The proposed bill aims to adjust the financial thresholds determining whether Colorado local governments are required to conduct annual financial audits or can apply for exemptions. Effective for fiscal years starting on or after January 1, 2025, the bill proposes the following changes:
Audit Exemption for Smaller Entities:
Local governments with both total revenues and expenditures of $200,000 or less (increased from the current $100,000 threshold) may apply for an exemption from the annual audit requirement.
The exemption application must be prepared by an individual skilled in government accounting.
Audit Exemption for Mid-Sized Entities:
Local governments with either total revenues or expenditures exceeding $200,000 but not more than $1,000,000 (up from the current $750,000 threshold) may also seek an audit exemption.
Applications for this exemption must be prepared by an independent accountant knowledgeable in government accounting.
These adjustments aim to align state requirements with federal standards and account for inflationary changes, thereby reducing the administrative burden on smaller local governments.
Summary
Legislative Audit Committee. Currently, a local government must
obtain an audit of its financial statements for each fiscal year or obtain approval from the state auditor for an exemption if they meet certain requirements. A local government with total revenues and expenditures that are each less than or equal to $100,000 during a fiscal year may complete an application for exemption from audit. A local government seeking this exemption must provide the state auditor with an application prepared by a person who is skilled in government accounting. A local government with total revenues or expenditures that are over $100,000 and no more than $750,000 during a fiscal year may also complete an application for exemption from audit. A local government seeking this exemption must provide the state auditor with an application that is prepared by an independent accountant with knowledge of government accounting.
The bill changes these 2 thresholds for any fiscal year commencing
on or after January 1, 2025. First, the bill changes the $100,000 threshold to $200,000. Second, the bill changes the $750,000 threshold to $1,000,000. The bill would provide consistency with federal requirements and align statutory thresholds with current inflationary values.
