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HomeMy WebLinkAboutItem 06.oOctober 3, 2016 Item No.________ CITY AUDITING SERVICES REQUEST FOR PROPOSALS Proposed Action Staff recommends adoption of the following motion: Move to authorize request for proposals to be sent out for City auditing services. Passage of this motion will result in the City distributing requests for City auditing services. Overview In August, 2015, the City Council established a schedule for seeking updated proposals for various professional services throughout the City. The City’s auditing services are scheduled for review in 2016. Primary Issues to Consider • The primary issue to consider when reviewing the proposals will be the quality versus the cost of services. Supporting Information • Request for proposals and review process. Financial Impact: $ Budgeted: Y☐ N☐ Source: Related Documents: (CIP, ERP, etc.): Envision Lakeville Community Values: Good Value for Public Services Report Completed by: Jerilyn Erickson, Finance Director N/A N/A N/A 1 City of Lakeville Minnesota Request for Proposals for Professional Auditing Services For the periods ending December 31, 2016 December 31, 2017 December 31, 2018 Jerilyn Erickson Finance Director 20195 Holyoke Avenue Lakeville, Minnesota 55044 952-985-4481 jerickson@lakevillemn.gov 2 REQUEST FOR PROPOSALS TABLE OF CONTENTS I. INTRODUCTION A. General Information B. Term of Engagement C. Subcontracting II. NATURE OF SERVICES REQUIRED A. Scope of Work to be Performed B. Auditing Standards to be Followed C. Reports to be Issued D. Special Conditions E. Working Paper Retention and Access to Working Papers F. Contract Termination III. DESCRIPTION OF THE GOVERNMENT A. Principal Contact B. Background Information C. Budgetary Basis of Accounting D. Pension Plans E. Component Units F. Personnel Assigned G. Technology Infrastructure H. Internal Audit Function I. Availability of Prior Audit Reports and Working Papers IV. TIME REQUIREMENTS A. Proposal Calendar B. Firm Selection C. Schedule for the 2016 Fiscal Year Audit D. Entrance Conferences and Exit Conferences E. Date Final Report is Due V. ASSISTANCE TO BE PROVIDED TO THE AUDITOR AND REPORT PREPARATION A. Finance Department and Clerical Assistance B. Work Area C. Report Preparation VI. PROPOSAL REQUIREMENTS A. General Requirements B. Technical Proposal C. Dollar Cost Proposal 3 VII. EVALUATION PROCEDURES A. Review of Proposal B. Evaluation Criteria C. Oral Presentation D. Final Selection E. Right to Reject Proposals F. Disclaimer APPENDIX A – Proposer Warranties APPENDIX B – Schedule of Professional Fees and Expenses APPENDIX C – Sample Copy of Standard Agreement for Professional Services 4 PROPOSALS MUST BE RECEIVED BY 4:30 PM, OCTOBER 25, 2016 I. INTRODUCTION A. General Information The City of Lakeville is requesting proposals from qualified certified public accounting firms for audit of its financial statements for the three (3) fiscal years ending December 31, 2016, 2017 and 2018, with the option of auditing its financial statements for each of the three (3) subsequent fiscal years. These audits are to be performed in accordance with auditing standards generally accepted in the United States of America, the standards set forth for financial audits in the General Accounting Office’s (GAO) Government Auditing Standards, the provisions of the federal Single Audit Act of 1996 and U.S. Office of Management and Budget (OMB) Circular A-133, Audits of State and Local Governments as well as other Federal, State and local requirements in effect now or placed in effect during the engagement. Inquiries about the engagement or the request for proposal should be addressed to: Jerilyn Erickson Finance Director jerickson@lakevillemn.gov 952-985-4481 Firms shall not contact any other City staff or elected officials with any questions or inquiries. There is no expressed or implied obligation for the City of Lakeville to reimburse responding firms for any expenses incurred in preparing proposals in response to this request. To be considered, qualified firms must submit four (4) copies of their proposal to Jerilyn Erickson, Finance Director, at the City offices located at 20195 Holyoke Avenue, Lakeville, MN 55044 by 4:30 p.m. on October 25, 2016. The City of Lakeville reserves the right to reject any or all proposals submitted. The City of Lakeville reserves the right, where it may serve the City’s best interest, to request additional information or clarification from proposers or to allow corrections of errors or omissions. At the discretion of the City, firms submitting proposals may be requested to make oral presentations as part of the evaluation process. Following a review of the proposals, a recommendation for award will be made by the Finance Director to the City Council. A final decision for award of the work will be made by majority vote of the City Council. The City of Lakeville reserves the right to retain all proposals submitted and to use any ideas in a proposal regardless of whether that proposal is selected. Submission of a proposal 5 indicates acceptance by the proposing firm of the conditions contained in this request for proposal, unless clearly and specifically noted in the proposal submitted and confirmed in the written contract between the City of Lakeville and the firm selected. It is anticipated the selection of a firm will be in November of 2016. B. Term of Engagement A three-year contract is contemplated, subject to annual review and renewal. Based on satisfactory performance, the concurrence of the Lakeville City Council and the annual availability of an appropriation, the City may extend the agreement annually without solicitations from other firms. In the event of unsatisfactory performance, or when in the best interest of the City, proposals may be solicited before the end of the three-year period. The contract shall be in the form of the City’s Agreement for Professional Services (Attachment C). The City reserves the right