Agenda Item 8-F
Consent Item
To:
Chairman Milde and the VRE Operations Board
From:
Doug Allen
Date:
December 19, 2014
Re:
Authorization to Participate in a Joint Request for Proposals
for Auditing Services
Recommendation:
The VRE Operations Board is asked to authorize the Chief Executive Officer to participate in
a joint Request for Proposals (RFP) for auditing services for a period of three years with
options to extend for up to four additional years, in two year increments. The solicitation
will be issued by the Northern Virginia Transportation Commission (NVTC) on behalf of
both Commissions and VRE. The intention is for VRE, NVTC and the Potomac and
Rappahannock Transportation Commission (PRTC) to each have separate contracts with
the auditor chosen to provide the requested services.
Background:
In May 2008, VRE entered into a contract with PBMares (formally PBGH) for the audit of
the VRE financial statements, as the result of a joint solicitation issued by NVTC for the
audits of the VRE and NVTC financial statements. The contract was for a three-year period
with options to extend for up to four additional years. The last year of the extension was
for the recently completed audit of the FY 2014 financial statements. (PBMares also serves
as the auditor for PRTC, but as the result of a separate procurement.)
As joint owners of VRE, NVTC and PRTC each recognize a portion of VRE as a fund in their
audited financial statements. Contracting all three engagements with the same firm will
result in the most cost effective approach and will help to ensure timely completion of the
audits.
NVTC and VRE staff recently polled member jurisdictions about their policies and practices
regarding auditing services. The jurisdictions largely follow the recommendations of the
Government Finance Officers Association (GFOA). These best practices include the
recommendation to enter into multiyear agreements of at least five years in duration. Such
agreements allow for greater continuity and help to minimize the potential for disruption
in connection with the audit. Multiyear agreements can also help to reduce audit costs by
allowing auditors to recover certain “start-up” costs over several years, rather than over a
shorter period. At the conclusion of the contract, a competitive procurement process is
recommended whereby participation of all qualified firms, including the current auditors,
is sought.
While the perception that auditor independence may be enhanced by required audit firm
rotation at the end of the audit contract, the GFOA recognizes the frequent lack of
competition among audit firms fully qualified to perform public-sector audits and meeting
a government’s unique selection criteria. The GFOA further recommends that the audit
procurement process should be structured so that the principal factor in the selection of an
auditor is the auditor’s ability to perform a quality audit. Accordingly, the GFOA does not
recommend the mandatory rotation of auditors. Those jurisdictions polled by NVTC and
VRE also follow the GFOA’s recommendation in this regard.
In accordance with the VRE Public Procurement Policies and Procedures, and the
recommendations of the GFOA, an RFP is the preferred method of procurement for this
solicitation since there are different approaches to the desired service and an evaluation of
technical merit is required. Price will be considered in context of technical performance for
this service to achieve a best value determination.
Services
NVTC, VRE and PRTC each require an audit of their financial statements to be performed
annually in accordance with Government Auditing Standards. The selected firm will issue
an audit opinion on the financial statements, a report on the internal control over financial
reporting and on compliance, and a report on compliance for major federal programs for
NVTC and PRTC (federal programs for VRE are audited through PRTC). If requested,
additional accounting or auditing services may be provided at the option of the audit firm,
but only if the firm’s independence is not impaired by performing those services.
Schedule and Selection Process:
To accommodate the schedule of all three entities, it is expected that the RFP will be issued
in early January 2015, with proposals due in early February, and contracts executed in
March or early April. NVTC, VRE and PRTC will enter into separate contracts, which are
2
expected to be with the mutually selected firm. This schedule will allow time for the
selected firm to properly plan and staff the engagements so that the audits may be
conducted in the most efficient and effective manner.
A selection committee will be established to rate the proposing firms and ultimately make a
recommendation to the audit committees. Members of the selection committee will be
responsible for reviewing and rating all proposals received, and will need to be available
for interviews and oral presentations of the top rated firms. The selection committee
should be made up of individuals with a complete understanding of NVTC, VRE and PRTC’s
operations and activities. It is also important that the members understand the specific
audit and reporting requirements that must be followed, are familiar with current auditing
standards, have an understanding of various audit approaches and procedures, and have
experience dealing with a variety of auditing firms and personnel. Members possessing
these qualities will allow the committee to best assess the proposing firms’ ability to
perform a quality audit, which the GFOA states should be the principal factor in the
selection of an auditor. Staff recommends that the selection committee be comprised of
financial staff from NVTC, VRE, PRTC and the NVTA.
NVTC approved the issuance of the RFP at their November meeting and PRTC approved the
issuance at their meeting in December.
Fiscal Impact:
Funding for auditing services is provided in the current budget for audit and accounting
fees in the Finance and Administration department. Funding for future years will be
included in each proposed annual budget.
3
Virginia Railway Express
Operations Board
Resolution
8F-12-2014
Authorization to Participate in Joint
Request for Proposals for Auditing Services
WHEREAS, in May 2008, VRE entered into a contract with PBMares (formally PBGH) for
the audit of the VRE financial statements, as the result of a joint solicitation issued by NVTC
for the audits of the VRE and NVTC financial statements; and,
WHEREAS, the contract was for a three-year period with options to extend for up to four
additional years; and,
WHEREAS, the last extension was for the audit of the FY 2014 financial statements;
NOW, THEREFORE, BE IT RESOLVED THAT, the VRE Operations Board does hereby
authorize the VRE Chief Executive Officer to participate in a joint Request for Proposals
(RFP) for auditing services, issued by the Northern Virginia Transportation Commission
(NVTC), for a period of three years with options to extend for up to four additional years, in
two year increments.
Approved this 19th day of December, 2014
____________________________
Gary Skinner
Secretary
______________________________
Paul Milde
Chairman
4