1.  Does each program develop financial statements, footnotes/disclosures or is assistance required?

The Programs share a Certified Public Accountant who produces financial statements for each of the programs.  No assistance in this respect is required.

2.  When will each program be ready (based on the 6/30 year end) for audit procedures?

Each program will be ready for fiscal year audits approximately four months following the close of each fiscal year.

3.  When are audit reports required?

With respect to the administrative audits, substantially complete draft audit reports are required to be submitted for review by each Board’s committee responsible for audits within 30 days following completion of the field work.  Field work is required to be completed within 60 days following notice that the records are available.  Thus, the selected auditor is required to submit substantially complete draft reports within approximately three months following notice of the availability of the records.  (See section 5.3.2 of the RFP.)  The RFP does not specify a definite timeframe for production of a final audit report.  The Boards would expect, however, that a final report would be produced in a timely manner.

With respect to the loss audit, field work is to be completed within 120 days following access to the records.  The RFP does not specify a definite date for submission of either a draft audit report or a final audit report, but anticipates that testing and production of a written draft and final audit reports will occur in a timely manner. 

4.  Is there a preferred timeframe for audit fieldwork?

The timeframes are set forth in sections 5.3.2 and 5.3.3 of the RFP.  See the response to #3 above.

5.  Reading the meeting minutes of prior board minutes, we did not note the attendance of the current auditors. Based on our interpretation of the standards for communication with those charged with governance, we would typically meeting with the audit committee 2 times (depending on the nature of the matters to be discussed). Would this cause a problem if we were selected? A conference calls for the required communication during planning would be acceptable.

Meeting requirements are set forth at sections 5.3.2 and 5.3.3.  The selected auditor is expected to meet at least twice with respect to each audit.  A meeting prior to commencement and at the end of the audit is required for the administrative audit by Executive Order 122.  Two meetings are also required for the loss audit.  The RFP requires the auditor to have greater availability as necessary to address issues; however, meetings need not always be in person.  (These meetings are recorded in committee minutes, which are not posted on the Internet, and may or may not be included in the committee reports to the IHC Board.)  Generally speaking, selected auditors have had occasional additional formal meetings regarding the loss audits with the IHC Operations and Audit Committee and staff, with or without participation of the carrier in question.  Although auditors have met with the IHC Board in the early years, and should be available to meet, such meetings do not occur often.

6.  Have any management comment letters been issued in the past 2 years; if so, could copies be made available?

SAS 115 letters have been issued for both the IHC and SEH Programs within the past 2 years.  The letters (or at least drafts of them) are available upon request, and can be sent by fax or we can scan them in and send them by email.

7.   In reviewing the questions from the last RFP for the administrative and loss audits it appears many of the responses would be applicable to this RFP as well,  are the responses to those questions still valid?

We are unable to provide a direct answer to this question.  However, it can be noted that, with the exception of the termination of the loss reimbursement aspect of the IHC Program, the SEH and IHC Programs are largely unchanged in terms of day-to-day operations over the past several years.  

8.  Have there been any audit adjustments recorded or proposed and passed on?

Yes, the following have been recorded (none have been proposed and passed on):

1)  Reclassify interest earned on investments to Interest Payable from unbilled receivables for FYs  2000 through 2007 and from Accounts Payable – Member Co’s for FY 2008.

2)  Adjustment for professional services from FY 2003 to FY 2004.

3)  Reclassify from Deferred Income to Accounts Payable – Member Co’s for FY 2007 and FY 2008

9.  Prior carrier audits indicated multiple carriers were subject to loss reimbursement.  It appears that only Celtic Insurance Company remains in this pool, therefore only one carrier audit is needed, is that correct?

Yes. 

10.  4.3.2(10):  Can we assume, based upon our read of Section 4.5, that we are not limited to defining our professional staff categories all inclusive rates to the three noted in the paragraph following 4.4.1 (6)? The end product appears that the State wants a detailed breakdown staffing budget that was used to derive the blended hourly rate, is that correct?

In order to evaluate the cost proposal, we specify that bidders show their all-inclusive hourly rates (on which the blended hourly rate is based) using the four generic professional skills classifications set forth in 4.4.1.  However, bidders are not tied solely to the four professional classifications for purposes of demonstrating the firm’s organization and experience – they may use their existing titles within the firm, if the qualifications for the titles are provided in the bid as specified. 

11.   The last paragraph of 4.3.3 seems to indicate that the Political Disclosure Form is not necessary if one was filed within the last two years with the State, is that correct? Also, if the bidder already has a completed Business Registration Certificate and/or W-9 on file with the Treasury, is another one required to be sent since the information is on file already?

If a bidder is already in a two-year certification period, it may certify to that in the bid.  Prior to awarding the contract, the agency will send an e-mail to CD134@treas.state.nj.us to verify the certification status of the potential vendor.   If the New Jersey Department of Treasury cannot verify that the bidder is in a two-year certification period, the bidder/potential vendor will have to file a new Contractor Certification and Disclosure of Political Contributions form prior to the contract award. 

The bidder should include a copy of the W-9 and Business Registration form in the bid. 

12.  In response to 4.5, would it be sufficient to state that we as a bidder will mirror our travel and expense policies to be in line with the guidance limiting costs provided by the NAIC? We feel that the Department would be comfortable with those standards since they employ them as well.

