KRS 43.073: Annual audit of school district entity by Auditor or private accountant --

Expenses -- Review of private audit by Auditor.

(1) The Auditor of Public Accounts shall be responsible for an annual audit of the

funds contained in each school district cooper ative, school district consortium,

school district corporation, and any other entity formed by school districts in an

agreement made pursuant to KRS 65.210 to 65.300, with the cost of the audit to be

borne by the audited entity.

(2) A school district cooperative, school district consortium, school district corporation,

or other entity formed by school districts in an agreement made pursuant to KRS

65.210 to 65.300 may employ a certified public accountant to audit the books,

accounts, and papers of the coope rative, consortium, corporation, or other entity in

lieu of the audit required by subsection (1) of this section, if the Auditor of Public

Accounts declines in writing to assume responsibility for performing the audit or

fails to respond in writing within thirty (30) days of receiving the cooperative's,

consortium's, corporation's, or other entity's written notice of its intent to employ a

certified public accountant to conduct the audit. The cooperative, consortium,

corporation, or other entity shall not e nter into any contract with a certified public

accountant for an audit unless the Auditor of Public Accounts has declined in

writing to assume responsibility for performing the audit or has failed to respond

within thirty (30) days of receipt of a written request for an audit.

(3) (a) Any contract with a certified public accountant entered into as a result of the

Auditor of Public Accounts either declining to assume responsibility of

performing the audit or failing to respond within thirty (30) days of rece ipt of

a written request for an audit shall specify the following:

1. That the certified public accountant shall forward a copy of the audit

report and management letters to the Auditor of Public Accounts for

review;

2. That the Auditor of Public Accounts shall have the right to review the

certified public accountant's work papers before and after the release of

the audit; and

3. That after review of the certified public accountant's work papers, if

discrepancies are found, the Auditor of Public Accounts sh all notify the

audited entity of the discrepancies. If the certified public accountant

does not correct these discrepancies prior to the release of the audit, the

Auditor of Public Accounts may conduct its own audit to verify the

findings of the certified public accountant's report.

(b) If an audit verifying the findings of the certified public accountant's report is

conducted by the Auditor of Public Accounts, the total audit expense incurred

by the audited entity shall be an allowable expenditure and shall be paid by the

audited entity to the Auditor of Public Accounts. If the audit conducted by the

Auditor of Public Accounts discloses discrepancies in the audit by the

certified public accountant, the findings of the Auditor of Public Accounts

shall be deemed official for all purposes.