HomeMy WebLinkAboutResolutions - 2016.09.22 - 22604REPORT (MISC. 1116259) September 13, 2016
BY: Audit Subcommittee, Eileen Kowall, Chairperson
IN RE RECOMMENDATION FOR AWARD OF CONTRACT FOR AUDITING SERVICES WITH
PLANTE & MORAN, LLP
To the Finance Committee
Chairperson, Ladies and Gentlemen:
The Audit Subcommittee met on September 13, 2016, and reviewed the recommendation by the
Audit Request for Proposal Review Committee (Review Committee) to award a contract to Plante &
Moran, LLP for auditing services for Fiscal Years 2016 — 2018, with an option to extend the contract for
Fiscal Years 2019 and 2020. The Audit Subcommittee recommends that the attached suggested
resolution be adopted.
Chairperson, on behalf of the Audit Subcommittee, I move acceptance of the foregoing report.
AUDIT SUBCOMMITTEE
AUDIT SUBCOMMITTEE VOTE:
Motion carried unanimously on a roll call vote with Woodward absent.
MISCELLANEOUS RESOLUTIOW 16259 September 22, 2016
BY: Finance Committee, Tom Middleton, Chairperson
IN RE: BOARD OF COMMISSIONERS — APPROVAL OF THE AWARD OF CONTRACT FOR FISCAL
YEAR 2016 THROUGH FISCAL YEAR 2018 INDEPENDENT ANNUAL AUDIT
To the Oakland County Board of Commissioners
Chairperson, Ladies and Gentlemen:
WHEREAS the County is required to hire an independent party to conduct annual audits of the County's
financial statements; and
WHEREAS the contract with the current independent auditor, Plante & Moran, PLLC, expired on June 30,
2016; and
WHEREAS in July 2016, the County issued Request for Proposal (REP) #003715 to conduct to the annual
independent audit of the County's financial statements; and
WHEREAS REP #003715 specified a Review Committee to evaluate the proposals received and recommend
a vendor to the Audit Subcommittee; and
WHEREAS the RFP issuance and evaluation was conducted in accordance with Oakland County Purchasing
Policies and Procedures; and
WHEREAS the Audit Subcommittee has reviewed the Review Committee's recommendation and concurs in
recommending contracting with Plante & Moran, PLLC to conduct the annual independent audit of the
County's financial statements for the fiscal year ending September 30, 2016 through the fiscal year ending
September 30, 2018 with an option to include Fiscal Year 2019 and Fiscal Year 2020; and
WHEREAS Plante & Moran's proposal includes audit fees of $242,000 for the first year, with inflationary
adjustments each succeeding year; and
WHEREAS the County Executive's FY 2017- FY 2019 Budget recommendation includes sufficient funding,
under the Board of Commissioners' budget, to cover the cost of this agreement.
NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commissioners concurs with the
Audit Subcommittee recommendation to approve contracting with Plante & Moran, PLLC to conduct the
annual independent audit of the County's financial statements for the fiscal year ending September 30, 2016
through the fiscal year ending September 30, 2018, with an option to include Fiscal Year 2019 and Fiscal Year
2020.
BE IT FURTHER RESOLVED that the continuation of this agreement to include the annual independent audit
of the County's financial statements for the fiscal year ending September 30, 2019 and the fiscal year ending
September 30, 2020 requires the approval of the Audit Subcommittee.
Chairperson, on behalf of the Finance Committee, I move adoption of the foregoing resolution.
FINANCE COMMITTEE VOTE:
Motion carried on a roll call vote with Woodward voting no and Long absent.
