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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 09/18/2018 - RESOLUTION 2018-086 AUTHORIZING THE PROCUREMENT OAgenda Item 8 Item # 8 Page 1 AGENDA ITEM SUMMARY September 18, 2018 City Council STAFF Travis Storin, Accounting Director John Duval, Legal SUBJECT Resolution 2018-086 Authorizing the Procurement of Services for an Annual Independent Audit of the City's Financial Records. EXECUTIVE SUMMARY The purpose of this item is to authorize City staff to enter into a professional services agreement with BKD LLP (“BKD”), the independent audit firm recommended by the Council Finance Committee. The Committee interviewed two finalists at the September 5, 2018, special meeting and adopted a motion to recommend BKD for the Council's selection. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION An annual, external audit by an independent CPA firm is required by Colorado Statute, City Charter (Article II, Section 17), City debt covenants on outstanding bonds and leases, and the majority of grant agreements for which the City is a recipient. Per City Code: • A competitive selection process was undertaken given that the current audit contract is in its fifth and final year (Sec. 8-186) • The Finance & Audit Committee completed interviews of finalists in a public meeting (Sec. 8-158) • There is a limit of two consecutive 5-year contract terms on audit services, and as such the incumbent auditor was not eligible for selection. (Sec. 8-158) Properly performed audits play a vital role in the public sector by helping to preserve the integrity of the public finance functions and by maintaining citizens’ confidence in their local government. Best practices published by the Government Finance Officers Association and the American Institute of CPAs strongly recommend that the selection of auditing services be conducted by governing and oversight bodies (rather than by employees of the auditee) as an important measure to preserve auditor independence. It is also ideal for auditor independence to require auditors be replaced after a defined contract term, as is often the case in the private sector. A request for proposals (“RFP”) was sent to interested firms and those registered as vendors with the City of Fort Collins Purchasing Division. The City received seven proposals, and a joint team of City, Poudre Fire Authority, and Library District Staff recommended two finalists for evaluation by the Finance Committee. Intergovernmental agreements with PFA, the Library District, the URA, and DDA defer to the City for selection of service providers on internal services within Finance and Human Resource functions. Agenda Item 8 Item # 8 Page 2 The criteria for selection were: • Scope of Proposal • Assigned Personnel Qualifications • Cost and Work Hours • Firm Capability & Reputation BKD was the top-ranked firm and determined to be best suited to provide audit services. The Finance Committee unanimously recommended a contract with BKD, and the proposed resolution authorizes the Purchasing Agent to enter into a professional services agreement for audit services with BKD for the 2018 year-end audit, and renewable on an annual basis through 2022 with the approval of the Finance/Audit Committee. The agreement can be terminated if the auditing services are deemed unsatisfactory. CITY FINANCIAL IMPACTS The selected auditor’s cost proposal is comparable with the incumbent’s. Audit fees for 2017 totaled $93,100 with the incumbent, while the recommended firm’s 2018 proposal is for $95,000 with an annual increase of 3%, pending contractual negotiations of the City Purchasing Agent. The fees proposed appear to be reasonable and at parity with the other RFP respondents. BOARD / COMMISSION RECOMMENDATION Council Finance Committee supported adoption of this resolution at its September 5, 2018, special meeting. ATTACHMENTS 1. Financial Auditing Services RFP (PDF) 2. BKD, LLP Technical Proposal (PDF) 3. Council Finance Committee minutes, September 5, 2018 (draft) (PDF) RFP 8781 Financial Audit Services Page 1 of 31 REQUEST FOR PROPOSAL 8781 FINANCIAL AUDITING SERVICES The City of Fort Collins is requesting proposals from qualified firms to provide financial auditing services. To meet the requirements of this request for proposals, each audit shall be performed in accordance with generally accepting auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. Government Accountability Office's Government Auditing Standards (1994), the provisions of the Single Audit Act of 1984 (as amended in 1996) and the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, Audits of State and Local Governments. As part of the City’s commitment to Sustainable Purchasing, proposals submission via email is preferred. Proposals shall be submitted in a single Microsoft Word or PDF file under 20MB and e-mailed to: purchasing@fcgov.com. If electing to submit a hard copy proposal instead, one (1) hard copy and one (1) electronic copy on a jump drive, will be received at the City of Fort Collins' Purchasing Division, 215 North Mason St., 2nd floor, Fort Collins, Colorado 80524. Proposals must be received before 3:00 p.m. (our clock), August 10, 2018 and referenced as Proposal No. 8781. If delivered, they are to be sent to 215 North Mason Street, 2nd Floor, Fort Collins, Colorado 80524. If mailed, the address is P.O. Box 580, Fort Collins, 80522-0580. Please note, additional time is required for proposals mailed to the PO Box to be received at the Purchasing Office. The City of Fort Collins is subject to public information laws, which permit access to most records and documents. Proposals will be evaluated by members of the City Council Finance Committee and interviews will be conducted in a public meeting. Proposals must not include any information which respondents deem proprietary, confidential or trade secrets because the proposals will be subject to public disclosure. The City encourages all Disadvantaged Business Enterprises (DBEs) to submit proposals in response to all requests for proposals. No individual or business will be discriminated against on the grounds of race, color, sex, or national origin. It is the City’s policy to create a level playing field on which DBEs can compete fairly and to ensure nondiscrimination in the award and administration of all contracts. Questions regarding RFP should be directed to Gerry Paul, Purchasing Director at 970-221- 6779 or gspaul@fcgov.com and the Project Manager, John Voss, Senior Manager, Accounting at 970-221-6772 or at jvoss@fcgov.com. All questions must be submitted in writing via email to Gerry Paul and John Voss, no later than 5:00 PM our clock on August 1, 2018. Questions received after this deadline will not be answered. A copy of the RFP may be obtained at http://www.bidnetdirect.com/colorado/city-of-fort-collins. Financial Services Purchasing Division 215 N. Mason St. 2nd Floor PO Box 580 Fort Collins, CO 80522 970.221.6775 970.221.6707 fcgov.com/purchasing ATTACHMENT 1 RFP 8781 Financial Audit Services Page 2 of 31 New Vendors: The City requires new vendors receiving awards from the City to fill out and submit an IRS form W-9 and to register for Direct Deposit (Electronic) payment. If needed, the W-9 form and the Vendor Direct Deposit Authorization Form can be found on the City’s Purchasing website at www.fcgov.com/purchasing under Vendor Reference Documents. Sales Prohibited/Conflict of Interest: No officer, employee, or member of City Council, shall have a financial interest in the sale to the City of any real or personal property, equipment, material, supplies or services where such officer or employee exercises directly or indirectly any decision- making authority concerning such sale or any supervisory authority over the services to be rendered. This rule also applies to subcontracts with the City. Soliciting or accepting any gift, gratuity favor, entertainment, kickback or any items of monetary value from any person who has or is seeking to do business with the City of Fort Collins is prohibited. Collusive or sham proposals: Any proposal deemed to be collusive or a sham proposal will be rejected and reported to authorities as such. Your authorized signature of this proposal assures that such proposal is genuine and is not a collusive or sham proposal. The City of Fort Collins reserves the right to reject any and all proposals and to waive any irregularities or informalities. Utilization of Award by Other Agencies: The City of Fort Collins reserves the right to allow other state and local governmental agencies, political subdivisions, and/or school districts to utilize the resulting award under all terms and conditions specified and upon agreement by all parties. Usage by any other entity shall not have a negative impact on the City of Fort Collins in the current term or in any future terms. Sustainability: Consulting firms/teams participating in the proposal are to provide an overview of the organization’s philosophy and approach to Sustainability. In no more than two (2) pages please describe how your organization strives to be sustainable in the use of materials, equipment, vehicles, fuel, recycling, office practices, etc. The City of Fort Collins incorporates the Triple Bottom Line into our decision process by including economic (or financial), environmental, and social factors in our evaluation. The selected Service Provider shall be expected to sign the City’s standard Agreement prior to commencing Services (see sample attached to this Proposal). Sincerely, Gerry Paul Purchasing Director RFP 8781 Financial Audit Services Page 3 of 31 REQUEST FOR PROPOSALS 8781 FINANCIAL AUDITING SERVICES SECTION 1 – GENERAL SCOPE OF SERVICES A. Scope of Services to be Performed 1. The City of Fort Collins desires the auditor to express an opinion on the fair presentation of its governmental activities, its business-type activities, its aggregate discretely presented component units, each of its major funds, and its aggregate remaining fund information in conformity with generally accepted accounting principles. 2. The City of Fort Collins also desires the auditor to express an opinion on the fair presentation of its combining and individual fund financial statements and schedules in conformity with generally accepted accounting principles. The auditor is not required to audit the supporting schedules contained in the comprehensive annual financial report. However, the auditor is to provide an "in-relation-to" opinion on the supporting schedules based on the auditing procedures applied during the audit of the basic financial statements and the combining and individual fund financial statements and schedules. The auditor is not required to audit the introductory section of the report or the statistical section of the report. 3. The auditor shall also be responsible for performing certain limited procedures involving required supplementary information required by the Governmental Accounting Standards Board as mandated by generally accepted auditing standards. 4. The auditor is not required to audit the schedule of expenditures of federal awards. However, the auditor is to provide an "in-relation-to" report on that schedule based on the auditing procedures applied during the audit of the financial statements. B. Auditing Standards To Be Followed To meet the requirements of this request for proposals, the audit shall be performed in accordance with generally accepting auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. Government Accountability Office's Government Auditing Standards (1994), the provisions of the Single Audit Act of 1984 (as amended in 1996) and the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, Audits of State and Local Governments. C. Reports to be Issued Following the completion of the audit of the fiscal year's financial statements, the auditor shall issue: 1. A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles, including an opinion on the fair presentation of the supplementary schedule of expenditures of federal awards in relation to the audited financial statements. 2. A report on compliance and internal control over financial reporting based on an audit of the financial statements 3. A report on compliance and internal control over compliance applicable to each major federal program. RFP 8781 Financial Audit Services Page 4 of 31 In the required report[s] on compliance and internal controls, the auditor shall communicate any significant deficiency or material weakness found during the audit. A significant deficiency shall be defined as a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected. A material weakness shall be defined as a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected. Significant deficiencies that are also material weaknesses shall be identified as such in the report. Control deficiencies discovered by the auditors that are neither significant deficiencies nor material weaknesses shall be reported in a separate letter to management, which shall be referred to in the report[s] on compliance and internal controls. A control deficiency shall be deemed to have occurred whenever the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. The report on compliance and internal controls shall include all material instances of noncompliance. All nonmaterial instances of noncompliance shall be reported in a separate management letter, which shall be referred to in the report on compliance and internal controls. 4. 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: • Mayor and Council Members of the City of Fort Collins • Council Finance Committee • City Manager • Chief Financial Officer • Accounting Director • Controller 5. Reporting to the Council Finance Committee. Auditors shall assure themselves that the City of Fort Collins's Council Finance Committee is informed of each of the following: • The auditor's responsibility under generally accepted auditing standards • Significant accounting policies • Management judgments and accounting estimates • Significant audit adjustments • Auditor’s judgments about the quality of the entity’s accounting principles • Other information in documents containing audited financial statements • Disagreements with management • Management consultation with other accountants • Major issues discussed with management prior to retention • Difficulties encountered in performing the audit RFP 8781 Financial Audit Services Page 5 of 31 D. Special Considerations 1. The City of Fort Collins will send its comprehensive annual financial report to the Government Finance Officers Association of the United States and Canada for review in their Certificate of Achievement for Excellence in Financial Reporting program. It is anticipated that the auditor will not be required to provide special assistance to the City of Fort Collins to meet the requirements of that program. 2. The City of Fort Collins currently anticipates it will prepare one or more official statements in connection with the sale of debt securities which will contain the general purpose financial statements and the auditor's report thereon. The auditor shall be required, if requested by the fiscal advisor and/or the underwriter, to issue a "consent and citation of expertise" as the auditor and any necessary "comfort letters." 3. The City of Fort Collins has determined that no specific United States Department functions as the cognizant agencies in accordance with the provisions of the Single Audit Act of 1984 (as amended in 1996) and U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. All federal awards and related expenditures are reported to the Federal Clearinghouse. 4. The Schedule of Expenditures of Federal Awards and related auditor's report, as well as the reports on compliance and internal controls are not to be included in the comprehensive annual financial report, but are to be issued separately. 5. A list of findings and other weaknesses from the City of Fort Collins's most recent financial statement audit, as well as a list of findings from internal audits conducted during the most recent fiscal period to be audited may be found at http://fcgov.com/finance/?departments. 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 three (3) years, unless the firm is notified in writing by the City of Fort Collins of the need to extend the retention period. The auditor will be required to make working papers promptly available, upon request, to the following parties or their designees: 1. City of Fort Collins 2. U.S. Government Accountability Office (GAO) 3. Parties designated by the federal or state governments or by the City of Fort Collins as part of an audit quality review process 4. Auditors of entities of which the City of Fort Collins is a subrecipient of grant funds 5. Auditors of entities of which the City of Fort Collins is a component unit 6. 