FY23 Audit Request for ProposalsCITY OF KALISPELL REQUEST FOR PROPOSALS (RFPs)
FOR ANNUAL INDEPENDENT FINANCAL AUDIT INFORMATION AND INSTUCTIONS TO SUBMITTERS I -GENERAL INFORMATION
1.1 Pursuant to the authority granted to it under MCA Title 7, Chapter 5, Part 43, the City of
Kalispell is soliciting proposals for the annual independent audit of the City's financial records.
1.2 The proposal must be sealed and titled "Proposal of Independent Financial Audit” and must be received by the City Clerk at 201 First Avenue East, Kalispell, Montana, no later than 5:00 PM local time on September 11, 2023.
1.3 General questions pertaining to the Request for Proposal should be directed to the City Clerk
at (406) 758-7756 or cityclerk@kalispell.com.
1.4 One (1) original plus three (3) copies of sealed proposals are required, not to be opened until after the final submission date and hour noted above.
1.5 To be eligible to qualify as external auditor, the following minimum requirements must be met: a. The firm of certified public accountants must be of widely recognized ability and
standing and licensed to practice in Montana.
b. The CPA firm must be a member of the American Institute of Certified Public
Accountants and must adhere to the AICPA professional standards of audit practices and conduct.
c. The firm must have audited similar governmental units and must have the capability of
assisting the City in retaining its Certificate of Achievement for Excellence in Financial Reporting awarded by the Government Finance Officers' Association.
d. The audit examination shall result in financial statements prepared in conformity with
generally accepted accounting principles for local governments. The resulting financial
statements will conform to all applicable GASB Statements, including GASB Statement #34.
e. The firm must include a statement of the all-inclusive fee for which the work will be done
for fiscal years 2023, 2024, and 2025 (separate costs for each year). A statement of the estimated total number of hours required for each year for audit staff is also required.
f. The CPA firm must demonstrate that it satisfies the Government Auditing Standards
educational requirements issued by the GAO. g. The auditor must demonstrate compliance with the CPE requirements for auditing and
governmental accounting.
1.6 The Auditor Selection Committee will schedule oral presentations by selected firms if deemed
necessary.
1.7 For FY23 the auditor's report will be submitted to the City by the third Monday in March, after
the close of the audited fiscal year. For FY24 and FY25 the auditor’s report will be submitted to the
City by the third Monday in December, after the close of the audited fiscal year. The audit work can
commence by the successful audit firm at any time after the contract is awarded.
1.8 The audit contract will be between the audit firm, the City, and the Department of Commerce.
A copy of the latest standard audit contract is attached. (See ATTACHMENT 1) Auditors should be
fully aware of any changes contemplated by the Commerce Department. Auditors must also comply
with the terms of this RFP.
1.9 The City of Kalispell reserves the right to reject any or all Proposals, to waive any informality
or irregularity in any Proposal received, and to be the sole judge of the merits of the respective
Proposals received.
2 - SCOPE OF WORK
2.1 Periods to be Audited: July 1, 2022 through June 30, 2023 - Fiscal Year 2023
July 1, 2023 through June 30, 2024 - Fiscal Year 2024
July 1, 2024 through June 30, 2025 - Fiscal Year 2025
The City reserves the right to negotiate with the successful proposer for two subsequent
fiscal years to be audited.
2.2 Standards and Guidelines - The audit shall be conducted in accordance with: a. Generally Accepted Auditing Standards (GAAS).
b. Government Auditing Standards issued by the Comptroller General of the US 2003
Revision (GAO Standards).
c. AICPA Audit & Accounting Guide-Audits of State and Local Governmental Units
(ASLGU).
2.3 Audit Review - The audit should not be limited to a specific review of the financial transactions
and statements of the City. It should include an overall review of the City's financial and accounting
systems and procedures.
2.4 Specified "Deliverable" - The "deliverables" required for this audit shall be provided within
the time frame specified in Section 1.7. They are listed below.
a. All certifications and audit reports required by the Federal government for Federal
monies the City has received.
b. All certifications and audit reports required by the State for compliance with State Law
regarding the financial reporting of municipalities; including the reporting on compliance with
building inspection codes as prescribed by Montana statute.
2.5 The auditors shall familiarize themselves with and comply with the provisions of any and all
Federal, State and City orders, statutes, ordinances, bond covenants, and administrative rules and
regulations which may pertain to the work required in the engagement.
2.6 Audit Conferences:
a. The CPA firm will have an entrance conference with the Finance Director. b. The CPA firm will meet with the Finance Director & City Manager for the purpose of
reviewing its audit findings and recommendations prior to the issuance of management letters,
certifications, or reports.
c. The CPA firm will present the final reports to the Finance Director, City Manager, and if requested, the City Council.
2.7 The CPA firm shall develop a time schedule and procedures to be observe d during the audit
and prior to the beginning of each audit. The schedule and procedures will be developed in conjunction with the City and shall be subject to approval by the City. The schedule will be
approved prior to the audit work commencing. The City's goal is to complete a preliminary close
of its accounting system by the 1st week of September. Other than interim audit work and confirmations, the auditors should not expect to perform general field work prior to this date.
2.8 The audit will meet the requirements of the Single Audit Act of 1984 (31 U.S.C. 7501- 7507), as amended by the Single Audit Act Amendments of 1996 (P.L. 104-156) and the Federal Office of
Management and Budget's (0MB) Circular A- 133, when applicable.
3 - CITY RESPONSIBILITIES 3.1. The City will provide:
a. Draft Financial Statements.
b. Such City-wide schedules as necessary.
c. Bank reconciliations, vouchers in support of accounts payable, such checks, etc. as needed to examination.
d. Access to all files and records of the City departments.
e. A City staff member to assist in the audit. 3.2 The City will prepare the entire AFR (FY23) and ACFR (FY24, FY25), including preparation
of the government-wide and fund level statements, the combining and combined financial statements,
notes to the financial statements, and schedule of Federal Financial Assistance. 3.3 City staff will not prepare auditor work papers or data entry.
