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NEVADA IRRIGATION DISTRICT

REQUEST FOR PROPOSALS FOR

External Independent Auditing Services

The Nevada Irrigation District (the District) requests proposals from qualified independent certified public accountants to audit and report on the financial position of the District. The District will be accepting proposals from independent certified public accounting firms of “recognized ability and standing” and licensed to practice in the State of California to be engaged as External Auditors for the operations of the District. The audit period will be for the fiscal year beginning January 1, 2013 and ending December 31, 2013 with options to renew for annual audits for the fiscal years ending December 31, 2014, 2015, 2016 and 2017. Price proposals for five years are requested along with qualifications, Your proposal should address the scope of work listed in this Request for Proposals (RFP) and generally conform to the requirements herein. You are requested to arrange your proposal into sections consistent with the Evaluation Criteria described in this RFP. The cost of services shall be provided in a separate envelope. The work will be awarded, at District’s sole discretion, to the proposer with the most responsive and reasonable proposal which is within the competitive range and determined to be the most advantageous to the District based on the evaluation criteria specified herein. The following items are included in this RFP:

A. Background B. Purpose of the Request for Proposals C. Scope of Work D. Proposal Format and Content E. Calendar of Events F. Agreement for Consulting Services G. Evaluation Criteria H. General Information

A. BACKGROUND Formed in 1921, The Nevada Irrigation District (NID) is headquartered in Grass Valley, California, a picturesque and historic California Gold Rush town in the foothills of the Sierra Nevada, 60 miles northeast of Sacramento. NID is a special district operating under the California Water Code and is located at 1036 W. Main Street, Grass Valley, CA, 95945. The District is governed by an elected

RFP – External Independent Auditing Services Page 1 of 11

Board of Directors representing five divisions within its approximate 287,000 acre boundary. The District provides treated water to approximately 19,000 customers and raw water to approximately 6,000 customers in Nevada, Placer and Yuba Counties. NID owns and operates seven hydroelectric power plants with all power produced sold to Pacific Gas & Electric. Recreation facilities operated by the District, concessionaires and the United States Forest Service are provided at four of the District’s ten storage reservoirs. The District has an overall annual 2013 operating and capital budget of approximately $54 million. A General Manager is appointed by, and reports to, the Board of Directors. For additional information see the NID web page www.nidwater.com. Previous years audited financial statements can be found under About NID – Financial & District Documents. The District maintains six separate funds: water, improvement district, recreation, hydroelectric, hydroelectric debt service and fiduciary. The District does not have any governmental activities. The three major sources of revenue are: water sales - $19 million, property taxes - $10 million and electric power revenue - $18 million. As a state agency, NID operates under rules and regulations adopted under authority conferred by the California Water Code. NID board meetings are conducted in public and the district’s records are open to public inspection during normal business hours.

NID is headquartered at an 18-acre site located on West Main Street in Grass Valley. The district also operates a maintenance yard on Gold Hill Road near Lincoln and a Hydroelectric Department office off Interstate 80 near Colfax.

B. PURPOSE OF THIS REQUEST FOR PROPOSALS The purpose of the requested services is to provide the District with an annual audit in accordance with Generally Accepted Auditing Standards as set forth by the American Institute of Certified Public Accountants.

C. SCOPE OF WORK The following scope of work is an outline of minimum services. Your proposal should include all services that can be reasonably anticipated for developing a Comprehensive Annual Financial Report (CAFR) that meets the criteria of the Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Program. The proposal should include a detailed timeline for scheduling work, completion and review of documents, and Board appearances.

I. Services To Be Provided By The Auditor 1. The auditor will:


a. Perform an audit in accordance with Generally Accepted Auditing Standards (GAAS) in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

b. Express an opinion on the financial statements as to whether they present fairly, in all material respects, the financial position of the District and the changes in financial position in conformity with generally accepted accounting principles (GAAP), and issue an independent auditors’ report stating this opinion.

c. Test internal controls over financial reporting and compliance with

certain provisions of laws, regulations, contracts and grant agreements and other matters, in accordance with Government Auditing Standards, and issue a report on their consideration.

d. Apply limited procedures related to the Required Supplementary Information (RSI), Management’s Discussion and Analysis (MD&A), budgetary comparison information, and the Supplementary Information.

