City of Newman

RFP - Professional Accounting and Auditing Services

I.INTRODUCTION

A.General Information

The City of Newmanand the Newman Redevelopment Agency are requesting proposals from qualified certified public accounting firms to:

1) Provide assistance to city staff to review, correct and close the accounts of the City and the Redevelopment Agency, and draft the Management Discussion and Analyses (MD&A’s) of the financial statements; and/or,

2) Audit the accounts and records of the City of Newman and prepare the financial statements, as defined below in Section II B.

The fiscal period ends June 30, 2012, and there will be the option of continuing with either/or both engagements for each of four (4) subsequent years.

If it is determined that the City of Newman has met the federal funds threshold of the Federal Single Audit Act as amended in 1996, a single audit report will also be prepared in accordance with the U.S. Office of Management and Budget (OMB) Circular A-133 Audits of States, Local Governments, and Non-Profit Organizations.

All work is to be performed in accordance with generally accepted accounting and auditing standards and the standards set for financial audits contained in Governmental Auditing Standards (1994) issued by the Comptroller General of the United States as revised.

There is no expressed or implied obligation for the City to reimburse responding firms for any expenses incurred in preparing proposals in response to this request. Materials submitted by respondents are subject to public inspection under the California Public Records Act (Government Code Sec. 6250 et seq.), unless exempt. Any language purporting to render the entire proposal confidential or proprietary will be ineffective and will be disregarded.

All property rights, including publication rights of all reports produced by proposer in connection with services performed under this agreement, shall be vested in the City. The proposer shall not publish or release any of the results of its examination without the expressed written permission of the City.

During the evaluation process the City Manager reserves the right - where it may service the City of Newman’s best interests - to request additional information or clarifications from the proposers. At the discretion of the City of Newman, firms submitting proposals may be requested to make oral presentations as part of the evaluation process.

The City of Newman reserves the right to retain all proposals submitted and to use any ideas in a proposal regardless of whether the proposal was selected. Submission of a proposal indicates acceptance by the firm of the conditions contained in this request for proposals, unless clearly and specifically noted in the proposal submitted and confirmed in the contract between the City of Newman and the firm selected.

It is anticipated the selection of a firm and/or firms will be completed by March 1st, 2012. Following the notification of the selected firms it is expected a contract will be executed between both parties by April 1, 2012. The City of Newman reserves the right to reject any or all proposals, to waive any non-material irregularities or information in any proposal, and to accept or reject any items or combination of items.

A.Term of Engagement

It is the intent of the City to contract for the services presented herein for a term of one (1) year. The City reserves the right to extend the term for four (4) additional one-year terms subject to the annual review and recommendation of the City Manager, the satisfactory negotiation of terms (including a price acceptable to both the City of Newman and the selected firms), the concurrence of the City Council of the City of Newman and the annual availability of an appropriation.

II.NATURE OF SERVICES REQUIRED
A.Scope of the Work to be Performed:

The City of Newman’s goal is to provide the public and our constituents with financial statements that give complete, accurate and understandable information about the City’s financial condition. The selected independent firm/and or firms will be required to perform the following tasks:

  1. Review, correct and provide direction in closing the books and accounts of the City of Newman.
  2. Draft the Management Discussion and Analysis of the City’s financial reports and brief the City staff on the draft.
  1. A firm may also bid separately, additionallyor solely to provide the following audit services:
  1. Audit the financial records and accounts of the City of Newman in accordance with generally accepted auditing standards.
  1. Perform tests of compliance in accordance with Guidelines for Compliance Audits of California Redevelopment Agencies and issue required Compliance Reports thereon.
  1. Prepare a Memorandum on Internal Control Structure and Management Letters.
  1. Test compliance with Proposition 111, Article XIII.B – Review of Appropriation Limit Calculations.
  1. Prepare General Purpose Financial Statements of the City of Newman in conformity with generally accepted accounting principles.
  1. Prepare the financial statements of the City of Newman Transportation Development Act Funds.
  1. Prepare the Component Unit Financial Statements of the Redevelopment Agency of the City of Newman.
  1. Prepare the state Controller’s Reports for the City of Newman and the Newman Redevelopment Agency.
  1. Prepare the State Highway (Gas Tax) Report.
  1. If it is determined that the agency has met the federal funds threshold, test compliance with the Single Audit Act as amended in 1996, and prepare the Single Audit Report.
C.Auditing Standards to be Followed:

To meet the requirements of this request for proposal, the audit shall be performed in accordance with:

1.Generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants
2.The standards applicable to financial audits contained in Government Auditing Standards (1994 Revision), issued by the Comptroller General of the United States:
3.The provisions of the Single Audit Act as amended in 1996 and the provisions of the U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, if preparation of a Single Audit Report is determined to be required.
D.Financial Reports to be Issued:

Following completion of the fiscal year’s financial statements and financial audit, the audit firm shall issue:

  1. Reports on the fair presentation of the financial statements in accordance with auditing standards generally accepted in the United States of America as listed below:

a)General Purpose Financial Statements for the City of Newman;

b)Component Unit Financial Statements for The Redevelopment Agency of the City of Newman;

c)Financial Statements for the City of Newman Transportation Development Act.

d)State Controller’s Report for the City of Newman and the Newman Redevelopment Agency.

e)State Highway Report for the City of Newman.

