HB 0349

CS

CHAMBER ACTION

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

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