Audit Services City of Bonner Springs, KS

Proposal for: Audit services

City of Bonner Springs, KS November 12, 2019

Proposal contacts:

Mike D. Lowry Jonathan M. Nibarger Senior Vice President Senior Manager Assurance Services Assurance Services 316.291.4057 316.291.4064 [email protected] [email protected]

Allen, Gibbs & Houlik, L.C. 301 N. Main, Suite 1700 Wichita, KS 67202-4868

Contents

Letter of transmittal 03

Profile of the firm 05

Mandatory criteria 09

Summary of firm qualifications 10

Audit approach 14

Quality control 20

Work space requirements 21

City staff support 22

Compensation 23

Appendix 24

Letter of transmittal

November 12, 2019

City of Bonner Springs, Kansas City Clerk’s Office Attn: Tillie LaPlante, Finance Director P.O. Box 38, 200 E 3rd Street Bonner Springs, KS 66012

Dear Ms. LaPlante:

Allen, Gibbs & Houlik, L.C. (AGH) is pleased to provide service information for conducting the City of Bonner Springs’ (City) audit services. We believe AGH is the best partner for the City. We currently serve most of the major local governments in the Kansas City Metro area. This includes the City of Kansas City, Missouri; the Unified Government of Wyandotte County; the City of Overland Park; the City of Olathe; the City of Gardner; the City of Merriam; the Economic Development Corporation of Kansas City; and Johnson County Education Research Triangle. Our specialized government team can provide an efficient audit while also delivering the kind of deep governmental expertise and top-notch client service the City deserves. This proposal outlines our qualifications and experience to provide not only “compliance,” but serve as a trusted advisor to help the City fulfill its mission for the citizens of Bonner Springs.

By developing a relationship built on continuous communication, effective and efficient technical expertise, and five-star client service, we are committed to helping you strengthen the City’s resources now and for the future. To do that, the City needs a focused and specialized governmental team that can provide the experience and expertise necessary for its diverse operations. AGH offers the City the personal attention and relationships of an independently owned firm that is based in Kansas, combined with deep and specialized governmental- focused resources. As the City, like most governmental entities, continues to balance community needs and using its resources efficiently and effectively to deliver those services, it is critical to have a trusted and proven advisor in your corner. This proposal outlines why we believe AGH is the best choice to provide auditing services and value to the City.

The AGH Difference: Many firms offer auditing services; few are able to deliver the depth and breadth of governmental focus and expertise AGH offers. Only AGH offers the unique combination of the following items.

Proven track record of excellent client service, accompanied by unbiased technical resources: “Accurate, timely and within budget” is just the start of our commitment to our clients. We recognize that how we work with you is as critical as what we do. Most CPA firms will tell you they provide great service, but few ask their clients to grade their services each year. We pride ourselves on a well-planned project, staffing and executing in accordance to your schedules, and delivering on our promises. Through our client satisfaction surveys, our clients consistently tell us that they would recommend AGH to others, they would choose AGH again, and that we deliver top-notch expertise and client service.

Kansas government and City knowledge: You will experience the efficiency that you gain with a firm that has invested in a large and specialized public sector team. Our experience includes audits of funds and activities similar to the City’s. Both the proposed manager and in-charge have previous experience auditing the City of Bonner Springs. This allows AGH to provide a unique mix of auditors with previous knowledge of the City, as well as those who will bring a fresh perspective. This familiarity with the City’s financial transactions will create a smooth transition for City staff to AGH.

Deep resources: Long ago we committed to the government audit sector. This is evidenced by: o AGH audits several of the cities and counties in Kansas, which ensures that our governmental team – at all levels – understands municipal finance and, in particular, the nuances of the Kansas statutes that apply to Kansas governmental entities. o If expertise is needed beyond audit, AGH’s broad range of expertise is outlined in the Range of services section. o Like national or regional firms, we have equally high-quality – if not better – resources available for our clients. However, our relationships with clients are much stronger than the larger firms; all resulting in better audits and more value.

We combine top-notch client service with technical excellence: To truly serve as a trusted advisor, our relationship with you must be based on communication, respect and responsiveness. Communication will be two-way, timely and ongoing. Yes, our main office is located in Wichita, but your proposed engagement manager and in-charge both live in the Johnson County area. On most days, they could be in your office in minutes. We will work to earn and maintain your trust in a variety of ways including regular communication, off-season face-to-face meetings and ‘Bonner Springs-focused’ GASB analysis!

Scope of Services: We have read and fully understand the scope of services required as detailed in the City’s RFP. We commit to performing the work during the time period outlined in section IV of the RFP. This proposal is a firm and irrevocable offer for 60 days from the proposal deadline of November 12, 2019.

Authorized Firm Representative: Mike D. Lowry is authorized to make representations for the firm and is authorized to bind the firm. Title/credentials: CGFM, Senior Vice President, Assurance Services Address: Allen, Gibbs & Houlik, L.C., 301 N. Main, Suite 1700, Wichita, Kansas 67202 Phone: 316.291.4057 Email: [email protected]

Summary: AGH appreciates the opportunity to submit our qualifications to serve the City’s auditing needs. We hope to earn the opportunity to serve the City with AGH’s mix of deep governmental audit experience combined with our focus on delivering top-notch client service. We look forward to the next step in forming a relationship as your trusted advisor. Please contact me with questions or to discuss further.

Respectfully,

ALLEN, GIBBS & HOULIK, L.C.

Mike D. Lowry Senior Vice President, Assurance Services

Profile of the firm

Allen, Gibbs & Houlik, L.C. is one of the top 225 CPA and advisory firms in the U.S., specializing in helping public sector organizations and closely held or family-owned companies succeed in their missions and build and preserve the organization’s resources. Founded in 1938 and for a time part of a national firm, AGH has been an independently owned and managed firm since 1987 with national and international reach.

AGH’s headquarters in Wichita is home to more than 130 staff. However, we have several staff members serving on our Governmental Team that are based in the Kansas City metro area.

