(a)

1. (1) The accounts of all publicly funded educational institutions shall be audited annually by:

   1. (A) Arkansas Legislative Audit; or
   2. (B) A private, independent certified public accountant (private auditor).

2. (2) A private auditor, other than Arkansas Legislative Audit, must be selected by the:

   1. (A) School district board; or
   2. (B) Governing body of the institution.

3. (3)

   1. (A) If a private auditor was used for the prior year audit, or if the auditee did not exist during the prior year, the auditee may request that Arkansas Legislative Audit conduct its financial audit.
   2. (B) The written request shall be submitted to the Legislative Auditor at least ninety (90) days prior to end of the fiscal year to be audited.

4. (4)

   1. (A) If the publicly funded educational institution is an open-enrollment public charter school, Arkansas Legislative Audit shall prepare the required financial audit of the institution’s first year of operation unless the State Board of Education approves the use of an entity other than Arkansas Legislative Audit.
   2. (B) With the approval of the State Board of Education, an open-enrollment public charter school may retain the services of a licensed certified public accountant, or a licensed accountant in public practice, who is in good standing with the Arkansas State Board of Public Accountancy, to conduct the financial audit of its first year of operation in accordance with:

(i) Auditing standards generally accepted in the United States; and

1. (ii) Government Auditing Standards issued by the Comptroller General of the United States.

(b) The financial statements shall be presented on a fund basis format, and as a minimum:

1. (1) The general fund and the special revenue fund presented separately; and

2. (2) All other funds included in the audit presented in the aggregate.

   1. (c) The financial statements shall consist of the following:
3. (1) A balance sheet;
4. (2) A statement of revenue, expenditures, and changes in fund balances;
5. (3) A comparison of the final adopted budget to the actual expenditures for the general fund and the special revenue funds; and

6. (4) Notes to the financial statements.

   1. (d) The report shall include as supplemental information a schedule of capital assets, including:
7. (1) Land;
8. (2) Buildings; and
9. (3) Equipment.

(f) The report must include information on:

1. (1) Internal control over financial reporting;
2. (2) Compliance; and
3. (3) Other matters based on an audit of financial statements performed in accordance with Governmental Auditing Standards.