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FY2022-34 Auditing Services With Altman, Rogers&Co., For KIB&KIBSD For Fiscal Years 22-26 Provided There Are No Timely Protests Received.AGREEMENT FOR AUDIT SERVICES FOR THE KODIAK ISLAND BOROUGH This Agreement made and entered into this 12th day of April, 2022, by and between the Kodiak Island Borough, hereinafter "Borough", a general law municipality and a Borough of the second class, whose address is: 710 Mill Bay Road Kodiak, Alaska 99615, and Altman, Rogers & Co., whose address is 3000 C Street, N., Suite 201, Anchorage, AK, 99503 and licensed and qualified to do business within the State of Alaska, hereinafter called "Contractor." RECITALS A. The Borough desires the performance, provision, and accomplishment of the work, services and materials described and set forth in Part 1, Section 2. B. Contractor represents that it is ready, able and qualified to perform, and will perform, in all respects, all of the work, services, and materials, and to otherwise perform all of the terms, covenants, conditions and provisions of the agreement in the manner, at the times, and for the consideration hereafter provided. Now, Therefore, for and in consideration of the terms, covenants, conditions, and provisions contained herein, and/or attached and incorporated herein and made a part hereof, the parties hereto agree as follows. This contract consists of: A. Part I, consisting of eighteen (18) sections of General Provisions. B. Part II, consisting of six (6) sections of Special Provisions. PART GENERAL PROVISIONS Section 1: Agreement to Perform. The Borough hereby agrees to engage the Contractor, and the Contractor hereby agrees to perform, complete, provide and furnish, in a timely and proper manner, and pursuant to and in accordance with all of the terms, covenants, conditions and provisions of this agreement, all of the work, services, labor and materials required to accomplish all of the work described in Section 2 hereof at the times, in the manner, and for the consideration and payments hereinafter set forth. Section 2: Description of Work. The Contractor shall perform, supply, and provide all of the work, services and materials; hereinafter collectively referred to as "work", as set forth and described on Attachment A and included in Attachment D, attached hereto and incorporated herein by this reference. If there is a conflict between This Agreement, Attachment A and Attachment B, this Agreement shall prevail first, then Attachment A shall prevail over Attachment B. Auditing Services for the Kodiak Island Borough Page 1 Section 3: Time for Commencement and for Completion of Work. (a) Commencement. Contractor shall commence the work called for in this agreement upon the giving of a Notice to Proceed by the Borough. (b) Completion. Upon giving of Notice to Proceed, the work called for in this agreement shall be performed starting May 1, 2022, and completed by the dates indicated in Exhibit A for the prior year audit ending June 30, 2023. For renewal years the commencement of each annual audit shall be July 1 of each year for the prior fiscal year ending the prior June 30 and shall be completed by the reporting dates corresponding to the dates listed in the Scope of Work, Attachment A for the relevant fiscal year. Unless earlier terminated as provided for in this agreement, the Borough shall reserve the right to renew this agreement for a maximum of two (2) extensions of two (2) years each not to exceed a total of five (5) years. The renewal option shall be solely at the discretion of the Borough. Section 4: Financial Terms. (a) Compensation and Payment. For and in consideration of the timely and proper performance of work authorized as provided herein, the Borough shall pay the Contractors for audit services an amount not to exceed a maximum for each year of service in accordance with the Cost Proposal Schedule listed in Attachment B. Additional non -audit consulting of up to 60 hours per year shall be billed at the rates in Attachment C which is appended to this contract and incorporated herein by reference. Services shall be invoiced no more frequently than monthly. (b) No Additional Work. Additional work, identified as additional engagements, shall be estimated, billed, and paid based upon the rates in Attachment C which is appended to this contract and incorporated herein by reference. No claim for additional work, services or materials, not specifically and expressly requested and authorized as provided for in this agreement, or by a written amendment thereto signed by both parties, done or furnished by the Contractor, will be allowed or paid by the Borough and Contractor expressly waives any claim therefore. (c) Availability of Funds. This contract is subject to the availability of funds lawfully appropriated for its performance. Section 5: Borough's Contracting Officer. For purposes of this agreement, the Borough's contracting officer shall be the Borough Finance Director or such other person as is designated in writing by the Borough Manager. Section 6: Contractor Qualified. The Contractor expressly represents and warrants it is now and shall continue to be at all times during the performance of this agreement, the holder of all required or necessary professional, business or other licenses or permits and is qualified and capable of performing all of the work covered or called for by this agreement and is presently ready, able and willing to undertake and perform all of such work and services, and to supply all necessary materials and equipment, at the times, and in a non -negligent professional and workmanlike manner, and pursuant to the terms, conditions and provisions, and for the compensation and payments as herein provided. Section 7: Termination. (a) By Consent. This agreement may be terminated in whole or in part by the mutual Auditing Services for the Kodiak Island Borough Page 2 consent of the parties. Such consent shall be in writing. (b) Termination for Cause. This agreement may be terminated in whole or in part in writing by Borough in the event of failure by Contractor to fulfill any of the terms and conditions of this agreement upon the giving of not less than five (5) calendar days prior written notice of intent to terminate in the manner provided in Part 1, Section 10, hereof. (c) Termination for Convenience of Borough. This agreement may be terminated in whole or in part in writing by the Borough for Borough's convenience provided the Contractor is given not less than thirty (30) calendar days prior written notice of intent to terminate in the manner provided in Part 1, Section 10, hereof. (d) In the event termination by the Borough is effected pursuant to (b) above, the Contractor shall not be entitled to receive any further payment until the work is completed, or the Borough elects to not proceed further with the project. Upon completion of the work, or termination of the project in the event the Borough elects to not proceed with the project, the Contractor shall be paid as follows: 1) In the event the costs and expense of taking over, re -advertising and completing the project or the costs of closing out the project if the Borough elects to not proceed with the project (hereinafter referred to as "close out costs"), exceed the remaining unpaid amount of this agreement, any amount which was otherwise due and unpaid to Contractor at the time of termination shall be applied to such increased costs in taking over, re - advertising and completing the project, (or applied to close out costs) and the remaining amount of such costs, if any, shall be paid by the Contractor to the Borough. 2) In the event said costs and expense of taking over, re -advertising and completing the project, (or close out costs) are less than the total amount which was otherwise due and unpaid to the Contractor at the time of termination, the increased costs of taking over and completing the project (or the close out costs) shall be deducted from the amounts due the Contractor and the balance, if any, paid to the Contractor without interest. (e) Upon receipt of a termination notice pursuant to paragraphs (b), (c), or (d) above, the Contractor shall promptly discontinue all services (unless the notice directs otherwise), and deliver or otherwise make available to the Borough all data, drawings, notes, specifications, reports, estimates, summaries, work in progress, and any and all other information and/or materials as may have been accumulated by the Contractor in performing this agreement, whether completed or in process, and free and clear of any mechanics or other liens or claims in favor of Contractor or any other person. (f) Upon termination pursuant to paragraphs (b), (c), or (d) above, the Borough may, but shall not be required to, take over the work and prosecute the same to completion by agreement with another person or otherwise, may elect to complete the work itself, or to not proceed further with the work and project. (g) If, after termination by the Borough pursuant to (b) above, it is determined that the Contractor had not so failed, the termination shall be deemed to have been effected for the convenience of the Borough. In such event, adjustment of the amounts to be paid to Contractor for termination shall be made as provided in paragraph (f) of this section. Auditing Services for the Kodiak Island Borough Page 3 (h) No other damages, whether for lost profits or otherwise, other than the amounts allowed and computed as provided for in this Section 7 shall be due or payable to Contractor in the event of termination. Section 8: Conflict of Interest. The Contractor covenants, warrants and represents that the Contractor has no interest and shall not acquire any interest, direct or indirect, which would conflict in any manner with the subject matter or the performance of this agreement. The Contractor further covenants, warrants and represents that in the performance of this agreement, no person having any such interest shall be employed. Section 9: Assignment and Subletting Prohibited. The Contractor shall not assign, transfer, convey, pledge, hypothecate, sublet, subcontract, or otherwise dispose of or encumber this agreement, or the rights thereunder, nor shall the Contractor delegate any of his/her/its duties hereunder without the prior written consent of the Borough. Any such attempted assignment, transfer, conveyance, pledge, hypothecation, subletting, or other disposition, or the attempted assignment, disposition or delegation of duties or rights shall be null and void and of no force or effect and shall be grounds and cause for immediate termination of this agreement without liability by and at the option of the Borough. Section 10: Notice. (a) Any notice, demand, request, consent, approval, or other communication that either party desires or is required to give to the other party or any other person shall be in writing and either served personally or sent by prepaid, first-class mail at the address set forth below. Either party may change its address by notifying the other party of its change of address in writing. Notice shall be deemed to have been duly made and given when delivered if served personally, or upon the expiration of twenty-four (24) hours after the time of mailing if mailed as provided in this section. Borough: The Borough Manager's Office 710 Mill Bay Road Kodiak, Alaska 99615 Contractor: Altman, Rogers & Co. 3000 C Street, N., Suite 201 Anchorage, AK 99603 (b) The performance and administration of this program and this agreement will be monitored by the Borough and such other agencies as may be required or authorized pursuant to the terms of any grant to the Borough. Necessary reports, in proper form, will be required as a prerequisite to any payment to the Contractor. (c) All project records shall be maintained by the Contractor for not less than three (3) years after completion and final acceptance of all work by the Borough and shall be subject to inspection and copying by the Borough or any funding agency during said period. Section 11: Status of Parties. (a) Independent Contractor. The Contractor shall perform its obligations hereunder as an independent contractor of the Borough. The Borough may administer the contract and monitor the Contractor's compliance with its obligations hereunder. The Borough shall not supervise or direct the Contractor other than as provided in this section. Auditing Services for the Kodiak Island Borough Page 4 (b) Relationship of the Parties. Nothing herein contained shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of partnership or of joint venture between the parties hereto, it being understood and agreed that neither method of computation of payment nor any other provision contained herein, nor any acts of the parties hereto, shall be deemed to create any relationship between the parties hereto other than the relationship of Borough and an independent Contractor. Section 12: Hold Harmless and Indemnity. (a) The Contractor shall indemnify, defend, save and hold the Borough, its officers, employees and agents harmless from any and all claims, lawsuits, liabilities, penalties, or fines, including attorney's fees and costs, allegedly arising out of, in connection with, or incident to any loss, damage or injury to persons or property occurring as a result of the Contractor's or any subcontractor's intentional misconduct or negligent acts, errors or omissions in its performance pursuant to this contract. (b) Contractor further agrees to appear and defend, and to indemnify and save free and harmless the Borough and its officers, employees and agents from and against any of the foregoing claims, liabilities, penalties, fines or damages, whether or not valid, and for any cost and expense, including reasonable attorney's fees, incurred by the Borough, its officers, employees or agents on account of any claim therefore, including claims by reasons of any defects in any plans, drawings, specifications, computer programs, technical reports, or other work product of Contractor prepared for or submitted to the Borough pursuant to this agreement provided said claim is not based upon a use of said plans, drawings, specifications or other work product for other than the purposes for which such data was prepared and submitted to the Borough. Section 13: No Third -Party Beneficiaries. Nothing in this agreement shall be construed to give any person other than the Borough and the Contractor any legal or equitable right, remedy or claim under this agreement, but it shall be held to be for the sole and exclusive benefit of the Borough and the Contractor. Section 14: Compliance with Laws and Regulations. Contractor shall, at ContractorMs sole cost and expense, comply with all of the requirements of all local, state, or federal laws, ordinances, or regulations now in force, or which may hereafter be in force, pertaining to this agreement, or the project or work to be performed, and shall faithfully observe in the performance of this agreement, all local, state, and federal laws, ordinances and regulations now in force or which may hereafter be in force. When a change in laws, ordinances or regulations results in additional costs, the Contractor may request a change order to cover those costs. Any such change order shall be limited to the ContractorMs actual additional costs as a result of the change. The Contractor shall pay all taxes pertaining to its performance under this contract. Section 15: Successors and Assigns. Except as otherwise provided herein, the covenants, agreements and obligations herein contained shall extend to bind and inure to the benefit not only of the parties hereto but their respective personal representatives, heirs, successors and assigns. Section 16: Miscellaneous. (a) Terminology. Whenever herein the singular number is used, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders. (b) Law Applicable. The laws of the State of Alaska shall govern the construction, validity, Auditing Services for the Kodiak Island Borough Page 5 performance and enforcement of this agreement. Venue as to any action, claim, or proceeding arising out of, or based upon this agreement, including, but not limited to, any action for declaratory or injunctive relief, shall be the appropriate Court sitting in the City of Kodiak, Third Judicial District, Alaska. (c) Paragraph Headings. The headings of the several sections and subsections contained herein are for convenience only and do not define, limit or construe the contents of such sections and subsections. (d) Terms Construed as Covenants and Conditions. Every term and each provision of this agreement performable by Contractor shall be construed to be both a covenant and a condition. (e) Time of the Essence. Time is of the essence of each term, condition, covenant and provision of this agreement. (f) Severability. In the event any provision of this agreement is adjudicated or held to be invalid or unenforceable, the remaining provisions shall remain in full force and effect. (g) Nonwaiver. No delay or omission of the right to exercise any power by either party shall impair any such right or power, or be construed as a waiver of any default or as acquiescence therein. One or more waivers of any covenant, term or condition of this agreement by either party shall not be construed by the other party as a waiver of a subsequent breach of the same covenant, term or condition. The consent or approval by either party to any act by the other party of a nature requiring consent or approval shall not be deemed to waive or render unnecessary consent to or approval of any subsequent similar act. Section 17: Amendment. (a) This contract shall only be amended, modified or changed by writing, executed by authorized representatives of the parties. (b) For the purpose of any amendment modification or change to the terms and conditions of this contract, the only authorized representatives of the parties are. 1) Kodiak Island Borough, Borough Manager 2) Altman, Rogers & Co, Principal (c) Any attempt to amend, modify, or change this contract by either an unauthorized representative or unauthorized means shall be void. Section 18: Entire Agreement. This agreement and any schedules, appendices or exhibits attached hereto sets forth all the covenants, promises, agreements, conditions and understandings between the parties hereto, and there are no covenants, promises, agreements, conditions or understandings, either oral or written, between them other than as herein set forth. Except as herein otherwise expressly provided, no contemporaneous or subsequent agreement, understanding, alteration, amendment, change or addition to this agreement, or any schedule, appendix, exhibit or attachment thereto shall be binding upon the parties hereto unless reduced to writing and signed by both parties. This agreement constitutes a final, complete, and exclusive statement of the agreement between the parties. PART II Auditing Services for the Kodiak Island Borough Page 6 SPECIAL PROVISIONS Section 1 : Insurance. (a) During the entire period of the project or work, the Contractor shall provide the following types of insurance. The Borough shall be insured as additional insured on all insurance policies required under subsection (a)(4) of this section. All policies shall have a thirty (30) day cancellation clause except in the event of cancellation due to non-payment of premium, when notification to Contractor is ten (10) days. 1. Professional liability insurance covering errors and omissions at $1,000,000 per claim. 2. Valuable papers and electronic data processing (EDP) coverage in an amount sufficient to reconstruct the work done under this contract, but in no event less than $10,000 is required. 3. Workers' compensation as required by law and employer's liability coverage at a minimum of $1,000,000. 4. Commercial general liability insurance - $1,000,000 per occurrence and $2,000,000 aggregate. (b) The Borough shall have the right at any time to require higher limits for public liability and property damage insurance. In any such event, the additional premium or premiums payable solely as the result of such additional insurance shall be added by amendment to the contract price. (c) Each policy of insurance required by this section shall provide for no less than thirty (30) days' advance notice to the Borough prior to cancellation except in the event of cancellation due to non-payment of premium, when notification to Contractor is ten (10) days. Insurance certificates will be required to be submitted for review by the Borough's Finance Director before the Borough will issue a notice to proceed. Failure to maintain coverage is a material breach and grounds for termination of the contract. Section 2: Equal Employment Opportunity. (a) The Contractor shall not discriminate against any employee or applicant for employment because of race, color, religion, disability, national origin, ancestry, age, or sex. The Contractor will take affirmative action to insure that applicants are employed and that employees are treated during employment without regard to their race, color, religion, disability, national origin, ancestry, age or sex. Such action shall include, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination, rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this nondiscrimination clause. (b) The Contractor shall state in all solicitations or advertisements for employees to work on contract jobs to be let in the performance of this agreement, that all qualified applicants will receive Auditing Services for the Kodiak Island Borough Page 7 consideration for employment without regard to race, color, religion, disability, national origin, ancestry, age, or sex. (c) The Contractor agrees to fully cooperate with the office or agency of the State of Alaska which seeks to deal with the problem of unlawful or invidious discrimination, and with all other State efforts to guarantee fair employment practices under this agreement, and said Contractor will comply promptly with all requests and directions from the State Commission of Human Rights or any of its officers or against relating to prevention of discriminatory employment practice. (d) Full cooperation as expressed in the foregoing clause (c) shall include, but not be limited to, being a witness in any proceeding involving questions of unlawful or invidious discrimination if such is deemed necessary by any official or agency of the State of Alaska, permitting employees of said Contractor to be witnesses or complainants in any proceeding involving questions of unlawful or invidious discrimination, if such is deemed necessary by any official or agency of the State of Alaska, or the Borough, participating in meetings, submitting periodic reports on the equal employment aspects of present and future employment, assisting in inspection of relevant facilities, and promptly complying with all State directives deemed essential by any office or agency of the State of Alaska, or the Borough, to insure compliance with all federal and state laws, regulations, and policies pertaining to the prevention of discriminatory employment practices. (e) Failure to perform any of the above agreements pertaining to equal employment opportunities shall be deemed a material breach of the contract and sufficient grounds for termination of this agreement for cause without liability. Section 3: Contractor Responsible for Personnel. The Contractor has or will secure, at Contractor's own cost and expense, all personnel required to perform this agreement in a timely and proper manner. The parties hereto agree and understand that such personnel shall in no event be deemed to be, and are not, employees, agents, or representatives of the Borough and