RFP Global Audit Services Questions And Answers. Date January 25th 2018

Transcription

1 Mercy Corps RFP Global Audit Services Questions And Answers Date January 25th 2018 Q. Can the RFP submission deadline be extended? A, We have extended the submission of the proposal deadline to February 1 st Q. There was a supplier information form attached to with the RFP. I didn t see an instruction that indicated this needs to be completed and submitted with the proposal response. Can you confirm if this should be attached, or if this was only included for informational purposes, to be completed once the audit contract is awarded? If required to be attached, can you confirm that it would not comprise part of the 12-page limit? A. Yes please; the supplier information form should be included in the proposal package. Confirming it is not part of the 12-page limit. Q. Are the affiliates subject to separate audits? It would be useful to have financial statements for them as the audit opinion on the consolidated financial statements will need to include them. A. We have outlined the audits and review procedures that need to take place. The other entities are either immaterial or are already audited. Q. The RFP mentions vendor meetings week of Week of February 18 th, where will these be held? A. These will be held in either Edinburgh or Portland (Oregon).

2 Q. The deliverables listed, Annual Mercy Corps Europe Consolidated Financial Statements, including Mercy Corps Netherlands in accordance with Charities SORP (FRS102) and Dutch Law. Can you confirm if this is intended to include the stand-alone compilation report for Mercy Corps Netherlands, currently completed by Baker Tilly NL? To confirm it is intended to include stand-alone compilation report for MCN currently completed by Baker Tilly. Q. The deliverables listed Review of Kompanion Bank financials and 6 month stub period. The stand-alone audit of Kompanion is currently completed by Deloitte, and the review work currently completed by KPMG in the US does not result in a specific deliverable to Mercy Corps, but instead is used to support the annual consolidated audit of Mercy Corps and Affiliates. Can you confirm that the proposal is to continue providing the same services that KPMG US is currently providing (i.e. Deloitte will continue to conduct the December 31 stand-alone audit of Kompanion)? A. Yes - we plan to continue with the current review process for Kompanion financials. Unless Kompanion changes auditors, it can be assumed that Deloitte will continue to conduct the stand-alone audit and this RFP includes the review in order to rely on the annual consolidated audit of Mercy Corps. Q. Please can we see an organization chart of the legal structure of Mercy Corps and Affiliates. We've attached an org chart to the RFP that should address this request. Q. Please can we see a copy of the 6/30/2018 consolidating schedules of Mercy Corps and Affiliates so we may see the respective materiality of each legal entity. Q. Please identify which affiliates that are not in the scope of this RFP are audited by other CPA firms and which firms conduct the audits. See org chart Q. How many weeks are the auditors on-site in OR for the consolidated and single audit work? MCE & MCNL - 1 week interim (April), 2 week final (Sept) on site, baring in mind these timings are not based on a 1st year audit MCG - Two weeks in July and 4-6 weeks October to first week of vember for OR. Page 2 of 13

3 Q. Please confirm whether management drafts the Financial statements footnotes, and SEFA. MCE & MCNL drafted by management for review by auditors. MCG - Yes, Management prepares the drafts. Q. How many posted audit adjustments were there in the prior year? MCE - 4 adjusted (3 immaterial) decrease in net income 86k, 3 unadjusted (net 213k) MCG - We did not have any formally communicated posted audit adjustments for FY18. Q. Was a management comment letter issued in the prior year, if so may we see a copy? MCE - We can check with auditors if we can share audit findings report. significant items raised. MCG - N/A, a comment letter was not issued. Q. Also, we have noted your 12 page limit and also that there can be a separate proposal for MCG and MCE. If we decide to do one proposal rather than two separate ones can we increase the page limit? We are OK with increasing the page limit to 15 pages for a single proposal Q. Is there a preference with having one audit firm who sources component auditors vs. continuing with one firm as the group auditor and sourcing component auditors independently? Is it preferred to have the group auditor take responsibility for MCE and Kompanion? There is a preference for a group auditor to take responsibility for MCE but not Kompanion. Kompanion will continue with their own auditor. Q. Would you please provide copies of management letters issued by the current auditor? Response above Q. Are there any changes in the structure or operations of Mercy Corp in FY19 that would create a significant impact on any of the reporting entities? MCE & MCNL - none of significance MCG - ne Page 3 of 13

