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HomeMy WebLinkAboutC2005-280 - 6/14/2005 - Approved PROFESSIONAL AUDITING SERVICES CONTRACT BETWEEN CITY OF CORPUS CHRISTI TEXAS AND COLLIER, JOHNSON & WOODS 'INs Professional Auditing Services Agreement ("Agreement") is entered into by and between the City of Corpus Christi, a mulficipal corporation ("City"), and Collier, Johnson & Woods, ("Contractor") effective for all purposes upon execution by the City Manager. WHEREAS, City desires to have financial stalements audited for fiscal year ended July 31, 2005. NOW, THEREFORE, Contractor and City agree as follows: 1. SERVICES TO BE PERFORMED. The Contractor agrees to provide professional auditing services to audit City's financial statements fi~r the fiscal year ending July 3 ], 2005. At the request of the City Manager, Contractor may perform annual auditing of the financial statements for up to four additional one-year periods. These audits are to be performed in accordance with auditing standards generally accepted in the 1 r nited S rotes of America, the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the provisions of the federal Single Audit Act of 1984 (as amended in 2003) and U.S. Office of Management and Budget (()MB) Circular A- 133, Audits Q/'Slale& Local Governments. and Von-Profit Organizations. I1. SCOPE OF SERVICES. Contractor shall perform the professional auditing services in accordance with the Request for Proposals (RFP) dated February 25, 2005, as amended, attached as Exhibit "A," Contractor's proposal dated March 24, 2005. attached as Exhibit "B", and Contractor's engagement letter dated June 8, 2005. attached as Exhibit "C". In the event of conflict between Contractor's proposal and thc terms of this Agreement. this Agreement shall control. III. CONTRACT ADMINISTRATOR. The parties agree perlbrmance of the work shall commence upon authorization to proceed by the City Contract Administrator. The Director of Financial Services is designated as the Contract Administrator responsible for all phases of pcrlbrmance and operations under this Agreement, including authorizations for payment. All notices or communications regarding this Agreement shall be directed to the Contract Administrator. IV. TERM. The term of this Contract shall be lbr twelve months, with an option to extend for up to four additional twelve-month periods sulqject to the approval of the Contractor and the City Manager or his designee. 2005-280 06/14/05 M2005-188 (oilier, Johnson &Woods ¥. FEE FOR SERVICES. '[otal ['ecs for all services provided by Contractor under this Agreemem for the initial term shall not exceed $126,000 unless expressly authorized by written amendment to this Agreement. estimated fees for subsequent terms are: Year ended July 31, Estimated Fees 2006 $128,000 2007 $132.000 2(t08 $136,000 2009 $140.000 Progress payments shall be made on the basis of hours of work completed during the course of the engagement and out-of-pocket expenses incurred in accordance with the Contractor's proposal. Interim billing shall cover a period of not less than a calendar month. VI. TERMINATION OF CONTRACT. The City may, at any time, with or without cause, terminate this Contract upon thirty days written notice to the Contractor at 555 N. Carancahua, Suite 1000, Corpus Christi, Texas 78478-0052. VII. APPROPRIATION OF FUNDS. All parties recognize that the continuation of any contract after the close of any fiscal year of City, which fiscal year ends on July 31 of each year, shall be subject to appropriations and budget approval providing for covering such contract item as an expenditure in said budget. City does not represent that the budget item will be actually adopted, said determination being within the sole discretion of the City Council at the time of adoption of such budget. Vlll. ASSIGNABILITY. The Contractor shall not assign, transfer, or delegate any of his obligations or duties in this Contract to any other person without the prior written consent of the City, except for routine duties delegated to field assistants and clerical helpers. The performance of this Agreement by Contractor is the essence of this Agreement and City's right to withhold consent to such assignment shall be within thc sole discretion of the City on any grounds whatsoever. IX. INDEPENDENT CONTRACTOR. Contractor shall perlbrm all professional services as an independent contractor and shall furnish such services in its own manner and method, and under no circumstances or conditions shall an agent, servant, or employee of the Contractor be considered an employee of the City. X. SUBCONTRACTORS. ( ontractor may use subcontractors in connection with the work performed under this Agreement. When using subcontractors, however, Contractor must obtain prior written approval from the City. In using subcontractors, Contractor agrees to be responsible for all their acts and omissions to the same extent as if the subcontractor and its employees were employees of the Contractor. All requirements set forth as part of this Agreement shall be applicable to all subcontractors and their employees to the same extent as if the Contractor and its employees had performed the services. Xi. VENUE AND APPLICABLE LAW. This Agreement shall be subject to all Federal, State and local laws. All duties of the parties shall be performed in the City of Corpus Christi, Texas. The applicable law for any legal disputes arising out of this Agreement shall be the law of Texas and such forum and venue for such disputes shall be the appropriate district, county, or justice court in and For Nueces County, Texas. XII. INDEMNIFICATION. Contractor agrees to indemnify and save harmless City, its agents, servants, and employees from any and all liabilities, losses, damages, or expenses, including attorney's fees resulting from Contractor's negligence or willful acts or omissions while in performance of this Agreement. XIII. INSURANCE. Contractor agrees to provide insurance in accordance with the Exhibit "D". XIV. NO WAIVER. No waiver of any covenant or condition, or the breach of any covenant or condition of this Agreement, constitutes a waiver of any subsequent breach of the covenant or condition of the Agreement XV. AMENDMENTS OR MODIFICATIONS. No amendments or modifications to this Agreement may be made, nor any provision waived, unless in writing signed by a person duly authorized to sign agreements on behalf of each party. XVI. RELATIONSHIP OF PARTIES. In performing this Agreement, both the City and Contractor shall act in an individual capacity, and not as agents, representatives, employees, employers, partners, joint-venturers, or associates of one another. The employees or agents of either party may not be, nor be construed to be, the employees or agents of the other party, for any purpose. XVII. CAPTIONS. The captions in this Agreement are for convenience only and are not a part of this Agreement. The captions do not in any way limit or amplify the terms and provisions of this Agreement. XVIlI. SEVERABILITY. If for any reason, any section, paragraph, subdivision, clause, provision, phrase or word of this Agreement or the application of this Agreement to any person or circumstance is, to any extent, held illegal, invalid, or unenfbrceable under present or future law or by a final judgment of a court of competent jurisdiction, then the remainder of this Agreement, or the application of the term or provision to persons or circumstances other than those as to which it is held illegal, invalid, or unenfurceable, will not be affected by the law or judgment, for it is the definite intent of the parties to this Agreement that eveu' section, paragraph, subdivision, clause, provision, phrase, or word of this Agreement be given full force and effect for its purpose. To the extent that any clause or provision is held illegal, invalid, or unenforceable under present or future law effective during the term of this Agreement, then the remainder of this Agreement is not affected by the law, and in lieu o1' an)' illegal, invalid, or unenforceable clause or provision, a clause or provision, as similar in terms to the illegal, invalid, or unenforceable clause or provision as may be possible and be legal, valid, and enforceable, will be added to this Agreement automatically. IXX. NOTICES. Notices provided shall be in writing and delivered Lo: On behalf of the City: City of Corpus Christi Director of Financial Services P.O. Box 9277 Corpus Christi, TX 78469-9277 On behalf of the Contractor: Collier, Johnson & Woods 555 N. Carancahua, Suite 1000 Corpus Ckristi, Texas 78478-0052 XX. SOLE AGREEMENT. This Agreement constitutes the sole agreement between the City and Contractor. Any prior agreements, promises, negotiations, or representations, verbal or otherwise, not expressly stated in this Agreement, are of no force and effect. EXECUTED IN DUPLICATE, each of which shall be considered an original, this 6/17(day of ~ .2005. ATTEST: CITY OF CORPUS CHRISTI Armando Chapa City Secretary APPROVED THIS ti DAY OF ,J~ By: Assistant Ci~__~ttoruey For City Attorney Name: Title: Date: ,2005 City Manager Attachments: Exhibit "A," City of Corpus Christi Request for Proposal Exhibit "B," Collier, Johnson & Woods, Proposal Exhibit "C," Collier, Johnson & Woods, Engagement Letter Exhibit "D." Insurance Requirements EXHIBIT "D" INSURANCE REOUIREMENTS AUDITOR'S INSURANCE Auditor must not commence work under this agreement until all insurance required herein have been obtained and the City has approved such insurance. Auditor must not allow any subcontractor to commence work until all similar insurance required of the subcontractor has been obtained. B Auditor must furnish to the City's Risk Manager, two (2) copies of Certificates of Insurance, showing the following minimum coverage by insurance company(s) acceptable to the City's R~sk Manager. The City must be named as an additional insured for the General and Automobile liability policies and a blanket waiver of subrogation is required on all applicable policies. TYPE OF INSURANCE MINIMUM INSURANCE COVERAGE 30-Day written notice of non-renewal, termination or material change and 10 day written notice of cancellation is required on all certificates COMMERCIAL GENERAL LIABILITY including: 1. Commercial Form Premises - Operations 3. Products/Completed Operations Hazard 4. Contractual Liability Bodily Injury and Property Damage Per occurrence aggregate $1,000,000 COMB1NED S1NGLE LIMIT AUTOMOBILE LIABILITY $1,000,000 COMBINED SINGLE LIMIT 1 OWNED, NON-OWNED AND RENTED WORKERS COMPENSATION EMPLOYERS LIAB IL[FY PROFESSIONAL LIABILITY including: Coverage provided must cover officers, directors, employees and agents ERRORS and OMISSIONS Which complies with the Texas Workers' Compensation Act and Section II of this exhibit $500,000/$500,000/$500,000 $1,000,000 COMBINED SINGLE LIMIT C. In the event of accidents of any kind, Auditor must furnish the Risk Manager with copies of all reports of such accidents within 10 days of any accident. Il ADDITIONAL REQUIREMENTS Auditor must obtain workers' compensation coverage through a licensed insurance company obtained in accordance with Texas law. The contract for coverage must be written on a policy and endorsements approved by the Texas Department of Insurance. The coverage provided must be in amounts sufficient to assure that all workers' compensation obligation incurred by the Auditor will be promptly met. B. Certificate of Insurance: The City of Corpus Christi must be named as an additional insured on the General Liability policies and a blanket waiver of subrogation is required on all applicable policies. If your insurance company uses the standard ACORD form, the cancellation clause (bottom right) must be amended by adding the wording "changed or" between "be" and "canceled", and deleting the words, "endeavor to", and deleting the wording after "left". In the alternative, verification of endorsement to the applicable policy is acceptable. c. The name of the project must be listed under "Description of Operattons" d At a minimum, a 30-day written notice of non-renewal termination or material change and a 10-day written notice of cancellation is required. C. If the Certificate of Insurance does not show on its face the existence of the coverage required by items 1.B (1)-(4), an authorized representative of the insurance company must include a letter specifically stating whether items lB. (1)-(4) are included or excluded. City of Corpus Christi CITY OF CORPUS CHRISTI, TEXAS FINANCIAL SERVICES DEPARTMENT REQUEST FOR PROPOSAL FOR PROFESSIONAL AUDITING SERVICES FEBRUARY 25, 2005 1201 LEOPARD STREET CORPUS CHRISTI, TEXAS 78401 BI-0081-05 Professional Auditing Services Table of Contents Section 1.0 Notice of Request for Proposal 1.1 Request For Proposal 1.2 Submission of Proposal 1.3 Tentative Schedule Section 2.0 Conditions Governing the Procurement 2.1 Acceptance of General Requirements 2.1.2 2.1.3 2.1.4 2.1.5 2.1.6 2.1.7 2.1.8 2.1.9 2.1.10 2.1.11 2.1.12 2.1.13 2.1.14 2.1.15 2.l.16 2.1.17 2.] ,18 2.1.19 2.1 20 2.1.21 2.1.22 2.1.23 2.1.24 2.1.25 2.1.26 2.1.27 2.1.28 2.1.29 2.1.30 2_1.31 2.1.32 2.1.33 RFP Notice Requirement RFP Procedural and Content Questions Basis for Proposal Closing of Proposals Proposer Tcims and Conditions Disclosure of Proposal Contents Late Proposals Signing of Proposals Cost of Proposal Disclosure of Interest Equal Employment Opportunity Ownership of Proposals Disquahfication or Rejection of Proposals Right to Waive Irregularities Withdrawal of Proposals Amending of Proposals Proposal Offer Firm Proposer Qualifications Exceptions to RFP Specifications Consideration of Proposals Termination of RFP Contract Governing Law No Obligation Contract Deviations Sufficient Appropriation Recommendation to City Council Award of Contract Execution of Contract Contract Payment Disputes Change in Contractor Representatives 2.1.34 2.1.35 2.1.36 2.1.37 2.1.38 Section 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.6.1 3.6.2 3.6.3 3.6.4 3.6.5 3.6.6 3.6.7 3.6.8 3.6.9 3.7 3.7.1 3.7.2 3.7.3 3.7.4 Change Requests Tumfination of Contract Right to Publish Proposer's Ethical Behavior Scope of Work Nature of Services Required Auditing Standards to be Followed Reports to be Issued Special Considerations Subcontracting / Joint Ventures Description of the City Fund Structure Budgetary Basis of Accounting Federal and State Awards Pension Plans Component Units 3.6.5.1 Blended Component Units 3.6.5.2 Discretely Presented Component Units Related Organizations and Jointly Governed Organizations Magnitude of Financial Operations Computer Systems Working Papers Assistance to be Provided to the Auditor and Report Preparation Financial Services Department Statements and Schedules to be Prepared by the City of Corpus Christi Staff Work Area, Telephones, Photocopying and Fax Machines Report Preparation Section 4.0 4.1 4.2 4.2.1 4.2.2 4.2.3 4.2.4 Proposal Format and Organization General Instructions The Proposal Format Transmittal Letter Table of Contents Information Requested General Questionnaire 4.2.4.1 4.2.4.2 4.2.4.3 4.2.4.4 4.2.4.5 4.2.4.6 4.2.4.7 4.2.4.8 4.2.4.9 Program System Concept and Solution Program - Technical Project Management Structure Firm Background, Personnel and Prior Experience Understanding of the City's Commitment to Plan Preparation Other Pertinent Information as Reqmred Authorized Negotiator Local Participation Concluding Remarks ii Sec~on 5.0 5.1 5.2 5.3 5.4 Attachments Exhibit A. Exhibit B. Exhibit C. Exhibit D. 4.2.3 Cost of Services 4.2.3.1 Out-of-pocket Expanses 4.2.3.2 Rates by Partner, Specialist, Supervisors and Staff 4.2.3.3 Additional Professional Services Proposal Evaluation Committee Evaluation Criteria Additional Evaluation Recommendation of the Committee Disclosure of Interest Exception Page Sample Contract Organizational Chart iii Section 1.0 Notice of Request for Proposal The City of Corpus Christi, hereinafter referred to as the "City", seeks proposals in response to the request from qualified firms of certified public accountants to audit its financial statements lbr the fiscal year ending July 31, 2005, with the option of auditing its financial statements for each of the four subsequent fiscal years. These audits are to be performed in accordance with generally accepted auditing standards, the standards set forth for financial audits in the General Accountmg Office's (GAO) Government Auditing Standards (2003), the provisions of the federal Single Audit Act of 1984 (as amended in 2003) and U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizattons. The City has designated Cindy O'Bnen, Director of Financial Services, as Project Manager with overall project responsibility for adm~mstration of the project. The Project Manager will serve as the Technical Project Coordinator responsible for day-to-day administration and coordination of project activities: Cindy O'Brien Director of Financial Services City of Corpus Christi P.O. Box 9277 Corpus Christi, Texas 78469-9277 Phone: (361) 880-3610 Fax: (361) 880-3601 ~Io facilitate the RFP process, the Project Manager has designated Michael Barrera as RFP Project Coordinator to serve as the City's single point of contact throughout the proposal, evaluation and award process. All inquiries or requests regarding tiffs RFP must be submitted, in writing, to the RFP ProJect Coordinator as indicated below. Other employees do not have the authority to respond for the City in writing, and the attempt to question other employees regarding this RFP may result in the Proposer's disqualification. Only written responses fi-om the RFP ProJect Coordinator will be binding with regard to inquiries requesting clarifications or additional information. 32ne RFP Project Coordinator's written responses will be forwarded simultaneously to all prospective Proposers. Michael Barrera Procurement & General Services Manager City of Corpus Christi P.O. Box 9277 Corpus Christi, Texas 78469-9277 Phone: (361) 880-3169 Fax: (361) 880-3174 The Proposer must submit six (6) copies of the response to this RFP to the City of Corpus Chnst~ as specified below. All responses must be complete and accurate and must be on City approved lbrms and in City approved format. The City will review and evaluate the written responses to this RFP. The City may conduct additional interviews with selected Proposers for the purpose of further exploring and clarifying the Proposer's response. The City will rank the Proposers based on the suggested evaluation criteria set forth in the Evaluation Model of this RFP. The City will then negotiate the applicable terms and conditions into the final form of the Professional Services Agreement with the first ranked Proposer for the completion of required work for the project. If contract negotiations are not successful w~th the selected Proposer, the City will begin negotiations with the next Proposer on the list. Award(s) will be placed by best overall value to the C~ty. RFP responses will be evaluated to ascertain which Proposer best meets the needs of the City. The City intends to utilize an Evaluation Model specifically designed for this analysis. The Evaluation and Selection process will be based upon R~sk, Strategic Need, Technical Solution, and Cost parameters. The weightings of these parameters will be designated by the Evaluation Committee. Proposals should be returned in a sealed envelope marked with the Proposer's name, address and the file number corresponding to this RFP. The Proposals will be received until Thursday, March 24, 2005 at 12:00 noon. -[he Proposer can mail the Proposal to the following address: City of Corpus Christi (6 copies) Purchasing Division P.O. Box 9277 Corpus Christi, Texas 78469-9277 OR, The Proposer may deliver the Proposal in person to the following addresses: City of Corpus Christi (6 copies) Purchasing Division 4~h Floor, City Hall 1201 Leopard Sr Corpus Christi, Texas 78401-2825 Proposer shall comply with the additional detailed instructions regarding submission of Proposals found in Section 4.0 of this RFP. A final report will be prepared by the Evaluation Committee documenting the Proposer's capabilities based on the merits of the Proposal. The/rbllowing is a tentative schedule of project evaluation and selection activities: D ate ¼February 19, 2005 7-~M~!h 8, 2005 March 24, 2005 I April 8, 2005 DApnl 19, 2005 ~April 26, 2005 !