Bill Text: CA SB490 | 2015-2016 | Regular Session | Amended
Bill Title: Regional centers: audits.
Spectrum: Bipartisan Bill
Status: (Failed) 2016-11-30 - From Assembly without further action. [SB490 Detail]
Download: California-2015-SB490-Amended.html
BILL NUMBER: SB 490 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 18, 2015
AMENDED IN SENATE APRIL 23, 2015
INTRODUCED BY Senators Beall and Huff
(Coauthors: Senators Anderson, Bates, Cannella, Hall, Nguyen,
Pavley, Stone, Vidak, and Wolk)
(Coauthors: Assembly Members Chu and Salas)
FEBRUARY 26, 2015
An act to amend Section 4652.5 of the Welfare and Institutions
Code, relating to developmental services.
LEGISLATIVE COUNSEL'S DIGEST
SB 490, as amended, Beall. Regional centers: audits.
Under existing law, the Lanterman Developmental Disabilities
Services Act, the State Department of Developmental Services is
authorized to contract with regional centers to provide services and
supports to individuals with developmental disabilities. Existing law
requires an entity that receives payments between $250,000 and
$500,000 per year from one or more regional centers to obtain an
independent audit or review of its financial statements and requires
an entity that receives payments that are equal to or more than
$500,000 per year to obtain an independent audit. Existing law
exempts payments made using usual and customary rates for services
provided by regional centers from these requirements.
This bill would instead require an entity to obtain an independent
audit or review report of its financial statements relating to
payments made by regional centers if it receives payments between
$500,000 and $2,000,000 from one or more regional centers and would
authorize these entities to apply for, and require the regional
center to grant, a 2-year exemption from this requirement if the
regional center does not find issues in the audit or review that have
an impact on regional center services. The bill would also require
an entity to obtain an independent audit if it receives payments that
are equal to or more than $2,000,000 and would authorize these
entities to apply for, and require the regional center to grant, a
2-year exemption from the audit requirement if the audit resulted in
an unmodified opinion, an unmodified opinion with additional
communication, or a qualified opinion with issues that are not
material and pervasive. The bill would require a regional center to
notify the department of any exemption it grants to an entity that
receives a qualified opinion report. The bill would also exempt
social security benefit payments from these requirements.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 4652.5 of the Welfare and Institutions Code is
amended to read:
4652.5. (a) (1) An entity that receives payments from one or more
regional centers shall contract with an independent accounting firm
to obtain an independent audit or review of its financial statements
relating to payments made by regional centers subject to all of the
following:
(A) If the amount received from the regional center or regional
centers during the entity's fiscal year is more than or equal to five
hundred thousand dollars ($500,000) but less than two million
dollars ($2,000,000), the entity shall obtain an independent audit or
independent review report of its financial statements for the
period. Consistent with Subchapter 21 (commencing with Section 58800)
of Title 17 of the California Code of Regulations, this subdivision
shall also apply to work activity program providers receiving less
than two hundred fifty thousand dollars ($250,000).
(B) If the amount received from the regional center or regional
centers during the entity's fiscal year is equal to or more than two
million dollars ($2,000,000), the entity shall obtain an independent
audit of its financial statements for the period.
(2) This requirement does not apply to payments made using usual
and customary rates, as defined by Title 17 of the California Code of
Regulations, for services provided by regional centers or social
security benefit payments.
(3) This requirement does not apply to state and local
governmental agencies, the University of California, or the
California State University.
(b) An entity subject to subdivision (a) shall provide copies of
the independent audit or independent review report required by
subdivision (a), and accompanying management letters, to the
vendoring regional center within 30 days after completion of
the audit or review. nine months of the end of the
fiscal year for the entity.
(c) Regional centers that receive the audit or review reports
required by subdivision (b) shall review and require resolution by
the entity for issues identified in the report that have an impact on
regional center services. Regional centers shall take appropriate
action, up to termination of vendorization, for lack of adequate
resolution of issues.
(d) Regional centers shall notify the department of all qualified
opinion reports or reports noting significant issues that directly or
indirectly impact regional center services within 30 days after
receipt. Notification shall include a plan for resolution of issues.
(e) For purposes of this section, an independent review of
financial statements shall be performed by an independent accounting
firm and shall cover, at a minimum, all of the following:
(1) An inquiry as to the entity's accounting principles and
practices and methods used in applying them.
(2) An inquiry as to the entity'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 the
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) For purposes of this section, an independent review report
shall cover, at a minimum, all of the following:
(1) Certification that the review was performed in accordance with
standards established by the American Institute of Certified Public
Accountants.
(2) Certification that the statements are the representations of
management.
(3) Certification that the review consisted of inquiries and
analytical procedures that are lesser in scope than those of an
audit.
(4) Certification that 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) The department shall not consider a request for adjustments to
rates submitted in accordance with Title 17 of the California Code
of Regulations by an entity receiving payments from one or more
regional centers solely to fund either anticipated or unanticipated
changes required to comply with this section.
(h) (1) An entity required to obtain an independent audit or
independent review of its financial statement pursuant to
subparagraph (A) of paragraph (1) of subdivision (a) may apply to the
regional center for, and the regional center shall grant, a two-year
exemption from the independent audit or independent review
requirement if the regional center does not find issues in the prior
year's independent audit or independent review that have an impact on
regional center services.
(2) An entity required to obtain an independent audit of its
financial statements pursuant to subparagraph (B) of paragraph (1) of
subdivision (a) may apply to the regional center for an exemption
from the independent audit requirement, subject to all of the
following conditions:
(A) If the independent audit for the prior year resulted in an
unmodified opinion or an unmodified opinion with additional
communication, the regional center shall grant the entity a two-year
exemption.
(B) If the independent audit for the prior year resulted in a
qualified opinion and the issues are not material and pervasive, the
regional center shall grant the entity a two-year exemption. However,
the entity and the regional center shall continue to address issues
raised in this independent audit, regardless of whether the exemption
is granted.
(3) A regional center shall notify the department of any exemption
it grants to an entity that receives a qualified opinion report.
