1. If we are selected to audit the aforementioned administrative aspects of the IHC, would that conflict us from the RFP to Audit Losses of Carriers Seeking Reimbursements from the IHC Program?

No.  The same audit firm can perform both audits.

2. It would appear that carrier losses should be audited before auditing the administrative aspects of the IHC, do you concur?

That may be the ideal situation, however, planning and performing audits of the losses at the carrier locations may not be as easily scheduled and completed as the administrative audits at the Board office in Trenton.  The administrative audit would evaluate the billings and collections of loss assessments during the fiscal year being audited.  Adjustments, if any, to the reported losses would be recorded in the fiscal year when loss audits are completed and amount of adjustment is known.
 

3. We noted that a number of administrative orders have been issued by the IHC since inception; will IHC provide access to the background data, including any legal opinions, that support their treatment of an issue?

Yes, we will provide any information necessary in completing the audit.

4. Will the IHC entertain a pre-bid meeting for perspective bidders to question program staff directly?

While a pre-bid conference is scheduled on June 11, 2008 for the audits related to the losses, no such conference has been scheduled for the administrative audits.

5. Minutes are available on the IHC website but exclude Executive Session discussions; will this information be available to the successful bidder?

No, since executive session discussions are privileged and confidential.  Any action arising out of such discussions is reported in open session.

6. Since it appears that the IHC wants 9 separate audits, should the bid be per audit or in aggregate for all 9?

For the administrative audits, the bid can be per fiscal year, or for the total of the years.

7. Overview outlines among many things the MLR and access loss recovery requirements of carriers; how can we assess IHC procedures without knowing if the carrier(s) have had either financial condition or market conduct reports that might impact our review?  If these reports exist, will we have access to them?

We are not sure we understand the prospective bidder’s question.  We note that the carrier’s calculation of the MLR’s is not relevant to the administrative audit.  We are not aware of any “access loss recovery requirements” in the individual market nor would any such requirement be relevant to an administrative audit.

 8.  Will we also have access to the AG’s office since they are counsel to the IHC?

Yes, to the extent the discussion with the assigned Deputy is necessary for the audit, for example, in terms of a litigation disclosure statement.

9. Are IHC financial statements for each year online for review, we do not see them and it would be important for assessing work to be performed.

The audited financial statements have now been posted and can be reviewed on the website at http://www.state.nj.us/dobi/ihcpage.htm, and will give bidders an idea of what the administrative audits will entail.

10. Also, since the IHC expects GASB standards to be followed, does that mean you require a “Yellow Book” audit?

Yes.

11. It is unclear if the IHC is expecting 9 separate invoices or one invoice for all 9 audits. 

For the administrative audits, one invoice for the total number of years would be acceptable, but amounts should be specified for each year.

12. Would the IHC consider progress billing throughout the course of the audit or each separate audit?

Progress billings would not be necessary for the administrative audits as we anticipate completion to be fairly quickly.

13. Fieldwork implies that we may have to travel to a carrier to obtain documentation is this correct?

All work for the administrative audits will be performed at the Board’s office in Trenton.  Please note the correction to Section 2.0 Field Work shown above.

14. Since most HMOs and insurers have calendar year ends, does this affect the IHC accounting for payments (i.e.: cash basis vs. accrual)?

No.

15. Attachment E seems to suggest a limited scope audit of defined items versus a normal audit and the report would reflect this fact.  Can you please clarify what type of audit the IHC expects?

The audit would be a normal audit of the operations of the Program.

16.  Does the IHC have formal written policies and procedures related to accounting and IT controls and will they be made available to the selected bidder at the beginning of fieldwork?  In the Administrative RFP, page 7, 3rd paragraph,  what State rules are you specifically referring to and is the Department of Treasury, by reference, the NJ Department of Treasury?

Formal written policies and procedures have not been established, but all information regarding the accounting and IT controls can be obtained through conversations with the Program staff. 

The State rules referred to would include New Jersey requirements such as the standard terms and conditions for state contracts, Circular letters, Executive Orders, etc. 

Yes, the Department of Treasury refers to the NJ Department of Treasury.

17. Section 4.3.2 references availability of the auditor to meet with the IHC Operations and Audit Committee, do you know how many meetings are anticipated? Also, from an audit perspective, how accessible would the BOD and OAC be to the auditor for inquiries that pertain to the audit?

EO122 requires the auditor to meet with the committee at least two times; at the beginning of the audit and at the end.  However, the committee and/or the Board have the option of requesting more meetings.

