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Using the reasonably adjusted trial balance, the audit team will test the appropriateness of major funds. Materiality will then be calculated by opinion unit. Our substantive tests generally require the audit team to test all individually significant items and, depending on the remaining untested balance, may require sampling the remaining population. 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. ■ Statistical Sampling. We anticipate the use of sampling during our audit of the County. The extent to which we use sampling will depend on the County's activity level and our professional judgment. Typically,we use sampling to test accounts with numerous,small balances when it is not practical or cost-efficient to examine 100% of the details of the account. There are two general approaches to audit sampling:non-statistical and statistical. Both approaches require that the auditor use professional judgment in planning, performing and evaluation of a sample. The typical sample size will range from 10 to 80 transactions based on the method used. • Analytical Review. Using the current and prior years'trial balances and the final amended budget,we will perform analytical procedures at the financial statement level. In general,we consider an income statement line item to be reasonable and consistent if it is within either 10 percent of the prior year actual or current year budget. Any financial statement line items with fluctuations outside of these parameters will be selected for additional procedures.We will review fluctuations at a greater level of detail (by general ledger account) and have discussions with management to identify and document the reasons for the change. At times,this process will identify errors or inconsistencies in posting of transactions, or accruals that still need to be posted (or reversed from the prior year). 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 later in this detailed audit approach. • Gaining and Documenting an Understanding of Internal Controls.A questionnaire will be provided that describes various typical control activities by transaction class (i.e., 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. • Laws and Regulations.We will obtain an understanding of the entity and its environment, including an understanding of its legal and regulatory framework,to determine which laws and regulations should be tested for compliance. This will be done through inquiries of management, review of changes to Florida statues,and rules of the Florida Auditor General. Once we gain our understanding of the laws and regulations affecting the County ,we will select sample transaction for compliance with those laws and regulations. Typical compliance areas include,but are not limited to,travel,budgeting,bond covenants, financial condition assessment,litigation,the State of Florida Auditor General requirements and the annual financial report. Paje /8 PaFkehmann 61