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HomeMy WebLinkAboutRFP for Professional Auditing Services 2025 CITY OF DIAMOND BAR REQUEST FOR PROPOSALS PROFESSIONAL AUDITING SERVICES Finance Department City of Diamond Bar 21810 Copley Drive Diamond Bar, CA 91765 CITY OF DIAMOND BAR REQUEST FOR PROPOSALS PROFESSIONAL AUDITING SERVICES TABLE OF CONTENTS INTRODUCTION 1 General Information 1 Term of Engagement 2 NATURE OF SERVICES REQUIRED 2 Scope of the Work to be Performed 2 Auditing Standards to Be Followed 3 Working Paper Retention 4 Irregularities and Illegal Acts 4 Ill. DESCRIPTION OF THE GOVERNMENT 4 Background Information 4 Fund Structure 5 Component Units 5 Magnitude of Finance Operations 5 Computer Systems 6 Availability of Prior Reports and Work Papers 6 TIME REQUIREMENTS 6 Proposal Calendar 6 Date Audit May Commence 6 Date Reports Are Due 7 ASSISTANCE TO BE PROVIDED TO THE AUDITOR AND REPORT PREPARATION 7 Finance Department and Clerical Assistance 7 Work Area, Telephone, and Office Equipment. 7 Report Preparation 7 PROPOSAL REQUIREMENTS 8 General Requirements 8 Format for Technical Proposal 8 Contents of Technical Proposal 8 Contents of Cost Proposal 11 EVALUATION PROCEDURES 11 Review of Proposals 11 Evaluation Criteria 11 Oral Presentations 13 Final Selection 13 Right to Reject Proposals 13 CITY OF DIAMOND BAR REQUEST FOR PROPOSALS PROFESSIONAL AUDITING SERVICES INTRODUCTION General Information The City of Diamond Bar ("City") is requesting proposals from qualified certified public accountant firms to audit its financial statements fiscal years ending June 30, 2026, 2027, and 2028 with the option to renew for fiscal years ending June 30, 2029, and 2030. Proposal shall also include additional services, such as: Preparation of the City’s Single Audit (if required), Preparation of the City’s Annual State Controller Report, Preparation of the tri-annual Safe, Clean Water Program audit for FY’s 23/24 through FY 25/26 (i.e. Measure W) as required by chapters 16 and 18 of LACFD code. All costs incurred in the preparation of proposals, in the submission of additional information, and/or in any other aspect of a proposal will be borne by the proposer. The City will not be responsible for any costs or obligation of any kind that may be incurred by a proposer. All proposals submitted to the City in response to this RFP shall become the property of the City. There will be no public opening of proposals. Prices and other proposal information will not be made public until the successful proposal is selected and a contract is awarded or presented to the City Council for award. Upon receipt by the City, proposals are considered a public record and subject to disclosure under the Public Records Act. Further, after the award of the Contract by the City, whether or not a proposer is the successful firm, all material in proposals received by the City shall be subject to the right of the public to inspect and to obtain copies. The City shall retain all proposals submitted in response to this RFP for as long as the City is required to do so under the law. In submitting a proposal, each proposer agrees that the City may reveal any trade secret and/or confidential materials contained in such response to all City staff and City officials involved in the selection process, and to any outside consultant or other third parties who are hired or appointed by the City to assist in the evaluation process. Each proposer may designate specified information as a trade secret and confidential and agrees to indemnify and hold harmless the City and each of its officers, employees, and agents from all liability, damages and expenses, including reasonable attorneys' fees, incurred by any of them in connection with the City's refusal to disclose any material that the proposer has so designated. In the event a proposer claims such exemption, the proposer must state in the response that: "Pursuant to the terms of the RFP, the proposer will indemnify the City and hold it harmless from all liability, damages and expenses, including reasonable attorney's fees, and will defend any action brought against the City for its refusal to disclose trade secret and confidential material, or other proprietary information to any person making a request thereof." Failure to include such a statement shall constitute waiver of the responder's right to exemption from disclosure and authority for the City to provide a copy of the proposal or any part thereof to the requestor. Any proposer that designates its entire proposal as a trade secret will be disqualified. To be considered, four (4) physical copies of the electronic proposal must be delivered to Jason Jacobsen, Finance Director at City Hall, 21810 Copley Drive, Diamond Bar, CA 91765, by 5:00 p.m. on October 27, 2025. The City reserves the right to reject any or all proposals submitted. During the evaluation process, the City 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. The City reserves the right to use any idea(s) in a proposal regardless of whether that proposal is selected. Submission of a proposal indicates acceptance by the proposer of the conditions contained in the RFP, unless clearly and specifically noted in the proposal submitted and confirmed in the contract between the City and the firm selected. It is anticipated that the selection of a firm will be completed by November 