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J.Aggi6Approach Overall Approach PLANNING Continuance Considerations Occurs 4-6 months before year-end. We consider items such as: Feedback received from previous audit exit conferences with management Meeting with management to discuss any significant or unusual activities that have occurred during the year or are expected to occur within the year Pre -Planning Conversations Occurs 1-3 months before year-end. We inquire about items such as: Changes to intended services desired from our firm or the intended use of the financial statements >- Changes in management or other key staffing areas Impact of any recent accounting standards These items are important for us in proactively planning for the nature, extent, and timing of the audit, but they also help us in serving as advisors. All relevant conversations are shared with key engagement team members in a timely manner so the entire team remains updated. Formal Planning and Interim Procedures Occurs near year-end. Procedures include: Establish preliminary planning materiality Develop detailed audit plan, to include: Assessment of risk at the financial statement account balance level Plan tests of controls, tests of compliance and substantive procedures Communicate audit plan with all members of engagement team Perform initial data extraction analysis of key accounts and transaction classes Perform tests of controls and compliance Evaluate results of testing and, if necessary, modify the audit plan Internal Controls Internal controls are the steps put in place to provide reasonable assurance that the organization will achieve its objectives. These objectives fall into three categories: 1] Financial reporting 21 Operations 31 Compliance with laws and regulations Obtaining an understanding of the entity's internal controls is a fundamental part of understanding the entity and its environment. Although the process for obtaining an understanding of the entity's internal control is addressed here as a separate process, it is part of our risk assessment and may be performed concurrently with other risk assessment procedures. The primary reason for understanding the entity's internal controls is the same as performing other risk assessment procedures: (1) to assess the risk of material misstatement, and (2) to design and perform further audit procedures. Our understanding of the internal controls will include the following: The five interrelated components of internal control: (1) control environment (2) risk assessment (3) information and communication systems (4) control activities (5) monitoring The entity's selection and application of accounting policies The entity's use of information technology ........... A PROPOSAL TO INDIAN RIVER COUNTY 26