The Joint Legislative Auditing Committee has released draft guidelines to provide direction to accountants and lobbyists on statutorily mandated random quarterly audits of compensation reports. While these laws have been on the books since 2005, no audits have been conducted to date due to the logistic challenges of finding willing (and conflict-free) auditors, and questions on whether the costs of audits are worth the information attained.
The draft guidelines were released with the purpose of gaining input from the Florida Association of Professional Lobbyists, individual practitioners, the Florida Institute of Certified Public Accountants, and other interested parties.
The guidelines outline which records should be maintained by lobbying firms to document compensation from principals. These include marketing agreements or lobbying contracts, subcontractor agreements, compensation schedules, payment records, reimbursement records and receipts, and allocation records.
For the latter, the Committee suggests that lobbyists maintain documentation to support both the method and any percentages used to determine amounts allocated to lobbying services versus non-lobbying services, executive versus legislative lobbying, and state versus local or federal activities.
“The Committee recognizes that a reasonable, common sense approach is necessary when any allocation is required,” the guidelines state. “Therefore, in calculating such allocated amounts, any reasonable, fact-based method of calculation is acceptable.”
Such records are required to be maintained for at least four years.
For their part, contracted auditors are instructed to compare lobbyist registration records with lobbyist firm records, including a review of all agreements or contracts obtained. Auditors are to discuss any differences or discrepancies with the lobbying firm, and are to document explanations.
Importantly, the guidelines make clear that compensation reports are to exclude fees for non-lobbying services and that there must be no double reporting of compensation on legislative and executive branch quarterly reports. If the firm has not utilized and documented a reasonable allocation method between compensation for legislative versus executive services, the assumption will be that the compensation is equally split between the two.
The Committee’s draft guidelines do not make clear any specific method that will be used to ensure the randomness of audits, however, in his letter accompanying the draft guidelines, committee chairman Joe Abruzzo acknowledges that this and other concerns will likely be addressed during the 2014 session.
He also acknowledges that more far-reaching changes may go down during that time.
“If individual Senators or Representatives wish to file bills to change the law that is certainly their prerogative, but as a Committee we are obligated to carry out our statutory duty to implement the law as it currently exists,” Abruzzo writes.
The Committee has a three-hour meeting block in November and Abruzzo intends to use this time to discuss the draft guidelines, accept public testimony, amend the recommendations, and adopt a set of guidelines.