement and, to the extent practical, assist you in mitigating any harmful effects caused by breaches, material security incidents or unauthorized uses or disclosures of which we become aware. To assist you in fulfilling your responsibility to notify impacted individuals and others of a breach involving unsecured PHI (as required under 45 CFR 164.400 et seq.), in this report we will identify to you, to the extent reasonably possible: Each individual whose unsecured PHI was subject to the breach. Any other available information you are required to include in your notification to such individual(s) or others under 45 CFR 164.404(c). We agree that any material violation of these confidentiality provisions entitles you to terminate this engagement. BKD agrees to: Upon their request, make available to the Secretary of Health and Human Services (HHS) our internal practices and books and records relating to the use and disclosure of PHI for purposes of determining your compliance with the Security and Privacy Rule, subject to any applicable legal privileges. Make available information necessary for you to make an accounting of disclosures of PHI about an individual. To the extent we maintain information that is part of a Designated Record Set, make available information necessary for you to respond to requests by individuals for access to PHI that is not in your possession but is considered part of a Designated Record Set, Upon receipt of a written request from you, incorporate any amendments or corrections to PHI contained in our workpapers in accordance with the Security and Privacy Rule to the extent such PHI is considered part of a Designated Record Set. For purposes of this agreement, the term "Security and Privacy Rule" refers to the final rules published to implement the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act of 1996, specifically 45 CFR Parts 160 and 164. The terms "Protected Health Information" and "Designated Record Set" have the same meaning as defined in the Security and Privacy Rule. At the conclusion or termination of this engagement, any PHI retained by us will be subject to the same safeguards as for active engagements. We will obtain from any agents, including subcontractors, to whom we provide PHI received from you, or created or received by us on behalf of you, an agreement to the same restrictions and conditions that apply to us with respect to such PHI. To the extent that any relevant provision of HIPAA is eliminated or held to be invalid by a court of competent jurisdiction, the corresponding portion of this agreement shall be deemed of no force and effect for any purpose. To the extent that any relevant provision of HIPAA is materially amended in a manner that changes the obligations of business associates or covered entities that are embodied in term(s) of this engagement, the Parties agree to negotiate in good faith appropriate amendment(s) to this engagement to give effect to such revised obligations. In addition, Honorable Tom Martin, Mayor Members of the City Council Ms. Lee Ann Dumbauld, City Manager Mr. Andy Burcham, Chief Financial Officer City of Lubbock, Texas Page 7 the terms of this engagement should be construed in light of any interpretation and/or guidance on HIPAA issued by HHS from time to time. If the above arrangements are acceptable to you, please sign the enclosed copy of this letter and return it to us. If the signed copy you return to us is in electronic form, you agree that such copy shall be legally treated as a "duplicate original" of this agreement. �Kplt,op BKD, LLP Signature Awi, A) � in d 0 L t4) Printed Name and Titl Date: -)L1w { -4d f 1 The services and arrangements described in this letter are in accordance with our understanding and are acceptable to us. City of Lubbock, Texas A_t& 43-1-� Signature " b QP6, m , o Printed Name and Title Date: V 0Y"o , Imi Resolution No. 2011—R0244 Clifton Gunderson LLP Cenified Public Accountants & Consultants System Review Report To the Partners of BKD, LLP and the Center for Public Company Audit Firms Peer Review Committee We have reviewed the system of quality control for the accounting and auditing practice of BKD, LLP (the firm) applicable to non -SEC issuers in effect for the year ended May 31, 2008. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants. The firm is responsible for designing a system of quality control and complying with it to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Our responsibility is to express an opinion on the design of the system of quality control and the firm's compliance therewith based on our review. The nature, objectives, scope, limitations of, and the procedures performed in a System Review are described in the standards at www.eicpa.org/prsummary. As required by the standards, engagements selected for review included engagements performed under the Government auditing Standards; audits of employee benefit plans, and an audit performed under FDICIA. In our opinion, the system of quality control for the accounting and auditing practice applicable to non -SEC issuers of BKD, LLP in effect for the year May 31, 2008 has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass, pass with deficiency(ies) or fail. BKD, LLP has received a peer review rating of pass. July 31, 2008 'Ahf e<_. it, I i VImv: an J ':.;.hmzi�•r,, LC 1.vlernaf�orwl Resolution No. 2011-RO244 Attachment to the Peer Review Report of BKD LLP Description of the Peer Review Process Overview Firms enrolled in the AICPA Center for Public Company Audit Firms (the Center) Peer Review Program have their system of quality control periodically reviewed by independent peers. These reviews are system and compliance oriented with the objective of evaluating whether: The reviewed firm's system of quality control for its accounting and auditing practice applicable to non -SEC issuers has been designed to meet the requirements of the Quality Control Standards established by the AICPA. The reviewed firm's quality control policies and procedures applicable to non -SEC issuers were being complied with to provide the firm with reasonable assurance of complying with professional standards. A peer review is based on selective tests and directed at assessing whether the design of and compliance with the firm's system of quality control for its accounting and auditing practice applicable to non -SEC issuers provides the firm with reasonable, not absolute, assurance of complying with professional standards. Consequently a peer review on the firm's system of quality control is not intended to, and does not, provide assurance with respect to any individual engagement conducted by the firm or that none of the financial statements audited by the firm should be restated. The Center's Peer Review Committee (PRC) establishes and maintains peer review standards. At regular meetings and through report evaluation task forces, the PRC considers each peer review, evaluates the reviewer's competence and performance, and examines every report, letter of comments, and accompanying response from the reviewed firm that states its corrective action plan before the peer review is finalized. The Center's staff plays a key role in overseeing the performance of peer reviews working closely with the peer review teams and the PRC. Once the PRC accepts the peer review reports, letters of comments, and reviewed firms' responses, they are maintained in a file available to the public. In some situations, the public file also includes a signed undertaking by the firm agreeing to specific follow-up action requested by the PRC. Firms that perform audits or play a substantial role in the audit of one or more SEC issuers, as defined by the Public Company Accounting Oversight Board (PCAOB), are required to be registered with and have their accounting and auditing practice applicable to SEC issuers inspected by the PCAOB. Therefore, we