KRS § 65A.030 — KY Code / Title IX / Chapter 65A / Section 65A.030
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
Status: in_force

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) 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.

(2) (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

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.

(d) 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.

(e) 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.

(f) 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.

(g) 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.

(h) All audit reports, attestation engagement reports, and financial statements of

special purpose governmental entities shall be public records.

(3) (a) 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.

(b) The Auditor of Public Accounts shall review the application and if the auditor

determines that the board, commission, or agency has the resources and

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.

(4) 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.

(5) 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.

(6) (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

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) In determining the requirements relating to audits and financial statements

under subsection (1) of this section of special purpose governmental entities

that are public use airports operating under KRS 183.132 to 183.160, the DLG

may exclude annual receipts received by those public use airports if the

receipts constitute nonoperating or recurring grants for the purpose of capital

asset acquisition, capital construction, disaster recovery efforts, or other one

(1) time purposes as determined by the DLG.

(c) Any receipts excluded under paragraph (a) or (b) of this subsection shall still

be reported as required under KRS 65A.020(2)(a)2.

(7) The DLG may promulgate administrative regulations pursuant to KRS Chapter 13A

to implement the provisions of this section.