Act 71, passed by the General Assembly in 2023, allows cities and towns that have less than $500,000 in total recurring revenues the option of providing a compilation of financial statements, rather than a full audit, to the SC Office of the State Treasurer, but this new law comes with its own requirements. The Municipal Association of SC has a resource to help municipalities understand how to comply with the new law.
Before Act 71, SC Code Section 5-7-240 required all municipalities to submit an audit within 13 months of the municipality’s fiscal year, no matter the population size or budget size of the municipality. Those that did not submit the required audit could have all state payments, including Local Government Fund payments, withheld until the State Treasurer’s office received the audit. However, cities and towns with smaller budgets faced difficulty affording an audit, and so the Municipal Association advocated for a bill allowing a less-expensive compilation of financial statements as an alternative that would still provide transparency in how they spend their funds.
Municipalities that pursue this option under Act 71 must still have the compilation be prepared by an independent certified public accountant or firm of CPAS, as well as other minimum agreed-upon procedures. They must provide the compilation either every year if they have a court system, or every three years if they do not have a court system.