Wiley Federal Government Auditing: Laws, Regulations, Standards, Practices, and Sarbanes-Oxley, 2nd Edition

CHAPTER 12

END-OF-AUDIT, QUALITY CONTROL, AND REPORTING PROCEDURES

The reporting phase, Phase IV, will, of course, culminate with the issuance of the auditor’s reports; however, prior to the issuance of the reports a significant number of procedures requiring the involvement of the more senior members of the audit team will take place. During this phase, the auditor:

1. Obtains legal and management representation letters.

2. Performs a final evaluation of audit results, including waived adjustments, and determines the types of audit assertions that the audit results support.

3. Concludes quality review procedures (including a technical review by an independent senior-level member of the audit organization, such as a partner or equivalent, if a government audit team performs the audit).

4. Issues draft and final reports.

OBTAIN MANAGEMENT AND LEGAL REPRESENTATION LETTERS

Management Representation Letter(s)

Guidance from the American Institute of Certified Public Accountants (AICPA) AU-C 580 requires auditors to obtain management representations on all audit engagements.1 Office of Management and Budget (OMB) Bulletin 07-04, Audit Requirements for Federal Financial Statements, and the Government Accountability Office (GAO) Financial Audit Manual (FAM) adopt this guidance and require that the letter, at a minimum, address:

• Financial statements (acknowledging management’s responsibility for the statements and asserting that the statements were prepared in accordance with generally ...