MISSION AND VALUES OF COUNCIL
"A Sustainable Community that is inclusive, attractive, healthy and pleasant to live in, that uses our land so as to preserve our history and environment, respects the rights and equality of our citizens and manages our future growth wisely."
AGENDA
FOR THE
Audit Committee Meeting
25 August 2015
OUR VISION
"A thriving and friendly community that recognises our history and embraces cultural diversity and economic opportunity, whilst nurturing our unique natural and built environment."
OUR MISSION
“To deliver affordable and quality Local Government services.”
CORE VALUES OF THE SHIRE
The core values that underpin the achievement of the
mission will be based on a strong customer service
focus and a positive attitude:
Communication
Integrity
Respect
Innovation
Transparency
Courtesy
DISCLAIMER
The purpose of Council Meetings is to discuss, and where possible, make resolutions about items appearing on the agenda. Whilst Council has the power to resolve such items and may in fact, appear to have done so at the meeting, no person should rely on or act on the basis of such decision or on any advice or information provided by a Member or Officer, or on the content of any discussion occurring, during the course of the meeting.
Persons should be aware that the provisions of the Local Government Act 1995 (Section 5.25 (e)) establish procedures for revocation or rescission of a Council decision. No person should rely on the decisions made by Council until formal advice of the Council decision is received by that person. The Shire of Broome expressly disclaims liability for any loss or damage suffered by any person as a result of relying on or acting on the basis of any resolution of Council, or any advice or information provided by a Member or Officer, or the content of any discussion occurring, during the course of the Council meeting.
Agenda – Audit Committee Meeting 25 August 2015 Page 3 of 3
SHIRE OF BROOME
Audit Committee Meeting
Tuesday 25 August 2015
INDEX – Agenda
3. Declarations Of Financial Interest / Impartiality
5.2 KIMBERLY COUNCIL AUDIT TENDER PROCUREMENT PROCESS
Agenda – Audit Committee Meeting 25 August 2015 Page 4 of 5
NOTICE OF MEETING
Dear Council Member,
The next Audit Committee of the Shire of Broome will be held on Tuesday, 25 August 2015 in the Council Chambers, Corner Weld and Haas Streets, Broome, commencing at 3:00pm.
Regards
K R DONOHOE
Chief Executive Officer
18/08/2015
Agenda – Audit Committee Meeting 25 August 2015 Page 5 of 6
That the Minutes of the Audit Committee held on 12 May 2015 be confirmed as a true and accurate record of that meeting.
|
Agenda – Audit Committee Meeting 25 August 2015 Page 6 of 7
LOCATION/ADDRESS: Nil APPLICANT: Nil FILE: ADM 03 AUTHOR: Manager Financial Services CONTRIBUTOR/S: Nil RESPONSIBLE OFFICER: Director Corporate Services DISCLOSURE OF INTEREST: Nil DATE OF REPORT: 10 August 2015 |
SUMMARY: RSM Bird Cameron has advised of the retirement of the Shire of Broome’s current appointed auditor, Mr Simon Cubitt. In accordance with Section 7.3 of the Local Government Act 1995 (LGA) the Audit Committee is require to recommend to Council the appointment of Mr David Wall who has assumed responsibility for Mr Cubitt’s client base until the current audit contract ends on completion of the final audit of the 2014/2015 financial year. |
BACKGROUND
Previous Considerations
The Audit Committee previously considered the recommendation to appoint an auditor at the meeting held 29 July 2014.
COMMENT
As attached, RSM Bird Cameron provided notice of the retirement of Mr Simon Cubitt, the appointed auditor for the Shire of Broome. Mr David Wall has assumed responsibility for Mr Cubitt’s client base. As per Section 7.3 of the LGA, a local government is required to appoint a person who is either a registered company auditor or an approved auditor.
The Audit Committee is required to recommend to Council the appointment of Mr David Wall as the Shire of Broome’s auditor for the remainder of the contract with RSM Bird Cameron until the finalisation of the 2014/2015 external audit.
CONSULTATION
RSM Bird Cameron
STATUTORY ENVIRONMENT
7.3 Appointment of Auditors
1) A local government is to, from time to time whenever such an appointment is necessary or expedient, appoint a person, on the recommendation of the audit committee, to be its auditor
2) The local government may appoint one or more persons as its auditor
3) The local government’s auditor is to be a person who is –
(a) a registered company auditor; or
(b) an approved auditor
POLICY IMPLICATIONS
Nil
FINANCIAL IMPLICATIONS
Nil
RISK
The risk of not appointing an auditor represents a non-compliance risk. This is assessed as possible with an impact of extreme, representing the non achievement of key objectives. To mitigate this risk, RSM Bird Cameron has provided advice and communication of the change in auditor. Officers have implemented a process to ensure that this compliance item is met when appointing future auditors under new contracts.