did not review the firm's accounting and auditing practice applicable to SEC issuers. Planning the Review for the Firm's Accounting and Auditing Practice Applicable to Non - SEC Issuers To plan the review of BKD LLP, we obtained an understanding of (1) the nature and extent of the firm's accounting and auditing practice, and (2) the design of the firm's system of quality control sufficient to assess the inherent and control risks implicit in its practice. Inherent risks were assessed by obtaining an understanding of the firm's practice, such as the industries of its clients and other factors of complexity in serving those clients, and the organization of the firm's personnel into practice units. Control risks were assessed by obtaining an understanding of the design of the firm's system of quality control, including its audit methodology, and monitoring procedures. Assessing control risk is the process of evaluating the effectiveness of the reviewed firm's system of quality control in preventing the performance of engagements that do not comply with professional standards. Performing the Review of the Firm's Accounting and Auditing Practice Applicable to Non - SEC Issuers Based on our assessment of the combined level of inherent and control risks, we identified practice units and selected engagements within those units to test for compliance with the firm's system of quality control. The engagements selected for review included engagements performed under the Government Auditing Standards, audits performed under FDICIA, a multi - office audit, and audits of Employee Benefit Plans. The engagements selected for review represented a cross-section of the firm's accounting and auditing practice with emphasis on higher -risk engagements. The engagement reviews included examining working paper files and reports and interviewing engagement personnel. The scope of the peer review also included examining selected administrative and personnel files to determine compliance with the firm's policies and procedures for the elements of quality control pertaining to independence, integrity, and objectivity; personnel management; and acceptance and continuance of clients and engagements. Prior to concluding the review, we reassessed the adequacy of scope and conducted a meeting with firm management to discuss our findings and recommendations. n C ity Of Tub TEXAS Resolution No. 2011-RO244 ADDENDUM I RFQ 11-10072-DT Audit of Financial Statements DATE ISSUED: APRIL 19, 2011 CLOSE DATE: APRIL 27, 2011 @ 3:00 P.M. The following items take precedence over specifications for the above named Request for Qualifications (RFQ). Where any item called for in the RFQ documents is supplemented here, the original requirements, not affected by this addendum, shall remain in effect. Offeror's attention is invited to review the following changes to RFQ 11-10072-DT — Audit of Financial Statements. 1. Revised Submittal Section, attached. Added Item 4, In the Price Proposal Information Section "Firms shall include a price sheet in a separate, sealed envelope with the signature of the representative of the vendor who is authorized to make such an offer". All requests for additional information or clarification must be submitted in writing and directed to: City of Lubbock D'Ana Torres, Buyer P.O. BOX 2000 Lubbock, Texas 79457 Questions may be faxed to (806)775-2164 or Email to dtorres6d,)mylubbock.us . THANK YOU, D'Ana Torres It is the intent and purpose of the City of Lubbock that this request permits competitive proposals. It shall be the offeror's responsibility to advise _the City of Lubbock Director of Purchasing and Contract Management if any language, requirements, etc., or any combinations thereof, inadvertently restricts or limits the requirements stated in this RFO to a single source. Such notification must be submitted in writing and must be received by the Director of Purchasing and Contract Management no later than five (5) business days prior to the bid close date. A review of such notifications will be made. P.O. Box 2000 • 1625 13`h Street ■ Lubbock, TX 79457 ■ 806.775.3150 4 Purchasing and Contract Management SUBMITTAL Proposals must be submitted in the format provided below, with each of the referenced sections addressed in full. Each of the sections described below must begin on a separate page, and each page must clearly state the name of the auditor. City reserves the right to eliminate from further consideration any proposal deemed to be substantially or materially unresponsive to the requests for information contained herein. The auditor must respond in writing to the following in order to be considered. Each category represents criteria that will be used to select the successful respondent. The completeness and accuracy of the information provided by each auditor will be considered in the selection process, in addition to the content of the data. Additional data and/or material related to the qualification of the auditor may also be submitted; however, such data and/or material may or may not be given value when considering the qualification of the auditor. MANDATORY ELEMENTS Independence (Pass or Fail) The auditor shall provide an affirmative statement that it is independent of the City and all component units of the City as defined by generally accepted auditing standards of the U.S. General Accounting Office's Government Auditing Standards (1994). The firm shall also list and describe the firm's professional relationships involving the City or any of its component units for the past 5 years and provide a statement explaining why such relationships do not constitute a conflict of interest relative to performing the proposed audit. 2. License to Practice in Texas (Pass or Fail) An affirmative statement shall be included indicating that the auditor and all assigned key professional staff are properly licensed to practice in the State of Texas. 3. Required Timeframe (Pass or Fail) An affirmative statement that the auditor has the ability to complete the audit and submit the financial statements and auditor's reports to the office of the City of Lubbock City Secretary within 120 days after the last day of the City's fiscal year. 4. Professional Education Program (Pass or Fail) A brief description of the auditor's professional development program, including: a) Approximate number of days of continuing professional education provided to members of your audit firm annually. 2 Q:Purchase/Bid Doc/l 1-10072-DVADDENDUM i b) The number of days of specialized training in governmental auditing and accounting received during the last three (3) years by the personnel who will be assigned to the City. c) Whether the continuing professional education program of your audit firm is of an internal or external nature. TECHNICAL QUALIFICATIONS 5. Statement of Qualifications (15 Percent) Include in this section a "Statement of Qualifications" with the size of the audit firm, the size of the audit 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 the 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 shall list the entities for which they provided assistance, and the nature of that assistance, that led to the successful achievement of the Certificate of Achievement for Excellence in Financial Reporting offered by the GFOA. The auditor is also required to submit a copy of the report on its most recent external quality control review, with a statement whether that quality control review included a review of specific government engagements. The auditor shall also provide information on the results of any federal or state desk reviews or field reviews of its audits during the past 3 years. The auditor shall provide information on the circumstances and status of any disciplinary action taken or pending against the firm during the past 3 years with state regulatory bodies or professional organizations. Provide a list of your