2017 Kentucky Revised Statutes CHAPTER 65A - SPECIAL PURPOSE GOVERNMENTAL ENTITIES .030 Audits, financial statements, and attestation engagements for fiscal periods beginning on or after July 1, 2014 -- Alternative financial review -- Exclusion of some annual receipts.
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65A.030
Audits, financial statements, and attestation engagements for fiscal
periods beginning on or after July 1, 2014 -- Alternative financial review -Exclusion of some annual receipts.
(1)
(2)
For fiscal periods beginning on or after July 1, 2014, requirements relating to audits
and financial statements of special purpose governmental entities are as follows:
(a) Every special purpose governmental entity with the higher of annual receipts
from all sources or annual expenditures of less than one hundred thousand
dollars ($100,000) shall:
1.
Annually prepare a financial statement; and
2.
Once every four (4) years, contract for the application of an attestation
engagement as determined by the DLG, as provided in subsection (2) of
this section;
(b) Every special purpose governmental entity with the higher of annual receipts
from all sources or annual expenditures equal to or greater than one hundred
thousand dollars ($100,000) but less than five hundred thousand dollars
($500,000) shall:
1.
Annually prepare a financial statement; and
2.
Once every four (4) years, contract for the provision of an independent
audit as provided in subsection (2) of this section; and
(c) Every special purpose governmental entity with the higher of annual receipts
from all sources or annual expenditures equal to or greater than five hundred
thousand dollars ($500,000) shall:
1.
Annually prepare a financial statement; and
2.
Be audited annually as provided in subsection (2) of this section.
(a) To provide for the performance of an audit or attestation engagement as
provided in subsection (1)(a) to (c) of this section, the governing body of a
special purpose governmental entity shall employ an independent certified
public accountant or contract with the Auditor of Public Accounts to conduct
the audit or attestation engagement unless the provisions of subsection (3) of
this section apply.
(b) The audit or attestation engagement shall be completed no later than twelve
(12) months following the close of the fiscal year subject to the audit or the
attestation engagement.
(c) 1.
The special purpose governmental entity shall submit for publication on
the registry the audit or attestation engagement, in the form and format
required by the DLG.
2.
A federally regulated municipal utility may comply with the
requirements of this section for the public power component of its
operations by submitting an audit that conforms to the requirements
imposed by the federal agency with which it maintains a wholesale
power contract.
3.
A public utility established pursuant to KRS 96.740 that is not a
(d)
(e)
(f)
(g)
(h)
(3)
(a)
(b)
federally regulated municipal utility may comply with the requirements
of this section for the public power component of its operations by
submitting a copy of its annual audit performed under KRS 96.840.
1.
The audit or attestation engagement shall conform to:
a.
Generally accepted governmental auditing or attestation standards,
which means those standards for audits or attestations of
governmental organizations, programs, activities, and functions
issued by the Comptroller General of the United States;
b.
Generally accepted auditing or attestation standards, which means
those standards for all audits or attestations promulgated by the
American Institute of Certified Public Accountants; and
c.
Additional procedures and reporting requirements as may be
required by the Auditor of Public Accounts.
2.
Rather than meeting the standards established by subparagraph 1. of this
paragraph, the audit submitted by a federally regulated municipal utility
or a public utility established pursuant to KRS 96.740 that is not a
federally regulated municipal utility with regard to the public power
component of the utility's operations shall conform to KRS 96.840 and
the financial standards of the Federal Energy Regulatory Commission's
Uniform System of Accounts.
Upon request, the Auditor of Public Accounts may review the final report and
all related work papers and documents of the independent certified public
accountant relating to the audit or attestation engagement.
If a special purpose governmental entity is required by another provision of
law to audit its funds more frequently or more stringently than is required by
this section, the special purpose governmental entity shall comply with the
provisions of that law, and shall comply with the requirements of paragraph
(c) of this subsection.
Notwithstanding any provision of the Kentucky Revised Statutes to the
contrary, a unit of government furnishing funds directly to a special purpose
governmental entity may require additional audits at the expense of the unit of
government furnishing the funds.
