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H. B. No. 1515 *HR26/R1996* ~ OFFICIAL ~ G3/5
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To: Municipalities;
Accountability, Efficiency,
Transparency
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026
By: Representative Taylor
HOUSE BILL NO. 1515
AN ACT TO AMEND SECTION 21-35-31, MISSISSIPPI CODE OF 1972, 1
TO PROVIDE THAT ANY MUNICIPALITY WITH A POPULATION OF 3,000 OR 2
LESS MAY EMPLOY A COMPETENT ACCOUNTANT OR AUDITOR TO PREPARE AN 3
ANNUAL COMPILATION REPORT AND COMPLIANCE LETTER IN LIEU OF AN 4
ANNUAL AUDIT WHEN SUCH AUDIT WILL BE A FINANCIAL HARDSHIP ON THE 5
MUNICIPALITY; TO PROVIDE THE PREPARATION OF SUCH REPORT AND LETTER 6
SHALL BE PAID FOR BY THE STATE; AND FOR RELATED PURPOSES. 7
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 8
SECTION 1. Section 21-35-31, Mississippi Code of 1972, is 9
amended as follows: 10
21-35-31. (1) The governing authority of every municipality 11
in the state shall have the municipal books audited annually, 12
before the close of the next succeeding fiscal year, in accordance 13
with procedures and reporting requirements prescribed by the State 14
Auditor. The municipality shall pay for the audit or report out 15
of its general fund. No advertisement shall be necessary before 16
entering into the contract, and it shall be entered into as a 17
private contract. The audit or report shall be made upon a 18
uniform formula set up and promulgated by the State Auditor, as 19
the head of the State Department of Audit, or the director 20
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thereof, appointed by him, as designated and defined in Title 7, 21
Chapter 7, Mississippi Code of 1972, or any office or officers 22
hereafter designated to replace or perform the duties imposed 23
by * * * such chapter. Provided, however, any municipality with a 24
population of three thousand (3,000) or less may employ a 25
competent accountant or auditor, approved by the State Auditor to 26
prepare annually a compilation report and a compliance letter, 27
which preparation of will be covered by state funds, in a format 28
prescribed by the State Auditor in lieu of an annual audit when 29
such audit will be a financial hardship on the municipality. Two 30
(2) copies of the audit or report shall be mailed to the * * * 31
State Auditor within thirty (30) days after completion. The State 32
Auditor, at the end of each fiscal year, shall submit to the 33
Legislature a composite report showing any information concerning 34
municipalities in this state that the Auditor deems pertinent and 35
necessary to the Legislature for use in its deliberations. A 36
synopsis of the audit or report, in a format prescribed by the 37
State Auditor, shall be published within thirty (30) days by the 38
governing authority of each municipality in a newspaper published 39
in the municipality or, if no newspaper is published in a 40
municipality, in any newspaper having a general circulation 41
published in the county wherein the municipality is located. The 42
publication of the audit or report may be made as provided in 43
Section 21-17-19. Publication shall be made one (1) time, and the 44
governing authority of each municipality shall be authorized to 45
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pay only one-half (1/2) of the legal rate prescribed by law for 46
such legal publication. 47
(2) It shall be the duty of the State Auditor to determine 48
whether each municipality has complied with the requirements of 49
subsection (1) of this section. If upon examination the State 50
Auditor determines that a municipality has not initiated efforts 51
to comply with the requirements of subsection (1), the State 52
Auditor shall file a certified written notice with the clerk of 53
the municipality notifying the governing authority of the 54
municipality that a certificate of noncompliance will be issued to 55
the * * * Department of Revenue and to the Attorney General thirty 56
(30) days immediately following the date of the filing of the 57
notice unless within that period the municipality substantially 58
complies with the requirements of subsection (1). If, after 59
thirty (30) days from the giving of the notice, the municipality, 60
in the opinion of the State Auditor, has not substantially 61
initiated efforts to comply with the requirements of subsection 62
(1), the State Auditor shall issue a certificate of noncompliance 63
to the clerk of the municipality, * * * Department of Revenue and 64
the Attorney General. Thereafter, the * * * Department of Revenue 65
shall withhold from all allocations and payments to the 66
municipality that would otherwise be payable the amount necessary 67
to pay one hundred fifty percent (150%) of the cost of preparing 68
the required audit or report as contracted for by the State 69
Auditor. The cost shall be determined by the State Auditor after 70
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ST: Municipal annual audits; authorize certain
small municipalities to prepare annual
compilation report in lieu of audit.
receiving proposals for the audit or report required in subsection 71
(1) of this section. The State Auditor shall notify the * * * 72
Department of Revenue of the amount in writing, and the * * * 73
Department of Revenue shall transfer that amount to the State 74
Auditor. The State Auditor is authorized to escalate, budget and 75
expend these funds in accordance with rules and regulations of the 76
Department of Finance and Administration consistent with the 77
escalation of federal funds. All remaining funds shall be 78
retained by the State Auditor to offset the costs of administering 79
these contracts. The State Auditor shall not unreasonably delay 80
the issuance of a written notice of cancellation of a certificate 81
of noncompliance but shall promptly issue a written notice of 82
cancellation of certificate of noncompliance upon an affirmative 83
showing by the municipality that it has come into substantial 84
compliance. 85
SECTION 2. This act shall take effect and be in force from 86
and after July 1, 2026. 87