Ariz. Admin. Code § 7-5-504

Current through Register Vol. 30, No. 50, December 13, 2024

Section R7-5-504 - Annual Audit and Financial Performance Review

A. By July 1 of each year, the Board shall make available on its website written requirements regarding the audit each charter school is required to submit annually under A.R.S. §§ 15-183(E)(6) and 15-914.

B. Before beginning the audit, a charter holder or the audit firm shall submit for the Board's approval a copy of the audit contract the charter holder intends to execute with an audit firm.

1. Board staff shall approve the audit contract unless the Board has knowledge that one of the following is applicable:

a. A person employed by the audit firm has been convicted under federal or state law of a crime indicating lack of business integrity or honesty;

b. The audit firm or supervising certified public accountant is subject to a current or pending disciplinary action or a regulatory action requiring the audit firm or supervising certified public accountant to complete conditions specified by an accounting industry regulatory body;

c. The audit firm violates or fails to meet generally accepted auditing standards or generally accepted government auditing standards as identified by an accounting industry regulatory body;

d. The audit firm receives an opinion of "fail" during the audit firm's most recent peer review;

e. An auditor scheduled to work on the audit fails to meet the continuing professional education requirements prescribed by generally accepted government auditing standards; or

f. The audit firm fails to agree to adhere to the audit requirements specified in subsection (A).

2. Within 10 days after receiving a copy of an audit contract under subsection (B), the Board shall provide the charter holder and audit firm written notice whether the audit contract is approved.

3. If the Board disapproves an audit contract submitted under subsection (B), the Board shall include the reason for the disapproval in the written notice provided under subsection (B)(2). If the charter holder or audit firm provides documentation to the Board demonstrating the cause for the disapproval no longer exists, Board staff shall approve the audit contract and provide written notice to the charter holder and audit firm.

C. A charter holder or the audit firm that conducts an audit for the charter holder shall submit the annual audit to the Board for a determination whether the audit is complete. Within five days after receiving the annual audit, Board staff shall provide the charter holder and audit firm written notice whether the audit is complete.

D. Board staff shall find an audit is incomplete if it does not comply with all requirements specified under subsection (A) or if the audit is prepared by an audit firm that fails to meet the requirements under subsection (B)(1)(a) through (e). If Board staff finds an audit is incomplete, Board staff shall include the reason for the finding in the notice provided under subsection (C). If the charter holder or audit firm provides documentation to the Board demonstrating the reason for the finding no longer exists, Board staff shall find the annual audit is complete and provide written notice to the charter holder and audit firm.

E. A charter holder that fails to timely submit a complete audit may be subject to charter oversight as specified in Article 6.

F. Board staff shall review each audit deemed complete.

G. The Board shall annually calculate a performance rating for each charter holder using the Financial Performance Framework, the annual audit submitted to the Board by the charter holder and the average daily membership calculations completed by the Department using student attendance data submitted to the Department by the charter holder. The Board shall make each charter holder's financial performance dashboard publicly available on the Board's website.

H. Board staff shall send notice to a charter holder after the audit is reviewed unless the Board has been notified the charter holder will not be operating during the next fiscal year.

1. If the Board identifies an issue in the audit, Board staff shall direct the charter holder to address the issue and may require the charter holder to submit a CAP, as described in R7-5-510.

2. The Board shall require a charter holder that receives a summative financial performance rating of "Intervention" under R7-5-402(F) to prepare the financial intervention submissions as described in R7-5-509.

3. The Board shall require a charter holder identified as "On Probation" and, therefore, pursuant to R7-5-402(G) does not meet the minimum financial performance expectations to prepare the financial intervention submissions as described in R7-5-511.

I. If Board staff identifies a serious impact finding in the audit, the charter holder shall be subject to charter oversight as specified in Article 6 unless the charter holder provides credible evidence to the Board that the charter holder's next audit will find the charter holder in compliance.

J. In general, Board staff does not grant extensions for corrective action plan submissions under R7-5-504(H)(1) as the Board has an interest and duty to timely review these submissions to better ensure the charter holder addresses identified concerns quickly. However, if the deadline has not passed, Board staff may, for good cause, grant the charter holder an extension of time to submit the CAP pursuant to subsection (H)(1) or any additional information pursuant to R7-5-510. A charter holder seeking an extension of time must submit the request in writing and include the reason or reasons for the request.

Ariz. Admin. Code § R7-5-504

New Section made by final rulemaking at 12 A.A.R. 577, effective February 7, 2006 (Supp. 06-1). Amended by final rulemaking at 23 A.A.R. 693, effective 5/6/2017. Amended by final exempt rulemaking at 25 A.A.R. 1926, effective 7/8/2019. Amended by final exempt rulemaking at 26 A.A.R. 3245, effective 11/20/2020. Amended by final exempt rulemaking at 27 A.A.R. 1423, effective 9/30/2021.