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I M S L MOORE STEPHENS <br /> LOVELACE cras & ADVISORS <br /> Iopinion, we will decline to express an opinion or may not issue a report as a result of the engagement, <br /> as required under the applicable professional standards. <br /> IStandards-Based Audit Approach <br /> Overall, we will follow a standards-based audit approach, which is mandated under United States <br /> I Auditing Standards Clarified (AU-C) Section 300. In our planning process, we will identify the risks of <br /> significant accounts and transactions related to the financial statements and plan our audit procedures <br /> to properly address those risks at the financial statement assertion level. In addition,we will incorporate <br /> I AU-C Section 600 - Audits of Group Financial Statements, which relates to the audit approach and <br /> related documentation requirements for group audits. Under this standard, we are required to evaluate <br /> the City's components, as well as business activities to determine which aspects of the City's activities <br /> I are significant and need to be evaluated separately from a financial accounting and reporting <br /> perspective.Our general audit approach is illustrated below: <br /> IFour Phases of Your Audit Plan <br /> Devel op Audi t Plan Audit Planning Process <br /> I •Assessrisksassociated with •Establish terms of <br /> account balances and engagement <br /> potential error levels \. ,,„,..—` •Preliminary assessment <br /> •Plan tests of controls an•I ca. of the key risks related to <br /> reliance on internal audi <br /> Develop the Oty <br /> work Audit Plan Callate <br /> Process •Understand the City's <br /> •Plan substantive tests - operations and <br /> S�Nrrr tsre accounting processes <br /> o,` ,'re, \ •Understand entity-level <br /> ,�.,Q`_ controls <br /> u - s •Understand process-level <br /> • <br /> 111Mcontrols <br /> I <br /> Prepare and <br /> ( <br /> •�D• F cORo� • •communicate the audit <br /> plan <br /> I Perform Audit Plan Perform Report and Report and Monitor Results <br /> Audit Plan Monitor •Revlewz of CHER <br /> as I •Exit conference with staff& <br /> •Perform tests of controls <br /> and evaluate \ management <br /> I .Imin_ _ •Obtain management <br /> Perform substantive tests, representationsIncluding analytical •Engagement reporting to <br /> procedures and evaluate those charged with <br /> • <br /> Perform tests of governance <br /> I compliance •Audit team debriefing and <br /> assessment <br /> I <br /> I <br /> I <br /> ,V`'1`es <br /> ct <br /> • 1 221 <br />