Agenda Cover Memorandum

Meeting Date: March 6, 2017

Meeting Type: Committee of the Whole City Council Budget Workshop

Item Title: Approve a three-year contract for Audit Services, FN-FY17-02, to BKD, LLC of Oakbrook Terrace, IL.

Action Requested: Approval For Discussion Feedback Requested For Your Information

Staff Contact: Andrea Lamberg, Acting Finance Director Phone: (847) 318-5214 Email: alamberg@parkridge.us

Background: Staff prepared an RFP to search for a qualified firm of certified public accountants to audit the City’s financial statements for the three (3) fiscal years starting with the fiscal year ending April 30, 2017, with two possible one year extensions. The request was posted on the City website and legal notice was published in the Pioneer Press on January 13, 2017. Seven (7) firms submitted bid proposals. One firm, Lauterbach & Amen, LLP, was deemed non-responsive due to lack of capability to provide the full audit due to a conflict of interest. Six bids were evaluated by staff based on the proposals only, without the associated costs. A criterion for the evaluation was based on: General Firm Qualifications, Key Qualifications, and Project Understanding and Approach. The scores for each proposal were averaged to determine the proposal with the highest score. The results are provided. Staff recommends that the contract be awarded to the lowest responsive and responsible bidder that provides the best value for the City; BKD, LLC of Oakbrook Terrace, IL. BKD, LLC has provided audit services for the City for the past five (5) years. BKD, LLC’s audit services have been acceptable. The contract was discussed at the February 27, 2017 Finance Committee of the Whole Meeting and passed unanimously, 6-0. Recommendation: Approve a three-year contract for Audit Services, FN-FY17-02, to BKD, LLC of Oakbrook Terrace, IL. Budget Implications:

Does Action Require an Expenditure of Funds: Yes No

If Yes, Total Cost: $40,150 (year 1) $40,650 (year 2) $41,200 (year 3) $41,850 (year 4 – optional) $42,600 (year 5 – optional)

If Yes, is this a Budgeted Item: Yes No Requires Budget Transfer

If Budgeted, Budget Code (Fund, Department, Object Code): 100-1031-941600

Attachment(s), if any: Scorecard Proposal

AUDIT SERVICES FN-FY17-02 PAGE 1 of 1

BKD, LLP

Ste 5001901 S. Meyers Road

Oakbrook Terrace, IL 60181

Baker TillySte 400

1301 West 22nd StreetOak Brook, IL 60523

Crowe HorwathSte 700

One Mid America PlazaOak Brook, IL 60522-3697

RSM Ste 500

20 N Martingale RoadSchaumburg, IL 60173

Hubbard Financial Inc.Unit 1

8501 W. 191st StreetMokena, IL 60448

CliftonLarsonAllenSte 1100

1301 West 22nd StreetOak Brook, IL 60523

CRITERIA AVAILABLE POINTS

General Firm Qualifications,including References*

10 10 10 10 9 5 8

Key Qualifications 30 30 30 27 27 11 28

Project Understanding and Approach

20 20 19 19 19 9 19

Total Cost 40 40 37 33 32 30 29

100 100 96 89 86 54 82

TOTAL COST (WEIGHTED AGAINST LOWEST BIDDER)

BKD, LLPSte 500

1901 S. Meyers RoadOakbrook Terrace, IL 60181

Baker TillySte 400

1301 West 22nd StreetOak Brook, IL 60523

Crowe HorwathSte 700

One Mid America PlazaOak Brook, IL 60522-3697

RSM Ste 500

20 N Martingale RoadSchaumburg, IL 60173

Hubbard Financial Inc.Unit 1

8501 W. 191st StreetMokena, IL 60448

CliftonLarsonAllenSte 1100

1301 West 22nd StreetOak Brook, IL 60523

ANNUAL PRICE

FY17 AUDIT $40,150.00 $42,450.00 $47,000.00 $48,000.00 $50,000.00 $52,800.00

FY18 AUDIT $40,650.00 $43,735.00 $48,400.00 $49,920.00 $52,500.00 $54,912.00

FY19 AUDIT $41,200.00 $45,020.00 $49,900.00 $51,915.00 $55,000.00 $57,108.00

FY20 AUDIT $41,850.00 $46,374.00 $51,400.00 $53,990.00 $57,500.00 $59,393.00

FY21 AUDIT $42,600.00 $47,788.00 $52,900.00 $56,145.00 $60,000.00 $61,769.00

TOTAL COST $206,450.00 $225,367.00 $249,600.00 $259,970.00 $275,000.00 $285,982.00

Weighted Percentage 100% 92% 83% 79% 75% 72%Points Awarded 40 37 33 32 30 29

AUDIT SERVICES FN-FY17-02SCORECARD BID TABULATION

* If a bid does not meet acceptable standards due to lack of adherence to specification, reference check, etc., the bid would be deemed non-responsive

Lauterbach & Amen, LLP of Warrenville, IL was deemed non-responsive due to lack of capability to provide the full audit due to a conflict of interest.

RECEIVING QUALITY AUDIT SERVICES FROM TRUSTED ADVISORS WITH A DEPTH OF GOVERNMENTAL ACCOUNTING EXPERTISE

CITY OF PARK RIDGE

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INTRODUCTORY LETTER OF INTEREST

February 10, 2017

Ms. Andrea Lamberg Acting Finance Director City of Park Ridge 505 Butler Place Park Ridge, IL 60068 DEAR MS. LAMBERG:

City of Park Ridge (the City) is mindful of those you serve—the thousands of residents who live, work and raise families in your city. Amid a rebounding economy, many cities also face a number of challenges, from delivering effective services using finite resources to engaging your citizens and keeping pace with rapidly evolving technologies and demographics. Therefore, you need the continued guidance and expertise of a national CPA and advisory firm that helps you have confidence in your financial statements and demonstrate your effectiveness at providing public services. With our depth of experience providing professional services to municipalities nationwide and familiarity with the City, we believe BKD, LLP is still that firm.

