Loading...
HomeMy WebLinkAbout18- RFP Submission - Annual Independent Financial Audit - Wipfli LLP 303 N 28th, Suite 503 Billings, MT 59101 406.248.1681 Firm Contact – Kimberly E. Dare kdare@wipfli.com 303 N 28th, Suite 503 Billings, MT 59101 406.248.1681 Firm Contact – Kimberly E. Dare kdare@wipfli.com A proposal to provide auditing services City of Bozeman March 16, 2018 Presented to Honorable Mayor, City Commissioners and City Manager of the City of Bozeman, Montana Table of Contents Letter of Transmittal 1  Profile of Firm 2  Summary of Firm Qualifications 5  Scope Section 12  Peer Review Letters: 17  Additional Data 20  Price Matrix 27  Appendixes Professional Profiles Non-discrimination Affirmation Form City of Bozeman and Wipfli LLP 1 Letter of Transmittal Wipfli LLP US Bank Building 303 North 28th Suite 503 Billings, MT 59101 Ph: 406.248.1681 www.wipfli.com March 16, 2018 Honorable Mayor, City Commissioners, and City Manager of the City of Bozeman Bozeman, Montana 59101 Wipfli LLP (“Wipfli”) is pleased to submit this proposal to provide auditing services for the City of Bozeman. We have prepared our proposal based on your request of services needed. We appreciate your consideration of Wipfli. We assure you that we are prepared to provide the highest level of quality service to your organization. We have selected a client service team of highly competent, experienced professionals who are committed to serving you and who have worked with you in the past. You may also be assured that we will allocate the resources necessary to serve your interests and objectives. Wipfli’s philosophy is to provide our clients with quality services, while maintaining an open working relationship. Like other quality auditing firms, we analyze records and disclose weaknesses. More importantly, we emphasize correcting the weakness and working with management to strengthen internal controls, improve operating efficiency, and take advantage of opportunities that will benefit your organization. We have found that the extra time and effort it takes to provide special, personalized service to each of our clients is beneficial to our clients and to our firm. The proposal has a quotation for professional auditing services for the years ending June 30, 2018 through 2019. Our fee estimate is based on your current operations, our hourly rates for the various levels of personnel involved in the engagement, and the participation in the audit process by your staff. If there are changes in these assumptions, unexpected circumstances arise, or there are changes in your operations, we will discuss revisions in the scope of the engagement and obtain your approval before proceeding. Any additional work outside of these estimates would be discussed with management before it is performed and billed. We are committed to performing the work as outlined in our proposal section titled Audit Approach to Engagement and are also committed to meeting any and all deadlines you have placed on this engagement. We appreciate the opportunity to propose on the audit services you desire. Kimberly E. Dare, Partner, is authorized to make representations for the firm. Kimberly can be contacted at Wipfli LLP, 303 N 28th, Suite 503, Billings, MT 59101 or by phone at 406.248.1681. Sincerely, Wipfli LLP Kimberly E. Dare, CPA, CFE, CGMA Partner City of Bozeman and Wipfli LLP 2 Profile of Firm Firm experience: A national leader For more than 87 years, nonprofit and government organizations throughout the United States have relied on the experienced professionals at Wipfli for advice. Wipfli is a multidiscipline, national professional services firm. We are one of the largest accounting firms in the United States. At Wipfli, the City will have access to the resources of a large national firm and will receive the personal attention of a local firm. Our focus and dedication to industry segments provides our client's access to business experts in their industry. We offer training, webinars, products, services, and other proactive information that will help our clients shape their organizations, assist their communities, and stay in compliance. Firm Structure Wipfli LLP is a limited liability partnership, formed in 1930, with capital provided by the firm’s 239 partners. The firm operates 49 United States offices in Wisconsin, Minnesota, Idaho, Illinois, Pennsylvania, Virginia, Montana, Washington, Utah, Colorado, and California. Its headquarters are located in Milwaukee, Wisconsin. Minority-Owned Business Wipfli does not qualify as a small business firm as defined by the Small Business Administration (13 CFR 121.201) because of having annual receipts for the last three fiscal years of more than $20,500,000. Although 47 of Wipfli’s 239 partners are women, we do not meet the definition of a minority or women business enterprise (51% ownership). We are above the AICPA’s average for female/male partner ratios compared with other firms. City of Bozeman and Wipfli LLP 3 Independence Wipfli is independent of the City as defined by auditing standards generally accepted in the United States and the U.S. General Accounting Office’s Government Auditing Standards. Our firm annually obtains certifications from the professional staff regarding independence concerns with any clients. Wipfli does not have any professional relationships involving the City or any of its agencies or component units. If an independence issue would surface during the contract period, it will be promptly discussed with you. License to Practice Wipfli is a certified public accounting firm licensed to practice in the State of Montana. Wipfli and key professional staff are properly licensed to practice in Montana and have active licenses in good standing. Evidence of licensure is available upon request. It is the policy of our firm that all professional personnel be familiar with and adhere to the independence, integrity, and objectivity rules, regulations, interpretations, and rulings of the AICPA, the Montana Board of Public Accountants, state statutes, and other regulatory agencies as applicable. In order to maintain this level of quality and fulfill the trust our clients place in us, Wipfli provides ongoing training to all associates. This training is also provided to all new hires as they begin their service with the firm. Wipfli also conducts an independent, in-house inspection of a sample of assurance engagements for each partner to make sure that the firm’s quality control standards are being met. In addition, we update our quality control document whenever new auditing requirements are enacted. Wipfli utilizes three distinct levels of review on every engagement to ensure that different perspectives are considered and addressed. Resolution of any potential disputes regarding accounting, auditing, and financial reporting issues are ultimately resolved under the direction of the firm’s partner of assurance services, who has the final approval on disposition of these issues. Engagement partners are not able to issue reports without the requisite levels of quality