What to Expect from the Audit Process

The Engagement

Our firm is engaged to perform the services outlined in this proposal once the engagement letter is signed and returned to our office. Once we receive the signed engagement letter, we will contact the previous auditing firm, if any, for required information we will need to begin the audit. We will also work with the board of directors and management agent representative for any necessary information we may need in order to begin the fieldwork.

Fieldwork

Our audit fieldwork will begin once the financial statements for the period under audit have been prepared. If the draft or final audit is needed by a certain date, please let us know in advance, so that we can make every effort to accommodate the request.

Audit Report – Draft

Once we complete the audit, a draft copy of the audit will be provided to the Association for review. The draft package will include the following information:

  • Cover Letter – The audit report is issued in draft for the Association to review. The cover letter explains what information must be returned to our office before the audit report (and other letters) can be finalized.
  • Independent Auditor’s Report – This is our report on the Association’s financial statements. Once finalized, the Association may distribute this document, along with the audited financial statements, notes to financial statements and any supplementary information in its entirety to members, potential members, etc.
  • Representation Letter – The representation letter is a letter from the Association to us confirming, that to the best of your knowledge and belief, all information was provided or disclosed to us. This letter needs to be signed by the President or Treasurer of the Association and the management agent representative, and returned to our office before the audit can be finalized.
  • Management Letter – The management letter is not a required communication under auditing standards, but is a by-product of the audit. We generally issue a management letter to communicate our comments and recommendations. Use of this letter is restricted to the board of directors and management.
  • Communication with Those Charged with Governance under AU-C §260 – Under AU-C §260, we are required to communicate audit matters that, in our professional judgment, may be significant and relevant to those charged with governance of the Association. Use of this letter is restricted to the board of directors and management.
  • Communication of Significant Deficiencies and/or Material Weaknesses under AU-C §265 – Under AU-C §265, we are required to communicate in writing any significant deficiencies and/or material weaknesses in the Association’s internal controls. Use of this letter is restricted to the board of directors and management. If we did not note any significant deficiencies or material weaknesses, no letter will be issued.
  • Adjusted Trial Balance and Adjusting Journal Entries –These are the proposed audit adjustments for the period under audit.

Audit Report – Final

After the board and the management company have reviewed and accepted the audit, the representation letter will need to be signed and returned to our office. Once we process the completed representation letter, the audit will be finalized. Our office will provide you with a copy of the final audit in electronic format. Bound copies will be provided upon request.

As an added service to our clients, we are available to meet with the board and management to present the final audit and answer any questions you may have. Additional fees apply. Additionally, even though we audit your financial statements on an annual basis, we are available throughout the year for questions. We do not charge for routine questions and are happy to be a resource for board members and managers.

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