January 2020 Committee on School Finance/Permanent School Fund Item 2
Discussion of Proposed Amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter B, Texas Education Agency Audit Functions, §109.23, School District Independent Audits and Agreed-Upon Procedures
January 30, 2020
COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND: DISCUSSION
STATE BOARD OF EDUCATION: NO ACTION
SUMMARY: This item provides an opportunity for the committee to discuss a proposed amendment to 19 Texas Administrative Code (TAC) Chapter 109, Budgeting, Accounting, and Auditing, Subchapter B, Texas Education Agency Audit Functions, §109.23, School District Independent Audits and Agreed-Upon Procedures. The proposed amendment would reflect changes by House Bill (HB) 1520, 86th Texas Legislature, 2019, that eliminated the requirement for out-of-state certified public accountancy (CPA) firms to be licensed in Texas.
STATUTORY AUTHORITY: Texas Education Code (TEC), §§7.102(c)(32), 44.001, 44.007, 44.008, and 44.010.
TEC, §7.102(c)(32), authorizes the State Board of Education (SBOE) to adopt rules concerning school district fiscal account audits and budgets.
TEC, §44.007, requires each school district to annually submit to Texas Education Agency (TEA) a report of its revenues and expenditures for the preceding fiscal year and authorizes the SBOE to prescribe the management, cost accounting, and financial information format to enable the board to monitor the funding process and determine educational system costs.
TEC, §44.008, authorizes the SBOE to establish the format and minimum requirements of the independent audit of school district fiscal accounts.
TEC, §44.010, requires the school district budgets, fiscal reports, and audit reports filed with TEA to be reviewed and analyzed by TEA to determine whether all legal requirements have been met and to collect fiscal data needed in preparing school fiscal reports for the governor and the legislature.
The full text of statutory citations can be found in the statutory authority section of this agenda.
FUTURE ACTION EXPECTED: The proposed amendment to 19 TAC §109.23 will be presented for first reading and filing authorization at the April 2020 SBOE meeting.
BACKGROUND INFORMATION AND JUSTIFICATION: HB 1520, 86th Texas Legislature, 2019, updated Texas Occupations Code, §901.461, to eliminate the requirement for out-of-state CPA firms to be licensed in Texas. The amended statute took effect September 1, 2019.
The proposed amendment to §109.23 would reflect the changes to Texas Occupations Code, §901.461. Subsection (d)(1)(A) would be modified to allow an independent auditor hired by a school district to be associated with a CPA firm that has a current valid license issued by a state licensing agency from another state.
Staff Members Responsible:
David Marx, Director, Financial Compliance
Attachment: Text of Proposed Amendment to 19 TAC Chapter 109, Budgeting, Accounting, and Auditing, Subchapter B, Texas Education Agency Audit Functions, §109.23, School District Independent Audits and Agreed-Upon Procedures