Townships

The Minnesota Legislature recently changed the Audit and Agreed-Upon Procedures Engagement (AUP) reporting requirements for townships. These changes, enacted during the 2025 legislative session, amend Minnesota Statutes, section 367.36, subdivision 1(b) and 1(c), and are effective August 1, 2025. They raise the audit threshold in 2025, and state it will be adjusted for inflation annually thereafter.[1] Please refer to 2025 Minn. Laws, ch. 39, art. 6, §§ 6 and 16.

To receive distributions under sections 477A.011 to 477A.03, townships must submit all the financial reports to the Office of 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 townships and is available in SAFES. If submitting annual financial reports through CTAS, this document is titled the State Auditor Data File. The due date is March 31 for townships that are not required to submit audits or AUPs and use a cash basis of accounting. Townships that do not have to submit audits or AUPs are encouraged to submit unaudited financial statements along with the financial reporting form.
  • GAAP or Cash Audit or Agreed-Upon Procedures Engagement (AUP): If a township needs to have a cash audit or AUP, both the audit and financial reporting form must be completed and submitted to the Office of the State Auditor by June 15. Townships reporting on a GAAP basis must submit both the audit and financial reporting form to the Office of the State Auditor by June 30.

Revenue Threshold Updates:

  • The annual audit threshold will increase to $1 million starting in 2025.[2]
  • This threshold will be adjusted annually for inflation.

Townships over 2,500 in population, according to the latest census, with annual revenue equal to or more than $1,223,000 (2024 amount will be adjusted annually for inflation), must have an annual audit in accordance with Generally Accepted Accounting Principles (GAAP). (Minn. Stat. § 471.697).

  • Townships over 2,500 in population, with a combined Clerk/Treasurer, and revenues between $1 million and $1,223,000 (2024 amount will be adjusted annually for inflation), generally are required to have an annual cash audit.
  • Townships over 2,500 in population, with a combined Clerk/Treasurer, and under the $1 million revenue threshold, are required to do an AUP or cash audit once in every 5 years.
  • Townships over 2,500 in population with a separate Clerk and Treasurer, and revenues under $1,223,000 (2024 amount will be adjusted annually for inflation) generally are not required to have an audit or AUP unless required due to debt, grant, and or other contractual agreements.

Townships 2,500 or less, with separate offices of Clerk and Treasurer: In general, Minnesota law does not require a township with separate offices of Clerk and Treasurer to have an annual audit if (1) the township has a population of 2,500 or less, or (2) the township’s annual revenue is less than the annual threshold.

Townships with Population 2,500 or less with Combined Clerk/Treasurer Offices:

  • If total annual revenues for all governmental and enterprise funds combined exceed the threshold ($1 million for 2025, adjusted for inflation thereafter), an annual audit is required.
  • If revenues for all governmental and enterprise funds combined are at or below the threshold, an AUP is required once every five years.

Procedural Requirements Based on Revenue: Please refer to 2025 Minn. Laws, ch. 39, art. 6, § 6

  • If the clerk and treasurer offices are combined and revenues for all governmental and enterprise funds exceed the annual threshold ($1 million for 2025, adjusted for inflation thereafter), the Town board must provide for an annual cash audit by the state auditor or a certified public accountant, following procedures prescribed by the state auditor.[3]
  • If revenues for all governmental and enterprise funds combined are at or below the threshold ($1 million for 2025, adjusted for inflation thereafter), the Town board must arrange for an AUP once every five years, conducted for a randomly selected one-year period.[4]

Township Aid Distribution:

  • To receive distributions under sections 477A.011 to 477A.03, townships 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.[5]

 

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

[2] Id.

[3] Id.

[4] Id.

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