RFP__R005840_Financial_Auditing_and_Related_Services.pdf

Request for Proposal #R005840

Financial Auditing and Related Services

September 16, 2026

California Lottery 700 North 10th Street

Sacramento, California 95811 i

REQUEST FOR PROPOSAL

Notice to Prospective Proposers

September 16, 2026

You are invited to review and respond to this Request for Proposal (RFP # R005840 Financial Auditing and Related Services). You must comply with these instructions when submitting a Proposal.

All agreements entered into with the California State Lottery (Lottery) will include by attachment Terms and Conditions and Contractor Certification Clauses that are hereby included in this solicitation.

If you have questions, or should you need any clarifying information, the contact person for this RFP is:

Megan Madueno California State Lottery solicitations@calottery.com mmadueno@calottery.com

Please note that no verbal information given will be binding upon the Lottery unless such information is issued in writing as an official addendum.

Megan Madueno

Megan Madueno Procurement Specialist ii

Table of Contents REQUEST FOR PROPOSAL ........................................................................................... i

I. GENERAL INFORMATION

A. Purpose B. Background C. Description of Required Services D. Partner Rotation Requirement E. Submission of Proposal F. Projected Timetable G. Verbal Communication H. Examination of All Requirements I. Modifications to the RFP J. Written Questions K. Written Intent to Bid L. Property of the Lottery M. Proposals are Public Records N. Acceptance Period O. Rejection of Proposals P. Contract Execution Q. Hiring of Lottery Personnel R. Bid Protests S. Governing Law and Regulations

II. PROPOSAL REQUIREMENTS

A. Mandatory Submittals B. Evaluation of Mandatory Submittals C. Rated Submittals

III. PROPOSAL EVALUATION AND AWARD

A. Minimum Requirements B. Rated Submittals Evaluation C. Scenario and Cost Evaluation D. Best Value Proposal Analysis E. Right to Cancel

IV. DELIVERY OF PROPOSAL

A. Delivery

ATTACHMENT 1 Required Attachment Checklist ATTACHMENT 2 Firm Fact Sheet (U.S. Operations) ATTACHMENT 3 Résumé Form ATTACHMENT 4 Classification and Hourly Rates Sheet ATTACHMENT 5 Scenario and Cost Evaluation ATTACHMENT 6 Certification ATTACHMENT 7 Disabled Veteran Business Enterprise Participation Forms (if applicable) ATTACHMENT 8 Small and Microbusiness Participation (if applicable) iii

ATTACHMENT 9 Payee Data Record (STD 204) ATTACHMENT 10 Generative AI Impact Assessement Form ATTACHMENT 11 Proposed Terms and Conditions

**Attachment 5 Scenarios (6 documents) are attached separately to this RFP.

RFP #R005840 Financial Auditing 1 California State Lottery and Related Services

I. GENERAL INFORMATION

A. Purpose

The California State Lottery (Lottery) is inviting proposals from qualified certified public accountant (CPA) firms interested in providing auditing and related services to the Lottery.

The purpose of this RFP is to select a single audit contractor to conduct audit related services for the Lottery. Government Code §8880.46.5 states, “The director shall engage an independent firm of certified public accountants to conduct an annual audit of all accounts and transactions of the Lottery. The audited financial statements shall be presented to the Commission, the Governor, the Controller, the Treasurer, the Attorney General, and the Legislature not more than 120 days after the close of the fiscal year. The independent auditor’s report shall be posted on the Internet.”

The Contractor shall prepare an annual audit report, in accordance with generally accepted auditing standards approved by the American Institute of Certified Public Accountants and in accordance with Government Accounting Standards Board Statement No. 34, Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments. These standards require that a study and evaluation of the Lottery’s system of internal control be performed. The annual audit report shall state an opinion as to whether the Lottery’s financial statements have been fairly presented in conformity with generally accepted accounting principles.

The agreement resulting from this RFP will be for a period of three (3) years, with the option to extend for up to two (2) additional one-year periods under the same terms, conditions, and pricing at the sole discretion of the Lottery.

1. Minimum Proposer Qualifications

This RFP is open to all proposers that, at the time of proposal submission, meet the following Proposer qualifications:

a) Must be an independent CPA firm.

b) Must have audited the financial statements of one of the following types of entities within the last five years:

a government entity or agency;

RFP #R005840 Financial Auditing 2 California State Lottery a business organization with an asset base of at least US $250 million; or a business entity with a revenue base of at least US $1 billion.

c) Must have all licenses required to conduct business in California.

d) Must possess all necessary permits required by law, if any, for completing the services called for in this RFP.

e) The Lead Partner, who has responsibility for conducting the audit, must have a minimum of ten years’ experience as a CPA.

f) Partners must be members of good standing with the American Institute of Certified Public Accountants (AICPA).

g) Must be in compliance with applicable peer review and continuing professional education (CPE) requirements.

h) Must meet the other requirements set forth in this RFP.

B. Background

In November 1984, the voters of California approved Proposition 37, the California State Lottery Act (the Act). The stated purpose of the Act is to provide supplemental funding for public education without the imposition of additional or increased taxes. The Act requires that not less than 87% of the total annual revenues from the sale of lottery tickets be returned to the public in the form of prizes and net revenues to benefit public education. The Lottery Commission determines the percentage of total annual revenues that are to be returned to the public in the form of prizes, subject to a required minimum of 50%.

