The Financial Audit Report (Section 218.39, Florida Statutes)

  • Covers the results of a financial audit;
  • Examines financial statements in order to assess whether they are fairly presented in conformity with generally accepted accounting principles;
  • Examines whether operations are properly conducted in accordance with legal and regulatory requirements; and
  • Must be filed with:
    • The Florida Auditor General; and
    • The Florida Department of Financial Services.

Be careful not to confuse the Financial Audit Report with the Annual Financial Report (see The Annual Financial Report). These are two separate reports with two different filing requirements.

Special Districts That Must Provide for a Section 218.39, Florida Statutes, Financial Audit

  • All special districts with revenues or combined expenditures and expenses exceeding $100,000;
  • All special districts whose revenues or combined expenditures and expenses fall between $50,000 and $100,000 and have not had a financial audit for the previous two fiscal years; and
  • All housing authorities in accordance with federal audit requirements. Housing authorities are exempt from the state requirement to file a Financial Audit Report with the Florida Auditor General and the Florida Department of Financial Services.

Anytime, or at the direction of the Joint Legislative Auditing Committee, the Florida Auditor General may perform audits of any governmental entity in Florida, including any special district.

In addition, the Joint Legislative Auditing Committee may investigate any matter within the scope of an audit conducted by the Florida Auditor General and use its powers of subpoena.

Special Districts Must Cooperate with Counties and Municipalities

Counties and municipalities must also comply with the section 218.39, Florida Statutes, audit requirement. As they prepare their financial audit, they may need financial information from special districts located solely within their boundaries. Therefore, special districts must cooperate with any such request and provide financial information as requested by the county and / or municipality.

Special Procedures for Dependent Special Districts that are Component Units of a County or Municipality

Most dependent special districts that are component units of a county or municipality may provide for the required financial audit by being included in the audit of that county or municipality (for community redevelopment agencies, see Special Procedures for Community Redevelopment Agencies that are Component Units of a County or Municipality). "Component Unit" is defined in:

Questions concerning whether a special district is a component unit must be directed to the special district's certified public accountant or the appropriate municipality or county. The audit report must clearly state that the special district is a component unit and the special district must be included within the financial statements of the county or municipality.

Special Procedures for Community Redevelopment Agencies that are Component Units of a County or Municipality

Pursuant to section 163.387(8), Florida Statutes, as amended by section 8 of Chapter 2019-163, Laws of Florida, effective for audits for fiscal years beginning October 1, 2019, and thereafter, each community redevelopment agency (CRA) with revenues or a total of expenditures and expenses in excess of $100,000 must provide for their own separate financial audit. Such audits must include a finding by the auditor as to whether the CRA complied with sections 163.387(6) and (7), Florida Statutes. Pursuant to section 163.387(8)(c), Florida Statutes, the CRA financial audit report must accompany the annual financial report submitted to the Department of Financial Services by the county or municipality. Section 163.387(8), Florida Statutes, requires that CRA financial audits be conducted In accordance with the Rules of the Auditor General.

The CRA financial audit is to be separate from the financial audit of the county or municipality that created the CRA, which include within their reporting entities the CRA as a component unit. The separate CRA financial audit report must include the financial statements required by section 163.387(8)(b)2., Florida Statutes. Pursuant to Florida Auditor General Rule 10.557(3), the CRA financial audit report must include basic financial statements, notes to the financial statements, and management’s discussion and analysis and other required supplementary information. CRA Stand-Alone Finance Statements Guidance is available on the Florida Auditor General website.

Procedures to Follow When a Section 218.39, Florida Statutes Audit is Required

  1. Create an auditor selection committee (see section 218.391, Florida Statutes - Auditor selection procedures).
  2. Define auditor selection procedures.
  3. Select an auditor that is an independent certified public accountant licensed pursuant to Chapter 473, Florida Statutes - Public Accountancy.
  4. Arrange for a financial audit to occur shortly after the beginning of the new fiscal year (usually October 1).
  5. Ensure that the Financial Audit Report:
    • Is prepared in accordance with the Rules of the Auditor General and contains all the required information in Rule 10.557;
    • Is a single document; and
    • Includes a statement that indicates whether the special district met any financial emergency conditions.

