It depends. Some local government entities such as school districts, industrial development agencies, fire districts with revenues of $400,000 or more and sponsors of length of Service Award Programs (LOSAP) for volunteer firefighters are required each year by law to have an audit conducted by an external auditor. A local government that expends $750,000 or more in federally awarded funds in its fiscal year is also required to have an audit, conducted by an external auditor, in accordance with the provisions of the federal "single audit act". Other external audits of one type or another may also be required pursuant to the terms of specific contracts, agreements, or special legislation applicable to your local government. These audits are generally conducted in accordance with nationally recognized auditing standards by external auditors who are independent of the local governments they audit, either members of private certified public accounting firms or organizationally independent government auditors.
Sometimes confusion arises over the meaning and / or context in which the term "audit" is used. For example, an often misunderstood duty is the requirement that certain governing boards annually "audit", or cause to be audited, the records and documents of various officers and employees responsible for receiving and disbursing moneys. For this purpose, the relevant laws do not define the term "audit" and the depth and involvement of such audits can vary. Governing board members or designated officials performing this audit function internally would not generally be expected to comply with professional standards or perform the same type of audit services as an independent public accountant hired for that purpose. For guidance in performing this audit function, we have developed several checklists for reviewing the records of various municipal officers and departments within your government. These are included in our Local Government Management Guide publication entitled Fiscal Oversight Responsibilities [pdf].