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Regular Session, 2012
SENATE BILL NO. 514
BY SENATOR MARTINY
ECONOMIC DEVELOP DEPT. Provides relative to an audit of the motion picture investor
tax credit program. (8/1/12)
AN ACT1
To amend and reenact R.S. 47:6007(B)(10) through (13), (D)(2)(d) and (7) and to enact R.S.2
47:6007(B)(14) through (16) and 6007.1, relative to the motion picture investor tax3
credit; to provide for definitions; to provide for an audit; to provide for duties of a4
qualified accountant; to provide for a qualified cost report; to provide for certain5
terms, conditions, and procedures; and to provide for related matters.6
Be it enacted by the Legislature of Louisiana:7
Section 1. R.S. 47:6007(B)(10) through (13), (D)(2)(d) and (7) are hereby amended8
and reenacted and R.S. 47:6007(B)(14) through (16) and 6007.1 are hereby enacted to read9
as follows: 10
§6007. Motion picture investor tax credit11
* * *12
B. Definitions. For the purposes of this Section:13
* * *14
(10) "Qualified accountant" means an independent certified public15
accountant licensed in the state who has sufficient knowledge of accounting16
principles and practices generally recognized in the film and television industry17 SB NO. 514
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and who has been approved by the office as having met such criteria.1
(11) "Qualified cost report" means a report of production expenditures2
that is subject to an agreed upon procedures engagement conducted by a3
certified public accountant in accordance with Statement on Standards for4
Attestation Engagements established by the American Institute of Certified5
Public Accountants.6
(10) (12) "Resident" or "resident of Louisiana" means a natural person7
domiciled in the state. A person who maintains a permanent place of abode within8
the state and spends in the aggregate more than six months of each year within the9
state shall be presumed to be domiciled in the state.10
(11) (13) "Secretary" means the secretary of the Department of Economic11
Development.12
(12) (14) "Source within the state" means a physical facility in Louisiana,13
operating with posted business hours and employing at least one full-time equivalent14
employee.15
(13) (15) "State" means the state of Louisiana.16
(14) (16) "State-certified production" shall mean a production approved by17
the office and the secretary which is produced by a motion picture production18
company domiciled and headquartered in Louisiana and which has a viable multi-19
market commercial distribution plan.20
* * *21
D. Certification and administration.22
* * *23
(2)(a) * * *24
(d) Prior to any final certification of the state-certified production, the motion25
picture production company shall submit to the office and the secretary an audit of26
the production expenditures certified by an independent certified public accountant27
as determined by rule a qualified cost report. The office and the secretary shall28
review the audit qualified cost report, the production expense details, and may29 SB NO. 514
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require additional information needed to make a determination. Within sixty days1
of the receipt of a qualified cost report, Upon approval of the audit, the office and2
the secretary shall issue a final tax credit certification letter indicating the amount of3
tax credits certified for the state-certified production to the investors. The rules4
required by this Subparagraph shall, at a minimum, require that:5
(i) The auditor shall be a certified public accountant licensed in the state of6
Louisiana and shall be an independent third party, not related to the producer.7
(ii) The auditor's opinion shall be addressed to the party which has engaged8
the auditor (e.g., directors of the production company, producer of the production).9
(iii) The auditor's name, address, and telephone number shall be evident on10
the report.11
(iv) The auditor's opinion shall be dated as of the completion of the audit12
fieldwork.13
(v) The audit shall be performed in accordance with auditing standards14
generally accepted in the United States of America and the auditor shall have15
sufficient knowledge of accounting principles and practices generally recognized in16
the film and television industry.17
(e) In addition to the requirements of Subparagraph (d) of this Paragraph,18
prior to any final certification of a state-certified production or infrastructure project,19
the motion picture production company or infrastructure project applicant shall20
submit to the office a notarized statement demonstrating conformity with, and21
agreeing to, the following:22
(i) To pay all undisputed legal obligations the film production company has23
incurred in Louisiana.24
(ii) To publish, at completion of principal photography, a notice at least once25
a week for three consecutive weeks in local newspapers in regions where filming has26
taken place in order to notify the public of the need to file creditor claims against the27
film production company by a specified date.28
