Education Code § 41020.2

41020.2.

(a) (1) If the governing board of a school district or educational joint powers authority has entered into a contract for an independent audit of its financial statements in accordance with Section 41020 and the audited financial statements have not been filed with the county superintendent of schools on or before the due date established under Section 41020, the county superintendent of schools shall investigate the causes for the delay and initiate one of the actions described in subdivision (c) that will provide the required audited financial statements in the most effective manner.

(2) If the governing body of a charter school has entered into a contract for an independent audit of its financial statements in accordance with Section 41020 and the audited financial statements have not been filed with the chartering authority on or before the due date established under Section 41020, the chartering authority shall investigate the causes for the delay and initiate one of the actions described in subdivision (c) that will provide the required audited financial statements in the most effective manner.

(3) If the county superintendent of schools has entered into a contract for an independent audit of its financial statements in accordance with Section 41020 and the audited financial statements have not been filed with the Superintendent and the Controller on or before the due date established under Section 41020, the Superintendent shall investigate the causes for the delay and initiate one of the actions described in subdivision (c) that will provide the required audited financial statements in the most effective manner.

(b) (1) (A)The county superintendent of schools may, after consultation with the governing board of the school district or educational joint powers authority and the auditors under contract to the school district or educational joint powers authority, and with the consent of the Controller’s office and the Superintendent, grant an appropriate extension for the completion of the audit and the filing of the audited financial statements. An extension does not waive the deadline established under Section 41020, but permits the filing of the report after the deadline.

(B) (i)The chartering authority may, after consultation with the governing body of the charter school and the auditors under contract to the charter school, and with the consent of the county superintendent of schools, the Controller’s office, and the Superintendent, grant an appropriate extension for the completion of the audit and the filing of the audited financial statements. An extension does not waive the deadline established under Section 41020, but permits the filing of the report after the deadline.

(ii) If a charter school has an approved audit extension pursuant to this subparagraph, a failure to file an audit on or before the legal deadline shall not be a cause for or contributing justification for charter nonrenewal or revocation. Failure to file an audit with the chartering authority on or before the legal deadline due to the inability of a charter school to contract for an audit due to market conditions of available auditors shall not be a cause for or contributing justification for charter nonrenewal or revocation.

(C) The Controller may, after consultation with the county superintendent of schools and the auditors under contract to the county superintendent of schools for the county office of education or for a charter school where the county board of education of the county in which the charter school is located is the chartering authority, and with the consent of the Superintendent, grant an appropriate extension for the completion of the audit and the filing of the audited financial statements. An extension does not waive the deadline established under Section 41020, but permits the filing of the report after the deadline.

(2) An extension granted pursuant to this subdivision shall be appropriate if the extension adheres to all of the following requirements:

(A) The local educational agency and the auditor have certified that the audit cannot be completed on time due to unforeseen circumstances or complex situations.

(B) An extension shall be the shortest amount of time reasonable given the extenuating circumstances justifying the extension.

(C) Extensions shall be in increments of no longer than 30 calendar days.

(D) Extensions shall not be granted past March 31 following the deadline established under Section 41020.

(3) (A) As applicable pursuant to subdivision (a), the county superintendent of schools or the chartering authority may, after consultation with the governing board or body of a school district, educational joint powers authority, or charter school, the auditors under contract to the school district, educational joint powers authority, or charter school, and the Controller’s office, contract with another qualified certified public accountant or public accountant to obtain the required audited financial statements and charge the cost of the audit to the funds of the school district, educational joint powers authority, or charter school. The county superintendent of schools or the chartering authority, or the Controller shall, to the extent feasible, assist the school district, educational joint powers authority, or charter school in initiating action to avoid payment to the auditors under contract who did not complete the original audit.

(B) As applicable pursuant to subdivision (a), the Controller may, after consultation with the county superintendent of schools, the auditors under contract to the county superintendent of schools, and the Superintendent, contract with another qualified certified public accountant or public accountant to obtain the required audited financial statements and charge the cost of the audit to the funds of the county superintendent of schools. The Controller shall, to the extent feasible, assist the county superintendent of schools in initiating action to avoid payment to the auditors under contract who did not complete the original audit.

(4) As applicable pursuant to subdivision (a), the county superintendent of schools, the chartering authority, or the Superintendent may request the Controller’s office to investigate the situation and initiate action as provided in subdivision (c).

(c) (1) If the audited financial statements required by Section 41020 have not been filed by a local educational agency with the Controller’s office on or before the due date established under Section 41020, the Controller’s office shall determine the most advantageous method of obtaining the required audited financial statements. The Controller’s office may, after consultation with the governing board or body of the local educational agency and the auditor under contract with the local educational agency, do any of the following:

(A) Accept the action of the county superintendent of schools, the chartering authority, or the Superintendent permitted by subdivision (b).

(B) Conduct the audit and prepare the auditor’s report, using the staff available within that office and charge the cost of the audit to the next regular apportionment from the State School Fund to the local educational agency.

(C) Contract with any qualified certified public accountant or public accountant, using the appropriate contracting procedures, for the conduct of the audit and preparation of the audited financial statements and charge the cost of the audit to the next regular apportionment from the State School Fund to the local educational agency.

(D) Consistent with the limits described in paragraph (2) of subdivision (b), grant a reasonable extension of the time for filing the report if, in the judgment of the Controller’s office, this will provide the required audited financial statements within the shortest time period. The extension of the time for filing does not waive the deadline established under Section 41020, but permits the filing of the report after the deadline.

(2) The Controller’s office shall consult with the governing board or body of the local educational agency, the auditors under contract to the local educational agency, and the county superintendent of schools or the chartering authority, as applicable, before making the determination of the method to be used in obtaining the audited financial statements. The Controller’s office shall, to the extent feasible, assist the local educational agency in initiating action to avoid payment to the auditors under contract who did not complete the original audit.

(d) Notwithstanding any extension granted under subdivision (b) or subparagraph (D) of paragraph (1) of subdivision (c), the Controller’s office may determine at any time after the due date for filing of audit reports established by Section 41020 that the audited financial statements not yet filed with that office are delinquent and that the audit will be performed under subparagraph (B) or (C) of paragraph (1) of subdivision (c).

(e) If an extension has not been requested or granted and the audited financial statements required by Section 41020 have not been filed by a local educational agency with the Controller’s office on or before the due date established under Section 41020, the local educational agency and the auditors under contract with the local educational agency shall notify the chartering authority, the county superintendent of schools, the Superintendent, and the Controller that the audit filing is delayed, the reasons for the delay, and the estimated filing date. The notification shall be made no later than 15 calendar days from the due date established under Section 41020.

(f) Notwithstanding Section 10231.5 of the Government Code, the Controller shall notify the appropriate policy committees of the Legislature, consistent with Section 9795 of the Government Code, and the Department of Finance if local educational agencies are unable to contract for an audit due to market conditions of available auditors.

(g) Notwithstanding Section 10231.5 of the Government Code, on or before September 30, 2028, and every three years thereafter, the Controller shall, in consultation with the entities listed in Section 14502.1, provide recommendations to the appropriate committees of the Legislature, consistent with Section 9795 of the Government Code, regarding outdated or ineffective audit requirements in statute.

(h) For purposes of this section, “local educational agency” means a school district, educational joint powers authority, county superintendent of schools, or charter school.