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RESPONSE - RFP - P1134 AUDIT SERVICES
McGladrey& Pullen Certified Public Accountants Cfitr of r tCollins Sealed Dollar Cost Bid Proposal August 13, 2008 2. Firm Profile While in many cases the value of the services that accounting firms provide an organization is reduced to just meeting compliance needs, we believe by carefully listening to the needs of our clients, communicating regularly with management and working together to create a collaborative environment, we can bring substantial value to our relationship with you in many ways. Governmental Experience We take pride in our service and commitment to the public sector. As a result, we will deliver the specialized industry expertise that you expect and deserve. As a national firm, we have dedicated resources to monitor industry developments. These resources communicate regularly with local practice offices on important issues affecting your industry to ensure our client service personnel are well versed in issues affecting you. Our governmental clients range in size from small towns to large cities and state agencies. This translates into direct knowledge of the unique challenges faced by your organization and experience in helping you meet your business challenges and achieve your goals and objectives. Nationally, our firm works with over 2,000 government clients on an annual basis and provides a wide variety of services. Our Profile McGladrey & Pullen is an international firm and is one of the nation's leading providers of audit and attest services. We have more than 100 offices in the U.S. and over 8,000 CPAs and professionals who are committed to helping our clients grow and prosper. McGladrey & Pullen is part of RSM International, the seventh largest accounting and consulting organization in the world, with 630 offices and 24,000 professionals in 72 countries. Our Central Plains region includes more than 1,000 employees. This local presence, including depth of resources and strength, is unmatched by any other CPA firm. To meet the consulting needs of our clients, McGladrey & Pullen has an alternative practice structure with RSM McGladrey Inc. Though separate and independent legal entities, the two firms work together to serve your business needs. In fact, we were one of the first organizations in the industry to separate our audit and attest services from our consulting practice. When considered together, the two companies rank as the fifth largest provider of accounting, tax and business consulting in the United States. McGladrey& Pullen `fit couus Certified Public Accountants Great information. Keen analysis. Smart advice. You'll need the right people and the right tools. The combination of local presence and national strength assures you will receive exceptional advice from professionals experienced in the governmental industry, prompt responses to your needs and questions, and timely and cost-effective delivery of services, While our size affords us the national resources heeded to serve complex industries, size by itself is not important. What is important are the factors that have resulted in our success. We believe McGladrey & Pullen is unique because while we possess the expertise of a national firm, our client service philosophy matches that of a local accounting firm. Our growth has been the result of our ability to provide our clients with close, personal attention, continuity and accessibility of all professional personnel, including partners, and prompt quality services in a cost-effective and innovative manner. Public Sector Practice and Local Profile McGladrey & Pullen serves approximately 2,000 public sector clients as a part of our public sector practice industry focus. We have created a public sector practice designed to meet the needs of governmental clients in the Midwest. The primary goal of building this team is to develop more specialization within the governmental niche so we can create higher value for our clients through better advice, more efficient audit processes and deeper knowledge of their organization. A related objective is to provide a valuable career path for those professionals from various offices who want to spend significant amounts of time focused on clients in this industry. The audit of the City of Fort Collins, Colorado will be performed only by public sector industry specialists. Public sector industry specialists spend approximately 75 to 100 percent of their time auditing entities similar to the City of Fort Collins, Colorado. There are approximately 100 public sector industry specialists in the Central Plains Practice. We now have one of the largest Public Sector Practices and the broadest local expertise in serving the needs of the industry. We anticipate staffing the engagement with a partner, a manager and approximately three staff members. All professional staff assigned to this engagement will be on a full-time basis and will be sourced from the Davenport, Iowa and Denver, Colorado office. As a national firm, we have dedicated resources to monitor industry developments. These resources communicate regularly with local practice offices on important issues affecting your industry to ensure our client service personnel are well versed in issues affecting you. While size and resources available to you are important, we believe what matters most is you will be served by a team of professionals that knows and understands your entity. Your engagement team works with numerous other governmental organizations and is passionate about providing quality client service. McGladrey&Pullen FortCoQms Certified Public Accountants / N;n� Our total complement of professionals in the Central Plains Practice is as follows: Of the 1,002 professionals listed above, approximately 370 are Certified Public Accountants. External Quality Control Review Peer review is now required by all firms of a minimum size who perform audits by the Institute's Division for CPA firms. As members of the AICPA Public Companies Practice Section, our firm has participated in "peer review" since 1977 and has been examined every three years since that date. We are visited by a peer review or interoffice compliance team once every three or four years and were last evaluated in 2005 by an interoffice compliance team and in 2007 by a peer review team, Both of those reviews included governmental audit engagements. The Government Auditing Standards require we provide you with a copy of our most recent peer review report as well as any accompanying letter of comments. Our most recent peer review was conducted for the period ended April 30, 2007. The required reports are included in Appendix B. Disciplinary Action There has been no disciplinary action against McGladrey & Pullen by the AICPA or any other governing authority which oversees the accounting profession. Results of Desk Reviews Our audit report of a local governmental entity is subject to desk review annually by the United States Department of Commerce and the Iowa Department of Transportation, Their reviews were to determine if the audits were performed in accordance with (1) the General Auditing Office Standards for Audit of Governmental Organizations, Programs, Activities and Functions; (2) auditing standards generally accepted in the United States of America and guidelines established by the American Institute of Certified Public Accountants; (3) the provision of the Office of Management and Budget (OMB) Circular A-133; and (4) applicable compliance supplements approved by OMB. Based on their reviews, we were acknowledged to have complied with Audit Standards, OMB Circular A-133 and applicable compliance supplements. Additionally, their conclusions were that our working papers generally supported the opinions expressed in the audit report. McGladrey&Pullen ortCotpns Certified Public Accountants 3. Partner, Supervisory and Staff Qualifications and Experience People Philosophy We developed a firmwide People Philosophy several years ago intended to create a culture that will retain our most important asset — our people. Our People Philosophy states our goal is to attract and retain the best people and provide them with superior development opportunities. This philosophy guides our activities internally and externally and is responsible for our strong employee retention numbers. Striking the right balance between work and life is a top priority for our firm. In August 2005, we introduced Work -Life Goals as an integral part of our performance goal system. This stresses our commitment to work -life balance and builds a culture where people are valued both personally and professionally. To measure ongoing employee satisfaction, we also conduct an annual people survey and our various operating units are rewarded or not rewarded based on the results of our people survey. We clearly understand the importance of our people and the value that skilled and satisfied employees deliver to our clients. Many of our people efforts have been recognized in the national media, such as the Wall St. Journal and network news programs. We were named for the second consecutive year to Working Mother's 100 Best Companies list, which is highlighted in its October 2007 issue. Staff Experience and Continuity Staff Experience. We believe you can select us as your auditor and achieve the best of both worlds — auditor independence and quality and timely services. It is the audit partner/director's responsibility to coordinate, design and ensure quality audit services, The quality of the service you receive is dependent upon the capabilities of the individuals assigned to the engagement and the manner in which those personnel resources are organized to efficiently focus their abilities on providing you with the requested audit services. Our team has the capabilities and experience we believe are indispensable for the audit. This includes background in the following: • A variety of governmental engagements • Large organizations with multiple functions and divisions • Sophisticated computer auditing and statistical sampling techniques. Full -scope audits encompassing management efficiency and economy as well as financial matters. • Accounting, auditing and financial reporting principles applicable to governmental entities McGladrey&Pullen ort'`Coufns Certified Public Accountants Continuity of Client Service Team A knowledgeable team with minimal turnover. We appreciate and understand your preference to have a client service team established and in place to serve you on a continuing basis. Our team includes professionals who are passionate about their service to clients and who spend the majority of their time in this industry. The quality of our people and their commitment to your industry is evident in the attention and dedication they demonstrate during the audit process. We strive to maintain continuity for the benefit of our clients and our firm, so as not to incur time by either party in '.educating" engagement personnel about your business, operations and other aspects that may be unique to property serving you. While it is not possible for us, or any other CPA firm, to guarantee that staff turnover will not occur, the active participation in the audit process by our managers and partners/directors assures that even if there is turnover, there will be experienced resources available to ensure continuity. Education and Training Members of our audit team are degreed accountants who meet the continuing education requirements of the AICPA and the Government Auditing Standards (Yellow Book). Specific governmental related training available to our governmental professionals is outlined below: x x x x x x x x x x x x x x x x x x x x In order to be designated to serve the government industry, all of our assurance service professionals at the supervisor, manager, director and partner levels are required to make an annual commitment to be involved on a significant number of industry audits or attest engagements and attend a substantial amount of industry specific continuing professional education ("CPE") courses. We encourage our professionals to attend locally or nationally sponsored industry conferences and seminars. We also comply with the GAO education requirements for performing audits under Government Auditing Standards. McGladrey& Pullen Foist Cotttns Certified Public Accountants /—"C- To us, an audit is more than a report card. It's intelligence to help you run your City better. The engagement team assigned to the City of Fort Collins, Colorado has received training in the following specific topics: • Governmental Accounting Standards Board (GASB) Statement Nos. 43 and 45 • Statements on Auditing Standards Statements 104-114 • Single Audits of Municipalities • General Obligation Bonds All audit professionals of the firm were required to attend a week of training on the new risk assessment standards during 2007. Robert Dohrer, National Partner, serves on the Assessing and Responding to Audit Risk in a Financial Statement Audit Guide Task Force which was responsible for authoring the AICPA's audit guide for the risk assessment standards. Sarah Bohnsack and Mia Frommelt, the partners assigned to the City of Fort Collins, Colorado, author the firm's government manual and tools. This requires them to serve on the firm's national task force for industry specific risk assessment implementation and to be a resource for other offices. Our client base includes many municipalities with the above audit areas and we are familiar with their complexities and requirements. We have provided training of these topics to our clients and to other organizations such as chapters of the Government Finance Officers Association (GFOA) and the National GFOA. As part of our audit, we discuss new standards with you upon issuance and assist you in preparing for implementation far ahead of the actual implementation date, On an annual basis, the Central Plains Practice Unit conducts local training seminars for professionals serving the governmental industry. This training covers topics such as GASB updates, compliance issues and other relevant topics affecting audits of governmental clients. We bid and staff our engagements to make sure both partner and manager are involved in all significant aspects of planning, fieldwork, review and engagement reporting and we have learned efficiency and effectiveness is enhanced when such procedures are performed on site. In fact, the partner and manager utilize our "Lights Out" approach whereby we review the workpapers and reports at your office. Participation in Industry Organizations As a national firm, we have dedicated resources to monitor industry developments. These resources communicate regularly with local practice offices on important issues affecting your industry to ensure our client service personnel are well versed in issues affecting you. McGladrey&Pullen o�fotans 7 Certified Public Accountants The commitment of our personnel to the public sector extends far beyond a normal professional relationship. Our firm's personnel actively participate in governmental and not -for -profit activities. We are volunteer instructors at seminars conducted by the GFOA, local Chambers of Commerce, Association of School Business Officials, Association of Government Accountants, the State Society of Certified Public Accountants and other meetings of government officials, Our professionals serve on the Special Review Committee for the GFOA Certificate of Achievement for Excellence in Financial Reporting. We participate actively in the GFOA, the American Institute of Certified Public Accountants ("AICPA') and the State Societies of Certified Public Accountants. We are a