REQUEST FOR PROPOSALS (HCHC RFP No 01-11-2011) Howard County Housing Commission 6751 Columbia Gateway Drive, Third floor Columbia Maryland 21046 Financial Auditing Services Issuance Date: November 22, 2011 Submission Due Date: December 20, 2011 Issued by: Howard County Housing Commission Stacy L Spann, Executive Director Thomas P Carbo, Deputy Director For additional information contact: Samit Paul Contracts Manager 6751 Columbia Gateway Drive, Third Floor Columbia, MD 21046 410-313-6337 spaul@howardcountymd.gov 6751 Columbia Gateway Drive Columbia, Maryland 21046 Telephone (410) 313-6318 FAX (410 )313-6064 This is trial version www.adultpdf.com HCHC RFP No 01-11-2011 INTRODUCTION 1.1 1.2 It is the intent of the Howard County Housing Commission (the “Commission”) to enter into a contract with a qualified certified public accountant (CPA) firm (the “Contractor”) to provide financial auditing services and tax preparation services for the fiscal year for the Commission (July thru June 30) and the calendar year for two other entities - The Residences at Ellicott Gardens, LLC and Monarch Mills, LP as set forth in this Request for Proposals The Commission reserves the right to withdraw from the scope of the contract any services to be provided for Monarch Mills, LP or The Residences at Ellicott Gardens, LLC before the Contractor begins performance of such services The withdrawal shall be effective upon written notice by the Commission to the Contractor The Commission shall be obligated during the period of the contract to purchase all of its normal requirements of the services specified herein from the Contractor and the Contractor shall be obligated to supply the services required for operation CONTRACT PERIOD The contract period shall be for one year commencing on or about June 30, 2012, after approval and proper execution of the contract documents, with a renewal option for three additional years in one-year increments, exercisable at the sole discretion of the Commission COMMISSION BACKGROUND Organized in 1990, the Commission is an independent State-chartered Public Housing Authority The mission of the Commission is to provide safe, quality, affordable, and sustainable housing opportunities for low- and moderate-income families in Howard County, Maryland (the “County”) and to assist them in moving toward economic independence The Commission pursues this mission through open, efficient, innovative, and accountable processes The Commission’s Board of Commissioners consists of seven members, each appointed by the County Executive and approved by the County Council The Commission develops and manages housing resources to benefit low- and moderate-income residents of the County In addition to owning and managing residential property, the Commission develops housing opportunities through cooperative efforts with developers, government entities, and private investors Additionally, the Commission operates the federally funded Housing Choice Voucher and Public Housing Programs for the County CONTRACTOR’S QUALIFICATIONS 4.1 All Contractors must be certified public accountants and must have been Page of 14 6751 Columbia Gateway Drive Columbia, Maryland 21046 Telephone (410) 313-6318 FAX (410) 313-6064 This is trial version www.adultpdf.com HCHC RFP No 01-11-2011 engaged in the business of providing government audit and review services specific to a public housing authority for a period of no less than five years Additionally, Contractor must have experience preparing audited financial statements and tax returns for tax credit and bond financed properties 4.2 4.3 The Contractors shall have a proven record of providing the services required 4.4 All Contractors shall complete the Contractor’s Qualification Information Sheet 4.5 The Contractor must be licensed and in good standing to provide government audit and review services under Maryland law The Commission reserves the right to perform investigations as may be deemed necessary to insure that competent personnel and management will be utilized in the performance of the contract SPECIFICATIONS FOR FINANCIAL AUDITING SERVICES 5.1 Conduct a review of the Commission’s financial statements, financial activities, and adherence to policy and procedures as dictated by the Commission’s bylaws and state and federal requirements for each fiscal year, in accordance with the provisions contained in this Request for Proposals 5.2 Conduct a review of grant funds in accordance with generally accepted auditing standards, the standards set forth for a financial review in the General Accounting Office's (GAO) most current Government Auditing Standards, the provisions of the federal Single Audit Act of 1984 and the Single Audit Act Amendments of 1996, and the provisions of U.S Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations 5.3 Conduct a review of the Commission’s financial statements, receipt and