RFP Staff
♦ Recent RFP Freedom of Information Act Inquiries, under North Carolina Public Records Law, G.S. §132-1., have revealed that Martin Starnes & Associates, CPAs, P.A., of Hickory, NC, began the proceedings of an SAS 99 audit of the City of Salisbury some time during or before last month. The morning after the June 17th “mutual termination” of former City Manager Doug Paris, City Council member Brian Miller received the following request to answer questions regarding possible fraud from a Martin Starnes staff accountant:
View a PDF of the email message here: https://drive.google.com/file/d/0B2E5Ew6OLdElNjBJT3VFZ2U0Mkk/edit?usp=sharing
An SAS 99 audit is the consideration of fraud in a financial statement audit. In such an audit for fraud, the assessor gathers information, identifies and assesses risks, and then responds to the assessed risks. During the process of assessment such as that referenced in the email above, the assessor seeks to identify three conditions that may indicate fraudulent misrepresentation in financial statements: incentive/pressure, opportunity, and rationalization/attitude.
As this process begins, the assessor investigates management and other members of an organization such as those who undertake and report finances, procedures, fraud risk factors, and other sources and factors. Others who are assessed will include personnel not necessarily directly involved in the financial-reporting process, those with knowledge of unusual transactions or transactions that appear complex, and in-house legal counsel.
The City of Salisbury Financial Services Department, for example, would be considered during such a process. The current Financial Services Department appears in the following screenshot, taken this morning:
Read more about the SAS 99 audit process:
http://www.journalofaccountancy.com/Issues/2003/Jan/AuditorsResponsibilityForFraudDetection.htm
SAS 99 in layman’s terms:
http://www.fraud-magazine.com/article.aspx?id=4294967855
SAS No. 99 (Statements on Auditing Standards) from AICPA: http://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-00316.pdf
