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1 REQUEST FOR PROPOSALS (RFP) FOR AUDIT SERVICES RFP Title: City of Whitefish Audit Services RFP Response Due Date and Time: 4:30 P.M., Mountain Time / July 15, 2021 Issue Date: June 8, 2021 ISSUING AGENCY INFORMATION City Of Whitefish 418 E. 2nd Street P.O. Box 158 Whitefish, MT 59937 Single Point of Contact (SPOC): Benjamin Dahlman: [PHONE REDACTED], [EMAIL REDACTED] Website: www.cityofwhitefish.org INSTRUCTIONS TO FIRMS Return Sealed Statements to: City of Whitefish City Clerk – Audit Services RFP 418 E. 2nd Street P.O. Box 158 Whitefish, MT 59937 Mark Face of Envelope/Package with: RFP Response-Audit Services Special Instructions: FIRMS MUST COMPLETE THE FOLLOWING Firm Name/Address: (Name/Title) (Signature) Print name and title and sign in ink. By submitting a response to this RFP, offeror acknowledges it understands and will comply with the RFP specifications and requirements. Type of Entity corporation, LLC, etc.) Phone Number: E-mail Address: FAX Number: FIRMS MUST RETURN THIS COVER SHEET WITH RFP RESPONSES ---PAGE BREAK--- 2 The City of Whitefish, Montana is requesting proposals from qualified certified public accounting firms to conduct annual financial statement audits for three fiscal years ending June 30, 2021, June 30, 2022 and June 30, 2023. These audits are to be performed in accordance with generally accepted governmental auditing standards by firms qualified to conduct audits for municipal governments in Montana. Additional services to be provided include an annual audit of businesses required to collect Resort Tax in the City of Whitefish from the sales of taxable goods and services and certain consulting services. Resort Tax business audits will be structured as agreed upon procedures as a separate process from the audit of the City’s financial statements and single audits, if required. The firm selected to provide these services will be required to enter into a three year contract. The City reserves the right to extend the contract for one-year optional extensions with the successfully awarded firm covering the fiscal years ending June 30, 2024 and June 30, 2025. The Single Point of Contact (SPOC) for this solicitation is: Benjamin Dahlman, Finance Director 418 E. 2nd Street P.O. Box 158 Whitefish, MT 59937 [PHONE REDACTED], [EMAIL REDACTED] RFP Submittal Terms: • Questions about this RFP must be submitted via e-mail or in writing to the SPOC by 4:30 p.m. on June 25, 2021. No additional RFP questions will be addressed after this date. A response addendum listing all questions received and City of Whitefish’s responses will be posted by 5:00 p.m. on June 30, 2021 on the City of Whitefish’s webpage under Bid Opportunities, Finance Department Bids at: • Proposals must be submitted to: Whitefish City Clerk’s Office, 418 E. 2nd Street, P.O. Box 158, Whitefish, MT 59937 no later than 4:30 p.m. on July 15, 2021. • Five copies of the RFP response must be submitted as well as one electronic virus-free usb drive. • Please label outside of response package envelope as: RFP Response-Audit Services. • Proposals are scheduled for opening by the Finance Department at 9:15 a.m., July 16, 2021 in the Arches Conference Room, located on the second floor of the Whitefish City Hall at 418 E. 2nd Street, Whitefish Montana. • The Notice of Award is intended on or before September 7, 2021. TARGET SCHEDULE OF EVENTS Deadline for Receipt of Written Questions to SPOC on RFP June 25, 2021 RFP Questions Responses Posted on City Website June 30, 2021 RFP Responses Due to City Clerk at City Hall July 15, 2021 RFP Opening of Reponses July 16, 2021 ---PAGE BREAK--- 3 Intended Date for Contract Award September 7, 2021 BACKGROUND INFORMATION REVENUE STRUCTURE: The City operates Water, Sewer and Garbage utilities accounted for in its three utility enterprise funds. The City collects approximately $4.5 million from a 3% resort tax. The City receives $4.4 million from property taxes and $2.1 million in various assessments. The City’s Tax Increment Financing District (TIF) expired in FY2021 and no additional TIF revenues are anticipated from the former district. The City uses the following fund types and account groups in its financial reporting: Fund Type Individual Funds Legally Adopted Annual Budgets General 1 1 Law Enforcement Fund/Consolidated into General Fund for financial statement reporting purposes 1 1 Special Revenue Funds 21 21 Enterprise 3 3 Agency Funds 1 Debt Service 3 3 EXPENDITURES: The City of Whitefish operates on an annual fiscal year (FY) operating budget beginning July 1 and ending June 30. In FY 2021, the budget (not including transfers) totaled $58.7 million. During Fiscal Year 2020, the City received approximately $871.5 thousand from 11 program and 8 clusters in federal financial awards. In FY 2021, the City received CARES Act Funding and is anticipating a distribution of ARP funding in FY2021 and