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4 <br /> LGC-205 CONTRACT TO AUDIT ACCOUNTS Rev. 11/2023 <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 <br /> issues 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 <br /> other significant matters. If matters identified during the audit were required to be reported as described in <br /> AU-C §260.12-.14 and were communicated in a method other than an AU-C §260 letter, the written <br /> documentation must be submitted. <br />