County auditors: special districts: annual audit exceptions.

Header changed from Senate Bill format to authenticated Chapter 150 format with 'STATE OF CALIFORNIA AUTHENTICATED ELECTRONIC LEGAL MATERIAL' language

Governor approval date (August 27, 2026) and Secretary of State filing date were added

Page numbers changed from 'SB 992' pagination to 'Ch. 150' pagination throughout the document

The revenue cap for replacing an annual audit with a financial review (Section 26909(c)(1)(B)) was increased from $150,000 to $250,000, making more special districts eligible for this less costly alternative.

An agreed-upon procedures engagement was added as a new alternative to the annual audit in Section 26909(c)(1), alongside the existing financial review option. A corresponding cost provision (c)(1)(C) requires the district to pay for these engagements.

A new subdivision (d) was added allowing special districts with revenues under $250,000 to replace the annual audit with an annual financial compilation. Districts with $50,000 or more in revenues are limited to five consecutive years of compilations before reverting to a full audit; those under $50,000 may revert to either a full audit or a financial review after five years.

A new subdivision (f) gives the county auditor the right to appoint a certified public accountant to conduct a full audit of a special district after receiving a financial review, agreed-upon procedures engagement, or financial compilation, providing an oversight mechanism over the lighter alternatives.

The operative date for the second amended code section (Section 2) was clarified from an ambiguous reference showing both January 1, 2027 and 2037 to a single clear date of January 1, 2037.

Section 2 was changed from repealing the existing code section to amending it, and the bill title was updated from 'amend and repeal' to simply 'amend,' reflecting that the prior law is being modified rather than eliminated.

The annual revenue cap for a special district to replace its required annual audit with a financial review or agreed-upon procedures engagement was raised from $150,000 to $250,000.

The annual revenue cap for a special district to replace its required annual audit with an annual financial compilation was raised from $150,000 to $250,000.

A new graduated rule was added for what happens after five consecutive years of using a financial compilation: districts with revenues of $50,000 or more must return to a full annual audit, while districts with revenues under $50,000 may either return to a full audit or step down to a financial review.

The expiration date of the new provisions was extended from January 1, 2027 to January 1, 2037, giving special districts a decade instead of one year to use the alternative reporting options before reverting to full annual audits.

Section 26909 of the Government Code is now amended rather than repealed and replaced. The amended Section 26909 retains a lower $150,000 revenue threshold and only permits a financial review (not an agreed-upon procedures engagement) as an alternative to the annual audit.