This text of Indiana § 5-11-1-24.4 (Opt out of state board of accounts examination; selection of certified
public accountant to perform examination; examination report) is published on Counsel Stack Legal Research, covering Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
4.
(a)This section applies only to an audited
entity (excluding a college or university (as defined in IC 21-7-13-10))
that has:
(1)an internal control officer; and
(2)an internal control department;
established by the legislative body of the audited entity. However, the
requirements of this section do not apply to a consolidated city that
hires an internal auditor or an independent certified public accountant,
or both, as authorized under IC 36-3-4-24 to examine the books and
records of the consolidated city.
(b)An audited entity may request in writing that the state board of
accounts authorize the audited entity to:
(1)opt out of examinations by the state board of accounts; and
(2)engage a certified public accountant to conduct the
examinations.
The request must be approved by reso
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4. (a) This section applies only to an audited
entity (excluding a college or university (as defined in IC 21-7-13-10))
that has:
(1) an internal control officer; and
(2) an internal control department;
established by the legislative body of the audited entity. However, the
requirements of this section do not apply to a consolidated city that
hires an internal auditor or an independent certified public accountant,
or both, as authorized under IC 36-3-4-24 to examine the books and
records of the consolidated city.
(b) An audited entity may request in writing that the state board of
accounts authorize the audited entity to:
(1) opt out of examinations by the state board of accounts; and
(2) engage a certified public accountant to conduct the
examinations.
The request must be approved by resolution adopted by the legislative
body for the audited entity.
(c) The state board of accounts shall, not more than sixty (60) days
after receiving a written request under subsection (b):
(1) acknowledge receipt of the request; and
(2) notify the requesting audited entity that the request is:
(A) approved; or
(B) disapproved.
(d) The state board of accounts shall approve a request under
subsection (b) by an audited entity if the state examiner determines
that:
(1) within the last six (6) years, the state board of accounts has not
issued an examination or special investigation report critical of
the audited entity's internal controls and there have been no
reports under section 9.5 of this chapter;
(2) the audited entity filed the written request under subsection
(b) with the state board of accounts more than one hundred eighty
(180) days before the beginning of the audited entity's fiscal year;
(3) the audited entity selects the certified public accountant in
accordance with the selection procedure under this section;
(4) the certified public accountant selected by the audited entity
is:
(A) licensed in Indiana; and
(B) qualified to conduct examinations in accordance with the
government auditing standards adopted by the state board of
accounts;
(5) the certified public accountant's examination shall:
(A) be conducted in accordance with the guidelines established
by the state board of accounts; and
(B) make findings regarding the audited entity's compliance
with the uniform compliance guidelines established by the state
board of accounts;
(6) the certified public accountant's examination is paid for by the
audited entity; and
(7) the certified public accountant's examination of the audited
entity includes:
(A) all associated component units;
(B) audits required or necessary for federal financial assistance;
(C) findings of noncompliance with state law and uniform
compliance guidelines as required by IC 5-11-5-1; and
(D) a separate report in accordance with the guidelines
established by the state board of accounts for any items of
noncompliance identified.
(e) The audited entity must use the following selection procedures:
(1) The legislative body of the audited entity shall establish an
audit committee to facilitate the selection of a certified public
accountant. The audit committee shall be composed of the
following three (3) members:
(A) One (1) member of the legislative body appointed by the
legislative body.
(B) One (1) certified public accountant appointed by the
legislative body who is not the fiscal officer or an employee of
the audited entity.
(C) One (1) person appointed by the executive of the audited
entity who is qualified due to an involvement with financial
matters, and who is not the fiscal officer or an employee of the
audited entity.
Each member shall be appointed for a three (3) year term and
shall serve without compensation. However, a member appointed
under clause (A) who ceases to hold the office of legislative body
member ceases to be a member of the audit committee. A member
may not have a contractual relationship, financial interest, or
political affiliation with the certified public accountant selected.
(2) The audit committee established under subdivision (1) shall
do the following:
(A) Establish factors to evaluate the audit services provided by
a certified public accountant, including:
(i) experience;
(ii) ability to perform the required services;
(iii) capability to follow the guidelines and standards adopted
by the state board of accounts;
(iv) ability to timely complete all necessary components of
the examination; and
(v) any other factors considered necessary by the audit
committee.
(B) Publish notice of a request for proposals under IC 5-3-1 that
includes:
(i) a brief description of the audit requirements;
(ii) a time frame;
(iii) application procedures;
(iv) evaluation criteria; and
(v) any other items considered necessary by the audit
committee.
(C) Evaluate the proposals submitted by qualified certified
public accountants. If compensation is a factor established
under clause (A), it may not be the sole factor used to evaluate
proposals.
