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Indian River County, Florida 1 30 Based on our preliminary analytical review, certain income statement accounts may be selected for substantive testing because of their significance and/or ease of testing. Common substantive tests over income statement accounts are described in the detailed audit approach in the Appendix. UNDERSTANDING OF INTERNAL CONTROLS A questionnaire will be provided that describes various typical control activities by transaction class (ie., cash, accounts receivable, long-term debt, etc.). We will ask you to answer these questions and provide us with any additional information that may be helpful to us in understanding the internal control structure. Based on the responses to these questions, we will determine the 2-3 "key controls" over each transaction type. ENGAGMENT APPROACH We will complete our work in four inter -related phases: (1) planning and risk assessment, (2) primary fieldwork and testing, (3) financial statement preparation and review, and (4) conclusion and issuance procedures. A brief overview of our audit approach is provided below. A detailed explanation of the audit process and Rehmann's approach is provided in the appendix. Phase 1: Planning and risk assessment In accordance with your time schedule, we will hold a planning meeting prior to the start of the engagement involving all associates assigned to the job. We will schedule the dates of our fieldwork, arrange for downloads from your computer systems, document internal controls over financial reporting and compliance, and review the materials you typically provide your auditors. At roughly the same time, we will work closely with you to begin preparing / updating the format and structure of the financial statement tie out in Microsoft Excel. Once the County is ready and has available a final trial balance, we will complete the planning process. Our engagement executives will analytically review the draft financial statements and document our assessment of audit risk by area. We will use this information to tailor our standard governmental audit programs to correlate with our risk assessment of the County's accounting and financial processing environment. Phase 2: Primary fieldwork and testing Working from the trial balance used to complete our planning procedures, we will begin our year-end fieldwork. Our lead schedules and audit workpapers will be created based on the County's financial statements. This allows us to conduct our audit at the same level of detail on which our opinions will be expressed and enhances the efficiency of the entire process. Each audit area will be tested through a combination of analytical, substantive, and sampling procedures, consistent with the tailored audit programs developed in Phase 1. As the year-end fieldwork procedures are completed, we will review the workpapers, quality control documents, and checklists as part of our internal system of quality control. All comments and issues generated by these reviews will be resolved in the field. Phase 3: Financial statement tie -out and review Financial statement review actually begins in Phase 1 and continues throughout Phases 2 and 3. Once the draft County financial statements are tied out to the Excel pivot tables and related notes have been received, thev will be processed through our Technical Standards Review (TSR). ,F\ehmann