control review. Quality Control and Assurance Our professionals must meet rigorous standards. Only graduates with high academic achievement who exhibit qualities of leadership and exceptional communication skills are considered for employment at Wipfli. Wipfli is committed to training our professionals. To accomplish this, we maintain a continuing education program for our entire staff. We provide at least 120 hours of continuing professional education every three years to all our professional staff. Professionals who perform audits in accordance with Government Auditing Standards (Yellow Book) meet the annual education requirements in governmental continuing education. In addition, the firm complies with the Yellow Book independence standards as well. Our professionals regularly attend in-house education programs as well as programs conducted by the American Institute of Certified Public Accountants and a variety of professional organizations. City of Bozeman and Wipfli LLP 4 Because Wipfli LLP operates in a highly competitive environment, it is important to set and achieve the highest standards of quality. We believe this is good business. It helps ensure we have satisfied clients, and it gives us a positive basis for differentiating Wipfli from other firms. The effectiveness of our internal quality control program and procedures are independently evaluated every three years through our participation in the peer review program. Our firm has consistently received an unqualified opinion which means our system of quality control in the year of review met the objectives of quality control standards published by the AICPA and was being complied with. Our last quality control review was performed for the year ended June 30, 2016. A copy of our latest peer review report is included. Our in-house inspection program covers all of our firm locations. Our program encompasses all of the elements of quality control. In addition to our inspection program, our quality control review procedures provide for partner concurring reviews of selected engagements before issuance of the financial statements, post-issuance of selected financial statements and obtaining independence statements from all of our personnel twice a year. Mr. Dan Szidon is currently the quality control partner for our firm. It is his responsibility to administer our inspection program and he is also responsible for leading our peer review process that occurs every three years. No disciplinary action has been taken against Wipfli LLP, or any member of our firm by the State Board of the AICPA or any other regulatory agency. Local Presence Wipfli has 10 offices in Montana, spanning from Kalispell to Billings. Out Montana offices have over 250 associates who specialize in a variety of industries including twenty professionals dedicated full-time to governmental entities. Your audit will be conducted mainly by the Billings office with assistance from staff in our Bozeman office. The Billings and Bozeman offices are comprised of the following staff: Total CPA Other Partner 5 5 0 Senior Manager 6 6 0 Manager 12 12 0 Senior Accountants 12 10 2 Staff Accountants 5 2 3 Specialists 4 0 4 Consultant 1 1 0 Clerical 6 0 6 Total Professional Staff 51 36 15 In Billings and Bozeman, we provide an array of services such as audit, tax, employee benefit plan audits and administration, payroll, bookkeeping, valuation, litigation, and forensic and management advisory services. The high quality of our client service and our engagement teams separate us from the competition. Conflict of Interest We are not aware of any potential conflicts of interest. City of Bozeman and Wipfli LLP 5 Summary of Firm Qualifications Engagement Team The City is seeking a seasoned engagement team that will be proactive business advisors throughout the year. Your team has been selected based on each member’s experience serving governmental activities. Professional profiles for your Wipfli Core Team can be found in the Appendix. Kimberly E. Dare, CPA, CFE, CGMA, Engagement Partner Kimberly Dare provides high-quality auditing and consulting services to governments and nonprofit organizations. She is the government practice leader within Wipfli LLP’s nonprofit and government practice (NGP). She loves working with her clients to resolve issues large or small. After graduating from Montana State University-Billings, she decided to apply her accounting skills and knowledge wherever they were most needed. The result is a solid foundation in a wide variety of industries, including state and local governments and nonprofit organizations. Kimberly has also met the stringent criteria and passed the CFE exam to achieve the designation of Certified Fraud Examiner. Kimberly’s diverse background, keen sense of detail, and depth of expertise make her an excellent resource for most any business. Ryan D. Lindsay, CPA, Concurring Partner Ryan D. Lindsay has been serving governmental clients for over 15 years. He specializes in the not for profit and governmental area. Ryan graduated from Carroll College in Helena, MT with a bachelor of accounting and business administration with a concentration of finance. He will serve as the concurring review partner on the engagements. City of Bozeman and Wipfli LLP 6 Matt D. Hjelm, CPA, Senior Manager Matt Hjelm is an audit manager in Wipfli LLP’s nonprofit and government practice. He leads financial and compliance audits of local governments and nonprofit organizations and is also knowledgeable about regulatory reporting for Montana municipalities, special districts, and school districts. Working exclusively in the government and nonprofit sectors has provided Matt with an extensive knowledge of and background in these organizations, their issues, and audit requirements. He understands that effective communication is imperative in building and maintaining strong client relationships. In addition to audits, Matt has performed a number of forensic accounting engagements. Additional Engagement Members Your service team may be supplemented with other appropriate auditors and accountants who work within our Nonprofit and Government Practice group. You can be assured that any staff member assigned to work with you will be experienced with governmental organizations. Before assigning anyone other than those listed in this proposal to your audit engagement, we will submit a profile to the City for specific approval. City of Bozeman and Wipfli LLP 7 Relevant Experience Wipfli is organized along specialized industry and business unit practices. Our practice group includes CPAs, dedicated information technology specialists, human resource specialists, tax experts, and other specialists. Our philosophy is to provide clients with quality, overall service tailored to meet their special needs. Our firm does not consider an audit engagement to consist of simply analyzing the records and submitting the report. We believe that identification and follow-up on problem areas, as well as maintaining a positive relationship with our clients, can be more important