such persons shall have no contractual or other relationship with the Borough, and the Borough shall have no responsibility or liability whatsoever to any of said persons, or for the acts or omissions of any of such persons. Section 4: Personnel Suaervision. Contractor agrees that all work and services required or provided under this agreement shall be performed personally by the Contractor, unless otherwise authorized in writing by the Borough's contracting officer, and in such event all personnel engaged in any such work shall be fully qualified, and shall be licensed and authorized under applicable state, federal and local laws to perform such services. Section 5: Corporate Authority. If Contractor is a corporation Contractor shall deliver to the Borough at the time of execution of this agreement a certified copy of a resolution of its board of directors authorizing the execution of this agreement and naming the officers that are authorized to execute this agreement on behalf of the corporation. Section 6: Additional Terms and Conditions. This agreement is subject to each of the additional terms, covenants, conditions and Auditing Services for the Kodiak Island Borough Page 8 provisions set out in the RFP, attached hereto as Attachment D which are hereby expressly referred to and incorporated herein as though set forth in full. Wherefore the parties have entered into this agreement the date and year first above written at the City of Kodiak, Alaska. KODIAK ISLAND BOROUGH: Date:�� Z,2, i By. Roxanne Murphy Borough Manager V OWPA 0i � 12 Date'. /7 Auditing Services for the Kodiak Island Borough Page 9 ATTES B - Nova Javier Interim Borough Clerk Sci jBra • - richten Borough Attorney 10101,11 By: (Print -Name/Position) BOROUGH ACKNOWLEDGMENTS STATE OF ALASKA FIRST JUDICIAL DISTRICT THIS IS TO CERTIFY that on this day of , 2022, before me, the undersigned, a notary public in and for the State of Alaska, duly commissioned and sworn, personally appeared Roxanne Murphy to me known to be the Borough Manager of the Kodiak Island Borough, a municipal corporation, the corporation which executed the above and foregoing instrument; who on oath stated that she was duly authorized to execute said instrument on behalf of said corporation; who acknowledged to me that she signed the same freely and voluntarily on behalf of said corporation for the uses and purposes therein mentioned. WITNESS my hand and official seal the day and year in the certificate first above written. (Seal) STATE OF ALASKA ) )SS. FIRST JUDICIAL DISTRICT 1 NOTARY PUBLIC FOR ALASKA My Commission Expires: THIS IS TO CERTIFY that on this day of 2022, before me, the undersigned, a notary public in and for the State of Alaska, duly commissioned and sworn, personally appeared Alise Rice to me known to be the Borough Clerk of the Kodiak Island Borough, a municipal corporation, the corporation which executed the above and foregoing instrument; who on oath stated that she was duly authorized to execute said instrument on behalf of said corporation; who acknowledged to me that she signed the same freely and voluntarily on behalf of said corporation for the uses and purposes therein mentioned. WITNESS my hand and official seal the day and year in the certificate first above written. (Seal) Auditing Services for the Kodiak Island Borough Page 10 NOTARY PUBLIC FOR ALASKA My Commission Expires: ACKNOWLEDGMENT LIMITED LIABILITY COMPANY STATE OF ALASKA ) SS. FIRST JUDICIAL DISTRICT I, , a Notary Public, in and for the State of , hereby certify that , whose name as manager/member of LLC., is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he or she, as such officer and with full authority, executed the same voluntarily for and as the act of said limited liability company. WITNESS my hand and official seal the day and year in this certificate above written. NOTARY PUBLIC FOR, My Commission Expires: (Seal) Auditing Services for the Kodiak Island Borough Page 11 EXHIBIT A SCOPE OF WORK The Borough desires the auditor to express an opinion on the fair presentation of its basic financial statements in conformity with generally accepted accounting principles. The Borough presents all major funds with budgetary comparisons as part of its basic financial statements. The auditor is not required to audit the combining and individual fund financial statements and supporting schedules. However, the auditor is to provide an "in -relation -to" report on the combining and individual fund financial statements and supporting schedules based on the auditing procedures applied during the audit of the basic financial statements. The auditor is not required to audit the statistical section of the report. The auditor shall also be responsible for performing certain limited procedures involving required supplementary information required by the Governmental Accounting Standards Board as mandated by generally accepted auditing standards. 1. Auditina Standards to be Followed To meet the requirements of this request for proposals, the audit must be performed in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of the Single Audit Act of 1984 as amended, the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, and the AICPA Guide Audits of State and Local Governmental Units and the State of Alaska Single Audit Regulation 2 AAC 45.010. 2 Financial Statements and Compliance Statements - Borough 2.1 SCOPE OF WORK TO BE PERFORMED The Kodiak Island Borough desires the auditor to express an opinion on the fair presentation of its general-purpose financial statements in conformity with generally accepted accounting principles. The Borough also desires the auditor to express an opinion on the fair presentation of its combining and individual fund and account group financial statements and schedules in conformity with generally accepted accounting principles. The auditor is not required to audit the supporting schedules contained in the Annual Financial Report. The auditor is not required to audit the statistical section of the report. The auditor is required to report on compliance with applicable state and with applicable federal laws and regulations and on internal controls over financial reporting that could have a material effect on the fair presentation of the financial statements. Auditing Services for the Kodiak Island Borough Page 12 The auditor is required to test internal controls and compliance, as described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of the Borough's major federal programs. The auditor is also required to test internal controls and compliance, as described in the State of Alaska Audit Guide and Compliance Supplement for State Single Audits that are applicable to each of the Borough's major state programs. The auditor must report on compliance and internal control over compliance applicable to each major federal and to each major state program. The auditor is not required to audit the schedules of expenditures of federal and state awards. The auditor is required to report any findings or questioned costs found in the course of the work described above. Findings must be reported in three separate categories: 1) those affecting financial reporting, 2) those affecting major federal programs, and 3) those affecting major state programs. Recommendations for corrective action should be included. The auditor shall also be responsible for performing certain limited procedures, for Management's Discussion and Analysis and for other Required Supplementary Information required by the Governmental Accounting Standards Board, as mandated by generally accepted auditing standards. 2.2 AUDITING STANDARDS TO BE FOLLOWED To meet the requirements of this request for proposal, the audit shall be performed in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and the provisions of the State of Alaska Single Audit Regulation (2AAC 45.010), to include the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. 2.3 REPORTS TO BE ISSUED Reports shall be written in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and the provisions of the State of Alaska Single Audit Regulation (2 AAC 45.010), to include the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Auditing Services for the Kodiak Island Borough Page 13 Following the completion of the audit of the fiscal year's financial statements, the auditor shall issue: • A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles. • For federal purposes, a report on compliance and on internal control over financial reporting based on an audit of the financial statements performed in accordance with Government Auditing Standards. • An "in -relation -to" report on the Schedule of Expenditures of Federal Awards, along with a report on compliance with requirements applicable to each major program and on internal control over compliance in accordance with OMB Circular A-133. • A Schedule of Findings and Questioned Costs summarizing auditor results for a federal single audit, along with recommendations for corrective action. • Accounting assistance will be required for preparation of the Annual Comprehensive Financial Report (ACFR). This will be included in the lump sum cost for audit services. In the required state and federal reports on compliance and on internal controls over financial reporting and on the state and federal reports on compliance with requirements applicable to each major program, the auditor shall communicate any reportable conditions found during the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of internal control, which could adversely affect the Borough's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Reportable conditions that are also material weaknesses shall be identified as such in the report. Nonreportable conditions discovered by the auditors shall be reported in a separate letter to management, which shall be referred to in the report on internal controls. The report on compliance with requirements to each major assistance program shall include all material instances of noncompliance. All nonmaterial instances of noncompliance shall be reported in a separate management letter, which shall be referred to in the report on compliance. Fraud and Illegal Acts. Auditors shall be required to make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware. This notification should be made in accordance with Statements of Auditing Standards No. 54 and No. 99, and with the U.S. General Accounting Office's Government Auditing Standards. Auditing Services for the Kodiak Island Borough Page 14 2.4 REPORT DEADLINES The opinion on the financial statements of the Borough for the fiscal years ending June 30 is to be submitted by November 15 for each year of the engagement, unless adjusted by mutual agreement. The reports required for the federal Single Audit Act, as amended in 1996, and the state single audit regulation are to be submitted by December 15 for each year of the engagement, unless adjusted by mutual agreement. 2.5 SPECIAL CONSIDERATIONS The Kodiak Island Borough will send its Annual Comprehensive Financial Report to the Government Finance Officers Association for review in its Certificate of Achievement for Excellence in Financial Reporting program. The auditor may be required to provide limited special assistance to the Kodiak Island Borough to meet the requirements of that program. Any fees for this assistance are outside the scope of the audit and will be billed as additional engagement work at the rates in Attachment C. The Kodiak Island Borough may prepare one or more official statements in connection with the sale of debt securities, which may contain the general- purpose financial statements and the auditor's report thereon. The auditor shall be required, if requested by the financial advisor and/or the underwriter, to issue a "consent and citation of expertise" as the auditor and any necessary "comfort letters". The schedules of expenditures of federal and state awards the related auditor's reports, as well as the federal and state reports on compliance and on internal control over financial reporting and on compliance with requirements applicable to each major program and on internal control over that compliance are not to be included in the Annual Comprehensive Financial Report but are to be issued separately. 2.6 WORKING PAPER RETENTION AND ACCESS TO WORKING PAPERS All working papers and reports must be retained, at the auditor's expense, for a minimum of three (3) years from the end of the audited period, unless the firm is notified in writing by the Borough of the need to extend the retention period. The auditor will be required to make working papers available, upon request, to the following parties or their designees: • Kodiak Island Borough • Parties designated by the federal or state governments or by the Kodiak Island Borough as part of an audit quality review process • Auditors of entities of which the Kodiak Island Borough is a sub recipient of grant funds Auditing Services for the Kodiak Island Borough Page 15 In addition, the firm shall respond promptly and fully to the reasonable inquires of successor auditors. The firm shall allow successor auditors to review working papers, including documentation of planning, internal control, audit results, and other matters of continuing accounting and auditing significance. 3. Financial Statements and Compliance Statements — School District 3.1 SCOPE OF WORK TO BE PERFORMED The Kodiak Island Borough School District desires the auditor to express an opinion on the fair presentation of its general-purpose financial statements in conformity with generally accepted accounting principles. The School District also desires the auditor to express an opinion on the fair presentation of its combining and individual fund schedules in conformity with generally accepted accounting principles (i.e., a "full -scope" audit). The auditor is not required to audit the supporting schedules contained in the Annual Comprehensive Financial Report. The auditor is not required to audit the statistical section of the report. The auditor is required to report on compliance with applicable state and with applicable federal laws and regulations and on internal controls over financial reporting that could have a material effect on the fair presentation of the financial statements. The auditor is required to test internal controls and compliance as described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of the School District's major federal programs. The auditor is also required to test internal controls and compliance, as described in the State of Alaska Audit Guide and Compliance Supplement for State Single Audits that are applicable to each of the School District's major state programs. The auditor must report on compliance and internal control over compliance applicable to each major federal and to each major state program. The auditor is not required to audit the schedules of expenditures of federal and state awards. The auditor is required to report any findings or questioned costs found in the course of the work described above. Findings must be reported in three separate categories: 1) those affecting financial reporting, 2) those affecting major federal programs, and 3) those affecting major state programs. Recommendations for corrective action should be included. The auditor shall also be responsible for performing certain limited procedures, for Management's Discussion and Analysis and for other Required Supplementary Information required by the Governmental Accounting Standards Board, as mandated by generally accepted auditing standards. Auditing Services for the Kodiak Island Borough Page 16 3.2 AUDITING STANDARDS TO BE FOLLOWED To meet the requirements of this request for proposal, the audit shall be performed in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and the provisions of the State of Alaska Single Audit Regulation (2AAC 45.010), to include the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. 3.3 REPORTS TO BE ISSUED Reports shall be written in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and the provisions of the State of Alaska Single Audit Regulation (2 AAC 45.010), to include the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Following the completion of the audit of the fiscal year's financial statements, the auditor shall issue: • A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles. • For federal purposes, a report on compliance and on internal control over financial reporting based on an audit of the financial statements performed in accordance with Government Auditing Standards. • An "in -relation -to" report on the Schedule of Expenditures of Federal Awards, along with a report on compliance with requirements applicable to each major program and on internal control over compliance in accordance with OMB Circular A-133. • A Schedule of Findings and Questioned Costs summarizing auditor results for a federal single audit, along with recommendations for corrective action. • For state purposes, a report on compliance and on internal control over financial reporting based on an audit of the financial statements performed in accordance with Government Auditing Standards. Auditing Services for the Kodiak Island Borough Page 17 An "in -relation -to" report on the Schedule of Expenditures of State Awards, along with a report on compliance with requirements applicable to each major program and on internal control over compliance in accordance with the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. The auditors must send out these reports for the School District: • A report on fund balance compliance requirements, in accordance with AS 14.17.505. A report on the fair presentation of the tuition rate report, in accordance with Alaska Department of Education and Early Development instructions for Form 05-00-014. • One copy of the General -Purpose Financial Statement for each state agency listed on either the schedule of state financial assistance or Federal Awards should be sent to the Statewide Single Audit Coordinator, Office of Management & Budget. • One copy of the General -Purpose Financial Statement should be sent to the State of Alaska, Department of Administration, Division of Finance. Their report should also include the Tuition Rate Report and Management Letter • Two copies of the General -Purpose Financial Statement will be sent to the Federal Audit Clearing House. It will also include the Data Collection Form for Reporting on Audits of States, Local Governments and Nonprofit Organizations (Form SF -SAC) which the auditors have prepared. Five additional copies each of the General -Purpose Financial Statement, Management Letter, Letter to the School Board and two (2) copies of the Tuition Rate Report sent to the School District along with an electronic version of all reports. In the required state and federal reports on compliance and on internal controls over financial reporting and on the state and federal reports on compliance with requirements applicable to each major program, the auditor shall communicate any reportable conditions found during the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of internal control, which could adversely affect the School District's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Reportable conditions that are also material weaknesses shall be identified as such in the report. Nonreportable conditions discovered by the auditors shall be reported in a separate letter to management, which shall be referred to in the report on internal controls. Auditing Services for the Kodiak Island Borough Page 18 The report on compliance with requirements to each major assistance program shall include all material instances of noncompliance. All nonmaterial instances of noncompliance shall be reported in a separate management letter, which shall be referred to in the report on compliance. Fraud and Illegal Acts. Auditors shall be required to make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware. This notification should be made in accordance with Statements of Auditing Standards No. 54 and No. 99, and with the U.S. General Accounting Office's Government Auditing Standards. 3.4 REPORT DEADLINES Opinions on the financial statements of the School District and on reports required by the Alaska Department of Education and Early Development for the fiscal years ending June 30 are to be submitted by October 1 for each year of the engagement, unless adjusted by mutual agreement. The reports required for the federal Single Audit Act, as amended in 1996, the state single audit regulations, and the applicable state statutes and regulations of the Alaska Department of Education and Early Development are to be submitted by October 1 for each year of the engagement, unless adjusted by mutual agreement. 3.5 WORKING PAPER RETENTION AND ACCESS TO WORKING PAPERS All working papers and reports must be retained, at the auditor's expense, for a minimum of three (3) years from the end of the audited period, unless the firm is notified in writing by the or School District of the need to extend the retention period. The auditor will be required to make working papers available, upon request, to the following parties or their designees: • Kodiak Island Borough and Kodiak Island Borough School District • State Department of Education and Early Development and U.S. Department of Education • Parties designated by the federal or state governments or by the Borough or School District as part of an audit quality review process • Auditors of entities of which the Kodiak Island Borough School District is a subrecipient of grant funds In addition, the firm shall respond promptly and fully to the reasonable inquires of successor auditors. The firm shall allow successor auditors to review working papers, including documentation of planning, internal control, audit results, and other matters of continuing accounting and auditing significance. 4. Peer Reviews Auditing Services for the Kodiak Island Borough Page 19 The firm shall provide copies of their peer reviews as they are performed during the term of the contract. 5. Management Letters The auditor shall observe the adequacy of the systems of internal control, accounting procedures, and other significant matters. Upon the request any appropriate recommendations may be reviewed with management and included in separate letters to the Borough Manager and Assembly, and to the Superintendent and School Board. Interim management letters on improvements in controls and procedures for the Borough and School District will be submitted within three weeks of interim fieldwork for each year. Final management letters for the Borough and School District will be submitted by December 15 and September 30, respectively, of each year, unless adjusted by mutual agreement. The auditor will meet at least semi-annually with the Assembly and School Board, or with designated Committee(s), for the purpose of reviewing the interim and/or final management letters. 