Local government: financial reports: failure to timely submit.

Senator Choi's proposal to modify California's local government financial reporting requirements recalibrates submission deadlines and initiates an assessment of potential reporting modernization. The legislation extends the period before penalties apply for late financial reports from 20 days after notice to 10 months after a local agency's fiscal year end.

The bill establishes a tiered penalty structure based on agency revenue, with forfeitures ranging from $1,000 for agencies with annual revenues under $100,000 to $5,000 for those exceeding $250,000. The Attorney General retains authority to prosecute forfeiture actions upon the Controller's request, while the Controller maintains discretion to waive penalties given sufficient cause.

A new provision requires the Controller to evaluate whether existing financial transaction reports could be replaced by machine-readable audited financial statements, as mandated by the federal Financial Data Transparency Act of 2022. The Controller must report findings to the Legislature by December 31, 2026. This assessment stems from the bill's recognition that local agencies currently submit both financial transaction reports and federal single audit reports containing overlapping information.