Municipal audits, expenditure thresholds for municipal audits revised

Alabama towns face spending-based audit rules

Beginning October 1, 2026, Alabama municipalities spending $500,000 or more each year must get an annual independent audit. Those spending less than $500,000 must generally get an independent audit every two years, covering each fiscal year. The mayor or city manager must ensure these audits are done by an independent public accountant. For municipalities spending less than $300,000 yearly, the council can choose an annual report instead of the two-year audit. That report must follow Department of Examiners of Public Accounts procedures and counts as an annual audit report. It must include cash verification and reconciliation, confirmed cash balances, all bank balances, and cash receipts and payments. It must also cover compliance with state law, agreed-upon review procedures, and motor-fuel tax collections, distribution, and use. All audits and reports must follow generally accepted auditing standards and the department’s required format. They must be sent to the department under state reporting rules. Under the annual-report option, the completed audit or report must reach the council at its first meeting after completion. It must also be recorded in the meeting minutes.