![]() ![]() Further, the use of a consultant can provide other benefits, for example, consultants may perform work during the year or at year end that can help the government minimize adjustments as discussed above. If management does not have the skills necessary to prepare GAAP financial statements and desires the assistance of its independent auditors to help it do so, but without exposing itself to the risk of an automatic significant deficiency or material weakness, it may wish to consider obtaining the services of a consultant or some other outside party (e.g., retiree volunteer) to review the auditor’s work on the government’s behalf. If management chooses to make use of the services of the independent auditors in helping to prepare the financial statements as a matter of convenience, it should carefully document that a staff member with the requisite skills has reviewed all of the work performed by the auditor (e.g., by completing the GFOA financial reporting checklist or by using some similar review tool). Review any financial statement preparation assistance provided by the independent auditors. The guidance also makes it clear that material auditor-identified audit adjustments typically will require that a significant deficiency or material weakness be reported. Because such contractors would work for management (unlike the independent auditors) they would qualify as part of the government’s financial reporting system, thus avoiding an automatic finding of a significant deficiency or material weakness. If management does not possess the skills to prepare GAAP financial statements on its own, the government could always choose to engage the services of someone other than the independent auditor to provide the needed assistance. However, such assistance will constitute either a significant deficiency or a material weakness if it is provided as a matter of necessity rather than of convenience (i.e., management does not have the skills needed to prepare GAAP financial statements). Such assistance does not constitute a significant deficiency or material weakness if it is provided merely as a matter of convenience (i.e., management could produce the financial statements, but chooses not to), although the auditor will have to consider how the provision of this service impacts their independence. Independent auditors often assist clients with the preparation of their financial statements. This guidance indicates that it is not sufficient that the independent auditor determine that the financial statements under audit are, in fact, fairly presented in accordance with generally accepted accounting principles (GAAP): generally accepted auditing standards (GAAS) also require that the financial statements be the product of a financial reporting system that offers reasonable assurance that management is able to produce financial statements that comply with GAAP. ![]() These standards require auditors to report any material weaknesses or significant deficiencies identified in conjunction with the financial statement audit. ![]() This guidance is applicable whenever an auditor expresses or disclaims an opinion on financial statements. ![]() The Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA) has issued guidance on communicating matters related to a government’s internal control over financial reporting identified in an audit of financial statements. Employment Resources for Finance Officers.Economic Development & Capital Planning.Accounting, Auditing, & Financial Reporting.Alliance for Excellence in School Budgeting. ![]()
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