Relating to the penalty for noncompliance with certain audit requirements by a municipality.

Contracts

Existing "Non-Appropriation of Funds" clauses in your government contracts are now high-risk liabilities.

• New Clause: Insert language defining an OAG determination of audit noncompliance as a "Material Adverse Event," granting you the immediate right to suspend performance or demand assurance of payment.
• Payment Terms: Renegotiate payment terms from Net-45/60 to Net-30 for municipalities with a history of late reporting.

Hiring/Training

• Accounts Receivable: Train AR staff to identify the fiscal year-end (FYE) for every municipal client.
• Sales/Bid Teams: Pre-bid due diligence must now include a check of the municipality’s last three years of audit filing dates. If they are habitually late, price the contract to account for higher default risk.

Reporting & Record-Keeping

• Compliance Calendar: You must maintain a tracking system for client audit deadlines (FYE + 180 days).
• Evidence Logs: If you intend to file a complaint with the AG to trigger pressure on a non-paying city, you must document the specific date the audit was due and the absence of the filing with the municipal clerk.

Fees & Costs

• No Direct Fees: There are no new filing fees for your business.
• Cost of Capital: Expect increased costs in municipal bond underwriting and potentially higher insurance premiums for accounts receivable coverage involving municipal debt.