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

Santa Cruz Metropolitan Transit District
Based on experience auditing California transit agencies, we have developed standard audit
plans, which have been tailored to comply with:
• Generally accepted auditin g standards as set forth by the American Institute of Certified
Public Accountants.
• The standards for financial audits set forth in the U.S. General Accounting Office’s
Government Auditing Standards.
. The provisions of the Single Audit Act of 1984.
• The provisions of U.S. Office of Management and Budget (OMB) Circular A-133.
• The provisions of PUC Section 99243 and 99245 and the Transportation Development
Act.
Study and Evaluation of Internal Control in Connection with the Financial Statement Audit
This is the cornerstone of the examination. Internal accounting control generally comprises the
plan of organization and the procedures and records that are concerned with the safeguarding of
assets and the reliability of financial records.
Based on our experience with transit agencies, we will focus our evaluation of the internal
control system in the following areas:
. controls over the evaluation of passenger fares,
. controls over disbursements and purchasing,
. controls over payroll, and
. controls related to the administration of federal programs.
We will begin by preparing flow charts and other memoranda to describe the internal control
system. These flow charts and other memoranda are prepared based on information obtained
through our inquiry and observation of District personnel, and from our review of the District’s
organizational charts, procedural manuals and programs, and documented financial and
management information systems. Our flow charts and memorandum will then be reviewed to
isolate significant strengths and weaknesses that would affect the extent of our substantive audit
procedures to be employed. Each strength is then tested and the results subjected to evaluation.
These evaluations assist us in determining the amount of reliance we can place on the significant
strengths we have identified.
BROWN ARMSTRONG
ACCOUNTANCY CORPORATION 10
Providing Accounting and Auditing Service
for more than 29 yea]