The Act provides for the Governor to appoint a five-member Lottery Commission, to develop and oversee the operations of the Lottery, and a Director, whose responsibilities include ensuring that the Lottery maintains appropriate financial records and prepares financial statements in conformity with generally accepted accounting principles.

Annually, an independent audit firm performs financial audits of the Lottery’s financial statements. Since the inception of the Lottery, the annual financial statements have been fairly and appropriately presented without any identified exceptions, and in compliance with Generally Accepted Accounting Principles. Further, in recognition of the Lottery’s commitment to prepare financial statements reflecting transparency and full disclosure, RFP #R005840 Financial Auditing 3 California State Lottery the Lottery submits an Annual Comprehensive Financial Report (Annual Report) to the Government Finance Officers Association (GFOA) of the United States and Canada each year. This Annual Report includes the audited financial statements and is due six months after the end of the fiscal year. The GFOA has awarded a Certificate of Achievement for Excellence in Financial Reporting to the Lottery for 20 fiscal years. Additionally, the State Controller’s Office conducts quarterly and annual post audits of all accounts and transactions of the Lottery including quarterly transfers to education, vendor claim schedules, and all prize payments.

The Lottery is also required to meet annual reporting requirements for Party Lotteries under the Mega Millions® and Powerball® agreements.

Lottery Operations

The Lottery is comprised of 1,148 employees, as of June 30, 2025. The basic business operating mission of the Lottery is to sell lottery tickets, draw the winning numbers, pay prizes, and transfer net revenues to public education. For fiscal year 2024-25, the Lottery recorded nearly $9 billion in sales, resulting in a contribution of more than $1.9 billion to public education. It is expected that the Lottery will continue to see sales growth in the foreseeable future. For every $1 of sales revenue, approximately 95% goes back to local communities in the form of contributions to public schools and colleges, prizes and retailer compensation. Visit the Lottery website for details at https://www.calottery.com.

The Lottery currently offers the following styles of play: Scratchers® instant tickets, draw games, namely, POWERBALL, Mega Millions, SuperLotto Plus, Fantasy 5, Daily Derby, Daily 3, Daily 4, and Hot Spot, and promotions, such as 2nd Chance draws. Visit the Lottery website for game and promotion details at https://www.calottery.com.

Lottery Accounting System

The Lottery currently uses Epicor 10 (E10) software for its accounting system including the general ledger, accounts payable, accounts receivable and asset management modules. E10 is an accounting package that has been customized for the Lottery’s business needs. The Lottery receives daily and weekly files containing gaming activity and retailer activity, from its gaming system vendor. Data from these files is imported into the E10 system. The Lottery also transfers funds to and from its contracted retailers using bank electronic fund transfers (EFTs). The Lottery receives monthly

RFP #R005840 Financial Auditing 4 California State Lottery files from the State Controller’s Office containing payroll and disbursement data. These files are also imported into E10.

C. Description of Required Services

The Lottery seeks an independent auditor to provide assurances to stakeholders and the public that its financial statements are in accordance with required standards. The services shall require independent, objective, responsive and reliable audits of financial statements and will require the firm to issue audit reports of the Lottery’s financial statements. Reports shall clearly state an opinion as to whether the Lottery’s financial condition and results of operations have been fairly presented in the statements in conformity with Generally Accepted Accounting Principles. The Contractor will also provide reports for agreed upon procedure engagements certifying that the Lottery has met its reporting requirements for Party Lotteries under the Mega Millions and Powerball agreements.

D. Partner Rotation Requirement

The Lottery intends to observe AICPA guidelines on partner rotation. Thus, the Lottery will require the replacement of the lead partner in charge of audit services if such partner has performed audit services in that capacity for the Lottery for five consecutive years.

The replaced lead partner will not be permitted to perform work on the contract, in any capacity, for a minimum period of one year. Where replacement occurs during an ongoing contract, the new lead partner in charge must possess all the qualifications required for that role under the applicable RFP and will be subject to Lottery approval.

E. Submission of Proposal

Issuance of this RFP does not constitute a commitment by the Lottery to award a contract. All notices or questions pertaining to this RFP must be directed to:

California State Lottery Procurement Services and Support Attention: Megan Madueno 700 North 10th Street Sacramento, CA 95811 Email: solicitations@calottery.com and mmadueno@calottery.com

RFP #R005840 Financial Auditing 5 California State Lottery

No contact regarding this RFP will be allowed between Proposers or potential Proposers and members of the Evaluation Team, Lottery Commissioners, or Lottery staff after issuance of the RFP, with the exception of the Lottery contact person named above. Any such contact may disqualify a Proposer from further consideration. Requests for clarification from Proposers will be allowed, provided such requests are made through the above contact via e-mail.

F. Projected Timetable

1. Key Action Dates

The following projected timetable is subject to change and is provided for informational and planning purposes only. The Lottery may change these dates without amending this RFP.

Event Date Time

RFP Issued September 16, 2026

Intents to Bid/Written Questions Due

September 30, 2026 Received by

10AM PST

Responses to Written Questions

October 7, 2026

Proposals Due October 16, 2026 Received by

3:00PM PST

Evaluation Period October 17, 2026 – November 6, 2026

Notice of Intent to Award November 13, 2026

Projected Contract Effective Date

March 1, 2027

G. Verbal Communication

Any verbal communication with a Lottery employee concerning this RFP is not binding on the Lottery and will in no way alter a specification, term, or condition of this RFP or any resulting contract.