disbursement of funds, recording of funds, adherence to financial policies and procedures, and financial investment of funds 5.4 Evaluate all of the Commission’s financial activities The agreed-upon procedures contract is to be performed in accordance with standards established by the American Institute of Certified Public Accountants 5.5 Perform review procedures for all financial contracts entered into with, or on behalf of, the Commission that include: 5.5.1 Obtaining a trial balance on all projects, completing an analytical review, and investigating any significant variances; 5.5.2 Tracing cash, accounts receivable from the Commission and Page of 14 6751 Columbia Gateway Drive Columbia, Maryland 21046 Telephone (410) 313-6318 FAX (410) 313-6064 This is trial version www.adultpdf.com HCHC RFP No 01-11-2011 5.5.3 5.5.4 5.5.5 5.5.6 5.5.7 5.5.8 supporting schedules; Identifying and reviewing the internal controls related to all cash receipts and cash disbursements; Reviewing supporting details for restricted accounts; Reviewing daily cash receipts, and comparing them to the cash receipts recorded in the electronic register and classification of such receipts; Reviewing comments from the prior year agreed-upon financial statements and determining whether policies, procedures, and recommendations were followed The agreed-upon procedures are to be performed in accordance with standards established by the American Institute of Certified Public Accountants; Expressing an opinion on the fair presentation of its basic financial statements, in conformity with (GAAP) generally accepted accounting principles; and Providing assistance in the drafting of financial statements and footnotes 5.6 The Contractor shall conduct a review of the Commission’s financial institution deposits and investment instruments This review shall also be conducted in accordance with the Commission’s Bylaws and the County Code The Contractor shall ascertain the degree of reliability of accounting and financial data developed within the Commission’s concerning funds received as payment of rent, security deposits, and damage claims The Contractor shall determine if the receipt and booking of these funds are consistent with applicable law and regulations The review shall be conducted in accordance with generally accepted accounting principles and in appropriate scope for the Contractor to express an opinion as to whether the Commission’s records reasonably reflect the funds received, costs incurred, and the classification of those costs 5.7 The Contractor’s partners, managers, other supervisory staff and specialists may be changed if those personnel leave the Contractor, are promoted or assigned to another office These personnel may also be changed for other reasons with the express prior written permission of the Commission In either case, the Commission retains the right to approve or reject replacements 5.8 Consultants and contract specialists mentioned in response to this Request for Proposals can only be changed with the express prior written permission of the Commission, which retains the right to approve or reject replacements 5.9 Other audit personnel may be changed at the discretion of the Contractor provided the replacements have substantially the same or better Page of 14 6751 Columbia Gateway Drive Columbia, Maryland 21046 Telephone (410) 313-6318 FAX (410) 313-6064 This is trial version www.adultpdf.com HCHC RFP No 01-11-2011 qualifications or experience 5.10 Required Reports: 5.10.1 Following the completion of the review, the Contractor shall issue a draft report (for recommendations and comments) and subsequent final report on the fair presentation of the Financial Statements and financial activities in conformity with generally accepted accounting principles in the United States and Government Auditing Standards In addition, the audit must be in compliance with the Office of Management and Budget (OMB) Circular A133, “Audits of States, Local Governments, and NonProfit Organizations.” 5.10.2 In addition, along with the review of grant funds, the Contractor shall prepare the required reporting package including the: 5.10.2.1 Financial Statements and Schedule of Expenditures of Federal Awards; 5.10.2.2 Summary schedule of prior audit findings; 5.10.2.3 Contractor’s reports: 5.10.2.3.1 A report which provides an opinion on the Financial Statements; 5.10.2.3.2 A report which provides supplemental data on each Commission-owned housing project (including partnership projects), financial statements on each project, a financial data schedule, supporting data required by HUD and CDA, project compilations where required, and an opinion on the adherence to policy and procedures; 5.10.2.3.3 A report which discusses the consideration of internal control and compliance with laws and regulations as a part of the review of the Financial Statements; 5.10.2.3.4 A report which