4 -AUDITOR RESPONSIBLITIES 4.1 The auditors will:
a. Submit a draft copy of the financial statements to the City at least 2 weeks prior to the
final report date to enable City officials to review the financial statements for possible changes. b. In addition to the auditors' normal internal control review procedures, the auditors will
perform an in-depth review of the City's internal control procedures and internal audits of one area each year as selected by the City.
c. Provide the City with two (2) written copies of the final audit reports and a USB flash
drive. This does not include copies that the auditors must submit to the state. 4.2 If there is a substantial change in the firm’s audit staff (i.e., audit manager, managing audit
partner, etc.) prior to or during the audit, the City reserves the right to void the contract.
5 - COMPENSATION Estimate the total hours and the resulting all-inclusive maximum fee for the requested work, separately
stated for fiscal years 2023, 2024, and 2025. An appendix stating the hourly rates to be charged for each staff classification is required. The auditor will not be reimbursed for any travel, per diem, photo
copying, telephone bills, or other related expenses of the audit unless incurred at the specific request of
the City.
6 - PROPOSAL SELECTION CRITERIA
The Proposal will be selected through the following selection process. Firms interested in providing the
above-described scope of services to the City of Kalispell must submit a Proposal that addresses the following evaluation criteria. Applicants are encouraged to organize their submissions in such a way as
to follow the general evaluation criteria listed below. Information included within the RFP may be used
to evaluate your firm as part of any criteria regardless of where that information is found within the
RFP. Information obtained from the RFP and from any other relevant source may be used in the
evaluation and selection process.
6.1 Cover Letter (1-page) containing at a minimum: company name, contact name, address,
telephone number, and email address.
6.2 Qualifications Criteria: 6.2.1 General Information
a. Description of company.
b. Legal company organization; organization chart with names. 6.2.2 Relevant Company Experience
a. Applicant's overall reputation, service capabilities s, and quality as it relates
to this Proposal.
b. Referrals and references from other municipalities or local governments.
c. List and describe any litigation; arbitration; claims filed by your firm against any other jurisdiction as a result of a contract dispute; any contract or negligence
claims filed against your company; premature termination from a services agreement.
d. Applicant's capacity and intent to proceed without delay if selected.
6.2.3 Company Qualifications The auditors must demonstrate compliance with the continuing professional education
requirements and the external quality control review requirements as set out in
Government Auditing Standards as established by the Comptroller General of the United
States.
a. State whether the firm is local, regional, or national.
b. Give the location of the office from which the work is to be done and the number
of partners, managers, supervisors, seniors, and other professional staff employed at
that office.
c. Describe the range of activities performed by the local office such as audit and
accounting, tax, and/or management advisory services.
d. Briefly describe certifications and licensure held by the company in the state
of Montana.
e. Identify the partners, managers and supervisors who will work on the audit.
Resumes for each supervisory person to be assigned to the audit should be included.
The resumes may be included as an appendix.
f. Describe local office auditing experience similar to the type of audit requested
and give the names and telephone numbers of client officials who can be contacted as
references.
6.2.4 Contract Understanding and Approach
a. Describe your understanding of the scope of work and the particular expertise your company has in this area of work.
b. Identify and discuss any potential difficult issues your company may face in
providing services within Flathead County.
c. Identify and discuss methods to mitigate these difficulties. 6.2.5 Approach to Contract Management
a. Describe your company's approach in initiating and establishing the service that meet the needs and requirements of the City.
b. Describe systems used for planning, scheduling, estimating and managing
manpower requirements. c. Describe the firm's experience in maintaining training and certifications of
personnel.
6.2.6 Proposal for Audit a. Provide a work schedule with beginning and ending times that meet the
scope criteria.
b. Provide a full schedule of proposed work methods that meet the scope
criteria.
c. Provide a full schedule of costs for each component of the work scope.
6.2.7 Other Factors
a. Current contracts and ability to proceed promptly. b. Willingness to abide by the City's needs and requirements with few or no
objections or changes.
c. Relevant factors impacting the quality and value of service.
7- EVALUATION OF PROPOSALS Proposals will be evaluated using a predetermined method to ascertain which proposer best meets the
needs of the City. In some circumstances, proposals may be so similar in quality that oral interviews
may have to be arranged to assist in making the final selection. Evaluation considerations will include
the following.
7.1 Qualifications of the Firm:
a. Relevant auditing experience (governmental), including experience m the
implementation of GASB Statement #34. b. Reputation of firm (based on references).
c. Qualifications of personnel to be assigned (experience, training, communicative skills.)
7.2. Technical Approach: a. Ability to meet or exceed performance expectations.
b. Ability to communicate audit plans in an organized, clear, and convincing manner. 7.3 Fees:
a. Estimated cost as compared with other bids. 7.4 A three-member Auditor Selection Committee will evaluate each Proposal according to
the above criteria and may select up to three finalists that will be Short Listed for the contract. If
interviews are determined to be desirable, the Short List firms will meet with the Auditor Selection
Committee for interviews. The purpose of the interview will be to expand on the information
provided in the Proposal, not to repeat information already provided. Those firms selected for the
Short List will be provided additional instruction by the City. Those firms not selected for further
consideration will be notified.
7.5 The award to the audit firm will also conform to the Administrative Rules of Montana, Section
2.4.407. 7.6 Following the interviews, the Auditor Selection Committee will rank each Short List firm.
Consideration will be given to both the written Proposals and any oral presentations or interviews. No other factors or criteria will be used in the qualification ranking.
7.7 The highest ranked firm will be recommended to the City Manager and City Council for
contract award.
7.8 Requests for debriefings or selection decisions shall be made in writing to the City. All information submitted by firms and related Auditor Selection Committee evaluations and rankings
shall be considered confidential until after contract execution and award by the City Council.
