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j 6.1.A. - Page 38 rJ ty of Redwood City Proposal Identification of Anticipated Potential Audit Problems We do not anticipate that there will be any audit problems at the City. However, the following are some areas that we will carefully investigate and monitor during our audit procedures: Investments: o Evaluate compliance with GASB 31. o Review and evaluate the City's authorization and approval process of its investments. o Review and evaluate the City's controls to assure compliance with investmenl limitations and types of specific investments. o Review and evaluate the City's monitoring of its investments. Financial Reporting: o Review and evaluate that the City's Annual Financial Reports are in compliance with current reporting and disclosures requirements issued by the GASB and GFOA. o Review Annual Financial Reports for financial reporting conformance awards issued by CSMFO and GFOA. o Review and evaluate degree of compliance with the various GASBs in effect. o Review degree of compliance with infrastructure obligations and regulatory provisions, Internal Control Structure: • Review and evaluate the City's internal control functions and ascertain compliance with proper internal control philosophies. • Review computer system processes and controls and evaluate adequacy of the control environment. Several new GASB pronouncements will become effective over the time period of this proposal. As such, specific attention will be provided to determine the proper implementation of these new pronouncements. A list of known new pronouncements with implementation dates that fall within 11 this proposal period are as follows: • GASB 54 — Fund Balance Reporting and Governmental Fund Type Definitions • GASB 57 — OPEB Measurements By Agent Employers and Agent Multi - Employer Plans • GASB 58 — Accounting and Financial Reporting for Chapter 9 Bankruptcies • GASB 59 — Financial Instruments Omnibus • GASB 60 -- Accounting and Financial Reporting for Service Concession Arrangements • GASB 61 — The Financial Reporting Entity: Omnibus -an amendment of GASB Statements No/ 14 and No. 34 • GASB 62 — Codification of Accounting and Financial Reporting Guidance Contained in Pre - November 30, 1989 FASB and AICPA Pronouncements Currently, the GASB's agenda includes the following issue and may result in a new standard: • Pension Accounting and Financial Reporting In addition, the National Sampling Project on audits of Federal Expenditures has been completed by the GAO. There were several significant findings. The AICPA and OMB are currently reviewing the findings and will be developing new auditing approaches for Federal Awards. :_ Caporicci & Utrson, CPAs 20 ' 3 ._ 3