Cal. Code Regs. tit. 17 § 58874

Current through Register 2024 Notice Reg. No. 52, December 27, 2024

Section 58874 - Reporting Requirements

(a) To receive a rate based on allowable cost, in accordance with these regulations, a vendor shall establish a historical period. In the case of new vendors meeting all other criteria for vendorization, the historical period need not extend a full year, but it shall occupy at least three months ending no later than March 31 preceding the payment year for which the Work Activity Program's rate is being established. That historical period shall be representative of the vendor's ongoing operating costs excluding start-up costs.

(b) The vendor shall submit, as required by the Department, a completed Cost Statement for the historical period in accordance with the principles, policies, procedures, and instructions specified in Section 58864. Using representative cost and consumer data in the Cost Statement, the Department shall apply the policies and procedures in these regulations to establish the rate for the upcoming payment year. If service provider operations during the historical period are dependent upon establishment grant funds which will terminate before the payment year for which the rate is being set, the Department shall not apply such grant funds as a recovery in its computation of the rate.

(c) If the Department determines that the minimum required historical period is not sufficiently representative of cost and consumer data as the basis for establishing the rate, the policy set forth in Section 58860(c) shall be in effect. To be sufficiently representative, the historical period shall not contain costs that are essentially start-up costs (security deposits, moving expenses, etc.), and the consumer attendance during the historical period shall reasonably approximate the caseload level that had been anticipated in the service provider's request -for vendorization.

(d) Expenses for other programs not provided as part of the Work Activity Program shall be reported separately from the expenses of Work Activity Program services. However, such expenses may be consolidated under one cost center unless a portion of those expenses are allowable Work Activity Program expenses.

(e) An independent review of financial statements performed by an accountant may be submitted instead of an independent audit and shall cover at a minimum the following:

(1) An inquiry as to the vendor's accounting principles and practices and methods used in applying them;

(2) An inquiry as to the vendor's procedures for recording, classifying, and summarizing transactions and accumulating information;

(3) Analytical procedures designed to identify relationships or items that appear to be unusual;

(4) An inquiry about budgetary actions taken at meetings of board of directors or other comparable meetings;

(5) An inquiry about whether the financial statements have been properly prepared in conformity with Generally Accepted Accounting Principles and whether any events subsequent to the date of the financial statements would have a material effect on the statements under review;

(6) Working papers prepared in connection with a review of financial statements describing the items covered as well as any unusual items, including their disposition.

(f) An independent review report shall accompany the financial statements reviewed by an accountant and shall cover the following points:

(1) A review was performed in accordance with standards established by the American Institute of Certified Public Accountants;

(2) The statements are representations of management;

(3) The review consisted of inquiries and analytical procedures that are less in scope than those of an audit; thus, no opinion is expressed regarding the financial statements as a whole;

(4) The accountant is not aware of any material modifications that need to be made to the statements for them to be in conformity with Generally Accepted Accounting Principles.

(g) If there are material changes as the result of the independent review or independent audit report, the vendor shall revise the Cost Statement to reconcile with the review or audit and resubmit them. The Department shall revise the rate accordingly.

Cal. Code Regs. Tit. 17, § 58874

1. New section filed 7-22-2004 as an emergency; operative 7-22-2004 (Register 2004, No. 30). A Certificate of Compliance must be transmitted to OAL by 11-19-2004 or emergency language will be repealed by operation of law on the following day.
2. Repealed by operation of Government Code section 11346.1(g) (Register 2004, No. 49).
3. New section refiled 11-29-2004 as an emergency; operative 11-29-2004 (Register 2004, No. 49). A Certificate of Compliance must be transmitted to OAL by 3-29-2005 or emergency language will be repealed by operation of law on the following day.
4. New section refiled 3-30-2005 as an emergency; operative 3-30-2005 (Register 2005, No. 13). A Certificate of Compliance must be transmitted to OAL by 7-28-2005 or emergency language will be repealed by operation of law on the following day.
5. Certificate of Compliance as to 3-30-2005 order, including amendment of subsections (b)-(c), transmitted to OAL 6-21-2005 and filed 8-1-2005; amendments operative 8-31-2005 (Register 2005, No. 31).

Note: Authority cited: Section 11152, Government Code; and Sections 4857.1, 4859(a), 4860(b) and 4866, Welfare and Institutions Code. Reference: Sections 4859 and 4861(b), Welfare and Institutions Code.