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. Schedule for the 2018 Fiscal Year Audit (A similar time schedule will be developed for audits of future fiscal years if the City of Fort Collins exercises its option for additional audits). Each of the following should be completed by the dates indicated, unless otherwise approved by both the City and Auditor. RFP 8781 Financial Audit Services Page 6 of 31 1. Interim Field Work The auditor shall complete interim work by November 15th. 2. Detailed Audit Plan The Auditor shall provide the City at least 1 month before interim and final field work a detailed audit plan and a list of all schedules to be prepared by the City. 3. Fieldwork The auditor shall complete all fieldwork by May 15th. 4. City Charter Requirement for Public Notification of Summary Financials In accordance with the City of Fort Collins Charter, Article II, Section 17, a summary of the independent audit of the City’s financial records needs to be published no later than May 31st. In order to meet this deadline, staff requests the auditors complete a review of the summary by May 24th. 5. City Prepared Reports Fund Financial Statements, Notes and Required Supplementary Information - The City shall have drafts ready for auditing on the first day of final field work. Financial Statements – The City shall complete the management’s discussion and analysis, government wide financial statements, fund financial statements, notes, required supplementary information and all elements of a Comprehensive Annual Financial Report by May 15th. The Auditor shall provide all corrections, suggestions and comments to the City by June 1. 6. Auditor Prepared Reports Opinion Letters, Single Audit Reports, and Management Letter - The auditor shall have drafts of the audit report[s] and recommendations to management available for review by the City by June 1st. The City shall have all comments and suggestions on these items by June 8th. The Auditor will print and deliver the final reports by June 15th. Number of Auditor Reports – For the City of Fort Collins, the Auditor shall an electronic version of opinion letter, 25 Single Audit Reports, and 25 Management Letter Reports by June 15. For the Poudre River Public Library District and the Poudre Fire Authority, the Auditor shall print, for each, 25 Financial Statements, including Opinion Letter, and 25 Management Letter Reports by June 30. The auditor should deliver all reports to the Controller at 215 North Mason Street, 2nd Floor, Fort Collins, CO 80522-0580. 7. Presentation to Governing Bodies The auditor shall present the results of the audit to the three governing bodies by August 31: o City of Fort Collins Council Finance and Audit Committee o Poudre River Public Library District Board o Poudre Fire Authority Board RFP 8781 Financial Audit Services Page 7 of 31 SECTION 2 – DESCRIPTION OF THE GOVERNMENT A. Name and Telephone Number of Contact Persons/Organizational Chart/ Location of Offices 1. The auditor's principal contact with the City of Fort Collins will be Mike Beckstead, Chief Financial Officer, phone 970-221-6795. However, the designated representatives will be John Voss, Controller, phone 970-221-6772, and Travis Storin, Accounting Director, 970-221-2367, who will coordinate the assistance to be provided by the City of Fort Collins to the auditor. 2. An organizational chart and a list of key personnel can be seen in the 2017 CAFR, pages 8-9. Link to the City’s website: http://www.fcgov.com/finance/annual-financial- reports.php B. Background Information 1. The City of Fort Collins serves an area of 57 square miles with a population of 171,100. The City of Fort Collins's fiscal year begins on January 1 and ends on December 31. 2. The City of Fort Collins provides the following services to its citizens: ▪ general government ▪ public safety ▪ streets and highways ▪ cultural opportunities and recreation ▪ transportation ▪ sustainability ▪ planning and development ▪ electric distribution ▪ broadband (new in 2018) ▪ water treatment and distribution ▪ wastewater collection and treatment ▪ storm drainage ▪ golf 3. The City of Fort Collins has a total payroll of $184 million covering 2,122 FTE employees. $ In millions Entity with Unique Tax ID Gross Pay Benefits Total Payroll FTE City $ 114.8 $ 36.6 $ 151.4 1,741 Downtown Development Authority 0.4 0.1 0.5 5 Poudre Fire Authority 21.1 5.2 26.3 282 Library District 4.5 1.4 5.9 94 TOTAL $ 140.8 $ 43.3 $ 184.1 2,122 4. The City is organized into 9 service areas and 3 agencies. The accounting and financial reporting functions of the City of Fort Collins are generally centralized with the most significant exception of dedicated personnel in Utilities. 5. More detailed information on the government and its finances can be found in the Budget Document, CAFR’s, and Single Audit Report. See website - http://www.fcgov.com/finance/ RFP 8781 Financial Audit Services Page 8 of 31 C. Fund Structure The City of Fort Collins uses the following fund types in its financial reporting: Individual Fund Type Funds Annual Budgets General fund 1 1 Special revenue funds 16 16 Special rev fund (blended component) 5 5 Debt service funds 1 1 Capital projects funds 3 0 Permanent funds 0 0 Enterprise funds 6 6 Internal service funds 5 5 Private-purpose trust funds 0 0 Investment trust funds 0 0 Pension (and other employee benefits) trust funds 1 1 Agency funds 2 0 Other Entity’s Fund Type Funds Annual Budgets DDA General (discrete c.) 1 1 DDA Debt service (discrete c) 1 1 PFA General 1 1 PFA Capital project 1 0 Library General 1 1 Library Capital project 1 0 D. Basis of Budgeting The City of Fort Collins does not always prepare its budgets on a basis consistent with generally accepted accounting principles. Proprietary funds are budgeted on current financial resources basis. In some of the funds, grants and capital projects are budgeted on a project length basis, rather than annual budgets. E. Federal and State Awards Refer to 2017 single audit report, which is typical in its volume and complexity. https://www.fcgov.com/finance/files/single-audit-compliance-2017.pdf F. Pension Plans The City of Fort Collins participates in the following pension plans: Plan Multiple Employer Cost Sharing Agent Single Employer Defined Benefit Contribution General Employees Retirement Program (GERP) X Money Purchase Plan (401a) X Actuarial services for the GERP plan are provided by Milliman. The defined contribution plan is administered by ICMA-RC. * The Poudre Fire Authority is planning to replace their 401a, for employees represented by a bargaining unit, with a defined benefit pension through the Fire & Police Pension Association of Colorado. Estimated to begin in 2019. RFP 8781 Financial Audit Services Page 9 of 31 G. Component Units 1. The City of Fort Collins is defined, for financial reporting purposes, in conformity with the Governmental Accounting Standards Board's Codification of Governmental Accounting and Financial Reporting Standards, Section 2100. Using these criteria, component units are included in the City of Fort Collins's financial statements. 2. The management of the City of Fort Collins identified the following component units for inclusion in the City of Fort Collins's financial statements: a) Fort Collins Colorado Downtown Development Authority. The DDA is a discrete component unit and is to be audited as part of the audit of the City of Fort Collins's financial statements. b) Fort Collins Urban Renewal District. This is a blended component unit that is presented in the City’s CAFR as another fund. c) General Improvement District #1. This is a blended component unit that is presented in the City’s CAFR as another fund. d) General Improvement District #15 – Skyview. This is a blended component unit that is presented in the City’s CAFR as another fund. 3. The management of the City of Fort Collins has determined that the following potential component units should not be included in the City of Fort Collins's financial statements for the following reasons: Potential Component Unit Reason for Exclusion Poudre Fire Authority Joint Venture Poudre River Public Library District Completely separate board, we don’t contribute financially, different boundaries H. Joint Ventures The City of Fort Collins does participate in joint ventures with other governments. NAME OF JOINT VENTURE NAME OF OTHER PARTICIPATING GOVERNMENT(S) TYPE OF SERVICES PROVIDED Fort Collins- Loveland Airport City of Loveland Airport Operations North Front Range Transportation & Air Quality 10 Northern CO municipalities, and Larimer and Weld Counties Transportation & Air Quality Planning Poudre Fire Authority Poudre Valley Fire Protection District Fire Protection Platte River Power Authority Longmont, Loveland & Estes Park Wholesale Power Supply I. Magnitude of Finance Operations Financial services area has 47 people and is headed by Mike Beckstead, Chief Financial Officer for the City. There are 4 departments in Financial Services: Finance Administration, Purchasing, Safety, Security & Risk Management, Sales Tax, and Accounting & Treasury. The Accounting & Treasury Department is headed by Travis Storin, Director of Accounts. Other Services Areas throughout the City have positions performing financial work and have dotted line accountability to Financial Services. RFP 8781 Financial Audit Services Page 10 of 31 J. Computer Systems 1. JDE Production Database Server • HP BL 460 Gen 9 • 2 – 12 core processors • 128 GB RAM • Operating System: Windows Server 2012 R2 (64 bit) • Applications: Oracle DBMS 12c Enterprise Edition Release 12.1.0.2.0 2. JDE Production Web Server • VM Ware Virtual Machine (running on top of same physical blades) • 2 - 2 Core Processors • 16 GB RAM • Operating System: Windows Server 2012 R2 (64 bit) • Applications: Oracle WebLogic Server 3. JDE Production Batch Server • HP BL 460 Gen 9 • 2 – 12 core processors • 128 GB RAM • Operating System: Windows Server 2012 R2 (64 bit) • Applications: Oracle/JD Edwards Software 4. JDE Software Version • Oracle JD Edwards EnterpriseOne 9.2, Tools Release 9.2.1.2 5. JD Edwards EnterpriseOne Modules (go live date) • Financials, A/P, Purchasing, Budget, Job Costing, Foundation & Security (1/1999) • Accounts Receivable, Procurement (12/1999) • Human Resources/Payroll (1/2000) • Fixed Assets (8/2001) • Enterprise Asset Management (12/2003) • Self Service Benefits Enrollment (10/2004) • Employee and Manager Self Service (10/2006) • SAP Business Objects implemented for Enterprise Reporting (10/2006) • JDE Chart of Accounts Conversion (11/2008) • Expense Management (9/2015) • AP Automation via Tungsten Networks Integration (target 9/2018) K. Availability of Prior Audit Reports and Working Papers Interested proposers who wish to review prior years' audit reports and management letters should contact Kevin Smith at 4801 Main Street, Suite 400, Kansas City, MO 64112-2543, phone 816-751-4027. The City of Fort Collins will use its best efforts to make prior audit reports and supporting working papers available to proposers to aid their response to this request for proposals. L. Organizational Chart and listing of Key Officials may be found in the CAFR https://www.fcgov.com/finance/annual-financial-reports.php RFP 8781 Financial Audit Services Page 11 of 31 SECTION 3 - TIME REQUIREMENTS A. Proposal Calendar The following is a list of key dates up to and including the date proposals are due to be submitted: Last day to submit bid questions Aug 1, 2018 Due date for proposals Aug 10, 2018 3:00 PM (MDST) B. Notification and Contract Dates (estimated subject to change) Interviews of finalists September 5, 2018* Selected firm notified September 7, 2018 Contract date September 17, 2018 * The interview date is firm and will be conducted September 5, 2018 from 3:00 pm to 5:00 pm. Interviews will be conducted by City Council member of the Council Finance Committee. All proposals and the interviews will be open to the public. C. Date Audit May Commence The City of Fort Collins will have all records ready for audit and all management personnel available to meet with the firm's personnel as of October 1, 2018. D. Schedule for the 2018 Fiscal Year Audit (A similar time schedule will be developed for audits of future fiscal years if the City of Fort Collins exercises its option for additional audits). Each of the following should be completed by the auditor no later than the dates indicated. 1. Interim Work The auditor shall complete interim work by December 15th. City is open considering alternative dates 2. Detailed Audit Plan The auditor shall provide City of Fort Collins by December 31 both a detailed audit plan and a list of all schedules to be prepared by the City of Fort Collins. 3. Fieldwork The auditor shall complete all fieldwork by May 15. 4. City Charter Requirement for Public Notification of Summary Financials In accordance with the City of Fort Collins Charter, Article II, Section 17, a summary of the independent audit of the City’s financial records needs to be published no later than May 31. In order to meet this deadline, staff request the auditors complete review of the summary by May 24. 5. Draft Reports The auditor shall have drafts of the audit report[s] and recommendations to management available for review by the Chief Financial Officer and Controller/ Assistant Financial Offer by June 1. RFP 8781 Financial Audit Services Page 12 of 31 E. Date Opinion Letter and Single Audit Report is Due The City staff shall prepare draft financial statements, notes and all required supplementary schedules by May 6. The auditor shall provide a draft of all recommendations, revisions and suggestions for improvement to the Chief Fiscal Officer and Controller/Assistant Financial Officer by June 1. The final signed opinion letter should be provided electronically for inclusion in the CAFR no later than June 15. SECTION 4 - ASSISTANCE TO BE PROVIDED TO THE AUDITOR AND REPORT PREPARATION A. Finance Department and Clerical Assistance The finance department staff and responsible management personnel will be available during the audit to assist the firm by providing information, documentation and explanations. The preparation of confirmations will be the responsibility of the City on Auditor approved forms. B. Electronic Data Processing (EDP) Assistance The Enterprise Resource Planning (ERP) personnel will be available to assist the auditor in performing the engagement during normal working hours, with reasonable advanced notice. ERP personnel will also be available to provide systems documentation and explanations. The auditor will be provided reasonable computer time and the use of the City of Fort Collins's computer hardware and software. This will be limited to inquiry and review of accounting records. C. Statements and Schedules to be Prepared by the Staff of the City of Fort Collins The staff of City of Fort Collins will prepare the following statements and schedules for the auditor by the dates indicated: Statement or Schedule Date Fund statements April 15 Notes April 22 Government Wide May 1 MD&A, Statistical, Intro Section May 7 D. Work Area, Telephones, Photocopying and FAX Machines The City of Fort Collins will provide the auditor with reasonable work space, desks and chairs. The auditor will also be provided with access to one telephone lines, photocopying facilities and FAX machines. E. Report Preparation Report preparation, editing and printing shall be the responsibility of the auditor. SECTION 5 - PROPOSAL REQUIREMENTS A. General Requirements 1. Submission of Proposals The following material is required to be received by August 10, 2018 by 3:00 PM for a proposing firm to be considered: i. Title Page 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. ii. Table of Contents RFP 8781 Financial Audit Services Page 13 of 31 iii. Transmittal Letter A signed letter of transmittal briefly stating the proposer's 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 a statement that the proposal is a firm and irrevocable offer for 60 days. iv. Detailed Proposal The detailed proposal should follow the order set forth in Section 5 B and C of this request for proposals. v. Executed copies of Proposer Guarantees and Proposer Warranties, attached to this request for proposal (Appendix B and Appendix C) B. Technical Proposal 1. 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 Fort Collins in conformity with the requirements of this request for proposals. As such, the substance of proposals will carry more weight than their 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. THERE SHOULD BE NO DOLLAR UNITS OR TOTAL COSTS INCLUDED IN THE TECHNICAL PROPOSAL DOCUMENT. The Technical Proposal should address all the 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 the request for proposals. While additional data may be presented, the following subjects, items Nos. 2 through 10, must be included. They represent the criteria against which the proposal will be evaluated. 2. Independence The firm should provide an affirmative statement that is independent of the City of Fort Collins as defined by generally accepted auditing standards/the U.S. Government Accountability Office's Government Auditing Standards (1994). The firm also should provide an affirmative statement that it is independent of all of the component units of the City of Fort Collins as defined by those same standards. The City of Fort Collins currently has one component unit, the Fort Collins Downtown Development Authority, whose budget and any issuance of debt requires approval of the Fort Collins’ City Council. The firm should also list and describe the firm's (or proposed subcontractors') professional relationships involving the City of Fort Collins or any of its component units or joint venture members 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. RFP 8781 Financial Audit Services Page 14 of 31 In addition, the firm shall give the City of Fort Collins written notice of any professional relationships entered into during the period of this agreement. 