Local government agencies and quasi-public organizations (local auditees) 
are required by
the audit law (
Louisiana Revised Statute (R.S.) 24:513) to hire or engage one of the certified public accounting (CPA) firms that have been approved by the Louisiana Legislative Auditor (LLA) to perform their audit, review/attestation, and compilation engagements.
Some local auditees find the process of hiring a CPA firm to be daunting. They are unsure of what to do first. They don’t know how to tell whether one CPA firm is better than another one.
LLA has prepared this information to assist local auditees in the selection of a CPA firm.
Where is the list of approved CPA firms? The
list of approved CPA firms is available on LLA’s website.
What process does LLA use to approve the firms on its list? LLA requires CPA firms to provide certain information regarding their firm, including licensing, education, and other information, prior to approval. See the related document
CPA Firm Approval .
What does LLA do on an ongoing basis to ensure the quality of the firms on its list? LLA performs ongoing monitoring activities of the CPA firms on its approved list to ensure that they maintain current licenses, firm permits and peer reviews (see below). LLA staff also review each firm’s reports that are submitted to LLA to ensure that they maintain a basic level of competency. See the related document
Legislative Auditor Monitoring and Disciplinary Actions Regarding CPA Firms .
Peer reviews Every CPA firm that has been approved by LLA must undergo a peer review every three years. A peer review is an “audit of the auditor” – an evaluation of a CPA firm’s work by another CPA firm (the peer reviewer). Deficiencies noted by the peer reviewer are included in the peer review report, and are addressed in the firm’s corrective action plan that is attached to the peer review report. LLA maintains a copy of each approved firm’s peer review report on its
website. A local auditee should consider the most recent peer review report of any CPA firm it is evaluating as part of its selection process. See the related document
Peer Reviews .
Do audit services have to be bid out? Local auditees are encouraged (
though not required by Louisiana law) to bid out their audit, review/attestation, and compilation engagements.
If a local auditee chooses not to bid out its engagement, it is recommended that they call at least three firms on LLA’s approved list to determine which firm would be the best fit for their agency.
Questions that a local auditee should ask a firm it is considering include:
Ø What is the firm’s experience in performing the engagements of local auditees in general?
Ø What is the firm’s experience in performing the engagements of the local auditee’s particular type of agency?
After we select a CPA firm, what happens next? The CPA firm chosen by a local auditee will prepare a contract called an engagement agreement that spells out the terms and conditions of the engagement. The engagement agreement must include the cost of the engagement. LLA recommends that a provision also be included in the engagement agreement that allows for an adjustment to the cost of the engagement if the adjustment is in writing and agreed to by the local auditee and the CPA firm.
The engagement agreement is signed by the local auditee and the CPA firm. The engagement agreement is
not signed by LLA because LLA is not a party to the engagement. However, LLA is required by
R.S. 24:513 to approve the engagement prior to its commencement.
The CPA submits the engagement for approval through a form on LLA’s website, and establishes the date to start the audit with the local auditee.
QUESTIONS:
Q. Will LLA recommend a CPA firm to perform my agency’s audit?
A. Upon request, LLA will provide a local auditee with information regarding firms that have performed certain types of engagements. However, LLA cannot recommend one CPA firm over another CPA firm because of independence reasons.
Q. Are local auditees required to change auditors every few years? The same CPA firm has been auditing our agency for many years, and we are happy with their work.
A. There is no requirement in Louisiana law for a local auditee to hire a new CPA firm to perform their engagement after a certain number of years with one firm. However, auditor rotation is recommended because it will ensure that a fresh “set of eyes” will periodically look at the local auditee’s transactions.
Q. Does LLA have a sample solicitation for procurement of audit services?
A. LLA does engage CPA firms to perform the audits and other engagements of some state agencies. The
sample solicitation for proposal document used by LLA is available on LLA’s website, and may be used by local auditees as an example for their own SFP.
Q. I would like to include a provision in my agency’s RFP that the CPA firm will be fined $100 a day if the audit report is not submitted to LLA by the statutory due date; and $100 for every day after the due date that the report is late. Is this a good idea?
A. Although timely financial reporting is of primary importance, there may be very good reasons, beyond the control of the CPA firm, that a report cannot be submitted by the statutory due date. If the local auditee’s financial records are in disarray, or if the CPA finds evidence indicating fraud has occurred, the CPA is required by professional standards to perform additional audit procedures in order to render an opinion on the financial statements. A fine or other constraint that is placed upon a CPA firm as a condition of engaging a local auditee may be construed as a scope limitation on the engagement. Most CPA firms will not accept an engagement with such a condition; nor should they.
Q. My agency is in the process of engaging a CPA firm for our audit. The firm we are considering seems to be a good fit, but there were several exceptions noted in their most recent peer review. Should this disqualify them from our consideration?
A. If a CPA firm’s latest peer review has exceptions, it does not mean that the firm should automatically be disqualified as a potential auditor. However, the local auditee should address any concerns it has regarding a CPA firm, including remedial actions taken for any exceptions in its peer review, with the firm before hiring it to perform its audit or other engagement.
Q. May a local auditee submit the engagement approval request form to LLA instead of the CPA firm?
A. The portal on LLA's website through which the engagement approval request form is submitted is currently accessible only by approved CPA firms and LLA staff. Therefore, the CPA must submit the Engagement Approval Request Form to LLA. For additional information, see
Submitting An Engagement Approval Request Form to the Legislative Auditor .
Q. I would like to use a CPA firm that is not on LLA’s approved list to perform my agency’s audit. What should I do?
A. The CPA firm should contact the
LGS Engagement Manager to get a list of the information that they need to submit for approval of their firm.
Q. I am a local auditee that is statutorily required to submit sworn financial statements. Instead of submitting sworn financial statements, I would like for a CPA firm that is not on LLA’s approved list to perform an audit, and submit the audit report to LLA. May I submit an audit report in lieu of sworn financial statements? If so, must the firm that performs the audit be approved by LLA?
A. If a local auditee is required to submit sworn financial statements, LLA will accept an audit (performed either under
generally accepted auditing standards or generally accepted government auditing standards ), a review, or a compilation report from a CPA firm that is not on LLA’s approved list, in lieu of sworn financial statements. These reports must be submitted within ninety days after the agency's fiscal year end to
ereports@lla.la.gov.