§ 7335. Auditing Requirements.

(a) Establishment Grants, Innovation and Expansion Grants, and other grants and contracts shall be audited to evaluate the financial transactions and determine compliance with the terms of the grant or contract.

(b) Grant and contract recipients shall arrange for independent audits that meet the standards and needs set forth by the Department. The audit shall be conducted in accordance with the Department's basic audit standards for grants and contracts and any additional audit standards required by the Department.

(c) Contracts for independent auditors shall provide that their audits meet the Department's needs and requirements. Copies of independent audit reports shall also be furnished to the Department. Audit working papers shall be made available to the Department and other governmental audit staff.

(d) The Department may also utilize independent audits made by Certified Public Accounting or Public Auditing firms, by an audit agency of the Federal or State Government, or Department auditors to accomplish the purpose of this article.

(e) External or internal audits shall be made in accordance with:

(1) Generally accepted auditing standards including the standards of the U.S. Accounting Office's publication “Standards for the Audit of Governmental Organizations Programs, Activities, and Functions”.

(2) Federal Regulations 34 CFR, Part 74.

(3) OMB Circular No. A-110, Federal Management Circular FMC 74-7.

(4) Department of Rehabilitation's “Grant Management Handbook”.

(5) The terms of the contract.

(6) Grant management guidelines.

(f) Audits shall be conducted at regular intervals, usually once a year, but at least once every two years. Audits may be conducted at other times at the discretion of the Department. The frequency shall depend on the nature, size and complexity of the recipient's grant or sub-grant supported activities.

(g) A copy of each audit report and a description of its resolution shall be furnished to the facility and the appropriate regional office of the U.S. Department of Education Audit Agency.

(h) A copy of the audit report shall be transmitted to the facility within 45 calendar days after the completion of the audit.

(i) The audit report is considered final 30 days after mailing unless the facility appeals the findings and recommendations in accordance with this section.

(j) If the facility disputes any audit finding or recommendation, the facility may, within 30 days of the mailing of the written notice of the audit, appeal the finding or recommendation. The appeal shall be in writing, clearly identify all issues in dispute, contain a full statement of the facility's position with respect to each issue, and contain pertinent facts and reasons in support of the facility's position. The appeal shall be addressed to the Audit Review Committee, Department of Rehabilitation. The Department may require the facility to submit additional documentation relevant to the disputed findings.

(k) The Audit Review Committee, shall be appointed by the Chief Deputy Director and shall consist of up to three Departmental employees, selected at the Chief Deputy Director's discretion. The Audit Review Committee shall receive appeals of audit findings, conduct hearings or otherwise review the appeal to decide the merit of the dispute. The decision of the committee shall be based on the Federal and State laws and regulations and the Federal audit guidelines.

(l) The Departmental Audit Review Committee shall consider the appeal and the pertinent documentation and arrive at a decision within 45 days from receipt of the appeal. Representatives of the facility may present information to the Audit Review Committee orally or in writing.

(m) The decision of the Audit Review Committee is final and shall be in writing and shall contain findings of fact, a determination of the issues presented, a decision and an order to recover overpayments, if appropriate. Copies of the decision shall be mailed to the facility.

(n) Any overpayment determined by audit to be due and payable shall be liquidated in the following manner:

(1) By lump-sum payment.

(2) By off-set against current payments due to the provider.

(3) In accordance with a repayment agreement executed by the facility and the Department.

(4) By any other method of recovery available by law.

(o) The Department may charge interest on any overpayment from the time of the final decision of the Audit Review Committee.

HISTORY

1. Amendment filed 3-2-82; effective thirtieth day thereafter (Register 82, No. 10).

2. Amendment of subsections (k) and (o) and amendment of Note filed 1-9-2001; operative 1-9-2001 pursuant to Government Code section 11343.4(c) (Register 2001, No. 2).

Note

Note: Authority cited: Sections 19006 and 19016, Welfare and Institutions Code. Reference: 34 CFR, Part 74, 80.26 and 80.40, and Sections 11180 and 12419, Government Code.