Or. Admin. Code § 162-040-0005 - General Requirements
(1) All municipal
corporations, as defined in ORS
297.405, are required to have
their accounts and fiscal affairs audited annually, unless they are exempt from
audit under ORS 297.435. The following
administrative rules apply to review reports prepared under 297.435(3). Review
reports must be prepared in accordance with Statements on Standards for
Accounting and Review Services (SSARS), which contain professional
requirements, together with related guidance, in the form of explanatory
material. Accountants performing a compilation or review have a responsibility
to consider the entire text of SSARS in carrying out their work on an
engagement and in understanding and applying the professional requirements of
the relevant Standards.
(2) The
objective of a review differs significantly from the objective of an audit of
financial statements in accordance with generally accepted auditing standards.
The objective of an audit is to provide a reasonable basis for expressing
opinions on the financial statements that collectively comprise the
municipality's basic financial statements. A review does not contemplate
obtaining an understanding of the entity's internal control; assessing fraud
risk; testing accounting records by obtaining sufficient appropriate evidence
through inspection, observation, confirmation, or the examination of source
documents; or other procedures ordinarily performed during an audit. A review
is designed to obtain limited assurance that there are no material
modifications that should be made to the financial statements in order for the
statements to be in conformity with GAAP or another financial reporting
framework permitted by law.
(3) The
accountant who performs a review of the financial statements of a municipal
corporation must:
(a) Be licensed by the
Oregon Board of Accountancy to conduct municipal audits;
(b) Personally perform the review in
accordance with these rules to an extent satisfactory to the Secretary of
State; and
(c) Prepare a report
expressing limited assurance on the financial statements in accordance with
these rules.
(4) Since
the functions and forms of government, as well as the accounting, internal
control, and management information systems, will vary greatly among municipal
corporations, the accountant must be or become familiar with legal provisions
applicable to a particular government. The accountant must also be familiar
with the accounting principles considered to be generally acceptable for
governments.
(5) Officials of the
municipal corporation must account for all resources for which they are
responsible. An appropriate accounting by officials of the municipal
corporation will include financial statements, notes to the financial
statements, and the supplementary information required by these
rules.
(6) Based upon the review,
the accountant should ascertain whether the municipal corporation's accounts
and records are maintained in a manner that will permit the preparation of
financial statements that fairly present its financial position and results of
operations in accordance with legal provisions, and in accordance with
generally accepted accounting principles or other financial reporting framework
permitted by law. The accounting principles contemplated are those contained in
pronouncements of authoritative bodies including, but not necessarily limited
to, the Financial Accounting Standards Board, the American Institute of
Certified Public Accountants, and the Governmental Accounting Standards Board.
If the municipal corporation does not prepare and present the financial
statements specified in these rules, the accountant should make a reasonable
attempt to draft them for the municipal corporation using its accounts and
records. Whenever legal provisions conflict with generally accepted accounting
principles or principles applicable to another comprehensive basis of
accounting, the accountant shall disclose these conflicts and modify the review
report if necessary.
(7) The
accountant should establish an understanding of the industry in which the
municipality operates, and whether operations have been carried out in
accordance with appropriate legal provisions including federal and state laws,
charter provisions, court orders, ordinances, resolutions, and rules and
regulations issued by other governmental agencies. If significant deficiencies,
material weaknesses, or other recommendations for improvements have been
communicated in a separate letter to management or the governing body, the
independent accountant shall file a copy of the letter with the Secretary of
State within 30 days of delivering the report to the municipal
corporation.
(8) The report shall
include financial statements with appropriate notes, and the accountant's
review report containing limited assurance on the financial statements. If the
accountant becomes aware of a departure from GAAP or another financial
reporting framework permitted by law that is material to the financial
statements, the accountant should consider whether modification of the standard
report is adequate to disclose the departure. The accountant's review report
shall include the reporting elements prescribed by the Statements on Standards
for Accounting and Review Services issued by the American Institute of
Certified Public Accountants.
(9)
The municipal corporation must file a copy of its report with the Secretary of
State. The report and supporting documentation are subject to review by the
Secretary of State for compliance with these rules. The Secretary of State may
require the accountant to submit documentation covering the review engagement
for purposes of this requirement.
(10) The accountant shall submit a summary of
the revenues and expenditures of the municipal corporation within 30 days after
delivering the review report. The summary shall encompass the period covered by
the review and shall be prepared in a manner and on forms prescribed by the
Secretary of State. One copy of the summary shall be delivered to the municipal
corporation.
Notes
Statutory/Other Authority: ORS 297.465
Statutes/Other Implemented: ORS 297.465
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