Within our audit department, we have the following staff members:  Eight officers – of which two are dedicated 100 percent to governmental audits  Seven managers – of which three are dedicated 100 percent to governmental audits and four others who perform governmental audits during the year  10 supervisors and seniors – all of which have governmental audit experience  16 other professionals and staff – all of which have governmental audit experience

All personnel on the proposed engagement team are full-time professionals. Two officer-level individuals, one manager and one supervisor will service the team (including the independent reviewer). Additional professionals to complete the team at the staff level would be drawn from the pool of individuals with governmental audit experience. The proposed engagement manager is based in Overland Park.

Capability of auditing governmental units

Our government team has provided auditing and consulting services to numerous governmental entities for more than 30 years. AGH has extensive experience in conducting audits for governmental entities in compliance with Government Auditing Standards (GAS), Uniform Guidance, and that obtain the Government Financial Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting. Since the majority of our governmental clients are subject to the provisions of the Single Audit, we have developed compliance specialists within our government services team. Our experience provides us with knowledge and understanding of nearly all types of federal programs received by cities and counties.

Because of our wide range of public sector clients, our experience in auditing entities in the public sector is deep, comprehensive and up-to-date. Last year, we provided nearly 25,000 hours of professional services to our public sector clients.

Governmental organization participation and leadership

AGH is a member of the AICPA’s Government Audit Quality Center (GAQC) and an associate member of the GFOA with team members active in both local and national GFOA, frequently serving in leadership and teaching capacities for local chapters, including service on the GFOA Certificate of Achievement for Excellence in Financial Reporting committee.

The GAQC membership requires additional commitments from a firm, including establishing internal leadership and expertise in governmental auditing, maintaining a designated level of CPE, establishing policies and procedures specific to the firm’s governmental audit practice, and conducting annual internal inspections to review compliance with accounting and auditing requirements specific to the government practice.

AGH’s government team members are professional leaders, routinely presenting training courses for local industry groups, including GFOA chapters in several regions. They also present training topics for individual clients, tailored to their needs. Client-specific training often relates to the implementation of new GASB standards, and providing tools and templates for them to use in implementing the new guidance. For example, AGH created a tool to assist clients in implementing GASB 68 during 2014. Additionally, tailored Uniform Guidance training sessions have been presented for grant program managers to help them understand the basic compliance requirements, documentation needs and the latest in federal requirements.

Range of services

Part of AGH’s unique value for clients is the breadth of financial and consulting expertise all within one firm. As client needs arise, our clients have access to the entire resources of the firm.

Audit & Assurance Services | AGH’s audit staff is one of the region’s largest, with many specializations:

 Financial statement audits and reviews  Certified fraud examiners covering various industry specializations  Litigation support services  Employee benefit plan audits  Internal audit outsourcing

Tax Planning and Compliance Services | AGH’s tax group is also one of the largest in the region. Our broad range of tax expertise includes professionals specialized in specific aspects of tax planning, compliance and management of tax liabilities. Services include:

 Federal tax  Individual, estate and trust taxes  State and local tax  Not-for-profit and other 501(c)3 tax-  International tax compliance and exempt entities, including unrelated reporting business income, 990s and supporting  Corporate, C, S, partnership, LLC and organizations and requirements for sole proprietor business taxes charitable giving

Organizational Development and Family Business Services | This group helps organizations address some of the most critical issues, including leadership, ownership, succession & strategy. Services include:

 Strategic & succession planning  Governance issues: board assessment,  Executive coaching training, recruiting and development

Technology Services | Information technology is at the heart of many organizations. Our technology consultants hold multiple certifications and work in several primary areas:

 IT security review and reporting  Web development  IT risk advisory services  Network infrastructure  IT system selection, implementation &  Cloud computing support  Custom programming solutions

AGH Specialized Tax Solutions | A number of complex tax approaches require specialized training, expertise and professionals with the experience to implement them. These approaches include:

 Tangible asset reviews and repair and  Micro-captive insurance companies maintenance services  International tax required reporting  Cost segregation studies  Interest-Charge Domestic International  Research & Development tax credit Sales Corporation (IC-DISC) studies  Transfer pricing studies

AGH Advisors | Our corporate finance team members are CPAs whose credentials include certified business analyst, certified valuation analyst and accredited in business valuation. Services include:

 Business brokering  Debt and equity financing  Merger and acquisition  Management buyout  Business valuation  Post-acquisition integration  Family business transfers

AGH Employer Solutions | For most organizations, one of their biggest expenses, best opportunities and sometimes biggest headaches – is their people. We can help with:

 Recruitment, pre-employment testing  Controller accounting outsourcing  Hiring  Succession planning  Fair and equitable compensation  Strategic planning facilitation structures  HR consulting  Performance management  Training  Executive and next-generation coaching  Benefit plan design  Payroll and timekeeping outsourcing  Education

AGH Wealth Management | AGH affiliate AGH Wealth Management provides a range of wealth-protection and wealth-building services. Using the financial planning process Lifestyle to Legacy™ to develop a long-term plan, this group can address:

 Cash management  Tax planning  Investment management  Estate planning  Risk management  Retirement planning

Additional services for governmental entities

Audit related services

 Special investigations involving the misuse of public funds  Internal control reviews  Training for finance or grant management personnel  Financial audits for pension plans and Section 457 deferred compensation plans  Performance of special procedures to assist management in meeting its fiduciary responsibilities for oversight of Section 457 plans  Operational reviews to improve the economy and efficiency of departments or services

Other assurance consulting services

 Assistance in the preparation and review of official bond offering statements  Debt capacity studies to assess the potential impact of bond ratings for future debt issuances  Presentations to bond rating agencies for information in official bond offering statements  Corporate finance consulting to assist entities in performing due diligence in evaluating economic development projects

Tax consulting services

 Consultation and calculations for arbitrage  Consultation regarding property tax abatements or appeals of assessments  Sales tax consulting for utilities, including studies to identify potential refunds  Review of policies regarding potentially taxable fringe benefits (travel, entertainment, use of laptops and cell phones, etc.)

Fund forecasting – multi-fund view

 Pro forma and benefit/cost analysis and reviews  Development proposal review  Debt / pay-go financing structure reviews  “But-for” analytics  Corporate finance consulting to assist entities in performing due diligence in evaluating economic development projects  General, debt service and enterprise fund forecasting  Rate model reviews  Risk management fund forecasting and analysis

Mandatory criteria

Licensing

AGH and key professional staff members of the proposed client service team are properly licensed as certified public accountants in the State of Kansas and hold appropriate permits to practice issued by the State of Kansas Board of Accountancy.

Independence

Allen, Gibbs & Houlik, L.C., is independent of the City of Bonner Springs, Kansas, and its component units and related entities as listed in the RFP, as defined by the American Institute of Certified Public Accountants under generally accepted auditing standards and the provisions of the GAO Standards for Audit of Governmental Organizations, Programs, Activities and Functions.

Summary of firm qualifications

Staff members & supervisors who will work on the audit

The engagement officer is a Certified Government Financial Manager designated by the Association of Government Accountants. Both the officer and manager on the engagement team are members of the GFOA’s special review committee for the CAFR program, which means we review CAFRs for entities across the country.

The City’s independent technical reviewer is a member of the GAQC, Certified Government Financial Manager and GFOA reviewer for the CAFR program.

Additionally, all members of our government team are part of the AICPA GAQC. This provides an opportunity for the government team to build relationships with key members of the Government Accountability Office, Office of Management and Budget, federal grantor agencies and others to gain insight into ongoing improvements in the quality of government audits.

 Mike Lowry will serve at the engagement officer for the City. Mike will direct all activities for the engagement, including approval of the audit plan, partner-level review, assistance in revolving technical issues and approval of all required deliverables.

 Jonathan Nibarger is based out of Overland Park and will be responsible for the daily management of the financial statement audit engagement. He has more than 11 years of public sector-specific auditing experience.

 Kyle Young is based out of Lenexa and will oversee the on-site staff for the audit.

 Tara Laughlin will provide the independent technical review which serves as an additional layer of quality control from a partner-level perspective. To preserve her objectivity for the review, she will not participate directly in the day-to-day work of the audit team.

 Brian Johnson will provide any technology expertise or resources needed to assist with the review of IT systems and controls. A certified public accountant, Brian has extensive experience in IT risk advisory services and has earned multiple technology credentials, including four focused specifically on IT security and risk management.

 Staff associates assigned to the engagement team will be members of our public sector service team who possess specific experience from similar entities. Assigned staff will have received training as required by government auditing standards and are properly licensed in the State of Kansas.

Please refer to the Appendix for a detailed biographical profile of key team members.

Financial Statement Expertise

AGH team members have helped numerous entities meet the rigorous criteria of the GFOA Certificate of Achievement for Excellence in Financial Reporting – both as city staff and external independent auditors. Additionally, two team members serve on the GFOA’s Certificate of Achievement Review Committee. The following is a sample of AGH clients who have earned the GFOA Certificate of Achievement for Excellence in Financial Reporting:

 City of Kansas City, Missouri  City of Overland Park, Kansas  City of Oklahoma City, Oklahoma  City of Wichita, Kansas  City of Merriam, Kansas  City of Gardner, Kansas  Johnson County, Kansas  Unified Government of Wyandotte County/Kansas City, Kansas  Wichita Public Schools USD #259  City of Branson, Missouri

While the City of Bonner Springs does not currently participate in the GFOA’s certificate program, we bring this experience and critical eye to every government client to ensure we are assisting the City in producing the best financial statement product possible.

Most recent auditing experience & client references

City of Merriam, Kansas

Scope of work  Audit of financial statements and Comprehensive Annual Financial Report in accordance with GFOA Certificate of Achievement for Excellence in Financial Reporting requirements  Includes experience with a variety of unique economic development projects Dates 2012 to present Engagement partners Tara Laughlin, engagement officer Alicia Simon, engagement manager Mike Lowry, engagement technical reviewer Total hours 300 Client contact Ms. Cindy Ehart, Finance Director (913) 908-0256

City of Gardner, Kansas

Scope of work  Audit of financial statements and Comprehensive Annual Financial Report in accordance with GFOA Certificate of Achievement for Excellence in Financial Reporting requirements  Includes experience with a variety of unique economic development projects Dates 2014 to Present Engagement partners Mike Lowry, engagement officer Jonathan Nibarger, engagement manager Tara Laughlin, engagement technical reviewer Total hours 550 Client contact Ms. Nancy Torneden, Fiscal Services Manager (913) 856-0950

City of Bel Aire, Kansas

Scope of work  Audit of GAAP financial statements producing an annual financial report  Includes experience with land sale projects Dates 2012 to Present Engagement partner Tara Laughlin Total hours 300 Client contact Mr. Ted Henry, Director of Finance and Administration (316) 744-2451

City of Overland Park, Kansas

Scope of work  Audit of financial statements and Comprehensive Annual Financial Report in accordance with GFOA Certificate of Achievement for Excellence in Financial Reporting requirements  Includes experience with a variety of unique economic development projects  Includes the audit of two component units: o The Overland Park Convention Center o The Overland Park Development Corporation Dates 2018 to present Engagement partners Mike Lowry, engagement officer Jonathan Nibarger, engagement manager Tara Laughlin, engagement technical reviewer Total hours 1,000 Client contact Mr. Dave Scott, Chief Financial Officer (913) 895-6140

Peer review and quality assurance

While building a team of innovative professionals, AGH has paid equal attention to technical service that is second to none. To ensure the quality of technical services, all CPA firms providing financial statement audits are required to undergo a “peer review” of their accounting and auditing practice every three years.

Most firms in Kansas conduct their reviews under the supervision of the Kansas Society of CPAs (KSCPA), and results of the review are kept confidential. AGH voluntarily makes all of its peer review reports public by submitting them to the AICPA for publication on their website, and we are proud to share our results.

In its most recent peer review, AGH received the highest possible rating. The firm’s latest peer review marks the eighth consecutive report, covering nearly 25 years, in which AGH’s accounting and auditing practice merited the highest marks under the rigorous peer review process. The peer review included a review of public sector engagements which encompassed a financial and compliance audit under the Single Audit Act and other related federal audit standards.

A copy of the firm’s most recent Peer Review report is included in the Appendix section.

Recently completed audit of municipality of similar size & characteristics

The following link will take you to the City of Merriam, Kansas, Comprehensive Annual Financial Report for the year ended December 31, 2018: https://www.merriam.org/DocumentCenter/View/6230/2018-CAFR_web

Audit approach

Work plan

Estimated Number of Hours Professional Staff & Segment Officers Managers Supervisors Clerical Total Phase I – Planning, Internal Controls, Risk Assessment 5 10 25 20 60 Phase II – Audit Testing 5 10 30 80 125 Phase III – Completion/Wrap-up 10 20 60 40 130

Total 20 40 115 140 315

Note: All time includes status meetings throughout the engagement.

Financial audit

a) The audit will be made in accordance with generally-accepted auditing standards. b) The primary purpose of the examination is to express an opinion on the financial statements and such an examination is subject to the inherent risk that errors or irregularities may not be detected. c) Should conditions be discovered which lead to belief that material errors, defalcations or other irregularities may exist, or if any other circumstances are encountered that require extended services, the auditor will promptly advise the City. d) No extended services will be performed unless authorized in the contractual agreement or in an amendment to the agreement.

Compliance audit

a) In accordance with the auditing standards of the cognizant agency or in accordance with other applicable standards, the proposal will indicate the necessary procedures to test compliance and to disclose noncompliance with specific laws and regulations.

Proposed segmentation of the engagement: three-phase process

Phase 1 Phase 2 Phase 3 Audit planning Independent review Year-end fieldwork Internal controls Draft/review/issue Substantive tests Risk assessment reports

Phase One – Audit planning, internal controls and risk assessment Current auditing standards require a risk-based approach to the audit.

No surprises – We meet with key personnel to discuss the general audit plan and work to be performed, as well as updates throughout the audit. Within phase one, this would include discussion of the following:  review of report requirements and deadlines, the timeline and key dates;  any concerns related to the audit;  any anticipated changes in accounting principles or changes in internal systems; and  review of any assistance provided by department personnel.

Understanding the department – This process includes obtaining an understanding of internal and external environments including the identification of any new issues, transactions or events affecting the entity during the year. Documenting may include reviews of key documents such as budgets, Comprehensive Annual Financial Report, organizational chart, official statements, etc.

We also obtain an understanding of:  Entity-level controls by performing certain procedures and evaluate the design of control systems for significant transaction cycles and the financing reporting process.  IT systems and controls, including general controls such as IT organizational structure, hardware/software systems, business continuity and system access, as well as application controls.

Test of controls – This testing allows us to consider fraud (discussed below) as required by generally accepted auditing standards, as well as to identify areas of significant risk and assess risk of material misstatement at account and assertion levels. This is based on the information gathered previously and determines which areas receive greater emphasis in phase two.

Assessment of fraud risk – As required by generally accepted auditing standards, we make inquiries of certain management personnel and staff regarding fraud risks within your organization. These inquiries are also required to be made of members of the governing body. Throughout the audit process or at any other time of the year, we encourage members of the governing body or personnel of your organization contact us if they have any concerns about internal control violations or fraud.

Preliminary report preparation – During phase one, we obtain and review a preliminary schedule of expenditures of federal awards in an effort to identify major programs to be audited in the Single Audit.

Phase Two – Year-end fieldwork audit testing

Substantive tests – These tests are designed to provide reasonable assurance as to the validity of the information produced by the accounting system that appears on the financial statements. The extent of our detailed substantive work is governed by the results of our tests of controls.

Tests of significant accounts and balances include a combination of:  substantive analytical reviews;  confirmation of selected balances;  reviews of management’s determination of significant estimates, including evaluations of the underlying assumptions used;  sampling transactions to verify underlying supporting documentation;  evaluation of significant accounting issues, including the application of new accounting principles; and  agreeing account balances to the general ledger and draft financial statements and footnotes.

Single Audit – The first step in developing an audit approach for the Single Audit is to obtain or construct the Schedule of Expenditures of Federal Awards (SEFA) for federal funding. A determination of major programs is then made, based on risk assessment factors. For each major program, we obtain and review the Compliance Supplement guidance for the program and design audit procedures for the applicable compliance requirements that are direct and material to the program.

AGH utilizes tailored audit programs and tools for completion of the Single Audit. A knowledge-based database tool called Caseware provides for linkage of identified compliance requirements to audit programs, internal control forms and testing, which results in efficiencies for the audit.

Phase Three – Completing the audit

The completion phase includes an overall review of the financial statements and evaluation of audit results. This includes government-wide financial statements and reconciliations, MD&A and Statistical Section. We utilize the AICPA’s reporting and disclosure checklists for State and Local Governments and GFOA’s checklist for this review. The final report review by our technical, quality control reviewer is conducted during this phase.

In addition, we:  review the report for compliance with the reporting;  review for contingencies and subsequent events;  evaluate overall audit results and overall reasonableness of financial statements (analytical procedures);  issue audit reports;  issue management letter detailing comments and observations resulting from the audit, including ideas related to possible improvements in operations; and  conduct presentations of findings to audit committee and governing body.

Most importantly, we conduct our independent technical review in the field. There is nothing more frustrating than thinking the audit is done and then getting hit with last minute questions because the independent review was not timely. We commit to having the independent review done when we leave the field.

Communications process & responsiveness

Because of our large governmental practice, we are fully aware of the high expectations any public entity must meet for transparency, efficiency and good stewardship. Our communication process is structured to deliver timely and relevant information to the City – minimizing interruption to your workload and staff, as well as providing immediate feedback for any timely improvements that would be valuable to you. We work with you to define contacts, format and frequency of communication so that we begin the engagement with the same expectations and can adapt as needs arise. We value your feedback in these areas, and we want to ensure that we have thoroughly addressed all matters before making adjustments or issuing audit findings or comments on internal control deficiencies.

Typically, we will conduct the following:

 Initial pre-engagement planning meetings  Interim fieldwork updates  Entry conference before substantive testing  Weekly fieldwork updates that include a summary of:  What has been completed to date and what is still in process  Information we may still need along with discussing priorities  Discussion of possible adjusting entries, if not previously discussed  Discussion of potential findings, internal control deficiencies or other issues  Weekly updates post-fieldwork, but prior to issuance of the final report  Exit conference at close of fieldwork  Review of audit report and management letter  Post-engagement debrief and wrap-up  Periodic off-season update communications in person or via telephone  Continuous year-round access to partners and senior managers

We encourage you to call us as you have questions or updates on your operations throughout the year. Often, quick conversations with your team during the year can save your staff time and work during the audit.

One thing we all seem to have in common is that we are short on time. When engaging in any business interaction, nothing is more frustrating than not receiving responses to questions in a timely manner. In order to continue building trust and credibility with our clients, responsiveness is one of the most important aspects of our culture. Responsiveness is made up of value and speed. AGH provides valuable information quickly and accurately. Email and voicemail communications are addressed immediately and handled accordingly.

Use of software in the engagement

Technology can provide significant efficiencies in the performance of audit procedures. In addition to accessing the City’s information system, we utilize the following software to generate these benefits:

Caseware – This paperless audit software utilizes automated audit programs, workpapers and trial balances. AGH’s audit teams have remote access to the primary AGH servers, allowing closer collaboration and supervision in working together. Team members can use the network’s 24/7 access to share and review workpapers onsite or from our office, bypassing unnecessary delays in sharing information and decreasing the reproduction costs of paper copies.

Data Analytics – Your organization generates impressive amounts of data every day and this data can reveal important facts, trends and patterns that can provide invaluable insights into your organization and produce a more efficient and effective audit product. We will incorporate data analytics into our audit process through the use of IDEA, a computer-assisted audit software technology. This data-analysis software generates random samples, performs statistical sampling and the evaluation of test results, and carries out journal-entry testing, among other tasks.

LeapFILE – AGH uses a secure file-transfer system and portal called LeapFILE, which facilitates the secure transmission of sensitive information among AGH team members or between AGH and our clients. For security reasons, we strongly recommend use of LeapFILE for data transmission, but will work with you to avoid creating unnecessary barriers between our teams.

Accounting Research Manager – This web-based research tool provides all team members with instant access to authoritative auditing and accounting standards, allowing them to address technical issues in the field as they arise.

New GASB implementation

Regarding the application of new GASBs, AGH takes an education-based approach to assisting our clients. We don’t buy into the thought process that an audit is a one-time-of-year event. Being in year-round communication with your auditor to address concerns and technical issues is essential to a successful audit and relationship. We work with our clients during implementation of new standards and ensure they are prepared for upcoming changes.

Transition plan to begin providing services

AGH’s team is acutely aware of the trust placed in us. We understand that transitioning from another firm can be a burden on your personnel. Our experience managing this change has resulted in transitions providing seamless service and minimal disruption for you and your staff. At the core of any plan is excellent two-way communication, thorough preparation and a strong service orientation.

Our clients’ experiences with a transition are successful because they include these elements:

Team preparation from the start – A key to any new relationship is setting expectations and discussing how we will work together. To that end, we will:

 conduct an initial planning meeting with management to review our team, roles and responsibilities, and approach in more detail;  seek feedback on the City’s preferred communications approach with our team, along with any questions or concerns your team may have;  establish target dates for completion of activities and subsequent meetings;  use our review of the prior auditor’s work to obtain historical information about the City, to assist in minimizing the first-year questions of management; and  provide you with an extensive, detailed Prepared By Client (PBC) listing as soon as possible. We will review this list with your personnel and come to agreement on due dates, as well as seek your feedback regarding any questions or concerns you have on the items requested.

Partnership orientation – An audit, while providing independent and objective review, is most effective when the client and auditor share goals for an accurate, timely and thorough engagement. AGH’s ultimate objective is to help your organization fulfill its mission by providing assurance services as a trusted advisor, not as an adversary. We will invest in our relationship during the transition period, and our partners and managers will be involved in the transition and planning process, especially as it pertains to gaining an understanding of the City, its operations and internal controls. With our most experienced team members involved in this phase, we can ensure that other team members get up to speed quickly and that the development of the audit plan will be focused on areas of risk, minimizing unnecessary efforts by your personnel.

Client satisfaction surveys, testimonial

Every firm says they provide great client service, but we back it up with facts. After each engagement, we send our clients a survey to assess their satisfaction with our service. This survey includes seeking feedback on our performance via questions or topics like whether we conducted the audit in a professional manner, responded to questions in a timely manner, completed fieldwork with minimal disruption and delivered the final product on- time. We also ask clients if they would recommend AGH to others “without hesitation”. Clients rate us on a scale of 1-5 (with 5 being outstanding) and our score has consistently averaged over 4.8 out of 5.

Quality control

AGH maintains quality control policies and procedures that comply with, and in many cases exceed, requirements outlined by generally accepted auditing standards. As part of our quality control procedures, several levels of review are incorporated into each audit. The following is a summary of the review process, with notation of which engagement team members will be performing each review.

 The engagement supervisor performs the basic working-paper review. Next, the engagement manager reviews the overall engagement and discusses with the engagement supervisor any critical areas and unusual accounting or other matters encountered during the course of the engagement. The assurance engagement officer also reviews and approves the working papers, auditor’s report, financial statements, management letters and/or other reports.

 A second assurance officer, who is not otherwise associated with the engagement, evaluates the appropriateness of financial statement disclosures, auditor’s report and/or other reports for compliance with generally accepted accounting principles, generally accepted auditing standards, and other appropriate standards. The second officer reviews the key areas of the audit working papers and may, at his or her discretion, hold discussion with engagement team personnel.

 Before issuance, the Comprehensive Annual Financial Report will be reviewed by our administrative staff for clarity, grammar and readability.

The review will be performed at the firm’s headquarters in Wichita, Kansas by Independent Technical Reviewer, Tara Laughlin. Please refer to the Appendix for a detailed biographical profile of Ms. Laughlin.

Work space requirements

AGH utilizes computer-based technology for testing and work paper documentation. Electronic schedules and scanned documentation is preferred, if possible. We anticipate three to five engagement team members at any given time and would appreciate workspace adequate to accommodate them. For network and information security purposes, we utilize our own mobile private network for internet connections to access our network server.

City staff support

An efficient and effective audit is achieved when there is strong two-way communication and cooperation. Through emphasis in the pre-audit planning, our team will establish appropriate communication channels to assure effective utilization of your staff during the audit. The coordination, scheduling and timing of audit procedures will be carefully outlined and monitored throughout the course of the audit.

Throughout the audit process, we will need access to certain schedules, reconciliations and supporting documents. We anticipate that City personnel would prepare supporting schedules and work papers similar to those prepared in the prior years, requiring staff time commitments similar to those in prior years.

We anticipate needing assistance from your staff in establishing our understanding of your activity cycles and accounting system. Additionally, during our initial planning procedures, we will prepare a detailed listing of documents needed for interim procedures. We may also request policy and procedure narratives related to internal controls; this can include copies of policy / procedure manuals already available or we can provide templates for staff to complete electronically.

During interim procedures, we will be assembling additional information that we will need for phase two – audit testing. As a practice, we stay in touch with our clients throughout the process of assembling the detail list and remain available for any questions regarding the information needed for any phase of the audit process.

Compensation

With AGH’s relationship focus, it is our desire to attract and retain clients interested in growing their organizations within an environment of strong professional relationships. If AGH is engaged to provide services to the City, your management and the governing body has the opportunity for a continuous, year-round dialogue with our specialists, led by engagement officer Mike Lowry. This includes discussion pertaining to any potential or existing issues so that we can draw upon our experience to offer advice and counsel.

It is our practice not to bill our clients for telephone consultation unless substantial research time is required. If that is the case, we will discuss potential costs with you before beginning any work. We believe this policy is beneficial to both you and AGH in that it encourages you to call us throughout the year. By keeping abreast of issues as they occur, we will not only be able to deliver more efficient service, but the advice we provide to you will be more meaningful because we will better understand the City.

New accounting or auditing pronouncements may be issued that affect your financial reporting or our responsibilities as your auditors. Our future fee estimates do not include any additional time and fees that may be necessary to determine the impact of such pronouncements on your financial reporting or to implement the requirements of any pronouncements that may apply to your audit or financial reporting. We do not foresee any additional fees based on the RFP. However, should such work be required we will discuss immediately with City staff prior to its commencement.

We can provide an effective and cost-efficient mix of personnel with various levels of expertise all with the necessary experience you require. Our total cost to perform the audit is shown below, including total hours and hourly rates by category. Interim billings will be submitted as work progresses.

Staff Assigned Hours Rate Total Cost

Independent Technical Reviewer 5 $200 $1,000

Partner 15 $200 $3,000

Supervisory Staff 155 $90-$150 $16,000

Staff 140 $50-$85 $9,750

Out-of-pocket expenses Included

Total Cost for 2019 Audit $29,750

Total Cost for 2020 Audit $30,750

Additional Services 2019 2020

Single Audit – cost for each major program $4,500 $4,500

Appendix

Resources AGH offers to Bonner Springs as part of the engagement

As part of our client-focused service approach, we believe two-way communication is essential to help us serve as a trusted advisor for you. Rather than check in only once a year when it is time for audit planning to begin, we seek a year-round relationship so that we clearly understand your needs, goals and environment. This occurs in several key ways:

Quarterly meetings: To stay in touch with current concerns, challenges and opportunities, we will schedule meetings outside the audit timeframe with you and key staff. We use this time to understand your organization better; help foresee issues or changes that could affect your audit or finances; and share information about regulatory, accounting and auditing changes affecting you.

These meetings with your engagement team leaders represent a commitment ranging from 12-16 hours annually valued at $3,000 to $5,000 at no additional cost.

Additional grant testing: The Single Audit Act requires a certain level of grant testing be performed within the audit. However, we understand that federal monies flow through to departments that may never have a chance to be audited due to the level of funding allocated. If AGH is selected for this engagement, we would be available to immediately assist the City in evaluating internal controls surrounding lower level federal funds, evaluation of staff abilities contained within those grant management roles or other procedures that may be of assistance related to this additional grant testing.

Strategic planning services: We recognize the strain on resources occurring in local governments across the nation. Government entities are facing new challenges and decisions with the significant decline of revenue once relied upon for their growth in services. These governments, such as the City, are reinventing the budget process in an effort to put the evaluation of the services or the level of services being rendered at the forefront of budget discussions. AGH is committed to providing assistance by leveraging knowledge of applicable City processes with our organizational development and strategic planning expertise.

Ongoing alerts, educational and training resources: As part of the value AGH would add for the City, we strive to keep you aware of recent developments that may be of interest. We deliver this in a number of ways.

The items listed below could be delivered at no or minimal cost to the City.

 AGH-sponsored seminars – We have conducted regional seminars for finance personnel on the changes in auditing and accounting standards.

 AGHUniversity.com – We offer a full schedule of complimentary webinars to provide continuing education and other updates throughout the year. For CPAs seeking hard-to-find ethics CPE, two ethics webinars have been offered each of the past three years. Topics covered recently include:  GASB Update: Prepare Now to Implement Successfully  GASB Statement 75: Employer Reporting for OPEB Plans  Organizational Ethics – When Right & Wrong Is Not Black & White  Cybersecurity: Protect Your Organization from Cybercriminals

 AGH alerts and newsletters – We publish periodic emails, along with a Government Insights e- newsletter, to alert clients to new accounting standards or regulatory changes, as well as frequently updating our resources offered on AGHLC.com. The AGH website provides a comprehensive archive of client communications and resources on audit, tax, accounting, HR and risk management topics.

Our values related to service

AGH’s #1 business principle guiding our approach is to “work for our clients’ success.” To achieve that goal, we work hard to earn our clients’ trust by demonstrating honesty and integrity in everything we do, and by partnering with our clients to provide effective and efficient audit services, but also to help them be successful in their missions.

Top-notch client service means that although we are independent auditors, it is not a “gotcha” game, but a partnership to meet goals together. Our clients describe working with AGH using phrases like these:

“Very satisfied with “Knowledgeable, courteous, a “Presented many staff assigned to our real pleasure to work with. value-added audit. Very helpful and Lucky to have them as our suggestions.” very professional.” auditors.”

We listen – and we solve problems.

Staff continuity and quality assurance

Our proposed service team for the City is based on the proven approach of ensuring the availability of our top- level management to report to and communicate with your staff throughout the engagement. The availability of top management facilitates timeliness and efficiency during the audit, since questions that arise often require on-the-spot judgment provided best by an engagement officer.

We work to communicate with your staff before, throughout and after the engagement, to keep you in the loop – but stay out of your way. Assignment of members from our specialized governmental and utilities teams facilitates timeliness and efficiency during the audit because team members work either exclusively or primarily in those industries.

The remaining personnel forming our audit team will be selected from the firm’s professional staff. All professional staff who would be assigned to the City meet the governmental CPE requirements and, therefore, have adequate training related to governmental accounting and federal grants.

Staff education and professional development for governmental team members

To keep all members of the firm current with advanced techniques, AGH conducts numerous general and specialized training programs. Each individual professional receives more than 40 hours of formal continuing education guidance annually.

In addition, AGH has long recognized the need for specialized training as it relates to a specific industry area such as the public sector. Our continuing education requirements for our team exceed the requirements of the revised GAS, as well as the additional CPE requirements needed for membership in the AICPA’s GAQC. In addition, key members of our team attend or instruct local and regional training courses sponsored by the AICPA, KSCPA, Missouri GFOA, Kansas GFOA and the AGA.

A sample of the government-specific seminars recently attended includes:

 AICPA National Governmental Audit and Accounting Conference  AICPA National Government and Nonprofit Training Conference  GFOA Annual GAAP Update webcast  GFOA Annual National Conference  Kansas GFOA summer and fall conferences  KSCPA – Annual Government and Nonprofit Conference

A sample of our team’s recent continuing education follows:

Organization Program title AICPA OPEB-GASB 75: Special Emphasis and Considerations for Non-trusted Plans GFOA Annual Governmental GAAP Update AICPA Uniform Guidance Year 3: A Deeper Dive Into Challenging Audit Areas AICPA Implementing the Financial Statement Presentation Standard: Mastering the Most Difficult Challenges AICPA GASB Fair Value: Audit & Accounting Issues AICPA Commonly Asked Questions – Uniform Guidance/Yellowbook AICPA GASB 75 OPEB Implementation: A&A Considerations AICPA Uniform Guidance Considerations: Challenging Comp Areas GFOA Accounting for Pensions and OPEB AICPA GAQC Annual Update AICPA State & Local Government Audit Planning Considerations AICPA Governmental Accounting & Auditing Update Conference AICPA Understanding SAS 133-Auditor Involvement with Exempt Offering Documents AGA Infrastructure Financing with State and Local Government AICPA OPEB-GASB 75: Special Emphasis and Considerations of Non-trusted Plans AICPA Procurement Under the Uniform Guidance: The Time is Now GFOA Accounting and Reporting for Debt GFOA GASB 84 Fiduciary Activities GFOA GASB 87 Leases GFOA Implementing GASB Guidance OPEB GFOA Pension and OPEB Reporting

Engagement officer

Mike D. Lowry, CGFM Senior Vice President, Assurance Services [email protected] | 316.291.4057

Experience & specialization  Specialized in public sector auditing since joining AGH in 2004; prior experience includes 20 years in private sector financial and technology leadership positions  Expertise focused on governmental accounting and auditing under Governmental Auditing Standards and Uniform Guidance 2 CFR Part 200  Service to governmental entities including states, cities, counties and school districts  Also serves as the Outsourced CFO for the State of Kansas with his main responsibility being to assist the Department of Administration in successfully getting through the statewide external financial statement audit

Relevant experience  State of Kansas Audit Consultant  Unified Government of Wyandotte County /  City of Overland Park, Kansas Kansas City, Kansas  City of Kansas City, Missouri  Johnson County, Kansas  City of Oklahoma City, Oklahoma  Economic Development Corporation of  City of Wichita, Kansas Kansas City

Education  Bachelor of business administration in accounting, Wichita State University  Master of management information systems, Friends University

Professional organizations  Kansas, Missouri and Texas Government  Kansas Society of Certified Public Finance Officers Association Accountants  AICPA Government Audit Quality Center  Sedgwick County Nonprofit Chamber of  Government Finance Officers Association Service  American Institute of Certified Public  Association of Government Accountants, Accountants Washington, D.C.

Professional certifications  Certified Public Accountant, Kansas  Certified Governmental Financial Manager, Association of Government Accounting

Continuing Professional Education  Mike has completed continuing professional education as required by the AICPA and GAGAS

Engagement manager

Jonathan M. Nibarger Senior Manager, Assurance Services [email protected] | 316.291.4064

Experience & specialization  11 years of experience focused on governmental accounting and auditing under Governmental Auditing Standards and Uniform Guidance 2 CFR Part 200  Service to governmental entities including states, cities, counties, school districts and not-for-profit entities

Relevant experience  City of Kansas City, Missouri  City of Mission, Kansas  City of Olathe, Kansas  City of Mission Hills, Kansas  City of Overland Park, Kansas  City of Topeka, Kansas  City of Pittsburg, Kansas  City of Junction City, Kansas  Johnson County, Kansas  City of Lawrence, Kansas  City of Shawnee, Kansas  City of Branson, Missouri  City of Spring Hill, Kansas  Blue Valley USD #229  City of Bonner Springs, Kansas

Education  Bachelor of accounting, Baker University

Professional organizations  American Institute of Certified Public Accountants  Kansas Society of Certified Public Accountants  Eastern Kansas Government Finance Officers Association  AICPA Government Audit Quality Center  Government Finance Officers Association

Professional certifications  Certified Public Accountant, Kansas

Continuing Professional Education  Jon has completed continuing professional education as required by the AICPA and GAGAS

Supervisor

Kyle M. Young Supervising Associate, Assurance Services [email protected] | 913.687.2237

Experience & specialization  Expertise focused on governmental accounting and auditing under Government Auditing Standards and Uniform Guidance  Service to governmental entities including cities, counties and school districts

Relevant experience  City of Olathe, Kansas  City of Topeka, Kansas  City of Kansas City, Missouri  City of Junction City, Kansas  City of Pittsburg, Kansas  City of Lawrence, Kansas  Blue Valley USD #229  City of Leavenworth, Kansas  City of Shawnee, Kansas  Leavenworth County, Kansas  Shawnee Mission USD #512  Olathe USD #233  City of Spring Hill, Kansas  City of Mission Hills, Kansas  City of Bonner Springs, Kansas

Education  Bachelor of science in accounting and finance, Baker University

Professional organizations  Eastern Kansas Government Finance Officers Association

Continuing Professional Education  Kyle has completed continuing professional education as required by the AICPA and GAGAS

Independent reviewer

Tara J. Laughlin, CGFM Vice President, Assurance Services [email protected] | 316.291.4043

Experience & specialization  Expertise focused on governmental accounting and auditing under Governmental Auditing Standards and Uniform Guidance  Service to cities, counties and school districts with up to $500 million in revenues and $1 billion in assets

Relevant experience  State of Kansas  Unified Government of Wyandotte County /  City of Kansas City, Missouri Kansas City, Kansas  City of Overland Park, Kansas  City of Merriam, Kansas  Economic Development Corporation of  Kansas Development Finance Authority Kansas City (component unit of the State of Kansas)  City of Oklahoma City, Oklahoma  Johnson County Research Triangle  Kansas Turnpike Authority  City of Wichita, Kansas

Education  Master of accounting, Wichita State University  Bachelor of accounting, Wichita State University

Professional organizations  American Institute of Certified Public Accountants  Kansas Society of Certified Public Accountants  Government Financial Officers Association  AICPA Government Audit Quality Center

Professional certifications  Certified Public Accountant, Kansas  Certified Government Financial Manager, Association of Government Accountants

Continuing Professional Education  Tara has completed continuing professional education as required by the AICPA and GAGAS 

Technology consultant

Brian K. Johnson, CISA, CISM, CPA Senior Vice President, Technology Services [email protected] | 316.291.4107

Experience & specialization  Practice includes protection and optimization of IT systems, financial and management information system consulting, custom solution development, IT security services and infrastructure consulting

Relevant experience  Serves clients in areas ranging from operational, management and executive information systems  More than 30 years of experience in technology and cybersecurity services consulting for and assisting clients across a wide range of industries, including the public sector, financial services, manufacturing, retail/wholesale/distribution, transportation and construction

Education  Master of professional accountancy, Wichita State University  Bachelor of business administration, Wichita State University

Professional organizations  ISACA (formerly the Information Systems Audit and Control Association)  APICS, the Educational Society for Resource Management

Professional certifications  Certified Information Systems Auditor  Certified Information Security Manager  Certified in the Governance of Enterprise IT  Certified in Risk and Information Systems Control  Certified Public Accountant  Certified in Production and Inventory Management  Microsoft Certified Systems Engineer  Certified Novell Engineer  Certified Commercial Computer Programmer

Building a Best Places culture

AGH was founded and grew as a traditionally structured CPA firm, providing our clients with audit and tax services. But as our clients grew, their businesses and their needs became more complex. AGH has responded over the years by investing in the recruitment, training and development of a broad range of specialized expertise – often spurred by client requests for our assistance. With that vision in mind, AGH has increased client service activities fivefold since 1987 through broadening our client base, rather than by acquiring or merging with other firms.

AGH hires and retains leading professionals who are typically from the central U.S. and dedicated to their communities. Continuing education, direction and shared knowledge from senior engagement staff, and these professionals’ work on dozens of other engagements will assure their professional growth and the quality of their work. To recruit and retain the top-notch talent that differentiates AGH in helping our clients succeed, we consciously work to make and keep AGH an employer of choice. These efforts have paid off as demonstrated by the following awards and, as a result, the firm’s turnover rate is significantly lower than our industry average, especially among management staff.

Top 100 Best Accounting Firms to Work For: AGH has been named one of the 100 Best Accounting Firms to Work For by Accounting Today and Best Companies Group on eight occasions. The awards, which are published in September of each year, are designed to identify, recognize and honor the best employers in the accounting industry, and no other firm in the region has earned so many consecutive placements on this distinguished list. The Best Accounting Firms to Work For awards are open to accounting firms across the country. Entries are evaluated based on two categories: 75 percent weighting for responses to a survey of firm employees, and 25 percent for an extensive questionnaire about the firm’s workplace policies and processes. Nearly 90 percent of AGH’s employees responded to the most recent survey.

Best Firms for Women list: Accounting Today and Best Companies Group also utilize the information from the annual list of Best Firms to Work For to identify firms that offer the best workplaces for women in the profession. AGH came in at #5 on the list for 2018, the second year of the award report. In order to be named a Best Firm for Women, a firm must have either a minimum of 25 female employees or women must represent 25 percent of staff. In addition, the female response rate to the Best Firms to Work For anonymous employee survey has to be greater than or equal to 50 percent. The list is ranked in order of percent of positive female response, from largest to smallest.

Best Places to Work: AGH has been chosen every year since its first entry in 2009 as an honoree in the Wichita Business Journal’s Best Places to Work finalist category. The firm won the large company category in 2013.

Resources through PrimeGlobal network

Although AGH is independently owned, the firm can leverage its services on behalf of clients through our membership in PrimeGlobal. AGH has access to the network’s worldwide resources in a broad range of technical, professional and industry-specific areas that can provide additional client benefit. As one of the largest affiliations of CPA and advisory firms in the world, PrimeGlobal’s resources are among the strongest and one of the primary reasons AGH joined the network.

Peer Review report