audit firm's open litigation describing the nature and the amount of each lawsuit for which your audit firm is a named defendant. Provide proof of insurance coverage for the following: Business Automobile Liability: The audit firm's insurance shall contain a combined single limit of at least $300,000 per occurrence, and include coverage for but not limited to the following: • Bodily injury and property damage • Any and all vehicles owned, used or hired Q:Purchase/Bid Doc/1 1-10072-DT/ADDENDUM 1 Professional Liabili The auditor's insurance shall contain a combined single limit of a minimum of $1,000,000 per occurrence and in the aggregate. Workers' Compensation and Employers Liabilijy Insurance: The auditor shall elect to obtain workers' compensation coverage pursuant to Section 406.002 of the Texas Labor Code. Further, the auditor shall maintain said coverage throughout the term of this contract and shall comply with all provision of Title 5 of the Texas Labor Code to ensure that the auditor maintains said coverage. Any termination of workers' compensation insurance coverage by Contractor or any cancellation or non - renewal of workers' compensation insurance coverage for the Contractor shall be a material breach of this contract. The auditor may maintain Occupational Accident and Disability Insurance in lieu of Workers' Compensation. In either event, once the Contract is awarded, the policy must be endorsed to include a waiver of subrogation in favor of the City of Lubbock. Employer's Liability with limits of at least $500,000 each accident, $500,000 by disease policy limit, and $500,000 by disease each employee shall also be obtained and maintained throughout the term of this contract. 6. Partner, Supervisory and Staff Qualifications and Experience (10 Percent) The auditor shall identify the principal supervisory and management staff, including engagement partners, managers, other supervisors and specialists, who would be assigned to the engagement. The auditor also shall provide information on their government auditing experience, general audit experience, and membership in professional organizations relevant to the performance of this audit. Provide brief resumes of the personnel to be assigned to the engagement. At a minimum, detailed information should be provided for. 2 The partner in charge of the audit team ■ The manager in charge of the onsite field work ■ The senior in charge of the onsite field work Also include their educational and professional experience, with particular emphasis on experience in auditing governmental units. Indicate whether these individuals are certified public accountants or independent public accountants licensed to practice in the State of Texas. Also, indicate whether these individuals are members of the American Institute Of Certified Public Accountants (AICPA) and/or the Texas Society of Certified Public Accountants. The auditor shall provide as much information as possible regarding the number, qualifications, experience and training including relevant continuing professional 4 Q:Purchase/Bid Doc/1 I-10072-DTIADDENDUM 1 education of the specific staff to be assigned to this engagement. The firm also shall indicate how the quality of staff over the term of the agreement will be assured. Thorough knowledge of a full -service municipal corporation. (10 Percent) The auditor shall list all municipal engagements within the last 5 years. For each engagement, the auditor shall indicate the scope of the work, date, the type of engagement, engagement partners, total hours, the location of the auditor's office from which the engagement was performed, and the name and telephone number of the principal client contact. Provide at least one sample report of a municipal audit performed with the last three years by your audit firm. The auditor shall demonstrate their active participation that led to the successful achievement in the GFOA Certificate of Achievement for Excellence in Financial Reporting program. The firm shall list experience with electric utilities. Similar Engagements with Other Government Entities (10 Percent) For the auditor's office that will be assigned responsibility for the audit, list the most significant engagements performed in the last 5 years that are similar to the engagement described in this Request for Qualifications. Indicate the scope of work, engagement partners, total hours, and the name and telephone number of the principal client contact. 9. Equal Opportunity (5 Percent) The commitment of the City to equal opportunity applies to the selection of professional services. Show evidence of an Equal Employment Opportunity Policy and of compliance with applicable Federal Law pertaining to Equal Employment Opportunity. It is also the desire of the City that the City of Lubbock program serve, as much as practicable, to stimulate growth in all sectors of the business community. Prospective auditors are strongly encouraged to explore and implement methods for the utilization of local resources. 10. Specific Audit Approach (25 Percent) Set forth a work plan including an explanation of the audit methodology to be followed to perform the services required in this Request for Qualifications. Auditors are 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 Q:PurchaseBid Doc/1 1-10072-DT/ADDENDUM 1 d) Extent of use of audit software in the engagement e) Type and extent of analytical procedures to be used in the engagement t) 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 test compliance Some items for the auditor to consider in developing an audit approach are as follows- - The City prepares the CAFR and Single Audit including statements, footnotes, transmittal letter, covers, dividers, etc. — The City generates lead schedules from the financial system. — The City provides supporting schedules such as debt, lease, investment, and fixed asset roll -forwards, payroll data, inventory counts, receivable confirmations, etc. h) Sample prepared by client list and required timeline for completion PRICE PROPOSAL INFORMATION (25 Percent) 1. Once the Statements of Qualifications have been evaluated and rated as technically acceptable, the Price Proposal in the City's best interest will be determined. 2. Response should include the following information on anticipated fees for EACH of the audit years: a) Maximum number of professional hours, by staff classification, to complete this engagement. b) State the hourly rate to be charged for the audit as well as the total anticipated cost of the audit based on the estimated time to complete the audit. c) A not to exceed fixed annual fee. d) Anticipated, and not to exceed, expenses to be billed to the City. e) The auditor shall also disclose all expected additional costs if any to be charged to the City. Include anticipated terms of payment that would be acceptable to the auditor, although monthly progress billings are preferred both for the audit fee and out-of-pocket expenses. 