7.9 The City will enter a contract upon selection of the firm for the project to be submitted
to the City Council for approval. If the selected firm determines not to enter into a contract with the City, the City may then contact the second or third highest ranked team until a contract
is executed or may decide to terminate the selection process.
Publication Dates: August 27, 2023, and September 3, 2023
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DEPARTMENT OF ADMINISTRATION
STANDARD AUDIT CONTRACT
This Contract is made this day of , 20 , by and among
Certified Public Accountant ("Contractor"),
Governmental Entity
("Entity"), and the Montana Department of Administration, Local Government Services, ("State"), acting under the authority of Title 2, Chapter 7, Part 5, of the Montana Code Annotated. The State’s mailing address, phone
number and e-mail address are P.O. Box 200547, Helena, MT 59620-0547; (406) 444-9101; and LGSPortalRegistration@mt.gov. 1. Effective Date: This contract is not effective with respect to any party until it is approved and signed by the State, as required by Section 2-7-506(3), MCA. The Contractor may not begin any audit work until
the State gives this approval. If the Contractor begins work before the State’s approval of the contract and
the State subsequently does not approve the contract, the Contractor is not entitled to receive any compensation for the work performed. 2. Audit Period and Payment: This contract covers the following audit period(s):
, 20 to , 20 .
A. The Entity shall pay the Contractor for the audit work on the basis of time and necessary out-of-pocket expenses, which will not exceed:
$ for initial (or sole) audit covering / / to / / .
$ for subsequent audit covering / / to / / . $ for subsequent audit covering / / to / / . The Entity shall pay the fees listed in Appendices A, B & C, as applicable, which are attached hereto
and incorporated by reference. Any change to the audit fees requires a contract amendment.
B. The contract payments do not include the cost of additional work that may be required if the Contractor discovers a defalcation or material irregularity. Any change in the scope of the audit services to be provided under this contract requires a contract amendment.
C. The Contractor may submit interim bills to the Entity each month, based upon the estimated percentage of contract completion. The Entity may retain ten percent (10%) of each of these estimates until the Contractor has delivered the final audit report, at which time the Entity shall release the amount retained.
3. Peer Review: The Contractor shall provide the Entity with a copy of its most recent external peer review report and any letter of comment, and any subsequent peer review reports and letters of comment received
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during the contract period.
4. Audit Scope: The Contractor shall perform the following:
A. The Contractor shall conduct the audit in accordance with (i) generally accepted auditing standards adopted by the American Institute of Certified Public Accountants and (ii) the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the
United States.
The Contractor shall opine on the presentation of the Entity’s financial statements in accordance with the Entity’s applicable financial reporting framework prescribed at Section 2-7-504, MCA.
If the Contractor’s opinion on the Entity’s financial statements is other than unmodified, the Contractor
shall fully discuss the reasons with the Entity in advance of issuing a report. If, for any reason, the Contractor is unable to complete the audit or is unable to form or has not formed an opinion, the Contractor may decline to express an opinion or decline to issue a report as a result of the engagement.
B. The Contractor shall perform tests of internal control over financial reporting. Findings resulting from
these tests shall be reported in accordance with Government Auditing Standards C. The Contractor shall perform tests of the Entity’s compliance with provisions of laws, regulations, contracts, and grant agreements. The Contractor shall use the local government compliance supplement
prepared by the State, as required by Section 2-7-505(2), MCA, in conjunction with Government
Auditing Standards to determine the compliance testing to be performed during the audit. Findings resulting from these tests shall be reported in accordance with Government Auditing Standards. If the Contractor becomes aware of fraud, waste or abuse, the Contractor shall report related findings in accordance with Government Auditing Standards. The Contractor shall perform tests, including but not
limited to the following, to determine whether:
(1) the Entity has complied with all appropriate statutes and regulations, as required by Section 2-7-502, MCA;
(2) the Entity has complied with the provisions of each of its debt covenants and agreements;
(3) if the audit is of a county, city or town, the Entity has retained money in a local charge for services fund contrary to the requirements of Sections 17-2-301 through 17-2-303, MCA, as required by Section 17-2-302, MCA. The Contractor shall report any findings of noncompliance with the
provisions of these statutes, regardless of materiality; and
(4) if the audit is of a county or consolidated city/county government, the Entity has complied with state laws relating to receipts and disbursements of agency or custodial funds maintained by the Entity, as required by Section 2-7-505, MCA.
If required by the State, the Contractor shall provide documentation of testing performed to comply with (3) and (4), above.
D. When applicable, the audit must meet all requirements of the Federal Single Audit Act of 1984, as
amended, and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”). If these federal regulations are amended, the amended regulations will prevail.
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E. The audit scope with regard to federal financial assistance for each fiscal year covered by this contract
must be as specified in Appendices A, B and C. Any change to the audit scope with regard to federal
financial assistance requires a contract amendment. F. Except as provided below, for purposes of determining the scope of the audit, the Entity is considered the financial reporting entity as defined in the Entity’s applicable financial reporting framework
prescribed at Section 2-7-504, MCA. This provision does not preclude the Entity from engaging a
different audit firm for the audit of a segment, fund or component unit of the Entity. However, both the Entity and Contractor shall notify the State whenever the Entity elects to engage a different audit firm for the audit of a segment, fund or governmental component unit. Such additional audit must be contracted for on the State’s Standard Audit Contract, and the audit firm shall be on the Roster of
Independent Auditors authorized to conduct audits of Montana local governments that is maintained by
the State. If this contract is for an audit of a segment, fund, or governmental component unit of the primary government, the Entity is considered to be the segment, fund or component unit.
G. Any school district audit must also include auditing procedures sufficient to provide an opinion as to whether the following supplemental information is fairly stated in relation to the basic financial statements:
(1) the school district's enrollment for the fiscal year or years being audited as reported to the Office of
Public Instruction in the Fall and Spring “Student Count for ANB” reports; and (2) when applicable, the extracurricular funds for pupil functions.
