Invitation to Submit Proposals to Conduct Audits for each of the Fiscal Years Ending June 30, 2024, 2025, and 2026
April 15, 2024
To All Interested Firms:
The Rhode Island Health and Educational Building Corporation (“RIHEBC” or the “Corporation”) is soliciting proposals from firms interested in acting as Auditor to the Corporation. The Corporation, subject to approval by the Auditor General and the Department of Administration, will appoint a firm to act as Auditor based upon the responses received to the enclosed Invitation to Submit Proposals. The engagement period will be for each of the three (3) fiscal years ending June 30, 2024, 2025 and 2026.
The Corporation is a quasi-public corporation created in 1966 by the General Assembly of Rhode Island to assist not-for-profit colleges and universities, hospitals, nursing homes and other healthcare and educational institutions through the issuance of tax-exempt and taxable debt. The Corporation’s powers expanded in 2003, making it the designated issuer of bonds for school projects undertaken by school districts eligible for reimbursements through the Rhode Island Department of Education’s (RIDE’s) school housing aid program. The Corporation is also the designated administrator of RIDE’s school housing aid. In 2015, the Rhode Island legislature established the School Building Authority Capital Fund to provide upfront funding to public elementary and secondary schools for high priority building repairs and designated the Corporation as administrator of the School Building Authority Capital Fund. In 2019, legislation provided the State with the ability to issue $250 million School Construction Bonds. The Corporation serves as administrator of the School Construction Bond program.
The Corporation is governed by a Board of Directors consisting of five (5) members, appointed by the Governor for terms of five (5) years. The Corporation operates under the direction of the Executive Director.
For financial reporting purposes, the Corporation is reported as a component unit of the State of Rhode Island. Accordingly, the Corporation’s financial statements are included in the State of Rhode Island’s annual financial report.
Interested firms must submit one (1) electronic copy of its proposal to RIHEBC by 3:00 p.m. on May 1, 2024.
RIHEBC will review all proposals received and firms selected as finalists may be requested to have a representative or representatives available for interview should RIHEBC require additional information. It is anticipated that the selection of an Auditor will take place at RIHEBC’s Board Meeting on May 15, 2024.
RIHEBC will consider many factors in its selection process, including, but not limited to, relevant experience, demonstrated competence, quality of personnel assigned, and proposed fees. RIHEBC reserves the right to reject any and all proposals, and it need not select the lowest bidder. RIHEBC’s selection of Auditor is subject to approval by the Auditor General and the Department of Administration. In selecting an Auditor, RIHEBC will comply with Chapter 2 of Title 37 of the Rhode Island General Laws.
Each firm’s proposal shall not exceed twenty (20) pages. Any supplemental materials submitted with the required information will not be considered. Any questions regarding this Invitation to Submit Proposals should be submitted by email to Scott O’Malley, Chief Financial Officer of RIHEBC, at somalley@rihebc.com.
Sincerely,
Dylan Zelazo
Executive Director
Invitation to Submit Proposals to Conduct Audits for each of the
Fiscal Years Ending June 30, 2024, 2025, and 2026 in
Accordance with Approved Audit Specifications Listed Below
Agency Seeking Proposals
Rhode Island Health and Educational Building Corporation
33 Broad Street, Suite 200
Providence, Rhode Island 02903
Instructions for Submission of Proposals
Email one (1) electronic copy to:
Dylan Zelazo, Executive Director
and
Submission Deadline
May 1, 2024 by 3:00 p.m.
Proposed Format
Each interested firm will provide the information requested in each of the following sections. Responses should be as brief as possible.
Qualifications of Auditors
- The firm selected for the audit shall be a firm of certified public accountants holding a valid practice permit in the State of Rhode Island (issued by the Rhode Island Board of Accountancy).
- The senior accountant in charge of the fieldwork must be a certified public accountant.
- The audit organization and the individuals responsible for planning, directing, conducting substantial portions of the fieldwork, or reporting on government audits shall meet the continuing educational requirements of Government Auditing Standards issued by the Comptroller General of the United States.
- The audit organization shall have an appropriate internal quality control system in place and participate in an external quality control review program as required by Government Auditing Standards.
- The audit organization shall provide a copy of its most recent external quality control review report as well as the results of any subsequent review performed during the term of the contract to the Corporation, the Auditor General and the Director of Administration.
- The audit firm shall have at the time of proposal, and throughout the period of engagement, professional liability insurance coverage of not less than one million dollars ($1,000,000).
Audit Contract
1. The audit contract, with the selected bidder, will be for three (3) fiscal years. Each year will be treated as a separate audit, therefore, please specify a fee amount and expenses for each year. Proposals that do not include this breakdown will not be accepted.
2. The auditor may advise the Corporation on matters relating to internal control and other various financial matters, subject to an hourly rate. The auditor’s undertaking of any additional services must not compromise auditor independence.
a) All requests for special services, which are beyond the scope of the audit, will be made in writing and will be invoiced at the hourly rates specified in your proposal as follows:
Partner $ _________________
Manager $ _________________
Audit Standards
1. Each firm shall certify its ability to meet the following audit standards:
a) The audit shall be conducted in accordance with generally accepted auditing standards established by the American Institute of Certified Public Accountants.
b) The audit shall also be conducted in accordance with the standards for financial audits contained in the Government Auditing Standards issued by the Comptroller General of the United States.
