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I I I I I [I I I II ,I I .1 I, 'I !, I II II II G~8 Gerstle, Rosen & Goldenberg, P.A. Certified Public Accountants d. Extent of Use of EDP Software The information systems (IS) operating environment of the City's financial management programs and use of EDP software influences the approach and extent of the planning of the various auditing procedures. To that extent, GRG can potentially use any of the following computer assisted audit techniques during this engagement: . Audit software such as ACL (Audit Command Language), . Audit scripts, . Automated tools such as commands, utilities, queries, report writers, and . Integrated test facilities and test data. e. Analytical Procedures Analytical procedures are defined in the AICPA's Statement of Auditing Standards No. 56, Analytical Procedures as methods to assist in audit planning, testing and overall review of the four phases of an audit. The analysis typically enables the auditor to perform substantive tests that provide sound audit evidence that assists the auditor in better understanding a client's business and should result in a more efficient and effective means of testing an account balance. Analytical procedures may be used in: . Audit planning - to understand financial activity during the audit period, . Substantive testing - tests of account transactions and balances, and . Conclusive review - evaluate conclusions and final financial statements. f. Internal Control Structure Approach Internal control is a process designed to provide reasonable assurance regarding the achievement of objectives in (1) effectiveness and efficiency of operations, (2) reliability of financial reporting, and (3) compliance with applicable laws and regulations. Internal control ensures the reliability of financial reporting, i.e. all transactions are recorded and that all recorded transactions are real, properly valued, recorded on a timely basis, properly classified, and correctly summarized and posted. In order to understand the IS, internal control is documented and reviewed considering the City's objectives, procedures and systems. In addition, report, legal structure and governance of the City, interviews of appropriate City personnel and any other data pertinent to the audit are considered. g. Laws and Regulations Approach The auditor must consider applicable laws, statutes, regulations and other compliance factors that control the City's financial management program. In developing the overall audit program, the auditor must consider restrictions or limitations imposed on the City to 8