Corporate Audit RFP 2024 (SAM v2).pdf

Request for Proposal

For

Financial Statement Audit

February 28, 2024

Office of Inspector General Legal Services Corporation

3333 K St, NW Washington, DC 20007 https://www.oig.lsc.gov/

Inquiries should be directed to:

Alison Ottenbreit, Ph.D.

Operations Program Analyst aottenbreit@oig.lsc.gov https://www.oig.lsc.gov/ mailto:aottenbreit@oig.lsc.gov

T A B L E O F C O N T E N T S

I. PURPOSE

II. BACKGROUND

III. DESCRIPTION OF ENTITY TO BE AUDITED

IV. REQUIREMENTS

V. MINIMUM STAFF REQUIREMENTS

VI. INSTRUCTIONS ON PROPOSAL SUBMISSION

VII. OPTION TO EXTEND THE EFFECTIVE PERIOD OF THE CONTRACT

VIII. DELIVERY SCHEDULE

IX. PAYMENT

X. AUDIT REVIEW

XI. CONFIDENTIALITY

XII. LSC OIG’s RIGHTS

XIII. INSTRUCTIONS TO PROSPECTIVE OFFERORS

XIV. PROPOSAL EVALUATION

XV. FREEDOM OF INFORMATION ACT

XVI. CONTRACT NEGOTIATION

XVII. CERTIFICATIONS

I. PURPOSE

The purpose of this Request for Proposal (RFP) is to select an independent public accounting (IPA) firm to conduct an audit of the Legal Services Corporation’s (hereafter referred to as “LSC” or “Corporation”) financial statements (hereafter referred to as “the financial statement audit”) for the fiscal year ending September 30, 2024, under a fixed-price contract (contract). This RFP includes options for two (2) additional fiscal years ending September 30, 2025, and September 30, 2026, to be exercised at the sole discretion of the Office of Inspector General (OIG). The contracted services will include presenting the completed audit results to the LSC Board of Directors. The Contractor is not responsible for audits of grantee financial statements.

As a quasi-federal non-profit entity funding legal services to low-income individuals throughout the United States, LSC qualifies for General Services Administration, non-profit and charitable rates. This RFP is not subject to the Federal Acquisition Regulation.

II. BACKGROUND

LSC was established pursuant to the Legal Services Corporation Act of 1974. It is required by law to have its accounts audited annually by independent certified public accountants, 42 U.S.C. § 2996h(a). LSC Management is responsible for the preparation and fair presentation of the Corporation’s financial statements in accordance with U.S. generally accepted accounting principles. The OIG is an independent office within LSC charged by statute with, among other things, conducting, supervising, and coordinating audits of LSC, Inspector General Act (IG Act), 5 U.S.C. § 404(a)(1). As part of its responsibility for overseeing the audits of LSC’s operations, the OIG contracts with an IPA firm to conduct the annual financial statement audit and must assure that work performed by the IPA firm is conducted in accordance with Government Auditing Standards, see IG Act at 5 U.S.C. § 404(b)(1)(C).

In addition, the OIG recommends policies to prevent fraud, waste, and abuse, as well as to promote economy, efficiency, and effectiveness of the Corporation’s programs and operations. The OIG is also responsible for keeping the LSC Board of Directors (Board), including its Committees, and Congress informed of challenges and deficiencies relating to the administration of LSC programs and operations and, where appropriate, recommending corrective actions to address these items.

III. DESCRIPTION OF ENTITY TO BE AUDITED

LSC is a private non-profit corporation (501(c)(3)), established by Congress in the LSC Act of 1974, as amended, 42 U.S.C. §§ 2996-2996(l). The Corporation is governed by an eleven-member Board of Directors appointed by the President and confirmed by the Senate. By law, the Board is bipartisan: no more than six (6) members may be of the same political party. The primary purpose of the Corporation is to provide grants to independent organizations that provide free civil legal assistance to individuals unable to afford legal representation. Approximately 131 service providers across the 50 states, the District of Columbia, Guam, Micronesia, Puerto Rico, and the U.S. Virgin Islands deliver legal representation on civil matters to eligible clients. LSC oversees its grants, programs, and administrative activities from its headquarters located in Washington, DC; there are no regional offices.