founding member of the AICPA's government audit quality center, a nonpartisan, not -for -profit group based in Washington, D.C. Its mission is to work to increase confidence in the audit process and make public company audits even more reliable and relevant by advancing constructive suggestions for change rooted in the profession's core values of integrity, objectivity, honesty and trust. in addition, we encourage our professionals to get involved in the public sector through membership of board of directors or other volunteering opportunities. Relationships with Regulatory and Professional Standards Organizations Auditing and accounting of federal funding is one of the most dynamic aspects of public accounting. The needs of clients and the expectations of financial statements and audit report users are changing rapidly. As a result, it is necessary both our firm and our clients have a means to keep current on changing requirements, to have access to decision makers when laws, regulators, standards and principles are being considered and established, and to have an avenue of appeal, if necessary. To assure these benefits for both our firm and clients, we have established extensive formal and informal relationships with government officials, industry associations, standards - setting bodies and professional organizations at the national, regional and state levels. At the national level, we have established both formal and informal relationships with officials of most key federal departments. Formally, we participated as an advisor to the President's Council on Integrity and Efficiency through the Quality of Audit Roundtable. Numerous relationships are maintained with officials in the Office of Inspector General of most federal service capabilities departments and agencies, and close working relationships exist with key officials of the Government Accountability Office and the Office of Management and Budget. McGlatl Accountants ,,Fort�'CoUtns Certified To be informed of problems likely to be experienced by individual clients, we maintain memberships in and participate in varying degrees at the national and state levels of industry organizations including the GFOA. In addition to maintaining relationships with officials of these organizations, we emphasize building and maintaining a confidant and counselor relationship with Iowa officials concerned with audit matters and accounting principles. Many of our audit professionals are members of one or more of the following: • The American Institute of CPA, AICPA • Applicable state societies • Association of Governmental Accountants, AGA • National Association of Local Government Auditors, NALGA • The Government Finance Officers Association, GFOA McGladrey& Pullen ort r othns Certified Public Accountants Regulatory Body Representation Bob Wright Member of AICPA Health Care Audit Guide Task Force Member of the AICPA Expert Panel for Health Care Matters Firmwide Specialist in the Nonprofit Health Care Area Bill Travis Council of the American Institute of Certified Public Accountants Leroy Dennis AICPA Center for Public Company Audit Firms Executive Committee SEC Advisory Committee on Smaller Public Companies Ray Krause Former Member of: • Financial Accounting Standards Advisory Council • Emerging Issues Task Force • Accounting Standards Executive Committee Dale Lien AICPA Center for Public Company Audit Firms Peer Review Committee Bruce Webb AICPA Professional Issues Task Force AICPA Chair of Professional Ethics Executive Committee Former Member of the Auditing Standards Board Scott Pohlman AICPA SEC Regulations Committee Brian Schebler AICPA State and Local Government Expert Panel AICPA Executive Committee - Government Audit Quality Center Bob Dohrer AICPA Technical Audit Advisors Task Force AICPA Internal Control Reporting Task Force ("SOX 404°) AICPA Internal Control Audit and Accounting Guide Revision Task Force Lynne McMennamin AICPA Employee Benefit Plan Industry Expert Panel Josephine Hammond AICPA Employee Benefit Plan Industry Expert Panel Becky Miller AICPA Employee Benefits Conference Committee Jay Hanson Emerging Issues Task Force Observer Tim Martin AICPA SEC International Practices Task Force Sarah Bohnsack AICPA Single Audit Task Force: • SamplinglMateriality Issues in a Single Audit Environment • Schedule of Expenditures of Federal Awards Reporting Issues Mia Frommelt AICPA Single Audit Task Force: • Internal Control and Compliance Responsibilities in a Single Audit Environment • Reporting Audit Findings in a Single Audit Virginia Striegel AICPA Exempt Organizations Tax Resource Panel McGladrey&Pullen oit'CotUns 10 Certified Public Accountants Your Engagement Team With a partner -to -staff ratio of 1:13, as compared to 1 15 for most Big Four firms, McGladrey & Pullen and RSM McGladrey are geared to providing you the seasoned professionals and personalized service your City deserves. We are committed to providing the highest quality work. We provide talented, bright professionals for the engagement. The engagement team assigned to the City of Fort Collins, Colorado has a substantial portfolio of governmental clients and has assisted numerous clients with tax exempt financing and bond issues. In addition, the team has assisted numerous clients on obtaining and maintaining the GFOA Certificate of Achievement for Excellence in Financial Reporting and ASBO's Certificate of Excellence in Financial Reporting. The partners assigned to the City of fort Collins, Colorado serve on the Special Review Committee for the GFOA. The engagement team assigned to service the City of Fort Collins, Colorado will be as follows. This team reflects the City's commitment to Affirmative Action. Client Service and Audit/Assurance Partner— Sarah Bohnsack Sarah will be responsible for assuring the quality of services and continuity of the client service team. She will be responsible for determining your needs and providing resources. She will also have ultimate responsibility for the overall quality of the audit and will ensure required professional services are delivered in a timely and efficient manner. AuditlAssurance Manager— Heidi Hobkirk Heidi will also be responsible for the quality and timeliness of the audit services provided, including determining the content of our auditor's reports and being responsible for ascertaining that state, professional and regulatory standards have been met throughout the engagement. AuditlAssurance In -Charge — Joe Gassman Joe will lead the field engagement team in auditing the financial statements of the City. He has worked on audits of multiple governmental clients including City of Boulder, City of Peoria, City of Galesburg, City of Bloomington, Village of Milan, Black Hawk County, Sac & Fox Tribe of the Mississippi in Iowa, Chitimatcha Tribe and Scott County. Quality Assurance and Financial Reporting Partner— Mia Frommelt Mia will be responsible for the final quality control report review. Full bios and certificates of continuing professional education are in Appendix A. McGladrey&Pullen ,,Y-f urs Certified Public Accountants We are committed to providing the highest. quality work. We provide talented, bright people for the engagement. APPENDIX A Page 1 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR ADDITIONAL SERVICES (SERVICES ARE DESCRIBED IN RFP APPENDIX F1 Maximum All -Inclusive Nature of Service To Be Provided Total Price 2008 Audits of City, Poudre Fire Authority and Library District $81,000 2009 Audits of City, Poudre Fire Authority and Library District 83,000 2010 Audits of City, Poudre Fire Authority and Library District 86,000 2011 Audits of City, Poudre Fire Authority and Library District es,000 2012 Audits of City, Poudre Fire Authority and Library District 89,000 Issuance of Consent Letter for a Bond Issue 500 Verification of Arbitrage at the End of Each Five -Year Period of a Bond Issue t`YA Verification of Bond Escrow for a Bond Issue 2-%c Agreed Upon Procedures Performed in Relation to City's Cable TV Franchise Agreement with Service Provider 8,,O00 Of the Total ail -inclusive maximum price for the 2008 audit, please estimate the expected costs for the services related to the Library District and the Poudre Fire Authority: Library District 5,OD0 Poudre Fire Authority 7,500 i Wadrey & Pullen LLPacknowledges receipt of Addendum lend 2 4. Prior Engagements with the City of Fort Collins, Colorado McGladrey & Pullen has had no engagements with the City of Fort Collins, Colorado for any of the past five years. McGladrey &Pullen confirms it will give the City of Fort Collins, Colorado written notice of any professional relationships entered into during the period of this agreement. McGladrey&Pullen o�t°Coutrs 12 Certified Public Accountants 5. Similar Engagements with Other Governmental Entities Governmental Experience and Expertise is Crucial Our firm has established a public sector practice in the Midwest that is focused on serving the needs of governmental organizations across Colorado, Iowa, Illinois, Kansas, Missouri and Nebraska. This practice serves over 60 governmental organizations and includes over 100 professionals. The team assigned to your engagement includes professionals that spend a significant amount of time serving governmental entities. You will benefit from the expertise of this team and not be asked to train them on the unique aspects of accounting within your organization. Governmental Auditing Experience The Central Plains Practice has a large base of auditing experience with governmental audits similar to the City. A list of our most significant engagements similar to the City of Fort Collins, Colorado is listed below: City of Boulder, Colorado Population: 292,500 Duane Hudson 1777 Broadway Boulder, Colorado Phone: 303.441 1812 Hours: 617 Major Source of Federal Funding: HOME, CDBG, Transportation Total Federal Awards: $5,007,000 GFOA Certificate Holder Scope: Engagement includes the audit of the City's December basic financial statements and related component units and audit of federal programs in accordance with the Single Audit Act. McGladrey&Pullen cum CotUns 13 Certified Public Accountants City of Des Moines, Iowa Population: 198,682 Allen McKinley, Finance Director 400 East First Street, Suite 2 Des Moines, Iowa 50309-1891 Phone: 515.283.4844 Partner: Sarah Bohnsack Hours: 1,100 Major Source of Federal Funding: CDBG, HUD, Airport Improvement Program, Passenger Facility Charge Total Federal Awards: $45,000,000 GFOA Certificate Holder Scope: Engagement includes the audit of the June basic financial statements and the audit of federal programs in accordance with the Single Audit Act. In addition, we provided extensive training to multiple departments on GASB implementation. Engagement also includes Des Moines Wastewater Reclamation Authority, Des Moines Housing Agency, Des Moines Airport and REAC Certification, The City has been awarded the GFOA Certificate of Excellence program each year. City of Peoria, Illinois Population: 389,634 Jim Scroggins 419 Fulton Street Peoria, Illinois 61602 Phone: 309.494.8514 Partner: Sarah Bohnsack Hours: 1,100 Major Source of Federal Funding: CDBG, HOME, WIA Total Federal Awards: $8,000,000 GFOA Certificate Holder Scope: Engagement includes the audit of the City's December basic financial statements, single audit, DZO, TIF Districts and Environmental Review Agreed -Upon Procedures. McGladrey&Pullen ort'CnUtns 14 Certified Public Accountants City of Cedar Rapids, Iowa Population: 121,000 Casey Drew, City Controller Auditor 50 Second Avenue Bridge Cedar Rapids, Iowa 52401 Phone: 319.286.5006 Partner: Sarah Bohnsack Partner: Mia Frommelt Hours: 835 Major Source of Federal Funding: CDBG, Transit, Home Total Federal Awards: $19,000,000 GFOA Certificate Holder Scope: Engagement includes the audit of the June basic financial statements and audit of federal programs in accordance with the Single Audit Act. Engagement also includes a separate landfill, airport and arena/convention center audit, REAC certification, Passenger Facility Charge and bond comfort letters. The City has been awarded the GFOA Certificate of Excellence program each year. Colorado River Conservation District Mary Giorgio 201 Centennial Street, Suite 200 Glenwood Springs, Colorado 81602-1120 Phone: 970.945,8522 Hours: 300 Scope: Engagement includes the audit of the District's December 31, 2007 basic financial statements. McGladrey& Pullen obi co�urs 15 Certified Public Accountants Sarah Bohnsack, Partner, and Mia Frommelt, Partner, serve the following list of governmental entities annually: Auditing Exponents With Similar Governmental Entitles GFOA Cenif,ca;e Ad33 Service Contact Major Souse of Federal Funding Holding AudA Years COLORADO City of Boulder ✓ J 2 Duane Hudson, 303.441.7872 1777 Broadway, Boulder Colorado River Conservation District 1 Mary Giorgio, 970.945,8522 201 Cealennial Street, Ste. 200, Glenwood Springs Colorado Springs School District No. 11 J ✓ 1 Charles Struck, 719.5202309 1115 with El Pace Skeet Colorado Springs MISSOURI School District of Kansas City Neldtion, Ti!lo 1, Head shut J J 2 Jan Tosser, at 6.410 7240 1211 McGee, Kansas City City of Excelsior Springs J 4 Steve Marriott 816,630.0760 201 Ent Broadway, Excelsior Springs City of Liberty Transpodalisn, EPA J ✓ 5 Linda Tyree, 816.792.6000 101 Eel Kansas Street Llbedy City of Maryville ✓ 5 Denise Town, 660.562,8001 41S North Market Street Maryville City of North Kansas City Tmesportahm J J 5 Shirley Lard, 81CF4.6000 2010 Howell, North Kansas City City of Riverside, Missouri ✓ ✓ 2 Donna Resa, 816.372,9009 2050 NW Vivion Road, Rbemide Platte County Regional Sewer District 5 Chuck Reinke, 616.858.2052 414 State Route 273, Tracy Kansas City Area Transportation FTA ✓ 3 Authority Michel Graham, 616.346.0304 1200 Eas1781h Street Kansas City KANSAS City of Overland Perk HUD ✓ J 1 David Scott 913.895.6154 8500 Santa Fe Dane, Overhand Park City of Raeford Park EPA ✓ ✓ 6 Jahn Carter, 913.7222600 4600 West Slit Street, Roeiand Perk Kansas Municipal Energy Agency 5 They Tume69Z..677.2064 6330 Lama, Avenue. Overland Park Kansas Municipal Gat Agency 5 Tony Turner, 913,677.2864 6330 Lamar Avenue, Overland Park Johnson County Park and Recreation 3 District Greg Reinert 913.894.3330 7900 Renner Road, Shown Mission Water District No. i of Johnson County 2 Ron App5sek 913.09$.5595 10747 Renner Blvd, Lenexa LOUISIANA ChAlmeche Tribe of Louisiana 1 Patty Perry, 337,923.7911 Lis Cheimacha Loop Road, Charonton McGladrey& Pullen obi �ottfns 16 Certified Public Accountants Auditing Experience With Similar Governmental Entities GFOA GenklCale A-133 Service Contact Major Source of Federal Funding Holding Audit Years ILLINOIS Jo Devices County Transit ✓ 2 Dan Reimer, 815.777.6557 330 N. Bench Street, Galena McLean County 1 John Zeunik, 309.888.5110 116 E. Washington Street, Bloominglon Rock Island County WIC, WIA ✓ 6 Diana Robinson, 309.558.3518 1504 Third Avenue, Rock Island Rock Island School District Nutrition, Head Stan, Title 1, Title 11, ✓ ✓ 31 Mike Oberhaus, 309,793.5900 21s1 Century 541-21st Street, Rock island Moline School District Nuldtion, Title l ✓ B Dave McDermott, 309.736.2100 1619-11th Avenue, Molina City of Bloomington CDBG ✓ ✓ 6 Judy Whikeharl. 309,434.2335 109 East Olive St., Bloomington City of Farmington 8 33 Noun East, Farmington City of Galesburg CDBG, Home ✓ ✓ 8 Gloria Osborn, 309.343.4181 55 West Tompkins Street, Galesburg City of Moline CDBG ✓ ✓ 20 Kathleen Can, 309.752.1536 1616 - 6th Avenue, Moline City of Peoria CDBG, DOT ✓ ✓ 1 Jim Scroggins, 309.494,8514 419 Fulton Street, Peoria Village of Milan Economic Dev. Admin, FEMA, EDA 36 Barb lee, 309.787,8500 321 West 2nd Avenue, Milan Town of the City of Peoria 7 1500 Norm East Jefferson, Peoria SI•Slate Regional Commission CDBG ✓ 35 Donna Moritz, 309.793.6300 1504. 