H. If the Entity is a school district or associated cooperative, the Contractor shall contact the State Office
of Public Instruction and the county superintendent of schools before or during the audit of the Entity. The Contractor shall determine whether those offices are aware of potential financial or legal compliance problems relating to the Entity that could affect the scope of the audit.
I. The Contractor shall immediately notify the Entity and the State in writing of any material irregularities
it discovers. If the Entity is a school district or special education cooperative, the Contractor shall also immediately notify the State Office of Public Instruction in writing. To notify the State, Contractors shall email LGSPortalRegistration@mt.gov to the attention of the Local Government Services Bureau Chief. To notify the State Office of Public Instruction, Contractors shall email
OPIAuditReport@mt.gov to the attention of the OPI Auditor.
J. The Contractor shall notify the Entity of all proposed audit adjustments and, if the Entity concurs, shall obtain written acceptance of these proposed adjustments. The State reserves the right to request documentation of these proposed and accepted audit adjustments.
5. Entity’s Responsibilities: The Entity shall be responsible for: A. its basic financial statements, including note disclosures;
B. all supplementary information required by its applicable financial reporting framework prescribed at
Section 2-7-504, MCA and by provisions of this contract; C. establishing and maintaining effective internal control over financial reporting, including internal
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controls related to the prevention and detection of fraud;
D. ensuring that it complies with the laws, regulations, contracts and grant agreements applicable to its
activities; E. making all financial records and related information available to the Contractor;
F. the schedule of expenditures of federal awards required for audits conducted under Uniform Guidance;
G. approving all proposed audit adjustments before posting, if the Entity concurs with the proposed adjustments;
H. adjusting the financial statements and accounting records to correct material misstatements and to agree
with the audited financial statements; and I. providing the Contractor, at the conclusion of the audit engagement, with a letter that confirms certain representations made during the audit, including an affirmation that the effects of any uncorrected
misstatements aggregated by the auditor during the current engagement and pertaining to the latest
period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. 6. Dates for Annual Financial Report or Trial Balance of Accounts: The Entity shall prepare its annual
financial report or a trial balance of accounts no later than the dates specified in Appendices A, B and C. If
the Entity is unable to prepare its annual financial report or trial balance by the date specified in the Appendices, the Entity shall notify the Contractor and the State in writing prior to the specified dates. 7. Beginning the Audit: The Contractor shall begin the audit field work based on the schedule established in
Appendices A, B and C. Under Section 2-7-503(3)(a), MCA, all audits must commence within nine months
from the close of the last fiscal year of the audit period.
8. Completion of Audit: The Contractor shall deliver the audit report to the Entity and the State, based on the
schedule established in Appendices A, B and C. If the Contractor cannot deliver the audit report to the Entity
and the State on the date specified in the Appendices, the Contractor shall notify the Entity and the State in writing of that fact, and the reason(s) for the delay. Under Section 2-7-503(3)(a), MCA, all audits must be completed and the reports issued within one year from the close of the last fiscal year covered by the audit. If
the audit is conducted in accordance with the provisions of Uniform Guidance, the Contractor shall complete
the audit and issue the audit report within the time period required by that federal regulation, unless a longer period has been agreed to in advance by the federal cognizant or oversight agency for audit. If the Entity has requested and received an extension of the due date of the Uniform Guidance from a federal agency, the Entity shall submit a copy of the approved extension to the State.
9. Due Date Extension: The State may grant an extension to the Entity for filing the audit report beyond the one- year due date provided for in paragraph 8, above. To do so, the Entity shall make a request to the State in writing and shall show good cause for the delinquency or demonstrate that the failure to meet the deadline provided for in paragraph 8, above, was the result of circumstances beyond the Entity’s control. The State will
determine good cause or circumstances beyond the Entity’s control based on the facts of each case.
10. Presentation of Audited Financial Statements: The final audit report must contain basic financial statements and supplementary information consistent with the applicable financial reporting framework prescribed at Section 2-7-504, MCA. In addition, other supplementary information required by provisions within this
contract and by Uniform Guidance must also be included, if applicable.
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A. The final audit report must also contain any supplementary or other information as agreed upon by the
Entity and Contractor.
B. If the Entity’s accounting records or other circumstances do not permit financial statements to comply with the applicable financial reporting framework prescribed at Section 2-7-504, MCA, the Contractor shall notify the State of those conditions and describe the financial statements that will be presented.
The applicable auditor’s reports must be modified in accordance with professional standards to reflect a
departure from the applicable financial reporting framework.
C. If the audit is of a school district with separate elementary and high school district general funds, the
general funds must be combined as a single major fund. All other funds must be separately considered
for major fund criteria. D. If the audit is a biennial audit covering two years, the Contractor shall present complete financial statements as specified above for each year covered by the audit. However, note disclosures for both
fiscal years may be in one set of notes, with separate fiscal year disclosures as necessary. The two years
must be presented under one audit report cover and opined upon in one Independent Auditor’s Report. 11. Auditor’s Reports: All audit reports must contain the following auditor's reports, which must comply with applicable professional standards in effect for the fiscal year or years being audited:
A. a report on the financial statements of the Entity; B. a report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards.
C. a reference to a report disclosing any deficiencies in internal control or instances of noncompliance with provisions of contracts or grant agreements or abuse that have a less than material effect on the financial statements but warrant the attention of management or those charged with governance. This report must be referred to in the report required in 11.B. above.
