| [NAME] |
| Engagement Team Discussion and Planning Memo |
| [DATE] |
| Part III - Engagement Team Discussion |
| Discussion Participants: |
| Discussion Date: |
| In General: | | | | The audit team met on the date shown above, face-to-face at MHFA’s office to identify, discuss and address significant risks (whether from error or fraud) associated with this client. The team reviewed the significant transaction classes, audit areas, etc and brainstormed regarding whether these audit areas and transaction classes contained fraud or other significant risks specific to those areas (in addition to the overall discussion of fraud risk and discussions and brainstorming regarding overall financial statement risks, and MHFA’s planned responses) and developed a corresponding audit approach for each area based on these risk assessments/analyses. See A-05 (Risk Identification and Assessments). |
| | | | | 1. | MHFA discussed Part I, II and III on A-05. |
| | | | | 2. | Fraud Inquiries: MHFA selected the following individuals for fraud interviews: |
| | | | | | a. |
| | | | | | b. |
| | | | | 3. | Consideration of Reconciling Detailed GL to TB: |
| | | | | | a. |
| | | | | 4. | Significant Estimates: |
| | | | | 5. | Will attorney letters be sent for this engagement? |
| | | | | 6. | Relevant Changes in Accounting Standards and Expected Impact on the Audit: |
| | | | | 7. | Discussion of Relevant Carryforward Notes, If Any. |
| | | | | 8. | Consider ways that the IDEA software or First Research could be used on this engagement: |
| | | | | 9. | Specific Items for Discussion at Meeting (List Items that were identified during planning / planning review process that require further discussion) |
| | | | | | a. | Comments from fraud brainstorming, see step 11 below: |
| | | | | | b. | Other items for discussion: |
| | | | | | | Specifically address the risk of non-compliance with applicable rules, regulations, etc., and document MHFA's planned approach with regards to non-compliance as it pertains to this audit / client: |
| | | | | 10. | Describe the fieldwork plan and post fieldwork plan, including estimated senior manager/partner review dates and an overall description of the planned workflow for the audit. |
| | | | | 11. | Discuss and Identify Areas of Partner Focus |
| | | | | 12. | MHFA also discussed the following required discussion topics: |
| | | | | | | · Areas susceptible to management override of controls. |
| | | | | | | · Application of GAAP to the entity’s facts and circumstances in light of its accounting policies. |
| | | | | | | · The need to exercise professional skepticism throughout the engagement, be alert for information or other conditions that indicate that a material misstatement or noncompliance due to fraud or error may have occurred, and to be rigorous in following up on such indications. |
| | | | | | | · How and where the entity’s financial statements (for example, which accounts or transaction classes) might be susceptible to material misstatement due to fraud. |
| | | | | | | · For areas susceptible to material misstatement or noncompliance due to fraud, the methods management might use to conceal the fraud. |
| | | | | | | · Circumstances that might indicate earnings management or manipulation of other financial measures. |
| | | | | | | · Practices that management might use to manage earnings or other financial measures that could lead to fraudulent financial reporting. |
| | | | | | | · How the entity’s assets could be stolen. |
| | | | | | | · External and internal factors that might create incentives/pressures, provide opportunities, or enable rationalization of fraud. |
| | | | | | | · How the engagement team might respond to the susceptibility of the client’s financial statements to material misstatement due to fraud. |
| | | | | | | · Known related party relationships and transactions, the possibility of unidentified related parties and how those might be identified, and the susceptibility of the financial statements to material misstatement due to fraud or error that could result from related party relationships and transactions, including how related parties could be used to perpetrate fraud. |
| | | | | | MHFA also discussed the following suggested discussion topics: |
| | | | | | | · Critical issues and areas of significant audit risk. |
| | | | | | | · Unusual accounting practices used by the client. |
| | | | | | | · Important control systems. |
| | | | | | | · Significant IT applications and how the use of IT may affect the audit. |
| | | | | | | · Materiality levels and how materiality will be used to determine the extent of testing. |
| | | | | 13. | (FOR SINGLE AUDIT ENGAGEMENT) Specific Items for Discussion at Meeting (List Items that were identified during planning / planning review process that require further discussion) |
| | | | | 14. | (FOR SINGLE AUDIT ENGAGEMENT) MHFA also discussed the following required discussion topics: |
| | | | | | a. | How the audit team might respond to the susceptibility of the client’s major programs to material noncompliance due to fraud |
| | | | | | b. | How and where the entity’s schedule of expenditures of federal awards (if applicable) (for example, which accounts, transaction classes, or major programs) might be susceptible to material misstatement or noncompliance due to fraud |
| | | | | | c. | Major federal award programs, including the entity’s experience with each of them |
| | | | | | d. | Significant compliance requirements |
| | | | | | e. | Materiality at the major program and compliance requirement level |
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Engagementteamdiscussion21.xls
