HB 0349

1
A bill to be entitled
2An act relating to auditor selection procedures; amending
3s. 218.391, F.S.; revising the auditor selection
4procedures that local governmental entities, district
5school boards, charter schools, and charter technical
6career centers must use in selecting auditors to conduct
7certain required financial audits; revising provisions
8relating to membership, purposes, and duties of audit
9committees required to be established to aid in such
10selection; providing for requests for proposals; providing
11review and ranking requirements; requiring written
12contracts and providing requirements therefor, including
13renewal requirements; providing an effective date.
14
15Be It Enacted by the Legislature of the State of Florida:
16
17     Section 1.  Section 218.391, Florida Statutes, is amended
18to read:
19     218.391  Auditor selection procedures.--
20     (1)  Each local governmental entity, district school board,
21charter school, or charter technical career center, prior to
22entering into a written contract pursuant to subsection (7),
23except as provided in subsection (8), shall use auditor
24selection procedures when selecting an auditor to conduct the
25annual financial audit required in s. 218.39.
26     (2)  The governing body of a charter county, municipality,
27special district, district school board, charter school, or
28charter technical career center shall establish an audit auditor
29selection committee and auditor selection procedures or use the
30procedures outlined in subsection (3). Each noncharter county
31shall establish an audit committee that, at a minimum, shall
32consist of each of the county officers elected pursuant to s.
331(d), Art. VIII of the State Constitution, or a designee, and
34one member of the board of county commissioners or its designee.
35The primary purpose of the audit committee and the procedures is
36to assist the governing body in selecting contract with an
37auditor to conduct the annual financial audit required in s.
38218.39; however, the audit committee may serve other audit
39oversight purposes as determined by the entity's governing body.
40The public shall not be excluded from the proceedings under this
41section.
42     (3)  The audit governing body of a noncharter county or
43district school board that retains a certified public accountant
44shall establish an auditor selection committee shall and select
45an auditor according to the following procedure:
46     (a)  Establish factors to use for the evaluation of audit
47services to be provided by a certified public accounting firm
48duly licensed under chapter 473 and qualified to conduct audits
49in accordance with government auditing standards as adopted by
50the Florida Board of Accountancy. Such factors shall include,
51but are not limited to, ability of personnel, experience,
52ability to furnish the required services, and such other factors
53as may be determined by the committee to be applicable to its
54particular requirements For each noncharter county, the auditor
55selection committee shall consist of the county officers elected
56pursuant to s. 1(d), Art. VIII of the State Constitution, and
57one member of the board of county commissioners or its designee.
58     (b)  The committee shall Publicly announce requests for
59proposals, in a uniform and consistent manner, each occasion
60when auditing services are required to be purchased. Public
61announcements notice must include, at a minimum, a brief general
62description of the audit and must indicate how interested firms
63certified public accountants can apply for consideration.
64     (c)  Provide interested The committee shall encourage firms
65with a request for proposal. The request for proposal shall
66include information on how proposals are to be evaluated and
67such other information the committee determines is necessary for
68the firm to prepare a proposal engaged in the lawful practice of
69public accounting who desire to provide professional services to
70submit annually a statement of qualifications and performance
71data.
72     (d)  Any certified public accountant desiring to provide
73auditing services shall first be qualified pursuant to law. The
74committee shall make a finding that the firm or individual to be
75employed is fully qualified to render the required services.
76Among the factors to be considered in making this finding are
77the capabilities, adequacy of personnel, past record, and
78experience of the firm or individual.
79     (e)  The committee shall adopt procedures for the
80evaluation of professional services, including, but not limited
81to, capabilities, adequacy of personnel, past record,
82experience, results of recent external quality control reviews,
83and such other factors as may be determined by the committee to
84be applicable to its particular requirements.
85     (f)  The public shall not be excluded from the proceedings
86under this subsection.
87     (d)(g)  The committee shall Evaluate proposals provided
88current statements of qualifications and performance data on
89file with the committee, together with those that may be
90submitted by qualified other firms regarding the proposed audit,
91and shall conduct discussions with, and may require public
92presentations by, no fewer than three firms regarding their
93qualifications, approach to the audit, and ability to furnish
94the required services. If compensation is one of the factors
95established pursuant to paragraph (a), it shall not be the sole
96or predominant factor used to evaluate proposals.
97     (e)(h)  The committee shall select Rank and recommend in
98order of preference no fewer than three firms deemed to be the
99most highly qualified to perform the required services after
100considering the following factors established pursuant to
101paragraph (a): the ability of professional personnel; past
102performance; willingness to meet time requirements; location;
103and recent, current, and projected workloads of the firms.