August 29, 2016
Commissioner Eileen KowaII
Chairperson, Audit Subcommittee
Oakland County Board of Commissioners
In Re: REVIEW COMMITTEE RECOMMENDATION FOR INDEPENDENT AUDITING FIRM
Commissioner KowaII and Members of the Audit Subcommittee:
In July 2016 Oakland County issued a Request for Proposal (REP) #003715, for independent auditing
services covering fiscal years 2016-2018 with an option to extend the services to fiscal years 2019 and
2020. In response to this REP, four professional accounting firms submitted proposals:
UHY LLP
Rehmann Robson
Baker Tilly Virchow Krause, LLP
Plante & Moran, PLLC (current vendor)
These proposals were reviewed by the following individuals who comprise the Audit RFP Review
Committee (Review Committee):
Chris Ward, Board of Commissioners
Pam Weipert, Compliance Office
Scott Guzzy, Compliance Office, Purchasing Unit
Carol Morin-Jablonski, Fiscal Services
Lynn Sonkiss, Fiscal Services
Using the criteria listed in the RFP, the Review Committee recommends that the Board of
Commissioners contract with Plante & Moran, PLLC to conduct the required independent audit of
Oakland County's financial report for fiscal years 2016, 2017, 2018 with the option of to continue the
engagement for fiscal years 2019 and 2020.
The attached documents provide the scoring summary and brief explanation of the issues with each
proposal. The Review Committee requests the Audit Subcommittee review and approve this
recommendation, and submit a resolution to the Finance Committee approving a professional services
contract with Plante & Moran, PLLC, to conduct the required independent audit of Oakland County's
financial report for the fiscal years stated in the REP.
Request for Proposal for Independent Audit Services —Review Committee Summary
UHY 1.19
Experience and Expertise — In general, the firm has a very small/limited staff related to governmental
services. Although they list that the firm has more than 650 professionals, of which 330 are located in
southeast Michigan, the firm referenced that they only had 15 governmental services staff. The five (5)
references that were included in the REP were governmental clients, but most were much smaller
clients than Oakland County (less than 400 hours per year) and none of the five (5) clients noted were
recognized under the Government Finance Officers Association (GFOA) as a recipients of the Certificate
of Achievement for Excellence in Financial Reporting program (CAFR award). The resources named do
have experience in governmental engagements when they worked for other firms. The hours by
resource has significantly less partner/principal/manager hours in comparison to the other three
responding firms. This is of concern given the size and complexity of Oakland County operations and the
need to have adequate higher level and depth of audit staff resources.
Audit Approach - The approach appears to be a very general approach. There is mention that the firm
subscribes to a paperless auditing process that is "IT driven and designed to increase efficiencies" but
doesn't provide details as to how this is achieved. The overall approach appears generally adequate,
and thus was scored as meeting the minimum specifications.
Price —The second highest of all the firms and does provide discounted rates. The price is submitted is
constant over the 5 years with 2,000 hours estimated per year. The pricing document submitted by the
firm noted that it is expected that the firm will incur approximately 50 hours of initial set-up costs that
they will absorb and would not charge the County for these hours. No transportation, meals or out of
pocket expenses were noted on the pricing schedule but the firm indicated that they would accept
reimbursement for travel, lodging and subsistence at the prevailing County rates of its employees.
Rehmann
Expertise and Expertise —This firm provides auditing services to many Michigan counties and cities. They
also appear to have extensive experience in producing CAFRs or working with units of government that
receive the CAFR award under the GFOA Certificate of Achievement for Excellence in Financial
Reporting. The proposal identified staff to be assigned to the engagement of which several are well
known in providing training/presentations at various governmental sector professional
conferences/organizations. Overall size of firm is noted to have 800 employees which include 105
professionals attributed to their governmental audit staff. The firm references that the engagement will
be staffed with approximately 15 members of their professional staff and that priority will be given to
making the same assignments from one year to the next.
Audit Approach —The audit approach submitted was detailed and was scored by the review committee
as somewhat exceeding the specifications. Their approach references a focus on a 'paperless' system/
electronic audit file. There may be some additional County staff time required to facilitate this as not
everything is in electronic format. The proposal does however state that they will come equipped with a
high speed scanner to provide the audit team the ability to scan documents into the electronic audit file.
