February 4, 2015
8:30 am – 12:00pm
Training Code: #1506
Marisa Neff
Pooja Tulsian
Selome Negassa
OBJECTIVES OF THIS
CLASS
To familiarize all contract
monitors with the important
aspects of each phase of
monitoring financial
contracts.
Agenda:
1.
2.
3.
4.
5.
6.
Introductions
File Wrap Up for FY2014 Contracts
Final Billing for FY2014 Contracts
First Phase for FY2015
Second Phase for FY2015
Contract Monitor Tips
Roles in a contract audit
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Contract Monitor (CM)
Financial Manager(s) (FM)
Outside Auditor (Contractor)
Department/Agency (Controller)
OSA CFO
Note: CM needs to maintain constant communication with
Deputy about the progress of the audit.
Types of Contract Audits
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Stand Alone
Feeder Audits
Others - Stand Alone Audits – usually statutory audits –
some are related parties (Pinnacol, PERA, and GOCO)
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Final Phase
Final Invoices
10% contract retainage will be released after:
 The audit report is released by the LAC, or
 Attest memos and report comments are submitted and
approved.
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Final Phase
 Final files to be saved by CM in the Contract Database.
 Completed Contract Compliance and Monitor Log
Checklist
 Contractor Evaluation
 Team TEC Project Hours
 Final Billing Form- Standalone only
 Financial Benefits Form (in database) – Standalone only
 Contractor Communication E-mails
 All fields should be completed in the Contract Database.
If a field does not apply to your contract, then add a
comment, such as “not applicable.”
 All Contract Monitor files should be completed by end
of February or sooner.
• Final Billing
• FY2014 billing rate is $70
• FY2015 billing rate is $75
Types of Contract Audits : Bill or not to Bill
Bill if:
 The audit is statutorily required to be billed.
 The audit is an enterprise exempt from TABOR
(see Fiscal Procedure Manual).
 The audit involves federal funds.
 The audit involves trust or agency funds.
 The audit involves a Constitutional entity that is
not in the Long Bill.
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Types of Contract Audits : Bill or not to Bill
Enterprises Exempt TABOR
 Enterprises are designated in one of two ways:
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The first method is by statute like Lottery, College
Assist, CollegeInvest, and State Nursing Homes, etc.
(see FY13 Fiscal Procedures Manual)
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For FY12-13, statutorily designated enterprises are:
Name
Citation
Agency Code
Funds Included
Brand Board
35-41-101(5)(a)
BAA
108, 109, 721
Capitol Parking Authority
24-82-103(5)(a)
AGB
519
Clean Screen Authority
42-3-304(19)(a)(II)
TCA
520,
College Assist
23-3.1-103.5(1)(a)
GDA
501, 502, 511, 523, 524, 526, & all funds
and all funds
except 461
CollegeInvest
23-3.1-205.5
GRA
512-515, 527, 528, 545, 546, & all funds
Correctional Industries
17-24-104(1)
CFA, CFB, and CFC
507, 508, 506, & all funds except 461
23-5-101.7(2)
GFX, GGX, GJX,
Fund 320, 334, 335, 342, 399, & all funds
GKA, GLA, GMA,
except 100, 305, 333, 398, and 461
except 461
Higher Education
Institutions
GSA, GTA, GWA,
GYA, GZA
Parks and Wildlife
33-9-105
PBA, PJA, PMA
16H, 172, 173, 175, 210, 21H, 22F, 410,
411, 412, 413, 418, 420, 421, 422, 423,
425,428, 429, 433, 750, 761, 861, 426, 427
Petroleum Storage Tank
Fund
8-20.5-103
KAA
130
State Lottery
24-35-202(1)(b)
TFA
503, & all funds except 820, 461
State Nursing Homes
26-12-110
ILA-ILG
505, & all funds except 100, 461, 813, 700,
19C
Statewide Bridge
Enterprise
43-4-805(2)(c)
HTB
538, 539
43-4-806(2)(d)
HTC
536, 537
8-71-103(2)(a)
KAA
701, 702, 21U, 23P, 24M, 25U, 26Y
Statewide Transportation
Enterprise
Unemployment
Compensation Section
Source: FY13 Fiscal Procedures Manual
Bill or Not to Bill continue –
Enterprises Exempt TABOR
 Enterprises are designated in one of two ways:
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Second method, which is exclusive to higher education
enterprises, is by designation of the governing boards
with review by the State Auditor;
For FY14, Adams State University and AHEC did
NOT qualify as TABOR enterprises. All other higher
educations institutions retained their enterprise status.
Five Minute Break Time
First Phase (Pages 1-9 of the responsibility matrix)
• Set-up audit time code
• RFPs
• Contracts
• Engagement letters
• Meeting with Contractor
• Entrance Conference
First Phase
Set-up audit time code
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TeamMate Administrator, James, will establish audit
time codes for each contract audit.
The audit time code will also be used as the Report
Control number for all stand-alone reports.
First Phase
RFP’s (Request for Proposals), Time Code 701
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OSA policy is to re-bid the contract audit every five
years or sooner if determined by the contract monitor,
the Deputy, and the State Auditor;
FM or designee completes RFP, prior year CM reviews
RFP and FM determines potential contractors with
Deputy;
FM sends RFP to potential contractors, cc: Stelios
Pavlou for posting to OSA website, Deputy, and CM.
First Phase
RFP Inquiries, Time Code 701
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CM is responsible for collecting and responding to the
RFP inquiries.
CM compiles all inquiry questions and answers into
one document and removes any duplicate questions.
CM then sends the document to the Deputy for review
and approval.
Once the Deputy approves the answers, then the CM
can send the document to potential contractors and cc:
Stelios for posting to OSA website.
