Governmental Entities

Your auditor can help build public trust

Each year governmental entities, such as municipalities and counties, go through independent annual audits. During the independent audits, the auditors, who are also certified public accountants (CPAs), audit the entities’ financial records, internal controls, and operations.

The citizens fully approve this practice as they are looking for accountability from their government and confirmation their officials manage their tax dollars efficiently and with integrity. An annual independent audit can help county and municipality officials gain the public’s trust. With public trust, our officials can be more effective in implementing new initiatives in the community.

• The annual independent audit will provide:
  • An informed opinion of the governmental entity’s operating policies and officials’ honesty
  • Protection for both parties: the governmental entity’s employees and the citizens
  • A review of the internal control system and recommendations for its improvement
  • A review of the accounting system and recommendations for improving practices and procedures in operations
  • Accurate and dependable financial and statistical reports outlining the entity’s financial condition and results of operations

The independent auditors will provide the best audit and accounting services if they:

• Are diligent in applying proper auditing standards and procedures
  • Auditing procedures relate to acts to be performed: audit planning, fieldwork, sampling, analytical procedures, etc.
  • Auditing standards are the rules for performing an audit. They are issued by governing organizations. For governmental entities the auditing standards are more stringent. In addition to meeting AICPA’s auditing standards requirements, the auditors must follow United States General Accounting Office (GAO) Government Accounting Standards (GAO 2003), the “Yellow Book” standards and, in Florida, the Rules of the Auditor General.
• Are knowledgeable and experienced in auditing governmental entities. Hiring an independent auditor to perform the audit does not automatically mean the governmental entity will receive the kind of audit and accounting services it needs. The quality of the services heavily depends on the auditors’ specialized knowledge and the diligence and care they apply in providing the services.

What’s so different about auditing governmental entities versus other organizations, such as for-profit companies?

In comparison with private, for-profit companies, governmental entities are (1) owned collectively by constituents who do not use the governmental entities’ goods and services proportionately; (2) they are not driven by profit motives and (3) are subject to political processes, which affect the decision-making process.

Because of these characteristics, auditing a local governmental entity is different from auditing private, for-profit businesses.

When auditing a governmental entity the auditor will enhance the audit procedures to address issues unique to governmental entities, such as:

• Fund accounting
• Budgeting
• Compliance with laws and regulations
• Encumbrances
• Budget-to-actual comparison statements
• Assessment of internal controls.

The governmental entities are facing increased pressure from their citizens to demonstrate a high level of accountability over public funds. The advantages to everyone from a properly conducted audit fully justify the costs. With the help of independent auditors, municipality or county officials can find ways to run leaner and more efficient operations, monitor effectively the conversion of resources into services the citizens demand, and maintain public’s trust.