LSC receives its funding through a congressional appropriation. While the appropriation for fiscal year 2024 has not yet been awarded, the LSC is operating under a continuing resolution at fiscal year 2023 spending levels of $560 million; with an additional $20 million appropriated for emergency disaster relief funding. Supplemental disaster funding appropriations are additional funds allocated by the federal government to respond to unforeseen disasters or emergencies. These funds are provided in addition to regular appropriations and are not considered part of LSC’s annual appropriation.

Congressional funding for grants represents approximately 97 percent of the total appropriation, while funding for Management and Grants Oversight (MGO), and the OIG represents approximately 3 percent. The congressional appropriation delineates separate line items for all grant programs, including Basic Field, Pro Bono Innovation Fund, Technology Initiative Grant, Student Loan Repayment Assistance, and US Court of Veterans Appeal, as well as for the activities of MGO and the OIG. Additionally, LSC engages in private fundraising and has raised approximately $8.2 million between fiscal years 2018 and 2022 (per audited financial statements). In FY 2023, private funding or contributions amounted to approximately $3 million. LSC hosts one annual conference, the Innovation Technology Conference, with approximately 500 attendees and $300,000 in revenue in FY 2023.

The books and records of the Corporation are maintained on cloud-based enterprise resource planning software (NetSuite) which is integrated with LSC’s other financial systems including: payroll (ADP), the grants management system (GMS), accounts payable

(Anybill), travel and expense management (Concur), and the vendor portal (Gatekeeper).

The Corporation draws its appropriation from the U.S. Treasury under a letter of credit.

Grant payments to recipients are facilitated by ACH through its bank. Annual electronic payments for grants and payroll are approximately $550 million and $25 million respectively. The Corporation is exempt from federal and state taxes.

IV. REQUIREMENTS

A. Independent Public Accounting Firm: The independent public accounting firm selected, hereafter referred to as “Contractor”, shall be certified or licensed by the District of Columbia (DC) Board of Accountancy and shall therefore meet applicable DC Board of Accountancy requirements. If the Contractor is not certified or licensed by the DC Board of Accountancy, it should otherwise be authorized or have the privilege to practice in DC. The partners of the Contractor shall be independent Certified Public Accountants. In response to this RFP, the Contractor shall identify the qualified personnel it will assign to perform the financial statement audit. If proposed personnel later become unavailable prior to or during the engagement, with the approval of the OIG, personnel of equivalent experience may be assigned to perform the audit. The personnel assigned to the contract shall meet the general standards set forth in Government Auditing Standards, as promulgated by the U.S. Government Accountability Office (GAO).

B. Standards: The Contractor shall conduct the financial statement audit in accordance with generally accepted government auditing standards contained in the Government Auditing Standards, as well as professional standards published by the American Institute of Certified Public Accountants (AICPA).

C. Financial Statement Audit Guidance: The Contractor shall utilize the June 2022 revision (updated May 2023) of the Financial Audit Manual (FAM) jointly authored by GAO and the Council of the Inspectors General on Integrity and Efficiency as guidance in conducting the financial statement audit. The FAM can be accessed at https://www.gao.gov/financial_audit_manual/overview.

D. Scope of Work: The OIG is soliciting the services of a qualified independent public accounting firm to audit the financial statements prepared by the Corporation for the fiscal year ending September 30, 2024. The audit is to be performed in accordance with the provisions contained in this RFP. As such, the contractor will be responsible for the following:

https://www.gao.gov/financial_audit_manual/overview

1. The Contractor shall audit the Corporation’s fiscal year ( FY) 2024 financial statements for the purposes of satisfying GAO’s Government Auditing Standards requirements. The Contractor shall determine and report on whether:

a. LSC’s financial statements, including notes to the financial statements, are fairly presented in all material respects in conformity with generally accepted accounting principles;

b. LSC’s internal controls provide reasonable assurance of achieving the internal control objectives of the audit; and,

c. LSC has complied with applicable laws, regulations, contracts, and grant agreements which could have a direct and material effect on the financial statements;

