Sec. 13a.02.07.04. Audits of Financial Statements

A. Audit Required. Each local board shall have an audit made of its financial statements for each fiscal year in accordance with this regulation.

B. Qualifications of Auditor. An independent certified public accountant, or a partnership or corporation of certified public accountants who hold a license or permit issued by the State Board of Public Accountancy shall perform the audit.

C. Approval by State Superintendent of Schools. The local superintendent of schools shall submit to the State Superintendent of Schools for approval, by May 1 of the fiscal year to be audited, the name of the auditor.

D. Standards. The auditor shall conduct the audit in accordance with generally accepted auditing standards and the requirements set forth in the following documents:

(1) "Audit and Accounting Guide for State and Local Governments"; and

(2) "Government Auditing Standards".

E. Report on Audit of Financial Statements. The audit reporting package shall include, at a minimum:

(1) The auditor's opinion which states whether the local board's financial statements are presented fairly in accordance with generally accepted accounting principles;

(2) Management's discussion and analysis of the local board's financial performance during the fiscal year;

(3) Basic financial statements prepared in accordance with generally accepted accounting principles and current Government Accounting Standards Board pronouncements that provide at least the following information, if applicable:

(a) Statement of net assets;

(b) Statement of activities that presents expenses and revenues by individual functions and the corresponding change in net assets;

(c) Governmental funds balance sheet;

(d) Reconciliation of the governmental funds balance sheet to the statement of net assets;

(e) Statement of revenues, expenditures, and changes in fund balances of governmental funds;

(f) Reconciliation of the statement of revenues, expenditures, and changes in fund balances of governmental funds to the statement of activities;

(g) Statement of net assets of proprietary funds;

(h) Statement of revenues, expenses, and changes to fund net assets of proprietary funds;

(i) Statement of cash flows of proprietary funds;

(j) Statement of fiduciary net assets; and

(k) Notes to the financial statements with all required disclosures;

(4) Required supplemental information that includes, if not already included as part of the basic financial statements, budgetary comparison schedules for the General Fund and for each major special revenue fund that has a legally adopted budget;

(5) The auditor's report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Governmental Auditing Standards; and

(6) The letter of recommendation submitted by the auditor to the management of the local board noting other matters involving the internal control over financial reporting, certain matters relating to compliance, or both.

F. Submission of Report. The local superintendent of schools shall submit a copy of the audit reporting package required under §E of this regulation to the State Superintendent of Schools and the appropriate local authority by September 30 after the close of the fiscal year.

G. Reconciliation. If there are any differences between the audited financial statements and the annual school financial report submitted pursuant to COMAR 13A.02.01.02D, the local superintendent of schools shall submit a report reconciling the differences to the State Superintendent of Schools by December 31 after the close of the fiscal year.