15-914

15-914. Financial and compliance audits

A. The governing board of a school district that is required to comply with
the single audit act amendments of 1996 (P.L. 104-156; 110 Stat. 1396; 31 United States
Code sections 7501 through 7507) shall contract for at least annual financial and
compliance audits of financial transactions and accounts subject to the single audit act
amendments of 1996 and kept by or for the school district. Beginning with fiscal year
2003-2004, the governing board of a school district that is not required to comply with
the single audit act and that has adopted an expenditure budget of two million dollars or
more for the maintenance and operation fund pursuant to section 15-905 shall contract for
an annual financial statement audit. Beginning with fiscal year 2004-2005, the governing
board of a school district that is not required to comply with the single audit act and
that has adopted an expenditure budget of less than two million dollars but more than
seven hundred thousand dollars for the maintenance and operation fund pursuant to section
15-905 shall contract for a biennial financial statement audit. An independent certified
public accountant shall conduct the audit in accordance with generally accepted
governmental auditing standards. To the extent permitted by federal law, a school
district that is required to participate in an annual audit pursuant to this subsection
may convert to a biennial audit schedule if the previous annual audit did not contain any
significant negative findings. If a biennial audit of a school district conducted
pursuant to this subsection contains any significant negative findings, the school
district shall convert back to an annual audit schedule. If a school district is required
to convert back to an annual audit schedule pursuant to this subsection because of
significant negative findings, the school district may subsequently convert to a biennial
audit schedule if the previous two annual audits did not contain any significant negative
findings. For the purposes of this subsection, "significant negative finding" means a
finding that results in the issuance of a letter of noncompliance from the auditor
general.

B. The governing board of a charter school that is required to comply with the
single audit act amendments of 1996 shall contract for an annual financial and compliance
audit of financial transactions and accounts subject to the single audit act amendments
of 1996 and kept by or for the charter school.

C. A charter school that is not subject to the single audit act amendments of 1996
shall contract for at least an annual financial statement audit conducted in accordance
with generally accepted governmental auditing standards. An independent certified public
accountant shall conduct the audit.

D. For all audits referred to in subsections A, B and C of this section, the
independent certified public accountant shall submit a uniform system of financial
records compliance questionnaire to the auditor general with the applicable audit
reports.

E. Contracts for all financial and compliance audits and financial statement audits
and the completed audits shall be approved by the auditor general as provided in section
41-1279.21. Contracts for all financial and compliance audits and financial statement
audits shall comply with the rules for competitive sealed proposals as prescribed by the
state board of education in section 15-213.

F. If the school district or charter school will incur costs of financial and
compliance audits for the budget year, the governing board of a school district or the
governing body of the charter school may increase its base support level for the budget
year by an amount equal to the amount expended for the district's or charter school's
financial and compliance audits in the year before the current year, increased by the
growth rate as prescribed by law, subject to appropriation. In determining the amount
expended for the district's or charter school's financial and compliance audits, the
school district or charter school shall include only the portion of the audit that must
be paid from monies other than federal monies. The department of education and the
auditor general shall prescribe a method for determining the increase in the base support
level and shall include in the maintenance and operation section of the budget format, as
provided in section 15-903, a separate line for financial and compliance audits
expenditures.

G. Beginning in fiscal year 2003-2004, every audit contract shall include a
systematic review of average daily membership, as defined in section 15-901, using
methodology that is consistent with guidelines established by the auditor general. The
auditor general shall consider cost when establishing guidelines pursuant to this
subsection and, to the extent possible, shall attempt to minimize the cost of the review.
The purpose of the review is to determine whether the average daily membership reported
by the charter school or school district is in compliance with the laws of this state and
the uniform systems of financial records for charter schools and school districts.