City of Dana Point

City of Dana Point

33282 Golden Lantern, Ste. 203

Dana Point, CA 92629

REQUEST FOR PROPOSAL

Professional Audit Services

Sealed proposals must be received on or before

Wednesday, February 20, 2013 no later than 5:00 p.m. by:

City of Dana Point

Attn. Beverly Brion, Accounting Supervisor

RFP – Professional Audit Services

33282 Golden Lantern, Suite 203

Dana Point, CA 92629

CITY OF DANA POINT

AUDITING SERVICES - REQUEST FOR PROPOSAL

INTRODUCTION

Intent of the Request for Proposal (RFP)

It is the intent of the City of Dana Point (“City”) to receive proposals from qualified vendors for auditing services. It is anticipated that the term for the services offered will be three consecutive years, beginning with the fiscal year ending June 30, 2013.

The City will select and negotiate with the qualified vendor(s) whose competitive proposals are responsive to this RFP and are in the best interest of the City. Any competitive proposal submitted in response to this RFP must provide sufficient detail and information to complete an evaluation of its merits. The instructions contained herein must be followed in order for competitive proposals to be considered responsive to this RFP. The City reserves the right to reject any or all proposals.

Proposals

Sealed proposal process:

1. All proposals must be received by 5:00 p.m. on Wednesday, February 20, 2013.
2. All criteria for evaluation are set forth in this RFP. Only these criteria will be used by the City to determine, in its sole judgment, the proposal it deems to be in its best interest.
3. All submitted proposals, and information included therein and attached thereto, shall become public record upon receipt by the City for consideration of selection of auditor.
4. It is the responsibility of the proposer to ensure that the proposal is delivered on time. Any proposal received after the deadline will be disqualified.
5. The City reserves the right to reject any or all proposals with or without cause.

Proposal Submission

Three hard copy and one electronic PDF version of the Proposal must be submitted. The proposal package must be sealed and plainly labeled:

City of Dana Point

Attn. Beverly Brion, Accounting Supervisor

RFP – Professional Audit Services

33282 Golden Lantern, Suite 203

Dana Point, CA 92629

Proposal Deadline

All proposals must be received by the City of Dana Point located at 33282 Golden Lantern, Suite 203, Dana Point, CA 92629 NO LATER THAN 5:00 P.M., WEDNESDAY, FEBRUARY 20, 2013. Postmarks will not be accepted in lieu of this requirement. The vendor is solely responsible for reading and completely understanding the requirements of this RFP.

If the proposal is mailed, it is the sole responsibility of the vendor to have the proposal delivered to the City of Dana Point by the date and time specified in this RFP. Any proposal received later than the specified date and time will not be accepted or considered. All responses will be retained as property of the City of Dana Point.

All proposals shall be prepared and submitted in accordance with the provisions of this RFP. However, the City may waive any informalities, irregularities or variances, whether technical or substantial in nature, or reject any and all proposals at its sole discretion. Any competitive proposal may be withdrawn prior to the indicated time for receipt of proposals or authorized postponement thereof. No vendor may withdraw a proposal within ninety (90) days after the actual date of the receipt by the City of the proposal.

Clarification and Addenda

Each vendor shall examine all RFP documents and shall judge all matters relating to the adequacy and accuracy of such documents. Any inquiries, suggestions, or requests concerning interpretation, clarification or additional information pertaining to the RFP shall be made in writing to the City of Dana Point Administrative Services Office, 33282 Golden Lantern, Suite 203, Dana Point, CA 92629 or via email to .

The City shall not be responsible for oral interpretations given by any City employee, representative, or others. The issuance of a written addendum is the only official method whereby interpretation, clarification or additional information can be given. If any addenda are issued to the RFP, the City will attempt to notify all prospective vendors who have secured same. However, it shall be the responsibility of each vendor, prior to submitting the competitive bid, to contact the City of Dana Point’s Administrative Services Office at 949-248-3593 to determine if addenda were issued and to make such addenda a part of the competitive proposal. Vendors are encouraged to send contact information via email to Beverly Brion at so that notification regarding any addenda may be communicated.

Proposal Preparation Expenses

Each vendor preparing a response to the RFP shall bear all expenses associated with its preparation and no claims for reimbursement shall be submitted to the City for the expense of proposal preparation or presentation.

Legal Name

Proposals shall clearly indicate the vendor’s legal name, address and phone number and shall indicate whether the vendor is a corporation, general partnership, individual or other business entity. In addition, the proposal must include the name, phone number and email address of the person to whom correspondence should be directed. Proposals shall be signed above the typed or printed name and title of the signor. The signer must have the authority to bind the vendor to the submitted competitive proposal.

Openness of Procurement Process

Written proposals, other submissions, correspondence and all other pertinent records shall be handled as public records. The City gives no assurance as to the confidentiality of any portion of any proposal once submitted.

Errors and Omissions

Once a proposal is submitted, the City shall not accept any request by any vendor to correct errors or omissions in any calculations or competitive proposal price submitted.

