Request for proposal to provide Audit Services.

Page 1 of 16 CITY OF NEWTON P.O. Box 550 Newton, N.C. 28658 phone 828.695.4300 fax 828.465.7419 City of Newtons Request for Proposal (RFP) To Provide Audit Services Responses Due: March 21, 2022 at 5:00 pm Citys Contact information: Name: Vickie Thomas Title: Finance Officer, City of Newton Physical Address: 401 N. Main Avenue, Newton, NC 28658 Mailing Address: Post Office Box 550, Newton, NC 28658 Phone: (828) 695-4258 Email: vthomas@newtonnc.gov mailto:vthomas@newtonnc.gov Page 2 of 16 Request for Proposal The City Council of City of Newton, North Carolina (hereinafter called the City) 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 City of Newton to reimburse firms for any expenses incurred in preparing proposals in response to this request. The specific details shown herein shall be considered minimum unless otherwise shown. The specifications, terms, and conditions included with this RFP shall govern in any resulting contract(s) unless approved otherwise in writing by the City of Newton. The bidder consents to personal jurisdiction and venue in a state court of competent jurisdiction in Catawba County, North Carolina. Type of Audit 1. The audit will encompass a financial and compliance examination of the units Annual Comprehensive Financial Report (ACFR) 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 financial and compliance audit will cover federal, state, and local funding sources in accordance with generally accepted auditing standards; Government Auditing Standards, July 2018 revisions; the provisions of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), the State Single Audit Implementation Act; and all other applicable laws and regulations. 2. The scope of the audit and all fee quotes presented should include all approved and known pronouncements through the date of proposal submission. This includes, but is not limited to, the Governmental Accounting Standards Board (GASB) statements and Government Auditing Standards. Although some pronouncements will not be in effect until after the first year of the audit, estimates for future years should include pronouncements that will become effective during that contract period. The audit firm will be expected to advise appropriate City staff on the applicability of accounting and reporting standards as they become effective. 3. The financial audit opinion will cover the financial statements for the governmental activities, the business-type activities, each major fund, discretely presented component units (as applicable) and the remaining fund information, which collectively constitutes the basic financial statements. The combining and individual financial statements, schedules, and related information are not necessary for fair presentation, but will be presented as additional analytical data. This supplemental information, as required by GASB 34, 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 Page 3 of 16 supplemental information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The auditor shall express an opinion on the budgetary comparison information for the General Fund and any annually budgeted Major and Special Revenue Funds. An opinion will not be given on the Management Discussion and Analysis. The working papers shall be retained and made available upon request for no less than three years from the date of the Audit report. 4. The audit will also include the following: a. Pre-planning conference with Finance staff where both the auditor and Finance staff discuss their expectations of the audit. b. Interim audit work prior to June 30th and/or prior to final close. c. Attendance at the City Council meeting for presentation of the financial statements by Manager or Partner of the Audit Staff with comments and potential questions from the Council as requested. 5. The audit should encompass all funds and entity-wide activities as reported in the Citys Annual Comprehensive Financial Report (ACFR) at June 30, 2021 and any additional funds or entity-wide activities that may be added subsequent to that date. 6. If required, the audit firm will issue a management letter to the City Council after completion of the audit and assist management in implementing recommendations, as is practical. City staff also request that an informal letter be addressed to the Finance Officer with any efficiency, internal control or accounting improvements that could be made based on the audit staffs observation during their fieldwork. All content must be discussed with the Finance Officer prior to issuance. The audit firm is encouraged to discuss the content while the management letter is in draft form to ensure that all parties fully understand the circumstances that lead to auditor comments. 