REQUEST FOR PROPOSAL:

AUDIT SERVICES

COUNTY OF CLEVELAND

NORTH CAROLINA

DECEMBER 5, 2003

TIMELINE

FRIDAY, DECEMBER 5, 2003COUNTY MAILS RFP PACKAGES

FRIDAY, DECEMBER 19, 2003 (5:00 p.m.)AUDITOR SUBMITS INTENT FOR PROPOSAL

Call 704-484-4811

FRIDAY, JANUARY 23, 2004 (5:00 p.m.)AUDITOR SUBMITS OFFICIAL PROPOSAL

Mail or deliver sections 1 and 2

TUESDAY, FEBRUARY 3, 2004 (6:00 p.m.)COUNTY AWARDS CONTRACT

Action by Board of Commissioners

December 8, 2003

The Board of Commissioners of the County of Cleveland (hereinafter called the “County”) invites qualified independent auditors (hereinafter called “auditor”) having sufficient governmental accounting and auditing experience in performing an audit in accordance with the specifications outlined in this Request for Proposal (RFP) to submit a proposal. There is no expressed or implied obligation for the County to reimburse firms for any expenses incurred in preparing proposals in response to this request.

Type of Audit

The audit will encompass a financial and compliance examination of the County’s annual financial and compliance report in accordance with the laws and/or regulations of the State of North Carolina, which include requirements for the minimum scope of the audit. The annual financial and compliance report includes the basic financial statements, required and other supplementary information, and compliance reports. The auditor is not obligated to audit required supplementary information nor the statistical section of the annual financial and compliance report. The financial and compliance audit will cover federal, state, and local funding sources in accordance with all of the following:

  • generally accepted auditing standards;
  • Government Auditing Standards;
  • the Single Audit Act of 1984 and the Single Audit Act Amendments of 1996;
  • the provisions of OMB Circular A-133: Audits of State, Local Governments, and Non-Profit Organizations;
  • the State Single Audit Implementation Act; and
  • applicable laws and regulations.

Audit Service Period

The County intends to continue the relationship with the selected auditor for no less than three years on the basis of annual negotiation after the completion of the first year contract.

  • July 1, 2003 to June 30, 2004 (fiscal year 2004)
  • July 1, 2004 to June 30, 2005 (fiscal year 2005)
  • July 1, 2005 to June 30, 2006 (fiscal year 2006)

Each year after negotiation has taken place, the auditor will forward an annual audit contract (created and approved by the Local Government Commission) that documents the terms of the audit to the County for signature. Since one governing board may not obligate future governing boards, the remaining years of the agreement, as well as any subsequent years, are subject to governing board approval each year.

Audit Service Requirements

  1. The audit must be conducted in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; the State Single Audit Implementation Act; any other applicable procedures for the audit of a local government’s financial statements prepared in accordance with generally accepted accounting principles (GAAP); and encompass any requirements imposed by the Local Government Commission.
  2. Should circumstances arise during the audit that require work to be performed in excess of the original estimates, any additional costs will be negotiated prior to commencement of the work and an amended contract will be submitted for approval by the governing board and forwarded to the Local Government Commission for approval.
  3. The auditor must submit a preliminary draft of the final report and required journal entries, if any, to the Finance Director or designee by October 10 and allow 5 to 10 working days for proofing and reconciliation to the County’s records.
  4. The financial audit opinion will cover the basic financial statements. Certain combining and individual financial statements and schedules, and related information are not necessary for fair presentation, but will be presented as additional analytical data. This supplemental information will be subjected to the tests and other auditing procedures applied in the audit of the basic financial statements, and an opinion will be given as to whether the supplemental information is fairly stated in all material respects in relation to the financial statements taken as a whole.
  5. The audit must be completed during the four months following the fiscal year end and final reports must be rendered by October 31. The final report will be subjected to quality control review by the Local Government Commission prior to acceptance by the County.
  6. Copies of each final report, management letter, and U.S. Office of Management and Budget’s Form SF-SAC (a.k.a. Data Collection Form) must be supplied to the Finance Director within the time frame cited above. Each year, the Finance Director will specify the needed number of copies. Please see the attached list of recipients of the final report, management letter, and Data Collection Form for the fiscal year ended June 30, 2003.
  7. The working papers shall be retained and made available upon request by the County or any cognizant agency for no less than three years from the date of the audit report.

Other Services

The auditor will prepare and print the final report. To do so, the auditor should use the basic financial statements, required supplementary information, and other supplementary information that the County will provide in negotiated formats. As required, the auditor will submit a draft financial and compliance report for review by the Finance staff. The Finance Director or designee will return the draft with any proposed revisions before release of the final report.

Further, the auditor will complete the U.S. Office of Management and Budget’s Form SF-SAC (a.k.a. Data Collection Form) from information contained in the “Schedule of Expenditures of Federal and State Awards” located in the final report.

Audit Contract & Payment of Audit Fees

Prior to commencement of work, the Local Government Commission must approve the annual audit contract. Prior to processing by the County, invoices must be approved by the Local Government Commission. If applicable, invoices may also be subject to approval by an appropriate grantor agency prior to processing by the County.

