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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 institution's 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.

Some of the factors to be considered, therefore, in selecting external auditors include:

-Knowledge and experience with other not-for-profit organizations that engage in similar activities;
-Ability and willingness to provide ongoing advice and counsel;
-Experience levels of personnel assigned to the engagement;
-Ability to provide total service to the organization via specialized management consulting and tax services;
-Basic audit approach and technique;
-Procedures to assure the firm's independence;
-Specialized training provided to audit staff;
-The firm's quality control procedures;
-The firm's commitment to the particular industry or industry segment;
-Manner of communicating weaknesses noted in the internal accounting control system;
-Basis for determining fees; and
-Management's attitude toward the firm.

Exhibit II details the answers received to the survey questionnaire by the Institution. The Treasurer and the Comptroller will be available at the Audit and Review Committee to further discuss this matter.