to negotiate all terms and conditions of the contract. In the event the City and the firm are unable to agree upon all contract provisions, the City reserves the right to cease negotiations, reject the firm’s proposal, and proceed to negotiate with the next selected firm. C. Subcontracting Following the award of the audit contract, no subcontracting will be allowed without the express prior written consent of the City of Lakeville. II. NATURE OF SERVICES REQUIRED A. Scope of Work to be Performed The City of Lakeville will retain the accounting firm to perform the following tasks: 1. Audit the City’s financial processes, records and statements in order to express an opinion on the fairness of the presentation of its government-wide, governmental major fund, business-type major fund and aggregate remaining non-major governmental and business-type fund financial statements in conformity with generally accepted accounting principles. 2. Perform the tests and procedures involving required supplementary information required by the Governmental Accounting Standards Board (GASB) as mandated by generally accepted auditing standards. 3. Review the presentation of the statistical section of the financial statements insofar as current generally accepted auditing standards require such review. 6 The auditor will not be required to audit the schedule of expenditures of federal awards if such audit is not triggered by the threshold of funding received by the City for the fiscal year. B. Auditing Standards to be Followed To meet the requirements of this Request for Proposal, the auditor’s work shall be performed in accordance with: • Generally accepting 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 (GAO) Government Auditing Standards; • The provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of State and Local Governments; • The provisions of the Minnesota Legal Compliance Audit Guide for Local Governments; • Any other Federal, State and local requirements in effect now or placed into effect during the engagements. C. Reports to be Issued Following the completion of the audit of the fiscal year's financial statements, the auditor shall: 1. Issue a report on the fair presentation of the financial statements in conformity with generally accepted accounting principles. 2. Issue a report on the internal control structure based on the auditor’s understanding of the control structure and assessment of control risk. 3. Issue a report on compliance with applicable laws and regulations. 4. Communicate in a letter to City management 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. Reportable conditions that are also material weaknesses shall be identified as such in the reports. Non-reportable conditions discovered by the auditors will be reported in the separate letter to City management, which shall be referred to in the report(s) on internal controls. 7 The audit firm will 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 City Administrator, the Finance Director, and the Mayor of the City. 5. If applicable, issue a report on the Schedule of Expenditures of Federal Awards required by OMB Circular A-133. 6. Prepare any other requested or required reports agreed upon in the annual engagement letter. Final reporting to the City Council. Auditors will ensure that the partner in charge of the audit and/or the Audit Manager is available to attend public meetings for discussion of the final report should his/her attendance be requested by the City Council. Auditors will assure themselves that the Lakeville City Council is informed of each of the following: a) The auditor's responsibility under generally accepted auditing standards and government auditing standards. b) Significant accounting policies. c) Management judgments and accounting estimates. d) Significant audit adjustments. e) Other information in documents containing audited financial statements. f) Disagreements with management. g) Management consultation with other accountants. h) Major issues discussed with management prior to retention. i) Difficulties encountered in performing the audit. j) Performance/efficiency of the City in the fiscal year versus prior years and as compared to other government agencies. k) Assumed potential that a single audit may need to be performed and the reports that may have to be included. D. Special Conditions 1. The City of Lakeville will occasionally request the auditors to present information related to new GASB requirements to the City Council, either during workshops or council meetings. E. Working Paper Retention and Access to Working Papers All working papers and reports must be retained, at the auditor's expense, for a minimum of six (6) years following the issuance of an opinion, unless the firm is notified in writing by the City of Lakeville of the need to extend the retention period. The auditor will be required to make working papers available, upon request, to the following parties or their designees: 1. City of Lakeville 2. Office of the State Auditor 3. U.S. General Accounting Office (GAO) 8 4. Parties designated by the federal or state governments or by the City of Lakeville as part of an audit quality review process 5. Auditors of entities of which the City of Lakeville is a sub-recipient of grant funds In addition, 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. F. Contract Termination Either party may cancel the contract for an audit year by giving notice in writing to the other party at least ninety (90) days prior to January first of the audit year. III. DESCRIPTION OF THE GOVERNMENT A. Principal Contact The auditor's principal contact with the City of Lakeville will be the Finance Director or Assistant Finance Director, who will coordinate the assistance to be provided by the City to the auditor. B. Background Information The City of Lakeville is located in Dakota County about 20 miles south of downtown Minneapolis, Minnesota. The City encompasses an area of approximately 38 square miles, and