McMinnville officials are trying to determine how loose, or how stringent, their audit requirements will be for nonprofit groups seeking funding.
“We need to sit down with a CPA,” said Finance Committee chair Everett Brock.
City attorney Tim Pirtle agreed, recommending Finance Committee members, Finance Department director Shirley Durham, and the city’s accountant sit down with a certified public accountant.
City officials recently decided to require nonprofits which receive city funding to have an audit conducted. This was done in an effort to ensure taxpayer funds are being spent responsibly.
However, the city has learned the expense of an audit is cost-prohibitive for some nonprofits. That has led to talks of tweaking the audit requirements.
“Since we have tightened up on our nonprofits requiring they have an audit, it has come to our attention that we are really starving some people that can’t afford to do an audit or not much more than a cursory audit with their CPA as required by the 501(c)3 status,” said Brock.
Pirtle says the city officials can determine what “audit” means to them.
“The statute does and still requires certain financial information to be provided for the city recorder in order for that entity, that nonprofit or charitable organization, to receive public funds from a municipality,” said Pirtle. “That statute does not define what an audit is, who has to conduct it, or how it is to be conducted. There is no requirement in the law the audit must be performed by a CPA or public accountant.”
Alderman Ben Newman suggested a sliding scale – requiring nonprofits receiving smaller donations to provide less financial information about the organization and tighten the requirements as the donation requested increases.
“If you look at the purpose of having an audit, they just want to make sure we are giving money to someone who is using it for the purpose they are telling us they are using it for. If someone is going to get $1,000 from us, the chance of them running off and doing something else with it is pretty small. If it’s a larger donation we are making, the chance of them using it for a purpose other than what we want to use it for is greater.”
The measure was tabled.