PORT OF HOOD RIVER –AUDITOR RFP

REQUEST FOR PROPOSALS

AUDIT SERVICES

1. BACKGROUND & SCOPE OF WORK

1.1. About the Port of Hood River

The Port of Hood River (“Port”) was established in 1933 as a result of the Bonneville dam project because of the expressed desire of the Oregon State Legislature and the United State Government to develop industrial lands in the Columbia River Basin. As such, a port district is a local unit of government with primary responsibility for stimulating economic development and facilitating maritime shipping, aviation and commercial interest of the region within district boundaries. The powers of the Port are addressed in ORS 777.

The Port is governed by a five-member board, elected for four-year terms. The board meets once a month and may hold special meetings. The usual role of commissioners is to set policy and the board selects the Executive Director and the Finance Director who are responsible for the day-to-day management of the Port District.

1.2. About the Request for Proposals

The Port has long been committed to excellence in fiscal administration, striving for the highest standards of performance and accountability. As part of its continuing efforts to ensure financial management excellence, the Port invites competitive proposals from qualified and experienced audit firms to audit its financial statements.

The Port is soliciting the services of qualified firms of certified public accountants to audit its financial statements for the fiscal years ending June 30, 2024 through June 30, 2026, with options to audit the Port of Hood Rivers' financial statements for each of the three (3) subsequent fiscal years. These audits are to be performed in accordance with the provisions contained in this request for proposal.

The objective of requesting proposals is to determine which institution can offer the highest quality of service at the most reasonable cost.

Summary of the Anticipated Time Line for Proposal, Initiation, and Completion of Work

1.3. Summary of Services Required

The Port requires audit services as defined in Oregon Revised Statutes (ORS) 297.405 to 297.466 and Oregon Administrative Rules Chapter 162, Division 40.

The Port desires the auditor to express an opinion on the fair presentation of its basic financial statements in conformity with generally accepted accounting principles. The auditor is required to audit the combining and individual fund statements and supporting schedules. The auditor is not required to audit the introductory section of the report or the statistical section of the report, if included.

The auditor shall also be responsible for performing certain limited procedures involving required supplementary information required by the Governmental Accounting Standards Board as mandated by generally accepted auditing standards. The auditor is required to audit the schedule of expenditures of federal awards.

1.3.1. Accounting Standards to be Followed

To meet the requirements of this request for proposal, the audit shall be performed in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of the Single Audit Act of 1984 (as amended in 1996) and the provisions of U.S. Office of Management and Budget Uniform Guidance.

1.3.2. Reports to be Issued

Following the completion of the audit of the fiscal year's financial statements, the auditor shall issue:

1.3.2.1. A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles.

1.3.2.2. A report on compliance and internal controls over financial reporting based on an audit of the financial statements.

1.3.2.3. A report on compliance and internal controls over compliance applicable to each major federal award program.

1.3.2.4. A report of audit comments and disclosures as required by state regulations.

In the required reports on internal controls, the auditor shall communicate any reportable conditions found during the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of the internal 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. Reportable conditions that are also material weaknesses shall be identified as such in the report. Non-reportable conditions discovered by the auditors shall be reported in a separate letter to management, which shall be referred to in the report on compliance and internal controls.

The report on compliance and internal controls shall include all instances of noncompliance. All nonmaterial instance of noncompliance shall be reported in a separate management letter, which shall be referred to in the report on compliance and internal controls.

Auditors shall be required to make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware to the following parties:

Port of Hood River Commission Kevin Greenwood, Executive Director Debbie Smith-Wagar, Finance Director

1.4. Working Paper Retention and Access to Working Papers

All working papers and reports must be retained, at the auditor's expense, for a minimum of three (3) years from the date of the Independent Auditor’s Report, unless the firm is notified in writing by the Port of Hood River of the need to extend the retention period. The auditor will be required to make working papers available, upon request, to the following parties or their designees:

1.4.1. Port of Hood River,

1.4.2. Grant Oversight Agency,

1.4.3. Parties designated by the federal or state governments or by the Port of Hood River as part of an audit quality review process, and

1.4.4. Auditors of entities of which the Port of Hood River is a sub recipient of grant funds (if any).

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.

