Effective for June 30, 2017 fiscal year-ends, auditors of local governments and quasi-public entities in Louisiana are required to perform an agreed upon procedures engagement as part of their audit in accordance with LA R.S. 24:513 (the audit law). The procedures are directed toward specific areas of government operations where fraud and abuse, noncompliance, or internal control deficiencies have been found to be at higher risk by the Legislative Auditor.
Such areas include credit card purchases, contracting, travel costs ethics law matters and others. The Louisiana Legislative Auditor (LLA) has prescribed these agreed-upon procedures (AUPs), which are intended to represent a minimum level of additional work to be performed. These procedures may be considered to be “complementary” rather than “additive”, depending on the extent to which previous audits considered these areas in development of the auditor’s opinion on the financial statements as required by generally accepted auditing standards.
Beginning with the year ended June 30, 2017, each local government and quasi public entity subject to the audit law will be required to engage it’s audit firm to perform the agreed upon procedures with respect to public funds. These procedures may increase the time and effort required to complete the audit and potentially its costs. Additionally, since the auditor’s scope is now enhanced, increased detection by the auditor of fraud, abuse, noncompliance and internal control matters could occur. Auditees may want to review the agreed-upon procedures closely when released, to address areas of operations and internal controls subject to the procedures.