according to the Metropolitan Council, has an estimated population of 60,633. For 2016, the City has approximately 239 full time equivalent employees, a General Fund budget of $25.4 million, and a total budget of approximately $94.6 million. City enterprise funds include water, sewer, street light utilities, environmental resources and liquor store services. Moody's Investors Service has assigned an Aa1 rating for the City’s general obligation debt instruments and an Aa3 for the City’s HRA lease revenue debt instruments. The City is organized as a Plan A city in accordance with applicable Minnesota State Statutes. The City's governing body consists of a Mayor and four Council members, all elected at large. Council members serve overlapping terms of office. The present Mayor and Council members and their respective terms are: Matt Little Mayor December 31, 2016 Doug Anderson Council Member December 31, 2016 Bart Davis Council Member December 31, 2018 Colleen Ratzlaff LaBeau Council Member December 31, 2018 Kerrin Swecker Council Member December 31, 2016 9 Justin Miller, the City Administrator, has been with the City since December 2014. He is responsible for the daily management of city business and the administration of policy as directed by the Council. Jerilyn Erickson has been with the City as the Finance Director since April 2015. She was previously the Finance Director for the City of Prior Lake and Accounting Manager for the City of Burnsville. The City has been awarded the Certificate of Achievement for Excellence in Financial Reporting for twenty-seven consecutive years. More detailed information on the government and its finances can be found in the Comprehensive Annual Financial Report (CAFR) for the year ended December 31, 2015, and the 2016 Budget Document. Documents are available online at www.lakevillemn.gov. C. Budgetary Basis of Accounting The City of Lakeville prepares its budgets on a basis consistent with generally accepted accounting principles. D. Pension Plans All full-time and certain part-time employees of the City are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). The association administers the Public Employees Retirement Fund and the Public Employees Police and Fire Fund, which are cost sharing multiple employer retirement plans. The Lakeville Fire Relief Association has its own defined contribution plan, for which a separate financial audit is completed and a report issued. A disclosure of the plan is located in the City’s Comprehensive Annual Financial Report (CAFR) Notes to Basic Financial Statements section. E. Component Units The Housing and Redevelopment Authority (HRA) of Lakeville was created by the City to provide housing and redevelopment assistance to its citizens. The HRA is governed by a five-member Board of Commissioners comprised of the City of Lakeville Council in accordance with Minnesota Statutes 469.003, Subdivision 6. Although it is legally separate from the City, the HRA is reported as if it were part of the City (blended) because the City Council is also the HRA governing board. F. Personnel Assigned The City’s Finance Department is headed by the Finance Director and consists of one Assistant Finance Director, three Senior Accountants, one Accountant, one Accounts Payable Technician and two Utility Billing/Accounts Receivable Technicians. Typical 10 functions include accounts payable, accounts receivable, cash management, utility billing, debt management and financial reporting. G. Technology Infrastructure The City is a part of the LOGIS consortium and utilizes JD Edwards financial software. H. Internal Audit Function The City of Lakeville does not maintain an independent internal audit function other than internal checks performed by the Finance Department. I. Availability of Prior Audit Reports and Working Papers Interested proposers who wish to review prior years' audit reports and management letters should contact: Jerilyn Erickson, Finance Director 20195 Holyoke Avenue Lakeville Minnesota 55044 jerickson@lakevillemn.gov 952-985-4481 The City of Lakeville will make its best efforts to make prior audit reports and supporting working papers available to proposers if requested. IV. TIME REQUIREMENTS A. Proposal Calendar Request for proposal issued October 4, 2016 Due date for notification of interest October 11, 2016 Last date for submission of questions October 11, 2016 Responses to questions distributed October 14, 2016 Due date for proposals October 25, 2016, 4:30 pm Possibility of interviews November 1-3, 2016 B. Firm Selection Selected firm notified November 14, 2016 Council consideration November 21, 2016 11 C. Schedule for the 2016 Fiscal Year Audit 1. Detailed Audit Plan: The auditor will provide the City of Lakeville both a detailed audit plan and a list of all schedules to be prepared by the City of Lakeville no later than December 31, 2016. 2. Fieldwork: The auditor will complete all fieldwork by April 28, 2017. A schedule for interim work, fieldwork and draft reports will be determined upon completion of this selection process. A similar time schedule will be developed for audits of future fiscal years. D. Entrance Conferences and Exit Conferences At a minimum, the following conferences should be held by the dates indicated on the schedule. These dates may be changed by mutual, written agreement between the City of Lakeville and the selected auditor. Week of January 9, 2017: Entrance conference with Finance Director and Assistant Finance Director. The purpose of this meeting will be to discuss any potential audit problems and the interim work to be performed. This meeting will also be used to establish overall liaison for the audit and to make arrangements for work space and other needs of the auditor. Discussions of a preliminary audit could be discussed at this time. No Later than the Week of May 29, 2017: Exit conference with City Administrator, Finance Director and Assistant Finance Director. The purpose of this meeting will be to summarize the results of the field work and to review results and findings. A similar meeting schedule will be developed for audits of future fiscal years. E. Date Final Report is Due The Finance Director will complete a review of the draft report as expeditiously as possible. It is not expected that this process should exceed one (1) week. During that review period, the auditor should be available for any meetings that may be necessary to discuss the audit reports. Once all issues for discussion are resolved, the final signed report shall be delivered to the City by May 31, 2017. The audit and final report presentation to the City Council will be scheduled for the third Monday in June of 2017. A similar reporting schedule will be developed for audits of future fiscal years. 