FY2022. PERSONNEL: The City of Whitefish employs approximately 112 Regular full and part time employees plus seasonal staff. Payroll for all employees is processed bi-weekly by the City. In FY 2021, the personnel budget totals approximately $11.2 million. City employees participate in the following pension plans through the State of Montana: • Public Employees Retirement System, • Firefighters' Unified Retirement System (FURS) • Municipal Police Officers' Retirement System (MPORS) ---PAGE BREAK--- 4 City employees can voluntarily participate in the following deferred compensation retirement plan to those eligible: • ICMA-RC (457 Plan) The City of Whitefish negotiates with the following unions: • International Association of Firefighters Local 3995 (City Firefighters/Paramedics) • Montana Federation of Public Employees Association Whitefish Police Protective Association (Police Officers) • American Federation of State, County and Municipal Employees, AFLCIO, its Montana Council No. 9 and its Local Union No. 2943, (Public Works Employees) The City’s Finance Department structure includes a finance director, an accountant, two customer service specialists, a utility billing supervisor, two utility billing customer service specialists, a utility service operator, one information technology administrator and one IT support specialist. ACCOUNTING SOFTWARE: The computerized accounting records are processed using Black Mountain Software. The following cloud-based modules used by the City are: Accounting (Accounts Payable, General Ledger), Human Resources and Payroll), Cash Receipting, Sales Tax, Business Licensing, Special Assessments and Utility Billing. Budgets are built outside of Black Mountain Software but are entered in the Budget Ledger in Black Mountain system for reporting purposes. PRIOR YEAR AUDIT INFORMATION: The FY 2020 audit included the following major funds: Governmental Funds; General Fund, Resort Tax, Tax Increment Fire and Ambulance, Tax Increment Revenue Bond, and Business Type Enterprise Funds; Water and Sewer. The City of Whitefish was audited for Fiscal Year 2020 and prior years by Denning, Downey & Associates, P.C., Certified Public Accountants. A copy of their report is available on our website at: SCOPE OF WORK FROM AUDIT FIRM The audit firm shall be required to perform the audits in accordance with the audit standards promulgated in the U.S. Government Accountability Office’s Government Auditing Standards (Generally Accepted Government Auditing Standards (GAGAS)). The audit firm will be required to express an opinion on the fair presentation of the City of Whitefish’s financial statements in conformity with Generally Accepted Accounting Principles in the United States of America typical for a local government. The audit firm is not required to express an opinion on those sections not required by auditing standards such as, the introductory section or the statistical section of the report. The audit firm will also complete a Single Audit, if required, and issue required statements in compliance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost principles and Audit Requirements for Federal Awards The audit firm may also provide the following assistance at the request of the City of Whitefish: ---PAGE BREAK--- 5 • Provide guidance on any new GASB pronouncements and GAAP application to City operations. • Provide financial reporting guidance on difficult or unusual circumstances. • Prepare the City’s financial statements including GASB 34 Government-Wide financial statements with all required conversions and reconciliations. • Conduct the Resort Tax audit (agreed upon procedures) of 12 -15 businesses collecting and reporting resort tax to the City on an annual basis. • . AUDITING STANDARDS: To meet the requirements of this request for proposals, the audit shall be performed in accordance with Generally Accepted Government Auditing Standards and the provisions of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost principles and Audit Requirements for Federal Awards and other relevant regulations. DELIVERABLE REPORTS REQUIRED: Reports to be issued for the City of Whitefish: 1) A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles, including an opinion on the fair presentation of the supplementary schedule of expenditures of federal awards in relation to the audited financial statements, if applicable. 2) A report on compliance and internal control over compliance applicable for federal programs if required thresholds are met. 3) All other reports required by the Generally Accepted Government Auditing Standards. In the required reports on compliance and internal controls, the audit firm shall communicate any reportable conditions found during the audit. A reportable condition shall be defined as a material weakness and/or 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. Non-reportable conditions discovered by the auditors shall be reported in a separate letter to management, which shall be referred to in the report(s) on compliance and internal controls. The report on compliance and internal controls shall include all material instances of noncompliance. All nonmaterial instances of noncompliance shall be reported in a separate management letter, which shall be referred to in the report on compliance and internal controls. 