than the audit report itself. We believe that our continuing long-term relationships with organizations listed throughout this proposal are evidence of our service commitment. Government Specialty As a firm, Wipfli has been providing governmental audit services for more than 50 years. This wealth of experience has allowed us the opportunity to provide a multitude of services to a variety of different governmental entities including townships, municipalities, villages, cities, counties, school districts, and more. Wipfli’s specialized knowledge and experience with state and local government assignments encompasses a variety of engagements such as  Financial Statement Audits under Government Auditing Standards  Compliance Audits under OMB Title 2 CFR Part 200  Compliance Audits under the HUD Consolidated Audit Guide  Operation Audits  Internal control studies We have also provided financial management training and program eligibility audits. These engagements have provided us with the opportunity to learn a variety of state and local government accounting systems, which span the spectrum from manual accounting systems to the largest computerized systems. We understand the appropriate General Accounting Office and other pronouncements regarding the audits of grants and nonprofit organizations and related publications. In order to maintain our position as a leader in governmental programs, Wipfli is committed to ongoing education for our staff in this highly technical practice area so they can serve as both technical advisers and providers of quality services. Our dedicated governmental staff must meet the continuing education requirements of the Government Auditing Standards. In addition, they are encouraged to gain a broad range of experience in various government entities. We believe this provides them with a better understanding of how governments work and how they are interrelated. City of Bozeman and Wipfli LLP 8 Wipfli has joined the American Institute of Certified Public Accountants’ (AICPA) Governmental Audit Quality Center (the “Center”) for CPA firms. The Center is a national community of CPA firms that demonstrates a commitment to governmental audit quality and raises awareness of the importance of governmental audits. The Center provides members with best practices, guidelines, and tools CPAs need to perform quality governmental audits and better serve their clients. Members of the Center demonstrate their commitment by voluntarily agreeing to adhere to the Center’s membership requirements, including designating a partner responsible for the quality of our governmental audit practice, establishing quality control programs, performing annual internal inspection procedures, and making the firm’s peer review report findings publicly available. Our auditors are also involved with various state CPA societies’ government-related committees. Service on those committees has included leading the committee, developing model financial statements, and being discussion leaders at state-sponsored seminars. Prior Experience Auditing Government Entities Our firm presently audits or recently has audited counties, cities, school districts, technical colleges, Indian tribes, cooperative education service areas, and other government entities. Our auditing experience related to governmental agencies ranges from school districts to municipalities in the State of Montana. We also have experience auditing community health centers as a fund of the government and self-insured risk programs. Some of our current Montana government clients include: Colleges/Universities Montana Little Big Horn College Chief Dull Knife College Counties Montana Chouteau County Cascade County Phillips County Blaine County Cities Montana City of Kalispell City of Malta City of Havre City of Helena City of Deer Lodge City of Bozeman and Wipfli LLP 9 Towns Montana Town of Big Sandy Town of Stevensville School Districts Montana Yellowstone Academy School District #58 Lodge Grass School District #27 Pryor School District #2 & 3 Circle School District #1 Saco School District #12A & B Turner School District #43 Ekalaka School District #15 Forsyth School District #4 Richey School District #78J & 2 Big Timber School District #1 Sweet Grass County High School Lockwood School District #26 St. Ignatius K-12 School District #28 Shepherd School District #37 Roundup School District #55 & 55H North Star School District #99 & M Laurel School District #7 & 7-70 Livingston School District #4 & 1 Chinook School District #10 Lame Deer School District #6 Polson School District #23 Poplar School District #9 & 9B Harlem School District #12 Malta K-12 School District #14A Helena School District #1 Special Education Cooperatives Montana Bear Paw Special Education Cooperative Prairie View Special Services Cooperative Missoula Area Special Education Cooperative City of Bozeman and Wipfli LLP 10 Enterprise Funds Montana S&K Security Group, LLC S&K Logistic Services, LLC S&K Technologies, LLC S&K Global Solutions, LLC S&K Environmental Restoration, LLC S&K Aerospace, LLC S&K Technologies, Inc. (Holding) Fire Districts Montana Gallatin Gateway Rural Fire District Sourdough Rural Fire District Madison Valley Rural Fire District Lockwood Rural Fire District #8 Irrigation Districts Montana Malta Irrigation District Glasgow Irrigation District Big Horn Irrigation District Water/Sewer Districts Montana Woods Bay Water & Sewer District Hill County Water District Lockwood Water & Sewer District Library Districts Montana North Lake County Public Library District Business Improvement District Montana Helena Tourism Business Improvement District City of Bozeman and Wipfli LLP 11 References City of Malta 39 South 2nd St. E Malta, MT 59538 Contact: Lorie R. Bond, Clerk/Treasurer Telephone: 406.654.1251 Scope of Work: Annual Financial Statement Audit Partner in Charge: Kimberly Dare City of Havre 520 4th Street Havre, MT 59501 Contact: Doug Kaercher, Finance Director/City Clerk Telephone: 406.265.6719 Scope of Work: Annual Financial Statement/Single Audit Partner in Charge: Kimberly Dare City of Helena * 316 N Park Ave, Room 320 Helena, MT 59623 Contact: Liz Hirst, CPA, Controller Telephone: 406.447.8402 Scope of Work: Annual Financial Statement/Single Audit Partner in Charge: Ryan Lindsay City of Kalispell * 201 1st Avenue East Kalispell, MT 59901 Contact: Rick Wills, CPA, Finance Director Telephone: 406.758.7950 Scope of Work: Annual Financial Statement/Single Audit Partner in Charge: Ryan Lindsay Helena School District #1 * 316 N Park Ave, Room 320 Helena, MT 59623 Contact: Janelle Mickelson, CPA, Business Manager Telephone: 406.324.2000 Scope of Work: Annual Financial Statement/Single Audit Partner in Charge: Kimberly Dare * Recipient of GFOA Certificate of Achievement for Excellence in Financial Reporting City of Bozeman and Wipfli LLP 12 Scope Section The City is unique; therefore, no cookie-cutter audit would be appropriate for the results you expect. That’s why Wipfli has developed state-of-the-art audit tools and methodologies that identify