EXHIBIT IV

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Exhibit IV Page 1 of 89
^o\£\-^Q^-^-

GOVERNMENT OF PUERTO RICO

DEPARTMENT OF EDUCATION

HATO REY, PUERTO RICO

CONTRACT FOR PROFESSIONAL SERVICES

This contract, made and entered into by and between the Department of Education,

represented by Julia Beatrice Keleher, of legal age, single, and resident of San Juan,

Puerto Rico, in her official capacity as Secretary of Education (hereafter referred to as

"the DEPARTMENT"), and BDO Puerto Rico, P.S.C., a professional servicescorporation organized under the laws of the Commonwealth of Puerto Rico, with offices

in San Juan, Puerto Rico, represented in this act by Harry E. Aleman Quinones, oflegal age, married, and resident of San Juan, Puerto Rico, hereinafter designated as

the SECOND PART.

WITNESSETH

WHEREAS, the FIRST PART, in the exercise of the faculties conferred upon it by

Public Law 85-2018 for the Department of Education of Puerto Rico, by the

Constitution of the Commonwealth of Puerto Rico and by the laws that the

FIRST PART administers, contracts the services of the SECOND PART.

WHEREAS, the SECOND PART has represented to the FIRST PART that it has the

necessary experience, capacity, expertise and resources to perform the obligations

and duties assumed hereunder.

WHEREAS, the SECOND PART has demonstrated experience and capacity in this

area of endeavor.

WHEREAS, the FIRST PART engages the SECOND PART to render certaintechnical and consulting services in connection with the administration of Federal

education programs and others of the SECOND PART.

NOW, THEREFORE, in consideration of the mutual covenants and promises herein

contained and other valuable consideration, it is hereby agreed as follows:

COVENANTS

1. The preamble of this contract is hereby made an integral part hereof.

2. The FIRST PART designates the Auxiliary Secretariat of Federal Affairs as its

representative in all matters related to this Contract.

3. The SECOND PART will provide the following services, that are described in the

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Contract between the Department of Education and BDO Puerto Rico, P.S.C.

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11. The combination of these objectives will serve as the basis of the

Department's workplan. This workplan pursues the idea that funds should

assist the Department in achieving the goals they are intended to be use

for. The following approaches will be used as part of our work in order to

add value, identify flaws and establish mechanism to correct them:

12. Establish the use of metrics to measure compliance and ensure that all

program reporting is being prepared on time.

13.Analyze the data received from programs to assist them in the

development of new strategies to ensure compliance with Federal laws

and regulations by pursuing efficiency.

14. Budget vs Actual comparisons to identify deviations on a timely manner

and correct them.

15. Evaluation of information and results to assist in strategic decisionmaking.

16. Establish a detailed workplan for each program goal and for each project

to organize the work to performed and ensure that all tasks are being

assigned and deadlines are established.

17. Monitoring activities to ensure that funds are being used for the purposes

intended for and to determine its effectiveness.

18. Use of frameworks, flowcharts and procedures manuals to transfer the

obtained knowledge and reduce the learning curve.

19. Data validation to ensure that the data used in the decision-making

process is reliable and can serve as the basis for comparisons, decisions

and analysis.

20. Use of Risk Analysis approaches to identified problematic areas and then

develop and establish preventive and detective controls to reduce oreliminate risks.

21. Maximize the use of Information Systems to generate data in a speed up

manner for better decision making.

22. Project Management strategies to organize the work to be performed, the

goals to be accomplished and follow up the timeline established.

23. Other related matters as requested by the FIRST PART.

Appendix B

1. Will provide Technical Assistance and Financial Consulting Services to

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Contract between the Department of Education and BDO Puerto Rico, P.S.C.

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to organize the work to performed and ensure that all tasks are being

assigned and deadlines are established.

10. Monitoring activities to ensure that funds are being used for the purposes

intended for and to determine its effectiveness.

11. Use of frameworks, flowcharts and procedures manuals to transfer the

obtained knowledge and reduce the learning curve.

12. Data validation to ensure that the data used in the decision-making

process is reliable and can serve as the basis for comparisons, decisions

and analysis.

13. Use of Risk Analysis approaches to identified problematic areas and then

develop and establish preventive and detective controls to reduce oreliminate risks.

14. Maximize the use of Information Systems to generate data in a speed up

manner for better decision making.

15. Assist the Human Resources department in teacher and employee

assignment, needs determination, data analysis, data validation and

roster creation by school, regions and central level to ensure that all

needs are being covered, the finding is adequate and reduce the surplus

of personnel.

16. Provide assistance in the implementation of the Law 85 (School Reform

Law).

17. Provide support to the Budget Office in the preparation of the 2019-2010

budget.

18. Assist in the preparation of the National Public Education Financial Survey

for the 2017-2018 fiscal years.

19.Assist the Department with FEMA as part of the recovery efforts related to

Hurricane Irma and Maria.

20. Assist the Department in the school reopening for the new school year in

terms of facilities, conditions and moving of equipment and materials. Will

also assist during the process of inventory of equipment in order to update

the Departments records and ensure compliance with laws and

regulations.

21.Advice the Secretary in any petition requested and perform any other

duties assigned by the FIRST PART.

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Contract between the Department of Education and BDO Puerto Rico, P.S.C.

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which are proprietary to the disclosing PART and which have not been made

available to the general public; and (vii) any information which the disclosing

PART would not release without obligations of confidentiality.

7. Each PART shall use the Confidential Information of the other PART for the sole

purpose of performing their respective obligations under this Agreement and

shared only with employees with a need to know such information. Each PARTshall not disclose the Confidential Information of the other PART to any third

PART without the prior written consent of the PART who owns such information,

unless required by law. The term "Confidential Information" shall not mean anyinformation which: (i) is previously known to the PART without obligation of

confidence; (ii) which is publicly disclosed either prior or subsequent to thereceiving PART'S receipt of such information; or (iii) is rightfully received by the

receiving PART from a third PART without any obligations of confidence.

8. The SECOND PART agrees to defend, support and represent the findings,

evaluation and analyses of the written materials, including reports, drafts from

studies and projections carried out by the SECOND PART in compliance with the

provisions of this Contract at any forum which requests the SECOND PART'S

appearance.

9. The SECOND PART will coordinate and meet with the FIRST PART, with their

authorized representative or with representatives of other agencies or branches of

the Commonwealth of Puerto Rico to guarantee a uniform public policy in anysteps that it takes, when applicable.

10. The SECOND PART shall not subcontract the performance of the services

specified in paragraph number "3" of this Agreement. The SECOND PART will be

responsible for hiring the personnel that will offer the services under this

Agreement. The FIRST PART shall have no obligation regarding the working

schedule, wages and any other claim on the part of the personnel recruited by theSECOND PART under this Agreement.

11. The parties represent and warrant that no employee of the FIRST PART has direct

or indirect monetary interest in the present Contract.

12. The SECOND PART recognizes that in the performance of its professional

functions it owes complete loyalty to the FIRST PART, which includes not having

adverse interests to said governmental organization. These adverse interests

include the representation of clients that may have or could have interests contrary

to the FIRST PART. Furthermore, this duty includes the continuous obligation of

disclosing to the FIRST PART all the circumstances of the relationship of the

SECOND PART with clients and third persons and any interest that could have

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Contract behveen the Department of Education and BDO Puerto Rico, P.S.C.

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14. The FIRST PART agrees to pay to the SECOND PART for all the services

provided according to the terms of this contract up to a maximum of six million

three hundred sixty three thousand dollars ($6,363,000.00) prior presentation

of invoices for the cost incurred for the services provided and duly certified by the

FIRST PART.

i. For the services described in paragraph number "3" under Appendix A of this

Agreement, the FIRST PART will pay the SECOND PART the amounts under

the following categories:

RESOURCES

Senior /Senior Manager,

Manager y Seniors

NUMBER OF

HOURS

34,300

HOURLY

RATE

$105.00

TOTAL

$3,601,500.00

For the services described in paragraph number "3" under Appendix B of this

Agreement, the FIRST PART will pay the SECOND PART the amounts under

the following categories:

RESOURCES

Senior/Senior Manager/

Manager y Seniors

NUMBER OF

HOURS

26,300

HOURLY

RATE

$105.00

TOTAL

$2,761,500.00

a. The SECOND PART agrees to invoice the FIRST PART up to a maximum of

eight (8) hours daily per employee or resource that provides services to the

FIRST PART under the terms of this Contract. The SECOND PART mayinvoice for sen/ices rendered in excess of eight (8) hours daily, or onSaturdays, Sundays or holidays, only if the FIRST PART previouslyauthorized them in writing.

b. The FIRST PART may retain payment under this Contract in any of the above

category until the SECOND PART submits all reports and other documents

required by this contract. The FIRST PART has the right to request additional

documentation if the documentation already submitted pursuant to the

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Contract between the Department of Education and BDO Puerto Rico, P.S.C.

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object of this contract has been the accorded payment agreed upon with the

authorized representative of the Department of Education. I hereby certify

that this invoice is correct and that payment thereof has not been received."

f. The SECOND PART shall submit invoices for payment within the first ten (10)

days of the month following the rendering of services. In the event that theSECOND PART submits invoices for payment after forty (40) days from the

last day of the month in which services were provided, the SECOND PART

accepts that the FIRST PART will make an automatic adjustment to theinvoices which will lead to a reduction of five percent (5%) of the

submitted invoices. In case that the FIRST PART returns to the

SECOND PART the invoices to correct them, the SECOND PART will have

five (5) working days from the notification to carry out corrections and submitthem again. If this does not occur within such five (5) working days, the

SECOND PART accepts that the FIRST PART will make automatic

adjustments to the invoices which will lead to a reduction of five percent (5%)

of the total amount of the invoices.

g. The SECOND PART shall submit the invoices by the FIRST PART'S on line

billing system according to the procedure established by the FIRST PART.

The SECOND PART will be responsible for the veracity and accuracy of the

information provided in the online billing system. If the online billing system isnot available, the FIRST PART will determine the procedure to follow for the

delivery of the invoices and shall notify it in writing to the SECOND PART.The SECOND PART certifies that the FIRST PART has delivered the

documentation or User Manual for the supplier for the use of the online billingsystem.

15. This Contract will be in effect from the effective date of the agreement to

June 30, 2019 subject to the availability funds. At the option of the FIRST PART,the term of this Contract can be extended by written agreement by both parties.With previous written notification to the SECOND PART thirty (30) days in

advance, the FIRST PART will be able to rescind this Contract, before theexpiration date, without any additional compensation to the SECOND PART,

except for what has been accrued under the same until that date.

-The Office of the Governor's Chief of Staff has the faculty to cancel this

Agreement at any moment, without prior notification.

16. The negligence in the compliance or noncompliance of the provisions in this

Contract or inappropriate conduct of the SECOND PART will constitute sufficientcause to rescind the same forthwith, without the need of a previous notice. If the

FIRST PART opts for a resol

tion of the present Contract

the SECOND PART

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Contract between the Department of Education and BDO Puerto Rico, P.S.C.

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Agreement does not make any of the parties hereto an employee, agent,

representative, alter ego or attomey-in-fact of the other. This Agreement does not

authorize the SECOND PART to enter into obligations on behalf of the FIRST

PART. The SECOND PART recognizes that it may not alter any of the FIRST

PART'S internal procedures or policies without express consent. Consequently, theactions of the SECOND PART shall not be binding on the FIRST PART.

20. The SECOND PART certifies that it has a total waiver with regard to the withholding

at source of payment for services rendered by corporations pursuant to Section

1062.03(g) of the Puerto Rico Internal Revenue Code of 2011, as amended.

Accordingly, the FIRST PART will withhold at source any amount for payments

made to the SECOND PART. The FIRST PART, whenever applicable, will retain a

special contribution equal to one point five percent (1.5%) of the Agreement's total

amount from the payments made to the SECOND PART according to

Commonwealth of Puerto Rico Law 48-2013.

21. The SECOND PART will submit at the signing of this contract the following

documents as applicable:

(X) Certificate of Merchant Registry issued by Puerto Rico's Department of Treasury.

(X) Certificate of eligibility of the strategic network of services to the citizen (Red

Estrategica de Servicios al Ciudadano (RESC).).

(X) "Good Standing" Certificate issued by Puerto Rico's Department of State.( ) Authorization of Puerto Rico's Department of State for Doing Business in Puerto Rico.(X) Certificate of Filing Sales and Use Tax Form issued by Puerto Rico's Department

of Treasury.

(X) Certificate of Sales and Use Tax Debt Form issued by Puerto Rico's Department

of Treasury.

(X) Certificate of Debt issued by Puerto Rico's Department of Treasury.(X) Certificate of Income Tax Returns on Earnings for the Past Five (5) Years

issued by Puerto Rico's Department of Treasury.

(X) Certificate of tax Deduction Exemption issued by Puerto Rico's Department of

Treasury, if applicable.

(X) Certificate of Filing Personal Property Tax Form for the past five (5) years

issued by Puerto Rico's Center for Collection of Municipal Revenues.

(X) If the Corporation does not own personal property or has not filed the Personal

Property Tax Form for the past five (5) years, it must submit a sworn statement

to that effect.

(X) Certificate of Debt issued by Puerto Rico's Center for Collection of Municipal

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Contract between the Department of Education and BDO Puerto Rico, P.S.C.

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25. The SECOND PART assures that the services shall be rendered in good manner

and professionally. If the SECOND PART fails to render the services in such

manner, the FIRST PART will be entitled to contract other persons for the

rendering of said services, and the SECOND PART shall pay to the FIRST PART

any cost or expense incurred and attributable to such services if the fees of theSECOND PART have been paid or for the amount in excess of the fees under this

Agreement for said services if the fees have not been paid by the FIRST PART.

26. This contract may not be assigned or in any way by the SECOND PART to any

other natural or legal person.

27. The SECOND PART shall defend, indemnify and hold the FIRST PART and its

employees harmless from all losses, liabilities, damages, costs, expenses and

/'"j^-^ claims incurred by the FIRST PART by reason of a defense against any such

1^J^ ^ c'aim °1'for any jud9ment that mayfau against it as a result of any damage or loss

1~~{~^, that may occur to persons or property by reason of any act or occurrence arising

/ out of or in connection with the activities performed by the SECOND PART under

; this Agreement.

28. The SECOND PART represents and warrants that the services to be rendered to

the FIRST PART pursuant to another contract subscribed with the FIRST PART

are not in conflict with the services to be rendered under this Contract.

29. The SECOND PART acknowledges and accepts that the FIRST PART may retain

from the amounts it owes to the SECOND PART, those amounts that are

necessary to satisfy or pay any debts for concept of tax revenue, on personal or

real property (CRIM), duties, unemployment insurance, disability, chauffeurs social

security, and debts for interests, dividends, rents and other similar distributions

made by the SECOND PART and any other debt which the SECOND PART owes

to the Government of Puerto Rico.

30. The SECOND PART certifies that neither it, neither any of their officials,

employees and subsidiaries have been convicted, or has been found probable

cause for their arrest, for no crime against the treasury, the faith and the public

function; against the government exercise; or that involves funds or public

property, in the federal or state scope.

31. This contract may be canceled IMMEDIATELY in case that there is a

determination of probable cause for arrest against the SECOND PART for thecommission of any crime against the treasury, the faith or the public function;against the government exercise; or that it involves funds or public property, at the

federal or state scope.

32

The SECOND PART acknowledges their obligation to inform the FIRST PART in

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Contract between the Department of Education and BDO Puerto Rico, P.S.C.

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extent permitted by law.

37. In the event of any inconsistency between the interpretation of the clauses of this

agreement and the content of the proposal which is incorporated as part of this

contract as an appendix, the clauses of this agreement shall prevail and be bindingupon the parties.

38. In all pertinent and the applicable, the SECOND PART is specifically committed to

the transference of knowledge to the personnel of the FIRST PART during the

term of the present contract, which is an essential and obligatory condition to itsfulfillment. The violation of this disposition will be sufficient cause for the

FIRST PART to conclude this obligation and the SECOND PART will have to

refund to the FIRST PART all sum of money received under this Contract.

The SECOND PART will abide by Law 168-2000, as amended, regarding thesupport of elderly people. In order to obtain or maintain a contract with the

FIRST PART, it is an essential condition that the person liable for a pension to an

elderly person is up to date with the payments or is in compliance with a payment

plan, and has not failed to comply with orders, citations, requirements, resolutions

or sentences issued by the court or the Administrator by virtue of said law.

40. No services or payment subject to this Agreement can be claimed until the same

has been registered in the Comptroller's Office, as set forth by Public Law Number

18 of October 30, 1975 as amended.

