[LSC Name]

Items Needed for Internal Audit

[Audited as of Date]
Thefollowingitemsshouldbeavailableinpreparationforyourinternalaudit:
1.Generalledgerforthelastcompletefiscalyearandyeartodateforthecurrentyear.
2.Balancesheetforthelastcompletefiscalyearandyeartodateforthecurrentyear.
3.Incomestatementforthelastcompletefiscalyearandyeartodateforthecurrentyear.
4.Incomestatementthatcomparesactualtobudgetforthelastcompletefiscalyearandyeartodate
forthecurrentyear.
5.Form990taxreturnsforthelasttwofiscalyears.
6.BoardofDirectorsmeetingminutesforthelastcompletefiscalyearandyeartodateforthecurrentyear.
7.Vendorinvoicesforthesameperiodasthegeneralledger.
8.Bankstatementsandcancelledchecksforthesameperiodasthegeneralledger.
9.Bankreconciliationsforthesameperiodasthegeneralledger.
10.Checkbookforthesameperiodasthegeneralledger.
11.Creditcardstatements&receipts,ifapplicable,forthesameperiodasthegeneralledger.
12.CorporateregistrationwiththeSecretaryofState'soffice.
13.Salestaxexemptioncertificate.
14.Stateregistrationtoconductcharitablesolicitations.
15.Forms1099and1096filedwiththeInternalRevenueServiceforthelastcalendaryear.
16.Forms941,W2andW3filedwiththeInternalRevenueServiceforthelastcalendaryear.
17.ScheduleofallfeeschargedbytheLSC.

[LSC Name]
Audit Plan Worksheet

Audit competed by:

[Auditor name]
[Date completed]

[Audited as of Date]

General controls
General control area

Control

Notes

Control environment

Company has a formal ethics and a communication policy to ensure that ethical
standards are documented and communicated to all employees and volunteers.

Control environment

Company has a formal audit committee, consisting of independent board

members.

Control environment

Related party transactions.

Control environment

Conflict of interest policy.

Control environment

Determine whether the LSC is current in filing its most recent 990 and financial
statements.

Control environment

Inquire of USA Swimming as to whether they have experienced any recent

problems with the LSC.

Control environment

Permanent records review.

Business planning

Business and operating plans are reviewed on a regular basis to ensure that the
company is achieving its planned objectives.

Management reporting

Management has implemented formal processes for reviewing operational data to

assist with day-to-day decision-making.

Financial reporting

Systems are maintained to store all transactional and accounting data required to I.e., password protection, review audit trail
produce financial statements. (Note: If systems are relied upon to produce
report
financials, consider whether information technology controls should be evaluated.)

Records retention

The company maintains a formal records retention policy, which enforces the
minimum standards required by the Internal Revenue Service (IRS)
(IRS).

Business continuity

Management has developed a business continuity policy, which states that the
procedures should be enforced if a situation were to arise where business is
interrupted.
Key documents, including employee records, checks, contracts, customer
information, and other confidential materials, are kept in locked or otherwise
physically secure locations.
Inquire as to whether any fraud has occurred in the past two years.

Physical security

Fraud

In light of recent ethical issues within the

industry, pay close attention to this item.

Business process audit areas

Control area

Control

Procure to pay

Duties are segregated so that the person who authorizes vendor payments is not
responsible for generating purchase orders or writing checks.

Procure to pay

Formal purchase orders or check requests are used for every purchase.

Procure to pay

A list of authorized vendors is maintained; purchase orders or check requests can

be written only against an authorized vendor.

Procure to pay

Vendors are audited on a semi-annual basis to determine if conflicts of interest

exist between procurement personnel and vendors.

Procure to pay

Vendor invoices are checked against signed purchase orders and delivery
receipts before a check is cut.

Procure to pay

Numbered purchase orders and delivery receipts are kept in a locked area and
are logged in sequential order.

Procure to pay

New sellers of the company's product are required to pass a prospective

customer credit review before credit terms can be offered.

Procure to pay

A subsidiary ledger of all purchase and accounts payable transactions is

maintained and is stored within a physically secure area.

Customers

Customer records are maintained, including a purchase history for each

transaction during the audit year.

Customers

An accounts receivable ledger is kept for all customer credit purchases. An aged
accounts receivable report is generated to monitor cash collections.

Cash

Verify completeness of cash reporting.

Cash

A cash collection log is maintained for all cash receipts. Such receipts are
deposited at the end of each business day.

Book to report

A log for journal entries that affect the monthly closing process is kept to
document all adjustments made for reporting purposes,
purposes such as depreciation or
amortization.
An employee roster is maintained, including status (exempt/non-exempt), pay
rate, and tax jurisdiction.

Payroll

Payroll

State and federal taxes are withheld properly for all payroll, based on tax
jurisdiction.

