1. The state auditor shall audit the following political subdivisions once every two years, except as provided in this section or otherwise by law: a. Counties. b. Cities, and when a city is audited, to include any political subdivision that was created by the city and has bonding authority. c. Park districts. d. School districts. e. Firefighters relief associations. f. Airport authorities.
g. Public libraries. h. Water resource districts, created under chapter 61-16 and operating under chapter 61-16.1. i. Garrison Diversion Conservancy District. j. Rural fire protection districts. k. Special education districts. l. Area career and technology centers. m. Correction centers. n. Recreation service districts. o. Weed boards. p. Irrigation districts. q. Rural ambulance service districts. r. Southwest water authority. s. Regional planning councils. t. Soil conservation districts. u. Western area water supply authority industrial water sales on an annual basis. v. Water districts subject to chapter 61-35. 2. The state auditor shall charge the political subdivision an amount equal to the fair value of the audit and any other services rendered. The fees must be deposited in the state auditor operating account. The state treasurer shall credit the state auditor operating account with the amount of interest earnings attributable to the deposits in that account. Expenses relating to political subdivision audits must be paid from the state auditor operating account, within the limits of legislative appropriation. 3. In lieu of conducting an audit every two years, the state auditor may require annual reports from political subdivisions subject to this section, or otherwise provided by law, for any report delinquent as of June 30, 2023, or from political subdivisions with less than two million dollars of annual receipts, excluding any funds passed through the political subdivision to another entity. If any federal agency performs or requires an audit of a political subdivision that receives federal funds to pass through to another entity, the political subdivision shall provide a copy to the state auditor upon request by the state auditor. The reports must contain the financial information required by the state auditor. The state auditor may: a. Make any additional examination or audit determined necessary in addition to the annual report. b. Charge the political subdivision an amount equal to the fair value of the additional examination or audit and any other services rendered. c. Charge a political subdivision a fee not to exceed ninety dollars an hour for the costs of reviewing the annual report. 4. A political subdivision, at the option of its governing body, may be audited by a certified public accountant or licensed public accountant rather than by the state auditor. The public accountant annually shall register with the state auditor and comply with generally accepted government auditing standards for audits of political subdivisions. The report must be in the form and content required by the state auditor. The number of copies of the audit report requested by the state auditor must be filed with the state auditor when the public accountant delivers the audit report to the political subdivision. The state auditor shall review the audit report to determine if the report is in the required form and has the required content, and if the audit meets generally accepted government auditing standards. The state auditor also may periodically review the public accountant's workpapers to determine if the audit meets generally accepted government auditing standards. If the report is in the required form and has the required content, and the report and workpapers comply with generally accepted government auditing standards, the state auditor shall accept the audit report. The state auditor may charge the political subdivision a fee of up to ninety dollars an hour, but not to exceed seven hundred fifty dollars per review, for the related costs of reviewing the audit report and workpapers.
5. A political subdivision may not pay a public accountant for an audit until the state auditor has accepted the audit. However, a political subdivision may make progress payments to the public accountant. A political subdivision shall retain five percent of any progress payment until the audit report is accepted by the state auditor. 6. The state auditor may require the correction of any irregularities, objectionable accounting procedures, or illegal actions on the part of the governing board, officers, or employees of the political subdivision disclosed by the audit report or workpapers, and failure to make the corrections must result in audits being resumed by the state auditor until the irregularities, objectionable accounting procedures, or illegal actions are corrected.
54-10-15. Audits of political subdivisions by request of governor or order of the legislative audit and fiscal review committee, upon petition, or upon request of the state court administrator. 1. The state auditor, by duly appointed deputy auditors or other authorized agents, shall audit or review the books, records, and financial accounts of any political subdivision when ordered by the legislative audit and fiscal review committee. The state auditor, by duly appointed auditors or other authorized agents, may audit or review the books, records, and financial accounts of any political subdivisions when requested by the governor, requested by the governing board, or upon petition of at least thirty-five percent of the qualified electors of any political subdivision enumerated in section 54-10-14 voting for the office of governor at the preceding general election regarding school districts, upon petition of at least thirty-five percent of the qualified electors voting at the preceding school board election regarding water districts subject to chapter 61-35, upon a petition of at least ten percent or three hundred participating members, whichever is fewer, or upon the request of the state court administrator with respect to clerk of district court services provided by a county in accordance with chapter 27-05.2. Fees for the audits must be paid in accordance with the provisions of section 54-10-14. 2. If an audit is ordered due to financial irregularities or allegations of embezzlement, the governor may suspend an elected or appointed school board member from the individual's duties if the governor determines suspension is in the best interest of the state pending the results of the audit. If the governor suspends an elected or appointed school board member, the governor immediately shall provide notice to the school board with which the suspended member serves. Within five days of receiving notice, the school board shall appoint an individual to replace the suspended member to serve during the pendency of the audit. The governor shall consult with the superintendent of public instruction in determining whether suspension of a member of a school board is in the best interest of the state.