RFP #R005840 Financial Auditing 6 California State Lottery

H. Examination of All Requirements

Proposers are strongly encouraged to examine this document thoroughly and become familiar with the RFP’s requirements, including but not limited to those set forth in, Attachment 11, Proposed Contract Terms and Conditions (“Attachment 11”), Exhibit A (Scope of Work) and Exhibit C (Standard Agreement Terms and Conditions). Proposals must be based solely on the information and materials contained in the RFP and any amendments thereto and on other written communications regarding the RFP that are issued by the Lottery contact person named above. Proposers must disregard all other information, including draft material, newspaper advertisements or articles, and verbal representations.

A proposal may be rejected if it is conditional or incomplete, or if it contains any alterations of form or other irregularities of any kind. However, the Lottery may waive an immaterial deviation in a proposal, at its sole discretion. The Lottery’s waiver of an immaterial deviation shall in no way modify the RFP document or excuse the Proposer from full compliance with all requirements if awarded the agreement.

A proposer may modify a proposal after its submission by withdrawing its original proposal and resubmitting a new proposal prior to the proposal submission deadline as set forth in the Key Action Dates. Proposal modifications offered in any other manner, oral or written, will not be considered.

I. Modifications to the RFP

The Lottery may cancel or modify this RFP at any time by the issuance of an addendum. Notice of modification or cancellation will be sent to Proposers that submitted a written Intent to Bid if the modification or cancellation occurs prior to proposal submission, and to Proposers that submitted a proposal if the modification or cancellation occurs after proposal submission.

J. Written Questions

Questions regarding the content of this RFP must be submitted in writing via email to the Lottery contact person specified above by the due date and time specified in the Projected Timetable. It is the Proposers sole responsibility to verify receipt of submitted questions. The Lottery may, in its sole discretion, respond to written questions received after the specified due date and time. Questions and responses will be provided to firms that

RFP #R005840 Financial Auditing 7 California State Lottery submitted a written Intent to Bid and will also be posted on the Lottery’s website at https://www.calottery.com/vendor-opportunities and California State Contracts Register (CSCR).

If Proposers identify any issues with the exhibits set forth in Attachment 11, Proposers must communicate those issues during the Written Questions phase of this RFP for them to be considered. The Lottery may, at its sole discretion, elect to address such issues by amending this RFP, prior to the Proposal Due Date.

K. Written Intent to Bid

Interested Proposers must submit an Intent to Bid in writing via email to the Lottery contact person by the date and time specified in the Projected Timetable in order to receive direct communications from the Lottery about this RFP.

The written Intent to Bid must include the Proposer’s contact person’s name, email address, mailing address, and telephone number.

If a written Intent to Bid is not sent, a proposal may still be submitted.

However, RFP notices and amendments issued by the Lottery will only be sent directly to Proposers with a written Intent to Bid on file. After the proposal due date, only Proposers that have submitted proposal packages in accordance with section II, Proposal Requirements, and section IV, Delivery of Proposal, to the Lottery contact person specified in section I.E. will receive direct RFP communications and notices.

All interested parties may access such notices and amendments on the Lottery’s website at https://www.calottery.com/vendor-opportunities and California State Contracts Register.

L. Property of the Lottery

All proposals become the property of the Lottery upon receipt and will not be returned to Proposers.

M. Proposals are Public Records

Pursuant to the California Public Records Act, California Government Code §§ 6250 et seq., all data, materials, information, and documents submitted to the Lottery by a Proposer may be incorporated into a publicly-available contract and may otherwise be subject to disclosure upon request by

RFP #R005840 Financial Auditing 8 California State Lottery competitors and members of the public after the apparent successful Proposer has been announced. The Lottery will process all Public Records Act requests in accordance with the laws of the State of California. A Proposer’s labeling of any proposal materials as “confidential” or otherwise exempt from disclosure is not binding on the Lottery, and the Lottery will not be liable to the Proposer or to any other person or entity for disclosing information as required by law.

N. Acceptance Period

As a condition of submission, each Proposer’s proposal constitutes an unconditional offer to the Lottery and is irrevocable for 180 days from the date submissions are due.

O. Rejection of Proposals

The Lottery reserves the right to reject all proposals. The Lottery is not required to award an agreement.

P. Contract Execution

The Lottery, in its sole discretion, may treat failure or refusal by the intended Contractor to begin performance within ten state working days of contract execution as repudiation of the contract. The Lottery may then either (1) select another proposal which conforms to the requirements of this RFP and represents, in the Lottery’s sole discretion, the best value; or (2) reject all proposals. The Lottery may also seek compensation for any damages associated with repudiation of the contract.

The Lottery reserves the right to cancel all elements of this solicitation or rescind the announced award at any time before execution of the contract.

Issuance of this RFP does not constitute a commitment by the Lottery to award a contract.

Q. Hiring of Lottery Personnel

At all times during the proposal evaluation period and continuing through contract award or rejection of all proposals, Proposers are prohibited from officially or unofficially making any employment offer or proposing any business arrangement whatsoever to any Lottery employee involved in the evaluation of proposals. A Proposer making such an offer or proposition will be disqualified from further consideration.