12 V. ASSISTANCE TO BE PROVIDED TO THE AUDITOR AND REPORT PREPARATION A. Finance Division and Clerical Assistance The finance division staff and responsible management personnel will be available during the audit to assist the firm by providing information, documentation and explanations. The preparation of any confirmations desired by the auditor will be the responsibility of the City of Lakeville using the format provided by the auditor. B. Work Area The City of Lakeville will provide the auditor with reasonable workspace, table and chairs. The auditor will also be provided with access to the internet, a telephone, photocopying facilities and a fax machine. C. Report Preparation Comprehensive Annual Financial Report: Report preparation, editing, printing and binding shall be the responsibility of the City of Lakeville. The audit firm shall do report editing and proofing. All Other Reports: Report preparation, editing, printing and binding shall be the responsibility of the audit firm. VI. PROPOSAL REQUIREMENTS A. General Requirements Responses to this Request should include the following information in the order prescribed below. Submissions must be received by 4:30 p.m. on Tuesday, October 25, 2016 for a proposal/response to be considered by the City: 1. Title Page: Title page showing the request for proposal subject; the firm’s name; the name, address and telephone number of the contact person; and the date of the proposal. 2. Table of Contents 3. Transmittal Letter: A signed letter of transmittal which briefly states the proposers' understanding of the work to be done, the commitment to perform the work within the time period, a statement why the firm believes itself to be best qualified to perform the engagement and an acknowledgement that the proposal is a firm and irrevocable offer for the three year period. 4. Technical Proposal: The Technical Proposal should follow the order set forth in Section VI – B below. 13 5. An executed copy of the Proposer Warranties attached to this Request for Proposal (Appendix A). 6. Dollar Cost Proposal: The Dollar Cost Proposal should follow the order set forth in Section VI – C below (Appendix B). 7. Professional Services Agreement: An executed copy will be required only from the selected firm. During the bidding process, firms should reference the sample Professional Services Agreement (Appendix C) to ensure their ability to meet all of the requirements outlined in the agreement. Proposers should send four (4) completed proposal packets to the following address: Jerilyn Erickson Finance Director City of Lakeville 20195 Holyoke Avenue Lakeville, Minnesota 55044 Please mark the package as an “Audit RFP.” B. Technical Proposal General Requirements: The purpose of the Technical Proposal is to demonstrate the qualifications, competence and capacity of the firms seeking to undertake an independent audit of the City of Lakeville in conformity with the requirements of this request for proposal. The Technical Proposal should demonstrate the qualifications of the firm and of the particular staff to be assigned to this engagement. It should also specify an audit approach that will meet the request for proposal requirements. The Technical Proposal should address all the points outlined in the request for proposal (excluding any cost information, which should only be included in the dollar cost proposal). The Technical Proposal should be prepared simply and economically, providing a straightforward, concise description of the proposer's capabilities to satisfy the requirements of the request for proposal. While additional data may be presented, the following items must be included. They represent the primary criteria against which the proposal will be evaluated: 1. Independence: The firm should provide an affirmative statement that it is independent of the City of Lakeville as defined by generally accepted auditing standards. The firm also should provide an affirmative statement that it is independent of all of the City’s agencies and component units. 14 The firm should also list and describe the firm's professional relationships involving the City or any of its agencies or component units for the past five (5) years, together with a statement explaining why such relationships do not constitute a conflict of interest relative to performing the proposed audit. In addition, the firm shall give the City written notice of any relevant professional relationships entered into during the period of this agreement. 2. License to Practice in Minnesota: An affirmative statement should be included that the firm and all assigned key professional staff are properly licensed to practice in Minnesota. 