Frequently Asked Questions

House Bill 560 (2014 Regular Session) created a new section of Idaho Code, 67-450E. This section of Idaho Code affects local governing entities (LGEs), the Legislative Services Office (LSO), and the State Tax Commission and is intended to improve transparency and compliance with audit requirements contained in Idaho Code section 67-450B and C. 

This legislation requires all LGEs to register through the portal providing administrative and financial information. It also provides for penalties when LGEs are not compliant with the registration requirement or do not submit audit reports in accordance with Idaho Code 67-450B or C.

The introductory paragraph for each section is virtually the same, one focused on primary local governments such as cities, counties, authorities and districts, and one focused on affiliated entities such as commissions and institutions; 

The requirements set forth in this section are minimum audit requirements for all local governmental entities, and include, without limitation, all cities, counties, authorities and districts organized as separate legal and reporting entities under Idaho law, and include the councils, commissions and boards as appointed or elected and charged with fiscal management responsibilities of the local governmental entity.

Those code sections provide the minimum audit requirements for all LGEs based on annual expenditures as follows:

• Entities expending less than $100,000 from all sources in a fiscal year have no audit requirement
• Entities expending more than $100,000, but less than $250,000 from all sources in a single fiscal year are required to have an audit every two years
• Entities expending more than $250,000 from all sources in a single fiscal year are required to have an annual audit

Audit reports are required to be submitted to LSO within 9 months of the close of the fiscal year.

Legislators over the past few sessions had raised concerns to the Legislative Services Office (LSO) and prepared draft legislation to address concerns about the ability to access financial information related to local governments and special districts across the state. However, prior to the 2014 legislative session, nothing had been voted out of committee for a full floor hearing.

Additionally, the Legislative Services Office-Audits Division receives calls from constituents asking for financial statements or audits for a variety of local governing entities and we did not have a good directory of entities or consistent submission of audit reports. The combination of this concern and legislator interest led to the identification of a study report.

January 2014, LSO issued a report on local government financial reporting and compliance with Idaho Code. The objectives of the report were:

• Identify the number of local governing entities in Idaho
• Determine how the entities are monitored, both operationally and financially
• Determine compliance with Idaho Code Section 67-450B

The report contained three findings:

• No budget data is submitted which makes it difficult to determine whether local governments are complying
• No central registry exists, which makes it difficult to determine who should be submitting audit reports
• No enforcement mechanism exists for noncompliance

The report’s recommendations were:

• Amend the statute to include a notification and enforcement process for noncompliance
• Establish a central registry to provide a comprehensive list of all local governing entities authorized to operate within the State of Idaho
• Require all local governing entities to submit an approved budget

The resulting legislation passed and was signed into law March 26, 2014. House Bill 560 passed by the 2014 Legislature to address the findings in the special report. Support for the bill was unanimous, passing the House 68-0 with 2 absent and the Senate 35-0 with one absent. It was then signed by the Governor on March 26, 2014, with an effective date of January 1, 2015.

All LGEs are required to register with the portal. The following are important dates for compliance with this requirement:

• January 1, 2015 – The Legislative Services Office (LSO) must have the registry portal operational.
• March 1, 2015 – Every existing local governing entity must complete the initial registration via the portal.
• September 1 – Every year on or before this date, the LSO must notify the appropriate board of county commissioners and the Idaho State Tax Commission of any local governing entities that have failed to comply with Section 67-450E.
• December 1 – Every year on or before this date, local governing entities must update registration information, the State Tax Commission must submit a list to LSO of all taxing districts within the state, and the county clerk of each county must submit a list to LSO of all taxing districts and all other local governing entities in the county.

• Every existing local governing entity must register using the registry portal. 
  • This initial submission of information must be completed by March 1, 2015. 
  • After the initial registration, every year on or before December 1 entities must update the registration information.
• The information that must be provided is in three categories:
  • Administrative
  • Documents to Submit (approved budgets, audits, unaudited financial statements)
  • Financial

This table (PDF) contains the requirements of Idaho Code Section 67-450E and an explanation of the acceptable types of information for each requirement.

After the initial registration deadline of March 1, 2015, entities will have some flexibility to select a date that most easily accommodates the entities’ workloads to comply with the requirement to update information reported on the portal every year on or before December 1. 

Uploading on the Deadline

Here is an example for an entity with a fiscal year-end of September 30, 2015, who completes their annual audit on June 15, 2016, including a timeline for submitting information to the portal that would satisfy the requirements:

• September 30, 2015: Fiscal year ends
• December 1, 2015: This is the deadline for updating registry information. The following information should be available:
  • Any changes to the administrative information of the entity.
  • The most recently adopted budget should be for the fiscal year ending September 30, 2016.
  • An unaudited budget to actual comparison should be available for the fiscal year ended September 30, 2015.
  • The amount of bonds and other debt outstanding, the average length of terms, and the average interest rate of all debt obligations should be available from the audited financial statements for the fiscal year ended September 30, 2014.
• June 15, 2016: The audit of fiscal year 2015 is completed and can be uploaded to the portal.
• September 30, 2016: The fiscal year ends and the cycle begins again.

