RFP: External Financial & Compliance Auditing

Southwest Michigan Behavioral Health
Request For Proposals
Scope of Work & Bid Project Summary
External Financial & Compliance Auditing: RFP
May 15, 2020

1.1 Purpose

Southwest Michigan Behavioral Health (SWMBH) www.swmbh.org is seeking interested vendors for a competitive bid(s) to provide Financial Statement Audit, Single Audit, and Compliance Examination services for fiscal years ending September 30, 2020, September 30, 2021, and September 30, 2022. SWMBH will accept vendor bids for all three audits. There will be three (3) one-year options to extend services, at the sole discretion of SWMBH.

Audit functions shall include expressing an opinion whether financial statements are fairly presented, in all material respects, in conformity with US generally accepted accounting principles; reporting, and presentation to the SWMBH Board of Directors as to vendor’s opinion of any deficiencies noted in internal controls or non¬compliance with generally accepted government accounting principals, laws, or regulations which would have a material effect on the financial statements taken as a whole. Interested vendors must be Certified Public Accountant/Accounting Firm licensed in Michigan. All processes, formatting and contents shall adhere to applicable federal and state statue, regulations and MDHHS guidelines.

1.2 Southwest Michigan Behavioral Health (SWMBH): Who is SWMBH

The Southwest Michigan Behavioral Health (the “Regional Entity”) was created pursuant to MCL 330.1204b of the Michigan Mental Health Code, 1974 PA 258, MCL 330.1001 et seq (the “Mental Health Code”) by the following Participant Community Mental Health Services Programs (CMHSP) which are organized and operated as community mental health authorities under the Mental Health Code:

• Barry County Community Mental Health Authority;
• Berrien Mental Health Authority d/b/a Riverwood Center;
• Branch County Community Mental Health Authority, d/b/a Pines Behavioral Health Services;
• Calhoun County Community Mental Health Authority, d/b/a Summit Pointe;
• Cass County Community Mental Health Authority d/b/a Woodlands Behavioral Healthcare Network;
• Kalamazoo County Community Mental Health Authority d/b/a Integrated Services of Kalamazoo;
• Community Mental Health and Substance Abuse Services of St Joseph County
• Van Buren Community Mental Health Authority;

Pursuant to MCL § 330.1204b(3), the Regional Entity is a public governmental entity separate from the counties, authorities, or organizations that establish it. The Regional Entity’s designated service area encompasses the following Michigan counties: Barry, Berrien, Branch, Cass, Calhoun, Kalamazoo, St. Joseph and Van Buren (“Service Area”). The Regional Entity is formed for the purpose of carrying out the provisions of the Mental Health Code in the Service Area as they relate to: serving as a prepaid inpatient health plan, as defined in 42 CFR 438.2 (“PIHP”), to manage the Medicaid Specialty Support and Services Concurrent 1915(b)/(c) Waiver Programs (“Medicaid) and Healthy Michigan Program, ensuring a comprehensive array of services and supports as provided in the PIHIP Medicaid contract with MDHHS. SWMBH will participate in Demonstration project to integrate care for persons eligible for Medicare and Medicaid.

SWMBH operates in a complex funding environment. SWMBH financial statements should be reported as described in GASB Statement 34. SWMBH serves as the Pre-Paid Inpatient Health Plan (PIHP) for persons with disabilities including serious mental illness, emotional disorders, intellectual / developmental disabilities, and/or substance use disorders. SWMBH receives capitated funding from the Michigan Department of Health and Human Services (MDHHS) and operates in a managed care environment to provide services to eligible citizens in its Service Area. Vendors with proven experience, knowledge, and expertise in the funding, financial reporting, cost allocation methods, risk management, and procedures of MDHHS, PIHPs, and CMHSPs will be given a priority status in this bid selection.

1.3 Scope of Services: Audit Objectives

Audit functions shall include expressing an opinion whether financial statements are fairly presented, in all material respects, in conformity with US generally accepted accounting principles; reporting any deficiencies noted in the internal controls or any areas of non-compliance with laws, regulations, and contracts which would have a material effect on the financial statements taken as a whole, as required by Government Auditing Standards.

The Michigan Department of Health and Human Services (MDHHS) has issued guidelines titled, “Community Mental Health (CMH) Compliance Examination Guidelines” to assist independent audit personnel, Prepaid Inpatient Health Plan (PIHP) personnel, and Community Mental Health Services Program (CMHSP) personnel in preparing and performing compliance examinations as required by contracts between MDHHS and PIHPs or CMHSPs, and to assure examinations are completed in a consistent and equitable manner. It is anticipated that these guidelines will be followed.

