Committee advances bill to raise audit threshold for small Minnesota local governments

Senate File 564, which would raise the revenue threshold that triggers a required annual audit for many small Minnesota local governments, was discussed and amended at the State and Local Government Committee on Feb. 27, with members adopting two amendments and laying the bill over for possible inclusion in an omnibus package.

The bill’s author, Senator Erin Hauschildt, told the committee the change would ease a recurring financial burden for small entities across rural Minnesota, where annual audits often cost thousands of dollars. “Many small entities such as local special districts and townships often have very small annual budgets,” Hauschildt said. Under current law the audit threshold is indexed and is roughly in the mid-$200,000 range; the bill would raise the level to $1,000,000, while retaining annual financial reporting and an agreed-upon-procedures engagement every five years for entities below the new threshold.

The change is intended to reduce audit costs for small governments while preserving oversight. Graham Berg Moberg of the Minnesota Association of Townships said many township officers are unpaid volunteers and that audits can cost “$10,000 to $15,000 per year” for some small entities; he told the committee his association represents nearly all of Minnesota’s 1,776…