41. The Parties agree to comply with all aspects of the Federal False Claims Act

which, in general, prohibits: (i) knowingly presenting, or causing to be presented tothe Government of the United States a false claim for payment; (ii) knowingly

making, using, or causing to be made or used, a false record or statement to get a

false claim paid or approved by the Government of the United States; (iii)

conspiring to defraud the Government of the United States by getting a false claimallowed or paid; (iv) falsely certifying to the United States the type or amount of

property to be used; (v) certifying receipt of property on a document withoutcompletely knowing that the information is true; (vi) knowingly buying Governmentof the United States property from an unauthorized officer of the Government of

the United States, and; (vii) knowingly making, using, or causing to be made or

used a false record to avoid or decrease an obligation to pay or transmit property

to the Government of the United States.

42. The SECOND PART certifies and guarantees that it does not discriminate under

any circumstance on the basis of age, race, color, gender, birth, veteran status,

political ideology, religion, social origin or condition, sexual orientation or gender

identity, physical or mental disability; or for being a victim of domestic violence,

sexual aggression or harassment

stalking or any other discriminatory cause

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Contract between the Department of Education and BDO Puerto Rico, P.S.C.

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the date of termination of his Government employment. This prohibition does not

apply to intergovernmental Agreements.

-—This prohibition does not apply to former public servants who want to return to

the specialized private sector from which they came, provided their official actions,

according to defined in the article 1.2 (to) of Law 1-2012, did not favor the entity in

which the former public servant proposes to work or have pecuniary interest.

-—The SECOND PART acknowledges and agrees that any public servant may not

use confidential or privileged information acquired in the exercise of his official

duties to enrich himself or a third party.

-—The SECOND PART acknowledges and agrees that it will not employ or

maintain Contractual or business relationships with a public employee that,although legally allowed:

A. Have the effect of undermining the independence of judgment of the public

servant in the performance of his official duties.

B. Have the faculty to decide or influence the official actions of the Agency

related to the SECOND PART.

C. Have the authorization to Contract or who is empowered to approve or

recommend the granting of a Contract to the SECOND PART.

44. The SECOND PART recognizes that Article 18 of Law 103-2006, as amended,

regulates and expressly limits the use of public funds to pay for lobbying costs only

to those lobbying services exclusively performed to search and identify federalfunds or legislation that promotes Puerto Rico's economic well-being.The SECOND PART certifies that: (a) the services under this contract do not

include lobbying services and (b) the funds assigned under this contract will not beused to pay for lobbying services, regardless of their purpose. Through this

certification, the SECOND PART establishes that it will not use the public funds

under this contract to render lobbying services before the following government

branches: Federal Government, Federal Congress, state governments, state

legislatures, municipal governments, municipal assemblies, and public

corporations, among others.

Any violation to this clause, the regulation and the limitation of Article 18 of

Law 103-2006, as amended, will be sufficient cause for the FIRST PART to cancel

this contract automatically.

45. Both parties recognize and agree that the services described in this Contract may

be provided by instruction of the FIRST PART to any entity of the ExecutiveBranch with which the FIRST PART has an interagency agreement or by direct

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Contract between the Department of Education and BDO Puerto Rico, P.S.C.

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the FIRST PART to the Office of Management and Budget of Puerto Rico.

47. According to the laws and the rules that guide the contracting of services, both

parties in this contract acknowledge that no services will be rendered under this

contract until both parties have signed it. Accordingly, no service will be renderedafter its date of conclusion, except that at said time there is an amendment to thiscontract signed by both parties. No services will be paid in violation of this clause.

Any employee of the Department of Education that solicits and/or accepts services

in violation of this disposition does so without any legal authority.

48. The SECOND PART promises to comply with the dispositions of the Code of

Ethics for Contractors, Suppliers and Applicants for Economic Incentives

from Executive Agencies of the Commonwealth of Puerto Rico of Law 84 ofJune 18, 2002.

IN WITNESS WHEREOF, the parties have respectively signed and sealed this

Agreement on July ^\ , 2018.

By:

Julia Beatrice Keleher, Ed. D.

Secretary of Education

FIRST PART

DIN Num

By: -^irry E. Aleman Quinones

Partner

SECOND PART

DIN Nu

By Express Delegation:

Eric R. Huertas Morales, Esq.

Undersecretary of AdministrationDEPARTMENT OF EDUCATION

Submitted by : <-^^v=;^ - /•

Yanln M. Dieppa Pefea, Esq. Assistant Secretary of Federal Affairs

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JUNE 21, 2018

BDO PUERTO RICO/USVI PROPOSAL TO PROVIDE SERVICES TO:

PUERTO RICO DEPARTMENT OF 

EDUCATION 

Appendix A

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 2

BDO PUERTO RICO, PSC

1302 Ponce De Leon Ave. 

1ST Floor 

San Juan, Puerto Rico 00907

Tel: 787-754-3999 Fax: 787-754-3105

www.bdopr.com

BDO USVI, LLC

Foothills Professional Building

9151 Estate Thomas, Suite 201

St. Thomas, VI 00802

Tel: 340-776-0640 Fax: 340-779-8653

www.bdousvi.com

June 21, 2018

Ms. Yanín M. Dieppa Perea, Esq.

Federal Affairs Office Director

Puerto Rico Department of Education

PO Box 190759

San Juan, PR 00919-0759

Dear Ms. Dieppa:

We thank you for the opportunity to present our proposal to provide advisory services to the Puerto Rico Department of

Education (“Department of Education”). BDO has a unique culture rooted in core values that ensures continuous focus

on our clients and professionals and a long-term commitment to quality service. Our clients experience our culture

through a service approach characterized by extensive involvement of senior professionals, direct access to top

technical resources, and straightforward, proactive communications delivered through a centralized, responsive,

knowledgeable client service team.

With a global footprint that spans 154 countries and extensive experience delivering professional accounting services to

companies around the world, BDO is poised to address your immediate service needs and is ready to leverage our

capabilities to support you in your objectives.

We understand there are several matters that you consider to be important when selecting a professional accounting

firm. We believe the following attributes demonstrate why BDO is the ideal firm for the Department of Education:

 BDO’s extensive experience and expertise in assurance, tax and advisory services

 BDO’s deep government and related sectors experience

 Swift responsiveness and issue resolution

 Your engagement team is empowered to make technical decisions in the field.

 BDO’s “no surprises” and value-added competitive fees philosophy

The following statement of our capabilities aims to address these concerns and outline how BDO will meet your service

needs. Our involved and accessible partners combined with our technical knowledge and flexible, non-bureaucratic

organizational structure will provide you with responsive service. We are confident BDO can meet your needs and

exceed your expectations in providing well-coordinated services in a cost-effective manner.

Again, we thank you for the opportunity to propose. We look forward to personally presenting our proposal, further

demonstrating our capabilities and distinctly different service approach, and responding to any related questions.

Sincerely,

Fernando Scherrer, CPA, CA, MBA

Managing Partner

Business Advisory & Assurance Services

787-378-4363

fernando@bdo.com.pr

BDO Puerto Rico, PSC, a Puerto Rico Professional Services Corporation, is a member of BDO International Limited, a UK company limited by guarantee, and forms part 

of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. 

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Exhibit IV Page 14 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

CONTENTS

4 Firm Profile and Qualifications

8 Public Sector Experience

14 Service Approach

21 Service Team

28 Professional Fees

30 Appendixes

Page 3

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FIRM PROFILE AND 

QUALIFICATIONS

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 5

THE BDO NETWORK - WHERE YOU NEED 

US, WHEN YOU NEED US

The world seems to be much smaller, and BDO clients value our international reach. Our global network in more

than 162 countries stands ready to serve your Organization wherever in the world you do business. The benefits of a

global network include:

A globally integrated service model

The active involvement of local senior professionals

A consultative, client-specific approach

An industry-specific team, with you for the long term

A service culture of continuous, proactive communication

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

BDO PUERTO RICO / USVI

12

Partners

283 Staff

2

Offices

Main Offices

Audit Tax

Ranked

#1

In Puerto Rico

#1Customer

Satisfaction Serving 

Local Market

As of 02/01/2018

Advisory

REVENUES %

LOCAL PRESENCE

BDO is a full service certified public accounting, tax and business

advisory firm with 18 years of industry-focused experience,

providing services to public and private clients. With a novel,

ground breaking approach centered in partnering with our clients

and providing exceptional client service, BDO is the fastest growing

and largest local firm in the Island. We are your ideal business

partner with the best skilled and trained professionals suited to

manage your ongoing and future needs.

Since its foundation, our key to success has always been focusing

on our clients’ needs and having high caliber professionals. This

allows us to keep up-to-date with the industry trends, anticipating

changes, and designing proper strategies to take advantage of

arising opportunities.

 Member of the BDO international network, leveraging local

expertise with a global perspective

 Building bridges between creative ideas and viable

entrepreneurships

 Only international firm with meaningful local presence in the

USVI

 Winner of the prestigious Network of the Year award at the

International Accounting Bulletin (IAB) Awards 2015.

 Over 240 skilled and trained professionals, including CPAs,

CVAs, CFEs, MAFFs, CGMAs, CIAs, CRMAs, CGAPs, CISAs,

CIRAs, PMPs and Attorneys

 Ranked #1 in customer satisfaction at a recent survey of

audit and consulting firms in Puerto Rico

 First CPA Firm ever awarded with the recognition as one of

the Top 20 Employers in Puerto Rico

 The only Firm recognized by the Ernst & Young Entrepreneur

of the Year Award in Puerto Rico

 Registered with the American Institute of Certified Public

Accountants and the Public Company Accounting Oversight

Board

BDO PUERTO RICO/USVI

LOCAL REACH

INDUSTRY STRENGTHS

• Education and Non-profit

• Energy and Natural Resources

• Financial Services and Insurance

• Government and Public Sector

• Healthcare

• Hospitality 

• Manufacturing

• Private Equity and Hedge Funds

• Real Estate Ventures and Development

• Retail and Distribution

Page 6

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Exhibit IV Page 18 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

BDO PUERTO RICO RANKS NO.1 IN CUSTOMER

SATISFACTION

Customers of audit and advisory firms in Puerto Rico

participating in an independent survey, ranked BDO

Puerto Rico No. 1 in customer satisfaction.

The market research firm Centroamérica en Siete Días

surveyed 150 mid and large, companies located in Puerto

Rico that currently receive services from local audit and

advisory firms. The surveys were conducted in February

of 2015.

BDO scored 4.16 (out of 5) in customer satisfaction,

exceeding even international “Big 4” firms. The survey

also shows BDO’s solid second position in terms of market

share with 18%, surpassed only by PwC with 20%.

EXCEPTIONAL CLIENT SERVICE

#1 IN CUSTOMER SATISFACTION

Others, 3.37

RSM ROC, 3.38

Kevane, 3.51

Baker Tilly, 3.95

E&Y, 3.96

Deloitte, 4.03

PWC, 4.08

BDO, 4.16

Customer Satisfaction Index

(Scale: 1=worst, 5=best)

Average, 3.72

Gabriel Hernandez, CPA

Partner, BDO Puerto Rico, P.S.C.

“We focus every day on putting our customers at the 

center of everything we do. The results of this 

customer satisfaction survey reflect our hard work and 

drives us to continue to think of our customers first and 

how we can partner with them every day to obtain a 

better economic performance in their respective 

businesses." 

Because of our commitment to quality service BDO has

emerged as the firm of choice for many organizations

transitioning away from local service providers as well

as “Big 4” firms.

Some of the organizations that have found value

changing from the “Big 4” to BDO include:

 3M Puerto Rico, Inc.

 Advent-Morro Equity Partners, Inc.

 Agilent Technologies Inter-Americas, Inc.

 Ballester Hermanos, Inc.

 CCM Group (Commercial Centers Management)

 César Castillo, Inc.

 ddr Group

 Dubon Group

 Economic Development Bank

 Empresas Caparra Group

 Fundación Ángel Ramos

 Guardian Insurance

 Hubbell Incorporated

 Kraft-Heinz

 Industrial Rubber & Mechanics Inc. (INRUMEC)

 Lamar Advertising of Puerto Rico, Inc.

 Lockhart Group (USVI)

 Luxury Hotels International of Puerto Rico, Inc.

 Perfecseal, Inc.

 Puerto Rico Electric Power Authority (PREPA)

 Puerto Rico Industrial Development Company

(PRIDCO)

 Puerto Rico Infrastructure Financing Authority (AFI)

 Puerto Rico Ports Authority

 Rooms To Go (PR), Inc.

 Sealy Matress Co. of Puerto Rico

 Tegrant Alloy Brands of Puerto Rico

 United Surety Insurance Company & USIC Life

 University of the Virgin Islands

 Wärtsilä Caribbean, Inc.

Page 7

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Exhibit IV Page 19 of 89
PUBLIC SECTOR EXPERIENCE

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Exhibit IV Page 20 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

SERVING THE PUBLIC SECTOR –

WE KNOW YOU

BDO’s Government Services professionals have an indepth knowledge and understanding of applicable state

and local government rules and regulations, federal

and industry accounting and auditing standards and

requirements, financial management rules and

requirements, information technology system auditing

standards, and economic stimulus program and

reporting requirements. Our methodologies and

program management approach are designed to deliver

repeatable and reliable processes that help clients

achieve their goals, facilitate communications, assure

accurate and timely reporting, and enable effective

operations.

BDO is a valued business advisor to many agencies in

the public sector. Our professionals deliver hands-on

experience and technical skills to address each of our

clients’ distinctive needs.

Our team of professionals offers the hands-on

experience and technical skill you can rely upon to

serve the distinctive needs of the Department of

Education.

Our team includes professionals that have worked with

GASB 34 financial statements since the pronouncement

was issued in 2002. We have implemented GASB 34 for

several Public Corporations and the Commonwealth of

Puerto Rico, including the conversion from fund

accounting to Government Wide financial statements.

We also engage in efforts to design, direct, or

recommend corrective action programs to assist

governmental and other public sector agencies

remediate deficient practices and establish effective

accounting protocols, systems, and procedures.

Many of these have been complex and comprehensive

projects requiring coordination of multiple tasks for

numerous entities within short timelines. We are,

therefore, prepared and well-qualified to perform the

required audits and prepare all of the reports required

by the Department of Education in a coordinated and

integrated manner that meets your needs for accurate

reporting and timely delivery.

BDO PUBLIC SECTOR EXPERIENCE

Page 9

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Exhibit IV Page 21 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

PUBLIC SECTOR SERVICES

BDO’s Public Sector provides advisory and management

consulting support services to government clients. We

do this by leveraging over one hundred years of

commercial and global history as a company and highly

qualified, experienced professionals within the

government sector.

BDO’s Public Sector practice was launched in the past

decade in response to the demand for a fresh,

independent perspective in the government

environment from a firm able to leverage its proven

methodologies and reputation for providing services to

its clients for more than 100 years.

ADVISORY

Audit Readiness and Audit Remediation: Our

team provides audit readiness and remediation

support to clients undergoing financial statement

and compliance audits. From assisting in the

development of standardized documentation to

support financial transactions to business process

improvement and reengineering, our team assists

government clients overcome financial and

performance audit obstacles.

Internal Controls: We assist government clients

develop and maintain sustainable internal

controls programs that provide effective and

efficient operations; accurate, timely, and

relevant data; and prevent and detect misuse,

mismanagement, and fraud through our internal

controls services. We provide internal controls

assessment services which take a risk-based

approach view of an organization to develop and

implement an internal controls program that is

not only effective and efficient, but resultsdriven and cost effective. By developing a riskbased approach, an agency can direct people,

resources, and funds to a series of actions to

ensure efficient and effective financial

reporting.

Financial Compliance and Financial Management:

Our team provides financial management services to

government clients that cover the spectrum of CFO’s

responsibilities: budget planning and execution,

financial reporting, performance and program

evaluation, financial policy, accounting, financial

system testing and maintenance, and internal control

assessments. We also assist government entities with

achieving and maintaining compliance with standards

and regulations such as Office of Management and

Budget Circulars and government accounting standards.

GASB 34 Financial Statements and Comprehensive

Annual Financial Report (CAFR): Our team of

professionals are the industry leaders in preparing

GASB 34 Financial Statements and the CAFR. We

have over 15 years of experience with GASB 34 and

over 20 years in the preparation of the CAFR for the

Commonwealth of Puerto Rico.

