GEORGIA LOTTERY CORPORATION

Georgia Lottery Corporation External Audit Services Request for Proposal Page 1 of 25 GEORGIA LOTTERY CORPORATION REQUEST FOR PROPOSAL FOR EXTERNAL A...
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Georgia Lottery Corporation External Audit Services Request for Proposal Page 1 of 25

GEORGIA LOTTERY CORPORATION REQUEST FOR PROPOSAL FOR EXTERNAL AUDIT SERVICES A. PURPOSE The Georgia Lottery Corporation (“GLC”) is requesting proposals for External Audit Services, as outlined in this Request For Proposal (“RFP”). Proposal documents shall be submitted to the GLC in accordance with the instructions and specifications detailed herein. B. GENERAL INFORMATION AND SCHEDULE This RFP has been issued on Wednesday, February 15, 2017. Questions and requests for clarifications relating to this RFP must be directed to the GLC’s Contract Compliance Administrator. All questions and requests for clarification must be submitted in writing via fax or email by Wednesday, March 8, 2017, at 5:00 P.M EST. The GLC will respond to all submitted written questions and requests via fax or email by close of business on Wednesday, March 22, 2017, by placing its responses on the GLC’s website, www.galottery.com. The Contract Compliance Administrator is to be the sole point of contact at the GLC for firms, effective with the date of release of this RFP and until a firm is selected to provide External Audit services. Contact with any representative of the GLC, other than the Contract Compliance Administrator, will result in disqualification. The GLC’s Contract Compliance Administrator is: Mr. Steven Silver Contract Compliance Administrator Georgia Lottery Corporation 250 Williams Street Suite 3000 Atlanta, GA 30303-1071 Telephone: 404-215-5038 Facsimile: 404-215-5105 E-mail: [email protected] Delivery of seven (7) copies of the proposal, with original signatures, to the GLC Contract Compliance Administrator at the above address is due no later than 5:00 P.M. EDT on Wednesday, March 29, 2017. Proposals received by the GLC Contract Compliance Administrator after this date and time will be rejected, without exception. No provisions are made for extenuating circumstances in this RFP. A contract will be awarded to the firm whose proposal is determined to be the most advantageous for the GLC, considering all the conditions set forth in this RFP, and which the GLC believes provides the greatest long-term benefit to the State of Georgia, the greatest integrity for the GLC, and the best services and products for the public. While price will be an important factor, it

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alone will not be the deciding factor in the selection process. In accordance with the Georgia Lottery for Education Act, O.C.G.A. § 50-27-15, the firm selected will be required to pass a security and financial responsibility background check. Issuance of this RFP does not constitute a commitment on the part of the GLC to award a contract pursuant to this RFP. The GLC reserves the right to reject any and all proposals submitted in response to this RFP, in whole or in part, and to award a contract pursuant to this RFP or cancel this RFP if it is considered to be in the best interests of the GLC. The GLC further reserves the right to make changes to this RFP at any time by issuance of written addendum/addenda, amendment(s) or clarification(s).

External Audit Services RFP - Project Timeline Task RFP Publicly Advertised and Issued to External Audit Firms Bidders Conference (Optional but External Audit Firms Strongly Encouraged to Attend) Deadline for Questions from External Audit Firms /Bidders GLC Responses Sent Back to External Audit Firms /Bidders External Audit Firms /Bidders Submit Their Proposals to the GLC RFPs Submitted to Evaluation Committee GLC Evaluation Committee Completes Their Review of the RFPs RFP Awarded to Winning External Audit Firms

Date Wednesday, February 15, 2017 Wednesday, February 22, 2017 10:00-12:00 GA Lottery Corporation Zell Miller Room Wednesday, March 08, 2017 Wednesday, March 22, 2017 Wednesday, March 29, 2017 Friday, March 31, 2017 TBD est. Friday, April 07, 2017 TBD est. Friday, April 28, 2017

C. LOTTERY BACKGROUND In accordance with the Georgia Lottery for Education Act (O.C.G.A. §§50-27-1 et seq., the “Act”), the Georgia Lottery Corporation (GLC) was established as a vehicle to operate the State of Georgia’s lottery. A seven-member board of directors appointed by the Governor establishes policies and oversees the operation of the GLC. Day-to-day administration of the lottery operations is the responsibility of the President/CEO. The Act mandates that all net proceeds from the lottery’s operation shall be transferred on a quarterly basis to a Lottery for Education Account within the Office of Treasury and Fiscal Services. Net proceeds include all revenue derived from the sale of lottery tickets or shares and all other monies derived from the lottery, less “Operating Expenses” (as defined in the Act). The GLC began its sale of lottery tickets on June 29, 1993. The games currently available to the public include instant tickets and online games and may be purchased via retail, Internet, or mobile application. There are approximately 8,700 retail outlets authorized by the GLC to sell lottery tickets to the public. The GLC’s gross ticket sales have exceeded $4.022 billion, $4.19 billion, and $4.55 billion annually for the past three (3) fiscal years (FY2014, FY2015 and FY2016), respectively, and are expected to exceed $4.5 billion for the current FY2017.