4. Firms shall include a price sheet in a separate, sealed envelope with the signature of the representative of the Vendor who is authorized to make such an offer. b Q:Purchasd id Doe/11-10072-DT/ADDENDUM 1 Resolution No. 2011-RO244 CITY OF LUBBOCK REQUEST FOR QUALIFICATIONS RFQ - 11-10072-DT To Provide Professional Services For Audit of Annual Financial Statements Due Date: April 27, 2011 at 3:00 PM (CST) ISSUED BY: City of Lubbock Purchasing and Contract Management Department 1625 131h Street, Room 204 Lubbock, Texas 79401 RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS City of Lubbock Audit of Annual Financial Statements Request for Qualifications RFQ 11-10072-DT Checklist Please ensure that you complete and return the following documents and information to the City of Lubbock. Purchasing and Contract Management Department before the deadline. Any corrections must be initialed by the person making the correction. Late submittals will not be accepted. ❑ Cover letter addressed to the Mayor ❑ The Checklist page as the First Page of Your Submittal ❑ The Statement of Qualifications form MUST be completed ❑ Clearly mark the RFQ number, title, due date, time, and your company name and address on the outside of the sealed envelope or container. ❑ Insurance Affidavit ❑ Completed and signed Suspension and Debarment Certification ❑ Completed Non -Collusion Affidavit ❑ Anti -Lobbying Certification ❑ City of Lubbock Procurement Outreach Survey FAILURE TO PROVIDE ANY OF THE ABOVE MAY RESULT IN YOUR PROPOSAL BEING DEEMED NON -RESPONSIVE. Print Name of Company. Contact Person/Phone PLEASE INCLUDE THIS COMPLETED PAGE AS THE FIRST PAGE OF YOUR SUBMITTAL. REQUEST FOR QUALICATIONS I Q:PurchaselBid Docs/l1-10072-DT RFQ 11.10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS City of Lubbock Audit of Annual Financial Statements Request for Qualifications RFQ 11-10072-DT 1 INTENT a) The City of Lubbock (hereinafter called "City") is soliciting Statements of Qualifications and Price Proposals from interested auditor is (hereinafter called "the auditor") to provide Professional Audit Services. b) The information contained within this document is intended to provide interested auditors with the requirements and criteria that will be used to make the selection. 2 GENERAL INFORMATION a) The City is seeking the services of a qualified certified public accountant firm to audit the City's financial statements, perform the Federal and State Single Audits, perform the Passenger Facility Charge (PFC) audit, perform agreed -upon procedures for the Texas Commission of Environmental Quality, and prepare the accompanying reports for the fiscal years ending September 30, 2011 through 2015. b) The City is a municipal corporation governed by a Mayor -Council form of government. There is a City Manager, Chief Financial Officer, Chief Operating Officer and four Assistant City Managers as well as various divisional directors and department heads. c) The City has an Audit and Investment Committee that is involved in the selection of the auditor. They monitor the progress and results of the financial statement audit, ensure that control weaknesses and legal compliance violations identified in the course of the financial statement audit are promptly and effectively remedied, serve as a direct communication between the independent auditor and the City Council, and monitor the adequacy of the City's internal control structure on an ongoing basis. d) The City's fiscal year begins on October 1 and ends on September 30. e) The City provides the following services to its citizens: public safety (police and fire), public works, parks and recreation, public health, electric, water, sewer, solid waste, stormwater utilities, airport, and general administrative services.. e) More detailed information on the government can be found in the 2010 City of Lubbock Comprehensive Annual Financial Report (CAFR) and in the 2011 City of Lubbock Annual Operating Budget at hltp://finance.ei.lubbock.tx.us. f) Contract initiation date: Upon acceptance by the City Council, for the fiscal year ending September 30, 2011. 3 SCOPE OF SERVICES REQUESTED REQUEST FOR QUALICATIONS 2 Q:Purchase/Bid Docs/I 1-10072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS The following Scope of Work is to be provided by the successful auditor: a) The City's general purpose financial statements will be audited in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States, the provisions of the Federal Single Audit Act and the provisions of U.S. Office of Management and Budget (OMB) Circular A-133 Audits of States, Local Governments, and Non -Profit Organizations. The auditor will express an opinion concerning whether the general purpose financial statements present fairly, in all material respects, the financial position of the City of Lubbock, Texas and the results of its operations and the cash flows of its proprietary fund types for the year then ended in conformity with generally accepted accounting principles. b) In accordance with Government Auditing Standards, the auditor will consider the City's internal control structure over financial reporting and assess control risk. It is recognized that the management of the City is responsible for establishing and maintaining an internal control structure. c) Reports to be Issued Following the completion of the audit of the fiscal year's financial statements, the auditor shall file in the office of the City Secretary within 120 days after the last day of the City's fiscal year: A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles. A report on the fair presentation of the stand alone financial statements of Lubbock Power & Light, the City's electric utility fund. A report on the internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards. A report on compliance with requirements applicable to each major federal program and on internal control over compliance in accordance with OMB Circular A--133 and on the Schedule of Expenditures of Federal Awards. A report on the internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards and the State of Texas Uniform Grants Management Standards. A report on compliance with requirements applicable to each major state program and on internal control over compliance in accordance with Uniform Grants Management Standards and on the Schedule of Expenditures of State Awards. REQUEST FOR QUALICATIONS 3 Q:Purchase/Bid Docs/I 1-10072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS A report on the Federal PFC and related Federal Requirements. — A report to the Texas Commission on Environmental Quality pursuant to Subchapter C of Title 30 Texas Administrative Code §37.271. — A report on adherence to the City's investment policies as required by the Public Funds Investment, Act Chapter 2256 of the Texas Government Code. — The auditor shall communicate significant deficiencies and material weaknesses in writing to management and those charged with governance in accordance with auditing standards. — The reports on compliance shall include all material instances of noncompliance. — 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 Chief Financial Officer and the Audit and Investment Committee. d) Special Considerations — The City will send its comprehensive annual financial report to the Government Finance Officers Association of the United States and Canada (GFOA) for review in its Certificate of Achievement for Excellence in Financial Reporting program. The auditor is required to provide special assistance to the City to meet the requirements of that program. — The City currently anticipates it will prepare one or more official statements in connection with the sale of debt securities that will contain the general purpose financial statements and the auditor's report thereon. The auditor may be asked to supply a confirmation letter as to debt service coverages or necessary "comfort letters." — The City may require the auditor's assistance to comply with new reporting requirements mandated by the Government Accounting Standards Board (GASB). — The audit will submit Form SF -SAC data collection form and a copy of the A-133 reporting package to the Federal Audit Clearinghouse. — The City may periodically amend the contract for a special engagement. An example of this would be a franchise fee audit. 