Feedback on Approach to the Audit Engagement of Vehicles for Hope Limited

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prepare financial statements easily, and etc. It can provide more accurate and timely financial reports to board members for decision making.

Performance Measures Issue

VHL would like to provide key performance measures to their current and potential donors in order to attract more potential donors. One of the board members suggests that VHL should provide a report which shows the number of applicants accepted by the program. The issue of this performance measure is that the applicants who accepted by the program may not find an employment once they graduated. This performance measurement could mislead their external users.

As an auditor, I would recommend VHL to provide a report that shows the number of applicants who graduated from the program found long term employment. This performance measure is more relevant for VHL.

Expense Reporting Issue

When I examined the board member’s expense reports. I noticed that there are some expense reports do not have supporting documentation. I also noticed that some unusual purchases were made by chair in early December and the receipts do not show details of what kind of stuffs did the chair purchased. Based on the supporting documentation that the chair provided, it is hard to determine if these purchases are for business purpose or for personal purpose. There may be a conflict relate to chair’s personal interests. So, further investigation needed for these expenses.

Issue Regarding to Compliance with the Provincial Conflict of Interest Act

According to board minutes, the chair did disclose the personal conflict when the topic of December expenditures was discussed and excused himself from the meeting. This seems complied with the Provincial Conflict of Interest Act 13.4 and 13.5. However, because the chair has a strong personality to influence the board member. It is hard to determine that if the chair comply with the Provincial Conflict of Interest Act 13.4 (b).

Here is the summary of my recommendations of the issues which identified in this memo.

1. VHL may need to hire another auditor in the firm to perform the engagement to avoid the independent issue.

2. A written policy needed to identify the weakness of internal control.

3. VHL should hire a professional appraiser to evaluate the future market value for land, building, and equipment in order to record these assets in their books.

4. Purchase off-the-shelf accounting software.

5. Provide more relevant key performance measures to external users.

6. For board member expense reports, the accountant needs to ensure there is supporting documentation provided for all expense claims.

7. All board members need to comply with Provincial Conflict of Interest Act.

Please let me know if you have any questions or concerns and I would happy to discuss these issues and recommendations with you personally.

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