28, 2025. Following the notification of the selected firm, a recommendation and contract will be finalized and taken to the City Council for approval at a regular City Council meeting in December 2025/January 2026. A sample contract is attached to this RFP. The City reserves the right to reject any or all proposals, to waive any non-material irregularities or information in any proposal, and to accept or reject any items or combination of items. Term of Engagement It is the intent of the City to contract for the services presented herein for a term of three (3) years. The City of Diamond Bar reserves the right to extend the term of this contract for two (2) additional one-year terms subject to the satisfactory negotiation of terms, including a price acceptable to both the City and the selected firm. The proposal package shall present all-inclusive audit fees for each year of the contract term. NATURE OF SERVICES REQUIRED Scope of the Work to be Performed The City's goal is to provide the public and its constituents with a comprehensive financial report that presents complete, accurate and understandable information about the City's financial condition. The selected firm will be required to perform the following tasks: The audit firm will perform an audit of all funds of the City. The audit will be conducted in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller of the United States. The basic financial statements for the City's Annual Comprehensive Financial Report (ACFR} will be prepared and word processed by the audit firm. The audit firm will render their auditors' report on the basic financial statements which will include both Government-Wide Financial Statements and Fund Financial Statements. The audit firm will also apply limited audit procedures to Management's Discussion and Analysis (MD&A) and required supplementary information pertaining to the General Fund and each major fund of the City. City staff will prepare the introductory, MD&A and statistical sections of the ACFR. The audit firm will prepare the annual State Controller's Report for the City and the Diamond Bar Public Financing Authority in conjunction with the annual audit. The audit firm will perform a single audit on the expenditures of federal grants in accordance with and render the appropriate audit reports on Internal Control over Financial Reporting based upon the audit of the City's financial statements in accordance with Government Auditing Standards and the appropriate reports on compliance with Requirements Applicable to each Major Program, Internal Control over Compliance and on the Schedule of Expenditures of Federal Awards in Accordance the Uniform Guidance. The single audit report will include appropriate schedule of expenditures of federal awards, footnotes, findings and questioned costs, including reportable conditions and material weaknesses, and follow up on prior audit findings where required. The audit firm will perform a three-year compliance audit of the City’s Safe, Clean Water Program expenditures (Measure W) in accordance with chapter 16 and 18 of LACFD code, beginning with FY 23/24 through FY 25/26 and submit the report to LACFD. The audit firm shall perform agreed-upon auditing procedures pertaining to the City's GANN Limit (Appropriations Limit) and render a letter annually to the City regarding compliance. The audit firm shall issue a separate "management letter" that includes recommendations for improvements in internal control, accounting procedures and other significant observations that are considered to be non-reportable conditions. The audit firm shall make available a lead auditor to remotely attend the City’s annual Audit Committee meeting (held mid-day during business hours) and annual ACFR presentation to City Council (held during a regular City Council meeting at 6:30 p.m.). The City may request additional services from the Proposer on an as-needed basis, such as tax consulting or GASB implementation. It is anticipated that these additional services would not exceed 20 hours in a fiscal year. Copies of the City's most recent Annual Comprehensive Financial Reports can be found on the City's website at: https://www.diamondbarca.gov/177/Annual-Comprehensive-Financial-Report-AC Auditing Standards to Be Followed To meet the requirements of this Request for Proposals, the audit shall be performed in accordance with: Generally accepted auditing standards as set forth by the American Institute of Certified Public Accounts; The standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and The provisions of the Single Audit Act and the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Working Paper Retention All working papers and reports must be retained at the firm's expense for a minimum of seven years, unless the firm is notified in writing by the City of the need to extend the retention period. The firm will be required to make working papers available to the City or any government agencies included in the audit of federal grants. 