6. Presentations As early as possible after the statements have been printed, the appropriate financial reports, compliance reports, and the management letters are to be reviewed with a designated committee of the School District and with the Borough's audit committee. Then they are to be presented to the School Board and to the Assembly at a regular meeting, respectively. The audit partner assigned to the engagement should be in attendance, if requested to be present. Auditing Services for the Kodiak Island Borough Page 20 COST PROPOSAL SCHEDULE KODIAK ISLAND BOROUGH 710 Mill Bay Road Kodiak, AK 99615 EXTERNAL AUDIT SERVICES FOR KODIAK ISLAND BOROUGH AND KODIAK ISLAND BOROUGH SCHOOL DISTRICT 2022 2023 2024 2025 2026 Borough Annual Comprehensive Financial Report Federal Single Audit State Single Audit Consultation Total $ 99,890 104,500 108,000 112,500 117,500 5,000 5,000 5,500 5,500 5,500 4,000 4,000 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 $113 390 118.000 122 0 127.000 132,000 School District Financial Statements, Statements of Compliance (Alaska Statutes and Department of Education and Early Development, Reimbursable Expenditures for School Construction, and Tuition Rate Report $ 41,910 Federal Single Audit 4,500 State Single Audit 4,500 Consultation 3,000 Total $ 53,910 GRAND TOTAL $ !Q 7300 44,000 45,000 47,000 48,500 4,500 5,000 5,000 5.500 4,500 5,000 5,000 5,500 3,000 3,000 3,000 3,000 56,000 58,000 60 00 62,00 174 000 180,500 1 7 0 194,500 RATE SCHEDULE FOR POTENTIAL ADDITIONAL ENGAGEMENT(S) KODIAK ISLAND BOROUGH 710 Mill Bay Road Kodiak, AK 99615 EXTERNAL AUDIT SERVICES FOR KODIAK ISLAND BOROUGH AND KODIAK ISLAND BOROUGH SCHOOL DISTRICT Staff Category 2022 2023 2024 2025 2026 Partner 210 215 215 220 220 Manager 185 190 190 195 195 Supervisor 175 180 180 185 185 Senior 150 155 155 160 160 In -Charge 125 130 130 135 135 Staff 110 115 115 120 120 SUBMITTAL DEADLINE: TIME: 3:00 p.m. DATE: March 30, 2022 DELIVER PROPOSALS TO: Kodiak Island Borough Managers Office 710 Mill Bay Road Kodiak AK 99615 COVER SHEET THIS IS NOT AN ORDER ISSUE DATE PROJECT: March 9, 2022 EXTERNAL AUDIT SERVICES THE ATTACHED TERMS & CONDITIONS SHALL BECOME PART OF ANY CONTRACT RESULTING FROM THIS REQUEST FOR PROPOSAL. PROPOSALS SHALL BE SUBMITTED IN THE PROPER FORMAT AND MUST HAVE ORIGINAL SIGNATURES ON THE FORMS PROVIDED. FOR VENDOR USE ONLY: PLEASE RETURN THIS ORIGINAL. MAKE A COPY FOR YOUR FILES. DATE OF PROPOSAL: BUSINESS LICENSE NUMBER: BUSINESS NAME: MAILING ADDRESS: PHYSICAL LOCATION: TELEPHONE NUMBER: FACSIMILE NUMBER: BY: Print Name Signature TABLE OF CONTENTS 1. INSTRUCTIONS FOR RESPONDENTS........................................................................................................3 2. GENERAL INFORMATION...........................................................................................................................4 3. PROPOSAL SUBMISSION REQUIREMENTS............................................................................................5 4. LOBBYING....................................................................................... ERROR! BOOKMARK NOT DEFINED. 5. ALTERNATE PROPOSALS............................................................................................................................6 6. FAX OR EMAIL SUBMITTAL NOT ACCEPTABLE.................................................................................6 7. WITHDRAWAL, MODIFICATION, OR CORRECTION...........................................................................6 8. LATE PROPOSALS..........................................................................................................................................6 9. RESPONSIBILITY TO KEEP INFORMED..................................................................................................6 10. PRICES..............................................................................................................................................................6 11. VENDOR TAX ID NUMBER..........................................................................................................................7 12. FIRM OFFER...................................................................................................................................................7 13. EXTENSION OF PRICES...............................................................................................................................7 14. PROPOSAL PREPARATION COSTS...........................................................................................................7 15. CONTRACT FUNDING..................................................................................................................................7 16. RIGHT TO REJECT AND NOT AWARD....................................................................................................7 17. EQUAL OPPORTUNITY................................................................................................................................7 18. CONFLICTS OF INTEREST PROHIBITED .............................. ERROR! BOOKMARK NOT DEFINED. 19. SUBMITTAL FORMAT REQUIREMENTS................................................................................................8 20. CONTRACT NEGOTIATION......................................................................................................................11 21. INSURANCE REQUIREMENTS.................................................................................................................11 22. CONTRACT SPECIFICATIONS.................................................................................................................12 23. CURRENT AND FUTURE ENVIRONMENT............................................................................................12 24. ADDITIONAL INFORMATION..................................................................................................................16 25. ENGAGEMENT REQUIREMENTS...........................................................................................................16 26. POTENTIAL ADDITIONAL ENGAGEMENT(S).....................................................................................25 27. ASSISTANCE TO BE PROVIDED TO THE AUDITOR AND REPORT PREPARATION.................26 28. EVALUATION CRITERIA...........................................................................................................................27 29. SELECTION PROCESS................................................................................................................................28 ATTACHMENTA....................................................................................................................................................31 ATTACHMENTB....................................................................................................................................................32 EXTERNAL AUDIT SERVICES FOR THE KODIAK ISLAND BOROUGH AND THE KODIAK ISLAND BOROUGH SCHOOL DISTRICT..........................................................................................................................32 ATTACHMENTC....................................................................................................................................................33 ATTACHMENTD....................................................................................................................................................34 Page 2 of 34 KODIAK ISLAND BOROUGH REQUEST FOR PROPOSAL (RFP) GENERAL INFORMATION TITLE CONTACT FOR QUESTIONS EXTERNAL AUDIT SERVICES Dora Cross, Finance Director Telephone: (907) 486-9320 Email: dcross@kodiakak.us 1. INSTRUCTIONS FOR RESPONDENTS SUBMIT PROPOSALS ONLY TO RFP SUBMITTAL DEADLINE Kodiak Island Borough Managers Office Rm 125 710 Mill Bay Rd Kodiak, Alaska 99615 March 30, 2022, 3 PM local time NUMBER OF COPIES TO BE SUBMITTED: Four (4) complete and signed copies of your proposal package along with an electronic version. 1.1. Deliver proposal copies (number specified above) only to the address above before the submittal deadline. Proposals received by the Manager's Office after the submittal deadline will be returned to the proposer upon receipt of written request or retained unopened in the proposal file. 1.2. QUESTIONS, OBJECTIONS, OR COMMENTS Proposers are requested to carefully review this Request for Proposal (RFP), without delay, for defects and questionable or objectionable matter. Questions, objections, or comments should be made in writing and received by the Question Contact no later than 10 calendar days prior to the proposal submittal deadline, so that any necessary amendments may be published and distributed to proposers to prevent the opening of a defective proposal. Proposers' protests based upon any omission or errors, or the content of the RFP will be disallowed if not made known prior to the proposal submittal deadline. 1.3. Address all auestions. obiections. or comments to: Borouah Finance Director Dora Cross, 710 Mill Bay Road, Kodiak, Alaska 99615, or by email at dcross kodiakak.us. 1.4. The Kodiak Island Borough (the Borough) assumes no responsibility for any interpretation or representations made by any of its officers, agents, or employees unless interpretations or representations are incorporated in a written amendment to the RFP. Page 3 of 34 2. GENERAL INFORMATION 2.1. The Kodiak Island Borough and its component unit, the Kodiak Island Borough School District (School District), are seeking financial auditing services, for their fiscal years ending June 30, to result in audit opinions rendered on each entity's financial statements (which are prepared by the Borough and the School District) and on the Borough's and School District's compliance with state and federal single audit reporting requirements. Furthermore, the scope of the engagement must also include non -audit consulting time up to 60 hours annually at fixed hourly rates set in the agreement, and which is in addition to the fixed fee work. The engagement will be for a fixed fee and cover a period of one year with two, two-year renewal options based on satisfactory performance in the first and through the third years. The fixed fee is to include all audit expenses. Also see 25.1.5 "Special Considerations" on page 18-19. 2.2. In addition, the Borough and School District are requesting fixed hourly rate quotes for each staff category of the proposer. The non -audit consulting time and any additional engagements outside of the non -audit consulting time arising during the five years shall be estimated, billed, and paid based on these rates. 2.3. The Kodiak Island Borough was incorporated September 23, 1963 as a Second Class Borough under the provisions of the state of Alaska Borough Act (1963), as amended. The Borough operates under an Assembly -Manager form of government and has the following powers: Area wide: public education and public schools; general administration and finance; assessment and collection of taxes; debt service; planning and zoning in the entire Borough. Community Health: this is restricted to Hospital and Mental Health services on an area wide basis. Non areawide: Parks and Recreation, Economic Development and Animal Control. Enterprise activities: Solid Waste Disposal & Collection District; E-911; KFRC; Hospital; Long Term Care Center; and Research Court Apartments. Service Area: road construction and maintenance, fire protection, tide gate and streetlights on a neighborhood or community basis. All funds of the Borough are accounted for in accordance with generally accepted accounting principles. 2.4. The Kodiak Island Borough School District operates a public school system under an elected school board pursuant to Alaska Statutes, Title 29.35.160. All funds of the School District are accounted for in accordance with generally accepted accounting principles and the requirements of the State of Alaska, Department of Education and Early Development. Page 4 of 34 2.5. The Borough intends to follow the schedule of activities described below during the procurement process. The Borough reserves the exclusive right to alter the schedule. Activity Release of RFP Proposal Due Date Notice of Intent to Award Final Selection Date March 9, 2022 March 30, 2022 March 31, 2022 (tentatively) April 7, 2022 3. PROPOSAL SUBMISSION REQUIREMENTS Each respondent must submit its complete proposal divided into 2 parts: Part One: Proposal Exclusive of Price Proposal Component Part One consists of the complete proposal exclusive of the price -proposal component. Part One must be signed and dated by a person who is authorized to bind the respondent. Failure to properly sign and date the proposal will be grounds for rejection. Important note: The Part One Proposal and copies of Part One Proposal must exclude all price proposal information. Part Two: Price Proposal Component Submit 1 set of the Part Two price proposal component enclosed in a separate sealed envelope placed within the sealed envelope or box containing the Part One proposal. The Part Two Price Proposal Component shall be submitted on the forms included as Attachment B, Cost Proposal Schedule, and Attachment C, Rate Schedule, provided in this RFP for the specified project. Failure to include the Part Two Price Proposal Component in a separate sealed envelope inside the sealed envelope or box containing the Part One proposal will be grounds for rejection. The Part One Proposal shall be in the format called for in section 17 and shall include all required contents. It shall be submitted in the following form: 3.1. A completed page one (1) shall be the face document of each Part one proposal. 3.2. Submit four (4) complete and signed copies of your Part one proposal package along with an electronic version. 3.3. Neither the Borough nor its officers, agents, or employees shall be responsible for the premature opening of, or the failure to open, a proposal not properly addressed and identified. Page 5 of 34 3.4. The manager's office is located at 710 Mill Bay Road, room 125, Kodiak, Alaska, and is open for business from 8:00 a.m. to 5:00 p.m., Monday through Friday. Acceptance of Special Delivery mail is not available Saturday, Sunday, or holidays. It shall be the responsibility of the proposer to assure that his proposal is delivered to the Manager's Office prior to the submittal deadline. 4. ALTERNATE PROPOSALS 4.1. Alternate proposals will not be considered unless specifically requested and approved. 5. FAX OR EMAIL SUBMITTAL NOT ACCEPTABLE 5.1. Fax or email submittal of a proposal is not acceptable. 6. WITHDRAWAL, MODIFICATION, OR CORRECTION 6.1. After depositing a proposal, a proposer may withdraw, modify, or correct his proposal, providing the Manager's Office receives the request for such withdrawal, modification, or correction before the time set for submittal deadline. The original proposal, as modified by such written communication, will be considered as the proposal. No proposer will be permitted to withdraw his proposal after the time set for submittal deadline. 7. LATE PROPOSALS 7.1. Late proposals are proposals received after the time and date set for submittal deadline. Proposals will be received during the period and at the place stated on the RFP Cover Sheet. It is the sole responsibility of the proposer to see that his proposal is submitted in time. Any proposal received after the scheduled opening time will not be considered, but will be held unopened in the file, unless other disposition is requested or agreed to by the proposer. Other disposition will not take place until after award. 8. RESPONSIBILITY TO KEEP INFORMED 8.1. It is the potential proposer's responsibility to keep informed. Failure to do so may result in a proposal being declared non-responsive. 9. PRICES 9.1. The proposer shall state prices in terms of estimated hours and the applicable rate on this RFP. Prices quoted for services must be in U.S. funds and include applicable duties, fees, and costs so that the services can be provided, without further cost. Prices quoted in proposals must be exclusive of federal, state and local taxes. If the proposer believes that certain taxes are payable by the Borough, the proposer may list such taxes separately, directly below the price for the affected item. Page 6 of 34 10. VENDOR TAX ID NUMBER 10.1. If services procured through this RFP must be included on a 1099 -NEC tax form, as described in the Internal Revenue Code, a valid taxpayer identification number must be provided to the Borough before payment will be made. 11. FIRM OFFER 11.1. Offers made in response to this RFP must be good and firm for a period of ninety (90) days from the date of submittal deadline. 12. EXTENSION OF PRICES 12.1. In the case of error in the extension of prices in the proposal, the unit price will govern. 13. PROPOSAL PREPARATION COSTS 13.1. The Borough is not liable for any costs incurred by the proposer in proposal preparation. 13.2. The Borough shall not be liable for any cost incurred by any firm in response to this solicitation. 14. CONTRACT FUNDING 14.1. Borough funds are in the proposed budget for FY 2023. Payment and performance obligations for this work and/or contract renewals are subject to the availability and appropriation of funds. 15. RIGHT TO REJECT AND NOT AWARD 15.1. The Borough may acceptor reject any and all proposals. 15.2. The Borough reserves the right to not award the proposed agreement, if it is in the Borough's best interest. 16. EQUAL OPPORTUNITY 16.1. The Borough is an Affirmative Action/ Equal Opportunity Employer. 16.2. The Borough, and all contractors, vendors, and suppliers, agree and certify that they shall comply with the requirement of all pertinent Federal and State laws relating to equal opportunity in contracting and procurement activities. Page 7 of 34 17. SUBMITTAL FORMAT REQUIREMENTS 17.1. Proposers are advised that, notwithstanding any instructions or inferences elsewhere in this Request for Proposal, only the documents shown in this section need be submitted with and made part of their proposal. Other documents may be required after the submittal deadline, but prior to award. Proposers are advised that failure to submit the documents shown in this section and return the forms in the condition indicated SHALL RENDER THE PROPOSAL NON-RESPONSIVE. 17.2. To achieve a uniform review process and obtain the maximum degree of comparability, proposals will not be considered if the following documents and/or attachments are materially deficient or not provided in the condition indicated, and organized in the manner specified below: Title Page/Cover Sheet: Complete the first page of this RFP. Be sure all blanks are filled and accurate. Show the name of your firm, local address, telephone number, name of contact person and date. Signature must be original. Table of contents: Clearly identifies the material in your proposal by section and page number. Acknowledgments: Use the form supplied in Attachment A. Signature must be original and the acknowledgment form must be properly filled out. Letter of transmittal: Limit to one or two print pages. Briefly state your firm's understanding of the work to be done and of the organization and its accounting environment. Give the names of the persons who will be authorized to make representations for your firm, their titles, addresses, and telephone numbers. Letter of intent for insurance coverage: Submit a letter of intent indicating how you will meet the insurance and/or bonding requirements of this RFP (section 19). Failure to provide a detailed description, or acceptable coverage, may result in the proposal being declared non-responsive Profile of the audit organization, technical qualifications, and approach: Firms submitting proposals must have an Alaskan decision-making office. Please state whether your audit organization is national, regional, or local. Indicate the number of people (by level) located within the Alaskan office that will handle the audit. Provide a list of the Alaskan office's current and prior government audit clients (borough and school district accounts, other local governments, federal and/or state single audits, grant compliance audits), including telephone number and contact person's name, indicating the type(s) of services performed, and the number of years served for each. Indicate the Alaskan office's experience in providing additional services to government clients by listing the name of each government, the type(s) of service performed, and the year(s) of engagement. Page 8 of 34 Describe your audit organization's quality control program for audits and whether your audit organization has been the object of any disciplinary action during the past three years. Include a copy of the report on the results of your most recent peer review with your proposal. Describe your approach to the audit. This should include at least the following points: • Type of audit program used (tailor-made, standard government, or standard commercial) • Use of statistical sampling • Use of analytical procedures • Approach for obtaining your understanding of internal control and for assessing control risk • Approach for determining which laws and regulations should be tested for compliance and how samples will be drawn • Use of computer audit specialists • Organization of audit team and approximate percentage of time spent on audit at each staff level • Management letter (provide a sample letter) • Typical assistance expected from the Borough and School District staff • Tentative timetable outline for completing the audit within specified deadlines of the RFP Summary of the proposer's individual audit staff technical qualifications Identify the partners, managers, and supervisors/seniors who will work on the audit, including any staff from other than the Alaskan office. Include resumes for each supervisory person to be assigned to the audit. (The resumes may be included as an appendix.) Describe the experience in local government audits, including federal and state single audits, and grant compliance audits of each senior and higher-level person assigned to the audit, including years on each job and their position while on each audit. Indicate the percentage of time the senior and supervisor/manager will be on-site. Describe your program to ensure staff maintains professional proficiency through continuing education and training. Describe the relevant educational background of each individual assigned to the audit. This should include seminars and courses attended within the past three years and any governmental accounting and auditing during the last two years. Explain your policies on notification of changes in key personnel Page 9 of 34 Cost proposals All proposals shall include the following for both the Borough and the School District: • Number of audit person days by level (Person Day = 8 Hours) • Cost per person day • Total person days cost • Travel cost • Other cost, if any • Total cost Cost proposals must be summarized by filling in each line for the Cost Proposal Schedule, Attachment B, and all proposals shall follow the format on the Cost Proposal Schedule with respect to price quotations. Award will be influenced by the sum of the total cost for the five years but will also be based on factors outlined in section 26, Evaluation Criteria. Prices shall be firm and open for acceptance by the Borough for a period of not less than ninety (90) calendar days from the date the proposal is due. Prices proposed shall be firm for the audited years June 30, 2022 through June 30, 2026. All prices and quotations shall be written legibly by printer or pen and ink. A proposal shall be rejected if it contains a material alteration or erasure which is not initialed by the signer of the proposal. Rate schedule for potential additional engagement(s): Proposers must fill in each line on the Rate Schedule for Potential Additional Engagement(s), Attachment C. Prices shall be firm and open for acceptance by the Borough for a period of not less than ninety (90) calendar days from the date the proposal is due. Prices shall be firm for the period June 30, 2022 through June 30, 2026. All prices and quotations shall be written legibly by computer or pen and ink. A proposal shall be rejected if it contains a material alteration or erasure which is not initialed by the signer of the proposal. References: Proposers must submit references as outlined in section 28, Evaluation Criteria. 17.3. Erasures or other changes made to the proposal must be initialed by the person signing the proposal. "White Out" or other liquid correction methods must be initialed. 