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In 2013, Georgia House Bill 487, codified as Article 3 of the Georgia for Lottery Education Act (the “Act”), transferred responsibility for regulatory administration and enforcement of the operation of Coin Operated Amusement Machines (“COAMs”) to the GLC. Pursuant to O.C.G.A. §50-27-70 (in pertinent part), a bona fide COAM means every machine of any kind or character used by the public to provide amusement or entertainment whose operation requires the payment of or the insertion of a coin, bill, other money, token, ticket, card, or similar object and the result of whose operation depends in whole or in part upon the skill of the player. The lottery accounts for its gaming activities through the use of a vendor-supplied electronic gaming systems. The lottery gaming system is supplied by IGT Corporation’s central computers that connect to lottery retailer terminals throughout the state; the COAM gaming system is supplied by Intralot’s central computers that connect to COAM retailer terminals throughout the state. The electronic gaming system records and accounts for all lottery instant ticket inventory, retailer instant and online game ticket sales, prize validation and payments to the public, retailer commissions earned, and retailer account settlement and billing activities. The system produces a range of management and accounting reports that are generated on a daily and weekly basis, and upon request by the GLC. On a daily basis, the electronic gaming system’s lottery transactions are verified and balanced through the use of an internal control system (ICS) program independently maintained and operated by the GLC. The internal control system program reprocesses and verifies the daily gaming transactions, and produces various management and control reports that allow the GLC to balance its reports and information to the official gaming system records. Once verified and balanced, summary gaming transaction information is posted to the GLC’s corporate accounting system to reflect gaming revenues, retailer commissions, prize expense and liability and retailer accounts receivables. General non-lottery specifications, transactions and activities of the GLC are recorded directly to the GLC’s accounting records through various electronic and manual processes and verified through control procedures and systems established by the GLC. These transactions include, but are not limited to, general administration costs, payroll, accounts payable, fixed assets and investments. The GLC’s fiscal year begins on July 1 of the current calendar year and ends on June 30 of the subsequent calendar year. The corporation currently employs approximately 358 employees at its headquarters and seven (7) other district offices located throughout the state. By law, in the Act, the firm providing the annual financial audit of the GLC “shall have no financial interest in any vendor with whom the corporation is under contract.” (O.C.G.A. §5027-33(4)) The terms “vendor” and “major procurement contract” are defined in the Act. The primary on-going major procurement contract vendors of the GLC are IGT CORPORATION, SCIENTIFIC GAMES INTERNATIONAL, INC., INTRALOT, BBDO ADVERTISING, INC., and their affiliates.

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D. EQUAL OPPORTUNITY The GLC prohibits discrimination on the basis of race, color, gender, religion, national origin, or disability in connection with employment of any person, or the award of any contract with the corporation. The GLC will provide equal opportunities without regard to race, color, gender, religion, national origin, or disability, by requiring that any firm doing business with the corporation provide equal opportunity to persons and businesses employed by, or contracting with the supplier of products and services to the Corporation. E. MINORITY PARTICIPATION The Georgia Lottery for Education Act encourages the participation of minority businesses in all aspects of the work of the GLC, and all firms should be aware of and address this objective in their proposals. It is the policy of the GLC to contribute to the establishment, preservation and strengthening of minority-owned businesses, and to encourage their participation in the GLC's procurement activities. Towards that end, the GLC strongly encourages minority-owned firms to submit proposals or become part of a team or teams which submit a proposal, and the GLC encourages non-minority firms to provide for the participation of minority-owned firms through partnerships, joint ventures, subcontracts and other contractual opportunities. F. CONTRACT AND TERMS A contract with the GLC will be negotiated and executed after the successful firm is selected. This contract will contain the provisions typically required by GLC of its major vendors. Subject to certain negotiated termination provisions, the initial term of the GLC’s financial audit services contract will be for the audits of fiscal years ending June 30, 2017, through June 30, 2019. GLC may, in its sole discretion, renew the successful Firm’s contract annually thereafter, for no more than three (3) additional one year terms, covering the fiscal year audit periods ending June 30. The auditor hereby agrees to retain all books, records, working papers, and other documents relative to this contract for five (5) years after final payment. The auditor further acknowledges that the AICPA’s Statement on Auditing Standards No. 103 requires the auditor to adopt reasonable procedures to retain and access audit documentation for a period of time sufficient to meet the needs of his or her practice and to satisfy any applicable legal or regulatory requirements for records retention. Such retention period, however, should not be shorter than five years from the report release date. The GLC, its authorized agents, and federal and state regulatory and grantor agencies, including the Georgia Department of Audits and Accounts, shall have full access to and the right to examine any of said materials during said period at no cost to either the GLC or any other entity authorized to examine said materials.

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The GLC reserves the right to conduct any review it may deem advisable to assure services conform to the specifications. An employee of the GLC will be designated as audit monitor to discuss issues that need to be resolved and may require periodic progress reports. The monitor will review the financial statements and may provide limited assistance to the auditor by way of comments and suggestions for enhancements to the report prior to its preparation in final form. The monitor will also be available for technical assistance concerning the interpretation of state laws, regulations and policies. G. COSTS OF PROPOSALS The GLC is neither responsible nor liable for any of the costs incurred by any firm in preparing and/or submitting a quotation pursuant to this RFP. H. FORM OF PROPOSAL AND EVALUATION FACTORS Each proposal shall be prepared simply and economically, providing a straightforward, concise explanation of the Firm’s capabilities to satisfy the requirements of this RFP. Emphasis should be placed on completeness and clarity of content, and each proposal must contain each of the following sections in order to fulfill the requirements of Section H. Each proposal should include detailed narrative statements for each section, especially sections 1, 2, 5, and 6. In order to expedite this process, firms must submit seven (7) copies of their proposal and follow the format set forth in this Paragraph when submitting their proposals.

