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ANALYTICAL PROCEDURES <br />Analytical procedures are used in the planning and final stages of the audit. In the planning phase, we <br />use analytical procedures to identify unusual financial transactions and comparing relationships to <br />expected results. We compare current year information to the prior years for balance sheet items, <br />revenues and expenditures. In addition, revenues and expenditures are compared to budgets to <br />identify unexpected results. In the final stages of the audit, the financial statements are reviewed to <br />identify expected relationships such as comparing debt paid to expenditures recorded on <br />governmental funds, transfers between funds, depreciation expense, etc. For all significant <br />relationships identified, explanations are obtained as to why the situation occurred and additional <br />audit procedures are applied to resolve any concerns. <br />MANAGEMENT LETTERS <br />In connection with each audit, a complete review of internal controls will be made of all significant <br />accounting procedures. Our firm uses an internal control questionnaire, computer systems <br />questionnaire and narration to gain an understanding of the internal control process as part of our <br />audit. We will identify weaknesses and after discussion with the appropriate City staff, we will submit <br />a management letter which will identify weaknesses observed during these reviews and throughout <br />the audit. The management letter will also assess the effect of the management letter comments on <br />the financial reporting process and recommend steps towards eliminating the weaknesses. <br />POTENTIAL AUDIT PROBLEMS <br />We do not anticipate any significant potential audit problems. If any potential audit problems are <br />identified, we will immediately discuss them with the City's management. Our approach is to <br />coordinate the resolution of any problems with the City's management. Considering our experience <br />with auditing governmental entities and resources, we expect minimal disruption to the City's <br />management in resolving any identified audit problems. <br />RETENTION OF AND ACCESS TO AUDIT WORKPAPERS <br />In accordance with provisions of the Uniform Guidance, GAO requirements, and the California Board <br />of Accountancy, our audit workpapers will be maintained for at least seven years after the date of the <br />report. These workpapers will be made available as necessary to your cognizant audit agency (or its <br />designee), to GAO representatives, or to any other federal or state agency needing access to the <br />workpapers. Also, our firm will respond to any reasonable inquiries of successor auditors and we will <br />allow any successor auditors to review our workpapers. <br />OTHER PROFESSIONAL SERVICES <br />We will be available for any other professional assistance you require to research and answer <br />accounting and reporting problems raised by the City, regardless of the time of year. Such assistance <br />may include, but is not limited to, tax questions, the review of bond documents, cost allocation <br />programs and employee benefit programs. We have provided several tax opinions to City audit clients <br />for matters relating to deferred compensation, fringe benefits, stipends and allowances, and other <br />issues. We also will keep the City informed of new developments affecting municipal finance and <br />reporting, changes in grant rules and regulations, etc. <br />IRREGULARITIES AND ILLEGAL ACTS <br />We will make an immediate, written report of all irregularities, illegal acts or indications of illegal acts <br />of which we become aware, to those charged with governance. <br />0 <br />