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REQUEST FOR PROPOSAL FOR QUALIFIED AUDITORS TO PERFORM AUDITS OF CAROLINE ISLANDS AIRLINE INC. FOR FISCAL YEAR ENDING SEPTEMBER 30. 2007 NATIONAL PUBLIC AUDITOR Federated States of Micronesia P.O. BOX PS-05 Tel: 011 (691) 320-2862/2863 Fax: 011 (691) 320-5482 E-mail: hhainrick@fsmopa.fm Table of Contents I. DESCRIPTION OF THE ENTITY TO BE AUDITED . 3 II. SYSTEMS AND RECORDS 3 III. SCOPE OF SERVICES . 4 IV. TERM OF THE ENGAGEMENT . 4 V. NOTICES REGARDING PROPOSALS .... 4 VI. SUBMISSION OF PROPOSALS 5 VII. MANDATORY CRITERIA 5 VIII. PROPOSAL CRITERIA .. 6 IX. SELECTION PROCESS .. 7 X. CONTRACT REQUIREMENTS . 8 XI. CONTACT PERSON 9 I. DESCRIPTION OF THE ENTITY Caroline Islands Airline, Inc. (CIA) is a public corporation established under the laws of the Federated States of Micronesia (FSM). The FSM is a democratic, constitutional federation comprised of the national, state, and local governments as established by the constitution of the Federated States of Micronesia . It is a nation comprised of 607 islands that are spread across more than a million square miles of the Western Pacific Ocean within a chain of islands known collectively as the Caroline archipelago. While FSM is large in size, the total land area is small, 270 square miles. On December 27, 1997 , Public Law No. 10-72 established the public corporation to manage the operation and maintenance of the aircraft already purchased, as well as any other aircraft that may subsequently be purchased to operate out of Pohnpei State in the FSM. CIA is managed by a Board of Directors composed of 5 members: the Secretary of the FSM Department of Transportation, Communication and Infrastructure, or his designee; one Member from Chuuk, one member from Kosrae, one member from Yap , one member from Pohnpei and the chief executive officer of CIA. CIA is based on the island of Pohnpei and serves the neighboring islands within the FSM (e.g. the outer islands of Pohnpei, Chuuk and Yap ). It currently has a staff of seven (7) persons and operates 3 airplanes with passenger capacity of eight persons each. The budget is about $80,000 a year. Because CIA is incorporated within FSM and receives public funds from appropriations made by the FSM Congress, the Office of the FSM Public Auditor, by law, elects to have the entity audited. Additionally, the FSM President's Office has also expressed the desire to have the Corporation audited. II. SYSTEMS AND RECORDS There is one bookkeeper/accountant who uses Quick Book and Excel spreadsheets to maintain the accounting system for the Corporation. The general ledger, subsidiary ledgers, trial balance and financial statements for the Corporation can be generated automatically after the manual inputting of financial transactions into the Quick Book accounting software. Other financial reports for tax purposes, aging schedules, payroll data, and others are likewise tracked within the Quick Book accounting package. CIA has a full-time accountant who handles the financial recording and reporting on behalf of the Corporation. The financial reports can be computer generated and transmitted through email as may be requested and authorized. SCOPE OF SERVICES The audits of the CIA are to include reporting on financial statements prepared in accordance with generally accepted accounting principles including the requirements of the Government Accounting Standards Board. These audits shall be made in accordance with generally accepted government auditing standards covering financial and compliance audits. The audits shall cover the entire operation of CIA to enable the auditor to report on the financial statements, internal controls, and compliance with laws and regulations, findings and recommendations, and a management letter commenting on any accounting practices or procedures and review/evaluation of internal controls that needs to be improved. III. TERM OF THE ENGAGEMENT The contract is to cover an audit of CIA fiscal year which ended September 30, 2007. IV. NOTICES REGARDING PROPOSALS No oral explanation in regard to the meaning of the specification will be made and no oral instructions will be given before the award of the proposal. Discrepancies, omissions, or doubts as to the meaning of the specifications should be communicated in writing to Mr. Haser Hainrick , National Public Auditor, P. O. Box PS-05 Palikir, Pohnpei, FM 96941, or at email hhainrick@fsmopa.fm , for interpretation. Proposers should act promptly and allow sufficient time for a reply to reach them before submission of their proposals. Interpretation, if required, shall be made in the form of an amendment to the RFP, which will be forwarded to all prospective proposers, and its receipt by the proposer should be acknowledged on the proposal form. All questions regarding the proposal should be in writing directed to Mr. Haser Hainrick , National Public Auditor, P.O. Box PS-05 Palikir, Pohnpei, FM 96941 or email hhainrick@fsmopa.fm . Except to the above person named, direct or indirect contact with ONPA management or staff, or any person participating in the selection process, is prohibited. The proposer is required to read each and every page of the Request for Proposal and by the act of submitting