The GLC has established an Evaluation Committee that will be responsible for evaluating the proposals received from interested firms. With the release of this RFP, the Evaluation Committee has established uniform criteria by which all proposals will “scored”. Each of the following will be factored into the evaluation process and, while significant, price alone will not be the determining factor: Section 1

Understanding of the Services Required

Section 2

Approach, Work Plan and Timing of Services

Section 3

Pricing of Services (submitted under separate cover - Exhibit A)

Section 4

Firm Background and Related Experience (Must complete the MANDATORY PRE-QUALIFICATION FORM - Exhibit B)

Section 5

State the identity of the partners and managers who will work on the audit, including staff from other than the local office. Resumes and biographies including relevant experience and continuing education for each supervisory person to be assigned to the audit should be included. (The resumes and

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biographies may be included as an appendix.) Specify governmental CPE attended in the past 24 months by the partner(s) and each person to be assigned to this engagement. Hours should be shown separately for those that qualify for the requirements of Government Auditing Standards and other hours that do not. Section 6

Client References. The Firm should provide at least three (3) client references for engagements of comparable complexity and sensitivity to this RFP conducted within the past five (5) years. The Firm should include the business name, contact name, address, and telephone number of organizations that may be contacted to verify qualifying experience. In addition, the Firm may disclose comparable information concerning positive peer reviews in the past five (5) years (Must complete Exhibit C).

Section 7

Firms must specifically list all material litigation to which they are a party and any bankruptcy, insolvency or similar proceeding to which they may have been subjected to, as well as any finding or plea, conviction or adjudication of guilt in state or federal court for any felony or other criminal offense other than a traffic violation. Firms must disclose whether or not they have been a party to any professional disciplinary action during the past five (5) years. Firms should also submit evidence of their financial responsibility, security and integrity.

Section 8

Firms must certify that the information contained herein is true and correct to the best of their knowledge, and that the person submitting the RFP on behalf of the proposer has the authority to submit this RFP and make all representations contained herein. (Must complete Exhibit D).

I. PRICING AND PAYMENT TERMS ALL PRICING INFORMATION MUST BE SUBMITTED IN A SEPARATELY SEALED ENVELOPE ALONG WITH THE PROPOSAL (EXHIBIT A). Firms must provide detailed pricing information for each fiscal year in the initial term described above, as follows: a) Firms must propose a firm, “not to exceed” aggregate quote for all services, out-of-pocket and other reimbursable expenses for all tasks set forth in Section Y for each year of the contract. In addition, the aggregate price quote should be itemized to include a breakdown of all personnel who will be assigned to the audit engagement, the estimated number of hours each will work, and their respective hourly rates. In addition, the price quote should include a breakdown of the Firm’s estimated out-of-pocket expenses detailed by general expense category (e.g., travel, lodging, report preparation, etc.). All travel related expenses will be reimbursed in accordance with the GLC’s reimbursement policies (as amended from time to time), a current copy of which is attached as (Exhibit E). b) In addition to the total price of the financial audit services set forth in Paragraph a) above, each Firm must also submit the hourly rates, by level of assigned personnel, at which the

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GLC would be able to obtain professional services not in conflict with the audited financial statement work. This price quote should include a breakdown of the Firm’s estimated out-of-pocket expenses detailed by general expense category (e.g., travel, lodging, report preparation, etc.). The successful Firm will be required to invoice the GLC for services rendered and expenses incurred no more frequently than once a month, and the GLC will remit payment of all uncontested amounts within thirty (30) calendar days from the date the invoice was received. The successful Firm will also be required to submit documentation supporting its invoices in a manner and form prescribed by the GLC and consistent with the GLC’s travel reimbursement and other policies, as amended from time to time. J. PROPOSAL TENURE All proposals will be an irrevocable offer for ninety (90) calendar days from the proposal due date. K. INDEPENDENCE The GLC requires the successful Firm to be independent as defined by the American Institute of Certified Public Accountants (AICPA), the Act, the GLC and other professional regulatory agencies governing the public accounting profession. Each Firm must affirm, in its proposal, its independence in accordance with such definitions, and must disclose any actual or potential conflict of interest involving the GLC, its directors, employees, consultants, management personnel, major vendors and suppliers.

L. INSURANCE The GLC requires that the successful Firm maintain sufficient professional liability, commercial general liability, and other insurance coverage during the term of the contract to provide for damages, claims, or other losses incurred by the GLC arising from the Firm’s performance of its services. Professional liability insurance shall be maintained in the minimum amount of Five Million Dollars ($5,000,000). The successful Firm shall provide proof of such insurance coverage to the GLC prior to execution of its contract with the GLC. M. BOND In accordance with the requirements of the Act, the successful Firm will be required to post a performance bond or similar security acceptable to the GLC in an amount as deemed reasonably necessary by the GLC, in its sole discretion.