1.5. Description of Government

1.5.1. General Background

The Port of Hood River owns and operates the Hood River/White Salmon Bridge, the Ken Jernstedt Airport, the Hood River Marina, various recreation sites on the Waterfront and nine leased light industrial spaces.

The Ports’ fiscal year begins on July 1 and ends on June 30. The Port has about 30 year-round employees with an annual payroll of $2.4 million. Additional summer help is part of that payroll amount. The annual budget for the 2023/2024 fiscal year is $36.9 million.

The Port is organized into six asset centers, Hood River Interstate Bridge, Leased Properties, Marina, Waterfront Recreation, Airport, and General Government. The accounting and financial reporting functions of the Port of Hood River are centralized and are the responsibility of the Finance Department.

1.5.2. Fund Structure

For the fiscal year ending June 30, 2024, the Port categorizes all of its activities within five funds, the General Fund, the Revenue Fund, the Bridge Repair Fund, the Bridge Repair Replacement Fund, and the Bi-State Bridge Fund. Beginning July 1, 2024, the Port will combine most of the Revenue Fund with the General Fund (the General Fund), will move the toll bridge operating portion of the Revenue Fund in with the Bridge Repair Fund (the Bridge Fund), will continue to have the Bridge Replacement Fund and the Bi-State Bridge Fund, and will have a new Administrative Fund which will be an internal service fund.

The General Fund accounts for activities that are related to the general operation of the Port. The revenues are from bridge tolls (which will move to the new Bridge Fund in fiscal year 2024-25), leased property rent, parking receipts, property tax receipts, and some grant revenue. The expenditures are bridge operations (which will move to the new Bridge Fund in fiscal year 2024-25), rental property operations, marina and airport expenses, and parks and recreation. Property tax receipts are not a significant revenue source (less than $100,000 in fiscal year 2023-24).

The Bridge Repair Fund is designated as a capital projects fund to segregate the revenues and expenditures related to toll bridge repairs and improvements. The sources of revenues for this fund are dedicated revenue from the 1994, 2012, and 2018 toll increases. This dedicated revenue is a transfer from the Revenue Fund. The expenditures for the fund are those charges that are identified with capital improvement projects that extend the useful life of the toll bridge.

The Bridge Replacement Fund is designated as a capital projects fund to segregate the revenues and expenditures related to construction of a new bridge. The sources of revenues for this fund are grants and transfers from the Revenue Fund. The expenditures for the fund are those charges that are related to planning and engineering the new bridge. All grants currently in the Port’s name are processed through this fund. There is a new Hood River White Salmon Bridge Authority that is getting all new bridge grants and allocations in its name, and eventually the Port’s Bridge Replacement Fund will be phased out.

The Bi-State Bridge Fund is new in fiscal year 2023-24 to account for the incremental toll increase that went into effect September 1, 2023. All of the incremental toll increase is dedicated to funding a reserve account to be used to secure a federal loan for part of the new bridge replacement cost.

1.5.3. Budgetary Basis of Accounting

The Port prepares its budget on the modified accrual basis. The Port prepares annual budgets.

1.5.4. Federal and State Financial Assistance

The Port is receiving significant federal and state funding for the new bridge. It also receives other grants for economic development. The Port anticipates needing a Single Audit for fiscal years 2023-24 and 2024-25, and possibly more.

1.5.5. Pension Plans

The Port participates in the Oregon Public Employees Retirement System (OPERS).

1.5.6. Finance Department Organizational Structure

The Finance Department is headed by Debbie Smith-Wagar and consists of two direct employees with three additional front office staff.

1.5.7. Financial Computer System

The accounting system for 2023-24 is Great Plains. It consists of integrated modules for Accounts Receivable, Accounts Payable, and Payroll. There is a separate system computer program for the electronic tolling on the Hood River Bridge.

The Port is currently in the process of implementing fund accounting software (Tyler’s ERP Pro 10, formerly known as InCode). It will go live on the new software on July 1, 2024.

