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<br />SECTION II - SPECIFIC AUDIT APPROACH
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<br />Phase I - Strategic Planning
<br />A thorough understanding of your organization and its operating environment is essential for the development of an
<br />audit plan for an efficient, cost effective audit. During this phase, we will meet with appropriate personnel to obtain
<br />and document our understanding of your operations and, at the same time, give you the opportunity to express your
<br />expectations with respect to the services that we will provide. Our work effort will be coordinated so that there will be
<br />minimal disruption to your staff.
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<br />During this phase we will perform the following activities:
<br />. Review the regulatory, statutory and compliance requirements within which the City operates. This will include a
<br />review of applicable federal laws, the City's ordinances, state statutes, County and City requirements and
<br />resolutions, debt instruments, contracts, other agreements, and minutes of meetings of the commission and
<br />various committees.
<br />. Review major sources of information such as budgets, organization charts, procedures manuals, financial
<br />systems, and management information systems.
<br />. Determine the procedures necessary with regard to opening balances, and obtain reasonable assurance
<br />concerning the consistency of application of accounting principles between the year being audited and the
<br />preceding year.
<br />. Review the working papers of the predecessor auditor.
<br />. Obtain and document an understanding of the City's internal control structure, including making an assessment
<br />of audit risk.
<br />· Consider the methods that the City uses to process accounting information which influence the design of the
<br />internal control structure. This understanding includes knowledge about the design of relevant policies,
<br />procedures, and records, and whether they have been placed in operation by the City.
<br />· Develop audit programs to incorporate the consideration of financial statement assertions, specific audit
<br />objectives, and appropriate audit procedures to achieve the specified objectives.
<br />. Identify and resolve accounting, auditing, and reporting matters.
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<br />Phase II - Execution of Audit Plan
<br />The audit team will complete a major portion of transaction testing and audit requirements during this phase. The
<br />procedures performed during this period will enable us to identify any matter that may impact the completion of our
<br />work or require the attention of management. Tasks to be performed in Phase II include, but are not limited to the
<br />following:
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<br />· Analytical procedures are applied in this stage of the audit to assist in planning the nature, timing, and extent of
<br />auditing procedures used to obtain evidential matter for specific account balances or classes of transactions.
<br />· Perform substantive tests of account balances and transactions. Samples will be drawn of major transaction
<br />systems, including cash disbursements, cash receipts, purchases, and payroll.
<br />. Perform tests of compliance with laws, regulations, contracts, and grants.
<br />. Review test results and preliminary conclusions.
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<br />Phase III - Completion and Delivery
<br />In this phase of the audit, we will complete the tasks related to the closing of year-end balances and financial
<br />reporting. This will include final testing in the areas of compliance, balance sheet accounts, revenue and
<br />expenditures, among others. All reports will be reviewed with management before issuance, and the partners will be
<br />available to meet with the commission to discuss our report and address any questions they may have.
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<br />Audit Management Plan
<br />Our audit approach is to develop a specific audit action plan tailored to the individual needs of our client. For each
<br />audit we develop the most efficient combination of audit techniques selected from the following methodologies.
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<br />Auditing Standards promulgated by the American Institute of Certified Public Accountants provide guidance for
<br />auditors in assessing the internal control structure for the purpose of the audit. As auditors, we consider the internal
<br />control structure which consists of the following five elements.
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<br />The Control Environment
<br />The control environment includes the management philosophy, operating style, organizational structure, functions of
<br />various boards and committees, methods of assigning responsibility, personnel policies and procedures, and various
<br />other factors that reflect the City's concern with control in the area of finances. We will read the various documents
<br />that impact this environment, and talk to employees to see how these ideologies are portrayed at various levels.
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<br />CITY OF SUNNY ISLES BEACH
<br />RFP # 10-06-01
<br />Page 9
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