Special Districts

The Minnesota Legislature recently changed the Audit and Agreed-Upon Procedures Engagement (AUP) reporting requirements for Special Districts. Under Minnesota Statutes, section 6.756, special districts are subject to auditing and reporting requirements that are tied to thresholds applicable to cities.[1] During the 2025 legislative session, the legislature changed the statutes setting thresholds and other audit/AUP requirements for cities, which in turn changes the requirements for special districts, effective August 1, 2025.[2]

To receive distributions under a special district aid program, special districts must submit all the financial reports to the state auditor by the reporting deadline. This requirement applies to all aid distributions to be paid on or after August 1, 2025. These reports include:

  • Local Government Financial Reporting Form: This Excel form is required to be completed by all special districts and is available in SAFES. If submitting annual financial reports through CTAS, this document is titled the State Auditor Data File. Special districts that do not have to submit audits or AUPs are required to submit unaudited financial statements along with the financial reporting form. The unaudited financial statements or audit and financial reporting form are due within 180 days following the end of the fiscal year.
  • GAAP or Cash Audit or Agreed-Upon Procedures Engagement (AUP): If a special district needs to have a GAAP or cash audit or AUP, both the audit and financial reporting form must be completed and submitted to the OSA within 180 days following the end of the fiscal year.

Revenue Threshold Updates:

Procedural Requirements Based on Revenue:

  • If the revenues for all governmental and enterprise funds exceed the annual threshold, the special district must provide for an annual cash audit by the state auditor or a certified public accountant, following procedures prescribed by the state auditor.[4]
  • If revenues for all governmental and enterprise funds combined are at or below the threshold, the special district must arrange for an AUP once every five years, conducted for a randomly selected one-year period.[5]

Special District Aid Program Distribution:

  • To receive distributions under a special district aid program, special districts must submit all the financial reports to the state auditor by the reporting deadline. This requirement applies to all aid distributions to be paid on or after August 1, 2025.[6]

 

Note: Consult with the special district or its legal advisor to determine whether the special district is subject to financial auditing and reporting requirements under another law. For example, Minn. Stat. § 103D.355 requires each watershed district to have an annual audit.

 

[1] Minn. Stat. § 6.756.

[2]  See 2025 Minn. Laws, ch. 39, art. 6, §§ 10 and 13.

[3] Id.

[4] Id.

[5] Id.

[6]  See 2025 Minn. Laws, ch. 39, art. 6, § 16.