The purpose of COA is to encourage and assist state and local governments to go beyond the minimum requirements of generally accepted accounting principles to prepare annual comprehensive financial reports (ACFRs) that evidence the spirit of transparency and full disclosure, and then to recognize individual governments that succeed in achieving that goal.
For financial reporting to be effective, the information in the reports must be: understandable, reliable, relevant, timely, consistent, and comparable. (1) The COA program requirements incorporate each of these characteristics. The characteristic of timeliness is incorporated by requiring submission of applications and annual comprehensive financial reports (ACFRs) within six months of the end of the fiscal year covered by the ACFR.
Our policy has been that governments could apply for an extension of one month under extenuating circumstances, which would be awarded by staff based on the explanation provided. In certain cases, governments were permitted additional one-month extensions, up to a total of six extensions for a single year, if circumstanced warranted. With the extenuating circumstances caused by the COVID-19 pandemic, however, we unofficially increased the maximum to 12 one-month extensions, meaning that with a COVID-19-related justification, a government could be eligible to win the award for an ACFR issued up to 18 months after the end of the subject fiscal year.
While we are highly sympathetic to the many governments that continue to struggle with staff turnover and shortages, or that have had their audits delayed by CPA firms or government audit offices suffering from similar issues, we believe it is time to reaffirm the importance of timeliness in financial reporting. Therefore we are formalizing our timely submission policy as follows.
Effective for submissions of applications for ACFRs for fiscal years ending on or after December 31, 2022, the following policy will be uniformly enforced:
1. The deadline for submission to the COA is six calendar months after the end of the fiscal year for which the ACFR is prepared.
Extensions for hardships and failures to submit a timely application:
2. Governments that experience what they identify as severe nonrecurring hardships may apply to the COA program staff for an extension, as follows:
a. Each extension application will be evaluated by GFOA staff and may be granted or rejected based on the facts and circumstances of the hardship(s) described by the applicant. Criteria that will be used by staff in granting or denying extensions may include, but are not limited to the following:
- The extent to which the cause of the delay was outside of the control of the government,
- The extent to which the cause of the delay was reasonably foreseeable by the government,
- The frequency of extensions granted to this government in recent prior years, if any, and
- The number of extensions previously issued for the same fiscal year, if any.
b. Staff may not grant more than a total of six, one-month extensions to a government for the same fiscal year’s application (i.e., the final extension period sought may end up to maximum of six calendar months beyond the program’s usual submission deadline, which would be up to one year after the end of the fiscal year covered by the ACFR).
c. Staff may not grant extensions to a government for the same hardship(s) for consecutive years.
3. If a government can demonstrate that their eligible ACFR was made publicly available within six months after FYE, but that they simply failed to make a timely submission of their COA application, they may apply for an extension following the same guidelines as for governments that experience hardships, as put forth in item 2, above.
4. Governments may appeal to the COA Special Review Executive Committee (SREC) for extensions if:
a. COA staff denies hardship extension(s), as described in item 2 above for periods within the six-month limit, based on the staff’s evaluation of the facts and circumstances of the hardship(s) described by the applicant, or
b. The government experiences extraordinary circumstances that they believe outweigh the negative effects of delay on the essential characteristic of timeliness of financial reporting and therefore seek (i) extensions totaling more than six months for a single year for hardship(s), or (ii) any extension for the same hardship(s) in consecutive years.
(1) The Governmental Accounting Standards Board Concepts Statement No. 1, Objectives of Financial Reporting.