3. Firm Qualifications and Experience: The proposer should state the size of the firm, the size of the firm's governmental audit staff, the location of the office or offices from which the work on this engagement is to be performed, the number and nature of the professional staff to be employed in this engagement on a full-time basis and the number and nature of the staff to be so employed on a part-time basis. The firm is also required to submit a copy of the report on its most recent external quality control review, with a statement whether that quality control review included a review of specific city engagements. The firm shall also provide information on the results of any federal or state desk review of field reviews of its audits during the past three (3) years. In addition, the firm shall provide information on the circumstances and status of any disciplinary action taken or pending against the firm during the past three (3) years with state regulatory bodies or professional organizations. The firm shall include the number of clients it has assisted in implementing, and that have received awards in, the GFOA certificate program. 4. Partner, Supervisory and Staff Qualifications and Experience: Identify the principal supervisory and management staff, including engagement partner, managers, other supervisors and specialists, who would be assigned to the engagement. Indicate whether each such person is licensed to practice as a certified public accountant in Minnesota. Provide information on the government auditing experience of each person. Provide information regarding the number, qualifications, experience and training, including relevant continuing professional education, of the specific staff to be assigned to this engagement. Indicate how the quality of the staff, over the term of the engagement, will be assured. Engagement partners, managers, other supervisory staff and firm specialists mentioned in the response to this request for proposal may be changed if those personnel leave the firm, are promoted or are assigned to another office. These 15 personnel may also be changed for other reasons with the express prior written permission of the City. However, in either case, the City retains the right to approve or reject replacements. Other audit personnel may be changed at the discretion of the proposer provided that replacements have substantially the same or better qualifications or experience. 5. Prior Engagements with the City of Lakeville: List separately by type of engagement (i.e., audit, management advisory services, other) all engagements within the last five years for the City of Lakeville, ranked on the basis of total staff hours. Indicate the scope of work, date, engagement partners, total hours, the location of the firm's office from which the engagement was performed and the name and telephone number of the principal client contact. 6. Similar Engagements with Other Government Entities: For the firm's office that will be assigned responsibility for the audit, list the most significant engagements (minimum – 3, maximum - 5) performed in the last three (3) years that are similar to the engagement described in this request for proposal. These engagements should be ranked on the basis of total staff hours. Indicate the scope of work, date, engagement partners, total hours and the name and telephone number of the principal client contact. For engagements for cities, indicate whether the Comprehensive Annual Financial Report prepared for each city received the GFOA Certificate of Excellence in Financial Reporting for the most recent audit. 7. Specific Audit Approach: The proposal should set forth a work plan, including an explanation of the audit methodology to be followed to perform the services required in Section II of this request for proposal. In developing the work plan, reference should be made to such sources of information as the City of Lakeville's budget and related materials, Capital Improvements Program, organizational charts, manuals and programs, and financial and other management information systems. Proposers will be required to provide the following information on their audit approach: a) Proposed segmentation of the engagement b) Level of staff and number of hours to be assigned to each proposed segment of the engagement c) Sample size and the extent to which statistical sampling is to be used in the engagement d) Extent of use of EDP software in the engagement e) Type and extent of analytical procedures to be used in the engagement f) Approach to be taken to gain and document an understanding of the City’s internal control structure 16 g) Approach to be taken in determining laws and regulations that will be subject to audit test work h) Approach to be taken in drawing audit samples for purposes of tests of compliance 8. Identification of Anticipated Potential Audit Problems: The proposal should identify and describe any anticipated potential audit problems, the firm's approach to resolving these problems and any special assistance that will be requested from the City of Lakeville. 9. Report Format: The proposal should include sample formats for required reports. C. Dollar Cost Proposal 1. Total All-Inclusive Maximum Price: The dollar cost proposed should contain all pricing information relative to performing the audit engagement as described in this request for proposal. The total all-inclusive maximum price to be bid is to contain all direct and indirect costs including all out-of-pocket expenses. The City of Lakeville will not be responsible for expenses incurred in preparing and submitting the technical proposal or the dollar cost bid. Such costs should not be included in the proposal. The following information should be included in the Dollar Cost Proposal: a) Name of Firm b) Certification that the person signing the proposal is empowered to submit the proposal, and authorized to sign a contract with the City of Lakeville if the firm is selected. c) A total all-inclusive maximum price for the 2016, 2017 and 2018 engagements. d) Rates by Partner, Specialist, Supervisory and Staff Level and hours anticipated for each. 1 e) A schedule of professional fees and expenses, presented in the format provided in the attached Appendix B, which supports the total all-inclusive maximum price for each year. The cost of special services should be disclosed as separate components of the total all- inclusive maximum price. f) Out-of-pocket expenses included in the total all-inclusive maximum