4 SELECTION AND AWARD PROCESS Statements of Qualifications and Price Proposals will be reviewed by an evaluation committee, which may include senior management representatives, a financial officer, and/or REQUEST FOR QUALICATIONS 4 Q:Purchase/Bid Doc&/I I-10072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS an independent consultant. A short list of firms will be identified and may be interviewed by the evaluation committee. Initial selection shall be based on the following mandatory criteria: a) The auditor is an independent auditor and licensed to practice in Texas. b) The auditor has no conflict of interest with regard to any other work performed by the firm for the City. c) The auditor must have the ability to conduct the audit in the timeframe required. d) The auditor must have a continuing professional education program in state and local government accounting, auditing, and financial reporting. After the evaluation committee makes its initial selection of firms meeting the mandatory criteria, Statements of Qualifications will be evaluated and scored for both technical qualifications and price. The evaluation committee then makes a recommendation to the Audit and Investment Committee. If the City is unable to negotiate a satisfactory contract with the highest ranked auditor, the City shall formally end negotiations with the auditor and begin negotiations with the second most highly ranked auditor. Negotiations shall be undertaken in this sequence until a contract is made. The contract will be subject to approval by the City Council. NO INDIVIDUAL OF ANY USING DEPARTMENT HAS THE AUTHORITY TO LEGALLY AND/OR FINANCIALLY COMMIT THE CITY TO ANY CONTRACT, AGREEMENT OR PURCHASE ORDER FOR GOODS OR SERVICES, UNLESS SPECIFICALLY SANCTIONED BY THE REQUIREMENTS OF THIS REQUEST FOR QUALIFICATIONS. 5. SUBMISSION PROCESS, DUE DATE, AND REQUIRED DOCUMENTS One reproducible original and four bound copies of the response, including all required forms and applicable supporting documentation, are required. Responses must be submitted not later than 3:00 p.m. Central Standard Time on Apra 27, 2011. The responses must be bound and sealed when submitted. The response material must be addressed and delivered to: REQUEST FOR QUALICATIONS 5 QYurchaseBid Docs/11-10072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS City of Lubbock Marta Alvarez, Director of Purchasing and Contract Management Purchasing and Contract Management, Room 204 1625 13t" Street Lubbock, Texas 79401 The outside of the envelope or container must state: RFQ 11-10072-DT RESPONSE — Audit of Annual Financial Statements Proposals received later than the above date and time may be rejected and returned unopened. 6. PROPOSAL FORMAT & CONTENTS: Proposals should be presented on 8.5-inch x 11-inch paper, pages sequentially numbered, and single-spaced with an easily legible font size. Proposals should be prepared as simply as possible and provide a straightforward, concise description of the auditors's capabilities to satisfy the requirements of the RFQ. Expensive bindings, color display, promotional material, etc., are not necessary. EMPHASIS SHOULD BE CONCENTRATED ON ACCURACY, COMPLETENESS, AND CLARITY OF CONTENT. All parts, pages, figures, and tables should be numbered and labeled clearly. 7. CLARIFICATION OF REQUIREMENTS ALL REQUESTS FOR ADDITIONAL INFORMATION OR CLARIFICATION CONCERNING THIS REQUEST FOR QUALIFICATUINS (RFQ) MUST BE SUBMITTED IN WRITING NO LATER THAN FIVE (5) BUSINESS DAYS PRIOR TO THE DUE DATE AND ADDRESSED TO: City of Lubbock Marta Alvarez, Director of Purchasing and Contract Management Purchasing and Contract Management, Room 204 1625 13th Street, Room 204 Lubbock, Texas 79401 Fax: (806) 775-2164 BidSync: http://www.BidSync.com It is the intent and purpose of the City of Lubbock that this request permits competitive proposals. It is the auditor's responsibility to advise the Cily of Lubbock Director of Purchasing and Contract Management if and language, requirements, etc., or any combinations thereof, inadvertently restricts or limits the requirements stated in this RFQ to a singlesource. Such notification must be submitted in writing and must be received by the Director of Purchasing and Contract Management no later than five (5) business days prior to the due date. A review of such notifications will be made. Any changes, additions, or clarifications to the RFP are made by ADDENDA information available over the Internet at http://www.Bidsync.com. We strongly suggest that you check REQUEST FOR QUALICATIONS 6 Q:Furchase/Bid Docs/I 1-10072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS for any addenda a minimum of forty-eight hours in advance of the response deadline. BUSINESSES WITHOUT INTERNET ACCESS may use computers available at most public libraries. 8. RIGHT OF CITY TO REQUEST FURTHER DOCUMENTATION The City reserves the right to request any further documentation that it deems appropriate and necessary for the review and award process, including financial statements, during both the initial review process and the negotiation/award/appointment phase. Right of City to Cancel Request for Qualifications, to Elect Not to Award, to Reject Proposals, and to Waive Informalities or Irregularities The City expressly reserves the right to cancel this RFQ at any time, to elect not to award any or all of the contracts cited in this RFQ, to reject any or all Proposals, to waive any informality or irregularity in any Proposal received, and to be the sole judge of the merits of the respective Proposals received. 9. EQUAL OPPORTUNITY IN CITY BUSINESS CONTRACTING Race, religion, sex, color, ethnicity, and national origin will not be used as criteria in the City's business contracting practices. Every effort will be made to ensure that all persons regardless of race, religion, sex, color, ethnicity and national origin have equal access to contracts and other business opportunities with the City. 10. INQUIRIES AND INTERPRETATIONS Responses to inquiries that directly affect an interpretation or change to the RFQ are issued in writing by the Purchasing and Contract Management Office as an addendum to the RFQ and posted at www.bidsync.com. All such addenda issued by the Purchasing and Contract Management Office before the time that Qualification packages are received shall be considered part of the RFQ. Only those inquiries the Purchasing and Contract Management Office replies to by addenda and posts at www.bidsync.com shall be binding. Oral and other interpretations or clarifications are without legal effect. It. THE CITY RIGHT TO AUDIT At any time during the term of the contract, or thereafter, the City, or a duly authorized audit representative of the City, at its expense and at reasonable times, reserves the right to audit Contractor's records and books relevant to all services provided to the City under the Contract. In the event such an audit by the City reveals any errors or overpayments by the City, Contractor shall refund the City the fall amount of such overpayments within thirty (30) days of such audit findings, or the City, at its option, reserves the right to deduct such amounts owing the City from any payments due Contractor. The City of Lubbock is aware of the time and effort you expend in preparing and submitting your response to the City. Please let us know of any requirement causing you difficulty in responding to REQUEST FOR QUALICATIONS 7 Q:Purchase/Bid Docs/1 I-I0072-DT RFQ l 1-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS our Request for Qualifications. We want to facilitate your participation so that all responsible firms can compete for the City's business. Awards should be made approximately four to six weeks after the opening date. If you have any questions, please contact the City of Lubbock Purchasing and Contract Management Office at (806) 775-2572. 