4 Q. What is the relative size/materiality of the following consolidated entities expected to be for FY19? a. Asian Credit Public Fund b. Kompanion Development Institution c. MC Nigeria LTD/GTE d. Mercy Corp China Holdings, LLC e. Mercy Corp Development Holdings, LLC f. Mercy Corp India See legal entity org chart. Q. Are there any plans to create new entities in FY19 that are significant? Q. How many auditors have been out in the field in the past? For how long? MCE - interim & final 2-3 (1 week & 2 weeks) MCG - interim 2 weeks (mostly single audit), final 4-6 weeks Q. How many audit adjustments have the auditor's proposed in the past? How many adjustments have been booked and how many have been reported as uncorrected audit adjustments? MCG - There are usually a handful of adjustments are reclassifications posted at the end of the audit. We had one uncorrected audit adjustment in FY18. MCE - see above Q. Have there been any deficiencies in internal control that have resulted in a material weakness or significant deficiency during the past three years? MCE - none MCG - There have been no material weaknesses reported Q. Who drafts the financial statements? MCE - Addressed above MCG - Mercy Corps drafts the financial statements and the SEFA. Page 4 of 13

5 Q. Section II Mercy Corps Overview - What is Mercy Corps hoping to get from its new auditor? More value, more nonprofit specific knowledge? Continued partnership in producing materially correct financial statements. Q. Section II Mercy Corps Overview -Have you had material audit adjustments during the past two years? Q. Section II Mercy Corps Overview -Have you had a material weakness or significant deficiencies in the past two years, if so, could you provide a summary of the issue? Q. Section II Mercy Corps Overview -How long is the onsite audit expected to last based on past performance? 6-8 weeks Q. Section II Mercy Corps Overview We understand no tax services are being requested, however from an audit perspective, have you had an issues related to the new Wayfair tax ruling, Tax Reform Act of 2017 compliance or in-country compliance? Q. Section II Mercy Corps Overview What is your compliance methodology for ex-patriate considerations? We have hired outside firms to assist with expat tax compliance considerations Page 5 of 13

6 Q. Section II Mercy Corps Overview -How large is the current external audit team on-site in Portland? n/a Q. Section II Mercy Corps Overview - Are there any significant changes expected in Mercy Corps s business for during the period referenced in the RFP? Q. Section II Mercy Corps Overview -What does Mercy Corps see as its most significant global challenge? Foreign currency Q. Section II Mercy Corps Overview -From the Audit Committee s perspective, what is Mercy Corps s greatest risk? Safety and Security Q. Section II Mercy Corps Overview -What are the three biggest risks that Mercy Corps is looking to mitigate? Q. Section II Mercy Corps Overview Will the current auditor be allowed to rebid? Yes Page 6 of 13

7 Q. Section III Desired Services / Scope of Work: Does Mercy Corps have a centralized procurement system? t yet A centralized expense and oversight function (invoices and support sent back to Oregon/Scotland)? Centralized policies and procedures for global offices? Yes Q. Section III - Is all reporting centralized regionally, office by office or only at headquarters? This arises from questions in regard to local and donor audits. It depends on the type of reporting, we have both consolidated audit and reporting managed via HQ and statutory audits managed by field offices. Q. Section III Desired Services / Scope of Work: Who controls the procurement (i.e., centralized or local offices)? Is there a threshold between centralized and local offices by value? Local offices, yes we have policies with thresholds. Q. Section III - Desired Services and Scope of Work: What is the payroll process for both local personnel and foreign operations? Timesheet considerations? US based and expats are paid from Portland, national staff are paid locally. Page 7 of 13

8 Q. Section III - Desired Services and Scope of Work: Does Mercy Corps perform regular vendor checks overseas? If so, how often? For procurement, we perform ICC checks as part of the bidding process and references are checked for the winning vendor Q. Section III - Desired Services and Scope of Work: If we are awarded the audit, is Mercy Corps open to use of our member firms to assist in test work in country under U.S. supervision? Yes Q. Section III - Desired Services and Scope of Work: What is the involvement of the internal audit function over financial and operational considerations, if any? Internal audit reports are provided to the auditor for reference Q. Section III - Desired Services and Scope of Work: You mention utilization of internal audit work; what would be the level of effort provided or available in labor hours? Internal audit conducts audits based on an internal risk assessment. They will provide their audit reports for reference, but are not available to support the audit Q. Section III - Desired Services and Scope of Work: Does your current auditor rely on internal audit testing? Q. Section III - Desired Services and Scope of Work: What are the qualifications of the internal audit team and do they report directly to the audit committee? n/a, They report to the audit committee Page 8 of 13

