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4 <br /> Slide #3 <br /> Role of the External Auditor <br /> Actions R#Sullts Required <br /> .. <br /> Obtain ,. <br /> misstatement Compliance —.AM <br /> %.1 CherryBekaert' <br /> Mike Carey continued the presentation. He said Cherry Bekaert uses a risk-based <br /> approach in planning the audit. He said that includes review of prior year adjustments, annual <br /> reports, inquiry with management, preliminary analytics and a review of industry trends in North <br /> Carolina. He said that the information is used to assess areas of significance in the county's <br /> audit and to develop Cherry Bekaert's risk assessment. He said that based on the risk <br /> assessment, the team then develops the audit approach and testing procedures. He said that <br /> the procedures are used to obtain reasonable assurance of the audit results not absolute <br /> assurance. He explained that based on the test, they draw conclusions that the annual report is <br /> free from material misstatements or if adjustments are required. He said that after the audit is <br /> performed, they develop opinions based on components of the county's annual report, internal <br /> controls over financial reporting, and internal controls over county's compliance with reporting <br /> on federal and state program funding. He said that certain components are included based on <br /> required communications and that those are contained in the governance letter for the audit. <br /> Slide #4 <br /> Internal Controls <br /> Test Df Controls <br /> W3ERS;bLwarial -Access and'Acurity <br /> w�Cherry <br /> Mike Carey said that part of risk assessment process identifies certain audit areas to <br /> gain an understanding of internal control processes. He said that once that is done, they <br /> complete a "cradle to grave" walk through of any significant audit area. <br />