7. The City staff may require the auditors guidance or input on the completion of certain schedules/documents as to proper format and content, so that they can be used in the audit process as well as inclusion in the Citys financial statements. Guidance may be required for new note disclosures, all outstanding and effective authoritative standards and other reporting requirements at June 30 year-end. Cost for providing these services should be included in the auditors base fee quote and will not be considered extra for additional billings. In cases, however, where services requested would require a more in-depth scope and require work significantly above the original fee quote, such additional fees must be negotiated prior to commencement of work. Auditor Requirements The audit firm is considered to be an independent contractor and will be wholly responsible for the services and the supervision of its own employees and permitted sub-contractors. Page 4 of 16 A planning meeting will be held each year to determine schedules that the City will be responsible for preparing. Estimated timeframes will be established and interim audit work will be planned. Adequate notification will be given prior to any changes in estimated times. The City of Newton audit engagement must be conducted in accordance with Generally Accepted Auditing Standards (GAAS); Government Auditing Standards, 2018 revisions, issued by the Comptroller General of the United States; and if applicable, the U. S. Office of Management and Budgets (OMB) Uniform Guidance and, if applicable, the State Single Audit Implementation Act, and any other applicable procedures for the audit of a local governments financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP). By accepting this engagement, the Auditor warrants that he has met the requirements for a peer review and continuing education as specified in Government Auditing Standards. The Auditor must provide a copy of their most recent peer review report with their proposal. The City staff will prepare all standard year-end accruals and other adjusting entries. The auditor will prepare the government wide year-end adjusting journal entries as well as any necessary entries to allocate the state pension balances. The City shall designate an individual, such as the Finance Officer, with the suitable skills, knowledge, and/or experience (SKE) necessary to oversee the services and accept responsibility for the results of the services performed. The City management will ultimately be responsible for the preparation and fair presentation of the financial statements, which includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements. The City will need the assistance of the auditor for the preparation, typing, proofing, printing, and copying of the Basic Financial Statements, notes, supplementary information and compliance reports. The City of Newtons Finance Officer will prepare information for the MD&A. A preliminary draft of the audit and required adjusting journal entries must be submitted to the Finance Officer by October 1 for proofing and reconciliation to the Citys records to allow ample time for review and corrections before it is sent to the Local Government Commission. The City of Newtons Finance Officer will return the draft to the auditor with proposed revisions within 10 working days. The auditor will be ultimately responsible for the preparation, typing, proofing, printing, and copying of the Basic Financial Statement, supplementary information and all applicable compliance reports. The auditor will complete and submit the necessary Single Audit information to the Federal Audit Clearinghouse on behalf of the City, if required. Meeting LGC deadlines is a high priority for the City. Therefore, City of Newton prefers interim fieldwork be completed in June or July, at the latest. Year-end fieldwork should begin by mid-August and be completed by late September. While many documents can be shared electronically, the City expects that the audit firm staff will be onsite for fieldwork, including manager and partner level staff for at least a portion of the onsite work. An agreed upon post-closing trial balance must exist by September 30. The Finance Officer will expect a listing of requested information needed for the Page 5 of 16 audit at the preplanning conference, periodic conferences during the conduct of the audit, as well as an exit conference prior to the completion of fieldwork. The timing of the draft and review should insure final completion of the Financial Statements by the annual October 31st deadline or no later than the annual grace period of December 1. Twenty copies of each Audit report, management letter, and other applicable reports must be supplied to the Finance Officer within the time frame cited above. The auditor is responsible for completing the required data input sheet and electronically submitting the final ACFR as a text-based PDF file to the State & Local Government Financial Division when (or prior to) submitting the final invoice for audit services rendered