LSC_Audit_RFP_41117.pdf

Request for Proposals For

Financial Statement Audit

April 12, 2017

Office of Inspector General Legal Services Corporation

3333 K St, NW Washington, D.C. 20007

Inquiries should be directed to:

John Seeba Assistant IG for Audit jseeba@oig.lsc.gov mailto:mk@oig.lsc.gov

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

I. INTRODUCTION

II. PURPOSE

III. DESCRIPTION OF ENTITY TO BE AUDITED

IV. REQUIREMENTS

V. MINIMUM STAFF REQUIREMENTS

VI. INSTRUCTIONS ON PROPOSAL SUBMISSION

IX. PAYMENT

X. AUDIT REVIEW

XII. INSTRUCTIONS TO PROSPECTIVE OFFERORS

XIII. PROPOSAL EVALUATION

XIV. CERTIFICATIONS

I. INTRODUCTION

The Office of Inspector General (OIG) recommends policies for activities designed to prevent fraud, waste, and abuse, as well as to promote economy, efficiency, and effectiveness of Legal Services Corporation (hereafter referred to as “LSC” or

“Corporation”) programs and operations. The OIG is responsible for keeping the

LSC Board of Directors (Board), including Committees of the Board, and Congress informed of problems and deficiencies relating to the administration of LSC programs and operations and, where appropriate, recommending corrective actions to address such problems and deficiencies. As part of this responsibility, the OIG oversees the LSC’s annual financial statement audit performed by an independent contractor.

II. PURPOSE

The purpose of this Request for Proposals (RFP) is to select an independent public accounting firm to conduct an audit of the Corporation’s financial statements

(hereafter referred to as “the financial statement audit”) for the fiscal year ending

September 30, 2017, under a fixed-price contract (contract). This RFP includes options for two (2) additional fiscal years ending September 30, 2018 and

September 30, 2019, to be exercised at the sole discretion of the OIG. The contracted–for services will include presenting the completed audit results to the

LSC Board of Directors and preparation of LSC’s Federal tax return (IRS Form 990

– Return of Organization Exempt from Income Tax).

III. DESCRIPTION OF ENTITY TO BE AUDITED

LSC is a private nonprofit 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 members may be of the same political party. The purpose of the Corporation is to provide grants to independent organizations which provide free civil legal assistance to those who could not otherwise afford the services of an attorney. Legal representation on civil matters is provided to eligible clients through approximately 133 service providers located in the 50 states, the District of

Columbia, Guam, Micronesia, Puerto Rico and the U.S. Virgin Islands. LSC receives its funding through a congressional appropriation; the Continuing

Resolution for fiscal year 2017 is $384 million. The congressional appropriation contains separate line items for field grant funding, as well as for the management and administrative activities of the Corporation and the OIG; client self-help and information technology; and student loan repayment assistance.

LSC administers its grants, programs, and administrative activities from its headquarters located in Washington, DC; there are no regional offices. Within LSC, the office primarily responsible for awarding grants and overseeing grantee operations is the Office of Program Performance (OPP).

The books and records of the Corporation are maintained on an automated system;

the payroll is processed by an outside service bureau. The Corporation draws its appropriation from the U.S. Treasury under a letter of credit. Grant payments to recipients are made by direct deposit. The average number of checks drawn each month on the Corporation's bank accounts is approximately 150 for management and payables (including payroll). Monthly electronic payments for grants and payroll are approximately $30.5 million and $1.2 million respectively.

The Corporation also makes approximately 10 electronic payments each month for taxes and rent.

Generally, Congressional funding for grants and the Loan Repayment Assistance

Program (LRAP) represents approximately 94 percent of the total appropriation, while management, grants oversight and the OIG represent approximately 6 percent. Grants to recipients are audited annually by independent accounting firms selected by the recipients in accordance with guidance promulgated by the OIG.

