Once you have determined that your agency is a local auditee and needs to provide a report to the Louisiana Legislative Auditor (LLA), the next determination you need to make is what kind of report your agency must provide to LLA.
The type of report a local auditee must provide to LLA is based upon the amount of:
- Revenues and other sources the local auditee receives, if the local auditee is a local government agency, or a quasi-public organization that fits within the definition of Louisiana Revised Statute (R.S.) 24:513 A (1) (b) (i-iii and v)
- Local and state assistance the local auditee receives, if the local auditee is a nonprofit agency that fits within the definition of a quasi-public organization under R.S. 24:513 A (1) (b) (iv)
The amount of revenue and other sources/local and state assistance a local auditee receives also determines whether the local auditee may self-prepare the report, or must contact a certified public accounting (CPA) firm to perform the related engagement.
|Amount of revenues and other sources/local and state assistance received||Type of Report Required1||Report Due Date||CPA or self–prepared|
|$75,000 and under||Sworn financial statements||90 days after the end of the fiscal period2||Either self-prepared or CPA as determined by local auditee|
|$75,001 - $199,999||Compilation||6 months after the end of the fiscal period3||CPA|
|$200,000 - $499,999||Review/attestation||6 months after the end of the fiscal period3||Independent CPA|
|$500,000 and over||Audit and statewide agreed-upon procedures||6 months after the end of the fiscal period3||Independent CPA|
|1. R.S. 24:513(J)(1)(c)|
2. R.S. 24:514(E)(1)
3. R.S. 24:513(A)(5)(a)(i)
|Engagement agreements are required to be submitted to the Legislative Auditor for approval within 60 days of the close of the fiscal year per R.S. 24:514(F)(1).|
An audit engagement is an examination of a local auditee’s financial statements that is performed by an independent CPA firm. Included in the audit report is the auditor’s opinion on the financial statements, in which the CPA states whether or not he or she believes that the financial statements present fairly, in all material respects, the financial position of the local auditee for the period of time that the audit covers – which is usually one year.
Most audit reports that are submitted to LLA also include a report in which the CPA describes the results of his or her tests on the local auditee’s internal controls over its financial systems, and its compliance with laws and regulations. For additional information, see What Is An Audit?
A review/attestation engagement is another type of examination performed by a CPA. In the review portion of the engagement, the CPA performs limited tests of the local auditee’s financial records, and states in the review report whether anything came to his or her attention that would indicate that the financial statements are not presented fairly, in all material respects, in accordance with generally accepted accounting principles. In the attestation portion of the engagement, the CPA reviews the local auditee’s compliance with certain laws and regulations that LLA has asked the CPA to test. The CPA’s attestation report states whether the local auditee has complied with these laws and regulations.
A compilation engagement is one in which the CPA compiles, or puts together, the financial statements for the local auditee. The CPA’s report that accompanies compiled financial statements gives no assurance as to whether or not the financial statements are correct.
Sworn financial statements include a simple financial statement form that a local auditee may self-prepare, without the aid of a CPA; although the local auditee may ask a CPA to prepare the form if they choose to do so. The local auditee also provides a notarized affidavit with the sworn financial statements affirming that the financial statements are true and correct, and that the local auditee received $75,000 or less during the fiscal year.
For the reporting requirement of housing authorities, see Special Reporting - Housing Authorities. For the reporting requirement for justices of the peace and constables, see Special Reporting - Justices of the Peace and Constables.
After you determine that your agency is a local auditee and needs to provide an annual audit, review/attestation or compilation report to LLA, you will need to contact a CPA firm on LLA’s approved list to perform the engagement. Additional information on engaging a CPA firm may be found at Choosing A CPA Firm.
A local auditee may elect to provide for a report that is at a higher level of assurance or engagement than what is required by the audit law. For example, a nonprofit that receives $100,000 in public funds may provide for audited financial statements, even though it is only required to provide a compilation report to LLA under the audit law.
If a local auditee is required by a grantor, bond indenture, or other outside party to provide for a report that is a higher level of assurance than the audit law, the local auditee should provide for a report with the higher level of assurance. For instance, if a nonprofit agency receives between $75,001 and $199,999 in local and/or state assistance annually, it is required by the audit law to provide a compilation report to LLA. If a grantor requires the nonprofit to provide an audit report, then the nonprofit may provide the audit report to LLA, so long as the audit is performed by a CPA on LLA’s approved list.
A local auditee may provide for a report with a higher level of assurance than what is required by the audit law. However, a local auditee may not elect to provide for a report with a lower level of assurance than what is required by law.
LLA has the authority under the audit law to require a local auditee to provide for a report that is at a higher level of assurance than what would normally be required based on the amount of revenues and other sources/local and state assistance it receives. LLA may make this requirement if a local auditee has significant unresolved findings or for other reasons, at LLA’s discretion. LLA will notify the local auditee of this requirement, and will allow the agency to again report at the level commensurate with the audit law when the matter is satisfactorily resolved.
- How often is my local government agency required to provide a report to LLA?
- How often is my nonprofit agency required to report to LLA?
- I am a nonprofit that had a reporting requirement to LLA last year. I received correspondence from LLA about my reporting requirement for the current year. My agency received no local or state assistance in the current year. What should I do?
- Why is the reporting requirement for local governments and some quasi-public organizations based on “revenues and other sources;” and the reporting requirement for nonprofits is based on “local and state assistance?”
- What does “revenues and other sources” mean?
- Are additions to fiduciary funds considered “revenues and other sources” for the purposes of determining a local government’s and some quasi-public organization’s reporting requirement to LLA?
- Does a nonprofit’s private funds need to be kept in a separate bank account in order not to be considered commingled with its public funds?
- What is a sworn financial statement?
- Why does a CPA who performs an audit or review/attestation engagement need to be independent, but a CPA who performs a compilation engagement does not?
- I am a local auditee that normally receives less than $500,000 in public funds. This year, due to an unusual transaction, we received slightly more than $500,000 in public funds. Must we provide for an audit in the year of the unusual transaction?
- My nonprofit received a grant from a Louisiana state government agency, and also received a federal grant directly from the federal government. Are the federal funds included in the calculation for the purposes of determining my agency’s reporting requirement to LLA?
- My nonprofit agency receives less than $200,000 in revenue and other sources annually, and is required by the audit law to provide for compiled financial statements. However, we wish to provide for an audit that is not performed in accordance with generally accepted government auditing standards (GAGAS). May we do so?
- I work for a local auditee that does not have the money to hire a CPA to perform its statutorily required audit engagement. Will LLA perform my audit at no charge?
- My local auditee’s records were destroyed in a fire. Are we still required to provide for our statutorily required report to LLA?