Transitioning to a new audit firm can be challenging. The resources required of the City to educate new advisors on your complex operations, internal processes and people can require a significant investment. Beyond added time and costs, which can often include initial startup fees and numerous first-year meetings, the risk of material misstatements within your financials can escalate as an unfamiliar team works to understand your overall financial and organization structure. Retaining trusted advisors from a top-tier firm can continue to provide engagement efficiencies, cost savings and, according to the American Institute of CPAs, improved audit quality as the ongoing application of the City’s policies and procedures are observed. Based on the strong working relationship we have forged with the City in recent years, you can have confidence knowing our commitment to you remains unchanged—to continue serving you with integrity while offering the high levels of quality and value you have come to expect. In addition, as governmental accounting standards increase in complexity, you will continue to benefit from our Chicago team’s availability to visit your offices and help provide practical applications.

The City is an important client, and we place great value on extending our working relationship while maintaining our independence. We believe we have responded to your request with a proposal that will allow our experienced professionals to continue providing timely, efficient and objective services. We will call you soon to answer questions you may have about this proposal, or you may reach us at 630.282.9500 or by email as provided below.

Sincerely, Scott C. Termine, CPA John F. Cutrera, CPA Partner Director stermine@bkd.com jcutrera@bkd.com

Our acceptance of this engagement is subject to completion of our normal client acceptance procedures. Upon acceptance, the actual terms of our engagement will be documented in a separate letter to be signed by you and us. All information contained within this proposal is proprietary and confidential. The information provided in this proposal is intended for informational purposes only and may not be copied, used or modified, in whole or in part, without BKD’s prior written approval. All information in this proposal is as of May 31, 2016, unless otherwise noted.

INTRODUCTORY LETTER OF INTEREST .................... iii

EXECUTIVE SUMMARY .................................................. 1

The City’s Desired Outcomes ...................................................... 1

Solutions for the City ................................................................... 1

Why Choose BKD ......................................................................... 2

RFP RESPONSE .............................................................. 3

General Firm Qualifications ......................................................... 3

Key Qualifications ........................................................................ 8

Project Understanding & Approach .......................................... 11

Municipal Client References...................................................... 16

Total Project Cost ...................................................................... 16

APPENDIX ..................................................................... 18

AICPA Peer Review Letter ......................................................... 19

BKD Peer Review Report ........................................................... 20

Commitment to Professional Development ............................. 21

BKD PRIDE Values ...................................................................... 22

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Similar to municipalities nationwide, the City of Park Ridge (the City) faces significant scrutiny from taxpayers, bond investors, granting agencies and other stakeholders. Moreover, you want to continue to effectively manage tax revenue while keeping up with changing Governmental Accounting Standards Board (GASB) pronouncements. The City needs to continue working with a trusted CPA and advisory firm that helps the City bolster citizen confidence through accurate financial reporting and proper presentation of your financial position. With knowledgeable advisors who understand the nuances of governmental accounting, BKD, LLP can continue providing the City with value for your investment through high-quality professional services.

We will continue developing an understanding of the City’s needs and draw upon our experience gained from our work with approximately 500 governmental entities, including approximately 120 municipalities, nationwide to provide focused solutions.

THE CITY’S DESIRED OUTCOMES The City desires to continue working with local advisors with a depth of governmental accounting experience and a familiarity with your specific needs. You also want:

Accessible advisors who are committed to providing professional services according to your requested timing

Professionals who have experience with Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting (CAFR Program) submission

Year-round communication from attentive advisors, including proactive best practice recommendations, industry updates and ideas aimed at continuing to help you operate effectively amid state budget fluctuations

A firm with extensive resources and a variety of professional services available to assist you as your needs continue to evolve

As you may already know, unmatched client service is a team effort at BKD. The City will be supported by individuals with a mix of specialized skills and expertise who are well informed and readily accessible to discuss the ideas and issues important to you. Beyond this immediate team is a far larger network of resources you can access to continue assisting you as you strategically plan for the future.

SOLUTIONS FOR THE CITY The City has requested information and a fee quote for the following professional services for the fiscal years ending April 30, 2017, 2018, 2019, 2020 and 2021:

Consolidated Financial Statement Audit in Accordance with Government Auditing Standards

Compliance Audit in Accordance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance)

Audit services may look alike on paper, but the reality is, the quality of the audit process, timeliness of services and suggestions to improve operational efficiency can vary among providers. It is important to engage a CPA and advisory firm that understands your needs, listens to your concerns and is receptive to an open dialogue about issues you face. We believe open communication is crucial to a strong working relationship with the City.

EXECUTIVE SUMMARY

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While other firms may be able to provide audit services to the City, we believe our key differentiators are our existing working relationship and the quality of our audit approach, which allows your stakeholders to breathe easy. BKD is committed to delivering more than just basic audit services.

Please see the Project Understanding & Approach section beginning on page 11 of this proposal for a detailed explanation of our audit service approach.

WHY CHOOSE BKD

THOUGHT LEADERSHIP BKD advisors are serious about reinforcing and strengthening their positions as thought leaders in the industries they serve. To help keep you informed about emerging issues in your industry, as well as changes in regulations and accounting and tax methods, we provide BKD Thoughtware® webinars, seminars and articles. Many of these are eligible for continuing professional education (CPE) credit. Topics include:

GASB Financial Reporting Model Improvements

Using Big Data to Make a Big Impact in Government

Pursuing Operational Excellence in the Public Sector

UNMATCHED CLIENT SERVICE The City wants to continue to have trusted advisors who will deliver exceptional client service, focus on your needs and take the time to address your unique challenges. BKD understands. You already know the level of unmatched high-quality service and personal attention you have received. That level of commitment will not change if you remain with BKD. We do not take our past working relationship for granted and will continue to enhance our service delivery and bring value to the City.