D. a report on any supplementary or other information presented in the audit report. This report must be given in an “other matters” paragraph(s) of the auditor’s report on the financial statements (11.A. above), and shall identify, if applicable:
(1) Any Required Supplementary Information (RSI), as required by the Governmental Accounting Standards Board. (2) Any Supplementary Information (SI) included in the report to comply with provisions of laws,
regulations, contracts, or grant agreements. For the following schedules, the Contractor shall report
on whether the information is fairly stated, in all material respects, “in relation to” the financial statements as a whole, unless the condition of the financial records do not allow the auditor to render such an opinion:
a) schedule of school district “Student Count for ANB” required in paragraph 13.A.;
b) schedule of school district extracurricular fund financial activities required in paragraph 13.B.;
c) schedule of expenditures of federal awards required by Uniform Guidance and in paragraph
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12.A.; and
d) Any supplementary information for financial reporting frameworks required by A.R.M.
2.4.401. (3) Any Other Information (OI) for financial reporting frameworks required by A.R.M. 2.4.401.
(4) Any Other Information (OI) that is included in the audit report, if deemed appropriate in accordance
with professional standards. E. a report disclosing the action taken by the Entity to correct any deficiencies or implement any recommendations contained in the prior audit report. This report must be in a format that specifically
identifies, by title or summary, each deficiency or recommendation contained in the prior audit report
and the action taken by the Entity on each such deficiency or recommendation. F. If the Contractor includes audit findings in the reports referenced in 11.B. and 11.C. above, the views of Entity officials and their planned corrective actions must also be included, as required by Government
Auditing Standards, if they are available at the time the Contractor submits the audit report to the State.
If the views and planned corrective actions are not available at that time, the Contractor shall so indicate in the reports. 12. Single Audits: All audit reports for single audits done in accordance with Uniform Guidance must contain the
following:
A. a schedule of expenditures of federal awards, prepared by the Entity, which must contain all elements required by Uniform Guidance.
B. a report on the schedule of expenditures of federal awards. This report may be combined with other
reports as provided by Uniform Guidance and professional standards. This report must comply with applicable professional standards in effect for the fiscal year or years being audited. C. a report on compliance for each major program and a report on internal control over compliance in
accordance with Uniform Guidance. These reports must refer to the separate schedule of findings and
questioned costs described in paragraph 12.D. of the contract and must comply with applicable professional standards in effect for the fiscal year or years being audited. D. a schedule of findings and questioned costs which must include the information required by Uniform
Guidance.
E. an Entity-prepared document, separate from the Contractor’s findings, that describes the Entity’s corrective action plan in accordance with Uniform Guidance for each current-year audit finding, if that plan is available at the time the Contractor submits the audit report to the State. This document should
be submitted on Entity letterhead and should include a corrective action plan for each finding, regardless
whether the finding is identified in accordance with Uniform Guidance or Government Auditing Standards. 13. School Districts: School district audit reports must include the following as supplementary
information/schedules:
A. a schedule of the district's enrollment as reported to the Office of Public Instruction for the fiscal year or years being audited. The schedule must contain the enrollment both as reported in the Fall and Spring
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“Student Count for ANB” reports and as documented by the school district's enrollment records; and
B. a detailed schedule of extracurricular fund financial activities.
14. Local Governments Reporting on Non-GAAP Financial Reporting Framework: Audit reports of local governments that report on a non-GAAP financial reporting framework as provided in A.R.M. 2.4.401 must include any Supplementary Information and Other Information required in that administrative rule.
15. Written Report to Entity: The Contractor shall render a single, written report for the Entity audited, including the reports and schedules referenced in paragraphs 11 through 14 above. 16. Exit Conference: Before submitting the final audit report, the Contractor shall hold an exit review conference
in which the audit results are discussed with those charged with governance and other appropriate Entity
officials and employees. The Contractor shall ensure that all members of the governing body and key members of management are notified of this exit conference. The Contractor further agrees that before the exit conference, it will not discuss the audit findings with anyone other than the Entity or the State. Once the Contractor delivers the final audit report to the Entity, the report is deemed to be a public record.
17. Report Distribution: The Contractor and Entity shall file copies of the audit report as specified below: A. The Contractor shall provide the Entity with the number of copies of the audit report specified in Appendices A, B and C. The cost of those copies is included in the total price for the engagement as set
out in paragraph 2.A., above, and in the Appendices.
B. The Contractor shall submit one of the copies referred to in 17.A., above, to the attorney for the Entity. C. Upon request by the Entity, the Contractor shall provide additional copies of the audit report at a price
per copy agreed upon by the Entity and Contractor.
D. The Contractor shall provide the State with a text-searchable, unlocked, and unencrypted electronic copy of the audit report at no charge. The report must be submitted to the State at the same time when the Contractor delivers the final audit report to the Entity. Any report delivered separately to management or
those charged with governance identifying findings and recommendations as described in 11.C. above
must be submitted electronically at the same time the audit report is submitted. The Contractor shall advise the State, at the time of submitting the electronic report, of the date the final report was delivered to the Entity, the date of the audit report, the actual number of hours the Contractor spent conducting the audit, the total audit fee billed the Entity, and whether the audit was conducted in accordance with the
provisions of Uniform Guidance.
E. If the Entity is a school district or associated cooperative, the Contractor shall provide at no additional
charge copies of the audit report to the Office of Public Instruction, the county superintendent of
schools, and the county attorney. F. If the Entity is a city or town fire department relief association disability and pension fund, the Contractor shall provide at no additional charge one copy of the audit report to the city or town clerk.
G. If the audit is a single audit conducted in accordance with the provisions of Uniform Guidance, the Entity shall provide copies of the reporting package defined in Uniform Guidance and the data collection form to the federal clearinghouse designated by OMB.
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18. Entity Response: If not included in the audit report as provided in paragraphs 11.F. and 12.E., within 30 days after receiving the audit report, the Entity shall notify the State in writing as to what action it plans to take to
correct any deficiencies or implement any recommendations identified or contained in the audit report as
required by Section 2-7-515, MCA, and ARM 2.4.409. This notification must also address any findings and recommendations identified in any report to management or those charged with governance described in 11.C. above. If the audit is a single audit conducted in accordance with Uniform Guidance, this corrective action plan must also meet the requirements of Uniform Guidance. If the Entity is a school district or special
education cooperative, the Entity shall also send a copy of this notification to the Office of Public Instruction.
