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(A) The 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 February 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 March 1 immediately following the fiscal year being audited.
(B) In lieu of the auditing requirements set forth in division (A), if the city for the fiscal year in question receives and expends, from all sources, and for all purposes, less than $75,000, and has no long-term debt, whether general obligation or revenue debt, the city shall not be required to audit each fund of the city for that particular fiscal year. The city shall instead annually prepare a financial statement in accordance with KRS 424.220, and shall, not later than October 1 following the conclusion of the fiscal year, forward one electronic copy to the Department for Local Government for informational purposes.
(C) If the 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.
(D) The Department for Local Government shall, upon request, make available electronic copies of the audit reports and financial statements received by it under divisions (A) and (B) 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.
(E) The city 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 shall 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 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 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 includes such tests of the accounting records and such auditing procedures as considered necessary under 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 Council 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 accountant’s work papers upon request.
(F) 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 the 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.
(G) Each city shall, within 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 are available to the public at no cost at the business address of the officer responsible for preparation of the statement.
(H) 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 guilty of a misdemeanor and fined not less than $50 nor more than $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 $50 nor more than $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.
(I) In the event of extenuating circumstances that prevent the city from completing and submitting a required audit or financial statement in compliance with divisions (A) or (B) 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. The Department shall approve the request if it is submitted on or before the applicable deadline, and in the judgment of the Department the request is warranted by extenuating circumstances beyond the control of the city. Extensions granted under this division shall not exceed nine (9) months from the original due date of the audit or financial statement. If the Department approves an extension for the 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 division (J) of this section shall apply.
(J) If a city fails to complete an audit or financial statement and submit it to the Department as required in divisions (A), (B), or (I) of this section, the Department 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 shall immediately notify the Cabinet when the city complies with the requirements of divisions (A), (B), and (I) of this section for all prior fiscal years it has failed to comply with the audit requirements of this section, and the Cabinet shall direct the reinstatement of payments to the city, including any funds that were withheld due to the noncompliance.
(K) 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.
Department for Local Government to provide assistance, see KRS 91A.050