117.114 Audits of qualifying and eligible subdivisions.

(A) As used in this section:

(1) "Qualifying subdivision" means an agricultural society, county board of health, cemetery, conservancy district, family and children first council, fire district, ambulance district, fire and ambulance district, library, park or recreation district, regional planning commission, solid waste district, township, village, water district, sewer district, or water and sewer district, or a political subdivision determined by the auditor of state on a case-by-case basis to be a qualifying subdivision.

(2) "Eligible subdivision" means a qualifying subdivision that meets the criteria specified in this section and the criteria established by rule of the auditor of state.

(B) The auditor of state shall establish by rule an agreed-upon procedure by which eligible subdivisions may be audited. The rules shall set forth the standards, procedures, guidelines, and reporting requirements for an agreed-upon procedure audit. At a minimum, the rules shall require that, to be eligible for an agreed-upon procedure audit, a political subdivision must be a qualifying subdivision that meets all of the following criteria:

(1) The qualifying subdivision's annual budgeted expenditures do not exceed five million dollars for any fiscal year for which the agreed-upon procedure audit will be performed;

(2) The qualifying subdivision follows the auditor of state's regulatory, cash, or modified cash accounting basis;

(3) The fiscal officer or bookkeeper of the qualifying subdivision did not leave office at any time during the audit period in question;

(4) The qualifying subdivision had an audit performed under division (A) of section 117.11 or division (A) of section 117.12 of the Revised Code within the prior two audit periods;

(5) In its most recent audit report, the qualifying subdivision did not experience any of the following:

(a) A qualified, adverse, or disclaimer opinion;

(b) A declaration under section 117.41 of the Revised Code that the qualifying subdivision was unauditable;

(c) A finding for recovery that indicated fraud or theft in office; or

(d) A finding related to material control weaknesses.

(6) The qualifying subdivision is not:

(a) Under investigation by the auditor of state's special investigations unit or is not otherwise at high risk of fraud as determined by the auditor of state;

(b) In a fiscal emergency; or

(c) Required to be audited on an annual basis under "The Single Audit Act of 1984," 98 Stat. 2327, 31 U.S.C. 7501 et seq., as amended, or under other laws, grants, bylaws, or debt covenants.

(7) The qualifying subdivision does not have outstanding audit fees in arrears; and

(8) Any other criteria the auditor of state determines the qualifying subdivision must meet to be eligible for an agreed-upon procedure audit.

(C) An eligible subdivision may, but is not required to, engage in an agreed-upon procedure audit. If the eligible subdivision does not engage in an agreed-upon procedure audit under this section and the rules adopted thereunder, the eligible subdivision instead shall undergo an audit under division (A) of section 117.11 or division (A) of section 117.12 of the Revised Code.

(D) An agreed-upon procedure audit shall be performed by the auditor of state or by an independent certified public accountant under the attestation standards established by the American institute of certified public accountants. Eligible subdivisions may have an agreed-upon procedure audit in two consecutive audit periods followed by one audit performed under division (A) of section 117.11 or division (A) of section 117.12 of the Revised Code.

(E) The auditor of state, on a case-by-case basis, may determine that a qualifying subdivision that fails to meet any one of the criteria established by rule under division (B) of this section is otherwise eligible for an agreed-upon procedure audit and may, in writing, grant a waiver of a particular criterion.

(F) An eligible subdivision that engages in an agreed-upon procedure audit shall continue to file an annual financial report as required under section 117.38 of the Revised Code.

History. Added by 130th General Assembly File No. 18, SB 67, §1, eff. 9/4/2013.