a proposal shall be deemed to have accepted all conditions contained therein. In no case will failure to inspect constitute grounds for a claim or for the withdrawal of a proposal after opening. Proposals may be withdrawn on written request received from the proposer prior to the time fixed for opening. Negligence on the part of the proposer in preparing the proposal confers no right for the withdrawal of the proposal after it has been opened. Proposals may be amended or modified prior to opening of the proposals but not subsequent to opening of the proposals. Any amendment issued pursuant to this RFP must be acknowledged as being received by the proposer. Amendments shall be distributed within a reasonable time to allow prospective firms to consider the issue in preparing their proposals. If the time and date set for receipt of proposals will not permit such preparation, such time shall be increased to the extent possible in the amendment or, if necessary, by telegram or telephone and confirmed in the amendment. • V. SUBMISSION OF PROPOSALS Proposals must be post-marked no later than October 19, 2007 and received in the Office of the Public Auditor, Federated States of Micronesia no later than 4:30 p.m. October 26, 2007, local time . Proposals arriving later than this time by postal route will not be considered. Proposal not delivered by postal route must be received in the above office not later than 4:30 p.m. Pohnpei standard time on October 26, 2007 . Any proposals submitted after the above deadline will not be accepted. Proposals must be delivered with original and six copies. The fee proposal should not be disclosed in the main proposal but should be submitted in a separate sealed envelope. Proposals must respond to all structured criteria as contained in part VII of this RFP. Proposals shall not be any longer than 30 pages, exclusive of resumes, references, and work examples. Proposals shall be typewritten and signed in ink. Erasures or other changes in a proposal must be explained or noted over the signature of the proposer. Proposals containing any conditions, omissions, unexplained erasures or alternations or items not called for in the RFP, or irregularities of any kind may be rejected by the Evaluation Committee as being incomplete. Proposals must remain valid for at least ninety (90) days. The Government of the Federated States of Micronesia reserves the right to: • Reject all proposals and reissue an amended RFP. • Request additional information from any firm submitting a proposal. • Negotiate a contract with the firm selected for the engagements. • Waive any non-material violations of rules set up in this RFP. The Government of the Federated States of Micronesia will not reimburse or pay for any costs incurred in preparing and submitting a proposal in response to this RFP. • VI. MANDATORY CRITERIA All respondents must include the following positive affirmations in their proposals: • An affirmation that the proposer is properly licensed for the public practice as a certified public accountant or public accountant in accordance with GAGAS. • An affirmation that the proposer meets the independence requirements of the Government Auditing Standards , 2007 revision, published by the U.S. Government Accountability Office. • An affirmation that the respondent does not have a record of substandard audit work. This should be accomplished by submitting a written report communicating the results of an external quality control review conducted for the fiscal year ending September 30, 2007 . • VII. PROPOSAL CRITERIA • Qualifications of the firm and Individuals • Describe the organization and size of the firm and whether it is local, regional, national or international in operations. • Describe the office from which the work is to be staffed including the number of professional staff by staff level employed at that location. • Describe the range of activities performed by the local office such as auditing, accounting, tax service, and management service. • Include positive affirmations as discussed in the section on mandatory criteria. • Identify the audit managers and field supervisors and other staff who will work on the audit, including staff from other than your local office. Resumes including relevant experience and the number and nature of Continuing Professional Education (CPE) hours for all auditors, including supervisors, managers and the individual with final responsibility for the engagement, should be included. • Scope of Services • Opinion reports on financial statements. • Reports on the study and evaluation of internal controls. • Describe the type and estimated amount of support you expect from the employees of CIA. List the types of documents that will be required to be produced before your staff arrives at CIA and while they are here. • Emphasize any special or extraordinary services your firm can provide that would distinguish it from its competitors. • Plan for work and references • Provide a listing of other contracts under which services similar in scope, size, and discipline for the required services were performed or undertaken in the past five years; • Include a plan, giving as much detail as is practical, explaining how the services will be provided