Fixed assets

A log of all fixed assets, along with a depreciation schedule, is maintained in a

secure location.

Inventory

An inventory valuation method (such as weighted average, FIFO, or LIFO) is used

consistently throughout the audit period.

Inventory

An inventory ledger including a cost-of-goods-sold analysis should be maintained.

Overall reasonableness

Perform an analytic review of the LSC's balance sheet and income statement.
The comparison should be made of the current year to prior year and in the case
of the income statement, a comparison of the actual to budgeted amounts should
be made.

Revenue

Perform an analytic review of the LSC's membership revenue.

Revenue

Perform an analytic review of the LSC's meet registration revenue.

Revenue

Obtain any grant or sponsorship contracts.

Tax reporting

Verify compliance with tax reporting for vendors.

Tax reporting

Verify compliance with tax reporting for employees.

Tax reporting

Verify compliance with tax reporting for the entity.

Tax reporting

Verify compliance with state reporting requirements.

Notes

[LSC Name]
Audit Worksheet
[Date]

General controls
General control
area

Control

Test of controls

Control environment

Company has a formal ethics and a communication policy to ensure that ethical
standards are documented and communicated to all employees and volunteers.

Control environment

Company has a formal audit committee, consisting of independent board members.

Control environment

Related party transactions.

Control environment

Conflict of interest policy.

Does the LSC have a conflict-of-interest policy and, if so, how is it monitored?

Control environment

Determine whether the LSC is current in filing its most recent 990 and financial
statements.

Access the IRS website to determine whether the LSC is current in filing its form 990
tax return. Verify timely reporting to USA Swimming. Determine that semi-annual
reviews are conducted.

Control environment

Inquire of USA Swimming as to whether they have experienced any recent problems
with the LSC.

Document conversation.

Control environment

Permanent records review.

Where does the LSC maintain is important legal and tax files?

Business planning

Business and operating plans are reviewed on a regular basis to ensure that the
company is achieving its planned objectives.

Interview key executive and management personnel to document timing of plan

reviews.

Review minutes of board meetings to determine whether ethics board was active;
Effective
review ethics policy to determine when last update was made; review employee
handbook to determine if ethics policy is being communicated to employees.
Review composition and background of board members to determine independence.
Determine if there are any related parties on the LSC Board such as related individuals,
business partners, etc.
What related party transactions have occurred and what procedures were followed to
assure that the transactions were the equivalent of an arms-length transaction?

Management reporting Management has implemented formal processes for reviewing operational data to
assist with day-to-day decision-making.

Interview key management personnel to document process for reviewing operational

data. Review sample of reports.

Financial reporting

Systems are maintained to store all transactional and accounting data required to
produce financial statements. (Note: If systems are relied upon to produce financials,
consider whether information technology controls should be evaluated.)
The company maintains a formal records retention policy, which enforces the minimum
standards required by the Internal Revenue Service (IRS).

Document key systems used to support financial statements; systems to document

include the general ledger and order management applications.

Management has developed a business continuity policy, which states that the
procedures should be enforced if a situation were to arise where business is
interrupted.
Key documents, including employee records, checks, contracts, customer information,
and other confidential materials, are kept in locked or otherwise physically secure
locations.
Inquire as to whether any fraud has occurred in the past two years.

Review the business continuity plan; determine whether it is current and whether it has
been tested recently. Review test results if available.

Records retention

Business continuity

Physical security

Fraud

Control
evaluation

Review the retention policy; conduct a site visit to determine if historical records are
stored in alignment with the retention policy.

Observe the physical locations for key business-related documents to gauge whether
the level of security is appropriate.
Document responses.

Notes on results
Ensure that ethics policy is updated during
next audit.

Business process audit areas

Control area

Control

Test of controls

Control
evaluation

Procure to pay

Duties are segregated so that the person who authorizes vendor payments is not
responsible for generating purchase orders or writing checks.

Review organizational charts; interview key personnel to understand job responsibilities Effective
Review purchase orders matched to checks to review signatures.

Procure to pay

Formal purchase orders or check requests are used for every purchase.

Procure to pay

A list of authorized vendors is maintained; purchase orders or check requests can be

written only against an authorized vendor.

Randomly sample 5% of the vendor payments to ensure that signed purchase

orders/check requests were available and that the data matches. Examine the vendor
invoice and supporting documentation, noting whether the LSC's internal controls were
followed.
Review log and determine when last updated. Conduct confirmation with sample of
vendors to determine authenticity.

Procure to pay

Vendors are audited on a semi-annual basis to determine if conflicts of interest exist

between procurement personnel and vendors.

Review results of last audit.

Procure to pay

Vendor invoices are checked against signed purchase orders and delivery receipts
before a check is cut.

