Minor Changes Made to Annual Audit Law

Training for: Legal Notes

We weren’t aware of it until recently, but the last session of the Legislature made some minor but still notable changes to the law requiring municipalities to have an annual audit (see PL 2015, c. 44, eff. Oct. 14, 2015).

The audit must now be performed by a certified public accountant or CPA, not merely a “qualified” accountant (see 30-A M.R.S.A. § 5823).

Also, the audit must now be conducted in accordance with government auditing standards promulgated by the United States Government Accountability Office, not the State Auditor.

Finally, it is now more difficult to engage the State Auditor to perform a new or second audit. Formerly, the voters, by a 10% petition, could effectively require the State Auditor to do another audit (at municipal expense). But now, a voter petition is dependent on the municipal officers (selectmen or councilors) first determining that “unusual circumstances” warrant a new audit by the State Auditor. Even if a petition is then submitted, the State Auditor may but is not required to perform an audit. If dissatisfied with the first audit, however, the municipal officers are authorized to engage a CPA in private practice to perform another one.

Apart from these changes, the municipal audit law remains as it has been. To recap, an annual audit (“postaudit”) of the last complete fiscal year is required, at municipal expense, and it is the municipal officers who must engage the auditor. Within 30 days of doing so, they must notify the State Auditor of their auditor’s name and address. And since a municipality’s annual report must be available to voters at least three days before the annual meeting and must include certain excerpts from the audit, the municipal officers should engage an auditor well before then.

For more on audits and annual reports, see “Annual Audit Required,” Maine Townsman, Legal Notes, March 2010 and “What Should/Shouldn’t Be in the Annual Report,” Maine Townsman, Legal Notes, December 2010. (By R.P.F.)

We weren’t aware of it until recently, but the last session of the Legislature made some minor but still notable changes to the law requiring municipalities to have an annual audit (see PL 2015, c. 44, eff. Oct. 14, 2015).

The audit must now be performed by a certified public accountant or CPA, not merely a “qualified” accountant (see 30-A M.R.S.A. § 5823).

Also, the audit must now be conducted in accordance with government auditing standards promulgated by the United States Government Accountability Office, not the State Auditor.

Finally, it is now more difficult to engage the State Auditor to perform a new or second audit. Formerly, the voters, by a 10% petition, could effectively require the State Auditor to do another audit (at municipal expense). But now, a voter petition is dependent on the municipal officers (selectmen or councilors) first determining that “unusual circumstances” warrant a new audit by the State Auditor. Even if a petition is then submitted, the State Auditor may but is not required to perform an audit. If dissatisfied with the first audit, however, the municipal officers are authorized to engage a CPA in private practice to perform another one.

Apart from these changes, the municipal audit law remains as it has been. To recap, an annual audit (“postaudit”) of the last complete fiscal year is required, at municipal expense, and it is the municipal officers who must engage the auditor. Within 30 days of doing so, they must notify the State Auditor of their auditor’s name and address. And since a municipality’s annual report must be available to voters at least three days before the annual meeting and must include certain excerpts from the audit, the municipal officers should engage an auditor well before then.

For more on audits and annual reports, see “Annual Audit Required,” Maine Townsman, Legal Notes, March 2010 and “What Should/Shouldn’t Be in the Annual Report,” Maine Townsman, Legal Notes, December 2010. (By R.P.F.)