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. 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 this act 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 to be prescribed by the State Auditor and Inspector, developed in collaboration with a representative from a statewide organization that has represented municipal governments for at least fifty (50) years, a representative from an organization that advises or trains municipal clerks and treasurers, and a certified public accountant. Each biennial agreed-upon-procedures engagement shall cover the two (2) preceding years.

For engagements performed for the fiscal year ending June 30, 2023, the prescribed procedures developed under the terms of this subsection will be utilized on a one-year basis ending June 30, 2024. The procedures shall then be submitted to the Legislature for ratification. If the rules are not ratified by the Legislature on or before December 31, 2023, the Municipal Audit Reform Act of 2022¹ shall sunset and be repealed as a matter of law. Agreed-upon procedures required under this act 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 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. 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.