What is Auditor Selection?

State law 7-5-4301, MCA exempts professional services (including audit services) from bidding requirements.

Section 2.4.407 of the Administrative Rules of Montana enumerates a series of criteria that local governments must consider in the selection of an audit firm. These criteria are:
1. Listing on department's roster of independent auditors authorized to conduct local government audits
2. Independence, as defined by applicable auditing standards
3. Demonstrated understanding of the work to be performed
4. Technical experience of the independent auditor in conducting similar types of local government entity audits
5. Qualifications of staff to be assigned to the audit
6. Work history of the independent auditor
7. The proposed audit fees

Typically, local governments seek proposals from audit firms that are interested in performing their audit. This is generally done through a Request for Proposal (RFP) process. Sample RFP’s can be obtained from several sources, including major Montana cities, internet searches, and the Government Finance Officers’ Association (GFOA). Regardless of the RFP form used, the contents must address the auditor selection criteria stated above. Once the government selects an audit firm, an audit contract, lasting up to three consecutive fiscal years, is required in a form prescribed by the Department of Administration.

State law does not require an RFP and it is not uncommon for local governments to renew their audit contracts without seeking new proposals. A level of efficiency may be gained by utilizing the same audit form for multiple years, since the auditors are familiar with the local government, their staff, and accounting system.

Montana Municipal Officials Handbooks 3rd Edition, Section 5.502