PUBLIC SECTOR SERVICES

Page 10

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Exhibit IV Page 22 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

PUBLIC SECTOR SERVICES OFFERING

Page 11

BREADTH OF EXPERIENCE

BDO offers a breadth of services tailored to meet your needs. Our core services include:

Assurance, Accounting, and Financial Reporting

 Financial Audit

 Performance Audit

 Single Audit pursuant to Uniform Guidance 2 CFR

200 Subpart F (Previously known as OMB Circular

A-133)

 Audit Readiness Support and Remediation

 Accounting Procedures Design and 

Implementation

 Outsourced CFO Act Accounting Support

 Budget and Performance Integration

 Cost Accounting Advisory Services

 Financial Statement Compilation

Inspector General Support Services

 Management and Evaluation of Use of Public 

Expenditures

 Audits and Reporting on Use of Public 

Expenditures

 Assessment of Internal Controls

 Forensic and Investigatory Projects

 Performance Audits and Reviews

Technology Governance and Portfolio

Management

 Information Technology Security, Risk Evaluation,

and Management

 General and Application Controls Internal Audit

 Information Technology and Business Process

Alignment

 IT Controls Assessments

Compliance, Risk Advisory, and Crisis

Management

 Regulatory and Statutory Compliance Reviews

 Program and Contract Compliance Reviews

 Internal Control Audit/Evaluation

 Internal Control Design and Improvement

 OMB Program Review and Submissions

 Business Process Improvement and Reengineering

Business Process Enhancement

 Operational Performance Assessments and 

Improvements

 Business Processes Integration

 Project Management Office

 Financial Analysis and Modeling

 Business Continuity Plans

 Controls Optimization

Enterprise Risk Management and Internal Audit

 Financial and Operational Audits

 Quality Assurance Reviews

 Risk Assessment

 Controls Optimization

 Strategic Partnering and Staffing

 Procurement, Vendor, Royalty, and Construction 

Audits

 Corporate Governance Assessments

Fraud Detection/Prevention, Investigations, 

and Litigation Support

 Fraud and Misconduct Risk Assessment

 Investigative Due Diligence

 Complex Damages Analysis

 Electronic Discovery (eDiscovery)

 Gap Analysis

 Benchmarking

 Forensic Data Analysis

 Intellectual Property Valuation

 Securities Litigation Services

 Fraud Awareness and Prevention

 Anti-Corruption Compliance and Investigations

 Large-Scale Data Recovery and Analysis

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Exhibit IV Page 23 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

PUBLIC SECTOR EXPERIENCE

Page 12

Advisory Services

 Autonomous Municipality of Caguas

 Commonwealth of Puerto Rico

 Department of Economic Development and

Commerce

 Employees Retirement System of the Government of

Puerto Rico and its Instrumentalities

 Government Development Bank of Puerto Rico and

Affiliates

 Public Corporation for the Supervision and Deposit

Insurance of Puerto Rico Cooperatives

 Puerto Rico Department of Agriculture

 Puerto Rico Buildings Authority

 Puerto Rico Council on Higher Education

 Puerto Rico Department of Justice

 Puerto Rico Department of Education

 Puerto Rico Department of Family

 Puerto Rico Department of Health

 Puerto Rico Department of Labor and Human

Resources

 Puerto Rico Department of Natural and

Environmental Resources

 Puerto Rico Environmental Quality Board

 Puerto Rico Health Insurance Administration

 Puerto Rico Housing Department

 Puerto Rico Housing Finance Authority

 Puerto Rico Office and Management and Budget

 Puerto Rico Treasury Department

Grants Management

 Puerto Rico Department of Education

 Puerto Rico Department of Labor and Human

Resources

 Puerto Rico Department of Natural and

Environmental Resources

 Puerto Rico Environmental Quality Board

Single Audits

 Government Development Bank and Affiliates

 Institute of Puerto Rican Culture

 Puerto Rico Department of Natural Resources

 Puerto Rico Infrastructure Financing Authority

(AFI)

 Puerto Rico Ports Authority

 University of Puerto Rico

 Virgin Islands Water and Power Authority

Preparation of Government 

Wide Financial Statements

 Commonwealth of Puerto Rico

 Government Development Bank

 Institute of Puerto Rican Culture

 Municipality of Caguas

 Puerto Rico Department of Labor and Human

Resources

 Puerto Rico Electric Power Authority (PREPA)

 Puerto Rico Infrastructure Financing Authority

 Puerto Rico Tourism Company

Indirect Cost Proposals and 

Cost Allocation Plans

 Administration for the Development of Families

and Children

 Puerto Rico Department of Education

 Puerto Rico Department of Family

 Puerto Rico Department of Labor and Human

Resources

 Puerto Rico Department of Natural and

Environmental Resources

 Puerto Rico Environmental Quality Board

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Exhibit IV Page 24 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

 Additional Lottery System

 Association of Employees of the Commonwealth of

Puerto Rico (AEELA)

 Autonomous Municipality of Caguas (includes Single

Audit)

 Autonomous Municipality of Humacao

 Autonomous Municipality of San Juan (includes

Single Audit)

 Department of Natural and Environmental Resources

(includes Single Audit)

 Economic Development Bank (includes Single Audit)

 Employees Retirement Systems of the Government

of Puerto Rico and Judiciary

 Government Development Bank of Puerto Rico and

Affiliates

 Institute of Puerto Rican Culture

 Office of the Commissioner of Insurance

 Port of the Americas Authority

 Public Buildings Authority

 Public Corporation for the Supervision and Deposit

Insurance of PR Cooperatives (COSSEC)

 Puerto Rico Commerce and Export Company

 Puerto Rico Department of Transportation and

Public Works (DTOP)

 Puerto Rico Department of Health (includes Single

Audit)

 Puerto Rico Electric Power Authority (PREPA)

 Puerto Rico Film Industry Corporation

 Puerto Rico Fiscal Agency and Financial Advisory

Authority (FAFAA)

 Puerto Rico Health Insurance Administration

(includes Single Audit)

 Puerto Rico Highways and Transportation

Authority (PRHTA)

 Puerto Rico Industrial Development Company

(PRIDCO)

 Puerto Rico Industrial, Tourist, Educational

Medical and Environmental Control Facilities

 Puerto Rico Infrastructure Financing Authority

 Puerto Rico Land Administration

 Puerto Rico Land Authority

 Puerto Rico Maritime Shipping Authority

 Puerto Rico Municipal Finance Agency

 Puerto Rico Ports Authority

 Puerto Rico Public Broadcasting Corporation

(WIPR-Puerto Rico Networks)

 Puerto Rico State Automobile Accident

Compensation Administration (ACAA)

 Puerto Rico Teachers Retirement System

 Puerto Rico Trade and Export Authority

 State Insurance Fund Corporation

 Teachers Retirement System

 University of Puerto Rico

 Virgin Islands Public Broadcasting System (WTJX)

Page 13

Governmental Audits

PUBLIC SECTOR EXPERIENCE

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Exhibit IV Page 25 of 89
SERVICE APPROACH

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Exhibit IV Page 26 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 15

SERVICES TO BE PROVIDED

The services to be provided include support to the Department of Education in exercising their

responsibilities and duties in its function as a State Educational Agency (SEA) and Local Educational Agency

(LEA). We will focus our assistance on increasing the Department’s efficiency by improving the mechanisms

used to manage, allocate, assign and use Federal Funds to achieve the desired results. These results will be

driven by the following main goals of the Department of Education:

1. Increase student’s academic achievement.

2. Assists students in their academic, emotional and social development.

3. Establish new strategies for teacher’s professional development.

4. Right-sizing the Department and establish streamlined procedures.

We will provide Technical Assistance and Financial Consulting Services to the Auxiliary Secretariat of Federal

Affairs Office (SAAF for its name in Spanish) during the fiscal year ending June 30, 2019. Below you will find

a list of the areas to which we will be providing services and the expected accomplishments for each one:

 Support and Technical Assistance to 21st Century Community Learning Centers

 Support and Technical Assistance to the Participation of Children Enrolled in Private Schools Unit

 Support and Technical Assistance to the Program Title II, Part A: Teacher and Principal Training and

Recruiting

 Support and Technical Assistance to the Program Mathematics & Science Partnership

 Support and Technical Assistance to the Auxiliary Secretariat of Federal Affairs as a liaison with the

Department of Education Office of Human Resources, The Office of Planning, The Budget Office

among others in relation to federal funds management.

 Support and Technical Assistance to the Work Plan Unit and the Adjudication Unit of the Auxiliary

Secretariat of Federal Affairs

 Support and Technical Assistance to the Monitoring Unit of the Auxiliary Secretariat of Federal

Affairs

 Support and Technical Assistance to Management and Administration of Federal Funds

 Support and Technical Assistance to the Homeless Program & Neglected and Delinquent Program

 Other Support and Technical Assistance to be Provided

SCOPE OF WORK

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Exhibit IV Page 27 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 16

SERVICES TO BE PROVIDED

The combination of these objectives will serve as the basis of the Department’s workplan. This workplan

pursues the idea that funds should assist the Department in achieving the goals they are intended to be use

for. The following approaches will be used as part of our work in order to add value, identify flaws and

establish mechanism to correct them:

 Establish the use of metrics to measure compliance and ensure that all program reporting is being

prepared on time.

 Analyze the data received from programs to assist them in the development of new strategies to

ensure compliance with Federal laws and regulations by pursuing efficiency.

 Budget vs Actual comparisons to identify deviations on a timely manner and correct them.

 Evaluation of information and results to assist in strategic decision-making.

 Establish a detailed workplan for each program goal and for each project to organize the work to

performed and ensure that all tasks are being assigned and deadlines are established.

 Monitoring activities to ensure that funds are being used for the purposes intended for and to

determine its effectiveness.

 Use of frameworks, flowcharts and procedures manuals to transfer the obtained knowledge and

reduce the learning curve.

 Data validation to ensure that the data used in the decision-making process is reliable and can serve

as the basis for comparisons, decisions and analysis.

 Use of Risk Analysis approaches to identified problematic areas and then develop and establish

preventive and detective controls to reduce or eliminate risks.

 Maximize the use of Information Systems to generate data in a speed up manner for better decision

making.

 Project Management strategies to organize the work to be performed, the goals to be accomplished

and follow up the timeline established.

The use of this approaches will guide our services in order to assist the Department in the establishment of

improved process, improve decision making and obtain better results. With the analysis performed and the

information provided the Department personnel will have all the necessary tools to achieve its goals in an

efficient way. A detailed list of the task to be performed is included in appendix A.

SCOPE OF WORK (CONT.)

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Exhibit IV Page 28 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 17

EFFECTIVE APPROACH

Terms of 

Engagement

Information 

gathering

Strategy & 

planning

Execution Reporting

BUSINESS RISK FOCUSED

Our methodology efficiently manages risk for our clients

and ourselves in a consistent manner. Our planning and

strategy is ‘business risk’ focused and therefore tailored

for each of our clients to reflect the specific operational,

regulatory and financial risks they face.

COMMON GLOBAL METHODOLOGY

We have a consistent shared global methodology that

manages our clients’ and our own risks effectively.

Because we use a common advisory methodology around

the world and share common software platforms, we are

consistent and transparent in how we approach the work

performed at every location. This allows members of our

global advisory engagement team to “speak the same

language,” which is critical to our ability to effectively

coordinate the services we provide.

OUR APPROACH

 Information gathering. Of current assessment utilities

and control activities to enable us to design

appropriate procedures, and conduct the engagement

in the most efficient manner and within the pre-agreed

time frame and budget.

 Suitably qualified staff. In order to enable an efficient

understanding procedure, while maximizing the

opportunity for value added service from their

experience.

 Effective communications. Effective listening and

regular, proactive two-way communication

throughout our work process is an essential

cornerstone of our work quality and superior client

service. This focus on communication allows your BDO

advisory team to gather information necessary to

perform the engagement and keep you up to date on

the status of our services so that you can provide

timely input and evaluate whether our services meet

your high expectations.

 Scalable. Every organization is unique, and obtaining

a strong understanding of your business is essential to

tailoring our services to your company’s unique risks

and business needs, and avoiding a “one size fits all”

approach. Our methodology has been specifically

designed to be flexible and scalable so that your

engagement team can incorporate its understanding

of your business into the approach to appropriately

size our efforts to your operations.

 Early and Continuous Partner Involvement. Our

professional staff to partner ratio is lower than our

major competitors, enabling more time for

shareholders to be actively involved in the

engagements. Your advisory shareholder has

considerable business experience, and BDO believes

the engagement shareholder should be actively

involved throughout the engagement process in a

hands-on manner. Our methodology has been

specifically designed to facilitate this level of partner

involvement.

 Industry Focus. Through our existing portfolio we

have developed industry specific procedures which

we will tailor to your specific situation.

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Exhibit IV Page 29 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 18

AUDIT INDEPENDENCE

Not only do we have to ensure that BDO remains

independent of our audit clients; we also have to

ensure that we are perceived to be independent by

any readers of your financial statements. We

therefore have a number of safeguards in place to

ensure this is the case.

If any of our staff believe that they might be

conflicted, there is a duty on them to make the

circumstances known to the partners. Any staff with

financial, business or personal relationships with you

will not be allowed to be part of the audit team.

The firm fully complies with the auditing

profession’s ethical standards on independence.

POTENTIAL CONFLICTS

We have made appropriate conflict of interest

inquiries with each of our firms around the world in

accordance with our quality assurance procedures,

and can confirm that our appointment by you will

not give rise to any conflicts.

BDO Puerto Rico, P.S.C. has maintained a

professional relationships with the Commonwealth of

Puerto Rico and several agencies as mentioned in our

Public Sector Experience on pages 9 and 17. These

relationships do not constitute a conflict of interest

relative to performing the proposed services.

OUR APPROACH TO DEALING WITH 

CONFLICTS OF INTEREST

We recognize that conflicts can arise from time to

time, for example due to a legal action. We will

always consider these conflicts on a case by case

basis. For every case, we will seek permission to

discuss with the other party before proceeding.

BDO will submit a written notice to the Management

of the Department of Education in the occasion of

engaging in any new professional relationship with

the Commonwealth of Puerto Rico during the period

of the audit contract.

If both parties are content for us to act, we will

agree the safeguards which need to be established −

which may involve the use of separate teams and

offices.

If it is not appropriate for us to act for both parties,

we will endeavour to reach the fairest solution by

recognizing the respective position of each party and

their ability to engage the services of another

provider.

CONFIDENTIALITY

We confirm that when you give us confidential

information we will at all times keep it confidential,

except as required by law, regulation or professional

pronouncements applicable to our engagement.

INDEPENDENCE AND CLIENT 

CONFIDENTIALITY

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Exhibit IV Page 30 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 19

QUALITY ASSURANCE

The quality of our work is key to our success and we

have made a number of investments to ensure our

professional services are performed to a high level of

quality in accordance with BDO’s policies and

applicable professional and regulatory standards.

INTERNAL QUALITY ASSURANCE 

PROCEDURES 

In order to protect our position as a recognized and

competent international accounting and consulting

organization and to ensure all clients are well

served, the BDO network abides by the standards

established by the various technical committees of

BDO. For the purpose of ensuring that there is

compliance with these standards, we have a Quality

Assurance manager.

BDO QUALITY ASSURANCE PROCEDURES

We have a number of mechanisms in place to ensure

that our professional services are performed to a

high level of quality in accordance with BDO’s

policies and applicable professional and regulatory

standards. These mechanisms include:

 Internal reviews − all technical work is reviewed

by a partner and/or a senior technical manager to

ensure work is performed and delivered to

standards consistent with all relevant professional

standards, and complies fully with appropriate

regulatory and legislative requirements.

 Staff continuity planning − we understand the

benefits to be gained both for our client and for

our internal staff in maintaining stable project

teams. To this end we build continuity planning

into our general business planning and transition

planning when necessary. This promotes

continuity wherever possible and ensures

seamless service.

 External reviews − BDO is subject to periodic

AICPA Independent Peer Reviews. Our most

recent inspection results are included as an

appendix.

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Exhibit IV Page 31 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 20

We fully expect our clients to monitor 

and measure our performance as 

external professional service 

providers. 

Depending on your requirements, this can be by

reference to all or some of the following:

 Our planning arrangements − it is essential in year

one to manage the transition from your present

auditors well;

 The completion of work in line with plans,

including the identification and response to

critical issues;

 Our understanding of your business and breadth of

operations;

 The quality of our conclusions and

recommendations (implemented, proportional);

 The timeliness of reporting;

 Meeting of pre-agreed deadlines;

 The overall involvement of the partner and

manager;

 The personal engagement of our team;

 The levels of communication throughout the year;

 Overall satisfaction with our service.

CLIENT SATISFACTION

Good quality, accurate and open client feedback

allows us to enhance our performance and gauge

how well we are meeting our client’s expectations.

We take client service and satisfaction seriously, and

continuously assess our clients’ expectations and

perceptions.