R. Bid Protests

RFP #R005840 Financial Auditing 9 California State Lottery

1. Only an actual Proposer may protest a contract award, and only on the following ground:

a) The Lottery did not follow its own written procedures in selecting the apparent successful Proposer, and

b) The protestor can demonstrate that had the Lottery followed its procedures, the protesting Proposer would have been the successful Proposer.

2. A notice of intent to protest must be received by the Lottery within seven business days after the Lottery posts a notice of intent to award on its website. A timely notice of intent to protest is a prerequisite to any protest.

3. Provided that a timely notice of intent to protest has been filed with the Lottery, a protest must be filed within twelve business days after the Lottery posts its notice of intent to award on its website. A protest must include a complete and detailed explanation of how the facts support the protest.

4. All protest documents must be received by the Lottery at its Sacramento headquarters no later than 3:00 p.m. Pacific Time on the last day of the applicable protest period. The envelope containing protest documents or the cover page to a protest must be addressed to the attention of the Director and must be clearly labeled: “Protest to the (title and number of the solicitation), DO NOT OPEN IN MAILROOM.” Untimely protests will not be considered.

5. It is the protestor’s responsibility to ensure that the Director has all information and arguments that the protestor deems relevant and necessary to resolve the protest. The Director may request additional information in writing from the protestor or from other sources, including the apparent successful Proposer and Lottery staff, as he/she deems appropriate for resolution of the protest.

6. The Director will issue a written decision within fifteen days of completion of his/her review of the record.

7. In his/her sole discretion, the Director may determine that it is in the best interest of the Lottery to proceed with contract award and performance, while a protest is pending, and may direct a Contractor to commence work.

RFP #R005840 Financial Auditing 10 California State Lottery

S. Governing Law and Regulations

The Lottery’s governing law and regulations, including the California State Lottery Act and the Lottery’s procedures for procurement of goods and services, are available on the Lottery’s website at https://www.calottery.com/about-us under Lottery Regulations (PDF). It is each Proposer’s responsibility to be familiar with these laws and regulations.

II. PROPOSAL REQUIREMENTS

Proposals submitted in response to this RFP must comply with the requirements of this section. Failure to complete and submit the information listed in this section in the specified format may result in rejection of the Proposers proposal.

Proposers must provide as much information as necessary in their proposal for the Lottery to award a contract. At a minimum, proposals must be fully responsive to the specific requirements stated in this RFP. Proposers must identify any requirements of this RFP they cannot satisfy.

The Lottery encourages Proposers to comment on the RFP, and in their proposals to demonstrate the methods they will employ for improved audit approaches or enhancements for the efficiency and effectiveness of the audits.

A. Mandatory Submittals

Proposers must not alter the Lottery’s mandatory submittals. Any change made to the forms, including but not limited to exceptions, deletions, and additions, may be the basis for disqualification of a Proposers proposal. The required forms are separate documents included with this solicitation.

If you need assistance with these forms, please contact Megan Madueno at solicitations@calottery.com and mmadueno@calottery.com.

Proposers must complete and submit the following as detailed below:

1. Required Attachment Checklist – (Attachment 1)

Proposers must submit the Required Attachment Checklist to confirm all required documents have been included in the proposal submittal package.

2. Transmittal Letter

RFP #R005840 Financial Auditing 11 California State Lottery

Proposers must submit a Transmittal Letter indicating that they are responding to the RFP and that all of the RFP requirements have been met. The letter must be signed by a representative identified in the Proposer Certification as legally authorized to contractually bind the Proposer.

Proposers must disclose whether they consulted with others in the preparation of this proposal. If others were consulted, they must identify those with whom they consulted and provide contact information. Any change or addition to those consulted while this RFP is pending must be reported to the Lottery. Failure to do so may result in a rejection of a Proposer’s proposal. The Lottery reserves the right to contact these consultants. Under no circumstances may Proposers submitting or considering the submittal of a proposal consult with a competing Proposer.

Proposers must also disclose any potential, actual or apparent conflicts of interest that may exist between any current client and the Lottery.

Because of the complexities involved in defining conflicts of interest, the Lottery will make a final determination as to whether a disqualifying conflict exists. Note: If there are no conflicts, provide a statement to this effect.

3. Audit Plan

Proposers must submit an audit plan, in PDF format, describing how the work specified in Attachment 11, Exhibit A (Scope of Work) will be performed.

See Section II.C.2 for more details.

4. Personnel Qualifications and Work Experience

Proposers must submit a document, in PDF format, describing the qualifications of the Proposer’s audit personnel that will be assigned to the Lottery.

See Section II.C.3 for more details.

5. Proposer Audit Team Organization

Proposers must submit an organizational chart of the firm and an organizational chart showing the reporting structure of the audit team to be assigned to the Lottery. See Section II.C.4 for more details.

RFP #R005840 Financial Auditing 12 California State Lottery

6. Firm Fact Sheet (U.S. Operations) – (Attachment 2)

Proposers must complete and submit the Firm Fact Sheet (U.S.

Operations).

7. Résumé Form – (Attachment 3)

Proposers must complete and submit Résumé Forms for all Key Personnel that will be assigned to the Lottery (as defined in Section II.C.3 Personnel Qualifications and Work Experience). The Résumé Form may be reproduced as needed. Résumés provided in other formats will not be accepted.

