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As used in this subchapter, unless the context otherwise requires, the following definitions shall apply:
BUDGET
. A proposed plan for raising and spending money for specified programs, functions, activities, or objectives during a fiscal year.
DEBT SERVICE
. The sum of money required to pay installments of principal and interest on bonds, notes, and other evidences of debt accruing within a fiscal year and to maintain sinking funds.
ENCUMBRANCES.
Obligations in the form of purchase orders or contracts that are chargeable to an appropriation. An obligation ceases to be an encumbrance when paid or when the actual liability is recorded.
FISCAL YEAR
. The accounting period for the administration of fiscal operations.
GENERALLY ACCEPTED GOVERNMENTAL AUDITING STANDARDS
. Those standards for audit of governmental organizations, programs, activities and functions issued by the Comptroller General of the United States.
(KRS 91A.010 (6))
GENERALLY ACCEPTED PRINCIPLES OF GOVERNMENTAL ACCOUNTING
. Those standards and procedures promulgated and recognized by the Governmental Accounting Standards Board.
(KRS 91A.010 (7))
(A) The city shall keep its accounting records and render financial reports in such a way as to:
(1) Determine compliance with statutory provisions; and
(2) Determine fairly and with full disclosure the financial operations of constituent funds and account groups of the city in conformity with generally accepted governmental accounting principles.
(B) The municipal accounting system shall be organized and operated on a fund basis.
(KRS 91A.020)
(A) The city shall operate under an annual budget ordinance adopted and administered in accordance with the provisions of this section. No moneys shall be expended from any governmental or proprietary fund except in accordance with a budget ordinance adopted pursuant to this section.
(B) Moneys held by the city as a trustee or agent for individuals, private organizations, or other governmental units need not be included in the budget ordinance.
(C) If in any fiscal year subsequent to a fiscal year in which the city has adopted a budget ordinance in accordance with this section, no budget ordinance is adopted, the budget ordinance of the previous fiscal year has full force and effect as if readopted.
(D) The budget ordinance of the city shall cover one fiscal year.
(E) Preparation of the budget proposal shall be the responsibility of the Mayor.
(F) The budget proposal shall be prepared in such form and detail as prescribed by ordinance.
(G) The budget proposal together with a budget message shall be submitted to Council not later than thirty (30) days prior to the beginning of the fiscal year it covers. The budget message shall contain an explanation of the governmental goals fixed by the budget for the coming fiscal year; explain important features of the activities anticipated in the budget; set forth the reasons for stated changes from the previous year in program goals, programs, and appropriation levels; and explain any major changes in fiscal policy.
(H) Adoption of budget.
(1) Council may adopt the budget ordinance making appropriations for the fiscal year in such sums as it finds sufficient and proper, whether greater or less than the sums recommended in the budget proposal. The budget ordinance may take any form that Council finds most efficient in enabling it to make the necessary fiscal policy decisions.
(2) No budget ordinance shall be adopted which provides for appropriations to exceed revenues in any one (1) fiscal year in violation of Section 157 of the Kentucky Constitution.
(I) The full amount estimated to be required for debt service during the budget year shall be appropriated for all governmental fund types.
(J) Council may amend the budget ordinance at any time after the ordinance's adoption, so long as the amended ordinance continues to satisfy the requirements of this section.
(K) Administration and implementation of an adopted budget ordinance shall be the responsibility of the Mayor. That responsibility includes the preparation and submission to Council of operating statements, including budgetary comparisons of each governmental fund for which an annual budget has been adopted. These reports shall be submitted not less than once every three (3) months in each fiscal year.
(L) To the extent practical, the system utilized in the administration and implementation of the adopted budget ordinance shall be consistent in form with the accounting system called for in § 33.02.
(M) No city agency, or member, director, officer, or employee of a city agency, may bind the city in any way to any extent beyond the amount of money at that time appropriated for the purpose of the agency. All contracts, agreements, and obligations, express or implied, beyond any existing appropriations are void; nor shall any city officer issue any bond, certificate, or warrant for the payment of money by the city in any way to and extent, beyond the balance of any appropriation made for the purpose.
(KRS 91A.030)
(A) Each city shall, after the close of each fiscal year, cause each fund of the city to be audited by the Auditor of Public Accounts or a certified public accountant. The audit shall be completed by March 1 immediately following the fiscal year being audited. The city shall forward an electronic copy of the audit report to the Department for Local Government for information purposes by no later than April 1 immediately following the fiscal year being audited.
(B) If a city is required by another provision of law to audit its funds more frequently or more stringently than is required by this section, the city shall also comply with the provisions of that law.
(C) The Department for Local Government shall, upon request, make available electronic copies of the audit reports and financial statements received by it under subsection (A) of this section to the Legislative Research Commission to be used for the purposes of KRS 6.955 to 6.975 or to the Auditor of Public Accounts.