~No~ember 30, 2005 Project Activity Advertisement in Local Paper. Deadline for questions 5:00 pm CST. Proposals due by 12:00 noon CST. Proposal Evaluation Complete. Selection and Award Conlzact(s) by City Council. Alternate date for Selection and Award Contract(s) by City Council. Comprehensive Annual Financial Report (CAFR) due Section 2.0 Conditions Governing the Procurement Fhe Proposer must accept the project requirements by paragraph number contained within Sections 2.0, Conditions Governing the Procurement and 3.0, Scope of Work~ in the transmittal letter as set forth in Section 4.2.1 of th~s RFP. Notice of Request for Proposal shall be published in the Corpus Christi Caller-Times once a week for two consecutive weeks. The date of the first publication will be at least fourteen (14) days prior to the Proposal due date. ,&ny Proposer requiring further clarification of the Request for Proposal procedures cont/med herein should submit specific questions in writing to the RFP Project Coordinator at the address set out in Section 1.1 on page 1 of this RFP. During a review of this RFP and preparation of the Proposal, certain errors, omissions, or ambiguities may he discovered. If so, or if there are doubts or concerns about the meaning of any part of this RFP, written questions should be submitted by March 8, 2005 to the RFP Project Coordinator at the address set out in Section 1.1 on page l of this RFP. This will allow time to answer the questions and distribute them so that all potential Proposers wil] have the benefit of the revised information. Only information supplied by the City in writing through the RFP Project Coordinator in this RFP should be used in the preparation of Proposer's Proposal(s). Proposals should be returned in a sealed envelope marked with the Proposer's name, address and file number BI-0096-04. The Proposals shall be received until March 24, 2005 at 12:00 noon. Proposals must be mailed or delivered in accordance with the instructions and to the addresses set out in Section 1.2 of this RFP. The Purchasing Division will record and time stamp receipt of the Proposal and forward it to the Project Manager. The official time for closing of this RFP will be 12:00 noon CST per the Purchasing Division's date/time stamp on March 24, 2005. A tbrrnal opemng of the Proposals will not occur. II l'he Proposer must submit, with each copy of the Proposal, a complete set of any additional terms and conditions that they propose to have included in a Contract negotiated with the City. RFP responses will be opened in a manner that avoids disclosure of the contents to competing Proposers and keeps the RFP responses secret during negotiations. All RFP responses are open tbr public inspection after the contracts are awarded, but trade secrets and confidential information in the RFP responses are not open for public inspection. It is specifically prov/ded; however, that each Proposer must identify any information contained in its RFP response, which it asserts, is either a trade secret or confidential information. Such material must be identified conspicuously by marking each page containing such information as "confidential" or "proprietary". If such material is not conspicuously identified, then by submitting its RFP response, a Proposer agrees that such material shall be considered public information. Proposals must be returned in sufficient tn-ne to be received and date/time stamped in the Purchasing Division on or before the published Proposal date and time specified in Section 1.2, herein. Any Proposal received after the time and date set for receipt of Proposals is late and shall not be considered. Any proposal received late shall be returned to the Proposer unopened by certified mail, return receipt requested. Fhe submission and signature of a Proposal shall indicate the intention of the Proposer to adhere to the provisions described in this RFP. 4 Proposals, which are signed tbr a partnership, shall be signed in the Proposer's name by at least one partner or in the Proposer's name by an attorney-in-fact. If signed by an attorney-in-fact, there should be attached to the Proposal a Power of Attorney evidencing authority to sign Proposals, dated the same date as the Proposal, and executed in accordance with the legal requirements of the Proposer. Proposals, which are signed tbr a corporation, shall have the correct corporate name thereon and a signature of thc president or a vice-president manually written below the corporate name. Any other signature must be accompamed by a resolution of the Board of Directors authorizing such signature to contract in the corporation's name. The title of the office held by the person signing for the corporation shall appear below the signature of the officer. This Request for Proposal does not commit the City to pay any costs incurred by a Proposer for preparation and/or submission of a Proposal or for procunng or contracting for the items to be furnished under this RFP. All costs directly or indirectly related to preparing and responding to this RFP, including all costs incurred for supplementary documentation, shall be borne solely by lhe Proposer. The Proposer agrees to bear all risks for loss, injury, or destruction of goods and materials ordered or supplied, in anticipation of the eventual contract, which might occur prior to delivery lo the City; and such loss, injury, or destruction shall not release the Proposer fi.om any obligations under this RFP or any resulting contract. I The City of Corpus Christi Code of Ordinances, Section 2-349, as amended, requires all persons or Proposers seeking to do business with the City to provide the Disclosure of Interest information on the City supplied form included as Exhibit A herein. Every question must be answered. If the question is not applicable, answer with N/A. Proposers are obligated to provide updated information concerning the disclosure of interests, as warranted, throughout the time the Proposals are being considered. Proposers are expected to comply with the Affirmative Action Policy Statement of the City, on file with the Human Relations Department, with respect to its provisions concerning Proposers. Any complaints filed with the City alleg/ng that a Proposer is not an Equal Opportumty Employer, due to activities arising during a previous City contract, will be referred to the Human Relations Commission ("Commission") of the City for the purpose of review and reco~nmendation. Sununaries of reports by the Human Relations Administrator or the cormTnssion may be considered in any future bid awards by the City. The City expressly reserves the right to consider such reports in determining the best Proposal. &ll documents submitted in response to this Request for Proposal and timely received shall become the property of the City of Corpus Christi. I Proposals may be rejected if they show any alteration of words or figures, additions not called tbr. conditional or uncalled-tbr alternate Proposals, incomplete Proposals, erasures, or irregularities of any kind. Proposals tendered or delivered after the official time designated for receipt of Proposal shall not be considered and will be returned to the Proposer as set out in Section 2.1.8. Proposers may be disqualified for any of the following reasons: · There is reason to believe that collusion exists among the Proposers; · The Proposer is involved in any litigation against the City; · The Proposer is m arrears on an existing contract or has defaulted on previous contracts with the City; · The Proposer lacks financial stability; · The Proposer has failed to perform under previous or present contracts with the City; · The Proposer has tailed to use the City's approved forms: · The Proposer has failed to adhere to one or more of the provisions established in this RFp; · The Proposer has tailed to submit its Proposal in the format specified herein; · The Proposer has failed to submit its Proposal on or before the deadline established herein; · The Proposer has failed to adhere to generally accepted ethical and professional principles during the Proposal process; or, · The Proposer has failed to provide a detailed cost summary in the Proposal. Proposals shall be considered as being "irregular" if they show any admissions, alterations of tbrm, additions or conditions not called for, unauthorized alternate Proposals, or irregularities of any kind. Vhe RFP Project Coordinator reserves the right to waive m~nor irregularities and mandatory requirements, provided that all responsive Proposals failed to meet the same mandatory requirements and the failure to do so does not otherwise materially affect the procurement. This right shall be exercised at the sole discretion of the RFP Project Coordinator. 6 Proposals may be withdrawn by written or telegraphic notice received by the City's Purchasing Division prior to the exact hour and date specified for receipt of Proposals. A Proposal may be withdrawn (in person) by a Proposer or his/her authorized representative, provided his/her :dentity is made known and he/she signed a receipt for the Proposal, but only if the withdrawal ~s made prior to the exact hour and date set for the receipt of Proposal. A Proposer may submit an amended Proposal; however, such amended Proposal must be received prior to the deadline, must be complete replacement of a previously submitted Proposal, and, furthermore, such amended Proposal must be clearly identified as such in the transmittal letter. The City will not merge, collate, or assemble Proposal materials for a Proposer. II Responses to this RFP will be considered firm for ninety (90) days after the due date for receipt of Proposals. The Committee, as set out in Section 5.1 of this RFP, may make such investigations as necessary to det~xmine the ability of the Proposer to adhere to the requirements specified within the RFP. The RFP Project Coordinator will reject the Proposal of any Proposer who is not a responsible Proposer. II Although the specffications in the following sections represent the City's anticipated needs, there may be instances in which it is in the City's interest to permit exceptions to specifications and accept alternatives. It is extremely important that the Proposer make very clear where exceptions are taken to the specifications and how the Proposer will provide alternatives. See Exhibit B. Therefore, exceptions, conditions, or qualifications to the provisions of the City's .~peciJications must be clearly identified as such, together with reasons for taking exception and inserted in the Proposal at that point In addition, the Proposer must provide responses on the "Exceptions'" page to address any and all items found in all bid documents that the Proposer cannot meet or provide. If the Proposer does not make clear that an exception is being taken, the City will assume the Proposer, in the received Proposal, is' responding to and will meet the specifications as written. 7 Discussions may be conducted with responsible Proposers capable of being selected for award for the purpose of clarification to assure full understanding of, and responsiveness to, the solicitation requirements. In discussions, there shall not be disclosure of any information derived from Proposals submitted by competing Proposers. Until award of the Contract is made by the City, City reserves the right to reject any or all Proposals, to waive teclmicalities, to re-advertise tbr new Proposals, or to proceed with the work in any manner as may be considered in the best interest of the City. Response to this RFP is the first step in a series of evaluation steps that will be conducted by the Committee. The City may elect to conduct any or all of the following additional activities with any Proposers who are not eliminated based on response to the RFP: · Reference Checking · Post submission, pre-award conferences with potential Proposers as needed. The City reserves the right to cancel the RFP at any time. The City reserves the right to reject any or all Proposals submitted in response to this RFP. The contract ("Contract") will consist of a cover document containing many of the provisions outlined in this RFP, and the Proposer's response to this RFP. Exhibit C is a sample agreement substantially in the form which the successful proposer will be expected to execute. Failure of Contractor to accept this obligation may result in the cancellation of any award. Any damages accruing to the City as a result of the Contractor's fadure to contract may be recovered from the Contractor. Pne laws of the State of Texas will govern the Contract. All duties of both parties shall be pertbrmed in Nueces County, Texas, where the contract will be executed. The applicable law for legal d~spute arising out of the Contract shall be the law of the State of Texas. This procurement in no manner obligates the Clty or any of its agencies to the eventual services offered until confirmed by an executed written Contract approved by the City Council. Any additional terms or conditions, which may be the subject of negotiation, will be discussed only between the City and the qualified Proposer. Any Contract awarded as a result of this RFP process may be terminated if sufficient appropriations or authorizations do not exist. Such termination will be effected by sending written notice to the Proposer. The City's dec~sion as to whether sufficient appropriations and authorizations are available must be accepted by the Proposer as final. Ire City Manager will recommend to the City Council that award be made to the Proposer whose Proposal is determined by the City to be the most advantageous ("Best Value") to the City. IIII The City reserves the fight to withhold final action on Proposals for a reasonable time not to exceed ainety (90) days after the date of opening Proposals. The award of the Contract, if an award if made, will be to the most responsible and responsive Proposer whose Proposal meets the requirements and criteria set forth in the Request for Proposal. The City reserves the fight to abandon, without obligation to the Proposer, any part of the project or the entire project, at any time before the Proposer begins any work authorized by the issuance of a fully executive Professional Services Contract by the City, as set out in Section 2.1 30 herein. The City Council shall authorize award of the Contact to the successful Proposer and shall designate the successful Proposer ("Contractor") as the City's Provider. The City will require the Contractor to sign the necessary documents entering into the required Contract with the City and to provide the necessary evidence of insurance as required under the Contract documents. No contract for tlus project may be signed by the City without the authorization of the City Council. No contract shall be binding on the City until it has been approved as to form by the City Attorney or his designee, and executed by the City Manager or his designee. The City's offimal representative, during this procurement process, is the RFP Project Coordinator or his designee. After signing of the Contract, the City will be represented by the Project Manager. 9 Progress payments will be made on the basis of hours of work completed during the course of the engagement and out-of-pocket expenses incurred in accordance with the firm's dollar pricing proposal. Interim billing shall cover a period of not less than a calendar month. In the case of any doubt or difference of opinion with regard to the items to be furnished by a Proposer or the interpretation of the provisions of this RFP, the decisions of the City shall be final and binding upon all parties. The City reserves the right to negotmte a change in Contractor representatives if the assigned rc'presentatives are not, in the opinion of the City, meeting the needs of the City adequately. The t~m~ of the agreement shall be for one year with option to extend for up to four additional one year periods. The contract to be awarded shall be for the provision of services as requested and described in th/s RFP at the estimated fees submitted in the proposals for a one-year tumL, and, if extended by the City, the second (2) through fifth (5) year of the contract. This is considered an all-inclusive, not-to-exceed fee estimate for each of the five (5) years. The City reserves the right, without impairing the Contract, to order changes or alterations in the work to be performed by the Contractor under the Contract including additions and deletions to the work. In case any orders or instructions, either oral or written, appear to the Proposer to involve extra work for which he should receive compensation, he shall give notice of such need to the Project Manager. However, such requests for compensation for extra required work shall be lnailed or delivered to the Project Manager prior to beginning such work. If the Contractor performs extra work without the prior written approval of the ProJect Manager, the Contractor shall not be entitled to compensation for such extra work. The Contract time and/or Contract price may only be changed by an amendment to th/s Contract executed in writing by the City and the Contractor and approved by the City Council. A request fk~r an extension for the Contract time or adjustment of the Contract price by the Contractor shall only be considered if such request, with supporting data, is received by the City in writing ten (10) working days prior to the event giving rise to the request. Failure of the Contractor to comply with these requirements shall be considered grounds for determination by the City that the Contractor is failing to perform the work with such diligence as will ensure its completion under the trines specified. 10 'l'he City may terminate the Contract at any time and for any cause or no cause by written notice of cancellation by certified mail, return receipt requested, to the Contractor. Upon receipt of such notice, the Contractor shall immediately discontinue all services and work and the placing ~f all orders or the entering of contracts for supplies, assistance, facilities and material in connection with the performance of the Contract and shall proceed to cancel all existing contracts insofar as they are chargeable to this Contract between the City and the Contractor. if the City terminates its Contract under the tbregoing paragraph, the City shall pay the Contractor for services actually performed prior to such termination, less such payments as have been previously made. Contractor shall not be entitled to any further compensation for work performed by Contractor or anyone under its control or direction from date of receipt of notice of cancellation including any and all costs related to the transferring of any files to another Contractor or any costs related to the electronic transfer of any information including but not limited to tape transfers, downloads, uploads, CD, etc. Upon termination of the Contract, the Contractor shall provide the City reproduc/ble copies of all completed work or partially completed documents prepared under the Contract, all such documents thereinafier being owned by the City within thirty (30) days of such termination at the Contractor's expense. 5hroughout the duration of the procurement process and Contract term, potential Proposers and Contractors must secure from the City written approval prior to the release of any information that pertains to the potential work or activities covered by the RFP or the subsequent Contract. Failure to adhere to this reqmrement may result in disqualification of the Proposer's Proposal or termination of the Contract. Proposer must indicate through written documentation that Proposer's officers, employees, or agents will not attempt to lobby or influence a vote or recommendation related to the Proposer's RFP response; directly or indirectly, through any contact with the City Council members or other City officials between the RFP submission date and approval for Award Date by the City Council. Such behavior will be cause for rejection of the Proposer's RFP at the discretion of the City Manager or his designee. Section 3.0 Scope of Work The City of Corpus Christi desires the Proposer to express an opinion on the fair presentation of its basic fmancial statements in conformity with auditing standards generally accepted in the United States of America and Government Auditing Standards issued by the Comptroller 11 General of the United States. The Proposer is required to perform tests of compliance and internal control based on the audit of the basic financial statements and is also required to audit the compliance of the City with the types of comphance requirements described in the U.S. O{]:ice of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs The Proposer is not required to audit the statistical section of the report. The Proposer is required to issue an independent auditor's report on compliance and internal controls based on an audit of the basic financial statements performed in accordance with ¢iovernment Auditing Standards, as well as an 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. The City seeks proposals in response to the Request from qualified firms of certified public accountants to audit its financial statements for the fiscal year ending July 31, 2005, with the option of auditing its financial statements for each of the four subsequent fiscal yea.rs. These audits are to be performed in accordance with auditing standards generally accepted in the Umted States of America, the standards applicable to financial audits contained in Government ,4 uditing Standards issued by the Comptroller General of the United States, the provisions of the Federal Single Audit Act of 1984 (as amended in 2003) and U.S. Office of Management and Budget (OMB) Circular A-133, Audits q[' States, Local Governments, and Non-Profit Organtzattons. Following the completion of the audit of the fiscal year's financial statements, the Proposer shall issue: A report on the fair presentation of the financial statements in conformity with the accounting principles generally accepted in the United States of America, including an opinion on the fair presentation of the supplementary schedule of expenditures of federal awards in relation to the audited financial statements. A report on compliance and internal control over financial reporting based on an audit of the basic financial state~nents. A report on compliance and internal control over compliance applicable to each major federal program. 