12. ANTI -LOBBYING PROVISION DURING THE PERIOD BETWEEN PROPOSAL SUBMISSION DATE AND THE CONTRACT AWARD, PROPOSERS, INCLUDING THEIR AGENTS AND REPRESENTATIVES, SHALL NOT DISCUSS OR PROMOTE THEIR PROPOSAL WITH ANY MEMBER OF THE LUBBOCK CITY COUNCIL OR CITY STAFF EXCEPT UPON THE REQUEST OF THE CITY OF LUBBOCK PURCHASING DEPARTMENT IN THE COURSE OF CITY -SPONSORED INQUIRIES, BRIEFINGS, INTERVIEWS, OR PRESENTATIONS. This provision is not meant to preclude offerors from discussing other matters with City Council members or City staff. The policy is intended to create a level playing field for all potential offerors, assure that contract decisions are made in public, and to protect the integrity of the RFP process. Its purpose is to stimulate competition, prevent favoritism and secure the best work and materials at the lowest practicable price, for the best interests and benefit of the taxpayers and property owners. Violation of this provision may result in rejection of the offeror's proposal. REQUEST FOR QUALICATIONS 8 Q:Purchase/Bid Docs/I1-10072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS CITY OF LUBBOCK RFQ 11-10072-DT Audit of Annual Financial Statements Candidates must complete each of the following items in order to be considered. 1. FIRM NAME: 2. BUSINESS ADDRESS: 3. TELEPHONE, WITH AREA CODE: FAX, WITH AREA CODE: E MAIL ADDRESS: INTERNET URL ADDRESS: 4. TYPE OF ORGANIZATION: (CHECK ONE) a. SOLE PROPRIETORSHIP ( ) b. PARTNERSHIP ( ) c. CORPORATION ( ) d. JOINT VENTURE ( ) 5. PRINCIPALS OF FIRM: DEGREE OR NAME CERTIFICATE INSTITUTION b d. e. REQUEST FOR QUALICATIONS 9 Q:Purchase/Bid Docs/11-10072-DT RFQ l 1-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS SUBMITTED BY: Signature: Date: Printed N Firm N Tel Address: State: Zip: PRIVACY NOTIFICATION The principal purpose for requesting the information on this form is for use in the selection process for professionals commissioned by the City of Lubbock. Furnishing all information requested on this form is mandatory. Failure to provide such information will delay or may even prevent completion of the action for which the form is being filled out. Information on this form will be used by the City of Lubbock and its Management Team in the consideration of commissions to professionals. If you consider any portion of your Proposal to be privileged or confidential by statute or judicial decision, including trade secrets and commercial or financial information, clearly identify those portions. Proposals will be opened in a manner that avoids disclosure of the contents to competing auditors and keeps the Proposals secret during negotiations. All Proposals are open for public inspection after the contract is awarded, but trade secrets and confidential information in the Proposals are not open for inspection. The City of Lubbock will honor your notations of trade secrets and confidential information and decline to release such information initially, but please note that the final determination of whether a particular portion of your Proposal is in fact a trade secret or commercial or financial information that may be withheld from public inspection will be made by the Texas Attorney General or a court of competent jurisdiction. In the event a public information request is received for a portion of your Proposal that you have marked as being confidential information, you will be notified of such request and you will be required to justify your legal position in writing to the Texas Attorney General pursuant to Section 552.305 of the Government Code. In the event that it is determined by opinion or order of the Texas Attorney General or a court of competent jurisdiction that such information is in fact not privileged and confidential under Section 552.110 of the Government Code and Section 252.049 of the Local Government Code, then such information will be made available to the requester. Marking your entire Proposal CONFIDENTI .LIPROPRIETARY is not in conformance with the Texas Open Records Act. REQUEST FOR QUALICATIONS 10 Q:PurchaselBod Ducsll 1-10072-DT RFQ I 1-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS DESCRIPTION OF SELECTION CRITERIA A committee will evaluate Statements of Qualifications and Proposals using three sets of criteria: 1) mandatory elements, 2) technical qualifications, and 3) price. Firms meeting the mandatory criteria will have their Statements of Qualifications evaluated and scored for both technical qualifications and price. The following represent the principal selection criteria that will be considered during the evaluation process. 1) Mandatory Elements a) The auditor is an independent auditor licensed to practice in Texas. b) The auditor has no conflict of interest with regard to any other work performed by the firm for the City. b) The auditor must have the ability to conduct the audit in the timeframe required. c) The auditor must have a continuing professional education program in state and local government accounting, auditing, and financial reporting. 2) Technical Qualifications (75 percent) a) Experience and Expertise (50 percent) — The auditor's past experience and performance on comparable government engagements — The auditor's past experience and performance on engagements involving the GFOA Certificate of Achievement for Excellence in Financial Reporting program — The quality of the auditor's professional personnel to be assigned to the engagement and the quality of the auditor's management support personnel to be available for technical consultation — The auditor's past experience and performance auditing similar federal or state financial assistance programs — Computer expertise with similar hardware and/or software b) Audit Approach (25 percent) — Adequacy of proposed staffing plan for various segments of the engagement — Adequacy of analytical procedures — Adequacy of approach to internal control structure understanding — Adequacy of sampling techniques 3) Price (25 percent) Price will not be the primary factor in the selection of an audit firm. REQUEST FOR QUALICATIONS I Q:Purchase/Bid Docs/11-10072-DT RF'Q I 1-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS SUBMITALS Proposals must be submitted in the format provided below, with each of the referenced sections addressed in full. Each of the sections described below must begin on a separate page, and each page must clearly state the name of the auditor. City reserves the right to eliminate from further consideration any proposal deemed to be substantially or materially unresponsive to the requests for information contained herein. The auditor must respond in writing to the following in order to be considered. Each category represents criteria that will be used to select the successful respondent. The completeness and accuracy of the information provided by each auditor will be considered in the selection process, in addition to the content of the data. Additional data and/or material related to the qualification of the auditor may also be submitted; however, such data and/or material may or may not be given value when considering the qualification of the auditor. MANDATORY ELEMENTS Independence (Pass or Fail) The auditor shall provide an affirmative statement that it is independent of the City and all component units of the City as defined by generally accepted auditing standards of the U.S. General Accounting Office's Government Auditing Standards (1994). The firm shall also list and describe the firm's professional relationships involving the City or any of its component units for the past 5 years and provide a statement explaining why such relationships do not constitute a conflict of interest relative to performing the proposed audit. 2. License to Practice in Texas (Pass or Fail) An affirmative statement shall be included indicating that the auditor and all assigned key professional staff are properly licensed to practice in the State of Texas. 