FINANCIAL AUDIT SERVICES _part1 doc

Northstar Lottery Group, LLC Confidential and Proprietary NORTHSTAR LOTTERY GROUP, LLC REQUEST FOR PROPOSAL FINANCIAL AUDIT SERVICES RFP #11-S-0005 This is trial version www.adultpdf.com 1 Table of Contents OVERVIEW 3 1.1 CORPORATION OVERVIEW 3 1.2 INTENT OF REQUEST FOR PROPOSAL 3 1.4 PROCESS AND TIMETABLE 7 1.5 RFP QUESTIONS AND ANSWERS 7 1.6 CONTACT INFORMATION 8 1.7 AMENDMENTS TO RFP 8 1.8 RIGHT TO REJECT PROPOSALS 8 1.9 OWNERSHIP OF PROPOSALS 8 1.10 PROPOSAL TENURE 8 1.11 NO NORTHSTAR LIABILITY FOR PROPOSAL COSTS 9 1.12 PROPOSAL DISCLOSURE PROHIBITION 9 1.13 CONFLICT OF INTEREST 9 1.14 APPROVAL AND PROBITY INVESTIGATIONS OF SUBCONTRACTOR 9 1.15 FLOW DOWN PROVISIONS 9 1.16 RESPONSE FORMAT 9 1.17 BIDDER’S PLANNED USE OF SUBCONTRACTORS; SUBCONTRACTING TO MINORITY, FEMALE AND DISABLED OWNED BUSINESSES 10 1.18 BIDDER’S RESPONSE TO PRICING REQUIREMENTS 10 1.19 CONFIDENTIAL INFORMATION; ILLINOIS FREEDOM OF INFORMATION ACT 10 1.20 DEVIATIONS AND EXCEPTIONS 11 1.21 PROPOSAL SUBMISSION REQUIREMENTS 11 REQUIREMENTS 12 2.1 PROPOSAL SUBMISSION REQUIREMENTS 12 PROPOSAL EVALUATION AND SUBCONTRACT AWARD 18 3.1 EVALUATION CRITERIA 18 3.2 EVALUATION PROCESS 18 3.3 PROPOSAL CLARIFICATION PROCESS 19 3.4 BEST AND FINAL OFFERS (BAFOs) 19 3.5 AWARD DECISION 19 3.6 NOTIFICATION OF AWARD 19 3.7 SUCCESSFUL EXECUTION OF A SUBCONTRACT 19 TERMS AND CONDITIONS 20 4.1 AMENDMENT 20 4.2 CHANGES AND MODIFICATIONS 20 4.3 CLARIFICATION OF NORTHSTAR’S INTENT 20 4.4 COMPLIANCE WITH APPLICABLE LAWS 20 4.5 DISPUTES 20 4.6 GOVERNING LAW 21 4.7 HEADINGS 21 4.8 INVOICING AND PAYMENT TERMS 21 4.9 NEWS RELEASES 21 4.10 NON-SOLICITATION 21 4.11 NOTICES 22 4.12 PROJECT SCHEDULE 22 4.13 RISK OF LOSS 22 4.14 SEVERABILITY 22 4.15 STAFFING 23 4.16 SUBCONTRACTING 23 4.17 SUBCONTRACTOR DEFAULT 23 4.18 SUBCONTRACTOR INITIATED CHANGES 23 4.19 SUBCONTRACTOR INSURANCE REQUIREMENTS 23 This is trial version www.adultpdf.com 2 4.20 TAXES 25 4.21 TERM OF SUBCONTRACT 25 4.22 TITLE AND OWNERSHIP 25 4.23 WAIVER 25 4.24 WARRANTY 25 SCHEDULE I  COST PROPOSAL FORMAT 27 ATTACHMENT A  FORM OF SUBCONTRACT 28 ATTACHMENT B  CORPORATE DISCLOSURE FORM 52 ATTACHMENT C – M/F/DBE REQUIRED FORM 70 ATTACHMENT D - DEVIATIONS AND EXCEPTIONS 73 This is trial version www.adultpdf.com 4 Licensure/Independence Standards Only Illinois licensed certified public accounting firms with sufficient governmental accounting and auditing experience will be considered for this RFP. Audit Standards 1.3 SCOPE OF SERVICES The Audit must be conducted in accordance with auditing standards generally accepted in the United States. These standards require that the audit is planned and performed to obtain reasonable assurance about whether the financial statements are free of material misstatements. Also, the audit must include consideration of internal controls over financial reporting as a basis for designing audit procedures, although no opinion is required to be expressed on the effectiveness of internal controls. The services to be provided under this contract are professional services customarily provided by an Auditor including, but not be limited to, the following: 1. Preparation and submission of an Annual Audit of Financial Statements in conformity with International Standards (IFRS). The following reports are required: a) Preparation of an Independent Auditor‘s Report as an expression of an audit opinion in conjunction with full-scope audit of annual financial statements, stating the scope of examination and that the audit was conducted in accordance with generally accepted auditing standards as well as all applicable Federal and state laws and provisions. b) Preparation of Financial Statements: • Statement of Net Assets; • Statement of Revenues, Expenses and Changes in Net Assets; • Statement of Cash Flows (Direct Method); and • Notes to Financial Statement – additional disclosure requirements. c) Preparation of Management‘s Discussion and Analysis (―MD&A‖) as an easily readable analytical review of the Northstar‘s financial activity. d) Preparation of Required Supplemental Information (RSI) including, but not limited to: • Schedules of Cash and Equivalent Balances; • Schedules of Investment; • Schedules of Operations; • Schedules of Administrative Expenses; • Schedules Management Expenses; and • Schedules Revenues. e) The Auditor shall issue Independent Auditors‘ Report on Internal Control over Financial Reporting and on Compliance and other matters based on an audit of Financial Statements This is trial version www.adultpdf.com 5 performed in accordance with Auditing Standards. The Auditor shall communicate all reportable conditions found during the audit in the report on internal controls. Further, the Auditor shall identify any material weaknesses in their audit. The Auditor shall report other weaknesses in internal controls not meeting the definition of a reportable condition in a separate letter to Northstar Management. f) Accompanying the financial statements, the Auditor will submit to management a Letter of Comments and Recommendations on internal control over financial reporting based on the Auditor‘s assessment of the internal control structure and risk: (i) indicating deficiencies or opportunities for accounting and reporting improvements; (ii) identifying any reportable condition or material weakness; and (iii) recommending the areas where operations can be improved or control enhanced. g) Auditor‘s report on Northstar‘s internal controls will include, without limitation, any significant deficiencies and material weaknesses in the system of which Auditor becomes aware as a result of obtaining an understanding of internal control and performing tests of internal control. 