This bill amends existing laws regarding the annual audits of municipalities in Oklahoma, specifically targeting those with total revenues of $50,000 or more. It mandates that these municipalities must submit an annual financial statement audit conducted by a licensed public accountant within six months after the close of the fiscal year. Additionally, municipalities with populations under 2,500 that are not required to conduct an audit by other laws can opt for an annual audit instead of a biennial one, and they may also choose to engage in agreed-upon-procedures engagements. The bill clarifies the timeline for filing these reports and allows for extensions under special circumstances.

Furthermore, the bill modifies the penalties for municipalities that fail to file their audits or agreed-upon-procedures reports. It establishes a two-year deadline for filing these reports, after which the Oklahoma Tax Commission will withhold funds from the municipality until compliance is achieved. The bill also ensures that any withheld funds will be redirected to the State Auditor and Inspector's Special Investigative Unit Auditing Revolving Fund. Additionally, it clarifies that the Municipal Audit Reform Act of 2022 was not repealed and outlines the release of withheld funds for specific fiscal years. The act is set to take effect on July 1, 2026, with an emergency clause for immediate implementation upon passage.