3rd Avenue, Rack Island I wireless Center 11 Rocky Jones, 309.764.2001 1201 River Drive, Moline Farmington Sanitary District 8 John Gagliardo, President Box 231, Farmington Metropolitan Airport Authority FAA, Illinois DOT, PFC ✓ ✓ 29 Holly Green, 309.764.9621 2200- Spin Avenue, Moline McGladrey& Pullen " t Collins 17 Certified Public Accountants Auditing Experlance With Similar Governmental Entities GFOA Ceraficato A-133 Service Confect Major Source of Federal Funding Holding Audit Yeam IOWA Block Hawk County Social Services Blank Grant ✓ 4 James Bromaw, 319.833.3073 316 East Finn Street, Waterloo Polk County Social Services Bieck Grant ✓ ✓ 4 Keith Olson, 515.285..3418 111 Court Avenue, Des Moines Scott County Social Services Black Grant, FEMA ✓ ✓ 16 Ray Werson, 563.326.8734 416 West Me groat, Davenport Davenport Community School District Nubilion, Title l ✓ ✓ 1 Claudia Wood, 563.336.5000 1606 Brady Shead, Davenport Dee Molnes Independent Community School District pointer, Tills 1, Head Stan ✓ 6 Patty Schroeder, 515.242,7745 1801-161h Street, Des Moinos Iowa City Community School District Numbon, Title ✓ ✓ 5 Paul Bobak, 319588.1000 509 South Dubuque Based, Iowa City City of 8ettendorl HUD, FEMA ✓ ✓ 20 Carol Barnes, 563.344.4000 1609 State Street, Bettendml City of Cedar Rapids HUD, CDBG, FAA, Federal Transit, PFC ✓ ✓ 11 Casey Drew, 319.286.5006 City Hall, Third Floor, Cedar Rapids City of Clear Lake HUD 14 Linda Nelson, 641.3575267 15 North &in Street, Clear lake City of Des Molnes, Iowa Municipal Housing Agency HUD ✓ 7 Allen McKinley, 515,283.4562 400 East First Street, Des Moines City of Des Molnes HUD, FAA, PFC ✓ ✓ 7 Allen McKinley, 515,283.4844 400 East First Share, Des Mons University of Iowa Revenue Bond Funds 3 Terry Johnson, 319.335.0728 B5 Jessup Hall, Iowa City Des Molnes International AlrpoH FAA ✓ 7 Allen McKinley, 515.283.4562 400 East First Sheet, Des Morris Eastern Iowa Airport FAA, PFC 11 Casey Drew, 319.398.6006 City Hell, Third Floor, Cedar Rapids Cedar Rapids/Linn County Solid i t Waste Agency Casey Drew, 319.3985D06 City Hall, Third Floor, Cedar Rapids Des Molnes Wastewater Reclamation Authority ✓ 7 Allen McKinley, 515.283.4562 400 East First Street, Des Molnes Des Molnes Water Works 3 Peggy Freese, 515.283.8755 2201 George Flagg Parkway, Des Moines Sac and Fox Tribe Department of interior Programs ✓ 9 Ram Dhanwada, 515.494.4678 349 Meskweki Road, Tama McGladrey&Pullen cHv Cottins 18 Certified Public Accountants__./^"• 6. Specific Audit Approach Required Auditing Standards and Required Reports Our understanding of the services required under this proposal are as follows: To meet the requirements of this Request for Proposal, the audit shall be performed in accordance with auditing standards generally accepted in the United States of America established by the American Institute of Certified Public Accountants (AICPA), the standards set forth for financial audits in the United States General Accounting Office's (GAO) Government Auditing Standards, and the provisions of the Federal Single Audit Act and the United States Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments and Nonprofit Organizations. The audits will also be performed in accordance with the rules that pertain to the Certificate of Achievement for Excellence in Financial Reporting established by the Government Finance Officer's Association of the United States and Canada (GFOA). We will communicate any significant deficiencies found during the audit. A significant deficiency is a control deficiency in the design or operation of the internal control which could adversely affect the City's ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements. Significant deficiencies that are also material weaknesses shall be identified as such in the report. The reports on compliance shall include all instances of noncompliance. The primary purpose of the examination is to express an opinion on the financial statements and that such an examination is subject to the inherent risk that errors or irregularities may not be detected. If conditions are discovered which lead to the belief that material errors, defalcations or other irregularities may exist, or if any other circumstances are encountered that require extended services, the auditor will promptly advise the finance director. No extended services will be performed unless the services are authorized in the contractual agreement or in an amendment to the agreement. Audit Services Approach Our tailored audit approach emphasizes early planning and focuses on the City of Fort Collins, Colorado and how it functions. We meet with management during the year and in a formal planning meeting before starting the audit. These conversations enable us to identify key components and risk areas, and to tailor our procedures to you. The obvious benefit to you is a less costly, independent audit, performed by some of our industry's most experienced professionals. Our audit process is continuous, whereby we address and resolve issues, new accounting standards, changes in your organization, etc. throughout the year, not just at year-end. A "no -surprises" audit is always our goal and communication is the key, McGladrey& Pullen Cori cotttns 19 Certified Public Accountants N_ ` As part of our commitment to you, we have developed a business advisory approach to audit services, which looks beyond accounting entries to underlying transactions and organization systems, We place substantial emphasis on understanding your operations and fundamental organization strategies. We don't view your audit as a commodity. Instead, we see it as a tool you can use to improve your "organization." We contribute recommendations about your internal controls, operating and accounting procedures and other important matters. These are communicated to you first orally and then in a written management letter. Risk Analysis. One of the most important aspects of the audit process is the proper analysis of your risk environment. To decide how audit resources can be used most cost effectively and efficiently, we will work with management to complete a risk assessment of the City of Fort Collins, Colorado's activities. Our risk assessment process provides: • An assessment of your inherent risks at the financial record and account balance levels • An evaluation of your internal control and the subsequent assessment of your control risk • An assessment of the effectiveness of your analytical procedures in controlling and detecting risk There is a clear trend in auditing - organizations are demanding value and innovation from the external audit (often with reduced cost), together with a greater contribution to the organization's strategic objectives. As a result, auditors must increasingly focus on improving and supporting the business, not just playing the role of "external auditor." McGladrey&Pullen `i,yl llns 20 Certified Public Accountants - Understanding Internal Controls A solid understanding of the City's systems of internal controls is the foundation of our audit process. Our assessment of internal control is concentrated in the following areas: • Inquiries of appropriate entity personnel regarding the design and/or application of a relevant internal control policy or procedure including the classes of transactions to which the policy or procedure applies; how it is applied and by whom; and the disposition of exceptions detected by the policy or procedure; • Inspection of documents and/or reports evidencing the design and/or application of the relevant policy or procedure by entity personnel; noting how the policy or procedure is applied and by whom; the classes of transactions to which it applies; and the disposition of exceptions detected by the policy or procedure; • Observation by the auditor of the performance of the relevant policy or procedure by entity personnel; noting how the policy or procedure is applied and by whom; the classes of transactions to which it applies; and the disposition of exceptions detected by the policy or procedure; and/or • Re -performance of the application of the policy or procedure by the auditor and comparison between the results obtained by the auditor and the results obtained by the entity personnel. Our audit approach, as noted above, is based on our gaining a solid understanding of your internal control systems. This understanding, along with testing the significant control areas, will allow us to reduce substantive testing procedures, focus the audit approach to risk areas and gain efficiencies as we audit the City. We will use this understanding to provide feedback in our management letter about opportunities in which you may have to strengthen controls or streamline processes. Technology Testing Our approach to auditing in a computer -based environment consists of gaining an understanding of the system, the input and output controls, the processing cycles and the ability to download information or generate specific reports. The purpose of gaining this understanding is to determine how the data processing system fits in the control structure and determines the reliance we can place on these control elements. In addition, by a thorough evaluation of the data processing systems, we can determine how we can use the computer system to gather data or generate reports that will meet specific audit objectives and provide you with an efficient audit. In more complex systems, an information technology consultant assists the engagement team in performing this function. McGladrey & Pullen also utilizes the EDP software IDEA. IDEA extracts data directly from clients' system and sorts data and samples according to parameters established by the audit. The software is often used to draw samples, detect exceptions (gap or data) and extrapolate data. McGladrey& Pullen �Pi cotuns 21 Certified Public Accountants Appendix A Page 2 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES Standard Quoted Hourly Hourly Rates Rates Partners $330-$440 $330 Managers tao-tso 140 Supervisory Staff 100-130 te) Staff 70-120 70-80 Other (specify): Out-of-pocket expenses: Meals and lodging (amount per person per day) Transportation (cents -per -mile) Other (specify): This schedule should reflect the hourly rates for any additional work outside the scope of this RFP if the City requests it. The Audit Process First Year Transition — We understand that changing professional service providers will result in additional work for your staff this first year as we establish the necessary permanent file documentation and begin to build a solid knowledge base about your City. Our goal is to try and make the transition as seamless as possible for your staff. The transition will be accomplished through meetings and discussions with your staff and with your predecessor auditor, which would be authorized by you. The gathering of information will be performed primarily in the early phases of planning so the interim and final fieldwork phases, for your staff, will be much more like a recurring audit rather than a first-time audit. The predecessor auditor meeting, required by professional standards, will involve a review of the 2007 audit workpapers, with an emphasis on key audit areas, and discussions with them regarding prior communications with the board and management. • Preplanning — The first step of the audit is preplanning, which involves meeting with management of the City to clearly identify the lines of communication, perform a risk analysis, discuss audit scopes and alternatives, discuss any concerns and set expectations. We will also establish a preliminary timetable to ensure a smooth audit process. Planning and Timing — The next step is to develop the audit plan, which includes tailoring audit programs and procedures to the City of Fort Collins, Colorado, requesting a list of schedules, arranging the timing of preliminary and final fieldwork, and performing analytical procedures. This step ensures we have identified and addressed all risk. We will also document your accounting information systems, controls and processes, timetables and overall accounting concerns. We will evaluate economic and industry factors affecting your operations. Once we identify the major areas of audit emphasis, we will coordinate the audit process with your personnel. • Fieldwork — Fieldwork is the largest part of the audit process and includes both substantive audit tests, such as confirmation work, and analytical review, such as variance examination. At the conclusion of preliminary and final fieldwork, we will discuss with management the results of our work and our recommendations. Reviews — To assure our final audit is of the highest quality, we review files and reports several times. Each review focuses on specific areas of the audit, with intentional overlap so every part of the audit is reviewed at least twice. McGladrey & Pullen performs these reviews while in the field. Ms. Bohnsack and Ms. Frommelt are GFOA reviewers. Your Comprehensive Annual Financial Report will also be reviewed for compliance with the GFOA Certificate of Excellence Program. McGladrey&Pullen cp cotuns 22 Certified Public Accountants Resolution of Accounting Issues - Because we communicate frequently with you throughout the year, we expect few, if any, major accounting -related issues to arise during the audit. Most accounting issues arise from a misunderstanding of the facts, circumstances and complexities unique to an organization and its industry. Because we take a business advisory approach to auditing, we truly believe we are better equipped to understand the issues surrounding management's position on accounting and reporting matters. Rather than analyze the transaction after the fact, we will help management and the fiscal services department with their decision -making process as accounting issues arise. Audit Conclusion — At the conclusion of the audit process, we will issue a management letter discussing internal control recommendations and weaknesses we identified as part of the audit. The letter will also include observations about accounting methods and procedures, business and industry practices or issues, operational ideas and suggestions to further enhance the City. We will advise you of any new accounting pronouncements that have been or may be issued and indicate their potential impact on you. • Council and Finance Committee Meetings — We would be happy to meet with the Audit Committee and the Council at the conclusion of the audit to discuss the results of our work and present the audited financial statements through a graphical format. In addition, we would be available to meet with the Board on an as -needed basis. Proposed Project Schedule • Planning Phase • Planning phase meetings with management of the City of Fort Collins, Colorado • Obtain interim financial statements and compute preliminary materiality by opinion unit to plan substantive testing • Review individual accounts to determine audit strategy • Establish audit risk control for sampling purposes: • Document inherent risk assessment • Document reliance on internal control • Assess effectiveness of analytical review • Compute audit detection risk • Design sample size and selection method based on audit detection risk and nature of population. Sample sizes are determined based on the account balance and the risk assessments assigned to the account. • Obtain a preliminary schedule of expenditures of federal awards and determine applicability of A-133 single audit McGladrey&Pullen or2t°`ColUns 23 Certified Public Accountants Partner 4 Manager 6 In -Charge 20 30 Preliminary Audit Phase • System understanding and