What Kind Of Report Does My Agency Need To Provide To The Legislative Auditor?

Questions:

How often is my local government agency required to provide a report to LLA?

A local government agency is required to report to LLA every year.

How often is my nonprofit agency required to report to LLA?

A nonprofit agency is required to report to LLA every year that it meets the definition of a quasi-public organization.

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?

Please contact LLA’s Local Government Services. You may be requested to provide additional information, such as a written statement that your agency received no public funds during the fiscal year. However, you will not be required to provide an annual financial report to LLA during the current year.

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?”

This is the language in the audit law, and it pertains to the determination of what constitutes public funds for different types of agencies.
All of the revenue local governments and some quasi-public organizations receive is considered to be public funds, and must be considered in determining these agencies’ reporting requirement to LLA, along with additions to fiduciary funds. "Revenues and other sources" should be calculated using the economic resources measurement focus and accrual basis of accounting for all fund types. Not all of the funds that a nonprofit receives are considered to be public funds. Local or state assistance are the grant funds the nonprofit receives from a Louisiana local or state government agency, plus any federal funds passed through a Louisiana local or state government agency. The private funds (such as donations and grants from non-governmental sources) that a nonprofit receives that are not commingled with the public funds (local or state assistance) it receives are not considered to be public funds, and do not need to be considered in determining its reporting requirement to LLA.
If a nonprofit receives direct federal assistance in addition to local or state assistance, the nonprofit must add the amount of direct federal assistance to the local and/or state assistance it receives to determine its reporting requirement to LLA. There is also a document on LLA's website that discusses how the receipt of federal funds by a nonprofit affects that nonprofit's reporting requirement to LLA. LLA staff can also assist a nonprofit in making that determination.

What does “revenues and other sources” mean?

For purposes of determining which type of report local auditees are required to provide to the LLA, "revenues and other sources" should be calculated using the economic resources measurement focus and accrual basis of accounting for all fund types. This would be program revenues and general revenues reported in the Statement of Activities of the primary government for amounts reported in governmental and proprietary fund types, added to total additions reported in the Statement of Changes in Fiduciary Net Position for amounts reported in fiduciary fund types. as shown in the chart below:

Governmental Fund Types    General fund    Special revenue funds    Capital projects funds    Debt service funds    Permanent funds Proprietary Fund Types    Enterprise funds    Internal service funds	Program revenue and general revenues reported in the Statement of Activities for the primary government
Fiduciary Fund Types Pension (and other post-employment benefit) trust funds    Investment trust funds    Private-purpose trust funds    Custodial funds	Total additions reported in the Statement of Changes in Fiduciary Net Position

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?

Yes.

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?

Not usually. Nonprofits need to keep their private funds and public funds separated in its accounting records in order for the funds not to be considered to be commingled; but there is no need to keep public and private funds in separate bank accounts unless specifically required as a condition of a grant.

What is a sworn financial statement?

A sworn financial statement is the annual financial report a local auditee provides to LLA if it receives $75,000 or less in revenues and other sources/local and state assistance in any one fiscal year. The financial statement forms may be found on LLA’s website; and consist of basic financial statements, and a notarized affidavit that states that the financial statements are true and correct, and the local auditee received $75,000 or less in revenues during the year.

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?

An audit or review/attestation report includes the CPA’s report that offers certain assurances about the correctness and completeness of the local auditee’s financial statements. If the CPA who signs these reports is not independent regarding the local auditee, and the audit or review report states that the financial statements are correct, there may be a question in the minds of persons relying on the report as to whether the CPA slanted his or her assurances to put the agency in a favorable light. The assurances in the CPA’s report would not be worth very much. That is why a CPA must be independent to perform these engagements.

A compilation report also includes the CPA’s report, but the report states that the CPA gives no assurance regarding the financial statements. Therefore, a CPA does not have to be independent to perform a compilation engagement. For additional information, see Independence of the CPA Firm Performing the Audit.

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?

Yes. A local auditee must provide for an annual financial report that is commensurate with the amount of revenues and other sources/local and state assistance that that they received during the fiscal year. If that amount equals or exceeds $500,000, the local auditee must provide for audited financial statements for that fiscal year, even if the reason that revenues equal or exceed $500,000 was unusual and is not expected to reoccur.

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?

Yes. Once a nonprofit agency receives or expends any local or state assistance in any fiscal year, it must include any direct federal funds it receives in order to determine its reporting requirement to LLA.

A nonprofit that receives only direct federal funds, and no local or state assistance, is not required to report 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?

The audit law requires that local auditee audit and review/attestation engagements be performed in accordance with GAGAS; but LLA allows local auditees that are required to provide for a compilation report or sworn financial statements to submit an audit or review report that is not performed in accordance with GAGAS. The reason is that a CPA gives no assurance in a compilation report or sworn financial statements as to whether the financial statements are materially correct. An audit or review engagement that is not performed in accordance with GAGAS still gives assurance on the numbers in the financial statements, and is therefore a report at a higher level of assurance than a statutorily required compilation report or sworn financial statements.

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?

A local auditee that cannot pay for its statutorily required audit and wishes LLA to perform it must make a written request to the Legislative Audit Advisory Council. However, due to limited staff, LLA may not be able to perform the audit.

My local auditee’s records were destroyed in a fire. Are we still required to provide for our statutorily required report to LLA?

LLA has no authority to waive a local auditee’s reporting requirement. However, a local auditee whose records have been destroyed may be asked to provide an alternative type of report – for example, a compilation report instead of a statutorily required audit; or an affidavit to LLA affirming that they will not be able to provide their statutorily required report. The alternative report will be accepted in lieu of the local auditee’s statutorily required report, and will be issued as a public document on LLA’s website in order to maintain a complete record of the local auditee’s annual financial report. Please see What Do I Do If My Agency's Records Are Destroyed? for further information.