STRATEGIC IMPLICATIONS
Our People Goal – Foster a community environment that is accessible, affordable, inclusive, healthy and safe:
Effective communication
Our Organisation Goal – Continually enhance the Shire’s organisational capacity to service the needs of a growing community:
An organisational culture that strives for service excellence
Improved systems, processes and compliance
VOTING REQUIREMENTS
Absolute Majority
That the Audit Committee recommends that Council:
1. Appoints Mr David Wall (Registered Company Auditor Number: 16200) as the Shire of Broome’s auditor in accordance with Section 7.3 of the Local Government Act 1995: and
2. Thanks Mr Simon Cubitt for his service to the Shire of Broome and congratulates him on 40 years of service at RSM Bird Cameron. (Absolute Majority Required) |
LETTER - CHANGE OF AUDITOR RSM BIRD CAMERON |
|
AUDITOR PROFILE - DAVID WALL |
Agenda – Audit Committee Meeting 25 August 2015 Page 13 of 14
5.2 KIMBERLY COUNCIL AUDIT TENDER PROCUREMENT PROCESS LOCATION/ADDRESS: Nil APPLICANT: Nil FILE: ADM 03 AUTHOR: Manager Financial Services CONTRIBUTOR/S: Nil RESPONSIBLE OFFICER: Director Corporate Services DISCLOSURE OF INTEREST: Nil DATE OF REPORT: 13 August 2015 |
SUMMARY: The current individual Audit engagements for the Shire of Broome, Shire of Derby West Kimberley and Shire of Halls Creek will expire at the completion of the final external audits for the financial year ending 30 June 2015. The Kimberley Zone of the Western Australia Local Government Association (WALGA) and Regional Collaborative Group at its meeting held 3 May 2015 resolved to jointly seek tenders for external audit services to achieve efficiencies and cost savings through a competitive tender process. The Audit Committee is requested to consider the proposed procurement plan and audit specifications for recommendation to Council. |
BACKGROUND
Previous Considerations
The Audit Committee previously considered Tender 14/11 at the Audit Committee meetings held 24 April 2014 and 29 July 2014. The Audit Committee resolved to recommend to Council to award the current two year audit engagement to RSM Bird Cameron and appoint Mr Simon Cubitt as the registered company auditor at each respective meeting. The tender was conducted jointly with the Shire of Derby. The current engagement expires on completion of the final audit for the financial year ending 30 June 2015.
The Kimberley Zone of WALGA and Regional Collaborative Group at its meeting held 3 May 2015 resolved to jointly seek tenders for external audit services to achieve efficiencies and cost savings through a competitive regional tender process. At this meeting, the Shire of Wyndham East Kimberley advised that they had already commenced procurement processes for external audit services and will continue separately from the other three Shires. The concept of a regional audit tender was conceived at the Kimberley Zone Chief Executive Officer (CEO) Group Meeting on the 25 November 2013. Members discussed the potential of a collective tender process and agreed to investigate it further. At that stage, both the Shires of Broome and Derby West Kimberley had contracts with UHY Haines Norton expiring 30 June 2013 and the Shire of Halls Creek and Shire of Wyndham East Kimberley had contracts with UHY Haines Norton expiring 30 June 2015. The Shire of Derby, Shire of Broome and Shire of Halls Creek are collaborating on the joint tender process and are required to present the proposed procurement plan and specifications to their respective Audit Committees for recommendation to their Councils.
The functions of Audit Committees are prescribed as per Regulation 16 of the Local Government (Audit) Regulations 1996 (AR). Specifically, one of the functions is to provide guidance and assistance to the local government as to the development of a process to be used to select and appoint a person to be an auditor. This report presents to the Audit Committee the proposed procurement plan and audit specifications for consideration and recommendation to Council to commence the tender process.
COMMENT
A teleconference meeting was held 12 August 2015 to consult with the Shire of Derby West Kimberley and Shire of Halls Creek in the drafting of the procurement plan and audit specifications. The meeting was attended by:
Sam Mastrolembo Director Corporate Services Shire of Broome
Theresa Bengtson Manager Financial Services Shire of Broome
Rebecca Herbert Project Manager Kimberley Regional Group Shire of Broome
Teresa Foster Financial Services Manager Shire of Halls Creek
Paul Bates Manager of Finance Shire of Derby West Kimberley
The final proposed procurement plan and audit specifications are now attached to this report for consideration by the Audit Committee for recommendation to Council. The tender will be referred to as the ‘Kimberley Councils Audit Tender 2015’. Specific points regarding the procurement plan and audit specification for the Audit Committee to consider are detailed as follows.
The Audit Specification is based on the template supplied by the Department of Local Government and Communities (DLGC) as per the Model Minimum Standard Audit Specification as part of the DLGC’s Local Government Operational Guidelines Number 09 – Audit in Local Government The appointment, function and responsibilities of Audit Committees Revised September 2013. The template was originally used for the 2013 audit tender. The Finance Managers of each participating Council have reviewed the 2015 version and made minor changes.
The changes include the requirement to supply estimations for turn around times and fees for separate audits such as grant acquittals. These additional audits are required to acquit funding from various areas such as Roads to Recovery, Department of Regional Development Country Local Government Fund, the Kimberley Zone Secretariat, and for property outgoings for leased properties charged on an estimated basis, rather than on a basis of immediate recoup. Depending on the scope these can cost Councils between $500 to $2,000 per acquittal, which can make up a material amount of a Council’s audit budget.
Another requirement was inserted to request that the timing of the interim audits occur no later than the last week of February and final audit visits to occur no later than the third week of September each year. This allows adequate time for each Council to address any issues identified in the interim audit prior to June each year and to prepare the Annual Financial statements with the view to holding the Annual Electors Meetings prior to Christmas. This provides the Audit Committee certainty as to the timing of any informal briefing meetings post-audit visit should this be a practice at each Council.
Section 7.6 of the LGA prescribes the maximum term of office of an auditor at not more than five financial years. It should be noted that the proposed engagement term in the specifications will be for the 3 financial years commencing 1 July 2015 and ending 30 June 2018. However, this does not exclude any currently engaged auditor from being eligible for re-appointment. The procurement plan and specifications outline the performance criteria which each tenderer will be assessed against.
