January 12, 2001

TO:    Cities, Villages, Townships, Authorities, and Other Municipal Agencies

FROM:    Richard L. Baldermann, Administrator
                Local Audit and Finance Division

SUBJECT:    Audit and Annual Financial Report Filing Extension

Public Act 493 of 2000 amended certain sections of the Uniform Budgeting and Accounting Act and was given immediate effect.

Section 7 (4) (MCL 141.427[4]) of the Uniform Budgeting and Accounting Act requires:

1. Requests for extensions must come from the chief administrative officer of the municipality. When an audit report can not be completed within 6 months after the end of the fiscal year, the chief administrative officer may request an extension of the filing deadline.

2. Requests must be made within 6 months from the end of the fiscal year. The written request for a filing extension must be made before the audit is actually delinquent (within 6 months of the end of the fiscal year).

3. Requests for an extension must be complete. A complete request for the extension for filing of an audit will include a letter from the chief administrative officer indicating:

a) that the audit is currently in progress (identify any component units);
b) when the audit is expected to be completed;
c) an explanation of the existence of extraordinary circumstances beyond the control of the local unit and the audit cannot be completed and filed timely (the reasonable cause). A letter from the auditor regarding a through c is acceptable as an attachment to the chief administrative officer's request.
d) In addition, requests for extension of the filing requirement for the annual financial report (F-65) must be accompanied by unadjusted year end trial balance reports. The Department of Treasury will post these unadjusted year end trial balance reports on the Department’s internet website if the extension is granted

4. A written response to each audit extension request will be sent to the local unit. The Department of Treasury will respond in writing to each request for an audit extension received.

5. Requests for an extension will be denied absent the existence of an extraordinary circumstance beyond the control of the unit of government justifying the extension.

(NOTE: This request for extension of the filing date for an audit with the Michigan Department of Treasury does not relieve the local unit from filing the continuing disclosure information required to comply with an undertaking Agreement in accordance with the requirements of Rule 15c2-12 of the Securities and Exchange Commission.)

Penalties for late audit filing may be initiated. The Department of Treasury will notify the local unit that their audit is delinquent as follows:

1. An audit of the local unit’s financial records will be conducted by audit staff from the Department of Treasury or by a Certified Public Accountant appointed by the state treasurer and will be billed to the local unit (MCL 141.426).

2. The Department of Treasury will withhold all or a portion of state shared revenues until an acceptable audit report is received (MCL 141.921(1)).

3. Borrowing requests will be denied or held until an acceptable audit report is received (MCL 133.11(1)(c) and MCL 133.5).

4. Public Act 72 of 1990 (MCL 141.1201 et al) provides that failure to file a required audit report is a condition that may authorize the State Treasurer to conduct a preliminary review to determine the existence of a local government financial problem.