Additionally, these CMH Compliance Examination Guidelines require that an independent auditor examine compliance issues related to contracts between PIHPs and MDHHS to manage The Medicaid Managed Specialty Supports and Services 1115 Demonstration Waiver, 1915 (c)/(i) Waiver Program(s), the Healthy Michigan Program, the Flint 1115 Waiver and Substance Use Disorder Community Grant Program Period (hereinafter referred to as “Medicaid Program”), an annual Financial Statement audit is required. Additionally, if a PIHP expends $750,000 or more in federal awards, the PIHP must obtain a Single Audit. SWMBH exceeds this threshold.

The annual audit is to include an expression of opinions from the auditor as to whether the financial statements prepared by and for the SWMBH, are fairly presented, in all material respects, and as required in conformity with generally accepted accounting principles.

The audits shall include testing of the accounting records of Southwest Michigan Behavioral Health to enable auditor’s expression of opinions on the fairness of reporting. Audit shall also include testing for single audit requirements and subsequent completion of single audits if necessary.

Financial arrangements between SWMBH and Participant CMHSPs (sub capitation style interim payments with cost settlement in the end of the fiscal year) require completion of compliance audit examination of each Participant CMHSP before performing compliance audit examination of SWMBH. It is expected that the successful bidder will perform compliance audit examination of SWMBH and eight Participant CMHSPs as part of an engagement with SWMBH.

Reporting on the internal controls related to the basic financial statements and compliance with laws, regulations, and provisions of grant agreements should be provided as a result of the audit that identifies any areas of non-compliance that have a material effect on the basic financial statements.

Working Papers Retention and Access to Working Papers

All working papers and reports must be retained, at the auditing firm’s expense, for a minimum of 7 years unless the firm is notified in writing by SWMBH of the need to extend the retention period. The audit firm will be required to make working papers available upon request by SWMBH or each individual CMHSP. Reports, documents, and working papers will only be released with specific written permission and direction from SWMBH. The firm shall respond to reasonable inquiries of successor firms and allow successor audit firms to review the working papers related to matters of continuing accounting significance.

Freedom of Information Act

Vendors are hereby notified that all information contained in their proposal is subject to the provisions of the Michigan Freedom of Information Act. Material which is truly proprietary, marked accordingly and submitted separately will be treated as confidential to the fullest extent of the law.

The Contract

If this RFP results in an award, the 3-year SWMBH Contract will consist of this RFP, written amendments to this RFP, the Contractor’s proposal, and written, authorized amendments to the Contractor’s proposal. It will also include any materials incorporated by reference in the above documents and any purchase order and change orders issued under the Contract.

If there are conflicting provisions between the documents that make up the Contract, the order of preference for the documents is as follows:

This RFP, as amended;
The documents and materials incorporated by reference in the RFP;
The Contractor’s proposal, as amended; and
The documents and material incorporated by reference in the contractor’s proposal.

Contract Duration

The terms of this contract will encompass the completion of audits for fiscal years 2020, 2021 and 2022. There will be three (3) one-year options to extend services, at the sole discretion of SWMBH.

Annual Audit Timeline:

Financial Audit Report – Begins early October with preliminary request following the fiscal yearend. On-site audit work in January with the final Financial Audit Report – ready for the required March 31 MI Treasury submission date.

Financial Audit Presentation to Board of Directors – April Board meeting

Compliance Examination and Single Audit Completions – May 31st for submission by June 30th MDHHS requirement.

Note – presentations dates to Board of Directors are subject to change.

Cost Reporting and Presentation

The cost quoted shall be presented as a not-to-exceed all-inclusive annual rate by fiscal year for work required to fulfill all audit objectives. A separate quote should be provided for each of the Financial Audits (2020, 2021, 2022) Single Audits (2020, 2021, 2022), and Compliance Examinations (2020, 2021, 2022).

Invoicing for audits:

Invoice the PIHP as work is completed.

Proposal Scoring Methodology

* Price 20%
* Audit Experience 30%
* PIHP / CMHSP Finance Knowledge 35%
* References 15%

2.1. Response Timeline

Activity Timeline
Issuance of RFP May 15, 2020
Vendor questions due (via email) May 29, 2020
Posted answers to vendor’s questions: (via SWMBH.org)

June 5, 2020
Proposals due to SWMBH June 12, 2020
Review of proposals and top vendor finalists notified June 29, 2020
Vendor demos completed July 10, 2020
Vendor notification July 20, 2020

As a part of the evaluation process, on-site interviews (if possible, virtual if in person are not possible) and/or presentations may be requested by the Finance / RFP Committee. Not all bidders will be invited to participate in this aspect of the proposal review process. Bidders will be invited to participate at the sole discretion of the Finance / RFP Committee.