The specifications require each tenderer to submit details of an audit plan, quotation of fees and hourly rates, estimation of hours and resources required to fulfil the audit engagement and specific examples of similar sized engagements. It is a requirement that tenders be submitted for the provision of external audit services either jointly for all Councils or severally. This provides flexibility for each Council to choose from the available tenders submitted.
The total combined audit budget for the three Councils amounts to between $90K to $120K per annum. The significance of this value has resulted in the need to undertake a tender process pursuant to Part 4 of the Local Government (Functions and General) Regulations 1996 (FGR) which sets out the process that must be complied with in regard to tenders for the provision of goods and services where the consideration is, or is expected to be worth more than $100,000. A tender process provides a high level of probity in the procurement process and mitigates any potential risks through the clear articulation of the evaluation process, specifications and requirements as detailed in the attachments.
The plan identifies the membership of the Evaluation Panel which will be comprised of the Finance Managers from each participating Shire and the Evaluation Meeting will be conducted via teleconference. The membership was determined on the basis that each Finance manager would be the direct relationship manager for the audit engagement over the term of appointment and would be best placed to make an objective assessment as the respective representative for each participating Council. The combined finance industry experience of the evaluation panel members is in excess of 49 years. All members possess relevant tertiary qualifications and are full members of the Institute of Certified Practicing Accountants Australia (CPA Australia).
The participants of the teleconference held 12 August 2015 agreed on the tender evaluation methodology and weighting. These have remained unchanged since the 2013 Specification document. The evaluation methodology outlines the criteria and associated weighting which will be applied to the assessment of each tender submitted and detailed as follows:
EVALUATION METHODOLOGY |
|
Criteria |
Weighting |
Lead Partners/Audit Managers experience and performance |
25% |
Depth of understanding of Local Government and the region |
20% |
Audit resources allocated |
25% |
Detailed and well-articulated audit plan |
15% |
Fees and control of fees |
15% |
To ensure the tender process attracts a sizable and quality pool of tenderers, the procurement plan identifies a possible list of candidates obtained from the WALGA Preferred Supplier panel list under Audit Services that could be invited to tender. The procurement plan outlines the timeframes which aim to complete the tender process by the end of October 2015. These documents are now presented to each Council’s Audit Committees for recommendation to each full Council respectively.
CONSULTATION
Shire Derby West Kimberley
Shire Halls Creek
STATUTORY ENVIRONMENT
Local Government Act 1995
Section 1.8 Statewide public notice
Where under this Act Statewide public notice of a matter is required to be given, section 1.7 applies except that the newspaper referred to in section 1.7(1)(a) is required to circulate generally throughout the State.
Section 3.57 Tenders for providing goods or services
(1) A local government is required to invite tenders before it enters into a contract of a prescribed kind under which another person is to supply good or services.
(2) Regulations may make provision about tenders
Division 2 — Appointment of auditors
7.2. Audit
The accounts and annual financial report of a local government for each financial year are required to be audited by an auditor appointed by the local government.
7.3. Appointment of auditors
(1) A local government is to, from time to time whenever such an appointment is necessary or expedient, appoint* a person, on the recommendation of the audit committee, to be its auditor.
* Absolute majority required.
(2) The local government may appoint one or more persons as its auditor.
(3) The local government’s auditor is to be a person who is —
(a) a registered company auditor; or
(b) an approved auditor.
[Section 7.3 amended by No. 49 of 2004 s. 6.]
7.4. Disqualified person not to be auditor
(1) A person may not be appointed as a local government’s auditor if that person is a disqualified person.
(2) In this section —
disqualified person means a person who —
(a) is a councillor or an employee of the local government; or
(b) is a person who is in debt for more than the prescribed amount to the local government for a period of more than 35 days after —
(i) in the case of that part of the debt which is for a rate or service charge under Part 6, the date the rate notice was issued; or
(ii) in the case of that part of the debt which is not for a rate or service charge, the date an account was rendered to the person by the local government;
or
(c) is an employee of, or a member of the governing body of, an entity of a kind prescribed for the purposes of this paragraph; or
(d) is a member of a class of persons prescribed for the purposes of this subsection.
7.6. Term of office of auditor
(1) The appointment of a local government’s auditor is to have effect in respect of the audit of the accounts and annual financial report of the local government for a term of not more than 5 financial years, but an auditor is eligible for re‑appointment.
(2) The appointment of an auditor of a local government ceases to have effect if —
(a) his or her registration as a registered company auditor is cancelled; or
(b) his or her approval as an approved auditor is withdrawn; or
(c) he or she dies; or
(d) the auditor ceases to be qualified to hold office as auditor or becomes a disqualified person; or
(e) the auditor resigns by notice in writing addressed to the local government; or
(f) the appointment is terminated by the local government by notice in writing.
(3) Where —
(a) the registration of a local government’s auditor as a registered company auditor is suspended; or
(b) a local government’s auditor becomes unable or unwilling to carry out all or part of his or her duties,
the local government is to appoint* a person to conduct the audit or to complete that part of the audit which remains to be conducted, as the case requires.
* Absolute majority required.
