HB17 • 2026

Municipal audits, expenditure thresholds for municipal audits revised

Enacted

This bill passed the Legislature and reached final enactment based on the latest official action.

Sponsor: Lamb
Last action: 2026-04-16
Official status: Enacted
Effective date: 2026-10-01

Plain English Breakdown

The official text uses the phrase 'at least $500,000' for the top tier threshold, which implies the exact upper limit may be subject to further definition or rounding in practice.

HB17: Changes to Spending Limits for City Audits

This law raises the amount of money a city must spend before it is required to have its finances checked by an outside accountant.

What This Bill Does

Increases the spending limit that requires cities to get an annual audit from $300,000 to at least $500,000.
Changes the range for biennial audits (every two years) so they apply to cities with between $300,000 and less than $500,000 in spending.
Raises the limit where a city council can choose an annual report instead of a full audit from under $100,000 to under $300,000.
Requires that all audits follow standard rules set by the Department of Examiners of Public Accounts.

Who It Names or Affects

Cities and towns in Alabama with annual spending over $100,000
City mayors or city managers who must order these checks
The Department of Examiners of Public Accounts which receives the reports

Terms To Know

Annual audit: A full check of a city's money and records done once every year by an independent accountant.
Biennial audit: A full check of a city's money and records done once every two years.
Expenditure threshold: The specific dollar amount of spending that decides which type of financial check a city must do.

Limits and Unknowns

This law only applies to cities and towns, not counties or other government groups.
Cities with less than $300,000 in spending can choose an annual report instead of a full audit, but they are not required to do so.

Bill History

2026-04-16 House
Enacted
2026-04-08 House
Delivered to Governor
2026-04-08 Senate
Signature Requested
2026-04-07 Senate
Motion to Read a Third Time and Pass - Adopted Roll Call 1206 (Yeas 34, Nays 0)
2026-04-07 Senate
Third Reading in Second House (Yeas 34, Nays 0)
2026-04-07 House
Enrolled
2026-04-07 House
Ready to Enroll
2026-03-03 Senate
Read for the Second Time and placed on the Calendar
2026-03-03 Senate
Reported Out of Committee Second House
2026-01-20 House
Motion to Read a Third Time and Pass - Adopted Roll Call 58 (Yeas 102, Nays 0)
2026-01-20 House
Third Reading in House of Origin (Yeas 101, Nays 0)
2026-01-20 Senate
Pending Committee Action in Second House
2026-01-20 Senate
Read for the first time and referred to the Senate Committee on County and Municipal Government
2026-01-14 House
Read for the Second Time and placed on the Calendar
2026-01-14 House
Reported Out of Committee House of Origin
2026-01-13 House
Pending Committee Action in House of Origin
2026-01-13 House
Read for the first time and referred to the House Committee on County and Municipal Government

Official Summary Text

This act amends Section 11-43-85, Code of Alabama 1975, to increase the annual expenditure threshold amounts that trigger municipalities to conduct certain municipal audits as follows: (1) for required annual audits, from $300,000 of annual expenditures to at least $500,000; (2) for required biennial audits, from less than $300,000 of annual expenditures to between $300,000 and $500,000; and (3) for those municipalities whose city council may elect an annual audit in lieu of a biennial audit, from less than $100,00 of annual expenditures to less than $300,000.

Current Bill Text

Read the full stored bill text

HB17 ENROLLED
Page 0
HB17
RBXAWYM-2
By Representative Lamb
RFD: County and Municipal Government
First Read: 13-Jan-26
PFD: 25-Jun-25
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HB17 Enrolled
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PFD: 25-Jun-25
Enrolled, An Act,
Relating to municipal audits; to amend Section
11-43-85, Code of Alabama 1975, to revise the annual
expenditure threshold amounts that trigger municipal audits.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 11-43-85, Code of Alabama 1975, is
amended to read as follows:
"§11-43-85
(a) This section shall be known and may be cited as the
Municipal Audit Clarification Act.
(b)(1) In a municipality with annual expenditures of
three five hundred thousand dollars ($300,000) ($500,000) or
more, the mayor or city manager shall provide for and cause to
be made an annual audit of the financial affairs and
transactions of all funds and activities of the municipality
by an independent public accountant for each fiscal year of
the municipality.
(2) Except as provided in subdivision (3), in a
municipality with annual expenditures of less than three five
hundred thousand dollars ($300,000) ($500,000) , the mayor or
city manager shall provide for and cause to be made a biennial
audit of the financial affairs and transactions of all funds
and activities of the municipality by an independent public
accountant for each fiscal year of the municipality. The audit
conducted pursuant to this subdivision shall include each
fiscal year since the preceding audit.
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fiscal year since the preceding audit.
(3) In a municipality with annual expenditures of less
than one three hundred thousand dollars ($100,000) ($300,000) ,
the city council may elect to provide for and direct the mayor
or city manager to cause to be made, in lieu of the biennial
audit required under subdivision (b)(2), an annual report that
complies with procedures established by the Department of
Examiners of Public Accounts. The annual report shall be
provided to the Department of Examiners of Public Accounts and
shall constitute an annual audit report. The report shall
include all of the following:
a. Proof and reconciliation of cash.
b. Confirmation of cash balances.
c. A list of all bank balances.
d. A statement of cash receipts and cash disbursements.
e. A statement of compliance with state law.
f. A report of agreed upon procedures.
g. A report of motor fuel excise taxes collected and
the distribution and use of those proceeds.
(c) A municipal audit under this section shall be
conducted in accordance with generally accepted auditing
standards in a format prescribed by the Department of
Examiners of Public Accounts.
(d)(1) A municipal audit or annual report under this
section shall be provided to the Department of Examiners of
Public Accounts in accordance with Section 41-5A-12.1.
(2) In addition to the requirements of subdivision (1),
a municipal audit report under subdivision (b)(3) shall be
submitted to the city council at its first meeting after
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submitted to the city council at its first meeting after
completion of the report and shall be spread upon the minutes
of the council."
Section 2. This act shall become effective on October
1, 2026.
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1, 2026.
________________________________________________
Speaker of the House of Representatives
________________________________________________
President and Presiding Officer of the Senate
House of Representatives
I hereby certify that the within Act originated in and
was passed by the House 20-Jan-26.
John Treadwell
Clerk
Senate 07-Apr-26 Passed
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