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. Irregularities and Illegal Acts Auditors 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: City Manager; City Attorney; and the Finance Director. If the irregularities or illegal acts involve the City Manager, City Attorney or Finance Director it shall be reported directly to the Audit Committee. Ill. DESCRIPTION OF THE GOVERNMENT Background Information The City was incorporated in 1989 as a general law city which operates under the council/manager form of government. The City is located at the junction of the 57 and 60 freeways and, as a result, is the hub of the Los Angeles basin transportation network. The City is a relatively young residential community, with a population of about 57,000 residents, which is situated among the meandering hills and valleys of the Brea Canyon. The City is a contract city and as such, it contracts for many of its services. This includes police services, building and safety services, engineering, road maintenance and landscape maintenance. The Los Angeles County Fire District provides fire protection, which is independent of the City. The City's fiscal year begins on July 1 and ends on June 30. The City's Annual Comprehensive Financial Report (ACFR) has received the Government Finance Officers Association's Certificate of Achievement for Excellence in Financial Reporting since 1995. The City's operating budget in FY 2025-26 is approximately $48 million for all funds combined. It has a Capital Improvement Budget of approximately $5 million. Fund Structure The City uses the following fund types and account groups in its financial reporting: Component Units The City is defined, for financial reporting purposes, in conformity with the Governmental Accepting Standards Board's Codification Governmental Accounting and Financial Reporting Standards, Section 2100. Using these criteria, component units are included in the City's financial statements. The management of the City identified the following component units (with fiscal year ending June 30) for inclusion in the City's financial statements: Diamond Bar Public Financing Authority This component unit is to be audited as part of the audit of the City's financial statements. The contact person and record location is the same as the primary unit. Magnitude of Finance Operations The Finance Department is headed by Jason Jacobsen, Finance Director and consists of 5 full-time employees. The principal functions performed and the number of employees assigned to each is as follows: Computer Systems The City’s Financial system is run on a Local Area Network (LAN). The accounting functions are computerized using Tyler Munis software on an SQL server. The applications operating on the system are general ledger, accounts payable, purchasing, payroll and projects ledger. Other systems used by the Finance Department include an in-house transit system used to sell transit passes from outside agencies including Metro and Foothill Transit Authorities. Availability of Prior Reports and Work Papers Lance, Soll & Lunghard, LLP in Brea, CA has conducted the City's audits for the past ten years. The work papers of the previous audits are the property of the previous auditor and can be reviewed by the successful Proposer. The following financial statements were prepared or audited by Lance, Soll & Lunghard, LLP: City of Diamond Bar General Purpose Financial Statements Single Audit Report Appropriations Limit Report State Controller's Report for the Diamond Bar Public Financing Authority TIME REQUIREMENTS Proposal Calendar The following is a list of key dates up to, and including, the date a contract will be recommended for award: October 01, 2025: Release of Request for Proposals October 27, 2025: Due date for Proposal delivery (four (4) physical copies of the electronic proposal due at City Hall by 5:00 p.m.). December 2025/January 2026: Contract recommended for award by City Council (selected audit firm is recommended to attend in-person). Date Audit May Commence Audit planning, documentation of systems of internal control and compliance and transaction testing should be completed during the interim stage. The City typically closes its books and is ready for the final audit by the third week of September.  . Date Reports Are Due The firm shall provide all drafts and recommendations for improvements to the Finance Director within a reasonable time period after the last day of field work. The auditor should be available for any meetings that may be necessary to discuss the draft audit reports. Once all issues of discussion are resolved, the financial statements, Single Audit report and other reports shall be delivered to the Finance Director. It is anticipated that this process will be completed and the final products are to be delivered by mid-November each year. ASSISTANCE TO BE PROVIDED TO THE AUDITOR AND REPORT PREPARATION Finance Department and Clerical Assistance The Finance Department staff will be available during the audit to assist the firm by providing information, documentation, and explanations. Work Area, Telephone, and Office Equipment The City will provide the firm with reasonable work space, desks and chairs. The firm will also be provided with access to a telephone, and photocopying and FAX machines. An onsite or remote connection can also be provided to the ERP system, Tyler Munis. If the audit firm prefers to conduct field work remotely, its proposal shall clearly state such. Report Preparation Following completion of the audit and preparation of the fiscal year's comprehensive financial statements and special purpose audits, the firm shall issue: Reports on the fair presentation of the financial statements in accordance with