Bidders who are not awarded the Contract will be notified in writing. The acceptance of a proposal will not diminish the right of SWMBH to negotiate specific contract terms, including price, with the successful bidder.

Contact Information and Bid Mailing Instructions

2.2 Contact Point for Communications

Questions or requests for additional information regarding this RFP must be received in writing no later than May 29th at 5p.m. 2020. Please email them to:
Contact Name: Tracy Dawson
Contact Title: CFO
Email: tracy.dawson@swmbh.org

No phone calls will be accepted or returned regarding the RFP. Should you have problems submitting emails to X should call 1-800-676-0423 for assistance.
All vendor questions and answers will be available on the SWMBH website:

https://www.swmbh.org. Click on the News & Events Tab and Latest News.

Interested vendors shall submit a signed PDF version of the bid document to: tracy.dawson@swmbh.org by 5:00 pm, June 12th, 2020.

Vendor Response Package Components

The vendor must incorporate the following three sections in their submitted proposal:
Section One: Vendor Overview Information
The information contained in this section is detailed in Section 3 of this RFP.

Section Two: Vendor Solutions Summary
The information contained in this section should provide full details around how vendor system will meet SWMBH’s requirements detailed in Section 1.3.

Section Three: Sample contracts
Please include a sample standard service agreement or contract. If it exists, an example of any ancillary agreements.
3. Vendor Overview Information

This section of the vendor response is designed to provide an overview of each vendor. Vendor responses should contain the following information:

A. A cover letter indicating desire and capability to bid on the project.

B. A narrative section including:

1. A description of the history of your CPA firm (including full legal name and address) and the services it currently provides – including years of experience and expertise in conducting similar projects.
2. Contact person (telephone number and e-mail address).
3. The total number of hours, hourly rate per staff position, and the total fee for the audit.
4. A sample of your “Letter of Engagement”
5. A sample of the “Client Representation Letter”
6. A list of schedules and work papers you will require our staff to prepare.
7. A sample of financial statements and notes to financial statements.
8. A sample of management letter.
9. A copy of your most recent quality control review report.
10. A letter of transmittal indicating your understanding of the work to be performed, making a positive commitment to complete the engagement within specified time period.
11. Professional staff biographies.
12. Explain in detail your experience with health care, PIHPs and CMHSPS, and governmental auditing.
13. List of major clients.
14. Any known potential conflicts of interest with SWMBH, any of Participant CMHSPs as listed on page 1 or any of its network providers.
15. Any consulting and management (acting CEO, COO, CFO, CIO, etc.) engagements with other PIHPs and CMHSPs.
16. Any additional information you consider essential to the proposal. If there is no additional information to present, state “There is no additional information to present”.
17. Pricing Methodology
C. Three (3) references or letters of support validating your ability to
provide services outlined in the RFP. Preferably, these references should be within our industry or from organizations with comparable volumes and types of services.

Proposal Review

SWMBH reserves the right to request additional information or clarification from vendors, to allow correction of errors or omissions, and to waive irregularities and/or formalities when so doing may serve the best long-term interests of the organizations involved.

SWMBH reserves the right to reject any or all RFP submissions and to proceed in any other manner selected by SWMBH. SWMBH also reserves the right to discontinue the RFP process at any time and for any reason. The right to amend this Request for Proposal, giving equal information and cooperation to all vendors, is also reserved.

SWMBH reserves the right to award the vendor that it believes, in its sole discretion; best meets the needs of the organization.

SWMBH will request the most recent financial report, audit and management letter, and articles of incorporation from the vendor chosen.

Responses to Requests for Proposal are subject to the terms of the Freedom of Information Act and will be retained by SWMBH. A vendor’s response to this RFP may become part of the final contract.

SWMBH intends to make a prompt selection decision following this bid deadline and will notify all bidding vendors of the outcome in writing.

Proposal Retention

SWMBH will retain all proposals submitted and all proposals become the property of SWMBH upon submission.

Acceptance of Proposal Content

RFP responses of selected vendor may become contractual obligations. Failure to accept these obligations may result in cancellation of the selection, and the Vendor may be required to reimburse SWMBH for damages incurred.


The vendor certifies that this proposal has not been made or prepared in collusion with any other vendor and the prices, terms or conditions thereof have not been communicated by or on behalf of the vendor to any other firm and will not be so communicated prior to the official receipt of this proposal. This certification may be treated for all purposes as if it were a sworn statement made under oath, subject to the penalties for perjury. Moreover, it is made subject to the provisions of 18 U.S. C. Section 1001, relating to the making of fa