Public Social Services; Aid and Medical Assistance; Computation and Payment of Aid Grants
(a) In accordance with subdivision (b), as a condition to receive an AFDC-FC rate for a program including, but not limited to, a group home, a foster family agency that provides treatment services, a short-term residential treatment center, and other similar business entities providing foster care, the following shall apply:
(1) Any provider who expends in combined federal funds an amount at or above the federal funding threshold in accordance with the federal Single Audit Act, as amended, and Section 200.501 of Title 2 of the Code of Federal Regulations shall arrange to have a financial audit conducted on an annual basis, and shall submit the annual financial audit to the department in accordance with regulations adopted by the department, all-county letter, or similar written instructions.
(2) Any provider who expends in combined federal funds an amount below the federal funding threshold in accordance with the federal Single Audit Act, as amended, and Section 200.501 of Title 2 of the Code of Federal Regulations shall annually submit to the department a financial audit on its most recent fiscal period. The department shall provide timely notice to the providers of the date that submission of the financial audit is required. That date of submission of the financial audit shall be established in accordance with regulations adopted by the department.
(3) The scope of the financial audit shall include all of the programs and activities operated by the provider and shall not be limited to those funded in whole or in part by the AFDC-FC program. The financial audits shall include, but not be limited to, an evaluation of the expenditures and accounting and control systems of the provider.
(4) The provider shall have its financial audit conducted by certified public accountants or by state-licensed public accountants, with audit designation, who have no direct or indirect relationship with the functions or activities being audited, or with the provider, its board of directors, or other governing body, officers, or staff.
(5) The provider shall have its financial audits conducted in accordance with Government Auditing Standards issued by the Comptroller General of the United States and in compliance with generally accepted accounting principles applicable to private entities organized and operated on a nonprofit basis.
(6) (A) Each provider shall have the flexibility to define the calendar months included in its fiscal year.
(B) A provider may change the definition of its fiscal year. However, the financial audit conducted following the change shall cover all of the months since the last audit, even though this may cover a period that exceeds 12 months.
(b) (1) In accordance with subdivision (a), as a condition to receive an AFDC-FC rate, a provider shall submit a copy of its most recent financial audit report, except as provided in paragraph (3).
(2) The department shall terminate the rate of a provider who fails to submit a copy of its most recent financial audit pursuant to subdivision (a). A terminated rate shall only be reinstated upon the provider's submission to the department of an acceptable financial audit.
(3) A new provider that has been incorporated for fewer than 12 calendar months shall not be required to submit a copy of a financial audit to receive an AFDC-FC rate for a new program. The financial audit shall be conducted on the provider's next full fiscal year of operation. The provider shall submit the financial audit to the department in accordance with subdivision (a).
(4) Repeated late financial audits may result in monetary penalties or termination of the provider's rate as set forth in regulation, all-county letter, or similar written directive by the department.
(c) The department shall issue a management decision letter on audit findings within six months of receipt of the financial audit report. The management decision letter shall clearly state whether or not the audit finding is sustained, the reasons for the decision, and the action or actions expected of the nonprofit organization provider to repay disallowed costs, make financial adjustments, or take other action.
(Amended by Stats. 2015, Ch. 773, Sec. 92.)