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SECTION II - SPECIFIC AUDIT APPROACH Approach To Be Taken In Completing The Single Audit Our objective in this area is to perform a single audit which meets the needs of the grantor agencies and the requirements of OMB A-133. In order to achieve this objective, we follow the following techniques: Planning and Supervision . Inquiry of management regarding identification of the grants subject to single audit . Review of grant documents . Review of OMB Circular A-133 Compliance Supplement . Review of Federal legislation for the enacted laws and regulations . Instruction to staff as to the requirements of the Single Audit . Supervision of staff in the performance of the procedures . Consideration of the effect of computer processing on the nature, timing and extent of auditing procedures Assessment of Risks . Perform an assessment of engagement risk by considering the level of Federal financial assistance and the nature of the various programs; corresponding consideration of external environments, internal factors, irregularities, illegal acts, fraud and other noncompliance matters. . The single audit is subject to the same risk assessment at the account balance or transaction level made in the financial audit of the entity. The single audit is designed to obtain assurance as to compliance with the grant agreements and the single audit requirements of OMB A-133, while the financial audit is designed to obtain assurance that the financial statements are free of material misstatement. Consequently, the single audit constitutes only a piece of the financial audit. Determination of Major Programs . Determine if the City is a low or high risk auditee . Identify the larger Federal programs based on the dollar threshold Identify in A-133 520(b) and label them as Type A programs, with the remaining programs labeled as Type B. . Perform and document risk assessment procedures on each Type A program to identify those that are low risk . Consider the criteria in A-133 when performing the risk assessment on Type B programs . Audit at least all Type A programs not identified as low risk; audit Option 1 - At least half of the high-risk Type B programs over the Type B threshold (if risk was assessed for all Type B programs subject to risk assessment) or Option 2 - At least one high-risk Type B program for each low-risk Type A program; plus programs that are requested in accordance with the requirements in A-133 .215 (c) to be audited as major; audit such additional programs as may be necessary to comply with the percentage of coverage rule Schedule of Expenditure of Federal and State Awards . Perform procedures to determine the Schedule of Federal Awards are presented fairly in all material respects in relation to the City's financial statements taken as a whole . Determine that the City was able to reconcile the amounts presented in the schedule to amounts in the financial statements . Assess the appropriateness and completeness of the City's identification of Federal programs included in the schedule . Determine that the City properly disclosed the basis of accounting and the significant accounting policies used in preparing the schedule Materiality . Determine materiality based on the major program Internal Control over Major Programs . For each of the 14 types of compliance requirements (listed in the Compliance Supplement) which are applicable and material to each major program, document an understanding of the 5 components of internal control (Control EnvironmenURisk AssessmenUControl Activitiesllnformation and Communication/Monitoring) sufficient to plan the audit to support a low level of control risk . Plan the testing of internal control . Make a sample selection to test internal control following the sample selection techniques under Sample Sizes and Statistical Sampling . Reach a conclusion as to the effectiveness of the internal control elements and all reportable conditions . If no internal control is found on any of the 14 types of compliance requirements, disclose as a reportable condition CITY OF SUNNY ISLES BEACH RFP # 10-06-01 Page 13