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— Determine whether FICA taxes are being accrued on the year- <br /> end <br /> balance. <br /> — Rollforward compensated absences liability by obtaining either <br /> the accrual for amounts earned or the amounts used/paid for <br /> disclosure in the notes to the financial statements. <br /> - Consider the appropriateness of the expense allocation for the <br /> change in compensated absences of governmental activities. <br /> — Inquire about an estimated current portion and consider <br /> whether this is being presented appropriately in the financial <br /> statements.Compare current portion to actual uses/payments <br /> for reasonableness. <br /> - Inquire about the existence of any severance agreements or <br /> termination benefits. Obtain supporting documentation and <br /> test accordingly. <br /> Equity - Compare beginning equity by fund to the prior year audit, and <br /> investigate any differences. <br /> - Review fund balance classifications based on the nature of the <br /> funds and board resolutions/policies (if applicable). <br /> - Review net asset classifications for accuracy. Recalculate net <br /> assets invested in capital assets net of related debt. <br /> These substantive procedures will be completed primarily by our staff auditors. Each workpaper will <br /> be reviewed by the engagement manager(and where appropriate,the engagement principal) during <br /> fieldwork so questions can be resolved while the team is still on-site. <br /> Phase 3: Financial Statement Review <br /> Financial Statement Review -Another key element of the fieldwork process is the review of draft <br /> financial statements (including footnotes),and the preparation of the independent auditors' report, <br /> management letter,and other applicable reports/correspondence. The following are the primary steps <br /> in the preparation of the financial statements: <br /> Procedure Description <br /> Footnotes Draft notes to financial statements using a current disclosure <br /> checklist to ensure completeness. <br /> — Obtain supporting documentation for disclosures not directly <br /> linked to the trial balance or financial statements,such as: <br /> retirement and other postemployment benefit plan funding <br /> progress and funded status, related party transactions, <br /> subsequent events,etc. <br /> SAS 114 letter — Through the audit process,the engagement team will keep a <br /> list of potential audit issues and/or internal control or <br /> efficiency recommendations. <br /> - Near completion of fieldwork,the potential items are reviewed <br /> and discussed amon:st the audit team. <br /> 73 <br />