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N. CRIMINAL BACKGROUND INVESTIGATIONS In accordance with the requirements of the Act, all employees, agents and representatives of the successful Contractor (and any permitted subcontractors of Contractor) assigned to this engagement and working on GLC premises will be required to submit to a criminal background investigation. The GLC reserves the right, in its sole discretion, to disqualify any person from working on the GLC account based on criminal background checks and the GLC shall have no liability regarding such disqualification. O. PROGRESS REPORTS Members of the successful Firm performing services related to this RFP shall meet regularly with the CEO or her designee(s) to discuss audit procedures and policies, work plans, implementation schedules, timetables for completion and other matters, as and when required by the CEO or his/her designee(s). P. PROPOSAL SIGNATURES AND PACKAGING A corporate representative who is authorized to contractually bind the firm must manually sign all copies of the proposal using the form attached hereto as “Exhibit F” (the “PROPOSAL, SIGNATURE, AND CERTIFICATION” form). The firm must also provide the GLC with the name, business address, and business telephone number of a person who will act as the contact person for all inquiries that the GLC may have during the proposal evaluation process. Such person shall be authorized to make representations for and bind the firm contractually.

ALL PROPOSALS MUST BE SUBMITTED IN A SEALED ENVELOPE AND PROPERLY ADDRESSED TO THE CONTRACT COMPLIANCE ADMINISTRATOR AT THE GLC. PRICING MUST BE SUBMITTED IN A SEPARATE SEALED ENVELOPE. Q. NON-EXCLUSIVE RIGHTS By this RFP, the GLC does not intend to grant any firm the exclusive rights to provide all equipment, materials, and services required by the GLC during the period covered by any contract resulting from this RFP. If the GLC determines that creation and production of materials and services by various firms is in the GLC's best interest, the GLC shall have the right to purchase, contract for, and use these materials and services without infringing upon or terminating any contract resulting from this RFP. R. PROPOSAL DELIVERY It is the firm's responsibility to assure that its proposal is delivered at the proper time and place, as specified in this RFP. Proposals which, for any reason, are not so delivered will not be considered by the GLC. Late proposals will not be accepted; they will be returned unopened to

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the responding firm. Proposals transmitted by telegram, telephone, or fax will not be accepted. A proposal may not be altered after delivery, unless requested by the GLC. S. ACCEPTANCE OF PROPOSAL BY THE GLC The GLC reserves the right to accept or reject any and all proposals and to award a contract pursuant to this RFP that is in the best interests of the GLC and the State of Georgia. The GLC reserves the right to ask any or all firms to clarify any portion of their proposals after submission. The GLC also reserves the right to negotiate with any or all firm(s) in any manner necessary to serve the Corporation’s best interests. T. PROPOSALS SUBJECT TO OPEN RECORDS All data, material and documentation originated and prepared for the GLC pursuant to this RFP shall belong exclusively to the GLC and may be available to the public in accordance with the Georgia Open Records Act, O.C.G.A. 50-18-70, as amended. However, in accordance with O.C.G.A. 50-27-25, the GLC will make reasonable attempts to maintain the confidentiality of any trade secrets or proprietary information identified by a firm if such firm properly identifies the particular data or other materials which are trade secrets or proprietary information in writing by page, paragraph and sentence prior to or upon submission to the GLC of the data or other materials to be protected. The firm should also state the reasons such confidentiality is necessary. However, under no circumstance will the GLC be liable to any firm or to any other person or entity, for any disclosure of any such trade secret or confidential information. The GLC may not consider proposals in which all or a substantial portion of the proposal is declared by the firm to constitute trade secrets or confidential information. U. ADVERTISING In submitting a proposal, the firm agrees not to use the results thereof as a part of any commercial or trade advertising without the prior written consent of the GLC. V. NEWS RELEASES The GLC is the only entity authorized to issue news releases relating to this RFP, its evaluation, and the award of any contract and performance thereunder. Under no circumstances shall any firm issue any such news releases without the express prior written consent of the GLC in each instance. W. INTERPRETATIONS AND DISPUTES Any questions concerning conditions and specifications in this RFP shall be directed in writing to the GLC Contract Compliance Administrator. Inquiries must reference this RFP and the date that delivery of the proposal is due to the GLC Contract Compliance Administrator. No interpretation shall be considered binding unless provided in writing by the GLC through the Contract Compliance Administrator. Any actual or prospective firm which disputes the reasonableness or appropriateness of the terms, conditions, and specifications of the RFP or any

