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Local Educational Agency Annual Audits

Resources for external auditors and local educational agency (LEA) personnel for completing the annual financial and compliance audits pursuant to Education Code Section 41020.

Overview

All LEAs are required to have an annual audit completed by an independent auditor registered with the State Controller’s Office (SCO), pursuant to Education Code (EC) Section 41020 External link opens in new window or tab.. The purpose of these annual audits is to promote accountability over public educational funding and encourage effective and efficient use of state funds for the children of California. Further, the annual audits are designed to encourage sound fiscal management and strengthen fiscal accountability at the LEA, county, and state level.

The audit reports should be completed in compliance with the K–12 LEA Annual Audit Guide (Audit Guide). The Audit Guide is updated every year by the SCO and submitted to the Education Audits Appeal Panel (EAAP) as described in EC 14502.1 External link opens in new window or tab. to provide audit steps, reporting requirements, and audit guidance for LEA audits. The California Department of Education (CDE) provides guidance to LEAs and external stakeholders, provides consultation on the audit guide content, reviews annual audit reports, and ensures certain audit findings are resolved.

Process & Key Dates

EC 41020 External link opens in new window or tab. requires each LEA to complete an annual audit. The annual audit report should be completed in compliance with the Audit Guide and filed with the California Department of Education, State Controller’s Office, and the County Superintendent of Schools of the county in which the LEA is located. This section provides statutory requirements and key dates for the K–12 LEA annual financial and compliance audit.

Annual Audit Process

This section provides a general overview of statutory requirements for annual audits. The audit process involves multiple entities that participate in the development of the audit guide and supplemental audit guide, audit report, audit report review process, and resolution process. For complete information about each participant in the audit process, visit each entity’s website. For the full text of statutory requirements related to the annual audit, see EC sections 14500-14509 External link opens in new window or tab. and EC sections 41344-41344.1 External link opens in new window or tab..

Audit Process Participants Statutory Requirements

State Controller’s Office (SCO)

  • Oversees the annual audit program. (EC 14500, 14502.1)
  • Submits the proposed contents of the Audit Guide to Education Audit Appeals Panel (EAAP) for review. (EC 14502.1)
  • Reviews all annual audits reports and ensures reports meet the reporting requirements through SCO’s report certification process. (EC 14504)
  • Party to the formal appeals in conjunction with the Department of Finance (DOF). (EC 41344.1)
  • See the SCO website External link opens in new window or tab. for additional details.

Education Audit Appeals Panel (EAAP)

  • Final approval and adoption of the Audit Guide and Supplemental Audit Guide. (EC 14502.1)
  • Receives and facilitates the summary reviews and formal appeals process. (EC 41344, 41344.1)
  • See the EAAP website External link opens in new window or tab. for additional details.

California Department of Education (CDE)

  • Provides consultation on the Audit Guide content. (EC 14502.1)
  • Reviews annual LEA audit reports and works with LEAs to resolve certain audit findings. (EC 41020)
  • May intervene as a party to the formal appeals in conjunction with DOF and SCO. (EC 41344.1)
  • Responds to audit related questions from LEAs, auditors, and external stakeholders. 

County Office of Education (COE)

  • Contracts for annual audit by May 1, if LEA does not have a contract by April 1. (EC 41020)
  • Reviews annual LEA audit reports and works with LEAs to resolve certain audit findings. (EC 41020)
  • Certification of Corrective Action Form (PDF) to CDE and SCO for LEAs under their jurisdiction that all findings are resolved for which the COE is responsible. (EC 41020)

Local Educational Agency (LEA)

  • Contracts with an independent auditor to perform the annual financial and compliance audit. (EC 41020)
  • Submits annual audit to COE, CDE, and SCO. (EC 41020)
  • Resolves any audit findings identified in their annual audit. (EC 41020)

Department of Finance

  • Provides consultation on the audit guide content. (EC 14502.1)
  • Party to the formal appeals in conjunction with SCO. (EC 41344.1)

Independent CPAs

  • Contracts with LEAs to conduct annual audits. (EC 41020)
  • Performs annual audits.

Key Dates for Annual Audit

The following table identifies key dates within the LEA annual financial and compliance audit process.

Annual Audit Key Process Education Code Section School Year
2024–25
School Year
2025–26

Audit Guide – Adopted and issued by the EAAP

July 1, 2024
July 1, 2025

Supplemental Audit Guide – Adopted and issued by the EAAP

March 1, 2025
March 1, 2026

LEA deadline to contract with independent auditor

April 1, 2025
April 1, 2026

County Office of Education (COE) contracts with independent auditor, if LEA has not done so by April 1

May 1, 2025
May 1, 2026

Audit Report filed with the California Department of Education, State Controller’s Office, and County Superintendent of Schools

December 15, 2025
December 15, 2026

School Board review of audit report and corrective actions

January 31, 2026
January 31, 2027

LEA corrective actions submitted to COE

March 15, 2026
March 15, 2027

COE Certifications to CDE and SCO

May 15, 2026
May 15, 2027

 

 

Questions:   Audit Resolution Office | LEAAudits@cde.ca.gov
Last Reviewed: Thursday, June 19, 2025
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