17.4. All amendments that require acknowledgment shall be acknowledged in the space provided on a copy of Attachment A by original signature. Acknowledgment of amendments must be submitted prior to the submittal deadline. Page 10 of 34 18. CONTRACT NEGOTIATION 18.1. The Borough, consistent with KIBC 3.30.110(E) may choose to clarify proposals through negotiation with qualified proposers or may offer the contract to the highest ranked proposer without further clarification. If the top ranked proposer fails to enter into the contract, the Borough may proceed to the next highest ranked proposer. The contract shall be substantially in the form attached as Attachment D. Proposers shall note any exceptions to the proposed contract form, 19. INSURANCE REQUIREMENTS If you are unsure if your firm will be able to provide the insurance described in this section, please contact your insurance broker or agent before you submit your proposal. A letter of intent to meet insurance requirements must be included in the proposal (section 17.2). 19.1. Before beginning work on a contract awarded as a result of this RFP, the contractor shall obtain all required insurance and the Borough shall receive and review the certificates of insurance. If the contractor is a joint venture, then the joint venture itself must have insurance as specified below. All insurance companies providing coverage must be rated "Superior" or "Excellent" by A.M. Best Company. 19.2. The contractor shall assure that there is insurance in force, which provides protection for the Borough from any claim, which might arise from the contractor's work under the contract. This insurance shall provide protection whether the work is performed by the contractor, by any sub -contractor, or by their employees, agents, successors, or assigns. 19.3. Workers' compensation insurance as required by law. 19.4. Commercial general liability insurance with a limit of not less than $1,000,000 per occurrence is required. The contractor shall add the Borough as an additional insured in the contractor's commercial general liability policy. 19.5. Valuable papers and electronic data processing (EDP) coverage in an amount sufficient to reconstruct the work done under this contract, but in no event less than $10,000 is required. 19.6. Professional liability insurance in the amount of $1,000,000 is required. 19.7. The Borough shall have the right at any time to require higher limits for public liability and property damage insurance. In any such event, the additional premium or premiums payable solely as the result of such additional insurance shall be added by amendment to the contract price. Page 11 of 34 19.8. The contractor shall furnish the Borough with Certificates of Insurance in a form acceptable to the Borough to certify insurance coverage. The contractor shall cause the insurance policies referred to therein to include a provision that while the contract shall remain in force, no such policy shall be canceled, not renewed, or materially altered until at least thirty (30) days written notice thereof has been given to the Borough. 20. CONTRACT SPECIFICATIONS 20.1. This request for proposal, including any amendments, and the technical and cost proposals shall become a part of the contract. 20.2. Proposals are requested for the following contract period: • Contract will end with the completion of the 2025-2026 fiscal years' audit, but not later than January 15, 2027. 20.3. After the initial one-year award, this contract may be renewed for two additional two-year periods at the Borough's discretion. 20.4. The Borough requires that the entire audit engagement be a fixed fee contract to include all expenses. No additional fees or costs will be allowed unless requested as part of the 60 hours of non -audit consulting time or additional engagements in accordance with section 244, Potential Additional Engagement(s). 20.5. Any additional fees/costs so authorized for additional financial work must be expressed as a fixed hourly rate for each fiscal year subject to audit, quoted for each staff category of the proposer (see Attachment C) and that the detail of the costs be disclosed. 20.6. A separate purchase order will be issued for each fiscal year's audit. Payment will be made upon receipt of monthly invoices, billed on a percentage -of - completion basis, less 15% retainage, with final payment to be rendered upon receipt and final invoice for the contracted services. Costs must be detailed for 1) the Borough audit, 2) the Borough single audit requirements, 3) the School District audit and Department of Education and Early Development compliance requirements, 4) the School District single audit requirements, 5) Borough non - audit consultation, and 6) School District non -audit consultation. 20.7. For any additional engagements, a separate purchase order shall be issued for each. Payment will be made upon receipt of monthly invoices, with final payment to be rendered after satisfactory completion of the engagement and upon receipt and final invoice for the additional engagement services. 21. CURRENT AND FUTURE ENVIRONMENT 21.1. Current Accounting Environment —Borough Page 12 of 34 21.1.1. GOVERNMENTAL FUNDS General Fund The general fund is the general operating fund of the Borough. It is used to account for all financial resources except those required to be accounted for in another fund. Special Revenue Funds Special revenue funds are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. There are currently 18 Special Revenue Funds. Of the 18 Special Revenue funds, there are 11 service areas that have been established by certain communities or neighborhoods within the Borough for purposes of providing certain services not otherwise exercised on an area wide or non -area wide basis. These services are: road maintenance and construction, fire protection, tide gate, and streetlights. The revenues for these services are provided by local taxation and state shared revenue. The Borough is restricted from using area wide revenues for service area expenditures. Debt Service Fund The debt service fund is used to account for the accumulation of resources for, and the payment of, principal, interest, and related costs for the Borough's general obligation bonds. Debt service requirements are funded by property tax revenues and by state funded reimbursements for school construction debt. Capital Projects Funds Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities and equipment. 21.1.2. PROPRIETARY FUNDS Enterprise Funds Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises: a) where the intention of the governing body is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges, or b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The Borough has six (6) enterprise funds: Solid Waste Disposal & Collection, Hospital, Long -Term Care, Kodiak Fisheries Research Center, Research Court Apartments, and 911 Service. Page 13 of 34 21.2. Current Data Processing Equipment and Software - Borough The Information Technology department is responsible for the computer systems that process all financial transactions of the Borough. The Borough employees have Windows 10 computers networked together with a 1 Gbps switched Ethernet network utilizing the TCP/IP protocol. Remote sites are linked through fiber -optics, metro -Ethernet or VPN connections. Our financial system runs on Windows x64 servers, hosted in a virtualized environment. We use New World Systems/Tyler Technologies' Logos.NET software for our financial software. Our tax accounting software is PACS, from True Automation/Harris Software. We currently use Microsoft Office 365 for our productivity software. 21.3. Assessing Department's Real Property Appraisal System PACS Appraisal software was acquired through its parent company True Automation, Inc. The license became active July 1, 2008 and systems use began in January of 2009. Vendor support is purchased on a year-to-year basis, and the PACS software is updated when applicable. PACS Appraisal maintains real and personal property ownership, assessments, exemptions and attributes. PACS Collection software works in conjunction with PACS Appraisal and is the software used in the Finance Department for tax accounting and collections. 21.4. The Internet The Borough has an internet web site. Our site currently contains a page of information for each of our departments and functions. One of the most popular areas of the site is the Map Center, which includes GIS information. In addition, the site contains the Borough's Codes, Assembly Agendas, Newsletters, and Meeting Minutes. Our current site can be viewed at http://www.kodiakak.us. 21.5. Current PC -Based Financial Systems - Borough 21.5.1. BUDGET The Borough's budget is prepared using the .NET version of New World Systems financial system. All statistical data presented to the public is available in Microsoft Excel. Workbooks are developed at the department level and linked to create a summary level budget. At the summary level, the budget can be presented by fund or for the Borough as a whole. Textual portions of the budget are done in Microsoft Word. The public may request to be given a copy or it can be found on our web site. 21.5.2. FINANCIAL STATEMENTS The Borough's financial report is prepared using the .NET version of New World Systems financial system. The public may request to be given a copy. Page 14 of 34 21.6. Current Accounting Environment - School District 21.6.1. GOVERNMENTAL FUNDS General Fund This is the School District's general operating fund and is used to account for all financial transactions except those required to be accounted for in another fund. Major revenue sources include the Borough's contribution to education, the State of Alaska public school foundation program, and other state and federal revenues. Expenditures are authorized in the annual budget and are made for such activities as student instruction, administration, and maintenance. Special Revenue Funds These funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. The School District maintains a separate cost center for each federal and state grant program. These cost centers are assigned to the appropriate special revenue funds based on their purpose and funding source. Capital Projects Funds These funds are used to account for those financial resources to be used for acquisition, construction, and major maintenance of facilities and equipment. The Borough accounts for most acquisition, construction, and major maintenance projects of school facilities. The School District accounts for projects related to the acquisition of furnishings and equipment. 21.6.2. FIDUCIARY FUND Agency Fund This fund is used to account for the assets held by the School District as an agent for various student organizations. 21.7. Current Data Processing Equipment and Software - School District The School District currently runs the financial system Infinite Visions which is accessed through the cloud. No servers are housed onsite. Infinite Visions is comprised of integrated financial, human resources, payroll, purchasing, warehouse, and fixed asset applications. Designed specifically for schools, Infinite Visions is a true K-12 multi -fund, modified accrual accounting system, both GAAP and GASB compliant • EMS (employee management system) • Payroll • FAS (fixed assets system) • Equipment inventory • WHS (warehouse inventory system) • Receiving & Issues • Central stores supplies, Food services & USDA commodities inventories. • FMS (financial management system) Page 15 of 34 • General Ledger • Accounts Payable • Cash Disbursements • Purchase order processing • Cash receipts • Report writers 21.8. Current PC -Based Financial Systems - School District 21.8.1. BUDGET All budget reports are generated through Infinite Visions but can be exported to excel. 21.8.2. FINANCIAL STATEMENTS All financial reports are generated through Infinite Visions but can be exported to excel. 22. ADDITIONAL INFORMATION 22.1. Copies of the following documents of each entity will be available: KIB 2020-2021 Annual Comprehensive Financial Report KIB 2020-2021 Single Audits and other compliance reports KIB 2020-2021 Approved Budget KIBSD 2020-2021 Annual Comprehensive Financial Report, including single audits and other compliance reports KIBSD 2020-2021 Approved Budget 23. ENGAGEMENT REQUIREMENTS 23.1. Financial Statements and Compliance Statements - Borough 23.1.1. SCOPE OF WORK TO BE PERFORMED The Kodiak Island Borough desires the auditor to express an opinion on the fair presentation of its general-purpose financial statements in conformity with generally accepted accounting principles. Page 16 of 34 The Borough also desires the auditor to express an opinion on the fair presentation of its combining and individual fund and account group financial statements and schedules in conformity with generally accepted accounting principles. The auditor is not required to audit the supporting schedules contained in the Annual Financial Report. The auditor is not required to audit the statistical section of the report. The auditor is required to report on compliance with applicable state and with applicable federal laws and regulations and on internal controls over financial reporting that could have a material effect on the fair presentation of the financial statements. The auditor is required to test internal controls and compliance, as described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of the Borough's major federal programs. The auditor is also required to test internal controls and compliance, as described in the State of Alaska Audit Guide and Compliance Supplement for State Single Audits that are applicable to each of the Borough's major state programs. The auditor must report on compliance and internal control over compliance applicable to each major federal and to each major state program. The auditor is not required to audit the schedules of expenditures of federal and state awards. The auditor is required to report any findings or questioned costs found in the course of the work described above. Findings must be reported in three separate categories: 1) those affecting financial reporting, 2) those affecting major federal programs, and 3) those affecting major state programs. Recommendations for corrective action should be included. The auditor shall also be responsible for performing certain limited procedures, for Management's Discussion and Analysis and for other Required Supplementary Information required by the Governmental Accounting Standards Board, as mandated by generally accepted auditing standards. 23.1.2. AUDITING STANDARDS TO BE FOLLOWED To meet the requirements of this request for proposal, the audit shall be performed in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and the provisions of the State of Alaska Single Audit Regulation (2AAC 45.010), to include the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Page 17 of 34 23.1.3. REPORTS TO BE ISSUED Reports shall be written in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of U.S. Office of Management and Budget (OMB) Circular A- 133, Audits of States, Local Governments, and Non -Profit Organizations, and the provisions of the State of Alaska Single Audit Regulation (2 AAC 45.010), to include the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Following the completion of the audit of the fiscal year's financial statements, the auditor shall issue: • A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles. • For federal purposes, a report on compliance and on internal control over financial reporting based on an audit of the financial statements performed in accordance with Government Auditing Standards. • An "in -relation -to" report on the Schedule of Expenditures of Federal Awards, along with a report on compliance with requirements applicable to each major program and on internal control over compliance in accordance with OMB Circular A-133. • A Schedule of Findings and Questioned Costs summarizing auditor results for a federal single audit, along with recommendations for corrective action. • Accounting assistance will be required for preparation of the Annual Comprehensive Financial Report (ACFR). This will be included in the lump sum cost for audit services. In the required state and federal reports on compliance and on internal controls over financial reporting and on the state and federal reports on compliance with requirements applicable to each major program, the auditor shall communicate any reportable conditions found during the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of internal control, which could adversely affect the Borough's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Reportable conditions that are also material weaknesses shall be identified as such in the report. Nonreportable conditions discovered by the auditors shall be reported in a separate letter to management, which shall be referred to in the report on internal controls. Page 18 of 34 The report on compliance with requirements to each major assistance program shall include all material instances of noncompliance. All nonmaterial instances of noncompliance shall be reported in a separate management letter, which shall be referred to in the report on compliance. Fraud and Illegal Acts. Auditors shall be required to make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware. This notification should be made in accordance with Statements of Auditing Standards No. 54 and No. 99, and with the U.S. General Accounting Office's Government Auditing Standards. 23.1.4. REPORT DEADLINES The opinion on the financial statements of the Borough for the fiscal years ending June 30 is to be submitted by November 15 for each year of the engagement, unless adjusted by mutual agreement. The reports required for the federal Single Audit Act, as amended in 1996, and the state single audit regulation are to be submitted by December 15 for each year of the engagement, unless adjusted by mutual agreement. 23.1.5. SPECIAL CONSIDERATIONS The Kodiak Island Borough will send its Annual Comprehensive Financial Report to the Government Finance Officers Association for review in its Certificate of Achievement for Excellence in Financial Reporting program. The auditor may be required to provide limited special assistance to the Kodiak Island Borough to meet the requirements of that program. Any fees for this assistance are outside the scope of the audit and will be billed as additional engagement work at the rates in Attachment C. The Kodiak Island Borough may prepare one or more official statements in connection with the sale of debt securities, which may contain the general-purpose financial statements and the auditor's report thereon. The auditor shall be required, if requested by the financial advisor and/or the underwriter, to issue a "consent and citation of expertise" as the auditor and any necessary "comfort letters". The schedules of expenditures of federal and state awards the related auditor's reports, as well as the federal and state reports on compliance and on internal control over financial reporting and on compliance with requirements applicable to each major program and on internal control over that compliance are not to be included in the Annual Comprehensive Financial Report but are to be issued separately. Page 19 of 34 23.1.6. WORKING PAPER RETENTION AND ACCESS TO WORKING PAPERS All working papers and reports must be retained, at the auditor's expense, for a minimum of three (3) years from the end of the audited period, unless the firm is notified in writing by the Borough of the need to extend the retention period. The auditor will be required to make working papers available, upon request, to the following parties or their designees: • Kodiak Island Borough • Parties designated by the federal or state governments or by the Kodiak Island Borough as part of an audit quality review process • Auditors of entities of which the Kodiak Island Borough is a sub recipient of grant funds In addition, the firm shall respond promptly and fully to the reasonable inquires of successor auditors. The firm shall allow successor auditors to review working papers, including documentation of planning, internal control, audit results, and other matters of continuing accounting and auditing significance. 23.2. Financial Statements and Compliance Statements — School District 23.2.1. SCOPE OF WORK TO BE PERFORMED The Kodiak Island Borough School District desires the auditor to express an opinion on the fair presentation of its general-purpose financial statements in conformity with generally accepted accounting principles. The School District also desires the auditor to express an opinion on the fair presentation of its combining and individual fund schedules in conformity with generally accepted accounting principles (i.e., a "full - scope" audit). The auditor is not required to audit the supporting schedules contained in the Annual Comprehensive Financial Report. The auditor is not required to audit the statistical section of the report. The auditor is required to report on compliance with applicable state and with applicable federal laws and regulations and on internal controls over financial reporting that could have a material effect on the fair presentation of the financial statements. The auditor is required to test internal controls and compliance as described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of the School District's major federal programs. The auditor is also required to test internal controls and compliance, as described in the State of Alaska Audit Guide and Compliance Supplement for State Single Audits that are applicable to each of the School District's major state programs. The auditor must report on compliance and internal control over compliance applicable to each major federal and to each major state program. Page 20 of 34 The auditor is not required to audit the schedules of expenditures of federal and state awards. The auditor is required to report any findings or questioned costs found in the course of the work described above. Findings must be reported in three separate categories: 1) those affecting financial reporting, 2) those affecting major federal programs, and 3) those affecting major state programs. Recommendations for corrective action should be included. The auditor shall also be responsible for performing certain limited procedures, for Management's Discussion and Analysis and for other Required Supplementary Information required by the Governmental Accounting Standards Board, as mandated by generally accepted auditing standards. 23.2.2. AUDITING STANDARDS TO BE FOLLOWED To meet the requirements of this request for proposal, the audit shall be performed in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and the provisions of the State of Alaska Single Audit Regulation (2AAC 45.010), to include the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. 