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LGC -205 CONTRACT TO AUDIT ACCOUNTS Rev . 1112022 <br /> the report was not submitted timely for State low- risk auditee status . Please refer to " Discussion of Single <br /> Audits in North Carolina " on the LGC ' s website for more information . <br /> If the audit and Auditor communication are found in this review to be substandard , the results of the review <br /> may be forwarded to the North Carolina State Board of CPA Examiners ( NC State Board ) . <br /> 3 . If an entity is determined to be a component of another government as defined by the group audit <br /> standards , the entity' s auditor shall make a good faith effort to comply in a timely manner with the requests of <br /> the group auditor in accordance with AU - 6 § 600 . 41 - § 600 . 42 . <br /> 4 . This contract contemplates an unmodified opinion being rendered . If during the process of conducting <br /> the audit , the Auditor determines that it will not be possible to render an unmodified opinion on the financial <br /> statements of the unit , the Auditor shall contact the LGC Staff to discuss the circumstances leading to that <br /> conclusion as soon as is practical and before the final report is issued . The audit shall include such tests of the <br /> accounting records and such other auditing procedures as are considered by the Auditor to be necessary in the <br /> circumstances . Any limitations or restrictions in scope which would lead to a qualification should be fully <br /> explained in an attachment to this contract . <br /> 5 . If this audit engagement is subject to the standards for audit as defined in Government Auditing <br /> Standards , 2018 revision , issued by the Comptroller General of the United States , then by accepting this <br /> engagement , the Auditor warrants that he/she has met the requirements for a peer review and continuing <br /> education as specified in Government Auditing Standards . The Auditor agrees to provide a copy of the most <br /> recent peer review report to the Governmental Unit(s) and the Secretary of the LGC prior to the execution of an <br /> audit contract . Subsequent submissions of the report are required only upon report expiration or upon auditor' s <br /> receipt of an updated peer review report . If the audit firm received a peer review rating other than pass , the <br /> Auditor shall not contract with the Governmental Unit(s ) without first contacting the Secretary of the LGC for a <br /> peer review analysis that may result in additional contractual requirements . <br /> If the audit engagement is not subject to Government Auditing Standards or if financial statements are not <br /> prepared in accordance with U . S . generally accepted accounting principles (GAAP) and fail to include all <br /> disclosures required by GAAP , the Auditor shall provide an explanation as to why in an attachment to this <br /> contract or in an amendment . <br /> 6 . It is agreed that time is of the essence in this contract . All audits are to be performed and the report of <br /> audit submitted to LGC Staff within four months of fiscal year end . If it becomes necessary to amend the audit <br /> fee or the date that the audit report will be submitted to the LGC , an amended contract along with a written <br /> explanation of the change shall be submitted to the Secretary of the LGC for approval . <br /> 7 . It is agreed that GAAS include a review of the Governmental Unit' s ( Units ' ) systems of internal control <br /> and accounting as same relate to accountability of funds and adherence to budget and law requirements <br /> applicable thereto ; that the Auditor shall make a written report , which may or may not be a part of the written <br /> report of audit , to the Governing Board setting forth his/her findings , together with his recommendations for <br /> improvement . That written report shall include all matters defined as " significant deficiencies and material <br /> weaknesses " in AU - C 265 of the AICPA Professional Standards (Clarified) . The Auditor shall file a copy of that <br /> report with the Secretary of the LGC . <br /> For GAAS or Government Auditing Standards audits , if an auditor issues an AU - C § 260 report , commonly <br /> referred to as " Governance Letter , " LGC staff does not require the report to be submitted unless the auditor <br /> cites significant findings or issues from the audit , as defined in AU - C § 260 . 12 - . 14 . This would include issues <br /> such as difficulties encountered during the audit , significant or unusual transactions , uncorrected <br /> misstatements , matters that are difficult or contentious reviewed with those charged with governance , and other <br /> significant matters . <br /> Page 2 <br />