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2001-3 Audit Requirements

January 12, 2001

TO: Cities, Villages, Townships, Authorities, and Other Municipal Agencies

FROM: Richard L. Baldermann, Administrator Local Audit and Finance Division

SUBJECT: Audit Requirements

Public Act 493 of 2000 amended certain sections of the Uniform Budgeting and Accounting Act and was given immediate effect.

Section 2d(4) (MCL 141.422d[4]) of the Uniform Budgeting and Accounting Act defines a "local unit" subject to the audit requirements as:

. . . a village, city, or township or an authority or commission established by a county, village, city, or township resolution, motion, ordinance or charter.

The cited language clarifies the definition of an authority or commission as one established by:

    (a) a county, village, city or township;
    (b) by the means of a resolution, motion, ordinance or charter.

The revised language confirms the Department of Treasury's long standing position that if a county, village, city or township establishes an authority or commission, the public funds handled by that organization are required to be audited. Some of these authorities or commissions may be established by ordinance or charter, however, most are created by resolution or motion that creates them or approves an agreement under the Urban Cooperation Act of 1967 (MCL 124.501 et al) or other shared power/cooperative statute creating a special purpose authority or commission.

If your unit of government has established an authority or commission that has not been obtaining an audit, please notify them of the requirement.

If you have questions or need further assistance, please call (517) 373-3227 or write our office: Michigan Department of Treasury, Local Audit and Finance Division, P.O. Box 30728, Lansing, Michigan 48909-8228.