GASB 34 Modified Approach RSI Auditor Perspective

1. 1 GASB 34 Modified Approach & RSI� Auditor Perspective Gerry C. Boaz Tennessee Division of State Audit April 25, 2001

2. 2 Modified Approach Asset-Management System Documentation Requirements Expenditures Transition Requirements Required Supplementary Information (RSI) Required note disclosures to RSI

3. 3 Auditor Considerations � Modified Approach Asset management systems used by management have the required characteristics Eligible infrastructure assets are properly recorded Capitalized amounts represent only original cost plus additions or improvements No accumulated depreciation was recorded for those assets

4. 4 Auditor Considerations � Modified Approach Major classes of capital assets are separately identified Detailed capital asset records are (or are not) available Condition assessment requirements have been met Condition assessments are replicable

5. 5 Auditor Considerations � Modified Approach Contractors or specialists are used to perform condition assessments RSI, including MD&A and Notes to RSI, includes required information

6. 6 Auditor Responsibility for RSI Inquire about methods of preparing RSI Compare information for consistency Consider written representations Apply additional procedures Make additional inquiries Disclaim opinion in auditor-submitted documents Say nothing or disclaim opinion in client-prepared documents

7. 7 Auditor RSI Reporting Explanatory paragraph could be added to the opinion letter under the following circumstances: Omission of RSI Material departures from GAAP Auditor procedures not completed Auditor�s unresolved doubts about presentation

8. 8 Words of Advice Start preparing now! Create an implementation plan Work with your auditors early and often Start preparing now!