School accountability: financial and performance audits.

Senator Cabaldon's school accountability legislation introduces comprehensive changes to financial and compliance audits of California's local educational agencies through amendments to state business and education codes. The measure establishes new requirements for accounting firms conducting these specialized audits while strengthening oversight mechanisms.

Beginning in fiscal year 2026-27, certified public accountants and audit staff must complete 24 hours of continuing education focused on governmental accounting and LEA-specific compliance topics every two years. Firms must also demonstrate prior experience with educational agency audits or obtain equivalent competency through training. The State Controller will convene a workgroup of education stakeholders to determine specific training requirements covering areas such as pupil attendance, independent study, and charter schools.

The legislation modifies peer review standards for firms auditing educational agencies by requiring review teams to include members experienced in LEA audits. The Controller must conduct quality control reviews after an auditor's first LEA audit and every three years for firms auditing charter schools. County superintendents, chartering authorities, and state officials may refer auditors to the California Board of Accountancy if reviews reveal material deficiencies or noncompliance with professional standards.

The measure maintains existing requirements for annual audits of all funds under county and local educational agency control while adding provisions for corrective actions when deficiencies are identified. Audit reports must evaluate agencies' financial viability and include specific plans to address any exceptions found. County superintendents must certify that exceptions have been corrected or that acceptable correction plans are in place.