23.2.3. REPORTS TO BE ISSUED Reports shall be written in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of U.S. Office of Management and Budget (OMB) Circular A- 133, Audits of States, Local Governments, and Non -Profit Organizations, and the provisions of the State of Alaska Single Audit Regulation (2 AAC 45.010), to include the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Following the completion of the audit of the fiscal year's financial statements, the auditor shall issue: A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles. • For federal purposes, a report on compliance and on internal control over financial reporting based on an audit of the financial statements performed in accordance with Government Auditing Standards. Page 21 of 34 • An "in -relation -to" report on the Schedule of Expenditures of Federal Awards, along with a report on compliance with requirements applicable to each major program and on internal control over compliance in accordance with OMB Circular A-133. • A Schedule of Findings and Questioned Costs summarizing auditor results for a federal single audit, along with recommendations for corrective action. • For state purposes, a report on compliance and on internal control over financial reporting based on an audit of the financial statements performed in accordance with Government Auditing Standards. • An "in -relation -to" report on the Schedule of Expenditures of State Awards, along with a report on compliance with requirements applicable to each major program and on internal control over compliance in accordance with the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. The auditors must send out these reports for the School District: • A report on fund balance compliance requirements, in accordance with AS 14.17.505. A report on the fair presentation of the tuition rate report, in accordance with Alaska Department of Education and Early Development instructions for Form 05-00-014. • One copy of the General -Purpose Financial Statement for each state agency listed on either the schedule of state financial assistance or Federal Awards should be sent to the Statewide Single Audit Coordinator, Office of Management & Budget. • One copy of the General -Purpose Financial Statement should be sent to the State of Alaska, Department of Administration, Division of Finance. Their report should also include the Tuition Rate Report and Management Letter • Two copies of the General -Purpose Financial Statement will be sent to the Federal Audit Clearing House. It will also include the Data Collection Form for Reporting on Audits of States, Local Governments and Nonprofit Organizations (Form SF -SAC) which the auditors have prepared. Five additional copies each of the General -Purpose Financial Statement, Management Letter, Letter to the School Board and two (2) copies of the Tuition Rate Report sent to the School District along with an electronic version of all reports. Page 22 of 34 In the required state and federal reports on compliance and on internal controls over financial reporting and on the state and federal reports on compliance with requirements applicable to each major program, the auditor shall communicate any reportable conditions found during the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of internal control, which could adversely affect the School District's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Reportable conditions that are also material weaknesses shall be identified as such in the report. Nonreportable conditions discovered by the auditors shall be reported in a separate letter to management, which shall be referred to in the report on internal controls. The report on compliance with requirements to each major assistance program shall include all material instances of noncompliance. All nonmaterial instances of noncompliance shall be reported in a separate management letter, which shall be referred to in the report on compliance. Fraud and Illegal Acts. Auditors shall be required to make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware. This notification should be made in accordance with Statements of Auditing Standards No. 54 and No. 99, and with the U.S. General Accounting Office's Government Auditing Standards. 23.2.4. REPORT DEADLINES Opinions on the financial statements of the School District and on reports required by the Alaska Department of Education and Early Development for the fiscal years ending June 30 are to be submitted by October 1 for each year of the engagement, unless adjusted by mutual agreement. The reports required for the federal Single Audit Act, as amended in 1996, the state single audit regulations, and the applicable state statutes and regulations of the Alaska Department of Education and Early Development are to be submitted by October 1 for each year of the engagement, unless adjusted by mutual agreement. 23.2.5. WORKING PAPER RETENTION AND ACCESS TO WORKING PAPERS All working papers and reports must be retained, at the auditor's expense, for a minimum of three (3) years from the end of the audited period, unless the firm is notified in writing by the or School District of the need to extend the retention period. The auditor will be required to make working papers available, upon request, to the following parties or their designees: • Kodiak Island Borough and Kodiak Island Borough School District Page 23 of 34 • State Department of Education and Early Development and U.S. Department of Education • Parties designated by the federal or state governments or by the Borough or School District as part of an audit quality review process • Auditors of entities of which the Kodiak Island Borough School District is a subrecipient of grant funds In addition, the firm shall respond promptly and fully to the reasonable inquires of successor auditors. The firm shall allow successor auditors to review working papers, including documentation of planning, internal control, audit results, and other matters of continuing accounting and auditing significance. 23.3. Peer Reviews The firm shall provide copies of their peer reviews as they are performed during the term of the contract. 23.4. Management Letters The auditor shall observe the adequacy of the systems of internal control, accounting procedures, and other significant matters. Upon the request any appropriate recommendations may be reviewed with management and included in separate letters to the Borough Manager and Assembly, and to the Superintendent and School Board. Interim management letters on improvements in controls and procedures for the Borough and School District will be submitted within three weeks of interim fieldwork for each year. Final management letters for the Borough and School District will be submitted by December 15 and September 30, respectively, of each year, unless adjusted by mutual agreement. The auditor will meet at least semi-annually with the Assembly and School Board, or with designated Committee(s), for the purpose of reviewing the interim and/or final management letters. 23.5. Presentations As early as possible after the statements have been printed, the appropriate financial reports, compliance reports, and the management letters are to be reviewed with a designated committee of the School District and with the Borough's audit committee. Then they are to be presented to the School Board and to the Assembly at a regular meeting, respectively. The audit partner assigned to the engagement should be in attendance, if requested to be present. 23.6. Non -Audit Consultation Time Page 24 of 34 24. The scope of the audit must also include consulting time up to 60 hours annually on subjects such as reviewing official statements for general obligation bond sales or other financial matters. It is anticipated that these hours would be at the level of a partner or manager. (This is in addition to consultations on matters directly relating to the audit and reports which should be included in the audit portion of the proposer's fixed fee.) Hours for non -audit consultation must be approved in advance (see section 23.7) and must be shown separately on invoices (see section 20.6). 23.7. Coordination Required The Borough requires that the external auditors coordinate their work with Borough and School District personnel as follows: • All work will be coordinated with the Borough Finance Director and the School District Chief Financial Officer or their designated appointee to facilitate staff scheduling and year-end closing. • The external auditors will develop schedules for the work required for the conduct of the audit. The Borough schedule will be coordinated with the Borough Finance Director. The School District schedule will be coordinated with School District Chief Financial Officer. The schedules will outline the requirements for the Borough and/or School District and external audit staff. • By March 31 (School District) and by April 30 (Borough), a tentative time schedule for conduct of interim and year-end fieldwork and for other engagement aspects shall be delivered to each entity for their approval. These dates may be adjusted by mutual agreement. • Progress reports will be provided on a biweekly basis during the conduct of the fieldwork and until all opinions, reports, and management letters are delivered. The reports should be addressed and sent to the Borough Finance Director and the School District Chief Financial Officer. The reports should indicate any problems encountered or foreseen, deficiencies in work being performed by Borough or School District staff, disagreements of the application of accounting principles, and other items, which would result in delay of the audit work or in additional work. By June 30 (School District) and July 31 (Borough) each year, establish in writing, an example format of each audit work paper and the financial and compliance statements to be required for each entity. These dates may be adjusted by mutual agreement. Use of the 60 non -audit consultation hours must be approved, in writing, in advance by the Chief Financial Officer (School District) or by the Finance Director (Borough). POTENTIAL ADDITIONAL ENGAGEMENT(S) 24.1. The Borough and/or School District may request additional services over the course of the contract. The additional engagement(s) will be approved and billed separately. Page 25 of 34 Consultation hours in excess of the 60 hours, described at section 23.6 will be considered an additional engagement. • Each additional engagement must be approved, in writing, in advance by: School District 1. Superintendent, or 2. Chief Financial Officer, or 3. their designee Borough 1. Manager, or 2. Finance Director, or 3. their designee 25. ASSISTANCE TO BE PROVIDED TO THE AUDITOR AND REPORT PREPARATION 25.1. The Borough Finance Department staff, the School District Business Office staff, and responsible management personnel will be available during the audit to assist the auditor by providing information, documentation, and explanations. The preparation of confirmations and legal letters will be the responsibility of the Borough and School District, respectively. 25.2. The Borough and School District will prepare standard audit work papers, electronically if requested, in formats agreed upon with the external auditors. 25.3. The auditor will have on-line, inquiry access to the primary financial systems of each entity, if requested. 25.4. The Borough and School District will provide the auditor with reasonable workspace, desks, and chairs. The auditor will also be provided with access to a telephone, internet, photocopying facilities, and facsimile machine. 25.5. Long distance use of the telephone and FAX machine will be limited to work on this engagement. Usage for other clients must be reimbursed by the auditor to the Borough or School District, as appropriate. 25.6. Preparation, editing, and printing of the drafts and final Annual Comprehensive Financial Reports, Single Audit Reports, and other compliance reports will be the responsibility of the auditors. Page 26 of 34 26. EVALUATION CRITERIA The Borough will review proposals to provide the services through evaluation of requirements defined as mandatory and as desirable. These requirements are intended to aid the Borough in assessing a proposer's technical, administrative, and historical abilities to provide similar quality services in a timely manner. 26.1. Mandatory Requirements Alaska CPA Firm The firm must be authorized to use the term "Certified Public Accountants" or "CPA" as set forth by the Accountancy Act (AS 08.04). Expertise Requirements Firm personnel must have experience and expertise in governmental accounting and state and federal single audit requirements. Timely Performance The Borough is interested in both the firm's ability to, and history of, conforming to deadline requirements on significant engagements. Therefore, the Borough has the following two requirements: Firm Size - The firm must be of a sufficient size that the audit can be conducted in a timely manner, including any escalation because of a one - to -three-week delay in the Borough's or School District's schedule for providing materials. Firm Adherence to Deadline Requirements - The firm must have a history of conforming to deadline requirements on significant engagements. Therefore, the Borough will require submission of references with contact names and phone numbers for client engagements of over 700 hours served by the proposer within the last three years. These references should be persons who can and will comment on performance in this area. These people will be contacted to verify the firm's performance in meeting audit submission deadlines. EDP Expertise Due to the significance of the computerized accounting processes currently used at the Borough and School District, an ability to evaluate computer systems and the level of reliance to be placed thereon is a requirement of the Borough's external auditors. A mandatory requirement is experience and expertise in performing such evaluations. Conformance with Fixed Fee Projected Hours - In order to determine the proposer's ability to conform to the fixed fee set forth, the Borough requires that the hours of audit work for each major segment of the work, by staff level, be disclosed in the technical proposal. This is to aid in determining that the engagement has been reasonably planned and therefore, that the fixed fee can be reasonably adhered to by the proposer. Page 27 of 34 Firm's Adherence to Fixed Fee Contracts - The Borough is interested in the firm's history in conforming to fixed fee contracts and therefore, requires references with contact names and telephone numbers for client engagements served by the proposer within the last three years who can and will comment on such performance. These people will be contacted to verify the firm's performance in meeting proposed fee amounts, and the incidence of billing for additional fees. 26.2. Desirable Criteria Quality of Management Letter Comments - The Borough is interested in receiving meaningful and pertinent comments in the management letter produced in conjunction with the financial statements. In order to determine if a firm provides comments of the nature desired by the Borough, firms desiring to receive additional consideration for performance in this area should provide references for clients served during the past three years who can and will respond to queries Borough and School District staff would make in this area. Routine Additional Information Support - The Borough is interested in the support provided and routinely available to the proposing firm's clients by being notified of changes in governmental accounting and reporting, as well as in association with management issues. A firm desiring to receive an additional consideration for services provided in this area should describe how it routinely provides such information to its clients. If this information is provided through issuance of a newsletter or similar materials, the Borough encourages firms seeking consideration in this area to provide samples of these materials. Firm Philosophy for Interaction with Client Management - The Borough is interested in the proposing firm's philosophy of its interaction with client management in the resolution of audit issues and routine audit administration matters. This would cover areas such as dealing with reporting issues and discussing and coordinating audit schedule changes. Although these areas are resolved prior to issuance of an audit opinion, ease of interaction and flexibility on routine engagements between the proposing firm and the client's administrative management is desirable. In order to evaluate a firm's philosophy for interaction with clients, firms desiring additional consideration should describe their philosophy and provide references for clients served during the past three years who can and will respond to queries Borough and School District staff would make regarding a firm's performance in this area. Approach to Client -Prepared Financial Statements - The Borough is interested in the approach the proposer uses in performing audit work on client - prepared financial statements. In order to evaluate a firm's approach to client - prepared financial statements, firms desiring additional consideration for performance in this area should provide references for clients served during the past three years who can and will respond to queries Borough and School District staff would make in this area. 27. SELECTION PROCESS 27.1. Proposals will be evaluated in a multi -stage process consisting of the following steps: Page 28 of 34 • Initial review and rating of the mandatory requirements. • Evaluation and rating of desirable criteria. • Review and rating of Cost Proposal. • Overall rating and final selection. The Borough reserves the option to conduct oral interviews, in Kodiak, of firms. If oral interviews are conducted, firms will be re -rated for mandatory requirements and desirable criteria. 27.2. Maximum of 25 points each component, with a maximum for this section of 100 points: • The firm's understanding of the work to be performed. • The individual audit staffs technical qualifications and experience. • The firm's experience with local government, federal and state grants and assistance, and electronic data processing (EDP); firm's adequacy as to size. • Performance, including timeliness, adherence to fixed fees, and sufficiency of projected hours. 27.3. Maximum of 10 points each component, with a maximum for this section of 50 points: • Quality of management letter comments. • Routine additional information support. • Firm philosophy for interaction with client management. • Approach to client -prepared financial statements. • Local office (Alaska). 27.4. Cost Proposals Will Be Evaluated As Follows: Lowest total cost of all proposals submitted X 50 = Cost Score Total cost of this firm's proposal Total cost is defined as the sum of the five years' fixed fees. 27.5. The firm with the highest total point scores (mandatory requirements, desirable criteria, and cost score — maximum 200 points) will be recommended for selection. Page 29 of 34 28. Confidentiality of Proposals. Proposal contents, and tabulation of ratings, shall remain confidential until a Notice of Intent to Award is issued. After a Notice of Intent to Award is issued proposers may, upon request, receive copies of the tabulation summary and proposals received and evaluated. 29. Notice of Intent to Award and Protests. 29.1 Notice of Intent to Award. The Borough will issue a notice of intent to award to the successful Proposer. 29.2 Protest Period. An aggrieved bidder may file a protest of the award within ten (10) calendar days after Notice of Intent to Award the contract is mailed. A protest may be made by delivery of a letter of protest to the Borough Manager's Office. Protests will only be accepted based on error in process. If/when a protest is received, an administrative review process will begin. The protestor can expect a final administrative decision by the Kodiak Island Borough Manager within 30 working days of the receipt of protest. Page 30 of 34 ATTACHMENT A KODIAK ISLAND BOROUGH 710 Mill Bay Road Kodiak, AK 99615 ACKNOWLEDGMENTS I certify that I am a duly authorized representative of the firm listed below and that information and materials enclosed with this proposal accurately represent the capabilities of the office listed below for providing the services indicated. The Borough is hereby authorized to request any owner identified in this proposal to furnish any pertinent information deemed necessary to verify information provided or regarding reputation and capabilities of the firm. AMENDMENTS The proposer represents to the Borough that it has relied upon no oral representations from the Borough in the preparation of this proposal. If any amendments are issued to this RFP, the proposer must acknowledge the receipt of such amendments in the space provided on the line below or by signing the amendment and submitting it before the submittal deadline, unless the amendment states otherwise. Proposals, which fail to acknowledge receipt of amendments, shall be considered non-responsive and will not be evaluated. Amendment Acknowledgment Number(s) ORIGINAL SIGNATURE Acknowledgment sheet must be manually (original signature) signed. A proposal shall be rejected when the proposal is not signed by hand. Signature of Representative Date: Name: Title: Firm: Type of Firm (check one) Individual Corporation in the State of: Other (Specify): Partnership Page 31 of 34 Office address for which this submittal is made: Street: P. O. Box: City, State, Zip: Telephone: AK Business License No. ATTACHMENT B KODIAK ISLAND BOROUGH 710 Mill Bay Road Kodiak, AK 99615 EXTERNAL AUDIT SERVICES FOR THE KODIAK ISLAND BOROUGH AND THE KODIAK ISLAND BOROUGH SCHOOL DISTRICT COST PROPOSAL SCHEDULE Borough Annual Comprehensive Financial Report Federal Single Audit State Single Audit Consultation Total School District Financial Statements, Statements of Compliance (Alaska Statutes and Department of Education and Early Development, Reimbursable Expenditures for School Construction, and Tuition Rate Report Federal Single Audit State Single Audit Consultation Total GRAND TOTAL 2022 2023 2024 2025 2026 Page 32 of 34 ATTACHMENT C KODIAK ISLAND BOROUGH 710 Mill Bay Road Kodiak, AK 99615 EXTERNAL AUDIT SERVICES FOR THE KODIAK ISLAND BOROUGH AND THE KODIAK ISLAND BOROUGH SCHOOL DISTRICT RATE SCHEDULE FOR POTENTIAL ADDITIONAL ENGAGEMENT (S) Staff Category * 2022 2023 2024 2025 2026 Partner Senior Manager Manager Senior Advanced Staff Staff * Please adjust the staff categories to reflect those of the proposer's firm. Page 33 of 34 ATTACHMENT D Form Contract Page 34 of 34 AGREEMENT FOR AUDIT SERVICES FOR THE KODIAK ISLAND BOROUGH This Agreement made and entered into this day of , 2022, by and between the Kodiak Island Borough, hereinafter "Borough", a general law municipality and a Borough of the second class, whose address is: 710 Mill Bay Road Kodiak, Alaska 99615, and , whose address is and licensed and qualified to do business within the State of Alaska, hereinafter called "Contractor." RECITALS A. The Borough desires the performance, provision, and accomplishment of the work, services and materials described and set forth in Part 1, Section 2. B. Contractor represents that it is ready, able and qualified to perform, and will perform, in all respects, all of the work, services, and materials, and to otherwise perform all of the terms, covenants, conditions and provisions of the agreement in the manner, at the times, and for the consideration hereafter provided. Now, Therefore, for and in consideration of the terms, covenants, conditions, and provisions contained herein, and/or attached and incorporated herein and made a part hereof, the parties hereto agree as follows. This contract consists of: A. Part I, consisting of eighteen (18) sections of General Provisions. B. Part II, consisting of six (6) sections of Special Provisions. PART GENERAL PROVISIONS Section 1: Agreement to Perform. The Borough hereby agrees to engage the Contractor, and the Contractor hereby agrees to perform, complete, provide and furnish, in a timely and proper manner, and pursuant to and in accordance with all of the terms, covenants, conditions and provisions of this agreement, all of the work, services, labor and materials required to accomplish all of the work described in Section 2 hereof at the times, in the manner, and for the consideration and payments hereinafter set forth. Section 2: Description