to the Commission. In the event that 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 approved by the governing board and forwarded to the staff of the LGC for approval. Either the manager or partner of the audit staff is required to present and attend the City Councils meeting in which the Audit report is presented. Required communications to the Council can be delivered at this point, as well as general comments regarding the audit process and the results of the audit. Finance staff will coordinate this presentation and determine the date and time of the meeting, typically held in November or early December following the audit completion. Audit Contract: Period & Payment of Audit Fees The City intends to continue the relationship with the auditor for no less than three (3) years starting with fiscal year ending June 30, 2022. Continuation after the first-year contract will be based on an annual review of the Auditor, recommendation of the department staff, satisfactory negotiation of terms (including price), and availability of an appropriation. Each year after negotiation has taken place an annual contract documenting the terms of the audit will be signed. Since one governing board may not obligate future governing boards, the remaining years of the agreement are subject to annual governing board approval. After the initial three-year period, an annual extension may be granted by the City based on the above-mentioned criteria and City Council (Council) concurrence for up to two additional years or until a determination is made to request new proposals. The years identified under this RFP are: July 1, 2021 to June 30, 2022 July 1, 2022 to June 30, 2023 July 1, 2023 to June 30, 2024 Page 6 of 16 The required current revision of the form Contract to Audit Accounts (form LGC-205) is required to be executed as the contract document; however, the auditor and the City may also execute an engagement letter and/or a City contract to include additional terms not addressed in the LGC-205. The entire audit contract package must be approved by the staff of the Local Government Commission. Invoices are subject to approval by the LGC prior to payment by the City. Interim or progress billings for services rendered marked approved by the LGC will be paid up to 75% of the total fee prior to submission of the final audited financial statements to the staff of the Local Government Commission. The final 25% of the Audit fees (final invoice) will be paid when the financial statements, single audit (if applicable), management letter and amended contract (if applicable) have been reviewed or approved by the LGC. The LGC only approves invoices for audit related work. Requests for payment related to any additional agreed upon procedures or AFIR work do not require LGC approval. Final invoices for these services will be paid after the final report results and findings have been reviewed and deemed satisfactory by City staff. Description of Selection Process Submission of Questions Concerning RFP After the proposal issue date, all communications between the City and prospective Auditors regarding this RFP shall be in writing. Any inquires, requests for interpretation, technical questions, clarification, or additional information shall be directed to Vickie Thomas by emailing vthomas@newtonnc.gov. Questions and responses affecting the scope of the services will be provided to Auditors by issuance of an Addendum which will be posted to the Citys website at http://www.cityofnewton.gov/. This information will also be emailed to all audit firms who have submitted their intent to bid and contact information. All questions shall be received no later than 5:00 P.M., Thursday, March 10, 2022. Bidders may not have communications, verbal or otherwise, concerning this RFP with any City personnel or officials, other than the persons listed in this section. Potential respondents should email vthomas@newtonnc.gov to acknowledge receipt of the RFP and to inform the City of its intent to respond. Provide the name, title, address, telephone and email address of the individual who can address inquiries related to this RFP and the respondents proposal. Proposals must be submitted in two sections and must be physically signed by an authorized representative of the Audit firm. The first section will be comprised of the audit firms prior experience and qualifications of its personnel in performing governmental audits. The second section will consist of completed cost estimate sheets. The Finance Office staff will evaluate the auditor/firm on educational and technical qualifications. The firm best meeting the Citys expectations for experience, audit approach, and cost requirements will be selected. mailto:vthomas@newtonnc.gov http://www.cityofnewton.gov/ mailto:vthomas@newtonnc.gov Page 7 of 16 Please keep in mind that cost, while an important factor, will not be a sole determining