Digital transformation, as one of the most important management trends of the last decade, has transformed the traditional structures of public sector financial management. Municipalities, as one of the most important institutions providing public services, have also moved towards the establishment of smart financial systems, digital financial reporting, open data, artificial intelligence, big data, and cloud technologies. In such circumstances, digital financial reporting no longer simply means converting paper reports into electronic versions, but is also considered a platform for promoting transparency, accountability, data-based decision-making, smart governance, and increasing public trust. The purpose of the present study is to analyze the trend of studies conducted in the field of digital financial reporting and digital transformation in the accounting system of municipalities. The present study is a systematic library and review study and articles published in reputable international scientific databases in recent years have been examined. The findings show that the main research focuses on five areas: digitalization of accounting processes, electronic financial reporting, financial transparency, digital governance, and the application of emerging technologies. The literature review also indicates that although much research has been conducted in the field of e-government and digital transformation, specific studies on digital financial reporting of municipalities are still limited and the need to develop indigenous models is felt more than ever.