RFP for financial audit of Lottery

The Colorado Office of the State Auditor issued a Request for Proposal on January 12, 2018, to conduct a comprehensive financial and compliance audit of the Department of Revenue, State Lottery Division for the fiscal year ending June 30, 2018. The procurement covers Ouray County and Denver City jurisdictions in Colorado and requires bidders to perform audits in accordance with generally accepted auditing standards, Government Auditing Standards, the Single Audit Act, and applicable federal uniform grant guidance. Key deliverables include an audit of basic financial statements with internal control review, evaluation of compliance with state and federal laws and regulations, assessment of prior audit recommendation implementation, preparation of management letters with findings and recommendations, and issuance of independent auditors' reports on financial statements and internal control over financial reporting. The contractor must also submit attestation memos to the OSA, review state controller exhibits, and be prepared to provide oral testimony before the Legislative Audit Committee and other legislative committees as well as entrance and exit conference presentations to the Department of Revenue. Critical evaluation criteria include the quality of the proposal, the contractor's experience and qualifications, and pricing, with the contract awarded to the bidder whose proposal is most advantageous to the State—notably, the lowest cost proposal will not necessarily be selected. The inquiry deadline was January 24, 2018, with OSA response deadline of February 5, 2018, proposal submission deadline of February 20, 2018 at 5:00 PM MT, anticipated bid selection of March 5, 2018, and approximate contract commencement of March 19, 2018. Key audit milestones include IT general control testing completion by May 31, 2018, non-IT internal control and compliance work by July 31, 2018, TABOR enterprise status and revenue testing by August 24, 2018, prior year recommendation testing by September 4, 2018, proposed audit adjustments by October 12, 2018, and final audit report delivery by October 31, 2018.

The RFP is exempt from the State Procurement Code and State Procurement Rules as an Office of the State Auditor solicitation, and no set-aside designations for disadvantaged enterprises were identified in the available documentation. The contractor must be a licensed certified public accounting firm in Colorado, must have completed a quality control review within the past three years, must maintain independence for the engagement, and cannot have performed audit services for more than five years in a 10-year period if previously engaged by the OSA. Eide Bailly LLP has served as the incumbent auditor since fiscal year 2013, with historical billing of $70,530 for fiscal year 2017, $68,480 for fiscal year 2016, and $67,800 for fiscal year 2015, establishing a baseline for proposal pricing expectations. The Lottery operates using the Colorado Operations Resource Engine (CORE) as its primary accounting system, with fieldwork historically conducted primarily at the Pueblo office, though the Lottery maintains additional locations in Denver, Grand Junction, and Fort Collins. The contract is structured as a one-year engagement with optional annual renewals for up to four additional years, subject to acceptable performance and costs, with the State retaining the right to withhold 10 percent of the total contract amount pending satisfactory completion of the audit. The Department of Revenue, State Lottery Division was appropriated $98,320,468 in total funds for Fiscal Year 2018, providing context for the scope and scale of the audit engagement.