A bill supported by NCACPA to hold local governments accountable for timely completion of annual audits is on its way to Governor Roy Cooper’s desk.
The House of Representatives voted 84-30 on June 7 to concur in SB 299, Reimburse Late Audit Costs with Sales Tax Revenue. The Senate voted 43-0 to approve the bill in late April.
Current law requires cities, towns, and counties to have their accounts audited by a CPA as soon as possible after the close of the fiscal year. Each local government unit is supposed to file a copy of its annual audit report with the Local Government Commission by October 31.
Audit reports for several of the state’s smaller counties and cities have been late due to deficiencies in the financial records provided to external auditors, and some local government units have ignored the audit requirement altogether. More than three dozen cities, counties, and local sewer districts on the state’s Unit Asssistance List are currently late on one or more annual audits.
SB 299 authorizes the Local Government Commission to withhold a portion of sales tax distributions from cities and counties that fail to file their audit report within one year of the fiscal year end. The withheld amount would be 150% of the cost of the audit, and the funds could be used to ensure that auditors are compensated for their work. The bill includes an appeal process for local governments.
The House passed its own version of the bill, HB 122, earlier this year. NCACPA joined State Auditor Beth Wood and Deputy Treasurer Sharon Edmundson in testifying in support of the measure before the House Committee on Local Government in March.
NCACPA has also supported a provision in HB 799 that would appropriate $3.52 million each year to the NC Association of Regional Council of Governments to provide financial administration help to local governments on the Unit Assistance List and others that struggle with getting their financial records ready for audit.
If you have questions about this issue or other policy matters, please contact NCACPA Director of Advocacy Robert Broome, CAE.