3. License to Practice in the State of Colorado An affirmative statement should be included that the firm and all assigned key professional staff are properly licensed to practice in the State of Colorado. 4. 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. If the proposer is a joint venture or consortium, the qualifications of each firm comprising the joint venture or consortium should be separately identified and the firm that is to serve as the principal auditor should be noted, if applicable. 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 government engagements. The firm 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 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. 5. 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 the engagement. Indicate whether each such person is registered or licensed to practice as a certified public accountant in the State of Colorado. Provide information on the government auditing experience of each person, including information on relevant continuing professional education for the past three (3) 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. The proposer should identify the extent to which staff to be assigned to the audit reflect the City of Fort Collins's commitment to Affirmative Action. 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 of Fort Collins. However, in either case, the City of Fort Collins retains the right to approve or reject replacements. RFP 8781 Financial Audit Services Page 15 of 31 Consultants and firm specialists mentioned in response to this request for proposal can only be changed with the express prior written permission of the City of Fort Collins, which 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. 6. Prior Engagements with the City of Fort Collins List separately all engagements within the last five years, ranked on the basis of total staff hours, for the City of Fort Collins by type of engagement (i.e., management advisory services, other). 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. 7. 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 five 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. 8. 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 City of Fort Collins's budget and related materials, 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 of Fort Collins's internal control structure 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 9. Identification of Anticipated Potential Audit Problems The proposal should identify and describe any anticipated potential audit problems, the firm's approach to resolving these problem and any special assistance that will be requested from the City of Fort Collins. RFP 8781 Financial Audit Services Page 16 of 31 10. Report Format The proposal should include sample formats for required reports. C. Dollar Cost Proposal 1. Total All-Inclusive Maximum Price The sealed dollar cost bid 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 Fort Collins will not be responsible for expenses incurred in preparing and submitting the technical proposal or the dollar cost proposal. Such costs should not be included in the proposal. The first page of the dollar cost proposal should include the following information: a. Name of Firm b. Certification that the person signing the proposal is entitled to represent the firm, empowered to submit the bid, and authorized to sign a contract with the City of Fort Collins. c. A Total All-Inclusive Maximum Price for the 2018 engagement and subsequent 4 years (Fill-out Appendix A). 2. Rates by Partner, Specialist, Supervisory and Staff Level Times Hours Anticipated for Each The second page of the dollar cost proposal should include a schedule of professional fees and expenses, presented in the format provided in the attachment (Appendix A), that supports the total all-inclusive maximum price. The cost of special services described in Section of this request for proposal should be disclosed as separate components of the total all-inclusive maximum price. 3. Out-of-pocket Expenses Included in the Total All-inclusive Maximum Price and Reimbursement Rates Out-of-pocket expenses for firm personnel (e.g., travel, lodging and subsistence) will be reimbursed at the rates used by the City of Fort Collins for its employees. All estimated out-of-pocket expenses to be reimbursed should be presented on the second page of the sealed dollar cost bid in the format provided in the attachment (Appendix A). All expense reimbursements will be charged against the total all-inclusive maximum price submitted by the firm. In addition, a statement must be included in the sealed dollar cost bid stating the firm will accept reimbursement for travel, lodging and subsistence at the prevailing City of Fort Collins rates for its employees. 4. Rates for Additional Professional Services If it should become necessary for City of Fort Collins to request the auditor 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 on this engagement, then such additional work shall be performed only if set forth in an addendum to the contract between City of Fort Collins and the firm. Any such additional work agreed to between City of Fort Collins and the firm shall be performed at the same rates set forth in the schedule of fees and expenses included in the sealed dollar cost bid. RFP 8781 Financial Audit Services Page 17 of 31 5. Manner of Payment Progress 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 bid proposal. Interim billing shall cover a period of not less than a calendar month. Ten percent (10%) will be withheld from each billing pending delivery of the firm's final reports. SECTION 6 – REVIEW AND ASSESSMENT Firms will be evaluated on the following criteria. These criteria will be the basis for review and assessment of the written proposals and optional interview session. At the discretion of the City, interviews of the top rated firms may be conducted. The rating scale shall be from 1 to 5, with 1 being a poor rating, 3 being an average rating, and 5 being an outstanding rating. WEIGHTING FACTOR QUALIFICATION STANDARD 2.0 Scope of Proposal Does the proposal address all elements of the RFP? Does the proposal show an understanding of the project objectives, methodology to be used and results/outcomes required by the project? Are there any exceptions to the requirements, Scope of Services, or agreement? 2.0 Assigned Personnel Qualifications Do the individuals who will be assigned to the project have the necessary skills and qualifications? Are sufficient people of the requisite skills and qualifications assigned to the project? 2.0 Cost and Schedule Does the proposal address all the cost elements and are the line-item costs competitive? Do the proposed cost compare favorably with the Project Manager's estimate and other proposals? Does the firm take any exceptions to the audit submittal dates. 2.0 Firm Capability & Reputation Does the firm have the resources, financial strength, capacity and support capabilities required to complete a comprehensive audit? Has the firm successfully completed previous audits of this type and scope? Official Purchasing Document Last updated 10/2017 RFP 8781 Financial Audit Services Page 18 of 31 APPENDIX A SCHEDULE OF PROFESSIONAL FEES & EXPENSES FOR ADDITIONAL SERVICES NATURE OF SERVICE TO BE PROVIDED MAXIMUM ALL-INCLUSIVE TOTAL PRICE 2018 Audits of City, Poudre Fire Authority and Library District $ 2019 Audits of City, Poudre Fire Authority and Library District $ 2020 Audits of City, Poudre Fire Authority and Library District $ 2021 Audits of City, Poudre Fire Authority and Library District $ 2022 Audits of City, Poudre Fire Authority and Library District $ Issuance of Consent Letter for a Bond Issue $ Verification of Arbitrage at the End of Each • Five-Year Period of a Bond Issue $ Verification of Bond Escrow for a Bond Issue $ Agreed Upon Procedures Performed in Relation to City’s Cable TV Franchise Agreement with Service Provider $ Of the Total all-inclusive maximum price for the 2018 audit, please estimate the expected costs for the services related to the Library District and the Poudre Fire Authority: • Library District $ • Poudre Fire Authority $ Proposer: Signature: Printed: Address: City/State/Zip: Phone: Email: Official Purchasing Document Last updated 10/2017 RFP 8781 Financial Audit Services Page 19 of 31 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES This schedule should reflect the hourly rates for any additional work outside the scope of this RFP if the City requests it. STANDARD HOURLY RATES QUOTED HOURLY RATES Partners $ $ Managers $ $ Supervisory Staff $ $ Staff $ $ Other (specify): $ $ $ $ $ $ $ $ ADDITIONAL COSTS Out-of-pocket expenses: $ Meals and lodging (amount per person per day) $ Transportation (cents-per-mile) $ Other (specify): $ $ $ $ Official Purchasing Document Last updated 10/2017 RFP 8781 Financial Audit Services Page 20 of 31 APPENDIX B PROPOSER GUARANTEES The Proposer certifies it can and will provide and make available all services set forth in Scope of Work and Time Requirements. Signature of Official: Printed: Title: Date: LIST OF PRINCIPALS The names and titles of the Proposer’s principals are: 1. 2. 3. 4. 5. Proposer: Address: City/State/Zip: Phone: Email: Official Purchasing Document Last updated 10/2017 RFP 8781 Financial Audit Services Page 21 of 31 APPENDIX C PROPOSER WARRANTIES A. Proposer warrants that it is willing and able to comply with State of Colorado laws with respect to foreign (non-state of Colorado) corporations. B. Proposer warrants, that if it is awarded the contract it shall obtain and maintain during the Agreement term the following insurance coverage’s with policy limits in accordance with NORA specifications: 1. Errors and omissions coverage for the willful or negligent acts, or omissions of any officers, employees or agents thereof; 2. Professional liability coverage; 3. Comprehensive general liability coverage; 4. Automobile liability coverage, including hired and non-owned vehicles; and 5. Workers’ compensation. Waiver of subrogation and hold harmless agreements will be agreed to for all of the above coverage. The City shall be named an additional insured for all insurance coverage. C. Proposer warrants that it will not delegate or subcontract its responsibilities under the contract without the prior written permission of the City of Fort Collins. D. Proposer warrants that all information provided by it in connection with this proposal is true and accurate. Signature of Official: Name: (Print or type) Title: Firm: Date: Official Purchasing Document Last updated 10/2017 RFP 8781 Financial Audit Services Page 22 of 31 SAMPLE SERVICES AGREEMENT (DO NOT SIGN) SERVICES AGREEMENT THIS AGREEMENT made and entered into the day and year set forth below by and between THE CITY OF FORT COLLINS, COLORADO, a Municipal Corporation, hereinafter referred to as the "City" and , hereinafter referred to as "Service Provider". WITNESSETH: In consideration of the mutual covenants and obligations herein expressed, it is agreed by and between the parties hereto as follows: 1. Scope of Services. The Service Provider agrees to provide services in accordance with the scope of services attached hereto as Exhibit A, consisting of ( ) page(s) and incorporated herein by this reference. Irrespective of references in Exhibit A to certain named third parties, Service Provider shall be solely responsible for performance of all duties hereunder. 2. The Work Schedule. [Optional] The services to be performed pursuant to this Agreement shall be performed in accordance with the Work Schedule attached hereto as Exhibit , consisting of ( ) page(s), and incorporated herein by this reference. 3. Time of Commencement and Completion of Services. The services to be performed pursuant to this Agreement shall be initiated within ( ) days following execution of this Agreement. Services shall be completed no later than . Time is of the essence. Any extensions of the time limit set forth above must be agreed upon in a writing signed by the parties. 4. Contract Period. This Agreement shall commence , 20 , and shall continue in full force and effect until , 20 , unless sooner terminated as herein provided. In addition, at the option of the City, the Agreement may be extended for additional one year periods not to exceed ( ) additional one year periods. Renewals and pricing changes shall be negotiated by and agreed to by both parties. Written notice of renewal shall be provided to the Service Provider and mailed no later than thirty (30) days prior to contract end. 5. Delay. If either party is prevented in whole or in part from performing its obligations by unforeseeable causes beyond its reasonable control and without its fault or negligence, then the party so prevented shall be excused from whatever performance is prevented by such cause. To the extent that the performance is actually prevented, the Service Provider must provide written notice to the City of such condition within fifteen (15) days from the onset of such condition. Official Purchasing Document Last updated 10/2017 RFP 8781 Financial Audit Services Page 23 of 31 6. Early Termination by City/Notice. Notwithstanding the time periods contained herein, the City may terminate this Agreement at any time without cause by providing written notice of termination to the Service Provider. Such notice shall be delivered at least fifteen (15) days prior to the termination date contained in said notice unless otherwise agreed in writing by the parties. All notices provided under this Agreement shall be effective when mailed, postage prepaid and sent to the following addresses: Service Provider: City: Copy to: Attn: City of Fort Collins Attn: PO Box 580 Fort Collins, CO 80522 City of Fort Collins Attn: Purchasing Dept. PO Box 580 Fort Collins, CO 80522 In the event of early termination by the City, the Service Provider shall be paid for services rendered to the date of termination, subject only to the satisfactory performance of the Service Provider's obligations under this Agreement. Such payment shall be the Service Provider's sole right and remedy for such termination. 7. Contract Sum. The City shall pay the Service Provider for the performance of this Contract, subject to additions and deletions provided herein, ($ ) as per the attached Exhibit " ", consisting of page(s), and incorporated herein by this reference. 8. City Representative. The City will designate, prior to commencement of the work, its representative who shall make, within the scope of his or her authority, all necessary and proper decisions with reference to the services provided under this agreement. All requests concerning this agreement shall be directed to the City Representative. 9. Independent Service provider. The services to be performed by Service Provider are those of an independent service provider and not of an employee of the City of Fort Collins. The City shall not be responsible for withholding any portion of Service Provider's compensation hereunder for the payment of FICA, Workmen's Compensation or other taxes or benefits or for any other purpose. 10. Subcontractors. Service Provider may not subcontract any of the Work set forth in the Exhibit A, Statement of Work without the prior written consent of the city, which shall not be unreasonably withheld. If any of the Work is subcontracted hereunder (with the consent of the City), then the following provisions shall apply: (a) the subcontractor must be a reputable, qualified firm with an established record of successful performance in its respective trade performing identical or substantially similar work, (b) the subcontractor will be required to comply with all applicable terms of this Agreement, (c) the subcontract will not create any contractual relationship between any such subcontractor and the City, nor will it obligate the City to pay or see to the payment of any subcontractor, and (d) the work of the subcontractor will be subject to inspection by the City to the same extent as the work of the Service Provider. 11. Personal Services. It is understood that the City enters into the Agreement based on the Official Purchasing Document Last updated 10/2017 RFP 8781 Financial Audit Services Page 24 of 31 special abilities of the Service Provider and that this Agreement shall be considered as an agreement for personal services. Accordingly, the Service Provider shall neither assign any responsibilities nor delegate any duties arising under the Agreement without the prior written consent of the City. 12. Acceptance Not Waiver. The City's approval or acceptance of, or payment for any of the services shall not be construed to operate as a waiver of any rights or benefits provided to the City under this Agreement or cause of action arising out of performance of this Agreement. 