factor. Unusually low bids that are obviously out of line with other bidders or are significantly lower than out current fees will raise concern. The lowest bid will not automatically be awarded preferential consideration. The City reserves the right to reject any or all bids, waive technicalities, and to be the sole judge of suitability of the services for its intended use and further specifically reserve the right to make the award in the best interest of the City. Failure to respond to any requirements outlined in the RFP, or failure to enclose copies of the required documents, may disqualify the bid. Firms must be registered with the North Carolina State Board of CPA Examiners. Section 1 - Profile of the Firm The first section should address the requested information below. The corresponding responses should begin with the number below for the requested information. 1. Indicate the Audit firms North Carolina office location(s) that will handle the audit. 2. Indicate the number of people (by level) located within the Audit firms local office that will handle the audit. 3. Provide a list of the audit firms local offices current and prior government audit clients, indicating the type(s) of services performed and the number of years served for each. Indicate if those services included a federal Single Audit or a State Single Audit. 4. Indicate the experience of the local office in providing additional services to government clients by listing the name of each government, the type(s) of service performed, and the year(s) of engagement. 5. Describe your audit organizations participation in AICPA sponsored or comparable quality control programs (peer review). Provide a copy of the firms current peer review. 6. Describe the professional experience in governmental audits of each senior and higher-level person assigned to the audit, the years on each job, and his/her position while on each audit. Indicate the percentages of time each senior and higher-level personnel will be on site. 7. Describe the relevant experience and education with the new GASBS reporting requirements, seminars and courses attended within the past three years. Courses in governmental accounting and auditing should be clearly communicated. 8. Describe the professional experience of assigned individuals in auditing relevant Page 8 of 16 government organizations, programs, activities, or functions (e.g., Water/Sewer, Electric service functions). 9. Describe any specialized skills, training, or background in public finance of assigned individuals. This may include participation in State or national professional organizations, speaker or instructor roles in conferences or seminars, or authorship of articles and books. 10. Provide names, addresses, and telephone numbers of personnel of current and prior governmental audit clients who may be contracted for a reference. 11. Describe the firms Statement of Policy and Procedures regarding Independence under Government Auditing Standards (Yellow Book), July 2018 Revision. Provide a copy of the firms Statement of Policy and Procedures. 12. Is the firm adequately insured to cover claims? Describe liability insurance coverage arrangements. 13. Describe any regulatory action taken by any oversight body against the proposing audit organization or local office. 14. Comment on your knowledge of and relationship with the NC Local Government Commission and the University of North Carolina School of Government in Chapel Hill. Section 2 Audit Approach Proposals should include completed cost estimate sheets and any other necessary cost information in a separate, sealed envelope marked Cost Estimate. The City will evaluate the qualifications of all firms submitting proposals before considering the Cost Estimate. 1. Type of audit program used (tailor-made, standard government, or standard commercial). 2. Use of statistical sampling. 3. Use of automated processes and internal control testing methods 4. Use of computer audit specialists. 5. Organization of the audit team and the approximate percentage of time spent on the audit by each member. 6. Information that will be contained in the management letter. Page 9 of 16 7. Assistance expected from the governments staff, if other than outlined in the RFP. 8. Tentative schedule for completing the audit within the specified deadlines of the RFP. 9. Specify costs using the format below for the audit year July 1, 2021 to June 30, 2022. For the two audit years which follow, list the estimated costs. The cost for the audit year ending June 30, 2022 is binding, while the second and third years are estimated costs. Cost estimates must indicate the basis for the charges and whether the amount is a not-to-exceed amount. A. Audit firm personnel costs Itemize the following for each category of personnel (partner, manager, senior, staff accountants, clerical, etc.) with the different rates per hour. 1) Estimated hours: please categorize estimated hours into the following: on- site interim work, year-end on-site work, and work performed in the auditors office. 