19. Entity’s Attorney: If requested by the State, the attorney for the Entity shall report to the State on the actions taken or the proceedings instituted or to be instituted relating to violations of law and nonperformance of duty as required by Section 2-7-515(4), MCA. The attorney shall report to the State within 30 days after receiving
the request.
20. Certification of Auditor Independence: The Contractor certifies that, as required by generally accepted government auditing standards, it and its principals and employees are independent in all matters regarding this engagement. This contract must not include non-audit services. The Contractor shall neither arrange for
nor accept other work with the Entity that could in any way impair the Contractor's compliance with
professional independence standards. If required by the State, the Contractor shall provide documentation that independence has been maintained in both mind and appearance as required by professional auditing standards.
21. Contractor and Subcontractors: The Contractor shall not assign any rights, or subcontract or delegate any
duties of the contract without the Entity’s and State’s prior written consent. The Contractor is the prime contractor and is responsible, in total, for all work of any subcontractors. Any subcontractors performing audit work shall be on the Roster of Independent Auditors authorized to conduct
audits of Montana local governments that is maintained by the State. The Contractor is responsible to the
Entity and the State for the acts and omissions of all subcontractors or agents and of persons directly or indirectly employed by such subcontractors or agents. There is no contractual relationship between any subcontractor and the State.
22 State Participation in Conferences: The State may participate in all entrance and exit conferences between
the Entity and Contractor, as well as all major conferences held in conjunction with the audit of the Entity. 23. Access to Records: The Contractor shall give the State and, when required by law, the Montana Legislative Audit Division, access to the Contractor's work programs, supporting working papers, time records, and all
other documents relating to the audit. Access to these documents must be provided at the State's offices in
Helena, Montana. Access to working papers includes the right of the State to obtain copies of working papers, as is reasonable and necessary. The Contractor shall make the work programs and supporting working papers available to the State for use by the State or other public accounting firms as directed by the State in future audits of the Entity. The Contractor shall make the audit programs and supporting working papers available to
the cognizant or oversight agency for audit or its designee, federal agencies providing direct or indirect
funding, or the U.S. General Accounting Office, if requested. Access to working papers includes the right of federal agencies to obtain copies of working papers, as is reasonable and necessary. The Contractor shall retain the audit report, work programs, and supporting working papers for a minimum of five years from the date of the audit report, unless the State notifies the Contractor to extend the retention period. If professional
standards or other applicable laws, rules, or regulations require a longer retention period, the Contractor shall
retain the above materials for that specified period. 24. State Review of Report: As provided by Section 2-7-522, MCA, the State shall review the Contractor’s audit
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report. If the State determines that reporting requirements have not been met, it will notify the Entity and the Contractor of the significant issues of noncompliance. The Contractor shall correct the identified deficiencies
within 60 days of notification.
25. Independent Contractor: The Contractor is an independent contractor and neither its principals nor its employees are employees of the State or Entity for any purposes.
26. Workers’ Compensation: The Contractor certifies that it carries Workers’ Compensation for its employees
and that it has either elected Workers’ Compensation or has an approved Independent Contractor’s Exemption covering the Contractor while performing work under this contract. (Montana Code Annotated, Title 39, Chapter 71).
27. Indemnity: The Contractor shall defend and indemnify the State and Entity, their elected and appointed
officials, agents, and employees from and against all claims, causes of action, damages, liabilities, court costs and attorney fees in favor of the Contractor’s employees or third parties for bodily or personal injuries, death, or damage to property arising from the acts or omissions or alleged acts or omissions of the Contractor and/or its agents, employees, representatives, assigns, subcontractors under this contract. This defense and indemnify
obligation does not apply to acts or omissions arising from the sole negligence of the State or Entity under this
contract. This defense and indemnity obligation survives termination or expiration of this contract. If the Contractor is or may be obligated to pay any cost, settlement, judgment, fine, penalty, or similar award or sanction as a result of a claim, investigation, or other proceeding instituted by any third party, then to the
extent that such obligation is or may be a direct or indirect result of the Entity’s intentional or knowing
misrepresentation or provision to the Contractor of inaccurate or incomplete information in connection with this engagement, and not any failure on the Contractor’s part to comply with professional standards, the Entity shall defend and indemnify the Contractor against such obligations.
28. Insurance – Commercial General Liability: The Contractor shall maintain for the duration of the contract,
at its cost and expense, occurrence coverage insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work by the Contractor, and/or its agents, employees, representatives, assigns, or subcontractors. The Contractor's insurance coverage shall be primary insurance for the Contractor’s negligence with respect to the State and Entity and their elected
officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the State and
Entity and their officers, officials, employees or volunteers shall be excess of the Contractor's insurance and shall not contribute with it. Insurance - Professional Liability: The Contractor shall purchase and maintain occurrence coverage to
cover such claims as may be caused by any act, omission, negligence of the Contractor or its officers, agents,
representatives, assigns or subcontractors.
If occurrence coverage is unavailable or cost-prohibitive, the state will accept ‘claims made’ coverage provided the following conditions are met: 1) the commencement date of the contract must not fall outside the
effective date of insurance coverage and it will be the retroactive date for insurance coverage in future years,
and 2) the claims made policy must have a three-year tail for claims that are made (filed) after the cancellation or expiration date of the policy. The State and Entity may require complete copies of certificates of insurance during the term of this contract.
29. Compliance with Laws: A. The Contractor shall, in performance of work under this contract, fully comply with all applicable federal, state, or local laws, rules, regulations, and executive orders including but not limited to, the
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Montana Human Rights Act, the Equal Pay Act of 1963, the Civil Rights Act of 1964, the Age Discrimination Act of 1975, the Americans with Disabilities Act of 1990, and Section 504 of the
Rehabilitation Act of 1973. The Contractor is the employer for the purpose of providing healthcare
benefits and paying any applicable penalties, fees and taxes under the Patient Protection and Affordable Care Act [P.l. 111-148, 124 Stat. 119]. Any subcontracting by the Contractor subjects subcontractors to the same provisions.
