HB 349

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