Cal. Code Regs. tit. 17 § 50606

Current through Register 2024 Notice Reg. No. 45, November 8, 2024

Section 50606 - Regional Center Auditing Requirements

(a) To the extent that regional centers determine that it is necessary, regional centers shall audit records of service providers. Such audits shall be:

(1) Performed utilizing existing personnel resources; and

(2) Commenced within three years following the final payment for the fiscal year under audit.

(b) Audits shall be performed to accomplish any or all of the following objectives as applicable to the specific service provider:

(1) Verification that the service provider's documentation submitted to the regional center as a basis for establishing a rate of payment by the Department is:

(A) Complete, including other sources of revenue related to the service program or provision of services to persons with developmental disabilities;

(B) Accurate; and

(C) Supported by the service providers' records and source documents.

(2) Verification that the service billings/invoices submitted by the service provider to the regional center for payment are supported by the service providers' consumer attendance and service records.

(3) Verification that the service providers' handling and accounting of the consumers' personal and incidental funds is in accordance with applicable regulations including, but not limited to, Title 17, California Code of Regulations, Sections 56557(b)(3)(G) and 56602(d), and Title 22, California Code of Regulations, Section 80026.

(4) Verification through analysis of payroll and consumer service records that staff-to-consumer ratios required by regulation, contract, or agreement are met.

(A) Verification that the required staff-to-consumer ratios are being met shall be determined as follows:

1. For activity centers, adult development centers, and behavior management programs:

a. For each month of the audit period multiply the number of actual consumer days of attendance by the number of direct service hours operated per day;

b. Divide the total computed in a. by the approved staffing ratio to compute the number of direct care staff hours required during the approved program hours each month to maintain the approved staffing ratio; and

c. Compare the number of direct care staff hours actually provided during the approved program hours for each month with the number of direct care staff hours required for each month computed pursuant to b.

2. For social recreation programs, independent living programs, and infant development programs:

a. For each month of the audit period determine the actual hours of consumer attendance for each month;

b. Divide the actual hours of attendance pursuant to a. by the approved staffing ratio to compute the number of direct care staff hours required during the approved program hours each month to maintain the approved staffing ratio; and

(B) If a determination is made that the approved staff-to-consumer ratio has not been met, the amount of any overpayments shall be determined as follows:

1. Subtract the number of direct care staff hours actually provided during the audit period from the number of direct care staff hours required pursuant to (A)1. or (A)2.;

2. Multiply the amount computed in 1. by the average hourly salary and wage and fringe benefit costs reported pursuant to Sections 57434(a)(1)(A) and (a)(2) and which were utilized to calculate the vendor's rate of reimbursement received during the audit period.

(5) Verification of compliance with other provisions of applicable statute, regulations, contracts, or agreements governing the service program and/or the provision of services to persons with developmental disabilities.

(c) If an audit of a service provider not vendored by the auditing regional center is proposed, such audit shall be coordinated with the vendoring regional center. If the service provider has already been audited for the same time period, the auditing regional center shall rely, to the extent possible, on the work performed by the vendoring regional center.

(d) Upon completion of an audit, the regional center shall process the audit findings and/or recommendations defined in Title 17, California Code of Regulations, Section 50701, as follows:

(1) A draft of the audit report shall be forwarded to the service provider for comment within sixty (60) days of completion of work performed at the service provider's location.

(2) The service provider shall be given thirty (30) days in which to respond to the audit report draft from time of its receipt.

(e) If an audit of a service provider involves review of documentation submitted to either the regional center or the Department and relied upon as the basis for establishing a rate of payment for that service provider, the regional center shall forward its preliminary audit report to the Department.

(1) The preliminary audit report shall include the service providers' response to the audit findings and/or recommendations as an attachment.

(2) The preliminary audit report shall include the regional center's reply to the providers' response as an attachment.

(3) The Department shall consider the preliminary audit report in establishing a rate. If an adjustment to the rate is proposed:

(A) The effective date of the adjusted rate of payment shall be determined by the Department based on information contained in the preliminary audit report and supporting audit working papers.

(B) The adjusted rate of payment shall be calculated and submitted by the Department to the regional center for use in determining any amounts which may be due from or due to the service provider.

