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SENATE FLOOR VERSION - SB2130 SFLR Page 1
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SENATE FLOOR VERSION
March 3, 2026
AS AMENDED
SENATE BILL NO. 2130 By: Murdock of the Senate
and
Newton of the House
[ annual financial statement audit - exemptions -
effective date ]
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 11 O.S. 2021, Section 17-105, as
last amended by Section 1, Chapter 287, O.S.L. 2024 (11 O.S. Supp.
2025, Section 17-105), is amended to read as follows:
Section 17-105. A. The governing body of each municipality
with Fifty Thousand Dollars ($50,000.00) or more in total revenue to
all funds, including component units of which the municipality is a
beneficiary, during a fiscal year shall cause to be prepared, by an
independent licensed public accountant or a certified public
accountant, an annual financial statement audit to be conducted in
accordance with auditing standards generally accepted in the United
States of America and Government Auditing Standards as issued by the
Comptroller General of the United States. Such audit shall be
ordered within thirty (30) days of the close of each fiscal year.
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Copies shall be filed with the State Auditor and Inspector within
six (6) months after the close of the fiscal year in accordance with
the provisions of the Municipal Audit Reform Act of 2022 and with
the governing body of the municipality.
B. The governing body of each municipality with Fifty Thousand
Dollars ($50,000.00) or more in total revenue to all funds,
including component units of which the municipality is a
beneficiary, and with a population of less than two thousand five
hundred (2,500) as of the most recent Federal Decennial Census, and
for whom an annual financial statement audit is not required by
another law, regulation or contract, shall cause to be prepared, by
an independent licensed public accountant or a certified public
accountant, a biennial financial statement audit in accordance with
auditing standards generally accepted in the United States and
Government Auditing Standards as issued by the Comptroller General
of the United States. Each biennial audit shall cover the two (2)
preceding years.
The governing body of each municipality may alternatively
request a biennial agreed-upon-procedures engagement. Agreed-upon
procedures required under the Municipal Audit Reform Act of 2022
shall be performed in accordance with the applicable attestation
standards of the American Institute of Certified Public Accountants.
The audit or agreed-upon-procedures engagement shall be ordered
within thirty (30) days of the close of the fiscal year that the
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audit is due. Copies shall be filed with the State Auditor and
Inspector within nine (9) months after the close of the fiscal year
in accordance with the provisions of paragraph 2 of subsection A of
Section 212A of Title 74 of the Oklahoma Statutes and with the
governing body of the municipality, with the deadline to order and
file the audit or agreed-upon procedures eligible for extension by
the State Auditor and Inspector for special circumstances or
emergencies.
C. 1. The municipal income requirements in subsections A and B
of this section shall not include any grant monies provided to a
municipality from any federal, state, or other governmental entity.
The municipal income requirements shall not include income of any
public trust established under Sections 176 through 180.4 of Title
60 of the Oklahoma Statutes with a municipality as the beneficiary
of the trust; provided, income from trusts established principally
for the purpose of operating electric, water, wastewater, and
sanitation utilities shall be included for purposes of the municipal
income requirements.
2. Other than an audit required pursuant to Section 180.1 of
Title 60 of the Oklahoma Statutes, a municipality with a total
revenue of less than Fifty Thousand Dollars ($50,000.00) across all
funds, including component units of which the municipality is a
beneficiary, and a population of less than five hundred (500) as of
the most recent Federal Decennial Census shall not be required to
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prepare an audit or agreed-upon-procedures engagement solely as a
condition to be eligible or a recipient of a grant from any federal,
state, or local source.
D. The governing body of each municipality that requests the
biennial agreed-upon-procedures engagement provided in subsection B
of this section shall:
1. Determine the establishment of policies related to
adjustments, write-downs, or write-offs for various receivables due
to the municipality or the utility-related trust and select a sample
of adjustments to test for adherence to policies and for appropriate
supporting documentation;
2. Obtain two (2) months of bank statements of the general fund
and utility fund and confirm that cash deposits were made in the
appropriate accounts and verify utility billing receipts or posting
reports agree with the daily deposits;
3. Agree upon a pay rate for the city manager or town
administrator, city or town clerk, city or town treasurer, and
payroll clerk, to be authorized and documented in the personnel file
or in approved meeting minutes. If any employee received
compensation over and above his or her authorized salary or hourly
rate, the payroll clerk, upon request, shall provide appropriate
documentation of authorization for such pay. The requirements of
this paragraph shall not include expense reimbursements but shall
include any allowances considered taxable;
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4. Determine the establishment of policies of use, proper
municipal purpose, and adherence to prescribed policies for entities
that use debit or credit cards;
5. Select a sample of transactions to test for supporting
documentation;
6. Prepare a cash basis schedule of changes in fund balances
for each fund and determine compliance with the statutory
prohibition of creating fund balance deficits;
7. Agree material fiscal year-end bank account balances to bank
statements and trace significant reconciling items to subsequent
clearance and determine if any bank accounts exist that are not
under city council purview;
8. Compare uninsured deposits at fiscal year-end to the fair
value of pledged collateral;
9. Inquire if any instances of known fraud, illegal acts, or
noncompliance with laws and regulations have occurred; and
10. Compare the use of material-restricted revenues and
resources to the restrictions of the governing body of the
municipality.
E. A public trust with a municipal government or governments as
the beneficiary that meet the same financial requirements
established in subsection B of this section may, as an alternative
to obtaining an audit as required in Section 180.1 of Title 60 of
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the Oklahoma Statutes, follow the biennial agreed-upon-procedures
engagement outlined in subsection D of this section.
SECTION 2. This act shall become effective November 1, 2026.
COMMITTEE REPORT BY: COMMITTEE ON LOCAL AND COUNTY GOVERNMENT
March 3, 2026 - DO PASS AS AMENDED