e. Prepare the District’s Annual Report of Financial Transactions of Special Districts to the State Controller’s Office and submit them including a copy of your auditor’s report to the District and the State Controller by required deadlines.

f. Prepare report to the Board of Directors and Management which

identifies internal control deficiencies, significant deficiencies, and material weaknesses, if any, and your recommendations for improvements in accounting and administrative controls.

g. Be in attendance and available to discuss annual financial

statements and results of operations to the Board of Directors during one of the May Board of Director meetings.

h. Communicate immediately and in writing all irregularities and illegal

acts, or indications of illegal acts, of which they become aware, to the General Manager and the Finance Manager.

i. Provide general consultation as required, during the year, on

financial accounting and reporting matters. j. Retain at auditor’s expense audit working papers for three (3)

years, unless the firm is notified in writing by the District’s need to extend the retention period. In addition, the firm shall respond to reasonable inquiries of the District and successor auditors and


allow the District and successor auditors to review working papers relating to matters of continuing accounting significance.

2. No extended services will be performed unless authorized in the contractual agreement or in an amendment to the agreement. The District is seeking to engage an audit firm for fiscal year 2013 records. Although the term of the proposed agreement is for only one year, the District desires to retain the independent auditor for additional years if satisfactory terms of renewal can be negotiated. The Board of Directors has a policy of changing auditors approximately every 5 years. II. Services To Be Provided By The District 1. Finance department staff will be available during interim and audit field work to assist the firm by providing access and direction to information, documentation, and be available for explanations of all inquiries. Staff will provide clerical assistance for preparation of confirmations and other routine correspondence. 2. The District will be responsible for the preparation of the Management Discussion and Analysis (MD&A). 3. The District’s outside Legal Counsel will be available to discuss pertinent legal issues to the District’s financial statements. 4. The District will provide the auditors with reasonable workspace, phone, wireless internet and copy machine access. 5. All documentation supporting the financial statements is located in the District office at 1036 West Main Street, Grass Valley, CA. 95945. III. Audit Report Requirements

1. The audit report will be prepared by the selected external auditor.

2. The auditor's report relating to the examination of the business-type activities of the District’s basic financial statements must (a) state the scope of the examination and that the audit was performed in accordance with generally accepted auditing standards and (b) must include an opinion as to whether the statements conform to generally accepted accounting principles.

3. The audit report shall include at least the auditor's report on the study and

evaluation of the internal control structure. It must identify the organization's significant internal accounting controls. This report must


identify the controls not evaluated, and the material weaknesses identified as a result of the evaluation.

4. A management letter that includes a statement of audit findings and recommendations affecting the financial statements, internal control structure, accounting procedures, accounting systems, legality of actions, other instances of non-compliance with laws and regulations and any other material matters.

5. Prior to the submission of the final report, the audit firm's staff will be required to review the draft of the report and management letter with District staff.

6. Any other applicable requirements of law of GASB. D. PROPOSAL FORMAT AND CONTENT

1. Cover Letter: A signature by a principal or officer having the authority to negotiate and contractually bind and extend the terms of the written proposals is required.

2. Executive Summary: In a brief, non-technical narrative, describe the proposed solution by setting forth the overall approach and plans to meet the requirements of the RFP. The contents of this narrative are to convince the District that the Consultant understands the Nature of Services Required and the Audit Report Requirements to be provided by the selected external auditor.

3. Approach to the Audit: Describe your approach to this audit and any special ideas, techniques or suggestions that you think might make the audit proceed smoothly.

4. Experience: Describe the experience of the firm and the individuals assigned with related audits of a similar nature.

5. References: List at least 3 references, including name, address, and contact person, email and phone number.

6. Qualifications: Describe your staff’s unique qualifications and training for this type of work. If using sub consultants, provide the company profile and define the responsibilities and services to be provided by the sub consultants.

7. Schedule: Describe your plan and work schedule for completing the audit


8. Cost Proposal: Provide a not-to-exceed and all inclusive Cost Proposal for the scope of work to be provided. List all hourly rates for additional contract work as may be necessary.

