Viewing page 22 of 175

This transcription has been completed. Contact us with corrections.

-9-

[[underlined]] Job Definition [[/underlined]]

An independent public accountant seeks to determine whether financial statements issued by the institution are fair representations of its financial position, whether data are accurate and accounting nomenclature proper, and whether the statements are the end results of procedures that are generally accepted and consistent with similar previous statements. Accordingly, the examination includes those tests and other audition procedures considered necessary for the purpose. Such an examination is concerned with the overall reliability of accounting records, the integrity of management, the soundness of internal control, the effectiveness of the institutions' program of internal audition, and the adequacy of accounting systems and staff. The examination does not usually include a detailed audit of all transactions.

On completion of the examination the independent auditing firm addresses a formal report to the governing board or to the Treasurer. This report usually consists of a statement describing the nature of the examination and an expression of the audit firm's opinion. The report often is accompanied by a management letter containing observations made in the course of the audit and recommendations for improving operations and controls The audit reports of external auditors are often useful indicators of the effectiveness of the institutions' internal control system. 
 
Independent auditors are also engaged for specialized audits or technical services. They can assist with expert advice and an independent view of accounting, fiscal systems, and management problems. For example, recent work completed by Coopers & Lybrand in addition to the audit has included advice on the newest government accounting system standards, a concessions (restaurant) audit, evaluation of a real estate proposal, tax advice on UBIT, firm representations at FASB's hearing on valuing museum collections, and assistance in procedures for handling retail inventories.

[[underlined]] Criteria for Selection [[/underlined]]

The foregoing job definition and the literature suggest the following broad criteria for the Smithsonian:

1. Technical competence

A. Understanding of compliance with Federal and AICPA auditing standards as well as all regulatory requirements.

-2-