your risk areas and focus your audit accordingly. We further encourage our staff to exercise professional judgment so as to conduct an audit that’s specific to your organization rather than simply completing an audit “checklist.” Our staff is trained to develop practical suggestions for improvements or recommend alternatives where opportunities exist. This value-added advice is communicated formally in the management report. Communication is an important factor when planning our audit engagement. Working closely together, we allocate sufficient meeting time with your management team to determine roles and discuss audit expectations. These meetings further help establish timelines, determine risk areas, and allow us to obtain a deeper understanding of your operations so that we may ensure an effective, efficient audit. Throughout the process, we work closely with your staff, keeping them apprised of what actions are planned and why and discussing the timing of our work, as well as the roles your staff members play. Maximizing efficiencies is another Wipfli audit objective. As such, we respect your valuable time and take measures to reduce the amount of time your organization spends producing information for audit procedures. We provide a detailed listing of the assistance we expect to prevent surprise requests and unnecessary demands of your staff. We use existing account reconciliations and analyses wherever possible, rather than duplicating work already performed at year-end closing. Likewise, we use electronic file downloads from your system and electronic workpapers when possible. To further ensure efficiencies, it is important that your key financial management be available to answer questions and provide support during the engagement. This accessibility is critical to providing our services in the most cost-effective manner. At the conclusion of our audit, we will meet with your management team in an exit conference. City of Bozeman and Wipfli LLP 13 Going Beyond the Ordinary Wipfli understands that it can be challenging to start a new relationship with a CPA firm. Procedural, organizational, and personality differences are just a few of the new dynamics that will need to be explored. However, we recognize that customer service is the key to our ongoing success and growth. Associates at every level of the firm are dedicated to delivering timely and high-quality service to help ensure that satisfaction. Effective communication and personal attention are critical. We constantly ensure that clients are, and remain, satisfied with the quality of service they receive. More specifically, our staff will meet with you to discuss specific expectations and any special considerations to ensure both parties are satisfied with the timing, communication, and deliverables. Wipfli’s engagement partner, Kimberly E. Dare, will spend time with your management staff, confirming your needs are being met and providing advisement on areas where you may require additional assistance. Wipfli devotes considerable time to monitoring developments in a variety of industries. We identify key issues for our clients and ensure they are aware of those issues and their impact. Our professionals are recognized for their expertise, speaking at regional and national conferences and publishing informative articles in a variety of publications. Key differentiators include:  Integrating a holistic approach to service delivery.  Creating a relationship with the client that is based on collaboration and trust.  Committing to our clients, ensuring the day-to-day working relationship we maintain with our clients is as important as the result.  Understanding how to drive ongoing performance by linking strategies to actions. If any areas of dissatisfaction are found, we will do everything we can to work with you and find a solution to the issue. With Kimberly E. Dare as partner, we will have the ability to fully discuss key issues that persist with on-site visits, in-person communication, and/or timely telephone conversations. Seldom do we have the problem of finding a mutually agreeable solution for our clients. The key is that Wipfli is made aware of any issue by the City so that we can take the appropriate action. Continuity of Your Service Team Our goal is to provide continuity of staff on your service team. Our clients appreciate the experience and dedication of our people who work hard to build long- term relationships with them. Specifically, our nonprofit group had a staff retention rate of 89.7% for 2017, well ahead of industry averages. City of Bozeman and Wipfli LLP 14 We strive to limit the rotation of personnel. As an important client of Wipfli, the City will receive priority on the staffing of your engagement. Our Understanding of Your Requirements and Expectations In your request for proposal, you indicated the need for professional services in the following areas:  Perform the audit of the financial statements for the years ended June 30, 2018 through 2019.  Perform the audit in accordance with generally accepted auditing standards (GAAS) adopted by the American Institute of Certified Public Accountants, the Montana Department of Administration, Local Government Services Bureau’s (“the State”) Standard Audit Contract, the standards applicable to financial audits contained in Government Auditing Standards (GAS), issued by the Comptroller General of the United States, and the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).  Consider internal control over financial reporting to determine audit procedures.  Perform and in-depth review of the City’s internal control procedures and internal audits of one are each year as selected by the City.  Provide reports in accordance with accounting principles generally accepted in the United States (GAAP) and 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, if applicable.  Agree to the audit schedule presented in the RFP.  Provide an entrance conference with the Audit Committee.  Provide and exit conference with the Finance Director and Controller for the purpose of reviewing any audit findings and recommendations.  Prepare the CAFR will all required information necessary to receive the Certificate of Achievement for Excellence in Financial Reporting.  Present to the Audit Committee and City Commission audited financial statements along with the management letter and required communications letter.  Provide ongoing financial and compliance consulting.  