Independent Audit Requirements
Statutory Requirement to Obtain an Independent Audit or Independent Review Report of Financial Statements
In 2011, Section 4652.5 was added to the Welfare and Institutions Code requiring that specified vendors contract with an independent auditing firm for an audit or review of their financial statements.
The Department of Developmental Services notified all regional center vendors who they believed are impacted by new requirements based upon purchase of service data.
Pursuant to this new law, when the amount the vendor receives from the regional center(s) during the vendor’s fiscal year is more than or equal to two hundred fifty thousand dollars ($250,000), the vendor must obtain an independent audit or independent review report of its financial statements for the period. Consistent with California Code of Regulations, Title 17, this requirement also applies to work activity program providers receiving less than two hundred and fifty thousand dollars ($250,000). When the amount received from the regional center(s) during the vendor’s fiscal year is equal to or more than five hundred thousand dollars ($500,000), the vendor must obtain an independent audit of its financial statements for the period.”
DDS later provided additional clarification that implementation of the statutory requirement for an independent review or audit applies to “vendors who receive regional center funding in excess of $250,000 and $500,000, respectively (Welfare and Institutions Code1 section 4652.5), and the 15 percent administrative cap requirement for provider contracts and agreements (section 4629.7).”