We take our commitment so seriously, we penned five standards of unmatched client service and supporting guidelines in The BKD Experience: Unmatched Client Service, a book that articulates the firm’s philosophy and sets expectations for serving clients. Our five standards are:

INTEGRITY FIRST

We work hard to do what is right for you. You can rely on us to tell you what you need to hear.

TRUE EXPERTISE

From BKD, you can expect trained, capable staff and a high level of supervision by partners and experienced personnel.

PROFESSIONAL DEMEANOR

You can depend on prepared and attentive advisors to help meet your needs and provide new ideas.

RESPONSIVE RELIABILITY

Accurate and thorough work, combined with timely delivery, is what you require, and at BKD, we do not want it any other way.

PRINCIPLED INNOVATION

We want you to succeed. For the City, that means looking for new ideas to streamline a process, better document work, train your staff and improve your effectiveness.

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For your convenience, we have structured our proposal according to the questions in your Request for Proposal (RFP). We believe our proposal will demonstrate our qualifications to serve the City.

GENERAL FIRM QUALIFICATIONS Provide a statement that portrays the firm’s qualifications in relation to the Scope of Services. The response should include the following:

a) a summary of the firm’s general qualifications including specific disciplines represented that are applicable to the proposed work, number of employees, office locations, etc.

GOVERNMENTAL ACCOUNTING EXPERTISE

As previously mentioned, BKD National Governmental Group works with approximately 500 governmental clients nationwide, including municipalities, counties, federal and state agencies, public utilities, airports and transportation authorities. Our advisors can help the City address the numerous financial considerations of governmental entities, including fiscal accountability and resource management, as well as performance management, budgeting and debt administration.

As part of our commitment to remaining at the forefront of the public sector, leaders across our national government practice created the BKD Center of Excellence for Government. This group of professionals meets regularly to discuss important developments, legislative updates and challenges affecting governmental entities similar to the City.

In addition, our public sector involvement has enabled us to establish connections with numerous regulatory and auditing organizations, including:

AICPA Governmental Audit Quality Center, as a member

Government Finance Officers Association (GFOA)

Governmental Accounting Standards Board (GASB)

Office of Management and Budget

U.S. Government Accountability Office

We look forward to communicating best practices and forward-looking strategies to help the City thoughtfully consider the areas important to fulfilling your fiduciary responsibilities.

SIGNIFICANT SINGLE AUDIT EXPERIENCE

Approximately one-third of our not-for-profit and government clients receive federal funding, and BKD performs approximately 425 Single Audits annually. We are familiar with the requirements for allowability of both direct and indirect costs, as well as the ability for the recipient to charge an administrative cost allowance under many federal programs.

To help streamline the Single Audit process, we use audit programs and checklists designed specifically for the federal programs we audit. Our firm maintains a database of audit programs tailored to the grants and other federal programs commonly found in governmental entities. Our extensive experience providing compliance testing in accordance with OMB requirements can help us properly perform and submit the City’s Single Audit on time.

RFP RESPONSE

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EXPERIENCE PREPARING THE CAFR

We understand the City intends to prepare a comprehensive annual financial report (CAFR) and apply for GFOA’s CAFR Program. BKD can continue to help you through this process by preparing or reviewing your reports. A review includes the evaluation of your reports using our independently prepared checklists designed to aid in financial reporting and disclosure accuracy and completeness. We will work with you to resolve identified discrepancies and reduce exceptions when your reports are returned.

FIRM PROFILE

BKD is one of the largest CPA and advisory firms in the United States. Our approximately 2,600 CPAs, advisors and dedicated staff* serve clients in all 50 states and clients with operations in more than 40 countries. BKD and our subsidiaries offer clients a variety of services in accounting, audit and assurance, tax, risk management, technology, forensics and valuation, corporate finance and wealth management.

OFFICE LOCATIONS

ARKANSAS

Fort Smith

Little Rock

Rogers

COLORADO

Colorado Springs

Denver

ILLINOIS

Chicago

Decatur

INDIANA

Bloomington

Evansville

Fort Wayne

Indianapolis

IOWA

Des Moines

KANSAS

Wichita

KENTUCKY

Bowling Green

Louisville

MISSISSIPPI

Jackson

MISSOURI

Branson

Joplin

Kansas City

Springfield

St. Louis

NEBRASKA

Lincoln

Omaha

OHIO

Cincinnati

OKLAHOMA

Enid

Oklahoma City

Tulsa

PENNSYLVANIA

Erie

Pittsburgh

TENNESSEE

Nashville

TEXAS

Dallas

Houston

San Antonio

Waco

WISCONSIN*

Madison

*As of December 31, 2016

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b) an outline of the firm’s capacity to carry out the scope and the extent of the work required. State disciplines where any subcontractors will be utilized

OUTLINE OF WORK REQUIRED

We believe BKD is qualified to perform the work described in your request for proposal as demonstrated throughout our proposal. With numerous advisors in BKD National Governmental Group and extensive experience with government entities in Illinois and across the country, we are confident we have the capacity to carry out the scope and extent of work required.