First Phase
Proposal/Bid Evaluation, Time Code 701
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CM evaluates proposals; finds one other person in the
office (must be B2 or higher) to also evaluate the
proposals; and CM completes their own bid evaluation
form, the other staff does their bid evaluation form, and
the CM completes the summary form.
CM obtains feedback from the Department/Agency.
CM e-mails RFP, proposals, all evaluation forms,
summary form, and contractor recommendation to the
Deputy.
Attach a copy of the RFP and all proposals in the
Contract Database.
First Phase
Awarding the Bid, Time Code 701
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Deputy communicates with all bidders the outcome of
their bids.
CM communicates the winning bidder to the
Department/Agency.
CM is responsible for completing the Predecessor
Auditor Letter.
First Phase
Contracts, Time Code 701
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Contracts are prepared annually;
Deputy works with FM/Controller/contractor to
determine fee increases;
FM or designee prepares the contract;
CM reviews the contract;
FM or CM will send contract draft to the Deputy for
final review and approval.
First Phase
Contract Routing
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After Deputy’s approval, contract will be sent to OSA
CFO for routing;
Contract will be signed in the following ordercontractor, LAC Chair, State Auditor and Deputy;
Three original fully executed copies will be distributed
to contractor, CM, and OSA CFO.
CM scans and attaches the signed contract in the
Contract Database.
Contract Contents
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Effective date and termination date
Statement of Work – Exhibit A
RFP and Proposal – Exhibit B, C & D
Contractor’s responsibility and dates – Exhibit A, H & I
Compensation – Exhibit F
Audit findings- Exhibit G
First Phase
Contract Amendment, Time code 701
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If there are changes in scope of work, price, termination
date, or any other areas, CM discusses with Deputy whether
amendment is necessary;
If determined necessary, CM prepares contract amendment;
Contract amendment follows the same review, approval,
and signature routing process as contract does.
If a contract amendment occurs, CM needs to re-evaluate
the billing amount noted in the engagement letter.
First Phase
Contract Database

All CM’s will have a short cut to your contract in the IBM
Contract Database. If not, please contact OSA CFO.
Contract Database:Following documents need to be attached in the contract database
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
RFP
Selected Proposal
Contractor Peer Review Letter
Letter to Predecessor Auditor
Responses to Bidder Inquiries
Rejected bids
Proposal Scoring Sheets
Signed Contract
Signed Contract Amendment(s), if any
Signed Engagement Letter
Contractor invoices
Final Billing Form
First draft of the recommendation(s)
Final draft of the recommendation(s)
Contract Database:
Following documents need to be attached in the contract
database
15. Attest Memos
16. Management Letter
17. Signed Management Representation Letter
18. Transmittal Sheet
19. Workpaper review Checklist
20. Audit Report Review tool
21. Stand-alone Report from Contractor
22. Contract Compliance and Monitor Log Checklist
23. Contractor Communications
24. Contract Evaluation
25. Team TEC Project Report
26. Misc. Info. – ie. Subsequent Events
First Phase
Engagement Letters, Time Code 701
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FM\CM prepares the engagement letter;
CM reviews engagement letter for accuracy and
ensures the correct peer review letter has been attached
(make sure the peer review letter is updated in the
contract database);
Total fee in the letter is generally contract price plus
5% contract monitoring fee (or other amount
determined by the Deputy) + Statewide billing. The
fee is different for feeder audits;
First Phase
Engagement Letters, Time Code 701
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CM may take the engagement letter to the entrance
conference or letter can be mailed directly to agency;
CM attaches a copy of signed letter in the contract
database; original signed letter should go to contractor;
CM scans and saves a copy of signed letter at
S:SAO\Contract Monitor\CM file\FYXX Signed
Engagement Letter.
First Phase
Meeting with Contractor, Time Code 702
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CM is required to have a meeting with the contractor
prior to the entrance;
Discussion should include contract specifics,
including important dates such as attest dates and the
scope of the audit which includes the prior year
findings;
CM is strongly encouraged to attend contractor’s
brainstorm sessions for risk assessments.
CM can be available for Fraud discussions and
planning;
First Phase
Entrance Conference, Time code 702
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Deputy should be included as invitee;
Contractor is responsible for the agenda and entrance
conference discussion;
CM Discussion items should include:
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OSA audit processes, timing of audit, including attest due
dates and approximate LAC date
New standards that will affect the audit
Process or expectation with regard to audit comments
CORE impacts to audit
First Phase
Risk Assessments- CM is responsible for
communicating group audit risks to the
contractors.
Second Phase (pages 9-12 of the responsibility matrix)
• Attest Memo Templates and other distribution
items should be sent. This is an ongoing process.
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
Other distribution items include Year-End Reports, Final
Analytics, TABOR Analytics, Lead Schedules, Statistical
Samples, Substantive Audit Programs, Cash Funds Report,
etc.
Attest Memos – Review for accuracy and timely submission.
• Discuss with your contractor about audit
progress and whether there are compliance
findings and update Deputy accordingly.
Second Phase
Interim Invoices
• Interim invoice should follow the split on Exhibit F
• Approve by initial and date
• Include contract #
• Scan the approved invoice in the contract database
• Send email to OSA CFO about the attached invoice
Second Phase
• Status of audit (planning, fieldwork, report)
• Compliance draft report comments
• CM documents first draft of the report
comments in the contract database
• Interim workpaper review – approx. July –
Sept.
• PERA footnote disclosures (available in
FPM)
QUESTIONS
Contact info:
 Contact your contract monitor mentor or other
experienced contract monitors for day-to-day
questions;
 For invoice payment/billing, please contact Controller;
 For others, please contact your Financial Manager.
REMINDER
Part 2 of this Contract Monitor Training will be
around the third week of July and will specifically
cover the Final Phase of the monitoring process.