The Myth of December 1
It’s that time again – October 31 is drawing near and LGC staff is receiving questions about audit report due dates, extensions, and grace periods. Just like our effort to debunk the “Myth of 8%” related to fund balance available, we’re now going to attempt to debunk another myth – the Myth of December 1.
Myth #1:
There is a “grace period” for the submission of audits and audits are not considered late until after December 1.
Facts:
There is no grace period for the submission of audit reports. Audit reports are due four months after the fiscal year-end (for units other than housing authorities). For most units (including all counties and all municipalities) the audit report due date is October 31.
Audits received after October 31 are considered late. The December 1 date is a “grace period” that determines whether an amended contract is required by the LGC – if an audit will be submitted late (after October 31) but on or before December 1, an amended contract is not required by the LGC (unless there is a fee change or other significant change in the contract terms). See contract resources here.
Myth #2:
If you’re going to be late with your audit, you can request an extension.
Facts:
The LGC does not grant extensions of due dates.
It is important to note that the date provided by the auditor in an audit contract or amended contract is not the “due date” of the audit and is not an extension request. The date in the contract or amended contract is the date by which the auditor is agreeing to complete the audit.
LGC approval of a contract or amended contract with a date later than October 31 is not an extension approval. Amended contracts serve to document (with local government governing board approval as required per board policy) modifications to the date the audit will be completed, a fee change, or other significant change in terms.
Myth #3:
If my audit report is going to be late, I should just submit it as soon as I can.
Facts:
An amended contract is required if an audit report is submitted after December 1, if the fee changes, or if there are other significant changes in terms. See contract resources here. We also strongly suggest you communicate any issues or delays you’re encountering to LGC staff. We’re happy to assist where we can and will make note of any challenges so that we can better provide resources and guidance to all units. Email us at SLGFD@nctreasurer.com.
Myth #4:
There are no implications for having a late audit.
Facts:
Units requesting LGC approval of debt must have a current audit in order to be placed on an agenda (with limited exceptions). During the months of November and December, any delay in the submission of the audit for the immediate past fiscal year and/or a sufficient response to any identified financial performance indicators of concern may cause the debt transaction/inclusion on the LGC agenda to be delayed. See application due dates and other information on LGC approval of debt here - Applying for Debt | NC Treasurer.
Many grants and loans require a recent audit in order to apply for funds.
Depending on the date the audit is submitted, a late audit may result in the unit being placed on the Unit Assistance List and may result in the unit being subject to provisions of Session Law 2023-59. The LGC is working to implement this new session law and staff will be providing details and updates in the coming weeks.
Summary
LGC staff understands the complexities and challenges associated with completing annual audit reports. But we also understand the importance of these reports in providing transparency and accountability related to public funds managed by local governments. We strive to provide easily accessible and helpful information to local governments, their auditors, and the public and always welcome suggestions for additions or improvements.
Some resources that may be helpful related to annual audits include:
This webpage provides information on audits submitted by local governments.
This webpage provides a list of all audits received (including date submitted and a link to the audit report).
This webpage lists audit fees approved by the LGC.
This webpage provides information related to the submission of annual audits, audit contracts, and audit invoices.
Please let us know how else we can help. SLGFD@nctreasurer.com.
