(a) The governing authority of each municipal corporation shall submit to the state auditor a copy of its regular annual audit not later than six months after the end of the fiscal year for which the audit was made. The state auditor shall compare the amount of funds distributed to each municipal corporation in such year under this article against the amount of funds expended by each municipal corporation in such year for the purposes authorized by such Code sections. If the state auditor determines that the amount so expended is less than the amount distributed, he shall certify such amount to the Office of Treasury and Fiscal Services, which shall deduct and withhold the certified amount from the next funds to be distributed to the offending municipal corporation under this article. If, however, a municipal corporation expending less than the amount distributed to it certifies at the time of the submission of its audit that it is accumulating such funds for a specified allowable purpose and submits proof of the deposit or investment of such funds, then such municipal corporation will be deemed to have complied with the requirements of this Code section, except that the amount of such funds shall be added to the amount of funds distributed to such municipal corporation in the next succeeding year or years for the purpose of making the comparison and determination provided for in this Code section.

(b) Upon certification by the state auditor to the Office of Treasury and Fiscal Services that the audit required by this Code section from any municipal corporation has not been received, the Office of Treasury and Fiscal Services shall not distribute any further funds under this article to such offending municipal corporation until the state auditor again certifies to the Office of Treasury and Fiscal Services that the delinquent audit has been filed. It shall be the duty of the state auditor to make such certification when no audit is received or when a delinquent audit is received.

(c) If any municipal corporation is not now having a regular annual audit made of its funds, the Office of Treasury and Fiscal Services shall not distribute any further funds under this article to such municipal corporation until either:

(1) An audit has been made and submitted to the state auditor; or

(2) The mayor or clerk submits a statement under oath to the state auditor stating:

(A) That the municipal corporation does not now have a regular annual audit;

(B) That the funds received under this article have been deposited in and disbursed from a separate account; and

(C) That the funds have been expended for the purposes authorized by this article.

(d) Upon the request of the Governor or the commissioner of transportation, the state auditor is authorized to audit the books and records of each municipal corporation to verify the accuracy of the report so filed with him and to ensure that the expenditure of such funds has been made for the purposes intended.