4 The auditor shall communicate in a letter to managemen! any reportable conditions found dunng the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of the ~ntemal control structure, which could adversely affect the organization's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. 12 The report on compliance and internal controls shall include all material instances of noncompliance. All nonmaterial instances of noncompliance shall be reported in a separate management letter, which shall be referred to in the report on compliance and internal controls. Irregularities and Illegal Acts. The Auditor shall be required to make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware to the City Manager who will report to the City Council. The Auditor shall assure themselves that the City Manager is informed of each of the following: · The auditor's responsibility under generally accepted auditing standards · Significant accounting policies · Management judgments and accounting estimates · Significant audit adjustments · Other information in documents containing audited financial statements · Disagreements with management · Management consultation with other accountants · Major issues discussed with management prior to retention · Difficulties encountered in performing the audit The City of Corpus Christi will send its comprehensive annual financial report to the Government Finance Officers Association of the United States and Canada for review in their Certificate of Achievement for Excellence in Financial Reporting program. It is anticipated that the Proposer will be required to provide special assistance to the City of Corpus Christi to meet the requirements of that program. The City of Corpus Christi currently anticipates it will prepare one or more official statements in connection with the sale of debt securities which will contain the government-wide financial statements and the auditor's report thereon. The auditor shall be required, if requested by the financial advisor and/or the underwriter, to issue a "consent and citation of expertise" as the auditor and any necessary "comfort letters." The City of Corpus Christi has determined that the United States Department of Health and Human Services will function as the cognizant agency in accordance with the provisions of the Single Audit Act of 1984 (as amended in 2003) and U.S_ Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. The Schedule of Expenditures of Federal Awards and related auditor's report, as well as the reports on compliance and ~ntemal controls, are to be issued as part of the comprehensive annual financial report. 13 5 A list of findings and other internal control weaknesses fi.om the City of Corpus Christi's financial statement audit is to be issued. Difficulties may be anticipated in implementing and complying with specffic reporting requirements recently mandated by GASB Statements No. 40, 44, and 45, and any subsequent GASB statements. The City of Corpus Christi may require the Auditor's assistance to comply with these reporting requirements. Firms submitting proposals are encouraged to consider subcontracting portions of the engagement to local audit firms or audit firms owned and controlled by socially and economically disadvantaged individuals. If this is to be done, that fact, and the name of the proposed subcontracting firms, must be clearly identified in the proposal. Following the award of the audit contract, no additional subcontracting will be allowed without the express prior written consent of the City of Corpus Christi. The City of Corpus Christi serves an area of 504 square miles with an estimated population of 287,290. The City of Corpus Christi's fiscal year begins on August 1 and ends on July 31. The City of Corpus Christi operates under a Council-Manager form of government and provides such services as are authorized by its charter to advance the welfare, health, morals, comfort, safety, and convenience of the City and its inhabitants. The City of Corpus Christi provides the following services to its citizens: · Public Safety (police and fire protection, building inspection, street lighting and traffic signals, and civil defense) · Public Services (water, wastewater collection and disposal, gas, garbage collection and disposal, maintenance of streets, and storm water drainage) Community Enrichment (libraries, parks, recreational facilities, marina, mtmicipal beaches, golf courses, swimming pools, tennis courts, baseball and softball diamonds, and senior citizen centers) · Airport · Preventive Health Facilities The City of Corpus Christi had a total payroll of $121,745,107 in Fiscal Year 03-04 covering 3,317 full time employees. 14 The City of Corpus Christi is organized into 35 departments and agencies. See Exhibit D for an organization chart. The accounting and financial reporting functions of the City of Corpus Christi are centralized. More detailed ~nformation on the government and its finances can be found at the City's website located at ww,~'.ccte.,x~s.com, as well as in the following documents: · City of Corpus Christi Adopted Budget located in Office of Management and Budget · Official Statements located in Financial Services Department · Comprehensive Annual Financial Report located in Financial Services Department The City of Corpus Christi uses the following fund types and account groups in its financial reporting: Fund Type/Account Grouv General fund Special revenue funds Debt service funds Capital projects funds Enterprise funds Internal service funds Expendable trust funds Number of Number With Individual Legally Adopted Funds Annual Budgets 1 1 13 9 4 4 15 0 5 5 5 5 2 0 Discretely Presented Component Units: Predominantly Proprietary 2 N/A Annual budgets are legally adopted on a basis consistent with generally accepted accounting principles for all governmental funds except the Federal/State Grant Fund, capital project funds, community enrichment fund, infrastructure fund, the Corpus Christi Community Improvement Corporation Fund (CCCIC), the Corpus Christi Housing Finance Corporation Fund (CCHFC), the Corpus Chnst~ Industrial Development Corporation Fund (CC1DC), and the Corpus Christi Health Facilities Development Corporation (CCHFDC). The Federal/State Grant Funds and the capital projects funds adopt project-length budgets. Budgets were not adopted for the CCCIC, ('CHFC, CCIDC, and the CCHFDC. All appropriations lapse at fiscal year end. Dur/ng the fiscal year to be audited, the City of Corpus Christi received Federal and State awards. 15 The City participates in funding two retirement plans: (1) all City employees, except firefighters, are provided benefits through a non-institutional, joint contributory, defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent multiple-employer public employee retirement system; and (2) all firefighters are covered by the Fire Fighters Retirement System of Corpus Christi, a s~ngle-employer defined benefit pension plan. Management of the City of Corpus Christi has addressed all potential component units for which the City may be financially accountable and, as such, have been included within the City's financial statements. The City (the primary government) is financially accountable if it appoints a voting majority of the organization's governing board and (1) it is able to impose its will on the organization, or (2) there is a potential ibr the organization to provide specific financial benefits to or burdens on the City. In doing so, management has considered other orgarfizations for which the nature and sigluficance of their relationship with the City of Corpus Christi are such that exclusion would cause the City of Corpus Christi's financial statements to be misleading or incomplete. ~ae fbllowing entities have been identified as blended component units due to their closeness of their relationship with the City of Corpus Christi: Corpus Christi Community Improvement Corporation, Corpus Christi Housing Finance Corporation, Corpus Christi Industrial Development Corporation, Corpus Christi Crime Control and Prevention District, Corpus Christi Business and Job Development Corporation, Tax Increment Zone No. 1, and the North Padre Island Development Corporation. The Corpus Christi Community Improvement Corporation was formed to provide financing for the rehabihtat~on of residential property in the City. The City manages the day-to-day operations of this corporation, and the Mayor and Council Members are directors of the corporation The Corpus Christi Housing Finance Corporation promotes business development and issues housing revenue bonds. The City manages the day-to-day operations of th/s corporation, and the Mayor and Council Members are directors of the corporation. The Corpus Christi Industrial Development Corporation promotes business development and issues industrial development bonds. The City manages the day-to-day operations of this corporation, and the Mayor and Council Members are directors of the corporation. 16 The Corpus Christi Crime Control and Prevention District (District) is a public non- profit corporation created under State law to provide funding for public safety programs. Although the District is legally separate from the City, the District is reported as if it were part of the primary government because it is a financing mechanism for the City to provide public safety to the citizens of the City. The Corpus Christi Business and Job Development Corporation (CCBJDC) is a public non-profit corporation created by State law to provide funding of voter approved capital improvement programs. The City Council appoints the Board and has financial accountability Although it is legally separate from the City, CCBJDC is reported as if it were part of the primary government because its primary purpose is to issue revenue bonds to finance major capital improvements on behalf of the City. Tax Increment Zone No. I (Zone No. D was established during 1984 to provide funds for development and improvement projects within the zone's boundaries. The receipt of post-1984 incremental property taxes from taxing umts within the boundaries of the zone provides the funding for its projects. The Mayor and Council Members are a voting majority of the board. The City, in addition to managing the day-to-day operations of Zone No. 1, is directly responsible for the repayment of debt ~ssued by Zone No. 1 to the extent of the taxes attributable to it. Zone No. 1 was dissolved effective March 1, 2004, after the last debt payment was made. North Padre Island Development Corporation (NPID) was created by the City pursuant to the Tax Increment Financing Act to facilitate development of the land within the boundaries of the tax increment zone, namely Packery Channel. NPID became effective on November 14, 2000, and will t~rmmate on December 31, 2022. The receipt of post- 2000 incremental property taxes from taxing units with property within the boundaries of the zone provides the funding for its projects. The Mayor and Council Members are a voting majority of the board, and the City manages ~ts day-to-day oporat~ons. The blended component units are included in the government fund statements as non-major government funds. The tbllowing entities have been identified as discretely presented component umts: the Coastal Bend Health Facilities Development Corporation and the Corpus Christi Convention and Visitors Bureau The component unit column in the government-wide financial statements includes the financml data of the City's other component units for which the City Council appoints the majority of the Board and has financial accountability. The Coastal Bend Health Facilities Development Corporation (CBHFDC) is a public, non-profit corporation created by the City under State law to facilitate financing and development of health and health-related facilities. The CBHFDC is presented as a governmental fund type 17 The Corpus Christi Convention and Visitors Bureau (V'tsitors Bureau) is a private Texas nonprofit corporation organized for the purpose of promoting convention and visitors' activity in the Corpus Christi Bay area. The Visitors Bureau has been presented as a governmental fund type. Related organizations and jointly governed organizations provide s~rvices within the City that are administered by separate boards or comrmssions, but the City is not financially accountable, and such organizations are therefore not component units of the City, even though the City Council may appoint a voting majority of an organization's board members. Consequently, financial information for the Coastal Bend Council of Governments, the Regional Transit Authority, the Corpus Christi Housing Authority, and the Corpus Christi Regional Economic Development Corporation are not included in the City's financial statements. The City of Corpus Christi does not participate in joint ventures with other governments. The financial services department is headed by Cindy O'Bri~n, Director of Financial Services, and consists of 131 employees. The principal functions performed and the number of employees assigned to each are as follows: Number of Function Employees Finance Administration Accounting Treasury Utilities Business Office Purchasing/Inventory 4 33 15 65 14 Total 131 HARDWARE T¥oe of Equipment PeopleSoft Series H.T.E. S~rver Number Make of Equipment HP7410 AS400 Networked Yes Yes 18 SOF'I'WARE Make PeopleSofl, Inc. PeopleSoff, lnc. H.T.E., Inc. Vendor PeopleSoft Financials PeopleSoft HR/Payroll H.T E., Inc DATABASES Type Uses ORACLE PeopleSoft DB2 H.T.E. Major Applications General Ledger, Accounts Payable, Asset Management, Purchasing, Inventory & Budget Human Resources, Benefits Admirdstration, e-Reeruit & Payroll Utility Systems: Customer Information Land Management Work Orders Financials: Accounts Receivable Cash Receipts Neighborhood Services: Building P~xmits Business Licenses Code Enforcement All working papers and reports must be retained, at the au&tor's expense, for a minimum of three (3) years, unless the firm is notified in writing by the City of Corpus Christi of the need to extend the retention period. Thc auditor will be required to make working papers available, upon request, to the following parties or their designees: · U.S. Depa,tment of Health and Human Services, · U.S. General Accounting Office (GAO), · Parties designated by the federal or state governments or by the City of Corpus Christi as part of an audit quality review process, and 19 · Auditors of entities of which the City of Corpus Christt is a subrecipient of grant funds. In addition, the firm shall respond to the reasonable inquiries of successor auditors and allow successor auditors to review working papers relating to matters of continuing accounting significance. Interested Proposers who wish to review prior years' audit reports and management letters should contact the Project Manager. The City of Corpus Christi will use its best efforts to make prior audil reports and supporting working papers available to Proposers to aid their response to this request for proposals. The Financial Services' staff and responsible management personnel will be available during the audit to assist the firm by providing information, documentation and explanations. The preparation of confirmations will be the responsibility of the City of Corpus Christi. The staff of the City of Corpus Christi is responsible for the preparation of all statements and schedules. The City of Corpus Christi will provide the auditor with reasonable work space, desks and chairs. The auditor will also be provided with access to one telephone line, photocopying thcilities and fax machines. Report preparation, editing and printing shall be the responsibility of the City of Corpus Christi. Section 4.0 Proposal Format and Organization Tkis section provides specific instructions on format and organization of the Proposal to be submitted by the Proposer. Each Proposer may submit only one Proposal in a totally self- supporting format without reference to any other Proposals. To provide for ease and uniformity and to aid in the evaluation of Proposals, it is required that all responses comply with the sequence outlined herein. Failure to comply may result in rejection of the response. The Proposal is to be completed in sections, which are described below. For ease 20 m handling, please submit the Proposal on 8.5" x 11" paper (larger paper is permissible for charts or spreadsheets) and place in binders with tabs delineating each section. The Proposer shall provide six (6) identical copies of their Proposal to the location specified in Section 1.2 on or before the closing date and time for receipt of Proposals. Oral, teleohone, electronic, or facsimile Prooosai will not be considered. This section outlines the minimum requirements for preparation and presentation of a response. The Proposer shall define the capabilities of their organization to supply and maintain the services as requested in this RFP. The response should be specified and completed in every detail, prepared in a simple and straightforward manner. Proposers are expected to examine the entire RFP including all specifications, standard provision and instructions. Failure to do so will be at the Proposer's risk. Proposers should provide their best pricing on each type of service. The Ixansmittal letter shall indicate the intention of the Proposer to adhere to the provision described in the RFP without modification. The letter of transmittal MUST: Be presented on company letterhead; Identify the submitting organization; Explicitly indicate acceptance of the requirements as described in the RFP Requirements; Acknowledge receipt of any amendments to this RFP; Reference the City of Corpus Christi Disclosure of Interest form which has been completed and follows the transmittal letter; and, Identify, by name and title, and be signed by the person authorized by the organization to obligate the organization contractually. A table of contents, listing titles, sections, and major sub-sections shall follow the Disclosure of Interest form referenced above. All pages shall have a unique identifier and be numbered sequentially within each section. · Using the format outlined below, the Proposer should provide three current client references tbr which the same services have been provided. References should be based on the office 21 that will be providing services to the City. This information will be used to determine the extent to which the Proposer is able to provide services to an entity the size of the City of Corpus Christi as well as the degree of Customer Service exhibited by the Proposer. Reference 1 Organization name: Address: Effective date of contract: Description of services provided: Reference 2 Organization name: Address: Effective date of contract: Description of services provided: Reference 3 Organization name: Address: Effective date of contract: Contact and title: Phone number: Number of employees: Contact and title: Phone number: Number of employees: Contact and t~tle: Phone number: Number of employees: Description of services provided: 22 SPECIAL NOTE: All responses to questions herein must be answered in accordance with providing services as specified in this RFP. Define in detail your understanding of the problem presented in Section 3.1, Nature of Services Required, of this request for proposal and your system solution. Provide all details as reqtdred in Section 3.1 in addition to those facts you deem necessary to evaluate your proposal. Describe your technical plan for accomplishing required work. Include such time-related display, graphs, and charts as necessary to show tasks, sub-tasks, milestones, and decision points related to the Statement of Work and your plan for accomplishment. Specifically indicate: Work program by tasks. Detail the steps to be taken in proceeding from the first to the last task. B The technical factors that will be considered in Section A above, and the depth to which each will be treated. C. The points at which written, deliverable reports will be provided. Provide a g~neral explanation and chart which specifies project leadership and reporting responsibilities. If use of subcontractors is proposed, identify their placement in the primary management structure, and provide internal management desc'nption for each subcontractor. This section should state key personnel of the local office of your firm (and other firms, if applicable). State the location of the office from which the work is to be done and key persormel of that office. Provide resumes for all key personnel listed. This section should also descTibe the range of services performed by your office, and should include a discussion of nationwide resources available to your firm in performing the aforementioned services and providing technical advice. Provide the number of years your firm has provide similar services. The maximum page length for this section is two (2) pages (not includmg resumes). 