Example A-9 (SLG Chapter 16.36-39 and 16.63-.85): Unmodified Opinions with Required Supplementary Information and Supplementary Information / Other Information

With Reference to Another Auditor

INDEPENDENT AUDITOR’S REPORT

[ENTITY NAME]

[COUNTY NAME]

[STREET ADDRESS]

[CITY], Ohio [ZIP CODE]

To the [GOVERNING BODY]:

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the [aggregate] discretely presented component unit(s), each major fund, and the aggregate remaining fund information of the [ENTITY NAME], [COUNTY NAME], Ohio (the Entity), as of and for the year ended [FYE DATE], and the related notes to the financial statements, which collectively comprise the Entity’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for preparing and fairly presenting these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes designing, implementing, and maintaining internal control relevant to preparing and fairly presenting financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to opine on these financial statements based on our audit. We did not audit the financial statements of [identify organization, function or activity], which represent XX percent, XX percent, and XX percent, respectively, of the assets, [net position, or fund balances], and revenues of the [identify opinion unit(s)]. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amount included for [identify organization, function, or activity], is based solely on the report of other auditors. We audited in accordance with auditing standards generally accepted in the United States of America and the financial audit standards in the Comptroller General of the United States’ Government Auditing Standards. Those standards require us to plan and perform the audit to reasonably assure the financial statements are free from material misstatement. . Add if necessary>>> The other auditors audited the financial statements of [identify organization, function, or activity, opinion unit audited by other auditors] in accordance with auditing standards generally accepted in the United States of America and not in accordance with Government Auditing Standards.

An audit requires obtaining evidence about financial statement amounts and disclosures. The procedures selected depend on our judgment, including assessing the risks of material financial statement misstatement, whether due to fraud or error. In assessing those risks, we consider internal control relevant to the Entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not to the extent needed to opine on the effectiveness of the Entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of management’s accounting policies and the reasonableness of their significant accounting estimates, as well as our evaluation of the overall financial statement presentation.

We believe the audit evidence we obtained is sufficient and appropriate to support our audit opinions.

Opinions

In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the [aggregate] discretely presented component unit(s), each major fund, and the aggregate remaining fund information of the Entity, as of [FYE DATE], and the respective changes in financial position and where applicable, cash flows,, thereof and the respective<<delete if only one budgetary fund comparison budgetary comparison[s] for the General and [list major special revenue funds] thereof for the year then ended in accordance with the accounting principles generally accepted in the United States of America.

Emphasis of Matter

As discussed in Note X to the financial statements, during 20XX, the Entity adopted new accounting guidance in Governmental Accounting Standards Board (GASB) Statement No. XX, [include name/title of GASB Statement in italics]. We did not modify our opinion regarding this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require this presentation to include management’s discussion and analysis, [Required budgetary comparison schedule(s) and Schedules for infrastructure assets accounted for using the modified approach,] and schedules of net pension and other post-employment benefit liabilities and pension and other post-employment benefit contributions listed in the table of contents, to supplement the basic financial statements. Although this information is not part of the basic financial statements, the Governmental Accounting Standards Board considers it essential for placing the basic financial statements in an appropriate operational, economic, or historical context. We and the other auditors<< insert unless their audit was unrelated to info in RSI>> applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, consisting of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, to the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not opine or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to opine or provide any other assurance.

Supplementary and Other Information

Our audit was conducted to opine on the Entity’s basic financial statements taken as a whole.

[The introductory section, the financial section’s combining statements, individual fund statements and schedules, and the statistical section information] present additional analysis and is/are not a required part of the basic financial statements.

[The Schedule of Expenditures of Federal Awards presents additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and is not a required part of the financial statements.]

The [statements] and [schedules] are management’s responsibility, and derive(s) from and relate(s) directly to the underlying accounting and other records used to prepare the basic financial statements. We and the other auditors< omit if they audited information unrelated to supp info> subjected this information to the auditing procedures applied to the basic financial statements. We and the other auditors< omit if they audited information unrelated to supp info> also applied certain additional procedures, including comparing and reconciling this information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves in accordance with auditing standards generally accepted in the United States of America. In our opinion, this information is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

We did not subject the introductory section and statistical section information to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion or any other assurance on it / them. (Omit paragraph if no “other information” included.)

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated [REPORT DATE], on our consideration of the Entity’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report describes the scope of our internal control testing over financial reporting and compliance, and the results of that testing, and does not opine on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Entity’s internal control over financial reporting and compliance.

[Auditor Signature]

[City, State]

[REPORT DATE]

Revised October 2020 – Updated for COVID-19 Guidance (endnote 8), added county name to header, simplified language in opinion paragraph, added underline guidance to endnote 9.

1	If we combine discrete component units and remaining fund information into one opinion unit under the circumstances permitted by footnote 7 to Exhibit 4-1 (following section 4.73) in SLG, revise this phrase as follows:

“ . . . governmental activities, the business-type activities, each major fund and the [aggregate] discretely presented component unit and remaining fund information . . . “

2	As discussed in SLG 16.58, insert “, a component unit of [PRIMARY GOVERNMENT],” if applicable.

Appropriate changes to this sentence should be made when an entire opinion unit is audited by another auditor, For example “ We did not audit the financial statements of the Sewer Enterprise Fund, which is both a major fund and XX percent, XX percent, and XX percent, respectively, of the assets, net position, and revenues of the business-type activities.” However, the report should still indicate in the “Auditor’s Responsibility” section the group auditor’s responsibility for auditing that opinion unit. The group auditor should also express or disclaim an opinion on the opinion unit in the “Opinion” section of the report. See further discussion in paragraph 16.85 and the guidance in AU-C section 600, Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors) (AICPA, Professional Standards).

