Amended in Assembly May 2, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2613


Introduced by Assembly Member Achadjian

February 19, 2016


An act tobegin delete amendend deletebegin insert amend, repeal, and addend insert Section 26909 of the Government Code, relating to local government.

LEGISLATIVE COUNSEL’S DIGEST

AB 2613, as amended, Achadjian. County auditor: audits: special districts.

Existing law requires the county auditor to either contract with a certified public accountant or public accountant to perform an audit, or perform an audit, of the accounts and records of every special district within the county, asbegin delete specified circumstances.end deletebegin insert specified.end insert Existing law authorizes a special district, by unanimous request of its governing board and unanimous approval by the board of supervisors, to replace the annual audit with an audit over a longer period of time or with a financial review, as specified.

This bill would additionally authorize a specialbegin delete district to,end deletebegin insert district, until January 1, 2027, and for a period of not more than 5 consecutive years,end insert bybegin insert annualend insert unanimous request of its governing board and withbegin insert annualend insert unanimous approval of the board of supervisors,begin insert toend insert replace the annual audit with an annual financial compilation and an annual review of the internal control procedures of the special district to be performed by the county auditor in accordance with professional standardsbegin insert,end insert if certain conditions are met.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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SECTION 1.  

Section 26909 of the Government Code is
2amended to read:

3

26909.  

(a) (1) The county auditor shall either make or contract
4with a certified public accountant or public accountant to make an
5annual audit of the accounts and records of every special district
6within the county for which an audit by a certified public
7accountant or public accountant is not otherwise provided. In each
8case, the minimum requirements of the audit shall be prescribed
9by the Controller and shall conform to generally accepted auditing
10standards.

11(2) begin deleteWhere end deletebegin insertIf end insertan audit of a special district’s accounts and records
12is made by a certified public accountant or public accountant, the
13minimum requirements of the audit shall be prescribed by the
14Controller and shall conform to generally accepted auditing
15 standards, and a report thereof shall be filed with the Controller
16and with the county auditor of the county in which the special
17district is located. The report shall be filed within 12 months of
18the end of the fiscal year or years under examination.

19(3) Any costs incurred by the county auditor, including contracts
20with, or employment of, certified public accountants or public
21accountants, in making an audit of every special district pursuant
22to this section shall be borne by the special district and shall be a
23charge against any unencumbered funds of the district available
24for the purpose.

25(4) For a special district that is located in two or more counties,
26begin delete the provisions ofend delete this subdivision shall apply to the auditor of the
27county in which the treasury is located.

28(5) The county controller, or ex officio county controller, shall
29effect this section in those counties having a countybegin delete controller,end delete
30begin insert controllerend insert or ex officio county controller.

31(b) A special district may, by unanimous request of the
32governing board of the specialbegin delete district,end deletebegin insert district andend insert with unanimous
33approval of the board of supervisors, replace the annual audit
34 required by this section with one of the following, performed in
35accordance with professional standards, as determined by the
36county auditor:

37(1) A biennial audit covering a two-year period.

P3    1(2) An audit covering a five-yearbegin delete period,end deletebegin insert periodend insert if the special
2district’s annual revenues do not exceed an amount specified by
3the board of supervisors.

4(3) An audit conducted at specific intervals, as recommended
5by the county auditor, that shall be completed at least once every
6five years.

7(c) (1) A special district may, by unanimous request of the
8governing board of the specialbegin delete district,end deletebegin insert district andend insert with unanimous
9approval of the board of supervisors, replace the annual audit
10required by this section with a financial review, in accordance with
11the appropriate professional standards, as determined by the county
12auditor, if the following conditions are met:

13(A) All of the special district’s revenues and expenditures are
14transacted through the county’s financial system.

15(B) The special district’s annual revenues do not exceed one
16hundred fifty thousand dollars ($150,000).

17(2) If the board of supervisors is the governing board of the
18special district, it may, upon unanimous approval, replace the
19annual audit of the special district required by this section with a
20financial review in accordance with the appropriate professional
21standards, as determined by the county auditor, if the special district
22satisfies the requirements of subparagraphs (A) and (B) of
23paragraph (1).