(iii) That the outstanding obligations are not waived should a creditor fail to29 SB NO. 514
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file by the specified date.1
(iv) To delay filing a claim for the film production tax credit until the office2
delivers written notification to the secretary of the Department of Revenue that the3
film production company has fulfilled all requirements for the credit.4
* * *5
(7) The Department of Economic Development may request an additional6
audit qualified cost report of the expenditures submitted by the motion picture7
production company at the cost of the motion picture production company. The8
motion picture production company, at its cost, may submit an amended9
qualified cost report if additional expenditures are incurred or discovered for10
audit by the office of such report and approval of the additional credits.11
* * *12
§6007.1. Qualified cost report; qualified accountant; qualified auditor13
A. A qualified cost report shall be performed by a qualified accountant14
that is unrelated to the motion picture production company associated with the15
application, be addressed to the party which has engaged the qualified16
accountant, contain a statement of acknowledgment by the qualified accountant17
that the state is relying on the qualified cost report in its issuance of the tax18
credits, be dated as of the completion of the qualified accountant's filed work,19
contain the qualified accountant's name, address, and telephone number, and20
be performed in accordance with the sampling and verification procedures.21
B. The qualified accountant shall perform the following sampling22
procedures and include in the report the following:23
(1) Obtain the cost report of all production expenditures for the24
production of the motion picture production company and verify the25
mathematical accuracy of such report.26
(2) Obtain the bank statements from the motion picture production27
company relevant to the applicable production for the period covered by the28
cost report of production expenditures.29 SB NO. 514
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(3) Obtain the detailed payroll registers applicable to the production1
and include in the report the names, addresses, taxpayer identification number,2
permanent addresses, the amount of compensation, and the employee's state of3
residence.4
(4) Footnote the payroll registers mentioned in Paragraph (3) of this5
Subsection for mathematical accuracy and agree to the total of the cost report6
of production expenditures provided for in Paragraph (1) of this Subsection.7
(5) Obtain the detailed listing of non-payroll expenditures for8
production of the motion picture production company and include in the report9
the payee, date of payment, the date the payment cleared the bank, and the10
amount of the payment.11
(6) Footnote the detailed listing of non-payroll expenditures mentioned12
in Paragraph (5) of this Subsection for mathematical accuracy and agree to the13
total of the cost report of production expenditures mentioned in Paragraph (1)14
of this Subsection.15
C. The Qualified Accountant shall perform the following verification16
procedures:17
(1) From the detailed payroll registers referenced in Paragraph (3) of18
Subsection B of this Section, segregate the gross payroll for all Louisiana19
residents and agree to the total of the Louisiana payroll or salaries indicated on20
either the cost report of production expenditures or the footnotes to the cost21
report of production expenditures.22
(2) From the payroll registers for Louisiana residents, select all23
disbursements to those individuals whose gross salaries during the period in24
question exceeded five percent of the total disbursements indicated on the cost25
report of production expenditures for the production for further testing.26
(3) Excluding those individuals already selected for further testing as27
provided in Paragraph (2) of this Subsection, select an additional sample28
consisting of the lesser of sixty individual payroll disbursements or fifty percent29 SB NO. 514
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of the payroll disbursements not already selected in Paragraph (2) of this1
Subsection from the payroll registers for Louisiana residents as provided for in2
Paragraph (1) of this Subsection, for further testing.3
(4) For each employee selected for testing in Paragraphs (2) and (3) of4
this Subsection, perform the following, detailing any exceptions noted:5
(a) If the employee is a salaried employee, verify that the gross salary for6
the selected disbursement is supported by and agrees to an employment7
contract or other form of approved pay documentation.8
(b) If the employee is an hourly employee, verify that the hourly wage9
rate for the selected transaction is supported by and agrees to the approved pay10
rate documentation in the employee's personnel file.11
(c) If the employee is an hourly employee, verify that the hours paid for12
the selected transaction is supported by approved timesheets.13