8. Classification and Hourly Rates Sheet – (Attachment 4)

Proposers must complete and submit the Classification and Hourly Rates Sheet, for the services identified in the Scope of Work. The costs shall be inclusive of all costs, including indirect, overhead and administrative costs, for the required services for the duration of the contract. The submitted Classification and Hourly Rate Sheet will be incorporated in the awarded contract under Attachment 11, Exhibit B (Budget Details and Payment Provisions).

9. Scenario and Cost Evaluation – (Attachment 5)

Proposers must complete the scenarios indicating the proposed Personnel, and providing a maximum cost for each of the two scenarios.

Personnel and hourly rates shall follow the same rates provided in the Classification and Hourly Rates Sheet. Attachment 5 will be completed using attached scenario documents (Reference 1 – 6).

10. Certification – (Attachment 6)

Proposers must complete and submit the Certification in the proposal package.

11. Disabled Veteran Business Enterprise Participation (DVBE) – If Applicable (Attachment 7)

In order to receive DVBE cost preference, Proposers must complete and submit the DVBE Participation form in the proposal package. While not required for this solicitation, a preference of up to 5% will be applied, based on the level of DVBE participation proposed. Additional details are provided on the DVBE form.

RFP #R005840 Financial Auditing 13 California State Lottery

12. Small and Microbusiness Participation (SMP) – If Applicable (Attachment 8)

In order to receive SMP cost preference, Proposers must complete and submit the SMP forms in the proposal package. Based upon the nature of the goods and services to be utilized under this solicitation (as outlined in Attachment 11, Exhibit A (Scope of Work)), the Lottery has set a SMP goal of 25% for utilization of small or microbusiness subcontractors under the contract resulting from this RFP. While not required for this solicitation, a preference of up to 5% will be applied, based on the level of SMP participation proposed. Additional details are provided on the SMP form.

13. Payee Data Record (Std 204) – (Attachment 9)

Proposers must complete and submit the Payee Data Record in the proposal package.

14. GenAI Impact Assessment Form (CSL 1499) – (Attachment 10)

Proposers must complete and sign the GenAI Impact Assessment Form if: 1) the Proposer intends to provide Generative Artificial Intelligence (GenAI) as a Contract deliverable; or (2) the Proposer intends to utilize GenAI, including GenAI from third parties, to complete any portion of the Contract deliverables or services.

B. Evaluation of Mandatory Submittals

The Lottery will validate that all mandatory submittals were received and are completed.

Mandatory Submittals: Pass or Fail

Failure to submit the following forms will result in Proposer disqualification:

Required Attachment Checklist (Attachment 1) Transmittal Letter Audit Plan Personnel Qualifications and Work Experience Proposer Audit Team Organization Firm Fact Sheet (U.S. Operations) (Attachment 2) Résumé Form (Attachment 3) Classification and Hourly Rates Sheet (Attachment 4)

RFP #R005840 Financial Auditing 14 California State Lottery

Scenario and Cost Evaluation (Attachment 5) Certification (Attachment 6) Payee Data Record (STD 204) (Attachment 9) GenAI Impact Assessment Form (CSL 1499) (Attachment 10)

Failure to submit the following forms will not result in Proposer disqualification but will render the Proposer ineligible to receive DVBE and/or SMP preference during the Scenario and Cost Evaluation.

DVBE and SMP Assessment (Attachments 7 & 8)

Disabled Veteran Business Enterprise Participation Incentive Program (if applicable). A preference of up to 5% will be applied, based on the level of DVBE participation proposed.

Small & Micro Business Participation (if applicable). A preference of up to 5% will be applied, based on the level of SMP participation proposed.

C. Rated Submittals

Proposers must submit the following information, which will be evaluated under the corresponding criteria and rated in accordance with the Rating Chart in section III, Proposal Evaluation and Award. Each section’s gray box summarizes how the section will be evaluated. Please be sure to thoroughly respond to all questions outlined in each section.

1. Proposer Experience and Capabilities

Proposers must submit Firm Fact Sheet (U.S. Operations) (Attachment

2) to demonstrate how the Proposer’s experience and capabilities make it best suited to provide the required services to the Lottery as outlined in Attachment 11, Exhibit A (Scope of Work).

Evaluation Criteria for Proposer Experience and Capabilities (10 points):

Qualifications and overall experience demonstrate the capability to complete the Scope of Work (5 points);

Extent of experience in financial auditing within the last five years that demonstrates the Proposer’s ability to perform the Lottery’s financial statement audit (5 points).

RFP #R005840 Financial Auditing 15 California State Lottery

2. Audit Plan

Proposers must submit an audit plan, in PDF format, describing how the work specified in Attachment 11, Exhibit A (Scope of Work) will be performed. At a minimum, the Plan should include the Proposer’s approach, work timetables, personnel assignment, and descriptions of responsibilities assigned. The plan must also describe how quality assurance will be achieved.

Where applicable, the Audit Plan should also include a discussion on how to transition the engagement from the Lottery’s current contractor, including but not limited to familiarization, work startup, the review of prior work papers, and other activities associated with new engagements.

Evaluation Criteria for Audit Plan (30 points):

Demonstrates an understanding of the Scope of Work requirements and deliverables (5 points);

Clarity of proposed task assignments, responsibilities, and role descriptions (5 points);

Sufficiency of proposed professionals and staff assigned to execute the Audit Plan (5 points);

Appropriateness and practicality of proposed work approach and timetable (5 points);

Soundness of proposed Audit Plan with satisfactory start and end dates for timely deliverables and minimal disruption to the regular operations of the Lottery organization (5 points);

Soundness of proposed transition plan and workable timetable (5 points).