13. Warranty. a. Service Provider warrants that all work performed hereunder shall be performed with the highest degree of competence and care in accordance with accepted standards for work of a similar nature. b. Unless otherwise provided in the Agreement, all materials and equipment incorporated into any work shall be new and, where not specified, of the most suitable grade of their respective kinds for their intended use, and all workmanship shall be acceptable to City. c. Service Provider warrants all equipment, materials, labor and other work, provided under this Agreement, except City-furnished materials, equipment and labor, against defects and nonconformances in design, materials and workmanship/workwomanship for a period beginning with the start of the work and ending twelve (12) months from and after final acceptance under the Agreement, regardless whether the same were furnished or performed by Service Provider or by any of its subcontractors of any tier. Upon receipt of written notice from City of any such defect or nonconformances, the affected item or part thereof shall be redesigned, repaired or replaced by Service Provider in a manner and at a time acceptable to City. 14. Default. Each and every term and condition hereof shall be deemed to be a material element of this Agreement. In the event either party should fail or refuse to perform according to the terms of this agreement, such party may be declared in default thereof. 15. Remedies. In the event a party has been declared in default, such defaulting party shall be allowed a period of ten (10) days within which to cure said default. In the event the default remains uncorrected, the party declaring default may elect to (a) terminate the Agreement and seek damages; (b) treat the Agreement as continuing and require specific performance; or (c) avail himself of any other remedy at law or equity. If the non-defaulting party commences legal or equitable actions against the defaulting party, the defaulting party shall be liable to the non-defaulting party for the non-defaulting party's reasonable attorney fees and costs incurred because of the default. 16. Binding Effect. This writing, together with the exhibits hereto, constitutes the entire agreement between the parties and shall be binding upon said parties, their officers, employees, agents and assigns and shall inure to the benefit of the respective survivors, heirs, personal representatives, successors and assigns of said parties. Official Purchasing Document Last updated 10/2017 RFP 8781 Financial Audit Services Page 25 of 31 17. Indemnity/Insurance. a. The Service Provider agrees to indemnify and save harmless the City, its officers, agents and employees against and from any and all actions, suits, claims, demands or liability of any character whatsoever brought or asserted for injuries to or death of any person or persons, or damages to property arising out of, result from or occurring in connection with the performance of any service hereunder. b. The Service Provider shall take all necessary precautions in performing the work hereunder to prevent injury to persons and property. c. Without limiting any of the Service Provider's obligations hereunder, the Service Provider shall provide and maintain insurance coverage naming the City as an additional insured under this Agreement of the type and with the limits specified within Exhibit , consisting of one (1) page, attached hereto and incorporated herein by this reference. The Service Provider before commencing services hereunder, shall deliver to the City's Purchasing Director, P. O. Box 580, Fort Collins, Colorado 80522, one copy of a certificate evidencing the insurance coverage required from an insurance company acceptable to the City. 18. Entire Agreement. This Agreement, along with all Exhibits and other documents incorporated herein, shall constitute the entire Agreement of the parties. Covenants or representations not contained in this Agreement shall not be binding on the parties. 19. Law/Severability. The laws of the State of Colorado shall govern the construction interpretation, execution and enforcement of this Agreement. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision of this Agreement. 20. Prohibition Against Employing Illegal Aliens. Pursuant to Section 8-17.5-101, C.R.S., et. seq., Service Provider represents and agrees that: a. As of the date of this Agreement: 1. Service Provider does not knowingly employ or contract with an illegal alien who will perform work under this Agreement; and 2. Service Provider will participate in either the e-Verify program created in Public Law 208, 104th Congress, as amended, and expanded in Public Law 156, 108th Congress, as amended, administered by the United States Department of Homeland Security (the “e-Verify Program”) or the Department Program (the “Department Program”), an employment verification program established pursuant to Section 8- 17.5-102(5)(c) C.R.S. in order to confirm the employment eligibility of all newly hired employees to perform work under this Agreement. b. Service Provider shall not knowingly employ or contract with an illegal alien to perform work under this Agreement or knowingly enter into a contract with a subcontractor that knowingly employs or contracts with an illegal alien to perform work under this Official Purchasing Document Last updated 10/2017 RFP 8781 Financial Audit Services Page 26 of 31 Agreement. c. Service Provider is prohibited from using the e-Verify Program or Department Program procedures to undertake pre-employment screening of job applicants while this Agreement is being performed. d. If Service Provider obtains actual knowledge that a subcontractor performing work under this Agreement knowingly employs or contracts with an illegal alien, Service Provider shall: 1. Notify such subcontractor and the City within three days that Service Provider has actual knowledge that the subcontractor is employing or contracting with an illegal alien; and 2. Terminate the subcontract with the subcontractor if within three days of receiving the notice required pursuant to this section the subcontractor does not cease employing or contracting with the illegal alien; except that Service Provider shall not terminate the contract with the subcontractor if during such three days the subcontractor provides information to establish that the subcontractor has not knowingly employed or contracted with an illegal alien. e. Service Provider shall comply with any reasonable request by the Colorado Department of Labor and Employment (the “Department”) made in the course of an investigation that the Department undertakes or is undertaking pursuant to the authority established in Subsection 8-17.5-102 (5), C.R.S. f. If Service Provider violates any provision of this Agreement pertaining to the duties imposed by Subsection 8-17.5-102, C.R.S. the City may terminate this Agreement. If this Agreement is so terminated, Service Provider shall be liable for actual and consequential damages to the City arising out of Service Provider’s violation of Subsection 8-17.5-102, C.R.S. g. The City will notify the Office of the Secretary of State if Service Provider violates this provision of this Agreement and the City terminates the Agreement for such breach. 21. Special Provisions. Special provisions or conditions relating to the services to be performed pursuant to this Agreement are set forth in Exhibit - Confidentiality, consisting of one (1) page, attached hereto and incorporated herein by this reference. Official Purchasing Document Last updated 10/2017 RFP 8781 Financial Audit Services Page 27 of 31 THE CITY OF FORT COLLINS, COLORADO By: Gerry Paul Purchasing Director DATE: ATTEST: APPROVED AS TO FORM: SERVICE PROVIDER'S NAME By: Printed: Title: CORPORATE PRESIDENT OR VICE PRESIDENT Date: Official Purchasing Document Last updated 10/2017 RFP 8757 Body Armor, Ballistic Vests & Rifle Plates Page 28 of 31 EXHIBIT A SCOPE OF SERVICES Official Purchasing Document Last updated 10/2017 RFP 8757 Body Armor, Ballistic Vests & Rifle Plates Page 29 of 31 EXHIBIT (BID SCHEDULE/COMPENSATION) Official Purchasing Document Last updated 10/2017 RFP 8757 Body Armor, Ballistic Vests & Rifle Plates Page 30 of 31 EXHIBIT INSURANCE REQUIREMENTS 1. The Service Provider will provide, from insurance companies acceptable to the City, the insurance coverage designated hereinafter and pay all costs. Before commencing work under this bid, the Service Provider shall furnish the City with certificates of insurance showing the type, amount, class of operations covered, effective dates and date of expiration of policies, and containing substantially the following statement: “The insurance evidenced by this Certificate will not reduce coverage or limits and will not be cancelled, except after thirty (30) days written notice has been received by the City of Fort Collins.” In case of the breach of any provision of the Insurance Requirements, the City, at its option, may take out and maintain, at the expense of the Service Provider, such insurance as the City may deem proper and may deduct the cost of such insurance from any monies which may be due or become due the Service Provider under this Agreement. The City, its officers, agents and employees shall be named as additional insureds on the Service Provider 's general liability and automobile liability insurance policies for any claims arising out of work performed under this Agreement. 2. Insurance coverages shall be as follows: A. Workers' Compensation & Employer's Liability. The Service Provider shall maintain during the life of this Agreement for all of the Service Provider's employees engaged in work performed under this agreement: 1. Workers' Compensation insurance with statutory limits as required by Colorado law. 2. Employer's Liability insurance with limits of $100,000 per accident, $500,000 disease aggregate, and $100,000 disease each employee. B. Commercial General & Vehicle Liability. The Service Provider shall maintain during the life of this Agreement such commercial general liability and automobile liability insurance as will provide coverage for damage claims of personal injury, including accidental death, as well as for claims for property damage, which may arise directly or indirectly from the performance of work under this Agreement. Coverage for property damage shall be on a "broad form" basis. The amount of insurance for each coverage, Commercial General and Vehicle, shall not be less than $1,000,000 combined single limits for bodily injury and property damage. In the event any work is performed by a subcontractor, the Service Provider shall be responsible for any liability directly or indirectly arising out of the work performed under this Agreement by a subcontractor, which liability is not covered by the subcontractor's insurance. Official Purchasing Document Last updated 10/2017 RFP 8757 Body Armor, Ballistic Vests & Rifle Plates Page 31 of 31 EXHIBIT CONFIDENTIALITY IN CONNECTION WITH SERVICES provided to the City of Fort Collins (the “City”) pursuant to this Agreement (the “Agreement”), the Service Provider hereby acknowledges that it has been informed that the City has established policies and procedures with regard to the handling of confidential information and other sensitive materials. In consideration of access to certain information, data and material (hereinafter individually and collectively, regardless of nature, referred to as “information”) that are the property of and/or relate to the City or its employees, customers or suppliers, which access is related to the performance of services that the Service Provider has agreed to perform, the Service Provider hereby acknowledges and agrees as follows: That information that has or will come into its possession or knowledge in connection with the performance of services for the City may be confidential and/or proprietary. The Service Provider agrees to treat as confidential (a) all information that is owned by the City, or that relates to the business of the City, or that is used by the City in carrying on business, and (b) all information that is proprietary to a third party (including but not limited to customers and suppliers of the City). The Service Provider shall not disclose any such information to any person not having a legitimate need-to-know for purposes authorized by the City. Further, the Service Provider shall not use such information to obtain any economic or other benefit for itself, or any third party, except as specifically authorized by the City. The foregoing to the contrary notwithstanding, the Service Provider understands that it shall have no obligation under this Agreement with respect to information and material that (a) becomes generally known to the public by publication or some means other than a breach of duty of this Agreement, or (b) is required by law, regulation or court order to be disclosed, provided that the request for such disclosure is proper and the disclosure does not exceed that which is required. In the event of any disclosure under (b) above, the Service Provider shall furnish a copy of this Agreement to anyone to whom it is required to make such disclosure and shall promptly advise the City in writing of each such disclosure. In the event that the Service Provider ceases to perform services for the City, or the City so requests for any reason, the Service Provider shall promptly return to the City any and all information described hereinabove, including all copies, notes and/or summaries (handwritten or mechanically produced) thereof, in its possession or control or as to which it otherwise has access. The Service Provider understands and agrees that the City’s remedies at law for a breach of the Service Provider’s obligations under this Confidentiality Agreement may be inadequate and that the City shall, in the event of any such breach, be entitled to seek equitable relief (including without limitation preliminary and permanent injunctive relief and specific performance) in addition to all other remedies provided hereunder or available at law. DELIVERING EXCELLENCE & INNOVATION CITY OF FORT COLLINS Request for Proposal 8781 Financial Auditing Services Submitted by BKD, LLP Christopher J. Telli, CPA, CIA® // Partner 1801 California Street // Suite 2900 // Denver, CO 80202 Phone: 303.861.4545 August 10, 2018 ATTACHMENT 2 Our acceptance of this engagement is subject to completion of our normal client acceptance procedures. Upon acceptance, the actual terms of our engagement will be documented in a separate letter to be signed by you and us. The information provided in this proposal is intended for informational purposes only and may not be copied, used or modified, in whole or in part, without BKD’s prior written approval. All information in this proposal is as of May 31, 2017, unless otherwise noted. III. TRANSMITTAL LETTER ................................................... iv B. TECHNICAL PROPOSAL ................................................... 1 2. Independence................................................................................... 1 3. License to Practice in the State of Colorado .................................... 1 4. Firm Qualifications & Experience ..................................................... 2 5. Partner, Supervisory & Staff Qualifications & Experience ............... 3 6. Prior Engagements with the City of Fort Collins .............................. 7 7. Similar Engagements with Other Government Entities ................... 8 8. Specific Audit Approach ................................................................... 9 9. Identification of Anticipated Potential Audit Problems ................. 15 10. Report Format .............................................................................. 17 C. DOLLAR COST PROPOSAL ............................................ 28 1. Total All-Inclusive Maximum Price ................................................. 28 2. Rates by Partner, Specialist, Supervisory & Staff Level Times Hours Anticipated for Each ............................................................. 30 3. Out-of-Pocket Expenses Included in the Total All-Inclusive Maximum Price & Reimbursement Rates ...................................... 30 4. Rates for Additional Professional Services ..................................... 31 5. Manner of Payment ....................................................................... 31 APPENDIX .............................................................................. 32 Our Commitment to Sustainability ..................................................... 33 Proposer Guarantees .......................................................................... 34 Proposer Warranties ........................................................................... 38 Addenda .............................................................................................. 39 Future Negotiations ............................................................................ 40 AICPA Peer Review Letter ................................................................... 41 BKD Peer Review Report ..................................................................... 42 Unmatched Client Service ................................................................... 43 BKD Firm Profile .................................................................................. 44 BKD PRIDE Values ................................................................................ 