23 i- .... I III!11 ----'7 ............ Clearly describe the resources and information you expect to be provided by the City in the course of your work and at any other time throughout the contract term. The maximum page length for this section ~s one (1) page. Since data not specifically requested must not be included in the foregoing proposal sections, give any additional information considered essential to the proposal in this section. If there is no additional information to present, state in this section, "There is no additional information we wish to present." The maximum page length for this section is two (2) pages. Include name, address, and telephone number of person in your organization authorized to negotiate contract terms and render hinding decisions on contract matters. lndicate whether a local office will be performing the work including the place of business and telephone numbers. 'Il This section shall contain any final remarks or elaboration which the Proposer believes is important to a clear understanding of the proposed services and/or the Proposer's capabilities. The maxtmum page length for this section is two (2) pages. The pricing proposal should contain all pricing information relative to performing the audit engagement as described in this request for proposals. The total all-inclusive maximum price to be submitted is to contain all direct and indirect costs including all out-of-pocket expenses. The City of Corpus Christi will not be responsible for expenses incurred in preparing and submitting the technical proposal or the pricing proposal. Such costs should not be included in the technical proposal. Out-of-pocket expenses tbr firm personnel (e.g., travel, lodging and subsistence) will be reimbursed at the rates used by the City of Corpus Christi for its employees. All estimated out- of-pocket expenses to be reimbursed should be presented on the second page of the pricing 24 proposal in the format provided in the attachment. All expense reimbursements will be charged against the total all-inclusive maximum price submitted by the firm. In addition, a statement must be included in the pricing proposal stating the firm will accept reimbursement for travel, lodging, and subsistence at the prevailing City of Corpus Christi rates lbr its employees. The pricing proposal should include a schedule of professional fees and expenses. If ~t should become necessary for City of Corpus Christi to request the auditor to render any additional services to either supplement the services requested in this RFP or to perform additional work as a result of the specific recommendations included in any report issued on this engagement, then such additional work shall be performed only if set forth in an addendum to the contract between City of Corpus Christi and the firm. Any such additional work agreed to between City of Corpus Christi and the firm shall be performed at the same rates set forth in the schedule of fees and expenses included in the pricing proposal. Section 5.0 Proposal Evaluation The City of Corpus Christi will conduct a comprehensive, fair and impartml evaluation of all Proposals received in response to this RFP. Each Proposal will first be analyzed to detcmdne overall responsiveness and completeness as defined in Section 4.0 Proposal Format and Organization and Section 5.2 Evaluation Criteria. Fatlure to comply with the instructions or to submit an incomplete Proposal that does not satisfy Section 4.0 and 5.2 will deem a Proposal non-responsive and may, at the discretion of the Committee, as defined in Section 5.1 below, be ehmlnated from further consideration. A Committee ("Committee") has been established to assist the City in the selection of a qualified Proposer. The Committee is comprised of representatives from Financial Services and Purchasing. The Committee will determine the responsiveness and acceptability of each Proposal. The Committee will then engage in a detailed review of each Proposal to evaluate the response ~n relation to the Ibm (4) major evaluation factors identified in Section 5.2. 37ne Proposal evaluation and selection process will be based upon the following major factors: Risk, Strategic Need, Technical Solution and Cost. Some of the criteria contained within this model may look s~milar to the following Proposed Evaluation Model. Each Proposer is to provide detailed responses including reference to any existing "in house" procedures, 25 policies, etc. as they reference all requirements of this RFP. Evaluation Criteria will include but not necessary he limited to the following RFP paragraghs to allow the Committee to determine "Best Value." Proposed Evaluation Model Professional Auditing Services experience and professional; activities of the firm 10% Risk ; Strategic Need Technical Cost Total Solution 20 % 20 % 20 % 40 % 100% l~em-0n~[;ated U~idersianding (~ ~it} need' proposed solution Expertise of 10 % staff available : to perform "on-site" work 20 % Personnel Evidence of good qualifications organization and 10 % management practices 5 % Utilization of local businesses 5 % Failure by the Proposer to provide information relative to the above criteria may deem a Proposal non-responsive and may, at the discretion of the Committee, as defined in the paragraphs above, be eliminated from further consideration. The Evaluation Committee reserves the fight to conduct other evaluation and measurements of Proposer responses as may be required in order to make an informed decision. The Committee will determine whether the Proposal attempts to modify any mandatory Contract provision applicable to the RFP. Proposers are cautioned [hat by submitting a Proposal, they are agreeing to the general requirement provisions of the RFP, wkich relate to their Proposal. The Committee will make a final recommendation to the City Manager who will place the item on the City Council Agenda for selection and award of the Contract. 26 EXHIBIT A CITY OF CORPUS CHRISTI DISCLOSURE OF INTEREST City of Corpus Christi Ordinance 17112 as amended, requires all persons or Proposers seeking to do business with the City to provide the following information. Every question must be answered. If the question is not applicable, answer with "N/A." See the following page for definitions. PROPOSER NAME: ADDRESS: CITY ZIP PROPOSER is: I. Corporation ( ) 2. Partnership ( ) 3. Sole Owner ( ) 4. Association ( ) 5. Other ( )_ DISCLOSURE QUESTIONS If additional space ~s necessary, please use the reverse side of this page or attach a separate sheet. 1 State the names of each "employee" of the City of Corpus Christi having an "ownership interest" constituting 3% or more of the ownership in the above named "Proposer." Job Title and City Department (if known) 2. State the names of each "official" of the City of Corpus Christi having an "ownership interest" constituting 3% or more of the ownership in the above named "Proposer." 3 State the names of each "board member" of the City of Corpus Christi having an "ownership interest" constituting 3% or more of the ownership in the above named "Proposer." Name: Board, Commission, or Committee 27 4 State the names of each employee or officer of a '~consultant" lbr the City of Corpus Christi who worked on any matter related to the subject of this contract and has an "ownership interest" consntuting 3% or more of the ownership in the above named "Proposer." Consultant CERTIFICATE I certify that all infbrmation provided is true and correct as of the date of this statement, that I have not knowingly w~thheld d~sclosure of any information requested; and that supplemental statements will be promptly submitted to the City of Corpus Christi, Texas as changes occur. Codifying Person: Title: Signature of Certifying Person: Date: DEFINITIONS a. "Board member." A member of any board, commission, or committee appointed by the City Council of the City of Corpus Christi, Texas. b. "Employee." Any person employed by the City of Corpus Christi, Texas either on a full or part-time basis, but not as an independent contractor. c "Proposer." Any entity operated for economic gain, whether professional, industrial or commercial, and whether established to produce or deal with a product or service, including but not hmited to, entities operated in the form of sole proprietorship, as a self-employed person, partnership, corporation, joint stock company, joint venture, receivership or trust, entities which for purposes of taxation are treated as non-profit organizations. d. ~'Offic~al." The Mayor, members of the City Council, City Manager, Deputy City Manager, Assistant City Managers, Department and Division Heads, and Municipal Court Judges of the City of Corpus Christi, Texas. c. "Ownership interest." Legal or equitable interest, whether actually or constructively held. In a Proposer, including when such interest is held through an agent, trust, estate, or holding entity. "Constructively held" refers to holdings or control established through voting trusts, proxies, or special t~m~s of venture or partnership agreements" 1~ "Consultant." Any person or Proposer, such as engineers and architects, h~red by the City of Corpus Christi for the purpose of professional consultation and recommendation. 28 EXHIBIT B EXCEPTIONS Proposer: Document Exceotions Proposer shall clearly state the exception. Proposer shall describe each item and state clearly any phce consequences. Important Note: The Proposer must fill this page in all submitted copies to the City. If the Proposer has no option or exception he should indicate None on this page. Proposer Authorized Signature Name of Proposer' s Authorized Representative { Print) Telephone Number (_ _ ) Date: / / 29 EXHIBIT C THE STATE OF TEXAS COUNTY OF NUECES PROFESSIONAL AUDITING SERVICES This Professional Auditing Services Agreement ("Agreement") is entered into by and between the City of Corpus Christi, a municipal corporation ("City"), and I"Consultant") effective for all purposes upon execution by the City Manager or City Manager's designee. WHEREAS, the City desires to have its financial statements audited for the fiscal year ended July 31,2005. NOW, THEREFORE, Consultant and City agree as follows: I. SERVICES TO BE PERFORMED: The Consultant agrees to provide professional auditing services to audit City's financial statements for the fiscal year ending July 31, 2005. At the request of the City, Consultant shall perform annual auditing financial statements for up to four (4) subsequent fiscal yea.rs. These audits are to be performed in accordance with auditing standards generally accepted in the [)nited States of America, the standards applicable to financrial audits contained in Government ,~uditing Standards issued by the Comptroller General of the United States, the provisions of the federal Single Audit Act of 1984 (as amended in 2003) and U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Orgamzations. II. SCOPE OF SERVICES Consultant shall perform the professional auditing services in accordance with the Request for Proposals (RFP) dated attached in Exhibit "A,' Consultant's proposal dated , attached in Exhibit "B', and Consultant's engagement letter dated , as attached in Exhibit "C." In the event of conflict between Consultant's proposal and the terms of this Agreement, thts Agreement shall control. Re partms agree performance of the work shall coma-hence upon authorization to proceed by the City. The Director of Finance is designated as the Contract Administrator responsible for all phases of performance and operations under this Agreement, including authorizations for payment. All notices or communications regarding this Agreement shall be directed to the Contract Administrator. 3O 111. FEE FOR SERVICES Total cost for all services provided by Consultant under this Agreement shall not exceed $ unless expressly author/zed by written amendment to this Agreement. IV. TERMINATION OF CONTRACT The City may, at any time, with or without cause, written notice to the Consultant at terminate this Contract upon thirty days V_ APPROPRIATION OF FUNDS All parties recognize that the continuation of any contract afier the close of any fiscal year of City, which fiscal year ends on July 31 of each year, shall be subject to appropriations and budget approval providing for coveting such contract item as an expenditure in said budget. City does not represent that the budget item will be actually adopted, said determination being within the sole discretion of the City Council at the time of adoption of such budget. VI. ASSIGNABILITY The Consultant shall not assign, transfer, or delegate any of his obligations or duties in this Contract to any other person without the prior written consent of the City, except for routine duties delegated to field assistants and clerical helpers. The performance oft.his Agreement by Consultant is the essence of this Agreement and City's right to withhold consent to such assignment shall be within the sole discretion of the City on any grounds whatsoever. VII. INDEPENDENT CONTRACTOR Consultant shall perform all professional services as an independent contractor and shall furnish such services in its own manner and method, and under no circumstances or conditions shall an agent, servant, or employee of the Consultant be considered an employee of the City. VIII. SUBCONTRACTORS Consultant may use subcontractors in connection with the work performed under this Agreement. When using subcontractors, however, Consultant must obtain prior written approval from the City. In using subcontractors, Consultant agrees to be responsible for all their acts and omissions to the same extent as if the subcontractor and its employees were employees of the Consultant. All requirements set forth as part of this Agreement shall be applicable to all subcontractors and their employees to the same extent as if the Consultant and its employees had performed the services. 31 IX. VENUE AND APPLICABLE LAW This Agreement shall he subject to all Federal, State ~nd local laws. All duties of the parties shall be performed in the City of Corpus Christi, Texas. The applicable law for any legal disputes arising out of this Agreement shall be the law of Texas and such forum and venue for such disputes shall be the appropriate district, county, or justice court in and for Nueces County, Texas. X. WAIVER No waiver of any breach of any term, or condition of this Agreement, shall be construed to waive any subsequent breach of the same. XI. DISCLOSURE OF INTERESTS Consultant further agrees, in compliance with City of Corpus Christi Ordinance No. 17112, to complete, as part of this Contract, the Disclosure of Interest form provided to Consultant. Xll. INDEMNIFICATION Consultant agrees to indemnify and save hanxfiess City, its agents, servants, and employees fi-om any and all liabilities, losses, damages, or expenses, including a~tomey's fees resulting fi-om Consultant's negligence or willful acts or omissions whtle in performance of th~s Agreement. XIll. INSURANCE Consultant agrees to provide insurance in accordance with Exhibit "D." XIV. NO WAIVER. No waiver of any covenant or condition, or the breach of any covenant or condition of this Agreement, constitutes a waiver o£ any subsequent breach of the covenant or condition of the Agreement. XV. AMENDMENTS OR MODIFICATIONS. No amendments or modifications to this Agreement may be made, nor any provision waived, unless in writing signed by a person duly authorized to sign agreements on behalf of each party XVI. RELATIONSItlP OF PARTIES. In performing this Agreement, both the City and Consultant shall act in an individual capacity, and not as agents, representatives, employees, employers, partners, joint-venturers, or associates of' one another. The employees or agents of either party may not be, nor be construed to be, the employees or agents of the other party for any purpose. 32 XVIi. CAPTIONS. The captions in this Agreement are for convenience only and are not a part of tiffs Agreement. The captions do not in any way limit or amplify the t~m~s and provisions of this Agreement. XVIII. SEVERABILITY. If for any reason, any section, paragraph, subdivision, clause, provision, phrase or word of this Agreement or the application of this Agreement to any person or circumstance is, to any extent, held illegal, invalid, or unenforceable under present or future law or by a final judgment of a court of competent jurisdiction, then the remainder of this Agreement, or the application of the term or provision to persons or c~rcumstances other than those as to which it is held illegal, invalid, or unenforceable, will not be affected by the law or judgrnent, for it is the definite intent of the parties to this Agreement that every section, paragraph, subdivision, clause, provision, phrase, or word of this Agreement be given full force and effect for its purpose. To the extent that any clause or provision is held illegal, invalid, or unenforceable under present or future law effective during the term of this Agreement, then the remainder of this Agreement is not affected by the law, and in lieu of any illegal, invalid, or unenforceable clause or provision, a clause or provision, as similar in terms to the illegal, invalid, or unenforceable clause or provision as may be possible and be legal, valid, and enforceable, will be added to this Agreement automatically. IXX. NOTICES. Notices provided shall be in writing and delivered to: On behalf of the City: City of Corpus Christi Director of Financial Services P.O. Box 9277 Corpus Christi, TX 78469-9277 On behalf of the Consultant: XX SOLE AGREEMENT. 'Fhis Agreement constitutes the sole agreement between the City and Consultant. Any prior agreements, promises, negotiations, or representations, verbal or otherwise, not expressly stated in this Agreement, are of no force and effect. 33 EXECUTED IN DUPLICATE, each of which shall be considered an original, this day of ,2005. ATTEST: CITY OF CORPUS CHRISTI Armando Chapa City' Secretary APPROVED THIS DAY OF By: Assistant City Attorney For City Attorney George K. Noe City Manager ,2005 CONSULTANT: By: Name: Title: Date: Attachments: Exhibit "A," City of Corpus Christi Request for Proposal Exhibit "B," __ ..... Proposal Exhibit "C," __ , Engagement Letter ExhtNt "D," Insurance Requirements 34 INSURANCE REQUIREMENTS AUDITOR'S INSURANCE A Auditor must not commence work under this agreement until all insurance required herein have been obtained and the City has approved such insurance. Auditor must not allow any subcontractor to commence work until all similar insurance required of the subcontractor has been obtained. Auditor must furnish to the City's Risk Manager, two (2) copies of Certificates of Insurance, showing the following m~nimum coverage by insurance company(s) acceptable to the City's Risk Manager. The City must be named as an additional insured for the General and Automobile liability policies and a blanket waiver of subrogation is required on all applicable policies. TYPE OF INSURANCE MINIMUM INSURANCE COVERAGE 30-Day written notice of non-renewal, termination or material change and 10 day written notice of cancellation is required on all certificates COMMERCIAL GENERAL LIABILITY including: 1. Commerctal Form 2 Prernises- Operations 3. Products/Completed Operations Hazard 4. Contractual Liability Bodily Injury and Property Damage Per occurrence aggregate $1,000,000 COMBINED SINGLE LIMIT AUTOMOBILE LIABILITY $1,000,000 COMBINED SINGLE LIMIT 1 OWNED, NON-OWNED AND RENTED WORKERS COMPENSATION EMPLOYERS LIABILITY PROFESSIONAL LIABILITY including: Coverage provided must cover officers, directors, employees and agents 1. ERRORS and OMISSIONS Which complies with the Texas Workers' Compensation Act and Section Il of this exhibit $500,000/$500,000/$500,000 $1,000,000 COMBINED SINGLE LIMIT 35 ( In the event of accidents of any kind, Auditor must furnish the Risk Manager with copies of all reports of such accidents within 10 days of any accident. 