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Partner Mike Ludin Discusses Government Audits
Mike Ludin is a partner with White Nelson Diehl Evans. He is a graduate of Cal State Fullerton, earning his bachelor’s degree in business with an emphasis in accounting. He worked as the audit liaison for a savings and loan association before joining the Diehl Evans team in 1978 (which merged with White Nelson in 2011). At Diehl Evans, he became a savings and loan auditor and an auditor for government agencies. Today, he is an audit partner for governmental entities, and does tax work for individuals and real estate-related businesses. The following is a continuation of a government audit Q&A with Bill Morgan that ran in last month’s newsletter.
When you do audits of a governmental agency, what are some common problems you find? How effective have you been in helping them find solutions?
Many government agencies are understaffed in the support staff departments, such as finance. It is often difficult for them to have enough staff that would be needed to operate with a good system of internal controls. It is a challenge for them to keep up with the huge number of transactions all year long, as well as the responsibility that goes along with dealing with large sums of taxpayers’ money, let alone closing their year-end books so that they can be ready for us to come in and perform the annual audit. They generally do very well in these circumstances. Part of our responsibility as auditors in every engagement is to communicate to our clients any material weaknesses or significant deficiencies we may see in their system of internal controls over financial reporting, and to offer them constructive suggestions for improvement. As independent auditors from the outside, it is often easier for us to see the situations that need improvement. Our clients have come to expect and appreciate our suggestions.
What should a governmental agency look for in selecting an accounting firm to perform an audit?
Governmental agencies are keenly aware that there are many nuances and special accounting and reporting rules that apply to them. They are most interested in finding an auditing firm whose staff is already familiar with these rules and who can help them based on their experiences with similar agencies. There are few firms in the state that can provide this specific kind of knowledge and expertise. WNDE is one of those select firms, with governmental accounting and auditing experience that goes back more than 50 years.
What are some of the types of governmental entities served?
The most common kinds of governmental entities that people think of are cities and water districts, which are the majority of our governmental clients. However, there are many other governmental agencies that are important to everyday life that also need to have annual audits. They can be library districts, sanitation districts, cemetery districts, transportation authorities and fire authorities, just to name a few. We issue over 100 reports on audits of government agencies every year.