45 iv III. TRANSMITTAL LETTER August 10, 2018 Mr. Gerry Paul Purchasing Director City of Fort Collins Purchasing Division 215 North Mason Street // Second Floor P.O. Box 580 Fort Collins, CO 80522 DEAR MR. PAUL: Those charged with governance in public sector entities are committed to protecting the resources provided by their constituents and being responsible stewards of both current and future resources. The quality of a government’s external audit firm is affirmation of this commitment to its constituents, bondholders, investment bankers, the Office of the State Auditor, Government Finance Officers Association (GFOA) and other readers of these financial statements. The City of Fort Collins (the City) needs to work with an experienced CPA and advisory firm that understands the complexities and industry challenges of governmental entities, including those providing innovative new services such as broadband. We know that quality, innovation and performance are a top priority for the City. This is evident by the City being awarded the Malcom Baldrige National Quality Award. This is an extremely impressive honor and exemplifies the City’s commitment to quality and performance. BKD, LLP believes our own Unmatched Client Service and PRIDE values will complement the City’s commitment in these areas. We understand you are seeking a Financial Statement Audit in Accordance with Government Auditing Standards and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance) for the years ending December 31, 2018 through 2022. Ultimately, you have to pick one firm to serve you. The key question from our perspective is: what then makes BKD the right choice?  Expertise: You will be served by skilled professionals who are experienced in your industry—you will not to need to train our personnel—that is our job.  Support: We encourage questions throughout the year—we want to quickly become familiar with your operations to help decrease the risk of adjustments or problems—a coordinated approach.  Local & National Depth: As one of the country’s largest CPA and advisory firms, we have the local and national resources to serve your needs and the experience of working with a diverse client base to effectively address the complex issues you may encounter.  Transition: We believe a smooth and efficient transition with little disruption to day-to-day operations is not only possible, but to be expected. Our goal is to simplify and help reduce transition time and costs with effective communication and our flexibility in using existing information. v  Timeliness: Using mutually agreed-upon dates and semiweekly or weekly status meetings with management, we have an excellent record for providing timely services to our clients. In fact, we are so committed to your deadlines that timeliness is embedded in our five standards of unmatched client service and commit to perform the work within the time period requested.  Excellence: BKD works closely with you on submitting your comprehensive annual financial report to GFOA, and our clients have an outstanding record of certificates with minimal comments.  Education: We host a complimentary annual conference (continuing professional education-eligible) for our clients’ available personnel as part of our value-added approach. We also offer a wide range of webinars and communications to help you stay informed of industry changes that can affect your financial reporting and compliance.  Value: We strive to bring value to our clients, beyond the audit process. We do this in the form of sharing best practice ideas and providing educational opportunities and year-round communications. In addition, we also use an experienced IT professional to review the control structure of your IT environment.  Commitment: Our governmental clients are important to our business—we will not abandon this practice segment as economic conditions change—we want to be the leading provider of governmental services both in Colorado and nationally. We believe our proposal outlines all you have requested and might need in your selection process, but would be happy to answer any questions you may have. We prefer to meet face to face with management or the selection committee whenever possible. BKD takes great pride in serving many of the most prestigious governmental clients in Colorado and nationwide and would be honored to serve the City. In addition, we work with hundreds of telecommunication clients nationally, including entities involved in broadband, telephone, wireless and other communication systems. We believe access to our telecommunications team could be valuable to the City as it moves forward with Fort Collins Connexion. This proposal highlights our firm’s guiding principles, our service approach and philosophy, and the quality of our people. While we believe this is very important information, the best evidence of the quality of our firm is what our clients think of our service, our people and our professionalism. Please call our references and we are convinced you will understand BKD’s commitment to unmatched client service. We believe our proposal will help you select our firm for timely, efficient and objective services delivered by experienced professionals. Our proposal is a firm and irrevocable offer for 60 days. We will call you soon to answer questions you may have about this proposal, or you may reach us at 303.861.4545 or by email as provided below. Sincerely, Christopher J. Telli, CPA, CIA® Anna L. Thigpen, CPA Partner Senior Manager ctelli@bkd.com athigpen@bkd.com 1 For the convenience of City of Fort Collins (the City), BKD, LLP has structured our proposal according to the requirements in your Request for Proposal (RFP). We believe our proposal will demonstrate our qualifications to serve the City with a Financial Statement Audit in Accordance with Government Auditing Standards and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance). 2. INDEPENDENCE The firm should provide an affirmative statement that is independent of the City of Fort Collins as defined by generally accepted auditing standards/the U.S. Government Accountability Office’s Government Auditing Standards (1994). The firm also should provide an affirmative statement that it is independent of all of the component units of the City of Fort Collins as defined by those same standards. The City of Fort Collins currently has one component unit, the Fort Collins Downtown Development Authority, whose budget and any issuance of debt requires approval of the Fort Collins’ City Council. BKD is independent with respect to the City, and your component units, as defined by the Code of Professional Conduct of the American Institute of CPAs (AICPA) and the United States Government Accountability Office’s Government Auditing Standards. We are not aware of any relationship that would impair our independence. The firm should also list and describe the firm’s (or proposed subcontractors’) professional relationships involving the City of Fort Collins or any of its component units or joint venture members 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. BKD has not had any known professional relationship with the City. We have provided audit services to Platte River Power Authority, a joint venture with the City, for the past five years. However, we do not believe any relationship exists that would constitute a conflict of interest relative to performing the proposed audit, as each engagement will be served by separate engagement teams. In addition, the firm shall give the City of Fort Collins written notice of any professional relationships entered into during the period of this agreement. BKD will provide written notice to the City should any professional relationships are entered into that would compromise our independence. 3. LICENSE TO PRACTICE IN THE STATE OF COLORADO An affirmative statement should be included that the firm and all assigned key professional staff are properly licensed to practice in the State of Colorado. BKD is properly licensed to practice public accounting in the state of Colorado. All key professionals who would be assigned to your engagement are properly registered/licensed to practice in the state of Colorado. B. TECHNICAL PROPOSAL “BKD’s personnel from staff to partner that I’ve worked with are very professional and consider the operations and timelines of the agency personnel in their planning. They are willing to discuss issues and accounting treatments in an open method while ensuring that the standards are met. The comments and recommendations are helpful and have assisted the city in making improvements.” Beth Machann City Controller 2 4. FIRM QUALIFICATIONS & 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.  FIRM SIZE BKD is one of the largest CPA and advisory firms in the United States. As of July 2018, we have 38 offices located in 17 states. Our approximately 2,650 CPAs, advisors and dedicated staff serve clients in all 50 states and clients with operations in more than 40 countries.  GOVERNMENTAL AUDIT STAFF SIZE BKD has approximately 130 professionals who spend more than 50 percent of their billable hours providing audit services to governmental entities.  LOCATION The City’s requested services will be provided by our Colorado offices in Denver and Colorado Springs. DENVER BKD, LLP 1801 California Street // Suite 2900 Denver, CO 80202 COLORADO SPRINGS BKD, LLP 111 South Tejon Street // Suite 800 Colorado Springs, CO 80903  NUMBER & NATURE OF STAFF We anticipate providing one partner, one managing director, one senior manager and one senior associate on a full-time basis and one managing director (concurring reviewer) on a part-time basis to complete the City’s audit. In addition, we anticipate providing two to three associates to complete the City’s audit. If the proposer is a joint venture or consortium, the qualifications of each firm comprising the joint venture or consortium should be separately identified and the firm that is to serve as the principal auditor should be noted, if applicable. BKD is not a joint venture or consortium. 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 government engagements. BKD is committed to providing quality audit services to our clients. We submit our work to external reviewers who challenge our approach and findings. We are proud of the findings from these reviews, which indicate our process works. Our report contained a rating of “Pass,” which is the best peer review rating available under the current peer review standards. A copy of our most recent AICPA peer review report is included in the Appendix. Our peer review included inspection of engagements performed under Government Auditing Standards. 3 The firm 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 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. From time to time, selected BKD audit engagements are subject to desk review by federal or other regulators. All such reviews during the past three years have shown our work to be generally satisfactory, and no disciplinary or other administrative proceedings have resulted from those reviews. In December 2014, BKD, LLP consented, without admitting or denying the findings, to a U.S. Securities and Exchange Commission (SEC) Order Instituting Public Administrative and Cease-and-Desist Proceedings (“Order”). The Order was based upon the SEC’s findings that BKD had violated the SEC’s independence rules by participating in drafting client financial statements in connection with broker-dealer audits from 2010 through 2012. The remedies provided for in the Order included a small fine. In November 2016, BKD reached a related settlement with the California Board of Accountancy. None of these proceedings affect BKD’s ability to serve clients. 5. PARTNER, SUPERVISORY & STAFF QUALIFICATIONS & EXPERIENCE Identify the principal supervisory and management staff, including engagement partners, managers, other supervisors and specialists, who would be assigned to the engagement. Indicate whether each such person is registered or licensed to practice as a certified public accountant in the State of Colorado. Provide information on the government auditing experience of each person, including information on relevant continuing professional education for the past three (3) 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. The most critical factor in providing high-quality service is choosing your engagement team. We take team selection seriously and have the appropriate team of advisors to meet your needs over the term of the engagement. As previously stated, BKD is properly licensed to practice public accounting in the state of Colorado. All key professionals who would be assigned to your engagement are properly registered/licensed to practice in the state of Colorado.  ENGAGEMENT TEAM ORGANIZATIONAL CHART Anna L. Thigpen, CPA Senior Manager Audit Senior Manager Rhonda R. Plantenga, CISA, CRISC Managing Director IT Managing Director Christopher J. Telli, CPA, CIA® Partner Lead Engagement Partner Jodie L. Cates, CPA Managing Director Concurring Reviewer Michael Meryhew, CPA Senior Associate II Audit In-Charge 4  ENGAGEMENT TEAM EXPERIENCE Christopher J. Telli, CPA, CIA® Partner Chris is a regional industry leader for BKD National Public Sector Group and is a member of the firm’s Not-for-Profit, Higher Education & Public Sector Committee. He has more than 18 years of experience in accounting and auditing, including three years as an internal auditor for a large not-for-profit organization. Chris assists governmental entities with audit, compliance and general business consulting and works with a variety of governmental entities, including municipalities, state agencies, airports, school districts, higher education institutions and public authorities. He routinely writes and speaks on a variety of governmental and not-for-profit accounting, audit and compliance issues and has served as an instructor for BKD internal seminars and trainings. He serves on the BKD Public Sector Center of Excellence, an internal committee of public sector leaders from across the firm who deliberate a variety of issues important to governments, and has served on both peer review and internal inspection teams. Chris is a member of the American Institute of CPAs, Colorado Society of CPAs (COCPA), Government Finance Officers Association of the United States and Canada (GFOA), Association of Government Accountants, The Institute of Internal Auditors and Association of Certified Fraud Examiners, Inc. He is a current board member of the COCPA, a former co-chair of the Governmental Issues Forum and previously served on the planning committee for the society’s Governmental Conference. Chris also is currently an advisor to the GFOA Committee on Accounting, Auditing, and Financial Reporting. He is active in the community and is the immediate past chair for the American Red Cross of Southeastern Colorado, and still serves on the board. Chris is a summa cum laude graduate of Regis University, Colorado Springs, Colorado, with a B.S. degree in accounting, and University of Colorado, Colorado Springs, with an M.B.A. degree in finance. He also holds the Certified Internal Auditor® (CIA® ) designation. He has completed approximately 207.5 hours of continuing professional education (CPE) in the last three years. Jodie L. Cates, CPA Managing Director Jodie has more than 25 years of governmental accounting and auditing experience, including four years with a local government subject to Single Audit requirements. She is a member of BKD National Public Sector Group, dedicating the majority of her time to the governmental practice. She provides audit and other advisory services to cities and counties, school districts, charter schools, utilities, state agencies, colleges and universities and various tax-exempt organizations. Her areas of expertise include compliance and controls for Single Audits of federal grant awards and implementing new accounting standards of the Governmental Accounting Standards Board. She also is very familiar with the Government Finance Officers Association (GFOA) Certification Program for Comprehensive Annual Financial Reports (CAFR). Jodie has conducted presentations for the Colorado GFOA and internal and external BKD seminars and has served on various BKD governmental committees and internal inspection teams. She is a member of the American Institute of CPAs, Colorado Society of CPAs and Colorado GFOA. Jodie is active in her community, serving as treasurer for various organizations. Jodie is a 1991 graduate of Oklahoma State University, Stillwater, with a B.S. degree in business administration. She has completed approximately 165.5 hours of CPE in the last three years. 