AB 84: School accountability: Office of the Education Inspector General: school financial and performance audits: charter school authorization, oversight, funding, operations, networks, and contracting: data systems: local educational agency contractor background checks and contracting.

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

(1)Existing law requires county superintendents of schools to provide for an audit of all funds under their jurisdiction and control, and requires the governing board of each local educational agency to either provide for an audit of the books and accounts of the local educational agency or make arrangements with county superintendents of schools to provide for that auditing. Existing law requires the governing board of each school district and each office of the county superintendent of schools to include specified provisions in their contracts for audits and requires financial and compliance audits to be performed in accordance with specified standards. If the governing board of a school district has entered into a contract for an independent audit of its financial statements and the audited financial statements have not been filed with the county superintendent of schools on or before a specified due date, existing law authorizes the county superintendent of schools to, among other things, investigate the causes for the delay, as provided.

This bill would expressly apply the above-described provisions to educational joint powers authorities and charter schools. The bill, among other things, would require those financial and compliance audits of local educational agencies to be conducted in accordance with specified filing deadlines and would revise requirements regarding which entity is responsible for providing an audit if a local educational agency has not provided for an audit of their respective books and accounts to include the Controller or a chartering authority, as provided. The bill would require, instead of authorize, a county superintendent of schools to investigate the causes for an above-described delay. The bill would require a local educational agency to post the local educational agency’s annual financial and compliance audits on its internet website.

Existing law requires the Controller to, among other things, on an annual basis, review and monitor the audit reports performed by independent auditors, determine whether audit reports are in conformance with specified reporting provisions, and notify each local educational agency, the responsible county superintendent of schools, the Superintendent, the Department of Finance, and the auditor regarding each determination. Existing law authorizes the Controller to perform quality control reviews of audit working papers to determine whether audits are performed in conformity with those specified standards. Existing law requires the Controller to annually report to the State Department of Education to apprise the department of school districts and offices of county superintendents of schools that are not in compliance with applicable statutes and regulations related to audits and requires the Controller to make recommendations as to what action should be taken by the department.

The bill would require the Controller to, if applicable, notify the responsible chartering authority of each determination made, as referenced above, and would require notification to applicable entities to be made within 6 months of the audit report due date or the audit report issue date, whichever is later. The bill would require the Controller to establish and publish as part of the audit guide a weighted risk-based criteria that considers auditor experience and quality factors in determining which audit engagements are required to undergo a quality control review, as provided. The bill would require the Controller to instead report and provide recommendations to the Superintendent of entities not in compliance with applicable statutes and regulations and would include educational joint powers authorities and charter schools as reported entities.

The bill, commencing with the 2027–28 fiscal year Guide for Annual Audits of K–12 Local Education Agencies and State Compliance Reporting, would require the Controller to include, among other things, instructions requiring specified supplemental information and schedules in audit report components for local educational agency audits and an appendix with the Controller’s desk review checklist that is used to determine whether audit reports are in conformance with specified reporting requirements, as provided.

Existing law requires audits to be made by a certified public accountant or a public accountant, licensed by the California Board of Accountancy, and selected by a local educational agency, as applicable, from a directory of certified public accountants and public accountants deemed by the Controller as qualified to conduct audits of local educational agencies.

Sponsors

Sponsors by party (alphabetical): Democratic 3

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. September 12, 2025Ordered to inactive file at the request of Senator Grayson.
2. September 10, 2025Read second time. Ordered to third reading.
3. September 9, 2025Read third time and amended. Ordered to second reading.
4. September 9, 2025Joint Rule 61(a)(13) suspended. (Ayes 28. Noes 8. Page 2752.)
5. September 2, 2025Read second time. Ordered to third reading.
6. August 29, 2025Read second time and amended. Ordered returned to second reading.
7. August 29, 2025From committee: Amend, and do pass as amended. (Ayes 4. Noes 2.) (August 29).
8. August 18, 2025In committee: Referred to suspense file.
9. July 17, 2025Read second time and amended. Re-referred to Com. on APPR.
10. July 17, 2025From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 4. Noes 2.) (July 16).
11. July 8, 2025From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on ED.
12. June 18, 2025Referred to Com. on ED.