All audit reports, attestation engagement reports, and financial statements of
special purpose governmental entities shall be public records.
Any board, commission, or agency established by statute with regulatory
authority or oversight responsibilities for a category of special purpose
governmental entities may apply to the Auditor of Public Accounts to be
approved to provide an alternative financial review of the special purpose
governmental entities it regulates or oversees that are required by subsection
(1)(a) of this section to submit an attestation engagement. The application
shall be in the form and format determined by the Auditor of Public Accounts.
The Auditor of Public Accounts shall review the application and if the auditor
determines that the board, commission, or agency has the resources and
(4)
(5)
(6)
capacity to conduct an acceptable alternative financial review, the auditor
shall notify the DLG that the board, commission, or agency is approved to
provide an alternative financial review of the special purpose governmental
entities it regulates or oversees that are required by subsection (1)(a) of this
section to submit an attestation engagement.
(c) The Auditor of Public Accounts shall advise the DLG and the board,
commission, or agency regarding modifications to the proposed alternative
financial review procedures necessary to obtain the Auditor of Public
Accounts' approval.
(d) Any board, commission, or agency approved to provide alternative financial
reviews shall reapply to the Auditor of Public Accounts for approval to
continue to provide alternative financial reviews at least every four (4) years.
The Auditor of Public Accounts may require more frequent approvals.
(e) The Auditor of Public Accounts or the DLG may withdraw any approval
granted under this subsection if the board, commission, or agency fails to
conduct alternative financial reviews using the procedures and including the
terms and components agreed to with the DLG.
(f) Any board, commission, or agency approved to provide alternative financial
reviews shall notify the Auditor of Public Accounts and the DLG if an
irregularity is found in the alternative financial review.
(g) Any special purpose governmental entity subject to regulation or oversight by
a board, commission, or agency that obtains approval to provide an alternative
financial review under this subsection shall have the option of having an
alternative financial review performed by the board, commission, or agency,
or may contract for the application of an attestation engagement as provided in
subsection (1)(a) of this section.
The DLG shall determine which procedures conducted under attestation standards
will apply to special purpose governmental entities meeting the conditions
established by subsection (1)(a) of this section. The DLG may determine that
additional procedures be conducted under attestation standards for specific
categories of special purpose governmental entities or for specific special purpose
governmental entities, as needed, to obtain the oversight and information deemed
necessary by the DLG.
Based on the information submitted by special purpose governmental entities under
KRS 65A.020 and 65A.090, the DLG shall determine when each special purpose
governmental entity was last audited, and shall notify the special purpose
governmental entity of when each audit or attestation engagement is due under the
new standards and requirements of this section.
(a) In determining the requirements relating to audits and financial statements of
special purpose governmental entities under subsection (1) of this section, the
DLG may exclude annual receipts received by the special purpose
governmental entity if:
1.
The receipts constitute nonrecurring, nonoperating grants for the purpose
(7)
of capital asset acquisition, capital construction, disaster recovery
efforts, or other one (1) time purposes as determined by the DLG; and
2.
The special purpose governmental entity requests, in writing to the DLG
and for each fiscal year it receives the revenue in question, that the
revenues in question not be included in determining its annual revenues.
(b) Any receipts excluded under paragraph (a) of this subsection shall still be
reported as required under KRS 65A.020(2)(a)2.
The DLG may promulgate administrative regulations pursuant to KRS Chapter 13A
to implement the provisions of this section.
Effective: June 24, 2015
History: Amended 2015 Ky. Acts ch. 17, sec. 3, effective June 24, 2015. -- Amended
2014 Ky. Acts ch. 7, sec. 3, effective March 19, 2014. -- Created 2013 Ky. Acts ch.
40, sec. 3, effective March 21, 2013.
Legislative Research Commission Note (3/19/2014). 2014 Ky. Acts ch. 7, sec. 11
provides that the amendments to this statute made in 2014 Ky. Acts ch. 7, sec. 3,
shall apply retroactively beginning January 1, 2014.
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