Special Reporting – Fiscal Administration

The fiscal administration statutes (Louisiana Revised Statute (R.S.) 39:1351-1357) were enacted in 1990 to allow state intervention if the financial stability of a political subdivision (for the purposes of this document, a local auditee) is in jeopardy. If the Fiscal Review Committee (the Louisiana Legislative Auditor, State Treasurer, and Attorney General) determines unanimously that a local auditee is reasonably certain to not maintain financial stability, including but not limited to having insufficient revenue to pay expenditures, excluding civil judgments, or failing to make a debt service payment, the Attorney General shall file a motion in district court to appoint a fiscal administrator.
Other criteria for the appointment of a fiscal administrator are the failure of a political subdivision to provide its audit or other report required by R.S. 24:513 to Louisiana Legislative Auditor (LLA) for three consecutive years; or the failure of a school board to resolve its status as financially at risk, as defined by the State Board of Elementary and Secondary Education.

For more information about fiscal administration, see Audit Guide Section 100-1080, Fiscal Administration Statutes.

The duties of a fiscal administrator are outlined in R.S. 39:1352; and include the authority to direct all fiscal operations of the local auditee and to take whatever action is deemed necessary to return the local auditee to financial stability, as defined in R.S. 39:1351. The fiscal administrator has broad authority to direct all operations of the local auditee regarding budgets, debt, contracts, and personnel. The officers, officials and employees of the local auditee assist the fiscal administrator in an advisory capacity. If a conflict arises, the decision of the fiscal administrator prevails.

The fiscal administrator makes periodic reports to the court and the Fiscal Review Committee. One of these reports is a final report or three-year plan. The goal of this document is to enable the local auditee to establish and maintain financial stability once fiscal administration is terminated.

In order to monitor implementation of the final report/three-year plan for those local auditees whose fiscal administration has been terminated, LLA requires the CPA firm performing the local auditee’s audit, review/attestation or compilation engagement to evaluate and report on the local auditee’s progress with the final report/three-year plan as part of their engagement beginning in the year following termination of fiscal administration.

The CPA firm will be notified of the requirement by LLA staff after submitting the engagement agreement for approval. The final report/three-year plan will be provided to the CPA by LLA, along with the specific procedures to be performed.

The CPA firm will use an agreed-upon procedures engagement to evaluate and report on the local auditee’s progress with implementation of the final report/three-year plan. The CPA may use the illustrative practice aids for the statewide agreed-upon procedures engagements (engagement agreement, management representation letter, and report) found in the Practice Aids and Related Documents section of the Louisiana Governmental Audit Guide as the basis for the related documents for this engagement.

The CPA will submit the agreed-upon procedures report at the same time and in the same PDF file as the audit, review/attestation or compilation report. The reports will be issued by LLA as a single document and the report evaluating the local auditee's progress with implementation of the final report/three-year plan will be provided to the Fiscal Review Committee.

Any questions regarding the special reporting requirements for agencies for whom fiscal administration has been terminated should be directed to LLA staff.