2. Present the completed audit results to the LSC Board of Directors;

3. Conduct entrance and exit conferences for the audit on dates to be determined in conjunction with the OIG, LSC Management, and Board representatives;

4. Communicate with those charged with governance in accordance with professional auditing standards;

5. Communicate audit status, outstanding issues, action items, and other pertinent audit information, as necessary, in progress reports provided at intervals specified by the OIG and during status meetings to be held jointly with OIG and designated LSC official(s);

6. In addition to joint briefings, discuss with OIG and LSC official(s) matters that come to the auditor’s attention that would significantly affect the auditor’s opinion on the Corporation’s financial statements being audited;

7. Prepare audit documentation in accordance with GAO’s Government Auditing Standards;

8. Retain all original audit documentation prepared in performing the audit in accordance with the firm’s record retention policy or five years, whichever is longer;

9. Cooperate with LSC and OIG oversight and monitoring official(s). To facilitate the monitoring of the audit, the OIG may accompany the Contractor to meetings;

10. Provide the OIG access to a full and complete set of audit workpapers to the OIG for review, including, but not limited to:

a. Planning and internal control audit documentation before the start of the testing phase or field work;

b. Substantive testing documentation not later than 5 working days after the end of field work;

c. Other supporting audit evidence obtained and produced to support the results of the audit.

d. Draft consolidated audit report with findings and recommendations cross-indexed to the supporting documentation; and,

e. Draft Management Letter cross-indexed to audit documentation.

This audit documentation must be delivered to the OIG in full prior to issuance of the draft audit report. The Contractor must factor the OIG’s review into the deliverables timeline and provide sufficient time, as specified by the OIG, for review.

V. MINIMUM STAFF REQUIREMENTS

The definitions of the following professional classifications are provided to aid in your preparation of the technical and cost portions of the proposal:

A. Partner/Principal: The minimum educational and professional experience requirements in this category include: a) a Bachelor’s degree in accounting or business; b) 80 hours of continuing professional education (CPE) in the last two years that meets the government CPE requirements; c) a partner or principal in the firm responding to this Request for Proposal (Offeror); d) a minimum of seven

(7) years of general audit experience, three (3) years of government audit experience and three (3) years of non-profit audit experience; and, e) a Certified Public Accountant (CPA), licensed by the District of Columbia, or have the privilege or authorization to practice in DC. The responsibilities in this category include final authority in the conduct of engagements and full responsibility for the work performed, i.e., overall project management, and final report review.

B. Manager/Supervisor: The minimum educational and professional experience requirements in this category include: a) a Bachelor’s degree in accounting or business; b) a CPA, licensed by the District of Columbia, or have the privilege or authorization to practice in DC; c) 80 hours of continuing professional education in the last two years that meets the government CPE requirements; d) a minimum of five (5) years of general audit experience, two (2) years of government audit experience and two (2) years of non-profit audit experience; and, e) regularly assigned as a manager or supervisor in the Offeror’s organization. The responsibilities in this category include management and supervision of an audit team or teams, on-site quality control, and those typically expected of an in-charge auditor.

C. Senior: The minimum educational and professional experience requirements in this category include: a) a Bachelor’s degree in accounting or business; b) licensed as a CPA or meeting the CPA educational requirements in the District of Columbia, or have the privilege or authorization to practice in DC; c) 80 hours of continuing professional education in the last two years that meets the government CPE requirements; d) a minimum of three (3) years of general audit experience and

(1) one year of government audit experience; and, e) a senior auditor in the Offeror’s organization.

D. Junior: The minimum educational and professional requirements in this category include: a) Bachelor’s degree in accounting or business; and, b) the appropriate number of hours of continuing professional education that meets the government CPE requirements. The responsibilities in this category include performing audit steps under the direct supervision of a manager/supervisor or a senior auditor.

Staff substitution will only be allowed with prior written OIG approval.

VI. INSTRUCTIONS ON PROPOSAL SUBMISSION

A. The Offeror must be a licensed Certified Public Accounting firm, with offices located in the Washington, DC Metropolitan Area. Proof of licensed status is required to be included within the proposal.