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action taken by the GLC in connection with this RFP or the contract to be awarded pursuant hereto, must first pursue and exhaust any and all remedies available to it in accordance with the dispute resolution procedures adopted by the GLC, as amended from time to time. Any appeal of any decision of the Board of Directors of the GLC must be made in accordance with such dispute resolution procedures and Section 50-27-31 of the Georgia Lottery for Education Act. X. NONASSIGNABILITY Any award resulting from this RFP cannot be assigned in whole or in part without the prior written approval of the GLC. Y. REQUIRED PROFESSIONAL AUDIT SERVICES The GLC will require the successful Firm to provide the following services as described in the below paragraphs: 1. An annual financial statement audit conducted in accordance with generally accepted auditing standards, promulgated by the American Institute of Certified Public Accountants (AICPA). 2. The annual financial statement audit should be performed as required to determine (a) whether the financial statements of the GLC present fairly the financial position and results of operations in accordance with generally accepted accounting principles; (b) identify statements, notes, and application of procedures to the GLC’s required supplementary information in accordance with auditing standards; and (c) whether the GLC complied with laws and regulations for those transactions and events that may have a material effect on the financial statements. 3. The annual financial statement audit should be performed as required to obtain an understanding of GLC’s internal controls and required communication about internal control matters required under AICPA standards, including computer controls specific to applications supporting the financial reporting structure. The Act, in O.C.G.A. §50-27-33(4) provides that the GLC, through its Board of Directors shall “Contract with a certified public accountant or firm for an annual financial audit of the corporation. The certified public accountant or firm shall have no financial interest in any vendor with whom the corporation is under contract. The certified public accountant or firm shall present an audit report no later than four months after the end of the fiscal year. The certified public accountant or firm shall evaluate the internal auditing controls in effect during the audit period. The cost of this annual financial audit shall be an operating expense of the corporation. The state auditor may at any time conduct an audit of any phase of the operations of the Georgia Lottery Corporation at the expense of the state and shall receive a copy of the annual independent financial audit. A copy of any audit performed by the certified public accountant or firm or the state auditor shall be transmitted to the Governor, the Lieutenant Governor, and the Speaker of

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the House of Representatives, the state auditor, the state accounting officer, and the oversight committee chairperson.” The GLC will require the successful Firm to comply with the Act, and to provide, at a minimum, the following reports and letters resulting from the audit services performed: 1. Audited general-purpose financial statements and an opinion on the fairness of the presentation of the financial statements in conformity with generally accepted accounting principles. Such report will be addressed to the GLC’s Board of Directors (the “Board”), and be distributed to others as required by the Georgia Lottery for Education Act. 2. A management letter to the Board Finance Committee and the President/CEO addressing material weaknesses in internal controls under standards established by the AICPA. Such report should address any material weaknesses in the GLC’s internal accounting controls, policies, procedures and systems, and should include recommendations for enhancing their effectiveness. 3. A written communication to the Board Finance Committee of certain matters related to the conduct of the audit, including as applicable: a) b) c) d) e)

Auditor’s responsibility under generally accepted auditing standards; The GLC’s significant accounting policies; The GLC’s management judgments and accounting estimates; Audit Adjustments; and Other significant matters as discussed with management relating to the audit work.

The audited financial statements, related opinion letter, and management letter on internal controls must be submitted in draft form to the corporation for discussion no later than three (3) months after fiscal year end. The final audited financial statements, related opinion letter, management letter on internal controls, and Board Finance Committee communication letter must be presented to the Board and the President/CEO no later than four (4) months after the end of the fiscal year.

Z. INTERVIEWS, QUESTIONS AND NEGOTIATIONS The GLC reserves the right to ask any or all firms to clarify any portion of their proposals after submission. Furthermore, the GLC also reserves the right to negotiate with any or all firms in any manner deemed necessary or appropriate by the GLC to serve the best interests of the GLC.

OTHER PROFESSIONAL SERVICES In addition to audit services, the successful Firm must make available, upon the specific request of the GLC:

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(i) Audit-related services which would not impair the independence of the external auditors and that would be appropriate for external auditors to provide because the services would be an extension of the work performed as part of the audit services or would enhance the ability of the external auditor to perform the audit; such audit-related services, for example, would include review and consultation concerning internal control requirements; and (ii) In the event during the course of the audit it is determined by any party a change in the scope of the audit work is necessary, the discovering party shall promptly notify the other parties in writing. The parties shall then determine whether the contract shall be amended to provide for an adjustment in the audit work to be performed by the auditor. In no event shall any payment be made for audit work beyond the scope of the original contract until the contract has been amended. (iii) Such non-audit services that both the GLC’s audit committee and the external auditor believe and agree can be provided without impairing the external auditor’s independence. Such services will be provided in accordance with pricing submitted under Section I. (b) of this proposal.

RELATED SERVICES PROVIDED BY THE GLC 1. Unless otherwise mutually agreed by the GLC and the successful firm, as evidenced in the approved work plans and timetables, the GLC’s accounting personnel will prepare financial statements and related notes and have a draft of such statements available no later than September 30 following the end of the fiscal year at June 30. The final statements with Auditor’s opinion are required for release to the State Auditor’s Office no later than October 31. 2. The GLC’s accounting personnel will also provide most of the audit lead sheets, supporting schedules and accounting analyses, and will make available accounting system policies, procedures, and other system documentation which the Firm’s audit team may require. However, no significant internal audit assistance will be provided.

