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CONEJO RECREATIONAND PARK DISTRICT AND THE MOUNTAINS RECREATION AND CONSERVATION AUTHORITY PROPOSAL FOR PROFESSIONAL AUDITING SERVICES Specific audit approach (continued) Analytical procedures In order to properly utilize analytical procedures, industry background and knowledge are needed. With our firm's long history and qualified staff, we believe we have the necessary knowledge and experience to effectively apply analytical procedures. We will utilize analytical review procedures throughout our audit of the District. During the interim phase of our audit, we will compare current and prior year unadjusted balances to determine areas that may need additional analysis; we will also compare current year actual amounts to the District's annual budget. During the final phase of our audit, we will perform procedures similar to those mentioned above, as well as compare certain financial ratios for current and prior years. We will also conduct certain "reasonableness" tests. Any significant variances are investigated further through inquiry and other substantive testing as deemed necessary until resolved to our satisfaction. Finally, after we have completed our fieldwork, we will compare current and prior year audited balances, keeping in mind expected relationships obtained from our knowledge of the District and various other entities. In addition, we may choose to use various other analytical techniques such as trend analysis, etc. Unlike many other firms, we use analytical procedures to supplement our substantive testing, not supplant them. Approach in determining applicable laws and regulations We understand the importance of laws and regulations in planning an audit of a local government or not-for- profit entity and design all of our audits to ensure we test transactions for compliance. As part of our audit process, our audit team will obtain an understanding of the laws and regulations that will have a direct and material effect on the District's financial statements. In determining which laws and regulations are applicable to the District's financial statement audit, we will consult the following sources: • AICPA Audit and Accounting Guide, Audits of State and Local Governments • California Government Code (investments, GANN limit requirements, etc.) • U.S. Government Accountability Office's Government Auditing Standards (The Yellow Book), 2011 Revision (for the 2021 audit we will follow the 2018 Revision) • Applicable contracts/grants of the District • Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (OMB Uniform Guidance) After consulting the applicable sources, we will design our audit to provide reasonable assurance of detecting material instances of noncompliance while continuing to refer back to the applicable compliance guideline to ensure changes in compliance are not missed. Evaluation of internal controls and management letter comments In connection with each audit, a comprehensive review of internal controls over financial reporting will be performed. Our firm uses customized internal control questionnaires, information technology questionnaires and narratives to gain an understanding of the internal control process during the audit process. If we identify any weaknesses and after discussion with the appropriate District staff, we will submit a management comment letter which will identify weaknesses observed during the audit process. The management comment letterwill provide our recommendation for correction and we will also provide management with the opportunity to comment on our findings. AICPA GAQC Member -20-