4) A report disclosing any lack of compliance with State statutes, rules, regulations, or ordinances that would not have a material effect on the financial statements. This report may be combined with other reports if appropriate, or the items may be included in a management letter. If included in a management letter, that letter must accompany the audit report as a separate document. 5) Audit firm 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 following parties: ---PAGE BREAK--- 6 1) The City of Whitefish Mayor and City Council 2) The City Attorney 6) Audit firm will be required to prepare 3 paper copies (or fewer if determined by the City) and one digital copy of the City’s competed financial statements including footnotes for the; Finance Department, City Manager, City Clerk, City Attorney and the Mayor and 6 City Council members. The audit firm will file the audit report with accompanying audited financial statements with the State Department of Administration. If a Federal Audit is required, the preparation of the Data Collection Form for the Federal Audit Clearinghouse will be initiated by the audit firm. 7) The City of Whitefish has a resort tax and the City utilizes the services of a qualified CPA firm under the direction of the City Manager to conduct audits of businesses collecting resort tax. It is the City’s intent that the same firm providing audit services will be engaged to provide the Resort Tax Scope of Work which may be billed and contracted separately from the other audit services. The Scope of Work for this particular service is to help ensure compliance with the Resort Tax Ordinance #95-15. The term for the Resort Tax audits should be for the same years covered in the audit contract for services described in the Scope of Work; however, this work will be structured as agreed upon procedures rather than a regular audit engagement. The number of businesses to be audited is approximately 12-15 entities per year. The Scope of Work for these services include testing whether the accounting and or point of sale systems for the businesses are adequate to provide the information necessary to accurately calculate and distribute the resort tax liability and propose adjustments to the amounts over and underpaid to the City. Resort Tax audit schedules can be negotiated with the City Manager and Finance Director at reasonable times each fiscal year. ADDITIONAL AUDIT REQUIREMENTS: • All working papers and reports must be retained, at the audit firm’s expense for a minimum of five years, unless the firm is notified in writing by the City of Whitefish of the need to extend the retention period. The firm will make these working papers available to interested parties upon request by the City. • The proposal should allow time for assistance to the City for any new, unusual or difficult items. • The firm shall respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance. AUDIT TIME REQUIREMENTS: It is imperative that the final report be available by the State deadlines each year. The City will have records ready as mutually agreed by both parties to ensure that deadlines are met. This is typically by March 31 for audits subject to federal single audit requirements and June 30 of the following year for non-federal audits. If your firm cannot meet this timeline, please refrain from responding to the RFP. • Interim work shall be completed in time to ensure the timely issuance of financial statements and auditor opinions by state deadlines of each year. • The audit firm shall provide the City with a detailed audit plan and list of schedules to be provided by the City prior to October 15th of each year. • The City of Whitefish Finance Director will deliver draft basic fiscal year close ---PAGE BREAK--- 7 information to the auditors as negotiated with the audit firm each year in preparation for the filing of the unaudited Annual Financial Report (AFR) with the state by December 31. • The audit firm shall a) complete all audit fieldwork in time to meet state deadlines of each year if the City which may be different timelines if the City is subject to a Federal Single Audit) and b) have the audit report(s) and recommendations to management available for review by the Finance Director and/or City Manager and presentation to the City Council if required in April or July. 1. At a minimum, the following conferences should be held: a. Entrance conference with Finance Director and/or City Manager, b. Progress conferences with the Finance Department on an “as needed” basis during the course of