9. Copy of an Annual Financial Report: Include a copy of an Annual Financial Report performed by the Proposer that most closely fit the Nature of Services Required and The Audit Report Requirements

E. CALENDAR OF EVENTS

Event Date (1)

RFP Issued October 30, 2013 Deadline of emailed Questions November 13, 2013 Submission Deadline November 27, 2013 Award of Contract December 18, 2013 Preliminary Report-Completion and Exit Conference

Approximately April 15, 2014

Draft of the Final Report for presentation to the Board of Directors

Approximately May 14, 2014

Special District Report – sent to State Controller’s Office

March 31, 2014

(1) Dates subject to change The selected external auditor shall schedule a kick-off meeting with the District within ten (10) days of when the Award of Contract is issued. Completion of a draft suitable for review by District Staff is anticipated within three (3) months of the end of the fiscal year.

F. AGREEMENT FOR CONSULTING SERVICES The District’s standard Professional Services Agreement is included at the end of this RFP for your review. When submitted, the proposal must contain any and all requests for revisions to the Services Agreement, including those discussed with District staff prior to submittal, and any additional revisions requested by the proposer not discussed prior to submission. Include this request at the end of the proposal. District staff will review all requests for revision; however, the District retains the authority to make the final determination as to acceptability of the requested revisions. G. EVALUATION CRITERIA The following table provides an itemized list of criteria that will be used to evaluate the proposals. The overall score of the proposals will be based on the sum of the relative percentages as shown below. The Auditor’s proposal should be broken into sections that follow the order of Items 1 through 4. Item 5 (costs) and a breakdown of services with costs shall be provided in a separate, sealed envelope. Include a statement of requested revisions to the District’s standard services agreement at the end of the proposal (See Section F of this RFP for details).


ITEM CRITERIA % RELATED PROPOSAL DETAIL

1 The firm’s capabilities, expertise, staffing levels, related experience, and references

20%

Describe the firm’s capabilities, areas of expertise, staffing levels and their locations, and related experience of your firm with regard to performing Financial Statement Audits. Provide a list of your anticipated sub consultants, if any, their duties, and their experience as it relates to their duties. List work representative of this RFP completed by the proposing firm and sub consultants in the last five years along with references, contact names, and phone numbers for each.

2 Design team related experience, references, qualifications, expertise and past performance

25%

List personnel from both the proposer’s firm and sub consultants who are proposed to perform the work along with an organization chart showing their duties and areas of responsibility for this work. Provide a listing of their qualifications, certifications, areas of expertise, education and related experience for the work. Clearly state who will be the individual designated as Director of Audit for this work. Please show the work listed under Item C for which this individual was a responsible Director.

3 Understanding of the scope of services, and the effort required to complete the work

25%

Describe the proposer’s level of understanding of the proposed work and work alternatives, and the level of effort required to complete the work as anticipated by the RFP. Submit a detailed work plan and schedule listing milestones and estimated completion times for the work. Use critical-path scheduling for key work items and discuss the schedule in the text. This listing is an estimate only and will not be deemed binding.

4 Firm’s ability to meet the time schedule requirements. Indicate staff committed to this work

10%

Describe proposer’s ability to meet the contract time requirements for each phase of the work. List other audits you have in progress with an approximate dollar amount and the estimated completion date for each. Include a simplified graph showing the timeline of this work with respect to other current commitments of the proposer.

5 Cost of the work 20%

Provide a cost estimate for the work broken down into staff classifications. Include assumptions, per-hour charge-out rates, and other identifiable costs payable under the attached services agreement. Provide in a separate, sealed envelope.

Total Percentage 100

RFP – Water Rate and Cost of Service Studies Page 7 of 11

H. GENERAL INFORMATION

1. The District invites firms to submit five (5) original proposals, which will be received at the main office of the Nevada Irrigation District, 1036 West Main Street, Grass Valley, CA 95945-5424, attention Jim Malberg until 5:00 p.m. on November 27, 2013. Faxed or other electronically submitted formats will not be accepted.

2. The proposal, as a complete package, must include a copy of the estimate for the cost of services. The estimate must be sealed in a separate envelope. The envelope must bear the firm’s name and address along with the following title: External Independent Auditing Services.

3. Proposer must comply with all instructions and provide all information requested. Failure to do so may disqualify your proposal.

