HB 1495

This bill requires all cities, towns, and village districts or precincts to have an annual audit performed by a certified public accountant. Audit findings shall be made public, and a copy of the audit report shall be submitted to the commissioner of revenue administration. Reasonable audit costs shall be reimbursed by the department of revenue administration to the municipality. Failure to submit an annual audit may result in the withholding of state funds until such an audit is received.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Section; Department of Revenue Administration; Cities, Towns, and Village Districts; Annual Audit Required. Amend RSA 21-J by inserting after section 19 the following new section:

I. An independent audit conducted by a certified public accountant shall be made of all accounts of any city, town, or village district or precinct annually. Audit findings shall be made public at a public meeting or hearing, and copies or abstracts of such audit and financial statements shall be made public and printed in the next annual report. At the conclusion of the audit, a copy of the audit report and a receipt of the costs of compiling the audit shall be submitted to the commissioner of revenue administration.

II. After receiving an annual report and receipt of the audit costs, as required under paragraph I, the department of revenue administration shall reimburse to the city, town, or village district or precinct the reasonable costs of the audit. If an annual audit is not received by the commissioner of revenue administration, state funds for future fiscal years may be withheld until such an audit is so received.

2 Funding. The department of revenue administration shall fund the audit reimbursement under RSA 21-J:19-a, II as set forth in section 1 of this act through existing department appropriations.

The Department of Revenue Administration indicates this bill will increase state general fund expenditures and local revenue by $2.58 million in FY 2000, $2.84 million in FY 2001, $3.12 million in FY 2002, $3.44 million in FY 2003 and by $3.78 million in FY 2004. The Department states local expenditures will increase by $1.26 million in FY 2000, $1.38 million in FY 2001, $1.52 million in FY 2002, $1.67 million in FY 2003, and by $1.84 million in FY 2004. There is no fiscal impact to state and county revenue or county expenditures.

The Department states that currently 61.3% of municipalities and 15.6% of village districts undergo annual audits performed by certified public accountants. The cost of such audits varies from $4,000 to $60,000 based on the types and number of funds, complexity of the audit, and audit history. The Department grouped audit costs by population to estimate the aggregate cost of municipal audits at $2 million. The Department estimated the cost to audit all 83 village districts at $7,000 each, for a total of $580,000. The total that the Department will reimburse municipalities and village districts, therefor, is $2.58 million in FY 2000, increased by 10% each year.

To estimate the local cost of the additional audits not previously performed, the Department subtracted the percentage of towns and village districts currently being audited from the estimated total cost. Thus from the $2 million estimated cost of municipal audits, 61.3% or $1.226 million was subtracted, and from the $580,000 estimated cost of village district audits, 15.6% or $90,480 was subtracted leaving a combined increased local cost of $1.26 million in FY 2000. These costs were also increased by 10% each year.