2025 USFR CQ Changes: What Arizona Districts Need to Know

by Mike A. Hoerig, CPA, Audit Partner

Posted on September 17, 2025

If you follow Arizona school district happenings, then you probably know that the 2025 legislative session ended on June 27, 2025, and (absent an emergency clause) the new laws will take effect September 26, 2025. Additionally, with the end of the legislative session, the Arizona Auditor General also finalized the USFR Compliance Questionnaire (USFR CQ) for 2024-25 audits and sent a notice regarding the changes on July 23, 2025. 

The USFR CQ changes are not as extensive as some previous years but do include several minor changes to enhance language and clarity, as well as a few significant changes that we think all District business officials should be aware of – see below for more details on the significant changes.

Background (and reminder)

The Arizona Auditor General has statutory responsibility for prescribing minimum internal control policies and procedures for Arizona School Districts – these are outlined in the Uniform System of Financial Records Manual (USFR). Compliance with these prescribed policies and procedures is monitored through the use of the USFR CQ, which must be completed and submitted annually by the district’s auditor.

Significant changes to the 2025 USFR CQ

The more significant changes include the following:

  • Combined previous years’ accounting records questions AR04 through AR06 into a single question (AR04) regarding monthly and year-end reconciliations between the District, the County Treasurer, and/or the County School Superintendent’s Office (CSS). This change highlights the differences in practice across the State and emphasizes the importance of sufficient District/CSS controls and procedures to fully reconcile their activity and balances to those maintained by the respective County Treasurers.
  • Modified the student attendance reporting question SAR23 regarding instructional time models (ITM). This change emphasizes that all forms of instruction should follow the ITM that the District submitted to ADE (i.e., not just those related to distance learning).
  • Added a new transportation support question (TS02) regarding vehicle inventory reports. This new question focuses on the accuracy and submission deadlines of the TRAN03-1 and TRAN40-2 reports.
  • Added a new general long-term debt question (GLTD05) regarding public meeting requirements for bond proceeds. This addition relates to A.R.S. §15-491(K), which requires that meetings be held between September 1 and October 31 each year, and that the meetings should discuss bond project progress, costs, future potential bonds, and the use of State capital aid and capital overrides. This requirement is in effect until all bond proceeds are expended.

We recommend that District business officials and department heads review the USFR CQ periodically to gauge your internal control structure and to identify areas where enhancements can be made in operational procedures.

The complete USFR CQ is located at the back of the USFR Manual, and can be downloaded at https://www.azauditor.gov/resources/school-districts/manuals-memorandums