discusses the consideration of internal controls used in administering state and federal programs, provides an opinion on major program compliance and provides an “in relation to” opinion on the Schedule of Expenditures of Federal Awards including a Single Audit Report; 5.10.2.3.5 Assisting with the preparation and electronic submission of the annual financial information under the uniform annual financial reporting standards for HUD’s Public Housing, Housing Choice Voucher housing, and assisted housing and multifamily insured housing programs; and Page of 14 6751 Columbia Gateway Drive Columbia, Maryland 21046 Telephone (410) 313-6318 FAX (410) 313-6064 This is trial version www.adultpdf.com HCHC RFP No 01-11-2011 5.10.2.3.6 Proposing journal entries 5.10.2.4 Schedule of findings and questioned costs; and 5.10.2.5 Corrective action plan 5.10.3 Irregularities and illegal acts: The Contractor shall make an immediate written report of all irregularities, illegal acts and indications of illegal acts to the Commission’s Executive Director 5.10.4 Reporting to the Commission’s Executive Director: The Contractor shall ensure the Executive Director is informed of each of the following: 5.10.4.1 The Contractor's responsibility under generally accepted auditing standards; 5.10.4.2 Significant accounting policies; 5.10.4.3 Other information in documents containing audited financial statements; 5.10.4.4 Management judgments and accounting estimates; 5.10.4.5 Disagreements with management; 5.10.4.6 Major issues discussed with management prior to retention; and 5.10.4.7 Difficulties encountered in performing the audit 5.10.5 Due Dates for Final Reports: 5.10.5.1 The Contractor's report shall be delivered to the Commission’s Executive Director by September 7, 2012 5.10.5.2 The Contractor shall print and bind 20 copies of the audit review report and submit an electronic version to the Commission’s Executive Director 5.11 Working Paper Retention and Access to Working Papers: 5.11.1 All working papers and reports must be retained, at the Contractor's expense, for a minimum of three years, unless the Contractor is notified in writing by the Commission to extend the retention period The Contractor shall make working papers available, upon request, to the following parties or their designees: 5.11.1.1 The County Government; 5.11.1.2 U.S General Accounting Office; 5.11.1.3 Parties designated by the Federal or State Governments or by the County as part of an audit quality review process; 5.11.1.4 Auditors of entities of which the County or the Commission is a sub-recipient of grant funds; and 5.11.1.5 In addition, the Contractor shall respond to the reasonable inquiries of successor Contractors and allow successor Contractors to review working papers relating to matters of continuing accounting significance 5.12 Availability of Prior Audit Reports: Interested Contractors who wish to review prior years’ Audit Reports and management letters shall contact the Commission to make a request Page of 14 6751 Columbia Gateway Drive Columbia, Maryland 21046 Telephone (410) 313-6318 FAX (410) 313-6064 This is trial version www.adultpdf.com HCHC RFP No 01-11-2011 5.13 The Contractor shall perform the following tax preparation services: 5.13.1 Prepare Maryland Personal Property Returns for: (1) HCH Partners I, LLC; (2) HCH Partners II, LLC; (3) HCH Partners III, LLC; (4) HCH Partners IV, LLC; (5) The Residences at Ellicott Gardens, LLC; and (6) Monarch Mills, LP 5.13.2 Prepare U.S Returns of Partnership Income and Maryland PassThrough Entity Income Tax Returns with all required schedules for: (1) The Residences at Ellicott Gardens, LLC; and (2) Monarch Mills, LP 5.14 For The Residences at Ellicott Gardens, LLC (the “LLC”), the Contractor shall: 5.14.1 By February 1, prepare and submit to the Commission for approval a first draft of the federal and state tax returns for the previous calendar year with all accompanying schedules and all work papers used by the Contractor to calculate the amount of tax credit to be claimed by the LLC under the Low Income Housing Tax Credit Program Accountant’s work papers shall include but not be limited to the actual amount of Tax Credit to be claimed by the LLC for each year of the Credit Period, with supporting schedules to show qualified occupancy, and a detailed depreciation schedule for all fixed assets After the Commission approves the first draft, a final draft shall be prepared and sent to all members of the LLC by no later than February 15 5.14.2 By February 1, prepare and submit to the Commission for approval a first draft of the calculation of the distribution of annual net cash flow in accordance with the operating agreement of the LLC This includes calculating the amount of the deferred developer fee After the Commission approves the first draft, a final draft shall be prepared and sent to all members of the LLC by no later