To help demonstrate our capacity, BKD is proud to work with governmental clients in Illinois, including:

Algonquin Area Public Library Bloom Township Bloomingdale Township* Brookfield-North Riverside Water Commission Chicago Heights Park District City of Hickory Hills, IL City of Highwood, IL City of Oakbrook Terrace, IL* City of Park Ridge, IL* DuPage Township Forest Preserve District of DuPage County* Glenside Public Library District Homewood-Flossmoor Park District* Illinois Municipal Insurance Cooperative (IMIC) Indian Trails Public Library District Mill Creek Water Reclamation District Oakbrook Terrace, City Police Pension Fund Park District of Oak Park, IL*

University of Illinois Chicago Dept of Athletics Village of Berkeley, IL* Village of Bloomingdale, IL* Village of Bolingbrook, IL Village of Bradley, IL Village of Burr Ridge, IL* Village of Chicago Ridge, IL Village of Downers Grove, IL* Village of Grayslake, IL Village of Hainesville, IL Village of Mettawa, IL Village of Mundelein, IL* Village of River Forest, IL* Village of Villa Park, IL* Village of Volo, IL Village of Willowbrook, IL* Will County Governmental League*

*Denotes client who received a GFOA’s CAFR Program

RELIANCE ON THE WORK OF OTHER FIRMS

We do not anticipate employing any other firm, affiliate or association member in completing the work for the City. We believe BKD possesses both the depth and breadth of experience to serve the City, as demonstrated throughout this proposal.

c) a description of the firm’s quality assurance and control program and how the work will be monitored with respect to both budget and time

QUALITY CONTROL

Audit services are the centerpiece of BKD’s assurance and compliance services. We work hard to maintain high standards of professional practice, including a strong system of quality control that emphasizes independence and objectivity. Our risk management program addresses a multitude of issues ranging from client acceptance to final working paper and financial statement review. Features of our quality control system include:

All professional personnel are required to confirm their independence with respect to the firm’s assurance clients annually.

The director of accounting and auditing, a partner independent of any client duties, is responsible for overseeing this process and making judgments on application of the independence rules.

We have rigid standards for acceptance of new engagements. Unusually large or complex new engagements require the approval of National Office personnel.

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All assurance engagements are reviewed by a second partner or manager who is not otherwise involved in providing services to the client.

We require numerous consultations with accountants well versed in difficult accounting or audit issues.

We conduct our own internal peer reviews regularly.

Our professionals average approximately 70 hours of training annually.

MONITORING

To deliver unmatched client service, BKD insists on the personal involvement of partners and managers in serving clients. That means face time with you. We have a client service guideline called “On Site = In Sight & Insight,” which simply means we get out of our office and into the client’s. We have found that by being on site with you, we get better information and perspective, resulting in more on-point recommendations and solutions for you.

Because of our low partner-to-staff ratio of 1-to-6, services we perform include a great deal of partner involvement compared to other national firms. Our partners are active members of the engagement team and encourage ongoing communication. Knowledgeable, experienced advisors bring a depth of industry expertise, which helps uphold the quality and improve the efficiency of our services.

d) the number of personnel (by specialty)

Industry Client Service Personnel

Construction & Real Estate Approximately 100Financial Services Approximately 430Health Care Approximately 590Manufacturing & Distribution Approximately 550Not-for-Profit, Government & Higher Education Approximately 330

e) the perspective on your firm’s distinctive competence

DELIVERING VALUE

It is important to monitor expenditures and receive exceptional value for your investments. However, informed consumers understand value is about more than just price. Value from a professional CPA and advisory firm is about the quality of the work and the merit of the advice. Expect BKD’s work to be accurate and insightful. We stand behind it. Our Public Company Accounting Oversight Board (PCAOB) inspections and American Institute of CPAs (AICPA) peer reviews demonstrate the firm’s record of excellence.

As evidenced by our inclusion in the INSIDE Public Accounting Best of the Best Firms list for the last six years, we also offer long-term consistency, exceptional performance and a national network of support and resources. BKD is large enough to help the City address a variety of financial issues. At the same time, we pride ourselves on hard work and low overhead, which keep our fees competitive. With our reputation, size, service and experience, you can consider us a good value.

PEER REVIEW

BKD is committed to providing quality audit services to our clients. We submit our work to external reviewers who challenge our approach and findings. We are proud of the findings from these reviews, which indicate our process works. A copy of our most recent AICPA peer review report is included in the Appendix.

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OUR COMMITMENT TO THE GOVERNMENTAL INDUSTRY

Our commitment to the industry and accounting profession also extends to involvement on national industry committees, such as the GASB and AICPA.

Mike Wolfe, the firm’s chief risk officer, has been appointed to the AICPA Governmental Audit Quality Center Executive Committee. He previously served as BKD’s liaison to the center, which helps raise awareness about the importance of improving governmental audit quality for entities receiving federal funding.

Chief Operating Officer Eric Hansen has been selected to serve as chair of the AICPA Board of Directors. He is currently serving a one-year term as vice chair, followed by a year as board chair and then another year as past chair, concluding his three-year rotation on October 31, 2019. Eric began serving a three-year term on the AICPA Board of Directors, effective November 1, 2013. The board acts as the executive committee for the AICPA’s Governing Council, which includes elected and appointed members from all 50 states, the District of Columbia and other U.S. territories. Eric previously served on the Governing Council and was a member of the AICPA Task Force on the Future of Learning.

Chris Telli, a partner in our Colorado Springs office, has been appointed as an advisor to the Government Finance Officers Association’s Committee on Accounting, Auditing, and Financial Reporting (CAAFR). This committee works closely with the GASB, the AICPA and other organizations and recommends best practices for effective government finance operations.

Amy Shreck, director in our Omaha office, accepted a Practice Fellowship with GASB. She is serving a two-year term at the GASB headquarters as a project manager to help formulate standards and assist with technical inquiries.

Andy Richards, partner in our Little Rock office, was a member of the GASB’s Comprehensive Implementation Guide Advisory Committee from 2012 to 2014. The 11-member committee advises GASB on its Comprehensive Implementation Guide, which helps financial statement preparers apply a number of GASB pronouncements. Andy also was involved with the governmental accounting standards-setting process as a Practice Fellow with the GASB in Norwalk, Connecticut. He was a member of the AICPA State & Local Government Expert Panel from October 2010 to October 2013, which identifies state and local government financial reporting and auditing issues and works to achieve resolutions benefiting the public interest.

