1 HB443
2 206352-2
3 By Representatives Chestnut, Lawrence, Wood (D) and Sorrells
4 RFD: County and Municipal Government
5 First Read: 23-FEB-21
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1 206352-2:n:03/12/2020:ANS/tgw LSA2020-1020R1
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8 SYNOPSIS: Under existing law, the mayor of a city or
9 town, at least once a year, is required to appoint
10 an independent public accountant or the Department
11 of Examiners of Public Accounts to conduct an
12 examination of all books and accounts of the city
13 or town since the preceding examination and to make
14 a full report of the audit to the city council upon
15 completion of the report.
16 In lieu of the existing requirements, this
17 bill would require the mayor or city manager of a
18 municipality with certain annual expenditures to
19 cause to be conducted an annual or biennial audit
20 of the financial affairs and transactions of the
21 municipality and to make an annual or biennial
22 report of the audit to the city council upon
23 completion of the report.
24 This bill would also permit the mayor or
25 city manager of a municipality with certain annual
26 expenditures to provide a report of agreed upon
27 procedures in lieu of a biennial audit report.
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1
2 A BILL
3 TO BE ENTITLED
4 AN ACT
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6 Relating to municipalities, to amend Section
7 11-43-85, Code of Alabama 1975, and to create the Chestnut
8 Accountability Municipal Audit Clarification Act, to require
9 the mayor or city manager of a municipality with certain
10 annual expenditures to cause to be conducted an annual or
11 biennial audit of the financial affairs and transactions of
12 the municipality and to make an annual or biennial report of
13 the audit to the city council upon completion of the report;
14 and to permit the mayor or city manager of a municipality with
15 certain annual expenditures to provide a report of agreed upon
16 procedures in lieu of a biennial audit report.
17 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
18 Section 1. Section 11-43-85, Code of Alabama 1975,
19 is amended to read as follows:
20 "11-43-85.
21 In cities and towns, the mayor, at least once a
22 year, shall appoint an independent public accountant or the
23 Department of Examiners of Public Accounts to conduct an
24 examination in accordance with generally accepted auditing
25 standards of all books and accounts of the city or town since
26 the preceding examination and to make a full report thereof in
27 writing, under oath, to be submitted to the council at its
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1 first meeting after the completion of such report, and the
2 same shall be spread upon the minutes of the council. For his
3 services said independent public accountant or the Department
4 of Examiners of Public Accounts shall be paid such sum as may
5 be agreed upon.
6 "(a) This act shall be known and may be cited as the
7 Chestnut Accountability Municipal Audit Clarification Act.
8 "(b)(1) In a municipality with annual expenditures
9 of three hundred thousand dollars ($300,000) or more, the
10 mayor or city manager shall provide for and cause to be made
11 an annual audit of the financial affairs and transactions of
12 all funds and activities of the municipality by an independent
13 public accountant for each fiscal year of the municipality.
14 "(2) Except as provided in subdivision (3), in a
15 municipality with annual expenditures of less than three
16 hundred thousand dollars ($300,000), the mayor or city manager
17 shall provide for and cause to be made a biennial audit by an
18 independent public accountant of the financial affairs and
19 transactions of all funds and activities of the municipality
20 by an independent public accountant for each fiscal year of
21 the municipality. The audit conducted pursuant to this
22 subdivision shall include each fiscal year since the preceding
23 audit.
24 "(3) In a municipality with annual expenditures of
25 less than one hundred thousand dollars ($100,000), the city
26 council may elect to provide for and direct the mayor or city
27 manager to cause to be made, in lieu of the biennial audit
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1 required under subdivision (b)(2), an annual report that
2 complies with procedures established by the Department of
3 Examiners of Public Accounts. The annual report shall be
4 provided to the Department of Examiners of Public Accounts and
5 shall constitute an annual audit report. The report shall
6 include all of the following:
7 "a. Proof and reconciliation of cash.
8 "b. Confirmation of cash balances.
9 "c. A list of all bank balances.
10 "d. A statement of cash receipts and cash
11 disbursements.
12 "e. A statement of compliance with state law.
13 "f. A report of agreed upon procedures.
14 "(c) A municipal audit under this section shall be
15 conducted in accordance with generally accepted auditing
16 standards in a format prescribed by the Department of
17 Examiners of Public Accounts.
18 "(d)(1) A municipal audit or annual report under
19 this section shall be provided to the Department of Examiners
20 of Public Accounts in accordance with Section 41-5A-12.1.
21 "(2) In addition to the requirements of subdivision
22 (1), a municipal audit report under subdivision(b)(3) shall be
23 submitted to the city council at its first meeting after
24 completion of the report and shall be spread upon the minutes
25 of the council."
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1 Section 2. This act shall become effective on the
2 first day of the third month following its passage and
3 approval by the Governor, or its otherwise becoming law.
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Statutes affected:
Introduced: 11-43-85