Request for Qualitifications - Payroll Audit Services

CITY OF DELANO
Finance Department
REQUEST FOR QUALIFICATIONS
Payroll Audit Services
Issuing Agency City of Delano, Finance Department
RFQ Title Payroll Audit Services
RFQ Number RFQ-FIN-2006-1000
Issue Date July 1, 2026
Proposal Due Date August 1, 2026, by 5:00 PM (PST)
Submission Method Electronic submission via email or hard copy to City Clerk
Contact Person Rosa Lara Rios, Finance Director
Contact Email rrios@cityofdelano.org
Contact Phone (661) 720-2235
1. Introduction and Background
The City of Delano ("City") is a municipal government located in Kern County, California. The
Finance Department is responsible for administering payroll for all City employees, including 163
full-time, 21 part-time, and 128 seasonal staff across all departments, including 56 sworn law
enforcement personnel.
The City is soliciting qualifications from experienced, independent public accounting firms or payroll
audit specialists to conduct a comprehensive payroll audit. This audit is intended to verify
compliance with applicable federal and state laws, identify any discrepancies in payroll processing
and tax withholding, and evaluate the effectiveness of internal controls governing the payroll
function.
2. Purpose and Objectives
The primary objectives of this payroll audit are to:
* Verify the accuracy of payroll calculations, employee classifications, pay rates, and benefit
deductions
* Confirm compliance with federal and California state payroll tax requirements, including
FICA, SDI, PFL, UI/ETT, and applicable wage exclusion rules
* Evaluate the adequacy of internal controls and segregation of duties within the payroll
process
* Identify overpayments, underpayments, or misclassifications that may require correction
* Assess the City's exposure to potential penalties or liabilities arising from noncompliance
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* Provide actionable recommendations for improving payroll processes and controls
3. Scope of Work
3.1 Payroll Processing Accuracy and Compliance
The selected firm shall review and verify:
* Accuracy of gross pay, overtime calculations, and retroactive pay adjustments across all
employee classifications
* Correct application of pay scales, MOUs, and employment agreements, including for sworn
police personnel (officers, commanders, Chief of Police)
* Proper processing of deductions including health benefits, retirement contributions
(CalPERS or City Pension Plan), garnishments, and voluntary deductions
* Timely and accurate issuance of payroll and reconciliation of payroll registers to general
ledger entries
* Review of at least 6 to 9 months of payroll records (exact period to be confirmed at project
kickoff)
3.2 Tax Withholding, Wage Exclusions, and Statutory Compliance
The selected firm shall evaluate:
* Proper withholding and remittance of federal payroll taxes (FICA - Social Security and
Medicare) for all employee types
* Correct application of California SDI withholding, including compliance with SB 951
(elimination of taxable wage cap effective January 1, 2024) and the current applicable rate
* Accurate identification and exclusion of non-taxable wage types, including SDI/State
disability payments received by employees, bona fide workers' compensation payments,
and any other statutory wage exclusions under the California Unemployment Insurance
Code (CUIC)
* Proper classification of employees versus independent contractors in accordance with AB 5
and IRS guidelines
* Timely filing and reconciliation of Forms 941, DE 9/DE 9C, W-2s, and related tax returns
* Review of any amended returns or prior-period adjustments and their adequacy
3.3 Internal Controls and Segregation of Duties
The selected firm shall assess:
* Adequacy of segregation of duties in the payroll cycle (authorization, processing, recording,
and disbursement)
* Access controls and authorization levels within the City's payroll system (including Neogov,
OpenGov, or other platforms in use)
* Processes for onboarding new employees, processing terminations, and managing pay
changes to prevent ghost employees or unauthorized adjustments
* Supervisory review and approval workflows for timesheets, payroll runs, and tax deposits
* Adequacy of documentation, recordkeeping, and audit trail capabilities within the payroll
system
* Compliance with the City's internal payroll policies and applicable Government Finance
Officers Association (GFOA) best practices
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4. Deliverables
The selected firm shall provide the following:
* Entrance conference with City leadership staff to confirm scope, timeline, and data
requirements
* Preliminary findings memorandum identifying any urgent issues discovered during fieldwork
* Draft audit report for City management review and response
* Final audit report including: executive summary, detailed findings, risk ratings, and prioritized
recommendations
* Findings matrix with corrective action plan template for Finance/HR Department use
* Exit conference presentation to city leadership.
5. Minimum Qualifications
Responding firms must demonstrate the following:
* Licensed Certified Public Accounting (CPA) firm or firm employing CPAs with governmental
payroll audit experience
* Minimum five (5) years of experience conducting payroll audits for California public agencies
(cities, counties, or special districts)
* Demonstrated knowledge of California payroll tax law including SDI, FICA wage exclusions,
CUIC, and CalPERS reporting requirements
* No conflicts of interest with the City of Delano or its employees
* Current professional liability (errors & omissions) insurance of at least $1,000,000 per
occurrence
6. Proposal Requirements
Responses shall include the following, organized by section:
* Cover letter confirming interest and identifying the lead engagement partner
* Firm qualifications and relevant experience, including at least three (3) references from
comparable California public agency engagements
* Description of proposed audit methodology and approach
* Proposed project timeline with key milestones
* Identification of all staff assigned to the engagement and their qualifications
* Fee proposal (lump sum or not-to-exceed amount), presented separately from the technical
proposal
* Proof of insurance and current business licenses
* Signed acknowledgment of RFQ terms (see Exhibit A)
7. Evaluation Criteria
Proposals will be evaluated on the following criteria:
Evaluation Criterion Weight
Firm qualifications and relevant public agency experience 25%
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Technical approach and audit methodology 25%
Knowledge of California payroll tax law and SDI/FICA compliance 20%
Internal controls and segregation of duties expertise 15%
Fee proposal (cost reasonableness) 10%
References and past performance 5%
8. General Terms and Conditions
* The City reserves the right to reject any and all proposals, to waive irregularities, and to
accept the proposal deemed most advantageous to the City.
* This RFQ does not commit the City to award a contract or to pay any costs incurred in the
preparation of a response.
* All submitted materials become the property of the City and are subject to the California
Public Records Act.
* The selected firm will be required to execute the City's standard Professional Services
Agreement prior to commencement of work.
* The City of Delano is an Equal Opportunity Employer and encourages proposals from
minority-owned and women-owned firms.
9. Submission Instructions
Proposals must be received no later than the date and time specified on the cover page. Late
submissions will not be accepted.
Submit one (1) electronic copy (PDF) via email to the contact listed on the cover page, with the
subject line:
"RFQ-FIN-2006-1000 | Payroll Audit Services | [Firm Name]"
Questions regarding this RFQ must be submitted in writing via email no later than July 10, 2026.
Responses to all written questions will be distributed to all registered interested parties.
Issued by the City of Delano - Finance Department
Rosa Lara Rios, Director of Finance
City of Delano * 1015 Eleventh Avenue * Delano, CA 93215
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