Jim Brown, retired BKD partner, was appointed January 12, 2012, to the seven-member GASB. He is serving a five-year term on the board that commenced on July 1, 2012. In this capacity, Jim is helping develop and improve the financial accounting and reporting standards used by state and local governments across the country. He specialized in government accounting and auditing for approximately 40 years and served as a BKD partner for more than 25 years before retiring in May 2011. He was responsible for quality control and training for BKD’s government and not-for-profit practice and acted as the firm’s principal contact with GASB. Since retirement, he has been serving as a CPE instructor for the AICPA. He also has been a member of AICPA’s Auditing Standards Board and Board of Examiners.

BKD advisors also actively serve as participants, exhibitors, speakers and sponsors in regional and national associations for governmental organizations, including:

Association of Government Accountants (AGA)

Government Finance Officers Association (GFOA)

Government Finance Officers Association of Texas (GFOAT)

National League of Cities (NLC)

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REPRESENTATIVE LIST OF CLIENTS

BKD is proud to work with municipalities, including:

City & County of Denver, CO* City of Arvada, CO* City of Aurora, CO* City of Balch Springs, TX City of Bedford, TX* City of Bellevue, NE City of Bentonville, AR* City of Brookings, SD* City of Conway, AR City of El Paso, TX* City of Fort Smith, AR* City of Greenville, TX* City of Greenwood Village, CO* City of Indianapolis & Marion County, IN* City of Kansas City, MO* City of Kerrville, TX*

City of Lancaster, TX City of Lincoln, NE* City of Little Rock, AR* City of Lubbock, TX* City of McKinney, TX* City of Nebraska City, NE City of North Richland Hills, TX* City of Oklahoma City, OK* City of Ralston, NE City of Roanoke, TX* City of Springdale, AR City of Texarkana, AR* City of Westminster, CO* Town of Addison, TX* Town of Highland Park, TX*

*Denotes client who received a GFOA’s CAFR Program

KEY QUALIFICATIONS Provide information on staff members who will provide services within the particular category. Note area of expertise/title, State of Illinois licensing information, number of financial audit projects in the past five (5) years, as well as years of experience (total) and with the firm. Also include a summary of experience applicable to the proposed work.

The most critical factor in providing high-quality service is choosing your engagement team. We take team selection seriously and have the appropriate team of advisors to meet your needs. All key professionals who would be assigned to your engagement also are properly registered/licensed to practice in the state of Illinois.

ENGAGEMENT TEAM EXPERIENCE

John F. Cutrera, CPA Director Engagement Role: Lead Engagement Director

John has more than 12 years of public accounting experience, including two with BKD (five with Wolf and Company prior to joining BKD), with governmental and not-for-profit entities, providing audit and consulting services such as financial statement audits and reviews. He has worked with a variety of entities, including counties, municipalities, villages, school districts, universities, water commission districts, foundations, food banks and social services organizations.

He has helped plan and manage Single Audits for various engagements, including housing, social services programs and highway planning and construction grants for governmental clients as well as agreed-upon procedures.

John is a member of the American Institute of CPAs, Illinois CPA Society (ICPAS) and Illinois Government Finance Officers Association (IGFOA). He serves on the ICPAS Governmental Report Review Committee.

He has presented a variety of topics for internal trainings and IGFOA and presents to various boards and finance committees.

John is a 2004 graduate of Dominican University, River Forest, Illinois, with a B.S. degree in accounting, and a 2009 graduate with an M.B.A. degree in general management.

As of January 2017, John has worked on approximately 75 financial audit projects within the past five years.

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Scott C. Termine, CPA Partner Engagement Role: Concurring Reviewer

Scott has 20 years of public accounting experience, including two years with BKD (seven years with Wolf and Company prior to joining BKD), providing accounting, audit and consulting services to governmental and not-for-profit entities. This includes state agencies, municipalities, counties, park districts, transit agencies and other units of local government. As part of these engagements, he has assisted in preparing numerous comprehensive annual financial reports (CAFR).

He has managed audits of federal funds received from numerous agencies. He also has experience providing agreed-upon procedures relating to various areas, including internal control design for governmental agencies. In addition to providing audit and attest services to a variety of governmental entities, Scott also has worked with his clients on projects involving internal control documentation and review, cost allocation, chart of accounts redesign and accounting department restructuring/outsourcing.

Scott is a member of the American Institute of CPAs and Illinois CPA Society (ICPAS). He also is a member of the Illinois Government Finance Officers Association (IGFOA) and serves on their Technical Accounting Review Committee (TARC). In addition, he is a member of the Special Review Committee (SRC) for the GFOA Certificate of Achievement for Excellence in Financial Reporting program.

He is a graduate of University of Illinois at Chicago with a B.S. degree in accounting.

As of January 2017, Scott has worked on approximately 80 financial audit projects within the past five years.

Christine M. Witnik, CPA Manager Engagement Role: Engagement Manager

Christine is a member of BKD National Governmental Group and has six years of public accounting experience, all with BKD. She has worked on numerous audit engagements for governmental and not-for-profit organizations, including Single Audits.

She is a member of the American Institute of CPAs and Indiana CPA Society.

Christine is a graduate of Purdue University, West Lafayette, Indiana, with a B.S. degree in accounting.

As of January 2017, Christine has worked on approximately 75 financial audit projects within the past five years.

ADDITIONAL RESOURCES

Michael S. Brink Director

Mike is a member of BKD’s Enterprise Risk Solutions division and focuses on operational excellence and data analytics in the public sector. He has approximately 20 years of experience working on public sector issues from positions within government, management consulting and the business process outsourcing industry. He has worked in a range of business transformation roles involving sales, quality, technology implementation, process re-engineering, managed competition, project management and sourcing.

Previously, working as an analyst for a major city, Mike assisted with implementing and managing a number of the city’s competitive government initiatives. In addition, he led management reviews of the city’s largest services contracts, developed performance improvement plans and trained teams to conduct management audits.