Uploading Before the Deadline

Reporting does not have to be on December 1 each year. The requirements state that the information must be updated on or before December 1 each year, which allows local governing entities to update their information on a schedule that is convenient for them.

Many local governing entities may find it most convenient to update the portal information once per year when they upload their audit reports. Using the same information as in the previous example, a local governing entity may choose a different timeline that would also satisfy the requirements:

• September 30, 2015: Fiscal year ends.
• December 1, 2015: The deadline for updating registry information. If your initial registry information has been entered by March 1, 2015, and the information is still accurate, then your 2015 reporting requirements have been satisfied.
• June 15, 2016: The audit of fiscal year 2015 is completed and can be uploaded to the portal. The following information should also be available for reporting to meet the December 1, 2016 reporting requirement:
  • Any changes to the administrative information of the entity.
  • The most recent adopted budget for the fiscal year ending September 30, 2016.
  • The most recent fiscal year end is September 30, 2015, and the audit report should contain audited budget to actual amounts. The requirements are for unaudited amounts, but many entities may be more comfortable reporting audited amounts which also satisfy the requirements.
  • The amount of bonds and other debt outstanding, the average length of terms, and the average interest rate of all debt obligations should be available from the audited financial statements for the fiscal year ended September 30, 2015.
• September 30, 2016: The fiscal year ends and the cycle begins again.

Counties must comply with the registry requirements of Idaho Code Section 67-450E just like all other local governing entities, but they also will be affected in different ways.

Notification by County Clerks

County Clerks must notify all local governing entities within their boundaries of the requirements of Idaho Code Section 67-450E. On or before December 1 of each year the county clerk of each county shall submit a list to the LSO of all local governing entities in the county that are authorized to impose fees, assessments, or taxes, or that receive property tax money. This list will be compared to the registry information submitted by entities to identify and notify entities that may not have registered.

Requesting Assistance

Local governing entities may request assistance from the county to comply with the provisions of this section, but the county is under no obligation to provide assistance. If the county chooses to provide assistance to the local governing entity, the county may charge the local governing entity all reasonable fees, costs, and other expenses incurred in providing this assistance. Reasonable fees and costs include, but are not limited to, labor, material, and copying costs. These fees and costs may be deducted from any distributions of taxes, fees, or assessments collected by the county on behalf of the local governing entity.

Notification of Missed Deadlines

The Legislative Services Office must notify entities immediately after a due date has passed (both for the registration requirements and the audit submission requirements) if required submissions have not been received or if the information submitted is noncompliant. The local governing entity then has 30 days to submit the information or notify LSO of the time when they will be able to comply.

Notification of Board of County Commissioners for Noncompliance

By no later than September 1 of any year, the Legislative Services Office must notify the appropriate board of county commissioners and the Idaho State Tax Commission of an entity's failure to comply with these requirements. 

The board of county commissioners must then place a public notice in a newspaper of general circulation in the county indicating that the entity is noncompliant with the legal reporting requirements of this section. The county commissioners shall assess to the entity the cost of the notice, and the cost may be deducted from any distributions of taxes, fees or assessments collected by the county on behalf of the local governing entity. 

The Legislative Services Office shall notify the board of county commissioners and the Idaho State Tax Commission of the compliance status of each entity by September 1 of each year until the entity is in compliance.

For entities that fail to comply, the following enforcement procedures are in place:

• Prohibition from any budget increase otherwise provided by either subsection (1)(a) or (e) of section 63-802, Idaho Code.
• The Idaho State Tax Commission shall withhold the annual sales tax distribution pursuant to section 63-3638(10), Idaho Code. The amount of the distribution shall be retained in a reserve account until the Legislative Services Office certifies to the Idaho State Tax Commission that the entity has complied, and then the distribution shall be paid.
• If the entity is a non-taxing district, the board of county commissioners shall convene to determine appropriate compliance measures which may include, but are not limited to:
  • Require a meeting of the board of county commissioners and the entity's governing body wherein the board of county commissioners shall require compliance of this section by the entity.
  • Assess a noncompliance fee on the noncomplying entity, not to exceed $5,000. The fee may be deducted from any taxes, fees, or assessments collected by the county on behalf of the local governing entity, and the local governing entity may not pass on the amount of the fee to the persons within the jurisdiction of the entity in the form of adjustments to fees or assessments.
  • Cause a special audit to be conducted on the entity at the expense of the entity.

Here is a list of documents and information that will be needed to complete the registration process. Find a more detailed explanation of these items.

• Board member information - appointed or elected members, term as a member (2 year, 4 year, etc.)
• Budget to actual information for revenues and expenditures. This information can come from financial reports utilized in board meetings, preliminary budget to actual financial statements used in the audit report, or the most recent audit report itself
• Entity contact - email and physical addresses
• Entity establishing information such as authorizing or operating statutes, oversight entity (such as transportation authorities are authorized by the Idaho Transportation Department)
• Most recently approved budget. Usually forward looking, state budgets are “approved” in March for the following fiscal year that will be completed in about 15 months
• Most recently completed audit