Investor Relations

Study Examines Municipal Audit Turnaround Time


The average lag time between the end of a municipal bond entity’s fiscal year and the date its audit is signed is about five months, according to a recent survey released by Merritt Research Services, an independent municipal bond research company.

The findings were based on an analysis of over 14,000 audits on more than 4,600 municipal bond issuers over a three-year span.

“While the time it takes to release the signed audit to the public was not a part of the study, our experience is that it can often take an additional month or two or more before the document is officially approved by a governmental body and made available to the general public,” according to Richard Ciccarone, President & Chief Executive Officer of Merritt Research Services.

As a group, large single-purpose wholesale electric agencies were the fastest to produce their signed audits. This group, which includes large federally-created utilities and joint action agencies, took an average of slightly more than three months after the end of their respective fiscal year to release their signed audits.

On the other end of the spectrum, state and local governments took the longest amount of time – on average just under six months – to produce their signed audits.

Within the combined category of state, county and city governments – totaling nearly 2,500 annual audits – Merritt found a wide range of reporting times, suggesting that more complicated accounting rules and complex activities are not necessarily an excuse for slower audits. New York City, which is the largest and has possibly the most complicated finances of all cities, was able to complete its audit within 115 days of the close of its fiscal year (2009).

While these averages point to best and worst sectors, the range can vary dramatically by individual government agencies within each of the sectors in the study.

“Credit quality was not necessarily a factor in the speed with which the audit was completed; however, weaker or more distressed credits were often more likely to be among those to produce their audits on the later side,” says Ciccarone.

If you would like to receive a complete copy of the full report, please contact Mardee Alvaro.

 About Merritt Research Services

Merritt Research Services, LLC (MRS) is an independent municipal bond research and data provider focused on credit information related to municipal bonds. Founded originally in 1985 as a part of Van Kampen Merritt Inc., it first began to collect municipal bond audits for its initial database software product called The Merritt System, which was launched in 1986. Ten years later, MRS partnered with Investortools, Inc. to primarily release its data through Creditscope. In 2001, Merritt Research was spun off from the Van Kampen Funds to become an independent municipal data research company. Today, Merritt Research, headquartered in Hiawatha, Iowa, collects municipal bond audits on over 8,000 municipal bond credits.

Richard Ciccarone, President & Chief Executive Officer of Merritt Research Services is also the Publisher of MuniNet Guide.

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