than February 15 5.14.3 By February 10, prepare and submit to the Commission for approval a first draft of the statements and report listed in Sections 5.14.3.1 thru 5.14.3.3 of this Request for Proposals After the Commission approves the first draft, a final draft shall be prepared and sent to all members of the LLC by no later than March 5.14.3.1 Audited financial statements, which shall include a tax/GAAP reconciliation, for the most recent calendar year in accordance with generally accepted accounting principles and prepare an auditor’s report containing: 5.14.3.1.1 the Contractor’s opinion on the financial statements; 5.14.3.1.2 a balance sheet and income statement with supporting schedules or exhibits which shall include an itemized listing of any loans payable; Page of 14 6751 Columbia Gateway Drive Columbia, Maryland 21046 Telephone (410) 313-6318 FAX (410) 313-6064 This is trial version www.adultpdf.com HCHC RFP No 01-11-2011 5.14.3.1.3 a disclosure of the fees and other remuneration and reimbursed expenses from the LLC to the managing member or its affiliate; 5.14.3.1.4 a statement of the equity of the members of the LLC; and 5.14.3.1.5 a statement of cash flow 5.14.3.2 An audited financial statement for the managing member and each guarantor as of the end of the previous calendar year including, but not limited to, a balance sheet and income statement with supporting schedules and exhibits 5.14.3.3 An annual report of the balance in the Initial Operating Reserve Account of the LLC and any other reserve account maintained by or on behalf of the LLC, as well as all disbursements thereform during the prior year 5.14.4 By September 15, prepare and submit to the Commission for approval a first draft of an estimate of each investor member’s respective share of distributions, tax credits, net cash flow, and net profit or loss and, if applicable, net profit from sale, net loss from sale and net proceeds from sale, of the LLC for income tax purposes for the current calendar year After the Commission approves the first draft, a final draft shall be prepared and sent to all members of the LLC by no later than October 5.15 For Monarch Mills, LP (the “LP”), the Contractor shall: 5.15.1 By March 15, prepare and submit to the Commission for approval a first draft of the audited financial statements of the LP for the previous calendar year including the balance sheet, related statement of operations, statement of changes in the capital accounts of the partners of the LP, statement of cash flows, and disclosure of any compensation paid to or for the benefit of the Commission or its affiliates with the report of the Contractor to the effect that such statements present fairly the financial position for the year then ended in conformity with generally accepted accounting principles applied on a consistent basis After the Commission approves the first draft, a final draft shall be prepared and sent to all members of the LLC by no later than March 31 5.15.2 By March 15, prepare and submit to the Commission for approval a first draft of all information necessary for the preparation of the federal income tax return of the sole limited partner of the LP in respect of income, gains, losses, deductions, credits, the allocation thereof to each partner of the LP, including Form K-1 (or other comparable form subsequently required by the IRS), and a copy of the federal “Partnership Return” and any state or local Partnership tax return required to be filed by the LP After the Commission approves the first draft, a final draft shall be prepared and sent to Page of 14 6751 Columbia Gateway Drive Columbia, Maryland 21046 Telephone (410) 313-6318 FAX (410) 313-6064 This is trial version www.adultpdf.com HCHC RFP No 01-11-2011 all members of the LLC by no later than March 31 5.16 Perform any services not explicitly stated herein that the Commission and Contractor agree upon at a later date INSURANCE REQUIREMENTS 6.1 The Contractor shall purchase and maintain, during the term of the contract, including any renewals thereof, such policies of insurance acceptable to the Commission as will protect the Contractor and the Commission from claims or losses, regardless of whether such claims or losses result from the Contractor's actions or omissions or those of a subcontractor or those of anyone directly or indirectly employed by any of them or anyone for whose acts any of them may be liable The following coverages are mandatory but may not be all-inclusive, based on the parameters of the proposal: 6.1.1 Worker's Compensation Insurance with limits of coverage as follows: 6.1.1.1 Coverage A: Statutory, covering Maryland jurisdiction; and 6.1.1.2 Coverage B: Employer’s Liability coverage of at least $100,000.00 6.1.2 Automobile Liability Insurance with combined single limits of liability of at least $1,000,000.00 per occurrence 6.1.3 Commercial General Liability