1.5.8. Availability of Prior Audit Reports

Interested proposers who wish to review prior years' audit reports and management letters should contact Debbie Smith-Wagar, Finance Director, Port of Hood River, 1000 E Port Marina Drive, Hood River Oregon, 97031, telephone number (541) 386-6651. The Port of Hood River will use its best efforts to make audit reports available to proposers to aid their response to this request for proposals.

1.6. Time Requirement and Guidelines

1.6.1. Dates Audits May Commence

The Port of Hood River will have all financial records and audit schedules ready for audit and all management personnel available to meet with the firm's personnel no later than August 30, 2024. The Port prepares its own financial statements. It is anticipated that the draft financial statements will be completed by September 16, 2024. Interim audit work may be conducted after the contract is signed by scheduling the work with the Finance Director.

The auditor shall provide the Port of Hood River a detailed audit plan and a list of all schedules to be prepared by the Port of Hood River.

1.6.2. Entrance Conferences and Exit Conferences

At a minimum, the following conferences should be held each year:

1.6.2.1. Entrance conference with the Finance Director prior to interim fieldwork: the purpose of this meeting will be to discuss the interim work to be performed and to review any prior year audit problems. This meeting will also be used to establish an overall liaison for the audit and to make arrangements for work space and other needs of the auditor.

1.6.2.2. Exit conference with the Finance Director prior to last day of fieldwork: the purpose of this meeting will be to summarize the results of the field work and to review significant findings and management letter comments.

The Port does not have an audit committee, however there is an internal committee made up of two Port commissioners who may wish to meet with the auditors.

1.6.3. Date Final Report is Due

The Audit must be approved by the Port Commission and filed with the Oregon Secretary of State by December 31st of each year. The Port Commission usually meets the third Tuesday of each month.

1.7. Assistance to be Provided to the Auditor and Report Preparation

1.7.1. Finance Department Assistance

The finance department staff and responsible management personnel will be available during the audit to assist the firm by providing information, documentation, and explanations. The preparation of confirmations will be the responsibility of the Port of Hood River. Auditors may be asked to schedule specific audit work around staff availability.

1.7.2. Access to Work Area, Electronic files

The Port of Hood River will provide the auditor with reasonable workspace, desks and chairs. The auditor will also be provided with internet access. The audit may be conducted remotely. Regardless of whether the audit is conducted on-site or remotely, the auditors should provide the Port with an online portal for uploading audit requests.

2. PROPOSAL PROCESS

The Port follows Oregon Revised Statutes Chapters 279A, 279B, and 279C in the procurement of personal services.

2.1. Port staff will mail or email the RFP to the interested vendor list and advertise the RFP. The RFP will be posted on OregonBuys.

2.2. Debbie Smith-Wagar, Finance Director, Port of Hood River, 1000 E Port Marina Drive, Hood River, Oregon 97031, telephone: (541) 386-6651, email: dsmith-wagar@portofhoodriver.com will accept written questions seeking clarification about the proposal requirements until March 14, 2024 at 5:00 p.m. All questions, including clarification of or exception to specifications, questions regarding proposal submittal instructions, questions or exceptions regarding contract terms, and questions or exceptions to the basis of award must be received by this date and time. No questions about the request for proposal document or the proposal process will be accepted after this date and time.

2.3. Written answers to all questions will be posted on OregonBuys by 5:00 p.m. on March 18, 2024.

2.4. Proposals must be emailed, mailed, or hand-delivered (delivered to the front desk) to Debbie Smith-Wagar at the Port of Hood River, 1000 E Port Marina Drive, Hood River, Oregon, 97031, dsmith-wagar@portofhoodriver.com, no later than 3:00 p.m. on March 28, 2024. Proposals received after this date/time shall be marked with the date/time received and held unopened by the Port. The Port is not responsible for traffic or mailing delays.

2.5. Staff will review the proposals submitted for completeness and compliance with the proposal requirements. All proposals shall be evaluated based on the criteria identified in section 3, Basis of Award of Contract. The Port reserves the right to waive irregularities and minor informalities if it is in the public interest to do so.

2.6. After scoring, staff will send a letter or email to all vendors submitting a proposal stating the Port’s Intent to Award the Auditor Services contract to one vendor. Vendors will have seven (7) calendar days to protest; any protest filed after the protest period will be late and will not be considered. To file a protest, a vendor must submit the protest in writing to the person named in section 2.5 above and state the reasons for the protest. The Executive Director will review any protest and make a decision as to the award of the proposal.