Local Government (Audit) Regulations 1996
16. Audit committee, functions of
An audit committee —
(a) is to provide guidance and assistance to the local government —
(i) as to the carrying out of its functions in relation to audits carried out under Part 7 of the Act; and
(ii) as to the development of a process to be used to select and appoint a person to be an auditor;
and
(b) may provide guidance and assistance to the local government as to —
(i) matters to be audited; and
(ii) the scope of audits; and
(iii) its functions under Part 6 of the Act; and
(iv) the carrying out of its functions relating to other audits and other matters related to financial management; and
(c) is to review a report given to it by the CEO under regulation 17(3) (the CEO’s report) and is to —
(i) report to the council the results of that review; and
(ii) give a copy of the CEO’s report to the council.
Local Government (Functions and General) Regulations 1996
Section 5 R14 Requirements for publicly inviting tenders
(1) When regulation 11(1), 12 or 13 requires tenders to be publicly invited, Statewide public notice of the invitation is to be given.
(2) If the CEO has, under regulation 23(4), prepared a list of acceptable tenderers, instead of giving Statewide public notice the CEO is required to give notice of the invitation to each acceptable tenderer listed.
(2a) If a local government —
(a) is required to invite a tender; or
(b) not being required to invite a tender, decides to invite a tender, the local government must, before tenders are publicly invited, determine in writing the criteria for deciding which tender should be accepted.
(3) The notice, whether under subregulation (1) or (2), is required to include —
(a) a brief description of the goods or services required;
(b) particulars identifying a person from whom more detailed information as to may be obtained;
(c) information as to where and how tenders may be submitted; and
(d) the date and time after which tenders cannot be submitted.
(4) In subregulation (3)(b) a reference to detailed information includes a reference to —
(a) such information as the local government decides should be disclosed to those interested in submitting a tender;
(b) detailed specifications of the goods or services required;
(c) the criteria for deciding which tender should be accepted;
(d) whether or not the local government has decided to submit a tender; and
(e) whether or not the CEO has decided to allow tenders to be submittedby facsimile or other electronic means, and if so, how tenders may so be submitted.
After a notice has been given under subregulation (1) or (2), a local government may vary the information referred to in subregulation (3) by taking reasonable steps to give each person who has sought copies of the tender documents or each acceptable tenderer, as the case may be, notice of the variation.
[Regulation 14 amended in Gazette 29 Jun 2001 p. 3130.]
Section 5 R15 Minimum time to be allowed for submitting tenders
(1) If the notice is published in the newspaper as part of giving Statewide public notice, the time specified in the notice as the time after which tenders cannot be submitted has to be at least 14 days after the notice is first published in the newspaper as part of giving Statewide public notice.
(2) If the notice is given to a person listed as an acceptable tenderer, the time specified in the notice as the time after which tenders cannot be submitted has to be at least 14 days after the notice is given.
Clause 2.4 The Local Government (Functions and General) Regulations 1996, Part 4, Division 2, regulation 18, paragraph (2)
(1) A tender that is submitted at a place, and within the time, specified in the invitation for tenders but that fails to comply with any other requirement specified in the invitation may be rejected without considering the merits of the tender.
POLICY IMPLICATIONS
Policy 2.3.7 Purchasing
Policy 1.2.9 Local Regional Price Reference
FINANCIAL IMPLICATIONS
The Council’s combined budgeted expenditure proposed for the 2015/2016 financial year for external audit services ranges between $90K to $120K per annum. The Shire of Broome has a total expenditure budget for all audit related expenses including external audit services and separate audits allocated to general ledger account code 22200 Audit Fees Op Exp - Other Governance of $45K for 2015/2016.
RISK
The Kimberley Councils Audit Tender 2015 is a strategic outcome identified by the Kimberley Zone of WALGA Regional Collaborative Group. Its aim is to facilitate an increased level of collaboration between the member Councils of the Zone and achieve resource efficiencies. Should the recommendation of this report not be adopted, the risk of not achieving the above objective has been assessed at a high level, resulting in the Kimberley Zone and each member Council experiencing a possible likelihood of significant delays in achieving the deliverables. Additionally it is a matter of legislative compliance for the Audit Committee to review the process of appointment of an auditor and to guide Council in this process in providing a recommendation.
To mitigate this risk officers of the three Councils have ensured the specifications meet all the requirements for each Council which have been sourced from the model audit specifications from the DLGC Guidelines. Additionally, the procurement plan is based on the WALGA procurement templates. Officers have collaborated to ensure all views from each Council are represented in a fair and equitable manner. Council should be aware that any changes to the procurement process will have to be done in consultation with the other Councils.
STRATEGIC IMPLICATIONS
Our People Goal – Foster a community environment that is accessible, affordable, inclusive, healthy and safe:
Effective communication
Affordable services and initiatives to satisfy community need
Our Prosperity Goal – Create the means to enable local jobs creation and lifestyle affordability for the current and future population:
Affordable and equitable services and infrastructure
Key economic development strategies for the Shire which are aligned to regional outcomes working through recognised planning and development groups/committees
Our Organisation Goal – Continually enhance the Shire’s organisational capacity to service the needs of a growing community:
An organisational culture that strives for service excellence
Sustainable and integrated strategic and operational plans
Responsible resource allocation
Improved systems, processes and compliance
VOTING REQUIREMENTS
Simple Majority
That the Audit Committee in accordance with regulation 16(a)(ii) of the Local Government (Audit) Regulations 1996 recommends Council accepts the attached Audit Specifications and the Procurement Plan as the tender process to be used to select and appoint a person to be an auditor for the Kimberley Councils jointly and/or severally with the Shires of Derby West Kimberley and Halls Creek for the financial years commencing 1 July 2015 to 30 June 2018.