Insurance with combined single limits of $1,000,000.00 per occurrence, naming “Howard County Government, Office of Risk Management” and “Howard County Housing Commission” as an additional insured Unless deemed unnecessary by the County or Commission, the policy shall contain, but not be limited to, the following coverage endorsements: 6.1.3.1 Contractual Liability, including Subcontractors; 6.1.3.2 Personal and Advertising Injury; 6.1.3.3 Products and Completed Operations; and 6.1.3.4 Broad Form Property Damage 6.2 All policies of insurance shall be underwritten by companies licensed to business in the State of Maryland 6.3 The Contractor shall assure that all subcontractors performing services in accordance with this solicitation carry identical insurance coverage as required of the contract, either individually or as an Additional Insured on the policies of the Contractor Exceptions may be made only with the written approval of the Commission Contractor shall indemnify the Commission for any uninsured losses relating to contractual services involving subcontractors, including workers' compensation claims Page of 14 6751 Columbia Gateway Drive Columbia, Maryland 21046 Telephone (410) 313-6318 FAX (410) 313-6064 This is trial version www.adultpdf.com HCHC RFP No 01-11-2011 6.4 6.5 The Contractor will not hold the County or Commission liable for any injuries to the employees, servants, agents, subcontractors or assignees of the contract arising out of or during the course of services relating to this agreement 6.6 The providing of any insurance required herein does not relieve the Contractor of any of the responsibilities or obligations assumed by the Contractor in the contract awarded or for which the Contractor may be liable by law or otherwise 6.7 The Contractor shall not commence work under the contract until the Commission receives evidence of all required coverage Further, the Contractor shall not reduce, cancel, or change any of the required coverages without 60 days notice of such change to the Commission Failure to provide and continue in force such insurance as required above shall be deemed a material breach of the contract for which the Commission may terminate the contract HOLD HARMLESS/INDEMNIFICATION: 7.1 7.2 The Contractor shall indemnify and hold the Commission harmless from and against all liability and expenses, including attorney's fees, howsoever arising or incurred, alleging damage to property or injury to, or death of, any person arising out of or attributable to the Contractor's performance of the contract awarded, provided that the Contractor shall not be responsible for acts of negligence or willful misconduct committed by the Commission, its employees, agents and officials Any property or work to be provided by the Contractor under this contract will remain at the Contractor's risk until written acceptance by the Commission; and the Contractor will replace, at Contractor's expense, all property or work damaged or destroyed by any cause whatsoever SUBMISSION OF DOCUMENTS 8.1 This Request for Proposals requires the return of the attached Document A (Technical Proposal Signature Cover Page, Price Proposal Cover Page, and Schedules of Professional Fees and Expenses), Document B (Contractor’s Qualification Information), Document C (Affidavit), and any exceptions the Contractor may take (on company letterhead) Failure to return required documents may be cause for rejection of proposal 8.2 Contractors shall submit one original, clearly marked as such, and five copies of the complete proposal The cost of preparing proposals is the responsibility of Contractors Neither the Commission nor the County may photocopy your proposal documents for the purpose of complying with this provision requiring a pre-determined number of duplicate copies Page of 14 6751 Columbia Gateway Drive Columbia, Maryland 21046 Telephone (410) 313-6318 FAX (410) 313-6064 This is trial version www.adultpdf.com HCHC RFP No 01-11-2011 Failure to provide the required number of complete duplicate copies may result in rejection of your proposal 8.3 Proposals must be securely sealed and addressed to the Howard County Housing Commission, Gateway Building, 6751 Columbia Gateway Drive, Third Floor, Columbia, MD 21046 8.4 Technical and price proposals are to be mailed together in one package If proposals are sent by mail or commercial express services, the Contractor shall be responsible for actual delivery of the proposal to the Commission before the deadline 8.5 Timely proposals become the property of the Commission Late proposals shall not be considered and will be returned unopened 8.6 A submission in response to this Request For Proposals shall be considered as a representation that the Contractor: (1) has carefully investigated all conditions which affect or may, at some future date, affect the performance of the services covered by the proposal; (2) is