2.7. The successful vendor will be expected to complete a contract for Auditor Services immediately after being notified of award. A sample contract form has been included with this request for proposal as Attachment B.

2.8. The Port reserves the right to cancel this procurement and/or reject all proposals if it is in the best interest of the Port to do so in accordance with ORS 279B.100. If the Port cancels this procurement after proposals have been submitted, the proposals will be returned, but the Port will keep a list of the proposals received.

2.9. The Port reserves the right to accept the offers and award a contract to a responsible vendor, to postpone the acceptance of the offer and the award of the contract for a period not to exceed thirty (30) calendar days, or to reject any and all offers received, and further advertise the project for offers.

2.10. The Port may reject any offer not in compliance with all prescribed public purchasing procedures and requirements and may reject for good cause any or all offers upon finding of the Port that it is in the public interest to do so.

3. BASIS OF AWARD OF CONTRACT

The Review Committee will use a point formula during the review process to score proposals. Each member of the review committee will review the mandatory requirements in section 3.1. Firms not meeting the mandatory requirements will not be evaluated or considered further. Each member will then score each technical proposal by each of the criteria described in section 3.2 and 3.3. The full Review Committee will then convene to review and discuss the evaluations and to combine the individual scores to arrive at a composite technical score for each firm. At this point, firms with an unacceptably low technical score will be eliminated from further consideration.

After the composite technical score for each firm has been established, additional points will be added to the technical score based on the bid price. The maximum score for price will be assigned to the firm offering the lowest total all-inclusive maximum price. Appropriate fractional scores will be assigned to other proposers.

The review committee will make a recommendation for the award of the contract to the Executive Director. Upon the Executive Director’s concurrence, the contract will be presented to the Commission for approval. A firm will be selected by April 16, 2024 and a contract signed by April 30, 2024. Proposals submitted will be evaluated by the Finance Director and two or three additional participants.

During the evaluation process, the Review Committee may, at its discretion, request any or all firms to make oral presentations. Such presentations will provide firms with an opportunity to answer any questions the Review Committee may have on a firm’s proposal. Not all firms may be asked to make such oral presentations.

Proposals will be evaluated using the following three (3) sets of criteria: mandatory criteria, technical qualifications, and price. Firms meeting the mandatory criteria will have their proposals evaluated and scored for both technical qualifications and price. Firms not meeting the mandatory requirements will be eliminated from the RFP process. The following represent the principal selection criteria which will be considered during the evaluation process.

3.1. Mandatory Requirements.

Failure to supply the mandatory requirements listed below will result in disqualification.

3.1.1. Confirmation that the audit firm is independent, a licensed CPA in the State of Oregon, and is a member of the Oregon Municipal Auditor Roster;

3.1.2. Confirmation that the firm has no conflict of interest with regard to any other work performed by the firm for the Port of Hood River;

3.1.3. Adherence to the instructions in this request for proposals on preparing and submitting the proposal; and,

3.1.4. Submittal of a copy of its last external quality control review report with the proposal and the firm has a record of quality audit work, as demonstrated through previous experience.

3.2. Technical Qualifications: (Maximum Points - 65)

3.2.1. Expertise and experience as demonstrated by:

3.2.1.1. The firm’s past experience and performance on comparable government engagements;

3.2.1.2. The quality of the firm’s professional personnel assigned to the engagement and the quality of the firm’s management support personnel to be available for technical consultation; and,

3.2.1.3. The firm’s experience in auditing Federal or State financial assistance.

3.2.2. Audit approach as demonstrated by:

3.2.2.1. Adequacy of proposed staffing plan for various segments of the engagement;

3.2.2.2. Adequacy of sampling techniques;

3.2.2.3. Adequacy of analytical procedures; and,

3.2.2.4. Ability to meet the Port’s guideline schedules and deadlines.

3.3. Price: (Maximum Points - 35)

After the composite score for technical qualifications for each firm has been established additional points will be added to the technical score based on the bid price. The maximum score for price, 35 points, will be assigned to the firm offering the lowest total all-inclusive maximum price. Appropriate fractional scores will be assigned to other proposers. Please note that cost is not the primary factor in the Port’s selection of an audit firm.

