Audit Archive 2022

Requests for an extension of the audit report filing deadline must be submitted for processing to SBAS no later than Dec. 1. To request an extension, please complete an Audit Extension Request Form and attach a letter stating the circumstances that require an extension. The letter should be addressed to Denice Cora, SBAS, and signed by the district's superintendent. We will obtain the required county signature and transmit your request directly to the SCO and CDE by Dec. 15. 

Extensions are only granted where circumstances leading to the delay of the report are considered extraordinary. Extension requests have been denied in prior years when documents were not received by the SCO and CDE by Dec. 15 or when the reason provided for the extension was not found to be extraordinary.

SBAS does not process audit extension requests for charter schools. There is no provision in law for an extension of a charter school audit as there is a school district. Since the State Controller’s Office (SCO) does not grant extensions for charter school audits, the extension must be obtained through the chartering entity (sponsoring school district), and the chartering entity should notify SBCEO, SCO and CDE of the extension.

If an annual audit report is not filed on time, the county superintendent may investigate the cause of the delay and take action to obtain the annual audit report in the most effective manner. 

1. Audit Extension (EC 41020.2(a)(1)): Granting an extension for the audit, after consultation with the district’s governing board and the auditors, and with the consent of the SCO and the SPI. The CDE’s guidelines state that extensions will be granted only under extraordinary circumstances. The request must be received by both the SCO and the CDE no later than Dec. 15. The SCO and CDE will review the request and accompanying justification and provide notification as to whether the extension is granted or denied.
2. Contracting with Another Firm (EC 41020.2(a)(2)): Contracting with another audit firm to complete the audit, after consultation with the district’s governing board, the auditors, and the SCO. If the county superintendent contracts with another firm, the county superintendent should, to the extent possible, help the district initiate action to avoid payment to the original contracted audit firm.
3. SCO Investigation (EC 41020.2(a)(3)): Requesting that the SCO investigate the situation and initiate action.

If a report is delinquent, the superintendent of public instruction has the authority to withhold payment of any stipend, expenses, or salaries to the superintendent or members of the governing board until the delinquent reports have been submitted. (EC 42129)

LEAs are required to comply with certain guidelines and limits with respect to the length of time an audit firm and/or audit partner can provide annual audit services.  Specifically, EC 41020(f)(2) states the following:

"Except as provided in subdivision (d) of Section 41320.1, it is unlawful for a public accounting firm to provide audit services to a local educational agency if the lead audit partner, or coordinating audit partner, having primary responsibility for the audit, or the audit partner responsible for reviewing the audit, has performed audit services for that local education agency in each of the six previous fiscal years. The Education Audits Appeal Panel may waive this requirement if the panel finds that no otherwise eligible auditor is available to perform the audit."

We recommend that LEAs check with their audit firm to ensure that the firm is in compliance with the rules concerning auditor rotation.

All audit contracts must contain the following provision:

"A provision to withhold 10 percent of the audit fee until the [state] controller certifies that the audit report conforms to the reporting provisions of subdivision (a) of Section 14503."  (EC 14505(a))

In addition, all multi-year audit contracts must contain the following:

"A provision to withhold 50 percent of the audit fee for any subsequent year of a multiyear contract if the prior year’s audit report was not certified as conforming to reporting provisions of subdivision (a) of Section 14503. This provision shall include a statement that a multiyear contract will be null and void if a firm or individual is declared ineligible pursuant to subdivision (c) of Section 41020.5. The amount withheld is not payable unless payment is ordered by the California Board of Accountancy or the audit report for that subsequent year is certified by the Controller as conforming to reporting provisions of subdivision (a) of Section 14503."  (EC 14505(b))