Bid B5-14-15

Financial Audit Services

Santa Clara County Office of Education

ADDENDUM #1

FOR

INDEPENDENT FINANCIAL AUDIT SERVICES

FOR

SANTA CLARA COUNTY OFFICE OF EDUCATION

This Addendum forms a part of the Proposal Documents for above subject project and modifies the original project specifications as noted below. Acknowledge receipt of this Addendum in your proposal response. Failure to do so may subject your response to disqualification. The following revisions have been made to the above referenced proposal document:

Q&A from Pre-Proposal Conference - Monday, February 2, 2015, 3pm

Judy Kershaw, Internal Auditor, opened the meeting with introductions of the SCCOE team responsible for the RFP and then had the firms in attendance and on the call introduce themselves. Two firms identified themselves as participating via the call-in number and three firms participated in person.

Judy Kershaw, Internal Auditor, continued the meeting referring to a one-page handout (Exhibit A) highlighting some of the information provided in the RFP and taking questions as she reviewed the material. The following items were included in this discussion.

Questions and Answers

1.  Question: The one-page hand-out describes the scope of the RFP as including “all funds under the jurisdiction and control of the SCCOE, including its wholly-owned finance corporation (the entity which issued debt to finance the purchase of the building that houses the SCCOE headquarters) along with preparing the related tax forms”. Since the RFP was silent on the tax preparation work, is this information an amendment to the RFP and can we review a copy of last year’s tax documents?

Answer: Yes, the RFP was silent on the tax preparation services requested and RFP respondents should consider tax services included in this RFP. A copy of the latest tax fillings for the Finance Corporation is provided as Exhibit B. Please take note of the tax year and the filing date as we often file extensions since this work is coordinated with the financial audits.

2.  Question: Who prepares the financial statements?

Answer: The SCCOE Accounting Services Department, headed by the Controller prepares the unaudited financials and provides the auditors with subsidiary information and site contact information needed to perform audit testing.

3.  Question: What is the basis of the audit adjustments and restatements?

Answer: The audit adjustments and restatements are described on page 53 of the financial audit report where items are delineated for reconciliation from the SACS reporting requirements and financial statement presentation along with other items detailed in notes to the financials such as the reduction in receivables by $1,264,736 for MAA claims from FY 2010-11 and FY 2012-13 that were not received. Under the modified accrual basis of accounting, receivables should only be accrued when the revenue is expected to be received within 60 days of the close of the fiscal year. The other adjustment to the General Fund was made to reduce unearned revenues by $2,268,234 for local grants and programs that should be recorded as revenues when the money is received. An adjustment was made in FY 2012-13 for the same purpose. The $12 adjustment in the Debt Service Fund was simply made to report the cash balance in that fund to the actual bank stated amount. Finally, the $9,181,048 adjustment to the self-insurance fund was made because the OPEB liability is required to be reported if it is accounted for in a self-insurance (proprietary) fund. This adjustment was also made in FY 2012-13.

4.  Question: What is the preferred timing for performing the financial audit?

Answer: In the past, auditors have performed their interim work in April or May (except week of Spring Break) and then the year-end work in October. This timing works for us as we generally close the books by September.

5.  Question: Does the practice continue to be the same when drafting the financial, that is drafting it in the format for the SACs and the auditors use this as the basis for placing the financial data in the proper format for financial statement reporting?

Answer: Yes, this is the continued practice.

ADDITIONAL QUESTIONS RECEIVED AFTER THE PRE-PROPOSAL CONFERENCE

6.  Question: Have you had any major events, or anticipate any, under the course of the contract?

Answer: Internal Audit surveyed the management team in finance and was informed that

there are no anticipated major events having a financial statement impact during this fiscal year and the near future. Please review both of the FY 2013-14 financial audit reports for items of interest such as Note 5 of the Finance Corporation audit report regarding potential restructuring of the Finance Corporation.

7.  Question: When was your last capital assets inventory (property, plant and equipment) and who was it performed by?

Answer: The latest inventory of capital assets other than real property was completed in the last calendar year quarter of 2014 by in-house staff. The latest appraisal of real property was completed in the last calendar year quarter of 2013 by American Appraisal Associates, Inc.

8.  Question: Have you had an actuarial study performed for OPEB as required by GASB 45 in the last 2 years?

Answer: Yes, the report of GASB 45 Valuation as of July 1, 2012 was completed on May 30, 2013 by North Bay Pensions.

9.  Question: Do you have any retirement plans other than PERS that require a separate actuarial study to meet the requirements of GASB 67 or 68 for the fiscal year ending June 30, 2015?

Answer: The SCCOE participates in the CalPERS and CalSTRS pension plans for which GASB 67 became effective in FY 2013-14. GASB 68 will become effective for employers participating in these plans in FY 2014-15.

10.  Question: What was the all-inclusive cost of your 2013-14 audit (if available, please provide the separate costs for the COE audit, Finance Corporation audit, and Finance Corporation tax preparation)?

Answer: As in previous years, the RFP for financial audit services covers all funds under the jurisdiction and control of the SCCOE including its wholly-owned finance corporation and the preparation of related tax documents. We paid $51,640 for all of these services related to FY 2013-14.