WHAT TO EXPECT DURING A CPA AUDIT

This is written by The NYS OFFICE OF THE STATE COMPTROLLER as information for Fire Districts when getting a CPA Audit. Fire Districts in NYS now have audit requirements if revenues exceed $200,000 (Since 2007).  This guide can be a good reference to any organization getting a CPA audit.
The guide can be found here.....
WHAT TO EXPECT DURING A CPA AUDIT 
Planning Phase:
I. Auditors will ask you to sign an engagement letter summarizing terms and 
conditions of audit, including: 
a. Method of accounting - Accrual versus cash basis 
b. Generally accepted auditing standards 
c. Government auditing standards 
d. Fees and payment terms 
II. Preliminary planning meeting with Fire District (FD) management/financial 
personnel 
a. Gather historical documents 
i. Charter, By-Laws, etc. 
b. Gather information regarding internal controls 
i. Cash receipts 
ii. Cash disbursements 
iii. Payroll 
iv. Property and equipment acquisition 
v. Other 
c. Communication with FD Board and/or Finance Committee 
d. Discussion about fraud risk and fraud risk assessment 
e. Discuss/negotiate the level of assistance from FD to auditors 
i. If you provide assistance, this will keep your audit fees lower 
f. Establish timetable for completing the work 
i. Planning 
ii. Fieldwork 
iii. Financial statement completion 
III. Auditor will ask you to sign confirmations 
a. Bank accounts 
b. Investments 
c. Significant amounts receivable 
d. Revenue contract with Town 
e. Legal representation letter to your attorney 
f. Other 
Fieldwork Phase
I. Auditors will typically spend several days on-site at FD 
a. Will need physical space to work 
b. Will need access to records 
c. Will need access to FD personnel who can answer their questions WHAT TO EXPECT DURING A CPA AUDIT 
(cont.)
II. Auditors will want to review: 
a. Board minutes 
b. Finance reports issued by you during the year 
c. Copy of your annual budget 
d. General ledger 
e. Journal entries 
f. Bank statements and cancelled checks 
g. Original invoices for assets and expenses 
h. Payroll records 
i. Contracts 
j. Major leases 
k. Bank loans and mortgages 
III. Auditors should want to physically inspect certain assets 
a. Major equipment (new and older items) 
b. Building 
c. Major construction projects 
d. Possibly look at major inventories/supplies 
IV. Auditors will usually ask many questions 
a. Explanations for key transactions 
b. More backup to support transactions 
c. Reasons for fluctuations between your budgeted and actual results 
Financial Statements, Reports and Wrap-up Phase
I. Auditors will provide you with proposed changes (adjusting entries) to 
your records 
a. You need to agree or disagree 
b. Possible to "pass" on minor proposed adjustments 
c. Auditors will ask you to sign a "Management Representation Letter" 
at end of audit to codify various questions and answers provided 
during the audit 
i. Usually signed by key member of management and at least 
one Board member 
II. Auditors will provide draft financial statements for your review and 
approval WHAT TO EXPECT DURING A CPA AUDIT 
(cont.)
III. Auditors should provide other written reports 
a. Letter on reportable conditions (internal controls) and/or 
management letter suggestions 
i. Major internal control weaknesses, if any, will be identified 
with recommendations for improvements 
ii. Other comments may cover minor internal control 
weaknesses or efficiency tips 
b. Communication letter to Finance Committee or Board 
i. Summarizes the results of the audit, including: 
1. Accounting policies 
2. Accounting estimates 
3. Audit adjustments recorded 
4. Describe any difficulties dealing with management 
5. Other 
IV. Auditors should be invited to present their reports to Board or Finance 
Committee 
a. Board or Finance Committee members should ask questions 
V. Good communication between auditors, Board and FD personnel will 
increase the chances of a smooth and effective annual audit 

WHAT TO EXPECT DURING A CPA AUDIT Planning Phase:I. Auditors will ask you to sign an engagement letter summarizing terms and conditions of audit, including: a. Method of accounting - Accrual versus cash basis b. Generally accepted auditing standards c. Government auditing standards d. Fees and payment terms II. Preliminary planning meeting with Fire District (FD) management/financial personnel a. Gather historical documents i. Charter, By-Laws, etc. b. Gather information regarding internal controls i. Cash receipts ii. Cash disbursements iii. Payroll iv. Property and equipment acquisition v. Other c. Communication with FD Board and/or Finance Committee d. Discussion about fraud risk and fraud risk assessment e. Discuss/negotiate the level of assistance from FD to auditors i. If you provide assistance, this will keep your audit fees lower f. Establish timetable for completing the work i. Planning ii. Fieldwork iii. Financial statement completion III. Auditor will ask you to sign confirmations a. Bank accounts b. Investments c. Significant amounts receivable d. Revenue contract with Town e. Legal representation letter to your attorney f. Other Fieldwork PhaseI. Auditors will typically spend several days on-site at FD a. Will need physical space to work b. Will need access to records c. Will need access to FD personnel who can answer their questions WHAT TO EXPECT DURING A CPA AUDIT (cont.)II. Auditors will want to review: a. Board minutes b. Finance reports issued by you during the year c. Copy of your annual budget d. General ledger e. Journal entries f. Bank statements and cancelled checks g. Original invoices for assets and expenses h. Payroll records i. Contracts j. Major leases k. Bank loans and mortgages III. Auditors should want to physically inspect certain assets a. Major equipment (new and older items) b. Building c. Major construction projects d. Possibly look at major inventories/supplies IV. Auditors will usually ask many questions a. Explanations for key transactions b. More backup to support transactions c. Reasons for fluctuations between your budgeted and actual results Financial Statements, Reports and Wrap-up PhaseI. Auditors will provide you with proposed changes (adjusting entries) to your records a. You need to agree or disagree b. Possible to "pass" on minor proposed adjustments c. Auditors will ask you to sign a "Management Representation Letter" at end of audit to codify various questions and answers provided during the audit i. Usually signed by key member of management and at least one Board member II. Auditors will provide draft financial statements for your review and approval WHAT TO EXPECT DURING A CPA AUDIT (cont.)III. Auditors should provide other written reports a. Letter on reportable conditions (internal controls) and/or management letter suggestions i. Major internal control weaknesses, if any, will be identified with recommendations for improvements ii. Other comments may cover minor internal control weaknesses or efficiency tips b. Communication letter to Finance Committee or Board i. Summarizes the results of the audit, including: 1. Accounting policies 2. Accounting estimates 3. Audit adjustments recorded 4. Describe any difficulties dealing with management 5. Other IV. Auditors should be invited to present their reports to Board or Finance Committee a. Board or Finance Committee members should ask questions V. Good communication between auditors, Board and FD personnel will increase the chances of a smooth and effective annual audit