Los Angeles County

LOS ANGELES COUNTY OFFICE OF EDUCATION Review Report AUDIT RESOLUTION PROCESS Fiscal Year 2019-20 and Fiscal Year 2020-21 M M. C ALIA OHEN C ALIFORNIA S TATE C ONTROLLER March 2025 MALIA M. COHEN CALIFORNIA STATE CONTROLLER March 24, 2025 Dr. Debra Duardo, Superintendent Los Angeles County Office of Education 9300 Imperial Highway Downey, CA 90242 Dear Dr. Duardo, The State Controller’s Office reviewed the Los Angeles County Office of Education’s (COE) audit resolution process for local education agency exceptions noted in the annual audit reports. The review covered fiscal year (FY) 2019-20 and FY 2020-21. Our review found that the Los Angeles COE followed its audit resolution process for FY 2019-20 and FY 2020-21. However, the audit resolution process was deficient because it did not include the review of audit exceptions related to the information reported on the school accountability report card required by Education Code section 33126. Except for this deficiency, the Los Angeles COE complied with Education Code section 41020. If you have any questions regarding this report, please contact Joel James, Chief, Financial Audits Bureau, by telephone at 916-323-1573, or email at jjames@sco.ca.gov. Thank you. Sincerely, Original signed by Kimberly A. Tarvin, CPA Chief, Division of Audits KAT/rs MAILING ADDRESS P.O. Box 942850, Sacramento, CA 94250 SACRAMENTO 3301 C Street, Suite 700, Sacramento, CA 95816 | 916.324.8907 LOS ANGELES 901 Corporate Center Drive, Suite 200, Monterey Park, CA 91754 | 323.981.6802 Dr. Debra Duardo March 24, 2025 Page 2 of 2 Copy: Nkeiruka Benson, Director School Financial Services Los Angeles County Office of Education Octavio Castelo, Director Business Advisory Services Los Angeles County Office of Education Christina Hill, Assistant Director School Financial Services Los Angeles County Office of Education Elizabeth Dearstyne, Director School Fiscal Services Division California Department of Education Keith Smith, Administrator School Fiscal Services Division California Department of Education Jessica Holmes, Program Budget Manager Education Systems Unit California Department of Finance MAILING ADDRESS P.O. Box 942850, Sacramento, CA 94250 SACRAMENTO 3301 C Street, Suite 700, Sacramento, CA 95816 | 916.324.8907 LOS ANGELES 901 Corporate Center Drive, Suite 200, Monterey Park, CA 91754 | 323.981.6802 Los Angeles County Office of Education Audit Resolution Process Contents Review Report Summary ............................................................................................................................ 1 Background ........................................................................................................................ 1 Review Authority ............................................................................................................... 2 Objective, Scope, and Methodology ................................................................................. 2 Conclusion .......................................................................................................................... 3 Views of Responsible Officials .......................................................................................... 3 Restricted Use .................................................................................................................... 3 Finding and Recommendation .............................................................................................. 4 Attachment—Los Angeles County Office of Education’s Response to Draft Review Report Los Angeles County Office of Education Audit Resolution Process Review Report Summary The State Controller’s Office (SCO) reviewed the Los Angeles County Office of Education’s (COE) audit resolution process for local education agency (LEA) exceptions noted in the annual audit reports for fiscal year (FY) 2019-20 and FY 2020-21. Our review found that the Los Angeles COE followed its audit resolution process for FY 2019-20 and FY 2020-21. However, the audit resolution process was deficient because it did not include the review of audit exceptions related to the information reported on the school accountability report card required by Education Code (EC) section 33126. Except for this deficiency, the Los Angeles COE complied with EC section 41020. Background EC section 41020(n) directs the SCO to require that auditors categorize audit exceptions in the audit report in such a manner that both the county superintendent of schools and the State Superintendent of Public Instruction (SSPI) can discern which exceptions it is their responsibility to ensure that the LEAs correct. In addition, EC section 41020(n) requires the SCO to annually select a sample of county superintendents of schools for which the SCO will perform a follow-up review of the audit resolution process. Results of these reviews will be reported to the SSPI and the county superintendents of the schools that were reviewed. The Los Angeles COE provides coordination of educational programs, and professional and financial supervision for 80 LEAs under its jurisdiction. In addition, the county superintendent of schools maintains special schools and programs countywide, independent of the LEAs. County superintendents of schools are required to do the following: • Review, for each of their school districts, audit exceptions relating to attendance, inventory of equipment, internal control, and any miscellaneous items, and determine whether the findings have been corrected or an acceptable plan of correction has been developed (EC section 41020[i][1]); • Review audit exceptions related to the use of program funds for instructional materials, teacher misassignments, and school accountability report cards. The county superintendents must also determine whether the exceptions have been corrected or an acceptable plan of correction has been developed (EC section 41020[i][2]); • Review audit exceptions related to attendance, inventory of equipment, internal control, and other miscellaneous exceptions. Attendance exceptions or issues must include those related to local control funding formula allocations pursuant to EC section 42238.02, as implemented by section 42238.03, and independent study (EC section 41020[j][1]); -1- Los Angeles County Office of Education Audit Resolution Process • Notify the LEA, and request that the governing board of the LEA provide to the county superintendent of schools a description of the correction or plan of correction by March 15 of the subsequent year (EC section 41020[j][2]); • Review the description of the correction or plan of correction and determine its adequacy and, if the LEA’s response was not adequate, require the LEA to resubmit that portion of its response that is inadequate (EC section 41020[j][3]); • By May 15 of the subsequent year, certify to the SSPI and the SCO that the county has reviewed all applicable exceptions, and state that all exceptions have been corrected, or that an acceptable plan for correction has been submitted by the LEA to the county superintendent, except as noted in the certification. In addition, identify