Our Compliance Office Manager has indicated that use of software is prevalent, especially with the
larger audit firms. The proposal goes on to say that "throughout the year, if you contact the audit team
with a question, they will have easy access to the audit files, regardless of whether they are in the office,
at home, or at another client site". There would need to be a high level of assurance that the data is
secure and not a risk to potential data security issues, especially when there is mention of access of
information 'at home', as some of the data will be more sensitive in nature (i.e. employee payroll data
or legal audit confirmations). The firm's financial statement preparation notes the use of their own
software or processes; not sure how that will impact County process as we already have linked files
between MicroSoft Word and MicroSoft Excel for the compilation of the CAFR.
Price — This firm submitted the lowest cost of all the firms with substantial discounted rates. The
number of hours in the first year of 1,950 is decreased to 1,850 in years two through five. This is
aggressive after just one year of experience with a new client. While the hours proposed go down by
100 hours for years two through five, the pricing does increase. There is a statement that the proposal
is "based on professional standards issued as of the date of the proposal" and the fees quoted for years
subsequent to 2016 may be "subjected to renegotiation if significant changes in professional standards
or reporting requirements" if it makes the initial estimate of hours unrealistic. The proposal for the
single audit includes up to five major programs; additional major programs will require additional cost of
$3K to $5K for each additional major program (FY 2015 single audit included five major programs but
this has varied over the years from four to seven depending on the grants awarded). Finally, the pricing
proposal states that the firm will accept the mileage and lodging reimbursement received by County
employees. The proposal included $1,500 for meals and lodging and $1,500 for transportation; likely
because there are resources that are from offices outside of Oakland County. There is some concern
about possible pricing changes over the course of the audit contract. Also, while the pricing submitted
is the lowest, there will be additional County staff hours/time required as well as a learning curve
involved to acclimate the audit firm to the County.
Baker Tilley
Experience and Expertise — The firm appears to have substantial experience in the Midwest, primarily
Wisconsin, Illinois, Minnesota and Pennsylvania. They reference no Michigan government clients. The
firm's response makes a statement that "We understand the unique requirements specific to county
governments in Illinois, and this will allow us to provide you with timely, relevant, and state-specific
advice" (again, no Michigan experience). They have a team of 220 professionals dedicated to the state
and local government industry. The proposal includes a number of experienced and well trained
professional staff; however, these individuals demonstrate no previous experience in Michigan. All
2
higher level resources specifically noted in the response are from out of State and there is no mention as
to the sourcing location of the 'field' staff. Page 5 of the technical response indicates that "Baker Tilly
and our subcontractors are licensed and in good standing with the State of Michigan. In addition, the
key people assigned to your engagement are licensed (or will begin the process of becoming licensed
upon awarding of the contract) and are in good standing with the State of Michigan". The licensing
aspect is a significant concern.
Audit Approach - Very detailed approach to the audit. The approach submitted was well documented,
clear and workable. The proposal acknowledges that there will be additional hours required in the first
year of the contract, but they note that the costs for these hours are not going to be passed on to the
County. Also, the approach includes the use of electronic data processing (EDP) software. Overall, the
primary concern is that the project will be managed by out of state resources with no Michigan client
experience and no reference as to where the 'field' staff will be resourced from. This may have an
impact on the engagement.
Price — Second lowest price of the four (4) responses with lump sum discounts applied. There are
additional costs noted for any issuances of consent and citation of expertise (comfort letter) in regards
to bond issues/official statements. There are no costs for travel referenced even though that the
engagement staff noted in the proposal are from out of state. The technical portion of the response
indicated that there are additional hours anticipated during the first year of the engagement, but that
the County would not be charged for these hours.
Plante and Moran
Experience and Expertise—The firm provides auditing services for many Michigan counties, cities and
townships, including larger units of government. The firm has approximately 2,200 staff in total with 20
partners and 200 staff dedicated to serving governmental clients. Further, this firm has successfully
produced Oakland County's audit for the last ten years with all CAFR reports receiving the GFOA award.
