Golden Day Schools, Inc. v. Department of Education

Education Code section 8448 requires an organization having a “direct service contract” with the state for the operation of child care and development programs and related support services annually to prepare a single independent “financial and compliance audit” of its operations. If the audit meets generally accepted auditing standards, it shall be relied upon by the state Department of Education (the Department) and “any additional audit work shall build upon the work already done.” (Ed. Code, § 8448, subd. (i)(1); further statutory references to sections of an undesignated code are to the Education Code.)

In this declaratory relief action, plaintiff Golden Day Schools, Inc., sought a determination of its right, following preparation and submission of an audit pursuant to section 8448, to prohibit the Department from inspecting plaintiff’s business records. The trial court concluded section 8448 does not supersede powers granted to the Department elsewhere in the Education Code to audit and inspect the records of private entities contracting with the state. The court entered judgment declaring the Department’s right to inspect plaintiff’s records. We agree section 8448…