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Initial audit concerns Concerns of the City's management Establishment of report parameters and timetables Progress reporting process Establish principal contacts • Gain an understanding of the operations of the City, including any changes in its organization, management style, and internal and external factors influencing the operating environment. We will utilize reference materials such as the budget and related materials, organizational charts, manuals and programs, financial, and other management information systems • Identify significant accounts and accounting applications, critical audit areas, significant provisions of laws and regulations, and relevant controls over operations • Determine the likelihood of effective Information Systems (IS) - related controls • Perform a preliminary overall risk assessment • Confirm protocol for meeting with and requesting information from relevant staff • Establish a timetable for the fieldwork phase of the audit • Determine a protocol for using TeamMate Analytics and Expert Analyzer (TeamMate), our data extraction and analysis software, to facilitate timely receipt and analysis of reports from management • Compile an initial comprehensive list of items to be prepared by the City, and establish mutually agreed upon deadlines We will document our planning through preparation of the following: • Entity Profile. This profile will help us gain an understanding of the City's activities, organizational structure, services, management, key employees, and regulatory requirements • Preliminary Analytical Procedures. These procedures will assist in planning the nature, timing and extent of auditing procedures that will be used to obtain evidential matter. They will focus on enhancing our understanding of the financial results, and will be used to identify any significant transactions and events that have occurred since the last audit date, as well as to identify any areas that may represent specific risks relevant to the audit • General Risk Analysis. This will contain our overall audit plan, including materiality calculations, fraud risk assessments, overall audit risk assessments, effects of our IS assessment, timing, staffing, client assistance, a listing of significant provisions of laws and regulations and other key planning considerations • Account Risk Analysis. This document will contain the audit plan for the financial statements, including risk assessment and the extent and nature of testing by assertion • Prepared by Client Listing. This document will contain a listing of schedules and reports to be prepared by the City's personnel with due dates for each item One of the key elements in the planning of this audit engagement will be the heavy involvement of principals and managers. We will clearly communicate any issues in a timely manner and will be in constant contact with the City as to what we are finding and where we expect it will lead. We will develop our audit programs during this phase. Utilizing the information, we have gathered, and the risks identified, we will produce an audit program specifically tailored to the City. This program will detail by major section the nature and types of tests to be performed. We view our programs as living documents, subject to change as conditions warrant.