fieldwork, c. Exit conference with the Finance Director and/or City Manager, d. Presentation to the City Council if requested or required, e. Members of the audit staff will meet with the Finance Director and/or Staff periodically during the course of the audit to update on progress, and identify any findings. ASSISTANCE PROVIDED TO AUDIT FIRM Financial Services Department and Clerical Assistance The Finance Department staff and responsible management personnel will be available during the audit to assist the firm by providing information, documentation and explanations. The preparation of confirmations may be conducted by the City or the audit firm. Statements and Schedules to be Prepared by the City’s Finance Department The City and the firm selected will negotiate a list of schedules to be prepared by City staff along with due dates by October 15th of each year. It is important that the audit firm maintain flexibility with regard to due dates for specific schedules within this list. Work Area, Telephone, Photocopying and Fax Machines The City has limited space available, but will make every effort to provide reasonable work space, desks and chairs. The Audit firm will also be provided with access to one phone line, photocopying facilities, and a fax machine. On request, the City will coordinate cloud-based Auditor access to the financial system including scanned A/P records. RFP RESPONSE REQUIREMENTS Firms are solely responsible for all costs incurred in the preparation and submittal of the RFP. Respondents should submit five full copies of their RFP responses and one virus-free electronic USB ---PAGE BREAK--- 8 drive copy to the City of Whitefish Clerk’s Office, 418 E, 2nd Avenue, or P.O. Box 158, Whitefish MT 59937, by 4:30 p.m. on July 15, 2021. No late, faxed, or email RFP responses will be accepted. Questions about the RFP must be submitted via e-mail or in writing to the SPOC on or before 4:30 p.m. on June 25, 2021. A Response Addendum listing all questions received and the City of Whitefish’s responses will be posted by 5:00 p.m. on June 30, 2021 on the City of Whitefish’s webpage at: It is the responsibility of each firm to check the website if it is interested in the questions received and the responses provided by the City. Subject to exceptions provided by Montana Law, all information received in response to this RFP, including copyrighted material, is public information. Responses will be made available for public viewing and copying shortly after the statement due date and time. The exceptions to this requirement are bona fide trade secrets meeting the requirements of the Uniform Trade Secrets Act, title 30, chapter 14, part 4, MCA, that have been properly marked, separated, and documented; matters involving individual safety as determined by the City; other constitutional protections. The City will provide a hard copy of the RFP responses for interested parties to review during regular business hours at the City of Whitefish’s Offices at City Hall at 418 E. 2nd Avenue, Whitefish, MT 59937. Copies are subject to prices charged by the City for open records. RFP Content: Responses to the RFP should demonstrate that the firm has the professional capability and availability to satisfactorily complete all the tasks as described in the Scope of Work section and be able to meet the timeline. If multiple firms team up to provide project consulting services, the following information should be provided for each firm. Responses should include: Basic Firm Information 1. Completed and signed RFP cover sheet (use page one of this solicitation) 2. Cover letter introducing the firm and the firm’s legal name, address, telephone number, principal’s contact email address along with acknowledgement that that the person signing the proposal is entitled to represent the firm, empowered to submit the response, and authorized to negotiate and sign a contract with the City. 3. Provide an affirmative statement that the firm is independent of the City of Whitefish defined by Government Auditing Standards. 4. Provide a list and describe professional relationships if any involving the City of Whitefish or any of the City’s staff or agencies for the past five years, together with a statement explaining why such relationships do not constitute a conflict of interest relative to performing the proposed audits if applicable. In addition, the successful firm entering into a contract with the City shall give the City of Whitefish written notice of any professional relationships entered into during the period of the signed agreement. 5. Provide an affirmative statement indicating that the firm, any proposed sub-contractors and all assigned key professional staff are properly licensed and authorized to conduct audits for local governments in the State of Montana Audit firm must be listed on the audit roster maintained by the Montana Department of Administration, Local Government Services. 