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<br />SECTION I.5(C) TECHNICAL PROPOSAL <br /> <br />8: SPECIFIC AUDIT APPROACH (Continued) <br /> <br />f. Approach to be taken to gain and document an understanding of the <br />internal control structure. <br /> <br />The internal control segment is the foundation for the entire audit and involves an extensive <br />understanding and evaluation of operating and management information systems and all related <br />internal controls. The results of this evaluation will influence the nature, timing and extent of our <br />substantive audit procedures. This approach ensures that we achieve maximum efficiency and <br />provides valuable feedback to management regarding the effectiveness of controls being relied <br />upon throughout the year. <br /> <br />Once we have obtained an understanding of the design of relevant policies and procedures, we <br />will determine whether such procedures have been placed in operation and assess control risk. <br />This begins by holding interviews with personnel and evaluating the internal system and <br />accounting documentation. We will then prepare documentation of the major systems. To the <br />extent it is available we will also use internal control documentation currently available. <br /> <br />g. Approach to be taken in determining laws and regulations that will be <br />subject to audit test work <br /> <br />The auditor must consider laws and regulations that have a direct and material effect on the <br />financial statements. Further, the auditor designs audit procedures to provide reasonable <br />assurance that the financial statements are free of material misstatements resulting from <br />violations of these laws and regulations that have a direct and material impact on the financial <br />statements. Identifying applicable laws and regulations is fundamental to fulfilling the <br />responsibility of understanding their effects. We will obtain this knowledge from various sources <br />including: <br /> <br />· Discussion of compliance requirements with management and the governing body. <br />· Identification of compliance matters in statutes, financial ordinances, policies, contracts, <br />and agreements. <br />· Our existing knowledge of laws. <br /> <br />In addition, we will obtain and read grant documents and will make inquiries to your personnel <br />about restrictions, limitations, terms and conditions under which grants were provided. <br /> <br />h. Approach to be taken in drawing audit samples for purposes of tests of <br />compliance. <br /> <br />Tests of compliance with laws and regulations are included with the tests of transactions and <br />controls, when practical. Additional samples are sometimes necessary to test specific laws and <br />regulations as well as for testing federal and state awards. Sample sizes for compliance resting <br />are determined based on the number of transactions and the relative significance of the <br />requirement. <br /> <br />i. Assistance to be provided in meeting the requirements of the "Certificate of <br />Excellence in Financial Reporting". <br /> <br />We are proud to have assisted our clients who participate in the GFOA Certificate of Achievement <br />for Excellence in Financial Reporting Program (CAFR) to qualify for that award. This certificate <br />program is recognized as the highest award in governmental financial reporting. <br /> <br />'Tr;~r?~;f~d ~~~:~~!:~ <br /> <br />14 <br />