The audit reports are submitted to the OIG within 120 days of the recipient's fiscal year end and are subject to an internal review procedure administered by the OIG.

OIG refers findings of noncompliance to LSC management for follow-up, and tracks the progress of corrective actions.

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 Board of Accountancy of the District of Columbia and shall therefore meet applicable DC Board of Accountancy requirements. The partners of the

Contractor shall be independent certified public accountants. The Contractor shall provide agreed-upon qualified personnel to perform the financial statement audit. The personnel so provided shall meet the general standards set forth in Government Auditing Standards, as promulgated by the 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 Joint

GAO/PCIE Financial Audit Manual (FAM) as guidance in conducting the financial statement audit. The FAM can be accessed at http://www.gao.gov/special.pubs/gaopcie.

http://www.gao.gov/special.pubs/gaopcie

D. Scope of Work: The Contractor shall audit the Corporation’s FY 2017 financial statements for the purposes of satisfying GAO’s Government

Auditing Standards requirements. The Contractor shall:

1. Determine and report on whether LSC’s financial statements, including notes to the financial statements, are fairly presented in all material respects in conformity with generally accepted accounting principles;

2. Determine and report whether LSC’s internal controls provide reasonable assurance of achieving the internal control objectives of the audit;

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

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

5. Prepare LSC’s Federal tax return (IRS Form 990 – Return of Organization

Exempt from Income Tax.

E. Audit Management: While performing the financial statement audit, the

Contractor shall:

1. Cooperate with OIG oversight and project management;

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

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

4. Communicate audit status, outstanding issues, action items, and other pertinent audit information, as necessary, during status meetings to be held jointly with OIG and designated LSC official(s);

5. 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

(the Contractor is not responsible for audits of grantee financial statements);

6. Prepare audit documentation in accordance with GAO’s Government

Auditing Standards;

7. 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.

To facilitate the monitoring of the audit, the OIG may accompany the Contractor to meetings. The Contractor shall provide the OIG access to the planning and internal control audit documentation before the start of the testing phase or field work. The

Contractor shall also provide the OIG access to the substantive testing documentation not later than 5 working days after the end of field work.

V. MINIMUM STAFF REQUIREMENTS

The definitions of 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 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 and three (3) years of government audit experience; and e) a Certified Public Accountant (CPA), licensed by the District of Columbia or other appropriate state licensing authority. 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) Bachelor’s degree in accounting or business; b) a CPA, licensed by the District of Columbia or other appropriate state licensing authority; 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 and two (2) years of government 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 including on-site quality control.

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 state where he/she is employed; 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. The responsibilities in this category include those of an in-charge accountant.

D. Junior: The minimum educational requirements in this category include:

a) Bachelor’s degree in accounting or business; and b) 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.

VI. INSTRUCTIONS ON PROPOSAL SUBMISSION

A. The Offeror must be a licensed Certified Public Accounting firm, with offices located in the Washington, D.C. Metropolitan Area.

B. Closing Submission Date: Proposals must be received no later than 5 PM

Eastern Time June 1, 2017. It is the responsibility of the Offeror to ensure that the proposal is submitted by the date and time specified herein. The

OIG reserves the right to exclude late proposals from consideration.

C. Inquiries: Inquiries concerning this Request for Proposal should be directed to John Seeba (telephone: 202-295-1581; email: JSeeba@oig.lsc.gov). As it deems appropriate, the OIG will answer questions related to the RFP by email and copy all prospective offerors.

D. 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.Proposal Submission: Each Offer will submit an electronic copy of their proposal to the OIG. To be considered, the proposal, including certifications, must be received no later than 5 PM Eastern Time

June 1, 2017. 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: A contract based upon the factors described in this

RFP will be signed by the OIG with the successful Offeror. The OIG expects the selection of the successful firms will be made by June 2017. All

Offerors will be informed in writing of the OIG’s choice.

