You have signed an engagement agreement with a CPA firm from the Louisiana Legislative Auditor’s (LLA’s) approved list to perform your agency’s statutorially required audit, review/attestation, or compilation engagement. Your records are in order; you may have already brought some of them to the CPA firm. You have assigned an agency liaison to facilitate the engagement, and have ensured that the person will be available during the time that the CPA will be on site.
Now you want to know:
How will I know when the engagement has officially started? Although the CPA firm may have performed some preliminary work on your agency’s audit at their office, the actual work on an audit or other engagement, referred to as the
fieldwork, begins with a meeting called the
entrance conference. During the entrance conference, your agency’s staff will be introduced to the CPA firm’s staff that will be performing the engagement. You will be given the chance to ask questions, and you may be asked questions by the firm. The auditor-in-charge or AIC will be able to tell you at the entrance conference if the actual field work will begin immediately after the entrance conference, or at a later date. You will be expected to provide sufficient space at your agency’s office for the CPA firm staff that will be performing the audit.
What other information will the CPA need? The AIC should have provided you with a list of records and documents that will be needed to perform the audit. If they did not, ask them for the list before the entrance conference. Although this list should be fairly comprehensive, you should expect that the CPA will request additional documents, and will ask additional questions, before the audit is completed. It is a good idea to keep a log of original documents that you provide to the CPA, to ensure that you know where all your documents are and that they are returned to you.
It is also a good idea to keep the prior year records handy in the event that the CPA needs to check on something that occurred in the previous year.
How long will it take for the CPA to perform the engagement? The AIC should be able to give you a preliminary estimate of the time it will take to perform the fieldwork on the audit at the entrance conference; and will give you updates as fieldwork progresses.
How will I know when fieldwork has been completed? After the fieldwork has been completed, you will have another meeting with the CPA, called the
exit conference. At the exit conference, the AIC will discuss:
Ø Any adjustments he or she is proposing to the financial statements.
Ø The type of opinion that will be rendered on the financial statements (if an audit was performed)
Ø Any findings that will be included in the report.
At the exit conference, the AIC will either have a copy of the report for you to review and sign off on, or will be able to give you an estimate of how long it will take to complete the report package. The AIC will ask you for a written response to any findings in the report. And, the AIC will ask you to sign and date the
management representation letter 
.
At this point it would be a good idea for you discuss with the auditor-in-charge what went well with the performance of the engagement, as well as what could have gone better; and to make notes for reference next year.
How long will it be before the report is submitted to LLA? The AIC should be able to give you an estimated date at the exit conference, and should update you on the progress until the report is submitted.
What do I do if there are problems with the CPA firm or the engagement in general? Problems encountered on the audit should be referred to LLA’s Engagement Manager. For additional information, see
Disputes Between the Local Auditee and Their Auditor .
QUESTIONS:
Q. I have hired a CPA firm to perform my agency’s statutorily required audit. The CPA will not respond to my requests to start the audit. It is getting close to the due date of the report. What should I do?
A. Contact LLA’s Local Government Services Engagement Manager . LLA’s staff will contact the CPA and instruct him to make arrangements with you to begin the audit. If the CPA does not respond to LLA’s requests, the engagement will be cancelled, and you will be asked to retain the services of another CPA firm to perform the engagement, and to file an
extension request for the report.
Q. The CPA who is performing my agency’s audit is asking for a lot of information that I don’t think pertains to my financial statements. Must I give these items to him?
A. A CPA’s main responsibility during an audit is to determine whether an agency’s financial statements are materially correct. In order to make that determination, a CPA will look at information that may not appear to be related to the financial statements. In addition, a CPA performing an audit under
Government Auditing Standards is required to test the agency’s compliance with laws and regulations. Because the CPA is the one who is performing the audit and is the one who has to sign the audit report, LLA will generally not overrule the CPA’s professional judgment in choosing the documents he or she chooses to review. The agency is always free to
call LLA’s Engagement Manager to discuss any concerns about the performance of the audit.
Q. Should I be worried if the CPA keeps asking me questions about a particular transaction?
A. If a CPA asks numerous questions about a transaction, it may be a good idea for you to ask what their concern is. It may be that the transaction is unusual, and/or you have not provided a key document that they need to complete their testing of the transaction.
Q. The CPA who is performing my agency’s audit is asking for information that was not on the list of records he requested when I signed the engagement agreement. Shouldn’t the auditor have known what records he would need before the engagement started?
A. An auditor should give the agency a list of records and other information he or she needs before the audit begins. However, it is normal for questions to arise during the performance of an audit that make it necessary for the auditor to obtain additional information. The agency should provide the CPA with the additional records he or she requests in a timely manner.
Q. The CPA is asking me to make adjustments to the financial statements. What will happen if I don’t make these adjustments?
A. The CPA “owns” five components of an agency’s annual financial report –
Ø The auditor’s opinion; or the accountant’s review or compilation report
Ø The Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards (Yellow Book report), which is included with an agency’s audit report If the audit is performed under Government Auditing Standards. A comparable document in a review/attestation engagement is the independent accountant’s report on applying agreed-upon procedures.
Ø The Independent Auditor’s Report on Compliance for Each Major Program and On Internal Control Over Compliance Required by the Uniform Guidance (Single Audit Report), which is included with an agency’s annual financial report if the agency expended $750,000 or more in federal funds during their fiscal year
Ø Findings related to the Yellow Book report, Single Audit report, or agreed-upon procedures report
Ø Management letter comments related to less material findings that the CPA feels need to be brought to the attention of the agency
The agency owns the rest of the information in its annual financial report. If the agency does not want to make the changes the CPA is proposing to its financial statements it certainly may; but it needs to understand that the CPA may be required to make a note of this in their auditor’s opinion or accountant’s review or compilation report. LLA may also ask the CPA to prepare a finding or management letter comment if the agency’s refusal to make an adjustment causes its financial statements not to be in accordance with
generally accepted accounting principles .