A3880

An Act concerning the annual audit of school districts and supplementing Title 18A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. The board of education of each school district shall make all necessary financial books, accounts, and records available to the public school accountant by July 1 of each year for the purposes of completing the annual audit of the district’s accounts and financial transactions required pursuant to N.J.S.18A:23-1.

b. A district that fails to comply with the provisions of this section shall be subject to a reduction or reductions related to one or all of the fiscal management, operations, and governance scores in the New Jersey Quality Single Accountability Continuum evaluation system under section 10 of P.L.1975, c.212 (C.18A:7A-10), as determined by the Commissioner of Education.

2. a. The Commissioner of Education may allow limited flexibility as to the deadlines established under N.J.S.18A:23-1 and N.J.S.18A:23-3 when a school district or public school accountant, as applicable, demonstrates hardship based on documented, extenuating circumstances, or based on the provisions of subsection b. of this section.

b. (1) If in any year, the furnishing by a State entity of information required to be included in the report of the annual audit of a school district’s accounts and financial transactions based on the standards for accounting and financial reporting issued by the Governmental Accounting Standards Board, including, but not limited to, those for postemployment benefits other than pensions, does not occur on or before four months after the end of the school fiscal year, the commissioner may allow the district or the accountant, or both, as applicable, to submit the portions of the audit including information from the most recent year available. The district and the accountant shall identify the portions of and the information in the audit that may need to be updated when the necessary information becomes available.

(2) Annually, the commissioner shall determine whether certain information required to be included in the annual audit report based on the standards for accounting and financial reporting issued by the Governmental Accounting Standards Board is integral to provide an accurate and complete statement of the financial condition of the school district. The commissioner shall advise school districts or public school accountants of any information that meets this standard that may be omitted from the audit or submitted on a delayed timeline as outlined by the commissioner.

(3) If in any year, the furnishing by a federal or other entity of information required for the completion of the annual audit of a school district’s accounts and financial transactions does not occur within an appropriate time, as determined by the commissioner, after the end of the school fiscal year, the commissioner may allow additional time for the district or the accountant, or both, as applicable, to submit the portions of the audit including information from the most recent year available. The district and the accountant shall identify the portions of and the information in the audit that may need to be updated when the necessary information becomes available.

(4) If in any year, the commissioner identifies extenuating circumstances that present or would present hardship or substantial difficulty for one or more school districts or public school accountants, as applicable, to complete or file the report of the annual audit of a school district’s accounts and financial transactions, the commissioner may allow the district or the accountant, or both, as applicable, to submit the portions of the audit including information as identified by the commissioner from the most recent year available. The district and the accountant shall identify the portions of and the information in the audit that may need to be updated when the necessary information becomes available.

c. The commissioner shall evaluate whether technical modifications to the annual school audit process can facilitate earlier data collection, including the feasibility of streamlining reporting fields and adding flexibility to digital tools, and shall implement feasible modifications within two years of the effective date of this act, P.L. , c. (C. ) (pending before the Legislature as this bill).

d. A decision or determination of the commissioner pursuant to this section shall not be considered a final agency action.

e. The commissioner may adopt rules and regulations as are necessary to implement the provisions of this act, P.L. , c. (C. ) (pending before the Legislature as this bill), which rules and regulations shall be effective immediately upon filing with the Office of Administrative Law for a period not to exceed 18 months, and shall thereafter be adopted or readopted pursuant to the provisions of the Administrative Procedure Act, P.L.1968, c.410 (C.52:14B-1 et seq.).

3. This act shall take effect immediately.

STATEMENT

This bill extends the deadline for the completion of a school district’s annual audit for the 2024-2025 school year.

Under current law, the board of education of every school district is required to complete an annual audit of the school district’s accounts and financial transaction completed no later than five months after the end of the school year. The school district’s accountant is required to file a report of the annual audit with the board of education, and within five days thereafter, the Commissioner of Education. This bill extends each of these deadlines for the 2024-2025 school year. The provisions of P.L.2023, c.305 similarly extended the deadline for the completion of a school district’s annual audit for the 2022-2023 and the 2023-2024 school years.