The Board and the Committee have regular scheduled meetings once a month.  If additional meetings become necessary, they can be scheduled based on availability of the members.

The reports are distributed to the Board, committee members, and the Commissioner of the Department of Banking and Insurance, and will be posted on the website.

Refer to #11 and 12 above.

20. Does 4.4.5 suggest that the BOD and/or the OAC can via review and increase scope of an audit plan that has already been pre-approved?  If so, will fees be adjusted accordingly?  Also, workpapers will be maintained on a licensed software audit database, does the State intend to purchase a license for its own use?

No, 4.4.5 does not suggest that via review of workpapers, the Board will extend the scope of work, but rather, may monitor whether work has been performed in accordance with the terms of the contract.  No additional fees would apply. 

The State does not intend to purchase a license for any software the auditor uses.  If a request is made, the Board would want paper copies or copies sent by email.

21. In 5.3 - The IHC is only suggesting that bidders discuss approach and we are not obligated to provide an audit plan per se with the RFP.

That is correct.

22. 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?

Yes, a copy should be included with the proposal.

23. Are proposal submissions by bidders to previous RFP’s received by the Department of Banking and Insurance for the IHC Program available to be reviewed by the bidders at the IHC Program Office in Trenton?

Yes.  Review of proposals is scheduled by appointment only.

24. Can the latest audited financial statements be reviewed for both RFP’s?

Audited financial statements for the administrative audits are posted on the website at http://www.state.nj.us/dobi/ihcpage.htm.

25. Can you provide the names of the IHC Board of Directors?

The IHC Board presently has seven active members comprised of representatives from Aetna, United HealthCare, Horizon, Guardian, the NJ Department of Banking & Insurance, and a member representing an employer and a consumer.  More information can be obtained on the website at http://www.state.nj.us/dobi/ihcpage.htm. 

26. Has an audit of the IHC Program ever been completed prior to this request? And if so, would a copy of the report(s) be available for our review?

Administrative audits of the IHC Program have been completed for each fiscal year through June 30, 1999.  Audited financial statements are posted on the website at http://www.state.nj.us/dobi/ihcpage.htm.

27.  If there was a prior audit, who were the prior auditors?

The prior auditors were Deloitte & Touche.

28. Are the financial statements prepared internally or by the auditors?

The financial statements are prepared internally by Rosaria Lenox, CPA, the IHC Program Accountant.

29. Can you provide a detailed Organizational Chart of the Accounting, Financial Reporting and Information Technology (IT) Departments?

The staff of the IHC Program is made up of the Executive Director, the Deputy Executive Director, the Program Accountant, and an Administrative Assistant.  IT services are provided through the State of NJ Department of Banking & Insurance.  All accounting and financial reporting documents are prepared by the Program Accountant and reviewed by the Operations and Audit Committee of the IHC Board.

30. How many individuals comprise the Accounting, Financial Reporting and Information Technology (IT) Departments and what is the experience level / background contained in the departments?

The IHC Board staff is comprised of only one financial employee.  She is a CPA, and has been with the Board for nearly five years.  Prior to this position she held several Controller positions in various industries.

31. Please describe the accounting and financial reporting systems used

The accounting system used by the Board is Great Plains.

32. Does the IHC Board file / submit any unaudited annual financial statements?

Unaudited financials are presented to the Board quarterly and at the end of the fiscal year.  Unaudited financials are also given to the Commissioner of Banking & Insurance at the end of the fiscal year.

33. Has there been any significant changes in the nature of operations over the period requested for audit (fiscal years 2000 – 2008)?

No.

34. Are the policies and procedures around internal controls documented?

No.

35. Have key controls been identified and tested?

Yes, with previous audits.

36. What are the key audit issues and what are the key risks that have been identified that would impact the audit?

None known.

37. Has an enterprise risk management (ERM) assessment been performed?

No.

38. In reference to completing the field work with 180 days, when does the IHC Board anticipate the records being available to the auditor?

The records for the fiscal years ended June 30, 2000 through 2007 are available now.  We anticipate fiscal year 2008 will be available by the end of September, 2008.

39.  Can you provide the names of the Operations and Audit Committee?

The committee is made up of members represented by Aetna, Oxford (United HealthCare), and the NJ Department of Banking & Insurance.

40. Is there an overall budgeted cost for the audits?

We have included an estimated amount in the budget, however, that may have to be adjusted depending on the firm selected.