2. Auditor will audit the general purpose financial statements, and related statements of operations and Funds equities for the year then ended December 31, 2011 and such additional fiscal years, as requested by Northstar. The audit of the books and records will be made in accordance with generally accepted auditing standards and will be for the purpose of expressing an opinion as to the fairness of the financial statements as prepared in accordance with GAAP. The test audit will include the recorded transactions in conformity with generally accepted auditing standards, which may not in every case discover defalcations, if they exist. However, the Auditor will inform Northstar promptly of any findings that appear unusual or abnormal. If the Audit opinion is other than unqualified, the Auditor will fully discuss the reasons with Northstar in advance of issuing the opinion. 3. A pre-audit conference is required with Northstar, regarding the timing of the audit, the personnel, the supervision, the documents required and respective responsibilities. A post-audit conference with Northstar will be conducted by the Auditor in charge. At the exit conference, findings and recommendations regarding compliance and internal control shall be discussed. Northstar‘s management shall have the opportunity to respond, orally or in writing, to the findings, and the Auditor will revise the audit documents in accordance with Northstar‘s comments, at no additional cost to Northstar. 5. The Auditor will provide copies of all reports to Northstar, in sufficient number for the required distribution and a minimum of 10 printed and bound copies of the Comprehensive Annual Financial Report. Additionally, a PDF copy will be provided for Northstar. 6. Visits to the various facilities of Northstar for the purpose of obtaining insight to the operations and information may be necessary. 7. The audit fieldwork should be completed by March 31st of each year. The statements must be ready for publication by May 31st of each calendar year following the audit year. 8. The audit working papers and reports must be retained, at the Auditor‘s expense for the longer of the following time periods: (i) five (5) years after the completion of the audit This is trial version www.adultpdf.com 6 engagement; (ii) the time required by applicable Federal and state laws; (iii) the time recommended by the AICPA; (iv) the time requested by Northstar in writing; or (v) in the event of litigation or claims which relate to such audit working papers and reports, then until such litigation or claims are completely disposed of and all time periods for appeal are expired. 9. Responsibilities of Northstar. (1) providing the source to financial statements to enable the preparation of Northstar‘s financial statements, (2) establishing and maintaining effective internal control over financial reporting, and compliance by means that include the monitoring of ongoing activities, the safeguarding of assets and informing the Auditor of all significant deficiencies in the design or operation of such controls of which Northstar management has knowledge, (3) properly recording transactions in the records, (4) identifying laws and regulations applicable to Northstar‘s activities, ensuring that Northstar complies with the laws and regulations applicable to its activities and informing the Auditor about all known material violations of such laws or regulations, (5) designing and implementing programs and controls to prevent and detect fraud and informing the Auditor about all known or suspected fraud affecting Northstar‘s involving management, employees who have significant roles in internal control and others where the fraud could have a material effect on the financial statements, (6) informing the Auditor of Northstar management‘s knowledge of any allegations of fraud or suspected fraud affecting Northstar received in communications from employees, regulators, or others, (7) making the Auditor aware of significant vendor relationships where the vendor is responsible for program compliance, (8) making all financial records and related information available to the Auditor, and (9) adjusting the financial statements to correct material misstatements. In addition, at the conclusion of the audit, the Auditor will also require that Northstar management affirm to the Auditor that the effects of any uncorrected misstatements aggregated by the Auditor during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to Northstar‘s financial statements taken as a whole. This is trial version www.adultpdf.com . governmental accounting and auditing experience will be considered for this RFP. Audit Standards 1.3 SCOPE OF SERVICES The Audit must be conducted in accordance with auditing standards generally. Independent Auditor‘s Report as an expression of an audit opinion in conjunction with full-scope audit of annual financial statements, stating the scope of examination and that the audit was. Revenues. e) The Auditor shall issue Independent Auditors‘ Report on Internal Control over Financial Reporting and on Compliance and other matters based on an audit of Financial Statements