3. Required Timeframe (Pass or Fail) An affirmative statement that the auditor has the ability to complete the audit and submit the financial statements and auditor's reports to the office of the City of Lubbock City Secretary within 120 days after the last day of the City's fiscal year. 4. Professional Education Program (Pass or Fail) A brief description of the auditor's professional development program, including: a) Approximate number of days of continuing professional education provided to members of your audit firm annually. REQUEST FOR QUALICATIONS 12 Q:Purchase/Bid Docs111-10072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS b) The number of days of specialized training in governmental auditing and accounting received during the last three (3) years by the personnel who will be assigned to the City. c) Whether the continuing professional education program of your audit firm is of an internal or external nature. TECHNICAL QUALIFICATIONS Statement of Qualifications (15 Percent) Include in this section a "Statement of Qualifications" with the size of the audit fret, the size of the audit 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 the 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 shall list the entities for which they provided assistance, and the nature of that assistance, that led to the successful achievement of the Certificate of Achievement for Excellence in Financial Reporting offered by the GFOA. The auditor is also required to submit a copy of the report on its most recent external quality control review, with a statement whether that quality control review included a review of specific government engagements. The auditor shall also provide information on the results of any federal or state desk reviews or field reviews of its audits during the past 3 years. The auditor shall provide information on the circumstances and status of any disciplinary action taken or pending against the firm during the past 3 years with state regulatory bodies or professional organizations. Provide a list of your audit firm's open litigation describing the nature and the amount of each lawsuit for which your audit firm is a named defendant. Provide proof of insurance coverage for the following: Business Automobile Liability: The audit firm's insurance shall contain a combined single limit of at least $300,000 per occurrence, and include coverage for but not limited to the following: • Bodily injury and property damage • Any and all vehicles owned, used or hired REQUEST FOR QUALICATIONS 13 Q:Purchase/Bid Docs/I1-10072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS Professional Liabili The auditor's insurance shall contain a combined single limit of a minimum of $1,000,000 per occurrence and in the aggregate. Workers' Compensation and Employers Liability Insurance: The auditor shall elect to obtain workers' compensation coverage pursuant to Section 406.002 of the Texas Labor Code. Further, the auditor shall maintain said coverage throughout the term of this contract and shall comply with all provision of Title 5 of the Texas Labor Code to ensure that the auditor maintains said coverage. Any termination of workers' compensation insurance coverage by Contractor or any cancellation or non - renewal of workers' compensation insurance coverage :;r the Contractor shall be a :material breach of this contract. The auditor may maintain Occupational Accident and Disability Insurance in lieu of Workers' Compensation. In either event, once the Contract is awarded, the policy must be endorsed to include a waiver of subrogation in favor of the City of Lubbock. Employer's Liability with limits of at least $500,000 each accident, $500,000 by disease policy limit, and $500,000 by disease each employee shall also be obtained and maintained throughout the term of this contract. 6. Partner, Supervisory and Staff Qualifications and Experience (10 Percent) The auditor shall identify the principal supervisory and management staff, including engagement partners, managers, other supervisors and specialists, who would be assigned to the engagement. The auditor also shall provide information on their government auditing experience, general audit experience, and membership in professional organizations relevant to the performance of this audit. Provide brief resumes of the personnel to be assigned to the engagement. At a minimum, detailed information should be provided for. ■ The partner in charge of the audit team ■ The manager in charge of the on site field work ■ The senior in charge of the on site field work Also include their educational and professional experience, with particular emphasis on experience in auditing governmental units. Indicate whether these individuals are certified public accountants or independent public accountants licensed to practice in the State of Texas. Also, indicate whether these individuals are members of the American Institute Of Certified Public Accountants (AICPA) and/or the Texas Society of Certified Public Accountants. The auditor shall provide as much information as possible regarding the number, qualifications, experience and training including relevant continuing professional REQUEST FOR QUALICATIONS 14 Q:PurchaselBid DocO 1-10072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS education of the specific staff to be assigned to this engagement. The firm also shall indicate how the quality of staff over the term of the agreement will be assured. 7. Thorough knowledge of a full -service municipal corporation. (10 Percent) The auditor shall list all municipal engagements within the last 5 years. For each engagement, the auditor shall indicate the scope of the work, date, the type of engagement, engagement partners, total hours, the location of the auditor's office from which the engagement was performed, and the name and telephone number of the principal client contact. Provide at least one sample report of a municipal audit performed with the last three years by your audit firm. The auditor shall demonstrate their active participation that led to the successful achievement in the GFOA Certificate of Achievement for Excellence in Financial Reporting program. The firm shall list experience with electric utilities. S. Similar Engagements with Other Government Entities (10 Percent) For the auditor's office that will be assigned responsibility for the audit, list the most significant engagements performed in the last 5 years that are similar to the engagement described in this Request for Qualifications. Indicate the scope of work, engagement partners, total hours, and the name and telephone number of the principal client contact. 9. Equal Opportunity (5 Percent) The commitment of the City to equal opportunity applies to the selection of professional services. Show evidence of an Equal Employment Opportunity Policy and of compliance with applicable Federal Law pertaining to Equal Employment Opportunity. It is also the desire of the City that the City of Lubbock program serve, as much as practicable, to stimulate growth in all sectors of the business community. Prospective auditors are strongly encouraged to explore and implement methods for the utilization of local resources. 10. Specific Audit Approach (25 Percent) Set forth a work plan including an explanation of the audit methodology to be followed to perform the services required in this Request for Qualifications. Auditors are 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 REQU EST FOR QUALICATIONS is Q:PurchaseBid Docs/l I-I0072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS d) Extent of use of audit software in the engagement e) Type and extent of analytical procedures to be used in the engagement fj 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 test compliance Some items for the auditor to consider in developing an audit approach are as follows: — The City prepares the CAFR and Single Audit including statements, footnotes, transmittal letter, covers, dividers, etc, — The City generates lead schedules from the financial system. — The City provides supporting schedules such as debt, lease, investment, and fixed asset roll -forwards, payroll data, inventory counts, receivable confirmations, etc. h) Sample prepared by client list and required timeline for completion PRICE PROPOSAL INFORMATION (25 Percent) l . Once the Statements of Qualifications have been evaluated and rated as technically acceptable, the Price Proposal in the City's best interest will be determined. 