Audit Scope
1. The financial statements to be presented, audited, and reported upon by the auditor for each fiscal year of the audit contract shall include:
a) Comparative basic financial statements for the Corporation (in accordance with GASB): Statements of Net Position; Statements of Activities and Changes in Net Position; Statements of Cash Flows; Statements of Fiduciary Net Position; Statements of Changes in Fiduciary Net Position; Notes to the Financial Statements.
b) Supplementary information: Combining Statements of Fiduciary Net Position; Combining Statements of Changes in Fiduciary Net Position; Schedule of Travel, Entertainment and Educational Expenses.
c) Required Supplementary Information: Management’s Discussion and Analysis.
d) Supplementary financial statements, schedules, and information (in specific format as required by the Office of Accounts and Control for component units): Schedule of Net Position; Schedule of Activities; Schedule of Debt Service to Maturity; Schedule of Changes in Long-Term Debt.
2. All statements shall be presented generally in the form as presented in the Corporation Financial Statements and Supplementary Information for June 30, 2023 (available on the Corporation’s website, rihebc.com).
Audit Reports
1. In order to allow for adequate review time and acceptance by the Corporation’s Executive Director, the audit committee, and the board of directors, draft copies of all audit reports and other audit communications shall be submitted to the Corporation not later than seven (7) business days prior to the Corporation’s September 25, 2024 board meeting. Submission in electronic form is preferred.
2. The auditor will assist in the coordination of and response to any review comments, inquiries, and questions made by the above parties resulting from the review of the draft audit reports.
3. The reports to be submitted shall include:
a) Report on basic financial statements and supplementary information based on an audit performed in accordance with generally accepted auditing standards and Government Auditing Standards.
b) Supplementary financial statements, schedules, and information (including supplementary schedules in specific format as required by the Office of Accounts and Control for component units).
c) Report on compliance and internal control based on an audit of the financial statements performed in accordance with Government Auditing Standards.
d) A schedule of all outstanding conduit debt of the Corporation, included in the notes to the financial statements, based on an audit performed in accordance with generally accepted auditing standards and Government Auditing Standards.
e) A detailed schedule of travel and entertainment expenses included as supplementary information to the financial statements presented generally in the form attached as Appendix A to this Invitation (Instructions for preparing the required travel and entertainment schedule). Chapter 35-7-14 of the General Laws of the State of Rhode Island requires quasi-public agencies to prepare and maintain documentation for all travel and entertainment expenses in sufficient detail to allow for post audit.
Completion of Audit and Delivery of Reports
1. The audit shall be completed, and final audit reports (including all audit communications) must be delivered to the Corporation, the Office of the Auditor General, and the Office of Accounts and Control by September 30 of each year (as required by Section 35-6-37 of the Rhode Island General Laws). Submission of audit reports and communications in electronic form is preferred. Failure to comply with the statutory submission date may result in termination of a firm’s audit engagement.
2. In addition to an electronic copy (PDF) of the final audit report, the Corporation requests two (2) paper-bound copies be provided.
Management Letter
1. A management letter shall be submitted upon completion of the audit to the Corporation’s Executive Director and Board of Directors, with copies to the Office of the Auditor General and the Office of Accounts and Control by September 30, 2024.
2. The management letter should summarize observations made and recommendations developed by the auditor during the course of the audit as would be of interest to the Corporation. The management letter should include comments and/or recommendations beyond those included in the reports described above, on such matters as:
a) Policies, procedures, and practices employed by the Corporation.
b) Immaterial weakness in internal control that are not "significant deficiencies".
c) Use of resources to provide a governmental service in a reasonable, judicious, economical, and efficient manner.
d) Compliance with State laws pertaining to the Corporation and with rules and regulations established by the Corporation.
Audit Firm Specific Qualifications
1. The following information shall be provided as part of the proposal:
a) Evidence of experience with governmental audit engagements and similar agencies.
b) Audit firm organization, leadership team, and professional staff resources.
c) Engagement staff qualifications and experience.
d) Evidence of understanding of work to be performed, including planned audit procedures, process to gain an understanding of internal controls sufficient to plan the audit, estimated hours, and other pertinent information.
e) Evidence of understanding regarding the data to be provided by and completed by the Corporation.
f) Description of project management approach and procedures the auditor will employ to ensure compliance with final audit completion delivery dates.
g) Identification of any subcontractors, co-auditors, or other entity that will be used to provide the professional services requested.
h) Audit client references that may be contacted regarding previously provided professional services.
i) Proof of professional liability insurance coverage in effect and in the amount of not less than one million dollars ($1,000,000).
j) Description of other professional services provided by the auditor to the State of Rhode Island or any component unit thereof.
