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(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) (1) The city shall operate under an annual budget ordinance adopted and administered in accordance with the provisions of this section.
(2) No monies shall be expended from any governmental or proprietary fund except in accordance with a budget ordinance adopted pursuant to this section.
(B) Monies 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 re-adopted.
(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 following standards shall apply to the form and detail in which the annual budget proposal of the city is to be prepared.
(1) The annual budget proposal shall detail the raising of revenue from all sources, including grants and transfers, and the spending of money for specified programs, functions, activities, or objectives of the city, including all principal and interest due on debt, for the budget year. The total of anticipated revenues shall equal or exceed the total of proposed expenditures.
(2) The form of the annual budget proposal shall be consistent in form, to the extent practical, with the accounting system of the city.
(3) The annual budget proposal shall provide a complete program and financial plan for all funds for the budget year. It shall contain the following:
(a) A budget message, as specified in KRS 91A.030(7); and
(b) A budget summary, as specified in division (F)(4) below, supported by:
l. An estimate of fund balance carry-forward, as specified in division (F)(5) below;
2. An estimate of all anticipated revenues of the city compared to previous years, as specified in division (F)(6) below;
3. Proposed expenditures compared to previous years, as specified in division (F)(7) below; and
4. An estimate of anticipated transfers, as specified in division (F)(8) below.
(4) At the head of the annual budget proposal, there shall appear a summary of the budget, which need not be itemized further than by principal sources of anticipated revenue, and proposed expenditures by program, function, activity, or objectives of the city, in such a manner as to present a simple and clear summary of the detailed estimates of the budget components.
(5) Each fund balance available for appropriation shall be limited to the amount by which assets are estimated to exceed liabilities at the beginning of the budget year.
(6) In parallel columns opposite the several items of anticipated revenue, there shall be placed:
(a) The amount of each such item actually received during the next preceding fiscal year;
(b) The total of the amount of each item actually received to the time of preparation of the annual budget proposal, plus anticipated receipts for the remainder of the current fiscal year estimated as accurately as possible; and
(c) The amount of each item anticipated to be received during the budget year, estimated as accurately as possible.
(7) In parallel columns, opposite the several items of proposed expenditures, there shall be placed:
(a) The amount of each such item actually expended during the next preceding fiscal year;
(b) The total of the amount actually expended to the time of preparation of the annual budget proposal, plus the expenditures for the remainder of the current fiscal year estimated as accurately as possible; and
(c) The amount of each item to be appropriated for the budget year.
(8) Any anticipated excess revenues, if legally available for general purposes and to the extent such excess is to be used to support other funds, shall be stated as a transfer item in the annual budget proposal.
(G) The budget proposal together with a budget message shall be submitted to the City Council not later than 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) (1) The City Council shall adopt a 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 be in any form that the City 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 fiscal year in violation of the State Constitution § 157.
(I) The full amount estimated to be required for debt service during the budget year shall be appropriated, for all governmental fund types.
(J) The City Council may amend the budget ordinance at any time after the ordinance’s adoption, if 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 the City Council of operating statements, including budgetary comparisons of each governmental fund for which an annual budget has been adopted. The reports shall be submitted not less than once every three 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 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 any extent beyond the unexpended balance of any appropriation made for the purpose.
(Ord. 263, passed 6-1-1981)
Statutory reference:
Related provisions, see KRS 91A.030
(A)
Except as provided in divisions (B) through (D) 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 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) In lieu of the annual audit requirements in division (A) above, a city with a population equal to or less than 1,000, based upon the most recent federal decennial census, may elect to have an audit performed every other fiscal year in the following manner:
(1) After the close of each odd-numbered fiscal year, the city shall for that odd-numbered 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. 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; and
(2) After the close of each even-numbered fiscal year, the city shall not be required to complete an annual audit, but shall forward an electronic copy of its financial statement prepared in accordance with KRS 424.220 to the Department for Local Government by no later than October 1 immediately following the close of the even-numbered fiscal year.
(C)
In lieu of the annual audit requirements in division (A) above, a city with a population of more than 1,000, but less than 2,000, based upon the most recent federal decennial census, may elect to have an audit performed every other fiscal year to cover the two fiscal years occurring since the prior audit in the following manner:
(1) After the close of each odd-numbered fiscal year, the city shall cause each fund of the city to be audited by the Auditor of Public Accounts or a certified public accountant. The audit shall include both fiscal years since the prior audit and shall be completed by March 1 immediately following the fiscal years to be 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 years being audited; and
(2) After the close of each even-numbered fiscal year, the city shall not be required to complete an annual audit, but shall forward an electronic copy of its financial statement prepared in accordance with KRS 424.220 to the Department for Local Government by no later than October 1 immediately following the close of the even-numbered fiscal year.
(D) 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 division (C) above shall:
(1) 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 or paper copy to the Department for Local Government for information purposes; and
(2) If exempted under this division for more than four consecutive fiscal years after July 1, 2022, have prepared an attestation engagement covering the fourth fiscal year in which the city qualified for an exemption under this division. An attestation engagement completed pursuant to this division shall be:
(a) Prepared by an independent certified public accountant or by the Auditor of Public Accounts pursuant to a contract with the city using generally accepted attestation standards as promulgated by the American Institute of Certified Public Accountants and any additional procedures established by the Department for Local Government through administrative regulation;
(b) Completed by no later than March 1 immediately following the conclusion of the fiscal year in which in the attestation engagement is required;
(c) Submitted to the Department for Local Government as one electronic copy no later than April 1 after its completion;
(d) Advertised to the public within 30 days of its completion by causing the publication of a legal display advertisement of not less than six column inches in a newspaper qualified under KRS 424.120 stating that the attestation has been prepared and copies have been provided to each local newspaper of general circulation, each news service, and each local radio and television station which has on file with the city a written request to receive copies of financial statements under KRS 424.220. Any city advertising under this division shall be exempt from publishing its financial statement under KRS 424.220(6)(b) for any year in which it is required to have an attestation engagement completed; and
(e) Provided to the Auditor of Public Accounts upon request for review of the final report and all related work papers and documents regarding the attestation engagement.
(E) 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.
(F) 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 through 42.495. The auditor shall include a certification with the annual audit or biennial 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 work papers upon request.
(G) 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 through 6.975.
(H) 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.
(I) Any resident of the city, or owner of real property within the city, may bring an action in the city’s circuit court to enforce the provisions of this section.
(J) (1) 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 divisions (A) through (D) above, 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.
(2) 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 division shall not exceed nine 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 division (K) below shall apply.
(K) (1) If a city fails to complete an audit or financial statement and submit it to the Department for Local Government, as required in divisions (A) to (D) and (J) 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.
(2) The Department for Local Government shall immediately notify the Finance and Administration Cabinet when the city complies with the requirements of divisions (A) through (D) and (K) 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.
(L) 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) Penalty, see § 33.99
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 U.S.C. 12, § 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)
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