documentation: Identification of significant types of transactions and classification into one of the following cycles: • Revenue • Purchasing segment • Payroll segment • Construction -in -progress • Acquisition and disposal of capital assets • Financing cycle • Financial reporting cycle Overview of EDP systems: • Document and review EDP equipment and applications • Document and review organization chart • Transaction forms • Financial and management information system reports Document EDP systems understanding: • Flow of transactions • EDP file processing • Transaction forms • Financial and management information system reports Documentation of employee duties and access for all transaction cycles and segments • Evaluate procedural controls for each transaction cycle or system. For internal control purposes, procedural controls should provide reasonable assurance that: • Each transaction is properly authorized before it is executed or recorded • Each authorized transaction is executed and recorded • Errors in execution or recording are detected and corrected on a timely basis • Each executed transaction is recorded on a timely basis • Accountability for each executed transaction and the related assets are established and maintained McGladrey&Pullen rort°Collins 24 Certified Public Accountants • Document significant and material weaknesses in internal control, if any • Determine degree of reliance on internal control and corresponding percentage of audit risk to be controlled by internal control risk • Assess significant account risk based on Statements on Auditing Standards (SAS) Statement No,112 annually • Complete permanent file, documentation of significant agreements, contracts and legal documents • Review of minutes Partner 5 Manager 10 In -Charge 80 Associates 40 135 • Fieldwork Phase • Throughout the fieldwork phase, a weekly meeting will be scheduled with the appropriate personnel from the City of Fort Collins, Colorado to review the progress of the audit and the schedule for the upcoming week to ensure the audit remains on track and progress has been communicated • Identify areas for substantive audit procedures • Perform audit procedures on identified accounts as appropriate: • Analyze investment activity for the year-to-date and verify sample of investment transactions • Examine documentation for capital asset and construction -in - progress additions over a predetermined scope or on a sample basis • Circularization of vendors and reconciliation to accounts payable • Year-end confirmations and cut-off procedures: • Cash • Investments • Long-term debts • Revenue • Laws and regulations: • Test compliance with laws and regulations • GASB Statement No. 34 • Review government -wide reconciliations and entries McGladrey &Pullen o` t `Coums 25 Certified Public Accountants • Single Audit • Determine inherent risk and control risk of each compliance requirement in OMB Compliance Supplement for each major program • Select samples of transactions from major program reporting and trial balances to test controls of each requirement and compliance with federal requirements • Other fieldwork: Tests on account balances using audit strategy (i.e., substantive testing, analytical review, inquiry, etc.) as determined in the planning phase and updated during the preliminary fieldwork phase Partner 30 Manager 40 In -Charge 200 Associates 320 690 Wrap -Up Phase • Quality control review by partner in the field • Review drafts of the financial statement, draft footnotes, internal control, compliance letters and management letter • Quality control review by audit and accounting quality control partner • Exit conference preparation and attendance • Deliver final reports Partners 10 Manager 10 20 This schedule is continually reviewed and updated as work is performed and completed. McGladrey&Pullen Fort''Cotltns 26 Certified Public Accountants"'�`^� Proposed Level of Assistance From City Staff We would anticipate the following level of assistance from City staff: Finance Department Assistance • Preparation of confirmations • Attendance at planning and progress meetings • Preparation of supporting schedules as outlined in the request for proposal • Provision of supporting documentation • Availability to answer questions Technology to Maximize Efficiencies Your Choice: Standard or Real -Time Auditing. At the beginning of the audit, we discuss with you how you like to work. Depending on the organization, there are different instructions for keeping you and your colleagues informed of our progress. You may have a specific hierarchy of communication or it may be more open. You may want to be informed at specific intervals as in a standard audit or choose to have real- time access and communication. We have developed several computer -based audit tools and techniques that allow us to be more efficient. In fact, we have converted the majority of our audit clients to a "paperless" approach. The "paperless" environment provides the ability to create the workpapers, program steps and conclusions all in a single, shareable application. Some benefits to using the paperless audit are: • Information is easier and faster to find, yet protected with several levels of security • Manager and partner have access to the working papers 24 hours a day, resulting in faster problem resolution and continuous partner scrutiny • Reduced preparation time for subsequent year's files, as procedures and working papers automatically roll forward • Information received from the City is in electronic format; therefore, no need to print schedules from Excel or reports from your computer system The choice is yours. Whether you choose to work with us in a traditional fashion or an electronic one, this is just one example of the innovative processes and ideas we bring to your project. McGladrey&Pullen oriCoulns 27 Certified Public Accountants We will provide information and consultation to you regarding new accounting pronouncements and are available for training on new standards. In addition, we develop tools for implementation when new standards are developed. For example, we have developed a template for the new statistical section which we have shared with all of our clients with no cost attached. Timeline rrepianningimterim October Final fieldwork April Drafts May 15 Final report June 18 Presentation to the Board As requested Note: These dates can be altered to meet the City's goals. We anticipate this schedule would be used for each year of this proposal. McGladrey&Pullen cityaf 28 ort colhns Certified Public Accountants 7. Report Format Independent Auditor's Report To the Honorable Mayor and Members of the City Council City of Sample, Colorado We have audited the accompanying financial statements of the governmental activities, the business -type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Sample, Colorado as of and for the year ended December 31, 2008, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Sample, Colorado's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business - type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Sample, Colorado as of December 31, 2008, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated May 29, 2008, on our consideration of the City of Sample, Colorado's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Govemment Auditing Standards and should be considered in assessing the results of our audit. McGladrey& Pullen `"�i courts 29 Certified Public Accountants The Management's Discussion and Analysis on pages 3 through 14, and the Modified Approach for City Streets Infrastructure Capital Assets on pages 55 through 57 are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Sample, Colorado's basic financial statements. The combining and individual nonmajor fund financial statements and other schedules, listed in the table of contents as supplementary information, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information for the year ended December 31, 2008 has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The accompanying introductory and statistical sections, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. This information has not been subjected to the auditing procedures applied in our audit of the basic financial statements and, accordingly, we express no opinion on them. Davenport, Iowa May 29, 2008 McGladrey&Pullen Forte `yt��ins 30 Certified Public Accountants Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards To the Honorable Mayor and Members of the City Council City of Sample, Colorado We have audited the financial statements of the governmental activities, the business - type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Sample, Colorado, as of and for the year ended December 31, 2008, which collectively comprise the City's basic financial statements, and have issued our report thereon dated May 29, 2008. We conducted our audit 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Sample, Colorado's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. A control deficiency exists when 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. A significant deficiency is 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 accounting principles generally accepted in the United States of America 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 by the entity's internal control. A material weakness is 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 by the entity's internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. McGladrey& Pullen ort Eottfns 31 Certified Public Accountants `/""� Important Investment We recognize that engaging an independent audit and accounting, tax and business advisory firm is an important investment for the City of Fort Collins, Colorado. Our goal is to provide timely and responsive services at a reasonable and competitive cost. We hope we have illustrated our capability to add value to the City through our experience and approach. Our fees, like those of other professional firms, are based on actual time spent by our people and are measured by standard hourly rates, reflecting the experience level of the professionals assigned to your account. We estimate professional hours and fees we believe are competitive, and that will enable us to be responsive and provide the high quality professional services you deserve. Routine Calls and Other Services Our general practice for our clients is not to bill for consultation services that can be provided over the phone in less than 30 minutes. We believe this type of policy is beneficial to both you and us in that it encourages you to call us during the year. By keeping abreast of issues as they occur, we will not only be able to deliver a more efficient audit, but the advice we provide to you will be more meaningful as we understand the City of Fort Collins, Colorado better. We will provide information to you regarding new accounting pronouncements and will work with you through implementation. If we have the opportunity to provide other consulting, tax or accounting assistance services, we would be happy to provide you with an estimate of fees for that service. We will work with you to determine the scope of the service and the best team (your people and ours) to provide that service. If we have the opportunity to provide other audit and accounting, tax or business advisory services, we would be happy to provide you with an estimate of fees for that service. We will work with you to determine the scope of the service and the best team (your people and ours) to provide that service. Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Sample, Colorado's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards, The City of Sample, Colorado's response to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the City of Sample, Colorado's response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of the City Council, management, federal awarding agencies and pass -through entities and is not intended to be and should not be used by anyone other than those specified parties. Davenport, Iowa May 29, 2007 McGladrey& Pullen on coutns 32 Certified Public Accountants Independent Auditor's Report on Compliance With Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance With OMB Circular A-133 To the Honorable Mayor and Members of the City Council City of Sample, Colorado Compliance We have audited the compliance of the City of Sample, Colorado with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133, Compliance Supplement, that are applicable to each of its major federal programs for the year ended December 31, 2008. The City of Sample, Colorado's major federal program is identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the City of Sample, Colorado's management. Our responsibility is to express an opinion on the City of Sample, Colorado's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations. Those standards and OMB Circular A-1 33 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City of Sample, Colorado's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City of Sample, Colorado's compliance with those requirements. In our opinion, the City of Sample, Colorado complied, in all material respects, with the requirements referred to above that are applicable to its major federal program for the year ended December 31, 2008. Internal Control Over Compliance The management of the City of Sample, Colorado is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City of Sample, Colorado's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of McGladrey& Pullen `rt'CotUns 33 Certified Public Accountants expressing our opinion on compliance but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Sample, Colorado's internal control over compliance. A control deficiency in an entity's internal control over compliance exists when 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 noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity's internal control. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. Schedule of Expenditures of Federal Awards We have audited the financial statements of the governmental activities, the business - type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Sample, Colorado as of and for the year ended December 31, 2008, which collectively comprise the City of Sample, Colorado's basic financial statements and have issued our report thereon dated May 29, 2008. Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as whole. This report is intended solely for the information and use of the City Council, management, Federal awarding agencies and pass -through entities and is not intended to be and should not be used by anyone other than those specified parties. Davenport, Iowa May 29, 2008 McGladrey&Pullen city-f olUns 34 Certified Public Accountants Sarah Bohnsack Lead Public Sector Industry Specialist Partner 0 563.888.4420 F 563,324.6939 Sarah. boh nsack@rsmi. com Specific Role in the City of Fort Collins, Colorado Engagement Sarah Bohnsack will be responsible for assuring the quality of services and continuity of the client service team. Sarah will be responsible for determining your needs and providing resources. She will also have ultimate responsibility for the overall quality of the audit and will ensure required professional services are delivered in a timely and efficient manner. Summary of Experience Sarah is a partner/managing director with McGladrey & Pullen and RSM McGladrey, a national certified public accounting firm, Sarah specializes in the public sector industry and is the Lead Public Sector Industry Specialist Partner within the Central Plains Practice of McGladrey & Pullen. In her role as a public sector specialist, she brings a unique understanding of the issues facing governmental entities Sarah has reviewed governmental reports and provided consultations for offices throughout the firm, assuring the firm's product meets both the statutory requirements of state and federal agencies and the highest financial reporting standards. Sarah is also a member of the GFOA Certificate of Achievement Review Program. She reviews governmental reports throughout the year to assess reporting excellence in accordance with the requirements of the Certificate of Achievement Program. Sarah is involved in the development and teaching of professional education courses on the national and local office level. She has provided training to audiences throughout the nation that focus on the implementation process of the new standards. Sarah is involved either as audit partner or report reviewer on every engagement performed by the Central Plains Region Public Sector Practice. Professional Certifications CPA licensed to practice in Colorado, Iowa, Illinois, Missouri, Wisconsin, Kansas, Nebraska and Louisiana Professional Affiliations American Institute of Certified Public Accountants Iowa Society of Certified Public Accountants Illinois Society of Certified Public Accountants Colorado Society of Certified Public Accountants Illinois State University Advisory Council Board of Directors for the Rockridge Booster Organization Government Finance Officers Association Education Bachelor of Science degree in Accounting, Illinois State University, Normal, Illinois Masters of Business Administration, University of Iowa, Iowa City, Iowa Appendix A ro to ml w N o ro C� T of m w m w) p o p p p o 0 0 0 0 0 0 o O H !y'I N N N W N N fl N N rvr N N N N N P r{ r� N IOV O N O p ylm m N M o O O o o O o p O p p o O 1� o 0 0 o p p o o p o 0 0 0 [v I vmi umi C a O N[ Y Ytl U IA u U 0 O o u Y A N m 0 O KOI U N FI ~I N � y H a H a a w M W W 4i a w w w W w w a w a ro a U Y U Up mmm m m-+up up .s. up F.r °J q u U 'v 'tla w as u" w a' H aaaaaaa"aaaaa Wmaa a'xm !°. u a o W w yy ti u Q i N N H eQ1 H .i a+ rororo b a W ro W W N N Vi N N N N 10 N N L Pr IE m Y a N Vv W W W Y L Y Y 4v H !dl x N A > � A N vai In N w r• >> '✓ > W C o C C a m a C C C C C C C C C C N H H o r{ 1J N w oy w{ vv Y vl N N ri r-1 r4 '] '•1 M rl ] y yy yy 7 a u Y Y H a W P1 P, w dui w N 'O C ..JJ a w W C 4 C ! W p •U C F C C W W .Y W rL iU vtl W W A a O � ro� N ti .ri 2 M N N a N N N N r4 NH a N Y T 1 N N H H 1 N N W N Q N ri 14 tP O JI (9 E g V u U V u W U U u µ q H M ..1 u W rL £ V £ £ U E e XU x H £ F R Q 4 2 £ S: £ £ H k a E 1W RI W 0 � Y a pr 'tl Y 11 rl Y Y Y L tl N Y Nr-1 Y Y V Y a li .rl N W r. Y Vi 11 W H O ¢I H N� Hr Hr H H N H N H 11 V a A Vd• F: N N QW H O M1r m m m O N ri O O Oi O O O O w U U O O M O 0 JOI M a N O O q a •{ N IV 7 N W ri N O N p b ry0 N N ri '1 ei .-1 N O H O 00 r-1 iP-1 ry O ryr N m a .•v a 'tl A rW.l .ml Nu 3 u u a w o i. l m i r 41 m ro a � � m m " •o. a �' o 'pdr '(%.y n°� 'ri �"+ ryi rory 'tl H OH 'O a H N H O r W N H 01 N T ba N T H yy �rl C 'i N 1� a r-1 Or a Or m N a qo (n T .Cu N o Y v1 U N u � 0 s u N a �o EE U Y Y aN w �9. (�u'�� .YY a H W H m z c u H H w o w a o c L N q Ho rop 3 q N m m° a q Uq t 9 1 1ai 'aj N a F„I M N N N 'rUC C ry. V Q yHv .i y . { Irl 0 Y. iyat a K ii a u o WNW o o ry O o n o o e o 0 0 0 o W o yWaW. 4 W W O L] �] m R � N a r P M N N W M •i •y O O rM1 N y P O N � O r-1 ry U N UU V O O O O U V O O O O N N H ri O mlw rH..l N N o N Yl N �-1 N N �QpI w P Poo o M N FJ O a� ro u o� Z U V H u u N M v K u u 3 C w q O y y„ Ot JJ w PJ O N p r� '0 U �Oy 'yP U TJ U bl bl ro N V 'C V „ H „ C H+i N 4 n 41 L k G J K K C a K o 0 a H N q U' R R H ro �11 s£z a aas`�i w" m my a a-ev a ww ✓ > w w u u ma Nry W O p. p� W W q£ 0 U' O U' U UN' O O G O O .YN N H ro o P W m O mO ''ei N wmmr' ry N m q a o N N O O r O 0 w N " u a N ? a 4� L N V W rl a J u u a u u ry G b ro Y' L N a 4"I E O S'ro OND vA�>� F' yy v� N G a Q W gC Pal H b iiiry���� m p pEp 5 C\ n \ o m V 1 M\ w E aW[ o N ri W V U O O. O .PI �P-I rNi Fi a 0 N I F V L U ti a ro ro v u R G v vUi k •tl N V D! V H N N N V rVl �U N N G u o a b 11 U V M W W 11 II W EN II N II �Ny( U N N U i V F M H k tl U Y. N N C 0 A N U UO W O G ti a n 'm M N N ro N 9 u m 0 O Vl � 'tl q C O N 31 N O A C o W N p a nl 0 O ro £ w bl M trot q\ N G N pp�� N Y P N[ N U ryN W a ti n n. u a n II a 11 m m •L N N V d II II O W .F R x £ U 4 •� N H y C m a' � M .tl N v N Y W TI N M Y � O d ro m ro m D Ii y Y W N W A A G N Y Y N V V i A jl N H ql q C p i� •O •i (9 > u ..1 Y N W 11 bl •.3 O .d '•1 N •`yi N O .1 dIJ �U U 41 O bl q pw; YP • O ri n R ¢ R It Iq H u � II n II U> N li 9> U N v m N l9 G> > N e u H p bl O H W3 O A G U v N w 0 N V N \ V V •O 'tl •k U bl N rL �yy A U °z Mia Frommelt, CPA Partner 0 816.751.1855 F 816.255.2055 mia.frommelt@rsmi.com Specific Role in the City of Fort Collins, Colorado Engagement Mia Frommelt will be responsible for the final quality control report review. Summary of Experience He is a partner in the Assurance practice of McGladrey & Pullen. She serves public sector industry clients. As a public sector specialist for the firm, Mia focuses on providing audit, consulting and reporting services to governmental and not -for -profit units. She is responsible for authoring and technical review of the frm's governmental and compliance procedure manuals. Mia is a member of the GFOA Certificate of Achievement Special Review Committee. She reviews state and local government comprehensive annual financial reports to assess reporting excellence in accordance with the requirements of the Certificate of Achievement Program. Mia is also involved in teaching professional education courses on a national and local office level. These courses include yellow book qualified seminars and new standards implementation programs. Mia is involved either as audit partner or report reviewer on every government engagement performed by the Central Plains Region Public Sector Practice. Professional Certifications CPA licensed to practice in Colorado, Missouri, Illinois, Iowa, Kansas and Nebraska Professional Affiliations American Institute of Certified Public Accountants Government Finance Officers Association National Association of College and University Business Officers Iowa Society of Certified Public Accountants Kansas Society of Certified Public Accountants Missouri Society of Certified Public Accountants Kansas Government Finance Officers Association Government Finance Officers Association of Missouri Education Bachelor of Arts degree in Accounting, Loras College, Dubuque, Iowa Masters of Business Administration, University of Iowa, Iowa City, Iowa Appendix A q a o A U m O W u d L F m d m rY b N N m N eY H N L H O N N N 1I, N F m w b N r C O (W1 a O � a A i U O 0 0 N 1 4ja H "g D A� H u v d n £ VI O N O O O O O O O O O O O O O 11 •'1 � 'i .-1 N N b .'I N N H N N N .-1 '1 N N O O O O O O O O O O V1 N •'I H b •-I N N HI .- „ N O O VI O O O O O O O O O N M 14 a a M W a a a M ,n a W w w ql w w a 14 W a a a a U 7 O V; N N U N N � .•J C C Oq y� N V� N 7 V U R R H R 4 a a R£ a� R R R R R ,C R 4 m R Y. a R R R R v 't Ili H >`H H H • i' n n i 4 TTTT am} N i O O O P• a a 0 H 7 ro U Y Y Ol O Pi Fi ; Ury U� N N� ra a Pq.N N N N b fi E? H N M qq d tl 7 d vp, 0 d L y J Y 0 0 I A1 �.( .�( N N N d d d N D O N N .1 d ?'.� F K U U u q d d U V C 99 C N H H H ri 7 •tl •] '] H FI N ri y Y T i. �-y1 N Y 11 Y VI '.i Ny •tl d Ll H H H N U• L9 U 4l d N N ,4 N ~ '~ M M d U ro I m I I m�s I ' ss'ro •mro (� f9 xU' R� i ii wi,m L9 w q$ £y £ vY�i £ a q� Od EN Ed U a r y£ U• (9 � O£ £ £ £ W K £ C K 15 £ x G m 4 R £ IG M £V £ £ m •d m •o •a d v •o m m a ro P N a a� y d d a v v T T T T v 7 d d m m m V U U DUI a P, V Fq, q H V'' O 00 O U U' U' U• O U' U• w N N N U O U'U U U• U• 0 o b Oo H N H.4o o mgm°�O'omo 000N O O O O O O O O N O O i4 N O H 1� Ot dl O o w o N Owl N m 0� 0 b .y � �-1 N N N i N N ri ri YI r1 O O O w� w W In w w w w .Ni ry N c tl� w w w I w w (Y JJ N C/ b •p O O 41 � W 0 N i In ..I N d Y Mro• [d � N a d N O U XN N i� U , Uq O P� M1J '] qro .] C d •U d R q T O N N [� i a� d N q d •U d N 1 q In p uG � d oq � rop qC M. tJ .qi .0 3 C w w RU R Itl U N R' V rc' V '4 �1 v q y •• N ryq w' C •-1 P W X o yN yN U•l• �/•,• O P q a. q F N a 41 a 4 O a p ry U• a A O' a W h K i u! w. N !+ 3 yR• ry2. w w al w� q O o O fl O N N M N N P N N N N 0 C N P M C r T O O Y1 O O O O U N O Ul N M „ r nail o 0 0 0 0 0 0 0 0 In o 0 0 o w o o g o 0 0 0 0 N N Y O C Yy 1p6 H V Y A N [I Nu H LL H W W a N N W a W P+ W W W W O •tl a w a 'r o 9u u a a'>>> > �'�i mQ pa �quu u.• N °� Y .q .q rbi u v v v v vu�cRw t%] tlJO 'wVtl �� q.c .� 4m1 'O 0 U Y O T tl H U W W a0 4 RI Q 0 t£T M Q Q 4 Q 4 y W 'V6 0 Q R R (W wW pV' a L Y Q U aTi yTl Ial H ry aTi C O N N U U U U N O O N N b) N OI U) N q [: N G O 'N U >> a° 4 al ti J 4!� U FI N rWi r-WI ri •-WI N .-WI d H �-dl U .tl .0 W N WN N 1 W N J1 �U �U �U O H Ca. £ •U N yN� �ytlW N d N W q •-1 W d d y d d W„ N d d 'tl 'U N 0 U 'p •O 'O 'tl 'O 'O •O u u A£ •tl N r+ ni .i b� I .-� •-I W N M uc�u N n; t s s` `n7. i i s c r n a i s s s ImA aro sro x0'. d W N .y •ov v, U d 0 v •a •e Hv m m v m a a a a m v v v v m m N ry v v v v a s N a A Y Y rl Y y N N N .A .•i it ,.] r]- ..1 r] .A I .A .�1 .A r1 IJ Y Y Y ,l rvl rvl N N N N Y u •tl ry G G d d d d C „ H G �4 P, V U U d C W a a �A .W J W 1 £ 0 U' 0 V' Vi W W N N N O O. O O V' G 0 N V' N U• U' U' G ['1 G U' U' ['l O O Il. O it O O O N N O 0, O O O O O O O W W W W W O O O O O W m q O W O W q 0 o O o o I o 0 0 m a 0 0 0 0 0 O N r ,D N ri fl N N O N W rl .4 N N C C W H W N M W H N N N P C N N ri .4 N V, w In C P W W W N V •-1 VI V, nl ,II W P ri N d d d N W Y Y W N N d N wv�u°i a .0 bw H �ro . vba�•�.%i N Iil 0) N W ,n q (y d W 'A d O] U w d F .i •O 'tl U, N W N p d H" Y W „ l N r Q a y W Q y N 0 O U a H U'a • yl N ro U. d u W H N O% VI N m q O pU U U 'C G� q ] N N ] Y W� O Ip q •O Y O bl H U U d •d Y J N d y n tqu a M !) d nl V Tl O > in N U •tl Y. •tl d P [L [L d 0 u U •. N YA. W a d U. Y Y !L a p a d u �� vq GaW Wm oN F m 4, U N apYQ u 0 0u u v ro a' y' eo oow O O O O O� .i ` iP-I fj^ N. ry O\ H O •4 N N .t o o U V ri ri ,4 ri V O O o O U O O O O q•-1 �I ii McGladrey& Pullen Certified Public Accountants Proposal for Audit Services for Ginty, of Fort Collins Years Ending December 31, 2008 — 2012 August 13, 2008 Y 9 u 9 w a L U H a h m a pN Pr U H z mN � N Heidi Hobkirk Manager 0 663,888,4428 F 563,324.6939 heidi.hobkirk@rsmi.com Specific Role in the City of Fort Collins, Colorado Engagement Heidi Hobkirk will also be responsible for the quality and timeliness of the audit services provided, including determining the content of our auditor's reports and being responsible for ascertaining that state, professional and regulatory standards have been met throughout the engagement. Summary of Experience Heidi is an assurance manager with McGladrey & Pullen's Central Plains Practice. Heidi specializes in serving on audit engagements of public sector organizations. Heidi has an extensive, highly technical background in audits of local government units. Professional Certifications CPA licensed to practice in Iowa Professional Affiliations Iowa Society of Certified Public Accountants American Institute of Certified Public Accountants Education Bachelor of Arts degree in Accounting, University of Northern Iowa, Cedar Falls, Iowa Appendix A m N O 0 N K 0 o P o 0 0 0 0 0 0 0 0 0 0 0 O O O O O O N w „ N W '1 0 •O ri N N N N N N iI N N el O O O O O O O O O O O O O O N„ P N r'I ri N N' H N N ,i N N ri N tl r1 N N N N N W N N M a I -I a M Pi M d H H d H W W W d W W W VI W W M W a W u u9 3 [tlI u tl v v U U n [Q C G C G L tf t9 u u' 11 0 1 O V '� %� o a u u •� a s °a o a w o utJ � 0 Q a a E a a w w 2 a Q Q C a a a a Q a W m a a a a u T T T T W 2 L L aJ Nry V p ,Yi ,U1 O O 1 N M> H �g$p O m � N N ro ro W 41 V! Y Y U Y N N M M •i IQ Ll 'J O 1 q p N N N N ,NI ..Ni N q g m N N N 'j �> •V 'V '3 G ry G G a v N tl C C C G C A I A I A ° u �o N >, S, u u N JJ Y Y •O o d G w W 14 oo U U q q �::�d Cw. W G 2 H C w ro ✓! •tl .tl •X i .°i H°14a n u iYro� '�'�•�•�a"u m l a N M ro NU' ro .r e n ro o m ro 0 0 1 a N 11 N SI N N N N N N'U U d U `yo' d a w O (9 N N !1 01 £. li U' U •1 v� � � m ro m •d ro '° 'tl ro w v m m m � VI •A Y a Y f/ N W (/� N H .'J ,'1 a .'J t/1 laa Y JJ LYY YYY Y a H„ w i 0Ll U U V Vi 41 11 V1 W U p, (1� V H 1Y H w a s VI tH I W a W O O N N N W W p, O 0 -O O O O 1py, O U' V N N N broi U m 0 U' tN'l U G V 0 o N O O o O O O O P o m m O, N O O M 1•I (V O m m W o P m b 0 o N N oo 0 o I O N m N W w 4 N O m ,i N W N O N M p N N m M O O O N P N N O O O O O N w 10 r N N m N ul M w ,y N w •f' N N N N P Vl N N N N r1 N M O O O N r N N p Y' W C W ul N ry N pN 0 tl W M p N a° m 10 G >, m N N 41 W N.N 'G Hri O U 3 ria H p. M ,y N fa'� W 4N U N 5 ,{ •W H N„ N 31 i(', JJ Ij p y N p Pi N p 41 E N O U Y U VI Y N I Y1 O p W O V V Na U (Y O }U( U Y u V K' y a U bl •U F C H s N N u O 1-0 Y N O {i R1 F' Y NtV 0 Y Y G H U• „ rvm y (9 O o Q 4 h l9 1GII O F N y u N a Q U U U u y N N N u� y K N !IJ v! d U' U '*F, b �-I ,GR d N H iNi rvl r] F N r0 � F• k p o m w M a NO N NO V) m N A N x n O x H Eo D] Po No N N r Yi r'1 r P N N N N N M P C W W N N O ri O O O O O O O O O M r rl N W U O O O O O O O O O O O O D U O O O U O O O ry O ri M r YI ri r N N P N N N N o m M M N ri Y C W O Ni O N n N .I A U O U V N U V N Nv � a U U V W �roJ Nu y ONI �1 V 7 V U N 0 T N H H T T tai N H H U N 0 0i U U Yp� O C vC N. M Pi P• N W N O O N ,aNi OPI Y N pNp N N fJ ££ N yy y IJ i; N rl y yN 9 N N N U U y 7 N O q P o W a s u v b41 Q Cpi M 'tl •O � 3 (.1 W N M b0 N b N W U Vl VJ H U U i U v •a •a a •o •a WW 00 •c •a •c •o v v u u V V U U P.H H( H V O O V p N. N� N V 0 0 40 1 O O O O 0 0 f9 t2 U U O O. t) O O O O ry N N O O ry W Ol O O O O 0 W W W O O W I 1 o 01 0 0 0 o N m m M m r m P n rl ri i Yt VI •i V e1 'i ri ri P D o m w o w ry W M N P O O ei rl .i N g Ol N L 0 0 C 0 41 N U 0 U Joe Gassman Senior Associate 0 563.888.4044 F 563.324.6939 joe.gassman @rsmi.com Specific Role in the City of Fort Collins, Colorado Engagement Joe Gassman will lead the field engagement team in auditing the financial statements of the City. Summary of Experience Joe is an assurance senior associate with McGladrey & Pullen, located in our Davenport, Iowa office, and specializes in serving the public sector. Joe has served on various public sector engagements including City of Rock Island, City of Boulder, City of Galesburg, Village of Milan, Moline School District, East Moline School District, Scott County, Black Hawk County, Chitimacha Tribe and Sac & Fox Tribe, Professional Certifications CPA licensed to practice in Iowa Professional Affiliations American Institute of Certified Public Accountants Iowa Society of Certified Public Accountants Education Bachelors degree in Accounting, University of Northern Iowa, Cedar Falls, Iowa Appendix A N N L E o vl o v T� n ry w N u 0 F o nl mo 0 o N Sri m w a N m N N n p iFl o 0 0 ry F N N a a N 9 M W O d P I u X YI Y a a U w N u 3 U �U[ VQj O W W q N O r N O N r o G O U On \ M N u v u v a u wpp rt v u >. T o N m N N 0 w m O w N o N Y N Ua F v N N u v a u v m v w v ry q U it V vi N N N N O �4 Ip N NT U 4! m m H W TJ d m v N N C G m w 4Ni N >i v o N q N uvl w H ua p P� W Ai a pN N p m i P A i V 0 u u °o o $ v 0 'Itlro ro 'S. F lon tp 3 H w O N L Q R N rtli N � ,u N ly. L O � R ill N m r] O U V � I i. �ro 1� a x° m N M O ry N ri N N N � N ri rmi " P o n o 0 0 0 o a d a P. W w A a a Pi a s U4 V g q q p q U !P u A u .i .Y1 N Jy Yi Y ..1 Y1 U O r fJ a'a a'a'aa'a a'aa m" n H H N 1 G O O ry nl C p. N mmmmmmm'>"'o"'> m m ti m m m a� o 0 o a m 0 0 0 0 0 0 0 0 m o mmory nav�000n ry tp O O O O N !Y n O ri N V P P P P N N O m N eNl ,NY rNi " N 0 0 0 0 0 0 0 o m o\ O •1 tml C t9 U t9 C H M 8 u° Ni w� o00 � oo Q „1 rl N m p q N N V U O O O NI w oom�n now o U r1 i+l N N N O (n P P r N Pp O N U P� u u u w ool ro G U U U Q v G V q 4q O U 'tl tji N Q.