(d) Verify that the disbursement of such funds is a qualifying14
expenditure given the operations of the motion picture production company.15
(e) Verify that the payroll expenditures were actually made by the16
motion picture production company as evidenced by deductions in the bank17
account statements maintained by the motion picture production company and18
that the disbursement cleared the bank during the period in question.19
(f) Review the employee's personnel file, verifying that the individual is20
a resident of Louisiana as provided for in R.S. 47:6022.21
(5) From the detailed payroll registers referenced in Paragraph (3) of22
Subsection B of this Section, segregate the gross payroll for all non-Louisiana23
residents and agree the total to the non-Louisiana payroll indicated on either24
the cost report of production expenditures or the footnotes to the cost report of25
production expenditures.26
(6) From the payroll registers for non-Louisiana residents, select all27
disbursements to those individuals whose gross salaries during the period in28
question exceeded five percent of the total disbursements indicated on the cost29 SB NO. 514
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report of production expenditures for the period in question as provided for in1
Paragraph (1) of Subsection B of this Section for further testing.2
(7) Excluding those individuals already selected for further testing in3
Paragraph (6) of this Subsection, select an additional sample consisting of the4
lesser of sixty individual payroll disbursements or fifty percent of the payroll5
disbursements not already selected in Paragraph (6) of this Subsection from the6
payroll registers for non-Louisiana residents as provided in Paragraph (5) of7
this Subsection, for further testing.8
(8) For each employee selected for testing as provided in Paragraphs (6)9
and (7) of this Subsection, perform the following procedures, detailing any10
exceptions noted:11
(a) If the employee is a salaried employee, verify that the gross salary for12
the selected disbursement is supported by and agrees to an employment13
contract or other form of approved pay documentation.14
(b) If the employee is an hourly employee, verify that the hourly wage15
rate for the selected transaction is supported by and agrees to the approved pay16
rate documentation in the employee's personnel file.17
(c) If the employee is an hourly employee, verify that hours paid for the18
selected transaction is supported by approved timesheets.19
(d) Verify that the disbursement of such funds is a qualifying20
expenditure given the operations of the motion picture production company.21
(e) Verify that the payroll expenditures were actually made by the22
motion picture production company as evidenced by deductions in the bank23
account statements maintained by the motion picture production company and24
that the disbursement cleared the bank during the period in question.25
(9) From the detailed listing of non-payroll expenditures referenced in26
Paragraph (5) of Subsection B of this Section, select all disbursements for a27
particular contract of purchase that exceeded five percent of the total28
disbursements indicated on the cost report of production expenditures for the29 SB NO. 514
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period in question for further testing.1
(10) Excluding those expenditures already selected for further testing2
in Paragraph (9) of this Subsection, select an additional sample consisting of the3
lesser of sixty individual disbursements or fifty percent of the non-payroll4
disbursements not already selected in Paragraph (9) of this Subsection from the5
detailed listing of non-payroll expenditures, for further testing.6
(11) For each disbursement selected for testing in Paragraphs (9) and7
(10) of this Subsection, perform the following procedures, detailing any8
exceptions noted:9
(a) Verify that the transaction is supported by an original invoice or10
receipt and that the amounts are in agreement.11
(b) Verify that the expense category to which the disbursement was12
coded appears reasonable based on the invoice documentation.13
(c) Verify that the disbursement of such funds is a qualifying14
expenditure given the operations of the motion picture production company.15
(d) Verify that the expenditures were actually made by the motion16
picture production company as evidenced by deductions in the bank account17
statements maintained by the motion picture production company and that the18
disbursement cleared the bank during the period in question.19
C. Before submission of the qualified cost report, the qualified auditor20
shall perform the following:21
(1) Redact all but the last four digits of any employee's social security22
number.23
(2) Separate expenditures by calendar year, as well as the aggregate24
project totals.25
(3) Submit detailed list of all expenditures.26 SB NO. 514
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The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Michelle Ducharme.
