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I,.U.C,.. ¡jIYlfjrY,'~:~~7~:"n~~'~.: j~J We will continue to involve you in putting together the Checklist so that everyone knows months in advance what has been promised and when. As you know, we tailor the Checklist to fit your existing report capabilities and we do not require special reports or reconciliations just for our audit. We have found that getting everyone involved in this way works very well because it helps minimize the impact on your staff at year end. The Checklist includes everything we will need from you at year-end, so you and your staff can plan and schedule your work accordingly. We wiII also review last year's audit adjustments with you to find ways to avoid repeating them. Our goal is to help you eliminate post-closing entries and audit adjustments of any kind; we have helped many of our clients achieve that goal. In short, we help you use our interim audit to set the stage for a smooth, well-planned year-end closing and audit. We understand that the City is considering having its auditors prepare the State Controller's Report in an effort to free up time during the year end close and reduce the number of post-closing audit adjustments. We applaud this effort and wiII prepare the State Controller's Report for you if you wish. AccOlmtiltg Issues Memoraltdum We wiII continue to produce an interim Accounting Issues Memorandum which is intended only for the Finance Department. This is an informal typewritten memo which covers housekeeping matters, minor audit findings, scheduled audit fieldwork start and finish dates, etc. We'll produce this memo right in your office before the conclusion of our interim work, so you have an idea of what we've found so far and whether there are areas which need work. Items in this Memo do not normally find their way into our Management Letter. Audit Approach-Year Em/ At year-end we do not repeat any of the work we performed at interim. Instead, we focus on the items on your Checklist and on the final reports. We will again ask you to have all the items on the Checklist ready for us no less than one week before we are scheduled to begin our year-end audit in your offices. As in previous years, Maria wiII visit your offiees to review this information with you before bringing it back to our offices. Then you will have a clear week while we begin your audit in our own offices. As you know, our year-end audit work starts in our office, so that when we arrive in your offices we are fully prepared and we minimize our impact on your operations. In our offices, we cross- reference or reconcile your Checklist information, reports and schedules and we insert your closing amounts into the draft financial statements we prepare. Maria then performs our detailed Analytical Review of the draft financial statements. Our experience is that this Analytical Review identifies any issues remaining after our interim work, as well as most potential audit adjustments. 111is gives all of us time to address these items in person while the audit fieldwork is proceeding, instead of by telephone, fax and mail afterward. When we do start work in your offices, we wiII need you to help us complete our Analytical Review, but we wiII not need much of your time and we will not ask for more schedules or reports. Maria and Rupinder wiII meet with you on the first day of the year-end audit to review the draft financial statements with you and to discuss any remaining unanswered Analytical Review questions. This meeting sets the stage for the year-end audit; by this time the format and content of the financial statements is pretty well set and most audit adjustments have been identified. If we find any material adjustments, we will discuss them with you immediately and provide you with the journal entries required; we do not propose adjustments which are not material. If there are financial statement changes or adjustments, we will make them immediately and print out revised pages of the reports we prepare, so that the draft financial statements remain cuITent as our work progresses. 16 r ï' . .,. T