The resume and background of key staff are included in the proposal; many of these individuals have
demonstrated expertise in Michigan issues and have provided training to professional financial
associations throughout the state. The staffing assignments noted are proven resources with the skills
and knowledge to successfully complete the audit engagement. All resources noted have been part of
the County's audit team for multiple years which achieves continuity of staffing and efficiencies during
the audit engagement. There is depth of staff resources with expertise in specific areas that lend to
addressing complex or unique circumstances that come up from time to time. The firm has also
demonstrated expertise in consulting services.
Audit Approach —The proposal includes a proven staffing plan and detailed audit approach to
accomplish the audit and was scored by the review committee as somewhat exceeding the
specifications. The proposal includes references to not only to reviewing historical compliance activity
but also references a focus on providing suggestions for improving accounting procedures and internal
controls.
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Price - The proposed price is the highest of the four proposals submitted. The number of hours has
been reduced from the prior engagement of 2,100 to 1,950 based on the engagement's team continuity,
knowledge and experience realized over the last contract period. The hourly rates are discounted and
the pricing does not quote any add-on charges. There are no additional costs noted based on the
quantity of single audit major programs. Past experience with this firm has not resulted in material
change orders to address unique and/or complex matters that have come up (recent example is the
County's assumption of City of Pontiac Waste Water Treatment Facility, Water System and Sewer
System from 2012 that has required on-going technical assistance over the past several years — of which
no additional fees were charged).
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Request for Proposal
Event # 003715 - REP for Professional Audit Services
Proposal Score Sheet - Final Tabulation will be by consensus of the committee
Category
MaximumTotals
Evaluation Scoring Criteria and Point Assignment 25
Point
Criteria
20
Point
Criteria
10
Point
Criteria
0 o 0 Fails to meet minimum requirements/specifications and/or information is missing.
6 5 2 Meets minimum specifications with exception and/or information is unclear.
12 10 6 Meets minimum specification and required information is complete and understandable.
18 15 8 Somewhat exceeds specifications and/or provides a somewhat enhanced solution/features/ or functionality.
25 20 10 Greatly exceeds specifications and/or provides greatly enhanced solutions/features/ or functionality,
Responders
Plante UHYLLP Baker
Tilly
Rehmann
Robson
Part 1 • ... .... - Mandatory Elements to be .Considered for Evaluation (YES if criteria met NOif criteria not Met .. ••.... :: ...• .: • . . ...•: • ....... •.: ....: " ••• . . :. •• • . .• :., : ...:••• •• : ••• .. - ."•• • •• .•• • .....• .•
la The contractor is independent and licensed to practice in Michigan Y Y Y Y
lb The contractor's professional personnel have received adequate continuing professional education
within the preceding two years Y Y Y Y
lC The contractor has no conflict of Interest with the County in regard to any other work currently being
performed Y Y Y Y
ld The contractor submits a copy of its most recent external qualify control review raped and the
contractor has a record of qualify audit work Y Y Y Y
le The contractor adheres to the instructions in this request for proposals on preparing and submitting
the proposal Y Y Y Y
.. ... . . . . , . . . ... ... . . . .
Part 2, •Tec hicat:Qualificationt•:-:MaximUm ..of•75 .Points • • . . - •••• . . •• . .
Maximum
Points
2a
Expertise and Experience- Maximum of 45 Points
The contractors past experience and performance on comparable government engagements 25 18 6 12 12
2 The quality of the contractor's professional personnel lobe assigned to the engagement and the
quality of the contractor's management support personnel to be available for technical consultation 20 15 5 10 15
2b Audit Approach Maximum of 30 Points
1 Adequacy and availability of proposed staffing plan for various segments of the engagement,
including on-site and continuity of staffing 10 8 a 6 6
2 Adequacy of sampling techniques 10 a a 6 8
2 Adequacy of analytical procedures 10 8 6 6 a
Part 2 Subtotal 75 57 29 40 61
I n12
Part 3 Price (Maximum of 25 Points) 5 Years of Costs
TOTAL RATING {Maximum of 100 points)
Request for Proposal
Event #003715 - RFP for Professional Audit Services
Proposal Score Sheet - Final Tabulation will be by consensus of the committee
Category
MaximumTotals
Evaluation Scoring Criteria and Point Assignment 25
Point
Criteria
20
Point
Criteria
10
Point
Criteria
0 0 a Fails to meet minimum requirements/specifications and/or information is rnissing.
