Inside Your Audit: Reviewing Expectations on What Local Governments Should be Asking Their Auditor  

July 10th, 2026 | BY Tom Jury | Audit | Audit & Assurance | Government
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Audits are one of the most valuable tools available to local governments. At their core, the purpose of an audit is for the independent auditor to express an opinion on whether the local unit’s financial statements are fairly presented. That opinion provides assurance to the board, management, and the public that the financial information can be relied upon.  

While the auditor’s opinion is the primary objective, the audit process can also provide additional value. It gives the board and management insight into internal controls, areas of risk, and opportunities to strengthen financial processes. When approached thoughtfully, an audit can go beyond compliance and become a useful tool for improving accountability, transparency, and overall financial management.  

An effective audit presentation should be more than just a review of a slide deck. It should encourage discussion between the auditors, the governing board, and management. By asking informed questions, board members and leadership can move beyond simply receiving the audit results and instead use the information to make better decisions and deliver quality services to the public.  

What is in Your Audit Report?  

Before we dive into which questions to ask the auditors, it is important to truly understand what makes up your audit report. The audit report can be broken down into a couple of main sections: the Management’s Discussion and Analysis, the Basic Financial Statements, Required Supplementary Information, and the Independent Auditor’s Report on Internal Controls. 

While the entire document has important information, when talking with your auditor, it can help to focus on a few key sections.  

Management’s Discussion and Analysis  

The Management’s Discussion and Analysis section of your financial statements provides a quick comparison of what amounts changed compared to the prior year, and why they changed. It also provides a high-level view of what could impact the local government in the coming year. Most importantly, it does this in a narrative style, making it easier for non-accounting individuals to understand the “why” behind the numbers.  

Using this high-level view, a few questions the board or management could ask that would help provide a better understanding of the financial health or potential pressures the local government potentially faces are: 

  • What are the most significant financial trends that either continued from the prior year or changed from the prior year?  
  • Are there any future financial pressures we should highlight more clearly?  
  • What key factors drove the biggest increases or decreases in revenues, expenditures, and fund balance?  
  • Are there early warning signs (declining revenues, rising costs, deferred maintenance) that the board should be monitoring closely?  

Answers to these questions could provide insight into areas of the local government’s operations that could drive continued financial health and, looking to the future, help you understand what you should be on the lookout for.  

Basic Financial Statements  

The board and management’s focus in this section should be on the fund-level financial statements, as these show the effect of the local governments’ day-to-day operations. Asking the right questions in this section can paint a picture of the government’s financial health, providing the knowledge to understand how the government should move forward with the numbers. A couple of questions that might be beneficial are: 

  • What is our fund balance ratio in the General Fund as a percentage of revenues, and is the trend positive or negative?  
  • Are there any compliance or legal restrictions affecting fund balance?  
  • For cash flow purposes, what is the current ratio in the General Fund?  
  • Is there an opportunity to invest more dollars beyond medium-term cash flow needs?  

All these questions will help provide a better idea of how financially healthy the local government actually is and can help the board and management plan for the future.  

Required Supplementary Information  

This is one of the most important sections of the audit report, as it contains the budget-versus-actual number schedules and can be a powerful tool for understanding why fund balances increased or decreased during the year.  

Some questions the board or management might find beneficial to ask are: 

  • Are there any trends in revenues and expenditures we should keep in mind for next year’s budget?  
  • Are there consistent patterns of over-or under-budgeting in certain areas?  

These two questions can better set up the local government for the future by providing more information to inform budgetary decisions.  

Lastly, a good question to ask is: 

  • Are there any areas where spending controls could be strengthened?  

This is extremely important if the local government is experiencing declining revenues; it becomes even more important to have tight controls over budgeting for expenditures.  

Independent Auditor’s Report on Internal Controls  

This part of the audit report can help the board and management of the local government understand which internal controls can be strengthened to operate more effectively and efficiently.  

The two main questions every board member or management team should be asking are: 

  • Are there any repeat findings or compliance items from the prior year?  
  • Was there anything noted that did not rise to the level of a formal finding?  

These two questions can help the board and management identify areas that may need attention, so the local government can operate in ways that enable the board and management to make the best decisions for the government.  

Learn How to Understand Your Audits with Help from Maner’s Government Team  

Having a greater understanding of what is included in your audit report allows the board and management to ask thoughtful, targeted questions. Those questions can lead to a clearer understanding of the local government’s financial health, help identify risks and opportunities, and support more informed decision-making about the future.  

It is important to recognize that many of these questions will require input from both the auditor and the management team. While some may be addressed during the audit presentation, others may require additional follow-up. Providing these questions in advance of the meeting can be especially helpful, as it allows auditors and staff time to prepare more complete and meaningful responses, leading to a more productive discussion.  

If you’re looking for guidance on what questions to ask or how to plan for an upcoming audit, then Maner’s government team is here to help. Contact us today to learn more about our experience supporting local governments in making the most of their audits.