|
KIMBERLEY COUNCILS AUDIT TENDER 2015 |
|
AUDIT SPECIFICATIONS 2015 |
Item 5.2 - KIMBERLY COUNCIL AUDIT TENDER PROCUREMENT PROCESS |
KIMBERLEY COUNCILS AUDIT TENDER 2015 |
Procurement Plan |
Kimberley Councils Audit Tender 2015 |
Prepared by: Theresa Bengtson
Manager Financial Services
Shire of Broome
Date: 10 August 2015
PROJECT OWNER / REQUESTOR DETAILS |
|
Requestor: |
Theresa Bengtson |
Position: |
Manager Financial Services |
Local Government: |
Shire of Broome |
Department: |
Financial Services |
Phone: |
08 9191 3445 |
Mobile: |
0428 819 888 |
Email: |
|
On behalf of and jointly with: |
Shire of Derby West Kimberley Shire of Halls Creek |
PROJECT OVERVIEW |
|
Project Title: |
Kimberley Councils Audit Tender 2015 |
Project Number: |
TBC |
Project Budget: |
$90,000 - $120,000 per annum |
Project Funding Source: |
Municipal Funds |
Project Duration (indicative): |
Three Financial Years – 2015/2016 to 2017/2018 |
Project Status: |
New Continuation of Service Phased |
Project Category: |
Goods Services Minor Works Construction
Construction Lease Consultancy
Other (Please List): _______________________________
|
STAKEHOLDERS (How customer expectations are going to be fulfilled, user requirements, Consultation with community, industry, benchmarks….) |
Stakeholder |
Support Type C.O.N.S. |
Role D.I.F.G. |
Possible Objections |
Shire of Broome |
Manage closely |
Decision maker |
Tender quote amounts Tenderer quality /qualifications |
Shire of Derby West Kimberly |
As above |
As above |
As above |
Shire of Halls Creek |
As above |
As above |
As above |
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SCOPE OF REQUIREMENTS (Describe, in specific terms, what items will be procured and under what conditions) Type of specification used |
Specification document supplied under separate cover
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POTENTIAL RISKS & MITIGATION PLAN (Probity, limited competition, etc.) |
||||
Risk Description |
Likelihood |
Impact |
Actions |
Responsibility |
Tender quotes are higher than budget |
Likely |
Medium |
Provision for quotes to be provided jointly or severally |
Councils |
Poor quality of tenderers |
Possible |
Medium |
Articulate criteria in specifications Ensure tender is advertised |
Councils/Shire of Broome |
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POTENTIAL CONFLICTS OF INTEREST |
1) Tenderers – provision of other services to Council. Assess independence. 2) Councils – ensure process of declaration of conflicts of interest by parties involved. |
Procurement Planning (Supply Positioning, procurement goals) |
The provision of external audit services to the Shire of Broome, Shire of Derby West Kimberley and Shire of Halls Creek for a period of three (3) financial years commencing 2015/2016 and ending 2017/2018.
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PROCUREMENT METHODOLOGY |
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Expressions of Interest (EOI)
Request for Tender (RFT)
Request for Proposal (RFP)
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Tender Exempt
Request for Quotation (RFQ)
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Reason for Selected Methodology: The total value of external audit services for the three Councils combined has the potential to be in excess of $100,000. Additionally, the tender process provides for a high level of probity in procurement. |
SOURCING PROFILE |
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Minor Works
Major Works (Construction)
Goods
Procurement of IT Equipment
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Consultancy Services
Lease
Services
Procurement of IT Software
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Reason for Selected Sourcing Profile: The nature of the provision of external audit services. |
SUPPLIER PROFILE (Supplier Preferencing) |
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Single Supplier
Dual Suppliers
Goods
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Multiple Suppliers (i.e. Panel)
Cross Supply
Goods and Services
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Potential suppliers are any audit firms or auditor that meets the specification criteria for the provision of local government external audit services. Council’s may choose to award the tender on a joint or separate basis. The combining of three Councils represents a sizable business opportunity to potential auditors with the attraction of achieving economies of scale through coordination of travel, timing and similar local government financial profiles.