Retention and Disposal of Proposals

The City reserves the right to retain all submitted competitive proposals for public record purposes. The City also reserves the right to dispose of any or all copies of competitive proposals in whatever manner it deems appropriate. No copies of any competitive proposal will be returned to the vendor.

Professional Services Agreement

The selected vendor will be required to sign a Professional Services Agreement with the City (Attachment A).

Insurance Requirements

The successful vendor shall submit appropriate evidence of required insurance coverage prior to finalizing the contract and commencing work. The City’s standard contract terms and conditions are provided in the attached draft Professional Services Agreement (Attachment A).

Payment

The selected vendor will be paid in accordance with negotiated payment terms plus other City contract terms and conditions as set forth in Attachment A.

Signature

The vendor is to acknowledge by authorized signature that it has read and concurs and/or takes specific exception to the requirements in this RFP.

DESCRIPTION OF THE GOVERNMENT

The City of Dana Point is a General Law City in the State of California located in southern Orange County. The City was incorporated on January 1, 1989 and operates under a Council-Manager form of government. The City Council consists of five members, elected at large on a non-partisan basis to four-year terms. The mayor and mayor pro tem are honorary positions filled by Council members for one-year terms.

The City is a coastal community consisting of approximately six square miles with an estimated population of 33,000. The City is bordered by Laguna Beach, Laguna Niguel, San Juan Capistrano and San Clemente.

Dana Point operates as a "contract city", primarily utilizing contracts with other governmental entities, private firms and individuals to provide many of the traditional municipal services to the community. The City contracts for municipal services such as police and fire (through the Orange County Sheriff’s Department and the Orange County Fire Authority, respectively), senior services, animal control, street maintenance and City Attorney. Other duties, such as planning, code enforcement, recreation, parks, public works & engineering administration, and general City administration are performed by in-house staff. The County of Orange administers operations of the Dana Point Harbor. The City has 64 full-time employees and 7 regular part-time staff. During summer months additional part-time staff are employed by the City's recreation department.

The City's principal revenue sources are transient occupancy taxes (31%), sales & uses taxes (12%), and property taxes (20%).

A. Background Financial Information

The following summarizes key General Fund budgetary information from the current fiscal year 2012-13 budget:

General Fund:

Revenues / $29,430,119

Expenditures:

Personnel / 7,419,508
Materials & Services / 21,207,650
Capital Outlay / 183,439
Risk Management / 755,800
Total General Fund Expenditures / $28,566,397

B.The City currently utilizes the following funds and account groups:

1. General Fund - general operations of the City.
2. Gasoline Tax Fund - state subventions for gasoline taxes.
3. Capital Improvement Project Fund - major construction projects.
4. Measure M Fund - proceeds of Measure M taxes.
5. Coastal Transit Fund - proceeds of California Coastal Commission grants
6. AB2766 Fund - proceeds of AB2766 (for air quality improvements).
7. Supplemental Law Enforcement Services Fund - proceeds of State's Citizens Options for Public Safety program.
8. Park Development Fund - proceeds of park development in-lieu fees.
9. Agency Funds - funds held by the City in a trustee capacity.
10. Facilities Improvement Fund – improvements to City Hall and Recreation Center
11. CFD 2006-1 Facilities Maintenance Fund – ongoing maintenance of landscaping, revetment, storm water quality and funicular for the Community Facilities District No. 2006-1.
12. CFD 2006-1 Facilities Acquisition Fund – acquisition and/or construction of certain public improvements for the Community Facilities District No. 2006-1.

C. Budgetary Basis of Accounting

Budgets are adopted bi-annually by the City Council and are prepared for each fund in accordance with its basis of accounting (generally modified accrual). The City Manager is responsible for preparing the budget and for its implementation after adoption. All appropriations lapse at year end. The City Council has the authority to amend the budget during the year.

The City maintains budgetary controls to ensure compliance with legal provisions embodied in the appropriated budget approved by the City Council. The level of budgetary control is established by function and activity within each fund.

The City Manager has the authority to transfer appropriations from one function or activity to another within the same fund without Council approval provided such changes would neither have a significant policy impact, nor affect budgeted year-end fund balances.

D. Federal, State and Local Assistance

The City receives financial assistance from state and federal programs which vary from year to year. Accordingly, compliance with the Single Audit Act of 1984 and implementing regulations issued by the United States Office of Management and Budget (OMB) Circular A-128 will be required in certain years.

E. Pension Plan

The City is a member of the California Public Employees Retirement System (CalPERS), an agent multiple-employer public employee retirement system that acts as a common investment and administrative agent for cities and school districts in California.

Commencing with the valuation of June 30, 2003, mandatory pooling was established for plans with less than 100 active members. As a result, the City was required to participate in a risk pool of other agencies with less than 100 employees. The valuation report as of June 30, 2011, contained two sections: 1) the specific information of the plan including the development of the pooled contribution rate, and 2) the report of the Risk Pool Actuarial Valuation as of June 30, 2011. The City participates in the 2% at 55 pool.

F.Long-term Debt

The City's long-term debt consists of vested amounts due to employees pursuant to the City's comprehensive annual leave program.