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EXHIBIT A

FIRM NAME: __________________________________________________________ SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE _______ FINANCIAL STATEMENTS Enter Year

(Complete one Schedule for each year covered by the proposal)

HOURS

HOURLY RATES

PARTNERS

______

__________

_________

MANAGERS

______

__________

_________

SUPERVISORY STAFF

______

__________

_________

OTHER (SPECIFY)

______

__________

_________

TOTAL FOR SERVICES DESCRIBED IN RFP

TOTAL

_________

OUT OF POCKET EXPENSES (See Section IV.B.3 for allow ability): MEALS AND LODGING

_________

TRANSPORTATION

_________

OTHER (SPECIFY)

_________

TOTAL ALL-INCLUSIVE PRICE FOR ___________ AUDIT

_________

AMOUNT OF PROFESSIONAL SERVICES, IN HOURS, ALLOWED FOR ______ YEAR WITHOUT ADDITIONAL COST

_________

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EXHIBIT B MANDATORY PRE-QUALIFICATION FORM

To be answered by Contractor

Section A - General Information 1. Firm Name: _________________________________________________________________ Contact Person:__________________________________Telephone Number:_____________ Email address:___________________________________ 2. Address:____________________________________________________________________ ___________________________________________________________________________ 3. Firm FEI Number:__________________________________ 4. Firm's Georgia CPA State License Registration Number:______________________________ 5. Type of Accounting Practice (place an "X" next to the appropriate response) a. __________ Individual b. __________ Partnership c. __________ Corporation

-

Give

name

of

the

State

where

incorporated:

________________

Section B - Contractor Firm's Quality Program For Audits Please answer each of the following questions by placing an "X" in the proper column at the right. CHECK ONE

1. Quality Control:

YES

NO

_______

_______

Does the Contractor Firm have internal

procedures to ensure proper quality control for its governmental audit assignments? (If yes, ATTACH A DESCRIPTION OF THE PROCESS)

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CHECK ONE

2. Quality Review:

YES

NO

_______

_______

_______

_______

_______

_______

_______

_______

_______

_______

Does Contractor Firm participate in an

External Quality review program every 3 years?

(If yes,

ATTACH A COPY OF LAST PEER REVIEW OR QUALITY REVIEW REPORT AND LETTER OF COMMENT. PLEASE ENTER ENDING DATE OF LAST PERIOD COVERED BY REVIEW____________) If no, explain the reason and your plan to participate. 3. Professional Membership: Do the partners of the Contractor Firm belong to either the AICPA or the Georgia Society of CPAs? 4. Proper License:

Is Contractor Firm properly licensed to

practice public accounting in Georgia? 5. Special GLC Audit Requirements: Is Contractor Firm familiar with the AICPA's Code of Professional Conduct ET Section 1.400.055 – “Governmental Audits”?

(According to this

section, if a CPA agrees to follow specified standards, guides, rules and procedures in addition to GAAS, then the CPA is OBLIGATED to follow all such requirements.) 6. Subcontracts: Does Contractor Firm agree not to subcontract any work required without the prior express written consent of the auditee? 7. Federal Audit Laws and Rules:

If federal audit work is

required, does Contractor Firm agree to perform the audit work in accordance with the Single Audit Act Amendments of 1996, (for federal awards prior to December 26, 2014) the provisions

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CHECK ONE YES

NO

_______

_______

_______

_______

_______

_______

_______

_______

_______

_______

_______

_______

of OMB Circular A-133, (for federal awards after December 26, 2014) UGG Subpart F, and AICPA Audit Guide “Government Auditing Standards and Circular A-133 Audits”, as necessary? 8. Confidentiality: Does Contractor Firm agree not to publish or distribute any information concerning work done for auditee, except as provided by law or rule? 9. Access to Records and Workpapers: Does Contractor Firm agree to keep workpapers and reasonable records to support work claims for at least 5 years and make them available for audit or review by any authorized parties? 10. Other Federal and State Laws and Rules: Does Contractor Firm agree to comply with all other Federal and State laws, rules and regulations which pertain to this engagement? 11. Independence: Does Contractor Firm meet the independence standards of the current "Government Auditing Standards", issued by the Comptroller General of the United States? (If "No", attach a brief summary of facts.) 12. Continuing Education: Does Contractor Firm have sufficient staff who meet continuing professional education requirements for government audits as set forth in "Government Auditing Standards"? 13. Conflict of Interest: Does Contractor Firm declare that there is no public or private interest which would conflict in any manner with performance of an audit for the auditee or would

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CHECK ONE

violate any laws of the State of Georgia?

YES

NO

_______

_______

_______

_______

_______

_______

_______

_______

14. No Substandard Work: Do Contractor Firm and all proposed Audit Team Members have a record of an acceptable standard of audit work? (Contractor Firm must answer this question "No" if the Firm or any Audit Team Member has received an enforcement action for substandard audit work during the past three years or has a related investigation pending by a professional or regulatory group. Attach a brief summary of any enforcement actions.) 15. Ethics:

Does Contractor Firm certify that its proposals are

made without collusion or fraud and that it has not offered or received any kickbacks or inducements from any other auditor, supplier, manufacturer or subcontractor in connection with their proposals, and that it has not conferred on any GLC employee having official responsibility for this procurement transaction any payment, loan, subscription, advance, deposit of money, services or anything of more than nominal value, present or promised, unless consideration of substantially equal or greater value was exchanged; that it is not in violation of the Official Code of Georgia Annotated, Sections 16-10-2 and 16-10-22, for acts of bribery and/or conspiracy in restraint of free and open competition in transactions with state or political subdivisions? 16. Provisions of RFP: Does Contractor Firm agree to abide by all General Terms and Conditions and Special Terms and Conditions specified in the RFP?

