In response to concerns the audit raised, changes and corrections were made before the district issued its formal report Jan. 31.
Butkovitz said it marked the first time his office had found such serious problems with accounting procedures during its yearly review of district reports.
"When you wave a flag and say there is a 'material weakness,' that's like saying you can't automatically trust these statements," Butkovitz said. "You have to kick the tires and examine them."
Michael Masch, the district's chief financial officer, challenged the language in the controller's audit and said none of the questioned areas rose to the level of a "material weakness."
"A material weakness would misrepresent the actual financial condition of the school district," Masch said.
Among other things, the district's annual report is used by bond-rating agencies to grade its ability to repay debts. The City Charter requires the Controller's Office to audit the statement.
The report was due Dec. 31, but the Government Finance Officers Association of the United States and Canada, which reviews government reports, granted a 30-day extension.
Masch said the transactions the Controller's Office questioned included esoteric accounting technicalities that did not affect the statement of the district's assets or liabilities.
"I am completely perplexed at the Controller's Office decision to report this the way it did," Masch said.
He also said that in the past, the Controller's Office has understood that the preliminary documents the district provides are drafts subject to change.
But Deputy City Controller Gerald V. Micciulla, who oversaw the audit, said the problems auditors found were serious and increased the risk that other errors could slip by.