by LEA any attendance-related exceptions or exceptions involving state funds, and require the LEA to submit the appropriate reporting forms to the SSPI for processing (EC section 41020[k]); • Review LEAs’ unresolved prior-year audit exceptions when the California Department of Education defers to the county (EC section 41020[l]); and • Adjust subsequent local property tax requirements to correct audit exceptions relating to LEA tax rates and tax revenues (EC section 41020[o]). We conducted this review in accordance with EC section 41020(n), which Review authorizes the SCO to facilitate correction of the exceptions identified by Authority audits issued pursuant to this section. In addition, Government Code section 12410 provides the SCO with general authority to audit the disbursement of state money for correctness, legality, and sufficient provisions of law for payment. Objective, Scope, The objective of our review was limited to determining whether the Los and Methodology Angeles COE followed its audit resolution process for FY 2019-20 and FY 2020-21 for resolving LEA audit exceptions in a manner consistent with EC section 41020. Our review did not include an evaluation of the sufficiency of the action taken by the LEA and the Los Angeles COE to address each exception, nor did it assess the degree to which each exception was addressed. To achieve our objective, we performed the following procedures: • We verified that the Los Angeles COE addressed all attendance, inventory of equipment, internal control, and miscellaneous exceptions. In addition, we verified that the Los Angeles COE addressed any findings on program funds for instructional materials, teacher misassignments, and school accountability report cards. However, with respect to exceptions based on sample items, our review did not include a determination of whether the exception results were properly quantified and addressed at a districtwide or countywide level. -2- Los Angeles County Office of Education Audit Resolution Process • We verified that the Los Angeles COE notified LEAs that they must submit completed corrective action forms to the Los Angeles COE by March 15, 2021, and April 15, 2022, for FY 2019-20 and FY 2020-21, respectively. Our review did not include an assessment of the LEAs’ progress in taking corrective action. • We verified that the Los Angeles COE required the LEAs to submit the appropriate reporting forms to the SSPI for any attendance-related exceptions that affected state funding. • We reviewed the letters of certification due on May 15, 2021, and June 15, 2022, that the Los Angeles COE sent to the SSPI and the SCO regarding any resolved and unresolved audit exceptions. • We verified that the Los Angeles COE followed up with unresolved prior-year audit exceptions that the SSPI had required the Los Angeles COE to conduct. • We verified that the Los Angeles COE adjusted subsequent local property tax requirements to correct audit exceptions related to LEA tax rates and tax revenues. Conclusion Our review found that the Los Angeles COE followed its audit resolution process for FY 2019-20 and FY 2020-21. However, the audit resolution process was deficient because it did not include the review of audit exceptions related to the information reported on the school accountability report card required by EC section 33126. Except for this deficiency noted, the Los Angeles COE complied with EC section 41020. We made no additional determination regarding the Los Angeles COE’s audit resolution process beyond the scope of the review outlined in this report. Views of We issued a draft review report on December 17, 2024. The Los Angeles Responsible COE’s representative responded by letter dated December 26, 2024. The Los Angeles COE agreed with the review results. This final review report Officials includes the Los Angeles COE’s response as an attachment. Restricted Use This report is solely for the information and use of the Los Angeles COE, the California Department of Education, the California Department of Finance, and the SCO; it is not intended to be, and should not be, used by anyone other than these specified parties. This restriction is not intended to limit distribution of this report, which is a matter of public record and is available on the SCO website at www.sco.ca.gov. Original signed by Kimberly A. Tarvin, CPA Chief, Division of Audits March 24, 2025 -3- Los Angeles County Office of Education Audit Resolution Process Finding and Recommendation FINDING— Based on our review of the Los Angeles COE’s audit resolution process Deficiencies in the for LEA audit exceptions noted in the annual audit reports for FY 2019-20 review of local and FY 2020-21, we found that the Los Angeles COE audit resolution process did not include the review of audit exceptions related to the educational agency information reported on the school accountability report card required by audit exceptions EC section 33126. We reviewed a sample of 29 LEA audit exceptions for FY 2019-20 and FY 2020-21. Of the 29 sample audit exceptions, we found that the Los Angeles COE did not review three audit exceptions related to the information reported on the school accountability report card required by EC section 33126 to determine whether the exceptions were corrected or an acceptable plan of correction was developed. Los Angeles COE indicated that it is not aware of the oversight responsibility for reviewing the school accountability report card audit exceptions. EC section 41020(i)(2) states: Commencing with the 2004-05 audit of local educational agencies pursuant to this section and subdivision (d) of Section 41020.1, each county superintendent of schools shall include in the review of audit exceptions performed pursuant to this subdivision those audit exceptions related to use of instructional materials program funds, teacher misassignments pursuant to Section 44258.9, information reported on the school accountability report card required pursuant to Section 33126 and shall determine whether the exceptions are either corrected or an acceptable plan of correction has been developed. EC section 33126(d) states: It is the intent of the Legislature that schools make a concerted effort to notify parents of the purpose of the school accountability report cards, as described in this section, and ensure that all parents receive a copy of the report card; to ensure that the report cards are easy to read and understandable by parents; to ensure that local educational agencies with access to the Internet make available current copies of the report cards through the Internet; and to ensure that administrators and teachers are available to answer any questions regarding the report cards. Recommendation We recommend that the Los Angeles COE comply with EC section 41020 by identifying and reviewing all audit exceptions that fall under its oversight responsibility. -4- Los Angeles County Office of Education Audit Resolution Process Attachment— Los Angeles County Office of Education’s Response to Draft Review Report State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, CA 94250 www.sco.ca.gov S23-COE-9006