auditing standards generally accepted in the United States of America as listed below: General Purpose Financial Statements for the City (Basic Financial Statements) Audit Report for the City Single Audit Act (if applicable) State Controller's Report for the City and the Diamond Bar Public Financing Authority Tri-annual Safe, Clean Water Program audit (Measure W). A Management Letter addressed to the City Council of the City of Diamond Bar setting forth recommendations (as applicable) for improvements in the City's accounting systems. A report on the City's compliance with Proposition 111, Article XIII.B of the California State Constitution and Government Code 7900 (et seq.) in its calculation of the "Gann Limit". PROPOSAL REQUIREMENTS General Requirements The Proposal and any inquiries concerning the Request for Proposals must be addressed to: Jason Jacobsen Finance Director Diamond Bar City Hall 21810 Copley Drive Diamond Bar, CA 91765 (909) 839-7051 JJacobsen@DiamondBarCA.gov INQUIRIES WITH PERSONNEL OF THE CITY OTHER THAN THE ABOVE REGARDING THIS REQUEST FOR PROPOSALS MAY BE GROUNDS FOR ELIMINATION FROM THE SELECTION PROCESS. Four (4) physical copies of the electronic proposal must be received at City Hall of the City of Diamond Bar by 5:00 p.m. on October 27, 2025 for the proposal to be considered. The Proposal should address the items listed in sections C and D below. Format for Technical Proposal Title Page showing the request for proposals subject; the firm's name; the name, address and telephone number of the contact person; and the date of the proposal. Table of Contents identifying the materials submitted by section and page number. Cross-referencing to section and page number in the RFP would be helpful. Signed Transmittal Letter briefly stating the Proposer's understanding of the work to be done; the commitment to perform the work within the time period; and the name(s) of the person(s) authorized to represent the Proposer, title, address, and telephone number. Detailed Proposal following the order set forth in Section C below. Contents of Technical Proposal The purpose of the Technical Proposal is to demonstrate the qualifications, competence and capacity of the firm seeking to undertake an independent audit of the City in conformity with the requirements of this request for proposals. As such, the substance of proposals will carry more weight than the form or manner of presentation. 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 proposals requirements. The Technical Proposal should address all points outlined in the request for proposals (excluding any cost information which should only be included in the Sealed Dollar Cost Bid). The proposal should be prepared simply and economically, providing a straightforward, concise description of the proposer's capabilities to satisfy the requirements of this request for proposals. While additional data may be presented, the following subjects must be included. They represent the criteria against which the proposal will be evaluated, License to Practice in California An affirmative statement should be included verifying the firm and all assigned key professional staff are properly licensed to practice in California. Independence The firm should provide an affirmative statement that it is independent of the City of Diamond Bar as defined by defined by auditing standards generally accepted in the United States of America and the General Accounting Office's Government Auditing Standards. 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 from which the work on this engagement is to be performed, and 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. Staff consistency is an important consideration. The proposer should provide the range of activities performed by the local office, e.g., audit, accounting, tax service and/or management consulting services. The proposer must provide a list of all current municipal clients. The proposer is also required to submit a copy of a report on its most recent external quality control review (peer review), with a statement whether that quality control review included a review of specific government engagements. The proposer shall also provide information on the results of any Federal or State desk reviews or field reviews of its audits during the past three (3) years. In addition, the Proposer 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. Partner, Supervisory and Staff Qualifications and Experience Identify the principal supervisory and management staff, including engagement partners, managers, other supervisors and specialists who would be assigned to this engagement. Include resumes, indicating whether each such person is registered or licensed to practice as a certified public accountant in California. Provide information on the government auditing experience of each person, including information on relevant continuing professional education for the past (3) three years and membership in professional organizations relevant to the performance of this audit. Provide as much information as possible 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 staff over the term of the agreement will be assured. Engagement partners, managers, other supervisory staff and specialists may be changed if those personnel leave the firm, are promoted or are assigned to another office. These 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. Similar Engagements with Other Government Entities For the firm's office that will be assigned responsibility for the audit, list the most significant engagements (maximum - 5) performed in the last three (3) years that are similar to the engagement described in this request for proposals. 