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HomeMy WebLinkAbout2023-08-07 G01 Presentation_Denman and Co Pre-AuditAGENDA ITEM: CITY OF WAUKEE, IOWA CITY COUNCIL MEETING COMMUNICATION MEETING DATE: August 7, 2023 AGENDA ITEM:Denman & Company on upcoming FY2023 audit FORMAT:Presentation SYNOPSIS INCLUDING PRO & CON: A representative of Denman & Company will be present to discuss the upcoming audit. GASB regulations require that the company performing the City’s annual audit discuss the matter with Council beforehand. FISCAL IMPACT INCLUDING COST/BENEFIT ANALYSIS: COMMISSION/BOARD/COMMITTEE COMMENT: STAFF REVIEW AND COMMENT: RECOMMENDATION: ATTACHMENTS: I. Presentation PREPARED BY:Becky Schuett REVIEWED BY: G1 The City of Waukee Communication with Those Charged with Governance dellis@denman-cpa.com jsparks@denman-cpa.com August 7, 2023 Responsibilities Under Auditing Standards Generally Accepted in the United States of America (GAAS) and Government Auditing Standards (GAS) Audit Scope and Objectives: Obtain reasonable assurance about whether the financial statements are free of material misstatement Required supplementary information (RSI) will not be audited and we will not express an opinion or provide any assurance on RSI Supplementary information will be subjected to the auditing procedures applied in our audit of the financial statements. We will provide an opinion on the supplementary information in relation to the financial statements as a whole. Responsibilities Under Auditing Standards Generally Accepted in the United States of America (GAAS) and Government Auditing Standards (GAS) – (Continued) We will also report on: •Internal control over financial reporting and compliance with the provisions of laws regulations, contracts, and award agreements in accordance with Government Auditing Standards. •Internal control over compliance related to major programs and an opinion on compliance with federal statutes, regulations, and terms and conditions of federal awards in accordance with the Single Audit Act Amendments of 1996 and Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Responsibilities Under Auditing Standards Generally Accepted in the United States of America (GAAS) and Government Auditing Standards (GAS) – (Continued) Auditor: Conduct our audit in accordance with GAAS, GAS, the Single Audit Act and the Uniform Guidance. Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess risks of material misstatement of the financial statements and perform audit procedures responsive to those risks. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate but not for the purpose of expressing an opinion on the effectiveness of internal control Responsibilities Under Auditing Standards Generally Accepted in the United States of America (GAAS) and Government Auditing Standards (GAS) – (Continued) Evaluate the appropriateness of accounting policies used and reasonable of significant estimates made by management as well as the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern for a reasonable period of time. Responsibilities Under Auditing Standards Generally Accepted in the United States of America (GAAS) and Government Auditing Standards (GAS) – (Continued) Management: Responsible for financial statements, all accompanying information and representations therein Responsible for establishing and maintaining effective internal controls Informing us of any fraud or suspected fraud and any noncompliance with laws and regulations. Identifying all federal awards received and complying with the compliance requirements. Responsibilities Under Auditing Standards Generally Accepted in the United States of America (GAAS) and Government Auditing Standards (GAS) – (Continued) Preparation and presentation of Required Supplementary Information and supplementary information. Evaluate whether there are conditions or events that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date. Our audit does not relieve you or management of your responsibilities Significant Risks of Material Misstatement Non-routine transactions Judgmental matters requiring estimates We have identified the following significant risks of material misstatement as part of our audit planning: Management override of internal controls Improper revenue recognition due to fraud Internal Control Internal control over financial reporting will be considered for the purpose of determining audit procedures, not to provide assurance on internal control We will also consider internal control over compliance requirements of major federal programs and report on internal control in accordance with Uniform Guidance Compliance We will perform tests of compliance with provisions of applicable laws, regulations, contracts, and agreements, including grant agreements. These tests will not be sufficient for us to render an opinion on overall compliance; accordingly, no such opinion will be expressed. As required by Uniform Guidance, we will test transactions and perform other applicable procedures to test compliance with compliance requirements applicable to each major federal award program. The purpose of these procedures is to express an opinion on the City’s compliance with these requirements. Materiality- Benchmarks Quantitative Computed for each opinion unit using: Total receipts Total assets Qualitative Based on risk Materiality – Factors Considered Council oversight Accountability – funded by tax payors Cash basis to accrual basis entries Uniform Guidance audit matters, when applicable Significance of debt Capital assets Opinion units Timing Fieldwork August 28th – September 8th Delivery of final audit report at a November 2023 Council meeting New Governmental Accounting Standards Board Pronouncements GASB Statement 94 –Public-Private and Public-Public Partnerships and Availability Payment Arrangements – effective for fiscal year ended June 30, 2023 GASB Statement 96 –Subscription-based Information Technology Arrangements – effective for fiscal year ended June 30, 2023 GASB Statement 99 –Omnibus 2022 – effective for fiscal year ended June 30, 2023 GASB Statement 100 –Accounting Changes and Error Corrections –effective for year ending June 30, 2024 GASB Statement 101 –Compensated Absences – Effective for year ending June 30, 2025 Council Views Regarding Business risks that may result in material misstatements due to fraud or error Matters that warrant particular attention during the audit Significant communications with regulators Other matters relevant to the audit Going concern issues noted, if any Council Comments Questions Thank you! Thank you for the opportunity to serve you.