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Mike completed Six Sigma black belt training with a major international manufacturer and led sourcing, business process re-engineering and custom software development projects as a component of the company’s Oracle enterprise resources planning (ERP) software implementation initiative. He also helped develop an e-commerce procurement strategy and manage the rollout to hundreds of suppliers. With a different international manufacturer, Mike led the capture team on one of the company’s largest state and local industry wins and spearheaded the company’s internal pay for performance, best management practices and at-home worker initiatives. As a consultant for six years prior to joining BKD, he has worked with numerous state and local clients, leading projects that have helped clients improve service quality while reducing service cost.

He is a graduate of Truman State University, Kirksville, Missouri, with a B.S. and a graduate of Indiana University’s School of Public and Environmental Affairs, Bloomington, with an M.P.A. degree. He served for eight years in the U.S. Navy Reserve.

Jeremy R. Clopton, CPA, CFE, ACDA, CIDA Director

As a member of BKD’s Forensics & Valuation Services division, Jeremy leads the Big Data & Analytics and Digital Forensics practices. He specializes in data analytics with applications in fraud prevention and detection, risk assessment and business intelligence.

He has experience in using ACL, IDEA and Tableau software for analysis, data visualization, visual analytics and dashboard development. Working with both IT and finance/accounting, he frequently assists with data gathering and extraction from accounting systems.

Jeremy’s project experience includes the development and implementation of continuous auditing programs for Fortune 500 companies, development of analytics for compliance with anti-bribery and corruption regulations and investigative experience working with criminal justice organizations. His industry experience includes working with higher education, banking, government, health care, retail, transportation and manufacturing organizations, as well as professional service firms.

He is a frequent speaker on the topics of data analytics, continuous auditing, data visualization and the value data can bring to an organization. He has spoken at global and national conferences, as well as regional and local conferences and in webinars. He also contributes to the Association of Certified Fraud Examiners’ Fraud Magazine and a variety of blogs on the topic of data analytics.

Jeremy is a CPA, Certified Fraud Examiner (CFE), ACL Certified Data Analyst (ACDA), Certified IDEA Data Analyst (CIDA) and member of the American Institute of CPAs, Missouri Society of CPAs, Association of Certified Fraud Examiners and Institute of Internal Auditors. He is one of a small number of professionals worldwide certified in the use of both IDEA and ACL data analytics technologies.

He is a 2005 summa cum laude graduate of Drury University, Springfield, Missouri, with a B.A. degree in accounting.

Jan S. Hertzberg, CIPP, CISA® Director

Jan has more than 30 years of experience in providing IT audit, risk, cybersecurity and privacy compliance services. This includes extensive experience in identifying and managing IT internal control risks and recommending solutions that apply cybersecurity and privacy frameworks, including COBIT, NIST, GAPP, ISO and AICPA Trust Principles, to implement leading practices and help clients meet compliance requirements.

Prior to joining BKD, he has held positions with Fortune 100 companies and, most recently, led the cybersecurity/privacy practice for an international public accounting firm, providing services

to clients that included national and international companies in the health care, financial services, professional services, not-for-profit, higher education, retail and manufacturing industries.

Jan is a frequent speaker and moderator on cybersecurity and privacy compliance topics and has written and lectured extensively on board-level awareness of cybersecurity risks and approaches to avoid, accept, mitigate and transfer them. He also serves an adjunct professor of IT audit/cybersecurity at DePaul University.

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He is a Certified Information Systems Auditor® (CISA®) and Certified Information Privacy Professional IT (CIPP). He is a member of the Institute of Internal Auditors (IIA), ISACA®, International Association of Privacy Professionals (IAPP) and Illinois-Sao Paulo Partners of the Americas (POA).

Jan is a graduate of Northern Illinois University, DeKalb, with a B.A. degree in history, Master of Arts degree of Latin American history and an M.S. degree in computer science.

PROJECT UNDERSTANDING & APPROACH Define all tasks and activities necessary to meet the objectives out in the Statement of Work. This section should include:

a) Description of all tasks and activities, the methodology that will be employed to accomplish them and which team members will work on each task b) Description of the products that would result from each task and activity c) Identification of points of input and review with staff d) Estimated time frame to complete each task e) Project schedule that identifies key tasks and milestone dates with associated duration f) Description of the final financial audit product.

FINANCIAL STATEMENT AUDIT IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS & UNIFORM GUIDANCE SERVICE DESCRIPTION

BKD’s audit approach focuses on areas of higher risk—the unique characteristics of the City’s operating environment, the design effectiveness of your internal controls and your financial statement amounts and disclosures. The objective is to express an opinion on the conformity of your financial statements, in all material respects, with accounting principles generally accepted in the United States of America.

Our audit will be performed in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States.

These principles make up the foundation of BKD’s audit approach:

The staff working on your engagement have been trained in the governmental industry. You will not have to train our people on audit areas or risks specific to the industry.

We provide a significant level of engagement executive involvement so you receive high-quality service with little interruption. We recognize we have to be flexible because not all audits go as planned. Because our partners and managers are in the field, we can adapt quickly to circumstances that arise.

Communicating the results of our audit procedures and sharing ideas to help your accounting processes are integral parts of your engagement. In addition, you will find communication does not end when the audit is completed. We strive to keep in contact with your management team throughout the year. Continued communication means you can receive an efficient and effective audit.

Using our five-phase approach, we will work with you to develop an audit plan tailored to your specific circumstances and risks.

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PHASE 1: PLANNING

As required by auditing standards, we will communicate with your city council and management team early in the audit process. Our communication with the city council and management team is a two-way process: we will be informing them of the scope and timing of the audit, but in return we will ask that your city council and management team let us know about any risk issues they have identified, any areas where they would like us to perform additional procedures or anything else material to the audit.

BKD also will work closely with your management team to develop an audit timeline that meets your requirements. For any audit to be successful, teamwork between the auditors and the management team is required. Both parties must set a realistic timeline to meet required deadlines.

