Slow, then slower: municipal bond issuer audit delays hit 12-year high

The median audit time for all municipal bond sectors rose nearly 10.5% from 2011 to 2022, according to a new report from the University of Illinois-Chicago and Merritt Research Services. 

The report also found a direct correlation between audit timeliness and credit rating for all governmental bond sectors and a majority of revenue bond sectors.

The median municipal bond audit time slowed by 16 days over that 11-year period, reaching a 12-year high in 2022, according — then Rule 15c2-12 should be modified to include a provision that says underwriting and trading can’t occur unless an audit is produced within a certain amount of time. 

“This is a sovereignty issue; the states should be doing it,” he said. “But if the states don’t do it, somebody has to do it, and that would leave it up to the federal government.”

Regulatory changes or no, Carroll argued that municipal issuers should not lose sight of why transparency matters. 

“Right now, broadly speaking, we are certainly at a point where there is a lot of distrust in government, and especially distrust in the way in which government spends its precious resources from taxpayers,” Carroll said. “For years, we’ve been talking about greater transparency in government finances… When things are happening that are not transparent, it just perpetuates that feeling that government has something to hide.”