Bill Text: CA SB992 | 2025-2026 | Regular Session | Amended
Bill Title: County auditors: special districts: annual audit exceptions.
Sponsorship: Partisan Bill (Republican 1)
Status: (Engrossed) 2026-07-02 - From committee: Do pass. Ordered to consent calendar. (Ayes 9. Noes 0.) (July 1). [SB992 Detail]
Download: California-2025-SB992-Amended.html
|
Amended
IN
Assembly
June 23, 2026 |
CALIFORNIA LEGISLATURE—
2025–2026 REGULAR SESSION
Senate Bill
No. 992
| Introduced by Senator Niello |
February 05, 2026 |
An act to amend and repeal Section 26909 of the Government Code, relating to local government.
LEGISLATIVE COUNSEL'S DIGEST
SB 992, as amended, Niello.
County auditors: special districts: annual audit exceptions.
Existing law requires a county auditor to make or contract with a certified public accountant or public accountant to make an annual audit of the accounts and records of every special district within the county for which an audit is not otherwise provided, as specified. Existing law authorizes a special district to replace this annual audit with a financial review, or, until January 1, 2027, an agreed-upon procedures engagement or an annual financial compilation of the special district, if specified conditions are met, including that the special district’s annual revenues do not exceed $150,000. Until January 1, 2027, upon receipt of the financial review, agreed-upon procedures engagement, or financial compilation, existing law authorizes a county auditor to appoint a certified public accountant or a public accountant to conduct an audit of the special district, as specified.
Existing law prohibits a special district from replacing the annual audit requirement with an annual financial compilation for more than 5 consecutive years, after which existing law requires the special district to use specified procedures.
This bill would remove extend the January 1, 2027, repeal date referenced above, above to January 1, 2037, and would increase the revenue cap described above to $250,000. After replacing the annual audit requirement with an annual
financial compilation for 5 years, the bill would authorize a special district with annual revenues of less than $50,000 to replace the annual audit with a financial review, as described above.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 26909 of the Government Code, as amended by Section 9 of Chapter 329 of the Statutes of 2019, is amended to read:26909.
(a) (1) The county auditor shall either make or contract with a certified public accountant or public accountant to make an annual audit of the accounts and records of every special district within the county for which an audit by a certified public accountant or public accountant is not otherwise provided. In each case, the minimum requirements of the audit shall be prescribed by the Controller and shall conform to generally accepted auditing standards.(2) (A) If an audit of a special district’s accounts and records is made by a certified public accountant or public accountant, the minimum requirements of the audit shall be prescribed by the Controller
and shall conform to generally accepted auditing standards.
(B) A report of the audit required pursuant to subparagraph (A) shall be filed within 12 months of the end of the fiscal year or years under examination as follows:
(i) For a special district defined in paragraph (2) of subdivision (d) of Section 12463, with the Controller.
(ii) For a special district defined in Section 56036, with the Controller, the county auditor, and the local agency formation commission of the county in which the special district is located, unless the special district is located in two or more counties, then with each local agency formation commission within each county in which the district is located.
(3) Any costs incurred by the county auditor, including contracts with, or employment of, certified public accountants or public accountants, in making an audit of every special district pursuant to this section shall be borne by the special district and shall be a charge against any unencumbered funds of the district available for the purpose.
(4) For a special district that is located in two or more counties, this subdivision shall apply to the auditor of the county in which the treasury is located.
(5) The county controller, or ex officio county controller, shall effect this section in those counties having a county controller or ex officio county controller.
(b) A special district may, by unanimous request of the governing board of the special district and with unanimous approval of the board of supervisors, replace the annual audit required by this section with one of the following, performed in accordance with professional standards, as determined by the county auditor:
(1) A biennial audit covering a two-year period.
(2) An audit covering a five-year period if the special district’s annual revenues do not exceed an amount specified by the board of supervisors.
(3) An audit conducted at specific intervals, as recommended by the county auditor, that shall be completed at least once every five years.
(c) (1) A special district may, by unanimous request of the governing board of the special district and with unanimous approval of the board of supervisors, replace the annual audit required by this section with a financial review, or an agreed-upon procedures engagement, in accordance with the appropriate professional standards, as determined by the county auditor, if the following conditions are met:
(A) All of the special district’s revenues and expenditures are transacted through the county’s financial system.
(B) The special district’s annual revenues do not exceed two hundred fifty thousand dollars ($250,000).
(C) The special district shall pay for any costs incurred by the county
auditor in performing an agreed-upon procedures engagement. Those costs shall be charged against any unencumbered funds of the district available for that purpose.