of Work. The Contractor shall perform, supply, and provide all of the work, services and materials; hereinafter collectively referred to as "work", as set forth and described on Attachment A and included in Attachment D, attached hereto and incorporated herein by this reference. If there is a conflict between This Agreement, Attachment A and Attachment B, this Agreement shall prevail first, then Attachment A shall prevail over Attachment B. Auditing Services for the Kodiak Island Borough Page 1 Section 3: Time for Commencement and for Completion of Work. (a) Commencement. Contractor shall commence the work called for in this agreement upon the giving of a Notice to Proceed by the Borough. (b) Completion. Upon giving of Notice to Proceed, the work called for in this agreement shall be performed starting June 1, 2022, and completed by the dates indicated in Exhibit A for the prior year audit ending June 30, 2023. For renewal years the commencement of each annual audit shall be July 1 of each year for the prior fiscal year ending the prior June 30 and shall be completed by the reporting dates corresponding to the dates listed in the Scope of Work, Attachment A for the relevant fiscal year. Unless earlier terminated As provided for in this agreement, the Borough shall reserve the right to renew this agreement for a maximum of two (2) extensions of two (2) years each not to exceed a total of five (5) years. The renewal option shall be solely at the discretion of the Borough. Section 4: Financial Terms. (a) Compensation and Payment. For and in consideration of the timely and proper performance of work authorized as provided herein, the Borough shall pay the Contractors for audit services an amount not to exceed a maximum of $ for each year of service in accordance with the Cost Proposal Schedule listed in Attachment B. Additional non -audit consulting of up to 60 hours per year shall be billed at the rates in Attachment C which is appended to this contract and incorporated herein by reference. Services shall be invoiced no more frequently than monthly. (b) No Additional Work. Additional work, identified as additional engagements, shall be estimated, billed, and paid based upon the rates in Attachment C which is appended to this contract and incorporated herein by reference. No claim for additional work, services or materials, not specifically and expressly requested and authorized as provided for in this agreement, or by a written amendment thereto signed by both parties, done or furnished by the Contractor, will be allowed or paid by the Borough and Contractor expressly waives any claim therefore. (c) Availability of Funds. This contract is subject to the availability of funds lawfully appropriated for its performance. Section 5: Borough's Contracting Officer. For purposes of this agreement, the Borough's contracting officer shall be the Borough Finance Director or such other person as is designated in writing by the Borough Manager. Section 6: Contractor Qualified. The Contractor expressly represents and warrants it is now and shall continue to be at all times during the performance of this agreement, the holder of all required or necessary professional, business or other licenses or permits and is qualified and capable of performing all of the work covered or called for by this agreement and is presently ready, able and willing to undertake and perform all of such work and services, and to supply all necessary materials and equipment, at the times, and in a non -negligent professional and workmanlike manner, and pursuant to the terms, conditions and provisions, and for the compensation and payments as herein provided. Section 7: Termination. (a) By Consent. This agreement may be terminated in whole or in part by the mutual Auditing Services for the Kodiak Island Borough Page 2 consent of the parties. Such consent shall be in writing. (b) Termination for Cause. This agreement may be terminated in whole or in part in writing by Borough in the event of failure by Contractor to fulfill any of the terms and conditions of this agreement upon the giving of not less than five (5) calendar days prior written notice of intent to terminate in the manner provided in Part 1, Section 10, hereof. (c) Termination for Convenience of Borough. This agreement may be terminated in whole or in part in writing by the Borough for Borough's convenience provided the Contractor is given not less than thirty (30) calendar days prior written notice of intent to terminate in the manner provided in Part 1, Section 10, hereof. (d) In the event termination by the Borough is effected pursuant to (b) above, the Contractor shall not be entitled to receive any further payment until the work is completed, or the Borough elects to not proceed further with the project. Upon completion of the work, or termination of the project in the event the Borough elects to not proceed with the project, the Contractor shall be paid as follows: 1) In the event the costs and expense of taking over, re -advertising and completing the project or the costs of closing out the project if the Borough elects to not proceed with the project (hereinafter referred to as "close out costs"), exceed the remaining unpaid amount of this agreement, any amount which was otherwise due and unpaid to Contractor at the time of termination shall be applied to such increased costs in taking over, re - advertising and completing the project, (or applied to close out costs) and the remaining amount of such costs, if any, shall be paid by the Contractor to the Borough. 2) In the event said costs and expense of taking over, re -advertising and completing the project, (or close out costs) are less than the total amount which was otherwise due and unpaid to the Contractor at the time of termination, the increased costs of taking over and completing the project (or the close out costs) shall be deducted from the amounts due the Contractor and the balance, if any, paid to the Contractor without interest. (e) Upon receipt of a termination notice pursuant to paragraphs (b), (c), or (d) above, the Contractor shall promptly discontinue all services (unless the notice directs otherwise), and deliver or otherwise make available to the Borough all data, drawings, notes, specifications, reports, estimates, summaries, work in progress, and any and all other information and/or materials as may have been accumulated by the Contractor in performing this agreement, whether completed or in process, and free and clear of any mechanics or other liens or claims in favor of Contractor or any other person. (f) Upon termination pursuant to paragraphs (b), (c), or (d) above, the Borough may, but shall not be required to, take over the work and prosecute the same to completion by agreement with another person or otherwise, may elect to complete the work itself, or to not proceed further with the work and project. (g) If, after termination by the Borough pursuant to (b) above, it is determined that the Contractor had not so failed, the termination shall be deemed to have been effected for the convenience of the Borough. In such event, adjustment of the amounts to be paid to Contractor for termination shall be made as provided in paragraph (f) of this section. Auditing Services for the Kodiak Island Borough Page 3 (h) No other damages, whether for lost profits or otherwise, other than the amounts allowed and computed as provided for in this Section 7 shall be due or payable to Contractor in the event of termination. Section 8: Conflict of Interest. The Contractor covenants, warrants and represents that the Contractor has no interest and shall not acquire any interest, direct or indirect, which would conflict in any manner with the subject matter or the performance of this agreement. The Contractor further covenants, warrants and represents that in the performance of this agreement, no person having any such interest shall be employed. Section 9: Assignment and Subletting Prohibited. The Contractor shall not assign, transfer, convey, pledge, hypothecate, sublet, subcontract, or otherwise dispose of or encumber this agreement, or the rights thereunder, nor shall the Contractor delegate any of his/her/its duties hereunder without the prior written consent of the Borough. Any such attempted assignment, transfer, conveyance, pledge, hypothecation, subletting, or other disposition, or the attempted assignment, disposition or delegation of duties or rights shall be null and void and of no force or effect and shall be grounds and cause for immediate termination of this agreement without liability by and at the option of the Borough. Section 10: Notice. (a) Any notice, demand, request, consent, approval, or other communication that either party desires or is required to give to the other party or any other person shall be in writing and either served personally or sent by prepaid, first-class mail at the address set forth below. Either party may change its address by notifying the other party of its change of address in writing. Notice shall be deemed to have been duly made and given when delivered if served personally, or upon the expiration of twenty-four (24) hours after the time of mailing if mailed as provided in this section. Borough: The Borough Manager's Office 710 Mill Bay Road Kodiak, Alaska 99901 Contractor: (b) The performance and administration of this program and this agreement will be monitored by the Borough and such other agencies as may be required or authorized pursuant to the terms of any grant to the Borough. Necessary reports, in proper form, will be required as a prerequisite to any payment to the Contractor. (c) All project records shall be maintained by the Contractor for not less than three (3) years after completion and final acceptance of all work by the Borough and shall be subject to inspection and copying by the Borough or any funding agency during said period. Section 11: Status of Parties. (a) Independent Contractor. The Contractor shall perform its obligations hereunder as an independent contractor of the Borough. The Borough may administer the contract and monitor the Contractor's compliance with its obligations hereunder. The Borough shall not supervise or direct the Contractor other than as provided in this section. Auditing Services for the Kodiak Island Borough Page 4 (b) Relationship of the Parties. Nothing herein contained shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of partnership or of joint venture between the parties hereto, it being understood and agreed that neither method of computation of payment nor any other provision contained herein, nor any acts of the parties hereto, shall be deemed to create any relationship between the parties hereto other than the relationship of Borough and an independent Contractor. Section 12: Hold Harmless and Indemnity. (a) The Contractor shall indemnify, defend, save and hold the Borough, its officers, employees and agents harmless from any and all claims, lawsuits, liabilities, penalties, or fines, including attorney's fees and costs, allegedly arising out of, in connection with, or incident to any loss, damage or injury to persons or property occurring as a result of the Contractor's or any subcontractor's intentional misconduct or negligent acts, errors or omissions in its performance pursuant to this contract. (b) Contractor further agrees to appear and defend, and to indemnify and save free and harmless the Borough and its officers, employees and agents from and against any of the foregoing claims, liabilities, penalties, fines or damages, whether or not valid, and for any cost and expense, including reasonable attorney's fees, incurred by the Borough, its officers, employees or agents on account of any claim therefore, including claims by reasons of any defects in any plans, drawings, specifications, computer programs, technical reports, or other work product of Contractor prepared for or submitted to the Borough pursuant to this agreement provided said claim is not based upon a use of said plans, drawings, specifications or other work product for other than the purposes for which such data was prepared and submitted to the Borough. Section 13: No Third Party Beneficiaries. Nothing in this agreement shall be construed to give any person other than the Borough and the Contractor any legal or equitable right, remedy or claim under this agreement, but it shall be held to be for the sole and exclusive benefit of the Borough and the Contractor. Section 14: Compliance with Laws and Regulations. Contractor shall, at ContractorMs sole cost and expense, comply with all of the requirements of all local, state, or federal laws, ordinances, or regulations now in force, or which may hereafter be in force, pertaining to this agreement, or the project or work to be performed, and shall faithfully observe in the performance of this agreement, all local, state, and federal laws, ordinances and regulations now in force or which may hereafter be in force. When a change in laws, ordinances or regulations results in additional costs, the Contractor may request a change order to cover those costs. Any such change order shall be limited to the ContractorMs actual additional costs as a result of the change. The Contractor shall pay all taxes pertaining to its performance under this contract. Section 15: Successors and Assigns. Except as otherwise provided herein, the covenants, agreements and obligations herein contained shall extend to bind and inure to the benefit not only of the parties hereto but their respective personal representatives, heirs, successors and assigns. Section 16: Miscellaneous. (a) Terminology. Whenever herein the singular number is used, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders. (b) Law Applicable. The laws of the State of Alaska shall govern the construction, validity, Auditing Services for the Kodiak Island Borough Page 5 performance and enforcement of this agreement. Venue as to any action, claim, or proceeding arising out of, or based upon this agreement, including, but not limited to, any action for declaratory or injunctive relief, shall be the appropriate Court sitting in the City of Kodiak, Third Judicial District, Alaska. (c) Paragraph Headings. The headings of the several sections and subsections contained herein are for convenience only and do not define, limit or construe the contents of such sections and subsections. (d) Terms Construed as Covenants and Conditions. Every term and each provision of this agreement performable by Contractor shall be construed to be both a covenant and a condition. (e) Time of the Essence. Time is of the essence of each term, condition, covenant and provision of this agreement. (f) Severability. In the event any provision of this agreement is adjudicated or held to be invalid or unenforceable, the remaining provisions shall remain in full force and effect. (g) Nonwaiver. No delay or omission of the right to exercise any power by either party shall impair any such right or power, or be construed as a waiver of any default or as acquiescence therein. One or more waivers of any covenant, term or condition of this agreement by either party shall not be construed by the other party as a waiver of a subsequent breach of the same covenant, term or condition. The consent or approval by either party to any act by the other party of a nature requiring consent or approval shall not be deemed to waive or render unnecessary consent to or approval of any subsequent similar act. Section 17: Amendment. (a) This contract shall only be amended, modified or changed by writing, executed by authorized representatives of the parties. (b) For the purpose of any amendment modification or change to the terms and conditions of this contract, the only authorized representatives of the parties are. 1) 2) Kodiak Island Borough, Borough Manager (c) Any attempt to amend, modify, or change this contract by either an unauthorized representative or unauthorized means shall be void. Section 18: Entire Agreement. This agreement and any schedules, appendices or exhibits attached hereto sets forth all the covenants, promises, agreements, conditions and understandings between the parties hereto, and there are no covenants, promises, agreements, conditions or understandings, either oral or written, between them other than as herein set forth. Except as herein otherwise expressly provided, no contemporaneous or subsequent agreement, understanding, alteration, amendment, change or addition to this agreement, or any schedule, appendix, exhibit or attachment thereto shall be binding upon the parties hereto unless reduced to writing and signed by both parties. This agreement constitutes a final, complete, and exclusive statement of the agreement between the parties. PART II Auditing Services for the Kodiak Island Borough Page 6 SPECIAL PROVISIONS Section 1 : Insurance. (a) During the entire period of the project or work, the Contractor shall provide the following types of insurance. The Borough shall be insured as additional insured on all insurance policies except professional liability contracts. All policies shall have a thirty (30) day cancellation clause. Professional liability insurance covering errors and omissions at $1,000,000 per claim. 2. Valuable papers and electronic data processing (EDP) coverage in an amount sufficient to reconstruct the work done under this contract, but in no event less than $10,000 is required. 3. Workers' compensation as required by law and employer's liability coverage at a minimum of $1,000,000. 4. Commercial general liability insurance - $1,000,000 per occurrence and $2,000,000 aggregate. (b) The Borough shall have the right at any time to require higher limits for public liability and property damage insurance. In any such event, the additional premium or premiums payable solely as the result of such additional insurance shall be added by amendment to the contract price. (c) Each policy of insurance required by this section shall provide for no less than thirty (30) days' advance notice to the Borough prior to cancellation. Insurance certificates will be required to be submitted for review by the Borough's Finance Director before the Borough will issue a notice to proceed. Failure to maintain coverage is a material breach and grounds for termination of the contract. Section 2: Equal Employment Opportunity. (a) The Contractor shall not discriminate against any employee or applicant for employment because of race, color, religion, disability, national origin, ancestry, age, or sex. The Contractor will take affirmative action to insure that applicants are employed and that employees are treated during employment without regard to their race, color, religion, disability, national origin, ancestry, age or sex. Such action shall include, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination, rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this nondiscrimination clause. (b) The Contractor shall state in all solicitations or advertisements for employees to work on contract jobs to be let in the performance of this agreement, that all qualified applicants will receive consideration for employment without regard to race, color, religion, disability, national origin, ancestry, age, or sex. Auditing Services for the Kodiak Island Borough Page 7 (c) The Contractor agrees to fully cooperate with the office or agency of the State of Alaska which seeks to deal with the problem of unlawful or invidious discrimination, and with all other State efforts to guarantee fair employment practices under this agreement, and said Contractor will comply promptly with all requests and directions from the State Commission of Human Rights or any of its officers or against relating to prevention of discriminatory employment practice. (d) Full cooperation as expressed in the foregoing clause (c) shall include, but not be limited to, being a witness in any proceeding involving questions of unlawful or invidious discrimination if such is deemed necessary by any official or agency of the State of Alaska, permitting employees of said Contractor to be witnesses or complainants in any proceeding involving questions of unlawful or invidious discrimination, if such is deemed necessary by any official or agency of the State of Alaska, or the Borough, participating in meetings, submitting periodic reports on the equal employment aspects of present and future employment, assisting in inspection of relevant facilities, and promptly complying with all State directives deemed essential by any office or agency of the State of Alaska, or the Borough, to insure compliance with all federal and state laws, regulations, and policies pertaining to the prevention of discriminatory employment practices. (e) Failure to perform any of the above agreements pertaining to equal employment opportunities shall be deemed a material breach of the contract and sufficient grounds for termination of this agreement for cause without liability. Section 3: Contractor Responsible for Personnel. The Contractor has or will secure, at Contractor's own cost and expense, all personnel required to perform this agreement in a timely and proper manner. The parties hereto agree and understand that such personnel shall in no event be deemed to be, and are not, employees, agents, or representatives of the Borough and such persons shall have no contractual or other relationship with the Borough, and the Borough shall have no responsibility or liability whatsoever to any of said persons, or for the acts or omissions of any of such persons. Section 4: Personnel Supervision. Contractor agrees that all work and services required or provided under this agreement shall be performed personally by the Contractor, unless otherwise authorized in writing by the Borough's contracting officer, and in such event all personnel engaged in any such work shall be fully qualified, and shall be licensed and authorized under applicable state, federal and local laws to perform such services. Section 5: Corporate Authority. If Contractor is a corporation Contractor shall deliver to the Borough at the time of execution of this agreement a certified copy of a resolution of its board of directors authorizing the execution of this agreement and naming the officers that are authorized to execute this agreement on behalf of the corporation. Section 6: Additional Terms and Conditions. This agreement is subject to each of the additional terms, covenants, conditions and provisions set out in the RFP, attached hereto as Attachment D which are hereby expressly referred to and incorporated herein as though set forth in full. Auditing Services for the Kodiak Island Borough Page 8 Wherefore the parties have entered into this agreement the date and year first above written at the City of Kodiak, Alaska. Date: KODIAK ISLAND BOROUGH: By: Roxanne Murphy Borough Manager ATTEST: By: Borough Clerk APPROVED AS TO FORM: By: Scott A. Brandt -Erichsen Borough Attorney CONTRACTOR: Date: By: (Print Name/Position) Auditing Services for the Kodiak Island Borough Page 9 BOROUGH ACKNOWLEDGMENTS STATE OF ALASKA FIRST JUDICIAL DISTRICT THIS IS TO CERTIFY that on this day of , 2022, before me, the undersigned, a notary public in and for the State of Alaska, duly commissioned and sworn, personally appeared Roxanne Murphy to me known to be the Borough Manager of the Kodiak Island Borough, a municipal corporation, the corporation which executed the above and foregoing instrument; who on oath stated that she was duly authorized to execute said instrument on behalf of said corporation; who acknowledged to me that she signed the same freely and voluntarily on behalf of said corporation for the uses and purposes therein mentioned. WITNESS my hand and official seal the day and year in the certificate first above written. (Seal) STATE OF ALASKA ) )SS. FIRST JUDICIAL DISTRICT 1 NOTARY PUBLIC FOR ALASKA My Commission Expires: THIS IS TO CERTIFY that on this day of 2022, before me, the undersigned, a notary public in and for the State of Alaska, duly commissioned and sworn, personally appeared Alise Rice to me known to be the Borough Clerk of the Kodiak Island Borough, a municipal corporation, the corporation which executed the above and foregoing instrument; who on oath stated that she was duly authorized to execute said instrument on behalf of said corporation; who acknowledged to me that she signed the same freely and voluntarily on behalf of said corporation for the uses and purposes therein mentioned. WITNESS my hand and official seal the day and year in the certificate first above written. (Seal) Auditing Services for the Kodiak Island Borough Page 10 NOTARY PUBLIC FOR ALASKA My Commission Expires: ACKNOWLEDGMENT LIMITED LIABILITY COMPANY STATE OF ALASKA ) SS. FIRST JUDICIAL DISTRICT I, , a Notary Public, in and for the State of , hereby certify that , whose name as manager/member of LLC., is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he or she, as such officer and with full authority, executed the same voluntarily for and as the act of said limited liability company. WITNESS my hand and official seal the day and year in this certificate above written. NOTARY PUBLIC FOR, My Commission Expires: (Seal) Auditing Services for the Kodiak Island Borough Page 11 EXHIBIT A SCOPE OF WORK The Borough desires the auditor to express an opinion on the fair presentation of its basic financial statements in conformity with generally accepted accounting principles. The Borough presents all major funds with budgetary comparisons as part of its basic financial statements. The auditor is not required to audit the combining and individual fund financial statements and supporting schedules. However, the auditor is to provide an "in -relation -to" report on the combining and individual fund financial statements and supporting schedules based on the auditing procedures applied during the audit of the basic financial statements. The auditor is not required to audit the statistical section of the report. The auditor shall also be responsible for performing certain limited procedures involving required supplementary information required by the Governmental Accounting Standards Board as mandated by generally accepted auditing standards. 