Auditor Selection and Auditor Selection Committee Guidance is available on the Florida Auditor General website. Section 218.391, Florida Statutes, applies only to audits required by section 218.39, Florida Statutes. Section 163.387(8), Florida Statutes, does not specify how the CRA is to select an auditor to conduct a financial audit required by that law. For guidance on selecting an auditor to conduct a CRA financial audit required by the section 163.387(8), Florida Statutes, see Appendix B, questions 17 and 18, of the Auditor Selection and Auditor Selection Committee Guidance.

Deadline for Submitting the Financial Audit Report

Whichever date is the earliest:

  • Within 45 days after the auditor delivers the completed audit report to the special district's governing body; or
  • Nine months after the end of the special district's fiscal year (the due date is each June 30 for most special districts).

How to File the Financial Audit Report

  1. Mail one paper copy to the Florida Auditor General (for the address, see the “Local Governmental Entity Audit Report Submittal Checklist” available on the Florida Auditor General website at Florida Auditor General - Technical Guidance - Local Governments.
  2. Email one electronic copy to the Florida Auditor General (for instructions, see Instructions for Local Governmental Entity Audit Reports Electronically Submitted to the Auditor General).
  3. Complete and mail or email the “Local Governmental Entity Audit Report Submittal Checklist”.
  4. Email one electronic copy to the Florida Department of Financial Services at localgov@myfloridacfo.com when filing the Annual Financial Report online (see The Annual Financial Report).
  5. Give one copy to each member of the special district's governing body.
  6. The special district must post on its official website the final complete audit report for the most recent completed fiscal year and any audit reports required by law or authorized by the governing body of the special district. If the special district has filed this audit report with the Florida Auditor General, the special district may provide a link to the audit report on the Florida Auditor General's website as opposed to posting the audit report on its own website. To find the direct link to the special district's audit report, visit Florida Auditor General - Financial Audit Reports Submitted by Special Districts

The Auditor General's Review

The Auditor General reviews all audit reports submitted by special districts to identify:

  • Financial trends
  • Significant findings
  • Whether the special district met one or more of the financial emergency conditions specified in section 218.503(1), Florida Statutes. If conditions are met, the Florida Auditor General will notify the Joint Legislative Auditing Committee and the Governor's office. If state assistance is needed, the special district is considered to be in a state of financial emergency (see also Financial Emergencies).

The Florida Auditor General's Reports

The Florida Auditor General prepares a report for the legislature that summarizes the results of audit reviews. In addition, the Florida Auditor General prepares a report to the Joint Legislative Auditing Committee that indicates if a special district has failed to take full corrective action in response to a recommendation that was included in the two preceding financial audit reports. The committee may direct the special district to provide a written statement to the committee:

  • Explaining why full corrective action has not been taken; or
  • Describing the corrective action the special district intends to take and when it will occur.

If the committee determines that the written statement is not sufficient, it may require the special district to appear before the committee.

Failure to Comply with the Section 218.39, Florida Statutes, Financial Audit Report Requirement

For information about what will happen when a special district does not comply with the section 218.39, Florida Statutes, Financial Audit Report requirement, see Noncompliance Status Reports and Follow-up Action. Section 163.387(8), Florida Statutes, does not specify what action is to be taken for CRAs that fail to provide for the financial audit required by that law.

Contact Someone Who Can Answer Questions About the Financial Audit Report

Additional Information - Florida Auditor General Contact

Special District Investment Requirements

Special district investment activities must be consistent with one of the following:

  1. A written investment plan containing sixteen specified criteria and adopted by the special district's governing body; or
  2. Invested or reinvested in one of the following:
    • The Local Government Surplus Funds Trust Fund (see Investment of Surplus Funds Option) or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act of 1969.
    • Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency.
    • Interest-bearing time deposits or savings accounts in qualified public depositories.
    • Direct obligations of the U.S. Treasury.

For more information, see section 218.415, Florida Statutes - Local government investment policies.

Failure to Comply with Special District Investment Requirements

For information about what will happen when a special district that was reported to be in noncompliance with section 218.415, Florida Statutes, fails to take corrective action, see Noncompliance Status Reports and Follow-up Action (Joint Legislative Auditing Committee section and Technical Assistance section).

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