Prepare regulatory filings. City of Bozeman and Wipfli LLP 15 In order to meet your needs, Wipfli will utilize the five-step approach below. Step 1: Audit Strategy We will develop a comprehensive audit strategy for the City. Our audit strategy will encompass the following: Comprehensive understanding of the entity and its environment Our knowledge of the governmental industry and federally funded programs gives us an excellent background to efficiently update our understanding after discussions with management. Our discussions will include areas of concern that management has as well as changes in operations and funding. Assessment of risk of misstatement We will review the nature of prior audit adjustments, management letter recommendations, and our initial assessment of the effectiveness of controls to assess financial statement and other risks. Step 2: Planning During the preliminary phase of the audit, we will request a meeting with the management team to ensure we have a clear understanding of their preferred style of communication and their expectations of Wipfli as the City’s independent auditors. The Wipfli audit team will also discuss with management recent activities that will impact financial accounting and reporting. We want to identify early any significant accounting issues and develop with management an approach to resolve them. We want to work closely with management to ensure the year-end financial close process proceeds smoothly and on time. During the planning phase, we will discuss the timing for the interim work, audit fieldwork, and the schedules, as well as the records to be provided by City staff. We will also perform initial risk assessments. Step 3: Interim Work Wipfli will perform certain procedures prior to year-end, including testing of 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards compliance. We will perform our study and evaluation of significant financial systems and prepare risk assessments through inquiries of management, analytical procedures, observation, inspections, and walk-throughs. At the conclusion of our interim work, we will design our more detailed audit plan. City of Bozeman and Wipfli LLP 16 Step 4: Year-End Fieldwork Year-end fieldwork will encompass numerous procedures including testing of account balances, review of minutes, grant analysis, and review of financial statement supporting documents. Certain audit procedures we perform each year will vary, and some will be unpredictable. Step 5: Reporting and Wrap-Up After the completion of fieldwork, we will conduct an exit conference with appropriate personnel to discuss all significant issues. We will submit one draft copy of the City’s report to the City by November 15th each year. The final audit report will be submitted by the first Monday in December each year. Engagement Timetable Please see the chart below for the estimated timetable for the 2018 and 2019 audit for each step of this engagement. The schedule was designed from your specific requirements and ensures on-time deliverables. This plan can be adjusted based on the input from the audit committee or finance team. Engagement Steps MONTH MONTH MONTH MONTH MONTH Audit Strategy July Planning July Interim Work August Year-End Fieldwork September/ October Reporting and Wrap-Up December Workpapers Upon request, Wipfli will provide a copy of the workpapers pertaining to any questioned costs determined in the audit. The workpapers must be concise and provide the basis for the questioned costs as well as an analysis of the problem. The workpapers will be retained for at least three years from the end of the audit period. The workpapers will be available for examination by authorized representatives of the cognizant federal or state audit agency, the GAO, and the City. Use of Technology We make significant use of technology as part of our audit process. We prefer workpapers in an electronic format whenever possible. City of Bozeman and Wipfli LLP 17 Peer Review Letters: City of Bozeman and Wipfli LLP 18 System Review Report To the Partners of Wipfli LLP and the National Peer Review Committee of the AICPA We have reviewed the system of quality control for the accounting and auditing practice of Wipfli LLP (the firm) applicable to engagements not subject to PCAOB permanent inspection in effect for the year ended June 30, 2016. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants. As part of our peer review, we considered reviews by regulatory entities, if applicable, in determining the nature and extent of our procedures. The firm is responsible for designing a system of quality control and complying with it to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Our responsibility is to express an opinion on the design of the system of quality control and the firm’s compliance therewith based upon our review. The nature, objectives, scope, limitations of, and the procedures performed in a System Review are described in the standards at www.aicpa.org/prsummary. As required by the standards, engagements selected for review included engagements performed under Government Auditing Standards, audits of employee benefit plans, audits performed under FDICIA, and examinations of service organizations [Service Organizations Control (SOC) 1 and 2 engagements]. In our opinion, the system of quality control for the accounting and auditing practice of Wipfli LLP applicable to engagements not subject to PCAOB permanent inspection in effect for the year ended June 30, 2016, has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass, pass with deficiency(ies) or fail. Wipfli LLP has received a peer review rating of pass. WEAVER AND TIDWELL, L.L.P. Dallas, Texas September 23, 2016 City of Bozeman and Wipfli LLP 19 December 8, 2016 Rick E Dreher Wipfli LLP 10000 W Innovation Dr Ste 250 Milwaukee, WI 53226 Dear Mr. Dreher: It is my pleasure to notify you that on December 8, 2016 the National Peer Review Committee accepted the report on the most recent system peer review of your firm. The due date for your next review is December 31, 2019. This is the date by which all review documents should be completed and submitted to the administering entity. As you know, the report had a peer review rating of pass. The Committee asked me to convey its congratulations to the firm. Sincerely, Michael Fawley Chair—National PRC nprc@aicpa.org 919 4024502 cc: Terrence Everett Ford; Daniel T Szidon Firm Number: 10077210 Review Number 462502 Letter ID: 1131944A City of Bozeman and Wipfli LLP 20 Additional Data Meeting Your Needs Why Work With Wipfli? At Wipfli LLP (“Wipfli”) our primary objective is to help our clients achieve their organizational goals. This is achieved by providing customized solutions and working hands-on to understand our clients’ needs, develop a plan for action or corrective action, and implement the solution. Wipfli understands that audits of any kind can be stressful for you, your organization, and your employees. Our team is dedicated to the nonprofit and federally funded industries full-time. Rest assured; we understand your industry, your organization, and your day-to-day practices. We pride ourselves on efficient and effective work during on-site visits, and it is our promise to treat you as any Wipfli team member. After all, our clients are our partners. City of Bozeman and Wipfli LLP 21 Wipfli-Serviced Organizations This map represents all the nonprofit and governmental entities that have benefited from Wipfli’s services over the past three years. Commitment to Sustainability Wipfli LLP supports sustainability efforts, which consider present needs without compromising the ability of future