BDO recognizes that exceptional client service is

achieved in the long term only if we provide a

sustained level of superior service which is

monitored throughout our relationship. The feedback

is gathered as follows:

 Regular engagement team meetings to discuss the

progress of our work and current issues

encountered;

 Engagement team and the Department of

Education’s management closing meeting at the

conclusion of the annual audit to receive

feedback and discuss opportunities for

improvement;

 Client professional performance evaluations

throughout the year;

 Periodic conversations initiated by BDO nonengagement team leaders to provide additional

opportunities for candid feedback.

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Exhibit IV Page 32 of 89
SERVICE TEAM

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 22

WORKING TOGETHER

Companies know their success is dependent upon swift management decisions and

the guidance of a sound business advisor. From global Fortune 500 companies to

emerging niche entrepreneurs, BDO is this advisor.

Represented by more than 280 top-notch professionals, Certified Public Accountants and skilled and

trained professionals, including CVAs, CFEs, MAFFs, CGMAs, CISAs, CIRAs, PMPs and Attorneys.

BDO Puerto Rico/USVI Organizational Chart

as of 02/01/2018

20

ADMINISTRATION

6

Partners

14

Directors & Managers

32

Senior Associates

35

Associates

4

Partners

16

Directors & Managers

14

Senior Associates

42

Associates

2

Partners

4

Directors & Managers

2

Senior Associates

6

Associates

4

Directors & Managers

2

Senior Associates

2

Associates

ASSURANCE TAX / OUTSOURCING ADVISORY

BUSINESS ADVISORY / TECHNOLOGY & RISK MANAGEMENT / GOVERNMENT

21

Directors & Managers

14

Senior Associates

43

Associates

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Exhibit IV Page 34 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

BDO LEADERS SERVING 

THE DEPARTMENT OF 

EDUCATION

Page 23

Engagement Team

(4)

Senior Associates

Relationship Partner

Fernando Scherrer

Senior Manager

Luis Torres Valdés

(5)

Associates

Engagement Partner

Harry Alemán

Senior Manager

Mario Sánchez

(4)

Managers

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 24

Fernando Scherrer, CPA, CIRA, CA, MBA

Managing Shareholder

Assurance & Business Advisory 

Mr. Fernando Scherrer is the Managing Shareholder in charge

of the Business Advisory and Assurance Divisions. He cofounded Scherrer Hernández & Co. along with CPA Gabriel

Hernández in February of 2000, now BDO Puerto Rico, P.S.C..

He has more than 23 years of experience in public accounting

providing assurance services to insurance companies as well

as to publicly-traded, private, multi-national, growthoriented companies and not-for-profit organizations. Mr.

Scherrer is a licensed Certified Public Accountant in Puerto

Rico, USVI, Illinois and Louisiana, and a Certified Insolvency

and Restructuring Advisor (CIRA). He is also certified as an

Arbitrator by the Puerto Rico Supreme Court and has

extensive insurance and SEC reporting experience and has

assisted clients on initial public offerings and other public

filings, mergers and acquisitions, due diligence procedures,

review of internal controls and other matters, and has

performed several valuation analyses for “buy-sell”

transactions. He has served as expert witness and consultant

in various cases working together with several law firms.

From 2006 and 2009, Mr. Scherrer was the Executive Vice

President and Chief Financial Officer at FirstBank of Puerto

Rico, at the time a $19 billion publicly traded financial

institution. During his three-year stay at FirstBank, Mr.

Scherrer led key projects like the restatement process,

capital raising initiatives, the implementation and

improvements of interest rate risk measurements and

reporting tools and was instrumental in the lifting of all cease

and desist orders by regulatory agencies.

Prior to founding Scherrer Hernández & Co., Mr. Scherrer

spent 10 years of his career in the Big 4 accounting firm Price

Waterhouse (now PricewaterhouseCoopers LLP or PwC),

where he acquired expertise in the financial services,

government, manufacturing, distribution and insurance

industries.

PROFESSIONAL AFFILIATIONS

American Institute of Certified Public Accountants

Puerto Rico Society of Certified Public Accountants

Institute of Internal Auditors

Association of Insolvency and Restructuring Advisors

EDUCATION

M.B.A. in Finance, University of North Carolina

B.B.A in Accounting, Washington University

Over 20 years of public accounting experience providing

services to clients in the industries of government, retail,

wholesale, and not-for profit.

Vast experience in analysis of internal controls, business

processes, federal funds management and fraud

investigations. He has served clients placed on high risk by

the Federal Government and helped them to be removed

from such placement. Also, he has helped many clients to

correct findings from their Single Audit by assisting them in

the preparation and implementation of the Corrective Action

Plan. Improving business processes and internal controls for

client’s operations is one of his capabilities as a professional.

PROFESSIONAL AFFILIATIONS

American Institute of Certified Public Accountants

Puerto Rico Society of Certified Public Accountants

Institute of Internal Auditors

Institute for Internal Controls

Association of Certified Fraud Specialists

EDUCATION

Masters in Finance from the Interamerican University of

Puerto Rico

B.B.A in Accounting, University of Puerto Rico

Harry Alemán, CPA, MBA, 

CIA, CGAP, CICA, CFS, CRMA

Partner

Business Advisory & Outsourcing

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 25

Mr. Torres is a Certified Public Accountant with over twelve

(12) years of experience within our Business Advisory

Division. Mr. Torres has worked as a Finance Director in

companies such as: Professional Consulting and Novotek PR.

He has an extensive experience working with the Department

of Education providing technical support in all aspects of the

federal funds management including budget creation,

changes and closing per federal laws and regulations. He

participated in the development process and all

administrative matters related to federal funds management

for No Child left behind Program. He also has provided

support to the Program Officers in maintenance an accurate

accounting records. Mr. Torres has implemented knowledge

transfer and training to the Program personnel in each area

for early warning system implementation.

PROFESSIONAL AFFILIATIONS

Puerto Rico Society of Certified Public Accountants

EDUCATION

B.B.A. in Accounting, El Turabo University

Luis Torres Valdes, CPA 

Senior Manager

Business Advisory

Mr. Sanchez is a Certified Public Accountant and Chartered

Global Management Accountant with more than twelve

(12) years working in public accounting.

Mario’s experience mainly developed around government

entities providing direct assistance on the preparation of

financial statements, identifying risk, conduct the efforts

proposed in accordance with generally accepted

accounting principles in accordance with all Federal

Agency accounting, quality assurance guidelines and

regulations.

He specialized in management and compliance related to

Federal Grants and establishing correction plans to remove

“High Risk” grantee designations. Mario also assisted the

finance, budget and external resources offices regarding

accounting, budget, time & labor process, and any issue

regarding federal funds management and provide direct

assistance on the preparation of Indirect Cost Rate

proposals in compliance with Federal Regulations.

PROFESSIONAL AFFILIATIONS

Puerto Rico Society of Certified Public Accountants

American Institute of Certified Public Accountants

Chartered Institute of Management Accountant

EDUCATION

B.B.A. in Accounting, University of Puerto Rico

Mario Sánchez, CPA

Senior Manager

Business Advisory

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 26

FOR OUR PROFESSIONAL STAFF

The Firm sets the plan and prepares for the annual CPE

program by the following process. Each year the CPE team

reviews and assesses the content of current training

material, and in conjunction with subject matter experts,

develops, updates and delivers core curricula in line with

the performance and development needs in group live,

group internet-based, and self-study platforms. This

content spans CPA Technical, Technology, and Business and

Leadership areas for national, regional and local office

training programs. The Curriculum Liaisons (Training &

Development Managers) provide feedback by summarizing

local needs/trends to the international sponsors on training

relevance based on feedback and experience in the day to

day offices. The annual forecasting process assists the

practice offices in identifying training participation for each

of the annual milestone courses and appropriate training for

new hires and industry group specialization

placement. Finally, the CPE Program complies with yellow

book CPE requirements.

CONTINUING PROFESSIONAL EDUCATION

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 27

STAFF CONTINUITY AND TURNOVER

STAFF CONTINUITY

We understand the benefits to be gained both for

our clients and our own team in maintaining a

consistent senior project team and we make every

effort to achieve continuity.

Planning for staff availability is an essential element

in the operational processes of our business and we

can confirm that the team outlined in this document

is the team you will see and work with for the

duration of this assignment.

We recognize that on occasions team changes are

inevitable. Should this arise, we will discuss the

options with you and enable you to meet the

potential new team members in advance. We will

ensure any new resources are appropriately

experienced and fully briefed. Any time spent

briefing the new team member would, of course, be

at our cost.

HISTORICAL LOW TURNOVER RATES

BDO has a history of low turnover rates. We know

high turnover negatively impacts client satisfaction,

the amount of time and energy our clients spend to

acclimate our personnel, and overall engagement

efficiency. It is also in our own best interest to

retain the investments we make in hiring and

training good employees. Because it benefits us and

our clients, we do not accept the theory that high

turnover in our profession is inevitable. We have

made significant efforts during the past several years

to keep our staff turnover below the industry

average.

We believe that our rates of turnover will continue

to be lower than industry standards. In Puerto Rico,

BDO is the first CPA Firm ever awarded with the

recognition as one of the Top 20 Employers.

Excellent Staff-to-Partner Ratio: We also view our

intentionally created low staff-to-partner ratio as a

strategy against staff turnover, as our staff receive

closer mentoring and oversight. This also

restructures relationships with clients to be much

more partner-driven.

Partners’ Responsibility: We have also placed

responsibility on all our partners to work hard to

retain staff; it is even a metric of their performance

evaluations.

Hiring: We invest heavily in the recruiting process.

Like many organizations, we believe the best way to

retain personnel is to be proactive in the recruiting

process; to find employees with the right strengths

and character who will fit into our firm culture.

High Growth Rate: This translates to greater career

opportunities for our professionals.

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Exhibit IV Page 39 of 89
PROFESSIONAL FEES

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 29

VALUE FOR FEES

We are committed to quality, 

value-added service.

We understand the importance of efficiencies and cost control, and have specifically designed our audit

methodology to provide your engagement team with the tools they need to perform high quality audit

service in as cost effective a manner as possible.

In addition, you may contact us at any time without additional charges. A collaborative relationship is

important and BDO is committed to investing the necessary time to discuss your changes, challenges and

potential issues which may impact you and your business.

We believe in complete transparency, which means:

 We quote services based on experience and realistic expectations to avoid unexpected fees.

 It is not our practice to bill for routine telephone consultations or questions unless they require

significant research. If you request special services outside the scope of services outlined in this

proposal, we will discuss those services and provide management with a fee estimate related to such

assistance. We will not allow concerns about fees to jeopardize a relationship based on mutual trust

and respect.

Our fee proposal:

We are committed to provide a quality service to the Department of Education that represents value for

money and is completely transparent when it comes to fees. Our proposed fees are as follows:

Estimated

Hours Blended Rate Fees*

Total 34,300 $105 per hour $ 3,601,500

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Exhibit IV Page 41 of 89
APPENDIXES

A. Detailed Scope of Work 

B. Our Services

C. Peer Review Report

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 31

With our assistance and support the Department of Education will provide capacity building to employees in

order to for them to develop the necessary skills to manage the program on an efficient way. In addition BDO

will assist the Department in the integration of tasks related to the new structure

SERVICES TO BE PROVIDED

Support and Technical Assistance to 21st Century Community Learning Centers

1. Creation and development of financial and statistical reporting tools that permits the program to create

reports on academic enrichment activities for children, contact hours per student and the correlation

between those activities and the students academic results.

2. Development of evaluation tools with specific metrics of execution that permits the program ranks the

service providers in relation with the students academic results, parental participation and community

satisfaction.

3. Do analysis and recommendation regarding the best practices of use of funds, focused in reduce the

carryover funds, planning process and a year work plan that guides the Program in achieving the main goals

of the Puerto Rico Department of Education

4. Prepare required reports on budgets, obligations, disbursements, as well as reports requested for Risk

Management or United State Department of Education, external auditors and other required by the

Program.

5. Guidance, knowledge transfer and training staff in the process of review of audit reports required, among

these single audit, contract compliance and financial statements submitted by the certified public

accountants of each participating entity of federal funds from the 21st Century Program.

Support and Technical Assistance to the Participation of Children Enrolled in Private Schools Unit

1. Development of strategies, templates and procedures in order to have automated and full online private

schools request of services, invoices process and the necessary audit trails documentation in order to have

complete visibility and reports that allow the Program to make informed decisions.

2. Create a reporting tool by compile financial and statistical data regarding the type of professional

development activities that permits the program evaluate the academic impact of those activities in the

private schools participants.

3. Development of evaluation tools with specific metrics of execution that permits the program ranks the

service providers in relation with the students academic results, parental participation and community

satisfaction.

4. Provide support and technical assistance to the Equitable Services Unit in the creation of efficient

processes that demonstrate compliance with section 1117 of the "Every Student Succeed Act" through the

use of best fund management practices.

5. Support and technical assistance in the automatization of the Consolidated State Performance Report

(CSPR), Student Poverty Level Threshold, EDFacts Reports, as well as any other report requested.

A. DETAILED SCOPE OF WORK

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 32

SERVICES TO BE PROVIDED

Support and Technical Assistance to the Program Title II, Part A: Teacher and Principal Training and

Recruiting

1. Create a database for the PRDE teacher certification and recertification needs and help the program to

develop an strategic to provide teachers with those certification in order to increase student achievement

consistent with the challenging State academic standards

2. Design a strategic plan by data analysis process to identified the teachers, principals, and other school

leaders who are effective in improving student academic achievement in schools in order to stablish the

goals for effectively use of the program funds.

3. Develop an effective procedures and tracking tool for the open and closeout process of each semester of the

universities tuition fees services to teachers in order to identified surplus of funds on time to redistribute

the funds and decrease the amount of carryover funds .

4. Conduct an analysis of the use of class size reduction academic strategic in order to assist the program in

the process of budget distribution in connection with the PRDE goals and effectively use of federal funds

5. Support and advice in the implementation of the law Every Student Succeeds Act in relation to the Title II of

the Act Preparing Training and Recruiting High Quality Teachers and Principals or Other School Leaders.

6. Support to the program coordinator, the Director of the Auxiliary Secretariat of Federal Affairs Assistant

Secretary or his delegate in any additional request related to the management of program funds.

Support and Technical Assistance to the Program Mathematics & Science Partnership

1. Support and technical assistance in the process of account closeout

Support and Technical Assistance to the Auxiliary Secretariat of Federal Affairs as a liaison with the

Department of Education Office of Human Resources, The Office of Planning, The Budget Office among

others in relation to federal funds management.

Among the tasks to be performed are:

1. Support and technical assistance in reconciling the budget and expenditures of federal accounts as part of

the activities to ensure that use of funds in a timely manner.

2. Create a reconciliation tool for personal assignment and the approved federal budget for each position paid

with federal funds

3. Support and technical assistance to Office of Budget and Finance Department in federal accounts close out

process.

A. DETAILED SCOPE OF WORK (CONT.)

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 33

SERVICES TO BE PROVIDED

Support and Technical Assistance to the Work Plan Unit and the Adjudication Unit of the Auxiliary

Secretariat of Federal Affairs

1. Development of a data collection tool of the students, teachers and schools’ feedback on the services

received through the approved work plans. Maintain a data base to create periodic progress reports based on

each work plan achievements. Including training and knowledge transfer to the PRDE staff.

2. Prepare cost and expected metrics analysis for work plans approved by the Auxiliary Secretariat of Federal

Affairs and provide support in the decision-making process.

3. Development and creation of working tools that would facilitate the invoices review process to the PRDE

staff on invoices received from vendors in an approved work plan. (Create uniformity in billing for the

services - this since the creation of the proposed work plan).

4. Prepare budget analysis impact of the work plans to ensure the effective implementation of the services

according to the goals established by the Department of Education.

5. Provide project management support and technical assistance to create timelines about all procedures and

process for the implementation of the work plans funded by the Auxiliary Secretariat of Federal Affairs.

Identify prematurely the potential remaining to prepare relevant adjustments and modifications for good

management of the federal funds.

6. Provide recommendations for improvement to the adjudication unit in evaluating the professional services

forms (PSF), request for proposal (RFP) process, work plan platform and the logistic for all process of the

office.

Support and Technical Assistance to the Monitoring Unit of the Auxiliary Secretariat of Federal Affairs

1. Train the Monitoring Unit personnel on planning and defining scope of monitoring activities to reach those

programs at most risk and work over improvement. Ordering activity planning on both SEA and LEA level and

sequencing the processes to work organized and effectively.

2. Resource planning based on the population of offices and programs to be monitored based on a Risk

Assessment Analysis. Develop professional education trainings to the monitoring personnel to empower them

on the areas to be visit and the processes to the evaluated.

3. Developing schedules and time lines and enforce their accomplishments. Work on time estimates to

effectively plan over reachable goals.

4. Follow up on the implementation of an electronic data base or software that enables the realization of the

monitoring process on-line, enabling the production of reports and statistical data that shows the results of

the work performed.