1. Auditina Standards to be Followed To meet the requirements of this request for proposals, the audit must be performed in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of the Single Audit Act of 1984 as amended, the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, and the AICPA Guide Audits of State and Local Governmental Units and the State of Alaska Single Audit Regulation 2 AAC 45.010. 2 Financial Statements and Compliance Statements - Borough 2.1 SCOPE OF WORK TO BE PERFORMED The Kodiak Island Borough desires the auditor to express an opinion on the fair presentation of its general-purpose financial statements in conformity with generally accepted accounting principles. The Borough also desires the auditor to express an opinion on the fair presentation of its combining and individual fund and account group financial statements and schedules in conformity with generally accepted accounting principles. The auditor is not required to audit the supporting schedules contained in the Annual Financial Report. The auditor is not required to audit the statistical section of the report. The auditor is required to report on compliance with applicable state and with applicable federal laws and regulations and on internal controls over financial reporting that could have a material effect on the fair presentation of the financial statements. Auditing Services for the Kodiak Island Borough Page 12 The auditor is required to test internal controls and compliance, as described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of the Borough's major federal programs. The auditor is also required to test internal controls and compliance, as described in the State of Alaska Audit Guide and Compliance Supplement for State Single Audits that are applicable to each of the Borough's major state programs. The auditor must report on compliance and internal control over compliance applicable to each major federal and to each major state program. The auditor is not required to audit the schedules of expenditures of federal and state awards. The auditor is required to report any findings or questioned costs found in the course of the work described above. Findings must be reported in three separate categories: 1) those affecting financial reporting, 2) those affecting major federal programs, and 3) those affecting major state programs. Recommendations for corrective action should be included. The auditor shall also be responsible for performing certain limited procedures, for Management's Discussion and Analysis and for other Required Supplementary Information required by the Governmental Accounting Standards Board, as mandated by generally accepted auditing standards. 2.2 AUDITING STANDARDS TO BE FOLLOWED To meet the requirements of this request for proposal, the audit shall be performed in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and the provisions of the State of Alaska Single Audit Regulation (2AAC 45.010), to include the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. 2.3 REPORTS TO BE ISSUED Reports shall be written in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and the provisions of the State of Alaska Single Audit Regulation (2 AAC 45.010), to include the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Auditing Services for the Kodiak Island Borough Page 13 Following the completion of the audit of the fiscal year's financial statements, the auditor shall issue: • A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles. • For federal purposes, a report on compliance and on internal control over financial reporting based on an audit of the financial statements performed in accordance with Government Auditing Standards. • An "in -relation -to" report on the Schedule of Expenditures of Federal Awards, along with a report on compliance with requirements applicable to each major program and on internal control over compliance in accordance with OMB Circular A-133. • A Schedule of Findings and Questioned Costs summarizing auditor results for a federal single audit, along with recommendations for corrective action. • Accounting assistance will be required for preparation of the Annual Comprehensive Financial Report (ACFR). This will be included in the lump sum cost for audit services. In the required state and federal reports on compliance and on internal controls over financial reporting and on the state and federal reports on compliance with requirements applicable to each major program, the auditor shall communicate any reportable conditions found during the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of internal control, which could adversely affect the Borough's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Reportable conditions that are also material weaknesses shall be identified as such in the report. Nonreportable conditions discovered by the auditors shall be reported in a separate letter to management, which shall be referred to in the report on internal controls. The report on compliance with requirements to each major assistance program shall include all material instances of noncompliance. All nonmaterial instances of noncompliance shall be reported in a separate management letter, which shall be referred to in the report on compliance. Fraud and Illegal Acts. Auditors shall be required to make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware. This notification should be made in accordance with Statements of Auditing Standards No. 54 and No. 99, and with the U.S. General Accounting Office's Government Auditing Standards. Auditing Services for the Kodiak Island Borough Page 14 2.4 REPORT DEADLINES The opinion on the financial statements of the Borough for the fiscal years ending June 30 is to be submitted by November 15 for each year of the engagement, unless adjusted by mutual agreement. The reports required for the federal Single Audit Act, as amended in 1996, and the state single audit regulation are to be submitted by December 15 for each year of the engagement, unless adjusted by mutual agreement. 2.5 SPECIAL CONSIDERATIONS The Kodiak Island Borough will send its Annual Comprehensive Financial Report to the Government Finance Officers Association for review in its Certificate of Achievement for Excellence in Financial Reporting program. The auditor may be required to provide limited special assistance to the Kodiak Island Borough to meet the requirements of that program. Any fees for this assistance are outside the scope of the audit and will be billed as additional engagement work at the rates in Attachment C. The Kodiak Island Borough may prepare one or more official statements in connection with the sale of debt securities, which may contain the general- purpose financial statements and the auditor's report thereon. The auditor shall be required, if requested by the financial advisor and/or the underwriter, to issue a "consent and citation of expertise" as the auditor and any necessary "comfort letters". The schedules of expenditures of federal and state awards the related auditor's reports, as well as the federal and state reports on compliance and on internal control over financial reporting and on compliance with requirements applicable to each major program and on internal control over that compliance are not to be included in the Annual Comprehensive Financial Report but are to be issued separately. 2.6 WORKING PAPER RETENTION AND ACCESS TO WORKING PAPERS All working papers and reports must be retained, at the auditor's expense, for a minimum of three (3) years from the end of the audited period, unless the firm is notified in writing by the Borough of the need to extend the retention period. The auditor will be required to make working papers available, upon request, to the following parties or their designees: • Kodiak Island Borough • Parties designated by the federal or state governments or by the Kodiak Island Borough as part of an audit quality review process • Auditors of entities of which the Kodiak Island Borough is a sub recipient of grant funds Auditing Services for the Kodiak Island Borough Page 15 In addition, the firm shall respond promptly and fully to the reasonable inquires of successor auditors. The firm shall allow successor auditors to review working papers, including documentation of planning, internal control, audit results, and other matters of continuing accounting and auditing significance. 3. Financial Statements and Compliance Statements — School District 3.1 SCOPE OF WORK TO BE PERFORMED The Kodiak Island Borough School District desires the auditor to express an opinion on the fair presentation of its general-purpose financial statements in conformity with generally accepted accounting principles. The School District also desires the auditor to express an opinion on the fair presentation of its combining and individual fund schedules in conformity with generally accepted accounting principles (i.e., a "full -scope" audit). The auditor is not required to audit the supporting schedules contained in the Annual Comprehensive Financial Report. The auditor is not required to audit the statistical section of the report. The auditor is required to report on compliance with applicable state and with applicable federal laws and regulations and on internal controls over financial reporting that could have a material effect on the fair presentation of the financial statements. The auditor is required to test internal controls and compliance as described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of the School District's major federal programs. The auditor is also required to test internal controls and compliance, as described in the State of Alaska Audit Guide and Compliance Supplement for State Single Audits that are applicable to each of the School District's major state programs. The auditor must report on compliance and internal control over compliance applicable to each major federal and to each major state program. The auditor is not required to audit the schedules of expenditures of federal and state awards. The auditor is required to report any findings or questioned costs found in the course of the work described above. Findings must be reported in three separate categories: 1) those affecting financial reporting, 2) those affecting major federal programs, and 3) those affecting major state programs. Recommendations for corrective action should be included. The auditor shall also be responsible for performing certain limited procedures, for Management's Discussion and Analysis and for other Required Supplementary Information required by the Governmental Accounting Standards Board, as mandated by generally accepted auditing standards. Auditing Services for the Kodiak Island Borough Page 16 3.2 AUDITING STANDARDS TO BE FOLLOWED To meet the requirements of this request for proposal, the audit shall be performed in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and the provisions of the State of Alaska Single Audit Regulation (2AAC 45.010), to include the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. 3.3 REPORTS TO BE ISSUED Reports shall be written in accordance with generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants, the standards for financial audits set forth in the U.S. General Accounting Office's Government Auditing Standards, the provisions of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and the provisions of the State of Alaska Single Audit Regulation (2 AAC 45.010), to include the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Following the completion of the audit of the fiscal year's financial statements, the auditor shall issue: • A report on the fair presentation of the financial statements in conformity with generally accepted accounting principles. • For federal purposes, a report on compliance and on internal control over financial reporting based on an audit of the financial statements performed in accordance with Government Auditing Standards. • An "in -relation -to" report on the Schedule of Expenditures of Federal Awards, along with a report on compliance with requirements applicable to each major program and on internal control over compliance in accordance with OMB Circular A-133. • A Schedule of Findings and Questioned Costs summarizing auditor results for a federal single audit, along with recommendations for corrective action. • For state purposes, a report on compliance and on internal control over financial reporting based on an audit of the financial statements performed in accordance with Government Auditing Standards. Auditing Services for the Kodiak Island Borough Page 17 An "in -relation -to" report on the Schedule of Expenditures of State Awards, along with a report on compliance with requirements applicable to each major program and on internal control over compliance in accordance with the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. The auditors must send out these reports for the School District: • A report on fund balance compliance requirements, in accordance with AS 14.17.505. A report on the fair presentation of the tuition rate report, in accordance with Alaska Department of Education and Early Development instructions for Form 05-00-014. • One copy of the General -Purpose Financial Statement for each state agency listed on either the schedule of state financial assistance or Federal Awards should be sent to the Statewide Single Audit Coordinator, Office of Management & Budget. • One copy of the General -Purpose Financial Statement should be sent to the State of Alaska, Department of Administration, Division of Finance. Their report should also include the Tuition Rate Report and Management Letter • Two copies of the General -Purpose Financial Statement will be sent to the Federal Audit Clearing House. It will also include the Data Collection Form for Reporting on Audits of States, Local Governments and Nonprofit Organizations (Form SF -SAC) which the auditors have prepared. Five additional copies each of the General -Purpose Financial Statement, Management Letter, Letter to the School Board and two (2) copies of the Tuition Rate Report sent to the School District along with an electronic version of all reports. In the required state and federal reports on compliance and on internal controls over financial reporting and on the state and federal reports on compliance with requirements applicable to each major program, the auditor shall communicate any reportable conditions found during the audit. A reportable condition shall be defined as a significant deficiency in the design or operation of internal control, which could adversely affect the School District's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Reportable conditions that are also material weaknesses shall be identified as such in the report. Nonreportable conditions discovered by the auditors shall be reported in a separate letter to management, which shall be referred to in the report on internal controls. Auditing Services for the Kodiak Island Borough Page 18 The report on compliance with requirements to each major assistance program shall include all material instances of noncompliance. All nonmaterial instances of noncompliance shall be reported in a separate management letter, which shall be referred to in the report on compliance. Fraud and Illegal Acts. Auditors shall be required to make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware. This notification should be made in accordance with Statements of Auditing Standards No. 54 and No. 99, and with the U.S. General Accounting Office's Government Auditing Standards. 3.4 REPORT DEADLINES Opinions on the financial statements of the School District and on reports required by the Alaska Department of Education and Early Development for the fiscal years ending June 30 are to be submitted by October 1 for each year of the engagement, unless adjusted by mutual agreement. The reports required for the federal Single Audit Act, as amended in 1996, the state single audit regulations, and the applicable state statutes and regulations of the Alaska Department of Education and Early Development are to be submitted by October 1 for each year of the engagement, unless adjusted by mutual agreement. 3.5 WORKING PAPER RETENTION AND ACCESS TO WORKING PAPERS All working papers and reports must be retained, at the auditor's expense, for a minimum of three (3) years from the end of the audited period, unless the firm is notified in writing by the or School District of the need to extend the retention period. The auditor will be required to make working papers available, upon request, to the following parties or their designees: • Kodiak Island Borough and Kodiak Island Borough School District • State Department of Education and Early Development and U.S. Department of Education • Parties designated by the federal or state governments or by the Borough or School District as part of an audit quality review process • Auditors of entities of which the Kodiak Island Borough School District is a subrecipient of grant funds In addition, the firm shall respond promptly and fully to the reasonable inquires of successor auditors. The firm shall allow successor auditors to review working papers, including documentation of planning, internal control, audit results, and other matters of continuing accounting and auditing significance. 4. Peer Reviews Auditing Services for the Kodiak Island Borough Page 19 The firm shall provide copies of their peer reviews as they are performed during the term of the contract. 5. Management Letters The auditor shall observe the adequacy of the systems of internal control, accounting procedures, and other significant matters. Upon the request any appropriate recommendations may be reviewed with management and included in separate letters to the Borough Manager and Assembly, and to the Superintendent and School Board. Interim management letters on improvements in controls and procedures for the Borough and School District will be submitted within three weeks of interim fieldwork for each year. Final management letters for the Borough and School District will be submitted by December 15 and September 30, respectively, of each year, unless adjusted by mutual agreement. The auditor will meet at least semi-annually with the Assembly and School Board, or with designated Committee(s), for the purpose of reviewing the interim and/or final management letters. 6. Presentations As early as possible after the statements have been printed, the appropriate financial reports, compliance reports, and the management letters are to be reviewed with a designated committee of the School District and with the Borough's audit committee. Then they are to be presented to the School Board and to the Assembly at a regular meeting, respectively. The audit partner assigned to the engagement should be in attendance, if requested to be present. Auditing Services for the Kodiak Island Borough Page 20 Altman, Rogers CERTIFIED PUBLIC C6. ACCOUNTANTS May 12, 2022 Audit Committee or Borough Assembly Kodiak Island Borough 710 Mill Bay Road Kodiak, AK 99615 Dear Audit Committee or Borough Assembly, You have requested that we audit the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Kodiak Island Borough, as of June 30, 2022, and for the year then ended, and the related notes to the financial statements, which collectively comprise Kodiak Island Borough's basic financial statements as listed in the table of contents. In addition, we will audit the entity's compliance over major federal and state award programs for the period ended June 30, 2022. We are pleased to confirm our acceptance and our understanding of this audit engagement by means of this letter. Our audits will be conducted with the objectives of our expressing an opinion on each opinion unit and an opinion on compliance regarding the entity's major federal and state award programs. The objectives of our audit of the financial statements are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in the United States of America (GAAS) and in accordance with Government Auditing Standards, will always detect a material misstatement when it exists. Misstatements, including omissions, can arise from fraud or error and are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. The objectives of our compliance audit are to obtain sufficient appropriate audit evidence to form an opinion and report at the level specified in the governmental audit requirement about whether the entity complied in all material respects with the applicable compliance requirements and identify audit and reporting requirements specified in the governmental audit requirement that are supplementary to GAAS and Government Auditing Standards, if any, and perform procedures to address those requirements. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison schedules, and schedules of proportionate share of the net pension and OPEB liabilities and contributions be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. As part of our engagement, we will apply certain limited procedures to the required supplementary information (RSI) in accordance with auditing standards generally accepted in the United States of America. 