9 Q. Section III - Desired Services and Scope of Work: How does the internal audit group assess risk of each location and determination of which sites to visit and when? Approved by whom? n/a Q. Section III - Desired Services and Scope of Work: Are you aware if the current auditor relied on the local external audits conducted in the field? no Q. Section III - Desired Services and Scope of Work: Has the current auditor performed site visits to Mercy Corps overseas field offices; assuming yes based on the significance of work performed, but if not, is that something you wish to occur? Yes, field visits are based on single audit and in scope programs Q. Section III - Desired Services and Scope of Work: If site testing did occur, can you advise on how many sites were tested annually and number of U.S. personnel who performed the work in country? Q. Section III - Desired Services and Scope of Work: How do your employees report time / effort reporting (manual timesheets or web based?)? If web based, could you provide the program name? Both Page 9 of 13

10 Section III - Desired Services and Scope of Work: How often are budget to actual consolidated reports produced? Is this performed on a project level or regional level? Monthly Q. Section III - Desired Services and Scope of Work: Do you have any significant contributions / partnerships with parties other than Federal entities; assume yes given your notation of required donor audits. If so, would you disclose the entities who require such audits as each donor does require something different in our experience? Conversely if a commingled group of donors who provide at relatively similar rate, could you comment on number of donors? Q. Section III - Desired Services and Scope of Work: How are the local country offices registered? Q. Section III - Desired Services and Scope of Work: What is your review process for activities that occur overseas in Oregon and Scotland? Detailed review of transaction support or more summarized? Detailed review and summary Q. Section III - Desired Services and Scope of Work: Are you aware of use of any of our member firms for any services globally in the past twelve months? If so, can you please advise of such activity to address any independence concerns. t sure Page 10 of 13

11 Q. Section III - Desired Services and Scope of Work: Do you use a third party for investment advisory services? If so, which firm? Q. Section III - Desired Services and Scope of Work: Do you use a third party for trustee and record keeping services for your investment portfolio? If so, which firm? Q. Section III - Desired Services and Scope of Work: Do you have intend to hold the portfolio or do you tend to buy and sell securities on a regular basis? no Q. Section III - Desired Services and Scope of Work: Who in country is reviewing costs incurred with the joint entity for appropriateness and compliance with local laws and regulations? Field finance managers Section III - Desired Services and Scope of Work: What is the percentage of Mercy Corps s expenditures outside the United States? Desired Services and Scope of Work: Would you be willing to share an entity chart outlining relationships and locations? Yes, it has been shared Page 11 of 13

12 Section III - Desired Services and Scope of Work: Could Mercy Corps provide potential bidders with a report of expenses by geographic location? t relevant Section III - Desired Services and Scope of Work: How does Mercy Corps address foreign currency considerations? Do you have a full time treasury function? Yes Section III - Desired Services and Scope of Work: Does Mercy Corps engage in any foreign currency swaps? Section III - Desired Services and Scope of Work: Has Mercy Corps entered into any derivative type arrangements or debt since issuance of the financial statements on the portal? Section III - Desired Services and Scope of Work: Do any of your international donors require donor audits? If so, how many? Yes, Section III - Desired Services and Scope of Work: How legally do you address compliance with laws and regulations in each country? Local legal counsel; use of an international law firm? Page 12 of 13

13 What is the mix between Mercy Corps financial assistance awards versus its contracts with USAID? Does Mercy Corps operate on a cash advance or reimbursement basis for their USAID awards (or a mix of the two depending on the award and USAID Mission)? Does Mercy Corps manage its Federally funded programs centrally (e.g., a centralized grants management or sponsored programs office) or is it decentralized? Have federal awards been expressly included in the scope of the internal audit departments audits? Page 13 of 13