generations to meet their needs. We use the four directions of the compass as our lens for sustainability: N—Nature, E—Economy, S—Society, W—Well-being. This ensures a balanced and holistic approach to sustainability planning and decision making for Wipfli’s clients and associates. Our Team Approach You can rely on a consistent, cohesive, and dedicated team of service professionals and industry-specific experts who draw from a wide range of collective knowledge and experience. Clients tell us our associates are a pleasure to work with, and they appreciate the time our associates take to understand their individual circumstances. Our partners also commit significant efforts to engagements, further ensuring client satisfaction. Team members arrive at Wipfli with considerable experience and knowledge, and they continue to develop their skills through continuing professional education. Recognizing the critical importance of engaged and satisfied associates, we regularly monitor and work to improve the engagement level of all associates. The Best of Both Worlds Since 1930, Wipfli has been creating value and securing the future of our clients, their businesses, and the community at large. As we look to the future, we continue to strive to be the firm of choice, fueling the success of clients across multiple industries. With Wipfli, you gain the significant resources of a large accounting and consulting firm while enjoying the personal service of a small firm. City of Bozeman and Wipfli LLP 22 Value-Added Services Beyond the Audit Having a CPA who can be an advisor about your diverse needs is critical. Did you know Wipfli offers more than just financial services? Our audit clients have access to additional resources to help them achieve their organizational goals. These tools are invaluable assets, allowing for better workflow, regulation management, policies and procedures, and more. Below are listings of services that Wipfli provides to nonprofit and governmental clients all across the country. Fiscal Consulting Services With our comprehensive background in grant-funded organizations along with our more than 85 years of audit experience, Wipfli can provide unparalleled financial consulting services. Wipfli provides fiscal consulting on:  Software system implementation  Policies and procedures manuals and processes  Process improvement  Cost allocation  Indirect cost rates  Evaluating financial condition  Budgeting/agency-wide budgets  Fiscal comprehension  Procurement  Monitoring Information Technology Consulting Services Wipfli approaches information technology from a different angle. First, we analyze your needs. Then, we use technology as a tool to address those needs for the long term. Our Information Technology Consulting Group specializes in planning, assessing, responding to and implementing services such as:  Planning  Assessing  Responding  Implementing Operations Consulting: Process Improvement and Workflow Analysis The interactions and connections between separate components of your operations impact the effectiveness of the whole organization. Wipfli can help close the gaps between where you are and where you want to be. City of Bozeman and Wipfli LLP 23 To help grow your organization and reduce costs, our operations consulting services are designed to:  Help to understand how work gets completed currently  Utilize industry best practices to advise on improvements  Improve efficient use of people and money  Redesign processes and workflows to support new technology  Support mergers, acquisitions, and other growth strategies  Collect data for decision making  My Wipfli Membership Service: - Best-practice financial policy and procedures manual Tax Consulting and Preparation Wipfli helps organizations in training, consulting and tax preparatory services, including:  Tax compliance  IRS Form 990  State and local tax Human Resources We help clients align their workforces with their goals, using our results-driven consulting process, tools, and programs with services such as:  Strategic planning and visioning  Organizational development  Growth and change implementation  Succession planning  Professional coaching  Employee handbooks  Compensation design and benchmarking  My Wipfli Membership Service:  Best-practice human resources policy and procedures manual Technology Health Check Wipfli’s Technology Health Check provides a vision and an actionable road map to organizations looking to leverage technology as a competitive advantage. The advancement of technology and the data explosion have increased both the complexity and the vulnerability of the IT environment. It is becoming increasingly challenging for organizations to mitigate the inherent risks of technology and make the right investments and decisions amidst the growing number of security threats, increasing demand for performance and tightening budgetary constraints. We are living in big-data, mobile-first world which has mandated changing traditional approaches and reinventing processes. Organizations are addressing this disruptive technology environment by embracing leaner and nimbler methods like the cloud and outsourcing. Wipfli can help you reinvent and manage processes around technology, finances, operations, employees and customers. City of Bozeman and Wipfli LLP 24 Retirement Plan Services Wipfli assesses retirement plans to help reduce risk, comply with regulatory requirements and deliver more value to employees. In addition, we can serve as your plan administrator. Sustainability Services Sustainability is the balancing and continuous improvement of three elements: people, plant, and profit. Wipfli provides:  Education on the value of sustainability  Sustainability strategy  Maximization of sustainable best practices Training and Education Wipfli prides itself on providing training and consulting services for nonprofit organizations. In fact, many other accounting and consulting firms send their associates to our seminars. We train almost 4,000 individuals annually who attend Wipfli nonprofit training seminars and webinars. Our 2017 annual conference had over 900 attendees and included over 95 different sessions, with more than half being new topics. More than 30 Wipfli professionals made presentations at our annual conference, which provides training in several core competencies. The topics presented include the following: Competencies Conference Topics Financial/Accounting COSO, GAAP, Indirect Cost Rates, Financial Analysis, 2 CFR Part 200,OMB’s Uniform Guidance Form 990 Process Improvement Procurement, Financial Conversations, Culture, HR, Board Governance Technology Microsoft 365, Cybersecurity, IT Policies and Procedures, Sage Intacct Risk Management Disaster Recovery Planning, Information Security, Security Awareness, Safer Computing Health Care Revenue Cycle Management, Financial Conversation and Planning, Data Analysis, Medicare Billing and Reimbursement Indirect Cost Consulting Wipfli regularly conducts seminars that include sessions on indirect cost allocation. The sessions provide guidance