Up to 75% of the total fee may be billed through interim or progress billings prior to submission of the final report to the Local Government Commission and their approval of the audited financial statements in the final report. The auditor may submit final billings following the Local Government Commission’s approval of the audited financial statements in the final report.

Time Schedule for Awarding the Contract

Request for proposal packages will be mailed by Friday, December 5, 2003. Please acknowledge receipt of this request for proposal and your intent for proposal by Friday, December 19, 2003.

Proposals signed by authorized officials will be received by David Dear, Finance Director at 311 East Marion Street, Shelby, North Carolina until Friday, January 23, 2004 at 5:00 p.m. Envelopes containing proposals should be clearly identified on the front as to the contents. The Finance Director and other County staff will review the proposals and the Finance Director or designee will make a recommendation to the Board of Commissioners on Tuesday, February 3, 2004 at which time the contract will be awarded.

The County reserves the right to adjust the dates for preliminary selection and final contract approval based upon changes to regularly scheduled Board meeting dates, unanticipated delays in the selection and/or negotiation process, or any other contingency based upon the best interest of the County. Nevertheless, every effort will be made to be respectful of the time constraints put upon public accounting firms in the late spring.

Any questions should be directed to Chris Crepps, Assistant Finance Director, at 704-484-4811. Appointments may be scheduled to further discuss any specific matters necessary in preparing your proposal. Please call Chris Crepps, Assistant Finance Director, at 704-484-4811 to schedule an appointment.

Description of the County and the Accounting System

The County of Cleveland is a local County government in North Carolina with a population approximating 99,000. Based on the criteria set forth in GASB Statements 14 and 39, one organization (the Cleveland County Industrial Facility and Pollution Control Authority or “Authority”) will be included as a component unit in the County’s annual financial and compliance report. The Authority has no financial transactions or account balances. Further, the County operates a solid waste landfill and various collection centers as the sole proprietary fund of the County. The County has no internal service funds. A listing of all reported funds follows. More information on the County can be found in the financial and compliance reports available at
Organization of Funds

The County maintains the following funds:

  1. General Fund (major fund) – separate funds on the books as follows, reported as one fund
  1. County General Fund
  2. Social Services Fund
  3. Health Department Fund
  4. Courts Fund
  5. Workers Compensation Fund (self-funded)
  6. Health and Dental Fund (self-insured)
  1. Special Revenue Funds:
  1. Public Schools Fund (major fund in FY 2002/2003)
  2. Schools Capital Reserve Fund
  3. Public Schools Building Bond Fund
  4. Community College Bond Fund
  5. Revaluation Fund
  6. Emergency Telephone Fund
  7. Fire District Fund
  8. Community Development Block Grant (CDBG) Fund
  1. Debt Service Fund
  2. Capital Projects and Capital Reserve Funds
  3. Enterprise Fund: Solid Waste Disposal and Collection Fund (major fund in FY 2002/2003)
  4. Trust and Agency Funds:
  5. Fines and Forfeitures Fund
  6. Inmate Trust Fund
  7. Property Tax Fund
  8. Rescue Squad Fund
  9. Social Services Trust Fund

Budgets

The County budgets all funds on the modified accrual basis of accounting as required by North Carolina law. Appropriations are made at the departmental level. The County also maintains an encumbrance system. Both the budgetary and encumbrance systems are integrated with the accounting system to provide easy comparison with actual expenditures. Budgeted revenues, excluding project amounts, are estimated at $87,842,019 in fiscal year 2004. More information on the annual budget is located at

Grants, Entitlements, and Shared Revenues

The “Schedule of Expenditures of Federal and State Awards” for the year ended June 30, 2003 is included in the annual financial and compliance report available on the website for the Finance Department website at Also included is a “Schedule of Findings and Questioned Costs” showing the major programs for the prior year.

Accounting Records

The County maintains all its accounting records at offices located at 311 East Marion Street, Shelby, North Carolina. The software used is One/Financials from Cox and Company. The County also uses the integrated One/Tax and One/Payroll software systems from Cox and Company.

Assistance Available to Auditor

Finance staff consists of the Finance Director, Assistant Finance Director, Internal Auditor, one Finance Accountant, two Finance Accounting Specialists, two Accounts Payable Specialists, one Accounts Receivable Specialist, one General Finance Technician, and one Purchasing Specialist.

The County will make available to the auditor sufficient help prepare all necessary confirmations and to pull and re-file records. The auditor will have access to all printed reports and to the computer system to view records and print reports. Sufficient space will be made available for audit staff fieldwork.Upon request, a trial balance with budgeted and actual amounts will be made available via email or computer diskette by the end of the fifth working day of each month following the end of the fiscal year.

The following accounting procedures will be completed and documents prepared by the County’s staff no later than the fifth working day of September. Many of the items listed below may be available by the fifth working day of August. Finance staff will supply additional data upon requests and may supply reasonable assistance in other areas.