11 ADDITIONAL REQUIREMENTS Auditor must obtain workers' compensation coverage through a licensed insurance company obtained in accordance with Texas law. The contract for coverage must be written on a policy and endorsements approved by the Texas Department of Insurance. The coverage provided must be in amounts sufficient to assure that all workers' compensation obligation incurred by the Auditor will be promptly met. B. Certificate of Insurance: The City of Corpus Christi must be named as an additional insured on the General Liability policies and a blanket waiver of subrogation is required on all applicable policies. If your insurance company uses the standard ACORD form, the cancellation clause (bottom right) must be amended by adding the wording "changed or" between "be" and "canceled", and deleting the words, "endeavor to", and deleting the wording after "left". In the alternative, verification of endorsement to the apphcable policy is acceptable. The name of the project must be listed under "Description of Operations" At a minimum, a 30-day written notice of non-renewal termination or material change and a 10-day written notice of cancellation is required. If the Certificate of Insurance does not show on its face the existence of the coverage required by items 1.B (1)-(4), an authorized representative of the insurance company must include a letter specifically stating whether items 1.B. (1)-(4) are included or exclude 36 Municipal Court Judicial ttonomble Rudolfo Tamez. 886-252(I Assistant to the City Manager JoAnn Hooks, 880-3003 EXHIBIT D CITIZENS City Organizational Chart CITY COUNCIL 880-3105 CITY MANAGER George K. "Skip" Noe 880-3222 Asslatant to the City Manager Yvonnc Haag, 880-3234 Libraries H~rh Canales, 880-7070 Municipal Court Administrative Rene Mtmdiola, 886-2515 City Se~remry Armando Chapa 850-3105 Aviation Dave Hamrick, 289-0171 City Attorney Mary Kay Fischer, 880-3360 Fire J. J. Adame, 880-3932 Police Pete Alvarez, 886-2603 Public Information Cheryl Sow~rd, 880-3211 ASSISTANT CITY MANAGER Ron Massey, 880 3218 ASSISTANT CITY MANAGER Margie C. Rose, 880-3232 ASSISTANT CITY MANAGER Oscar Marfinez, 826-3897 Engineering 'Angel Escobar, 980-3506 Klm McGuire, 8802,060 Gas Debbie Marroquin. 885-6024 Storm Water Vale'fie Gray, 857-188I StreetN & Solid Waate Jeff Kaplan. 857-1970 Wastewater Foster Crowel], 857-1800 Water Ed Garafia. 857-1881 Convention Facilities SMG Marc Soils, 8264171 Development Services Barbara Bailey Holly, 826-3560 Health Annette Rodriquez, Acting 851-7203 Human Relations kconid~ B~zar. 880-3196 Museum Rick Stryker. 826~660 Neighborhood Services Jon Wagner, Acting 880-3017 Code Enforcement Yvonne Haag, 880-3234 Parks & Recrention Sally Gavlik, 826-346d Budget Vacank 880-3235 Economic Development Oscar Marfinez, 826-3897 E-Government Susan Cable, 8264091 Financial Servlcea Cindy O'Br/en, 880-3613 General Services Jim Da.As. 880-1909 Human Re~ource~ Cynthia Gm-cia. 880-3315 Information Services Ogilv/e Gerike, 880-3740 37 CITY OF CORPUS CHRISTI. TEXAS BI-0081 PROFESSIONAL AUDITING SERVICES PROPOSAL (;oilier, Johnson & Woods P.C. 555 N. Carancahua, Suite 1000 Corpus Christi, TX 78478-0052 F. John Shepherd (361) 884-9347 March 24, 2005 ('oilier, Johnson ( crl[licd Public Accountanl~ 555 N Carancahua- ~mtc 1!)((! March 24, 2005 Michael Barrera, Procurement & General Services Manager City of Corpus Christi P.O. Box 9277 Corpus Christi, TX 78469-9277 Dear Mr. Barrera: Collier, Johnson & Woods P.C. is pleased to present our proposal for auditing services for the City of Corpus Christi, Texas (City) for the year ended July 31, 2005, with the option of auditing its financial statements for four subsequent years, and our qualifications to perform those services. We received Amendment No. I to the RFP and a copy of the signed amendment follows this transmittal letter. We accept the Conditions Governing the Procurement in Section 2 of the Request for Proposal (RFP) and the Scope of Work in Section 3 of the RFP including Amendment No. I to the RFP. The completed City of Corpus Christi Disclosure of Interest statement follows this transmittal letter. We have attached exceptions to the RFP and they follow this transmittal letter. The Collier, Johnson & Woods, P.C. representative is F. Jol'm Shepherd, our address is 555 N Carancahua, Suite 1000, Corpus Christi, Texas 78478, our phone number is (361) 884-9347. Collier, Johnson & Woods, P.C. is a professional corporation and a resolution of the Board of Directors authorizing Mr. Shepherd to contract in the corporation's name follows this transmittal letter. City of Corpus Christi March 24, 2005 Page -24 Collier, 3olmson & Woods, P.C. is prepared to provide copies of Certificates of Insurance showing mimmum insurance coverage outlined in the City's "Insurance Requirements" and nmning the City as an additional insured for general and automobile liability and a blanket waiver of subrogation if selected as auditors. Collier, Johnson & Woods, P.C. shareholders and employees (we have no agents) will not attempt to lobby or influence a vote or recommendation related to this RFP response; directly or indirectly, through any contact with the City Council members or other City official between March 24, 2005 (RFP submission date) and approval for Award Date by the City Council. The following pages contain more information regarding our Firm and our proposed audit plan for the City of Corpus Christi. Please call F. John Shepherd if you have any questions or/fi can help you in a_ny way. Very truly yours, COLLIER, JOHNSON & WOODS A. Professioni~ F~ Jo~h~herd, TreaSurer REQUEST FOR PROPOSAL AMENDMENT CITY OF CORPUS CHRISTI PURCHASING DIVISION Request for Proposal No. BI-0081-05 Amendment No. l Date March 14, 2005 In relbrence to the above request for proposal for Professional Auditing Services, the following responses to questions are submitted: I Question: Are there any professional disagreements with the current auditor concerning the application of accounting principles or financial statement presentation'? Response: No. 2 Question: How many audit adjustments did the CPA firm propose during the July 31, 2004 audit engagement? Response: None. Question: How many years has the current CPA firm been engaged as the City's external auditor? Response: lO years 4~ Question: What were the audit fees for the July 31, 2004 audit engagement? Response: $130,000 5. Question: On what date, approximately, will the books be closed and City staffready for the CPA firm to begin audit fieldwork procedures? Response: Augu.~l 19, 2005 is the date thai Accounts Payable will be closed for fiscal year 2004- 2005. At that point, the City's accountants begin closing each of the funds, and the external auditors can begin audit fieldwork. 2 Request for Proposal No. BI-0081-05 Amendment No. Date March 14, 2005 6. Question: The RFP specifies that the CAFR for the year-end July 31, 2005 is due November 30, 2005, however it was noted that the end of fieldwork date for the July 31, 2004 audit engagement was December 23, 2004 What changes have occurred to allow for the narrower time frame in the issuing of the July 31, 2005 financial statement report? Response: The City staff is more experienced in closing funds, and they know what is expected of them during year end. Additionally staff has been "cleaning" up the funds lhroughout FY 04-05 which should expedite the closing of the funds at year end. 7. Question: On what date was the July 3 I, 2004 financial report presented to the City Council? Response: The financial report was delivered to the City Council members in the City Manager packet on January 7, 2005. "ALL OTHER TERMS AND CONDITIONS REMAIN THE SAME" Procurement & General Services Manager ACKNOWLEDGED BY: FIRM N3tME One copy must be returned to the Purchasing Division prior to the RFP closing or with your sealed proposal. EXBIBIT A CITY OF CORPUS CHRISTI DISCLOSURE OF INTEREST City of Corpus Christi Ordinance 17112 as mended, requires all persons or Proposer'a seeking to do business with the City to provide the following information. Every question must be answered. If the question is not applicable, answer with "N/A." See the following page for definitions. PROPOSER NAME: ADDRESS: Collier. Johnson &Woods& P.C. 555 N. Carancahua Suite 1000 CITY Corpus Christi, Texas ZIP 70~7B-0052 PROPOSER is: 1. Corporation (x) 2. Partnership ( ) 3. SoleOw'ner ( ) 4. Association ( ) 5. Other ( ) DISCLOSURE QUESTIONS If additional zpace iz ncczss."..W, please use the reverse side of this page or attach a separate sheet. I. State the names of each ~employee" of the C~ty ot Corpus Cia- stt having an own rship interest" constituting 3% or more of the ownership in the above named "Proposer." Job Title and City Department (if known) NONE 2. State the names of each "official" of the City of Corpus Christi having an "ownership interest" constituting 3% or more of the ownership in the above named "Proposer." State the names of each "board member" of the City of Corpus Christi having an "ownership interesl" constituting 3% or more of the ownership in the above named "Proposer." Bom& Commission, or Committee NONE 27 4. State the names of each employee or officer of a "consultant" for the City of Corpus Christi who worked on any matter related to the subject of this contract and has an "ownership interemt" constituting 3% or more of the ownership in the above named "Proposer." Consultant NONE CERTIFICATE I certify that all information provided is true and correct as of the date of this statement, that I have not knowingly withheld disclosure of any information requested; and that supplemental statements will be promptly submitted to the City of Corpus Christi, Texas as changes occur. Certify/ng Person: F. John Shepherd Title: Treasurer Signature of ~ ~ J~ tO a. "Board member." A member of any board, commission, or committee appointed by the City Council of the City of Corpus Christi, Texas. b. "Employee." Any person employed by the City of Corpus Ctmsti, Texas either on a full or part-time basis, but not as an independent contractor. c. ~'Proposer.' Amy entity operated for economic gain, whether professional, industrial or commercial, and whether established to produce or deal with a product or serv/ce, including but not limited to, entittes operated in the form of sole proprietorship, as a self-employed person, partnership, corporation, joint stock company, joint venture, receivership or trust, ~ntities which for purposes of taxation are treated as non-profit organizations. d. "Official." The Mayor, members of the City Council, City Manager, Deputy City Manager, Assistant City Managers, Department and Division Heads, and Municipal Court Judges oft. he City of Corpus Christi, Texas. e. "Ownership interest." Legal or equitable interest, whether actually or constructively held. In a Proposer, including when such interest is held through an agent, trust, estate, or holding entity. "Constructively held" refers to holdings or control established through voting trusts, proxies, or special terms of venture or partnership agreements." [ "Consultant_" Any person or Proposer, such as engineers and architects, hired by the City of Corpus Christi for the purpose of professional consultation and recommendation. 28 EXHIBIT B EXCEPTIONS Proposer: Gollier~ Johnnon & Woods~ P.C. Doc~ment Exceptions Proposer shall clearly state the exception. Proposer shall describe each item and state clearly any price consequences. Im~ol-tlmt 1No~: The Proposer must fill this page in all submitted copies to the City. If the Pmpos~ ha~ no option or exception he should indicate None on this page. SEE ATTACMED SCHEDULE OF EXCEPTIONS (Print) F. John Shepherd Telephone Number (,~6_1_) §8~_-_93_qJ_Date: 03 04 / 2005 29 Schedule of Excel~tions Section 2.1.23 Contract Exhibit C is a sample agreement substantially in the form which successful proposer will be expected to execute. Professional standards require the auditor to establish an understanding with the auditee regarding services to be performed_ The understanding should include the objective of the engagement, management' s responsibilities, the auditor's responsibilities and the limitations of the engagement. In the past we have had an engagement letter signed by the City detailing these understandings. Attached is a copy of the 2004 engagement letter. Although the RFP covers some of the understanding, there are other areas we would include in the contract~ The 2004 engagement is the basically the same engagement letter used for the audit engagement for the past ten years. We see no problems incorporating the provisions of both documents in a final agreement. Section 2.1.34 Term The estimated fees submitted in the proposals are for a one-year term, and, if extended by the City, the second (2) through fifth (5) year of the contract. This is considered an all-inclusive, not-to-exceed fee estimate for each of the five (5) years. Because we can not predict inflation, changes in accounting standards, changes in audit requirements or changes in the City's operations, including the numar and amounts of tederal grants, over flus extendea penocl ol tune we are not able to comrmt to an all-inclusive, not-to-exceed fee estimate for four (4) additional years. Our estimated fees for the option period are based on 3 % inflation and the exact same operations and grants as 2004. As in the past ten years, Collier, Johnson & Woods, P.C. prepares a new engagement letter including fees which have been agreed to and approved by the City Council. We see no problems in negotiating the scope of worlc and fee each yem-. Our history with the Cit3' has shown we are fair in our charges and the only significant increases have been when there have been changes in accounting standards. Section 3.0 Scope of Work In 2004, the American Bank Center Arena Fund was audited by other auditors, and Collier, Johnson & Woods, P.C. based our opinion on the reports of the other auditors. This proposal has been prepared assuming the American Bank Center Arena Fund is audited by other auditors (Continued) Schedule of Exceptions (Continued) Section 3.4 Special Considerations If we are requested by the City's financial advisor ancot underwriter, to issue ~consent and citation of expertise" as the auditor and any necessary "comfort letters' we will do what is required. However, because we do not know the scope of the request, it is not included m our fee estimate and it will be billed at our standard hourly rates We have provided this information in the past and see no problems in the future. Section 3.6.5.2 Discretely Presented Component Units The scope of our audit includes the Coastal Bend Health Facilities Development Corporation but does not include the Corpus Christi Convention and Visitors Bureau. The Corpus Christi Convention and Visitors Bureau has been audited by other auditors in the past and our audit report refers to the other auditors. We have assumed that this will be the same situation in the future. RESOLUTION OF BOARD OF DIRECTORS The board of directors of Collier, Johnson & Woods, P.C. authorizes F. John Shepherd to negotiate and contract in the name of the corporation. This twenty-third day of March 2005. (Jo_fin E. Porche, President rigid VLK2ook, Secretary CITY OF CORPUS CHRISTI, TEXAS PROPOSAL FOR PROFESSIONAL AUDITING SERVICES TABLE OF CONTENTS PAGE Information Requested A References ................................................................................................... 1 General Questionnaire B Program- System Concept and Solution ............................................................ 2-4 C. Program - Technical Plan .......................................................................... 5-7 D. Project Management Structure ......................................................................... 8 E Firm Background, Personnel, and Prior Experience ............................................ 9-10 Y~ Understanding of the City's Commitment to Plan Preparation .................................... 1 Other Pertinent Informatiov~ H Authorized Negotiator ............................................................................ 13 I Local Participation .................................................................................... 14 J Concluding Remarks .......................................................................... 15-16 K Cost of Services .................................................................................. 17 L Out-of-pocket Expenses ............................................................................... 18 M. Rates by Partner. Specialist, Supervisor and Staff ................................................. 19 N. Additional Professional Services ...................................................................... 20 O Peer Review ......................................................................................... 21 P. Personnel Profiles .................................................................................... 22-24 Q 2004 Engagement Letter ............................................................................ 25-32 Reference 1 Orgmizafion name: Corpus Christi Independent School D~strict Address'. 801 Leopard Street Cnrpus Christi. Texa~ 78401 Effective date of contract: 1999-2004 Description of services provided: ludl~ of CAFR, Single Audit Reference 2 OrgamZation name: Port of Corpus Christi Authority Address: 222 Power Street Corpus Christi, Tel~as 78401 Effective date of contract: 1995-2004 DesCription of services provided: Audit of CAFR, Single Audit Reference 3 Organization name: Nueee8 County Hospital District Address: 555 N. Carancahua, Ste. 950 Corpu~ Christi, Texas 78478 Effective date of contract: 1997-2004 Descnption of services provided: Audit of financial statements Contact and title: Donna Hohn, Comptroller Phone number: 361-886-9168 Number of employees: 5,350 Contact and title: Danny Hodgkins, Director of Finance Phone number: 361-885-5633 Number of employees: 158 Contact and title: Jesse Hale, Comptroller Phone number: 361-808-3304 Number of emp|oyees: 34 SYSTEM CONCEPT AND SOLUTION Scope of Work We will audit the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Corpus Christi, Texas (City) as of and for the year ended July 31, 2004, which collectively comprise the City's basic financial statements. Our audit will be performed in accordance with auditing standards generally accepted in the United States of America, the requirements contained in the Government Auditing Standards issued by the Comptroller General of the United States; the Single Audit Act as amended in 1996; and the provisions of OMB Circular A-133, "Audits of States, Local Governments and Non Profit Organizations". We understand that the financial statements will be presented in accordance with the financial reporting model described in GASB Statement No. 34. The document you submit to us will include Management's Discussion and Analysis and Other Required Supplementary Information. We will apply limited procedures to these documents which will consist principally of inquiries of management regarding the methods of measurements and presentation. We will not express an opimon on these documents. The document you submit to us will include statistical information that will not be subject to the auditing procedures applied in our audit of the basic financial statements, and for which our auditor's report will disclaim an opinion Auditing procedures used by us will: extend to the combining financial statements and supporting schedules. We will express an opinion on whether such information is fairly presented ia all material respects in relation to the basic financial statements taken as a whole. include tests of compliance with laws, regulations, contracts and grants applicable to the City of Corpus Christi in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards and evaluation and testing of the City's internal control over financial reporting in accordance with auditing standards generally accepted in the United States of America and Governmental Auditing Standards. The results of our procedures will be summarized in a report in accordance with those standards. Any reportable conditions or reportable conditions considered to be material weaknesses in internal control over financial reporting will be included in this report. 