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Reason for Selected Supplier Profile: Councils may choose to appoint one auditor for all three Councils or select a separate auditor individually. |
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Early Tender Advice Required? Yes No |
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Suggested Tenderers: |
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Company Name: |
Contact Person: |
Phone/Email: |
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RSM Bird Cameron |
Travis Bate |
08 9920 7400 travis.bate@rsmi.com.au |
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Moore Stephens |
David Tomasi |
08 9444 3400 dtomasi@uhyhn.com.au |
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AMD Chartered Accountants |
Tim Partridge |
08 9780 7555 tim.partridge@amdonline.com.au |
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Deloitte Touche Tohmatsu |
Andrew Baldwin |
08 9365 7236 abaldwin@deloitte.com.au |
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Grant Thornton |
Michael Hillgrove |
08 9480 2000 michael.hillgrove@au.gt.com |
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Butler Settineri (Audit) Pty Ltd |
Marius van der Merwe |
08 6389 5222 mvdm@butlersettineri.com.au |
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PRICING METHODOLOGY (Link to type of specification) |
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Fixed Price (Lump Sum)
Bill of Quantities
Cost reimbursable
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Unit Price (Schedule of Rates)
Scaled percentage fee
Reimbursable-with-incentive (Cost Plus)
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Reason for Selected Pricing Method: · Quotes are required for hourly rates per employee level of the audit firm · Total estimated hours to complete the audit is required · Total lump sum cost is required to provide for future budgeting and assessment of financial implications and cost comparison to previous financial years. |
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Price Escalation Required Yes No Basis: add price escalation method |
REQUEST OPEN PERIOD |
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Management of Clarifications: |
To be directed to the Shire of Broome if the clarification is general in nature or to the specific Council if relevant. Notice to be give to other Councils of the request for clarification. |
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Tender Briefing Status: |
Not required – standard audit specification tender. Requests for clarifications to be addressed as and when required. |
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Tender Briefing Location: |
N/A |
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Tender Briefing Proposed Date: |
N/A |
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EVALUATION METHODOLOGY |
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Criteria |
Weighting |
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Lead Partners/Audit Managers experience and performance |
25% |
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Depth of understanding of Local Government and the region |
20% |
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Audit resources allocated |
25% |
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Detailed and well-articulated audit plan |
15% |
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Fees and control of fees |
15% |
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Required Mandatory Elements: Audit Plan Fees and hourly rates Estimation of hours/resources required Specific examples of similar sized engagements
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Due Diligence:
External financial analysis report Type: Insert Type (if required) |
Referee Checks
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Price Assessment Methodology:
Cost Effectiveness Ratio
Price Normalisation
Price Quality Method
Risk Adjusted Price Method
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Weighted Cost
Relative Value Cost
Quality Value Method
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Evaluation Scale:
0 The Evaluation Panel is not confident that the Tenderer will be able to satisfactorily meet the requirements
2 The Evaluation Panel has major reservations/concerns whether the Tenderer will be able to satisfactorily meet the requirements
4 The Evaluation Panel has some reservations (minor concern) whether the Tenderer will be able to satisfactorily meet the requirements
6 The Evaluation Panel is reasonably confident that the Tenderer will be able to satisfactorily meet the requirements
8 The Evaluation Panel is confident that the Tenderer will be able to satisfactorily meet the requirements
10 The Evaluation Panel is completely confident that the Tenderer will be able to satisfactorily meet the requirements and exceeds in some aspects
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KEY PERFORMANCE INDICATORS (KPI’s) Link this to scope and key deliverables |
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Deliverables on time
Agreed Services Provided
Stakeholder Satisfaction Survey
Services Completed on Budget
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Does the supplier show mutual commitment to the relationship and collaborate constructively with all stakeholders
Ability to respond to client and/or stakeholder requirements
Ability to deliver on time and on budget
|
Commentary on KPI’s: · KPIs and audit specification designed on standard template from the regulations and the Department of Local Government and Communities’ Local Government Operational Guidelines Number 09 – Audit in Local Government Revised September 2013. |
EVALUATION TEAM DETAILS – Stage 1 SHORTLIST |
||||
Name |
Position |
Role |
Phone/Email |
Stage (e.g. Shortlist, Presentation) |
Theresa Bengtson |
Manager Financial Services – Shire of Broome |
Panel Participant |
08 9191 3445 |
Whole of Tender process |
Paul Bates |
Manager of Finance – Shire of Derby West Kimberley |
Panel Participant |
08 9191 0999 |
As above |
Teresa Foster |
Financial Services Manager – Shire of Halls Creek |
Panel Participant |
08 9168 9104 |
As above |
CONDITIONS OF CONTRACT |
|
General Conditions of Contract – Goods and Services
General Conditions of Contract - Goods
General Conditions of Contract – Minor Works
|
AS 4000:1997 Construction Works
AS 4122:2010 Consultants
AS 4902:2000 Design & Construct
|
Key Commercial term considerations: · As per standard audit engagement contract |
POLICY MATTERS AFFECTING THE PROCUREMENT |
|
Local Policy: Yes No |
Environmental Impact: Yes No |
DAIP: Yes No |
OSH: Yes No |
Others (Please list): |
CONTRACT MANAGEMENT |
|
Contract Manager: |
Individually as per Council |
Date of Handover: |
|
Key Personnel/Responsibilities |
|
KPI’s |
|
Changeover requirements? |
|
Key Risks |
|
Proposed Contract Kick-Off Meeting: |
|
PROCUREMENT TIMEFRAMES |
|
Deliverable (add or delete as required) |
Indicative Timeframe |
Development and Sign off on Procurement Plan |
13 August 2015 |
Sign off on RFT |