3. Personnel Qualifications and Work Experience

Proposers must submit a document, in PDF format, describing the qualifications of the Proposer’s audit personnel that will be assigned to the Lottery. Include a summary of services performed to date that are similar to those described in Attachment 11, Exhibit A (Scope of Work), and a statement of the responsibilities each personnel would perform for the Lottery.

RFP #R005840 Financial Auditing 16 California State Lottery

Assigned personnel must include one designated Lead Partner and one designated Manager for the Lottery contract. The Lottery requires that all partners assigned to the Lottery contract are certified public accountants (CPAs) and members of good standing with the AICPA.

The Lead Partner, who has responsibility for conducting the audit, must have a minimum of ten years’ experience as a CPA. Proposers must submit the Résumé Form (Attachment 3) as proof of experience and qualifications for all partners and managers that may be assigned to the Lottery contract.

A Proposer’s designated Lead Partner and Manager shall be considered “Key Personnel” for purposes of any contract resulting from this RFP.

Evaluation Criteria for Personnel Qualifications & Work Experience (10 points):

Breadth of qualifications, educational background and experience of all personnel that will be assigned to the Lottery (5 points);

Extent of relevant experience of the Lead Partner and Manager in performing engagements similar to those described in Attachment 11, Exhibit A (Scope of Work) (5 points).

4. Proposer Audit Team Organization

Proposers must submit an organizational chart of the firm and an organizational chart showing the reporting structure of the audit team to be assigned to the Lottery. Identify the number of personnel assigned at each level with an anticipated time by staff level.

Evaluation Criteria for Firm and Audit Team Organization (10 points):

Clarity of structural lines of responsibility within the firm’s organization and within the assigned Audit Team in relation to the firm (5 points);

Adequacy of the proposed number of staff assigned to the Audit Team and time to complete the Scope of Work

RFP #R005840 Financial Auditing 17 California State Lottery

(Attachment 11, Exhibit A) (5 points).

III. PROPOSAL EVALUATION AND AWARD

The Lottery will conduct a fair and impartial evaluation of proposals received in response to this RFP. The complete evaluation process is comprised of three phases:

Minimum Requirements Review Rated Submittals Evaluation Scenario and Cost Evaluation

Proposals will be reviewed by the Lottery evaluation team in accordance with the criteria and ratings indicated in this RFP. The Lottery may request clarification from Proposers during any phase of the evaluation process.

POINT SCORING SCHEDULE

Rated Submittal Section Points

A. Minimum Requirements Pass/Fail B. Rated Submittals Evaluation 60 C. Scenario and Cost Evaluation 50

Overall Proposal Evaluation: Total Points Possible 110

A. Minimum Requirements

The documents required in Section II.A, Mandatory Submittals, must be completed and submitted before further consideration of a Proposer’s proposal.

The Firm Fact Sheet (U.S. Operations) (Attachment 2), Résumé Form (Attachment 3) and Classification and Hourly Rates Sheet (Attachment 4) will be evaluated to ensure the Proposer meets the Minimum Qualifications indicated in Section I.A.1 of this RFP.

All proposals shall be reviewed to verify the Proposer has met the RFP submission requirements. Proposals that have not followed the rules, do not

RFP #R005840 Financial Auditing 18 California State Lottery meet minimum content, requirements, qualifications, quality standards, make exceptions to the terms and conditions, or are non-responsive to the required responses in this RFP will be eliminated from further consideration.

Proposals meeting the Mandatory Submittals requirements will advance to Proposal Evaluation.

B. Rated Submittals Evaluation

The information requested in Section II.C, Rated Submittals, and listed herein will be rated in accordance with the Rated Submittals’ Scoring Criteria chart below. Proposals determined to have met the RFP mandatory requirements will be evaluated by the evaluation team. As a part of this evaluation, the Lottery may require proposing firms to clarify the information submitted. This clarification process may be conducted through written or electronic correspondence. It is in the proposing firm’s best interests to submit a thorough and complete proposal.

Rated Submittals’ Scoring Criteria Maximum Possible Points

Proposer Experience and Capabilities 10

Audit Plan 30

Personnel Qualifications and Work Experience 10

Proposer Audit Team Organization 10

Total Possible Points: 60

Proposers receiving a qualifying minimum score requirement of 36 points in the Rated Submittals, Sections II.C.1 through II.C.4 will advance to the Scenario and Cost Evaluation assessment.

C. Scenario and Cost Evaluation

Proposers must submit a completed Scenario and Cost Evaluation for each of the two scenarios provided in Attachment 5. The costs identified must be provided in US dollars and cover all services necessary to complete the scenario and as outlined in Attachment 11, Exhibit A (Scope of Work).

A qualified Proposer is a Proposer that meets the minimum score requirement of 36 points in the Rated Submittals Evaluation to advance to the Scenario and Cost Evaluation assessment.

RFP #R005840 Financial Auditing 19 California State Lottery

The Lottery will assess each qualified Proposer’s Scenario and Cost Evaluation to determine its responsiveness to the RFP’s requirements and its overall value to the Lottery. Each Scenario and Cost Evaluation contains scenarios that are each worth 25 points for a total of 50 points. A minimum of 0 points up to a maximum of 50 points can be allotted.

