Although changing audit firms can seem difficult, California’s regional centers must do it every five years. California’s legislature enacted the Welfare and Institutions Code (“WIC” section 4639), in 2011, which states that regional centers shall not use the same accounting firm more than five times in every 10-year period.
After management publishes their request for proposal for a new audit firm, consider the following factors when selecting the new firm:
• Stated firm experience with regional centers
• Understanding of audit scope, roles and responsibilities
• Ease of approach to the first-year audit with the new team
• Ability to include single audit (Uniform Guidance) and/or benefit plan audit
• Audit and tax process integration with each regional center’s systems and workflow
It is important to choose a reputable and experienced audit team. Independent audits are designed to improve financial transparency and accountability on behalf of the Department of Developmental Services (DDS), which in turn is accountable to funding from the State of California and Centers for Medicare and Medicaid Services (CMS).
According to a 2020 report by Stanford Law School, three questions address the goals of accountability and transparency to ensure long-term fiscal support and mitigate any cost-cutting measures among RCs in the future:
1. Current Level of Systemic Transparency: How transparent is the current system? How well equipped are DDS, the Legislature, and the public to identify existing deficiencies and track whether reforms are effective?
2. Current Level of Systemic Accountability: What accountability mechanisms are currently in place to correct those deficiencies that come to light? How effective are they?
3. Suggested Reforms: Are there measures that could enable the RC system to become more transparent and accountable to those it serves?
Fiscal transparency and accountability is only a small piece of the recommendations discussed in the Stanford report, but among them included certain financial disclosures for the public and regular board training to support their role in accountability.
Our firm’s regional center clients say that working with our firm allows them to achieve their goals more easily since we have a deep background in regional center auditing. Our audit and tax team know which questions to ask and minimize interruptions to your staff by resolving many issues internally based on our prior experience with regional centers.
LvHJ’s audit team focuses on nonprofit organizations, and we serve as experienced independent auditors for many of California’s regional centers. Our nonprofit audit and assurance services team is happy to walk you through insights when switching to a new auditor. Contact us with your questions.