4. The District may consider any proposal non-responsive if not prepared and submitted in accordance with the provisions hereof and may waive any formalities or reject any/or all proposals. Any proposal received after the date and time specified above shall not be considered. There will not be a formal public opening of the proposals.

5. The proposal should not exceed 50 pages, excluding the resumes and transmittal letter. Proposal shall be divided to correspond with the 5 evaluation criteria outlined in this RFP.

6. An officer or employee of the proposing firm authorized to contract work for the firm shall sign all proposals. Corrections to the proposal must be in ink and initialed by the person signing the proposal. Proposals may be withdrawn by written notice at any time prior to the day and time the proposals are due.

7. No interpretations of the meaning of the Request for Proposal or other proposal documents will be provided orally. Each request for such interpretations should be made in writing and addressed to Jim Malberg, 1036 West Main Street, Grass Valley, CA 95945-5424.

8. To be considered, any requests for additional information must be received by 5:00 P.M. on November 13, 2013.

9. Any and all such interpretations and any supplemental instruction will be in the form of written addenda to the Request for Proposals. Such addenda shall become part of the Request for Proposals.

10. During proposal evaluation, District staff may pose questions and discuss scope and costs of service with proposers who submit proposals determined to be reasonably susceptible of being selected for award. However, proposals may be accepted without discussion.


11. The proposals will be reviewed and evaluated in accordance with the five (5)

evaluation criteria outlined in this RFP.

12. Following evaluation of the proposals, the District may elect to have interviews with a short-list of proposers. Interviews will take place at the District office. Proposers on the short-list will be requested to provide a maximum one half-hour presentation to the evaluation committee with one half-hour of questions and answers. The final proposer, if desired by the Board, will be requested to present at a District Board meeting.

13. Following acceptable negotiations regarding the scope and cost of the work, the successful consultant shall execute and submit the agreement to the District. Upon receipt of the agreement, a memo of recommendation including the rating summary will be forwarded through the Engineering Committee to the District’s Board. Award of the work is subject to final approval of the services agreement by the District Board of Directors.


NOTICE OF REQUEST FOR PROPOSALS

EXTERNAL INDEPENDENT AUDITING SERVICES

The Nevada Irrigation District is requesting proposals to provide consulting services for External Independent Auditing Services.

Copies of the Request for Proposals will be made available electronically by request to:

Jim Malberg, Finance Manager [email protected]

(530) 273-6185

The Finance Department is open from 8:00 a.m. to 5:00 p.m., Monday through Friday, except holidays Parties invited to submit proposals may do so to the District’s main office located at 1036 West Main Street, Grass Valley, California, attention Jim Malberg. Proposals are due no later than 5:00 p.m. on Wednesday, November 27, 2013. Proposals received after this time will be returned unopened. Faxed or other electronically submitted proposals will not be accepted. Please contact Jim Malberg, at (530) 273-6185, if there are any questions. The Nevada Irrigation District, as Owner, retains the right to waive informalities, reject all proposals, or accept or reject any portion thereof.

RFP – External Independent Auditing Services 11 of 11

Nevada Irrigation District Audit Services RFP – Questions & Responses

1. Can you provide a copy of your 2012 audited financial statements and related

communications. We did not see it on your website. Unfortunately the 2012 audited financial statements are not completed at this time, 2005 -2011 Financial Statements and 2009-2013 budgets are located on the District’s website.

2. The scope of work in the RFP mentions a CAFR, but a CAFR was not prepared for 2011. Was a CAFR prepared for 2012, or will 2013 be the first year that a CAFR will be issued?

No, 2013 will be the first year that a CAFR will be issued.

3. If the District plans to prepare a CAFR for 2013, will the District be responsible for

preparing the introductory and statistical sections? Yes, district staff will prepare both the introductory and statistical sections.

4. Are any significant changes expected in 2013 that will affect the financial statements,

such as a new debt issuance? Yes, for the past 50 years PG&E has been responsible for all costs associated with the operations & maintenance of the upper division (Yuba-Bear Project) hydroelectric division consisting of four of the District’s seven hydroelectric power plants and related infrastructure in exchange for all the power generated. As of July 1, 2013 the District and PG&E entered into a new power purchase agreement shifting the responsibility of the cost of operations and maintenance to the District and requiring PG&E to purchase the power generated.