B. Inquiries: Inquiries concerning this Request for Proposal should be submitted by March 6, 2024, and directed to Alison Ottenbreit (email: aottenbreit@oig.lsc.gov).

As it deems appropriate, the OIG will answer questions related to the RFP by email and will copy all prospective offerors.

C. Conditions of Proposal: All costs incurred in the preparation of a proposal responding to this RFP will be the responsibility of the Offeror and will not be reimbursed by the OIG.

D. Proposal Submission: Each Offeror should submit an electronic copy of their proposal via email to Alison Ottenbreit with the OIG. To be considered, the proposal, including certifications, must be received no later than 5 PM Eastern Time March 20, 2024. The OIG reserves the right to exclude late proposals from consideration.

E. Right to Reject: The OIG reserves the right to reject any and all proposals received in response to this RFP.

F. Notification of Award: The OIG expects that the selection of the successful firm will be made no later than the beginning of July 2024. All Offerors will be informed in writing of the OIG’s decision.

VII. OPTION TO EXTEND THE EFFECTIVE PERIOD OF THE CONTRACT

The OIG may, at its option, extend the contract awarded for one or more of the two

(2) option periods covering FY 2025 and FY 2026. Extension of the contract for each of the option years is contingent upon affirmative action by the OIG. The decision to extend or not to extend would be predicated upon factors such as the quality of performance during the prior contract period(s); the degree of the Contractor's compliance with the contract schedule for deliverables; the reasonableness of the rates quoted in the price schedule; the availability of funds; and the convenience of the OIG.

VIII. DELIVERY SCHEDULE

A. The Contractor shall make available both an initial draft audit report and final draft audit report for LSC and the OIG’s review. The initial draft report and all documentation (to include all indexed workpapers) pertaining to the audit shall be made available no later than March 7, 2025 to the OIG. The final draft audit report shall be submitted no later than March 28, 2025. The OIG anticipates that the final contract will contain a penalty clause for delay in delivery of the final draft report and audit documentation caused by the contractor. The penalty will likely be 0.5% of the payment due upon acceptance of the final audit report per business day. See Section IX. At a minimum, audit documentation shall include a copy of the draft audit report package and draft management letter (if applicable) indexed to appropriate supporting working papers.

B. The Contractor shall deliver the original of the signed final audit report, and an electronic copy of the audit report including the management letter, attachments, and schedules, as appropriate, in Microsoft Word and searchable PDF formats to the OIG no later than May 9, 2025.

C. Reports and other deliverables may be submitted earlier than the above schedule.

However, if the Contractor fails to make delivery of the audit reports and other deliverables within the time schedule specified herein, or if the Contractor delivers audit reports and other deliverables which do not conform to all the provisions of the contract, the OIG may, by written notice of default to the Contractor, terminate the whole or any part of the contract. When it determines that there is sufficient justification for doing so, the OIG may extend this schedule upon written request of the Contractor.

D. The contractor will brief the Board of Directors as to the results of the audit at the April Board meeting.

IX. PAYMENT

Payments in the percentages specified below will be made at the following project milestones to the extent that the work performed is satisfactory to the OIG:

A. 25 percent at the start of fieldwork;

B. 30 percent upon submission of the initial draft audit report and indexed workpapers;

C. 30 percent upon the OIG’s acceptance of the final draft audit report; and D. 15 percent upon the OIG’s acceptance of the final audit report.

In the event the OIG rejects a report it will state the reason(s) for the rejection in a written notification. The right to reject a report shall extend throughout the term of the contract and for ninety (90) days after the Contractor submits the final invoice for payment.

At the completion of each of the above-listed project milestones, the Contractor may submit an invoice to the OIG for payment.

X. AUDIT REVIEW

An indexed copy of the draft audit report package and management letter (if applicable) will be reviewed by the OIG to ensure compliance with GAO’s Government Auditing Standards. The OIG will follow the FAM’s guidelines in the oversight of the audit including the review of the Contractor’s audit documentation.

XI. CONFIDENTIALITY

As part of the ensuing contract with the OIG, a successful offeror will be required to enter into a confidentiality clause, requiring information related to this audit to be kept in strict confidence, other than the reports submitted to and approved by the OIG. Any such agreement will not limit certain lawful reporting of fraud, waste or abuse.