2. Response should include the following information on anticipated fees for EACH of the audit years: a) Maximum number of professional hours, by staff classification, to complete this engagement. b) State the hourly rate to be charged for the audit as well as the total anticipated cost of the audit based on the estimated time to complete the audit. c) A not to exceed fixed annual fee. d) Anticipated, and not to exceed, expenses to be billed to the City. e) The auditor shall also disclose all expected additional costs if any to be charged to the City. Include anticipated terms of payment that would be acceptable to the auditor, although monthly progress billings are preferred both for the audit fee and out-of-pocket expenses. REQUEST FOR QUALICATIONS 16 QYurchaseBid Docsll 1-10072-DT RFQ I 1-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS INSURANCE REQUIREMENT AFFIDAVIT To Be Completed by Offeror and Agent And Attached to Submittal I, the undersigned Offeror, certify that the insurance requirements contained in this proposal document have been reviewed by me with the below identified Insurance Agent/Broker. If I am awarded this contract by the City of Lubbock, I will be able to, within ten (10) business days after being notified of such award by the City of Lubbock, furnish a valid insurance certificate to the City meeting all of the requirements defined in this proposal. If this time requirement is not met, the City has the right to reject the Offeror's proposal and award the contract to another Proposer. Offeror (Signature) Offeror (Print) Company Name (Print or Type) Company Address Name of AgentBroker (Print or Type) Address of Agent/Broker City. State, Zip: Phone Number Fax Number Email Address The City of Lubbock shall be named a primary additional insured with a waiver of subrogation in favor of the City on all coverages. All copies of the Certificates of Insurance shall reference the RFP or proposal number for which the insurance is being supplied. If you have any questions concerning these requirements, please contact the Purchasing and Contract Management Department for the City of Lubbock at (806) 775-2572. The Proposer must complete, sign and return as part of their submittal response. REQUEST FOR QUALICATIONS 17 Q:Purchasc(Bid Ducslll-10072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FFNANCIAL STATEMENTS SUSPENSION AND DEBARMENT CERTIFICATION Federal Law (A-102 Common Rule and OMB Circular A-110) prohibits non -Federal entities from contracting with or making sub -awards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred. Covered transactions include procurement contracts for goods or services equal to or in excess of $25,000 and all non - procurement transactions (e.g., sub -awards to sub -recipients). Auditors receiving individual awards of $25,000 or more and all sub -recipients must certify that their organization and its principals are not suspended or debarred by a Federal agency. Before an award of $25,000 or more can be made to your audit firm, you must certify that your organization and its principals are not suspended or debarred by a Federal agency. I, the undersigned agent for the audit firm named below, certify that neither this firm nor its principals are suspended or debarred by a Federal agency. COMPANY NAME: Signature of Company Official. Date Signed: Printed name of company official signing above: THIS FORM MUST BE RETURNED WITH YOUR RESPONSE TO THE RFQ. REQUEST FOR QUALICATIONS Is Q:Purchase/Bid Docs/I I- I 0072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS NON -COLLUSION DECLARATION I, by signing Proposal, hereby declare, under penalty of perjury under the laws of the United States that the following statements are true and correct: That the undersigned person(s), Vendor, association or corporation has (have) not, either directly or indirectly, entered into any agreement, participated in any collusion, or otherwise taken any action in restraint of free competitive bidding in connection with the Project for which this Proposal is submitted. 2, That by signing the signature page of this Proposal, I am deemed to have signed and have agreed to the provisions of this declaration. Company Name: Federal Tax ID or Social Security No. Signature or Company Official: Printed name of company official signing above: Date Signed: REQUEST FOR QUALICATIONS 19 Q:PurchaseBid Docsl11-10072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS CERTIFICATION REGARDING LOBBYING The undersigned certifies, to the best of his or her knowledge and belief, that: (1) No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of an agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement. (2) If any funds other than Federal appropriated funds have been paid or will be paid to any person for making lobbying contacts to an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form--LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions [as amended by "Government wide Guidance for New Restrictions on Lobbying," 61 Fed, Reg. 1413 (1/19/96). Note: Language in paragraph (2) herein has been modified in accordance with Section 10 of the Lobbying Disclosure Act of 1995 (P.L. 104-65, to be codified at 2 U.S.C. 1601, et seq .)] (3) The undersigned shall require that the language of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all subrecipients shall certify and disclose accordingly. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by 31, U.S.C. § 1352 (as amended by the Lobbying Disclosure Act of 1995). Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. [Note: Pursuant to 31 U.S.C. § 1352(c)(1)-(2)(A), any person who makes a prohibited expenditure or fails to file or amend a required certification or disclosure form shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such expenditure or failure.] DURING THE PERIOD BETWEEN PROPOSAL SUBMISSION DATE AND THE CONTRACT AWARD, PROPOSERS, INCLUDING THEIR AGENCY AND REPRESENTATIVES, SHALL NOT DIRECTLY DISCUSS OR PROMOTE THEIR PROPOSAL WITH ANY MEMBER OF THE LUBBOCK CITY COUNCIL, CITY STAFF, LUBBOCK METROPOLITAN PLANNING ORGANIZATION'S TRANSPORTATION POLICY COMMITTEE OR LMPO STAFF EXCEPT IN THE COURSE OF CITY/LMPO-SPONSORED INQUIRIES, BRIEFINGS, INTERVIEWS, OR PRESENTATIONS, UNLESS REQUESTED BY THE CITY. This provision is not meant to preclude offerors from discussing other matters with City Council members, City staff, Lubbock Metropolitan Planning Organization's Transportation Policy Committee or LMPO Staff. This policy is intended to create a level playing field for all potential offerors, assure that contract decisions are made in public, and to protect the integrity of the RFP process. Violation of this provision may result in rejection of the offeror's proposal. Signature of Contractor's Authorized Official Name and Title of Contractor's Authorized Official Date REQUEST FOR QUALICATIONS 20 Q:Purchase/Bid Docsll 1-10072-DT RFQ 11-10072-DT, AUDIT OF ANNUAL FINANCIAL STATEMENTS City of Lubbock Audit of Annual Financial Statements Request for Qualifications RFQ 11-10072-DT Purchasing and Contract Management Survey In an effort to better serve the business community, the City of Lubbock Purchasing and Contract Management Department is conducting the following survey. We appreciate the time and effort expended to submit your offer. Please take an additional moment to complete the information below and submit it with your response. If you have any questions or need more information, please call (806)775-2572. Thank you! Lubbock Avalanche Journal Yes No City of Lubbock Channel 2 Plan room or other type of service City of Lubbock website Notified by bidsync.com Requested documents from the Lubbock Purchasing and Contract Management Department Are you a member of bidsync.com? REQUEST FOR QUALICATIONS 21 Q:PurchaselBrd Docs/l1-10072-DT