(2) If the board of supervisors is the governing board of the special district, it may, upon unanimous approval, replace the annual audit of the special district required by this section with a financial review, or an agreed-upon procedures engagement, in accordance with the appropriate professional standards, as determined by the county auditor, if the special district satisfies the requirements of subparagraphs (A) and (B) of paragraph (1).
(d) (1) A special district may, by annual unanimous request of the governing board of the special district and with annual unanimous approval of the board of
supervisors, replace the annual audit required by this section with an annual financial compilation of the special district to be performed by the county auditor in accordance with professional standards, if all of the following conditions are met:
(A) All of the special district’s revenues and expenditures are transacted through the county’s financial system.
(B) The special district’s annual revenues do not exceed two hundred fifty thousand dollars ($250,000).
(C) The special district shall pay for any costs incurred by the county auditor in performing a financial compilation. Those costs shall be a charge against any unencumbered funds of the district available for that purpose.
(2) (A) A special district with annual revenues of fifty thousand dollars ($50,000) or more shall not replace an annual audit required by this section with an annual financial compilation of the special district pursuant to paragraph (1) for more than five consecutive years, after which a the special district shall comply with subdivision (a).
(B) A special district with annual revenues of less
than fifty thousand dollars ($50,000) shall not replace an annual audit required by this section with an annual financial compilation of the special district pursuant to paragraph (1) for more than five consecutive years, after which the special district shall comply with subdivision (a) or (c).
(e) Notwithstanding this section, a special district shall be exempt from the requirement of an annual audit if the financial statements are audited by the Controller to satisfy federal audit requirements.
(f) Upon receipt of the financial review, agreed-upon procedures engagement, or financial compilation, the county auditor shall have the right to appoint, pursuant to subdivision (a), a certified public accountant or a public accountant to conduct an audit of the special district, with proper
notice to the governing board of the special district and board of supervisors.
(g) This section shall remain in effect only until January 1, 2037, and as of that date is repealed.
SEC. 2.
Section 26909 of the Government Code, as amended by Section 10 of Chapter 329 of the Statutes of 2019, is amended to read:26909.
(a) (1) The county auditor shall either make or contract with a certified public accountant or public accountant to make an annual audit of the accounts and records of every special district within the county for which an audit by a certified public accountant or public accountant is not otherwise provided. In each case, the minimum requirements of the audit shall be prescribed by the Controller and shall conform to generally accepted auditing standards.(2) (A) If an audit of a special district’s accounts and records is made by a certified public accountant or public accountant, the minimum requirements of the audit shall be prescribed by the Controller and shall conform to generally accepted auditing standards.
(B) A report of the audit required pursuant to subparagraph (A) shall be filed within 12 months of the end of the fiscal year or years under examination as follows:
(i) For a special district defined in paragraph (2) of subdivision (d) of Section 12463, with the Controller.
(ii) For a special district defined in Section 56036, with the Controller, the county auditor, and the local agency formation commission of the county in which the special district is located, unless the special district is located in two or more counties, then with each local agency formation commission within each county in which the district is located.
(3) Any costs incurred by the county auditor, including contracts with, or employment of, certified public accountants or public
accountants, in making an audit of every special district pursuant to this section shall be borne by the special district and shall be a charge against any unencumbered funds of the district available for the purpose.
(4) For a special district that is located in two or more counties, this subdivision shall apply to the auditor of the county in which the treasury is located.
(5) The county controller, or ex officio county controller, shall effect this section in those counties having a county controller or ex officio county controller.
(b) A special district may, by unanimous request of the governing board of the special district and with unanimous approval of the board of supervisors, replace the annual audit required by this section with one of the following, performed in accordance with professional standards, as
determined by the county auditor:
(1) A biennial audit covering a two-year period.
(2) An audit covering a five-year period if the special district’s annual revenues do not exceed an amount specified by the board of supervisors.
(3) An audit conducted at specific intervals, as recommended by the county auditor, that shall be completed at least once every five years.
(c) (1) A special district may, by unanimous request of the governing board of the special district and with unanimous approval of the board of supervisors, replace the annual audit required by this section with a financial review, in accordance with the appropriate professional standards, as determined by the county auditor, if the following conditions are met:
(A) All of the special district’s revenues and expenditures are transacted through the county’s financial system.
(B) The special district’s annual revenues do not exceed one hundred fifty thousand dollars ($150,000).
(2) If the board of supervisors is the governing board of the special district, it may, upon unanimous approval, replace the annual audit of the special district required by this section with a financial review in accordance with the appropriate professional standards, as determined by the county auditor, if the special district satisfies the requirements of subparagraphs (A) and (B) of paragraph (1).
(d) Notwithstanding this section, a special district shall be exempt from the requirement of an annual audit if the financial statements are
audited by the Controller to satisfy federal audit requirements.
(e) This section shall become operative on January 1, 2027. 2037.