Bidders have flexibility in their travel and expense policies, and thus, may choose to use the standards established by the NAIC.  However, the restrictions on compensation for certain types of travel expenses set forth in the RFP would override any contrary standard that a bidder may choose to employ (i.e., the Boards will not authorize payment of any time-incurred travel expenses, and will cover costs of actual out-of-pocket travel expenses related to the loss audit only). 
       
13.  Section 5.3.2 requires the Contractor to complete fieldwork within 60 days of approval by either the IHC or SEH Boards, does this mean from notice of award by the Programs or upon officially receiving an executed copy of the agreement from the Deputy Attorney General’s office?

The first paragraph of section 5.3.2 states that the Contractor must complete the field work for each annual audit within 60 days after the IHC or SEH Board, as appropriate, provides the auditor with written notice of the availability of the respective Board's records for review.  The Boards will not provide the selected auditor with written notice of the availability of records until after the notice of award of the contract, and receipt of an executed copy of the agreement. 

14.  Are we to interpret the indemnification clause at 7.2.1 as covering all legal costs that may arise as a result of our audit?  Two examples, the first is a carrier decides to sue the State/and or the Boards over their assessment although our audit report found no issues or accounting irregularities related to the methodology as approved by statute; would we be responsible in this instance?  Example 2- A carrier has findings related to revenues and expenses that are reported in our audit report which effects their anticipated reimbursement, they sue the State who has agreed with our findings; are we responsible for defending the State related to said suit?  The language of this section appears to convey potentially unlimited legal obligations to the Contractor beyond his work product, if this is not the case, could you please clarify?

The auditor's liability for indemnification of the Board is for all of its own actions or inactions arising from the auditor's responsibilities and performance. The Boards cannot provide ironclad statements with respect to many theoretical examples, but the following theoretical examples can be addressed.  The auditor would have to indemnify if a suit was filed against the Board with regard to an audit and there was a flaw in the manner in which the audit was performed or the audit opinion reported.  However, in a situation in which a carrier is suing one of the Boards regarding solely the Board's interpretation of statute or regulation governing the audit process, but is not challenging the mechanics of the audit or the audit opinion, it is unlikely the auditor would be required to indemnify the Boards, because it is not the auditor's actions that are at issue.

15.  Section 5.4.5 mentions a separate hourly rate for testimony should be provided.  Does the State want an hourly rate for all classes of professionals that may testify or a single hourly rate that applies to all individuals testifying?

The bidder has flexibility in this regard. 

16.  Is the RFP for one audit of the SEH and IHC Programs or two?

The RFP requires separate audits of each program for five fiscal years (2009, 2010, 2011, 2012 and 2013).  In addition, the IHC Program requires an audit of the losses reported for reimbursement by one carrier.  Thus, the RFP is requesting a total of 11 separate audits to be performed, each resulting in its own audit report.

17.  Please provide more information regarding the requirement for a draft report which will be reviewed by the FAC of the SEH or by the OAC of the IHC:  does this require separate audit reports? are the programs exclusive of each other in terms of communication and internal controls? 

The SEH and IHC Programs are distinct from one another, and operate separately, although they may act jointly on specific issues as deemed appropriate by the two Boards.  The programs share staff and some physical resources, but operationally, functions are segregated.  The RFP requires that the audits be performed for each program separately, and that the separate audits result in separate audit reports.  Reports related to audits of the SEH Program will be reviewed by the SEH Board's FAC (Finance and Audit Committee).  Reports related to audits of the IHC Program will be reviewed by the IHC Board's OAC (Operations and Audit Committee).

18.  Is a separate proposal required for each audit, if the two programs are to be audited separately?

No, the Boards are expecting all of the requested audits to be addressed through a single proposal.

19.  Is this a new proposal for the SEH Program and the IHC Program?

The RFP is new and separate from any prior RFP issued by either the SEH or IHC Programs.  Audits for all prior periods of time have been performed and audit reports have either been finalized, or are in progress.

20.  What is the budgeted amount for audit fees or hours?

The IHC Board approved a two-year budget in May for FYs 2010 and 2011, budgeting $20,000 in FY2010 and $22,000 in FY2011 for audit fees related to program audits.  The IHC Board had budgeted $50,000 in FY2009 for fees related to the audit of losses reported for reimbursement.  The money has not been spent, and carries over.

The SEH Board approved a budget in April for FY2010, budgeting $10,000 for audit fees. 

21.  Where are documents located for the IHC Program and the SEH Program?

Documents for both programs are located in Trenton, New Jersey, where the Boards' offices and staff are located.  Documents required to perform field work with respect to the audit of Celtic Insurance Company's reported losses for 2007-2008, however, are located at Celtic's offices elsewhere, not in New Jersey.

22.  Are consultants, hired per diem, permitted to work on an audit?

No.  The RFP explicitly prohibits subcontractors.

23.  Are we allowed to hire a consultant as an employee for work? Not a contractor, but someone working on this project as an employee-but with specific skills for this project.

The people working on the project are required to be employees of the entity that submits the RFP.  We consider the term "employee" to have the meaning established by federal tax law.  We are seeking a contractor that has an existing team of employees with the experience required to perform the audits outlined in the RFP.  Generally speaking, a consultant is not an employee under federal tax law.  If the applicant firm is only hiring an employee with a specific set of skills (to do the work required by this RFP) upon the award of this contract, and the firm is unable to demonstrate that other current employees have the requisite experience, then the firm is unlikely to meet all of the qualifications stated in the RFP.