Information For Municipalities Information for Fire Districts Quasi-Public Entity Audit Bid Specifications and Procedures |
Information for Municipalities TABLE OF CONTENTS Annual Post Audit
Filing Annual Audit Reports Corrective Action Plan To Address Audit Issues
Developing A Plan To Reduce An Accumulated Deficit
Developing A Plan To Fund Annual Pension Costs Requesting Certification To Exceed The Statutory Tax Cap Due To An Emergency Situation Ministerial Approval of Bonds Rhode Island School Districts Local Regional Governmental Accounting Standards Rhode Island General Law Section 45-10-4 requires:
Procedure for Requesting Approval of RFP for Audit Services and Auditor Selection In order to assist municipalities going through the auditor selection process this office has issued Guidelines for Audit Bids and Specifications for municipalities. These guidelines contain information that should be included in a request for proposal of audit services, as well as the forms necessary to obtain approval of:
As part of the approval of a municipality’s or regional school district’s selection of an independent auditor, the Auditor General will consider several factors, including but not limited to the following:
By approving the municipality’s or regional school district’s selection of an audit firm, the Auditor General is not ensuring that the audit firm will (1) meet all contractual terms including the municipality’s or regional school district’s deadline for completion of the audit or (2) comply with professional standards in the conduct of the audit. Approval of a firm to conduct the audit does not limit our authority to review, make further inquiries, and/or reject the audit report. Rhode Island General Law Section 45-10-5 45-10-5 requires Rhode Island municipalities to file their annual audit reports with the Auditor General and the state Director of Administration no later than six months after the close of the fiscal year. This includes any findings and recommendations made as a result of the audit. General Law Section 45-10-5.2 and 45-10-5.3 provide for sanctions for communities that fail to comply with this requirement. Procedures for Requesting an Extension of Time Rhode Island General Law Section 45-10-5 further provides that the Auditor General may in his discretion, grant extensions in the filing of the audit report only upon reasonable cause for such extension being demonstrated by the municipality. The procedures for petitioning this office for extensions beyond the legal deadline are as follows: i. At least 30 days prior to the legal deadline for submission of reports, the chief municipal finance officer must schedule a meeting with the Auditor General. The purpose of this meeting will be to advise the Auditor General that the municipality or school district is unable to comply with the requirements of section 45-10-5 and is requesting an extension of time to file the audit report. This meeting will be held at the Auditor General's office. The municipal finance officer/school finance officer must be accompanied by the partner or manager-in-charge from the firm conducting the audit. ii. The finance officer must file the following written application with the Auditor General at least 5 business days prior to the meeting: a. A request to receive an extension of time, beyond the legal deadline, to submit the audit report. b. A confirmation of the date the audit will be completed and submitted to our office (completion date). c. A detailed description of the reasons why the audit will not be completed by the legal deadline. This should be prepared in conjunction with the auditor and include: 1. A list compiled by the auditor which describes: (a) all information or documents he or she is still waiting for in order to complete the audit; (b) the individual responsible to provide the information or document; and (c) the date each item must be received in order to meet the above stated completion date. 2. A statement from the municipal/school finance officer and any other official responsible for providing a document included on the auditor's list (e.g. solicitor), indicating that they agree to the timetable set by the auditor in order to meet the above-stated completion date. 3. A list of all other situations that are causing the delay and a timetable for when each one will be resolved or completed in order to meet the above-stated completion date. d. A corrective action plan and timetable. This plan should describe how and when the situations causing the delay will be corrected prior to the start of the audit for the following year. e. The entire application must be signed by the chief executive officer of the municipality (regional school district if applicable). We have adopted these procedures for late filers in order to obtain a better understanding of the causes of these significant delays in filing so that they can be remedied. The General Laws require timely submission of municipal audit reports so that information on fiscal accountability will be available to users of financial statements soon enough to be meaningful and useful. In addition, municipal and school audit reports are used by various state agencies to extract information that is needed within a certain time frame. This includes information needed for state aid computations and various reports prepared by the Office of Municipal Affairs. Municipalities and school districts are required to submit their audited financial statements by the deadline stated in the general laws. However, if significant circumstances prevent compliance, you must follow the procedures described above. CORRECTIVE ACTION PLAN TO ADDRESS AUDIT ISSUES Independent Auditors Opinion on Financial Statements Rhode Island General Law 45-10-6.1 requires that if an auditor conducting the post audit of a municipality expresses an opinion on the financials that is other than unqualified the chief finance officer shall:
Independent Auditors Findings and Recommendations Rhode Island General Law 45-10-6.1 also requires that:
DEVELOPING A PLAN TO REDUCE AN ACCUMULATED DEFICIT Section 45-12-22 of the Rhode Island General Laws entitled "Indebtedness of Towns and Cities" has been amended, as enacted June 27, 2003, by adding the following sections:
The purpose of this law is to ensure that municipalities and school districts monitor financial operations on an ongoing basis, execute a rapid response to budget problems and maintain a balanced budget. The following is a summary of certain provisions of this law. To view all provisions, please click the legal references outlined above. Monthly Monitoring of Financial Operations Rhode Island General Law 45-12-22.2 requires that:
Elements of the Reports:
If any reports required under this section project a year-end deficit the chief financial officer of the municipality shall submit to the state office of Municipal Affairs the monthly budget analysis report and a corrective action plan no later than thirty (30) days after completion of the monthly budget analysis (monthly reports). Elements of the Plan:
Rhode Island General Laws Section 45-12-22.3 provides that if at the end of the fiscal year, the chief financial official determines, based on available data, that it is likely that the city or town's general fund or combined general fund and unrestricted school special revenue fund will incur a deficit, the municipality must immediately develop a plan to eliminate the deficit. Elements of the Plan The plan must, at a minimum, comply with the following provisions in the law:
The Auditor General shall determine whether the plan reasonably insures elimination of the accumulated deficit in accordance with the law in a fiscally responsible manner. The judgment of the Auditor General in applying this standard shall be conclusive. DEVELOPING A PLAN TO FUND ANNUAL PENSION COSTS Rhode Island General Laws Section 45-10-15 requires the following:
To obtain a copy of GASB Statement Number 27 please contact the Governmental Accounting Standards Board as follows:
Order Department The GASB web site can be accessed at www.gasb.org. REQUESTING CERTIFICATION TO EXCEED THE STATUTORY TAX CAP DUE TO AN EMERGENCY SITUATION If a municipality plans to levy a property tax in excess of the cap as defined in Rhode Island General Laws (RIGL) Section 44-5-2 entitled "Maximum Levy" it must obtain certification from the Department of Administration and in some cases also from the Office of the Auditor General (OAG). The conditions under which a municipality must request certification from this office are described in the general laws. The guidelines are available here. In order to facilitate an application to this office, the municipal finance officer should submit the following:
Please mail your request to our office along with all required documentation at least 30 days before the date that you need our response. This procedure only applies to requests to this office for certification to exceed the property tax cap due to emergency situations. If you need an override for other conditions described in the general laws, you must continue to petition the Office of Municipal Affairs under the Director of Administration. Phone (401-222-2855). Web page http://www.muni-info.state.ri.us/ Rhode Island General Law Section 45-12-2.1 requires:
Procedure for Requesting Ministerial Approval of Bonded
The Auditor General shall submit a copy of each approval and each notification that approval has been denied within five (5) business days after issuance to the director of administration and the chairpersons of the house committees on corporations and finance and the chairpersons of the senate committees on housing and municipal government and finance. RHODE ISLAND SCHOOL DISTRICTS Local School District Deficits Rhode Island General Laws Section 16-2-9 requires that:
Please refer to the additional requirements of Rhode Island General Laws Section 45-12-22.1 through 45-12-22.7 which describe procedures to be followed by municipalities and local and regional school districts in monitoring their financial operations, reporting projected deficits, and developing corrective action plans. Local School District Appropriation Deficiencies Rhode Island General Laws Section 16-2-21.4 requires that:
Effective July 5, 2008 House Bill 7283 Substitute A as amended, revised Rhode Island General Law Section 16-2-21.4 as follows: When the school committee brings an action in the superior court to increase appropriations, the chief executive officer of the municipality shall cause to have a financial and performance audit of the school department in compliance with generally accepted government auditing standards (as promulgated by the Comptroller General of the United States). It shall be conducted by the Auditor General, the Bureau of Audits, or a certified public accounting firm qualified in performance audits. The results of the audit shall be made public upon completion and paid for by the school committee to the state or private certified public accounting firm. The Auditor General shall select the auditor if the audit is not directly performed by his or her office. Regional School District Deficits Rhode Island General Laws Section 16-3-11 requires that: The school committee of each regional school district shall be responsible for maintaining a school budget that does not result in a debt. (16-3-11(e))
Please refer to the additional requirements of Rhode Island General Laws Section 45-12-22.1 through 45-12-22.7 which describe procedures to be followed by municipalities and local and regional school districts in monitoring their financial operations, reporting projected deficits, and developing corrective action plans. Regional School District Appropriation Deficiencies Rhode Island General Laws Section 16-2-21.4 requires that:
Effective July 5, 2008 House Bill 7283 Substitute A as amended, revised Rhode Island General Law Section 16-2-21.4 as follows: When the school committee brings an action in the superior court to increase appropriations, the chief elected officials from each of the member municipalities shall cause to have a financial and performance audit of the school department in compliance with generally accepted government auditing standards (as promulgated by the Comptroller General of the United States). It shall be conducted by the Auditor General, the Bureau of Audits, or a certified public accounting firm qualified in performance audits. The results of the audit shall be made public upon completion, and paid for by the school committee, to the state or private certified public accounting firm. The Auditor General shall select the auditor if the audit is not directly performed by his or her office. |
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