(D) Each city required by this section to conduct an annual or biennial audit shall enter into a written contract with the selected auditor. The contract shall set forth all terms and conditions of the agreement which shall include but not be limited to requirements that:
(1) The auditor be employed to examine the basic financial statements, which shall include the government-wide and fund financial statements;
(2) The auditor shall include in the annual or biennial city audit report an examination of local government economic assistance funds granted to the city under KRS 42.450 to 42.495. The auditor shall include a certification with the annual or biennial audit report that the funds were expended for the purpose intended;
(3) All audit information be prepared in accordance with generally accepted governmental auditing standards which include tests of the accounting records and auditing procedures considered necessary in the circumstances. Where the audit is to cover the use of state or federal funds, appropriate state or federal guidelines shall be utilized;
(4) The auditor shall prepare a typewritten or printed report embodying:
(a) The basic financial statements and accompanying supplemental and required supplemental information;
(b) The auditor's opinion on the basic financial statements or reasons why an opinion cannot be expressed; and
(c) Findings required to be reported as a result of the audit;
(5) The completed audit and all accompanying documentation shall be presented to the city legislative body at a regular or special meeting; and
(6) Any contract with a certified public accountant for an audit shall require the accountant to forward a copy of the audit report and management letters to the Auditor of Public Accounts upon request of the city or the Auditor of Public Accounts, and the Auditor of Public Accounts shall have the right to review the certified public accountant's work papers upon request.
(E) A copy of an audit report which meets the requirements of this section shall be considered satisfactory and final in meeting any official request to a city for financial data, except for statutory or judicial requirements, or requirements of the Legislative Research Commission necessary to carry out the purposes of KRS 6.955 to 6.975.
(F) Each city shall, within thirty (30) days after the presentation of an audit to the city legislative body, publish an advertisement in accordance with KRS Chapter 424 containing:
(1) The auditor's opinion letter;
(2) The “Budgetary Comparison Schedules-Major Funds,” which shall include the general fund and all major funds;
(3) A statement that a copy of the complete audit report, including financial statements and supplemental information, is on file at city hall and is available for public inspection during normal business hours;
(4) A statement that any citizen may obtain from city hall a copy of the complete audit report, including financial statements and supplemental information, for his personal use;
(5) A statement which notifies citizens requesting a personal copy of the city audit report that they will be charged for duplication costs at a rate that shall not exceed twenty-five cents ($0.25) per page; and
(6) A statement that copies of the financial statement prepared in accordance with KRS 424.220, when a financial statement is required by KRS 424.220, are available to the public at no cost at the business address of the officer responsible for preparation of the statement.
(G) Any resident of the city or owner of real property within the city may bring an action in the Circuit Court to enforce the provisions of this section. Any person who violates any provision of this section shall be fined not less than fifty dollars ($50) nor more than five hundred dollars ($500). In addition, any officer who fails to comply with any of the provisions of this section shall, for each failure, be subject to a forfeiture of not less than fifty dollars ($50) nor more than five hundred dollars ($500), in the discretion of the court, which may be recovered only once in a civil action brought by any resident of the city or owner of real property within the city. The costs of all proceedings, including a reasonable fee for the attorney of the resident or property owner bringing the action, shall be assessed against the unsuccessful party.
(H) In the event of extenuating circumstances that prevent a city from completing and submitting a required audit or financial statement in compliance with the applicable deadlines in subsection (A) of this section, the city may submit a written request for an extension of time to the Department for Local Government on a form prescribed by the Department for Local Government. The Department for Local Government shall approve the request if it is submitted on or before the applicable deadline, and in the judgment of the Department for Local Government the request is warranted by extenuating circumstances beyond the control of the city. Extensions granted under this subsection shall not exceed nine (9) months from the original due date of the audit or financial statement. If the Department for Local Government approves an extension for a city and the city fails to complete and submit the required audit or financial statement in compliance with that extended deadline, then the provisions of subsection (I) of this section shall apply.
(I) If a city fails to complete an audit or financial statement and submit it to the Department for Local Government as required in subsections (A) and (H) of this section, the Department for Local Government shall notify the Finance and Administration Cabinet that the city has failed to comply with the audit requirements of this section, and that any funds in the possession of any agency, entity, or branch of state government shall be withheld from the city until further notice. The Department for Local Government shall immediately notify the Finance and Administration Cabinet when the city complies with the requirements of subsections (A) and (H) of this section for all prior fiscal years it has failed to comply with the audit requirements of this section, and the Finance and Administration Cabinet shall direct the reinstatement of payments to the city, including any funds that were withheld due to the noncompliance.
(J) Within a reasonable time after the completion of a special audit or examination conducted pursuant to KRS 43.050, the Auditor shall bill the city for the actual expense of the audit or examination conducted. The actual expense shall include the hours of work performed on the audit or examination as well as reasonable associated costs, including but not limited to travel costs. The bill submitted to the city shall include a statement of the hourly rate, total hours, and total costs for the entire audit or examination.
(KRS 91A.040(1), (6) - (13))
Statutory reference:
Department for Local Government to provide assistance, see KRS 91A.050.
(A) The Mayor shall designate as the city's official depositories one or more banks, federally insured savings and loan companies, or trust companies within the Commonwealth. The amount of funds on deposit in an official depository shall be fully insured by deposit insurance or collateralized in accordance with 12 U.S.C. § 1823, to the extent uninsured, by any obligations, including surety bonds permitted by KRS 41.240(4).
(B) All receipts from any source of city money or money for which the city is responsible, which has not been otherwise invested or deposited in a manner authorized by law, shall be deposited in official depositories. All city funds shall be disbursed by written authorization approved by the Mayor which states the name of the person to whom funds are payable, the purpose of the payment, and the fund out of which the funds are payable. Each authorization shall be numbered and recorded.
(KRS 91A.060)
(A) The fiscal year for the city shall be July 1 through June 30 each year.
(B) All financial records pertaining to the fiscal operation of said city, including the general fund and utilities system, shall be kept so as to conform with said fiscal year. Audits may be had for that portion of any year necessary in making the change. All financial statements required to be published shall conform to said fiscal year.
(Ord. 194, passed 1-7-69)
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