28 CA ADC § 1300.84.5
28 CCR s 1300.84.5
Cal. Admin. Code tit. 28, s 1300.84.5
CALIFORNIA CODE OF REGULATIONS
TITLE 28. MANAGED HEALTH CARE
DIVISION 1. THE DEPARTMENT OF MANAGED HEALTH CARE
CHAPTER 2. HEALTH CARE SERVICE PLANS
ARTICLE 12. REPORTS
This database is current through 06/09/06, Register 2006, No. 23.
s 1300.84.5. Public Entity Plans.
(a) A plan which is a public entity or political subdivision shall be
subject to the provisions of this section.
(1) Financial statements of a plan which is a public entity or political
subdivision, including financial statements or reports of specific funds
or groups of accounts where health plan activity is recorded, which are
required to be submitted pursuant to Section 1351(h) or 1384(c) of the Act
or by rule, order or request of the Director, shall be accompanied either
by an opinion of a certified public accountant or public accountant or by
a report of a government audit organization.
(2) For the purposes of Sections 1351 and 1384, governmental auditing
standards are defined to include the standards set forth in this item.
Every audit which results in the opinion or report referred to in Item (1)
of this subsection shall be conducted in accordance with the governmental
auditing standards indicated below:
(A) General Standards:
(i) The auditors assigned to perform the audit must collectively possess
adequate professional proficiency for the tasks required.
(ii) In all matters relating to the audit work, the audit organization and
the individual auditors, whether government or public, must be free from
personal or external impairments to independence, must be organizationally
independent, and shall maintain an independent attitude and appearance.
(iii) Due professional care is to be used in conducting the audit and in
preparing related reports.
(B) Standards of Field Work:
(i) The work is to be adequately planned and assistants, if any, are to be
properly supervised.
(ii) There is to be a proper study and evaluation of the existing internal
control as a basis for reliance thereon and for the determination of the
resultant extent of the tests to which auditing procedures are to be
restricted.
(iii) Sufficient competent evidential matter is to be obtained through
inspection, observation, inquiries, and confirmations to afford a
reasonable basis for an opinion regarding the financial statements under
examination.
(C) Standards of Reporting:
(i) The report shall state whether the financial statements are presented
in accordance with generally accepted accounting principles.
(ii) The report shall state whether such principles have been consistently
observed in the current period in relation to the preceding period.
(iii) Informative disclosures in the financial statement are to be
regarded as reasonably adequate unless otherwise stated in the report.
(iv) The report shall either contain an expression of opinion regarding
the financial statements, taken as a whole, or an assertion to the effect
that an opinion cannot be expressed. When an overall opinion cannot be
expressed, the reasons therefor should be stated. In all cases where an
auditor's name is associated with financial statements, the report should
contain a clear-cut indication of the character of the auditor's
examination, if any, and the degree of responsibility he is taking.
(D) Additional Standards and Requirements on Examination and Evaluation
for Government Financial and Compliance Audits.
(i) Planning shall include consideration of the requirements of all levels
of government.
(ii) A review is to be made of compliance with applicable laws and
regulations.
(iii) A written record of the auditors' work shall be retained in the form
of working papers.
(iv) Auditors shall be alert to situations or transactions that could be
indicative of fraud, abuse, and illegal expenditures and acts and if such
evidence exists, extend audit steps and procedures to identify the effect
on the entity's financial statements.
(E) Additional Standards and Requirements on Reporting for Government
Financial and Compliance Audits.
(i) Written audit reports are to be submitted to the appropriate officials
of the organization audited and to the appropriate officials of the
organizations requiring or arranging for the audits unless legal
restrictions or ethical considerations prevent it. Copies of the reports
should also be sent to other officials who may be responsible for taking
action and to others authorized to receive such reports. Unless restricted
by law or regulations, copies should be made available for public
inspection.
(ii) A statement in the auditors' report that the examination was made in
accordance with generally accepted government auditing standards for
financial and compliance audits will be acceptable language to indicate
that the audit was made in accordance with these standards.
(iii) Either the auditors' report on the entity's financial statements or
a separate report shall contain a statement of positive assurance on those
items of compliance tested and negative assurance on those items not
tested. It shall also include material instances of noncompliance and
instances or indications of fraud, abuse, or illegal acts found during or
in connection with the audit.
(iv) The auditors shall report on their study and evaluation of internal
accounting controls made as part of the financial and compliance audit.
They shall identify as a minimum: (a) the entity's significant internal
accounting controls, (b) the controls identified that were evaluated, (c)
the controls identified that were not evaluated (the auditor may satisfy
this requirement by identifying any significant classes of transactions
and related assets not included in the study and evaluation), and (d) the
material weaknesses identified as a result of the evaluation.
(v) Either the auditors' report on the entity's financial statements or a
separate report shall contain any other material deficiency findings
identified during the audit not covered in (ii) above.
(vi) If certain information is prohibited from general disclosure, the
report shall state the nature of the information omitted and the
requirement that makes the omission necessary.
(3) Financial statements, including reports of specific funds or groups of
accounts, which are to be submitted pursuant to this section must be
previously approved as to form by the Director. When all health plan
activity has been separately controlled and accounted for in an Enterprise
Fund, the financial statements or reports of such funds are presumptively
approved as to form for purposes of this subsection.
(b) A plan which is a public entity or political subdivision shall be
granted a total or partial exemption from Sections 1300.84.06 and
1300.84.2 upon proper application therefor, when and to the extent that
(1) the Director determines that such plan has demonstrated that the
information set forth in Sections 1300.84.06 and 1300.84.2 is neither
available to the plan nor necessary for its internal management and cannot
be produced without significant cost to the plan, and
(2) such plan undertakes to furnish alternative information which the
Director finds to be reasonable and adequate in view of the circumstances
of the plan.
Note: Authority cited: Section 1344, Health and Safety Code. Reference:
Sections 1345, 1351, 1384 and 1385, Health and Safety Code.
HISTORY
1. New section filed 5-9-80; effective thirtieth day thereafter (Register
80,
No. 19).
2. Amendment filed 7-3-84; effective thirtieth day thereafter (Register
84,
No. 27).
3. Change without regulatory effect amending subsections (a)(1), (a)(3)
and
(b)(1)-(2) filed 7-18-2000 pursuant to
section 100, title 1, California Codeof Regulations (Register 2000, No.
29).
28 CA ADC s 1300.84.5
END OF DOCUMENT
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