6. Provide an affirmative statement indicating the firm has performed audits in accordance with Federal requirements including Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards. ---PAGE BREAK--- 9 7. The proposal should state the size of the firm, the size of the firm’s governmental audit staff, and the location of the office from which the work on this engagement will be performed. 8. The firm is also required to submit a copy of the report on its most recent external quality control review including a review of specific government engagements. 9. The firm shall also provide information on the results of any federal or state desk review or field reviews of its audits during the past three years. 10. The firm shall provide information on the circumstances and status of any disciplinary action taken or pending against the firm during the past three years with state regulatory bodies or professional organizations. If this is not applicable, please indicate that in the response. Engagement Staffing, Resources and References 11. The proposal should identify the managing partner and supervisor for the engagement and provide a detailed description of their qualifications, relevant continuing education and experience, including an affirmative statement that they are licensed to practice in Montana. Other specialists and staff to be used on the engagement should also be identified in the proposal along with their qualifications, experience and licensing. The descriptions of this second group need not be as detailed. 12. The firm also should indicate how the quality of the staff will be assured over the term of the engagement. Engagement partners, managers, other supervisory staff and specialists may be changed for legitimate business reasons. However, the City reserves the right to approve or reject replacements. Other engagement personnel may be changed at the discretion of the audit firm provided that the replacements have substantially the similar or better qualifications. 13. For the firm’s office that will be assigned responsibility for the audit, list the most significant engagements (maximum of 5) performed in the last five years that are similar to the engagement described in this RFP. These engagements should be ranked on the basis of total staff hours. Indicate the scope of work, date, engagement partners, total hours, and name and phone number of the principal client contact. 14. The proposal should include how the firm will resolve any potential scheduling conflicts. Approach to Scope of Work 15. The proposal should briefly set forth a work plan and process which explains the audit methodology, including the following information: a. Proposed segmentation of the engagement and a tentative calendar. b. Level of staff and number of hours assigned to each proposed segment of the engagement. c. Approach taken to gain and document an understanding of City of Whitefish’s internal control structure. d. Description of determining sample sizes and the extent to which statistical sampling is to be used in the engagement. e. Sample listing of the audit schedules that might be requested from City staff. f. Plan for EDP auditing, if any, keeping in mind the limitations of available staff and computer time laid out in this request. g. Type and extent of analytical procedures to be used in the engagement. h. Approach taken in drawing audit samples to test transactions including tests of controls and substantive testing. i. Description of the methods to assess higher risk versus low-risk areas and how the audit plan might change to accommodate this. ---PAGE BREAK--- 10 j. Approach to maintaining positive relationships with City personnel. k. Audit firm’s philosophy about the content of the management letter. l. Format of exit conference presentation. m. Any anticipated problems, and the firm’s approach to resolving those problems. n. Description of the use of technology in the audit plan to improve efficiency. The audit firm should have and describe their secure portal where their clients can share information that may contain sensitive information. Engagement Cost and Pricing 16. A total all-inclusive maximum price* for each year of the engagement stated in separate columns by year for the City for an audit that meets the threshold for a federal single audit and for an audit below the single audit threshold. a. Rates by partner, specialist, supervisor and staff, and anticipated hours of each should be noted in the response. b. Manner and frequency of billings. *The dollar cost pricing should contain all information relative to performing the audit engagement as described in the RFP. This all-inclusive price is to contain all direct and indirect costs including the Black Mountain Cloud Hosting Auditor Access (Black Mountain currently charges audit firms $430 for this access), the Data Collection Form if a required federal submittal for all federal audits at the Federal Audit Clearinghouse site, the filing of the Audit Report with the State’s Department of Administration. 