on how to develop simple and straightforward cost allocations. We also frequently perform individualized consulting services on indirect costing. City of Bozeman and Wipfli LLP 25 Value-Added Services FOR YOU! As a service to your organization, Wipfli would like to offer the additional tools and services below at no additional charge. We encourage clients to utilize these tools and services to the highest degree. Please consult with your Wipfli engagement partner for further details. Added Value Product/Service Retail Value Client Cost Tools: My Wipfli Nonprofit and Government Membership Service $995 $0 Training: Two (2) Webinar Trainings $400 $0 Two (2) registrations for Wipfli National Training Conference in Las Vegas or Winter Conference $1,950 $0 Total $3,345 $0 Details on the Products/Services Your Organization Will Receive: Tools: My Wipfli Nonprofit and Government Membership Service is a hub for all your nonprofit and governmental needs. Wipfli has designed the site to provide constant guidance to organizations receiving federal and state funding. Ask Your Questions: Log into the service and ask our experts a question; we will follow up with you via e-mail or telephone no later than the end of the following business day. We can assist with questions on topic areas including financial, HR, IT, risk, and more. Do Research: Save time by having the information you need at your fingertips and access a library of 240 linked and searchable documents, laws, regulations, and guidelines. Find every related piece of information on your desired topic in one search. Get Updates: Worried about missing something? Don’t be. As a member, you will receive e- mail updates, newsletters, training discounts, and more! As an audit client, you will receive full access to this service. Policies and Procedures: If you maintain policy and procedures manuals for finance, HR, and even IT, you know the challenges of keeping them up to date. Wipfli has been visiting nonprofit and government organizations for decades, and we have seen organizations that understand how to operate efficiently while also staying compliant. That is why we have developed sample policy and procedures templates that combine industry best practices and compliance-based methodology. These templates are updated frequently to provide the most current and efficient methods possible. Training: Wipfli is a leader in providing training in the nonprofit and government industry. We believe in the method of making our clients self-sustaining, and the best way to do that is to provide the knowledge necessary to not only keep them in business, but allow them to thrive. City of Bozeman and Wipfli LLP 26 Our trainings cover topics in regulations, accounting, audit, HR, IT, management, leadership, process, and much more. As an audit client, you will receive: 1. Webinar Training: Solve the training needs of your entire staff in the most efficient way possible. Watch the live event and earn CPE credits, or download the recording at a more convenient time. Wipfli has dozens of webinar topics available to meet your training needs. 2. Uniform Guidance Training: It is absolutely critical that the changes to the new Uniform Guidance are understood by all federally funded programs. There are significant changes that will impact your organization. Stay in compliance by attending our two- or three-day on-site training sessions. We have designed our training for adult learning utilizing activities and discussions that will keep finance, HR, IT, and program staff engaged. Currently, we average over 200 people per training. Wipfli offers numerous trainings throughout the country, allowing you to take advantage of something close to home! 3. Wipfli National Training Conference: This conference is a Wipfli landmark that we have hosted for 15 years. With annual crowds of around 1,000 nonprofit leaders and staff, the five-day National Training Conference will provide your staff with comprehensive training. Network with hundreds of colleagues who share similar roles and interests and who face the same challenges as you. Executive directors, program directors, human resource directors, fiscal staff, administrative staff, program staff, board members, policy council members, funding source staff, and your independent CPA will all find a week of relevant and essential training opportunities Added Value *The value-added items provided equate to over $3,345 in custom products and services designed to benefit your organization. These products and services come at no additional cost to your organization. City of Bozeman and Wipfli LLP 27 Price Matrix While the process of conducting an audit can be very similar from accounting firm to accounting firm, the Wipfli difference includes the value you receive from our audit process. Our audit services approach is designed to deliver timely, cost-effective, high-quality professional services. It centers around service excellence, communication, and our continuing quest to be on the leading edge of industry changes. Right from the start of the audit engagement, you can expect Wipfli to understand your industry and provide expert assistance. Our well-planned approach ensures an efficient and effective audit experience. Budgeted Hours  Our budget to provide quality and timely services to the City are as follows: Phase Hours Planning 45 Interim work 50 Year-end fieldwork 230 Reporting and wrap up 75 Total 400 Fees (if not a Single Audit) Professional Services 2018 2019 Annual Audit $40,500 $43,000 Fees (if a Single Audit) Professional Services 2018 2019 Annual Single Audit $45,500 $48,000 Billing Rates Personnel Standard billing rates for the last three years Partner $250 - $400 Manager 150 - 250 Senior 100 - 150 Staff 95 - 125 City of Bozeman and Wipfli LLP 28 Assumptions The quote above is based on the following assumptions:  City staff will be cooperative participants in the process and will effectively communicate with the auditors.  City staff will perform a comprehensive financial close process, and there will be minimal adjusting journal entries.  Wipfli staff will prepare the City’s CAFR with all required information to receive the Certificate of Achievement.  City staff will provide updated information for the statistical section, MD&A and Letter of Tansmittal.  Requested information will be provided on a timely basis.  There will be no significant changes in the operation of the City. There will be no significant new accounting or audit requirement that will impact the City.  The City will assist in the preparation, communication, and resolution of confirmation exceptions. Out-of-Pocket Expenses The cost of out of pocket expenses is included in the fee. Cost Overruns We work closely with management to contain the cost of professional services. We do this by:  Making recommendations to improve efficiency and controls.  Obtaining a comprehensive understanding of your year-end closing process. This avoids misunderstandings and inefficiencies for both you and our personnel.  Preparing a comprehensive listing of client-prepared workpapers.  