Audit Time: What It Is and How to Prep

Audit Time: What It Is and How to Prep PRESENTED BY: MARY W. RICHTER, CPA

Today’s Discussion: ü Whatisanaudit

ü Whydowehavetohaveone

ü Whataretheresponsibilitiesoftheauditor

ü Whataretheresponsibilitiesofthedistrict

ü Howtoprepareforanaudit

WHAT IS AN AUDIT  Therearemanytypesofaudits◦  Financialstatementaudit–providesassuranceastothefairrepresentationofthefinancialstatements◦  Forensicaudit–collectingandanalysisinformationtopresentincourtproceedings◦  Internalcontrolaudit–assessingtheeffectivenessoftheinternalcontrols◦  Singleaudit–assessingcompliancewithfederalprogramrequirements,thecurrentthresholdis$750,000.

WHY DO WE HAVE TO HAVE AN AUDIT  Staterequirementforallgovernmentalagencieswithannualexpendituresover$100,000◦  Biannualrequirementif$100,000to$250,000◦  Annualrequirementifover$250,000

 HighwaydistrictsshouldhavetheirauditscompletedbyJanuary1stoftheprecedingyear

 ReportedtotheLSOwithin9monthsofthefiscalyear-end

AUDITOR’S RESPONSIBILITY VS DISTRICT’S RESPONSIBILITY  Theonlythingtheauditorisresponsibleforintheauditedfinancialstatementsaretheirreportsattestingtothefinancialstatements,theinternalcontrols,and/orthecompliancewithfederalprograms.

 EVERYTHINGELSEISTHERESPONSIBILITYOFTHEDISTRICT,EVENIFTHEAUDITORHELPSYOUDRAFTTHESTATEMENTS.

HOW TO PREPARE FOR AN AUDIT o TheauditorshouldprovideyouanauditrequestlistorPBC(PreparedbyClient)listo Reviewyourprioryearauditfilesandnotesincludinganyadjustingentriesfromauditor

o Ensureprioryearagreeswithprioryearaudito Printa“Mary’sList”orMasterList

o Agreeallassetsandliabilitiesaccountstosupportingdocumentationo Recordingaccrualsandfiscalyear-endadjustments

o Agreemajorrevenueandexpenditureaccountstosupportingdocumentationo Recordingallcapitalexpendituresintocapitaloutlayaccountso Recordalistingofallcapitalexpendituresbyprojectfordepreciationschedule

o Comparecurrentandprioryearaccountslookingforlargevariances

AUDIT PREP APPROACH – CHECKLIST EXAMPLE q Thepriorfiscalyearagreewiththeprioryearauditq Printatrialbalanceorfinancialstatementsforthecurrentfiscalyear

q Cashaccountsagreetothelastbankreconciliationq Haveallinterestpaymentsforthefiscalyearbeenrecordedq AreanybankaccountsoverFDIClimitsq Anyrestrictionstocash

q Accountsreceivableagreestoanysubledgersorsupportingdocumentsq Hasthehighwayuserreceivablebeenrecorded

q Anyprepaidexpenses(usuallyinsurance)q LIDreceivable

AUDIT PREP APPROACH – CHECKLIST EXAMPLE cont.

q Propertytaxreceivableanddeferredtaxcalculationq Inventorylistingagreestosupportingdocumentation

q Accountspayableaccountsagreetosubledgerorsupportingdocumentationq Ifthepayablewillbereimbursedisthereceivablerecorded

q AccruedpayrollcalculationincludingpayrolltaxesandPERSIq CompensatedabsencecalculationincludingpayrolltaxesandPERSI

q Anyotherdebtincludingleases,bondpayments,etc.

q PERSIinformationforGASB68disclosure

q Fixedassetschedulewithdepreciationcalculations

THANK YOU FOR ATTENDING  Thispresentationisintendedfortrainingpurposesonlyandisnottoberelieduponforanylegal,tax,consulting,orprofessionaladvice.Ifyouneedanyofthoseservicesyouneedtocontactyourlegaland/oraccountingprofessionalforassistance.

 ContactInformation:

 MaryW.Richter,CPA

 marywrichter@hotmail.com