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I I I SECTION VI.S - REQUIREMENTS OF THE TECHNICAL PROPOSAL (Co/lti/ll/ed) 8. SPECIFIC AUDIT APPROACH (Continued) ANAL YTICAL PROCEDURES (Continued) I I Substantive Tests Analytical procedures can be used as effective substantive tests in certain circumstances, for example, testing certain payroll related expenditures, such as payroll taxes, which are a specific percent of wages. I Overall Review Analytical procedures used at the conclusion of the audit are designed to assess the conclusions reached and evaluate the overall financial statement presentation. I I I INTERNAL CONTROLS The internal control segment is the foundation for the entire audit and involves an extensive understanding and evaluation of the City's operating and management information systems and all related internal controls. The results of this evaluation will influence the nature, timing and extent of our substantive audit procedures. This approach ensures that we achieve maximum efficiency and provides valuable feedback to management regarding the effectiveness of controls being relied upon throughout the year. I A thorough understanding of the internal control structure of an organization is critical in planning our audit procedures and providing useful comments and recommendations to the City. BKR Garcia utilizes a standardized control overview document which assists us in identifying key elements within internal control, such as the entity's risk assessment process, the control environment, information and communication systems, and general monitoring and control activities. I I Our evaluation of internal control includes considering the individual components noted above and then considering the effectiveness of internal control as a whole. We will obtain our understanding of each of the elements through the following procedures: ;... Meeting with the City personnel to discuss operations; and ;... Reviewing internal assessment of internal control I I I The control overview document helps to ensure that all elements of internal control are considered. I Subsequently, for significant internal control structure categories, we will obtain an understanding of the design of relevant policies and procedures, determine whether such procedures have been placed in operation and assess control risk. This review begins by holding interviews with data processing and accounting personnel and evaluating your internal system and accounting documentation. We will then prepare documentation of the major systems. To the extent it is available; we will also use internal control documentation currently available. This review is organized into major accounting cycles. I I I J~R~~.:~ 35