HomeMy WebLinkAboutCORRESPONDENCE - RFP - P953 AUDITING SERVICES (2)aFollowing is additional requested information on the details of our audit approach:
a. Our approach to understanding your major segments is to first obtain an
understanding of the accounting system and internal controls. This may include
review of MPO procedures or accounting manuals, interviews with key personnel,
and walk-throughs of key transactions cycles.
Audit test work over cash typically includes confirmation of balances and tests of
bank reconciliations. Receivables are tested through review of subsequent receipts
and grant billings. Fixed asset depreciation schedules are reviewed, and additions
tested.
Accounts payable are audited through tests of subsequent disbursements and review
of payroll, payroll tax and accrued vacation accruals. Deferred revenue is considered
for any grant receipts received which have not been earned. Advances from members
will be reviewed.
Grant revenue is tested through review of reimbursement requests and possibly
confirmation. Program revenues are compared to prior periods.
Expenditures are tested through disbursement testing and analytical review.
b. A detailed time budget by staff level and proposed segment is as follows:
Shareholder
Manager
In -Charge
Planning
1
6
4
Client Conferences
2
3
--
Internal Control Review
--
--
4
Audit test work
1
15
20
Research and Supervision
1
1
--
Workpaper Review
2
2
--
Review Financial Statements and MDA
2
2
4
Management Letter
1
1
--
Total
10
30
32
c. Audit sampling is anticipated to be used in the audit, particularly in transaction
testing over payroll and purchasing/disbursements. We do not rely on sampling
exclusively, as we consider it important to test large or unusual transactions or
balances on a 100% basis, not a sample basis. Our firm's approach to sampling is
usually that of "judgmental' sampling as opposed to "statistical" sampling.
One area that absolutely requires additional audit samples is the Single Audit
procedures over federal programs. Adequate samples must be selected in the major
program for the auditor to report on internal controls and give an opinion on
compliance with laws and regulations. We use sample sizes of 25-30 expenditures
per major program, as long as controls are reasonable and there have not been
significant exceptions in previous years. We would propose to select these
transactions systematically from the population of all expenditures subject to full or
partial federal reimbursement. Special care would be taken to ensure that a wide
range of transactions was selected including payroll, benefits, capital outlay,
payments to vendors, and payments to program participants, if any.
Inorth front range pro 2004 - 10 -