2 include tests of compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement applicable to each major program and evaluation and testing of the City's internal control over compliance in accordance with OMB Circular A-133. The results of our evaluation and testing will be summarized in a report in accordance with those standards. Any reportable conditions or reportable conditions considered to be material weaknesses in internal control over compliance will be included in this report. This report will also include an opinion on the Schedule of Expenditure of Federal Awards in relation to the basic financial statements take as a whole. Each of the above independem auditor's reports will be addressed to the Mayor and City Council. In the event we issue an opinion that is less than unqualified, we will communicate to the Mayor and City Council our reasons for such in writing. During the audit, our experienced auditors will be alert for constructive ways in which the City can improve controls or accounting procedures. We will inform the appropriate personnel of our suggestions as the work progresses and summarize all significant suggestions in a management letter addressed to the Mayor and City Council Our experience has indicated that management letters play a significant role in implementing improvements and in keeping the Mayor, City Council and staff informed of potential problems If conditions exist which would require us to expand the scope of our audit, we would advise management promptly. If we become aware of material errors and fraud, we would make an Uamediate and written report to management. We understand that the City intends to sell bonds from time to time and this may require the audited financial statements and Auditors opimon to be included in the Official Statements and that certifications may be requested as part of these bond sales. We provide these services to many of our governmental clients and will work w~th the City to facilitate these requirements in the most efficient and economical manner These services are not included in the scope of the services provided in the annual fee, but will be billed at our standard hourly rates based on the scope of the procedures and certifications requested. Moreover, we are available year-round for consultation on financial, operating, budgeting and reporting matters as requested. We would consider occasional questions regarding appropriate bookkeeping or accounting procedures to be part of our audit engagement. We anticipate that the implementation of GASB Statement No 40 and 44 will be part of this engagement. GASB Statement No. 45, as we discussed in the Management Letter, dated December 23, 2004, has significant implication to the City and may require significant time to determine the implications and implement. Consultation on specific accounting problems or financial and operating matters would be considered separate engagements and billed at our standard hourly rates based on the scope of work required. Options on Future Years If the City exercises its option to extend our contract, the procedures and reports described above will also apply for the years ended July 31, 2006, 2007, 2008 and 2009, unless there are changes in standards or other requirements. 4 TECHNICAL PLAN · Planning Our audit planning involves a review of the City's operations, including its primary activities, programs, and services. We will review the City's organi?ation and personnel structure to begin our assessment of the control environment. Minutes, contracts, and laws will be reviewed to determine their impact on the audit. As soon as possible after selection as auditors, we will meet with the Director of Financial Services and her management group to review recommendations concerning CAFR preparation we included in the Management Letter dated December 23, 2004. Additionally, we will assist in developing a work schedule that will allow completion of the CAFR by the November 30 deadline Working with the management group, we will develop a continuing education course for City staff. We have entered into an agreement with the Texas State Board of Public Accountancy to meet the requirements of CPE rules covering maintenance of attendance records, retention of program outlines, qualification of instructors, program content, physical facilities and length of class hours. This program will qualify for CPE hours. In 2004, we developed an 8 hour course and found that it enhanced the quality and efficiency of the CAFR process. · Evaluation of Accounting Controls Our audit will study and evaluate the internal accounting controls and report on them as a part .:f x~ .~:,anc:.:.2 audits, as rcquirzd by Gcve,,-r. ment Auditing Standc.-fis. Th~ zmdy and e-,'z2xzt'.~z, cf internal controls establish a basis for determining the extent of auditing procedures to be used in forming an opinion on the Financial statements. We will concentrate on those accounting and administrative controls that have a direct bearing on the reliability of the financial statements. Each audit area will be assessed to determine control risk and whether audit testwork will be substantive in nature or if tests of controls will be performed_ Considering the influence of the environment and the nature of the items comprising an account balance, we will then assess inherent risk and the possible occurrence of material misstatements. We use a variety of checklists and questionnaires which have proven to be efficient and practical tools in the audit process. · Testing of Controls If accounting controls can be relied upon and substantive tests can be reduced, we will perform tests to ascertain that the controls actually function. The audit areas where reliance on accounting controls is anticipated include: 'Revenues, Receivables, and Receipts Expenditures for Goods and Services and Accounts Payable Payroll and Related Liabilities Property, Equipment, and Capital Expenditures Debt and Obligations under Capital Leases · Analytical Procedures We will apply preliminary analytical procedures to the financial information to determine areas of audit concern where additional procedures may be necessary and final analytical procedures to assist in assessing the propriety of conclusions reached in the overall financial statement presentation. Analytical procedures focus on overall relationships within the financial statements and comparisons with budgets and prior year results. · Audit Sampling An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. Since it is not practicable to examine every transaction, audit sampling comprises an important part of an efficient audit. Sampling allows us to test a reduced number of transactions and project the results to the entire balance or class of transactions. We will use sampling in the following types of audit tests: Substantive Tests of Balances - Confirmation of Receivables Substantive Tests of Transactions - Vouching of Expenditures Compliance Tests of Controls - Test of Performance of Control Procedures Single Audit Test of Compliance with Laws and Regulations - Test of Procurement Procedures Based on the level of control risk, sample sizes for tests of controls will range from 25 to 60. Sample sizes for substantive tests of transactions or balances are based on assessment of appropriate level of tolerable misstatement, risk of material misstatement, other procedure risk and the estimated population balance after removal of items to be examined 100%. · Use of Computers Every member of the audit team has a laptop computer available for use at the client's location. Employees are encouraged to use these computers to efficiently plan and perform audits. We are constantly upgrading our software and hardware to keep up with new improvements in technology. We use GoSystem Audit software, Microsoft Excel and Word. We use computers to perform analytical review, generate random number samples for statistical sampling, process large spreadsheet calculations, document internal control procedures and produce trial balances, lead sheets and financial statements. We use downloads directly from the City's accounting system to efficiently accumulate necessary information. · Final Procedures At year end, we will confirm cash balances, receivables, selected revenues, investments and debt. When year end accounting is completed, we will finalize our audit procedures. We will request and evaluate responses from legal counsel to audit inquiries. We will review commitments and contingencies, as well as subsequent events that may have a material impact on the City's financial statements. A representation letter, confirming financial and compliance information provided to us is complete and accurate, from the City Manager, Director of Financial Services and Controller will be required to complete the audit. 6 · Report We will review the prepared draft of the CAFR and make recommendations to management in a management letter. The final signed report should be delivered before November 30. Work Program by Task TASK Evaluation of Controls Test of Cona-ols CordTan~tions of Cash, lnvesWn~nts, Receivables, Grants, Payables, Debt Testwork and Audit Procedures Relat~g to: Cash Investments Receivables Capital Assets Older Assets Payables Accrued Expenses Debt Ot~gr I ,labilities SingJe Audit Procedures Review of Closing F ok]ers Search for Unrecorded Liabilities Review of CAFR Statements and Notes, Tie M to Audited Balances Review MD&A F~aal Audit Procedures Deliver Auditor's Reports Deliver Draft Management Letter Deliver Management Letter SCF[EDULE Pre-Year End Pre-Year End Early August Early August As Completed by As Completed by City As Completed by City AS Completed by City As Completed by City AS Completed by City As Completed by City As Completed by City A~ Completed hv (?it3, When Schedule of Federal Expenditm'es is Completed As Completed by C~ After Closing of Accotmts Payable Through End of Field Work Need Two Weeks from C~y's Completion of CAFR Need Two Days from City's Completion of MD&A While Reviewn~g CAFR At Completion ofFir~al CAFR Two Weeks after Fhaal CAFR Alier Review w~h Management and Receipt of City's Responses PROJECT MANAGEMENT STRUCTURE We anticipate the following personnel will comprise your project leadership: F. John Shepherd, CPA-Engagement Shareholder The engagement shareholder is responsible for all aspects of the audit. He will direct and review fieldwork and report preparation. John has been the engagement shareholder for the past ten years. Brigid W. Cook, CPA-Concurring Reviewer The concurring reviewer provides additional technical expertise to the engagement. She resolves any technical disagreements and assists the engagement shareholder in completing the audit. Brigid has been the concurring reviewer for the past ten years. Timothy McKay, CPA, CITP-Audit Manager The audit manager is responsible for planning, directing and conducting substantial portions of the fieldwork, as well as report preparation. Tim has been the audit manager on the job for the past five years and was a senior or staff on the engagement for four years before advancing to the manager position. Each of the above are in full compliance with the professional education requixements in the GAO's Government Auditing Standards. A list of relevant continuing professional education is included on their resumes The educational background and professional licenses held by each are also included on their resumes. involvement by management facilitate atlainmg our staffing goals. Our experience has clearly demonstrated the mutual benefits derived from using the same personnel each year for your audit. We believe familiarity with your operations results in efficiently performed work, Jimited disruption of your operations and equitable fees. We plan to staff the City's audit with the same personnel each year to the maximum extent possible as we have in the past. Reporting Responsibilities John Shepherd aod Tim McKay will be the primary contacts for the project manager. They will work with the project manager to determine scheduling and organization of the engagement and be available to answer questions and deal with issues as they may arise_ Collier, Johnson & Woods, P.C. has the necessary resources in-house and thus no subcontractor will be used on the engagement. FIRM BACKGROUND, PERSONNEL, AND PRIOR EXPERIENCE Collier Johnson & Woods, P.C. is a local firm own, operated and staffed by local residents. Our only office is in Corpus Christi at 555 North Carancahua. Collier, Johnson & Woods was formed in December 1946 in Corpus Christi and has served the South Texas community since then Our members have been instrumental m shaping the area business and civic community. Throughout our history, we have been represented on civic organizations and advisory boards and have performed accounting services for many businesses, governments and individuals Personnel Profiles Following is a summary of our Firm's personnel: NUMBER CPAs Shareholders 4 4 Managers 4 4 Staff Accountants 5 1 Total Professionals 13 9 Other Support St,ff TOTAL PERSONNEL 16 9 We are proud of our high shareholder-to-staff ratio and our high ratio of CPAs to total professionals. Our staff accountants are required to have accounting degrees from accredited universities and to pursue certification as CPAs. Resumes of the project leadership, described in the previous section, are included on pages 22 through 24. Governmental Experience We have audited numerous governmental units and governmental grant contracts for fifty-eight years. Our current governmental clients include the Port of Corpus Christi Authority, Corpus Christi Independent School District, Del Mar College District, Nueces County Hospital District and the Coastal Bend Council of Governments. Our experience gives us expertise m governmental accounting and auditing and fund accounting in a budgetary environment. Our experience includes Single Audit Act reporting; combined and combining statements; governmental, fiduciary and proprietary fund types; financial and compliance auditing; 'and compliance with reporting requh-ements, promulgated by a wide variety of agencies and standard-setting groups. We have committed significant time and resources to developing our governmental services. All of our audit staff attend governmental audit training. We have expanded our library of reference materials and devoted considerable study to governmental issues. As part of our commitment to governmental accounting, we put on seminars for our clients and other local governmental officials on new accounting pronouncements such as GASB 34-. When it comes to nationwide resources available to our firm in providing technical advise, we go directly to the Governmental Accounting Standards Board (GASB), the Governmental Financial Officer Association (GFOA) or the American Institute of Certified Public Accountants (AICPA). Experience has proven that the best results are obtained by thoroughly researching an issue, developing our conclusions and then confirming our conclusions with the above standard setting organizations. Additionally, we actively communicate with grantor agencies regarding reporting requirements and are experienced in channels of consultation to resolve problems. We actively cormnent as a firm on governmental reporting requtrements. The best example of our governmental expertise is in the implementation of GASB 34. This was the most complex change in governmental accounting standards. We con'unitted the recourses to researching and understanding the issues in order to facilitate our clients' implementation of the new reporting model. In addition, we put on seminars for clients and other local government accounting personnel to help them deal with the implementation issues. Our audit practice focuses on large sophisticated governn~ents and corporations. This focus allows us to concentrate on complex issues and emerging accounting and auditing pronouncements. In the past ten years, we have dealt with these complex issues and responded to the City with timely and accurate advise. More importantly we continually monitor accounting literature and communicate with our clients to assure they are forewarned about upcoming pronouncements that could have dramatic impact on their financial statements. 10 UNDERSTANDING OF THE CITY'S COMMITMENT TO PLAN PREPARATION The City is responsible for making all financial records and related information available to us. We understand that you will provide us with such reformation required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, including the schedule of expenditures of federal awards, but the responsibility for the financial statements remains with you. That responsibility includes the establishment and maintenance of adequate records and effective internal control over financial reporting and compliance, the selection and application of accounting principles, and the safeguarding of assets. The City is responsible for adjusting the financial statements to correct material misstatements and for confirming to us in the representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole_ Additionally, as required by OMB Circular A-133, it is the City' s responsibility to follow up and take corrective action on reported audit findings and to prepare a summary schedule of prior audit findings and a corrective action plan. During our detailed planmng, we will review the detailed audit work plan and schedule with the project manager prior to commencing the audit assignment each year. We anticipate that it will be to our mutual benefit to utilize assistance from the project manager during the planning phase. We understand that City employees will prepare all cash, accounts receivable, or other confi .r?~tir~,,s w- request and will locate any invoices selected by us for testing. We will use City employees to explain procedures and resolve potential audit exceptions if encountered. We anticipate requesting selected workpapers to be prepared by City staff; such requests will be conrdinated with the project manager. The City will prepare the Comprehensive Annual Financial Report. 11 OTHER PERTINENT INFORMATION AS REQUIRED The Firm is and has been a member of the Private Companies Practice Section of the American Institute of Certified Public Accountants' Division for Firms for more than sixteen years. Members of this group voluntarily subject themselves to periodic review of their system of quality controls by specially trained CPAs from other firms. Results of these reviews, called peer review reports, are available to the public. Membership in the Private Companies Practice Section and submission to periodic peer reviews indicates our commitraent to the highest standards of professionalism_ Our last peer review was dated September 24, 2004 (a copy of our unqualified peer review report is included on page 21) There have been no disciplinary actions taken, and ~ere are none pending againsttheFirrn. 12 AUTHORIZED NEGOTIATOR F. John Shepherd is authorized to negotiate contract terms and render binding decisions on contract matters. Our address is 555 N. Carancahua Suite 1000, Corpus Christi, Texas 78478, our phone number is (361) 884-9437. 