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STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
SENATE BILL 275 By: Thompson
AS INTRODUCED
An Act relating to cities and towns; amending 11 O.S.
2011, Sections 17-105, as last amended by Section 1,
Chapter 82, O.S.L. 2017 and 17-107 (11 O.S. Supp.
2020, Section 17-105), which relate to municipal
finances; modifying minimum municipal income for
which certain audits shall be required; makin g
certain audits biennial; replacing cer tain auditing
procedures with procedures prescribed by the State
Auditor and Inspector; modifying time certain audit
report is due; modifying municipal income
requirements; redirecting certain funds; creating the
Special Investigative Unit Aud iting Revolving Fund;
providing for revenue and expenditures; repealing 11
O.S. 2011, Section 17-108, which relates to municipal
trusts; and providing for cod ification.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOM A:
SECTION 1. AMENDATORY 11 O.S. 2011, Section 17 -105, as
last amended by Section 1, Chapter 82, O.S.L. 2017 (11 O.S. Supp.
2020, Section 17-105), is amended to read as follows:
Section 17-105. A. The governing body of each municipality
with an income of Twenty-five Thousand Dollars ($25,000.00) Fifty
Thousand Dollars ($50,000.00) or more to its general fund in revenue
to all funds including component units of which the municipality is
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a beneficiary, during a fiscal year shall cause to be prepared, by
an independent licensed public accountant or a certified public
accountant, an annual financial statement audit to be conducted in
accordance with auditing standards generally accepted in the United
States of America and “Government Auditing S tandards” as issued by
the Comptroller General of the United States. Such au dit shall be
ordered within thirty (30) days of the cl ose of each fiscal year.
Copies shall be filed with the State Auditor and Inspector within
six (6) months after the close of the fiscal year in accor dance with
the provisions of Sections 3022 and 3023 paragraph 2 of subsection A
of Section 212A of Title 68 74 of the Oklahoma Statutes and with the
governing body of the municipality.
B. The governing body of each municipality with an income of
Twenty-five Thousand Dollars ($ 25,000.00) Fifty Thousand Dollars
($50,000.00) or more to its general fund during a fiscal year in
total revenue to all funds including component unit s 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 fin ancial statement audit
is not required by another law , regulation or contract, shall cause
to be prepared, by an independent licensed public accountan t or a
certified public accountant, an annual a biennial financial
statement audit in accordance with audi ting standards generally
accepted in the United States and Gover nment Auditing Standards as
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issued by the Comptroller General of the United States , or an. Each
biennial audit shall cover the two (2) pre ceding years. The
governing body of each m unicipality may alternatively request
biennial agreed-upon-procedures engagement over certain financial
information and compliance requirements to be performed in
accordance with the applicable attestation standar ds of The American
Institute of Certified Public Acco untants. The specific procedures
to be performed are as follows for the fiscal year:
1. Prepare a schedule of changes in fund balances for each fund
and determine compliance with the statutory prohibit ion of creating
fund balance deficits;
2. Prepare a budget and actual financial schedule for the
General Fund and any other significant funds listing separately each
federal fund and determine complianc e with the legal level of
appropriations by comparing expenditures and encumbrances to
authorized appropriations;
3. Agree material bank account balances to bank statements, and
trace significant reconciling items to subsequent clearance;
4. Compare uninsured deposits to fair value of pledged
collateral;
5. Compare use of material -restricted revenues and re sources to
their restrictions;
6. Determine compliance with requirements for separate funds;
and
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7. Determine compliance with reserve account and de bt service
coverage requirements of bond indentures.
Such prescribed by the State Auditor and Inspector. Each
biennial agreed-upon-procedures engagement shall cover the two (2)
preceding years. The audit or agreed-upon-procedures engagement
shall be ordered within thirty (30) days of the close of each fisc al
year that the audit is due. Copies shall be filed with the State
Auditor and Inspector within six (6) nine (9) months after the close
of the fiscal year in accordance wi th the provisions of Sections
3022 and 3023 paragraph 2 of subsection A of Section 212A of Title
68 74 of the Oklahoma Statutes and with the governing body of the
municipality.
C. The municipal income requirements in subsections A and B of
this section shall not include any grant moni es provided to a
municipality from any federal, state , or other governmental entity.
The municipal income requirements shall also 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, that 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.
SECTION 2. AMENDATORY 11 O.S. 2011, Section 17 -107, is
amended to read as follows:
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Section 17-107. If a municipality does not file a copy of its
audit or agreed-upon-procedures report as provided in Section 17 -105
of this title, the State Auditor and Inspector shall notify the
Oklahoma Tax Commission which shall withhold from the municipality
its monthly allocations of gasoline taxes until the audit report is
filed. If a report is not filed within two (2) years one (1) year
after the close of the fiscal year in the case of an annual audit,
or the second fiscal year of a biennial audit period , the funds
being withheld shall be remi tted by the Oklahoma Tax Commission to
the county in which the incorporated city or town is located and
deposited to the county highway fund of that coun ty to be used as
otherwise provided by law Special Investigative Unit Auditing
Revolving Fund created in Section 3 of this act .
SECTION 3. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 17-107A of Title 11, unless
there is created a duplication in numbering, reads as follows:
There is hereby created in the State Tr easury a revolving fund
for the State Auditor and Inspector to be desi gnated the “Special
Investigative Unit Auditing Revolving Fund”. The fund shall be a
continuing fund, not subject to fiscal year limitations, and shall
consist of all monies received by the State Auditor and Inspector
from funds withheld from a municipality’s allocations of gasoline
taxes as provided in Section 17 -107 of Title 11 of the Oklahoma
Statutes and all monies received from legislative appropriations.
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All monies accruing to the credit of the fund are hereby
appropriated and may be budgeted and e xpended by the State Auditor
and Inspector for the purpose of offse tting expenses incurred from
special investigative audit activities relating to municipal
government. Expenditures from the fund shall be made upon warr ants
issued by the State Treasurer against claims filed as prescribed by
law with the Director of the Office of Management and Enterprise
Services for approval and payment.
SECTION 4. REPEALER 11 O.S. 2011, Section 17-108, is
hereby repealed.
58-1-336 MR 1/6/2021 9:23:57 AM