XII. LSC OIG’s RIGHTS

Notwithstanding any other statement in this RFP or otherwise, the LSC OIG reserves the right to:

A. Accept or reject any or all proposals, or any part thereof;

B. Waive any informalities or technicalities contained in any proposal received;

C. Conduct discussions with respondents and accept revisions of proposals after the closing date;

D. Make an award based upon various selection criteria;

E. Request clarification from any respondents on any or all aspects of its proposals;

F. Cancel or re-issue this RFP at any time;

G. Retain all proposals submitted in response to this RFP; and, H. Invite some, all, or none of the respondents for interviews, demonstrations, presentations and further discussion.

XIII. INSTRUCTIONS TO PROSPECTIVE OFFERORS

Proposals shall be submitted on the most favorable terms, from both technical and price standpoints, that the Offeror can propose. The audit of the LSC financial statements will be performed under a fixed-price contract. The Offeror’s proposal shall, at a minimum, include the following:

A. Background: The Offeror shall describe the organization, size (in relation to the audit to be performed), percentage of practice attributable to services provided, and structure.

B. Technical Qualifications:

1. Prior Auditing Experience: The Offeror shall describe its prior experience in conducting financial statement audits in accordance with generally accepted government auditing standards, as well as in utilizing the GAO/CIGIE FAM as guidance in conducting Federal financial statement audits. Prior experience shall include all the following categories that apply:

a. Auditing entities that provide grants to independent organizations;

b. Auditing programs financed by the Federal Government; and,

c. Auditing non-profit organizations.

The Offeror shall also include a copy of the most recent Peer Review or a statement explaining why a Peer Review report is not available. The Offeror will also state whether it has been the subject of any disciplinary action within the last three years.

2. Staff Qualifications: The Offeror shall describe the qualifications of staff to be assigned to the audit. Descriptions should include:

a. Composition of audit team;

b. Overall supervision to be exercised; and,

c. Prior experience of individual audit team members, specifically in audits of non-profit organizations.

The Offeror shall include only resumes of staff to be assigned to the audits.

Education, position in the firm, length of employment with the firm, years and types of experience, continuing professional education, and state(s) in which licensed (if applicable), will be considered.

3. Project Plan and Approach: The Offeror shall provide a documented approach to the completion of the LSC FY 2024 financial statement audit. Specifically, the Offeror shall describe its understanding of work to be performed, including audit procedures, staffing schedule with estimated hours per professional classification, and other pertinent information. The Offeror shall describe how it would approach the work efforts in the subsequent years of the contract. The Offeror shall state that audit work will not be subcontracted and that all audit work will be performed by employees of the Offeror.

4. Certifications: The Offeror must sign and include as an attachment to its proposal the Certifications enclosed with this RFP.

5. Interview: At the OIG’s discretion the Offerors’ Partner/Principal and Manager/Supervisor on the proposal will be available for an introductory presentation and interview during the procurement evaluation.

6. References: The Offeror shall include the names, addresses, contact persons, and telephone numbers of three prior organizations audited.

Preferably, one or more of the references provided by the Offeror will be an entity similar in size, structure and attributes as LSC (e.g., quasi-federal, non-profit, grant making, congressionally funded, etc.).

C. Price: The price proposal shall be submitted separately from the technical proposal. The Offeror will provide a uniform fixed price for the audit of the LSC financial statements. The price proposal shall indicate, at a minimum, the estimated number of hours by staff level, hourly rates by professional classification, and total cost by staff level. Any anticipated out-of-pocket expenses should also be indicated. The proposed price shall include separate quotations for the base period of the contract and the two option years.

The price shall be predicated on the anticipated cooperation from LSC personnel.

The OIG must approve any additional time and fees in writing.

D. Page Limitation: The proposal (exclusive of appendices) must be no longer than seven (7) pages long.

XIV. PROPOSAL EVALUATION

A. Non-responsive Proposals: Proposals may be judged non-responsive and removed from further consideration if any of the following occur:

1. The proposal is not received timely;

2. The proposal does not follow the specified format;

3. The proposal does not include the Certifications; and,

4. The proposal is not adequate for the reviewers to form a judgment that the proposed undertaking would comply with Government Auditing Standards or GAO/CIGIE FAM guidelines.

