Alberni Caballero & Fierman, LLP

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I I City of Sunny Isles Beach ( ISI II IMI I I l = I I 11111111111 I 1 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 IInformation and Communication Analytical Procedures We will document the formal and informal information Professional Auditing Standards on Analytical Procedures, I flow relating to the processing and recording of financial transactions. provides guidance on the use and extent of analytical procedures in all audits. Analytical procedures are required in the planning and Monitoring overall review stages of the audit,and are used in the In this final component we will review City practices following areas: that are in place to monitor the performance of its internal control structure Audit Planning I Sampling Considerations Analytical procedures can provide great insight in planning an audit. These analyses can enhance our understanding of Our professionals will utilize sampling methodologies the City's transactions and events that may have occurred designed to ensure effective audit procedures are applied in during the year under audit. I the most efficient manner. We compare the current balances to the prior year and to the current budget. Isolating significant differences can Sampling Techniques identify areas that may require additional attention during I We will utilize representative audit sampling procedures the field work. For example, such a review could identify a with respect to substantive tests of details and tests of new revenue source for which we would need to obtain controls and tests of compliance,where a sample of documentation supporting the City for collecting such documentation is to be tested as the principal evidence of monies. I a control. During tests of controls,the tests will generally consist of a combination of corroborative inquiry and either Substantive Tests observation,examination of documents or re-performance. Analytical procedures can be used as effective substantive We will use attribute sampling to test documentary evidence tests in certain circumstances, (or example,testing certain I as documentation will be the principal corroborative payroll related expenditures,such as payroll taxes,which are evidence of identified controls. a specific percent of wages. I Statistical and Non-statistical Sampling Overall Review Substantive tests of details and tests of controls can be Analytical procedures used at the conclusion of the audit performed using either statistically or non-statistically based are designed to assess the conclusions reached and evaluate techniques. Statistical approaches will be based on our the overall financial statement presentation. I calculation of risk factors. If a non-statistical approach is deemed appropriate,we will design our procedures to Internal Controls obtain levels of assurance that we judge to be equivalent to The internal control segment is the foundation for the I those required when using statistically based techniques. entire audit and involves an extensive understanding and evaluation of the City's operating and management informa- Sample Sizes tion systems and all related internal controls. The results of For tests of controls,sample size will be based on the this evaluation will influence the nature,timing and extent of I planned or supported assessed level of control risk and the number of planned or actual deviations expected. our substantive audit procedures. This approach ensures that we achieve maximum efficiency and provide valuable For substantive testwork,sample size will be a function feedback to management regarding the effectiveness of I of population, materiality,and risk factors. controls being relied upon throughout the year. A thorough understanding of the internal controls of an I1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 Proposal for Professional Auditing Services Alberni Caballero&Herman,LLP ' page 20 I