B. In accordance with 49-3-207, MCA, and Executive Order No. 04-2016 the Contractor agrees that the
hiring of persons to perform this contract will be made on the basis of merit and qualifications and there will be no discrimination based on race, color, sex, pregnancy, childbirth or medical conditions related to pregnancy or childbirth, political or religious affiliation or ideas, culture, creed, social origin or condition, genetic information, sexual orientation, gender identity or expression, national
origin, ancestry, age, disability, military service or veteran status, or marital status by the persons
performing this contract. 30. Work Accommodations: The Entity shall provide the Contractor with reasonable space in which to conduct the audit and shall respond promptly to requests for information as well as for all necessary books and records.
Support for clerical, equipment, reproduction services shall be agreed upon by the Entity and the Contractor as
specified in Appendices A, B and C. 31. Termination before Audit Commences: Before the commencement of the audit, either the Contractor or the Entity, with the State’s consent, or the State alone, may terminate this contract for cause if another party has
breached a material term or condition of this contract or violated an applicable law or regulation. The non-
breaching party shall provide the other party written notice of the breach and allow 20 days to remedy the breach. The Contractor and the Entity may agree to terminate this contract without cause before the commencement of
the audit. If such a termination occurs, the State shall consent to the termination upon written notification by
the Contractor and the Entity of their agreement to terminate this contract. The State, however, will not consent to the cancellation of an audit contract for the sole purpose of allowing the Contractor and Entity to then enter into a new contract that extends the number of fiscal years to be audited
by the Contractor. Unless there are extenuating circumstances, the existing audit contract must be completed
first. This provision does not prohibit the cancellation of a contract for the purpose of replacing an annual audit with a biennial audit. 32. Termination after Audit Commences: After the audit has commenced, but before the audit report has been
issued, either the Contractor or the Entity, with the State’s consent, or the State alone, may terminate this
contract for cause if another party has breached a material term or condition of this contract or violated an applicable law or regulation. The non-breaching party shall provide the other party written notice of the breach and allow 20 days to remedy the breach. If the Contractor is the breaching party and fails to remedy the breach, the Contractor is not entitled to the fee set out in this contract. This is the Entity’s and the State’s sole
remedy. If the Entity is the breaching party, the Entity shall pay the Contractor a pro rata portion of the fee set
out in this contract, based on the percentage of work completed at the time of termination. This is the Contractor’s sole remedy. The Contractor and the Entity may agree to terminate this contract without cause after the audit has
commenced but before the audit report has been issued. If such a termination occurs, the State shall consent to
the termination upon written notification by the Contractor and the Entity of their agreement to terminate this contract.
AuditContract.11-2020 Page 11 of 13 11/2020
33. Contractor Compliance with CPE and Quality Control Review: The Contractor certifies compliance with the continuing professional education requirements and the external quality control review requirements as set
out in Government Auditing Standards, as established by the Comptroller General of the United States. The
State may require the Contractor to provide evidence that it has met the above requirements. 34. Single Audit Act Certification: If the audit is required to meet the requirements of the Single Audit Act of 1984, as amended, and Uniform Guidance, the Contractor certifies that neither it nor any of its principals is
presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from
performing audits by any Federal department or agency. 35. Time is of the Essence: Time is of the essence regarding all provisions of this contract.
36. Governing Law and Venue: This contract is governed by the laws of Montana. The parties agree that any
litigation concerning this contract in which the State is named as a party must be brought in the First Judicial District in and for the County of Lewis and Clark, State of Montana. Each party shall pay its own costs and attorney fees, except as otherwise allowed in this contract. The parties also agree that any litigation concerning this contract in which the State is not named as a party must be brought in the State of Montana
Judicial District in the County in which the Entity is located. Each party shall pay its own costs and attorney
fees, except as otherwise allowed in this contract. 37. Notice: All notices under this contract must be in writing and will be deemed given if delivered personally, by mail, certified, return receipt requested, or by e-mail. All notices will (a) if delivered personally, be deemed
given upon delivery, (b) if delivered by mail, be deemed given upon receipt, or (c) if delivered by e-mail be
deemed given upon receipt. 38. Invalid Provision: If any provision of this contract is held to be illegal or unenforceable and the parties’ rights or obligations will not be materially and adversely affected, such provision will be (a) severed from the
contract, (b) the contract will be interpreted as if such provision was never a part of the contract and (c) the
remaining provisions will stay in effect. 39. Authority: Each party represents that the person signing this contract has the authority to bind that party.
40. Entire Agreement and Amendment: This contract and the attached Appendices contain the entire
understanding and agreement of the parties. No modification or amendment of this contract is valid unless it is reduced to writing, signed by the parties, and made a part of this contract.
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Contractor, Entity, and State have executed this Standard Audit Contract on the date first above written: Certified Public Accountant Firm Name
By: Date: Authorized Representative Governmental Entity
Entity Name By: Date:
Authorized Representative Montana Department of Administration, Local Government Services
By: Date:
Approved By
AuditContract.11-2020 Page A1 11/2020
APPENDIX A Initial or Sole Audit under this Contract
GOVERNMENTAL ENTITY (ENTITY):
Address: Telephone: (Street Address or P.O. Box)
, MT 59 (City/Town) (Zip Code)
Contact Person(s) and E-Mail Address(es)
PUBLIC ACCOUNTANT/ACCOUNTING FIRM (CONTRACTOR) :
Address: Telephone: (Street Address or P.O. Box)
, MT 59 (City/Town) (Zip Code)
Contact Person(s) and E-Mail Address(es)