Proposers’ scenario rates and maximum costs shall match the Proposers’ submitted Classification and Hourly Rates Sheet – Attachment 4.

Proposers are to identify and define circumstances for any identified additional costs (that fall outside hourly rates) separately on the Scenario and Cost Evaluation, Attachment 5.

Pricing shall remain valid for a period of 180 days from the proposal due date. Where applicable, the DVBE and SMP preferences will be applied to the cost during this stage of the evaluation.

1. Small Business Preference

A. Small Businesses (SB). If there is at least one (1) California certified SB competing as the lead or prime contractor and the lowest qualified bid is submitted by a non-small business, the SB Preference shall be applied and computed as follows:

1. Only Proposers that meet the Minimum Requirements in Section II of this RFP shall be entitled to SB preference.

2. The SB preference amount will be five (5) percent of the cost submitted by the lowest qualified non-small proposer. This amount will be deducted from the submitted costs of all qualified certified SB proposers.

3. After all the calculations are determined, the proposer(s) with the lowest cost qualified bid (and including all incentive calculations) will be selected for contract award.

4. This calculation is only used in the evaluation process and will not be included in the final agreement.

SB certification information can be found at the following internet web site: https://caleprocure.ca.gov/pages/sbdvbe-index.aspx.

B. Non-Small Business (Non-SB). If there is not a responsive California certified SB competing as the lead or prime contractor and the lowest qualified bid is submitted by a Proposer that is not eligible for Non-

RFP #R005840 Financial Auditing 20 California State Lottery

SB preference (as described herein), then Non-SB preference will apply and be calculated as follows:

1. Only Proposers that meet the Minimum Requirements in Section II of this RFP and will provide a minimum of 25% SB participation in the performance of the contract shall be entitled Non-SB preference.

2. The Non-SB preference will be five (5) percent of the cost submitted by the lowest qualified Proposer that is not eligible for this preference. The amount will be deducted from the submitted costs of all qualified Proposers that meet the 25% Small Business (SB) participation requirements.

3. After all the calculations are determined, the Proposer(s) with the lowest cost qualified bid (and including all incentive calculations) will be selected for contract award.

4. This calculation is only used in the evaluation process and will not be included in the final agreement.

SB certification information can be found at the following internet web site: https://caleprocure.ca.gov/pages/sbdvbe-index.aspx.

(Note: Non-SB Preference cannot displace a direct award to a California certified Small Business or a California certified Micro Business).

During the Contract term, the Lottery’s SMP preference compliance shall be calculated based on the Lottery’s completed work as verified by an audit of Lottery’s invoices and Lottery’s payments to designated subcontractors. Small and Microbusiness Participation (Attachment 7), if applicable, must be completed by the Proposer.

2. Disabled Veteran Business Enterprise (DVBE) Preference

The Lottery recognizes disabled veterans for their service by establishing a Disabled Veteran Business Enterprise (DVBE) Participation Program. The program is intended to further veterans’ participation in Lottery contracting, promote competition and encourage greater economic opportunity.

The DVBE Program Requirement has been waived for this project.

However, Proposers may receive a percentage incentive based on the

RFP #R005840 Financial Auditing 21 California State Lottery

DVBE participation levels included in their proposal. Percentages will be determined as follows:

DVBE Incentive:

Confirmed DVBE Participation of 5% or Over; DVBE Incentive 5%

Confirmed DVBE Participation of 4% to 4.99%; DVBE Incentive 4%

Confirmed DVBE Participation of 3% to 3.99%; DVBE Incentive 3%

Confirmed DVBE Participation of 2% to 2.99%; DVBE Incentive 2%

Confirmed DVBE Participation of 1% to 1.99%; DVBE Incentive 1%

DVBE incentive will applied as follows:

1. Only Proposers that meet the Minimum Requirements in Section II of this RFP shall be eligible for the DVBE incentive.

2. The DVBE incentive amount will be calculated by multiplying the eligible Proposer’s specific DBVE incentive percentage by the lowest qualified Proposer’s cost. This amount will be deducted from the cost submitted by the eligible Proposer.

3. SB preference (and non-SB preference) will be calculated prior to the DVBE incentive, and in no event will application of the DVBE incentive displace an award to a small business with a non-small business.

4. After all the calculations are determined, the Proposer(s) with the lowest cost qualified bid (and including all incentive calculations) will be selected for contract award.

5. This calculation is only used in the evaluation process and will not be included in the final agreement.

DVBE certification information can be found at the following internet web site: https://caleprocure.ca.gov/pages/sbdvbe-index.aspx.

D. Best Value Proposal Analysis

Unless this procurement is cancelled or withdrawn, a contract will be awarded to the Proposer that meets the requirements of this RFP and submits the best value proposal, as determined by Lottery. The best value proposal is the proposal that provides the best overall value to the Lottery with respect to quality and pricing while fulfilling the Lottery’s mandate to: 1)

RFP #R005840 Financial Auditing 22 California State Lottery maximize the benefits to the state in relation to the areas of security, competence, experience, and timely performance; 2) take into account the particularly sensitive nature of the California Lottery; and 3) act to promote and ensure integrity, security, honesty, and fairness in the operation and administration of the Lottery.

For purposes of this RFP, the best value proposal will be determined using the Point Scoring Schedule listed at the beginning of Section III. The proposal that meets all mandatory requirements and receives the most combined points for the Overall Proposal Evaluation will be deemed the best value proposal.

