Local entities follow audit and financial-reporting rules

Special purpose governmental entities must follow reporting schedules based on their annual receipts or spending. The rules cover special purpose governmental entities that provide limited public services and operate separately from state or local governments. Entities under $500,000 must prepare annual financial statements and obtain an attestation engagement every four years. Entities from $500,000 to less than $1 million must prepare annual financial statements and obtain an independent audit every four years. Entities at or above $1 million must prepare annual financial statements and receive annual audits, unless they qualify for the less frequent schedule after two consecutive unqualified audits. The Department for Local Government may exclude certain one-time grants from the calculation when the entity makes a written request. Sections 1 and 8 are stated to take effect July 1, 2027; the reporting schedule applies to fiscal periods beginning on or after the date stated in the applicable law.

An eligible special purpose governmental entity may choose an agreed-upon procedures engagement instead of an audit. The option applies to entities that otherwise must complete an audit and that received and spent less than $15 million during the fiscal year under review. The entity must have followed the applicable reporting rules in the prior fiscal year. It must not have been subject to a special examination during the prior fiscal year or the year being reviewed. The entity must not face a stricter audit requirement under another state or federal law. The entity must send the Department for Local Government a written certification within 30 days after the fiscal year ends, and the department may object for any reason within the next 30 days. This option applies to fiscal years beginning on or after July 1, 2027; the engagement must be completed within 12 months after the fiscal year ends.

The Auditor of Public Accounts may allow a county clerk's or sheriff's annual audit to use agreed-upon procedures instead of a full audit. The option covers county clerks and sheriffs who meet the Auditor's requirements and applies to the audit period for a particular year. The official must apply by the deadline set by the Auditor. The office must have no reported audit comment or finding in its most recent audit report. The official and the Auditor must agree on the specific procedures. A first-time official, or an official returning after a break in service, cannot use the option for the first audit period after election. The Auditor may switch the engagement back to a full audit at any time if the agreed procedures do not provide enough oversight; no separate effective date is stated for these provisions.