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I I I I I I I I I I I I I I I I I I I VI. PROPOSAL REQUIREMENTS B.PROPOSAL 8. SPECIFIC AUDIT APPROACH (Continued) a. Proposed segmentation of the engagement (Continued) Phase I - Preliminarv PlanninQ (Continued) · Obtain an understanding of the City's fraud detection and prevention systems. · Obtain and document an understanding of the City's internal control. Consider the methods that the City uses to process accounting information which influence the design of the internal control. This understanding includes knowledge about the design of relevant policies, procedures, and records, and whether they have been placed in operation by the City. · Assess risk and determine what controls we are to rely upon and what tests we are going to perform. Perform test of controls. · Develop audit programs to incorporate the consideration of financial statement assertions, specific audit objectives, and appropriate audit procedures to achieve the specified objectives. · Discuss and resolve any accounting, auditing and reporting matters which have been identified. Phase II - Execution of Audit Plan The audit team will complete a major portion of transaction testing and audit requirements during this phase. The procedures performed during this period will enable us to identify any matter that may impact the completion of our work or require the attention of management. Tasks to be performed in Phase II include, but are not limited to the following: · Obtain trial balances for the fiscal year under audit and import into our paperless audit system. · Apply analytical procedures to further assist in the determination of the nature, timing, and extent of auditing procedures used to obtain evidential matter for specific account balances or classes of transactions. · Perform tests of account balances and transactions through sampling, vouching, confirmation and other analytical procedures. · Perform tests of compliance with applicable laws, regulations, contracts, and agreements. · Review test results and preliminary conclusions. For test of controls and tests of transactions, our professionals will utilize sampling methodologies designed to ensure effective audit procedures are applied in the most efficient manner. Statistical approaches will be based on our calculation of risk factors. If a non-statistical approach is deemed appropriate, we will design our procedures to obtain levels of assurance that we judge to be equivalent to those required when using statistically based techniques. '~r; ~r~'~if~d ~:~~~~~,!,~,~ 35