All proposers will be notified in writing when the best value proposal has been selected.

E. Right to Cancel

The Lottery reserves the right to cancel any and all elements of the procurement or rescind an announced award at any time up to and including execution of the actual contract with the apparent successful Proposer.

IV. DELIVERY OF PROPOSAL

A. Delivery

All proposals must be submitted to a Lottery Secure File Share site. The Liquid Files Instruction Guide is available on the California State Contracts Register.

Liquid Files transfers are to be addressed to mmadueno@calottery.com and ijen@calottery.com. Do not send to solicitations@calottery.com as it will not be received. Hard copies of proposals will not be accepted.

Proposers’ proposal responses are to be structured in the same format as the RFP, with the same heading, numbering, and bullet format for all sections and subsections, using at least 12-point Arial font, consecutively numbered, and sections clearly marked or labeled.

All proposals must contain the following documents:

1. Required Attachment Checklist (Attachment 1)

2. Transmittal Letter

3. Audit Plan

4. Personnel Qualifications and Work Experience

RFP #R005840 Financial Auditing 23 California State Lottery

5. Proposer Audit Team Organization

6. Firm Fact Sheet (U.S. Operations) (Attachment 2)

7. Résumé Form (Attachment 3)

8. Classification and Hourly Rates Sheet (Attachment 4)

9. Scenario and Cost Evaluation (Attachment 5)

10. Certification (Attachment 6)

11. Disabled Veteran Business Enterprise Participation (if applicable)

(Attachment 7)

12. Small and Microbusiness Participation (if applicable) (Attachment 8)

13. Payee Data Record (STD 204) (if currently not on file) (Attachment 9)

14. CSL 1499 – GenAI Impact Assessment Form (Attachment 10)

RFP Attachments and/or forms that require a signature must be signed by a person who is identified on the Certification as being authorized to contractually bind the contractor’s firm. A PDF signed copy of those documents will be accepted, however the original, signed document may be requested at a later date.

Proposers are solely responsible for ensuring timely receipt of their proposals.

RFP #R005840 Financial Auditing 24 California State Lottery

ATTACHMENT 1

REQUIRED ATTACHMENT CHECKLIST

A complete proposal package will consist of the items identified below.

Place a check mark or “X” next to each item that is included with the proposal sent to the Lottery. For the proposal to be responsive, all required attachments including this checklist must be returned with the proposal package.

Attached Attachment Attachment Name/Description

☐ Attachment 1 Required Attachment Checklist

☐ Transmittal Letter

☐ Audit Plan

☐ Personnel Qualifications and Work Experience

☐ Proposer Audit Team Organization

☐ Attachment 2 Firm Fact Sheet (U.S. Operations)

☐ Attachment 3 Résumé Form

☐ Attachment 4 Classification and Hourly Rates Sheet

☐ Attachment 5 Scenario and Cost Evaluation

☐ Attachment 6 Certification

☐ Attachment 7* Disabled Veteran Business Enterprise Participation Forms (if applicable).

☐ Attachment 8* Small and Microbusiness Participation (if applicable).

☐ Attachment 9 Payee Data Record (STD 204) (if currently not on file)

☐ Attachment 10 Generative AI Impact Assessment Form

N/A Attachment 11 Proposed Terms and Conditions (do not return)

*If applicable

RFP #R005840 Financial Auditing 25 California State Lottery

ATTACHMENT 2

FIRM FACT SHEET (U.S. OPERATIONS)

Firm:

Address:

Phone:

Names and Titles of Principal Officers:

Key Business Contact name:

Address:

Phone: Email:

A. Firm History and Background (limit to 2 pages; see RFP Section IV.A)

Provide a brief history of the firm including but not limited to the number of years in business, mission statement, a description of the types of services offered, number of personnel, major engagements, and current relevant industry memberships.

Include information on existing local offices. Briefly share specifics about what uniquely qualifies you to serve the Lottery, what skills you bring, what services you can offer, and what experience you have that others may not have.

B. Engagements Undertaken (in table format, limited to 2 pages or less per engagement)

List and describe a minimum of three engagements performed within the last five years prior to due date of responses to this RFP, for public and/or private organizations involving services similar to those described in Scope of Work. Include significant engagements performed for any government entity/agency and engagements performed for private organizations with an asset base of at least $250 million or revenue base of at least $1 billion. Proposer is encouraged to include all lottery and lottery-related engagements. The accounts shall be in order of dollar value, high to low. Provide the following information for each engagement:

(1) Company name, address, and website information

(2) Name of client’s contact officer

(3) Number of years of association with client

(4) Description of services provided

(5) Dates the indicated services were performed

RFP #R005840 Financial Auditing 26 California State Lottery

(6) If the client is a private sector client, its latest asset base and/or revenue base in US dollars.

RFP #50198 Financial Auditing 27 California State Lottery

ATTACHMENT 3

RÉSUMÉ FORM

Firm Name: ___________________

For each individual identified as Partner or Manager that may be assigned to the Lottery Contract, the Proposer shall complete the provided Résumé Form and include it in their proposal package. This form includes the following information (duplicate tables as needed):

Formal education level achieved, qualifications, additional certifications;

Work experience current and previous, with descriptive examples and time ranges;

A list of significant/relevant projects/engagements while employed with that firm together with a…