As part of the planning meeting, we will identify information you have readily available for the audit and what additional information we will need. We recognize the importance of compliance with professional standards, but we also emphasize the need to be practical. When possible, during our testing of year-end account balances, we will want to use your internal reports and information.

Materiality

BKD has a defined methodology for governmental clients that does not simply consider net income, but focuses on other metrics, such as total assets, total revenue or other meaningful metrics to scope our audit approach, to evaluate actual or potential errors and to develop audit samples. In addition, we will seek the input of your city council and management team to further direct our testing procedures prior to finalizing our scope.

PHASE 2: RISK ASSESSMENT

BKD will follow standards established by the Auditing Standards Board of the AICPA. These auditing standards affect the amount and type of information BKD will gather to perform your audit.

We will:

Obtain an understanding of your business and business environment, significant risks you face and how you mitigate those risks. This will include examining how you measure and manage financial performance, as well as your internal controls over financial reporting.

Evaluate where your financial statements might be susceptible to material misstatement due to error or fraud.

Consider whether internal controls have been implemented and assess the general controls around your IT systems.

Assess risks of material misstatement for the most significant financial statement amounts and disclosures.

To help facilitate the testing of internal controls, we use questionnaires specific to the governmental industry, which expedite gathering your control information. Based on the documentation of your controls, we will test the key controls of your organization.

We expect to interview your personnel and review prior city council minutes as part of our information-gathering process.

PHASE 3: FIELDWORK, TESTING & FURTHER AUDIT PROCEDURES

Based on our assessment of risks of material misstatements and determination of further audit procedures to be performed, we will design audit tests that take advantage of strengths in your internal control system.

During fieldwork, we will:

Perform substantive tests on material account balances

Evaluate significant unusual transactions

Ask management to further explore and clarify any identified potential misstatements

Evaluate the materiality of those misstatements, if applicable

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Conclude whether all identified risks of material misstatement have been addressed

Hold a formal exit conference with management to share findings and preliminary deliverables

BKD also will perform some tests from the following alternatives:

Test key items – Some items within an account may be large enough by themselves to involve significant risk of material misstatement. These key items can be audited individually.

Sampling – A detailed audit of representative individual items (a sample) selected from a population.

Analytical procedures – Taking a closer look at a grouping of information by examining it as it relates to other accounts, historical trends or other measures.

Computer-assisted auditing techniques (CAAT) – BKD uses ACL as one of the primary tools to apply CAAT. The use of ACL allows us to analyze data electronically, handle large amounts of data and increase the effectiveness and efficiency of audit procedures.

As needed, our partners across the firm serve as technical resources with expertise to deal with particularly challenging or unique situations that may arise in the course of your audit.

We know a great deal of audit information often comes from third parties. Sometimes information from those parties is not received on time. To keep your report on schedule, we will keep you informed of the status of outstanding items.

PHASE 4: REPORT & COMMUNICATIONS DELIVERY

A cornerstone of the quality of our audits is the use of a concurring reviewer before the issuance of any reports. Another member of our assurance team, who has otherwise not been involved in the engagement, reviews the financial statements and workpapers before issuing the report.

Generally accepted auditing standards establish requirements and provide guidance on our communication with those charged with governance. In addition, if applicable, we will issue a report to management and those charged with governance of any significant deficiencies or material weaknesses identified during the audit.

Our commitment to a smooth engagement also includes the timely delivery of our audit report. A draft of the audit report, management letter and any other deliverables will be provided to you for your review and comments. After completing our fieldwork, we generally deliver our audit report and other communications within four weeks.

PHASE 5: PRESENTATION TO THE CITY COUNCIL

We know you will want to formally share your audit results with your city council. We will make a presentation to your city council and answer their questions.

TIMING & YOUR BKD TEAM

Overall, we plan to spend about three weeks in your city hall working, approximately two days on interim/planning/ gathering information to design our audit approach and twelve days on final fieldwork at year-end. We will coordinate the scheduling of your audit to both accommodate your schedule and to allow for the timely completion of deliverables.

Your BKD team will include an experienced engagement manager and associate, who will be on site performing further audit procedures and gathering the information we need to support our opinion. In addition, your team will be led by a director with experience in the governmental industry, who will direct our staff’s audit approach, review their work and communicate audit results.

Compliance Audit in Accordance with Uniform Guidance

BKD performs hundreds of Single Audits annually, focusing on two objectives: first, an audit of your financial statements and reporting on the Schedule of Expenditures of Federal Awards in accordance with Government Auditing Standards, and second, a compliance audit for federal awards expended during the fiscal year.

At least one-third of our not-for-profit and government clients receive federal funding. Our extensive experience with compliance testing in accordance with OMB requirements can help provide the City with a Single Audit performed properly and submitted on time.

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Our Uniform Guidance Audit Approach

During our audit procedures of federal award programs, we do not simply look for findings to report. We look for opportunities to advise you of more efficient ways to comply with federal regulations to reduce the risks of sanctions or reduced funding. BKD has developed contacts at federal agencies and has been able to work cooperatively with these agencies to help clients resolve or avoid issues.

Entities subject to the Uniform Guidance and Government Auditing Standards will benefit from BKD’s specially designed audit programs, checklists and database of federal audit programs.

Identification and testing of your federal programs will be performed primarily during interim fieldwork, which will typically be performed before your fiscal year-end. We have found this to be the most efficient manner in which to perform our audit services when the additional Uniform Guidance requirements are present.

Training Requirements for Uniform Guidance Auditors

The City can have confidence in BKD auditors’ experience in testing federal funding subject to the Uniform Guidance. Our audit professionals are required to receive at least 120 hours of CPE every three years, and for auditors involved with audits performed under Government Auditing Standards, this education includes the hours required to comply with Government Auditing Standards (Yellow Book) guidance. Staff members attend a series of core audit and accounting courses over the first four years of their careers. Staff subsequently receive additional training on accounting and auditing for the not-for-profit and government environment.

