For Texas municipalities, meeting the annual financial reporting deadline now carries greater consequences. Missing it can affect more than compliance. It may also limit a municipality’s financial flexibility.

Texas law requires municipalities to file an annual financial statement, including the auditor’s opinion, with the municipal secretary or clerk within 180 days after fiscal year-end. Texas Senate Bill 1851, which took effect September 1, 2025, adds new consequences for municipalities that fail to meet applicable annual audit* or filing requirements. If the Texas Attorney General determines that a municipality has not complied, the municipality may not adopt an ad valorem tax rate above the no-new-revenue tax rate for the applicable tax year.

SB 1851 also allows a person to submit a complaint to the Attorney General regarding suspected noncompliance with either the annual audit requirement or the 180-day filing requirement. The Attorney General’s office has also established an SB 1851 complaint form for reporting suspected violations, making meeting the annual audit and filing requirements more than just a compliance issue.

Why the 180-Day Deadline Matters

It can be tempting to view the 180-day deadline primarily as an audit scheduling issue. In reality, whether a municipality meets it often depends on the financial reporting work that happens well before the audit begins.

Audit preparation shouldn’t start at fiscal year-end. By then, overdue reconciliations or unresolved reporting issues may already be slowing the close and putting the audit timeline at risk. Keeping financial reporting current throughout the year can make year-end much easier to manage and reduce the chance that routine issues turn into costly delays.

Those delays can have consequences beyond compliance. If the filing deadline is missed, areas such as budgeting, tax-rate planning, and other fiscal priorities may be affected. The goal should not simply be to complete the audit within 180 days, but to maintain financial processes that make timely completion realistic from year to year.

For smaller municipalities, that can be easier said than done. Limited staff, gaps in governmental accounting expertise, and competing day-to-day responsibilities can make it harder to stay ahead of the deadline.

Questions Municipal Leaders Should Be Asking

A useful place to start is by looking at where the year-end process has slowed down in the past. Municipal leaders and finance teams should consider whether the same issues are likely to create problems again.

• Can the current year-end close process support the 180-day filing requirement?
• Are recurring accounting or reporting issues contributing to audit delays?
• Does the finance team have the staffing and governmental accounting expertise needed to meet the timeline?
• Are internal controls and monthly reporting processes helping identify problems before year-end?

If certain issues surface year after year, address them before the next close begins. Doing so can reduce last-minute pressure and help keep the audit and filing process on schedule.

Prepare Before the Deadline Becomes the Problem

SB 1851 raises the stakes for timely financial reporting. For municipalities, falling behind on annual audit or filing requirements can create compliance concerns and limit financial flexibility at a critical point in the budgeting and tax-rate process.

CRI can help municipalities assess financial reporting processes, strengthen internal controls, address governmental accounting challenges, and support a more efficient year-end close and audit process. Contact your CRI advisor to discuss potential gaps and the steps you can take to address them before they affect annual audit and filing requirements. The earlier municipal leaders identify these issues, the more flexibility they have to address them before they become year-end problems.