Fiscal Note
Fiscal Services Division
SF 2311 – Audits of State Entities, Alternative Auditors (LSB6020XS)
Staff Contact: Joey Lovan (515.242.5925) joey.lovan@legis.iowa.gov
Fiscal Note Version – New
Description
Senate File 2311 allows a department currently subject to audit by the Auditor of State (AOS) to
fulfill the requirements of Iowa Code section 11.2 by employing a Certified Public Accountant
(CPA), subject to the approval of the Executive Council, and submitting the audit to the AOS.
Payment for the services of the CPA is required to be approved by the Executive Council
pursuant to Iowa Code section 11.32 and paid from the funds from which the AOS would have
been paid had the AOS performed the audit. If such funds are not available, the Executive
Council may authorize that the expense be paid as described in Iowa Code section 7D.29.
Background
Iowa Code section 11.2 requires the AOS to annually, or more often if deemed necessary, audit
the State and all State officers and departments receiving or expending State funds. Currently,
the AOS may, with prior written permission from the Executive Council, employ CPAs to perform
the required audits. The AOS receives a General Fund appropriation to complete the audits of
certain State agencies and receives payment from the agencies listed in Iowa Code section
11.5B for the reimbursement for the costs of the audit.
Over the last three years, the AOS has averaged approximately 65,000 hours of auditing the
State and State departments at a rate of $85 per hour, for an average cost of $5.3 million per
year.
Based on data obtained from audit reports filed with the AOS by private firms, CPA firm billing
rates for the periodic examination of small cities range from $95 per hour to $183 per hour.
Other audits of State entities performed by outside CPA firms have cost as much as $260 per
hour.
Assumptions
• CPA firms may charge hourly rates that differ from the rate currently charged by the AOS.
However, the average hourly rate that may be charged to a State agency that hires an
outside CPA and audit firm cannot be determined.
• State agencies may hire outside CPA and audit firms, but the number of State agencies that
will pursue these audits and whether the Executive Council will approve the requests cannot
be determined.
Fiscal Impact
The fiscal impact of SF 2311 may increase audit expenses for State agencies and decrease
revenue to the AOS, but the extent of the impact cannot be calculated since it is unknown how
many State agencies may choose to hire CPA firms rather than using the AOS’s services.
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Source
Auditor of State
/s/ Jennifer Acton
February 19, 2024
Doc ID 1446805
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
www.legis.iowa.gov
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Statutes affected:
Introduced: 11.2, 11.32