The audit law 
(
Louisiana Revised Statute (R.S.) 24:513 A. (3)) requires virtually every
local auditee report that is submitted to the Louisiana Legislative Auditor (LLA) to include a schedule of compensation, benefits, and other payments to the agency head, political subdivision head, or chief executive officer. This schedule is over and above what is required by
generally accepted accounting principles (GAAP).
The compensation, benefits, and other payments that are to be reported on the schedule include but are not limited to travel, housing, unvouchered expenses, per diem, registration fees, and reimbursements.
Nongovernmental or nonprofit entities that receive public funds may report on the schedule only those payments to the agency head that are derived from the public funds the nonprofit receives. Public funds are defined as Louisiana state and/or local governmental funds and/or federal funds passed through a Louisiana state or local government agency.
The schedule is to be included in the supplementary information within the local auditee’s financial statements. If the supplemental schedule is included in an audit report with an
unmodified opinion , the CPA performing the audit engagement must include an in-relation-to opinion on the schedule. The CPA should consult the professional standards on the type of opinion that may be rendered on supplemental information when a
modified opinion is rendered on the financial statements as a whole.
LLA’s legal staff has prepared a
frequently asked questions document on this subject that has an illustrative schedule that may be used for compliance with this provision of the law. The FAQ also addresses the following matters –
Ø Who needs to report their compensation on the schedule of compensation, benefits, and other payments to the agency head or chief executive officer
Ø What types of compensation, benefits, and other payments should be reported on the schedule
Ø Special rules for judges’ compensation
QUESTIONS:
Q. Does the schedule of compensation, benefits, and other payments to the agency head or chief executive officer need to be included in all reports submitted to LLA, or just the audit reports?
A. The schedule of compensation, benefits, and other payments to the agency head or chief executive officer must accompany virtually all reports submitted to LLA – audit, review/attestation, and compilation reports; and sworn financial statements.
Q. Does the schedule of compensation, benefits, and other payments to the agency head replace the schedule of board members’ compensation required to be included in the annual financial reports of local government agencies by House Concurrent Resolution No. 54 of the 1979 Legislative Session?
A. No. The schedule of board members’ compensation should still be included in the annual financial reports of local government agencies.
Q. Should payments for salary and benefits made directly to an agency head by another entity, or to a third party (such as a retirement system) on behalf of the agency head from another entity, be included in the schedule of payments to the agency head?
A. The heads of some local government agencies (e.g., sheriffs, district attorneys, clerks of court) receive part of their compensation from sources outside of their agencies. Payments may also be made on behalf of these agency heads to third parties, such as retirement systems. These payments must be reported on the schedule of compensation, benefits, and other payments to the agency head, even if these payments are not processed through their agency.
Local government agencies and their CPAs should be aware that Governmental Accounting Standards Board (GASB) Statement No. 24 requires local government agencies to recognize revenue and expenditures in their financial statements for
on-behalf payments made to the agency head for salary and fringe benefits; even if these payments are not processed through their agency and/or are paid directly to the agency head by another entity.
Q. Does the schedule of compensation need to include the name of the person whose compensation is being reported?
A. Yes. LLA believes that the name of the person whose compensation is being reported is critical information that needs to be included on the schedule. The
FAQ on Supplemental Reporting under R.S. 24:513 (A) (3) includes an illustrative schedule on page 7 that may be used by an agency to report the compensation of the compensation, benefits, and other payments to the agency head or chief executive officer.
Q. My CPA firm audits a hospital that reports to LLA. The hospital has been reporting the CEO’s compensation on the schedule of compensation, benefits, and other payments to the agency head or chief executive officer. However, my client told me they have seen other hospitals report the board chairperson’s compensation on this schedule instead of the CEO’s, and they want to do likewise in the hospital’s next audit report. Can the hospital make this change without notifying LLA?
A. Generally, hospital service districts and not-for-profit hospitals that report to LLA are required to report the CEO’s salary on the schedule of compensation, benefits, and other payments to the agency head or chief executive officer. However, each hospital has distinct operating characteristics and sources of funding that will determine whose compensation should be reported on this schedule.
For this reason, it is not appropriate for your client to conclude that it may report the board president’s compensation on this schedule, based solely on the way another hospital is reporting.
If a hospital wants to change the position of the person whose compensation is currently being reported in its schedule of compensation, the hospital or their auditor should contact
LLA’s Director of Local Government Services to discuss the matter PRIOR to submitting the hospital’s report to LLA.