GFOA Newsletter
GFOA Executive Board Opposes Unwarranted Auditor Involvement with Official Statements and Web Sites
At its March 18, 2005, meeting in Orlando, Florida, the GFOA Executive Board unanimously approved a strongly worded recommended practice that opposes attempts by some audit firms to require their prior approval before audited financial statements may be included in offering statements or posted on a government’s Web site. Some of the key points made in the new recommended practice are:
• Having paid for the independent audit, a government owns the audited financial statements and should feel free to use them in any appropriate manner.
• The independent auditor should not be permitted to create an essentially artificial “association” with audited financial statements included in offering statements or posted on the government’s Web site simply by inserting a clause to that effect in the audit contract.
• When the independent auditor actually does happen to become associated with audited financial statements included in an offering statement, a state or local government should take steps to avoid unwarranted delays and unjustified costs. In particular 1) a maximum time limit should be set for the independent auditor to read the unaudited material accompanying the audited financial statements and 2) because the amount of additional work required of the independent auditor would be minimal (i.e., simply reading the material that accompanies the audited financial statements), no additional fee should be required.
• The audit contract should clarify that the government is free to post its audited financial statements on its Web site.
See the complete text of the new recommended practice, with background information, including citations from the authoritative auditing literature.