Using technology efficiently in workpaper preparation and audit testing. We will work with City staff to agree on required schedules, informational needs, and due dates. It is also understood that any fee adjustments required if assumptions are not met will be discussed and agreed to by the City and Wipfli before additional work is performed. Going Forward The information contained in this proposal document is for discussion purposes only and does not constitute a binding contract between you or your organization and Wipfli LLP. If the above services and information are acceptable and you wish to proceed, we will prepare a formal engagement letter for you to sign, which will address the specific scope, responsibilities, and criteria relative to our engagement. The engagement letter will constitute the entirety of the terms and conditions of our arrangement with you. Professional Profiles www.wipfli.com Kimberly E. Dare Audit Partner Current Position and Responsibilities Kimberly Dare provides high-quality auditing and consulting services to local governments and nonprofit organizations. She is the government practice leader within Wipfli LLP’s nonprofit and government practice. Kimberly has vast audit and consulting experience in a wide range of industries with specialized knowledge relating to governmental and nonprofit organizations. In addition to her auditing experience, she has performed a number of forensic accounting engagements. Specializations  Audits of local governments including counties, cities, water and sewer districts, fire districts, school districts, tribes, tribal colleges and housing authorities  Audits of nonprofit organizations including both community based and grant funded programs  2 CFR Part 200, OMB’s Uniform Guidance  U.S. Department of Agriculture Rural Development housing programs  Nonprofit federal and state tax return preparation  Forensic investigations Past Experience  Audit committee member and designated audit partner for the Government Audit Quality Control Center for Galusha, Higgins & Galusha, PC (GHG), which merged with Wipfli in 2014  Joseph Eve Professional Memberships and Activities  American Institute of Certified Public Accountants (AICPA) – Member  Montana Society of Certified Public Accountants (MSCPA) – Member  Government Finance Officers Association (GFOA) - Member  MSCPA Governmental Audit Accounting Financial Reporting (GAAFR) Committee – Member  Association of Certified Fraud Exam Examiners (ACFE) – Member  Montana Association of School Business Officials (MASBO) – Member  United Way – Volunteer  YWCA Yellowstone County – Former Board/Finance Committee Member Education Montana State University - Billings  Bachelor of science degree in business administration with an emphasis in accounting Certifications: Certified Public Accountant Certified Fraud Examiner Chartered Global Management Accountant Contact Information: Please contact Kimberly in our Billings office Office: 406.248.1681 E-mail: kdare@wipfli.com www.wipfli.com Ryan D. Lindsay Partner Current Position and Responsibilities Ryan Lindsay is an audit partner in Wipfli LLP’s nonprofit and government practice. In addition to audit services, he has developed a deep expertise in the nonprofit and government industry and offers expert consultation on a wide array of issues including compliance with laws and regulations. With over 15 years of experience, he has forged strong ties with his clients through trust, knowledge, and consistent communication. Specializations  Municipalities  Counties  School districts  Head Start programs  2 CFR Part 200, OMB’s Uniform Guidance  Health and welfare organizations  Labor unions  Social service organizations  Contribution-based nonprofits  Grant-funded nonprofits  Form 990 preparation Professional Memberships  American Institute of Certified Public Accountants (AICPA) - Member  Montana Society of Certified Public Accountants (MSCPA) - Member  United Way of the Lewis & Clark Area - Treasurer Education Carroll College - Helena, Montana  Bachelor of arts degree in accounting and business administration with a concentration in finance Certifications: Certified Public Accountant Contact Information: Please contact Ryan in our Helena office. Office: 406.442.5520 E-mail: rlindsay@wipfli.com www.wipfli.com Matt D. Hjelm Senior Manager Current Position and Responsibilities Matt Hjelm is an senior audit manager in Wipfli LLP’s nonprofit and government practice. He leads financial and compliance audits of local governments and nonprofit organizations and is also knowledgeable about regulatory reporting for Montana municipalities, special districts, and school districts. Working exclusively in the government and nonprofit sectors has provided Matt with an extensive knowledge of and background in these organizations, their issues, and audit requirements. He understands that effective communication is imperative in building and maintaining strong client relationships. In addition to audits, Matt has performed a number of forensic accounting engagements. Specializations  Audits of local governments including counties, cities, special districts, school districts, tribes, and tribal colleges  Audits of nonprofit organizations including community-based programs, grant-funded programs, and voluntary health and welfare organizations  2 CFR Part 200, OMB’s Uniform Guidance  U.S. Department of Agriculture Rural Development housing program audits  Forensic investigations Past Experience  Audit committee member for Galusha, Higgins & Galusha, PC (GHG), which merged with Wipfli in 2014  Joseph Eve Professional Memberships and Activities  American Institute of Certified Public Accountants (AICPA) - Member  Montana Society of Certified Public Accountants (MSCPA) - Member and ethics committee member  Association of Certified Fraud Examiners (ACFE) - Member  Heights National Little League (HNLL) - Coach and volunteer  United Way – Volunteer  Past SD2 Audit Committee Member Education Montana State University  Bachelor of science degree in business with an emphasis in accounting  Master of professional accountancy degree Certifications: Certified Public Accountant Certified Fraud Examiner Contact Information: Please contact Matt in our Billings office. Office: 406.248.1681 E-mail: mhjelm@wipfli.com NON-DISCRIMINATION AFFIRMATION FORM Wipfli LLP hereby affirms it will not discriminate on the basis of race, color, religion, creed, sex, age, marital status, national origin, or because of actual or perceived sexual orientation, gender identity or disability in the performance of work performed for the city of Bozeman, if a contract is awarded to it, and also recognizes the eventual contract, if awarded, will contain a provision prohibiting discrimination as described above and that this prohibition shall apply to the hiring and treatment of the Wipfli LLP employees and to all subcontracts it enters into in performance of the agreement with the city of Bozeman. Signature of Bidder: Person authorized to sign on behalf of the bidder