HB452 Alabama 2020 Session

Summary

Primary Sponsor

Prince ChestnutRepresentative

Democrat

Session

Regular Session 2020

Title

Municipalities, Chestnut Accountability Municipal Audit Clarification Act, requiring annual, biennial audit for certain municipalities, annual report in lieu of audit for certain municipalities, Sec. 11-43-85 am'd.

Summary

HB452 changes how Alabama municipalities are audited by using expenditure-based rules and allows very small towns to report via an annual report instead of a full audit.

What This Bill Does

The bill sets thresholds for audit frequency based on annual expenditures: cities with $300,000 or more must have an annual audit; those with less than $300,000 must have a biennial audit; and those with less than $100,000 may substitute an annual report that acts as the audit. It also allows including a required report of agreed-upon procedures in the annual report for very small towns. All audits or reports must follow standards and be filed with the Department of Examiners of Public Accounts, with specific timing and council-record requirements.

Who It Affects

• Municipalities (cities and towns) and their mayors or city managers; they must follow new thresholds for annual vs biennial audits and may substitute an annual report for a biennial audit in very small towns.
• City councils and the Department of Examiners of Public Accounts (DEPA), which receive and oversee audit reports and annual reports, and set the procedures for reporting.

Key Provisions

• Creates the Chestnut Accountability Municipal Audit Clarification Act and amends Section 11-43-85 to require audits based on annual expenditures rather than a blanket annual requirement.
• For annual expenditures of $300,000 or more, the mayor or city manager must obtain an annual audit by an independent public accountant for each fiscal year.
• For annual expenditures less than $300,000, the mayor or city manager must obtain a biennial audit by an independent public accountant, covering each fiscal year since the previous audit.
• For annual expenditures less than $100,000, the city council may elect to substitute an annual report (instead of the biennial audit) that complies with DEPA procedures and counts as the annual audit, including a required list of specific financial items and a report of agreed-upon procedures.
• Audits and annual reports must be conducted or prepared in accordance with generally accepted auditing standards (GAAS) and in a format prescribed by DEPA; reports are to be submitted to DEPA and, for certain cases, to the city council and spread on the council minutes.
• Effective date is the first day of the third month after passage and governor approval.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Municipalities