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. Information should be provided regarding clients that the firm serves that have received the GFOA certificate of achievement in financial reporting for the most recent award year. Please provide a list of not less than five client references for which services similar to those outlined in the RFP are currently being provided. For each reference listed provide the name of the organization, dates for which the service(s) are being provided, type of service(s) being provided and the name, address and telephone number of the responsible person within the reference's organization. The City reserves the right to contact any or all of the listed references regarding the audit services performed by the Proposer. 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 proposals. In developing the work plan, reference should be made to such sources of information as City's budget and related materials, organizational charts, manuals, programs, and financial and other management information systems. Proposers will be required to provide the following information on their audit approach: Proposed task segmentation for the engagement; Level of staff and number of hours to be assigned to each proposed segment of the engagement; Sample size and the extent to which statistical sampling is to be used in this engagement; Extent of use of artificial intelligence/large language model software in this engagement; Type and extent of analytical procedures to be used in this engagement; Approach to be taken to gain and document an understanding of the City's internal control structure; Approach to be taken.in determining laws and regulations that will be subject to audit test work; and Approach to be taken in drawing audit samples for purposes of tests of compliance. Identification 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. NO DOLLAR AMOUNTS SHOULD BE INCLUDED IN THE TECHNICAL PROPOSAL. Contents of Cost Proposal – Sealed Bid Total All-Inclusive Maximum Price The proposal shall include a cost proposal in a separate sealed envelope containing all pricing information relative to performing the audit engagement as described in this RFP. The total all-inclusive maximum price to be bid is to contain all direct and indirect costs including all out-of-pocket expenses. Optional services should be itemized separately. A separate hourly rate may be provided for additional as-needed consulting work, if applicable. The City will not be responsible for expenses incurred in preparing and submitting the technical proposal or the sealed dollar cost bid. Such costs should not be included in the proposal. Manner of Payment Progress payment 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 proposal. Interim billings shall cover a period of not less than a calendar month. EVALUATION PROCEDURES Review of Proposals The Finance Director, the Audit Committee and one designee will review and evaluate the submitted proposals. Evaluation Criteria Proposals will be evaluated using three (3) sets of criteria. Firms meeting the mandatory criteria will have their proposals evaluated for price and technical criteria. The following represent the principal selection criteria, which will be considered during the evaluation process. Mandatory Elements Qualifications of the Firm (20 points) The audit firm is independent and licensed to practice in California. The firm has no conflict of interest with regard to any of the work performed by the firm for the City. The firm adheres to the instructions in this request for proposals on preparing and submitting the proposal. The firm submits a copy of its last external quality control review report and the firm has a record of quality audit work. The firm's past experience and performance on comparable government engagements. Staffing and Project Organization (20 Points) 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. Adequacy of proposed staffing plan for various segments of the engagement. Work Plan (25 points) Thoroughness of approach to conducting the audit of the City and demonstration of the understanding of the objectives and scope of the audit. Commitment to timeliness in the conduct of the audit. Price and Technical Elements Fees (30 points) Maximum fees to conduct the audit. Miscellaneous (5 points) Proposer has demonstrated experience or knowledge of recent GASB implementations. Oral Presentations During the evaluation process, the Audit Committee may, at their discretion, request any one or all of the firms to make oral presentations. Such presentations will provide firms with an opportunity to answer any questions the Audit Committee may have on a firm's proposal. Not all firms may be asked to make such oral presentations. Final Selection The Audit Committee will make the recommendation to the City Council. The contract will be approved by the City Council. 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 and the firm selected. The City reserves the right without prejudice to reject any or all proposals.