5. Develop a review process on the monitoring findings, train the monitoring personnel on this process to create

uniformity on the monitoring results.

6. Create additional monitoring tools for the evaluations on the use of funds, currently the main effort of the

monitoring unit is directed to the programmatic aspect of the processes. Documentation of results reached

including charts, graphics and presentations on a periodic basis to monitor the results of the efforts in place.

A. DETAILED SCOPE OF WORK (CONT.)

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 34

SERVICES TO BE PROVIDED

Support and Technical Assistance to Management and Administration of Federal Funds

1. Design and implementation of administrative processes that require the use and management of federal

funds to the various offices and programs, as requested by client. Provide recommendations to improve

operational procedures that impact federal funds and assists in their implementation.

2. Technical assistance in the analysis of reasonableness and permissibility in the use of federal funds support

and follow up on compliance with federal requirements of comparability, maintenance of effort and

supplement not supplant.

3. Support, and technical assistance in the process of preparing reports requested from the state and/or the

federal government related to the federal funds administered by the Auxiliary Secretariat of Federal Affairs

4. Provide training to the staff of the Auxiliary Secretariat of Federal Affairs on issues related to budget

management, federal requirements, and any other needs related to the proper use of federal funds.

5. Support and technical assistance in creation and evaluation of procedures manuals, circular letters,

regulations and administrative memorandums of compliance with federal requirements.

A. DETAILED SCOPE OF WORK (CONT.)

Other Support and Technical Assistance to be Provided:

1. Technical assistance related to the compliance of Federal laws and regulations related to the ESSA law

implementation process and its impact in the Human Resources functions.

2. Technical assistance related to the implementation of effectives strategies for the implementation of the

new Local Educational Agency Regions.

Support and Technical Assistance to the Homeless Program & Neglected and Delinquent Program

1. Support in the creation of procedure manuals to be used in the program.

2. Support and knowledge transfer to the program in the development of instrument of monitoring and risk

assessments.

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 35

B. GENERAL SERVICES

BDO offers a breadth of services tailored to meet your needs today and in the future. Beyond 

traditional audit, tax and consulting work, some of the specific ways we can help include:

BUSINESS ADVISORY SERVICES

Risk Advisory Services (RAS)

• Internal Audit

• Best Practices Policies and Procedures Documentation

• Risk assessment

• Governance, Compliance, and Risk Management

• Sarbanes-Oxley

• Contract and Regulatory Compliance

Transaction Advisory Services

• Financial Due Diligence

• Capital Raise Initiatives

• Mergers & Acquisitions (M&A) Tax

• Mergers & Acquisitions (M&A) Dispute Resolution

• Post-Merger Planning and Integration Support

Valuations and Business Analytics

• Financial and Tax Reporting

• Transaction Support

• Business Analytics

Forensic Accounting & Investigations

• Corruption and Fraud Investigations

• Anti-Fraud and Anti-Corruption Compliance 

• Forensic Technology Services

• Fraud Prevention and Fraud Risk Assessment

Restructuring and Turnaround Services

• Capital Raising Advisory

• Interim and Crisis Management

• Business Debt Restructuring

• Business Workout and Turnaround Management 

Consulting

• Business Bankruptcy Alternatives

Litigation, Arbitration, and Dispute Advisory

• Lost Profits / Damages Analysis

• Construction Claims Litigation

• Family Law

• Shareholder and Partners Disputes

• Post-acquisition Disputes

• Arbitration

Financial Institutions Advisory Services

• Loan Reviews process for loans portfolio

• Commissioner of Financial Institutions compliance 

examination

• Evaluation and documentation of intercompany 

changes as required by Regulation W

• Allowance for Loan Losses Documentation and 

Calculation

Government Contracting

• Grant Management and Compliance Services

• Cost Allocation Plans

• Indirect Cost Proposals 

Strategic and Other Advisory Services

• Interim Functions (CFO/Comptrollership)

• Acquisition and Divestiture Analysis

• Represent Clients to Obtain Closing Agreements and Ruling 

Requests

• Financial Statement Preparation Support

• Value of Recapitalizations

• Business Process Outsourcing

• Recruiting

IT, RISK, AND COMPLIANCE SERVICES

Information Technology

• IT Support

• Data Networks

• Technical Support

Risk Management

• CIO Advisory

• Business Impact Analysis

• Disaster Recovery Plan

• Business Continuity Plan

• Risk Assessments

• Strategic technology and information systems planning

• Vulnerability Assessments

• Penetration Test

• Documentation (policies and procedures)

• Project Management

• Process definition and development

• User Training

• RFP development for system selection

• IT Governance

• Computer Forensic Analysis

Compliance

• SSAE no. 16 readiness

• SSAE no. 16 engagements

• Rule 76 (as per the Insurance Commissioner)

• Data Analytics / Computer Assisted Audit Techniques 

(CAATs)

• Regulatory Frameworks

• IT Contract Compliance

• Systems Validation

• HIPAA Compliance Services

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 36

ASSURANCE SERVICES

Financial Statements Audit

• Consumer Business

• Financial Services

• Mortgage Banking

• Gaming, Hospitality & Leisure

• Government & Public Sector

• Healthcare

• Individuals

• Manufacturing & Distribution

• Natural Resources

• Nonprofit & Education 

• Mutual Funds/Private Equity

• Real Estate & Construction

• Restaurants

• Technology & Telecommunications

• Employee Benefits

• Others

Law 163 Compliance Report

Employee Benefit Plans Audit

• Defined Benefit Plans

• Defined Contribution Plans

• ERISA Compliance Matters

Agreed Upon Procedures

• Specific Certifications

• Tourism Tax Credits

• Development Tax Credits

• Compliance with Contractual Requirements

Sarbanes Oxley Section 404 Compliance and Documentation

Examinations Reports

Governmental Entities and Single Audits

Computer Application Audits – SSAE 16

Technical Accounting Advisory

Reviews and Compilations

Internal Control Assessments 

OUTSOURCING SERVICES

Accounting Services

• Bookkeeping

• Bank reconciliations

• Subsidiaries of A/R and A/P

• Fixed assets ledger

• Monthly financial reports

• Others

Payroll and Payroll Taxes

• Computation of payroll

• ACH transfers to the employees

• Payroll reports

• Deposits of social security and ITW

• Quarterly and Annual returns and reports 

• Informative returns

• Workmen compensation insurance policy 

Tax Compliance

• Sales and Use tax returns 

• Small Business Tax returns

Others

• Entity registration in the governmental agencies 

• ACH payment processing to vendors 

• Financial statements support

• Deal with debt notifications

• Human resources general advisory

TAX COMPLIANCE

Tax Return Preparation and/or Review

• Individual

• Corporate

• Trusts, local and foreign

• Partnerships

• Estates

• No-for-profits

• Deferred Compensation Plans

• Gift tax (local and federal)

• Corporation of Individuals

• Federal, State and Local Returns, with and without Tax 

Incentives

• Municipal and Personal Property Tax Returns

• Sales and Use Tax Returns

• Individual and Family Tax

• Expatriate Services

• Other

Income Tax Provision Reviews

TAX ADVISORY SERVICES

Business Income Tax Matters

• Choice of entity and business formations

• Entity classification elections

• Tax accounting methods

• Special deductions calculations

• Alternative minimum tax planning

• Insolvency and cancelation of indebtedness analysis

• Accounting for income taxes (ASC 740)- outsourcing and 

consulting

• Uncertain tax positions analysis (FIN 48)

• Tax planning and consulting

• Corporate documentation, operating agreements and 

capital structuring

Tax Controversy

• IRS and PR Treasury audits and examinations

• Ruling Requests

• Penalty Abatements

• Closing Agreements

• Tax notices 

Compensation and Benefits 

• Employee stock option plans

• Structuring executive pay

• Incentive plans

• Employee benefit plan audits

• Executive Compensation– Section 409A

• Cross-border compensation design

• Tax equalizations

B. GENERAL SERVICES (CONT.)

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 37

TAX ADVISORY SERVICES (CONT.)

State & Local Taxes

• Request for tax incentive

• Gross receipts diagnostic assessments

• Municipal nexus studies and license tax registrations

• Property tax planning 

• Municipal excise taxes

• Controversy and audit defense

• Sales and use tax registrations

• Sales and use tax nexus determination

• Sales and use tax general consulting and planning

Nonprofit Tax Services

• Nonprofit formation

• Tax exemption qualifications with IRS and PR Treasury

• Unrelated business income (UBI) issues

Private Client Services

• Asset protection strategies

• Wealth transfer planning

• Gift, estate and trust tax planning

• Foreign-trust reporting, planning, and compliance

• IRS, State and PR examinations

• Identification of tax-efficient opportunities

• Alternative minimum tax planning

• Projections for tax liability

Tax Incentives and Credits

• Planning and design of tax efficient structures

• Tax incentives applications

• Renegotiation and amendments of tax grants

• Tax credits documentation and monetization

• Individual Tax Grants 

• Export Services Tax Grants 

• Private Equity Tax Grants 

• International Financial Entities- licenses and consulting 

• International Insurance Companies Act

• Tourism Development Act

• Film Industry Incentives Act

• Green Energy Incentives Act

• Economic Incentives for the Development of Puerto Rico

Tax Transaction Advisory Services

• Structuring of acquisitions, dispositions, mergers, carveouts, etc.

• Tax modeling and tax benefit analyses

• Tax due diligence, both buy-side and sell-side

International Tax Services

• Permanent establishment analysis

• IRC 367 transfers

• Cross-border tax structures and reorganizations

• Anti Inversion Transactions

• CFC and Subpart F analysis

• PFIC analysis

• Foreign Account Tax Compliance Act (FATCA)

• Foreign withholding and information return reporting

Transfer Pricing

• Planning

o Compensation structure design

o Intangible property valuations and buy-in 

payments

o Market penetration strategies

o Mergers and acquisitions due diligence services

• Compliance Services

o Documentation studies (global and countryspecific)

o Intercompany policy and implementation 

guidelines

o Intercompany agreements

• Audit Defense Support

o Tax authority response and negotiation

o Dispute resolution

o Competent authority submissions

o Litigation support and testimony

• Benchmarking Services

o Financial ratio analysis

o Capital structure analysis

o Effective tax rate analysis

o Royalty rate analysis

B. GENERAL SERVICES (CONT.)

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 38

PEER REVIEW

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Exhibit IV Page 50 of 89
BDO Puerto Rico, PSC, a Puerto Rico Professional Services 

Corporation, is a member of BDO International Limited, a 

UK company limited by guarantee, and forms part of the 

international BDO network of independent member firms.

BDO USVI, LLC, a United States Virgin Island’s limited 

liability company, is a member of BDO International 

Limited, a UK company limited by guarantee, and forms 

part of the international BDO network of independent 

member firms.

BDO is the brand name for the international BDO network 

and for each of the BDO Member Firms.

Material discussed in this publication is meant to provide general information and should not be acted on without 

professional advice tailored to your individual needs.

Copyright ©2017 BDO Puerto Rico, PSC. All rights reserved.

CONTACT INFORMATION

FERNANDO SCHERRER, CPA, CIRA, CA, MBA

Managing Partner

Business Advisory & Assurance Services

t [787] 754-3999

f [787] 754-3105

m [787] 501-1926

e fernando@bdo.com.pr

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Exhibit IV Page 51 of 89
JUNE 21,2018

BDO PUERTO RICO/USVI PROPOSAL TO PROVIDE SERVICES TO:

PUERTO RICO DEPARTMENT OF 

EDUCATION 

Appendix B

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 2

BDO PUERTO RICO, PSC

1302 Ponce De Leon Ave. 

1

ST Floor 

San Juan, Puerto Rico 00907

Tel: 787-754-3999 Fax: 787-754-3105

www.bdopr.com

BDO USVI, LLC

Foothills Professional Building

9151 Estate Thomas, Suite 201

St. Thomas, VI 00802

Tel: 340-776-0640 Fax: 340-779-8653

www.bdousvi.com

June 21, 2018

Ms. Julia B. Keleher, ED. D, PMP

Puerto Rico Department of Education

PO Box 190759

San Juan, PR 00919-0759

Dear Ms. Keleher:

We thank you for the opportunity to present our proposal to provide advisory services to the Puerto Rico Department of

Education (“Department of Education”). BDO has a unique culture rooted in core values that ensures continuous focus

on our clients and professionals and a long-term commitment to quality service. Our clients experience our culture

through a service approach characterized by extensive involvement of senior professionals, direct access to top

technical resources, and straightforward, proactive communications delivered through a centralized, responsive,

knowledgeable client service team.

With a global footprint that spans 154 countries and extensive experience delivering professional accounting services to

companies around the world, BDO is poised to address your immediate service needs and is ready to leverage our

capabilities to support you in your objectives. 

We understand there are several matters that you consider to be important when selecting a professional accounting

firm. We believe the following attributes demonstrate why BDO is the ideal firm for the Department of Education: 

 BDO’s extensive experience and expertise in assurance, tax and advisory services

 BDO’s deep government and related sectors experience

 Swift responsiveness and issue resolution

 Your engagement team is empowered to make technical decisions in the field.

 BDO’s “no surprises” and value-added competitive fees philosophy

The following statement of our capabilities aims to address these concerns and outline how BDO will meet your service

needs. Our involved and accessible partners combined with our technical knowledge and flexible, non-bureaucratic

organizational structure will provide you with responsive service. We are confident BDO can meet your needs and

exceed your expectations in providing well-coordinated services in a cost-effective manner.

Again, we thank you for the opportunity to propose. We look forward to personally presenting our proposal, further

demonstrating our capabilities and distinctly different service approach, and responding to any related questions.

Sincerely,

Fernando Scherrer, CPA, CA, MBA

Managing Partner

Business Advisory & Assurance Services

787-378-4363

fernando@bdo.com.pr

BDO Puerto Rico, PSC, a Puerto Rico Professional Services Corporation, is a member of BDO International Limited, a UK company limited by guarantee, and forms part 

of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. 

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

CONTENTS

4 Firm Profile and Qualifications

8 Public Sector Experience

14 Service Approach

21 Service Team

28 Professional Fees

30 Appendixes

Page 3

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Exhibit IV Page 54 of 89
FIRM PROFILE AND 

QUALIFICATIONS

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 5

THE BDO NETWORK - WHERE YOU NEED 

US, WHEN YOU NEED US

The world seems to be much smaller, and BDO clients value our international reach. Our global network in more

than 162 countries stands ready to serve your Organization wherever in the world you do business. The benefits of a

global network include:

A globally integrated service model

The active involvement of local senior professionals

A consultative, client-specific approach

An industry-specific team, with you for the long term

A service culture of continuous, proactive communication

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

BDO PUERTO RICO / USVI

12 

Partners

283 Staff

2

Offices

Main Offices

Audit Tax

Ranked

#1

In Puerto Rico

#1Customer

Satisfaction

Serving 

Local Market

As of 02/01/2018

Advisory

REVENUES %

LOCAL PRESENCE

BDO is a full service certified public accounting, tax and business

advisory firm with 18 years of industry-focused experience,

providing services to public and private clients. With a novel,

ground breaking approach centered in partnering with our clients

and providing exceptional client service, BDO is the fastest growing

and largest local firm in the Island. We are your ideal business

partner with the best skilled and trained professionals suited to

manage your ongoing and future needs.

Since its foundation, our key to success has always been focusing

on our clients’ needs and having high caliber professionals. This

allows us to keep up-to-date with the industry trends, anticipating

changes, and designing proper strategies to take advantage of

arising opportunities.

 Member of the BDO international network, leveraging local

expertise with a global perspective

 Building bridges between creative ideas and viable

entrepreneurships

 Only international firm with meaningful local presence in the

USVI

 Winner of the prestigious Network of the Year award at the

International Accounting Bulletin (IAB) Awards 2015.

 Over 240 skilled and trained professionals, including CPAs,

CVAs, CFEs, MAFFs, CGMAs, CIAs, CRMAs, CGAPs, CISAs,

CIRAs, PMPs and Attorneys

 Ranked #1 in customer satisfaction at a recent survey of

audit and consulting firms in Puerto Rico

 First CPA Firm ever awarded with the recognition as one of

the Top 20 Employers in Puerto Rico

 The only Firm recognized by the Ernst & Young Entrepreneur

of the Year Award in Puerto Rico

 Registered with the American Institute of Certified Public

Accountants and the Public Company Accounting Oversight

Board

BDO PUERTO RICO/USVI

LOCAL REACH

INDUSTRY STRENGTHS

• Education and Non-profit

• Energy and Natural Resources

• Financial Services and Insurance

• Government and Public Sector

• Healthcare

• Hospitality 

• Manufacturing

• Private Equity and Hedge Funds

• Real Estate Ventures and Development

• Retail and Distribution

Page 6

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Exhibit IV Page 57 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

BDO PUERTO RICO RANKS NO.1 IN CUSTOMER

SATISFACTION

Customers of audit and advisory firms in Puerto Rico

participating in an independent survey, ranked BDO

Puerto Rico No. 1 in customer satisfaction.

