SCMTD February 2004 Board of Directors Agendas - Santa Cruz ...

Santa Cruz Metropolitan Transit District
Sample Sizes and Anticipated Statistical Sampling
We will utilize Statement on Auditing Standards Number 39 for guidance in selecting sampling
techniques and sizes. We anticipate usin g statistical sampling and evaluation in our tests of
receipts, disbursements, payroll and expenditures. Usually to achieve 95% confidence over large
populations, we do not sample more than 120 items, selected with replacement. We emphasize
compliance items over substantive when using sampling.
Judgmental sampling and evaluation will be used for large dollar items, usually in excess of our
selected materiality levels and bearing a strong relationship to our risk evaluation profile.
Analytical Procedures. We will use analytical procedures exactly as described in the foregoing
paragraph, both in planning and auditing phases of our work. In addition, we will use internal
data such as passenger fares per revenue miles to test reasonableness of fares collected and to
determine reasonableness of fluctuation in operating expenses.
Extent of EDP Software in the Engagement. Each staff person has a personal computer, and
has knowledge of a generic software we have purchased for auditing municipalities and report
writing. We use this software in the beginning, inputting all prior year actual numbers, and the
client current year budget, including amendments. We then input year-to-date numbers and run
analytical work at the end of the audit comparing appropriation-expenditure numbers to prior
year and budget amounts. All significant differences are investigated.
Report Writing. Our software is capable of complete report writing, including combining
statements and footnotes.
Data Extraction. We will use “ACL” for data inquiry, analysis and reporting. Some of the
procedures we perform with ACL are:
. Select disbursements over $100,000 for testing.
• Test for duplicate payments
. Test for aging of receivables
. Test of fixed asset depreciation
. Test of inventory pricing
BROWN ARMSTRONG
ACCOUNTANCY CORPORATION 15
Providing Accounting and Auditing Service
for more than 29 yea]