Annual financial audits are required for all publicly held firms. Many private firms, especially those that receive funding from investors, must also undergo a yearly audit. Depending on the size and complexity of a company, financial audits may take place over several months and cost a considerable amount of money. An audit tender process begins with a solicitation of bids. Audit firms provide audit tender offers, submitted according to instructions detailed in the audit services tender letter or request.
The Tender Document
The soliciting firm sends an audit services tender letter to firms asking bids. Conditions are stipulated in the document include the limit of only one tender per tenderer, the review and approval process timeline, eligibility and selection criteria. The letter also discusses site visits and related tender expenses.
An audit firm prepares a tender document, which must adhere to certain conditions and contain certain components as requested by the potential hiring firm. Each process may have its own requirements, but generally, tenderers should include a draft contract. This contract should include general conditions and address any special conditions. It should provide an explanation of proposed terms and include a model of the financial bid for the audit project work.
The audit firm's tender should include the conditions of employment, the experience of its team members and a description of key personnel -- usually experts who will be part of the audit team. The audit firm will need to provide an organization and audit methodology description. This includes the rationale, strategy, audit timetable and evidence of relevant experience. The soliciting firm may require a minimum number of previously completed audits similar in scope or nature to its own needs.
Audit firms must adhere to a formal tender submission process. The tender must be sealed and delivered as specified by the potential client. A submission time and a date will be identified in the invitation letter. Tenderers may submit variants of their proposals, but they must package and seal them separately, marking them clearly as variants. Tenders received after the stated deadline are usually not considered. If a tenderer wishes to alter or withdraw its tender, it must provide a written explanation, delivered in the same way as the original tender.
When the soliciting firm receives tenders, the evaluation process usually remains confidential until the audit work is awarded. If the soliciting firm is a public entity, the tender offers might be opened during a public meeting, resulting in a posted summary of the tender details. This could include tenderers' names, prices, proposal variants and any other information considered relevant. While the soliciting firm evaluates the offers, it may ask tenderers to provide clarification on certain points or issues. The tenders will be reviewed on criteria such as compliance with administrative, eligibility and technical requirements. Tenderers that meet the technical requirements may be asked to submit additional technical documentation or samples. Finally, tenders will undergo a financial evaluation where the soliciting firm evaluates the best financial offer.
Awarding the Contract
Upon selection of a qualified tender, the award will be stated in writing and delivered to the winning firm. Unsuccessful bidding firms are also notified, usually with details on the winning bidder, such as proposed price and name of the firm. The notice will also outline why the unsuccessful bidder was rejected and note the deadline for filing an appeal.
Cynthia Gaffney has spent over 20 years in finance with experience in valuation, corporate financial planning, mergers & acquisitions consulting and small business ownership. She has worked as a financial writer and editor for several online finance and small business publications since 2011, including AZCentral.com's Small Business section, The Balance.com, Chron.com's Small Business section, and LegalBeagle.com. A Southern California native, Cynthia received her Bachelor of Science degree in finance and business economics from USC.