{{ 4 l� aV{ N N U�UkUll Q H Q Na a si G N n G H U 3 > w x > 0 o ro .a v ro 0 0 v v rl N y� y N J q H w W N O M x q N v F. G v N NaN m u v m N o N 0 au aw N u x u x m v ro v v v N 1 O Va O W W 41 m l] F. H W H t9 O c9 W W O O N O N W O it G a0 O O o m v N O VI n H N V O O C P Yl N J N O 41 h O N O 1� N N O 4! U N �➢ .i C .i c N a � 4 U N O N Cci i N C R G a ry v > n m O ro Oro a U41 N w U q U a uo v W U V O o o O ri 0 .i w m ry O ry U Q 14 RH �i 0 a v Id To the Partners of McGladrey & Pullen, LLP and the Center for Public Company Audit Firms Peer Review Committee We have reviewed the system of quality control for the accounting and auditing practice of McGladrey & Pullen, LLP (the Firm) applicable to non -SEC issuers in effect for the year ended April 30, 2007. The Firm's accounting and auditing practice applicable to SEC issuers was not reviewed by us, since the Public Company Accounting Oversight Board (PCAOB) is responsible for inspecting that portion of the Firm's accounting and auditing practice in accordance with PCAOB requirements. A system of quality control encompasses the Firm's organizational structure and the policies adopted and procedures established to provide it with reasonable assurance of complying with professional standards. The elements of quality control are described in the Statements on Quality Control Standards issued by the American Institute of Certified Public Accountants (the AICPA). The design of the system, and compliance with it, are the responsibilities of the Firm. Our responsibility is to express an opinion on the design of the system, and the Firm's compliance with that system based on our review. Our review was conducted in accordance with standards established by the Peer Review Committee of the Center for Public Company Audit Firms and included procedures to plan and perform the review that are summarized in the attached description of the peer review process. Our review would not necessarily disclose all weaknesses in the system of quality control or all instances of lack of compliance with it since it was based on selective tests. Because there are inherent limitations in the effectiveness of any system of quality control, departures from the system may occur and not be detected. Also, projection of any evaluation of a system of quality control to fixture periods is subject to the risk that the system of quality control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the system of quality control for the accounting and auditing practice applicable to the non -SEC issuers of McGladrey & Pullen, LLP in effect for the year ended April 30, 2007, has been designed to meet the requirements of the quality control standards for an accounting and auditing practice established by the AICPA, and was complied with during the year then ended to provide the Firm with reasonable assurance of complying with applicable professional standards. As is customary in a peer review, we have issued a letter under this date that sets forth comments relating to certain policies and procedures or compliance with them. The matters described in the letter were not considered to be of sufficient significance to affect the opinion expressed in this report. November 30, 2007 Wells Fargo Center 1700 Uncoln Street, Sulte 1400 Denver, CO 80203.4514 P y.� ya •► 303861-4545 Fax 303832.5705 tl OMMEMiBER pkd.com Beyond Your Numbers GLOBAL ALLIANCE OF INe EPENDENT FIRMS McGladrey& Pullen Certified Public Accountants McGladrey & Pullen LLP 201 North Harrison Street, Suite 300 Davenport, lowa 52801 0 563.888.4000 F 563.324,6939 August 13, 2008 James B, O'Neill II, CPPO, FNIGP Director of Purchasing & Risk Management City of Fort Collins 215 N. Mason Street, Zed Floor PO Box 580 Fort Collins, Colorado 80522 We're pleased to present the City of Fort Collins, Colorado with this proposal to provide professional auditing services. We are committed to providing quality and timely services that exceed your expectations. The following summarizes our understanding of your needs and provides an overview of our resources and capabilities to meet them. As specified in your request for proposal (RFP), you are interested in the following services which we will provide: • Annual audit of the City of Fort Collins, Colorado for the years ending December 31, 2008.2012, The results of this engagement will include: • Auditing standards generally accepted in the United States of America as set forth by the American Institute of Certified Public Accountants • The standards for financial audits set forth by the Comptroller General of the United States and the Government Auditing Standards • The provisions of the Single Audit Act of 1996, as amended • The provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments and Nonprofit Organizations TIMING REQUIREMENTS We recognize the need to communicate and cooperate closely and regularly with management and the Council during the audit process. From the preliminary audit planning through delivery of the reports and presentation of the management letters, we strive to maintain open communications. This includes meeting with your staff to discuss audit approach and schedules to be prepared, gaining an understanding of your accounting controls via interviews and questionnaires, and conversing throughout the year to discuss changes and develop strategies to cope with these changes. It is important for us to provide an understanding of what is expected to minimize disruptions in your internal work schedules. We will commit to your timing requirements as outlined in your request for proposal. WHY CHOOSE US? Everything about us — our culture, our values, even the locations of our more than 100 U.S. offices — is designed to help us understand your challenges, earn your trust and contribute to your success. We have a passion for meeting the special needs of governmental entities. We provide our clients with a high level of commitment and the personal attention your City deserves. We also offer a full array of tax, business consulting and other advisory services designed to help you succeed. McGladrey & Pullen LLP serves clients' global business needs through its membership in RSM Internafional (an of Baton of separate and independent legal entities). Attachment to the Peer Review Report of McGladrey & Pullen, LLP Description of the Peer Review Process Overview Firms enrolled in the AICPA Center for Public Company Audit Firms (the Center) Peer Review Program have their system of quality control periodically reviewed by independent peers. These reviews are system and compliance oriented with the objectives of evaluating the following: • Whether the reviewed firm's system of quality control for its accounting and auditing practice applicable to non -SEC issuers has been designed to meet the requirements of the Quality Control Standards established by the AICPA. • Whether the reviewed firm's quality control policies and procedures applicable to non -SEC issuers were being complied with to provide the firm with reasonable assurance of complying with professional standards. A peer review is based on selective tests and directed at assessing whether the design of and compliance with the firm's system of quality control for its accounting and auditing practice applicable to non -SEC issuers provides the firm with reasonable, not absolute, assurance of complying with professional standards. Consequently a peer review on the firm's system of quality control is not intended to, and does not, provide assurance with respect to any individual engagement conducted by the firm or that none of the financial statements audited by the firm should be restated. The Center's Peer Review Committee (PRC) establishes and maintains peer review standards. At regular meetings and through report evaluation task forces, the PRC considers each peer review, evaluates the reviewer's competence and performance, and examines every report, letter of comments, and accompanying response from the reviewed firm that states its corrective action plan before the peer review is finalized. The Center's staff plays a key role in overseeing the performance of peer reviews working closely with the peer review teams and the PRC. Once the PRC accepts the peer review reports, letters of comments, and reviewed firms' responses, these documents are maintained in a file available to the public. In some situations, the public file also includes a signed undertaking by the firm agreeing to specific follow-up action requested by the PRC. Firms that perform audits or play a substantial role in the audit of one or more SEC issuers, as defined by the Public Company Accounting Oversight Board (PCAOB), are required to be registered with and have their accounting and auditing practice applicable to SEC issuers inspected by the PCAOB. Therefore, we did not review the firm's accounting and auditing practice applicable to SEC issuers. Planning the Review for the Firm's Accounting and Auditing Practice Applicable to Non -SEC Issuers To plan the review of McGladrey & Pullen, LLP, we obtained an understanding of (1) the nature and extent of the firm's accounting and auditing practice, and (2) the design of the firm's system of quality control sufficient to assess the inherent and control risks implicit in its practice. Inherent risks were assessed by obtaining an understanding of the firm's practice, such as the industries of its clients mid other factors of complexity in serving those clients, and the organization of the firm's personnel into practice units. Control risks were assessed by obtaining an understanding of the design of the firm's system of quality control, including its audit methodology, and monitoring procedures. Assessing control risk is the process of evaluating the effectiveness of the reviewed firm's system of quality control in preventing the performance of engagements that do not comply with professional standards. Performing the Review for the Firm's Accounting and Auditing Practice Applicable to Non -SEC Issuers Based on our assessment of the combined level of inherent and control risks, we identified practice units and selected engagements within those units to test for compliance with the firm's system of quality control. The engagements selected for review included engagements performed under the Government Auditing Standards, audits performed under FDICIA, multi. office audits, and audits of Employee Benefit Plans. The engagements selected for review represented a cross-section of the firm's accounting and auditing practice with emphasis on higher -risk engagements. The engagement reviews included examining working paper files and reports and interviewing engagement personnel. The scope of the peer review also included examining selected administrative and personnel files to determine compliance with the firm's policies and procedures for the elements of quality control pertaining to independence, integrity, and objectivity; personnel management; and acceptance and continuance of clients and engagements. Prior to concluding the review, we reassessed the adequacy of scope and conducted a meeting with firm management to discuss our findings and recommendations. To the Partners of McGladrey & Pullen, LLP and the Center for Public Company Audit Firms Peer Review Committee We have reviewed the system of quality control for the accounting and auditing practice of McGladrey & Pullen, LLP (the Firm) applicable to non -SEC issuers in effect for the year ended April 30, 2007. The matters described below were not considered to be of sufficient significance to affect the opinion expressed in that report, which should be read in conjunction with this letter. Engagement Performance Comment — The firm has followed two different methodologies for supporting a low control risk assessment for certain relevant assertions for significant account balances. Substantially all audits in a niche industry practice are performed using one methodology, while the rest of the firm uses the methodology in the firm's commercial audit manual. The alternative niche practice allowed for lower testing requirements than the standard approach in the manual. The support for the alternative approach for sampling is not documented in the manual, however, no departures from generally accepted auditing standards were noted. Recommendation — We believe the alternative approach should be reconsidered. Any approved. alternative methodology should be appropriately documented in the audit manual. ,3z� , 21/4-P November 30, 2007 Wells Fargo Center 1700 Lincoln Street, Suite 1400 Denver, CO 80203-4514 B)�CRr� y��., 303861-4545 Fax303832.5705 r/,Mity.' GLOBAL ALLIANDG OK bkd.COrt7 Beyond Your Numbers INDGTF.NOGN7 FIRMS McGladrey& Pullen Certified Public Accountants November 30, 2007 Center for Public Company Audit Firms Peer Review Committee C/o American Institute of Certified Public Accountants Practice Monitoring Department 220 Leigh Farm Road Durham, NC 27707 Ladies and Gentlemen: This letter represents our response to the letter of comments issued in connection with our firm's peer review for the year ended April 30, 2007 and should be read in conjunction with that letter. Implementation of the actions set out in this letter will be monitored in connection with our annual inspection program. Prior to January 31, 2008, the Firm's National Office of Audit and Accounting will reconsider the methods used for testing key controls in this niche industry and either conform the methodology to the methodology specified in the commercial audit manual or document the basis for any approved alternative methodology in the respective industry manual. AtiC.*� f,- , z McGladrey & Pullen, LLP is a member firm of RSM International, an affiliation of separate and independent legal entl6es. FundamentalsSecond Ouarter 2008 Ways and means for the public sector New fax reporting requirement for not -for -profits- What FiN 48 means for your organization In June 2oo6, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48 (FIN 48), Accounting for UncertainhIt in Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. log,Accomntingfor Income Taxes. FIN 48 prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in financial statements tax positions taken or expected to be taken on a tax return. This includes decisions to classify a transaction or entity as tax exempt. FIN 48 requires an organization to record in financial statements the uncertainty that a tax position will be sustained if examined by the taxing authorities. If a tax position is nnore-likely-than-not (MLTN) — more than ,o percent — to be expected to be sustained by taxing authorities, or if taxing authorities were in possession of all relevant information to ascertain the position is MLTN, then that tax position isn't considered uncertain and FIN 48 accounting and reporting provisions wouldn't apply, Basically, the goal of FIN 48 is to identify uncertain tax positions taken by an entity and determine the impact of that uncertainty on the organization's financial statements. For tax exempt entities, two universal tax issues should be considered when performing audit procedures under FIN 48: Exemption/exempt status and unrelated business intone tax. (Additional issues exist when NFPs control taxable subsidiaries.) After specific tax positions have been identified, FIN 48 analysis begins with a two-step process: 1. Determine whether a tax position will be sustained or not based on an examination by taxing authorities of the tax position if the taxing authorities are in possession of all relevant facts pertaining to the tax position. The assumption under FIN 48 is that the tax position will be examined by taxing authorities. 