A Checklist for Selecting an Audit Firm

Are you thinking about going out for Request for Proposal (RFP) for an auditing firm? The school district requests proposals from qualified individuals and accounting firms interested in providing audit functions. The yearly audit function will be performed to ensure that the operating procedures including all internal controls are being followed and that all expenditures of school district funds are in accordance with laws, regulations and district policy. What is needed for an Audit Firm RFP?

The yearly audit function will be performed to ensure that the operating procedures including all internal controls are being followed and that all expenditures of school district funds are in accordance with laws, regulations and district policy.

Here is a checklist of things you will need to have for your Auditing RFP:

GENERAL INFORMATION:

Name and address of the government issuing the RFP.

Name, address, title and telephone number of person to contact regarding questions.

Response due date and time deadline.

Number of copies of response.

Contract period — clarify if this is a multi-year contract proposal and if there is a chance it could be extended longer.

Specific location and method of delivery of response.

SCOPE OF THE AUDIT:

Explain that the annual audit shall consist of preparation and examination of governmental activities, each major fund and the aggregate remaining fund information (collectively referred to as “basic financial statements”). Your school district might also want a CAFR (Comprehensive Annual Financial Report); if that is the case then have that detailed in the scope.

Inform prospective proposers whether the Single Audit Act applies to the school district. You will need a single audit if your school district receives money from the federal government from grants and spends more than $750,000 of federal dollars in a single fiscal year.

Describe your school districts accounting system, administrative controls, records and procedures.

Identify the appropriate auditing standards.

Inform prospective proposers that data from prior years (audit reports and management letters) will be available.

Describe expected audit products and the required format of the audit report.

Explain any assistance that your organization will offer, such as staff support to assist the auditor (which could materially reduce your audit cost).

Outline the expected schedule of work.

Establish a Fee Schedule Page along with extra services and hourly rates.

RFP QUALIFICATIONS:

The audit shall be conducted under the supervision of a licensed Certified Public Accountant experienced and knowledgeable in Illinois school district auditing. The senior field auditor must have three to five years of actual experience in supervising a school district audit.

The firm must have demonstrated efforts to keep its staff current in the industry and in governmental organizations by active participation in such organizations.

The firm must meet the continuing professional education requirements of Government Auditing Standards.

The firm must provide a copy of its most recent peer review report.

The auditor does not have a record of substandard work. The proposal must disclose any enforcement action to which the firm has been subject during the past three years or which is in progress.

The firm must provide the names, titles, addresses and phone numbers of at least 4 school district or other units of local government clients for whom the firm has performed audits within the last 2 years similar in scope and reporting as those required by the district.

The firm must have existing engagements with at least 6 Illinois public school districts or other units of local government.

An expedient RFP will have certain information from prospective auditors to help you make your decision. Below are some of the questions an expedient RFP will ask prospective auditors to state:

How they would conduct the audit and if it were a multi-year contract, how they would approach the work efforts of the subsequent year(s)?

What are their firms’ qualifications and those of the proposed audit staff, including their government auditing experience?

Whether they meet appropriate state licensing requirements?

What are their policies on notification of changes in key personnel?

Whether the proposed staff have received continuing professional education in governmental accounting and auditing during the past two years?

Whether they are independent, as defined by applicable auditing standards?

Whether they have been suspended or debarred from performing government audits?

Have they received a positive peer review within the last three years?

I just highlighted some of the information you will need for an auditing firm RFP. All of our school districts are different and have certain requirements from the school board; however, this is a good head start on getting an RFP established. In an effort to have the best auditing firm for your school district, you need to do your research and plan for the future.