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EXHIBIT C

REFERENCES

Firm: ______________________________________________ Date: ____________________ Provide References – Please list four (4) major accounts with which you have provided similar services.

Company: ________________________

Company: ________________________

Address: ________________________

Address: ________________________

________________________

________________________

Contact: ________________________

Contact: ________________________

Phone #: ________________________

Phone #: ________________________

E-mail:

E-mail:

________________________

________________________

Company: ________________________

Company: ________________________

Address: ________________________

Address: ________________________

________________________

________________________

Contact: ________________________

Contact: ________________________

Phone #: ________________________

Phone #: ________________________

E-mail:

E-mail:

________________________

________________________

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EXHIBIT D

CONTRACTOR FIRM CERTIFICATION STATEMENT

I (we) certify that the information contained herein is true and correct to the best of my (our) knowledge, and that the person submitting the RFP on behalf of the proposer has the authority to submit this RFP and make all representations contained herein. I (we) understand that the inclusion of false information may result in rejection of the proposal submitted in response to this RFP.

____________________________________

____________________________________

Contractor Firm Name

Date

____________________________________ Signature of Preparer

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EXHIBIT E

CHAPTER 7- TRAVEL EXPENSE REIMBURSEMENT POLICY

POLICIES AND PROCEDURES MANUAL

CHAPTER 7 – FINANCE POLICIES 7.3 TRAVEL EXPENSE REIMBURSEMENT POLICY

7.3.1 Purpose: The purpose of these policies is to effectively account for expenses incurred by the Georgia Lottery Corporation (“GLC” or “Corporation”) employees while conducting business. Expenses incurred by employees should be ordinary and necessary to perform their duties and the cost of the expenses must be reasonable. Unreasonable and unnecessary expenses will not be approved and will not be reimbursed to the employee. If an employee is unsure whether an expense is reasonable and necessary, that employee should consult with his/her supervisor. GLC employees must have the expressed prior approval of the CEO, or the authorized designee, for any reimbursable overnight travel expenses. Expenses over $15.00, other than per diem meal allowances, require original receipts in order to obtain reimbursement. Legitimate business expenses are: a.

Transportation expenses;

b.

Lodging expenses for overnight travel;

c.

Meals incurred during overnight lodging and, for certain circumstances, when there is no overnight lodging;

d.

Mileage for use of a personal vehicle;

e.

Certain miscellaneous incidental expenses associated with travel;

f.

Conference expenses and fees (with itinerary or other documentation);

g.

Meals, etc. provided to prospective finalists/winners in drawings and jackpot winners;

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h.

Expenses necessary to promote goodwill necessary for conducting GLC business;

i.

Expenses pertaining to retailer development with both prospective and current retailers, in accordance with the Travel Expense Reimbursement Policy; and

j.

Expenses pertaining to employee recruitment with prospective employees, in accordance with the Travel Expense Reimbursement Policy.

7.3.2

Transportation Expenses: a.

Air Travel – All air travel must have prior approval of the CEO or the authorized designee.

b.

Ground Transportation - Allowable ground transportation must be reasonable in nature and includes: 1.

Rental cars and gasoline;

In that GLC employees and Board members are covered, when on GLC business, by the blanket liability policies issued by the Department of Administrative Services (“DOAS”), liability insurance must be declined when renting vehicles while traveling. However, because DOAS insurance does not cover vehicle collision damage, vehicle damage coverage (sometimes known as collision damage waiver coverage or CDW) must be purchased when renting a vehicle of any kind.1 Every attempt should be made to minimize charges for gasoline, mileage, etc. 2.

Corporation vehicles; Employees authorized to use Corporation vehicles must reimburse the GLC for personal mileage in accordance with IRS guidelines. Gasoline expenses for personal travel outside of the state of Georgia should not be charged to the credit card issued by the Department of Administrative Services. Adhere to Policy 5.27, “Fleet Vehicle Usage Policy”, for further guidance.

1

3.

Taxis;

4.

Buses;

(Technical note: There are certain situations in which CDW coverage automatically comes with a short-term rented or leased vehicle, such as a vehicle from the state motor pool, a vehicle provided under a certain statewide rental contract or a vehicle provided under the state maintenance contract. These are generally “non-travel” situations and should only be handled by the Administrative Services Manager or the Vice President of Human Resources.)

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7.3.3

7.3.4

5.

Trains;

6.

Airport limousines when appropriate and less expensive than alternative forms of transportation;

7.

Parking and toll fees; and

8.

Shuttles to and from hotels, etc.

Lodging Expenses for Overnight Travel: a.

Room and tax are reimbursable expenses (subject to a maximum of $125.00 plus tax) for overnight stays away from the employee’s home base. Exceptions for room rate and tax for specific situations, such as official conference hotels, may be made if approved in advance by the CEO or the authorized designee.

b.

When previously arranged by appropriate GLC personnel, direct billing by hotels may be used. The net amount directly billed to GLC must be for allowable room and tax charges only. All non-reimbursable charges that have been billed to the room (e.g. movies, room service, meals, etc.) must be paid by the employee.

c.

Non-reimbursable expenses include, but are not limited to: 1.

Movies;

2.

Health club, and other related charges;

3.

Meals and room service (covered by per diem meal allowances);

4.

Personal telephone calls (except as noted in section 7.3.6a); and

5.

Other personal charges.