2) Rate per hour. 3) Total cost for each category of personnel and for all personnel costs in total. B. Travel itemize transportation and other travel costs separately. C. Cost of supplies and materials itemize. D. Other costs completely identify and itemize. 1) If applicable, note your method of determining increases in audit costs on a year to year basis 10. Please list any other information the firm may wish to provide. 11. Please include the Summary of Audit Costs Sheet with your proposal. Page 10 of 16 Time Schedule for Awarding the Contract RFP Release Date February 16, 2022 Deadline for RFP Questions * February 28, 2022 by 5:00 pm Questions to be Answered No Later Than March 10, 2022 by 5pm Deadline for Receipt of Proposals ** March 21, 2022 by 5:00 pm City of Newton, Finance Department Attn: Vickie Thomas, Finance Officer Via USPS: PO Box 550 Via Courier:401 North Main Avenue Newton, NC 28658 Notice of Recommended Firm April 1, 2022 Council Approval *** April 5, 2022 *Any questions should be directed to Vickie Thomas, Finance Officer, at (828) 695-4258 or vthomas@newtonnc.gov. Appointments may be scheduled to discuss further any specific matters necessary in preparing your proposal. ** Proposals can either be submitted electronically (email) to vthomas@newtonnc.gov or on paper by March 21, 2022 by 5:00 pm. Envelopes containing proposals on paper should be clearly identified on the front with the words RESPONSE TO RFP FOR AUDIT SERVICES. Please note your email should include two separate pdf attachments for sections 1 and 2. Envelopes should include three copies of the bound proposal (clearly separating section 1 and 2) should be delivered to via USPS: Post Office Box 550, Newton, NC 28658 or via Courier: 401 North Main Avenue, Newton, NC 28658 ATTN: Vickie Thomas. *** The Finance Office will review the proposals and make a recommendation to the City Council on April 5, 2022 at which time the contract will be awarded. City of Newton reserves the right to request additional information deemed necessary to aide in the selection process. mailto:vthomas@newtonnc.gov mailto:vthomas@newtonnc.gov Page 11 of 16 Description of the Governmental Entity and Its Accounting System Reference should be made to the most recent ACFR for a general overview of the City. A PDF copy of the most recent ACFR is located on the Citys website see below or by emailing vthomas@newtonnc.gov. https://www.newtonnc.gov/ Funds City of Newton maintains the following funds: Governmental Funds General Fund Emergency Telephone System Fund Special Revenue Funds American Recovery Act Fund Building Reuse Funds CBDG Funds Capital Projects Funds: See ACFR on Citys Website Enterprise Funds Water & Wastewater Fund Electric Fund Capital Project Funds: See ACFR on Citys Website Internal Service Fund Grants, Entitlements, and Shared Revenues The City has not been required to have a federal or State Single Audit since FY2019. In FY2022, the City anticipates requiring both a federal and a State Single Audit. Anticipated significant grants for FY2022 include: Federal Grants: American Rescue Plan Act of 2021 Coronavirus State and Local Fiscal Recovery Funds Community Development Block Grant Coronavirus Program Community Development Block Grant Neighborhood Revitalization Program State Revolving Fund Loan for Wastewater Project State Grants: Powell Bill Funds State Reserve Fund Loan for Wastewater Project mailto:vthomas@newtonnc.gov mailto:vthomas@newtonnc.gov https://www.newtonnc.gov/ Page 12 of 16 Wastewater Asset Inventory & Assessment Grant from NC Department of Environmental Quality NC Department of Commerce Building Reuse Grants (2) State Capital and Infrastructure Directed Grant State Legislatively Directed Grant Budgets The City annual budget is adopted for the General Fund, Emergency Telephone System Fund and the 2 enterprise funds. Multi Year project ordinances are prepared for Capital Project funds and Special Revenue funds. All budgets are prepared using the modified accrual basis of accounting. All appropriations for annually budgeted funds are made at the departmental level and at the project level for the multi-year funds. The City also maintains an encumbrance system. Both the budgetary and encumbrance systems are integrated with the accounting system to provide comparison with actual expenditures. Accounting Records The City maintains all its accounting records at the finance office located at City Hall. All accounting journals and subsidiary ledgers are maintained on Tyler Systems New World software. Assistance Available to Auditor The City will designate an individual that understands the services to be provided in accordance to GAGAS 3.73 (GAGAS 2018 Revision) The City will make available to the auditor sufficient help to pull and re-file records, and prepare necessary confirmations. An electronic version of the trial balance with budgeted amounts will be made available in late August. The following accounting procedures will be completed and documents prepared by the Citys staff no later than September 1. The books of account will be fully balanced. All subsidiary ledgers will be reconciled to control accounts. All bank account reconciliations for each month will be completed. The Citys personnel will prepare the following items: General 1. Trial Balance for each fund. 2. General Ledger transaction detail report for each account. Page 13 of 16 3. A copy of the original budget, all amendments, and the final budget as of June 30, 2022. 