17. A proposed pricing structure for each year of the engagement for Resort Tax audits for businesses required to submit resort tax collected from the sales of taxable goods and services. The pricing proposal should include the method used to determine pricing such as an amount per business audited, fixed amount for all activity or some other method. The audit shall contemplate 12-15 businesses to be audited each year. The City may negotiate a not to exceed amount for this work. 18. Proposed consulting cost to prepare financial statements including the conversion of fund financial statements to GASB 34 government-wide financial statements which would be structured as a separate contract. 19. Proposed rates for additional services should the City find them necessary, such as closing services CONSULTING FIRM SELECTION PROCESS Upon receipt of responses, selection committee members will evaluate all responsive proposals and assign scores based on the stated evaluation criteria provided in this RFP. Highest ranking firms may be asked to attend an interview or the City may opt to open direct negotiations with the firm that presents the most qualified, highest scoring proposal. If interviews are conducted, finalists are encouraged to bring related examples of work and any other pertinent past project information. Contract negotiations will commence with the highest-ranked firm subject to City Council approval. If an appropriate agreement cannot be reached with the highest-ranked firm, the second-ranked firm will be approached, and so on. Unsuccessful firms will be notified as soon as possible. ---PAGE BREAK--- 11 Evaluation Criteria: Proposals will be evaluated by the City’s Audit Services Selection Committee and scored according to the following factors: 1. Overall quality of the Statement of Qualifications of the firm-10% 2. Related experience on similar projects (Government and MT Cities)- 10% 3. The qualifications and experience of the specific professional personnel to be assigned to the project, including reference checks-20% 4. The firm’s capability to meet time and project budget requirements, and the availability of personnel to respond and provide services in a timely manner-20% 5. Technical approach to the scope of work for the audit-20% 6. Pricing of service with proposed hours for the engagement – 20% ADDITIONAL CONSIDERATIONS This solicitation is being offered in accordance with federal and state statutes governing procurement of professional services. Accordingly, the City reserves the right to negotiate an agreement based on fair and reasonable compensation for the scope of work and services proposed as well as the right to reject any and all responses deemed unqualified, unsatisfactory or inappropriate. The project involves annual auditing services for a three-year contract with an option to extend the engagement for two additional one-year terms. Payment and contract terms will be negotiated with the selected firm. The City will use the Standard Audit Contract developed for local governments and posted on the State of Montana’s website: In no event shall any official, officer, employee or agent of the City be in any way personally liable or responsible for any covenant or agreement herein contained, whether expressed or implied, not for any statement, representation or warranty made therein or in any connection with the agreement. While the City has every intention to award a contract resulting from this RFP, issuance of the RFP in no way constitutes a commitment by the City to award and execute a contract. Upon a determination that such actions would be in its best interest, the City, in its sole discretion, reserves the right to: • Cancel or terminate this RFP; • Reject any or all proposals received in response to this RFP; • Waive any informalities or irregularities in the proposals; • Determine at any time whether a proposal or item in the proposal is unresponsive in any manner; • Not award a contract, if it is in the City’s best interest not to proceed with contract execution; or • If awarded, terminate any contract if the City determines adequate funds are not available. • City reserves the right to request for clarification of information submitted and to request additional information from the firm(s). • If a contract and fee cannot be successfully negotiated with the selected firm, the City may choose to enter into negotiations with another prospective firm, or it may re-advertise for new proposals. ---PAGE BREAK--- 12 • The successful firm shall provide and maintain professional liability, workers compensations, property damage, error and omissions, and any additional lines of coverage required by the City. • A contract, if negotiated with the City, is subject to approval by Montana Department of Administration, Local Government Services.