OUR EXPECTATIONS OF YOUR STAFF

In working with organizations similar to the City, we have developed an efficient approach that helps avoid wasted effort. We plan our work to facilitate client participation to help control costs, reduce unnecessary disruptions and meet deadlines.

The City plays a major role in timely completion of the audit. We need your staff to maintain records in good condition, provide the necessary schedules and cooperate with our audit team. Most organizations routinely prepare these records and schedules during their normal monthly or annual closing process.

Assistance from your personnel may include:

Preparing a complete and accurate general ledger trial balance by account, to which very few adjustments are needed

Preparing accurate audit schedules to support all significant balance sheet and certain other accounts

Responding to auditor inquiries

Preparing confirmation and other letters

Pulling selected invoices and other documents from files

Helping to resolve any differences or exceptions noted

Completing documentation of internal controls

Completing report and footnote information

We will provide a list of the needed schedules well in advance of any deadlines, as well as spreadsheet templates for many of these schedules. We also will meet with your staff, as needed, to help them clearly understand what we need.

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TECHNICAL WORK PLAN

Task/Event Proposed Timing Assigned Personnel Planning Delivery of internal control forms May 2017 ManagerDelivery of detailed audit plan & list of schedules to be prepared by the City May 2017 Manager Pre-audit planning meeting/entrance conference with management May 2017 Director/Manager Risk Assessment Completion of internal control questionnaires May 2017 Director/Manager/City StaffPlanning & interim fieldwork May 2017 Director/Manager/AssociateReview & walkthrough of internal controls, including IT May 2017 Director/Manager Completion of planning forms, including preliminary analytics, interviews with key management, confirmation work & review of governing body meeting minutes May 2017 Director/Manager Pre-audit communication to those charged with governance May 2017 Director/Manager Fieldwork, Testing & Further Audit Procedures Entrance conference with the City August 2017 Director/ManagerCash & investments Receivables Inventory Capital assets Other assets Debt & accruals Pension obligations & other post-employment benefits liabilities Net assets Income & expenses Supervision & review Special compliance reports Weekly progress reporting August 2017 Director/Manager/Associate Exit conference with the City August 2017 Director/ManagerReport & Communications Delivery Delivery of deliverable drafts September 2017 Director/ManagerConcurring reviewer independent final review September 2017 Partner/DirectorDelivery of final financial statements, management letters & other communications to those charged with governance October 2017 Director/Manager Presentation Presentation to the City Council October 2017 Director

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MUNICIPAL CLIENT REFERENCES Provide details for a minimum of five (5) recent major successfully completed municipal financial audit projects with contact information.

Our clients are our best ambassadors, and we encourage you to contact them about their satisfaction with our services. The following clients have consented to discussing BKD’s services and service delivery with you at your convenience.

Village of Bloomingdale, Illinois Mr. Gary Szott Finance Director 630.671.5637

Village of LaGrange Park, Illinois Mr. Larry Noller Finance Director 708.354.0225

Village of Mundelein, Illinois Mr. Doug Haywood Finance Director 847.949.3211

City of Oakbrook Terrace, Illinois Ms. Amy Marrero City Administrator/Finance Director

630.941.8300

Village of River Forest, Illinois Ms. Joan Rock Finance Director 708.714.3524

As an attachment, provide a copy of one recent financial audit project with a sample work plan that reflects the firm’s quality of work.

The following is a link to a sample CAFR prepared by BKD:

http://www.villageofbloomingdale.org/DocumentCenter/Home/View/1694

TOTAL PROJECT COST Provide an itemized, not-to-exceed Total Project Cost (Write Total Project Costs out in both words and numbers) for each fiscal year. Provide a rate table for consultant and staff time by the hour, including rates for expenses such as travel.

Per the instructions of your RFP, please see the completed Total Project Cost provided in the separately sealed envelope Total Project Cost – Audit Services FN-FY17-02.

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APPENDIX

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AICPA PEER REVIEW LETTER

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BKD PEER REVIEW REPORT

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COMMITMENT TO PROFESSIONAL DEVELOPMENT

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BKD PRIDE VALUES

RECEIVING QUALITY AUDIT SERVICES FROM TRUSTED ADVISORS WITH A DEPTH OF GOVERNMENTAL ACCOUNTING EXPERTISE

CITY OF PARK RIDGE

Total Project Cost – Audit Services FN-FY17-02

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BKD, LLP knows our clients do not like fee surprises. Neither do we. Our goal is to be candid and timely, and we want to answer the City of Park Ridge’s (the City) questions about fees upfront. We determine our fees by evaluating a number of variables: the complexity of the work, the project’s scope, the time we will spend and the level of professional staff needed.

PROPOSED FEES

We will waive an administrative fee of 4 percent to cover items such as copies, postage and other delivery charges, supplies, technology-related costs, such as computer processing, software licensing, research and library databases, and similar expense items. Our fees may increase if our duties or responsibilities change because of new rules, regulations and accounting or auditing standards. We will consult with you should this happen.

Our total fee for fiscal year ending April 30, 2017, engagement is forty two-thousand, one hundred fifty dollars; for 2018, it is forty-two thousand, six hundred fifty dollars; for 2019, it is forty-three thousand, two hundred dollars; for 2020, it is forty-three thousand, eight hundred fifty dollars; for 2021, it is forty-four thousand, six hundred dollars.

YOUR INVESTMENT

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Our acceptance of this engagement is subject to completion of our normal client acceptance procedures. Upon acceptance, the actual terms of our engagement will be documented in a separate letter to be signed by you and us. All information contained within this proposal is proprietary and confidential. The information provided in this proposal is intended for informational purposes only and may not be copied, used or modified, in whole or in part, without BKD’s prior written approval. All information in this proposal is as of May 31, 2016, unless otherwise noted.