5. Does the District perform any internal audits on the concessionaires? If not, how is the District ensuring that the proper controls are in place? Is the District expecting the financial statement audit to include the evaluation of internal controls at the concessionaires?

Yes, the Recreation Manager performs audits of the concessionaires at the recreation facilities. The District does desire an evaluation of internal controls at the concessionaires as this has been an area of concern for several years.

6. Did you receive federal funds in 2013 that would require a Single Audit? If so, do you want a separate fee quoted for it?

No, but the District may receive federal grant funds in 2014 that would require a Single Audit so we do desire a separate fee quote for any years in which a Single Audit is required.

7. How many audit adjustments did your prior auditors have?

Estimate 5 or 6


8. How many staff and how many days were your prior auditors on-site for fieldwork?

There was one staff person on-site for fieldwork and I would estimate that he spent somewhere between 15-20 days total for interim and final fieldwork.

9. Has there been any turnover in Finance Department staff that have contact with the

auditors?

Yes, we recently filled our vacant Accountant position; however, the new staff member is a Certified Public Accountant with some public sector experience so we expect to be much more timely in completing year end schedules.

10. When do you expect to have the books and available for audit? Middle to late February

11. What is your preferred timing for the audit fieldwork? March and/or April

12. Would we be able to perform interim fieldwork for internal control documentation and testing in either December or January?

Yes

13. Item 4 on page 7 of the RPF asks for a list of other audits in progress with an approximate dollar amount and estimated completion time. Since the audits currently in process would not have an effect on the NID audit, because they will be completed by the end of January, do you want us to just illustrate this fact in the timeline? Do you want this timeline to include other audits that would not start until January, but would be going on during the same timeframe as the NID audit?

Listing the audits going on during the same timeframe as the NID audit is fine.

14. What is the reason that the District is considering changing the auditor?

End of 5 year contract and the District has a practice of changing auditors every five years.

15. Will your prior auditors be invited to bid? The District cannot prohibit any firm from submitting a proposal, however the District’s practice is to change auditors every five years and we do not anticipate receiving a bid from the prior auditor.

16. How many staff did the audit team consist of in the past? There have been as many as 3 staff on the audit team; however this past year (2012) only one staff member was on the audit team.


17. Is the scope of the service requested the same as last year? The only difference is that the District now desires to prepare a CAFR that meets the standards of the GFOA Award for Excellence in Financial Reporting and will need assistance and guidance from the selected audit firm.

18. Have there been any changes in your accounting system or software since last year? No

19. Do you expect to have any retirement or replacement of key employees? Not in the accounting dept., but the District does expect a high number of retirements during the first six months of 2014 including possibly two finance dept. employees in the customer service and purchasing divisions.

20. How many weeks did your prior auditors encounter for your last audit? How many weeks/hours were spent by the prior auditors in the field?

See questions #7 & 8

21. What were the prior year audit fees and can you please breakdown by components? Decline to respond

22. Is there anything specific that you are looking for with the successor auditors? We are looking for an auditor with high ethical and professional standards that provides guidance to district staff to improve internal controls, accounting practices, transparency and complete the CAFR in a timely manner.

23. What are the things you liked and didn’t like about your current auditors? Decline to respond

24. What are the things you liked and didn’t like in the audit process followed by your current auditors?

Decline to respond

25. Can we obtain copies of prior year financial statements, single audit and other reports

issued? They are located on the Districts website under the “About NID” tab.


26. How many major programs you had last year?

One

27. How much were the total federal expenditures last year? $2,163,054

28. When is the District normally have its interim and final audit fieldwork performed?

Normally interim fieldwork is done in December and early January with final field work completed by early to mid-April.

29. How many auditors were on site in the prior year and what was the length of fieldwork performed?

One, fieldwork unfortunately started in March and was off and on throughout the entire summer.

30. Please confirm that the auditor drafts the Annual Financial Report based on the Districts Financial Records. If the District prepares the report, when is the draft normally available to the outside auditor?

Yes

31. When is the district normally able to provide a final closed trial balance to the outside auditor?

Usually by April

32. Generally speaking, what is the overall volume and nature of post-closing adjustments and audit adjustments in the prior year?