G.Community Facilities District Bonds

Included within the City is Community Facilities District No. 2006-1 of the City of Dana Point (“CFD”), which was formed pursuant to the Mello-Roos Community Facilities Act of 1982 for the purpose of financing the acquisition and/or construction of certain public improvements in the area of the City known as The Headlands. The CFD is authorized to issue up to $40 million of debt, which is to be repaid from revenues generated by special taxes levied on the taxable property within the CFD.

On July 2, 2008, the CFD sold 2008 Special Tax Bonds totaling $8,710,000 of aggregate principal. The bonds mature in increments over a 30-year period. The bonds are not general obligations of the City, and neither the faith nor the taxing power of the City is pledged to the payment of these bonds. Therefore, the bonds are not recorded as liabilities of the City. The City has no obligation beyond the balances, if any, in the agency fund for any delinquent CFD bond payments. The bonds are limited obligations of the CFD payable solely from the special tax or funds held pursuant to the bond indenture agreement. The principal amount of bonds outstanding as of June 30, 2012 was $8,185,000. An amount of $1,283,087 is being held by the City and is reflected as due to bondholders at June 30, 2012 in the Statement of Fiduciary Assets and Liabilities.

H.Risk Management

The City is a member of the California Joint Powers Insurance Authority ("CJPIA"), a public entity risk pool.

I.Treasury/Investment of Funds

The City Manager serves as the City Treasurer. Investment of funds is administered through the Administrative Services Department pursuant to the Investment Policy adopted by the City Council. As of June 30, 2012, the City's portfolio consisted of $15.4 million in the State of California Local Agency Investment Fund (LAIF) and $17.7 million of U.S. Treasury Notes. The City directly manages its investment portfolio.

J. Department of Administrative Services Operations

The Department of Administrative Services encompasses the general accounting, treasury, risk management, payroll, personnel, general administration,and purchasing functions. It consists of a full-time staff of six located at City Hall, including the Assistant City Manager/Director of Administrative Services, Accounting Supervisor, Accounting Technician, Management Analysts, and Administrative Secretary.

Typical transaction volume is as follows:

Number of bank accounts - 1

Number of cash disbursement per month - 350

Number of purchase orders issued per month - 50

Number of cash receipt batches per month - 50

Number of payroll checks per month - 150

K. Computer System

The City utilizes a Local Area Network (LAN) for all its data processing. It consists of approximately 115 workstations operating under Windows XP.

The City uses DataTeam Fund Accounting software. This includes general ledger and accounts payable. Fund Accounting is an "off the shelf" software package. Payroll services are provided through an outside service, ADP.

L. Internal Audit Function

Due to its small size, the City does not have an internal audit function. Within the constraints of available staffing, the City maintains segregation of key duties and responsibilities, and where not possible has in place mitigating controls.

M. Availability of Prior Reports and Working Papers

The audits of the City for the six fiscal years ending June 30, 2012 were performed by Rogers, Anderson, Malody & Scott, LLP. It is anticipated that their working papers will be available for review.

INSTRUCTIONS FOR PREPARATION OF PROPOSAL

NATURE OF SERVICES REQUIRED

A. General

The City is selecting auditors to perform an examination of the financial statements of all fund types and account groups of the City for the year ending June 30, 2013, and for the two succeeding years.

B. Auditing Standards to be Followed

The contracting independent auditor shall review the financial records and all the various funds of the City and prepare all the financial statements in conformance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants (AICPA), the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards (2003), the provisions of the Single Audit Act of 1996 and the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of State, Local Governments and Non-Profit Organizations.

C. Reports to be Issued

Audit reports are required for the Basic Financial Statements of the City, a Single Audit report and a report on your review of the City's Gann Limit computation will be required. The City also requires a management letter containing comments and recommendations regarding the auditor's review and evaluation of the systems of internal control and accounting procedures.

D. Special Considerations

The City desires assistance in preparation of the Comprehensive Annual Financial Report (CAFR) to ensure compliance with the reporting requirements for a Certificate of Achievement for Excellence in Financial Reporting issued by the Government Finance Officers Association (GFOA). The City has won such an award every year since its January 1, 1989 incorporation.

It is expected that the auditor selected will be available throughout the year for general consultation regarding matters of accounting.

E.The external auditor serves as an ex-officio member of the City's Investment Review Committee. This committee meets at City Hall periodically to review the City's investment portfolio and discuss investment strategies. In addition, the auditor is asked to review the City's Investment Policy annually to ensure conformity with all applicable State and Federal laws. The Investment Policy is adopted annually by the City Council. (A partner or manager level individual is required for service on the Investment Review Committee).

F. Working Paper Retention and Access to Working Papers

Working papers are to be retained for a period of five years and are to be made available (upon reasonable notice) to City staff as well as any third parties authorized by the City.

TIME REQUIREMENTS

It is anticipated that the audit work will be performed in two phases:

A.Interim Audit Work

Interim work should take place in late May or early June and would consist of planning and interim audit procedures (such as gaining an understanding of relevant systems, procedures and internal controls, selected compliance and transaction testing, etc.)