Cost Structure of the Annual Audit SAF November

Responsibility of the External Annual Audit Board of External Auditors Ernst & Young, LLC Audits the following funds and issues 6 audit opinions: o Regular, Specific, ICR, FEMCIDI o Medical Benefits o Leo S. Rowe Pan-American o Rowe Memorial o Inter-American Defense Board o Trust for the Americas Additionally and separately audits: o OMB-A-133 (Trust for the Americas) o Retirement and Pension Fund

Background of External Annual Audit -New bid for contracting de Ernst & Young, LLC approved by the Board of External Auditors -Contract to audit 3 accounting years: 2013, 2014 y Ernst & Young, LLC provided detailed cost by fund for each opinion it issues

External Annual Audit Cost by Fund EntitiesFY 2013FY 2014FY 2015Total (in thousands of USD) 1. Regular Fund Specific and Service Funds FEMCIDI Leo Rowe Pan-American Rowe Memorial Medical Benefits Trust for the Americas Inter-American Defense Board OMB Circular A Total , Audit cost from Ernst & Young, LLC by Fund and year

Cost Structure from Ernst & Young, LLC “The level of effort in an audit is not necessarily based in the size of the fund. Small funds simply have a lower level of materiality.” EY, LLC Other variables: -Number of transactions -Complexity of transactions -Uncertainty of transactions (like allowance for uncollectible loans) -Systems and subsystems used -Level of segregation of duties -Internal control structure and efficiency

Sequence of events -Up to year 2012, the total audit costs were charged to the Regular Fund -The budget of the Regular Fund has continued to decrease in nominal terms and in particular, the subprogram of the Board of External Auditors -The GS continuously tries to identify and allocate costs where they are incurred -In the year 2013, each Committee responsible for each Fund was informed that the audit cost for that fund would have to be covered by each fund -The cost would be allocated for the next 3 years in accordance with the signed agreement with Ernst & Young, LLC

Things to Consider -Possibility that the Regular Fund cover the audit cost of the Rowe Fund -The budget of the Board of External Auditors in the Regular Fund continues to decrease -If the budget of the Board of External Auditors Subprogram increases, the budget of the Subprogram to decrease must be identified -Possibility that the Rowe Fund contract its own audit -Contract signed with Ernst & Young, LLC is for 3 years and it cannot be modified unilaterally -Having various audit teams would be detrimental (duplicative and more expensive)