The evaluation of proposals and the determination of conformity and acceptability shall be the sole responsibility of the Port and will be based on information furnished by the proposer, or identified in the proposal, as well as on other information available to the Port.

4. INSTRUCTIONS FOR SUBMITTING THE PROPOSAL

4.1. The proposal must be submitted as identified in Section 6 - Form of Proposal no later than 3:00 p.m., on March 29, 2024. Proposals received after 3:00 p.m. will remain sealed, marked on the outside with the date and time received and kept by the Port.

4.2. Mail or email the proposal document in sealed envelopes to:

Dsmith-wagar@portofhoodriver.com

4.3. Proposals must be plainly marked as a proposal for audit services.

5. FORM OF PROPOSAL

5.1. Format

5.1.1.1. Title Page

Title page showing the request for proposal's subject; the firm's name; the name, address and telephone number of the contact person; and the date of the proposal.

5.1.1.2. Table of Contents

5.1.1.3. Transmittal Letter

A signed letter of transmittal briefly stating the proposer's understanding of the work to be done, the commitment to perform the work within the time period, a statement why the firm believes itself to be best qualified to perform the engagement, and a statement that the proposal is a firm and irrevocable offer for 60 days from the date of the transmittal letter.

5.1.1.4. Detailed Proposal

The detailed proposal should follow the order set forth in Section 6.2 and 6.3.

5.2. Technical Specifications and Features

5.2.1. General Requirements

The purpose of the Technical Proposal is to demonstrate the qualifications, competence and capacity of the firms seeking to undertake an independent audit of the Port of Hood River in conformity with the requirements of this Request for Proposal. As such, the substance of proposals will carry more weight than their form or manner of presentation. The Technical Proposal should demonstrate the qualifications of the firm and of the particular staff to be assigned to this engagement. It should also specify an audit approach that will meet the request for proposals requirements.

The Technical Proposal should address all the points outlined in the Request for Proposals (excluding any cost information which should only be included in the sealed dollar cost bid). The Proposal should be prepared simply and economically, providing a straightforward, concise description of the proposer's capabilities to satisfy the requirements of the Request for Proposals. While additional data may be presented, the following subject, sections 6.2.2 through 6.2.8, must be included. They represent the criteria against which the Proposal will be evaluated.

5.2.2. Independence

The firm should provide an affirmative statement that it is independent of the Port of Hood River as defined by the U.S. General Accounting Office's Government Auditing Standards.

5.2.3. License to Practice in Oregon

An affirmative statement should be included that the firm and all assigned key professional employees are licensed to practice in the State of Oregon as municipal auditors as defined by ORS 297.405 (1).

5.2.4. Firm Qualifications and Experience

The proposer should state the size of the firm, the size of the firm's governmental audit staff, the location of the office from which the work on this engagement is to be performed, the number and nature of the professional staff to be employed in this engagement on a full-time basis and the number and nature of the staff to be so employed on a part-time basis.

If the proposer is a joint venture or consortium, the qualifications of each firm comprising the joint venture or consortium should be separately identified and the firm that is to serve as the principal auditor should be noted, if applicable.

The firm is required to submit a copy of the report on its most recent external quality control review.

The firm shall also provide information on the results of any federal or state desk reviews or field reviews of its audits during the past three (3) years. In addition, the firm shall provide information on the circumstances and status of any disciplinary action taken or pending against the firm during the past three (3) years with state regulatory bodies or professional organizations.

5.2.5. Partner, Supervisory and Staff Qualifications and Experience

Identify the principal supervisory and management staff, including engagement partners, managers, other supervisors and specialists, who would be assigned to the engagement. Indicate whether each person is registered or licensed to practice as a certified public accountant and municipal auditor in the State of Oregon. Provide information on the government auditing experience of each person, including information on relevant continuing professional education for the past three (3) years and membership in professional organizations relevant to the performance of this audit.

Provide as much information as possible regarding the number, qualifications, experience and training, including relevant continuing professional education, of the specific staff to be assigned to this engagement. Indicate how the quality of staff over the term of the agreement will be assured.

