Policy Title
Policy Number
Version
Contact
Effective Date
Approved By
Audit Policy
311
DRAFT 0
Candy Shin, Chief Financial Officer
Audit Policy
Policy
IRIS will have conducted, no less than annually, an external audit by a qualified independent
public accountant, in accordance with applicable standards outlined in OMB Circular A-133
“Audits of States, Local Governments and Non-Profit Organizations”.
IRIS staff will fully cooperate with and assist external auditors.
Purpose
As an entity expending $500,000 or more in funding from Federal awards, IRIS is required
to obtain an annual A-133 audit, and is subject to the audit and review requirements under
its sponsored awards.
Scope
Responsibilities
An effective audit requires contributions by various entities, including the auditor,
management and the Budget & Finance Committee, as follows:

Role of the Independent Auditor: The auditor’s responsibility is to express an
opinion on IRIS’s financial statements and on IRIS’s compliance with applicable
requirements based on their audit. The financial statement audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, in order to obtain reasonable assurance that the financial
statements are free of material misstatement. The compliance audit includes
examining, on a test basis, evidence about IRIS’s compliance with the applicable
requirements and other procedures the auditor considers necessary, but does not
provide a legal opinion on IRIS’s compliance with those requirements.

Role of Management: IRIS’s annual financial statements are the responsibility of
management, as is the maintenance of an adequate internal control structure.
Management drafts the financial statements and other audited documents.
Management is also responsible for compliance with the requirements of laws,
regulations, contracts and grants applicable to IRIS’s major federal program.
Management recognizes the limitations of the testing on which the auditor’s
reports are based, and retains the responsibility for ensuring that the internal
control structure remains adequate in response to growth and evolving program
activities.

Role of Budget & Finance Committee: Annually, the Committee reviews audit
reports and auditor communications, discussed them with management, as
appropriate, and recommends acceptance of the reports by Board of Directors.
Periodically, the Committee will evaluate the auditor relationship. When a change
in audit firm is warranted for any reason, the Committee will review and evaluate
auditor proposals and recommend a provider to the Board of Directors.

Role of the Board of Directors: The Board of Directors reviews and accepts the
annual audit reports for IRIS. The Board has the sole authority to retain an
independent audit firm.
Procedures
A. Selection of Auditor
In the selection process, the Chief Financial Officer works with the Budget &
Finance Committee to develop a request for proposal, including the scope of work
required, which is provided to a number of independent accounting firms. The
responding proposals are received and evaluated by the Budget & Finance
Committee.
Proposals are assessed not solely on the basis of price, but on a number of other
factors, which may include:

Skills and knowledge of the team proposed to do the work;

Quality of work;

Independence of the audit firm;

Lead signing partner and independent review partner rotation and
succession planning;

Value for money; and

Ethical behavior and fair dealing.
Once the Budget & Finance Committee determines the desired firm, the
information is presented to the full Board, with a recommendation. The Board
considers and discusses the recommendation and selects the desired firm.

Engagement of the Auditor: Annually, the independent firm provides IRIS
with an engagement letter, which documents the scope and terms of the audit
engagement. The Chief Financial Officer reviews the letter and executes it, as
appropriate. Typically, IRIS engages the independent audit firm on a multiyear basis.

Review of the Auditor: While long-term audit relationships have their
benefits, prudent business practice dictates a periodic evaluation of the level
of services provided and fees charged by the incumbent firm. From time to
time, but not less frequently than every five years, the Budget & Finance
Committee will formally review the performance of the auditor and evaluate
their satisfaction with the current firm, including services provided and value
for fees paid.
If the Committee remains satisfied with the current firm, it may opt to continue
the relationship for up to ten years. At the ten-year mark, the engagement will be
subject to a competitive bidding process. The incumbent firm may be considered
if they participate in the process and present a winning bid.
B. Audit Fieldwork
Once IRIS engages the audit firm to perform the financial statement audit, the
auditor works with Financial Services to perform the audit test work onsite at
IRIS Headquarters. The Chief Financial Officer and the Accounting Manager are
the primary contacts for the auditors during the fieldwork.
C. Audit Reports
At the end of the audit process, the independent accounting firm issues a number
of reports and communications, which are reviewed by management and
discussed with the auditors, as necessary, to resolve any final issues. Once all
open items are resolved and the audit work is complete, the auditor issues the
audit reports.
At the conclusion of the audit, the independent firm will issue the following
reports:

Independent Auditor’s Report, which expresses an opinion on whether the
financial statements are free of material misstatement;

Independent Auditor’s Report on Internal Control over Financial Reporting
and on Compliance and other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government Auditing Standards;

Independent Auditor’s Report on Compliance with Requirements Applicable
to Each Major Program and On Internal Control over Compliance in
Accordance with OMB Circular A-133;

Schedule of Findings and Questioned Costs; and

Management Letter, which reports to management any concerns arising from
the audit.
The audit reports are reviewed by the Budget & Finance Committee and discussed
with management as appropriate. Once the Committee is satisfied, the Committee
recommends that Board of Directors accept the issued reports. The Board does
so, as appropriate, after any required discussion.
Copies of IRIS’s audited financial statements and other reports are distributed as
follows:






IRIS Management, including Project Managers
IRIS Board of Directors
Administaff, IRIS’s PEO
Dun & Bradstreet
The Federal Audit Clearinghouse
Awarding entities and agencies, as outlined in award documents.
If the auditor issues a management letter, the document is distributed to IRIS
management and Board of Directors, and to awarding agencies or entities as
outlined in the award document.
D. Audit Follow-up
The Chief Financial Officer works with other management staff to respond to any
findings identified in the auditor’s management letter.