See SLG 16.85 and AU-C600 for further discussions and remember to modify the GAGAS compliance and controls report to refer to the other auditors.

Delete the reference to cash flows if none are presented. If all funds present cash flow statements, delete the phrase “where applicable.” See the 8th point in SLG 16.103.

Delete the reference to the budgetary comparisons from the opinion paragraph, and refer to it with the “MD&A /RSI paragraph” if the budgetary comparisons are presented as RSI.

Modify this example when a client properly adopts a new GASB pronouncement (including required disclosures and restatements) and it materially affects the financial statements (see AU-C 708.08).

Do not include EOM paragraphs for new standards with immaterial financial statement effects, or standards that effect only disclosures.

COVID-19 Guidance:

Additional language regarding COVID-19 and a related draft disclosure, draft emphasis-of-matter paragraph, and draft GAGAS opening paragraph sentence can be found here.

Comparative Financial Statements

Note: “comparative financial statements” means only complete financial statements for one or more prior periods included for comparison with the current financial statements. (“Total only” columns are incomplete presentations.)

Per AU-C 700.44, when we are the continuing auditor we would refer to these statements in our opinion (See AU-C 700, Illustration 1); however, when the prior period was audited by a predecessor auditor the following is an example other matter paragraph (See AU-C 706.54).

Prior Period Financial Statements Audited by a Predecessor Auditor

The financial statements of the [ENTITY NAME], [COUNTY NAME], Ohio (the Entity), as of and for the year ended [FYE DATE], were audited by predecessor auditor whose report dated [DATE], expressed an unmodified opinion on those statements. << modify as necessary if other than an unmodified opinion was issued.

Comparative Information

AU-C 700 uses the term comparative information for partial presentations. (e.g. “Total Only” columns). (Comparative statements refer only to complete p/y presentations.)

Per AU-C 700.46 We should include one of the following other matter paragraphs to describe comparative information (from AU-C 700, Illustration 4):

Report on Summarized Comparative Information

We have previously audited the Entity's 20XX financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated [DATE]. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 20XX is consistent, in all material respects, with the audited financial statements from which it has been derived. << modify as necessary if other than an unmodified opinion was issued.

Or:

The financial statements of the Entity as of and for the year ended December 31, 20XX were audited by a predecessor auditor. An unmodified opinion was issued [DATE] by the predecessor auditor. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 20XX is consistent, in all material respects, with the audited financial statements from which it has been derived. << modify as necessary if other than an unmodified opinion was issued.

Modify this paragraph in the following circumstances. See AU-C 730 and SLG 16.66-.73 :

The required supplementary information is omitted.

Some required supplementary information is missing and some is presented in accordance with the prescribed guidelines.

The auditor has identified material departures from the prescribed guidelines.

The auditor is unable to complete the procedures in AU-C 730.05.

The auditor has unresolved doubts about whether the required supplementary information is presented in accordance with prescribed guidelines.

Modify the list of supplementary information paragraph as necessary. See SLG 16.74-.79. Also:

If an opinion qualification on the financial statements also affects the supplementary information, include a statement that, in the auditor's opinion, except for the effects on the supplementary information of (refer to the paragraph in the auditor's report explaining the qualification), this information is fairly stated, in all material respects, in relation to the financial statements as a whole. See AU-C 725.09(f) and AOS auditors consult with CFAE.

We must disclaim on this information if we render an adverse opinion or disclaimer of opinion. AOS auditors consult with CFAE.

Remove reference to Schedule of Expenditures of Federal Awards when reporting over it is instead included in the Single Audit Letter.

Important: We normally consider materiality for each opinion unit. However, our in-relation-to opinion on supplementary information is in relation to the financial statements as a whole. Therefore, we consider materiality at a level representing the entire governmental entity.

References to other auditors are only appropriate when the other auditor’s report discusses applicable RSI, SI, or both. (see paragraph 16.85)

Modify the list of supplementary information paragraph as necessary. See SLG 16.74- .79. Also:

If an opinion qualification on the financial statements also affects the supplementary information, include a statement that, in the auditor's opinion, except for the effects on the supplementary information of (refer to the paragraph in the auditor's report explaining the qualification), this information is fairly stated, in all material respects, in relation to the financial statements as a whole. See AU-C 725.09(f) and AOS auditors consult with CFAE.

We must disclaim on this information if we render an adverse opinion or disclaimer of opinion. AOS auditors consult with CFAE.

Important: We normally consider materiality for each opinion unit. However, our in-relation-to opinion on supplementary information is in relation to the financial statements as a whole. Therefore, we consider materiality at a level representing the entire governmental entity.

This last sentence derives from AU-C 720, and relates to financial or nonfinancial information that is neither RSI nor supplementary information subject to AU-C 725. Examples include introductory information or statistical tables, which are not subject to an “in –relation – to” opinion.

Our responsibility for this “unaudited” information is only to read it* to determine if (1) material inconsistencies exist between it and the audited statements, or (2) this information includes material misstatements of fact. If you identify a material inconsistency or misstatement of fact and management is unwilling to correct it, AOS auditors consult with CFAE.

* While standards only require us to “read it,” you should apply the procedures from our specimen programs to agree this information to supporting documentation. For example, you should agree 10 - year statistical tables to the prior-year CAFR to assure the prior years’ amounts did not inadvertently change. (SLG 16.80-.84)

Modify this to say “will also issue” when issuing a CAFR opinion separately from remainder of the report which is issued at a later time.