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Section 38041 Of Chapter 5. Direct Service Contract Audit Requirements From California Health And Safety Code >> Division 25. >> Chapter 5.
38041
. (a) Annually, there shall be a single independent financial
and compliance audit of nonprofit organizations that contract with
the state under a direct service contract. Any such audit shall
include an evaluation of the accounting and control systems of the
direct service contractor and of the activities by the contractor to
comply with the financial requirements of direct service contracts
received by the contractor from the state agency. Audits carried out
pursuant to this section shall be audits of the contractor, rather
than audits of individual contracts or programs. In the case of any
contractor that receives less than twenty-five thousand dollars
($25,000) per year from any state agency, the audit required by this
section shall be conducted biennially, unless there is evidence of
fraud or other violation of state law in connection with the direct
service contract. The cost of such audit may be included in direct
service contracts up to the proportionate amount that the contract
represents of the contractor's total revenue.
(b) A nonprofit organization shall have responsibility for financial and compliance audits of the nonprofit organization and any subcontractors. The audits shall be made by independent auditors in accordance with generally accepted auditing standards. The audit shall be completed by the 15th day of the fifth month following the end of the contractor's fiscal year.
(c) (1) Nothing in this chapter limits the authority of state agencies to make audits of direct service contracts; provided, however, that if independent audits arranged for by direct service contractors meet generally accepted auditing standards state agencies shall rely on those audits and any additional audit work shall build upon the work already done.
(2) The state is responsible for conducting, or contracting for the conduct of, contract performance audits which are not financial and compliance audits.
(3) Nothing in this chapter limits the state's responsibility or authority to enforce state law or regulations, procedures, or reporting requirements arising pursuant thereto.
(b) A nonprofit organization shall have responsibility for financial and compliance audits of the nonprofit organization and any subcontractors. The audits shall be made by independent auditors in accordance with generally accepted auditing standards. The audit shall be completed by the 15th day of the fifth month following the end of the contractor's fiscal year.
(c) (1) Nothing in this chapter limits the authority of state agencies to make audits of direct service contracts; provided, however, that if independent audits arranged for by direct service contractors meet generally accepted auditing standards state agencies shall rely on those audits and any additional audit work shall build upon the work already done.
(2) The state is responsible for conducting, or contracting for the conduct of, contract performance audits which are not financial and compliance audits.
(3) Nothing in this chapter limits the state's responsibility or authority to enforce state law or regulations, procedures, or reporting requirements arising pursuant thereto.