6 5 2 Meets minimum specifications with exception and/or information is unclear.
12 10 6 Meets minimum specification arid required information is complete and understandable.
18 16 8 Somewhat exceeds specifications and/or provides a somewhat enhanced solu)ion/features/ or functionality.
25 20 10 Great(y exceeds specifications and/or provides greatly enhanced solutions/features/ or functionality.
Responders
Plenty UHYLLP Baker
Tilly
Rebmann
Robson
............ . . .. -....... --..........
Part 3 Price:(Maximuin of Points) 3 Years o f Costs . . . . ... .. . ... i: . . ...... . .. . - ... .... .. 25 21 23 24 25
Part 3 Subtotal 25 21 23 24 25
ii . . • •......• . . ..... ..... . .. •i .
TOTAL RATING (Maximum of 100 points) 100 ••• 78 , .62 ,e4 . • 76
The evaluators will convert the price to points. The proposal with the lowest cost receives the maxlintun points allowed, All other proposals receive a percentage of the points
available based on their cost reiationship to the lowest cost proposal. This is determined by applying the !allowing fonnuia:
Price of Lowest Cost Proposal X Maximum points available =Awarded Price points
Price of Proposal Being Rated
Example: The total point available for cost in the REP wee forty 1401 points. The cost of the lowest acceptable proposal is $100,000. Therefore the lowest proposal cost of $100,000
would be awarded forty (40) points, The second lowesl acceptable proposal submitted a cost of $125,000. The second lowest proposal cost of $125,000 would he awarded thirty-two
(32) points.
e .86 X 40 = 32 points
0125,000
2 of 2
7/7-3/rk
Resolution #16259 September 22, 2016
Moved by Middleton supported by KowaII the resolution be adopted.
Discussion followed.
Moved by Woodward supported by Gershenson the resolution be amended as follows:
IN RE: BOARD OF COMMISSIONERS APPROVAL OF THE AWARD OF CONTRACT FOR FISCAL
YEAR 2016 THROUGH FISCAL YEAR 2018 INDEPENDENT ANNUAL AUDIT
NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commissioners concurs with
BC-OFFIMEIFKI-atic approve contracting with Plante & Moran, PLLC to
conduct the annual independent audit of the County's financial statements for the fiscal year ending
September 30, 2016 through the fiscal year ending September 30, 2018.T with-an-optioh-te-inclade
Sabcommitteer.
Discussion followed.
Vote on amendment:
AYES: Gershenson, Jackson, McGillivray, Quarles, Woodward, Zack, Bowman, Dwyer. (8)
NAYS: Fleming, Gingell, Gosselin, Hoffman, Kochenderfer, Kowall, Long, Middleton, Scott, Spisz,
Taub, Weipert, Crawford. (13)
A sufficient majority having not voted in favor, the amendment failed.
Vote on resolution:
AYES: Gingell, Gosselin, Hoffman, Jackson, Kochenderfer, Kowall, Long, McGillivray, Middleton,
Quarles, Scott, Spisz, Taub, Weipert, Crawford, Dwyer, Fleming, (17)
NAYS: Gershenson, Woodward, Zack, Bowman. (4)
A sufficient majority having voted in favor, the resolution was adopted.
GERALD D. POISSON
CHIEF DEPUTY COUNTY EXECUTIVE
ACTING RIANANT MCL 45.559A(7)
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