13 LOCAL PARTICIPATION Collier, Johnson & Woods P.C. has one office located in at 555 N. Carancahua Suite 1000, Corpus Cltristi, Texas 78478. Our phone number is (361) 884-9437. All work will be performed by this local office by our staff of local residents. Years ago when the last of the national accounting frrrns abandoned Corpus Christi we decided it was important to the community to have a professional fu-m to handle audit requirements of local governments. We have created a fn'm of professionals to provide these services locally and as a result have been able to offer local college graduates an oppormmty to pursue a career in public accounting here in Corpus Christi. !,4 CONCLUDING REMARKS We believe certain attributes set us apart from our competition and allow us to offer the City an association with a professional accounting fn'm that can fulfill its auditing and accounting needs. Collier, Johnson & Woods has been the City's auditors for the past ten years. During these ten years, the City has received the Government Finance Officers' Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting We assistc'd the City in implementing the GASB 34 reporting model which was the biggest change in governmental accounting standards in history. The worksheets we created in 2002, including the CAFR financial statements, were successfully used by the City to prepare the government-wide financial statements in 2003 and 2004. The City made major improvements in the CAFR process last year. We believe that with our help, including the training seminar, the City's accounting staff has gained the experience and knowledge necessary complete the CAFR in a timely and efficient manner. This is ilinstrated by the fact that in 2004 no out side consultants were used in the process saving the City thousands of dollars. Because of the improvements, we have reduced our audit fee by nearly 5% in 2005. Presenting seminars designed specifically to improve the knowledge of the City's staff is unique to our frrm and sets us apart from our competition. We understand the complexities of the CAFR process, and we know that time constraints become critical at the end of the process. We have always worked with the staff to review the final CAFR as quickly as possible at the end of the process. When evaluating proposal, the City should assure itself that other proposals are as accommodating as Collier, ~ohnson & Woods has been over ,~he past ten ycars. Throughout our tenure as auditors, we have used substantially the same professionals on the engagement. The advantage of this continuity is that we know the City's systems and are able to perform the audit efficiently without causing significant interruptions to the accounting staffs' regular duties. One attribute offered by Collier, Johnson & Womts that no other firm can offer is our in depth understanding of the City's operation we have gained over the past ten years. Combine that experience and our expertise in governmental accounting and auditing we believe we are the firm to provide the quality service the City deserves. Collier, Johnson & Woods is a local firm with all of our owners and employees making this community our home. Our objective has been to provide the community with a professional accounting firm that can service the local governments and businesses and provide opportunities for the graduates of our local college and university. Providing auditing services to the City for the past ten years has helped us to achieve our objective, and we hope to continue to provided the services and opportunities in the future. The auditor must maintain a professional and independent relationship with their clients. Those relationships requires a delicate balance between workang closely with management to efficiently and effectively perform the audit according to professional standards and our responsibility 15 to independently report to the Mayor, City Council and the public that may rely on our reports. In the normal course of performing our job as auditors, we sometimes become aware of weaknesses or inefficiencies in the financial reporting process which we reported in the form of a management letter_ We have always tried to make recommendations to assist management in their continuous ~mprovement efforts of the financial reporting process The past ten years has been a great opportunity to work with the City and hopefully improve the community we all live and work in. We hope we can continue this professional relation for years to come. 16 COST OF SERVICES The total all-inclusive maximum price for the scope of work detailed on pages 2 and 3 oft. his proposal for the year ended July 31, 2005 is $126,000_ This is nearly a 5% decrease over the prior year because we believe the experience and rebuilding of the fmanee department staff will allow the audit process to be more efficient. The estimated fees the second (2) through fifth (5) year of the contract if extended by the City are as follows: YEAR ENDED JULY 31, ESTLMEATED FEES 2006 128,000 2O07 132,000 2008 136,000 2O09 140,000 Because we can not predict inflation, changes in accounting stardards, changes in audit requirements or changes in the City's operations, including the number and mounts of federal grants over this extended period of time, we are not able to commit to an all-inclusive, not-to-exceed fee estimate for four (4) additional years. Our estLmated fees for the option period are based on 3 % inflation and the exact same operations and grants as 2004, As in the past ten years, Collier, Johnson & Woods, P C. prepares a new engagement letter including fees each year which have been agreed to and approved by the City Council We cee no prahlem~ in negotiating the sc?e o¢,~,~,rv a~d fee e~c? year. The 2005 proposed fee is nearly 5% less than the 2004 fee because of improvements made by the finance department. Our history with the City has shown we are fair in our charges and the only significant increases have been when there have been changes in accounting standards. 17 OUT-OF-POCKET EXPENSES Although the cost of services does not include any travel, lodging and subsistence, we will accept reimbursement for such cost at the City's prevailing rates for its employees should they arise_ The $160 of out-of-pocket expenses includes stationary for reports, return postage for confirmations and other supplies and expenses. 18 RATES BY PARTNER, SPECIALIST, SUPERVISOR AND STAFF Our charges are based on direct expenses, plus time expended at rates based on level of experience of personnel involved. The fee estimate is based on anticipated cooperation fi.om your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time ts necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. Billings for work performed will be made monthly and payment is expected upon receipt of billings. Rate Hours Total Shareholder 160 230 36,800 Manager 100 280 28,000 Staff 65 75 870 60,900 Clerical 35 4 140 1.38_4 125,840 Out-of-Pocket Expenses 160 126,090. 19 ADDITIONAL PROFESSIONAL SERVICES We would consider occasional questions regarding appropriate bookkeeping or accounting procedures to be part of our audit engagement. Consttltation on specific accounting problems or financial and operating matters would be considered separate engagements and would be negotiated at our standard hourly rates quoted on page 19 based on the scope of work. We understand that the City intends to sell bonds from time to time and this may require the audit financial statements and Auditors opinion to be included in the Official Statements and that certifications may be requested as part of these bond sales. We have provided these services to the City in the past and will work with the City to facilitate these requirements m the most efficient and economical manner. These services will be billed at our standard hourly rates based on the scope of the procedures and certifications requested. 2O Robert/Vi. Mc. Adams, CPA Rober~ L Lewis, CPA Franldln W. Burk, CPA Paul Roth-F, off~, CPA Carneiro,Chumney&Co., LC CERTIFIED PUBLIC ACCOUNTANTS J. Lowell Goode, CPA Julia C. Norton, CIA 5,andra J. C.,ePl~rt. CPA Ai[~n E. Robertson, Jr., CPA. September 24, 2004 To the Shareholders Collier, Johnson & Woods, P.C. We haw mviev~d the system of quality control for the aco,~nflng and auditing practice of Collier, Johnson & Woods, P.C. (the rrm) In effect for the year ended June 30; 2004. A system of quality contn:d encompasses the firm's organizational stru~ and the policies adopted and IxUCedures estsbished to provide It wt~ reasonable assurance of ca~orm~ wl~ standards. The elements of quality conth:fl are described In the Statements on QuaJlty Co, trul Standards Issued by the American Institute of Certified Public .a,,:~dntanta [AICPA). The design of the system and compliance with It are the responsibility of the firm. Our responsibility is to express an opinion on the design o1' the system, and the firm's compliance with the Our review was conducted in accordance with standards established bythe Peer Revtew Board of the AICPA. In performing our review, we obtaJned an understanding of the s/stem of quallt~ conical for the firm's accounting and auditing prac-Uce. In addition, ~e tested compliance with the firm's qua~y conlml policies and procedures to the extent we considered apprOpriate. These tests covered the application of the firm's polk;les and procedures o~ selected engagements. Because our review was based o~ selective tests, it would not nec~ssarily disclose all weaknesses in the system of cluallty cont. roJ or all instances of lack of ,~a,Oliarme wllh IL Because there are inherent limitations in the effectiveness of any system of quality contmt, departures from the system may occur and not be detected. Also, projection of any evaluation of a systam of quality control Io future pedods is subject to ~ dsk that the system of quality control may become inadequate because of changes in conditions, or because the degree of compliance with the policies or procedures may detedorale. In our opinion, the system of quality control for/he accounting and auditing practice of Collier, Johnson & Woods, P.C. in effect for the year ended June 30, 2004, has been designed to meet the requirements of the quality control standards {~or an accounting and auditing practice established by the AICPA and was complied with dudng the year then ended to provide the firm with reasonable assurance of conforming with professional standards. "He~pi~g C3er, ts S~ kx rncxe ~ 75 Ye,us' 40 N.E. Loop 410, Suite 200 · San Ana3flJo, Te~as 7~Zl 6-S876 12tO) ~l,Z-~000 · Fa~ (ZI0{ 34Z-(I~66 E-m~l: ca~neiro~c,trnelro.com · www.carnet[o.com An Independent A4ernber o~le B~() 5ddrnan Ail/atica F. JOHN SHEPHERD Certified Public Accountant Education B.B.A. Accounting, Texas A & M University, 1973 Experience John is a shareholder and the Director of auditing at Collier, Johnson & Woods. Before joining Collier, Johnson & Woods in 1978, he spent five years in the Corpus Christi office of KPMG, formerly Peat, Marwick & Mitchell. He has been auditing and consulting businesses and organizations in South Texas for his entire professional career. John's industry experience includes financial institutions, governmental entities, broadcasting, not-for- profit organizations, manufacturing and construction companies. He is currently engage'merit shareholder of the audits of the City of Corpus Christi, Texas, Corpus Christi Independc'nt School District, the Port of Corpus Christi Authority, the Coastal Bend Council of Govermnents and the Regional Transit Authority and the concurring reviewer on the audit of Nueces County Hospital District and Del Mar College District. John has done extensive consulting with clients related to mergers, acquisitions, public offerings, aale of debt securities, accounting systems, financial projections and budgeting and computer system selection and implementation. John has spent the past several years researching and attending seminars relating to the implementation of GASB 34. He is a regular speaker at area GFOA meetings discussing implementation issues. Governmental Continuin~ Professional Education Collrsc Audit Issues Related to Cities Planning Governmental Audit Engagements Governmental Audit Programs and Reports Single Audit Sampling and Other Texas Schools Accounting and Auditing Governmental Accounting and Financial Reporting Update Governmental Accounting and Financial Reporting Update GASB Statement No. 34 Governmental Accounting and Financial Reporting Update Date Hours 8/19/2004 8 7/20/2004 8 7/19/2004 8 7/18/2004 8 7/14/2004 8 6/10/2004 8 6/05/2003 8 6/18/2003 8 6/13/2002 8 Membershio in Professional and Civic Or£anizations American Institute of Certified Public Accountants (AICPA) Texas Society of Certified Public Accountants (TSCPA) Corpus Christi Chapter Texas Society of Certified Public Accountants Leademhip Corpus Christi Class XIX Consumer Credit Counseling Coastal Bend Commumty Foundation Trustee 22 BRIGID W. COOK Certified Public Accountant Edncation B.S. Accounting, Oral Roberts University, Tulsa, Oklahoma, 1980 ExDerienee Brigid is a shareholder at Collier, Johnson & Woods. Prior to joining Collier, Johnson & Woods in she was with the national accounting firm of Fox & Co Brig~d has performed consulting projects for the City of Corpus Christi, Nueces CountyMHMR and the Housing Authority of Corpus Christi. Bfigid currently is the engagement shareholder on the audit of Nueces County Hospital District and Del Mar College and concumng reviewer on the audits of the City of Corpus Christi, Texas, Corpus Christi Independent School District, the Port of Corpus Christi Authority, the Coastal Bend Council of Governments and the Regional Transit Authority. Brigid also was a speaker at a Continuing Education course given by the Firm for several of our governmental clients on the topic of Management's Discussion and Analysis and Budgeting. Brigid's industry specialization includes governmental, banking and manufacturing. Brigid has designed financial accounting systems and has assisted in the development of budgets and financial projections for a number of large commercial organizations She also provides consulting services relating to the performance of due diligence work in regard to mergers and acquisitions. Guverllmeatai Continuine l:ruressional Education Course Audit Issues Related to Cities Managing Governmental Audit Engagements Governmental Accounting and Financial Reporting Update Texas School District Accounting and Auditing Update Goverm~ental Accounting and Financial Reporting Update GASB Statement No. 34 Governmental Accounting and Financial Reporting Update Texas School District Accounting and Auditing Update Membership in Professional and Civic Organizations American Institute of Certified Public Accountants (AICPA) Texas Society of Certified Public Accountants (TSCPA) Corpus Christi Chapter Texas Society of Certified Public Accountants Myers-Briggs Personality Type Tester Date Hours 8/19/2004 8 8/31/2004 8 6/10/2004 8 6/23/2004 8 6/5/2003 8 6/18/2003 8 6/13/2002 8 6/25/2002 8 23 TIMOTHY C. McKAY Certified Public Accountant Certified Information Technology Professional Education and Awards BB.A. Accounting, with Highest Honors, Texas A&M University Corpus Ckristi, 1996 Post-Baccalaureate Certificate in Management Information Systems, Texas A&M University, Corpus Christi, 2000 Recipient of the Texas Society of CPA's 1996 Accounting Excellence award Exl~erlence Tim joined Collier, Johnson & Woods in 1996 and is an audit manager. He has experience in auditing governmental entities, wholesale companies and auto dealerships. Currently, T~m is the manager of the audit staff on the audits of the City of Corpus Christi, Texas, Corpus Christi Independent School District, Nueces County Hospital District, the Port of Corpus Christi Authority, Del Mar College and the Coastal Bend Council of Governments. Tim has passed the Information Systems Audit and Control Association's Certified Information Systems Auditor Examination and his certification is pending. He has experience with LAN management, systems needs assessments, contingency/disaster recovery planning and systems reviews. Governmental Continuing, Professional Education Course Date Hours City Government - What's Going On 11/12/2004 I Scb"ol Finance of Texa,$ 0/24/2004 ! Accounting & Audit Policies and Procedures 8/25/2004 2 Audit Issues Related to Citrus 8/19/2004 8 Audits of Looal Governments 7/22-25/2004 24 Governmental Audit Programs, Concluding the Audit 6/19/2004 8 Single Audit Sampling 6/19/2004 8 Pre-Engagement Activities and Planning Governmental Audits 6/19/2004 8 Texas School District Audit & Accounting Update 6/23/2004 8 Governmental Accounting and Financial Reporting Update 3710/2004 8 Governmental Accounting and Financial Reporting Update 6/05/2003 8 GASB Statement No 34 6/18/2003 8 Governmental Accounting, Reporting & Auditing Update 2002 6/10-12/2002 24 Membershio and Involvement in Professional and Civic Organizations American Institute of Certified Public Accountants (AICPA) Texas Society of Certified Public Accountants (TSCPA) Corpus Christi Chapter of TSCPA Vice President Information Systems Audit and Control. Association (ISACA) Finance Committee - Coastal Bend Blood Center CPA's Helping Schools Mcntoring Program 24 June 24, 2004 Colher. Johnson &Woods Cenified Publi* Acc0unlanl. 555 N Caranc~bua - S uile 100[I Corpus Cl~Jsli, Tcx~s 78478-0052 (3611884-9~47 lAX (3611 gg4-9422 George K. Noe, City Manager City of Corpus Clmsti P. O. Box 9277 Corpus Christi, Texas 78469-9277 Dear Mr. Noe: We are pleased to confirm our understanding of the services we are to provide for the City of Corpus Christi (City) for the year ended July 31, 2004_ We will audit the basic financial statements of the City of Corpus Christi as of and for the year ended July 31, 2004. We understand that the financial statements will be presented in accordance with the financial reporting model described in GASB Statement No. 34. Also, the document you submit to us will include the following additional information that will be subjected to the auditin~ l~rocedures applied in our audit of the basic financial statements: 1. Management's Discussion and Analysis. 2. Budgetary Comparison Schedules. 3. Infrastructure Information. 4. Schedule of Expenditures of Federal Awards. The document will also include statistical information that will not be subject to the auditing procedures applied in our audit of the basic financial statements, and for which our auditor's report will disclaim an opinion. Audit Obiectives The objective of our audit is the expression of an opinion as to whether your basic financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America and to report on the fairness of the additional information referred to in the fi~st paragraph when considered in relation to the basic financial statements taken as a whole. The objective also includes reporting 25 George K. Noe, City Manager June 24, 2004 Page -2- Internal control related to the financial statements and compliance with laws, regulations, and the provisions of contracts or grant agreements, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards. Internal control related to major programs and an opinion (or disclaimer of opimon) on compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 2003 and OMB Cimular A-133, Audits of States, Local Governments, and Non-Profit Organizations. The reports on internal control and compliance will each include a statement that the report is intended for the information and use of the Honorable Mayor and Members of the City Council, mauagement, federal awarding agencies, and if applicable, pass-through entities. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America; the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and the provisions of OMB Circular A-133, and will include tests of accounting records, a determination of major programs in accordance with Circular A-133, and other procedures we consider necessary to enable us to express such an opinion and to render the required reports If our opinion on the basic financial statements or the Single Audit compliance opinion is other than unqualified, we will fully discuss the reasons with you in advance. If, for any mason, we are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an opinion or to issue a report as a result of this engagement. Management Responsibilities Management is responsible [or establishing and maintaimng internal control and for compliance with the provisions of contracts, agreements, and grants. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with managernent's authorizations and recorded properly to permit the preparation of basic fmancinl statements in accordance with generally accepted accounting principles, and that federal award programs are managed in compliance with applicable laws and regulations and the provisions of contracts and grant agreements. 