2. Identify what tax benefit would be realized (o• liability required to be paid) — if the MLTN threshold is met. This process is based on judgment — at various probabilities beginning with complete success (at too percent sustainability) — working down a matrix of possibilities that would then cumulatively result in an MLTN position. The amount of benefit recognized in the statement of financial position and the amount taken, or expected to be taken, on the tax return may be different. These differences represent unrecognized tax benefits. The unrecognized tax benefits and the related interest and penalties will generally result in the recognition of a liability under FIN 48. Alternatively, the amount of any net operating loss carry forward or amount of refundable tax may be reduced. An NFP that has a liability for unrecognized tax benefits, and presents a classified statement of financial position, must classify this liability separately from other tax balances based on the expected timing of the cash flows. Deferred liability classification is either current or non -current and is based on a one-year or operating cycle criterion used for classifying other liabilities. The liability cannot be combined with deferred tax liabilities or assets. In addition, the tax position recognized as a result of applying FIN 48 may also affect the tax basis or liabilities which would create temporary variations. A taxable and deductible ternporaiy difference is the distinction between the book values in the statement of financial position and the tax basis of an item as determined by FIN 48 application. A liability recognized as a result of FIN 48 application cannot be classified as a deferred tax liability unless it arises from a taxable temporary difference. If there are changes in net assets as a result of FIN 48 application, they will be accounted for as an adjustment to the opening balance of retained earnings. Additional disclosures about the impact of FIN 48 will also be required. New tax reporting, continued on page 3 7 www.rsmmcciladrev.com_— vour sinole business_ resource Have accounting, tax or business consulting questions? RSM McGladrey provides tax and business consulting, wealth management, retirement resources, payroll services and corporate finance services to meet domestic and global midsized companies' needs - all in one source. Visit www,rsmmcgladrey.com for more information. Fundamentals is a publication of RSM McGladrey, Inc. 02008 New Form 990: The schedules This is a companion article to the first quarter Fundamentals article "Not -for -profits talked and the IRS listened —Input helps with redesign of Form 99o." When the IRS released the new Form 990 to be filed for 2008 tax years, the package included 16 schedules organizations may or may not be required to file. Part IV of the core form contains a 37-question checklist where "yes" answers indicate the need to file each schedule. The following is an overview of six of the schedules that will have relevance for many not -for -profits: Schedule A, Public Charity Status and Public Support This schedule — to be completed by all public charities — replaces the old schedule A, parts III and IV -A and now includes a catch-all "supplemental information" page that resembles a blank piece of notebook paper. Organizations must use their book method of accounting (as stated on Form 990, Part IX, line i) rather than the cash basis on the support schedules. This will likely result in restating or explaining prior year colunms from the support schedule. Interestingly, the IRS has stated the support schedules are designed to supersede a new organization's requirement to file Form 8934 after 6o months of operations. The plan is to do away with the "advance ruling letters."'Therefore, a new charity will receive its exemption letter at the time the IRS approves its exempt application and will have five years to establish that it isn't a private foundation. Schedule D, Supplemental Financial Statements Part IV of Form 990 has seven questions that, if answered "yes," filing of Schedule D is required, If you have land, buildings, equipment, investments or "other liabilities" on your books; engage an audit firm to conduct a GAAP audit; maintain donor advised funds; received conservation easements; hold art collections; provide credit counseling; and/or maintain endowment funds you are required to file Schedule D. Furthermore, if your NFP maintains donor advised funds, receives conservation easements, holds art collections, provides credit counseling or maintains endowment funds, you're required to file Schedule D. This schedule will affect the majority of NFPs. There are sections that require additional information about all of the items listed above, especially investments and other liabilities.. As with several of the new schedules, D has a full page of space for supplemental information. Schedule F, Statement of Activities outside the United States The IRS has backed off on requiring organizations with foreign operations to report the exact locations of those endeavors. Reputing is now on a regional basis. The proposed regions are Central America and the Caribbean; East Asia and the Pacific; Europe (including Iceland and Greenland); Middle East and North Africa; North America (which includes Canada and Mexico, but not the United States); Russia and the newly Independent States; South America; South Asia; and Sub -Saharan Africa. Information required for activities include region; number of offices and employees in region; activities conducted; program service activities; and total expenditures in region. Schedule J, Supplemental Compensation Information If any officer, director or Ivey employee received more than $150,000 in total compensation, your organization will need to file schedule J. Again, the amounts are based upon W-2s and nogg-MISCs filed in the year of reporting. Part I asks questions about fringe benefits provided and how your board arrived at your CEO's compensation (The IRS has eliminated reporting of amounts of de minimis fringe benefits and expense reimbursements.). In Part II, you must breakdown base compensation, bonus and incentive comp, other connp, deferred comp and nontaxable benefits. Schedule J actually gives you two "supplemental information" sub -schedules and there is also a column to report "compensation reported in prior Form 99o." Note: The compensation nuances of the new Form 990 and schedules will be covered deeper in a future Fundamentals article. Schedule 0, Supplemental Information to Form 990 This "blank slate" schedule allows exempt organizations to add "all the news that fits." Per the instructions, it "permits organizations to supplement information provided on the Form 99o, even if there is not a specific instruction requiring the organization to do so." Many in the NFP arena expect this form to be the place where organizations are expected to tell their story — and anyone can go here to find out what you do. Dave Moja is it director with RSM McGladrey. For more information on specific schedules, contact him at dave.moja@rsmi.com. ®7 T_he_eariy edition -get desktop delivery_ of Fundamentals Don't want to wait for your next issue of Fundamentals? Get quicker- and paper -free- access to not -for -profit and governmental entity information by signing up for the electronic version of our award -winning publication. Visit www.rsmmcgladrey.com/fundamentals and click on "Sign up now" to receive your Fundamentals e-newsietter. Fundamentals is a publication of RSM McGladrey, Inc. 02008 Conditional asset retirement obligations — is your NPP familiar with therm? In March 2005, the Financial Accounting Standards Board published FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, to provide guidance for more consistent recognition of liabilities relating to conditional asset retirement obligations and more information about future cash outflows relating to these obligations. FASB Statement No. 143 (FIN 47), Accounting for Asset Retirement Obligations, requires entities to record an obligation, when incurred, for the cost of retiring assets through renovation, demolishment or sale. For example, if an organization is legally obligated to restore a building site back to a certain condition, it's required to accrue that obligation once the contract or law establishes the obligation, as opposed to at the end of the asset's useful life. In addition, these liabilities need to be recorded even if the entity plats to sell the facility versus actually performing the remediation. Fntities may mistakenly believe FIN 47 applies only to "dirty" industries (e.g., mining or imelear power production) because they need to accrue clean up costs (such as land reclamation or nuclear decommissioning). Actually, asset retirement obligations exist in substantially all industries. Throughout the U.S., FIN 47 implementation has resulted in universities, hospitals, nursing homes and medical clinics, among others, recognizing asset retirement obligations when none had previously been recognized. For instance: University A knows some of its facilities contain asbestos and that they're located in a state that requires asbestos abatement — if the facilities undergo major renovations or are demolished. The university's to -year strategic plan calls for major renovation of two buildings within the next five years. Therefore, it has the, information needed to estimate a range of potential dates for asbestos removal, possible methods of removal and related costs and probabilities associated with those dates and methods. Consequently, the university is New tax reporting, continued from page I In February 2oo8, the FASB delayed the FIN 48 effective date for certain nonpublic enterprises to annual financial statements for fiscal years beginning after Dec. 15, 2007. NFI's that aren't obligors on debt securities traded in a public markets will be required to adopt FIN 48 in the preparation of their 2008 annual financial statements. able to approximate the fair value of the liability for the special handling of the asbestos using an expected present value technique. The university would recognize the cumulative effect of initially applying FIN 47 as a change in accounting principle reflected as of the beginning of the first period presented. Hospital B realizes some of its facilities contain asbestos and they're located in the same state that requires asbestos abatement — if the facilities undergo major renovations or are demolished. However, the hospital has no plans to renovate or demolish any of the facilities that would trigger a future outflow of cash for asbestos remediation. It's also unaware of any need for major renovations caused by technology changes, operational changes or other factors. Additionally, the hospital is unsure whether it will ever renovate or sell the facilities "as is" once the facilities are near or at the end of their useful life. It has concluded it doesn't have the information needed to estimate the range of time over which the entity may need to remove the asbestos and cannot reasonably assess the fair value of the liability. The hospital isn't required to estimate or record the abatement liability, but the circumstances must be disclosed in the financial statements. Although, in the firtme when this information becomes available, such as when it makes plans to renovate or demolish the facility, it will need to record the fair value of the abatement liability using an expected present value technique. Interpretation 47 was effective no later than the end of fiscal yeas coding after Dec. 15, 2005. If FIN 47 wasn't properly implemented in the financial statements of a period for which it was effective, such an error must be reported as a prior -period adjustment. For the full text of the interpretation, visit www.fasb.org/pdf/fin%2047.Pdf. For NFPs that are obligors, the interpretation became effective for periods beginning after Dec. 15, 2oo6. Proper evaluation of the implications of FIN 48 will likely take management a considerable amount of time, so organizations should start the evaluation process as soon as possible. W fundamentals is a publication of RSM McGladrey, Inc. 02008 KSM MC(i aarey Editor: Julia L. Ramirez'. Fundamentals is published by RSM McGladrey, the leading professional services others as a result of reliance upon such information This publication does not firm providing accounting tax and business cobsulling to midsized companies,. and is not intended to, provide legal, tax or accounting advice McGladrey& Pullen LLP.(a parinerowned CPA firm) delivers audit and attest Send additional copy requests change of address, comments or suggestions to services. RSM McGladrey and McGladrey& Pullen have an alternative practice. juha raddreoCnal copy call chaageofa structure Though separate and independent legal entities, they can work 3. together to serve cbents'business needs, They are member firms of For more infer motion about RSM McGladrey or any of our business services,'. RSM International an affiliation of separate and independent entities.,visitwww.rsmmcgiadfey.com or calf 800.Z743978 Information provided in this publication. has been obtained by RSM McGladrey 0 2008 RSM McGladrey Inc All rights reserved Inc from sources believed to be reliable, Hmvaver, RSM McGladrey Inc Fundamentals guarantees neiiber the accuracy nor completeness of any information and'. is not responsible for any errors of omissions or torresmts obtained by '.. Second Quarter 2008 '. Printed in U.S.A. Fundamentals is a publication of RSM McGladrey, Inc. ©2008 r Collins ADDENDUM No. 3 SPECIFICATIONS AND CONTRACT DOCUMENTS Description of RFP: P1134 Audit Services OPENING DATE: 3:00 P.M. (Our Clock) August 13, 2008 Financial Services Purchasing Division 215 N. Mason SL 2" Floor Po Box 590 Fart Collins, CO 80522 970.221.6775 970221.6707 fcg0v.e01n1purchasi"8 To all prospective bidders under the specifications and contract documents described above, the following additions are hereby made. ADDED: Proposer Guarantees (Appendix D) and Proposer Warranties (Appendix E) added. NOTE: Appendix " B" and "C" were not used. Please contact Project Manager Chuck Seest at (970) 221-6795 with any questions regarding this addendum. RECEIPT OF THIS ADDENDUM MUST BE ACKNOWLEDGED BY A WRITTEN STATEMENT ENCLOSED WITH THE BID/QUOTE STATING THAT THIS ADDENDUM HAS BEEN RECEIVED. Financial Services Of Purchasing Division 215 N. Mason St. 2 A Floor • Collins PO Box SRO Fort Collins. CO 80522 a� 970.221.6775 970.221.6707 Purchasi jr8f ..ce"111,ur,'a"ing APPENDIX "D" PROPOSER GUARANTEES The Proposer certifies it can and will provide and make available all services set forth in Scope of Work and Time Requirements. Signe Nam( Title: Firm: Date: LIST OF PRINCIPALS The names and titles of the Proposer's principals are: 2. 3. 4. 5. Limited Liability Partnership- NLltiple Partners Across 100 of ices Proposer: NtGadrey&!UIlenLLP Signature:. `axe Name: Sarah Bohnsack (Print or type) Address: 201 Wh Harrison Street, Silite 300 Area Code & Phone: Financial Services City Of 215 N;as Divisio n Z Purchasing Mason St. Floor Fort Collins 1°11 Boa5R0 Port Coilinx, CO 80522 �,,... 970.2Z1.6775 970,221.6707 Purchas�inaj ffmcom1purclia.sing APPENDIX "E" 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 is willing and able to obtain 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. 