01-20-04 Regular Meeting - Laserfiche WebLink

Browse Search

• What are the different types of audits? In the public sector, audits are most often classi- fied in one of three categories. • Financial statement audits are designed to provide users of financial reports with assur- ance concerning their reliability. • Attestation engagements are designed to pro- vide assurance on matters other than financial reports. • Performance audits are designed to determine whether government programs and activities are meeting stated goals and objectives, and to determine if governments are performing du- ties in the most economic and efficient manner possible. As can be seen from these definitions, an attesta- tion engagement and a performance audit are not mutually exclusive, thereby producing a certain degree of overlap between the two categories. Generally, the term attestation engagement is used when the work is performed by an auditor who also performs financial statement audits. Performance audits are sometimes referred to as operational audits, although this term is more common in the private sector than in the public sector. `~ AN ELECTED OFFICIAL'S GUIDE What is an "audit committee"? An audit committee is a group of individuals ap- pointed by the legislative body and given respon- sibility for overseeing audit procurement and monitoring from the selection of the independent auditor to the resolution of audit findings. The audit committee also may play an important role in providing direction and guidance to manage- ment on issues involving all aspects of a govern- ment's internal control framework, including the internal audit function. Perhaps the single most important role played by the audit committee is that of a communications link -especially be- tween the independent auditor and the legisla- tive body. As such, the audit committee helps to enhance the auditor's independence. In recogni- tion of this fact, GARS specifically require that auditors ensure that the audit committee (or its equivalent) is informed of a number of important matters that arise (or may arise) in connection with an audit of the financial statements. For some time, audit committees have played an important role in the private sector. For exam- ple, it is a requirement for listing on the New York Stock Exchange that a company have an audit committee composed ofnon-management directors. In recent years, audit committees have also become increasingly common in the public sector. GFOA recommends that every govern- ment, regardless of size, formally establish an audit committee or its equivalent, by charter, en- abling resolution, or other appropriate legal means.' The members of the audit committee collectively should possess the expertise and experience in Audit Committees (GFOA recommended practice, approved 1996). TO AUDITING 47