price and reimbursement rates: All reimbursable expenses by category as included in the total all-inclusive maximum price submitted by the firm. 1 If it should become necessary for the City of Lakeville to request the firm selected to render any additional services to either supplement the services requested in this RFP or to perform additional work as a result of the specific recommendations included in any report issued under the engagement, then such additional work will be performed only if set forth in an addendum to the contract between City of Lakeville and the firm. Any such additional work agreed to between City of Lakeville and the firm will be performed at the same rates set forth in the schedule of fees and expenses included in the dollar cost bid. 17 g) Manner of Payment: The City expects that payments will be made on the basis of hours of work completed during the course of the engagement and out-of-pocket expenses incurred in accordance with the firm's dollar cost proposal. Interim billing shall cover a period of not less than a calendar month. Payment of the final billing will be held by the City pending the delivery of the firm’s final reports. VII. EVALUATION PROCEDURES A. Review of Proposal The City of Lakeville reserves the right to retain all proposals submitted and use any idea in a proposal regardless of whether that proposal is selected. B. Evaluation Criteria Proposals will be evaluated using three sets of criteria. Firms meeting the mandatory criteria will have their proposals evaluated for both technical qualifications and price. The selection process will include, but not be limited to, the following criteria: 1. Mandatory Elements a) The audit firm is independent and licensed to practice in Minnesota. b) The firm has no conflict of interest with regard to any other work performed by the firm for the City. c) The firm adheres to the instructions in this request for proposal for preparing and submitting the proposal. d) The firm submits a copy of its last external quality control review report and the firm has a record of quality audit work. 2. Technical Quality a) Expertise and Experience 1) The firm's past experience and performance on comparable government engagements. 2) The quality of the firm's professional personnel to be assigned to the engagement and the quality of the firm's management support personnel to be available for technical consultation. 3) The firm's expertise with the GFOA Certificate of Excellence in Financial Reporting. b) Audit Approach 1) Adequacy of proposed staffing plan for various segments of the engagement. 2) Adequacy of sampling techniques. 3) Adequacy of analytical procedures. 18 3. Price a) Cost will be a factor in the selection of an audit firm. However, price will not be the sole or dominating factor in the selection process. b) The City will be issuing a Request for Proposal for auditing services for the Lakeville Fire Relief Association. A separate proposal will be required. A total, all-inclusive cost for providing auditing services for both the City and the Lakeville Fire Relief Association will be a factor in the selection of an audit firm. C. Oral Presentation During the evaluation process, the City may, at its discretion, request any one or all firms submitting proposals to make oral presentations. Such presentation will provide firms with an opportunity to answer any questions the City may have on a firm’s proposal. Interviews are tentatively planned to be held November 1-3, 2016. D. Final Selection Staff will recommend to the City Council the appointment of an independent CPA firm judged to be in the best interests of the City for the auditing services required. The final decision with respect to the appointment will be made by the City Council. E. Right to Reject Proposals Submission of a proposal indicates acceptance by the firm of the conditions contained in this request for proposal unless clearly and specifically noted in the proposal submitted and confirmed in the contract between the City of Lakeville and the firm selected. The City of Lakeville reserves the right to reject any or all proposals. F. Disclaimer There is no expressed or implied obligation for the City of Lakeville to reimburse responding firms for any expenses incurred in preparing proposals in response to this request. 19 APPENDIX A CITY OF LAKEVILLE PROPOSER WARRANTIES A. Proposer warrants that it is willing and able to comply with State of Minnesota laws with respect to foreign (non-state of Minnesota) corporations. B. Proposer warrants that it is willing and able to obtain an errors and omissions insurance policy providing a prudent amount of coverage for the willful or negligent acts or omissions of any officers, employees or agents thereof. C. Proposer warrants that it will not delegate or subcontract its responsibilities under an agreement without the prior written permission of the City of Lakeville. D. Proposer warrants that all information provided in connection with this proposal is true and accurate. E. Proposer certifies that it can and will provide and make available, at a minimum, all services set forth in Section II of the City’s request for proposals, “Services Requested.” Signature of Official: __________________________________________ Name (typed): ________________________________________________ Title: _______________________________________________________ Firm: _______________________________________________________ Date: _______________________________________________________ 20 APPENDIX B-1 CITY OF LAKEVILLE SCHEDULE OF PROFESSIONAL FEES AND EXPENSES ALL INCLUSIVE AUDIT COSTS CITY AUDIT (ONLY) Year Total All Inclusive Cost Total 2016 $ $ 2017 $ $ 2018 $ $ Total $ $ If the proposer has also submitted a proposal for auditing the Lakeville Fire Relief Association’s financial statements, please include a Total All Inclusive Cost if the firm is awarded contracts for both the City and Fire Relief Association. CITY AND FIRE RELIEF ASSOCIATION