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: Sarah Bohnsack or Title: Partner Firm: MGM Date: Angus City of Fort Collins, Colorado August 13, 2008 Page 2 The following are some features that make us uniquely qualified to serve your needs: • We understand your industry. Nationally, we provide services to approximately 2,000 public sector entities. This specialization provides a perspective that only comes with experience. Within our Central Plains Practice, we have developed a governmental practice with the primary goal of developing more specialization within the governmental niche so we can create higher value for our clients through better advice, more efficient audit processes and deeper knowledge of their organization. Your financial statements will be audited by a firm that understands municipalities and counties. Knowing your financial reporting meets industry accepted standards will help confirm the report's credibility to your various stakeholders. • Dedication to continuous and innovative learning opportunities. In order to provide services to the public sector, our firm requires team members to serve a significant number of clients in the public sector and attend industry specific continuing education. We go beyond basic industry standards to ensure your engagement team understands governmental and specific industry related issues. We provide team members constant learning opportunities through such mediums as web casts, local office training and industry conferences. Keeping abreast of industry trends ensures you will not be asked to train team members on governmental issues. • Exceptional level of service. We take a team approach that is heavy on experienced partnerldirector involvement. With a partner -to -staff ratio of 1:13, you won'tjust meet the partner/director at the initial planning sessions; your partner/director is in contact with you regularly to help ensure we meet your delivery expectations. They will also challenge your thinking, offer potential solutions and provide sound business advice, when appropriate. • We provide uncompromising client service. You need to work with a firm that will be committed to your goals. Proactive and timely client service is the number one priority among the professionals at McGladrey & Pullen LLP and RSM McGladrey Inc. We are structured to ensure our clients receive a high amount of attention and involvement. Many times throughout the year, questions arise concerning accounting procedures, tax matters, benefit plansstaffing, budgeting and other matters. We believe you will find it reassuring to be able to call experienced professionals and seek their advice whenever needed. We believe you will find our responsive service is different from what you will find with other accounting firms. • Our Governmental Practice has gained a national reputation for excellence. Many of our governmental clients have been referred to us by regulators, among whom we have developed a reputation for providing quality auditing services. In addition, we have assisted many clients in receiving and maintaining the GFOA Certificate of Achievement for Excellence in Financial Reporting. • A knowledgeable team with minimal turnover. We're pleased to report that turnover on our governmental engagement team has been low. The industry knowledge these employees have about organizations similar to yours increases audit efficiency and improves the quality of your audit. With programs we have in place to measure and track employee satisfaction and reward our employees, we're confident this high retention rate will continue. Our approach to the audit engagement will establish a delivery system for providing a truly exceptional level of service. Each element of that system, including team structure, staffing, audit approach, communication and coordination, has been examined and refined to fit the needs of the City of Fort Collins, Colorado. We believe our commitment to industry standards, quality and timely service, low turnover, range of service and our depth of governmental experience will serve the City of Fort Collins, Colorado well. We look forward to contributing to your long-term success. If you have any questions about this proposal, please don't hesitate to contact us. This proposal is a firm and irrevocable offer for 60 days. Ms. Sarah Bohnsack, Partner, 663.888.4420, is authorized to make representations for McGladrey & Pullen LLP Respectfully, McGladrey & Pullen LLP Sarah Bohnsack, Bohnsack, Partner Additional Services We Can Provide You Through our association with RSM McGladrey, the City of fort Collins, Colorado has local access to essential consulting services. As your audit firm, we would need to ensure any nonattest service does not impair our independence under Government Auditing Standards. However, following are some of the business consulting services we could offer you if requested. General Services • Opinion Audits • Compliance Reviews • Internal Control Evaluations • SEC Filings • Financial Projections • Internal Audit Program Development/Evaluation • Client Needs Assessment • Acquisition Audits • Litigation Support • Budget Preparation Assistance Actuarial Services • GASB 45 and 43 Implementation • Actuarial Calculations • Plan Administration Tax Services • Tax Penalty Exposure Reviews • Personal Financial Planning • Estate Planning • Employee Benefits Planning • Representation Before Taxing Authorities Appendix F Information Technology Planning Services • Strategic Technology Planning • Needs Assessment Studies • Hardware/Software Evaluations/Selections • Contract Review/Negotiations • Pre -/Post -Conversion Audits • Workgroup Technology/Lotus Notes Consulting • PC Replacement/Renewal Planning • Internet/Intranet Design & Development • System Capacity Reviews & Analysis Information Security Services • Internet/Firewall Security Reviews • Internet Intrusion Testing • Information Systems Auditing Security Policy Development Telecommunications Services • Needs Assessment Studies • System Design and Selection • System Implementation Management • Voice and Data Communications Networks • Voice and Data Integration LocalMide Area Network Services • Needs Assessment • LANNVAN Design and Selection • Network Implementation Assistance • Project Management • Cabling Design • Contract Review Appendix F Operations Enhancement Services • Operations Reviews • Organizational Reviews and Analysis • Work and Performance Measurement Analysis • Workflow Reengineering/Process Improvement • Policies and Procedures Development • Organizational Training Assessment and Planning Human Resources Consulting • Executive Search and Personnel Selection • Employee Climate and Attitude Surveys • Performance Evaluation and Appraisal Programs • Outplacement Services and Counseling • Wage and Salary Administration Programs Third Party Administrators Review Government Specific Services • Risk Assessment and Disaster Recovery Planning • GIS/Mapping Assessment and Planning • Needs Assessment and Systems Selection for: • Public Utility • Automated Meter Reading (AMR) • Public Safety/Criminal Justice • Tax Appraisal/Assessment/Collection For more information about these services and our Public Sector Practice, please access our Web sites at: www.rsmmcgladrey.com www.mcaladrey.com Aooendix F McGladrey& Pullen Certified Public Accountants .-4, of Collins t Sealed Dollar Cost Bid Proposal August 13, 2008 APPENDIX A Page 1 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR ADDITIONAL SERVICES (SERVICES ARE DESCRIBED IN RFP APPENDIX F) Maximum All -Inclusive Nature of Service To. Be Provided Total Price 2008 Audits of City, Poudre Fire Authority and Library District $81,000 2009 Audits of City Poudre Fire Authorit and Library District 83,0oo 2010 Audits of City, Poudre Fire Authority and Library District 86,000 2011 Audits of City, Poudre Fire Authority and Library District 88,000 2012 Audits of City, Poudre Fire Authority and Library District 89,000 Issuance of Consent Letter for a Bond Issue 500 Verification of Arbitrage at the End of Each NA Five -Year Period of a Bond Issue Verification of Bond Escrow for a Bond Issue z5W Agreed Upon Procedures Performed in Relation to City's Cable TV Franchise Agreement with Service Provider 8,000 Of the Total all-inclusive maximum price for the 2008 audit, please estimate the expected costs for the services related to the Library District and the Poudre Fire Authority: Library District 5,000 Poudre Fire Authority 7,500 N Oadrey & Pullen LLP acknoWedges receipt of Addendum 1 and 2 Appendix A Page 2 SCHEDULE OF PROFESSIONAL FEES AND EXPENSES Partners Managers Supervisory Staff Staff Other (specify): Out-of-pocket expenses: Standard Hourly Rates $330-$440 140-190 100-130 ,A 4« Meals and lodging (amount per person per day) Transportation (cents -per -mile) Other (specify): Quoted Hourly Rates 140 10D 70-80 This schedule should reflect the hourly rates for any additional work outside the scope of this RFP if the City requests it. Important Investment We recognize that engaging an independent audit and accounting, tax and business advisory firm is an important investment for the City of Fort Collins, Colorado. Our goal is to provide timely and responsive services at a reasonable and competitive cost. We hope we have illustrated our capability to add value to the City through our experience and approach. Our fees, like those of other professional firms, are based on actual time spent by our people and are measured by standard hourly rates, reflecting the experience level of the professionals assigned to your account. We estimate professional hours and fees we believe are competitive, and that will enable us to be responsive and provide the high quality professional services you deserve. Routine Calls and Other Services Our general practice for our clients is not to bill for consultation services that can be provided over the phone in less than 30 minutes. We believe this type of policy is beneficial to both you and us in that it encourages you to call us during the year. By keeping abreast of issues as they occur, we will not only be able to deliver a more efficient audit, but the advice we provide to you will be more meaningful as we understand the City of Fort Collins, Colorado better. We will provide information to you regarding new accounting pronouncements and will work with you through implementation. If we have the opportunity to provide other consulting, tax or accounting assistance services, we would be happy to provide you with an estimate of fees for that service. We will work with you to determine the scope of the service and the best team (your people and ours) to provide that service. If we have the opportunity to provide other audit and accounting, tax or business advisory services, we would be happy to provide you with an estimate of fees for that service. We will work with you to determine the scope of the service and the best team (your people and ours) to provide that service. No Text McGladrey & Pullen: National Firm 19 National Firm Strengths — Engaged in business for over 80 Revenue years Rank Firm $ Million — Industry specialization 1 Deloitte & Touche 8,769 2 PricewaterhouseCoopers 6,922 — Quality control 3 Ernst &Young 6,890 — Education and training 4 KPMG 4,801 5 RSM McGladrey/McGladrey;& 1,322 — Serve 2,000 governmental Pullen entities nationwide 6 Grant Thornton 939 7 BDO Seidman 558 — Founding member of AICPA 8 CBiz/Mayer Hoffman McCann 466 Government Audit Quality Center 9 Crowe Group 422 10 BKD 287 Source: 2007 Accounting Today Strong Local Practice and Experienced Team Creation of governmental practice to serve clients in the Central Plains region - Dedicated personnel - Author the Firm's Governmental Manual and Tools - National resource for other offices and training - Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting reviewers on your team We serve over 60 governmental organizations in our Central Plains practice Members and Participants - GFOA, AICPA and State Societies Contents 1. Independence and License to Practice in Colorado...............................................1 2. Firm Profile.............................................................................................................2 3. Partner, Supervisory and Staff Qualifications and Experience...............................5 4. Prior Engagements with the City of Fort Collins, Colorado..................................12 5. Similar Engagements with Other Governmental Entities......................................13 6. Specific Audit Approach.......................................................................................19 7. Report Format......................................................................................................29 Appendices Appendix A — Resumes and Certificates of Continuing Professional Education Appendix B — Peer Review Appendix C — Fundamentals Appendix D — Proposer Guarantees Appendix E — Proposer Warranties Appendix F —Additional, Services We Can Provide You Our Audit Process Client Service Approach Audit Process Prior to Audit Fieldwork: — On -site meeting with Management — Inquiries of the Board — Determine audit strategy and initial risk assessments a Interim Fieldwork: — Compliance testing — Document system processes and tests of controls — SAS 99 assessments — Review of minutes, agreements and contracts — Evaluate audit strategy and risk assessments Client Service Approach Audit Process Fieldwork — Execute audit strategy and perform substantive audit procedures — On -site review of Senior through Partner — Weekly progress meetings: No Surprises! — "Lights out" approach 0 Engagement Completion — Quality control review — Exit conference and review of drafts — Delivery of final audit reports Commitment to Quality 0 Service Excellence — Audit & Accounting Quality Review on all audits — Interoffice and peer review inspections 0 Client Service Team — Timely delivery — Smooth and efficient transition — Continuity 0 Proactive Communications — Introduction/facilitation of new standards — Accessible year-round Investment in Relationship 0 All inclusive fee 0 Routine calls and communications W Additional services Surrounding City of Fort Collins, Colorado with.. . . the rig choice McGladrey& Pullen Certifipd Pi ihlir Arm infante 1. Independence and License to Practice in Colorado Independence We are independent with respect to the City of Fort Collins, Colorado and its component units as that term is defined by Rule 101 of the Code of Professional Ethics of the American Institute of Certified Public Accountants and the Government Auditing Standards. Those rules require that the firm and all of its partners be independent with respect to any clients (not only on a local, but also on a national level) who engage McGladrey & Pullen LLP to express an opinion on the financial statements. Those rules specify that an auditor may not have or be committed to acquire a direct financial interest or material indirect financial interest in a client or any of the client's affiliates during the period of his or her engagement or at the time he or she expresses an opinion. Further, those rules specify that an auditor may not act in a capacity of promoter, underwriter, officer, director, voting trustee or employee of the audit client during the periods covered by his opinion. , License McGladrey & Pullen and all assigned key professional staff are properly registered/licensed to practice in the state of Colorado. McGladrey & Pullen has sufficient staff available that meets the continuing professional education requirements set forth in the U.S. General Accounting Offices (GAO) Government Auditing Standards, 2003 revision (Yellow Book). McGladrey&Pullen cityaf . Ort Collins Certified Public Accountants _./^'^ "RSM McGladrey and McGladrey & Pullen met every requirement of ours. They continually put their "A" team on our business needs, which differentiates them from other firms in my perspective." CFO Baader North America Corporation