Any non-federal entity that expends $500,000 ($750,000 for audits of fiscal years beginning on or after December 26, 2014) or more in a year in Federal awards shall receive a Single Audit. A Single Audit includes a Financial Audit, as well as a compliance audit of Federal Awards
An audit of an entity's financial statements and accompanying disclosures conducted in accordance with Generally Accepted Auditing Standards (GAAS). An audit of an entity's financial statements is conducted to provide an opinion on whether the financial statements are fairly stated in accordance with the applicable reporting standards. An audit is intended to provide reasonable, but not absolute, assurance that the financial statements are presented fairly. A Financial Audit is conducted in conjunction with a Single Audit.
Pursuant to IC 5-11-1-9(d), every entity that the SBOA is required to perform some type of engagement, inquiry is to be made as to whether the units comply with the laws of the State of Indiana. In most cases, compliance engagements are conducted in conjunction with another engagement, but there are cases in which a compliance engagement is performed on its own.
A review of an entity’s financial statements is conducted when the needs of the unit do not require the level of assurance that is provided in an audit or examination. The objective of a review is to obtain limited assurance about whether the examiner is aware of any material modifications that should be made to the financial statements to be in accordance with the applicable reporting standards. Reviews are performed in accordance with the Statement on Standards for Accounting and Review Services.
Pursuant to IC 5-11-1-27, any local government that has any erroneous or irregular variances, losses, shortages, or thefts of government funds or property is required to report those to the SBOA. In situations in which there is fraud, or suspected fraud, we will conduct a special investigation, with the purpose being to search for misfeasance, malfeasance, or nonfeasance by a local government official.
Occasionally, an entity will have a specific reporting need, and will engage the SBOA to perform an agreed-upon procedures engagement. In these situations, the purpose of the engagement and the procedures required are set out before hand and are conducted by the SBOA in accordance with Statements on Standards for Attestation Engagements.
Frequency of Examinations
Indiana Code 5-11-1-25 provides the criteria the SBOA is to use in determining the examination frequency of entities.
Examinations are completed annually (biennially for a school corporation) if one or more of the following apply:
- If the entity is subject to an annual federal audit;
- A federal audit is required if the amount of federal expenditures exceeds:
- $750,000 for an audit period that begins after December 26, 2014; or
- $500,000 for an audit period that begins before December 26, 2014.
- Due to continuing disclosure requirements; or
- As a condition of a public bond issuance.
The entity must provide notice to the State Examiner not later than 60 days after the close of the entity’s fiscal year that it is required to have an annual audit under these circumstances.
An audit of the State is completed annually. Historically, approximately 92% of schools, 84% of counties, 56% of cities, and 27% of towns meet these criteria.
If the above criteria are not applicable to an entity, then the SBOA uses a risk based approached to determine the frequency of examinations. These risk based factors include (but are not limited to):
- Election or Appointment of new fiscal officer or key employees
- Timeliness and accuracy of Annual Financial Report (AFR) (required by IC 5-11-1-4)
- Results of prior examinations
- Risk Assessment questionnaire they complete within their AFR
- Information presented to SBOA by outside sources (staff, citizens, vendors, etc.)
Regardless of the results of the risk based assessment, examinations are completed at least once every four years.