(A) Except as provided in divisions (B) and (C) below, 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 audits shall be completed by March 1 immediately following the fiscal year being audited. Within ten days of the completion of the audit and its presentation to the City Council, in accordance with division (D)(5) of this section, each city shall forward an electronic copy or three paper copies of the audit report to the Department for Local Government for information purposes.
(B) (1) A city with a population of less than 1,000 based upon the most recent federal decennial census shall, after the close of each odd-numbered fiscal year, cause each fund of the city to be audited by the Auditor of Public Accounts or a certified public accountant. The audits shall be completed by March 1 immediately following the fiscal year to be audited. Within ten days of the completion of the audit and its presentation to the Council, in accordance with division (D)(5) of this section, the city shall forward an electronic copy or three paper copies of the audit report to the Department for Local Government for information purposes.
(2) After the close of each even-numbered fiscal year, each city subject to the provisions of this division (B) shall prepare a financial statement in accordance with KRS 424.220 and immediately forward one electronic or paper copy to the Department for Local Government.
(C) Any city, which for any fiscal year receives and expends, from all sources and for all purposes, less than $150,000, and which has no long-term debt, whether general obligation or revenue debt, shall not be required to audit each fund of the city for that particular fiscal year. In addition, each city exempted in accordance with this division (C) shall annually prepare a financial statement in accordance with KRS 424.220 and immediately forward one electronic or paper copy to the Department for Local Government for information purposes.
(D) Each city required by this section to conduct an annual or biannual 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 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 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 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 public accountant’s workpapers 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 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.
(F) Each city shall, within 30 days after the presentation of an audit to the City Council, 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 or her 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 $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 city may utilize the alternative publication methods authorized by KRS 424.190(2) to comply with the provisions of this section.
(H) Any person who violates any provision of this section shall be 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. The costs of all proceedings, including a reasonable fee for the attorney of the resident bringing the action, shall be assessed against the unsuccessful party.
(KRS 91A.040)
(I) 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.
Statutory reference:
Department for Local Government to provide assistance, see KRS 91A.050