Meal Expenses:

Employees traveling on GLC business may be reimbursed for meals using the Corporation’s standard per diem meal allowances. The standard per diem meal allowance, however, for specified meals while attending seminars or conferences, will not be applicable if the meal(s) are included in the overall program agenda. The standard per diem meal allowance is for a full 24-hour day of travel. The meal allowance will be reimbursed for one (1) day trips or on the days of departure or return, as follows:

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The standard per diem meal allowances for lunch will be reimbursed to employees who are more than 30 miles away from headquarters or their assigned districts, as applicable, for travel that exceeds eight (8) consecutive hours. In addition to the lunch allowance, if travel exceeds eight (8) hours and begins prior to 6:30 a.m., breakfast allowance will be reimbursed. If travel ends after 7:30 p.m., dinner allowance will be reimbursed.

7.3.5

Personal Vehicle Mileage:

Reimbursable mileage must follow Internal Revenue Service (“IRS”) guidelines and allowable rates. a. General Staff – Mileage to and from the employee’s home traveling to and from his/her place of business (home base) is not reimbursable. Other mileage when using a personal vehicle during the business day for business purposes is reimbursable. b. Merchandising Representative (MR) – Mileage, when using a personal car, is only reimbursable to the extent that it exceeds the normal round trip mileage to the employee’s home base. Mileage is not reimbursable when a company vehicle is used or is available for use. c. Mileage charges are all inclusive reimbursements for the use of the employee’s personal car. 7.3.6

Miscellaneous and Incidental Expenses: a. Telephone charges – Business telephone calls and faxes should be documented to show to whom the call was placed or fax sent/received and its business purpose. When possible, calls should be placed on the business telephone calling card. Personal telephone calls are not reimbursable, except for one telephone call per day, limited to a maximum time of ten (10) minutes. b. Laundry charges – Reasonable laundry charges are reimbursable when continuously out of town for more than five consecutive work days. c. Allowable tips include: 1. Baggage handling; 2. Tips for taxi, shuttle, limousines, etc.; and 3. Valets when necessary and/or appropriate.

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d. Other appropriate business expenses, not to exceed $50.00 (per occurrence), include items such as notary fees, office supplies, etc.

7.3.7

7.3.8

Frequency of Payments: a.

Finance will process expense reports that have been properly documented and completed within ten (10) business days of receipt within Finance. Checks will be distributed to a designated representative of each functional area.

b.

To promote cost savings for the GLC, expenses totaling less than $35.00 may be paid only at month-end. When necessary, special payment arrangements may be made with the Senior Vice President of Finance and Information Systems. American Express Credit Cards:

GLC provides American Express credit cards for business purposes. Employees are encouraged to use them for expenses incurred under this policy. For information regarding issuance of a corporate American Express credit card, contact the Human Resources Department. 7.3.9

Employee Travel Advances:

When justified as necessary to meet unusual and unforeseen circumstances, travel advances may be authorized by the Chief Executive Officer or the authorized designee. Travel advances can be requested by any employee who will be traveling on company business. Requests for a specific dollar amount must be approved by senior management and submitted to Accounts Payable a minimum of five (5) business days before departure. Any travel advance received by an employee must be included on the expense report submitted for the trip under the “settlement” selection, “Less Cash Advances.” Employees must return any amounts in excess of allowable reimbursements within ten (10) business days after the trip is completed.

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EXHIBIT F

GEORGIA LOTTERY CORPORATION PROPOSAL, SIGNATURE, AND CERTIFICATION (Authorized representative must sign and return with proposal) We propose to furnish and deliver any and all of the deliverables and services named in the Request for Proposal ("RFP") for External Audit Services. The terms offered herein shall apply for the period of time stated in the RFP. We further agree to strictly abide by all of the terms and conditions contained in the RFP and the Georgia Lottery for Education Act, as amended from time to time. Any exceptions are noted in writing and included with our proposal. It is understood and agreed that we have read the Georgia Lottery Corporation’s (“GLC's”) specifications shown or referenced in the RFP and that this proposal is made in accordance with the provisions of such specifications. By our written signature on this proposal, we guarantee and certify that all items included in this proposal meet or exceed any and all of the GLC specifications. We further agree, if awarded a contract, to deliver goods and services that meet or exceed the specifications. I certify that this proposal is made without prior understanding, agreement, or connection with any corporation, firm, or person submitting a proposal for the same materials, supplies, equipment, or services and is in all respects fair and without collusion or fraud. I understand collusive bidding is a violation of State and Federal Law and can result in fines, prison sentences, and civil damage awards. I understand and agree to abide by all conditions of the RFP and this proposal and certify that I am authorized to sign this proposal for the responding firm. I further certify that the provisions of the Official Code of Georgia Annotated, Sections 45-10-20 et seq. have not been and will not be violated in any respect. Date:

__________________________________

Authorized Signature: __________________________________ Print Name:

__________________________________

Title:

__________________________________

Company Name:

__________________________________

NOTE: PLEASE ENSURE THAT ALL REQUIRED SIGNATURE BLOCKS ARE COMPLETED. FAILURE TO SIGN THIS FORM AND INCLUDE IT WITH YOUR PROPOSAL WILL RESULT IN REJECTION OF YOUR PROPOSAL.