Procure to pay

Numbered purchase orders and delivery receipts are kept in a locked area and are
logged in sequential order.

Observe Accounts Payable during disbursement cycle. Review sample of disbursement

file to determine that checks are cut only against signed purchase orders with delivery
confirmation.
Review logs and check against samples of purchase orders and receipts.

Procure to pay

New sellers of the company's product are required to pass a prospective customer
credit review before credit terms can be offered.

Sample customer list, and match selections to credit review analysis.

Procure to pay

A subsidiary ledger of all purchase and accounts payable transactions is maintained

and is stored within a physically secure area.

Review subsidiary ledgers, and match previous period totals to closed amounts on the
financial statements.

Customers

Customer records are maintained, including a purchase history for each transaction
during the audit year.

Review history for a sample of customers, and match to accounts receivable and/or
cash receipts records.

Customers

An accounts receivable ledger is kept for all customer credit purchases. An aged
accounts receivable report is generated to monitor cash collections.

Review subsidiary ledger and aged accounts receivable report. Tie ledger to financial
statement totals for previous periods. Email confirmations to 100 LSC members asking
for a listing of all fees paid to the LSC. Compare responses to financial records.

Cash

Verify completeness of cash reporting.

Inquire as to whether any bank or investment accounts exist, other than the ones listed
on the LSC's balance sheet.

Cash

A cash collection log is maintained for all cash receipts. Such receipts are deposited at Review deposit records for a sample period, and match to deposit receipts.
the end of each business day.

Book to report

A log for journal entries that affect the monthly closing process is kept to document all Review general journal entries to determine if appropriate sign-off on material
adjustments made for reporting purposes, such as depreciation or amortization.
transactions is present. Trace a sample of journal entries to the financial statements to
ensure proper posting.
An employee roster is maintained, including status (exempt/non-exempt), pay rate, and Take sample of current employee information, and verify with Human Resources and
tax jurisdiction.
with direct manager that information is kept accurately.

Payroll

Payroll

State and federal taxes are withheld properly for all payroll, based on tax jurisdiction.

Review tax deposits, and match to employee detail for a sample period.

Fixed assets

A log of all fixed assets, along with a depreciation schedule, is maintained in a secure Review fixed asset log and capital asset depreciation schedule. Ensure that totals equa
amounts on financial statements for previous periods.
location.

Inventory

An inventory valuation method (such as weighted average, FIFO, or LIFO) is used

consistently throughout the audit period.

Inventory

An inventory ledger including a cost-of-goods-sold analysis should be maintained.

Discuss with management the valuation method used, to determine appropriateness.

Note if any changes in valuation method were used, and if so, obtain justification from
management.
Review ledger and cost-of-goods-sold analysis for period, and tie to financial statement
results.

Overall reasonableness Perform an analytic review of the LSC's balance sheet and income statement. The
comparison should be made of the current year to prior year and in the case of the
income statement, a comparison of the actual to budgeted amounts should be made.

Inquiries should be made of the Treasurer and President as to the reasons for any
significant differences. Any unexplainable fluctuations need to be investigated further.

Revenue

Obtain reports from the SWIMS database to verify the number of members the LSC
has. Compute the expected amount of membership revenue and compare to the
financial statements.

Perform an analytic review of the LSC's membership revenue.

Notes on results
Create a uniform purchase order form that
needs two signatures to keep spending in
check.

Business process audit areas

Control area

Control

Test of controls

Revenue

Perform an analytic review of the LSC's meet registration revenue.

Obtain meet registration numbers and compute the expected revenue for meets.
Compare this amount to the financial statements.

Revenue

Obtain any grant or sponsorship contracts.

Determine that any grants or sponsorship contract funds were used for their intended
purpose.

Tax reporting

Verify compliance with tax reporting for vendors.

Inspect 1099/1096 forms that were filed for the previous calendar year. Verify that
forms were filed for any contractor who was paid $600 or more.

Tax reporting

Verify compliance with tax reporting for employees.

Inspect W-2/W-3 forms that were filed for the previous calendar year. Verify that 941
forms were reconciled with financial statements and W-2/W-3 forms and timely filed.
Verfiy that any requred state forms were timely filed.

Tax reporting

Verify compliance with tax reporting for the entity.

Review the LSC's form 990 to determine whether it was filed timely, prepared
professionally, and whether there are any obvious errors.

Tax reporting

Verify compliance with state reporting requirements.

Inspect the corporate registration to determine if the LSC is in good standing with the
Secretary of State's office. Inspect evidence to support that the LSC is registered to do
fundraising in the states in which it conducts business.

Control
evaluation

Notes on results

[LSC Name]
Audit Plan Recommendations
[Audited as of Date]

General controls
Audit recommendations

Business process audit areas

Audit recommendations