Responses_to_RFP_Questions_6.14.2019.pdf

Financial Statement Audit RFP Responses to Questions

1. What are the biggest concerns of the corporation? How might you look at your IPA firm to help you address those concerns?

Please see below for the IG’s interpretation of the corporation’s biggest concerns based on discussions with LSC management.

The biggest concerns are improving the internal control environment and staying current with new accounting standards that apply to non-profits and/or government entities. The corporation is also concerned with contracting with an IPA firm with experience conducting financial statement audits in accordance with government auditing standards in the non-profit, government, and quasi-government industries. The IPA firm should also understand and have experience working with Inspector Generals. Additionally, the IPA firm should understand the:

Inspector General’s responsibilities to oversee financial statement audits and provide oversight as it relates to government auditing standards;

relationship between the Inspector General and the audit entity, particularly the role of the Inspector General in the process; and appropriate quality and quantity of communication required during an audit engagement.

The ideal IPA firm should be knowledgeable about key industry trends and the regulatory environment in which LSC operates. We would request that our IPA:

• provide recommendations/insights based on best practices identified through auditing non-profit and government industries; and

• recognize and appreciate LSC norms, not limited to LSC’s interaction with the IG and preferred methods of communication.

2. Is the audit being put out to bid on a normal cycle? How long have your current auditors been servicing the corporation? Can the current firm propose?

The most recent contract covered the FY 2017 corporate audit, with options for subsequent fiscal years. The OIG exercised the option for the FY 2018 fiscal year audit. Yes, the current firm can propose.

3. Have there been any disagreements with the current auditors regarding accounting treatment, journal entries, findings or other matters?

There was back and forth discussion regarding the auditor’s presentation of the findings in the audit report.

Management of Legal Services Corporation (LSC) responded to the auditor’s findings with robust discussion. However, they concurred with the auditor’s recommendations in the FY 2018 Financial Statement Audit.

4. What are the current audit and form 990 fees for the scope of services? What have they been the past three years?

Fiscal Year Audit 990 Total

2018 $48,048 $1,500 $49,548 2017 $46,640 $1,500 $48,140 2016 $49,586 $5,510 $55,095

5. Has the current auditor ever billed over their fixed fee and if so what was the reason?

No, the current auditor has not billed over their fixed fee.

6. Has the current auditor provided any additional services outside the original audit contract?

No, the current auditor has not provided any additional services outside the original audit contract.

7. What are the desired audit fieldwork schedule for interim and final fieldwork?

Section VIII, Delivery Schedule of the RFP outlines the deadlines for major milestones: draft report, submission of audit documentation, signed final audit report and Federal tax returns. It will be incumbent on the auditor to coordinate with LSC management and the Office of Inspector General to determine a schedule for interim and final fieldwork that is reasonable for both parties.

8. For the interim and final fieldwork phase, how many audit managers, seniors, and staff are typically in the field and for how long?

We do not specifically track this activity. However, this year the team conducting onsite fieldwork normally consisted of one senior auditor and two staff auditors.

We estimate they conducted two visits that were a combined total duration of three weeks long.

9. Have there been many passed or posted adjustments resulting from the audit process in recent years? Is it possible to obtain the required communication correspondences as well as a copy of the 2018 financial statements?

During FY 2018, LSC discovered that it had improperly recognized certain grant expenses in prior periods. The correction of this error increased opening net assets by $8.8 million and required restatement of the FY 2017 financial statements.

Additionally, during FY 2018 year-end discussions between LSC management and the auditors, LSC management discovered that a lease for copiers was recorded as an operating lease when it should have been recorded as a capital lease. When LSC management corrected the error, an entry was recorded in FY 2018 to recognize the asset and lease liability at the present value of the lease payments of $188,455, and interest on the lease liability of $2,857. The entry included the recognition of depreciation in the amount of $12,564, and the reduction of the lease liability by $4,689.

The 2018 financial statements are available at:

https://oig.lsc.gov/images/pdfs/AR/FY2018_Financial_Statement_Audit_Report.pdf

The 2017 financial statements are available at:

https://oig.lsc.gov/images/pdfs/AR/2017_LSC_Financial_Statement_Audit.pdf

Prior Corporate audit reports can be found at for each year:

https://oig.lsc.gov/products/audit-reports.

10. Have you experienced turnover in key roles within the organization?

In September 2018, LSC’s long-time Comptroller/Treasurer took a leave of absence. LSC hired an Interim Controller in October 2018. In January 2019, the Interim Controller was appointed as Chief Financial Officer and Treasurer.

11. Has your auditor provided a management letter in the past 3 years? If so, can that document be made available?

Under current review; we will post a response pending review.

12. Do you have any major IT upgrades planned?

Yes, LSC management plans to replace their finance and accounting system.

13. Could you please tell me if the Combined Synopsis/Solicitation posted as solicitation number LSCOIG05232019 on FBO contains requirements similar to any work performed currently or in the past, or will this be a new requirement?

Yes, it contains requirements for conducting the annual financial statement audit of LSC. The audit is performed annually. It is not a new requirement.

14. If possible, can you please provide the most recent contract or task order number?

The FedBizOpps.gov reference number was LSCOIG0122017.

15. Do we need to submit two separate documents, one technical and one price document, or would you prefer that we submit one document only?

Please submit two separate documents. The price proposal should be submitted separately from the technical proposal.

https://oig.lsc.gov/images/pdfs/AR/FY2018_Financial_Statement_Audit_Report.pdf https://oig.lsc.gov/images/pdfs/AR/2017_LSC_Financial_Statement_Audit.pdf https://oig.lsc.gov/products/audit-reports

16. Please provide a copy of the previous issued Form 990 and supporting schedules for 2017 and 2018 so that we can better understand the tax compliance requirements of the organization, disclosures and other.

LSC’s IRS Form 990 tax returns are available online at https://www.lsc.gov/lsc-irs-form-990-returns.

LSC’s Form 990 for FY 2018 is has not been filed; we are unable to provide a copy at this time.

17. What is the nature of the organizations 990-T activity?

The 990-T includes qualified transportation benefits that became taxable with the Tax Cuts and Jobs Act.

18. Can you provide the anticipated date of the January 2020 board of directions meeting date?

The anticipated date is January 30 to February 1, 2020. The anticipated location for the meeting is Little Rock, Arkansas.

However, based on recent discussion with management, it is possible that presentation of the audit to the Board will take place at the April Board meeting. That meeting is scheduled to take place in Washington DC, April 19-21, 2020.

19. Please provide the start date of the 2018 audit?

Last year the auditor began interim audit procedures in June. In prior years, the audit started after the close fiscal year-end 9/30. Management has tentatively indicated that they would like the audit to begin in November this year. We cannot provide a definitive date at this time.

20. Is LSC willing to accept proposals from CPA firms licensed outside of District of Columbia?

Yes, the independent public accounting firm selected shall be certified or licensed by the District of Columbia Board of Accountancy (or other appropriate state licensing authority) and shall meet applicable State Board of Accountancy Requirements.

https://www.lsc.gov/lsc-irs-form-990-returns

Financial Statement Audit RFP