26 George K. Nee, June 24, 2004 Page -3 City Manager Management is responsible for making all financial records and related information available to us. We understand that you will provide us with such information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, including the schedule of expenditures of federal awards, but the responsibility for the financial statements remains with you. That responsibility includes the establishment and maintenance of adequate records and effective internal control over financial reporting and compliance, the selection and application of accounting principles, and the safeguarding of assets. Management is responsible for adjusting the financial statements to correct material misstatements and for confirming to us in the representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Additionally, as required by OMB Circular A- 133, it is management's responsibility to follow up and take corrective action on reported audit findings and to prepare a summary schedule of prior audit findings and a corrective action plan. Audit Procedures--General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are fi-ce of material misstatement, whether caused by error or fraud. As required by the Single Audit Act Amenclinents of 1996 and OMB Circular A-133, our audit will include test of transactions related to major federal award programs for compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements (whether caused by errors or fi-aud), illegal acts, or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements, immaterial illegal acts, or illegal acts that do not have a direct effect on the financial statements or major programs. However, we will inform you of any material errors and any fraud that comes to our attention. We will also inform you of any ether illegal acts that come to our attention, unless clearly inconsequential. We will include such matters in the reports required for a Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. 27 George K Noe, City Manager June 24, 2004 Page 4.- Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and habilities by correspondence with selected individuals, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also require certain written representations from you about the financial statements and related matters. Audit Procedures--Internal Controls In planning and performmg our audit, we will consider the intemal control sufficient to plan the audit in order to determine the nature, timing, and extent of our auditing procedures for the purpose of expressing our opinions on the City's basic financial statemenls and on its compliance with requirements applicable to major programs. We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation, and we will assess control risk. Tests of controls may be perfommd to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the basic financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the basic financial statements. Tests of controls relative to the basic financial statements are required only if control risk is assessed below the maximum level. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal conla-ol issued pursuant to Government Auditing Standards As required by OMB Circular A-133, we will perform tests of controls to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requu-ements, applicable to each major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opimon will be expressed in our report on internal control issued pursuant to OMB Circular A-133. 28 George K Noe, June 24, 2004 Page-5- City Manager An audit is not designed to provide a~surance on internal control or to identify reportable condinons. However, we will inform the Honorable Mayor and Members of the City Council and City management of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, ~n our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the basic financial statements. We will also inform you of any nonreportable conditions or other matters involving internal control, if any, as required by OMB Circular A-133. Audit Pro~edur es-- Compliance Our audit will be conducted in accordance with the standards referred to in the section titled Audit Objectives_ As part of obtaining reasonable assurance about whether the basic financial statements are free of material misstatement, we wilt perform tests of the City's compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing StandardJ. OMB Circular A-133 requires that we also plan and perform the audit to obtain reasonable assurance about whether the anditee has complied with applicable laws and regulations and the provisions ofcontrants and grant agreements applicable to major programs. Our procedures will consist of the applicable procedures described in the OMB Circular A-133 Compliance Supplement for the types of comphance requirements that could have a direct and material effect on each of the City's major programs. The purpose of those procedures will be to express an opinion on the City's compliance with requirements applicable to major programs in our report on compliance issued pursuant to OMB Circular A-133. Audit Administration, Fees, and Other We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any invoices selected by us for testing. At the conclusion of the engagement, we will complete the appropriate sections of and sign the Data Collection form that summarizes our audit findings. 29 George K. Noe, City Manager June 24, 2004 Page We will provide copies of our reports to the City; however, it is management's responsibility to submit the reporting package (including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings, auditors' reports, and a corrective action plan) along with the Data Collection Form to the designated federal clearinghouse and, if appropriate, to pass- through entities. The Data Collection Form and the reporting package must be submitted w~thin the earlier of 30 days after receipt of the auditors' reports or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audits. At the conclusion of the engagement, we will provide information to management as to where the reporting packages should be submitted and the number to submit. The workpapers for this engagement are the property of Collier, Johnson & Woods P.C. and constitute confidential information. However, we may be requested to make certain workpapers available to cognizant or grantor agencies pursuant to authority g~ven to them by law or regulation. If requested, access to such workpapers will be provided under the supervision of Collier, Johnson & Woods P.C. personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to cognizant or grantor agencies. The cognizant or grantor agencies may intend, or decide; to distribute the photocopies or information contained therein to others, including other governmental agencies. The workpapers for this engagement will be retained for a mimmum of three years after the date the auditors' report is issued or for any additional period requested by the cognizant agency, oversight agency for audit, or pass-through entity. If we are aware that a federal awarding agency, pass-through entity, or auditee is contesting an audit finding, we will contact the parties contesting the audit finding for gmdance prior to destroying the workpapers. We expect to begin our audit in August. Our fees for these services will be based on the actual time spent at our standard hourly rates, plus travel and other out-of-pocket costs such as report production, typing, postage, etc. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. 30 George K. Noe, City Manager June 24, 2004 Page -7- We estimate that our fees for the engagement cover the following task: Financial Audit of the City Compliance Audit 99,000 31,000 TOTAL 130,000 We do not anticipate the fee to exceed $130,000 for the above services, unless unforeseen circumstances arise. Such circumstances will be discussed when, and if, encountered. Our invoices for these fees will be rendered as work progresses and will be payable within 30 days of receipt and work will cease if fees are not paid. We acknowledge that no fees for the tasks outlined above that exceed $130,000 in the aggregate are authorized by this agreement, without the prior written authorization of the Director of Financial Services. Expenses will be iten'uzed and will be 1Lrnited to reasonable and customary charges The City is obligated to pay such fees under this agreement as may lawfully be made from funds budgeted and appropriated for that purpose during the current fiscal year. Should the City fail to budget and appropriate funds for the audit in the subsequent fiscal year this agreement shall be terminated We appreciate the opporturfity to be of service to the City of Corpus Christi and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to US Very truly yours, COLLIER, JOHNSON & WOODS A Professional Corporation F. John Shepherd 31 George K. Noe, City Manager June 24, 2004 Page 8 RESPONSE: This letter correctly sets forth the understanding of the City of Corpus Christi. George K. Noe, City Manager Date: Armando Chapa, City Secretary Date: Motion No.: 32 ( ollit,r, Jolmson &V bods June 8, 2005 George K. Noe, City Manager City of Corpus Christi P. O. Box 9277 Corpus Christi, Texas 78469-9277 Dear Mr. Noe: We are pleased to confirm our understanding of the services we are to provide for the City of Corpus Christi (City) for the year ended July 31,2005. We will audit the basic financial statements of the City of Corpus Christi as of and for the year ended July 31,2005. We understand that the financial statements will be presented in accordance with the financial reporting model described in GASB Statement No. 34. Also, the document you submit to us will include the following additional information that will be subjected to the auditing procedures applied in our audit of the basic financial statements: 1. Management's Discussion and Analysis. 2 Budgetary Comparison Schedules 3. Infrastructure Information. 4. Schedule of Expenditures of Fedcral Awards. The document will also include statistical infomiation that will not be subject to the auditing procedures applied in our audit of the basic financial statements, and for which our auditor's report will disclaim an opinion. Audit Objectives The objective of our audit is the expression of an opinion as to whether your basic financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the basic financial statements taken as a whole. The objective also includes reporting on: Internal control related to the financial statements and compliance with laws, regulations, and the provisions of contracts or grant agreements, noncompliance with which could have a ~naterial effect on the financial statements in accordance with Government Auditing Standards. George K. Noe, City Manager June 8, 2005 Page -2- Internal control related to major programs and an opinion (or disclaimer of opinion) on compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 2003 and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations The reports on internal control and cmnpliance will each include a statement that the report is intended for the information and use of the Honorable Mayor and Members of the City Council, management, federal awarding agencies, and if applicable, pass-through entities. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America; the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and the provisions of OMB Circular A-133, and will include tests of accounting records, a determination of major programs in accordance with Circular A-133, and other procedures we consider necessary to enable us to express such an opinion and to render the required reports. If our opinion on the basic financial statements or the Single Audit compliance opinion is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an opinion or to issue a report as a result of this engagement. Management Responsibilities Management is responsible 1hr establishing and maintaining internal control and for compliance with the provisions of contracts, agreements, and grants. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are cxecuted in accordance with management's authorizations and recorded properly to permit the preparation of basic financial statements in accordance with generally accepted accounting principles, and that federal award programs are managed in compliance with applicable laws and regulations and the provisions of contracts and grant agreements. George K Noe, City Manager June 8, 2005 Page -3- Management is responsible for making all financial records and related information available to us. We understand that you will provide us with such information required for our audit and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, including the schedule of expenditures of federal awards, but the responsibility for the financial statements remains with you. That responsibility includes the establishment and maintenance of adequate records and effective internal control over financial reporting and compliance, the selection and application of accounting principles, and the safeguarding of assets. Management is responsible for adjusting the financial statements to correct material misstatements and for confirming to us in the representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Additionally, as required by OMB Circular A- l 33, it is management's responsibility to follow up and take corrective action on reported audit findings and to prepare a summa~ schedule of print audit findings and a corrective action plan. Audit Procedures General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involvejudgrnent about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. As required by the Single Audit Act Amendments of 1996 and OMB Circular A-133, our audit will include test of transactions related to major federal award programs for compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements (whether caused by errors or fraud), illegal acts, or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements, immaterial illegal acts, or illegal acts that do not have a direct effect on the financial statements or major programs. However, we will inform you of any material errors and any fraud that comes to oor attention. We will also inform you of any other illegal acts that come to our attention, unless clearly inconsequential We will include such matters in thc reports required for a Single Audit. Our responsibility as auditor is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. George K. Noe, City Manager June 8, 2005 Page -4- Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also require certain written representations from you about the financial statements and related matters. Audit Procedures~lnternal Controls In planning and performing our audit, we will consider the internal control sufficient to plan the audit in order to determine the nature, timing, and extent of our auditing procedures for the purpose of expressing our opinions on the City's basic financial statements and on its compliance with requirements applicable to major programs. We will obtain an understanding of the design of the relevant con=ols and whether they have been placed in operation, and we will assess control risk. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the basic financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the basic financial statements. Tests of controls relative to the basic financial statements are required only if control risk is assessed below the maximum level. Our tests, if per formed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards As required by OMB Circular A-133, we will perfi~rm tests of controls to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements, applicable to each major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMB Circular A-133. George K. Noe, City Manager June 8, 2005 Page -5- An audit is not designed to provide assurance on internal conn-ol or to identify reportable conditions. However, we will inform the Honorable Mayor and Members of the City Council and City management of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect the entity' s ability to record, process, summarize, and report financial data consistent with the assertions of management in the basic financial statements. We will also inforn~ you of any noareportable conditions or other matters involving internal control, if any, as required by OMB Circular A- 133. Audit Procedures--Compliance Our audit will be conducted in accordance with the standards referred to in the section titled Audit Objectives. As part of obtaining reasonable assurance about whether the basic financial statements are free of material misstatement, we will perform tests of the City's compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opirfion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. OMB Circular A-133 requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with applicable laws and regulations and the provisions of contracts and grant agreements applicable to major programs. Our procedures will consist of the applicable procedures described in the OMB Circular A-133 Compliance Supplement for the types of compliance requirements that could have a direct and material effect on each of the City's major programs. The purpose of those procedures will be to express an opinion on the City's compliance with requirements applicable to maj or programs in our report on compliance issued pursuant to OMB Circular A-133. Audit Administration, Fees, and Other We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any invoices selected by us for testing. At thc conclusion of the engagement, we will complete the appropriate sections of and sign the Data Collection form that summarizes our audit findings. George K. Noe, City Manager June 8, 2005 Page -6- We will provide copies of our reports to the City; however, it is management's responsibility to submit the reporting package (including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings, auditors' repons, and a corrective action plan) along with the Data Collection Form to the designated federal clearinghouse and, if appropriate, to pass- through entities The Data Collection Form and the reporting package must be submitted within the earlier of 30 days after receipt of the auditors' reports or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audits. At the conclusion of the engagement, we will provide information to management as to where the reporting packages should be submitted and the number to submit. The workpapers for this engagement are the property of Collier, Johnson & Woods P.C. and constitute confidential information. However, we may be requested to make certain workpapers available to cognizant or grantor agencies pursuant to authority given to them by law or regulation. If requested, access to such workpapers will be provided under the supervision of Collier, Johnson & Woods P.C. personnel. Furthermore, upon request, we may provide photocopies of selected workpapers to cognizant or grantor agencies. The cognizant or grantor agencies may intend, or decide; to distribute the photocopies or information contained therein to others, including other governmental agencies. The workpapcrs for this engagement will be retained for a minimum of three years after the date the auditors' report is issued or for any additional period requested by the cognizant agency, oversight agency for audit, or pass-through entity. If we are aware that a federal awarding agency, pass-through entity, or auditee is contesting an audit finding, we will contact the parties contesting the audit finding for guidance prior to destroying the workpapers. We expect to begin our audit in July. Our tees for these services will be based on the actual time spent at our standard hourly rates, plus travel and other out-of-pocket costs such as report production, typing, postage, etc. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. George K Noe, City Manager June 8, 2005 Pa§e -7- We estimate that our fees for the engagement cover the following task: Financial Audit of the City Compliance Audit 95,000 31,000 TOTAL 126,000 We do not anticipate the fee to exceed $126,000 for the above services, unless unforeseen circumstances arise Such circumstances will be discussed when, and if, encountered. Our invoices for these fees will be rendered as work progresses and will be payable within 30 days of receipt and work will cease if fees are not paid. We acknowledge that no fees for the tasks outlined above that exceed $126,000 in the aggregate are authorized by this agreement, without the prior written authorization of the Director of Financial Services. Expenses will be itemized and will be limited to reasonable and customary charges The City is obligated to pay such fees under this agreement as may lawfully be made from funds budgeted and appropriated for that purpose during the current fiscal year. Should the City fail to budget and appropriate funds for the audit in the subsequent fiscal year this agreement shall be terminated. We appreciate the opportunity to be of service to the City of Corpus Christi and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to US. Very truly yours. COLLIER, JOHNSON & WOODS A Professional Corporation F. Jo George K. Noe. City Manager June 8, 2005 Page -8- RESPONSE: This letter correctly sets forth the understanding of the City of Corpus Christi. ~~oe, City Manager Date: kc[ z-Z { o$ Armando Chapa, Cit~Secretary Date: ~ {'7_ ~> Io 'G Motion No.: ~ Ct.~ / cd; ~:,