Minimal adjustments usually related to fixed assets and closing capital projects

33. Does the District receive any federal funding or anticipate receiving any funding that would require a Federal Single Audit during the contract term?

See question #6

34. Does the district have any planned changes or implementations or new IT or accounting systems during the term of the contract?

At this point the district is only planning on the implementation of an upgrade to a new version of our accounting software.

35. Are there any significant changes to the District or to the Scope of services requested from the prior year’s audit?

See question #17


36. How many fiscal staff are involved in the Districts Accounting Department? Has there

been any recent turnover of key personnel? The accounting dept. currently consists of the Finance Manager, Accounting Administrator (supervisor), one Accountant, one Finance Analyst, one Sr. Finance Technician, and one Finance Technician I/II. Our 2014 adopted budget authorizes the filing of one more Finance Technician I/II position which we expect to have filled by March 2014. As stated in question #9, we recently filled our vacant accountant position.

37. Were there any prior year findings or recommendations? If so, please provide either a copy of the letter or the number/nature of the findings.

To be provided, if any, once received from current audit firm.

38. Was the prior auditor invited to bid? The RFP stated it is the Boards policy to try and rotate auditors approximately every 5 years.

See question #15

39. Prior to this RFP what audit firm was the District with? Boller and Associates

40. Were you pleased with that firm’s service? See questions #23 & 24

41. Will the prior firm be invited to bid? See question #15

42. What were the prior year audit fees? Decline to respond

43. Was there any significant turnover in staff (accounting/finance) in the last 12 months? See questions #9 & 36

44. Was a Management Letter issued in the prior year? If so, can we get a copy. To be provided once received from current auditor

45. What Financial software does the District use? Pentamation (Sungard product) Finance Plus version 8.3, planning on moving to version 9.0 in 2014 or 2015 depending on scheduling from vendor


46. Please provide a copy of the 2012 CAFR, or a link to where it is online.

See question #1

47. Most recent audited financial statements – the RFP specifies that financial information can be found on the District’s website. It appears that most current set of financial statements posted on the website is for 2011. Are the financials for 2012 available for review?

See question #1

48. Federal awards – 2011 financial statements also include the audit of the schedule of expenditures of federal awards. Did the District receive Federal awards in 2013 that would require an audit? If so, were these funds for a new or an existing program?

See question #6

49. Annual Report of Financial Transactions to the State Controller’s Office – is the most recent copy of this report available for review? Has the auditor prepare this report in the past or was the auditor required to express assurance on the District prepared report?

Yes, attached. It was part of the scope of services under the prior auditing services contract; however, it is my understanding that District staff completed the report each year during the term of the contract. I have been with the District since April 28, 2012 and staff & I completed the report last year.

50. What was the staffing of the audit during the previous years – total audit hours, number of people on site and for how long?

See question #8

51. What were the annual audit fees paid in the past? Decline to respond

52. When was the audit work performed at the District offices in the past? How many days did the auditors spend on site? Was the audit work performed in two stages – interim and final – or only one?

See questions #10, 11, 16, & 28

53. How soon after year end the District can be ready for an audit? See questions # 10, 11, & 12

54. What were consulting services requested by the District from the auditor in the past? Audit of Cash & Investments at the beginning of the engagement and in 2012 when there was a change in Finance Managers.


55. Section “Services To Be Provided By The District” of the RFP states that the district will be responsible for preparation of MD&A – does the District prepare the financial statements also?

Please see question #30 as well as #3

56. Section “Proposal Format and Content”, item #9 requests a copy of annual financial report – what does this section refer to? Report of the audit firm? Reports of other entities that the audit firms has audited?

Report of other entities that the audit firm has audited

57. Has the District considered impact of new guidance, such as GASB 65 & GASB 68, on its financial statements?

Not at this point

58. Did the District have any disagreements with predecessor auditor? No, however the District is always looking at ways of improving our financial reporting as well as our transparency and believes that a “new set of eyes” auditing our records will lead to improvements in both of these areas.

59. Who were the previous auditors? See question #39

60. What were the prior year's cost? Decline to respond

61. What were the prior year's total hours? See question #8

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