and when the work will be done. • Provide clientele references, not to exceed five customers, describing level of satisfaction of similar type and scope of work. Also include contact name, title, complete address, phone number, email address, and facsimile number. Contact name should be capable of providing an appropriate reference for the work performed. • Fee Proposal • The fee proposal should be submitted in a separate sealed envelope and the fee amount should not be disclosed anywhere else in the proposal. • The auditor will be expected to provide transportation, temporary housing and meals while performing the audits. State the fee proposal and reimbursable costs and give a not-to-exceed amount to complete all work for CIA. Give your best estimate of all reimbursable costs to be included and give a not-to-exceed figure for all reimbursable costs. • VIII. SELECTION PROCESS Proposals will be evaluated by a committee consisting of three members. Proposals will be opened only by the committee and information contained in a proposal will not be disclosed to the public until after the award. Each response to one of the criteria contained in Section VII will be scored from 0 to 5, and then multiplied times the weight factor. The Committee will then evaluate the scores and may conduct phone interviews of the leading scores and check their references before selecting a firm to negotiate a contract with.
The evaluation committee will be comprised of the following members: • The National Public Auditor • A senior staff of the Office of the National Public Auditor, and • One representative from Caroline Islands Airline, Inc. The National Public Auditor reserves the right to appoint additional members to the committee or to appoint a substitute member if any of the listed members is unable to complete his/her duties. The National Public Auditor reserves the right to waive any minor informality or irregularity in proposals received. The National Public Auditor shall have the prerogative to reject proposals in whole or in part if a determination is made in the public interest. The results of the evaluation will be documented and used as guidance in the selection of the auditing firm. The National Public Auditor will make the final determination of which proposal is the most advantageous to the Government of the Federated States of Micronesia . All entities submitting proposals will be promptly notified of the determination of the National Public Auditor. Proposals will become the property of the Government of the Federated States of Micronesia and will not be returned. • IX. CONTRACT REQUIREMENTS The selected auditor shall: • Perform the services as described in the auditor's proposal for a Financial and Compliance Audit of CIA, which will be incorporated as an attachment to the resulting contract, to the satisfaction of the National Public Auditor. • Provide five copies of the draft report and up to 25 copies of the final report to the National Public Auditor. In addition, one electronic copy (i.e. .pdf format) will also be required to be submitted for possible publication of the report on the World Wide Web at www.fsmopa.fm . • Provide 5 copies of engagement letter along with listing of required reports and documents for the entrance conference. • Provide 5 copies of draft report for the exit conference. • Retain audit work papers and reports for a minimum of five years from the date of the audit report, unless the auditor is notified in writing by the National Public Auditor or his designee to extend the retention period. Audit work papers shall be made available upon request of the National Public Auditor or his designee. • Provide the National Public Auditor or his designee with access to review the Audit Plan, Materiality and Risk Assessment, and sampling Plan for the financial and compliance audit of the Corporation. • Provide the Public Auditor or his designee with access to the audit working papers for review along with the preliminary audit reports prior to conducting the exit conference. • Obtain all necessary licenses and permits to conduct business while auditing within the Federated States of Micronesia . The Office of the National Public Auditor will provide assistance in obtaining a foreign investment permit, if necessary. • Immediately notify the National Public Auditor in writing if, during the course of his/her audits, uncovers indications of possible fraud or other situations which need to be brought to the attention of the government. The auditing firm shall perform sufficient field work to be able to clearly describe and document the situation. • Guarantee that the service will be completed within the agreed upon completion date. If, however, the proposer cannot comply with the completion requirement, it is the proposer's responsibility to advise National Public Auditor in writing explaining the cause and reasons of the delay. The National Public Auditor may make a reasonable extension of time. • X. CONTACT PERSON The contact person is: Mr. Haser Hainrick National Public Auditor Federated States of Micronesia P.O. Box PS-05 Palikir, Pohnpei FM 96941 Telephone: 691 320 2862 Fax: 691 320 5482 Email: hhainrick@fsmopa.fm
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