5 Rhonda R. Plantenga, CISA, CRISC Managing Director Rhonda is a member of BKD’s IT Risk Services division. She has more than 20 years of experience helping governmental entities and has both public practice and industry experience. Her expertise includes IT risk services, regulatory compliance, System and Organization Controls (SOC) reports/SSAE 18 reviews and general IT auditing. She has been involved with regulatory governance, compliance and control issues, implemented risk-based approaches to identify and protect key applications/data and has performed and managed IT general control reviews and SOC/SSAE 16 reviews. Rhonda is a member of the American Institute of CPAs and ISACA® . She has earned numerous certifications, including Certified Information Systems Auditor (CISA), Certified in Risk and Information Systems Control (CRISC) and ITIL Foundation. She is a graduate of University of Nebraska–Lincoln, with a B.S. degree in finance and management, and a graduate of University of Missouri, Kansas City, with an M.S. degree in accounting with a concentration in accounting information systems. Rhonda has completed approximately 226.5 hours of CPE in the last three years. Anna L. Thigpen, CPA Senior Manager Anna has more than 10 years of governmental accounting and auditing experience, spending the majority of her time in the public sector practice. As a member of BKD National Public Sector Group, she provides audit and attest services to a wide variety of governmental clients, including cities and counties, school districts, charter schools, library districts, state departments and utility organizations. As a senior manager, Anna is responsible for overseeing and reviewing all audit phases, including planning, risk assessment and reporting. She has extensive knowledge in Single Audit compliance and helps clients navigate the complex requirements of federal guidelines under Uniform Guidance. Anna currently serves on the Town of Firestone Finance Committee. In addition, she has served on the BKD Colorado Foundation Committee and Engagement Council and was a participant in the 2016–2017 Leadership Weld County program. Throughout Anna’s career she has presented on a variety of accounting topics at BKD’s governmental seminars, Colorado Government Finance Officers Association (CGFOA), the Colorado Department of Education’s Charter School Program’s Finance Seminar, as well as various internal trainings. Anna is a member of the American Institute of CPAs, Colorado Society of CPAs and CGFOA. She is a 2007 graduate of University of Northern Colorado, Greeley, with a B.S. degree in business with an emphasis in accounting. Anna has completed approximately 144.5 hours of CPE in the last three years. Michael Meryhew, CPA Senior Associate II Mike has more than four years of experience in the public accounting industry. He provides audit services for a variety of public sector clients, including municipalities, airports, state agencies and authorities. As an audit in-charge, Mike leads the client engagement process, including supervising the audit team, managing deadlines and reviewing audit workpapers. Mike is a graduate of Jon M. Huntsman School of Business, Utah State University, Logan, with a B.S. degree in accounting and an M.Acc. degree. He has completed approximately 216 hours of CPE in the last three years. 6  CONTINUING PROFESSIONAL EDUCATION Our audit professionals are required to receive at least 120 hours of CPE every three years. For auditors involved with audits performed under Government Auditing Standards, this education includes the hours required to comply with Government Auditing Standards Yellow Book guidance. All individuals, including specialists involved in performing fieldwork on Government Auditing Standards audits, are required to obtain at least 24 hours of CPE every two years in subjects directly related to governmental auditing or the governmental environment. In addition, engagement team members responsible for planning, directing or reporting on Government Auditing Standards audits who spend more than 20 percent of their time performing Government Auditing Standards audits also are required to complete a minimum of 80 hours of CPE every two years that directly enhances their professional proficiency to perform audits. BKD offers an internal industry update seminar for managers through partners, as well as a seminar for our in-charge level employees. These seminars include auditing and accounting issues that are specific to governments, including Government Auditing Standards, Single Audits and accounting standards for governmental financial reporting. BKD professionals also receive additional training from external sources. RECOGNIZED LEARNING & DEVELOPMENT Since 2014, BKD has been ranked among Training magazine’s Training Top 125. We also have received Chief Learning Officer magazine’s LearningElite award since 2016, including a Gold- level recognition for 2018. These programs rank an organization’s excellence in employer- sponsored training and recognize outstanding outcomes in learning and development.  STAFF CONTINUITY Whenever possible, we keep a consistent engagement team for our clients. This helps reduce the learning curve and saves the time, frustration and disruption of dealing with new advisors unfamiliar with their organization. Past experience is a primary determinant for assigning professionals to engagements, and we will assign individuals who are experienced in working with public sector organizations for the City’s engagement. Though it is impossible for any firm to know the future career paths of its professionals, many of our clients maintain the same underlying BKD engagement team for years. The proposer should identify the extent to which staff to be assigned to the audit reflect the City of Fort Collins’s commitment to Affirmative Action. It’s not just about the law. While many organizations, including BKD, have a policy to comply with federal, state and local laws and regulations related to U.S. Equal Employment Opportunity (EEOC), we don’t stop there. We believe an EEOC policy that prohibits discrimination in employment on the basis of age, race, color, sex, sexual orientation, gender identity, national origin, religion, genetic information, disability, protected veteran status and other protected classifications is crucial to building a diverse workplace where each individual knows they are valued. We strive to move beyond the compliance function of our EEOC policy and embrace the reason these laws were created in the first place—to help create a work environment that offers all employees equal opportunities. We work diligently toward this goal every day, because having an inclusive culture doesn’t just allow us to attract the talent we need to thrive; it benefits our clients by bringing a broad perspective to their services. BKD’S SKY INITIATIVE SKY is a firmwide initiative to emphasize and strengthen diversity and inclusion in our firm. Focused on attracting, retaining and developing women leaders, SKY’s goal is to identify and remove cultural barriers and biases that could otherwise prevent BKDers from maximizing their potential. 7 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 of Fort Collins. However, in either case, the City of Fort Collins retains the right to approve or reject replacements. Consultants and firm specialists mentioned in response to this request for proposal can only be changed with the express prior written permission of the City of Fort Collins, which 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. In the event we are required to make a change to any key personnel assigned to your engagement, we will discuss this with you to explain the circumstances and proposed change. Your proposed lead engagement partner, Chris Telli, will be coordinating personnel changes. We generally do not remove key personnel from an audit once it has begun, but occasionally employee turnover or other events beyond our control require such a change. If a personnel change is required, we are confident we can provide a qualified replacement to complete your audit with limited interruption. We understand engagement team members, consultants and firm specialists mentioned in our response to this RFP can only be changed with the prior express written permission of the City, which retains the right to approve or reject replacements. 6. PRIOR ENGAGEMENTS WITH THE CITY OF FORT COLLINS List separately all engagements within the last five years, ranked on the basis of total staff hours, for the City of Fort Collins by type of engagement (i.e., management advisory services, other). 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. As previously mentioned, BKD has not had any prior professional relationship with the City. “BKD has been the best accounting firm I have used– helpful, reliable and responsive. They are terrific at facilitating a schedule that allows our audit to be completed within the established timelines and commitments.” Cherie Sanchez Accounting Manager City of Westminster, Colorado 8 7. 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 five 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. Our clients are our best ambassadors, and we encourage you to contact them about their satisfaction with our services. The following clients have consented to discussing BKD’s services and service delivery with you at your convenience. City and County of Denver Scope of Work: Financial Statement Audit, Standalone Audit of Airport System, Single Audit & Passenger Facility Charge Audit Date: 2006 to Present Engagement Partner/Managing Director: Christopher Telli Total Hours: 4,000 Ms. Beth Machann Controller 720.913.5515 City of Aurora Scope of Work: Financial Statement Audit, Single Audit & Agreed-Upon Procedures for the Scientific Cultural Facilities District Date: 2006 to Present Engagement Partner/Managing Director: Christopher Telli Total Hours: 1,010 Ms. Terri Vasquez, CPA, CPFO Director of Finance 303.739.7780 City of Arvada Scope of Work: Financial Statement Audit (City, Arvada Urban Renewal Authority, & Ralston House), Single Audit & Agreed-Upon Procedures for the U.S. Department of Housing & Urban Development’s Real Estate Assessment Center Date: 2013 to Present Engagement Partner/Managing Director: Jodie Cates Total Hours: 640 Mr. Bryan Archer Director of Finance 720.898.7123 City of Westminster Scope of Work: Financial Statement Audit & Single Audit Date: 2011 to Present Engagement Partner/Managing Director: Jodie Cates Total Hours: 570 Ms. Tammy Hitchens Finance Director 303.658.2036 Platte River Power Authority Scope of Work: Financial Statement Audit Date: 2006 to Present Engagement Partner/Managing Director: Jodie Cates Total Hours: 370 Mr. Dave Smalley Deputy General Manager/Chief Financial Officer 970.226.4000 9 8. 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 City of Fort Collins’s budget and related materials, organizational charts, manuals and programs, and financial and other management information systems.  AUDIT QUALITY STRUCTURE Our audit practice evaluates risk characteristics to focus key resources on technical matters. Our risk analysis is tied to team member experience in the industry or subject matter area, and audit engagement leaders are assigned specific responsibilities. Our goal is to help ensure talented and experienced personnel are addressing our clients’ challenging needs. Structurally, BKD audit engagements are subject to quality review by a professional not otherwise involved in the details of a client relationship. This layer allows for a fresh perspective on each engagement. In addition to engagement-based leadership, our professional practices team is vital to our results. Office-based accounting and auditing directors form the first line of support for engagement teams and often serve as quality reviewers. Talented personnel are recruited for these positions based on the strength of their technical ability. Accounting and auditing directors are supported through a firmwide network of similar personnel and with specific regional and national training and guidance.  FINANCIAL STATEMENT AUDIT IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS & THE UNIFORM GUIDANCE What is an Audit? Auditing standards set the technical requirements for our process, culminating with the expression of our opinion on the presentation of your financial statements. Our audit will be performed in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. What is an Audit Experience? While auditor selection should start with evaluating technical competence, it also should extend to your expectations for a service experience. Your audit experience includes how your engagement is managed, how you and your team are treated, the quality and timeliness of communication you receive and your confidence in the results and guidance you receive. We want you to consider our philosophy around independence, integrity and quality, along with our commitment to unmatched client service and the strength of your proposed engagement team. THE BKD DIFFERENCES THAT MATTER People Our people are key components of what differentiates a BKD audit. Through intentional training and our firm culture, our teams integrate a commitment to quality with an appreciation for client needs and expectations. We also bring relevant industry experience, which means you will not be required to train our staff. Leadership The engagement executive managing your audit will maintain a high level of involvement with the City by delegating appropriate tasks to other audit team members as needed while remaining engaged with you and the audit team. Our engagement executives are on site and participate in the supervision and delivery of your audit. 10 Communication Challenging matters or simple misunderstandings can arise, and they shouldn’t be ignored. While our responsibility is to issue an appropriate opinion on your financial statements, it is important for us to help keep your team informed of issues as they occur and recommend the appropriate solution. Our philosophy is to be courteous and professional, communicate timely and make reasonable requests. We are committed to treating you and your team with openness, candor and respect. Technology Technology plays a growing role in our audit as we adopt new tools to enhance our effectiveness and efficiency. We have invested heavily in improving dynamic workflows and increasing our audit data analytics capabilities. Though we use traditional tools such as Excel, we also delve deeper into analytic tools with ACL, unstructured data with Kira and artificial intelligence and trend analysis with MindBridge. These technologies, combined with our secure portal, help improve our results, enhance your experience and increase the insight we can provide. ONBOARDING & PROJECT MANAGEMENT Your BKD audit experience starts as soon as you select us. Our priorities include building rapport with your team, developing a deeper understanding of your operations and collaborating with you on the design and expectations of our service relationship. These efforts are part of the BKD Smooth Transition™ approach. The proposal process has provided us with the basics of your organization, but learning more will help us serve you better. If not already completed, we will finish the details of client acceptance to confirm what we have learned and verify confidential information not already obtained, such as litigation history or other sensitive matters. We will address various elements of project management with you, including how you will use BKDconnect Client Sites, our secure portal, to exchange and track information, the key dates of our processes and refinements to the details discussed in this proposal. We will schedule the professionals outlined in this proposal and coordinate with your team on details, such as timing of visits to your locations and discussions with your management. Proposed Timeline Engagement Phase Timing Planning & Interim Procedures, Including Predecessor Auditor Procedures November/December Single Audit November/December Final Fieldwork April/May Draft Audit Deliverables No Later Than June 1 Issuance of Final Audit Deliverables No Later Than June 15 Presentation to City Council Finance Committee June/July EXECUTING THE AUDIT Once we have established our overall process and communication plans with you, the detailed work can begin. Key elements of that work include: Risk Assessment We will identify and assess risks of material misstatement in your financial statements, including those from potential fraud. Our work is supported by building a strong understanding of your business environment through documents you provide and by gathering information through interviews and tests for significant transaction cycles. 