DIGEST
Present law provides relative to the motion picture investor tax credit.
Present law provides for definitions.
Proposed law retains present law definitions and adds the following:
1. "Qualified accountant" means an independent certified public accountant licensed
in the state who has sufficient knowledge of accounting principles and practices
generally recognized in the film and television industry and who has been approved
by the office as having met such criteria.
2."Qualified cost report" means a report of production expenditures that is subject to
an agreed upon procedures engagement conducted by a certified public accountant
in accordance with Statement on Standards for Attestation Engagements established
by the American Institute of Certified Public Accountants.
Proposed law provides that a qualified cost report must be performed by a qualified
accountant that is unrelated to the motion picture production company associated with the
application, be addressed to the party which has engaged the qualified accountant, contain
a statement of acknowledgment by the qualified accountant that the state is relying on the
qualified cost report in its issuance of the tax credits, be dated as of the completion of the
qualified accountant's filed work, contain the qualified accountant's name, address, and
telephone number, and be performed in accordance with the sampling and verification
procedures.
Proposed law requires a qualified accountant to perform sampling and procedures and
provides that such information must be included in the report.
Proposed law requires that the qualified Accountant shall perform the following verification
procedures:
1. From the detailed payroll registers, segregate the gross payroll for all Louisiana
residents and agree to the total of the Louisiana payroll or salaries indicated on either
the cost report of production expenditures or the footnotes to the cost report of
production expenditures.
2. From the payroll registers for Louisiana residents, select all disbursements to those
individuals whose gross salaries during the period in question exceeded five percent
of the total disbursements indicated on the cost report of production expenditures for
the production for further testing.
3. Excluding those individuals already selected for further testing, select an additional
sample consisting of the lesser of 60 individual payroll disbursements or 50% of the
payroll disbursements not already selected from the payroll registers for Louisiana
residents for further testing.
4. For each employee selected for testing perform certain procedures.
5. From the detailed payroll registers, segregate the gross payroll for all non-Louisiana
residents and agree the total to the non-Louisiana payroll indicated on either the cost
report of production expenditures or the footnotes to the cost report of production
expenditures. SB NO. 514
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6. From the payroll registers for non-Louisiana residents, select all disbursements to
those individuals whose gross salaries during the period in question exceeded five
percent of the total disbursements indicated on the cost report of production
expenditures for the period in question for further testing.
7. Excluding those individuals already selected for further testing, select an additional
sample consisting of the lesser of 60 individual payroll disbursements or 50% of the
payroll disbursements not already from the payroll registers for non-Louisiana
residents for further testing.
8. For each employee selected for testing, perform the certain procedures.
9. From the detailed listing of non-payroll expenditures, select all disbursements for a
particular contract of purchase that exceeded five percent of the total disbursements
indicated on the cost report of production expenditures for the period in question for
further testing.
10.Excluding those expenditures already selected for further testing, select an additional
sample consisting of the lesser of 60 individual disbursements or 50% of the
non-payroll disbursements not already from the detailed listing of non-payroll
expenditures, for further testing.
11.For each disbursement selected for testing, perform the following certain procedures.
Proposed law provides that before submission of the qualified cost report, the qualified
auditor shall perform the following:
1. Redact all but the last four digits of any employee's social security number.
2. Separate expenditures by calendar year, as well as the aggregate project totals.
3. Submit detailed list of all expenditures.
Effective August 1, 2012.
(Amends R.S. 47:6007(B)(10)-(13), (D)(2)(d) and (7); adds R.S. 47:6007(B)(14)-(16) and
6007.1)