The SBOA is required by IC 5-11-1-25 to determine the frequency of examinations of cities using risked based criteria. The frequency of examinations must not be less than once every four years. The criteria used to establish risk must include the following factors:
- A newly elected or appointed fiscal officer
- Annual Financial Reports that are not timely submitted or that contain material errors;
- Any other factor determined by the State Examiner and approved by the audit committee.
Examinations must be conducted annually for cities that require an annual audit (a) due to the receipt of federal financial assistance in an amount that subjects the city to a federal audit, (b) due to continuing disclosure requirements, or (c) as a condition of a public bond issuance.
By statute, cities are classified according to their populations. If a city has a population of 600,000 or more, it is considered a first class city. Cities with a population between 35,000 and 599,999 are considered second class cities while cities with populations below 35,000 are considered third class cities. If the population of a city changes and would put it within one of the other ranges, it does not automatically change classification. It can elect to change classification via ordinance adopted by its legislative body.