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Information for Municipalities and School Districts TABLE OF CONTENTS Annual Post Audit
Filing Annual Audit Reports School Uniform Chart of Accounts (UCOA) – Agreed-Upon Procedures 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 Limit Due To An Emergency Situation Ministerial Approval of Bonds Rhode Island School Districts Local Regional
Rhode Island General Law Section 45-10-4 requires:
Refer to section on School Uniform Chart of Accounts (UCOA) – Agreed-Upon Procedures for additional annual reporting requirements related to school districts. 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 requires Rhode Island municipalities and regional school districts to file their annual audit reports with the Auditor General and the state Director of Revenue 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. Refer to section on School Uniform Chart of Accounts (UCOA) – Agreed-Upon Procedures for additional annual reporting requirements related to school districts. Procedures for Requesting an Extension of Time Municipalities and regional school districts are required to submit their audited financial statements by the deadline stated in the general laws. However, if significant circumstances prevent compliance, the municipality or regional school district must follow the procedures described below to request an extension. Rhode Island General Law Section 45-10-5 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 or regional school district. The procedures for petitioning this office for extensions beyond the legal deadline are as follows:
Municipalities and regional school districts that comply with the above extension requirements will receive an automatic 30-day extension (acknowledged by email). No further extensions will be awarded beyond this initial 30-day extension. Corrective actions will be requested by the Auditor General after submission of the audited financial statements when deemed appropriate due to the reasons for the late submission. 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. As part of the annual audit, municipalities and school districts are also required to report certain financial data, which is reconciled to the audited financial statements, to the Division of Municipal Finance. The audit reports and the additional reported financial data, as well as, various analyses and comparisons between municipalities and school districts are posted on the Municipal Transparency Portal website. SCHOOL UNIFORM CHART OF ACCOUNTS (UCOA) – AGREED-UPON PROCEDURES Rhode Island General Law Section 16-2-9.4 required the Office of the Auditor General and the Rhode Island Department of Elementary and Secondary Education to promulgate a uniform system of accounting, including a chart of accounts based on the recommendations of the Advisory Council on School Finance. All accounts of the municipal school districts, regional school districts, state schools, collaboratives and charter schools are required to be kept in accordance with the uniform system of accounting; provided, that in any case in which the uniform system of accounting is not practicable, the Office of Auditor General, in conjunction with the Rhode Island Department of Elementary and Secondary Education, shall determine the manner in which the accounts shall be kept. Each school district, state school, collaborative, or charter school, which is required to adopt the Uniform Chart of Accounts (UCOA), shall have additional compliance testing procedures designed to assess compliance with UCOA requirements and the entity’s effectiveness of internal control over compliance with those requirements. The auditors engaged to perform the annual audit of the entity shall also be engaged to report on their tests of compliance with UCOA requirements in an agreed-upon procedures compliance attestation format. The Office of the Auditor General and the RI Department of Education have worked cooperatively to develop the following agreed-upon procedures to test compliance with UCOA requirements: Effective for fiscal 2024 engagements:
Effective for fiscal 2023 engagements:
Effective for fiscal 2022 engagements:
Contact the Office of the Auditor General for UCOA Compliance Testing Requirements for fiscal years prior to 2022. The most recent compliance testing requirements document above should be included in the entity’s request for proposals for audit services and agreed-upon procedures engagements. Auditors should have performed the test work necessary to complete the UCOA agreed-upon procedures before issuing the audited financial statements. For school entities with a June 30 fiscal year end, the agreed-upon procedures report and the audited financial statements shall be provided to the Rhode Island Department of Elementary and Secondary Education and the Office of the Auditor General at the conclusion of the annual audit – i.e., December 31 unless an extension has been granted. For school entities which have adopted a fiscal year end other than June 30, the agreed-upon procedures report shall be provided by December 31 for the activity related to the year ended on the preceding June 30. The Auditor General has provided additional guidance on filing the AUP reports – refer to November 2024 Auditor General Communication – UCOA file and AUP. For additional information on UCOA, please follow the below link to the Rhode Island Department of Elementary and Secondary Education’s website: RIDE's Uniform Chart of Accounts 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 or regional school district expresses a modified opinion on the financial statements (i.e., qualified, adverse, or disclaimer of opinion), 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" was amended 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 LIMIT DUE TO AN EMERGENCY SITUATION If a municipal entity plans to levy a property tax in excess of the limit as defined in Rhode Island General Laws (RIGL) Section 44-5-2 entitled "Maximum Levy", it must obtain certification from either the Department of Revenue or the Office of the Auditor General (OAG). The conditions under which a municipal entity must request certification are described in the General Laws. If a municipal entity experiences an emergency situation which may require it to increase its tax levy over the prior year’s levy by more than the statutory limit, the municipal entity must apply to the Auditor General to certify the emergency. The Standards and Procedures are available for requests of the Auditor General to certify the existence of an emergency situation.
Please submit your request to the Office of the Auditor General, along with all required documentation, at least 30 days before the date that you require a response. This procedure only applies to requests to this office for certification to exceed the property tax limit due to emergency situations. If you need an override for other conditions described in the general laws, you must petition the Division of Municipal Finance under the Director of Revenue. Phone (401-574-9900). Web page https://municipalfinance.ri.gov/financial-tax-data/property-tax-cap.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. Governmental Accounting Standards (GASB)
Government Finance Officers Association (GFOA)
Single Audit
American Institute of CPAs (AICPA) U.S. Government Accountability Office (GAO) State Information
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