Oregon Administrative Rules › Chapter 162 - SECRETARY OF STATE, AUDITS DIVISION › Division 10 - MINIMUM STANDARDS FOR AUDITS OF OREGON MUNICIPAL CORPORATIONS › Section 162-010-0020 - General Requirements

Current through Register Vol. 63, No. 7, July 1, 2024
(1)  All municipal corporations, as defined in ORS 297.405, are
				required to have their accounts and fiscal affairs audited annually in
				accordance with generally accepted auditing standards as promulgated by the
				American Institute of Certified Public Accountants (AICPA), unless they qualify
				under 297.435 for agreed-upon procedures reporting in accordance with
				Statements on Standards for Attestation Engagements (SSAE), or file financial
				reports in lieu of having an audit.
(2)  The independent auditor who contracts to conduct an audit
				of a municipal corporation must personally conduct the audit to an extent
				satisfactory to the Secretary of State, prepare an Independent Auditor's Report
				and express an opinion on the accounts in accordance with these rules. The
				expression of opinion must be signed by the independent auditor. The
				Independent Auditor's Report and expression of opinion are to be issued to the
				municipal corporation within six months after the close of the calendar or
				fiscal year unless an extension of time has been granted by the Secretary of
				State.
(3)  Management (of the municipal corporation) has the
				responsibility for adopting sound accounting policies, for maintaining an
				adequate and effective system of accounts, for the safeguarding of assets, and
				for devising a system of internal control that will, among other things, help
				assure the production of proper financial statements. The transactions which
				should be reflected in the accounts and in the financial statements are matters
				within the direct knowledge and control of management. The independent
				auditor's knowledge of such transactions is limited to that acquired through
				the audit. Accordingly, the fairness of the representations made through
				financial statements is an implicit and integral part of management's
				responsibility. The independent auditor may make suggestions as to the form or
				content of financial statements or he/she may draft them in whole or in part,
				based on management's accounts and records. However, responsibility for the
				statements examined is confined to the expression of opinion on them. The
				financial statements remain the representations of management.
(4)  Since the functions and forms of government, as well as
				the accounting, internal control, and management information systems, will vary
				greatly among municipal corporations, the independent auditor must be familiar
				with legal provisions applicable to municipal corporations and the accounting
				principles promulgated by GASB and other accounting principles considered to be
				generally acceptable for governmental organizations. The independent auditor
				shall review the information systems of accounting and internal control,
				develop audit programs to adequately test those systems, and form an opinion
				with respect to the financial statements of the municipal corporation.
(5)  Officials of the municipal corporation should make an
				accounting of all resources for which they are responsible. Preparation of the
				financial statements and notes thereto and the supplementary schedules
				considered necessary for full disclosure of financial position and results of
				operations as set forth in OAR 162-010-0050  through 162-010-0140  will be
				considered an appropriate accounting.
(6)  The independent auditor is expected to determine if the
				accounts and records are maintained in a manner that will permit the
				preparation of financial statements that will fairly present the financial
				position and results of operations of the municipal corporation in accordance
				with legal provisions and in accordance with generally accepted accounting
				principles. The accounting principles contemplated are those contained in the
				pronouncements of authoritative bodies including, but not necessarily limited
				to, the Governmental Accounting Standards Board (GASB), the AICPA and the
				Financial Accounting Standards Board (FASB). If the municipal corporation fails
				to prepare and present the financial statements specified in OAR 162-010-0050 through 162-010-0140, the independent auditor may consider modifying the
				engagement terms and making a reasonable attempt to draft them for the
				municipal corporation from the accounts and records made available or,
				encourage the municipality to engage with another accountant to perform that
				work. If the financial statements cannot be drafted with reasonable effort,
				appropriate comments must be included in the audit report, together with
				recommendations for improvements necessary to permit their preparation in the
				future. Wherever there is a conflict between legal provisions and professional
				standards setting bodies, legal provisions are to take precedence. The
				independent auditor shall make appropriate disclosure of such conflicts and
				shall be aware that a qualification of the opinion may be necessary.
(7)  In addition to auditing the accounts and financial
				statements of a municipal corporation, the independent auditor is required to
				review the municipal corporation's fiscal affairs. The review shall include,
				but not necessarily be limited to, determining if financial operations have
				been carried out in accordance with appropriate legal provisions including
				federal and state laws, charter provisions, court orders, ordinances,
				resolutions, and rules and regulations issued by other governmental agencies.
				It is the independent auditor's responsibility to disclose in the audit report
				material instances of noncompliance with such legal provisions.
(8)  The scope of the audit of a municipal corporation shall
				include programs wholly or partially funded by other federal, state, or local
				governmental agencies. In determining the audit procedures to be applied to
				such programs, the independent auditor shall consider any specific audit
				procedures which may have been developed for those programs by appropriate
				governmental agencies. The independent auditor shall also determine if
				financial reporting requirements applicable to such programs have been complied
				with.
(9)  The audit report of a municipal corporation shall contain
				financial statements with appropriate notes, the Independent Auditor's Report
				containing his or her expression of opinion on the financial statements, or an
				assertion that an opinion cannot be expressed, and the auditor's comments
				relating to the review of fiscal affairs and compliance with legal
				requirements.
(a)  The independent auditor must prepare the independent
				auditor's opinion in accordance with the Statements on Auditing Standards
				issued by the AICPA.
(b)  The independent auditor's report should include either an
				opinion on whether the accompanying financial information is fairly presented
				in all material respects in relation to the basic financial statements taken as
				a whole or a disclaimer of opinion depending on whether the information has
				been subjected to the auditing procedures applied in the audit of the basic
				financial statements.
(c)  In a GAAP presentation the independent auditor shall
				express an "in relation to" opinion on budgetary comparison schedules presented
				as required supplementary information.
(d)  The independent auditor shall express an "in relation to"
				opinion" on the combining and individual fund statements and schedules
				presented as supplementary information required by OAR 162-010-0050  through
				162-010-140.
(e)  The auditor's comments relating to the review of fiscal
				affairs, including compliance with legal requirements shall be in accordance
				with the provisions of OAR 162-010-200 through 162-010-0320.