2 September 2015 |
Advertise RFT |
5 September 2015 |
Tenders Close |
23 September 2015 |
Due Diligence (referees, clarifications, financial analysis report) |
To be conducted prior to evaluation panel meeting including review of tenders against specification criteria. |
Evaluation Panel Meeting (Teleconference) |
30 September 2015 |
Delivery of Recommendation Report |
1 October 2015 |
Audit Committee Meeting |
TBC |
Council Meeting agenda settlement |
8 October 2015 |
Council Meeting |
15 October 2015 |
Contract Preparation |
22 October 2015 |
Notifications to Tenderers |
29 October 2015 |
Contract Commencement |
Financial Year Commencing 1 July 2015 |
APPROVAL AUTHORITY |
|
Council: Yes No |
Date of Council Meeting: 15 October 2015 |
CEO: Yes No |
|
SIGNED BY EVALUATION TEAM |
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Name |
Organisation |
Signed |
|
|
|
|
|
|
|
|
|
|
|
|
SIGNED BY PROJECT SPONSOR / APPROVING AUTHORITY |
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Name |
Organisation |
Signed |
|
|
|
Lessons Learnt |
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What |
Changes to be made |
Actioned by |
|
|
|
|
|
|
|
|
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|
|
APPENDIX 1 – RISK MATRIX - POTENTIAL RISKS & MITIGATION PLAN |
Almost Certain |
H |
H |
E |
E |
E |
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Likely |
M |
H |
H |
E |
E |
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Possible |
L |
M |
H |
E |
E |
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Unlikely |
L |
L |
M |
H |
E |
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Rare |
L |
L |
M |
H |
H |
|||
Likelihood |
Insignificant |
Minor |
Moderate |
Major |
Catastrophic |
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and Impact |
||||||||
Legend |
Remedial Outcome |
|||||||
E |
Extreme Risk - Immediate intervention required |
|||||||
H |
High Risk - Director or CEO must be informed and aware |
|||||||
M |
Medium Risk - Management responsibility to monitor |
|||||||
L |
Low Risk - Operationally address |
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Frequency |
Likelihood of Incident Occurring |
|||||||
Almost Certain |
Expected to occur in most circumstances |
More than once per year |
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Likely |
Will probably occur in most circumstances |
At lease once per year |
||||||
Possible |
Should occur at some time |
At least once in three years |
||||||
Unlikely |
Could occur at some time |
At least once in ten years |
||||||
Rare |
May occur, only in exceptional circumstances |
Less than once in fifteen years |
Level |
Description |
Financial Impact |
Health |
Reputation |
Operation |
1 |
Insignificant |
Less than $1,000 |
No injuries |
Unsubstantiated, low impact, low profile or no news item |
Little impact |
2 |
Low |
$1,000 to $10,000 |
First aid treatment |
Substantiated, low impact, low media profile |
Inconvenient delays |
3 |
Medium |
$10,000 to $50,000 |
Medical treatment |
Substantiated, public embarrassment, moderate impact, moderate media profile |
Significant delays to major deliverables |
4 |
High |
$50,000 to $150,000 |
Death or extensive injuries |
Substantiated, public embarrassment, high impact media profile, third party actions |
Non achievement of major deliverables. |
5 |
Extreme |
More than $150,000 |
Multiple deaths or severe permanent disablements |
Substantiated, public embarrassment, very high multiple impacts, high widespread multiple media interactivity, third party action. |
Non achievement of key objectives. |
Item 5.2 - KIMBERLY COUNCIL AUDIT TENDER PROCUREMENT PROCESS |
AUDIT SPECIFICATIONS 2015 |
Tenders are invited from persons qualified under Section 7.3 of the Local Government Act 1995, to undertake external audits for the Shire of Halls Creek, Shire of Derby West Kimberley and Shire of Broome.
Auditors are required to address all of the matters outlined in the specification.
Auditors who submit an application may be asked to provide further information and/ or make a presentation to the relevant Audit Committees.
2.0 Parties to the agreement
Local Governments of Shire of Halls Creek, Shire of Derby West Kimberley and Shire of Broome hereinafter referred to as the “Council”.
Person(s) appointed as auditor by the Local Government hereinafter referred to as the “Auditor”.
3.0 Objectives of the Audit
To provide an independent audit opinion of the Accounts and Annual Financial Reports of the Councils for each financial year covered by the term of the audit appointment, and to provide professional guidance as follows:
(a) Appropriateness of internal controls designed to safeguard the assets of the organisation and whether financial management reporting meets statutory requirements;
(b) Other statutory compliance matters; and
(c) General assessment of financial performance and trend analysis.
4.0 Scope of the Audit
(1) The Auditor is to carry out such work as is necessary to form an opinion as to whether:
(a) The accounts are properly kept; and
(b) The Annual Financial Report:
(i) Is prepared in accordance with the financial records; and
(ii) Represents fairly the results of the operations of the Local Government and the financial position of the Local Government at 30 June in accordance with:
· Australian Accounting Standards.
· The Local Government Act 1995 (as amended),
· The Local Government (Financial Management) Regulations 1996 (as amended),
· The Local Government (Administration) Regulations 1996 (as amended),
· The Local Government (Functions and General) Regulations 1996 (as amended),
· And other mandatory professional reporting requirements.
(2) The auditor is to give an opinion in his or her audit report on –
(a) The financial position of the Local Government; and
(b) The results of the operation of the Local Government
(3) The auditor is to include in his or her audit report –
(a) Any material matters that indicate significant adverse trends in the financial position or the financial management practices of the Local Government; and
(b) Any matters indicating non-compliance with financial management or control requirements of the Act, Regulations and any other written law; and
(c) Details of whether information and explanations were obtained by the auditor; and
(d) A report on the conduct of the audit; and
(e) The opinion of the auditor as to whether or not the specific financial ratios reported are supported by verifiable information and reasonable assumptions.
5.0 Audit Methodology and Approach
(a) The Auditor is required to comply with the requirements of section 7.9 of the Local Government Act 1995 and the Local Government (Audit) Regulations 1996, except that Council will require the audit report to be supplied by 30 November of each year.
(b) An audit is to be carried out in accordance with “Australian Auditing Standards” and “Auditing Guidance Statements” adopted from time to time by the Australian Society of Certified Practicing Accountants and the Institute of Chartered Accountants in Australia.
(c) The Auditor is to provide Council with a general outline of his/her methodology.