(4) The Department shall notify the regional center if it is determined that an adjustment to the rate of payment is not necessary after considering the preliminary audit report.

(f) The final audit report shall be issued by the regional center, within 90 days of the deadline for the service provider's response.

(1) The final report shall notify the service provider of its right to appeal the audit findings pursuant to Title 17, California Code of Regulations, Section 50730.

(2) The final report shall incorporate the response of the service provider and the regional center's reply to the response.

(3) A copy of the rate letter issued by the Department adjusting the rate of payment shall be enclosed with the final report, if applicable.

(4) The final report shall include a breakdown of any amounts due the regional center and Department by fiscal year and require remittance in accordance with Section 50705. If an amount is due the service provider, the final report shall include a breakdown of any amounts due by State fiscal year. Procedures for requesting payment of the amount due from the regional center shall also be included.

(5) When a remittance pursuant to subsection (4) is made, a copy of the check and any transmittal document shall be sent to the Department.

(6) Upon issuance, a copy of the final report shall be sent to the Department.

(g) The auditing work performed by the regional center shall, to the maximum extent that the auditor determines practicable, follow the standards for financial and compliance audits, as listed in the "Standards for Audit of Governmental Organizations, Programs, Activities and Functions," 1981 Revision, sued by the Comptroller General of the United States, United States General Accounting Office, which is incorporated by reference herein.

(1) The auditing work performed by the regional center shall, at a minimum, meet the following standards:

(A) In all matters relating to the audit work, the regional center staff involved shall be free from conflicts of interest as defined in Title 17, California Code of Regulations, Section 54521, and in Section 4627 of the Welfare and Institutions Code.

(B) Due professional care shall be used in conducting the audit and in preparing related reports.

(C) When factors external to the audit organization and the auditor restrict the audit or interfere with the auditor's ability to form objective opinions and conclusions, the auditor shall attempt to remove the limitation or, failing that, disclose the limitation in the audit report.

(D) A review shall be made of compliance with applicable statutes and regulations governing the service program and/or the provision of services to persons with developmental disabilities.

(E) A written record of the auditor's work shall be retained in the form of working papers.

(F) Final audit reports shall be submitted to the appropriate officials of the organization audited and to the appropriate officials of the regional center and the Department. Copies of the reports shall also be:

1. Sent to the other officials who may be responsible for taking action and to others authorized to receive such reports.

2. Made available for public inspection, unless restricted by law or regulations; and

3. Accompanied by a transmittal document which specifies that the report is subject to appeal and includes the status of any such appeal.

(G) For purposes of subsection (F) "other officials" and "others" authorized to receive such reports include, but shall not be limited to, those designated by law or regulation to receive such reports, legislators, and those of other levels of government that have provided funds to the audited entity.

(h) The reports specified in this section shall be written reports.

Cal. Code Regs. Tit. 17, § 50606

1. New section filed 9-22-89; operative 10-22-89 (Register 89, No. 40).
2. Amendment of section filed as an emergency 6-17-93; operative 6-17-93. Submitted to OAL for printing only pursuant to SB485 (Chapter 722, Statutes of 1992) Section 147(a) (Register 93, No. 26).
3. New subsections (b)(4)(A)-(B)2 filed 6-20-94 as an emergency; operative 6-20-94. Submitted to OAL for printing only pursuant to Chapter 722, Statutes of 1992, Section 147 (Register 94, No. 25).
4. Certificate of Compliance as to 6-17-93 order transmitted to OAL 6-20-94 and filed 8-2-94 (Register 94, No. 31).
5. Certificate of Compliance as to 6-20-94 order transmitted to OAL 2-20-96 and filed 3-29-96 (Register 96, No. 13).
6. Change without regulatory effect amending section filed 1-17-97 pursuant to section 100, title 1, California Code of Regulations (Register 97, No. 3).

Note: Authority cited: Chapter 722, Statutes of 1992, Section 147; Sections 4405, 4631, 4648.2, 4791(i), Welfare and Institutions Code; and Section 11152, Government Code. Reference: Sections 4629(f), 4631, 4648.1 and 4791, Welfare and Institutions Code.