B. Proposal Evaluation: If the OIG selects an Offeror, the OIG will make the award to the responsible Offeror whose offer conforms to the solicitation and provides the best value – the most advantageous balance of price, quality, and performance.

In addition, evaluation of each proposal will include the following criteria, which are not weighted equally.

1. Technical Qualifications:

a. Prior Auditing Experience: Prior financial statement auditing experience in accordance with GAO’s Government Auditing Standards and in utilizing the GAO/CIGIE FAM as guidance in conducting Federal financial statement audits that include:

1) Auditing entities that provide grants to independent organizations;

2) Auditing programs financed by the Federal Government; and,

3) Auditing non-profit organizations.

b. Staff Qualifications:

Qualifications of staff to be assigned to the audit as determined from resumes submitted to include:

1) Education, position in the firm, years and types of experience, continuing professional education, and state(s) in which licensed as a CPA, etc., will be considered. Composition of the audit team and the percentage of time each level of personnel is estimated to spend on the audit;

2) Overall supervision to be exercised; and,

3) Prior experience of the individual audit team members, particularly in audits of non-profit organizations financed by the Federal government.

c. Project Plan and Approach: The OIG will assess the Offeror’s understanding of the work to be performed as demonstrated by the description of the audit approach to complete the LSC FY 2024 financial statement audit.

1) Adequate coverage that includes appropriate procedures in all phases of the audit;

2) An appropriate staffing schedule approach; and,

3) Realistic time estimates for each audit step.

d. Past Performance: As applicable, the OIG will assess the Offerors past performance in connection with contracts with LSC, the LSC OIG, or similar entities.

e. Interview: If an interview is conducted, the OIG will assess the Offerors’ senior staff introductory presentation and interview.

f. References: After the OIG has made a preliminary determination regarding an Offeror with whom it may contract, it will contact and assess the references of that firm.

2. Overall Price: (to be separately submitted)

a. The hourly rates as reflected in the proposal for each professional classification;

b. The average hourly rate to conduct the audit considering the mix of personnel to be assigned; and,

c. The overall cost for the base period (FY 2024) and the option years.

XV. FREEDOM OF INFORMATION ACT

The Freedom of Information Act (FOIA) and associated LSC regulations may require the LSC OIG to disclose certain documents to the public, including portions of your proposal.

Generally, we will not release any documents that would cause offerors competitive harm.

You are encouraged, however, to label any confidential information contained in your proposal to facilitate our ability to withhold it from disclosure.

XVI. CONTRACT NEGOTIATION

The selected Offeror will be invited to enter contract negotiations with the OIG.

XVII. CERTIFICATIONS

A. The individual signing certifies that he/she is authorized to contract on behalf of the Offeror and to make these certifications.

B. The individual signing certifies that the Offeror is a properly licensed Certified Public Accountant.

C. The individual signing certifies that the prices quoted in this proposal have been arrived at independently, without consultation, communication, or agreement for the purposes of restricting competition.

D. The individual signing certifies that the firm complies with the GAO requirement of an external quality control review at least once every three years, where applicable.

E. The individual signing certifies that the Offeror, including any individuals to be assigned to the audit, does not have a record of substandard audit work and has not been debarred or suspended from doing work with any Federal, state or local government. (If the Offeror or any individual assigned to the audit has been found in violation of any state or AICPA professional standards, this information must be disclosed).

F. The individual signing certifies on behalf of the Offeror that the Offeror will not subcontract any portion of the work.

G. The individual signing certifies that the Offeror carries professional malpractice insurance.

H. The individual signing certifies that the Offeror is an Equal Opportunity Employer and does not discriminate in hiring, employment, or activities because of race, color, religion, sex, age, national origin, disability, or any other basis prohibited by law.

Dated: ________________________________

Offeror's Firm Name: ____________________________________________

Signature of Offeror's Representative: ___________________________________

Printed Name & Title of Individual Signing: _____________________________________