  1. A report based on the auditor’s understanding of the internal control structure and assessment of control risk. In this report, the auditor will also communicate any reportable conditions found during the audit and indicate whether they are also material weaknesses (see #8 below for related item).
  1. A separate report on the auditor’s analysis of the internal control structure used in the administration of federal financial assistance programs.
  1. A report on the City’s compliance with laws and regulations related to “major” federal awards including an opinion on compliance with specific requirements applicable to “major” federal awards programs. The report on compliance shall include all instances of non-compliance.
  1. A report on compliance with laws, regulations and contracts and grants applicable to the Transportation Development Act (TDA) including on opinion on compliance with specific requirements applicable to the TDA including: (1) Public Utilities Code Section 99245 as enacted and amended by statute; (2) standards for financial and compliance audits contained in the California Administrative Code Section 6664 of the TDA; and (3) the allocation instructions of the Stanislaus Council of Governments.
  1. A report on the Redevelopment Agency’s compliance with the laws and regulations identified in the Guidelines for Compliance Audits of California Redevelopment Agencies as issued by the State Controller and a report on the Agency’s internal controls.
  1. A Management Letter addressed to the City Council of the City of Newman setting forth recommendations (as applicable) for improvements in the City’s accounting systems.
  1. The auditor shall communicate in a letter to the City Manager any reportable conditions found during the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of the internal control structure, which could adversely affect the organization’s ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. “Nonreportable conditions” discovered by the auditor shall be communicated in the “Management Letter”.
  1. A report on the City’s compliance with Proposition 111, Article XIII.B of the California State Constitution and Government Code 7900 (et seq.) in its calculation of the “Gann Limit”.
  1. Auditors shall be required to make immediate, written notification to the City Manager of all irregularities and illegal acts or indications of illegal acts of which they become aware
  1. Other Communications

The independent auditor shall make all communications to the City Manager required by the audit standards under which the engagement is performed. Those communications include, but are not limited to:

  1. The auditor’s responsibility under generally accepted auditing standards.
  1. Significant accounting policies.
  1. Management judgment and accounting estimates.
  1. Significant audit adjustments.
  1. Other information in documents containing audited financial statements.
  1. Disagreements with management.
  1. Management consultation with other accountants.
  1. Major issues discussed with management prior to retention.
  1. Difficulties encountered in performing the audit.
  1. Errors, irregularities, and illegal acts.

The independent auditor must be available to present the audit plan prior to beginning field work. In addition, the independent auditor must be available to present all final reports to City management and the City Council as requested.

F.Working Paper Retention and Access to Working Papers

All work papers and reports must be retained, at the auditor’s expense, for the minimum of five years (or the retention timeframe established by the professional standards, whichever is longer) unless the firm is notified in writing by the City of Newman of the need to extend the retention period. The work papers are subject to review by federal and state agencies and other individuals designated by the City of Newman. Accordingly, the work papers shall be made available upon request.

In addition, the firm shall respond to the reasonable inquiries of successor auditors and allow successor auditors to review work papers.

G.Journal Entries

All adjusting journal entries made by the independent auditors must be discussed and explained to the designated Finance Department personnel prior to recording. They should be in a format that shows the lowest level of posting detail needed for data entry in the general ledger systems.

III.DESCRIPTION OF THE CITY OF NEWMAN

A.Name and Telephone Number of Contact Person

Any questions regarding this proposal or additional information required by the respondents should be directed to:

Lewis Humphries, Finance Director

City of Newman

P.O. Box 787

Newman, California95360

(preferred method)

Phone(209) 862-3725 Fax (209) 862-3199

B. Background Information

The City of Newman is a general law city incorporated under California law in 1888. The City serves a population of approximately 10,000 and is located in western StanislausCounty. The governing body consists of an elected Mayor and four City Council members. The Mayor is elected to a two-year term with the Council members elected to overlapping four-year terms. Members of the City Council also serve as the Redevelopment Agency’s governing board.

The City, organized into 6 departments, provides a full range of municipal services including public safety (police and fire), parks and recreation, community development, water, wastewater collection and disposal, streets and roads, general government and the Newman Redevelopment Agency. The City’s total expected payroll for the year ended June 30, 2012 is approximately $3.1 million covering 34 budgeted full-time positions and approximately 11 part-time positions (including elected officials). The total municipal budget (including Redevelopment) for the 2011-2012 fiscal year is $9.3 million. The accounting and financial reporting functions of the City are centralized in the Finance department.

