§ 54-10-14 — Political subdivisions - Audits - Fees - Alternative audits and reports

1. The state auditor shall audit the following political subdivisions once every two years,
except as provided in this section or otherwise by law:
a. Counties.
b. Cities, and when a city is audited, to include any political subdivision that was
created by the city and has bonding authority.
c. Park districts.
d. School districts.
e. Firefighters relief associations.
f. Airport authorities.

g. Public libraries.
h. Water resource districts, created under chapter 61-16 and operating under
chapter 61-16.1.
i. Garrison Diversion Conservancy District.
j. Rural fire protection districts.
k. Special education districts.
l. Area career and technology centers.
m. Correction centers.
n. Recreation service districts.
o. Weed boards.
p. Irrigation districts.
q. Rural ambulance service districts.
r. Southwest water authority.
s. Regional planning councils.
t. Soil conservation districts.
u. Western area water supply authority industrial water sales on an annual basis.
v. Water districts subject to chapter 61-35.
2. The state auditor shall charge the political subdivision an amount equal to the fair
value of the audit and any other services rendered. The fees must be deposited in the
state auditor operating account. The state treasurer shall credit the state auditor
operating account with the amount of interest earnings attributable to the deposits in
that account. Expenses relating to political subdivision audits must be paid from the
state auditor operating account, within the limits of legislative appropriation.
3. In lieu of conducting an audit every two years, the state auditor may require annual
reports from political subdivisions subject to this section, or otherwise provided by law,
for any report delinquent as of June 30, 2023, or from political subdivisions with less
than two million dollars of annual receipts, excluding any funds passed through the
political subdivision to another entity. If any federal agency performs or requires an
audit of a political subdivision that receives federal funds to pass through to another
entity, the political subdivision shall provide a copy to the state auditor upon request by
the state auditor. The reports must contain the financial information required by the
state auditor. The state auditor may:
a. Make any additional examination or audit determined necessary in addition to the
annual report.
b. Charge the political subdivision an amount equal to the fair value of the additional
examination or audit and any other services rendered.
c. Charge a political subdivision a fee not to exceed ninety dollars an hour for the
costs of reviewing the annual report.
4. A political subdivision, at the option of its governing body, may be audited by a certified
public accountant or licensed public accountant rather than by the state auditor. The
public accountant annually shall register with the state auditor and comply with
generally accepted government auditing standards for audits of political subdivisions.
The report must be in the form and content required by the state auditor. The number
of copies of the audit report requested by the state auditor must be filed with the state
auditor when the public accountant delivers the audit report to the political subdivision.
The state auditor shall review the audit report to determine if the report is in the
required form and has the required content, and if the audit meets generally accepted
government auditing standards. The state auditor also may periodically review the
public accountant's workpapers to determine if the audit meets generally accepted
government auditing standards. If the report is in the required form and has the
required content, and the report and workpapers comply with generally accepted
government auditing standards, the state auditor shall accept the audit report. The
state auditor may charge the political subdivision a fee of up to ninety dollars an hour,
but not to exceed seven hundred fifty dollars per review, for the related costs of
reviewing the audit report and workpapers.

5. A political subdivision may not pay a public accountant for an audit until the state
auditor has accepted the audit. However, a political subdivision may make progress
payments to the public accountant. A political subdivision shall retain five percent of
any progress payment until the audit report is accepted by the state auditor.
6. The state auditor may require the correction of any irregularities, objectionable
accounting procedures, or illegal actions on the part of the governing board, officers,
or employees of the political subdivision disclosed by the audit report or workpapers,
and failure to make the corrections must result in audits being resumed by the state
auditor until the irregularities, objectionable accounting procedures, or illegal actions
are corrected.