Each year, the SC Revenue and Fiscal Affairs Office releases updated figures for the cities and towns that are allowed to provide a compilation of financial statements rather than a full audit.
South Carolina law, under SC Code Section 5-7-240, historically required all municipalities to submit audits to the state treasurer after each financial year. Acknowledging the costs associated with audits, the General Assembly passed Act 71 in 2023, allowing certain cities and towns with revenues below a set amount the option of providing a compilation of financial statements instead of a full audit. In these cases, the law allows the city to provide a compilation of financial statements instead of an audit either every year, in cases where the municipality has a court system; or at least once every three years, in cases where the municipality does not have a court system.
To be eligible to do this, the municipality’s total recurring revenues must fall below the threshold established in the Act and updated annually by the SC RFA. RFA adjusts the threshold each year based on the consumer price index. For fiscal years beginning after January 1, 2026, RFA determined that the threshold will increase to $528,292. Municipalities with recurring revenues above this threshold are required by law to submit a full audit.
More information about required financial reporting is available on the Municipal Association’s webpage discussing audits and how they are impacted by Act 71. The State Treasurer’s Office website covers the topic as well.
Those with questions about audit thresholds should contact their Municipal Association Field Services manager.