Engagement partners, managers, other supervisory staff and specialists may be changed if those personnel leave the firm, are promoted or are assigned to another office. These personnel may also be changed for other reasons with the express prior written permission of the Port of Hood River. However, in either case, the Port of Hood River retains the right to approve or reject replacements.

Consultants and firm specialists mentioned in response to this Request for Proposal can only be changed with the express prior written permission of the Port of Hood River, which retains the right to approve or reject replacements. Other audit personnel may be changed at the discretion of the proposer provided that replacements have substantially the same or better qualifications or experience.

5.2.6. Similar Engagements with Other Government Entities

For the firm's office that will be assigned responsibility for the audit, list engagements (maximum - 5) performed in the last five years that are similar to the engagement described in this Request for Proposal. Indicate the name of entity, scope of work and number of years of engagement, whether a single audit client, and the name and telephone number of the principal client contact.

5.2.7. Specific Audit Approach

The proposal should set forth a work plan, including an explanation of the audit methodology to be followed, to perform the services required in Section 1 of this Request for Proposal. In developing the work plan, reference should be made to such sources of information as the Port of Hood River’s budget and related materials, organizational charts, manuals and programs, and financial and other management information systems.

Proposers will be required to provide the following information on their audit approach:

5.2.7.1. Proposed segmentation of the engagement

5.2.7.2. Level of staff and number of hours to be assigned to each proposed segment of the engagement

5.2.7.3. Sample size and the extent to which statistical sampling is to be used in the engagement

5.2.7.4. Type and extent of analytical procedures to be used in the engagement

5.2.7.5. Approach to be taken to gain and document an understanding of the Port of Hood River' internal control structure

5.2.7.6. Approach to be taken in determining laws and regulations that will be subject to audit test work

5.2.7.7. Approach to be taken in drawing audit samples for purposes of tests of compliance

5.2.8. Identification of Anticipated Potential Audit Problems

The proposal should identify and describe any anticipated potential audit problems, the firm's approach to resolving these problems and any special assistance that will be requested from the Port of Hood River.

5.2.9. Total All-Inclusive Maximum Price

The cost should contain all pricing information relative to performing the audit engagement as described in this request for proposal. The total all-inclusive maximum price to be bid is to contain all direct and indirect costs including all out-of-pocket expenses for the 2023/2024 audit.

The first page of the sealed dollar cost bid should include the following information:

5.2.9.1. Name of Firm

5.2.9.2. Certification that the person signing the proposal is entitled to represent the firm, empowered to submit the bid, and authorized to sign a contract with the Port of Hood River.

5.2.9.3. A Total All-Inclusive Maximum Price for the 2023/2024 engagement. The firm must also project a maximum annual percentage increase for the next two fiscal years. If the annual price increase is tied to a price index, name the index and source.

5.2.10. Rates by Partner, Specialist, Supervisory and Staff Level Times Hours Anticipated for Each The second page of the sealed dollar cost bid should include a schedule of professional fees and expenses, presented in the format provided in Section 8.4 that supports the total all-inclusive maximum price. The cost of special services described in Section 1.4 of this request for proposal should be disclosed as separate components of the total all-inclusive maximum price.

5.2.11. Out-of-pocket Expenses Included in the Total All-inclusive Maximum Price All estimated out-of-pocket expenses to be reimbursed should be presented on the second page of the sealed dollar cost bid in the format provided in Section 8.4. All expense reimbursements will be charged against the total all-inclusive maximum price submitted by the firm.

5.2.12. Rates for Additional Professional Services

If it should become necessary for the Port of Hood River 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 Port of Hood River and the firm. Any such additional work agreed to between Port of Hood River and the firm shall be performed at the same rates set forth in the schedule of fees and expenses included in the sealed dollar cost bid.

6. COMPENSATION AND PAYMENT SCHEDULE

Progress payments will be made on the basis of hours of work completed during the course of the engagement and out-of-pocket expenses incurred in accordance with the firm's dollar cost bid proposal. Interim billing shall cover a period of not less than a calendar month and shall be itemized as to the hours provided, rates charged, and out-of-pocket expenses incurred.

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