3000 C Street N. Suite 201 Anchorage, Alaska 99503 Phone 907-274-2992 Fax 907-274-2993 Offices in Juneau and Soldotna A Professional Corporation Kodiak Island Borough Page 2 of 10 These limited procedures will consist primarily of inquiries of management regarding their methods of measurement and presentation, and comparing the information for consistency with management's responses to our inquiries. We will not express an opinion or provide any form of assurance on the RSI. The following RSI is required by accounting principles generally accepted in the United States of America. This RSI will be subjected to certain limited procedures but will not be audited: 1) Management's discussion and analysis. 2) Budgetary comparisons schedules. 3) Schedules of proportionate share of the net pension and OPEB liabilities and contributions. Supplementary information other than RSI will accompany Kodiak Island Borough's basic financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the basic financial statements and certain additional procedures, including comparing and reconciling the supplementary information to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and additional procedures in accordance with auditing standards generally accepted in the United States of America. We intend to provide an opinion on the following supplementary information in relation to the financial statements as a whole: 1) Combining schedules. 2) Schedule of expenditures of federal awards. 3) Schedule of state financial assistance. Schedule of Expenditures of Federal and State Awards We will subject the schedule of expenditures of federal and state awards to the auditing procedures applied in our audit of the basic financial statements and certain additional procedures, including comparing and reconciling the schedule to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and additional procedures in accordance with auditing standards generally accepted in the United States of America. We intend to provide an opinion on whether the schedule of expenditures of federal and state awards are presented fairly in all material respects in relation to the financial statements as a whole. Data Collection Form Prior to the completion of our engagement, we will complete the sections of the Data Collection Form that are our responsibility. The form will summarize our audit findings, amounts and conclusions. It is management's responsibility to submit a reporting package including financial statements, schedule of expenditure of federal awards, summary schedule of prior audit findings and corrective action plan along with the Data Collection Form to the federal audit clearinghouse. The financial reporting package must be text searchable, unencrypted, and unlocked. Otherwise, the reporting package will not be accepted by the federal audit clearinghouse. We will assist you in the electronic submission and certification. You may request from us copies of our report for you to include with the reporting package submitted to pass-through entities. The Data Collection Form is required to be submitted within the earlier of 30 days after receipt of our auditors' reports or nine months after the end of the audit period, unless specifically waived by a federal and state cognizant or oversight agency for audits. Data Collection Forms submitted untimely are one of the factors in assessing programs at a higher risk. Kodiak Island Borough Page 3 of 10 Audit of the Financial Statements We will conduct our audits in accordance GARS, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America; the audit requirements of Title 2 U.S. Code of Federal and state Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal and state Awards (Uniform Guidance), and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits). As part of an audit of financial statements in accordance with GAAS and in accordance with Government Auditing Standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. However, we will communicate to you in writing concerning any significant deficiencies or material weaknesses in internal control relevant to the audit of the financial statements that we have identified during the audit. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Conclude, based on the audit evidence obtained, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Kodiak Island Borough's ability to continue as a going concern for a reasonable period of time. Because of the inherent limitations of an audit, together with the inherent limitations of internal control, an unavoidable risk that some material misstatements or noncompliance may not be detected exists, even though the audit is properly planned and performed in accordance with GAAS and Government Auditing Standards of the Comptroller General of the United States of America. Please note that the determination of abuse is subjective and Government Auditing Standards does not require auditors to detect abuse. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any other periods. We will issue a written report upon completion of our audit of Kodiak Island Borough's basic financial statements. Our report will be addressed to governing body of Kodiak Island Borough. Circumstances may arise in which our report may differ from its expected form and content based on the results of our audit. Depending on the nature of these circumstances, it may be necessary for us to modify our opinions, add an emphasis -of -matter or other -matter paragraph(s) to our auditor's report, or if necessary, withdraw from the engagement. If our opinions on the basic financial statements are other than unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or to issue a report as a result of this engagement. Kodiak Island Borough Page 4 of 10 In accordance with the requirements of Government Auditing Standards, we will also issue a written report describing the scope of our testing over internal control over financial reporting and over compliance with laws, regulations, and provisions of grants and contracts, including the results of that testing. However, providing an opinion on internal control and compliance over financial reporting will not be an objective of the audit and, therefore, no such opinion will be expressed. Audit of Major Program Compliance Our audit of Kodiak Island Borough's major federal and state award program(s) compliance will be conducted in accordance with the requirements of the Single Audit Act, as amended; Uniform Guidance, and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, and will include tests of accounting records, a determination of major programs in accordance with the Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits and other procedures we consider necessary to enable us to express such an opinion on major federal and state award program compliance and to render the required reports. We cannot provide assurance that an unmodified opinion on compliance will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion or withdraw from the engagement. The Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits requires that we also plan and perform the audit to obtain reasonable assurance about whether material noncompliance with applicable laws and regulations, the provisions of contracts and grant agreements applicable to major federal and state award programs, and the applicable compliance requirements occurred, whether due to fraud or error, and express an opinion on the entity's compliance based on the audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the entity's compliance with the requirements of the federal and state programs as a whole. As part of a compliance audit in accordance with GAAS and in accordance with Government Auditing Standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Our procedures will consist of determining major federal and state programs and, performing the applicable procedures described in the U.S. Office of Management and Budget OMB Compliance Supplement and the State of Alaska Compliance Supplement for the types of compliance requirements that could have a direct and material effect on each of the entity's major programs, and performing such other procedures as we considers necessary in the circumstances. The purpose of those procedures will be to express an opinion on the entity's compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to the Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Kodiak Island Borough Page 5 of 10 Also, as required by the Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, we will obtain an understanding of the entity's internal control over compliance relevant to the audit in order to design and perform tests of controls to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements applicable to each of the entity's major federal and state award programs. Our tests will be less in scope than would be necessary to render an opinion on these controls and, accordingly, no opinion will be expressed in our report. However, we will communicate to you, regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we have identified during the audit. We will issue a report on compliance that will include an opinion or disclaimer of opinion regarding the entity's major federal and state award programs, and a report on internal controls over compliance that will report any significant deficiencies and material weaknesses identified; however, such report will not express an opinion on internal control. Management's Responsibilities Our audit will be conducted on the basis that management and, when appropriate, those charged with governance acknowledge and understand that they have responsibility: 1. For the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; 2. For the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; 3. For identifying, in its accounts, all federal and state awards received and expended during the period and the federal and state programs under which they were received; 4. For maintaining records that adequately identify the source and application of funds for federal and state funded activities; 5. For preparing the schedule of expenditures of federal and state awards (including notes and noncash assistance received) in accordance with the Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits; 6. For designing, implementing, and maintaining effective internal control over federal and state awards that provides reasonable assurance that the entity is managing federal and state awards in compliance with federal and state statutes, regulations, and the terms and conditions of the federal and state awards; 7. For identifying and ensuring that the entity complies with federal and state laws, statutes, regulations, rules, provisions of contracts or grant agreements, and the terms and conditions of federal and state award programs, and implementing systems designed to achieve compliance with applicable federal and state statutes, regulations, and the terms and conditions of federal and state award programs; 8. For disclosing accurately, currently, and completely the financial results of each federal and state award in accordance with the requirements of the award; Kodiak Island Borough Page 6 of 10 9. For identifying and providing report copies of previous audits, attestation engagements, or other studies that directly relate to the objectives of the audit, including whether related recommendations have been implemented; 10. For taking prompt action when instances of noncompliance are identified; 11. For addressing the findings and recommendations of auditors, for establishing and maintaining a process to track the status of such findings and recommendations and taking corrective action on reported audit findings from prior periods and preparing a summary schedule of prior audit findings; 12. For following up and taking corrective action on current year audit findings and preparing a corrective action plan for such findings; 13. For submitting the reporting package and data collection form to the appropriate parties; 14. For making the auditor aware of any significant contractor relationships where the contractor is responsible for program compliance; 15. To provide us with: a. Access to all information of which management is aware that is relevant to the preparation and fair presentation of the financial statements including the disclosures, and relevant to federal and state award programs, such as records, documentation, and other matters; b. Additional information that we may request from management for the purpose of the audit; c. Unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence; 16. For adjusting the financial statements to correct material misstatements and confirming to us in the management representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the current year period(s) under audit are immaterial, both individually and in the aggregate, to the financial statements as a whole; 17. For acceptance of nonattest services, including identifying the proper party to oversee nonattest work; 18. For maintaining adequate records, selecting and applying accounting principles, and safeguarding assets; 19. For informing us of any known or suspected fraud affecting the entity involving management, employees with significant role in internal control and others where fraud could have a material effect on compliance; 20. For the accuracy and completeness of all information provided; 21. For taking reasonable measures to safeguard protected personally identifiable and other sensitive information; and 22. For confirming your understanding of your responsibilities as defined in this letter to us in your management representation letter. Kodiak Island Borough Page 7 of 10 With regard to the schedule of expenditures of federal and state awards referred to above, you acknowledge and understand your responsibility (a) for the preparation of the schedule of expenditures of federal and state awards in accordance with the Uniform Guidance and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits, (b) to provide us with the appropriate written representations regarding the schedule of expenditures of federal and state awards, (c) to include our report on the schedule of expenditures of federal and state awards in any document that contains the schedule of expenditures of federal and state awards and that indicates that we have reported on such schedule, and (d) to present the schedule of expenditures of federal and state awards with the audited financial statements, or if the schedule will not be presented with the audited financial statements, to make the audited financial statements readily available to the intended users of the schedule of expenditures of federal and state awards no later than the date of issuance by you of the schedule and our report thereon. You are also responsible for the preparation of the other supplementary information, which we have been engaged to report on, in conformity with U.S. generally accepted accounting principles. You agree to include our report on the supplementary information in any document that contains, and indicates that we have reported on, the supplementary information. You also agree to include the audited financial statements with any presentation of the supplementary information that includes our report thereon OR make the audited financial statements readily available to users of the supplementary information no later than the date the supplementary information is issued with our report thereon. Your responsibilities include acknowledging to us in the written representation letter that (1) you are responsible for presentation of the supplementary information in accordance with GAAP; (2) you believe the supplementary information, including its form and content, is fairly presented in accordance with GAAP; (3) the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the supplementary information. As part of our audit process, we will request from management and, when appropriate, those charged with governance, written confirmation concerning representations made to us in connection with the audit. We understand that your employees will prepare all confirmations we request and will locate any documents or invoices selected by us for testing. If you intend to publish or otherwise reproduce the financial statements and make reference to our firm, you agree to provide us with printers' proofs or masters for our review and approval before printing. You also agree to provide us with a copy of the final reproduced material for our approval before it is distributed. Nonattest Services With respect to any nonattest services we perform, including preparation of the financial statements and federal data collection form. We will not assume management responsibilities on behalf of Kodiak Island Borough. However, we will provide advice and recommendations to assist management of Kodiak Island Borough in performing its responsibilities. Kodiak Island Borough's management is responsible for (a) making all management decisions and performing all management functions; (b) assigning a competent individual to oversee the services; (c) evaluating the adequacy of the services performed; (d) evaluating and accepting responsibility for the results of the services performed; and (e) establishing and maintaining internal controls, including monitoring ongoing activities. Kodiak Island Borough Page 8 of 10 Our responsibilities and limitations of the nonattest services are as follows: • We will perform the services in accordance with applicable professional standards. • The nonattest services are limited to the preparation of the financial statements and federal data collection form. Our firm, in its sole professional judgment, reserves the right to refuse to do any procedure or take any action that could be construed as making management decisions or assuming management responsibilities. Other Grant Todd is the engagement partner for the audit services specified in this letter. His responsibilities include supervising Altman, Rogers & Co.'s services performed as part of this engagement and signing or authorizing another qualified firm representative to sign the audit report. The estimated fee for our services will be $113,390 including out-of-pocket costs. This fee is based on three federal and four state programs selected as major programs for compliance purposes. Each additional compliance program will increase the fee by $2,000. This estimate is based upon anticipated cooperation from your personnel, your preparation of the financial statements, the assumption that unexpected circumstances will not be encountered and that significant deficiencies or material weaknesses will not be discovered during the audit. Additionally, if significant deficiencies or material weaknesses are found, our fees developing and writing deficiencies are estimated between $500 and $1,000 for each. If significant additional time is necessary, we will discuss it with you and arrive at a new fee before we incur the additional costs. Preparation of the Data Collection Form for the Federal Audit Clearinghouse is included in this fee. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 30 days or more overdue and may not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report(s). You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through the date of termination. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. During the course of the engagement, we may communicate with you or your personnel via fax or e-mail, and you should be aware that communication in those mediums contains a risk of misdirected or intercepted communications. Regarding the electronic dissemination of audited financial statements, including financial statements published electronically on your Internet website, you understand that electronic sites are a means to distribute information and, therefore, we are not required to read the information contained in these sites or to consider the consistency of other information in the electronic site with the original document. Professional standards prohibit us from being the sole host and/or the sole storage for your financial and non-financial data. As such, it is your responsibility to maintain your original data and records and we cannot be responsible to maintain such original information. By signing this engagement letter, you affirm that you have all the data and records required to make your books and records complete. Kodiak Island Borough Page 9 of 10 The audit documentation for this engagement is the property of Altman, Rogers & Co. and constitutes confidential information. However, we may be requested to make certain audit documentation available to federal and state agencies and the U.S. Government Accountability Office pursuant to authority given to it by law or regulation, or to peer reviewers. If requested, access to such audit documentation will be provided under the supervision of Altman, Rogers & Co.'s personnel. Furthermore, upon request, we may provide copies of selected audit documentation to these agencies and regulators. The regulators and agencies may intend, or decide, to distribute the copies of information contained therein to others, including other governmental agencies. We agree to retain our audit documentation or work papers for a period of at least five years from the date of our report. Further, we will be available during the year to consult with you on financial management and accounting matters of a routine nature. During the course of the audit, we may observe opportunities for economy in, or improved controls over, your operations. We will bring such matters to the attention of the appropriate level of management, either orally or in writing. We agree to retain our audit documentation or work papers for a period of at least five years from the date of our report. You agree to inform us of facts that may affect the financial statements of which you may become aware during the period from the date of the auditor's report to the date the financial statements are issued. At the conclusion of our audit engagement, we will communicate to those charged with governance the following significant findings from the audit: • Our view about the qualitative aspects of the entity's significant accounting practices; • Significant difficulties, if any, encountered during the audit; • Uncorrected misstatements, other than those we believe are trivial, if any; • Disagreements with management, if any; • Other findings or issues, if any, arising from the audit that are, in our professional judgment, significant and relevant to those charged with governance regarding their oversight of the financial reporting process; • Material, corrected misstatements that were brought to the attention of management as a result of our audit procedures; • Representations we requested from management; • Management's consultations with other accountants, if any; and • Significant issues, if any, arising from the audit that were discussed, or the subject of correspondence, with management. In accordance with the requirements of Government Auditing Standards, we have attached a copy of our latest external peer review report of our firm for your consideration and files. Please sign and return the attached copy of this letter to indicate your acknowledgment of, and agreement with, the arrangements for our audit of the financial statements compliance over major federal and state award programs including our respective responsibilities. Kodiak Island Borough Page 10 of 10 We appreciate the opportunity to be your financial statement auditors and look forward to working with you and your staff. Sincerely, Altman, Rogers & Co. Grant R. Todd, CPA Principal RESPONSE: This letter correctly sets forth our understanding. Acknowledged and agreed on behalf of Kodiak Island Borough by: Name: 111m,"hism"k,M. u 111!1111 -M Date: 5 11 (O I -12