11 Audit Design Based on risks identified, we will design an audit approach specific to your organization. This tailoring takes into consideration the uniqueness of your operations, the design of internal controls you have implemented and the nature of financial statement amounts and disclosures. We consider whether matters are truly important (materiality), as well as obtain input about concerns from management and the finance committee to design the tests we will perform. Gathering Evidence Once the plan is complete, we will execute the audit through a combination of on- and off-site work performed in accordance with the agreed-upon timeline. Reviewing the Work Critical to our process is a review of the team’s work by our engagement executive, as well as a quality review by another executive who is independent from the detailed work. The quality review is designed to improve our deliverable by providing a fresh perspective and reinforcing quality. Sharing Our Results We base our audit opinion on the evidence gathered and then communicate our findings. Professional standards drive the content of our opinion and the required communication about any deficiencies and other items we may identify during the audit. Beyond these requirements, we share results formally through our letters and presentations to management/city council/the finance committee, as well as opportunities for improvement through conversations during the audit process. COMPLIANCE AUDIT IN ACCORDANCE WITH THE UNIFORM GUIDANCE BKD performs hundreds of Single Audits annually, focusing on two objectives: first, an audit of your financial statements and reporting on the Schedule of Expenditures of Federal Awards (SEFA) in accordance with Government Auditing Standards, and second, a compliance audit for federal awards expended during the fiscal year in accordance with the Uniform Guidance. At least one-third of our not-for-profit and governmental clients receive federal funding. Our extensive experience with compliance testing in accordance with the Office of Management and Budget (OMB) requirements can help provide the City with a Single Audit performed properly and submitted on time. Our Approach During our audit procedures of federal award programs, we do not simply look for findings to report. We look for opportunities to advise you of more efficient ways to comply with federal regulations to reduce the risks of sanctions or reduced funding. BKD has developed contacts at federal agencies and has been able to work cooperatively with these agencies to help clients resolve or avoid issues. Entities subject to the Uniform Guidance and Government Auditing Standards will benefit from BKD’s specially designed audit programs, checklists and database of federal audit programs. Identification and testing of your federal programs will be performed primarily during interim fieldwork, which will typically be performed before your fiscal year-end. We have found this to be the most efficient manner in which to perform our audit services when the additional Uniform Guidance requirements are present. Training Requirements for Single Auditors The City can have confidence in BKD auditors’ experience in testing federal funding subject to the Uniform Guidance. Our audit professionals are required to receive at least 120 hours of CPE every three years, and for auditors involved with audits performed under Government Auditing Standards, this education includes the hours required to comply with Government Auditing Standards Yellow Book guidance. Staff members attend a series of core audit and accounting courses over the first four years of their careers. Staff subsequently receive additional training on accounting and auditing for the not-for-profit and governmental environment. 12  GENERAL IT SECURITY REVIEW Our evaluation of IT controls starts with a top-down, risk-based approach. By leveraging BKD’s expertise in IT review, security and risk management, clients get a fair, efficient and quality evaluation of their IT infrastructure and processes as they relate to core business functions. Through our experience in a wide variety of industries and our understanding of both medium- and large-sized companies, we have the flexibility to adjust to our clients’ ever- changing needs. BKD uses industry standard frameworks, such as COBIT and COSO, along with other established methodologies, to align specific IT processes with industry best practices. Evaluating the control environment with the client’s IT processes in mind, BKD makes it a priority to consider the big picture. As risk managers, we strive to identify the critical elements affecting our clients’ IT infrastructure and operations and to build a professional working relationship based upon trust and working toward a goal of security, sustainability and success. A NETWORK OF EXPERIENCED IT RISK SERVICES ADVISORS BKD’s IT Risk Services (ITRS) division comprises professionals located in BKD offices across the country. This highly specialized team provides IT reviews, risk assessments, cybersecurity, business continuity planning, penetration testing, social engineering and Sarbanes-Oxley Act of 2002 (SOX) consulting services. Our experienced, certified consultants can help the City understand the various risks and industry-specific regulations that affect you, as well as identify the likelihood and occurrence of risk within your business.  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 Proposed Audit Segmentation Estimated Hours Staff Level Risk assessment procedures, including meetings with officials & staff, preliminary analytics, review minutes & design of audit procedures based on assessed risks 65 All Professionals Document & evaluate internal controls, including IT 100 Senior Manager, Manager & Associate(s) Substantive procedures & analytical review techniques 315 All Professionals Review prepared comprehensive annual financial report (CAFR) & presentation to the finance committee 65 All Professionals Single Audit testing 90 Senior Manager, Manager & Associate(s) Supervision, review & technical assistance 75 Partner/ Managing Director/ Senior Manager/Manager 13 c. Sample size and the extent to which statistical sampling is to be used in the engagement Although it is not possible to set absolute rules for identifying sample sizes, we apply our professional judgment in identifying the appropriate sample size. The objective is to test the population to obtain reasonable confidence that the test objectives have been met. Sample sizes are controlled by the following considerations:  Tolerable error (precision) – as the expected monetary conclusion becomes more critical, sample size should increase to tighten the range of the extrapolated estimate  Significance of the account to the financial statements – as the significance increases, sample size should increase  Assessment of internal control risk – as assessed risk is reduced, sample size for substantive tests should decrease  Extent of other substantive audit procedures related to same audit objective (tests of detail, as well as analytical review) – as the extent of other procedures increase, sample size should decrease  Frequency and magnitude of expected errors – as the frequency and magnitude of expected errors increase, sample size should increase  The size of the population to be sampled and whether a sample is appropriate We anticipate using certain data extraction tools, such as ACL, in selecting and testing samples or complete populations, where appropriate. These effective tools allow us to efficiently test larger amounts of data. d. Extent of use of EDP software in the engagement Technology should do more than just execute an audit, which is why BKD continues to invest in significant technological enhancements. Our aim is to make the service process smoother and improve the client experience. We’re going beyond simply adapting to an electronic environment––we’re deploying tools that harness data analytics, artificial intelligence and powerful benchmarking solutions, all while emphasizing the importance of security and confidentiality. UNSTRUCTURED DATA ANALYSIS Kira is a data analysis platform that can help accelerate data organization and improve our ability to identify issues when assessing a large volume of documents. Beyond optical character recognition, Kira allows us to quickly and effectively process contracts, leases, debt agreements and other documents to extract relevant information to address disclosures and risk areas sooner. DATA ANALYTICS Our data analytics capabilities continue to expand. While common platforms such as Excel provide some level of data query and investigation, we train our personnel on more advanced tools. ACL is one such tool that helps normalize various types of reports and perform sophisticated analysis on the resulting data. We are piloting the use of artificial intelligence through MindBridge, an even more advanced application that allows us to upload multiple years of general ledger data. Using MindBridge, we can run analytics on 100 percent of the City’s transaction detail to detect potential anomalies and patterns that indicate risk. IMPROVING BUSINESS PROCESS WORKFLOWS While our industry-tailored forms have been an important differentiator in our practice thus far, we’re now moving to more sophisticated and dynamic checklists and workflows. We believe this new approach will increase efficiency and improve the data gathering experience for all parties. This evolution is enabling greater use of electronic signatures for contracts and will be integral to improved data sharing and transparency between BKD and our clients. BKDCONNECT CLIENT SITES We view project management as having multiple elements, with communication, timeliness and facilitating efficient exchanging of information among the most key. BKDconnect Client Sites is an innovative client portal designed to help address the challenges financial engagements present and conveniently connect you with our advisors. 14 BKDconnect Client Sites can make it easier to:  View and manage information about your engagement or project  Share documents and files with your BKD advisors and project teams  Organize documents and files for retrieval  Assign tasks to your team and receive requests for information from BKD  Track the progress of tasks toward completion  Access our award-winning, industry-specific articles, webinars, videos and more e. Type and extent of analytical procedures to be used in the engagement Analytical procedures involve auditing a material assertion or account balance by investigating its relationship to an expectation such as other accounts, historical trends or other related measures. BKD recognizes that stronger analytical procedures can help reduce or eliminate other substantive procedures that are usually more time-consuming. We would typically consider:  Ratio analysis – comparing relationships among account balances, ratios, nonfinancial data, budgets or industry averages  Reasonableness tests – using financial and/or nonfinancial data to develop an expectation of an account balance Successfully using analytical procedures requires auditors to ask the questions:  What is the risk of material misstatement?  How would we find those misstatements?  Have I gathered enough audit evidence? When analytical procedures provide sufficient evidence, other substantive audit procedures should not be necessary. If analytical procedures are not sufficient, some combination of analytical and substantive procedures is likely to be the preferred approach. f. Approach to be taken to gain and document an understanding of the City of Fort Collins’s internal control structure Understanding your operations and the design of your controls helps create an effective and efficient audit process. When performing our first audit, this effort is more substantial. There are several data sources we intend to use, including your prior auditor. Our first objective is to identify those resources that might advance our understanding without extra effort on your part. If you have documentation of your organizational structure, control environment (including technology) and the controls you have in place, along with any testing of those controls, we can often just read and supplement that information as needed. Even when clients have effective controls, their documentation is often limited, so additional effort may be required. When starting with limited documentation, we will:  Perform a risk assessment using your financial statements to identify the relevant areas for documenting our understanding and related testing. While we want to have an understanding of your operations, it isn’t necessary for us to document every control, particularly when a control is not related to a significant audit area.  Ask you to complete industry-specific questionnaires that summarize your control structure. You might complete these forms directly or we may interview you to guide the process, or some combination of both. This process includes understanding your information system and related controls.  Identify who performs or can perform control activities. We can use industry-based assignment of duties forms to capture those assignments.  Assess and/or identify key controls you have in place for significant areas of risk. We will look for gaps in your design and potential overlapping assignments of duties that could or should be segregated.  Perform limited tests of design effectiveness of control activities. These tests will help us evaluate whether our documentation matches the activities occurring. 15  Consider extended tests of controls. In some cases, your information may be so complex or voluminous that extended control testing is needed to rely on your control and reduce other substantive testing in our audit.  Summarize recommendations for your consideration. For minor deficiencies or suggestions, we may discuss changes during our audit. For others, including significant deficiencies or material weaknesses, we will prepare written recommendations for your consideration.  In periods following our first audit, the majority of our understanding and documentation will be complete. Going forward, we focus on changes that have occurred and continue performing tests of design effectiveness or expanded testing to evaluate whether control design has remained the same. g. Approach to be taken in determining laws and regulations that will be subject to audit test work Identification of applicable laws and regulations will begin with an inquiry of the City as to your understanding of applicable laws and regulations. In addition, our reviews of various documents, indentures, agreements, etc., will be designed to further assess that all known laws and regulations are encompassed within the scope of the audit. We are experienced in auditing public sector entities in the state of Colorado and are familiar with the laws and regulatory environment in which you operate. h. Approach to be taken in drawing audit samples for purposes of tests of compliance The sampling approach anticipated to be used in connection with the various areas of the audit is judgmental in nature. The size and nature of the population being tested, along with the assessed risk of the associated financial statement line item affected, will determine the size and approach for selecting a sample. All sample sizes will be sufficient to meet all requirements of the various state and federal laws and regulations. We anticipate using data extraction tools, such as ACL’s data extraction and analysis software, in certain situations in selecting and testing samples or complete populations, where appropriate. 9. IDENTIFICATION OF ANTICIPATED POTENTIAL AUDIT PROBLEMS The proposal should identify and describe any anticipated potential audit problems, the firm’s approach to resolving these problem and any special assistance that will be requested from the City of Fort Collins.  ACCOUNTING ISSUES While we do not anticipate significant audit problems, we understand the importance of good channels of communication with key engagement team members to facilitate the discussion of issues that may arise. Once we commence final fieldwork, we would ask for management’s participation in weekly progress meetings that would facilitate such communication and allow for timely identification and response to problems that may be encountered. When accounting issues arise, e.g., potential errors or interpretation differences, communication becomes even more important. Our communication process essentially consists of the following actions:  Putting the Moose on the Table – We will make you aware of the potential issue, even if we may not yet have all the facts to result in a conclusion.  Understanding Your Analysis First – We will listen to your analysis of the facts that led to the accounting decision or disclosures considered.  Seeking Help – In addition to the immediate team’s research, we may reach out to others with specialized industry or service experience to provide guidance and may consult with regional and national resources to evaluate the issue as required.  Finding the Appropriate Resolution – We will share the facts as we have them, the guidance we have used and the conclusions we think are appropriate for resolution. Your engagement executive is responsible for communicating accounting and audit-related issues with management and will take the lead on any significant accounting matters. 16  OUR EXPECTATIONS OF YOUR STAFF In working with similar clients, we have developed efficient approaches that aim to avoid wasted effort. Your participation helps control costs, reduce unnecessary disruptions and meet deadlines. We need your team to maintain records in good condition, provide the necessary schedules and cooperate with our audit team. Most clients routinely prepare these records and schedules during their normal monthly or annual closing process. Specific assistance from your personnel may include:  Preparing a complete and accurate general ledger trial balance by account, to which very few adjustments are needed  Preparing accurate audit schedules to support all significant balance sheet and certain other accounts  Responding to auditor inquiries  Preparing confirmation and other letters  Pulling selected invoices and other documents from files  Helping to resolve any differences or exceptions noted  Completing documentation of internal controls  Completing financial statements and footnote information We will provide a list of the needed schedules well in advance of any deadlines, as well as spreadsheet templates for many of these schedules. We also will meet with your staff, as needed, to help them clearly understand what we need. 17 10. REPORT FORMAT The proposal should include sample formats for required reports. 