familiar with the entire area to be serviced as described in the specifications; (3) has carefully reviewed all contract documents; (4) is fully informed concerning the conditions to be encountered, character, quality and quantity of work to be performed and materials to be furnished; and (5) is familiar with all federal, state and county laws, all codes and ordinances of the County that in any way affect the prosecution of the work or persons engaged or employed in the work 8.7 In responding to this Request for Proposals, each Contractor shall minimally include: 8.7.1 Name and office address of the firm submitting the proposal, when the firm was organized and if incorporated, the place and date of incorporation; 8.7.2 Table of Contents; and 8.7.3 Transmittal letter briefly stating the Contractor's understanding of the Auditing Services required by the Commission within the time period as described in this Request for Proposals It shall include commitments to deliver the independent auditor's review report on the review of the Commission’s financial statements to the Executive Director of the Commission by September 9, 2012 8.8 General Requirements: 8.8.1 The purpose of requesting a technical proposal is to allow the Commission to evaluate the qualifications, competence and capacity of the Contractor seeking to undertake an independent review of the Commission in conformity with the requirements of this Request for Proposals As such, the substance of proposals will carry more weight than their form or manner of presentation Page 10 of 14 6751 Columbia Gateway Drive Columbia, Maryland 21046 Telephone (410) 313-6318 FAX (410) 313-6064 This is trial version www.adultpdf.com HCHC RFP No 01-11-2011 8.8.2 The technical proposal shall demonstrate the qualifications of the Contractor and of the particular staff to be assigned to this contract It shall also specify an audit approach that will meet the Request for Proposals The technical proposal shall address all the points outlined in the Request for Proposals The technical proposals shall be prepared simply and economically, providing a straightforward, concise description of the Contractor's capabilities to satisfy the requirements of the Request for Proposals While additional data may be presented, the following paragraphs 9.9 through 9.14 shall be specifically addressed as they represent the criteria against which the technical proposal will be evaluated 8.9 Independence: 8.9.1 The Contractor shall provide an affirmative statement that it is independent of the Commission and all of the component units of the Commission as defined by the most current U.S General Accounting Office's Governmental Auditing Standards 8.9.2 The Contractor shall also list and describe the Contractor's, or proposed subcontractors', professional relationships involving the Commission for the past five years, together with a statement explaining why such relationships not constitute a conflict of interest relative to performing the proposed audit 8.9.3 In addition, the Contractor shall provide written notice to the Commission of any professional relationships the Contractor enters into during the period of this contract 8.10 License to Practice in Maryland: The Contractor shall include an affirmative statement that the Contractor and all assigned key professional staff are properly licensed to practice in Maryland 8.11 Specific Audit Approach: 8.11.1 The proposal shall set forth a work plan, including an explanation of the audit methodology to be followed, to perform the services required in this Request for Proposals, and a proposed schedule of activities to ensure compliance to the final report submission 8.11.2 Contractors shall be required to provide the following information on their audit approach: 8.11.2.1 Proposed segmentation of the contract; 8.11.2.2 Level of staff and number of hours to be assigned to each proposed segment of the contract; 8.11.2.3 Sample size and the extent to which statistical sampling is to be used in the contract; 8.11.2.4 Proposed use of software in the contract; 8.11.2.5 Type and extent of analytical procedures to be used in the contract; Page 11 of 14 6751 Columbia Gateway Drive Columbia, Maryland 21046 Telephone (410) 313-6318 FAX (410) 313-6064 This is trial version www.adultpdf.com ... the performance of the contract SPECIFICATIONS FOR FINANCIAL AUDITING SERVICES 5.1 Conduct a review of the Commission’s financial statements, financial activities, and adherence to policy and... qualified certified public accountant (CPA) firm (the “Contractor”) to provide financial auditing services and tax preparation services for the fiscal year for the Commission (July thru June 30) and... accordance with generally accepted auditing standards, the standards set forth for a financial review in the General Accounting Office''s (GAO) most current Government Auditing Standards, the provisions