104However, such distribution shall not violate the principle of
105selection of the most highly qualified firms. If fewer than
106three firms respond to the request for proposal desire to
107perform the services, the committee shall recommend such firms
108as it deems determines to be the most highly qualified.
109     (4)(i)  The governing body shall inquire of qualified firms
110as to the basis of compensation, select one of the firms
111recommended by the audit committee, and negotiate a contract,
112using one of the following methods:
113     (a)  If compensation is not one of the factors established
114pursuant to paragraph (3)(a) and not used to evaluate firms
115pursuant to paragraph (3)(e), the governing body shall negotiate
116a contract with The committee may request, accept, and consider
117proposals for the compensation to be paid only during
118competitive negotiations under paragraph (h). the firm ranked
119first may then negotiate a contract with the board giving, among
120other things, a basis of its fee for that engagement. If the
121governing body board is unable to negotiate a satisfactory
122contract with that firm, negotiations with that firm shall be
123formally terminated, and the governing body board shall then
124undertake negotiations with the second-ranked firm. Failing
125accord with the second-ranked firm, negotiations shall then be
126terminated with that firm and undertaken with the third-ranked
127firm. Negotiations with the other ranked firms shall be
128undertaken in the same manner. The governing body board, in
129negotiating with firms, may reopen formal negotiations with any
130one of the three top-ranked firms, but it may not negotiate with
131more than one firm at a time. The board shall also negotiate on
132the scope and quality of services. In making such determination,
133the board shall conduct a detailed analysis of the cost of the
134professional services required in addition to considering their
135scope and complexity. For contracts over $50,000, the board
136shall require the firm receiving the award to execute a truth-
137in-negotiations certificate stating that the rates of
138compensation and other factual unit costs supporting the
139compensation are accurate, complete, and current at the time of
140contracting. Such certificate shall also contain a description
141and disclosure of any understanding that places a limit on
142current or future years' audit contract fees, including any
143arrangements under which fixed limits on fees will not be
144subject to reconsideration if unexpected accounting or auditing
145issues are encountered. Such certificate shall also contain a
146description of any services rendered by the certified public
147accountant or firm of certified public accountants at rates or
148terms that are not customary. Any auditing service contract
149under which such a certificate is required must contain a
150provision that the original contract price and any additions
151thereto shall be adjusted to exclude any significant sums by
152which the board determines the contract price was increased due
153to inaccurate or incomplete factual unit costs. All such
154contract adjustments shall be made within 1 year following the
155end of the contract.
156     (b)  If compensation is one of the factors established
157pursuant to paragraph (3)(a) and used in the evaluation of
158proposals pursuant to paragraph (3)(d), the governing body shall
159select the highest-ranked qualified firm or must document in its
160public records the reason for not selecting the highest-ranked
161qualified firm.
162     (c)  The governing body may select a firm recommended by
163the audit committee and negotiate a contract with such firm
164using an appropriate alternative procurement method for which
165compensation is not the sole or predominant factor used to
166select the firm.
167     (d)  In negotiations with firms under this section, the
168governing body may allow a designee to conduct negotiations on
169its behalf.
170     (5)  The method used by the governing body to select a firm
171recommended by the audit committee and negotiate a contract with
172such firm must ensure that the agreed-upon compensation is
173reasonable to satisfy the requirements of s. 218.39 and the
174needs of the governing body.
175     (6)(j)  If the governing body board is unable to negotiate
176a satisfactory contract with any of the recommended selected
177firms, the committee shall recommend select additional firms,
178and negotiations the board shall continue negotiations in
179accordance with this section subsection until an agreement is
180reached.
181     (7)  Every procurement of audit services shall be evidenced
182by a written contract embodying all provisions and conditions of
183the procurement of such services. For purposes of this section,
184an engagement letter signed and executed by both parties shall
185constitute a written contract. The written contract shall, at a
186minimum, include the following:
187     (a)  A provision specifying the services to be provided and
188fees or other compensation for such services.
189     (b)  A provision requiring that invoices for fees or other
190compensation be submitted in sufficient detail to demonstrate
191compliance with the terms of the contract.
192     (c)  A provision specifying the contract period, including
193renewals, and conditions under which the contract may be
194terminated or renewed.
195     (8)  Written contracts entered into pursuant to subsection
196(7) may be renewed. Such renewals may be done without the use of
197the auditor selection procedures provided in this section.
198Renewal of a contract shall be in writing.
199     Section 2.  This act shall take effect July 1, 2005.


CODING: Words stricken are deletions; words underlined are additions.