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 2018 and FY 2019. 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 TO THE OIG

A. The Contractor shall make available all documentation pertaining to the audit no later than January 12, 2018. The OIG anticipates that the final contract will contain a penalty clause for delay in delivery of the 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. Audit documentation shall include a copy of the draft report indexed to appropriate supporting working papers.

B. The Contractor shall deliver the original of the final audit report, two (2) copies, and an electronic copy of the audit report including the management letter, attachments, and schedules, as appropriate, in Microsoft Word and searchable PDF formats no later than February 16, 2018.

C. The Contractor shall deliver the original of the Federal tax return

(Form 990) and two (2) copies no later than February 16, 2018.

D. 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.

E. The contractor will brief the Board of Directors as to the results of the audit at the January 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:

• 25% at the start of fieldwork;

• 65% upon OIG’s acceptance of the final audit report; and

• 10% when the final Form 990 is submitted to LSC.

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 final audit report will be reviewed by the OIG to ensure compliance with GAO’s Government Auditing Standards. The OIG will follow the

FAM guidelines in the oversight of the audit including the review of the

Contractor’s audit documentation.

XI. CONFIDENTIALITY

The Contractor agrees to keep information related to this audit in strict confidence.

Other than the reports submitted to and approved by the OIG, the Contractor agrees not to publish, reproduce or otherwise divulge such information in whole or in part, in any manner or form, or authorize or permit others to do so, and to take such reasonable measures as are necessary to restrict access to the information, while in the Contractor's possession, to those employees on the Contractor's staff who must have the information on a "need-to-know" basis. The Contractor agrees to immediately notify the OIG in writing in the event the Contractor determines there has been, or has reason to suspect, a breach of this requirement.

XII. 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/PCIE FAM as guidance in conducting Federal financial statement audits. Prior experience shall include all of the following categories that apply:

a. Auditing entities that provide grants to independent organizations;

b. Auditing programs financed by the Federal Government;

c. Auditing nonprofit 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 object 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. Audit team makeup;

b. Overall supervision to be exercised;

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 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 2017 financial statement audit. Specifically, the Offeror shall describe its understanding of work to be performed, including audit procedures, estimated hours, 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. References: The Offeror shall include the names, addresses, contact persons, and telephone numbers of three prior organizations audited.

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 cost for preparing the

Federal tax return in each of those years shall also be separately identified.

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) should be no longer than seven (7) pages long.

XIII. 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;

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/PCIE FAM guidelines.

B. Proposal Evaluation: The OIG will make the award to the responsible Offeror whose offer conforms to the solicitation and is most advantageous to LSC.

Evaluation of each proposal will be based on 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. Specifically, prior experience in utilizing the GAO/PCIE

FAM as guidance in conducting Federal financial statement audits that include:

i. Auditing entities that provide grants to independent organizations;

ii. Auditing programs financed by the Federal

Government;

iii. Auditing nonprofit organizations.

b. Staff Qualifications:

i. Qualifications of staff to be assigned to the audit as determined from resumes submitted. Education, position in firm, years and types of experience, continuing professional education, and state(s) in which licensed as a CPA, etc., will be considered. Audit team makeup and the percentage of time each level of personnel is estimated to spend on the audit;

ii. Overall supervision to be exercised;

iii. Prior experience of the individual audit team members, particularly in audits of nonprofit 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 2017 financial statement audit.

i. Adequate coverage that includes appropriate procedures in all phases of the audit;

ii. Realistic time estimates for each audit step.

d. 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

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;

c. The overall cost for the base period (FY 2017) and the option years.

XIV. CERTIFICATIONS

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

B. 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.

C. The individual signing certifies that the Contractor is a properly licensed certified public accountant.

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 Contractor, 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 Contractor 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 that the Contractor carries professional malpractice insurance.

G. The individual signing certifies that the Contractor 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.

(Contractor's Firm Name)

(Signature of Contractor's Representative)

(Printed Name and Title of Individual Signing) Dated this day of , 2017.