(d) The Auditor is to provide Council with a proposed timetable for the audit including:
· Timing of entrance interview;
· Timing of interim audit visits, no later than last week of February each year;
· Final audit visit, no later than the third week of September each year (within 30 days of being advised that the accounts and Annual Financial Report are available for audit);
· Timing of exit interview;
· Timing of the legislative requirement to meet with the Local Government and whether that meeting will be in person or by some other means; and
· The method to be used to communicate with, and provide advice and information to, the Local Government; and
(e) The Auditor is required to produce an audit report as required by section 7.9 of the Local Government Act 1995 and, if considered appropriate by the Auditor, a Management Report, which addresses any issues for the following areas:
Critical Audit Areas
(i) Revenue
· Rates revenue
· Government grants
· User pays revenue
· Profit on sale of non-current assets
· Other income
(ii) Expenditure
· Salary and wage costs and employee records
· Depreciation
· Materials and contract expenditure
· Loss on sale of non-current assets
· Insurances
· Bad debts
· Other expenditure
· Corporate Credit Cards
(iii) Current Assets
· Bank and short term investments
· Receivables and prepayments
· Inventory
(iv) Non-Current Assets
· Property, plant, furniture and equipment
· Infrastructure and depreciation
· Other receivables
· Revaluation of Non-Current Assets
(v) Liabilities (Current and non-current)
· Creditors and accruals
· Loan borrowings including new loans raised
· Provision for annual and long service leave entitlements
(vi) Reserve Funds
(vii) Contingent Liabilities
(vii) Capital Commitments
(ix) Accounting Policies and Notes to the Financial Statements
(x) Cash Flow Statement
(xi) The financial ratios required by the Local Government (Financial Management) Regulations 1996.
6.0 Term Of Contract
The contract will effectively cover three (3) financial years commencing 1 July 2015 through to 30 June 2018.
7.0 Information To Be Provided With The Tender
The Auditor is to provide:
· Fees for completing the audit in accordance with this specification, excluding travel and accommodation. Fees should be shown separately for each year of the term of contract and for each Council.
· Details (and fees if applicable) for any other value added services provided, which may include consultancy work, seminars, guidance booklets, newsletters, updates, regular feedback, support and direction.
· Estimate of the hours to be allocated for the audit for each Council.
· The proposed scheduling of the audit in accordance with Clause 5 (e).
· Nominated auditor(s) and registered company audit number(s).
· Experience of the nominated auditor(s) in completing Local Government audits and current Local Government engagements held.
· Experience of proposed Audit staff.
· A typical audit checklist of items reviewed and any other information consistent with Clause 5 (c).
· Hourly rate and/or fees and expected completion time for any separate audits requested by Council in addition to the audit function as defined in Clause 4.
Accommodation and travel expenses are to be reimbursed at cost. Please note that travel expenses refer to airfares and the like and shall not include the hourly rates of the audit staff. The accommodation and travel expenses of all the audits will be paid equally by each of the Shire of Halls Creek, Shire of Broome and the Shire of Derby.
All prices shown must exclude or separately identify GST.
Auditors may submit alternative fees for each council. Any economies of scale that may apply must be spread evenly over the three Shires.
8.0 General Conditions
The Auditor shall not sub contract to a third party.
The Auditor shall not, and has no right to, assign the audit contract to third parties.
The Auditor confirms that he or she has, and will maintain during the duration of the audit term, professional indemnity insurance covering the legal liability arising out of any neglect, default, error, or omission. The value of the indemnity will be that required by the professional accounting bodies for the holding of a practising certificate.
The auditor shall not be engaged by the Council to undertake any financial consultancy with the local government that requires the preparation of financial information that will be subject of the annual audit.
Notices or other communication between Council and the Auditor may be given by delivery, or sent prepaid post, to each of their respective postal addresses. Postal address may be altered by service of notice in accordance with this clause.
Notices or other communication sent by post shall, in the absence of proof to the contrary, be deemed to have been received by the addressee 96 hours after it was posted.
9.0 Termination of Appointment
The appointment as Auditor is terminated if:
(a) The Auditor ceases to be a registered company Auditor;
(b) The Auditor ceases to be an approved Auditor under Section 7.5 of the Local Government Act 1995;
(c) The Auditor is a disqualified person under Section 7.4(2) of the Local Government Act 1995;
(d) The Auditor resigns by notice in writing to Council;
(e) Council serves notice in writing to the Auditor terminating the appointment.
(f) The auditor’s registration is withdrawn or suspended.
10.0 Tender Submissions
Sealed tenders clearly labelled “Kimberley Councils Audit Tender” are to be lodged at the Shire of Broome, no later than 4pm on Friday 30 October 2015.
Emailed tenders to the Shire of Broome will be accepted, however it is the Auditors responsibility to confirm that tenders have been received and to supply any documentation requested.
Auditors should ensure that tenders address the items referred to in Clause 7.0 of this document.
Further information regarding this quote should be directed to Sam Mastrolembo Director Corporate Services (Shire of Broome), Lloyd Barton Corporate Services Manager (Shire of Halls Creek) or Martin Cuthbert Executive Manager Corporate Services (Shire of Derby West Kimberley).
11.0 Financial Data
The following information is supplied of the 2013/2014 financial year.
Council |
Operating Expenditure |
Operating Income |
Capital Expenditure |
Total Assets |
Total Liabilities |
Shire of Broome |
$38,106,623 |
$38,384,532 |
$9,318,900 |
$227,849,593 |
$13,481,790 |
Shire of Derby West Kimberley |
$21,388,562 |
$19,208,855 |
$10,046,785 |
$105,716,037 |
$4,730,542 |
Shire of Halls Creek, |
$12,971,628 |
$ 9,979,588 |
$ 3,694,645 |
$52,885,429 |
$2,548,076 |