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City considers new audit requirement guidelines
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McMinnville officials are considering a measure that will loosen their audit requirements for nonprofit groups seeking city funding.
Alderman Everett Brock recommended two different audit requirements – nonprofits receiving smaller donations would be in the lower level and required to provide less financial information than organizations in the higher level, which would be required to provide more financial information.
“We want to be able to have a balance sheet for a financial statement that applies to $5,000 and less or $10,000 and less,” said Brock. “I would like to keep it to two levels, if we possibly can. People who are up in the $30,000 to $40,000 range are going to have that kind of information regardless of whether we ask for it or not. They are going to have audited financial reports, I think.”
While organization receiving smaller donations would be asked to provide notarized verification from someone within their organization that the financials presented to the city are accurate, the organizations receiving larger donations would be required to provide an audit performed by a certified public accountant.
Alderman Ben Newman questioned which organizations have annual audits performed without being required by the city.
“Main Street McMinnville does,” said Brock. “They didn’t until recently, but I think they will continue to have one in the future. The Chamber of Commerce does, which also brings in things like BRAC and Sister Cities. We have theirs for this year.”
The Industrial Development Board and Magness Library were also mentioned as organizations that are audited annually.
Mayor Jimmy Haley suggested doing away with the levels and requiring the same of all organizations, but if one has an audit, it must be provided to the city.
“Why don’t we have a simple form for everybody and if you have an audit, attach it to it,” said Haley. “Otherwise, you are going to be picking and choosing who does and doesn’t have an audit. Just make everyone fill out a form and supply an audit if they have one.”
City attorney Tim Pirtle recommended going with the size of the contribution.
“In the accounting world, it would be broken down by the size of the contribution,” said Pirtle. “It would seem logical that the more of the taxpayers money a beneficiary is receiving the higher the expectation that you would want the money to be used for the purpose it was intended.”
Brock agreed with Haley.
“Most of our donations are small, from the $1,000 to $10,000 range,” said Brock. “Those are the ones that I think we need to address. Jimmy has a point. Maybe we should send this out and if they have a certified audit from a CPA, they must attach it.”
Finance Committee members Brock, Newman and Chastain unanimously approved a form for all organizations to fill out that would require a notarized financial statement from someone within the organization or, if available, a financial audit.
The measure will be sent to the full Board of Mayor and Aldermen for its consideration.