This bill amends 11 O.S. 2021, Section 17-105, to provide exemptions for certain municipalities from the requirement to conduct annual financial statement audits. Specifically, municipalities with total revenues of less than Fifty Thousand Dollars ($50,000) and a population of less than five hundred (500) will not be required to prepare an audit or agreed-upon-procedures engagement solely to qualify for federal, state, or local grants. Additionally, the bill clarifies that municipal income calculations for audit requirements will exclude grant monies from governmental entities and income from public trusts, except for those trusts primarily operating utilities.

The bill also introduces a biennial financial statement audit requirement for municipalities with revenues of Fifty Thousand Dollars ($50,000) or more and populations under two thousand five hundred (2,500), provided they are not subject to other audit requirements. The governing body of these municipalities may opt for a biennial agreed-upon-procedures engagement instead of a full audit. The bill outlines specific procedures and documentation that must be followed during these engagements, including testing for adherence to financial policies and verifying bank statements. The act is set to take effect on November 1, 2026.