1. Audit Period and Dates of Engagement:
A. This audit will cover the fiscal year(s) ending , (and ).
(Month & Day) (Year) (Year) B. Date to commence audit work: C. Date to submit final audit report
to Entity and State: 2. Time and Price for Engagement:
A. Estimated total hours -
B. Price for audit personnel $ Price for Travel
Price for typing, clerical and report preparation Total price for this
engagement $
3. The reporting entity contains the following discretely presented component units:
AuditContract.11-2020 Page A2 11/2020
4. Date Annual Financial Report or a trial balance will be available:
5. Number of copies of audit report Contractor will provide to Entity: __
6. The Entity will provide clerical, equipment, and photocopying or reproduction services to the Contractor as follows:
7. The audit scope with regard to federal financial assistance received by the Entity for the above fiscal year(s) will be as indicated below:
The audit will be a single audit conducted in accordance with the provisions of Uniform Guidance because the
Entity expended a total amount of federal awards equal to or in excess of $750,000 during the fiscal year(s), or such other dollar amount ($____________) that is effective for the fiscal year(s) being audited. OR
The audit will not be a single audit conducted in accordance with the provisions of Uniform Guidance and will not
include audit coverage of any federal financial assistance in accordance with requirements of that federal regulation, because the Entity expended a total amount of federal awards of less than $750,000 during the fiscal year(s), or such other dollar amount ($____________) that is effective for the fiscal year(s) being audited.
Certified Public Accountant Firm Name By: Date:
Authorized Representative Governmental Entity
Entity Name By: Date:
Authorized Representative Montana Department of Administration, Local Government Services
By: Date: Approved By
AuditContract.11-2020 Page B1 11/2020
APPENDIX B Subsequent Audit under this Contract
GOVERNMENTAL ENTITY (ENTITY):
Address: Telephone: (Street Address or P.O. Box)
, MT 59 (City/Town) (Zip Code)
Contact Person(s) and E-Mail Address(es)
PUBLIC ACCOUNTANT/ACCOUNTING FIRM (CONTRACTOR) :
Address: Telephone: (Street Address or P.O. Box)
, MT 59 (City/Town) (Zip Code)
Contact Person(s) and E-Mail Address(es)
1. Audit Period and Dates of Engagement:
A. This audit will cover the fiscal year(s) ending , (and ).
(Month & Day) (Year) (Year) B. Date to commence audit work: C. Date to submit final audit report
to Entity and State: 2. Time and Price for Engagement:
A. Estimated total hours -
B. Price for audit personnel $ Price for Travel
Price for typing, clerical and report preparation Total price for this
engagement $
3. The reporting entity contains the following discretely presented component units:
AuditContract.11-2020 Page B2 11/2020
4. Date Annual Financial Report or a trial balance will be available:
5. Number of copies of audit report Contractor will provide to Entity: __
6. The Entity will provide clerical, equipment, and photocopying or reproduction services to the Contractor as follows:
7. The audit scope with regard to federal financial assistance received by the Entity for the above fiscal year(s) will be as indicated below:
The audit will be a single audit conducted in accordance with the provisions of Uniform Guidance because the
Entity expended a total amount of federal awards equal to or in excess of $750,000 during the fiscal year(s), or such other dollar amount ($____________) that is effective for the fiscal year(s) being audited. OR
The audit will not be a single audit conducted in accordance with the provisions of Uniform Guidance and will not
include audit coverage of any federal financial assistance in accordance with requirements of that federal regulation, because the Entity expended a total amount of federal awards of less than $750,000 during the fiscal year(s), or such other dollar amount ($____________) that is effective for the fiscal year(s) being audited.
Certified Public Accountant Firm Name By: Date: Authorized Representative Governmental Entity
Entity Name By: Date:
Authorized Representative Montana Department of Administration, Local Government Services
By: Date: Approved By
AuditContract.11-2020 Page C1 11/2020
APPENDIX C Subsequent Audit under this Contract
GOVERNMENTAL ENTITY (ENTITY):
Address: Telephone: (Street Address or P.O. Box)
, MT 59 (City/Town) (Zip Code)
Contact Person(s) and E-Mail Address(es)
PUBLIC ACCOUNTANT/ACCOUNTING FIRM (CONTRACTOR) :
Address: Telephone: (Street Address or P.O. Box)
, MT 59 (City/Town) (Zip Code)
Contact Person(s) and E-Mail Address(es)
1. Audit Period and Dates of Engagement:
A. This audit will cover the fiscal year(s) ending , (and ).
(Month & Day) (Year) (Year) B. Date to commence audit work: C. Date to submit final audit report
to Entity and State: 2. Time and Price for Engagement:
A. Estimated total hours -
B. Price for audit personnel $ Price for Travel
Price for typing, clerical and report preparation Total price for this
engagement $
3. The reporting entity contains the following discretely presented component units:
AuditContract.11-2020 Page C2 11/2020
4. Date Annual Financial Report or a trial balance will be available:
5. Number of copies of audit report Contractor will provide to Entity: __
6. The Entity will provide clerical, equipment, and photocopying or reproduction services to the Contractor as follows:
7. The audit scope with regard to federal financial assistance received by the Entity for the above fiscal year(s) will be as indicated below:
The audit will be a single audit conducted in accordance with the provisions of Uniform Guidance because the
Entity expended a total amount of federal awards equal to or in excess of $750,000 during the fiscal year(s), or such other dollar amount ($____________) that is effective for the fiscal year(s) being audited. OR
The audit will not be a single audit conducted in accordance with the provisions of Uniform Guidance and will not
include audit coverage of any federal financial assistance in accordance with requirements of that federal regulation, because the Entity expended a total amount of federal awards of less than $750,000 during the fiscal year(s), or such other dollar amount ($____________) that is effective for the fiscal year(s) being audited.
Certified Public Accountant
Firm Name
By: Date: Authorized Representative
Governmental Entity
Entity Name By: Date: Authorized Representative Montana Department of Administration, Local Government Services By: Date: Approved By