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Miscellaneous - Section APP.E APP.E-4 AUDIT PROCUREMENT GUIDE 1. Introduction Under existing laws, the Office of the Comptroller of the Treasury of the State of Tennessee is responsible for ensuring that each local government is audited annually. Such audit may be performed under contract with an external audit firm or by the staff of the Comptroller’s Office. This audit procurement guide is intended to assist government officials in selecting an auditor and contracting for the performance of such an audit. This is only a guide and may be modified to fit your entity’s specific needs. Questions are often raised about this process and what should be included in the audit report. A synopsis of the questions asked most often follows: 2. What are the purposes of the financial and compliance audit? The primary purpose of the audit is to determine if financial statements are presented fairly and comply with the requirements of state and local laws and regulations. However, the audit has many other benefits: ‣ The report is available to any citizen interested in the cost of government and how government is funded. ‣ The audit identifies problems in the local government’s financial operation and recommends corrective action. ‣ The audit enables government officials to assess the local government’s financial condition. ‣ The audit can be used to provide other agencies with information regarding grants. ‣ The audit can be used by lending institutions to establish the credit worthiness of the local government. ‣ The audit can be used by the governing body to determine whether the local government has faithfully followed its mandates and policies. ‣ The audit can serve as a means of preventing and detecting fraud and dishonesty or unintentional misapplication of funds. 1
Miscellaneous - Section APP.E APP.E-5 3. What information should the audit contain? There are several financial statements, schedules, and reports that the audit report must contain before approval by the State Comptroller. A qualified auditor will automatically ensure that these items are included in the report. A. Introductory Section (table of contents, letter(s) of transmittal, etc.) B. Financial Section 1. Independent Auditor’s Report on the Financial Statements a. The report should be either (1) unqualified, (2) qualified, (3) disclaimer, or (4) adverse. The report should detail why an unqualified opinion could not be given 2. Management’s Discussion and Analysis 3. Financial Statements 4. Notes to the Financial Statements 5. Required Supplementary Information (RSI) 6. Combining Statements 7. Individual Fund Statements 8. Supplemental Schedules (including a Schedule of Expenditures of Federal Awards and State Financial Assistance) 9. Statistical Information 10. Independent Auditor’s Report(s) on Internal Control and Compliance 11. The report(s) on internal control and compliance should state that the audit was performed in accordance with Government Auditing Standards (generally accepted government auditing standards (GAGAS)) and the provisions of OMB Circular A-133 (as applicable). 12. The report(s) on internal control and compliance should detail any weaknesses noted or make reference to the findings and recommendations section of the audit report. When reporting on instances of noncompliance and internal control weaknesses, the following items should be included: a. The findings. 2
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PREFACE This audit manual supersede
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Introduction This manual sets forth
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Section 9-3-213, Tennessee Code Ann
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SECTION A GENERAL INFORMATION Compt
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Auditing Standards and Requirements
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