C.Availability of Prior Reports and Work Papers

The City’s most recent audit was conducted by Clendenin Bird & Company, PC ofModesto, California. The work papers of the previous audits are the property of the previous auditor and can be reviewed by the successful proposer. The following financial statements were prepared by Clendenin Bird & Company, PC for the fiscal year ending June 30, 2010:

  1. City of Newman General Purpose Financial Statements;
  2. Component Unit Financial Statements for the City of Newman Redevelopment Agency; and
  3. Financial Statements for the City of Newman Transportation Development Act Funds.
  4. State Controller’s Report for the City of Newman and Redevelopment Agency.
  5. State Highway Report
  6. Single Audit Report

IV.TIME REQUIREMENTS

A.Proposal Calendar

The following is a list of key dates up to, and including, the date proposals are to be submitted:

Date Activity

December 1, 2011Request for Proposal issued

January 31, 2012Due date for proposals (due by 5:00 p.m.)

March 1, 2012Selected firm notified

April 1, 2012Contract signed

B.Date Services May Commence

Accounting

The City of Newman will have all records ready for review and analysis at a date agreeable to the City and the accounting firm. The City anticipates that the selected firm will perform someaccounting work prior to June 30, 2012.

Auditing

The City of Newman will have all records ready for review and management personnel available to meet with the firm’s personnel on or before September 30, 2012. The City anticipates that the selected firm will perform preliminary audit work and internal control review prior to June 30, 2012. Changes in time requirements for commencement of work to completion of final reports must be approved by the City Manager in advance.

C.Date Reports are Due

The final audit reports are due by December 31, 2012. The due date for subsequent years is also December 31st (6 months following the fiscal year end).

V.ASSISTANCE TO BE PROVIDED TO THE AUDITOR AND REPORT PREPARATION

A.Finance Department and Clerical Assistance

The finance department staff and responsible management personnel will be available to assist by providing information, documentation, and explanations. Consideration must be given to the on-going tasks of the finance department.

B.Work Area, Telephone, Photocopying, and Fax Machine

The City of Newman will provide accountants and auditor with a reasonable workspace, access to telephone lines, photocopying facilities and a fax machine.

VI. PROPOSAL REQUIREMENTS

A firm may submit a proposal for either or both of the year-end accounting and auditing services described in this RFP. The proposal should be specific as to which of the services the firm proposes to provide. All proposals should contain the following components:

  1. Title Page - The title page shall show the proposal subject, the firm’s name and contact person and the firm’s California CPA License Number and Firm’s Federal Identification Number.
  1. Cover Letter - The cover letter should briefly state the proposer’s understanding of the work to be performed, the commitment to perform the work in the required time frame and statements as to why the firm believes it is best qualified to perform the engagement. The cover letter should also make a statement that the firm’s offer is a firm, irrevocable offer for 60 days. The cover letter should indicate whether the firm is independent with respect to the City of Newman and that the firm is an Equal Opportunity Employer.
  1. Table of Contents
  1. Proposer’s Qualifications - The firm should set forth the following:
  1. Qualifications and Related Experience of the Personnel Who Will Serve the City of Newman- Résumés of the Partner, Manager and Senior Staff should be included. Résumés should include all relevant experience, education and CPA licenses and continuing education of the individuals over the past 3 years.
  1. Prior Experience Auditing or Consulting with Cities, Redevelopment Agencies and Other Local Governments - Sufficient information should be provided regarding current local government audit clients, and date that the client has been served.
  1. References of Local Government Clients - Provide a listing of at least five municipal clients for which the firm’s local office serves.
  1. Capabilities in General Consulting - Provide any other information regarding general consulting and accounting provided to public agencies by the firm.
  1. Approach, Scope and Timing of the Accounting and/or Auditing
  1. Provide in sufficient detail the firm’s approach to the City of Newman’s accounting and/or auditing including procedures to be performed, tasks to be accomplished under GASB 34, tasks required as a part of the A-133 single audit, the use of statistical sampling, the utilization of computers on the audit engagement, analytical procedures that may be used, the consideration of laws and regulations, assistance required from City staff and proposed segmentation of the audit. Segmentation of the audit should include breakdown of hours required to perform the audit by classification and in total for the planning and interim, GASB 34 implementation, final audit procedures and reports preparation.
  1. Provide sufficient information of your firm’s understanding of the Objectives and Scope of the Engagement - Specifics should be provided of the services to be provided, the standards to be followed and reports to be issued by the firm.
  1. Maximum Fee and Hourly Rates

The maximum fees and estimated hours for the audit of the City of Newman should be provided in the following format for fiscal years ended June 30, 2012, 2013 and 2014. The fees should be inclusive of any out of pocket expenses incurred by the audit firm:

A. Est.Not to Exceed

Description of Services HoursAmount

Accounting

  1. Review and analysis of the accounting and financial records.
  2. Preparation and recommendation of the closing accounting entries.
  1. Draft and discussion of MD&A

Not to Exceed Maximum Fee (Including Expenses) Total___$______