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City of Santa Ana RFP No. 24‐009 Page 41 of 63 control policies and procedures that effectively achieve the control objectives. We will then determine the nature, timing, and extent of our control testing. Approach to be taken in determining laws and regulations that will be subject to audit test work We will obtain an understanding of the laws and regulations that impact the City’s operations by reviewing council minutes to identify any ordinances or resolutions that might have an impact to operations and reporting by the City, as well as interview key personnel and management of the City. The staff assigned to the engagement attend regular trainings and are well versed in upcoming legislation and federal and state laws (e.g., Uniform Guidance) and proactively discuss these upcoming changes with our clients. We will also review current operations, contracts, and IGA’s that may impact current operations. Identification of anticipated potential audit problems In situations where authoritative guidance on a particular transaction or accounting issue is unclear or subject to interpretation, our approach is to proactively meet with management to discuss the issue and reach a conclusion that is hopefully agreed upon by both parties. We do not have specific firm policies that dictate our conclusions to be reached on all complex accounting issues. Rather, each issue must be evaluated independently by our engagement team. As discussed above, we will not only meet internally, but also facilitate discussion with the City’s management team in order to obtain a mutual understanding of the particular accounting issue, determine the applicable authoritative guidance that most closely relates to the issue, and strive to reach an approach agreed upon by both parties. If there remains any ambiguity or disagreement, we can explore other resources that could possibly assist, such as subject matter professionals within the Government Accounting Standards Board staff or the Government Finance Officers Association (GFOA) or perhaps other municipalities who may have dealt with similar issues. We have not currently identified any potential audit problems. Communication process Effective communication is critical to a successful engagement. This includes weekly status meetings where observations, potential exceptions, and leading practices are discussed. To avoid surprises at the end of the engagement, we discuss and document our observations, clarify fact patterns, and confirm management’s understanding and agreement with our findings. CLA adheres to all auditing standards related to reporting observations, recommendations, and findings. All significant deficiencies and material weaknesses will be reported to the audit committee/governance in writing. Best practices, observations, and other matters will be reported to management in a management letter that can be used as a tool to track the implementation of our recommendations. Report to those charged with governance — In addition to observations and recommendations, we will inform the audit committee of:  Significant accounting policies  Management judgments and accounting estimates  Significant audit adjustments and passed adjustments, if any  Disagreements with management, if any  Management consultation with other accountants, if any  Major issues discussed with management prior to retention  Difficulties encountered in performing the audit, if any City Council 21 – 101 5/7/2024