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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



Opinion No. 5876

April 14, 1981


Authority of council to engage auditor for police and fire retirement system

A city council has authority to retain an auditor to perform an annual audit of the police and fire retirement system established under 1937 PA 345.

Honorable John T. Kelsey

State Representative

The Capitol

Lansing, Michigan

You have requested my opinion upon the following question:

'Does the City of Warren Council have the authority to engage an Auditor for the City of Warren Police and Fire Retirement System which operates under P.A. 345 of 1937 as amended?'

The creation and composition of police and fire retirement boards are provided for by 1937 PA 345, Sec. 1; MCLA 38.551; MSA 5.3375(1). The City of Warren has provided for such a board by adoption of said act pursuant to 1937 PA 345, Sec. 11, MCLA 38.561; MSA 5.3375(11), as indicated by the Warren Charter, Sec. 16.1. The powers and duties of such retirement boards are provided for by 1937 PA 345, Sec. 2; MCLA 38.552; MSA 5.3375(2), and states as follows with respect to the retaining of services:

'The retirement board created under this act shall perform the following:

2) Retain legal, medical, actuarial, clerical or other services as may be necessary for the conduct of the affairs of the retirement system and make compensations for the services retained.'

1937 PA 345, Sec. 9(4); MCLA 38.559; MSA 5.3375(9), contains a corresponding provision for payment by the city of the expenses indicated in 1937 PA 345, Sec. 2, supra.

The responsibility for obtaining an annual audit appears in 1968 PA 2, Sec. 5; MCLA 141.425; MSA 5.3228(25):

'All local units of government of less than 1,000,000 population shall have an annual audit of its financial records, accounts and procedures except that in the units of local government having populations of less than 2,000 such audit shall be required not less frequently than biennially.'

1968 PA 2, supra, Sec. 6, provides for the retaining of certified public accountants:

'Local units may retain certified public accountants to perform such audits. If any unit fails to provide for an audit, the state treasurer shall either conduct the audit or appoint a certified public accountant to perform it. The entire cost of any such audits will be borne by the local unit.'

The term local units is defined at 1968 PA 2, supra, Sec. 2d, as added by 1978 PA 621; MCLA 141.422d; MSA 5.3228(22d):

'Except as used in sections 14 to 20a, 'local unit' means a village, city, township, or an authority or commission established by a village, city, or township ordinance or charter. . . .' [Emphasis added.]

Prior to the addition of section 2d, supra, the definition appeared at section 2, which included the word 'board.' By deletion of the word 'board' in section 2d, supra, the legislature expressed an intention that a board not be included within the term local unit. The authority to retain certified public accountants to perform audits pursuant to 1968 PA 2, Sec. 6, supra, is conferred upon the local unit as defined by section 2d, supra, and no longer includes a board.

The Warren Charter, Sec. 8.13, expressly confers upon the city council the authority to designate the certified public accountant to perform the annual audit of all accounts of the city government:

'An independent audit shall be made of all accounts of the city government at the close of each fiscal year, and shall be completed within ninety days thereafter. Special independent audits may be made at any time that the Council may designate. All such audits shall be made by a Certified Public Accountant designated by the Council. The results of each such audit shall be made public in the manner that the council determines and copies thereof shall be placed to the office of the Clerk, and of the Controller.' [Emphasis added.]

It is, therefore, my opinion that the Warren City Council is authorized to retain an auditor to perform an annual audit of all the accounts of the city, including the police and fire retirement system under 1937 PA 345, supra.

Frank J. Kelley

Attorney General

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