General

  1. fully balance the books of account
  2. reconcile all subsidiary ledgers to control accounts
  3. list of top management and current related parties
  4. copy of County organizational chart and IT department organizational chart
  5. copy of the original budget, all amendments, and the final budget as of June 30
  6. copy of all project ordinances and all amendments for active projects
  7. copy of board policies, including travel, investment, and capitalization policies
  8. copy of all correspondence with the Local Government Commission
  9. confirmation requests that are mailed by auditor

Grants

The following will be available for your review for each grant:

  1. grantor agency name and grant name
  2. grant agreement
  3. grant budget and any amendments
  4. all financial reports and related financial information (including total revenues and expenditures for the fiscal year and for the project period, ending receivables balance, ending deferred revenues balance, ending payables balance, remaining budget, etc.)
  5. correspondence with the grantor agency, including monitoring reports
  6. CFDA number and/or pass-through grant number

Cash and Investments

  1. all bank account reconciliations for each month
  2. list of outstanding checks, showing check number, date, and amount
  3. schedule of all investments for all funds at the audit date, showing book value and estimated market value at fiscal year end

Receivables

  1. listing of unpaid taxes receivable by taxpayer and by year as of fiscal year end
  2. schedule of allowance for uncollectible taxes
  3. schedule of tax collections by year of tax levy
  4. schedule of tax rates for the various districts
  5. listing of outstanding accounts receivables by client account as of the fiscal year end
  6. schedule of allowance for uncollectible accounts
  7. schedule of miscellaneous receivables and any related deferred revenues

Capital Assets

  1. detail schedule and summary schedule of all capital asset acquisitions, dispositions, transfers, and gains/losses
  2. copy of depreciation expense by asset
  3. schedule of construction in progress

Other Assets

  1. schedule of insurance coverage
  2. schedule of due to/due from accounts and interfund transfers
  3. copy of inventory listing

Current Liabilities

  1. listing of accounts payable (including payroll-related accounts)
  2. listing of contracts payable
  3. schedule of other payables
  4. copy of outstanding purchase orders report

Long-Term Debt

  1. computation of accrued vacation leave and compensation time payable
  2. schedule of debt service for each debt issue
  3. schedule of capital lease payments for each lease agreement on a capital asset

Equity

  1. analysis of entries to fund balances and net assets and reconciliation to prior year’s report

Other

  1. all normal year-end adjusting entries
  2. working balance sheet for each fund
  3. working statement of revenues, expenditures, and transfers for each fund
  4. working schedules that appear in Notes to Financial Statements or other sections of report
  5. working schedule of expenditures of federal and state awards and notes thereof
  6. working schedules for government-wide presentation
  7. downloaded trial balance of all accounts that shows budget and actual amounts
  8. downloaded general ledger transaction detail report for each account
  9. quarterly reconciliation of general ledger to IRS Form 941
  10. analysis of legal and professional fees
  11. copy of indirect cost allocation plan
  12. copy of the capital lease schedule and list of contracts in force during the audit period

Size and Complexity of County

Personnel/Payroll

about 675 regularly paid employees, 665 payments remitted through direct deposit

paid semi-monthly on 15th and last day of month

Management Information Systems

500 PCs on the premises

2 GB core storage of the central processing unit

175 GB total disk capacity of the system

1 employed programmer is capable of modifying the operating system and the applications programs

The following financial applications are on the AS/400 computer system:

  • Accounts Payable
  • Accounts Receivable (exceptions)
  • Capital Assets
  • Cash Receipts (exceptions)
  • General Ledger
  • Grants/Project Accounting
  • Payroll
  • Permits (exceptions)
  • Purchasing
  • Taxes

The following financial applications are on a separate computer system:

  • Accounts Receivable (EMS, Health Department, and Landfill)
  • Cash Receipts (EMS, Health Department, Jail, Landfill, Register of Deeds, Sheriff, Social Services, and some smaller departments)
  • Permits (Sheriff)

Accounts Receivables Billing

EMS:about 2,000 statements sent each month

average about 20,000 delinquent accounts at month-end

Health Department:about 500 statements sent each month

average about 2,500 delinquent accounts at month-end

Landfill Receivables:about 200 statements sent each month

average about 50 delinquent accounts at month-end

Property Tax Billing

about 52,000 tax bills issued (without motor vehicles) over the past year

about 96,000 motor vehicle tax bills issued over the past year

fiscal year 2003 levy = $ 40,064,096, collections = $ 37,736,229

Bank Accounts

12 accounts at First National Bank

21 accounts at North Carolina Capital Management Trust

3 accounts at BB&T

various numbers of certificates of deposit and investments may be held at any time (typical purchase price is $1M or $2M even)

Central Depository:First National Bank, Shelby, North Carolina (pooling method)

average 500 deposits/credits each month

average 2,825 checks/debits each month

Purchasing

2,375 purchase orders issued in FY 2002/2003

Special Conditions:

  • County collects property taxes for other local governments and special districts within the County
  • County collects occupancy tax for City of Shelby, but not for City of Kings Mountain
  • County receives distribution of sales and use tax for all special districts within the County
  • County currently receives and accounts for CDBG funds in a Special Revenue Fund
  • To effect a CAFR-like financial report, County prepares various financial and statistical schedules that are not required

New Conditions: