<p> PROPOSAL # RFP18-13-14A AUDIT AND CONSULTING SERVICES - PAYROLL OPERATIONS SANTA CLARA COUNTY OFFICE OF EDUCATION</p><p>SANTA CLARA COUNTY OFFICE OF EDUCATION Request for Proposal (RFP) For Audit and Consulting Services Payroll Cycle (HR, Payroll, Accounting, and IT)</p><p>Notice is hereby given that the Santa Clara County Office of Education, hereinafter referred to as the SCCOE, is seeking sealed proposals for the award of a contract for independent audit services. Proposals shall be received in the office of the Purchasing Manager of the SCCOE at 1290 Ridder Park Drive, San Jose, California 95131 by no later than 3pm, Pacific Standard Time on Wednesday, February 26, 2014.</p><p>This Request for Proposal (RFP) has been assembled by the SCCOE to request proposals of individuals or firms to evaluate the processes, procedures, internal controls, information systems, payrolls, and overall management of the SCCOE’s payroll operations and its supporting human resources (HR), Accounting, and Information Technology (IT) processes We are seeking an evaluation of processes and systems against payroll and regulatory requirements, sound internal controls and generally accepted industry practices as well as contract terms with bargaining units, employee elected deductions, employee benefit administrators and the two public pension funds as well as employer remittances and reports. The scope of this work is the processes and systems of the payroll cycle from entry of an employee to the SCCOE to the point of exit. The SCCOE staff payroll is also known as District 90 payroll. As of January 31, 2014, there are a total of 1679 employees at the SCCOE. Of these employees, 433 are certificated, 1101 classified, 68 are certificated leadership, and 70 are classified leadership; and additionally, there are 7 board members.</p><p>The SCCOE is the connecting link between 31 local K-12 school districts and four (4) community college districts within the County of Santa Clara and the State Department of Education. The SCCOE is organized into five branches to provide administrative, business, and technical support to schools, districts, and the community. Please refer to the following for more information about the SCCOE: http://www.sccoe.org/depts/Pages/default.aspx. </p><p>The SCCOE seeks an independent auditor to conduct a thorough review of payroll operations and its related HR, Accounting and IT support processes. The auditors shall conduct a thorough review of the SCCOE’s full payroll cycle, including infrastructure and information systems that support the payroll cycle. The audit shall include a full review of User ID/password request and approval process. It shall also include an audit of user access permissions and processes to the Vault, the database where all payroll records for the SCCOE and all County districts are stored. </p><p>Page 1 of 9 PROPOSAL # RFP18-13-14A AUDIT AND CONSULTING SERVICES - PAYROLL OPERATIONS SANTA CLARA COUNTY OFFICE OF EDUCATION</p><p>REQUESTED SCOPE OF AUDIT SERVICES</p><p>PRIMARY WORK PRODUCT: The Auditors will provide an evaluation of the accuracy and completeness of the SCCOE’s District 90 regular end of the month, 10th of the month, and special payrolls, remittances, and reports for the calendar years 2012 and 2013, including 1099 and W-2’s, and other year-end responsibilities. Specifically, we require a thorough evaluation of compliance with all regulatory, benefits and pension, collective bargaining, management agreements, stipends, employee elected items, and other payroll-related and contractual requirements; as well as the related employer reports and remittances. To better understand areas requiring process improvements and accountability, the auditors will also trace transactions back to activities occurring in 2012 as appropriate when making process improvement or corrective action recommendations. </p><p>The audit shall also include an evaluation of internal controls such as separation of duties between the HR, Payroll, SCCOE management, Accounting, and IT operations; as well as make recommendations to improve controls to ensure compliance with the payroll program and regulatory requirements and enable detection of errors or fraudulent activities. The audit shall assess the systems in place to determine if they are effective, supportive and conducive to ensuring efficient and accurate payroll operations. </p><p>Finally, the auditors shall conduct a thorough review of the User ID request and approval procedures for District 90 payroll as well as county-wide districts to ensure that no User account sharing is taking place for any county related information system. </p><p>1. BACKGROUND AND ADDITIONAL DETAILS ON THE SCOPE OF WORK a. Preliminary Survey and background information. During 2013, the SCCOE became aware of concerns over the accuracy of payroll transactions for some employees and received complaints about other issues such as password sharing which impact payroll operations and controls designed for payroll, HR and IT security. To investigate these complaints, the SCCOE contracted with an external audit firm to perform a preliminary survey of its overall payroll operations and supporting functions in the HR and IT departments. The field work was completed in November 2013 and these auditors recommended that a full audit be performed to ensure the correctness of each employee’s pay and related remittances and payroll/employment data reports to regulatory, pension, unions, benefits and other employee-elected program administrators as well as employer reports and remittances. The preliminary survey report was issued in December 2013 along with process flowcharts prepared as part of the preliminary survey. These overview documents and other background information will be made available to respondents selected as finalists in this RFP process. PROPOSAL # RFP18-13-14A AUDIT AND CONSULTING SERVICES - PAYROLL OPERATIONS SANTA CLARA COUNTY OFFICE OF EDUCATION</p><p> b. Payroll Cycle – Scope of Work and description of operations and systems The Consultant will review both digital and hardcopy documents, information, or communications related to compliance with payroll and regulatory requirements, sound internal controls and generally accepted industry practices, and contract terms. </p><p>The Santa Clara County Office of Education uses QSS/QCC - Quintessential School Systems, a complete administrative application for public school districts. It is a fully integrated system that includes General Ledger, Accounts Payable, Payroll, Fixed Assets, Stores Inventory, Base Personnel, and Position Control. Please review the full offerings of this application at http://www.QSS.com/. The SCCOE recently completed a full migration to QCC, the gateway to the graphical user interface (GUI) version of QSS. </p><p>“TEAM” is the SCCOE’s payroll data collection and management system that was developed in-house. It is the equivalent of a “payroll card” to the payroll staff as previously, a lot of data such as comments could not be stored in QSS/QCC and the staff relied on a manual paper payroll card. Thus, this in-house application was developed to address short-comings and bugs identified in QSS/QCC. TEAM created an additional data base. To process the monthly payroll, staff enters similar data into QSS/QCC and TEAM, separately. HR initiates employee profiles in QSS/QCC, and in TEAM. The data collected and processed in TEAM from the QSS/QCC HR module is used in conjunction with the QSS/QCC payroll module that generates the pay warrants, then a comparison is made between QSS/QCC and TEAM for cross-check purposes to protect against bugs and to use enhanced features in TEAM not available in QSS/QCC. Therefore, data security in both systems is important, since TEAM contains the complete set of information that is used to generate a pay warrant in QSS/QCC. Please see Appendix A for a detailed description of the systems used in the Payroll Cycle.</p><p>Historically, the payroll for the staff employed by the SCCOE (identified as District 90) includes roughly 1700 regular1 employees and about 300-400 hourly or daily employees such as substitutes, professional experts, police officers, or workability students. The original payroll team consisted of six payroll specialists and one manager reporting to the Internal Business Services (IBS) Department within the Business Services Branch. Annually, the team processes approximately 2600 W-2s and 100 1099’s and salaries and benefits represents approximately 70% of the SCCOE budget. Specially, the W-2s are</p><p>1 As of January 31, 2014, there are a total of 1679 employees at the SCCOE. Of these employees, 433 are certificated, 1101 classified, 68 are certificated leadership, and 70 are classified leadership; and additionally, we have 7 board members. PROPOSAL # RFP18-13-14A AUDIT AND CONSULTING SERVICES - PAYROLL OPERATIONS SANTA CLARA COUNTY OFFICE OF EDUCATION</p><p> processed by District Business Advisory Services (DBAS) who prepares the W-2s for District 90 as well as all of the districts in Santa Clara County. In total, DBAS processes about 33,000 W-2s each year.</p><p>In December 2012, the payroll manager retired and it was determined that reduction of the manager position and the implementation of other process changes could result in cost savings, thus the remaining six payroll staff were moved to the DBAS department within the Business Services Branch. This move was completed in February 2013. After nine months and some staff attrition, the District 90 payroll function was moved back to the IBS Department in October 2013. It is currently staffed with six payroll specialists and is managed by the Controller.</p><p> c. Full Audit of Payroll. A full review of each regular employee record, pay and other data is currently being conducted by the SCCOE. This project began in January 2014 in response to potential issues identified in the preliminary survey work and is targeted for completion March 2014. In addition to auditing the HR, IT, accounting, and payroll operations, the auditors for this payroll cycle audit engagement will be responsible for auditing the review work of the professional payroll experts who are reviewing each employee’s record and make recommendations, if any. The accuracy of employee pay and data is an employer responsibility and the SCCOE has a further responsibility for compliance in spending program funds and the accuracy and completeness of the financials. Therefore, the audit of the payroll cycle will also be relied upon by our external financial auditors.</p><p> a. Systems support. A full review of the SCCOE’s information systems to support payroll processing. Systems support. A full review of the SCCOE’s information systems to support payroll processing. The final report shall include a full review, findings and recommendations associated with the SCCOE’s information systems to support the payroll operations and payroll-related users in HR and Accounting. It shall also include a review of access rights to the Vault, the database that provides full payroll data of over 30,000 employees county-wide. Findings and recommendations regarding user log in and possible password sharing for SCCOE and countywide districts shall be part of this review.</p><p>2. PROFESSIONAL STANDARDS </p><p>The Auditors will perform their work in accordance with appropriate professional standards required to accomplish the requested scope of services and may also be requested to provide evidence of staff certifications. PROPOSAL # RFP18-13-14A AUDIT AND CONSULTING SERVICES - PAYROLL OPERATIONS SANTA CLARA COUNTY OFFICE OF EDUCATION</p><p>3. ORGANIZATIONAL CONFLICTS OF INTEREST</p><p>Identify all relevant facts relating to past, present or planned interests of the auditor’s engagement team or within the firm that may result or could be viewed as an organizational conflict of interest in connection with this RFP.</p><p>4. PRODUCT DELIVERY</p><p> a. Interim updates on progress or work and issues. The Auditors will provide the Chief Business Officer, Director of Internal Business, and the Internal Auditor with weekly updates on the progress of work and any areas requiring their assistance or the assistance of other SCCOE staff. These updates shall be provided in person and include a written “weekly memo”. </p><p> b. Completed Draft Report. By May 30, 2014, the Auditors will provide a written draft report of their findings along with recommendations. Documented process flows of current processes and recommended processes shall be a part of the final report. Findings summaries that are fully developed must include these elements: i. Condition: What is the particular issue identified? ii. Criteria: What is the standard that was not met? The standard may be an SCCOE policy, regulatory requirement, or other benchmark. iii. Cause: Why did the problem occur? iv. Consequence: What is the risk/negative outcome (or opportunity foregone) because of the finding? v. Corrective action/Recommendation: What should management do about the finding and by when? </p><p>MUTUAL NON-DISCLOSURE</p><p>The SCCOE is given an absolute guarantee that the information obtained by or imparted to the auditors and their staff will be held in confidence and will not be released voluntarily to anyone, either directly or indirectly, without the SCCOE’s written consent. Neither party shall disclose (i) Confidential Information to any third party unless authorized by the other party in advance in writing; (ii) or disclose Confidential Information to its employees, except to those on a “need to know” basis as necessary for the performance of the requested scope of services.</p><p>SUBMITTAL OF RFP RESPONSES</p><p>1. SUBMITTAL CONTENT: Submittals should be provided in five (5) identical copies and include the following items, along with other material to demonstrate the Auditor’s expertise and capability: a. A description of the Auditor’s approach to the project. b. The expertise of each team member assembled by the Audit Firm to carry out the work. PROPOSAL # RFP18-13-14A AUDIT AND CONSULTING SERVICES - PAYROLL OPERATIONS SANTA CLARA COUNTY OFFICE OF EDUCATION</p><p> c. A list of comparable projects undertaken by the Audit Firm and/or team members with public entity experience. d. A breakdown of the estimated hours for the project, and a detailed fee schedule. e. An detailed plan with timelines to complete the full audit. f. A copy of a completed and issued report (client name and related identifying references removed) that demonstrates the quality of the Audit Firm’s work. The report is to be returned to the Auditor upon completion of the RFP process, but no later than March 30, 2014.</p><p>SUBMITTAL DUE DATE AND PLACE OF DELIVERY: </p><p>Proposals shall be received in the office of the Purchasing Manager of the SCCOE at 1290 Ridder Park Drive, San Jose, California 95131 by no later than 3pm, Pacific Standard Time on Wednesday, February 26, 2014. Electronic submittals may be sent to [email protected] by this due date and is acceptable provided that hard copies with original signatures are delivered to the address above by 3pm, Pacific Standard Time on Wednesday, February 26, 2014.</p><p>The Santa Clara County Office of Education reserves the right to reject any or all proposals and to waive any informality in the proposal process.</p><p>It is the sole responsibility of the firm submitting the proposal to see that it is delivered on time. Proposals received after 3pm, February 26, 2014 will be rejected.</p><p>RECOMMENDED FORMAT FOR SUBMITTALS:</p><p>1. DESCRIPTION OF APPROACH: Up to two pages describing the Auditor’s typical approach to engagements similar to this one, including the nature, scope, and results of past engagements. A matrix summarizing these descriptive components about past projects is acceptable.</p><p>2. TEAM EXPERTISE AND RATES: Brief description of general qualifications, the multi-disciplinary nature of the team assembled for this engagement and specific evidence of relevant experience of each person (not of the firm) available on March 3, 2014 to commence work. Please provide a detailed resume of each proposed engagement team member along with the proposed hourly rates for each member of the engagement team, their titles on the engagement and the total amount that is not to be exceeded for the “Requested Scope of Audit Services”.</p><p>3. COMPARABLE PROJECTS: Please provide a summary of at least three (3) similar engagements in progress or completed, with the following information for each project: a. Reference name, with current contact information b. Current status of engagement (field work in progress, report in discussion draft, report issued, next steps (such as negotiations with regulatory agencies, or potential litigations, if any) c. Nature and Scope of the engagement d. Client type (clarifying role of private sector client, if appropriate) e. Size and scale of the payroll cycle under audit PROPOSAL # RFP18-13-14A AUDIT AND CONSULTING SERVICES - PAYROLL OPERATIONS SANTA CLARA COUNTY OFFICE OF EDUCATION</p><p> f. Operating scope – provide a listing of the regulatory, pension (public and private), union, or other employee-directed or elected programs or agencies included in the scope of the payroll audit</p><p>EVALUATION OF SUBMITTALS: </p><p>Auditors responding to this RFP must demonstrate their experience in performing the work described in the “Requested Scope of Audit Services”. Responses to this RFP shall become part of the contract.</p><p>The SCCOE will evaluate all submittals to determine which Auditors have the experience and qualifications that are most suited for this engagement. The SCCOE may notify finalists February 28th, 2014 to request an in-person interview with the highest-ranked Auditor Teams or may request one or more prospective Auditor to submit more detailed proposals, which may include the following:</p><p>1. A more detailed description of the methodology being proposed.</p><p>2. A more detailed work program describing: . Tasks to be performed. . When each will be completed (timeline). . Tentative allocation of person days by task. . Schedule of work products.</p><p>Appendix A –Overview of Systems and Processes in the Payroll Cycle </p><p>Like many of the county offices of education in California (about a third), the Santa Clara County Office of Education (SCCOE) uses Quintessential School Systems, a fully integrated system which provides modules to cover the school business needs of the SCCOE. The QSS/OASIS product line includes integrated modules that cover the gamut of school business needs, including accounts payable, accounts receivable, budget development, financial reports, fixed assets, general ledger, human resources reporting, personnel, position control, purchasing, and of course, for the purposes of this audit, payroll. Please review the full offerings of this system at http://www.QSS.com/. The SCCOE recently completed full migration to QCC, the gateway to the graphical user interface (GUI) version of QSS which is known as QSS/QCC and hereinafter referred to as QCC. “TEAM” is our payroll data collection and management system that was developed in-house in 2011. There are two modules in TEAM: Payroll and HR. The Payroll module is the equivalent of a “payroll card” to the payroll staff as previously, a lot of data such as comments could not be stored in QCC and the staff relied on a manual or actually, a paper payroll card. Thus, this in-house application was developed to address short-comings and bugs identified in QCC. To process the monthly payroll, QCC PROPOSAL # RFP18-13-14A AUDIT AND CONSULTING SERVICES - PAYROLL OPERATIONS SANTA CLARA COUNTY OFFICE OF EDUCATION and TEAM are used together. HR initiates employee profiles in QCC that is used by TEAM. The data collected and processed in TEAM from the QCC HR module is used in conjunction with the QCC payroll module that generates the pay warrants, then a comparison is made between QCC and TEAM for cross-check purposes to protect against bugs and to use enhanced features in TEAM not available in QCC. Therefore, data security in both systems is important, since TEAM contains the complete set of information that is used to generate a pay warrant in QCC.</p><p>Each month, the HR Staff input any changes initiated in QCC to the HR module of TEAM. Previously, these monthly updates were processed in QCC ‘s Job History. At that time, HR Specialists needed to manually type update information into the comments section of Job History and then run a report (only 5 employees at a time) and provide these hard copy reports to the payroll staff to use in processing the monthly payroll. Since then, HR stopped using Job History in July 2013 and also fully migrated to QCC in January 2014. Another difficulty with the Job History comment screen of QCC was that it was not maintained in sequential order. Thus, moving this information to TEAM is beneficial since TEAM maintains all history chronologically. Examples of changes processed by HR that impact the payroll include longevity pay, site code change(which is important to record in TEAM since such historical information cannot be maintained in QCC), salary