Louisiana Revised Statute (R.S.) 24:513 and
24:514 (
the audit law 
) requires
local governments and quasi-public organizations (local auditees) to provide their annual financial reports to the Louisiana Legislative Auditor (LLA). The audit law also provides for the due dates of these reports.
Before 2005, the audit law did not give LLA the authority to extend the due dates of local auditee reports. In 2005, the Louisiana Legislature amended the audit law to provide for extensions due to gubernatorially declared disasters or emergencies. Legislation in subsequent years provided for extensions for other reasons.
LLA’s current policies and procedures regarding extensions support its objective of assisting local auditees that are unable to submit their annual financial reports by the statutory due date through no fault of their own, while ensuring that their reports are submitted in as timely a manner as possible.
Emergency Extension Requests – In 2005, following Hurricanes Katrina and Rita, the Louisiana Legislature amended the audit law to include a provision that allowed a local auditee to request an extension in which to file its annual financial report with LLA when a gubernatorially declared disaster or emergency prevented the local auditee from completing the report by the statutory due date. LLA’s granting of an emergency extension request was subject to approval by the
Legislative Audit Advisory Council (LAAC).
Non-emergency Extension Requests – During the 2007 Legislative Session, language was added to House Bill 1 (the General Appropriations Act) and House Bill 2 (the Capital Outlay Act) that prohibited the payment of funds authorized in these acts to any recipient that had failed to comply with the audit law; and had not obtained an extension from LLA.
Because the language in House Bills 1 and 2 was silent as to the criteria under which an extension could be granted, LLA began approving extensions for reasons other than gubernatorially declared disasters or emergencies in 2007.
In 2007, LLA also began publishing on its website a list of local auditees that had failed to comply with the audit law. The noncompliance list is reviewed by the Louisiana Department of Treasury and other state agencies before paying state funds to local auditees.
A provision for non-emergency extension requests was promulgated in
R.S. 39:72.1 by Act 771 of the Regular Legislative Session of 2008.
LLA Extension Request Policies and Procedures Regarding Extension Requests – Extensions are requested by a local auditee or the CPA performing the local auditee’s audit, review/attestation or compilation engagement, through the
extension request form available on LLA’s website. A full explanation of the reason the report is delayed must accompany the request; and the date by which the report is expected to be submitted to LLA.
A committee of three LLA employees (the First Assistant Legislative Auditor, the Director of Local Government Services, and the Engagement Manager) determines whether each extension request should be approved.
In order to support the objectives of timely financial reporting and compliance with the audit law, approval of
non-emergency extension requests is the exception, not the rule. In order for a non-emergency extension request to be considered for approval, the following criteria must be met:
· The local auditee must have engaged a CPA firm approved by LLA to perform its audit or other engagement no later than sixty days after its fiscal year end.
· The local auditee must have submitted two of its last three annual financial reports to LLA by the statutory due dates.
· The reason for the extension request must be beyond the control of the local auditee.
An exception may be made when the denial of an extension will adversely and significantly impact public safety, health, or welfare; as determined by the Legislative Auditor and the chairperson of LAAC.
LLA is more flexible regarding the criteria for approving
emergency extension requests. However, LLA also works with a local auditee that requests an emergency extension to ensure that it will be providing its annual financial report in as timely a manner as possible.
Extension Requests – Ninety Days or Less According to its current policy, LLA may approve an emergency or non-emergency extension request for up to ninety days after the statutory date of the local auditee’s report, subject to subsequent confirmation by LAAC.
At each LAAC meeting LLA provides a list of all ninety day or less extension requests approved by LLA since the last LAAC meeting; and LAAC votes on confirmation of the extension requests.
Extension Requests – Greater Than Ninety Days Extension requests that are greater than ninety days after the due date of a report are not approved by LLA, but by LAAC.
If a LAAC meeting is scheduled at the time the extension is received, the local auditee may be invited to the meeting to explain the reason the greater than ninety day extension is necessary; and LAAC decides if the extension should be approved.
If a LAAC meeting is not scheduled at the time the extension is received, and LLA believes that the extension should be approved, LLA contacts the chairperson of LAAC to obtain the chairperson’s verbal approval of the greater than ninety day extension request. Extension requests that are verbally approved by the LAAC chairperson are presented to the full body of LAAC for approval at its next meeting.
Extension Requests and Late Report Findings If a
non-emergency extension request is approved for a report, that report is required to include a finding regarding the local auditee’s noncompliance with the statutory due date.
If an
emergency extension request is approved for a report, that report is not required to include this finding.
QUESTIONS:
Q. How will I be notified if my agency’s extension request is approved?
A. The local auditee is notified by email regarding approval of the extension. If the local auditee has hired a CPA firm to perform the engagement for which the extension was requested, the email will also be sent to the CPA contact within the firm.
Q. Why is a finding required if a non-emergency extension request is approved for a local auditee, but not an emergency extension request?
A. The statutory provision for an emergency extension request provides for an actual exception in the audit law for the normal statutory due date of a report. The statutory provision for a non-emergency extension request does not provide for an exception for the due date of the report.
Q. What would be an acceptable reason to request a non-emergency extension?
A. Acceptable reasons to request a non-emergency extension include:
Ø Illness of agency personnel that are essential to completion of the audit, e.g., the bookkeeper, chief financial officer or chief executive officer
Ø Illness of the CPA performing the audit or other engagement
Ø Destruction of records due to a fire or other catastrophe that was not a gubernatorially declared disaster or emergency
Ø Delay caused by new software implementation
Ø Other conditions that result in an unavoidable and unforeseen delay in submitting a report that are beyond the control of the agency
Q. My agency’s audit report will not be submitted by the statutory due date because our bookkeeper is ill. LLA approved a non-emergency extension request. Why wouldn’t the illness of key accounting personnel be considered a reason to grant an emergency extension request?
A. Illnesses do not meet the strict definition in the law regarding the criteria for an emergency extension i.e., a gubernatorially declared disaster or emergency.
Q. I am a nonprofit agency and have filed an extension request with the IRS for my agency’s 990 form. Will LLA accept this form in lieu of submitting LLA’s extension request form?
A. No. The extension request form on LLA’s website must be used to request an extension for a local auditee’s report to LLA.
Q. I am a local auditee who wishes to cancel my current audit engagement. The CPA has agreed to cancel the engagement too. It will take some time to engage another CPA. May I request an extension for the report?
A. It would depend on the reason the engagement agreement was cancelled. If the reason for the cancellation is beyond the control of the local auditee, such as non-performance of the CPA, LLA would most likely consider approving an extension. However, if the cancellation was totally at the discretion of the local auditee, the local auditee would be expected by LLA to have made the decision far enough in advance to allow for timely submission of the report. In this situation, LLA would be less likely to approve an extension.