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I I I I I I I I I I i I I I I I I I I !1@@f};j;jJa@&lIJ [fJ(j@)fJJ@@&lD (Continued) Specific Audit Approach (Continued) Further, the auditor designs audit procedures to provide reasonable assurance that the financial statements are free of material misstatements resulting from violations of these laws and regulations that have a direct and material impact on the financial statements. For governmental entities, this requirement is even more important given the variety of legal and contractual considerations typical of the government environment. Identification of Anticipated Potential Audit Problems We are aware of the uniqueness of the City and will anticipate any issues by addressing them at their early stages. We do not know of any potential audit problems. If requested, GLSC can be involved throughout the entire year, at no extra cost, by providing assistance in current and new evolving issues. Identifying applicable laws and regulations is fundamental to fulfilling the responsibility of understanding their effects. We will obtain this knowledge through the following sources: Smooth Transition ~ Discussion of compliance requirements with the City officials, including legal counsel. ~ Identification of compliance matters in statutes, financial ordinances, City policies, contracts, grants and debt agreements. ~ Review of City Council meeting minutes. ~ Inquiries of the program administrator of the governmental entities that provided grants about restrictions, limitations, terms and conditions under which such grants were provided including review of the OMB Circular A-133 Compliance Supplement and the Florida Single Audit Act, if applicable. ~ Our existing knowledge of federal and state laws. GLSC's transition will be smooth, with minimal disruption of the City's staff and operations. We can make this assurance because we are experienced in transitioning a number of governmental engagements. Our transition process assures the City that: AUDIT SAMPLES FOR TEST OF COMPLIANCE only staff with directly relevant experience and genuine interest in serving the City will be assigned; · all of our staff will be thoroughly oriented to the City, its activities, organization and management; · our staff, at all levels, will familiarize themselves with the City's responsible staff and the areas in which they operate, and ensuring our staff will be immediately available to serve the City; and · the City realizes benefits right from the start including a fresh look at the City's control and systems. Tests of compliance with laws and regulations are included with the tests of transactions and controls, when practical. Additional samples are sometimes necessary to test specific laws and regulations. Sample sizes for compliance testing are determined based on the number of transactions and the significance of the requirement. ..., ) ~C ~<S~~~~j~~~"~~~S -- 15