step and column increases, merit increases, etc.. Since the SCCOE continues to use QCC throughout the organization, we must continue to use the “bandage” afforded by TEAM to maintain needed historical information that is not kept by QCC to correctly process the payroll. Unfortunately, the process of collecting needed information from QCC such as comments or information in the history field before it is overwritten by new comments remains manual as described above since TEAM is not designed to accept a data feed from QCC which would eliminate the need for double input. Even with some manual efforts to maintain TEAM from the information in QCC, we are fortunate to have this in- house application since some HR features in TEAM such as transaction reason codes, do not exist in QCC. Also, the ability to have all pertinent info for an individual on a single screen in TEAM allows for the efficient analysis of an employee’s record; unlike QCC where the collective information for an individual employee is spread across multiple screens. Each month, the Payroll staff must take the data from the HR side of TEAM and input it into the Payroll side of TEAM. This step is referred to as “auditing” HR data and some of this input is manual. For example, TEAM does not identify transactions by code. Therefore, if a transaction such as longevity pay needs to be added to all employees in a certain bargaining unit who have worked at the SCCOE for 5 years, TEAM cannot identify the entire group of such employees and allow the user to make a blanket transaction. Instead, staff must select each employee by name or ID and individually add longevity pay. Even so, some users would say that blanket transactions are not appropriate, and that they prefer to perform updates one employee at a time to ensure they are appropriate for the individual’s specific activity history. Discussions continue around enhancements to be made to TEAM. PROPOSAL # RFP18-13-14A AUDIT AND CONSULTING SERVICES - PAYROLL OPERATIONS SANTA CLARA COUNTY OFFICE OF EDUCATION</p><p>Timesheet data is also manually input into TEAM (i.e., hours worked and type of work performed by code along with comments when required for HR tracking purposes). For example, if an employee is being paid for working in a Non-Permanent Reassignment (NPR) capacity, the NPR tab in TEAM allows appropriate rates for NPR positions to be maintained and updated. However, rates are not automatically updated in QCC when employee changes occur, such as attaining an additional degree or working overtime hours, this is currently the Payroll specialists’ responsibility. TEAM does not recognize this assignment and apply the appropriate rate for this type of work and TEAM can only auto-apply an employee’s regular rate. The appropriate NPR rate must be determined by a payroll specialist who must also check with HR to determine if the employee was approved to work as NPR. Thus, payroll staff must input the rate and the hours so that TEAM can perform the calculation. Meanwhile, since there is no interface between QCC, the total hours worked and the budget cost center must also be input manually in QCC’s position screen. Another reason TEAM was developed was that a bug in QCC causes the system not to correctly maintain the monthly vacation accrual for SEIU employees. However, this accrual function is properly working in TEAM and allows the payroll staff to make sure employees receive the correct accrual rates so it can be manually corrected in QCC as needed. Should payroll docks occur for any negative balances in vacation and/or sick time, it must be processed in TEAM and then separately updated in QCC. This apparently duplicative effort also applies to Workers’ Comp and other leave activity. Although, certain types of payroll docks are processed with an automated TEAM feature and of course the TEAM application also allows users to provide comments or codes on the reason for the dock along with the calculation. Conversely, QCC only records the dollar amount of the dock. Once all the data needed to process payroll is completely input into the systems, a payroll prelist is run in QCC and uploaded to TEAM. Team matches the data input in QCC to TEAM and identifies variances between the two inputs. This is referred to as balancing payroll. This is a good crosscheck, although of course, if the same incorrect data was input in both QCC and TEAM, it would not be flagged as a variance. Even with some shortcomings, TEAM does achieve the goal of automating certain payroll processes that staff had been doing manually outside of QCC or when QCC fell short of certain features or contained bugs. In fact, the development of TEAM has provided some level of cross check to the QCC payroll process where previously there were none. TEAM also provides a level of quality control and maintains historical information needed to process payroll that is not available in QCC. Another wish list item is automating the seniority pay process as it is already embedded in TEAM’s design to allow for this enhancement. The Seniority pay process is 100% manual at this time. If automated, the opportunity to create reports about this type of pay activity would be beneficial as we are required annually to provide a report on seniority to the Personnel Commission. </p>