(D) Rank and recommend in order of preference not fewer than
three (3) certified public accountants considered most highly
qualified on the factors established under clause (A). If fewer
than three (3) certified public accountants respond to the
request for proposals, the audit committee shall recommend the
remaining qualified certified public accountants in order of
preference.
(3) The legislative body of the audited entity shall select a
qualified certified public accountant from the list recommended
by the audit committee and shall negotiate a contract with the
certified public accountant using one (1) of the following
methods:
(A) If compensation is a factor established under subdivision
(2)(A), the legislative body shall:
(i) select; or
(ii) document the reason for not selecting;
the highest ranked certified public accountant.
(B) If compensation is not a factor established under
subdivision (2)(A), the legislative body shall negotiate a
contract with the highest ranked qualified certified public
accountant. If unable to negotiate a satisfactory contract with
the highest ranked qualified certified public accountant, the
legislative body shall:
(i) formally terminate negotiations; and
(ii) negotiate with the second highest ranked certified public
accountant.
Negotiations with the other ranked certified public accountants
shall be undertaken in the same manner. The legislative body
may reopen formal negotiations with any of the top three (3)
ranked certified public accountants but may not negotiate with
more than one (1) certified public accountant at a time.
(C) The legislative body may select a certified public
accountant recommended by the audit committee and negotiate
a contract using an appropriate alternative negotiation method
for which compensation is not the sole or predominant factor.
(D) In negotiations with a certified public accountant, the
legislative body may allow a designee, who is not the fiscal
officer of the audited entity, to conduct negotiations on its
behalf.
(4) If the legislative body is unable to negotiate a satisfactory
contract with any of the recommended certified public
accountants, the audit committee shall recommend additional
certified public accountants, and negotiations shall continue in
accordance with this section until an agreement is reached.
(5) The procurement of audit services shall be evidenced by a
written contract embodying all provisions and conditions. For
purposes of this section, an engagement letter signed and
executed by both parties shall constitute a written contract. The
written contract shall include the following provisions:
(A) Specification of services to be provided and fees or other
compensation for the services.
(B) Invoices for fees or other compensation shall be submitted
in sufficient detail to demonstrate compliance with the terms of
the contract.
(C) Specification of the contract period and conditions under
which the contract may be terminated or renewed.
(D) The certified public accountant shall perform the
examination in accordance with:
(i) the guidelines and standards adopted by the state board of
accounts;
(ii) auditing standards generally accepted in the United
States; and
(iii) if applicable, government auditing standards, 2 CFR 200,
and any other guidelines required by the industry.
(E) If the certified public accountant discovers or suspects
instances of fraud, abuse of public funds, or the commission of
a crime, the certified public accountant shall notify the state
board of accounts:
(i) immediately; and
(ii) before disclosing the discovery or suspicion to the audited
entity.
(F) The certified public accountant shall deliver the completed
examination report to the state board of accounts:
(i) at the same time as the audited entity; and
(ii) not later than thirty (30) days after completion of the
examination.
The report shall be in a readable format prescribed by the state
board of accounts.
(G) All work papers supporting the examination report shall be
available for review by the state board of accounts.
(6) If a legislative body of an audited entity renews a written
contract with a certified public accountant that was entered into
in accordance with this section, the legislative body may renew
the contract without complying with the selection procedures in
this subsection.
(f) The certified public accountant must deliver the completed
examination report to the state board of accounts not later than thirty
(30) days after completion of the examination. The state board of
accounts shall review the examination report and may:
(1) ask questions of the certified public accountant;
(2) review the examination work papers; and
(3) take any other actions necessary to verify that the guidelines
and standards adopted by the state board of accounts have been
satisfied.
(g) If the certified public accountant's examination:
(1) satisfies the guidelines and standards adopted by the state
board of accounts, the state examiner shall publicly file the
examination report under IC 5-11-5-1; or
(2) fails to satisfy the guidelines and standards adopted by the
state board of accounts:
(A) the state board of accounts shall perform the audit; and
(B) the audited entity shall reimburse the state board of
accounts for the actual and direct cost of performing the
examination.
(h) An audited entity that requests a certified public accountant
under this section shall reimburse the state board of accounts for all
direct and indirect costs incurred by the state board of accounts for any
technical assistance and support requested by the audited entity.
(i) An audited entity may terminate the use of a certified public
accountant engaged under this section if:
(1) the termination is approved by resolution adopted by the
legislative body of the audited entity; and
(2) written notice of the termination is provided to the state board
of accounts more than one hundred eighty (180) days before the
beginning of the audited entity's fiscal year.
(j) The state board of accounts may terminate its approval of the use
of a certified public accountant engaged under this section if any
requirement under this article is no longer met.
(k) Conducting an examination of an audited entity by a certified
public accountant does not prohibit the state board of accounts from
conducting a compliance review of the audited entity or an examination
under section 9.5 of this chapter on the schedule determined by the
state board of accounts.