18 19 20 21 22 23 24 25 26 27 32 APPENDIX 33 OUR COMMITMENT TO SUSTAINABILITY For the City, sustainability and environmental awareness lie at the heart of your core values. These are not just idealistic concepts for the future, they are the way you do business today. BKD appreciates and embraces efforts to protect the environment and has undergone a number of specific steps to do our part. When relocating our National Office in Springfield, Missouri, we made a conscious decision to select a developer and builder who would construct an environmentally responsible building. The Opus Corporation, specializing in sustainable development, designed and constructed the building with the express purpose of achieving Leadership in Energy and Environmental Design (LEED® ) Certification, a process coordinated through the United States Green Building Council (USGBC). In October 2010, BKD was awarded the USGBC Gold Certificate. Reasons cited for the award include our efforts during construction to lower operating costs, reduce waste in landfills, conserve water and energy and reduce harmful greenhouse emissions. In addition, more than 75 percent of construction wastes were salvaged or recycled. Our green building includes many environmentally focused features, such as low-flow plumbing fixtures, energy-efficient heating and air systems, water-efficient landscaping and a white roof designed to reduce urban heat. Our green efforts that directly benefit our professionals are apparent in our internal recycling programs, bicycle storage and changing rooms. In addition, your BKD audit engagement will be conducted in a paperless environment. That means, to the extent possible, audit documentation will be obtained and maintained electronically. 34 PROPOSER GUARANTEES 35  BKD PARTNERS & PRINCIPALS As of July 2018, BKD’s partners and principals include:  A.J. Pearl, CPA  Abraham J. Cole, CPA  Adam B. Zieren, CPA  Adam W. Smith, CPA  Allan M. Blum, CPA  Andrew A. Rinzel, CPA  Andrew D. Klemens, CPA  Andrew M. Richards, CPA  Andrew M. Williams, CPA  Angela M. Miratsky, CPA, CHFP® , FHFMA  Angela R. Morelock, CPA, ABV, CFE, CFF  Ann M. King White, CPA  Ann M. Puckett, CPA  Anna Shaferova, CPA  Anthony D. Kruse, CPA  Anthony J. Balistreri, CPA  Anthony J. Pasternak, CPA  Anthony M. Perazzo, CPA  Anthony M. Spratte, CPA  Ari Rothkopf, CPA  Barry Adamson, CPA  Barry L. Davis, CPA  Benjamin D. Howard, CPA  Bradley K. Brotherton, CPA  Bradley R. Monahan, CPA  Brandon L. Shirley, CPA  Brian D. Matlock, CPA  Brian D. Todd, CPA  Brian D. West, CPA  Brian J. Mischel, CPA  Brian P. Hickman, CPA  Brian T. Mall, CPA  Bruce L. Meister, CPA  Bryan B. Bodnar, CPA  Bryan J. Wright, CPA  Bryant B Macaraeg, CPA  C. Travis Webb, CPA  Camille B. Lockhart, CPA  Cara L. Benningfield, CPA  Cary D. Hines, CPA  Chad E. Gassen, CPA  Chad M. Garber, CPA  Chad M. Moore, CPA  Chad W. Back  Cheryl A. Clauson, CPA  Chris J. Lindner, CPA, CGFM®  Chris M. Van Long, CPA  Christopher Dalton, CPA  Christopher J. Doolittle, CPA  Christopher J. Kramer, CPA  Christopher J. Murphy, CPA  Christopher J. Telli, CPA  Christopher M. Linck, CPA 36  Gregory D. Rexing, CPA  Gregory E. Usry, CPA  Gregory S. Sissel, CPA  H. Bryan Callahan, CPA, CFF, CFE, CVA  Harold Gelernter, CPA  Holly M. Pantzer, CPA  Isabel P-D Santner, CPA  J. Christopher Clark, CPA  J. Corey Jennings, CPA  J. Mark Lundy, CPA  J. Randy Vogel, CPA  J. Scott Golan, CPA  J. Scotty White, CPA  Jack E. Thurman, CIMA®  Jacob A. Beniawski, CPA  James E. Creeden, CPA  James M. Anderson, CPA  James P. Regnier, CPA  Jason A. Myers, CPA  Jason J. Barb, CPA, CHFP® , FHFMA  Jason L. Rader, CPA  Jason W. Bombeck, CPA  Jay A. Hargis, CPA  Jaye L. Waynick, CPA  Jean M. Nyberg, CPA  Jeffrey A. Layman, CFA®  Jeffrey E. Allen, CPA  Jeffrey E. Beach, CPA, CVA  Jeffrey M. Ronsse, CPA  Jeffrey R. Naig, CPA  Jeffrey T. Conrad, CPA, JD  Jeffrey T. Deane, CPA  Jeremy D. Carnahan, CPA  Jerry M. Goolsby, CPA  Jerry T. Henderson, CPA  Jesse A. Frommer, CPA  Jesse L. Palmer, CPA  Jim P. Still, CPA  Jody A. Gauthier, CPA  Joel R. Dziedzic, CPA, CIT  John D. Schlagenhauf, CPA  John E. Bourquard  John E. Curry, CPA  John M. Kmetz, CPA  John M. Mather, CPA  John R. Bruce, CPA  John W. Steffes, CPA  Jon A. Unroe, CPA  Jon M. McDowell, CPA  Jon P. Redelsperger, CPA  Jonathan D. Harris, CPA  Joseph D. Meyer, CPA  Joseph E. Roos, CPA, CFE  Joseph M. Watt, CPA  Joseph P. Vande Bosche, CPA 37  Michelle M. Brekken, CPA  Monica Fraczek, CPA  Nancy E. Ozuna, CPA  Olivia B. Host, CPA  Pamala D. Renninger, CPA  Patricia Quintana-Perron, CPA  Paul M. Koster, CPA  Peder R. Johnson, CPA  Peter J. Kern, CPA  Preston G. “Tracy” Young III, CPA  Rachel R. Dwiggins, CPA  Randy A. Biernat, CPA, ABV  Randy D. Oberdiek, CPA  Randy F. Throener, CPA  Richard T. Wittgren, CPA  Rick L. Klahsen, CPA  Robert A. Wedding, CPA  Robert D. MaCoy, CPA  Robert E. Opitz, CPA  Robert E. Purdy, CPA, CTFA  Robert J. Pruitt, CPA  Robert J. Wagner II, CPA  Robert M. Swartz, CPA  Robert T. Johnson, CPA  Robert W. Brandenburg, CPA, FHFMA  Robert W. Conner, CPA  Robyn A. Devore, CPA  Russell L. Romanelli, CPA  Ryan S. Reiff, CPA, CHFP®  S. Todd Burchett, CPA, ABV, ASA, CFF, CFE  Scott A. Humphrey, CPA  Scott C. Dowling, CPA  Scott C. Termine, CPA  Scott J. Brouillette  Scott L. Fields, CPA  Scott R. Bezjak, CPA, CGMA®  Scott W. Gold, CPA  Shaun D. McLean, CPA  Shaun P. Duffin, CPA, ABV, ASA, CMA® , CFM  Shawn R. Grotte, CPA  Sherri W. Greenwood, CPA  Stephanie C. Weis, CPA  Stephen H. Heilman, CPA  Steve K. Holden, CPA  Steven D. Warren, CPA  Steven H. Martin, CPA  Steven L. Toomey, CIMA®  Steven L. Webb, CPA  Sue Brammer, CPA, CHFP® , FHFMA 38 PROPOSER WARRANTIES 39 ADDENDA We received Addendum No. 1 on August 3, 2018. We received Addendum No. 2 on August 8, 2018. 40 FUTURE NEGOTIATIONS Upon being selected as the successful bidder, BKD may require modification to the terms and conditions, as referenced in the RFP, to comply with professional standards and/or BKD’s policies. As BKD has successfully resolved similar terms and conditions with other municipalities, BKD is confident the parties can successfully negotiate a mutually acceptable agreement. 41 AICPA PEER REVIEW LETTER 42 BKD PEER REVIEW REPORT 43 UNMATCHED CLIENT SERVICE 44 BKD FIRM PROFILE 45 BKD PRIDE VALUES Finance Administration 215 N. Mason 2nd Floor PO Box 580 Fort Collins, CO 80522 970.221.6788 970.221.6782 - fax fcgov.com Special Finance Committee Meeting Minutes 09/05/2018 3 - 5 pm CIC Room - City Hall Council Attendees: Mayor Wade Troxell, Ross Cunniff, Ken Summers Staff: Darin Atteberry, Mike Beckstead, John Duval, Gerry Paul, Travis Storin, John Voss, Jennifer Selenske, Kerri Ismael, Jeff Barnes (Library District) Kirsten Howard (Poudre Fire Authority) Meeting called to order at 3:04 pm URA – next URA Board meeting – let them know what we have done – context Josh Birks and staff have been working – looking at those issues To Council on the 18th for resolution A. Auditor Vendor Selection Travis Storin, Accounting Director Gerry Paul, Purchasing Director John Voss, Senior Manager Accounting SUBJECT FOR DISCUSSION: Selection of Audit Firm EXECUTIVE SUMMARY: The purpose of this item is to interview two finalists for financial audit services. A Request for Proposal (RFP) was issued and seven firms made proposals. A team of eight that included staff from the City, PFA and Library reviewed the written proposals and recommend BKD and Clifton, Larson Allen for consideration by the Council Finance Committee. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED • Recommend an audit firm for subsequent selection via City Council Resolution. BACKGROUND/DISCUSSION ATTACHMENT 3 2 Process Overview: Each firm will have up to 15 minutes to present, followed by 30 minutes for questions from the Committee. At the end of the interviews the Committee will discuss and recommend an audit firm. Staff that reviewed the written proposals will be available to answer questions from the Committee. The Committee recommendation will be brought to City Council on September 18. The auditor selected will have annual contracts that are renewable for a maximum of 5 years, and per recent Code modifications are eligible to be competitively selected for one additional 5-year period, for a maximum tenure of 10 years for a given firm. Firm Name: CLA Clifton, Larson Allen LLP Headquarters in Minneapolis, MN – Denver regional office in Broomfield Paul Niedermuller, CPA Principal 130 in Government practice, 175 employees in Colorado Recruit from CSU, UCD among others Firm Name: BKD Headquarters in Springfield, MO Jeff Ronsse, Colorado Managing Partner Chris Telli, Engagement Partner 38 offices in 17 states. Newest office is in NYC Recruit from CSU, UNC, Fort Lewis, Regis University among others. Council Finance Committee discussed both presentations based on the evaluation criteria (below) 3 Post Interview Discussion: Assessment Criteria: - Scope of the proposal and interview - Assigned personnel qualifications - Cost and commitment to meet the City’s annual audit timeline - Firm capability & reputation Following the discussion, Ross Cunniff made a motion to recommend BKD as the full partner to City Council. Ken Summers seconded the motion. The motion passed unanimously. The Committee recommendation will be brought to City Council on September 18. Meeting adjourned at 5:00 pm -1- RESOLUTION 2018-086 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE PROCUREMENT OF SERVICES FOR AN ANNUAL INDEPENDENT AUDIT OF THE CITY’S FINANCIAL RECORDS WHEREAS, the City Council is required by Section 17 in City Charter Article II to provide an annual independent financial audit of the City’s books and accounts conducted by a public accounting firm; and WHEREAS, City Code Section 8-158 sets out the process by which such accounting services, as well as similar professional services, are procured by the City through competitive sealed proposals; and WHEREAS, paragraph (n) of Section 8-158 specifically provides that if the proposals are for the services of a public accounting firm to conduct the annual independent audit of the City’s books and accounts as required in Section 17 of Charter Article II, those proposals are to be reviewed and the interviews conducted by the City Council or a committee of the Council in a public meeting and Council’s selection of the winning proposal is to be conducted in a public meeting; and WHEREAS, the City’s Purchasing Agent recently issued a request for proposals (the “RFP”) for a public accounting firm to conduct the City’s annual independent audit under a professional services agreement for the City’s 2018 fiscal year, with the agreement to be renewable annually for the City’s fiscal years 2019 through 2022, and to include the annual audits for the Poudre Fire Authority (the “PFA”), the Fort Collins Urban Renewal Authority (the “URA”), the Fort Collins Downtown Development Authority (the “DDA”) and the Poudre River Public Library District (the “Library District”); and WHEREAS, under intergovernmental agreements or as provided by law, the City provides accounting and other financial services to PFA, the URA, DDA and the Library District and, as part of those services, also contracts for the annual audits for each of these other entities as part of the City’s procurement of its annual auditing needs; and WHEREAS, in response to the RFP, the City received seven proposals and these seven proposals were reviewed by the Purchasing Agent and other City staff, together with staff representatives from PFA and the Library District, and these reviewers selected two of the proposals for review and interviews by the Council Finance Committee (the “Finance Committee”); and WHEREAS, on September 5, 2018, the Finance Committee held a special meeting at which it reviewed the two proposals submitted to it by the staff reviewers and it interviewed representatives from the two public accounting firms submitting those proposals; and WHEREAS, after the interviews, the Finance Committee voted unanimously to recommend to City Council that it select the national public accounting firm of BKD LLP -2- (“BKD”) to conduct the annual audits for the City, PFA, the URA, DDA and the Library District as requested in the RFP; and WHEREAS, the City Council agrees with the Finance Committee’s recommended selection of BKD and finds that this selection is in the best interests of the City, PFA, the URA, DDA and the Library District. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO, as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That the selection of BKD to conduct the annual independent financial audits requested in the RFP is hereby approved and the City’s Purchasing Agent is directed and authorized to enter into a professional services agreement with BKD for it to provide the annual independent financial audits described in the RFP under the terms and conditions set forth in BKD’s proposal and the RFP. Provided, however, that the Purchasing Agent is authorized to negotiate with BKD and agree to the final contract price and the precise scope of work as authorized in City Code Section 8-158(l) and to agree to such other terms and conditions that are consistent with the RFP, in the best interest of the City and in a legal form approved by the City Attorney as provided in City Code Section 8-185. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 18th day of September, A.D. 2018. _________________________________ Mayor ATTEST: _____________________________ City Clerk  Susan M. Miller, CPA, FHFMA  Susan W. Jones, J.D.  T. Carley Williams, CPA  T. Teal Dakan, CPA  Tad A. Goodenbour, CPA  Tammy J. Rivera, CPA  Theodore D. Dickman, CPA  Thomas B. Murtagh, CPA  Thomas F. Wheeland, CPA  Thomas J. Miller, CPA  Timothy A. Jackson, CPA  Timothy D. Johnson, CPA  Timothy J. Adler, CPA  Timothy J. Wilson, CPA  Timothy L. Chitwood, CPA, CFE  Timothy M. Hughes, CPA  Timothy T. Burns, CPA  Timothy T. Wilson, CPA, CCIFP®  Todd E. Thorson, CPA  Todd J. Kenney, CPA  Todd J. Lisle, CPA, ABV, CIA®  Todd J. Pefferman, CPA  Tom W. Watson, CPA, FHFMA  Tondeé L. Lutterman, CPA  Travis S. Hudson, CPA  Trent E. Parten, CPA  Trey W. Turnage III, CPA  Trisha M. Neidig, CPA  Troy E. Hill, CPA  Troy J. Gilstorf, CPA  Vincent F. Halupczynski, CPA  Vito G. Loisi, CPA, CIT  W. Ryan Underwood, CPA, CFSA®  Wallace P. Wetherill, CPA  Wendy J. Henry, CPA  William A. Pickert, CPA  William D. James  William E. Rasmussen, CPA  William G. Finnecy, CPA, CVA Note: Certified Financial Planner Board of Standards, Inc. owns the CFP® marks in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.  Joseph R. Blatt, CPA  Joseph R. Herting, CPA  Joseph S. Nelson, CPA  Joseph Weinberger, CPA  Juli C. Pascoe, CPA  Julie R. Hipsky, CPA  Justin A. Roberts, CPA  Justin D. McNabb, CPA  Keith Conine, CPA  Keith M. Messmer, CPA  Keith T. Galante, CPA  Kelly R. Hein, CPA  Kenneth M. Bishop, CPA  Kevin D. Gore, CPA  Kevin E. Cook, CPA  Kevin E. Morey, CPA  Kevin E. Pahud, CPA  Kevin G. Horn, CPA, CFA®  Kevin Kemp, CPA  Kimberly K. McKay, CPA  Kimberly S. Hamm, CPA, CGFM  Koy K. Dever, CPA  Kraig A. Ritter, CPA  Kristen G. Bright, CPA  Kristine D. Marsh, CPA  Kurt B. Berry, CPA  Kyle G. Hesemann, CPA  L. Douglas Bennett, CPA  L. Jamison McDonald, CPA  L. Toug Plilar, CPA  Lance M. Davis, CPA  Leslie D. Wilson, CPA  Lindsey D. Oakley, CPA  Lyle S. Alexander, CPA  M. Paige Gerich, CPA  M. Steven Moore, CPA  Mark A. Wilkerson, CPA  Mark P. Sharp, CPA  Marty J. Fredericks, CPA  Marvin W. Debner, CPA  Mary Anne Pipkin, CPA  Mary E. McKinley, CPA  Matthew P. Macdonald, CPA  Matthew P. Smith, CPA, CVA, CHFP®  Matthew P. Stout, CPA  Matthew R. List, CPA  Matthew S. Coffey, CPA  Melissa M. Pozniak, CPA  Michael A. Ososki, CPA, CFIRS™  Michael C. Gerber, CPA  Michael C. Senko, CPA  Michael G. Wolfe, CPA  Michael J. Engle, CPA  Michael R. Earls, CPA  Michael R. Gray, CPA, CPIM  Michael W. Burlew, CPA  Cindy H. Boyle, CPA, CIA® , CITP, CISA  Connie Benton Cagle, CPA  Craig C. Moffatt, CPA, CVA  Craig D. Kuechenberg, CPA  Dale C. Johnston, CPA  Danielle N. Solomon, CPA  David A. Weber, CPA  David C. Fields, CPA, CMA® , CFM  David C. Kottak, CPA  David E. Tate, CPA  David G. Bluemling, CPA, CVA  David L. Leising, CPA  David M. Coleman, CPA  David M. Kot, CPA, CFE  David R. Siehoff, CPA, CFE  David R. Vasquez, CPA  David S. Freeman, CPA, CMA®  David S. Mason, CPA  David S. Taylor, CPA  Deborah R. Whitley, CPA  Deborah S. Scanlon, CPA  Derek L. Smith, CPA  Derek R. Pierce, CPA, FHFMA  Donald DeSoto, CPA  Donald J. Rawe, CPA  Donna M. Doerhoff, CPA, CFE  Donna W. Bruce, CPA  Douglas E. Born, CPA  Douglas Van Meter, CPA  Drew Speed, CPA  Eddie C. Marmouget, CPA  Eric L. Hansen, CPA  Eric M. DeCoursey, CPA  Eric S. Goldfarb, CPA  Erica L. Smith, CPA  Eugene A. Morgenthaler Jr., CPA  Francis X. Godfrey, CPA  Frederick H. Markwell, CPA  Frederick K. Helfrich, CPA  Gary A. Edwards, CPA  Gary G. Genenbacher, CPA  Gary Kamath, CPA  Gary W. Schafer II, CPA, CMA®  George S. Storey, CPA  Georgia L. Salinas, CPA  Gordon J. Dobner, CPA  Grant G. Glackman, CPA, CFP® City and County of Denver, Colorado