24(d) begin insert(1)end insertbegin insertend insert A special district may, bybegin insert annualend insert unanimous request
25of the governing board of the special district and withbegin insert annualend insert
26 unanimous approval of the board of supervisors, replace the annual
27audit required by this section with an annual financial compilation
28and an annual review of the internal control procedures of the
29special district to be performed by the county auditor in accordance
30with professionalbegin delete standardsend deletebegin insert standards,end insert if all of the following
31conditions are met:

begin delete

32(1)

end delete

33begin insert(A)end insert All of the special district’s revenues and expenditures are
34transacted through the county’s financial system.

begin delete

35(2)

end delete

36begin insert(end insertbegin insertB)end insert The special district’s annual revenues do not exceed one
37hundred fifty thousand dollars ($150,000).

begin delete

38(3)

end delete

39begin insert(C)end insert The special district shall pay for any costs incurred by the
40county auditor in performing a financial compilation and evaluation
P4    1of the internal control procedures. Those costs shall be a charge
2against any unencumbered funds of the district available for that
3purpose.

begin insert

4
(2) A special district shall not replace an annual audit required
5by this section with an annual financial compilation and an annual
6review of the internal control procedures of the special district
7pursuant to paragraph (1) for more than five consecutive years,
8after which a special district shall comply with subdivision (a).

end insert

9(e) Notwithstandingbegin delete the provisions ofend delete this section, a special
10district shall be exempt from the requirement of an annual audit
11if the financial statements are audited by the Controller to satisfy
12federal audit requirements.

begin insert

13
(f) This section shall remain in effect only until January 1, 2027,
14and as of that date is repealed.

end insert
15begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 26909 is added to the end insertbegin insertGovernment Codeend insertbegin insert, to
16read:end insert

begin insert
17

begin insert26909.end insert  

(a) (1) The county auditor shall either make or
18contract with a certified public accountant or public accountant
19to make an annual audit of the accounts and records of every
20special district within the county for which an audit by a certified
21public accountant or public accountant is not otherwise provided.
22In each case, the minimum requirements of the audit shall be
23prescribed by the Controller and shall conform to generally
24accepted auditing standards.

25
(2) If an audit of a special district’s accounts and records is
26made by a certified public accountant or public accountant, the
27minimum requirements of the audit shall be prescribed by the
28Controller and shall conform to generally accepted auditing
29standards, and a report thereof shall be filed with the Controller
30and with the county auditor of the county in which the special
31district is located. The report shall be filed within 12 months of
32the end of the fiscal year or years under examination.

33
(3) Any costs incurred by the county auditor, including contracts
34with, or employment of, certified public accountants or public
35accountants, in making an audit of every special district pursuant
36to this section shall be borne by the special district and shall be
37a charge against any unencumbered funds of the district available
38for the purpose.

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(4) For a special district that is located in two or more counties,
2this subdivision shall apply to the auditor of the county in which
3the treasury is located.

4
(5) The county controller, or ex officio county controller, shall
5effect this section in those counties having a county controller or
6ex officio county controller.

7
(b) A special district may, by unanimous request of the
8governing board of the special district and with unanimous
9approval of the board of supervisors, replace the annual audit
10required by this section with one of the following, performed in
11accordance with professional standards, as determined by the
12county auditor:

13
(1) A biennial audit covering a two-year period.

14
(2) An audit covering a five-year period if the special district’s
15annual revenues do not exceed an amount specified by the board
16of supervisors.

17
(3) An audit conducted at specific intervals, as recommended
18by the county auditor, that shall be completed at least once every
19five years.

20
(c) (1)   A special district may, by unanimous request of the
21governing board of the special district with unanimous approval
22of the board of supervisors, replace the annual audit required by
23this section with a financial review, in accordance with the
24appropriate professional standards, as determined by the county
25auditor, if the following conditions are met:

26
(A) All of the special district’s revenues and expenditures are
27transacted through the county’s financial system.

28
(B) The special district’s annual revenues do not exceed one
29hundred fifty thousand dollars ($150,000).

30
(2) If the board of supervisors is the governing board of the
31special district, it may, upon unanimous approval, replace the
32annual audit of the special district required by this section with a
33financial review in accordance with the appropriate professional
34standards, as determined by the county auditor, if the special
35district satisfies the requirements of subparagraphs (A) and (B)
36of paragraph (1).

37
(d) Notwithstanding this section, a special district shall be
38exempt from the requirement of an annual audit if the financial
39statements are audited by the Controller to satisfy federal audit
40requirements.

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(e) The section shall become operative on January 1, 2027.

end insert


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