AUDIT Year Total All Inclusive Cost – City Audit Total All Inclusive Cost – Fire Relief Audit Total All Inclusive Cost - Combined 2016 $ $ $ 2017 $ $ $ 2018 $ $ $ Total $ $ $ 21 APPENDIX B-2 CITY OF LAKEVILLE SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE 2016 CITY OF LAKEVILLE FINANCIAL STATEMENTS NOTE: The rate quoted should not be presented as a general percentage of the standard hourly rate or as a gross deduction from the total all-inclusive maximum price. Hours Standard Hourly Rates Quoted Hourly Rates Total Partners $ $ $ Managers $ $ $ Supervisory Staff $ $ $ Other (Specify) $ $ $ Subtotal $ $ $__________ Out-of-Pocket Expenses $ Meals and Lodging $ Transportation $ Other (Specify) $ Total All- inclusive Price for 201 6 Audit Services $__________ 22 APPENDIX B-3 CITY OF LAKEVILLE SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE 2017 CITY OF LAKEVILLE FINANCIAL STATEMENTS NOTE: The rate quoted should not be presented as a general percentage of the standard hourly rate or as a gross deduction from the total all-inclusive maximum price. Hours Standard Hourly Rates Quoted Hourly Rates Total Partners $ $ $ Managers $ $ $ Supervisory Staff $ $ $ Other (Specify) $ $ $ Subtotal $ $ $__________ Out-of-Pocket Expenses $ Meals and Lodging $ Transportation $ Other (Specify) $ Total All- inclusive Price for 201 7 Audit Services $__________ 23 APPENDIX B-4 CITY OF LAKEVILLE SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE 2018 CITY OF LAKEVILLE FINANCIAL STATEMENTS NOTE: The rate quoted should not be presented as a general percentage of the standard hourly rate or as a gross deduction from the total all-inclusive maximum price. Hours Standard Hourly Rates Quoted Hourly Rates Total Partners $ $ $ Managers $ $ $ Supervisory Staff $ $ $ Other (Specify) $ $ $ Subtotal $ $ $__________ Out-of-Pocket Expenses $ Meals and Lodging $ Transportation $ Other (Specify) $ Total All- inclusive Price for 2018 Audit Services $__________ 24 ATTACHMENT C SAMPLE COPY OF STANDARD AGREEMENT FOR PROFESSIONAL SERVICES PROFESSIONAL SERVICES AGREEMENT AGREEMENT made this ________ day of ___________________, 2016, by and between the CITY OF LAKEVILLE, a Minnesota municipal corporation ("City") and _______________________, ______________________ ("Consultant"). IN CONSIDERATION OF THEIR MUTUAL COVENANTS THE PARTIES AGREE AS FOLLOWS: 1. SCOPE OF SERVICES. The City retains Consultant to furnish the services set forth in the Contract Documents. The Consultant agrees to perform the services. 2. CONTRACT DOCUMENTS. The following documents shall be referred to as the "Contract Documents," all of which shall be taken together as a whole as the contract between the parties as if they were set verbatim and in full herein: A. This Professional Services Agreement. B. Consultant’s proposal dated __________________ re: City of Lakeville Professional Auditing Services. C. Insurance certificate. In the event of conflict among the provisions of the Contract Documents, the order in which they are listed above shall control in resolving any such conflicts with Contract Document “A” has the first priority and Contract Document “C” having the last priority. 3. COMPENSATION. Consultant shall be paid by the City for the services described in Contract Documents on an hourly basis but not to exceed $___________, inclusive of reimbursables, taxes and other charges. The not to exceed fee shall not be adjusted if the estimated hours to perform a task, the number of estimated required meetings or any other estimate or assumption is exceeded. Consultant shall request payment for services rendered on a monthly basis. The monthly payment applications from Consultant shall identify work completed. 4. CHANGE ORDERS. All change orders, regardless of amount, must be approved in advance and in writing by the City. No payment will be due or made for work done in advance of such approval. 5. DOCUMENTS. The City shall be the owner of all documents, reports, studies, analysis and the like prepared by the Consultant in conjunction with this contract. 25 6. STANDARD OF CARE. Consultant shall exercise the same degree of care, skill, and diligence in the performance of the services as is ordinarily possessed and exercised by members of the profession under similar circumstances in Dakota County, Minnesota. Consultant shall be liable to the fullest extent permitted under applicable law, without limitation, for any injuries, loss or damages proximately caused by Consultant’s breach of this standard of care. City shall not be responsible for discovering deficiencies in the accuracy of Consultant’s services. Consultant shall be responsible for the accuracy of the work and shall promptly make necessary revisions or corrections resulting from errors and omissions on the part of Consultant without additional compensation. 7. COMPLIANCE WITH LAWS AND REGULATIONS. In providing services hereunder, Consultant shall abide by all statutes, ordinances, rules and regulations pertaining to the provisions of services to be provided. 8. INDEMNIFICATION. The Consultant shall indemnify and hold harmless the City, its officers, agents, and employees, of and from any and all claims, demands, actions, causes of action, including costs and attorney's fees, arising out of or by reason of the execution or performance of the work or services provided for herein to the comparative extent they are caused by Consultant’s negligent acts or omissions or those negligent acts or omissions of persons for whom Consultant is legally responsible. 9. COPYRIGHT. Consultant shall defend actions or claims charging infringement of any copyright or patent by reason of the use or adoption of any designs, drawings or specifications supplied by them, and they shall hold harmless the City from loss or damage resulting therefrom. 