State of Arizona Office of the Auditor General

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  School Districts - Frequently Asked Questions - Audit Requirements
  1. Must audit contracts and contract amendments be submitted to our Office for approval?
Yes. All proposed audit contracts and contract amendments must be reviewed and approved by our Office prior to the start of audit work.
  1. Is a school district required to select an audit firm to perform its annual/biennial audit from a list approved by our Office?
No. To assist districts in finding an audit firm to perform their annual/biennial audit, our Office will provide, upon request, a list of audit firms who currently have approved audit contracts or are interested in contracting for audit services with school districts. We do not recommend, endorse, or vouch for any audit firms on the list, and the list does not qualify as a prospective bidders' list. Districts may use one of these firms or may select a different firm.

When a proposed audit contract is submitted to our Office for approval, we determine whether the audit contract states that the auditor is independent as required by statute. We do not give any assurance that the work performed by the audit firm or the final audit reports will comply with applicable laws and professional standards. However, if we have previously reviewed the work of the audit firm and found that it consistently failed to comply with applicable laws and professional standards, we may disapprove the audit contract. The district must then contract with another audit firm to perform the audit.
  1. What is the deadline for school districts to submit their audit reports to our Office?
Districts should submit their audit reports and USFR Compliance Questionnaire to our Office within 9 months after fiscal year-end (March 31). Districts should also submit their audit reports to the Arizona Department of Education and make any other distributions as required by the Single Audit Act, if applicable. See USFR §VIII, Audit Requirements for specific requirements.
  1. Is a school district that is not subject to the Single Audit Act required to obtain an audit?
Yes. A school district that has an adopted expenditure budget of $2 million or more for the Maintenance and Operation (M&O) Fund is required to contract for an annual financial statement audit. A school district that has an adopted expenditure budget of less than $2 million but more than $700,000 for the M&O Fund, is required to contract for a biennial financial statement audit (e.g., an audit of two fiscal years performed after the 2nd year). Districts that are required to have an annual audit may choose to contract for a biennial audit if the district’s previous year’s audit did not contain significant negative findings. Districts must submit the annual or biennial financial statement audit reports and USFR Compliance Questionnaire (biennial audits require the questionnaire to be completed only for the later year) to our Office within 9 months after fiscal year-end (March 31). See USFR §VIII, Audit Requirements for specific requirements.

School districts that have an adopted expenditure budget of less than $700,000 for the M&O Fund, are subject to a procedural review performed at the discretion of our Office.
  1. What action is required for districts that exercise an option to renew for an existing audit contract?
If a district chooses to exercise a renewal option in an existing contract, the district should notify the audit firm that the district will be renewing the audit contract. The renewal should be made by written notification (letter or e-mail) addressed to the audit firm and include the type of audit to be performed, the year(s) being renewed, and the price(s) as stated in the audit firm’s original proposal. A copy of the renewal notification must be submitted to our Office before any audit work begins.

If a district has a multi-year contract, without an option-to-renew provision, that has already been approved by our Office, no additional action is needed.
 
 

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