Amended in Senate June 8, 2016

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 to amend, repeal, and add 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, as specified. 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 special district, until January 1, 2027, and for a period of not more than 5 consecutive years, bybegin delete annualend delete unanimous request of its governing board and withbegin delete annualend delete unanimous approval of the board of supervisors, to replace the annual audit with an annual financial compilationbegin delete and an annual review of the internal control proceduresend delete of the special district to be performed by the countybegin delete auditorend deletebegin insert auditor, or an agreed-upon procedures engagement,end insert in accordance with professional standards, 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:

P2    1

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) If an audit of a special district’s accounts and records is
12made 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,
26this subdivision shall apply to the auditor of the county in which
27the treasury is located.

28(5) The county controller, or ex officio county controller, shall
29effect this section in those counties having a county controller or
30ex officio county controller.

31(b) A special district may, by unanimous request of the
32governing board of the special district and with unanimous
33approval of the board of supervisors, replace the annual audit
34 required by this section with one of the following, performed in
P3    1accordance with professional standards, as determined by the
2county auditor:

3(1) A biennial audit covering a two-year period.

4(2) An audit covering a five-year period if the special district’s
5annual revenues do not exceed an amount specified by the board
6of supervisors.

7(3) An audit conducted at specific intervals, as recommended
8by the county auditor, that shall be completed at least once every
9five years.

10(c) (1) A special district may, by unanimous request of the
11governing board of the special district and with unanimous
12approval of the board of supervisors, replace the annual audit
13required by this section with a financial review,begin insert or an agreed-upon
14procedures engagement,end insert
in accordance with the appropriate
15professional standards, as determined by the county auditor, if the
16following conditions are met:

17(A) All of the special district’s revenues and expenditures are
18transacted through the county’s financial system.

19(B) The special district’s annual revenues do not exceed one
20hundred fifty thousand dollars ($150,000).

21(2) If the board of supervisors is the governing board of the
22special district, it may, upon unanimous approval, replace the
23annual audit of the special district required by this section with a
24financialbegin delete reviewend deletebegin insert review, or an agreed-upon procedures
25engagement,end insert
in accordance with the appropriate professional
26standards, as determined by the county auditor, if the special district
27satisfies the requirements of subparagraphs (A) and (B) of
28paragraph (1).

29(d) (1) A special district may, by annual unanimous request of
30the governing board of the special district and with annual
31unanimous approval of the board of supervisors, replace the annual
32audit required by this section with an annual financial compilation
33begin delete and an annual review of the internal control proceduresend delete of the
34special district to be performed by the county auditor in accordance
35with professional standards, if all of the following conditions are
36met:

37(A) All of the special district’s revenues and expenditures are
38transacted through the county’s financial system.

39(B) The special district’s annual revenues do not exceed one
40hundred fifty thousand dollars ($150,000).

P4    1(C) The special district shall pay for any costs incurred by the
2county auditor in performing a financial compilation and evaluation
3of the internal control procedures. Those costs shall be a charge
4against any unencumbered funds of the district available for that
5purpose.

6(2) A special district shall not replace an annual audit required
7by this section with an annual financial compilationbegin delete and an annual
8review of the internal control proceduresend delete
of the special district
9pursuant to paragraph (1) for more than five consecutive years,
10after which a special district shall comply with subdivision (a).

11(e) Notwithstanding this section, a special district shall be
12exempt from the requirement of an annual audit if the financial
13statements are audited by the Controller to satisfy federal audit
14requirements.

15(f) This section shall remain in effect only until January 1, 2027,
16and as of that date is repealed.

17

SEC. 2.  

Section 26909 is added to the Government Code, to
18read:

19

26909.  

(a) (1) The county auditor shall either make or contract
20with a certified public accountant or public accountant to make an
21annual audit of the accounts and records of every special district
22within the county for which an audit by a certified public
23accountant or public accountant is not otherwise provided. In each
24case, the minimum requirements of the audit shall be prescribed
25by the Controller and shall conform to generally accepted auditing
26standards.

27(2) If an audit of a special district’s accounts and records is
28made by a certified public accountant or public accountant, the
29minimum requirements of the audit shall be prescribed by the
30Controller and shall conform to generally accepted auditing
31standards, and a report thereof shall be filed with the Controller
32and with the county auditor of the county in which the special
33district is located. The report shall be filed within 12 months of
34the end of the fiscal year or years under examination.

35(3) Any costs incurred by the county auditor, including contracts
36with, or employment of, certified public accountants or public
37accountants, in making an audit of every special district pursuant
38to this section shall be borne by the special district and shall be a
39charge against any unencumbered funds of the district available
40for the purpose.

P5    1(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 districtbegin insert andend insert with unanimous
22approval of the board of supervisors, replace the annual audit
23required by this section with a financial review, in accordance with
24the appropriate 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 district
35satisfies the requirements of subparagraphs (A) and (B) of
36paragraph (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.

P6    1(e) The section shall become operative on January 1, 2027.



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