4. A copy of all project ordinances and all amendments for active projects during the audit period. 5. A copy of board policies, including travel and investment policies, debt policies, fund balance policies and purchasing policies including how the pre-audit process is performed. 6. Copies of all signed Board meeting minutes. 7. Copies of all correspondence with the staff of the Local Government Commission, including semiannual Cash and Investment Reports (LGC-203), unit letters, letters regarding the audited financial statements and compliance reports for the previous year. 8. Required supplementary information, e.g. actuarial information f o r the Law Enforcement Officers Separation Allowance and Other Postemployment Benefits (OPEB). Cash and Investments 1. All bank reconciliations for each month. 2. List of outstanding checks by account, 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 outstanding receivables by account as of the fiscal year end. 2. Listing of outstanding receivables in detail as of the fiscal year end. 3. Schedule of miscellaneous receivables booked as of the fiscal year end. Other Assets 1. Schedule of insurance coverage. Capital Assets 1. Listing of fixed assets by function and activity with supporting schedule of changes in Page 14 of 16 fixed assets and supporting detail of additions, retirements and transfers. 2. Printout of all capital asset acquisitions made during the audit year and CIP placed in service. 3. Printout of all capital asset dispositions made during the audit year. 4. Printout of depreciation expense posted for the audit year. Current Liabilities 1. Schedule of accounts payable and accrued accounts payable. 2. Schedule of accrued payroll. 3. Schedule of retainage payable. Long-Term Debt 1. Computation of vested vacation payable as of the audit date. 2. Debt Schedule for each debt issue and related payments. Grants The following will be compiled for each grant: 1. Grant agreement. 2. Grant Budget. 3. Schedule of Expenditures of Federal and State Awards. 4. Correspondence with the grantor agency, including monitoring reports. 5. ALN/CFDA # and/or pass-through grant #. 6. Summary Schedule of Prior Audit findings (if applicable). 7. Corrective action plan for each audit finding that will be presented on the Schedule of Findings and Question Costs on City letterhead (if necessary). Size and Complexity of City Personnel/Payroll Number of employees 192 Page 15 of 16 Frequency of payroll Weekly Number of payroll direct deposit advises per year 10,100 Purchasing Number of purchase orders issued in FY 2021 894 Bank Accounts Number of bank accounts 3 Number of investment accounts (non-escrow) (NC Capital Management Trust) 3 Number of escrow accounts 4 Number of deposits in FY2021: Central Depository 595 Number of checks in FY 2021: Central Depository 4,045 The following financial applications are on the computer system: General Ledger Accounts Payable Payroll Capital Assets Cash Receipts Accounts Receivable Page 16 of 16 SUMMARY OF AUDIT COSTS SHEET 1. Base Audit City of Newton a. Includes Personnel costs, travel, and on-site work $_________________ 2. Extra Audit Service a. $__________per hour $_________________ 3. Other: (explain) $_________________ a. ________________________________________ 4. Other: (explain) $_________________ a. ________________________________________ Total $_________________ FIRM: Primary Contact: Address: Telephone: Fax: E-mail: Date: By Signing above, I Certify that I have carefully read and fully understand the information contained in this RFP; and that I have the capability to successfully undertake and complete the responsibilities and obligations of the Proposal being submitted and have the authority to sign Proposal on behalf of my organization. BY (Printed): _________________________________________________________________ TITLE: _______________________________________________________________ COMPANY: ______________________________________________________________________ ADDRESS: _________________________________________________________________ TELEPHONE: ________________________________________________________________ EMAIL: ______________________________________________________________________