Representations Required of the Auditor
1. The following representations shall be provided as part of the proposal:
a) A written representation that the auditor is independent under the requirements of the American Institute of Certified Public Accountants and Government Auditing Standards.
b) A written representation that the auditor meets the continuing educational requirements of the Government Auditing Standards.
c) A written representation that the auditor has an appropriate internal quality control system in place and has participated in an external quality control review program as required by the Government Auditing Standards. The auditor will also provide the Corporation and the Office of the Auditor General with a copy of its most recent external quality control review report as well as any subsequent reports received during the term of the contract.
d) A written representation that the auditor is familiar with generally accepted accounting principles for state and local government units as prescribed by the Governmental Accounting Standards Board and with the generally accepted auditing standards promulgated by the American Institute of Certified Public Accountants; Government Auditing Standards issued by the Comptroller General of the United States and will conduct the audit and will report in accordance with those standards.
e) A written representation that any subcontractors, co-auditors, or any other entity providing professional services under the engagement will be subject to, and will have met, all the same applicable requirements as the selected audit firm.
f) In accordance with Chapter 27 of Title 17 of the Rhode Island General Laws, a written representation the auditor has filed, or will file upon execution of this contract if required, an affidavit with the State Board of Elections concerning reportable political contributions.
g) A certification that no Rhode Island “major state decision-maker,” or spouse, or dependent child of such person as defined in Rhode Island General Laws 42-6-1 holds either a ten percent or greater equity interest or a five thousand dollar or greater cash interest in the auditing firm.
Coordination Between the Auditor of the Corporation and the Office of the Auditor General and the Department of Administration
a) The auditor shall invite the attendance of the Auditor General at entrance, exit, and other conferences between the auditor and the Corporation.
b) The auditor shall submit all draft copies of the audit reports and other audit communications not later than seven (7) days prior to the statutory submission date for final audit reports. Submission in electronic form is preferred. Draft reports and other communications submitted for review to the Office of the Auditor General and the Office of Accounts and Control shall have undergone review by the firm’s internal quality control review process prior to submission.
c) The auditor shall promptly notify the Auditor General and Director of Administration if the auditor becomes aware of fraud, abuse, or illegal acts or indications of such acts affecting the Corporation.
d) The auditor shall promptly notify the Auditor General and Director of Administration if the auditor encounters any significant accounting or auditing problems, or any situations that would delay completion of the audit.
e) Audit work papers of the auditor shall be made available upon request of the Auditor General and/or the Director of Administration for their review at the completion of the Corporation’s audit.
For Audits of Quasi-public Entities which are also Considered Component Units of the State of Rhode Island
The Office of the Rhode Island Auditor General, in serving as the Group Auditor for the audit of the State of Rhode Island’s (State’s) financial statements will provide communication (refer to Appendix 4 of the State of Rhode Island Audit Procurement and Bid Specifications for Quasi-public Entities for sample communication) to each component auditor annually in conjunction with their component audit. This communication will include certain required representations that each component auditor must provide to the Auditor General as their documented understanding of their requirements as component auditors within the group audit of the State’s financial statements. This communication also provides certain information regarding the State’s financial reporting entity and established planning materiality levels for the various opinion units represented within the audit of the State’s financial statements. Component auditors will also be required to submit letters of understanding (engagement letters), materiality levels, management representation letters (with corresponding schedules of un-booked adjustments), and communications with those charged with governance as required by generally accepted auditing standards in accordance with their component units.
The auditor selected for the component audit shall cooperate with the Auditor General, as Group Auditor, in his/her coordination of the Single Audit of the State. This will include communications between the Auditor General and the private auditor regarding the determination of major federal financial assistance programs using the risk-based approach prescribed by OMB Circular Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards – Subpart F – Audit Requirements.
Evaluation Procedures
1. The Corporation will form an evaluation committee comprised of individuals knowledgeable about auditing and financial reporting matters to evaluate the audit firms submitting proposals. Proposals will be evaluated using the following scoring weights resulting in a maximum score of 100 points:
a) Overall qualifications and experience of the firm and the specific engagement personnel to be assigned, focusing on experience with governmental entities and the specific type of business or services provided by the entity to be audited. Scoring range: 1 - 40.
b) Overall audit approach and audit strategy described/outlined in the proposal and firm capacity to perform the engagement within the specified timeframe (prior experience of the firm in meeting timelines shall be considered here). Scoring range: 1 - 30.
c) Audit Fees. Audit fee scores will be determined using the following formula: lowest bid/bid from firm being evaluated X 30 points (see example below). Scoring range: 1 - 30.
2. An evaluation grid will be prepared summarizing the scoring by each member of the evaluation committee and the composite ranking which supports the Corporation’s request for approval of the selected audit firm. If any firm is disqualified and therefore not evaluated, the reason for such action shall be documented.
Example - Audit Fees Scoring:
Assuming 3 bids were received: (firm A = $40,000; firm B = $46,000; firm C = $50,000).
Firm A $40,000/$40,000 X 30 points = 30 points
Firm B $40,000/$46,000 X 30 points = 26 points
Firm C $40,000/$50,000 X 30 points = 24 points