Preparing for a financial audit
To help meet the agreed upon objectives of this audit, we ask that you provide in a timely manner:
- financial statements, audit schedules, and supporting information
- all significant accounting and financial reporting matters
- working space
- administrative help as mutually agreed upon.
Management is responsible for selecting accounting policies, ensuring that transactions are properly recorded in the accounting records, and for establishing and maintaining internal controls that permit the statements to be prepared in accordance with generally-accepted accounting principles.
Specifically, management is responsible for:
i) Completeness of Information
- All financial records and related data.
- Copies of all meeting minutes between directors and/or management committees.
- Information about any known or probably instances of non-compliance with legislative or regulatory requirements, including financial reporting requirements.
- Information about any illegal or possibly illegal acts.
- Information about all related parties and related party transactions.
ii) Awareness of Fraud and Error
- Designing and implementing internal controls to prevent and detect fraud and error.
- Assessing the risk that the financial statements may be materially misstated as a result of fraud.
- Providing us with information about any fraud or suspected fraud.
- Providing us with information about any reported allegations of fraud or suspected fraud.
- Communicating whether the effects of any uncorrected financial statement misstatements collected during the audit are immaterial both individually and in total to the financial statements as a whole.
iii) Recognition, measurement and disclosure of all information concerning financial statements
- An assessment of the reasonableness of significant assumptions underlying fair value measurements and disclosures in the financial statements.
- Any plans or intentions that may affect the carrying value or classification of assets or liabilities.
- Information concerning the measurement and disclosure of transactions with related parties.
- An assessment of any known areas of measurement uncertainty that require financial statement disclosure.
- Information concerning claims and possible claims whether or not they have been discussed with the organization’s legal counsel.
- Information concerning contingent assets and liabilities including those associated with guarantees whether written or oral under which the organization is contingently liable.
- Information on whether the organization has satisfactory title to assets, the existence of liens or encumbrances on assets or whether assets are pledged as collateral.
- Information concerning compliance with aspects of contractual agreements that may affect the financial statements.
- Information concerning significant events that took place after the financial statement date up to the date of our auditor’s report.
iv) Confirming Significant Representations
Written confirmation of significant representation must be provided in matters that are:
- directly related to items that are material, either individually or in total, to the financial statements;
- not directly related to items that are material to the financial statements but are significant either individually or in total to the engagement; and
- relevant to the organization’s judgements or estimates that are material either individually or in total to the financial statements.