The market research firm Centroamérica en Siete Días

surveyed 150 mid and large, companies located in Puerto

Rico that currently receive services from local audit and

advisory firms. The surveys were conducted in February

of 2015.

BDO scored 4.16 (out of 5) in customer satisfaction,

exceeding even international “Big 4” firms. The survey

also shows BDO’s solid second position in terms of market

share with 18%, surpassed only by PwC with 20%.

EXCEPTIONAL CLIENT SERVICE

#1 IN CUSTOMER SATISFACTION

Others, 3.37

RSM ROC, 3.38

Kevane, 3.51

Baker Tilly, 3.95

E&Y, 3.96

Deloitte, 4.03

PWC, 4.08

BDO, 4.16

Customer Satisfaction Index

(Scale: 1=worst, 5=best)

Average, 3.72

Gabriel Hernandez, CPA

Partner, BDO Puerto Rico, P.S.C.

“We focus every day on putting our customers at the 

center of everything we do. The results of this 

customer satisfaction survey reflect our hard work and 

drives us to continue to think of our customers first and 

how we can partner with them every day to obtain a 

better economic performance in their respective 

businesses." 

Because of our commitment to quality service BDO has

emerged as the firm of choice for many organizations

transitioning away from local service providers as well

as “Big 4” firms.

Some of the organizations that have found value

changing from the “Big 4” to BDO include:

 3M Puerto Rico, Inc.

 Advent-Morro Equity Partners, Inc.

 Agilent Technologies Inter-Americas, Inc.

 Ballester Hermanos, Inc.

 CCM Group (Commercial Centers Management)

 César Castillo, Inc.

 ddr Group

 Dubon Group

 Economic Development Bank

 Empresas Caparra Group

 Fundación Ángel Ramos

 Guardian Insurance

 Hubbell Incorporated

 Kraft-Heinz

 Industrial Rubber & Mechanics Inc. (INRUMEC)

 Lamar Advertising of Puerto Rico, Inc.

 Lockhart Group (USVI)

 Luxury Hotels International of Puerto Rico, Inc.

 Perfecseal, Inc.

 Puerto Rico Electric Power Authority (PREPA)

 Puerto Rico Industrial Development Company

(PRIDCO)

 Puerto Rico Infrastructure Financing Authority (AFI)

 Puerto Rico Ports Authority

 Rooms To Go (PR), Inc.

 Sealy Matress Co. of Puerto Rico

 Tegrant Alloy Brands of Puerto Rico

 United Surety Insurance Company & USIC Life

 University of the Virgin Islands

 Wärtsilä Caribbean, Inc.

Page 7

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Exhibit IV Page 58 of 89
PUBLIC SECTOR EXPERIENCE

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

SERVING THE PUBLIC SECTOR –

WE KNOW YOU

BDO’s Government Services professionals have an indepth knowledge and understanding of applicable state

and local government rules and regulations, federal

and industry accounting and auditing standards and

requirements, financial management rules and

requirements, information technology system auditing

standards, and economic stimulus program and

reporting requirements. Our methodologies and

program management approach are designed to deliver

repeatable and reliable processes that help clients

achieve their goals, facilitate communications, assure

accurate and timely reporting, and enable effective

operations.

BDO is a valued business advisor to many agencies in

the public sector. Our professionals deliver hands-on

experience and technical skills to address each of our

clients’ distinctive needs. 

Our team of professionals offers the hands-on

experience and technical skill you can rely upon to

serve the distinctive needs of the Department of

Education.

Our team includes professionals that have worked with

GASB 34 financial statements since the pronouncement

was issued in 2002. We have implemented GASB 34 for

several Public Corporations and the Commonwealth of

Puerto Rico, including the conversion from fund

accounting to Government Wide financial statements.

We also engage in efforts to design, direct, or

recommend corrective action programs to assist

governmental and other public sector agencies

remediate deficient practices and establish effective

accounting protocols, systems, and procedures.

Many of these have been complex and comprehensive

projects requiring coordination of multiple tasks for

numerous entities within short timelines. We are,

therefore, prepared and well-qualified to perform the

required audits and prepare all of the reports required

by the Department of Education in a coordinated and

integrated manner that meets your needs for accurate

reporting and timely delivery.

BDO PUBLIC SECTOR EXPERIENCE

Page 9

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Exhibit IV Page 60 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

PUBLIC SECTOR SERVICES

BDO’s Public Sector provides advisory and management

consulting support services to government clients. We

do this by leveraging over one hundred years of

commercial and global history as a company and highly

qualified, experienced professionals within the

government sector.

BDO’s Public Sector practice was launched in the past

decade in response to the demand for a fresh,

independent perspective in the government

environment from a firm able to leverage its proven

methodologies and reputation for providing services to

its clients for more than 100 years.

ADVISORY

Audit Readiness and Audit Remediation: Our

team provides audit readiness and remediation

support to clients undergoing financial statement

and compliance audits. From assisting in the

development of standardized documentation to

support financial transactions to business process

improvement and reengineering, our team assists

government clients overcome financial and

performance audit obstacles. 

Internal Controls: We assist government clients

develop and maintain sustainable internal

controls programs that provide effective and

efficient operations; accurate, timely, and

relevant data; and prevent and detect misuse,

mismanagement, and fraud through our internal

controls services. We provide internal controls

assessment services which take a risk-based

approach view of an organization to develop and

implement an internal controls program that is

not only effective and efficient, but resultsdriven and cost effective. By developing a riskbased approach, an agency can direct people,

resources, and funds to a series of actions to

ensure efficient and effective financial

reporting.

Financial Compliance and Financial Management:

Our team provides financial management services to

government clients that cover the spectrum of CFO’s

responsibilities: budget planning and execution,

financial reporting, performance and program

evaluation, financial policy, accounting, financial

system testing and maintenance, and internal control

assessments. We also assist government entities with

achieving and maintaining compliance with standards

and regulations such as Office of Management and

Budget Circulars and government accounting standards.

GASB 34 Financial Statements and Comprehensive

Annual Financial Report (CAFR): Our team of

professionals are the industry leaders in preparing

GASB 34 Financial Statements and the CAFR. We

have over 15 years of experience with GASB 34 and

over 20 years in the preparation of the CAFR for the

Commonwealth of Puerto Rico.

PUBLIC SECTOR SERVICES

Page 10

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

PUBLIC SECTOR SERVICES OFFERING

Page 11

BREADTH OF EXPERIENCE

BDO offers a breadth of services tailored to meet your needs. Our core services include:

Assurance, Accounting, and Financial Reporting

 Financial Audit

 Performance Audit

 Single Audit pursuant to Uniform Guidance 2 CFR

200 Subpart F (Previously known as OMB Circular

A-133)

 Audit Readiness Support and Remediation

 Accounting Procedures Design and 

Implementation

 Outsourced CFO Act Accounting Support

 Budget and Performance Integration

 Cost Accounting Advisory Services

 Financial Statement Compilation

Inspector General Support Services

 Management and Evaluation of Use of Public 

Expenditures

 Audits and Reporting on Use of Public 

Expenditures

 Assessment of Internal Controls

 Forensic and Investigatory Projects

 Performance Audits and Reviews

Technology Governance and Portfolio

Management

 Information Technology Security, Risk Evaluation,

and Management

 General and Application Controls Internal Audit

 Information Technology and Business Process

Alignment

 IT Controls Assessments

Compliance, Risk Advisory, and Crisis

Management

 Regulatory and Statutory Compliance Reviews

 Program and Contract Compliance Reviews

 Internal Control Audit/Evaluation

 Internal Control Design and Improvement

 OMB Program Review and Submissions

 Business Process Improvement and Reengineering

Business Process Enhancement

 Operational Performance Assessments and 

Improvements

 Business Processes Integration

 Project Management Office

 Financial Analysis and Modeling

 Business Continuity Plans

 Controls Optimization

Enterprise Risk Management and Internal Audit

 Financial and Operational Audits

 Quality Assurance Reviews

 Risk Assessment

 Controls Optimization

 Strategic Partnering and Staffing

 Procurement, Vendor, Royalty, and Construction 

Audits

 Corporate Governance Assessments

Fraud Detection/Prevention, Investigations, 

and Litigation Support

 Fraud and Misconduct Risk Assessment

 Investigative Due Diligence

 Complex Damages Analysis

 Electronic Discovery (eDiscovery)

 Gap Analysis

 Benchmarking

 Forensic Data Analysis

 Intellectual Property Valuation

 Securities Litigation Services

 Fraud Awareness and Prevention

 Anti-Corruption Compliance and Investigations

 Large-Scale Data Recovery and Analysis

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

PUBLIC SECTOR EXPERIENCE

Page 12

Advisory Services

 Autonomous Municipality of Caguas

 Commonwealth of Puerto Rico

 Department of Economic Development and

Commerce

 Employees Retirement System of the Government of

Puerto Rico and its Instrumentalities

 Government Development Bank of Puerto Rico and

Affiliates

 Public Corporation for the Supervision and Deposit

Insurance of Puerto Rico Cooperatives

 Puerto Rico Department of Agriculture

 Puerto Rico Buildings Authority

 Puerto Rico Council on Higher Education

 Puerto Rico Department of Justice

 Puerto Rico Department of Education

 Puerto Rico Department of Family

 Puerto Rico Department of Health

 Puerto Rico Department of Labor and Human

Resources

 Puerto Rico Department of Natural and

Environmental Resources

 Puerto Rico Environmental Quality Board

 Puerto Rico Health Insurance Administration

 Puerto Rico Housing Department

 Puerto Rico Housing Finance Authority

 Puerto Rico Office and Management and Budget

 Puerto Rico Treasury Department

Grants Management

 Puerto Rico Department of Education

 Puerto Rico Department of Labor and Human

Resources

 Puerto Rico Department of Natural and

Environmental Resources

 Puerto Rico Environmental Quality Board

Single Audits

 Government Development Bank and Affiliates

 Institute of Puerto Rican Culture

 Puerto Rico Department of Natural Resources

 Puerto Rico Infrastructure Financing Authority

(AFI)

 Puerto Rico Ports Authority

 University of Puerto Rico

 Virgin Islands Water and Power Authority

Preparation of Government 

Wide Financial Statements

 Commonwealth of Puerto Rico

 Government Development Bank

 Institute of Puerto Rican Culture

 Municipality of Caguas

 Puerto Rico Department of Labor and Human

Resources

 Puerto Rico Electric Power Authority (PREPA)

 Puerto Rico Infrastructure Financing Authority

 Puerto Rico Tourism Company

Indirect Cost Proposals and 

Cost Allocation Plans

 Administration for the Development of Families

and Children

 Puerto Rico Department of Education

 Puerto Rico Department of Family

 Puerto Rico Department of Labor and Human

Resources

 Puerto Rico Department of Natural and

Environmental Resources

 Puerto Rico Environmental Quality Board

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

 Additional Lottery System

 Association of Employees of the Commonwealth of

Puerto Rico (AEELA)

 Autonomous Municipality of Caguas (includes Single

Audit)

 Autonomous Municipality of Humacao

 Autonomous Municipality of San Juan (includes

Single Audit)

 Department of Natural and Environmental Resources

(includes Single Audit)

 Economic Development Bank (includes Single Audit)

 Employees Retirement Systems of the Government

of Puerto Rico and Judiciary

 Government Development Bank of Puerto Rico and

Affiliates

 Institute of Puerto Rican Culture

 Office of the Commissioner of Insurance

 Port of the Americas Authority

 Public Buildings Authority

 Public Corporation for the Supervision and Deposit

Insurance of PR Cooperatives (COSSEC)

 Puerto Rico Commerce and Export Company

 Puerto Rico Department of Transportation and

Public Works (DTOP)

 Puerto Rico Department of Health (includes Single

Audit)

 Puerto Rico Electric Power Authority (PREPA)

 Puerto Rico Film Industry Corporation

 Puerto Rico Fiscal Agency and Financial Advisory

Authority (FAFAA)

 Puerto Rico Health Insurance Administration

(includes Single Audit)

 Puerto Rico Highways and Transportation

Authority (PRHTA)

 Puerto Rico Industrial Development Company

(PRIDCO)

 Puerto Rico Industrial, Tourist, Educational

Medical and Environmental Control Facilities

 Puerto Rico Infrastructure Financing Authority

 Puerto Rico Land Administration

 Puerto Rico Land Authority

 Puerto Rico Maritime Shipping Authority

 Puerto Rico Municipal Finance Agency

 Puerto Rico Ports Authority

 Puerto Rico Public Broadcasting Corporation

(WIPR-Puerto Rico Networks)

 Puerto Rico State Automobile Accident

Compensation Administration (ACAA)

 Puerto Rico Teachers Retirement System

 Puerto Rico Trade and Export Authority

 State Insurance Fund Corporation

 Teachers Retirement System

 University of Puerto Rico

 Virgin Islands Public Broadcasting System (WTJX)

Page 13

Governmental Audits

PUBLIC SECTOR EXPERIENCE

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SERVICE APPROACH

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 15

SERVICES TO BE PROVIDED

We will provide Technical Assistance and Financial Consulting Services to the Secretariat of the Puerto Rico

Department of Education during the fiscal year ending June 30, 2019. We will focus our assistance on

increasing the Department’s efficiency by improving the mechanisms used to manage, allocate, assign and

use funds and resources to achieve the desired results. These results will be driven by the following goals:

1. Increase student’s academic achievement.

2. Assists students in their academic, emotional and social development.

3. Establish new strategies for teacher’s professional development.

4. Right-sizing the Department and establish streamlined procedures.

5. Other general goals.

Below you will find a table with the work to be performed including the related tasks for each work and the

Department’s goals that will be impacted by each task:

SCOPE OF WORK

WORK TO BE PERFORMED RELATED TASKS IMPACTED 

GOAL

Assist the Human Resources 

department in teacher and 

employee assignment, needs 

determination, data analysis, data 

validation and roster creation by 

school, regions and central level to 

ensure that all needs are being 

covered, the funding is adequate 

and reduce the surplus of 

personnel.

• Perform continuous roster evaluations to ensure that all 

the necessary positions are being correctly filled and on 

a timely manner in a way that students have the 

resources needed in classroom to reduce/eliminate the 

hours without classes due to unassigned teachers.

• Prepare roster reports to the Secretary to assist her in 

the decision-making process.

• Use monthly budget vs actual comparisons to identify 

differences between the Department’s headcount and 

the one established in the fiscal plan and the budget. 

1

Provide support to the Budget 

Office in the creation of the process 

to gather the information needed to 

prepare the 2019-20 budget and in 

the preparation of such budget to 

ensure that funds are being 

allocated in an equitable way and 

in compliance with laws and 

regulations.

• Create a formal process for gathering and evaluate the 

data/information needed from each area to ensure that 

it is received on a timely manner and aligned with the 

goals established by the Department in a way that all 

the necessary funds are being allocated to each school 

on a per student basis.

• Produce a uniform methodology to be used in the 

preparation of the budget in a way that each year can 

be comparable. 

• Generate comparison methods to compare actual 

expenses against the budget to establish a proper 

monitoring process of the budget that ensure that funds 

are being expended in the intended purpose.

• Use bench marking techniques to compare the 

Department’s per pupil funding with other similar 

jurisdiction to improve the way that funds are being 

allocated to schools. 

1, 2

Provide support to Department staff 

in the implementation of the Law 

85 (School Reform Law). 

• Serve as Project Managers to ensure that each area is 

complying on a timely manner with the requirements 

and changes to be implemented as part of the School 

Reform Law in a way that the ensure the purposes of the 

Law are being achieved. 

1, 2, 3

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 16

SERVICES TO BE PROVIDED

Below you will find a table with the work to be performed including the related tasks for each work and the

Department’s goals that will be impacted by each task (Cont.):

SCOPE OF WORK

WORK TO BE PERFORMED RELATED TASKS IMPACTED 

GOAL

Assist in the preparation of the 

National Public Education Financial 

Survey for the 2017 and 2018 fiscal 

years to ensure that the information 

provided to the Federal 

Government is accurate and the 

survey is submitted on time in order 

to comply with Federal regulations 

and there is no negative effect in 

the Federal funds received due to 

non-compliance or inaccurate 

information.

• Create a procedure manual to prepare this survey and 

provide capacity building techniques to employees to 

ensure the knowledge is transferred.

• Use data validation techniques to ensure that the 

information received and used is accurate and 

supportable.

