House Bill 5275 seeks to amend the current auditing requirements for nonstate entities receiving state financial assistance by increasing the threshold for mandatory audits from $300,000 to $500,000 in annual state financial assistance, effective from July 1, 2024. Entities that expend less than $500,000 are exempt from certain audit requirements but must maintain and provide access to financial records. The bill mandates that entities meeting the threshold must have a single or program-specific audit, file a copy of the audit report with the cognizant agency for public inspection, and adhere to filing deadlines, with provisions for extensions and penalties for noncompliance.

The bill also specifies that the Office of Policy and Management secretary can impose civil penalties ranging from $1,000 to $10,000 for late filings of audit reports, although these penalties can be waived if there is a reasonable cause for the delay. The extension period for filing audit reports is capped at 12 months after the fiscal year's end. The Planning and Development Committee has endorsed the bill with a unanimous vote, and it is set to take effect on July 1, 2024. The bill is expected to result in potential savings for municipalities and regional school districts that spend less than $500,000 of state funds annually, as they would no longer be required to conduct certain audits.

Statutes affected:
Raised Bill: 4-231, 4-232
PD Joint Favorable Substitute: 4-231, 4-232
File No. 229: 4-231, 4-232