{"data":{"id":"us-ky/krs-65a.032","jurisdiction":"us-ky","citation":"KRS 65A.032","heading":"Agreed -upon procedures engagement alternative to audit -- Conditions --","body":"Written certification -- Requirements -- Contract.  (Effective July 1, 2027)\n(1) Effective for fiscal years beginning on or after July 1, 2027, a special purpose\ngovernmental entity required to complete an audit pursuant to KRS 65A.030 may\nelect, subject to disapproval by the DLG as provided in subsection (3) of this\nsection, to instead have an agreed -upon procedures engagement with either the\nAuditor of Public Accounts or a c ertified public accountant in accordance with this\nsection.\n(2) In order for a special purpose governmental entity to proceed with an agreed -upon\nprocedures engagement under this section for a particular fiscal year, the following\nconditions shall be met:\n(a) The special purpose governmental entity shall have complied with any of the\nrequirements applicable to it under KRS 65A.030 or this section in the\nimmediately preceding fiscal year;\n(b) The special purpose governmental entity has not been subject to a special\nexamination by the Auditor of Public Accounts during the immediately\npreceding fiscal year or during the fiscal year to be reviewed under agreed -\nupon procedures;\n(c) For the fiscal year subject to an agreed -upon procedures engagement, the\nspecial p urpose governmental entity has received and expended, from all\nsources and for all purposes, less than fifteen million dollars ($15,000,000);\n(d) The DLG does not object to the special purpose governmental entity's election\nto use an agreed -upon procedures  engagement under subsection (3) of this\nsection; and\n(e) The special purpose governmental entity is not required by any other\nprovision of state or federal law to perform an audit or examination more\nstringently than is required by this section.\n(3) (a) In order to elect to use the alternative procedures provided by this section, a\nspecial purpose governmental entity shall complete a written certification sent\nto the DLG within thirty (30) days following the conclusion of the special\npurpose governmental entity's fiscal year.\n(b) The written certification shall affirm that  the special purpose governmental\nentity meets the qualifications of subsection (2)(a) to (e) of this section.\n(c) Within thirty (30) days following the receipt of the written certification, the\nDLG may for any reason in its discretion object to the use of  the agreed-upon\nprocedures engagement by notifying the special purpose governmental entity\nin writing the details of the objection.\n(d) A special purpose governmental entity that receives a written objection from\nthe DLG shall be disqualified from using t he agreed -upon procedures\nengagement for that fiscal year.\n(e) If the DLG does not provide a written objection to the special purpose\ngovernmental entity within thirty (30) days, then the special purpose\ngovernmental entity may proceed under this section.\n(4) An agreed -upon procedures engagement entered into by a special purpose\ngovernmental entity under this section shall be conducted and governed under the\nAmerican Institute of Certified Public Accountants professional standards, and any\nadditional stand ards and requirements established by the Auditor of Public\nAccounts through the promulgation of administrative regulations in accordance\nwith KRS Chapter 13A. At a minimum, any agreed -upon procedures engagement\nshall be required to examine and report on th e following matters of the special\npurpose governmental entity:\n(a) Reconciliation of cash, including the recalculation of year -end bank\nreconciliations, confirmation of beginning and ending balances, and\nverification that reconciled bank balances agree to  fund cash balances in the\naccounting system and financial statement;\n(b) Confirmation of cash balances directly with any external financial institutions;\n(c) Fund balances and transfers;\n(d) Inspection of investment holdings for compliance with applicable  state law\nand any policies adopted by the special purpose governmental entity;\n(e) A statement of receipts and disbursements, including payroll disbursements;\n(f) Identification of outstanding debt to include confirmation of beginning and\nending balances, any new debt issuance or payments, amortization schedules,\nand compliance with debt terms; and\n(g) Verification that total expenditures do not exceed appropriations.\n(5) An agreed -upon procedures engagement performed under this section shall be\ncompleted no later than twelve (12) months immediately following the conclusion\nof the fiscal year being examined. A copy of the agreed -upon procedures report\nshall be forwarded to the DLG in accordance with KRS 65A.030(2)(c)1.\n(6) Any special purpose governmental e ntity proceeding under this section to perform\nan agreed-upon procedures engagement in lieu of an audit shall enter into a contract\nwith the Auditor of Public Accounts or a certified public accountant. The contract\nshall set out all terms and conditions of  the agreement which shall include but not\nbe limited to requirements that:\n(a) The Auditor of Public Accounts completes an agreed -upon procedures report\nin compliance with subsection (4) of this section; and\n(b) The certified public accountant completing an agreed -upon procedures\nengagement under this section allows the Auditor of Public Accounts to\nreview the certified public accountant's work papers upon request.\n(7) An agreed-upon procedures report completed under this section shall be deemed to\nsatisfy any state law or administrative regulation that requires the submission or\ncompletion of an audit.\n(8) A special purpose governmental entity shall forward a copy of any agreed -upon\nprocedures report completed under this section to the Auditor of Public Ac counts\nupon request from that office.","path":["KRS Chapter 65A"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=58318","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:49:23Z","sha256":"ed05818bf7a703262e636d51586d38809f109df01e11d6ed6db11f98e8a2b9fb","source_id":"us-ky","stale":false,"prev":"us-ky/krs-65a.030","next":"us-ky/krs-65a.040"},"notice":"GroundRules: Original legal text. Not legal advice."}