• Prepare a list of areas for improvement in terms of the 

accuracy of the data needed and roadblocks 

encountered during the process and provide 

recommendations.

• Develop a plan to implement the recommendations and 

provide technical assistance for its implementation to 

ensure that futures surveys are submitted on time and 

accurate. 

1

Prepare the Department’s Indirect 

Cost Proposal for the fiscal year 

2019 (Base year 2017). 

• Create a procedure manual and the templates needed to 

prepare the proposal to ensure that it complies with the 

required laws and regulations established by the Federal 

Government.

• Use capacity building techniques to train employees in 

these regulatory aspects and in the process of preparing 

the proposal.

1, 2, 3

Analyze the teachers surplus and/or 

needs in all the school system in 

order to maximize the teachers’ 

distribution and the funds used for 

such purposes.

• Use data analysis techniques to keep track of changes in 

school personnel and to compare rosters against needs.

• Prepare reports to assist the secretary in the decisionmaking process related to personnel. 3

Provide support to the Department 

personnel in relation to the 

reorganization of the central level 

structure. 

• Assist in the design of the new organizational chart and 

in the process of its implementation.

• Use benchmarking techniques to compare other similar 

jurisdictions and assist the department in the decisionmaking process.

• Ensure that the Department is complying with all 

applicable laws and regulations and advise the Secretary 

of any possible deviation or risk of non-compliance. 

4

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Exhibit IV Page 67 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 17

SERVICES TO BE PROVIDED

Below you will find a table with the work to be performed including the related tasks for each work and the

Department’s goals that will be impacted by each task (Cont.):

SCOPE OF WORK

WORK TO BE PERFORMED RELATED TASKS IMPACTED 

GOAL

Assist the Department in the school 

reopening for the new school year 

in terms of facilities conditions and 

moving of equipment and materials.

Support and technical assistance in 

the school consolidation and 

redesign process in order to 

improve the efficiency by rightsizing the school system.

• Gather data from schools to update the database with 

current information.

• Perform data analysis to determine the schools needed 

based on their enrollment and other aspects such as 

distance, infrastructure conditions, security, health and 

safety, etc.

• Serve as Project Managers to ensure that all the schools 

are ready to open, and the planned work has been 

accomplished on time.

• Serve as Project Managers during the moving process to 

ensure that all the equipment and materials needed are 

delivered to each receiving school.

• Prepare data analysis in form of graphs, flowcharts, 

timelines, etc. to assist the secretary during the 

decision-making process.

• Design the plan to be used for the moving of equipment 

and materials to schools and/or warehouses.

4

Assist the Department during the 

process of inventory of equipment 

in order to update the 

Department’s records and ensure 

compliance with laws and 

regulations.

• Monitoring the inventory taking process to ensure that 

all schools are complying with the inventory taking 

requests.

• Visit schools to ensure that the inventory was correctly 

taken and uploaded to the system in a correct manner.

• Assist in the inventory taking process of schools that are 

at risk of not complying with the plan.

• Prepare weekly reports to the Secretary to assist in the 

decision-making process. 

4

Serve as liaison between the 

Department and FEMA as part of the 

funds recovery efforts related to 

Hurricane Irma and María.

• Assist the Department in the communication with FEMA 

to ensure that all guidelines are being follow.

• Ensure that all the documentation requested by FEMA is 

provided on a timely manner.

• Prepare weekly progress report to the Secretary to assist 

in the decision-making process.

• Prepare workplans and timelines needed to guide the 

recovery efforts. 

5

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Exhibit IV Page 68 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 18

SERVICES TO BE PROVIDED

Below you will find a table with the work to be performed including the related tasks for each work and the

Department’s goals that will be impacted by each task (Cont.):

SCOPE OF WORK

WORK TO BE PERFORMED RELATED TASKS IMPACTED 

GOAL

Provide support and technical 

assistance to the following areas:

• Vocational Program

• Technological Institutes 

• Budget Office 

• School Lunch Program

• Auxiliary Services

• Security

• Administration

• Planning Office

• Ensure that the tasks established for these areas are 

being worked as planned by the Secretary.

• Serve as Projects Managers to assist the managers of this 

areas in the daily operations and in accomplishing the 

established goals.

• Provide Capacity Building Assistance to train employees 

in these areas and improve their knowledge and 

effectiveness (on the job training).

• Prepare progress report to keep the Secretary inform on 

how the areas are accomplishing the established goals 

and/or tasks.

• Assist these areas in preparing their operational budget 

according to their needs and goals established. 

• Analyze the processes and internal controls in these 

areas to identify possible flaws and areas for operational 

improvement.

• Develop new processes to increase the operational 

efficiency.

5

Advise the Secretary of the Puerto 

Rico Department of Education in 

any petition requested and perform 

any other duties assigned by her.

• To be determined TBD

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Exhibit IV Page 69 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 19

SERVICES TO BE PROVIDED

This workplan pursues the idea that funds should assist the Department in achieving the goals they are

intended to be use for. We will be using the following approaches/techniques as part of our work with the

end of adding value and improve the operational efficiency of the Department:

 Establish the use of metrics to measure compliance and ensure that all program reporting is being 

prepared on time. 

 Analyze the data received from programs to assist them in the development of new strategies to 

ensure compliance with State laws and regulations by pursuing efficiency. 

 Evaluation of information and results to assist in strategic decision-making.

 Establish a detailed workplan for each program goal and for each project to organize the work to 

performed and ensure that all tasks are being assigned and deadlines are established.

 Monitoring activities to ensure that funds are being used for the purposes intended for and to 

determine its effectiveness.

 Design of timelines and operational strategies.

 Use of frameworks, flowcharts and procedures manuals to transfer the obtained knowledge and 

reduce the learning curve. 

 Data validation to ensure that the data used in the decision-making process is reliable and can serve 

as the basis for comparisons, decisions and analysis. 

 Use of Risk Analysis approaches to identify problematic areas and then develop and establish 

preventive and detective controls to reduce or eliminate risks. 

 Maximize the use of Information Systems to generate data in a speed up manner for better decision 

making.

 Project Management strategies to organize the work to be performed, the goals to be accomplished 

and follow up the timeline established. 

The use of this approaches/techniques will guide our services to assist the Department in the establishment

of improved process, improve decision making and optimize operations. With the analysis performed and the

information provided the Department’s personnel will have all the necessary tools to achieve its goals in an

efficient way.

SCOPE OF WORK (CONT.)

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Exhibit IV Page 70 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 20

EFFECTIVE APPROACH

Terms of 

Engagement

Information 

gathering

Strategy & 

planning

Execution Reporting

BUSINESS RISK FOCUSED

Our methodology efficiently manages risk for our clients

and ourselves in a consistent manner. Our planning and

strategy is ‘business risk’ focused and therefore tailored

for each of our clients to reflect the specific operational,

regulatory and financial risks they face.

COMMON GLOBAL METHODOLOGY

We have a consistent shared global methodology that

manages our clients’ and our own risks effectively.

Because we use a common advisory methodology around

the world and share common software platforms, we are

consistent and transparent in how we approach the work

performed at every location. This allows members of our

global advisory engagement team to “speak the same

language,” which is critical to our ability to effectively

coordinate the services we provide.

OUR APPROACH

 Information gathering. Of current assessment utilities

and control activities to enable us to design

appropriate procedures, and conduct the engagement

in the most efficient manner and within the pre-agreed

time frame and budget.

 Suitably qualified staff. In order to enable an efficient

understanding procedure, while maximizing the

opportunity for value added service from their

experience.

 Effective communications. Effective listening and

regular, proactive two-way communication

throughout our work process is an essential

cornerstone of our work quality and superior client

service. This focus on communication allows your BDO

advisory team to gather information necessary to

perform the engagement and keep you up to date on

the status of our services so that you can provide

timely input and evaluate whether our services meet

your high expectations.

 Scalable. Every organization is unique, and obtaining

a strong understanding of your business is essential to

tailoring our services to your company’s unique risks

and business needs, and avoiding a “one size fits all”

approach. Our methodology has been specifically

designed to be flexible and scalable so that your

engagement team can incorporate its understanding

of your business into the approach to appropriately

size our efforts to your operations.

 Early and Continuous Partner Involvement. Our

professional staff to partner ratio is lower than our

major competitors, enabling more time for

shareholders to be actively involved in the

engagements. Your advisory shareholder has

considerable business experience, and BDO believes

the engagement shareholder should be actively

involved throughout the engagement process in a

hands-on manner. Our methodology has been

specifically designed to facilitate this level of partner

involvement.

 Industry Focus. Through our existing portfolio we

have developed industry specific procedures which

we will tailor to your specific situation.

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Exhibit IV Page 71 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 21

AUDIT INDEPENDENCE

Not only do we have to ensure that BDO remains

independent of our audit clients; we also have to

ensure that we are perceived to be independent by

any readers of your financial statements. We

therefore have a number of safeguards in place to

ensure this is the case.

If any of our staff believe that they might be

conflicted, there is a duty on them to make the

circumstances known to the partners. Any staff with

financial, business or personal relationships with you

will not be allowed to be part of the audit team.

The firm fully complies with the auditing

profession’s ethical standards on independence.

POTENTIAL CONFLICTS

We have made appropriate conflict of interest

inquiries with each of our firms around the world in

accordance with our quality assurance procedures,

and can confirm that our appointment by you will

not give rise to any conflicts.

BDO Puerto Rico, P.S.C. has maintained a

professional relationships with the Commonwealth of

Puerto Rico and several agencies as mentioned in our

Public Sector Experience on pages 9 and 17. These

relationships do not constitute a conflict of interest

relative to performing the proposed services. 

OUR APPROACH TO DEALING WITH 

CONFLICTS OF INTEREST

We recognize that conflicts can arise from time to

time, for example due to a legal action. We will

always consider these conflicts on a case by case

basis. For every case, we will seek permission to

discuss with the other party before proceeding.

BDO will submit a written notice to the Management

of the Department of Education in the occasion of

engaging in any new professional relationship with

the Commonwealth of Puerto Rico during the period

of the audit contract.

If both parties are content for us to act, we will

agree the safeguards which need to be established −

which may involve the use of separate teams and

offices.

If it is not appropriate for us to act for both parties,

we will endeavour to reach the fairest solution by

recognizing the respective position of each party and

their ability to engage the services of another

provider.

CONFIDENTIALITY

We confirm that when you give us confidential

information we will at all times keep it confidential,

except as required by law, regulation or professional

pronouncements applicable to our engagement.

INDEPENDENCE AND CLIENT 

CONFIDENTIALITY

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Exhibit IV Page 72 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 22

QUALITY ASSURANCE

The quality of our work is key to our success and we

have made a number of investments to ensure our

professional services are performed to a high level of

quality in accordance with BDO’s policies and

applicable professional and regulatory standards.

INTERNAL QUALITY ASSURANCE 

PROCEDURES 

In order to protect our position as a recognized and

competent international accounting and consulting

organization and to ensure all clients are well

served, the BDO network abides by the standards

established by the various technical committees of

BDO. For the purpose of ensuring that there is

compliance with these standards, we have a Quality

Assurance manager.

BDO QUALITY ASSURANCE PROCEDURES

We have a number of mechanisms in place to ensure

that our professional services are performed to a

high level of quality in accordance with BDO’s

policies and applicable professional and regulatory

standards. These mechanisms include:

 Internal reviews − all technical work is reviewed

by a partner and/or a senior technical manager to

ensure work is performed and delivered to

standards consistent with all relevant professional

standards, and complies fully with appropriate

regulatory and legislative requirements.

 Staff continuity planning − we understand the

benefits to be gained both for our client and for

our internal staff in maintaining stable project

teams. To this end we build continuity planning

into our general business planning and transition

planning when necessary. This promotes

continuity wherever possible and ensures

seamless service.

 External reviews − BDO is subject to periodic

AICPA Independent Peer Reviews. Our most

recent inspection results are included as an

appendix.

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Exhibit IV Page 73 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 23

We fully expect our clients to monitor 

and measure our performance as 

external professional service 

providers. 

Depending on your requirements, this can be by

reference to all or some of the following:

 Our planning arrangements − it is essential in year

one to manage the transition from your present

auditors well;

 The completion of work in line with plans,

including the identification and response to

critical issues;

 Our understanding of your business and breadth of

operations;

 The quality of our conclusions and

recommendations (implemented, proportional);

 The timeliness of reporting;

 Meeting of pre-agreed deadlines;

 The overall involvement of the partner and

manager;

 The personal engagement of our team;

 The levels of communication throughout the year;

 Overall satisfaction with our service.

CLIENT SATISFACTION

Good quality, accurate and open client feedback

allows us to enhance our performance and gauge

how well we are meeting our client’s expectations.

We take client service and satisfaction seriously, and

continuously assess our clients’ expectations and

perceptions.

BDO recognizes that exceptional client service is

achieved in the long term only if we provide a

sustained level of superior service which is

monitored throughout our relationship. The feedback

is gathered as follows:

 Regular engagement team meetings to discuss the

progress of our work and current issues

encountered;

 Engagement team and the Department of

Education’s management closing meeting at the

conclusion of the annual audit to receive

feedback and discuss opportunities for

improvement;

 Client professional performance evaluations

throughout the year;

 Periodic conversations initiated by BDO nonengagement team leaders to provide additional

opportunities for candid feedback.

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Exhibit IV Page 74 of 89
SERVICE TEAM

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Exhibit IV Page 75 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 25

WORKING TOGETHER

Companies know their success is dependent upon swift management decisions and

the guidance of a sound business advisor. From global Fortune 500 companies to

emerging niche entrepreneurs, BDO is this advisor.

Represented by more than 280 top-notch professionals, Certified Public Accountants and skilled and

trained professionals, including CVAs, CFEs, MAFFs, CGMAs, CISAs, CIRAs, PMPs and Attorneys.

BDO Puerto Rico/USVI Organizational Chart

as of 02/01/2018

20

ADMINISTRATION

6

Partners

14

Directors & Managers

32

Senior Associates

35

Associates

4

Partners

16

Directors & Managers

14

Senior Associates

42

Associates

2

Partners

4

Directors & Managers

2

Senior Associates

6

Associates

4

Directors & Managers

2

Senior Associates

2

Associates

ASSURANCE TAX / OUTSOURCING ADVISORY

BUSINESS ADVISORY / TECHNOLOGY & RISK MANAGEMENT / GOVERNMENT

21

Directors & Managers

14

Senior Associates

43

Associates

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Exhibit IV Page 76 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION

BDO LEADERS SERVING 

THE DEPARTMENT OF 

EDUCATION

Page 26

Engagement Team

(4)

Senior Associates

Relationship Partner

Fernando Scherrer

Senior Manager

Luis Torres Valdés

Engagement Partner

Harry Alemán

Senior Manager

Mario Sánchez

(4)

Managers

(3)

Associates

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Exhibit IV Page 77 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 27

Fernando Scherrer, 

CPA, CIRA, CA, MBA

Managing Shareholder

Assurance & Business Advisory 

Mr. Fernando Scherrer is the Managing Shareholder in charge

of the Business Advisory and Assurance Divisions. He cofounded Scherrer Hernández & Co. along with CPA Gabriel

Hernández in February of 2000, now BDO Puerto Rico, P.S.C..

He has more than 23 years of experience in public accounting

providing assurance services to insurance companies as well

as to publicly-traded, private, multi-national, growthoriented companies and not-for-profit organizations. Mr.

Scherrer is a licensed Certified Public Accountant in Puerto

Rico, USVI, Illinois and Louisiana, and a Certified Insolvency

and Restructuring Advisor (CIRA). He is also certified as an

Arbitrator by the Puerto Rico Supreme Court and has

extensive insurance and SEC reporting experience and has

assisted clients on initial public offerings and other public

filings, mergers and acquisitions, due diligence procedures,

review of internal controls and other matters, and has

performed several valuation analyses for “buy-sell”

transactions. He has served as expert witness and consultant

in various cases working together with several law firms.

From 2006 and 2009, Mr. Scherrer was the Executive Vice

President and Chief Financial Officer at FirstBank of Puerto

Rico, at the time a $19 billion publicly traded financial

institution. During his three-year stay at FirstBank, Mr.

Scherrer led key projects like the restatement process,

capital raising initiatives, the implementation and

improvements of interest rate risk measurements and

reporting tools and was instrumental in the lifting of all cease

and desist orders by regulatory agencies.

Prior to founding Scherrer Hernández & Co., Mr. Scherrer

spent 10 years of his career in the Big 4 accounting firm Price

Waterhouse (now PricewaterhouseCoopers LLP or PwC),

where he acquired expertise in the financial services,

government, manufacturing, distribution and insurance

industries.

