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. As an example of documents and schedules that your AIC may ask you to provide, there is a sample schedule under the Best Practices, Example Documents and Templates section of the website called, Sample Provided by Client (PBC) List.
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:
- Any adjustments he or she is proposing to the financial statements.
- The type of opinion that will be rendered on the financial statements (if an audit was performed)
- 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:
- 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?
- 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?
- Should I be worried if the CPA keeps asking me questions about a particular transaction?
- 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?
- The CPA is asking me to make adjustments to the financial statements. What will happen if I don’t make these adjustments?