10. INSURANCE. Consultant shall secure and maintain such insurance as will protect Consultant from claims under the Worker's Compensation Acts, automobile liability, and from claims for bodily injury, death, or property damage which may arise from the performance of services under this Agreement. Such insurance shall be written for amounts not less than: Commercial General Liability (or in combination with an umbrella policy) $2,000,000 Each Occurrence $2,000,000 Products/Completed Operations Aggregate $2,000,000 Annual Aggregate The following coverages shall be included: Premises and Operations Bodily Injury and Property Damage Personal and Advertising Injury Blanket Contractual Liability Products and Completed Operations Liability 26 Automobile Liability $2,000,000 Combined Single Limit – Bodily Injury & Property Damage Including Owned, Hired & Non-Owned Automobiles Workers Compensation Workers’ Compensation insurance in accordance with the statutory requirements of the State of Minnesota, including Employer’s Liability with minimum limits are as follows: • $500,000 – Bodily Injury by Disease per employee • $500,000 – Bodily Injury by Disease aggregate • $500,000 – Bodily Injury by Accident The City shall be named as an additional insured on the general liability and umbrella policies on a primary and non-contributory basis. The Consultant shall secure and maintain a professional liability insurance policy. Said policy shall insure payment of damages for legal liability arising out of the performance of professional services for the City, in the insured's capacity as Consultant, if such legal liability is caused by a negligent act, error or omission of the insured or any person or organization for which the insured is legally liable. The policy shall provide minimum limits of $2,000,000 with a deductible maximum of $125,000 unless the City agrees to a higher deductible. Before commencing work, the Consultant shall provide the City a certificate of insurance evidencing the required insurance coverage in a form acceptable to City. 11. INDEPENDENT CONTRACTOR. The City hereby retains the Consultant as an independent contractor upon the terms and conditions set forth in this Agreement. The Consultant is not an employee of the City and is free to contract with other entities as provided herein. Consultant shall be responsible for selecting the means and methods of performing the work. Consultant shall furnish any and all supplies, equipment, and incidentals necessary for Consultant’s performance under this Agreement. City and Consultant agree that Consultant shall not at any time or in any manner represent that Consultant or any of Consultant’s agents or employees are in any manner agents or employees of the City. Consultant shall be exclusively responsible under this Agreement for Consultant’s own FICA payments, workers compensation payments, unemployment compensation payments, withholding amounts, and/or self-employment taxes if any such payments, amounts, or taxes are required to be paid by law or regulation. 12. SUBCONTRACTORS. Consultant shall not enter into subcontracts for services provided under this Agreement without the express written consent of the City. Consultant shall comply with Minnesota Statute § 471.425. Consultant must pay subcontractor for all undisputed services provided by Subcontractor within ten days of Consultant’s receipt of payment from City. Consultant must pay interest of 1.5 percent per month or any part of a month to subcontractor on any undisputed amount not paid on time to subcontractor. The minimum monthly interest penalty payment for an unpaid balance of $100 or more is $10. 27 13. ASSIGNMENT. Neither party shall assign this Agreement, or any interest arising herein, without the written consent of the other party. 14. WAIVER. Any waiver by either party of a breach of any provisions of this Agreement shall not affect, in any respect, the validity of the remainder of this Agreement. 15. ENTIRE AGREEMENT. The entire agreement of the parties is contained herein. This Agreement supersedes all oral agreements and negotiations between the parties relating to the subject matter hereof as well as any previous agreements presently in effect between the parties relating to the subject matter hereof. Any alterations, amendments, deletions, or waivers of the provisions of this Agreement shall be valid only when expressed in writing and duly signed by the parties, unless otherwise provided herein. 16. CONTROLLING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. 17. RECORDS. The Consultant shall maintain complete and accurate records of time and expense involved in the performance of services. 18. AUDIT DISCLOSURE AND DATA PRACTICES. Any reports, information, data, etc. given to, or prepared or assembled by the Consultant under this Agreement which the City requests to be kept confidential, shall not be made available to any individual or organization without the City’s prior written approval. The books, records, documents and accounting procedures and practices of the Consultant or other parties relevant to this Agreement are subject to examination by the City and either the Legislative Auditor or the State Auditor for a period of six (6) years after the effective date of this Agreement. This Agreement is subject to the Minnesota Government Data Practice Act, Minnesota Statutes Chapter 13 (Data Practices Act). All government data, as defined in the Data Practices Act Section 13.02, Subd. 7, which is created, collected, received, stored, used, maintained, or disseminated by Consultant in performing any of the functions of the City during performance of this Agreement is subject to the requirements of the Data Practice Act and Consultant shall comply with those requirements as if it were a government entity. All subcontracts entered into by Consultant in relation to this Agreement shall contain similar Data Practices Act compliance language. CITY OF LAKEVILLE BY: ________________________________ BY: _______________________________ Matt Little, Mayor Its AND _______________________________ AND ______________________________ Charlene Friedges, City Clerk Its