PROFESSIONAL AFFILIATIONS

American Institute of Certified Public Accountants

Puerto Rico Society of Certified Public Accountants

Institute of Internal Auditors

Association of Insolvency and Restructuring Advisors

EDUCATION

M.B.A. in Finance, University of North Carolina

B.B.A in Accounting, Washington University

Over 20 years of public accounting experience providing

services to clients in the industries of government, retail,

wholesale, and not-for profit.

Vast experience in analysis of internal controls, business

processes, federal funds management and fraud

investigations. He has served clients placed on high risk by

the Federal Government and helped them to be removed

from such placement. Also, he has helped many clients to

correct findings from their Single Audit by assisting them in

the preparation and implementation of the Corrective Action

Plan. Improving business processes and internal controls for

client’s operations is one of his capabilities as a professional. 

PROFESSIONAL AFFILIATIONS

American Institute of Certified Public Accountants

Puerto Rico Society of Certified Public Accountants

Institute of Internal Auditors

Institute for Internal Controls

Association of Certified Fraud Specialists

EDUCATION

Masters in Finance from the Interamerican University of

Puerto Rico

B.B.A in Accounting, University of Puerto Rico

Harry Alemán, CPA, MBA, 

CIA, CGAP, CICA, CFS, CRMA

Partner

Business Advisory & Outsourcing

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Exhibit IV Page 78 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 28

Mr. Torres is a Certified Public Accountant with over twelve

(12) years of experience within our Business Advisory

Division. Mr. Torres has worked as a Finance Director in

companies such as: Professional Consulting and Novotek PR.

He has an extensive experience working with the Department

of Education providing technical support in all aspects of the

federal funds management including budget creation,

changes and closing per federal laws and regulations. He

participated in the development process and all

administrative matters related to federal funds management

for No Child left behind Program. He also has provided

support to the Program Officers in maintenance an accurate

accounting records. Mr. Torres has implemented knowledge

transfer and training to the Program personnel in each area

for early warning system implementation.

PROFESSIONAL AFFILIATIONS

Puerto Rico Society of Certified Public Accountants

EDUCATION

B.B.A. in Accounting, El Turabo University

Luis Torres Valdes, CPA 

Senior Manager

Business Advisory

Mr. Sanchez is a Certified Public Accountant and Chartered

Global Management Accountant with more than twelve

(12) years working in public accounting.

Mario’s experience mainly developed around government

entities providing direct assistance on the preparation of

financial statements, identifying risk, conduct the efforts

proposed in accordance with generally accepted

accounting principles in accordance with all Federal

Agency accounting, quality assurance guidelines and

regulations.

He specialized in management and compliance related to

Federal Grants and establishing correction plans to remove

“High Risk” grantee designations. Mario also assisted the

finance, budget and external resources offices regarding

accounting, budget, time & labor process, and any issue

regarding federal funds management and provide direct

assistance on the preparation of Indirect Cost Rate

proposals in compliance with Federal Regulations.

PROFESSIONAL AFFILIATIONS

Puerto Rico Society of Certified Public Accountants

American Institute of Certified Public Accountants

Chartered Institute of Management Accountant

EDUCATION

B.B.A. in Accounting, University of Puerto Rico

Mario Sánchez, CPA

Senior Manager

Business Advisory

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Exhibit IV Page 79 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 29

FOR OUR PROFESSIONAL STAFF

The Firm sets the plan and prepares for the annual CPE

program by the following process. Each year the CPE team

reviews and assesses the content of current training

material, and in conjunction with subject matter experts,

develops, updates and delivers core curricula in line with

the performance and development needs in group live,

group internet-based, and self-study platforms. This

content spans CPA Technical, Technology, and Business and

Leadership areas for national, regional and local office

training programs. The Curriculum Liaisons (Training &

Development Managers) provide feedback by summarizing

local needs/trends to the international sponsors on training

relevance based on feedback and experience in the day to

day offices. The annual forecasting process assists the

practice offices in identifying training participation for each

of the annual milestone courses and appropriate training for

new hires and industry group specialization

placement. Finally, the CPE Program complies with yellow

book CPE requirements.

CONTINUING PROFESSIONAL EDUCATION

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 30

STAFF CONTINUITY AND TURNOVER

STAFF CONTINUITY

We understand the benefits to be gained both for

our clients and our own team in maintaining a

consistent senior project team and we make every

effort to achieve continuity.

Planning for staff availability is an essential element

in the operational processes of our business and we

can confirm that the team outlined in this document

is the team you will see and work with for the

duration of this assignment.

We recognize that on occasions team changes are

inevitable. Should this arise, we will discuss the

options with you and enable you to meet the

potential new team members in advance. We will

ensure any new resources are appropriately

experienced and fully briefed. Any time spent

briefing the new team member would, of course, be

at our cost.

HISTORICAL LOW TURNOVER RATES

BDO has a history of low turnover rates. We know

high turnover negatively impacts client satisfaction,

the amount of time and energy our clients spend to

acclimate our personnel, and overall engagement

efficiency. It is also in our own best interest to

retain the investments we make in hiring and

training good employees. Because it benefits us and

our clients, we do not accept the theory that high

turnover in our profession is inevitable. We have

made significant efforts during the past several years

to keep our staff turnover below the industry

average.

We believe that our rates of turnover will continue

to be lower than industry standards. In Puerto Rico,

BDO is the first CPA Firm ever awarded with the

recognition as one of the Top 20 Employers.

Excellent Staff-to-Partner Ratio: We also view our

intentionally created low staff-to-partner ratio as a

strategy against staff turnover, as our staff receive

closer mentoring and oversight. This also

restructures relationships with clients to be much

more partner-driven. 

Partners’ Responsibility: We have also placed

responsibility on all our partners to work hard to

retain staff; it is even a metric of their performance

evaluations.

Hiring: We invest heavily in the recruiting process. 

Like many organizations, we believe the best way to

retain personnel is to be proactive in the recruiting

process; to find employees with the right strengths

and character who will fit into our firm culture. 

High Growth Rate: This translates to greater career

opportunities for our professionals.

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Exhibit IV Page 81 of 89
PROFESSIONAL FEES

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Exhibit IV Page 82 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 32

VALUE FOR FEES

We are committed to quality, 

value-added service.

We understand the importance of efficiencies and cost control, and have specifically designed our audit

methodology to provide your engagement team with the tools they need to perform high quality audit

service in as cost effective a manner as possible.

In addition, you may contact us at any time without additional charges. A collaborative relationship is

important and BDO is committed to investing the necessary time to discuss your changes, challenges and

potential issues which may impact you and your business.

We believe in complete transparency, which means:

 We quote services based on experience and realistic expectations to avoid unexpected fees.

 It is not our practice to bill for routine telephone consultations or questions unless they require

significant research. If you request special services outside the scope of services outlined in this

proposal, we will discuss those services and provide management with a fee estimate related to such

assistance. We will not allow concerns about fees to jeopardize a relationship based on mutual trust

and respect.

Our fee proposal:

We are committed to provide a quality service to the Department of Education that represents value for

money and is completely transparent when it comes to fees. Our proposed fees are as follows:

Estimated

Hours Blended Rate Fees

Total 26,300 $105 per hour $ 2,761,500

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Exhibit IV Page 83 of 89
APPENDIXES

A. Our Services

B. Peer Review Report

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Exhibit IV Page 84 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 34

A. GENERAL SERVICES

BDO offers a breadth of services tailored to meet your needs today and in the future. Beyond 

traditional audit, tax and consulting work, some of the specific ways we can help include:

BUSINESS ADVISORY SERVICES

Risk Advisory Services (RAS)

• Internal Audit

• Best Practices Policies and Procedures Documentation

• Risk assessment

• Governance, Compliance, and Risk Management

• Sarbanes-Oxley

• Contract and Regulatory Compliance

Transaction Advisory Services

• Financial Due Diligence

• Capital Raise Initiatives

• Mergers & Acquisitions (M&A) Tax

• Mergers & Acquisitions (M&A) Dispute Resolution

• Post-Merger Planning and Integration Support

Valuations and Business Analytics

• Financial and Tax Reporting

• Transaction Support

• Business Analytics

Forensic Accounting & Investigations

• Corruption and Fraud Investigations

• Anti-Fraud and Anti-Corruption Compliance 

• Forensic Technology Services

• Fraud Prevention and Fraud Risk Assessment

Restructuring and Turnaround Services

• Capital Raising Advisory

• Interim and Crisis Management

• Business Debt Restructuring

• Business Workout and Turnaround Management 

Consulting

• Business Bankruptcy Alternatives

Litigation, Arbitration, and Dispute Advisory

• Lost Profits / Damages Analysis

• Construction Claims Litigation

• Family Law

• Shareholder and Partners Disputes

• Post-acquisition Disputes

• Arbitration

Financial Institutions Advisory Services

• Loan Reviews process for loans portfolio

• Commissioner of Financial Institutions compliance 

examination

• Evaluation and documentation of intercompany 

changes as required by Regulation W

• Allowance for Loan Losses Documentation and 

Calculation

Government Contracting

• Grant Management and Compliance Services

• Cost Allocation Plans

• Indirect Cost Proposals 

Strategic and Other Advisory Services

• Interim Functions (CFO/Comptrollership)

• Acquisition and Divestiture Analysis

• Represent Clients to Obtain Closing Agreements and Ruling 

Requests

• Financial Statement Preparation Support

• Value of Recapitalizations

• Business Process Outsourcing

• Recruiting

IT, RISK, AND COMPLIANCE SERVICES

Information Technology

• IT Support

• Data Networks

• Technical Support

Risk Management

• CIO Advisory

• Business Impact Analysis

• Disaster Recovery Plan

• Business Continuity Plan

• Risk Assessments

• Strategic technology and information systems planning

• Vulnerability Assessments

• Penetration Test

• Documentation (policies and procedures)

• Project Management

• Process definition and development

• User Training

• RFP development for system selection

• IT Governance

• Computer Forensic Analysis

Compliance

• SSAE no. 16 readiness

• SSAE no. 16 engagements

• Rule 76 (as per the Insurance Commissioner)

• Data Analytics / Computer Assisted Audit Techniques 

(CAATs)

• Regulatory Frameworks

• IT Contract Compliance

• Systems Validation

• HIPAA Compliance Services

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Exhibit IV Page 85 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 35

ASSURANCE SERVICES

Financial Statements Audit

• Consumer Business

• Financial Services

• Mortgage Banking

• Gaming, Hospitality & Leisure

• Government & Public Sector

• Healthcare

• Individuals

• Manufacturing & Distribution

• Natural Resources

• Nonprofit & Education 

• Mutual Funds/Private Equity

• Real Estate & Construction

• Restaurants

• Technology & Telecommunications

• Employee Benefits

• Others

Law 163 Compliance Report

Employee Benefit Plans Audit

• Defined Benefit Plans

• Defined Contribution Plans

• ERISA Compliance Matters

Agreed Upon Procedures

• Specific Certifications

• Tourism Tax Credits

• Development Tax Credits

• Compliance with Contractual Requirements

Sarbanes Oxley Section 404 Compliance and Documentation

Examinations Reports

Governmental Entities and Single Audits

Computer Application Audits – SSAE 16

Technical Accounting Advisory

Reviews and Compilations

Internal Control Assessments 

OUTSOURCING SERVICES

Accounting Services

• Bookkeeping

• Bank reconciliations

• Subsidiaries of A/R and A/P

• Fixed assets ledger

• Monthly financial reports

• Others

Payroll and Payroll Taxes

• Computation of payroll

• ACH transfers to the employees

• Payroll reports

• Deposits of social security and ITW

• Quarterly and Annual returns and reports 

• Informative returns

• Workmen compensation insurance policy 

Tax Compliance

• Sales and Use tax returns 

• Small Business Tax returns

Others

• Entity registration in the governmental agencies 

• ACH payment processing to vendors 

• Financial statements support

• Deal with debt notifications

• Human resources general advisory

TAX COMPLIANCE

Tax Return Preparation and/or Review

• Individual

• Corporate

• Trusts, local and foreign

• Partnerships

• Estates

• No-for-profits

• Deferred Compensation Plans

• Gift tax (local and federal)

• Corporation of Individuals

• Federal, State and Local Returns, with and without Tax 

Incentives

• Municipal and Personal Property Tax Returns

• Sales and Use Tax Returns

• Individual and Family Tax

• Expatriate Services

• Other

Income Tax Provision Reviews

TAX ADVISORY SERVICES

Business Income Tax Matters

• Choice of entity and business formations

• Entity classification elections

• Tax accounting methods

• Special deductions calculations

• Alternative minimum tax planning

• Insolvency and cancelation of indebtedness analysis

• Accounting for income taxes (ASC 740)- outsourcing and 

consulting

• Uncertain tax positions analysis (FIN 48)

• Tax planning and consulting

• Corporate documentation, operating agreements and 

capital structuring

Tax Controversy

• IRS and PR Treasury audits and examinations

• Ruling Requests

• Penalty Abatements

• Closing Agreements

• Tax notices 

Compensation and Benefits 

• Employee stock option plans

• Structuring executive pay

• Incentive plans

• Employee benefit plan audits

• Executive Compensation– Section 409A

• Cross-border compensation design

• Tax equalizations

A. GENERAL SERVICES (CONT.)

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A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 36

TAX ADVISORY SERVICES (CONT.)

State & Local Taxes

• Request for tax incentive

• Gross receipts diagnostic assessments

• Municipal nexus studies and license tax registrations

• Property tax planning 

• Municipal excise taxes

• Controversy and audit defense

• Sales and use tax registrations

• Sales and use tax nexus determination

• Sales and use tax general consulting and planning

Nonprofit Tax Services

• Nonprofit formation

• Tax exemption qualifications with IRS and PR Treasury

• Unrelated business income (UBI) issues

Private Client Services

• Asset protection strategies

• Wealth transfer planning

• Gift, estate and trust tax planning

• Foreign-trust reporting, planning, and compliance

• IRS, State and PR examinations

• Identification of tax-efficient opportunities

• Alternative minimum tax planning

• Projections for tax liability

Tax Incentives and Credits

• Planning and design of tax efficient structures

• Tax incentives applications

• Renegotiation and amendments of tax grants

• Tax credits documentation and monetization

• Individual Tax Grants 

• Export Services Tax Grants 

• Private Equity Tax Grants 

• International Financial Entities- licenses and consulting 

• International Insurance Companies Act

• Tourism Development Act

• Film Industry Incentives Act

• Green Energy Incentives Act

• Economic Incentives for the Development of Puerto Rico

Tax Transaction Advisory Services

• Structuring of acquisitions, dispositions, mergers, carveouts, etc.

• Tax modeling and tax benefit analyses

• Tax due diligence, both buy-side and sell-side

International Tax Services

• Permanent establishment analysis

• IRC 367 transfers

• Cross-border tax structures and reorganizations

• Anti Inversion Transactions

• CFC and Subpart F analysis

• PFIC analysis

• Foreign Account Tax Compliance Act (FATCA)

• Foreign withholding and information return reporting

Transfer Pricing

• Planning

o Compensation structure design

o Intangible property valuations and buy-in 

payments

o Market penetration strategies

o Mergers and acquisitions due diligence services

• Compliance Services

o Documentation studies (global and countryspecific)

o Intercompany policy and implementation 

guidelines

o Intercompany agreements

• Audit Defense Support

o Tax authority response and negotiation

o Dispute resolution

o Competent authority submissions

o Litigation support and testimony

• Benchmarking Services

o Financial ratio analysis

o Capital structure analysis

o Effective tax rate analysis

o Royalty rate analysis

A. GENERAL SERVICES (CONT.)

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Exhibit IV Page 87 of 89
A PROPOSAL TO PROVIDE SERVICES TO THE PUERTO RICO DEPARTMENT OF EDUCATION Page 37

PEER REVIEW

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Exhibit IV Page 88 of 89
BDO Puerto Rico, PSC, a Puerto Rico Professional Services 

Corporation, is a member of BDO International Limited, a 

UK company limited by guarantee, and forms part of the 

international BDO network of independent member firms.

BDO USVI, LLC, a United States Virgin Island’s limited 

liability company, is a member of BDO International 

Limited, a UK company limited by guarantee, and forms 

part of the international BDO network of independent 

member firms.

BDO is the brand name for the international BDO network 

and for each of the BDO Member Firms.

Material discussed in this publication is meant to provide general information and should not be acted on without 

professional advice tailored to your individual needs.

Copyright ©2017 BDO Puerto Rico, PSC. All rights reserved.

CONTACT INFORMATION

FERNANDO SCHERRER, CPA, CIRA, CA, MBA

Managing Partner

Business Advisory & Assurance Services

t [787] 754-3999

f [787] 754-3105

m [787] 501-1926

e fernando@bdo.com.pr

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Exhibit IV Page 89 of 89