What the statute actually bars
Vendors often assume one of two things: either the State must pay for the audit it requires, or the cost is purely theirs with no recourse. The statute is more specific than either.
WIC §4652.5(g): the Department of Developmental Services "shall not consider a request for adjustments to rates… by an entity receiving payments from one or more regional centers solely to fund either anticipated or unanticipated changes required to comply with this section."
Read it closely. What's prohibited is a rate adjustment requested solely to fund compliance. That's it. The statute does not say the audit fee is an unallowable cost, and it does not prohibit a regional center from reimbursing the fee through some other route. The "no" applies to one specific thing: a compliance-driven rate increase.
What happens in practice
Here's where the gap shows up. Because the fee isn't unallowable — and because regional centers have their own processes for allowable costs — some regional centers will reimburse a vendor's review or audit fee when the vendor submits the invoice. We've seen it happen: the vendor sends in the invoice for the engagement, and the regional center reimburses the cost.
We want to be straight with you about the limits of that: it is not uniform across all 21 regional centers, it is not a statutory entitlement, and it is not the same as a rate increase (which is the thing the statute blocks). It appears to depend on the regional center and, likely, on your rate arrangement. But the upshot is real and useful: for at least some vendors, the audit fee does come back to them.
The practical move: ask — the right way
Because practice varies, the answer to "is my audit reimbursable?" is genuinely "it depends on your regional center — so ask." How to ask matters:
- Ask your service coordinator or regional center contact whether they reimburse the cost of the required §4652.5 review or audit, and what they need from you (typically the CPA invoice).
- Submit the invoice through whatever allowable-cost or reimbursement process they point you to.
- Don't request it as a rate increase "to cover the audit." That's the one framing the statute tells the Department to reject — and asking the wrong way can get a "no" to something that might otherwise have been a "yes" through a different channel.
- Get it in writing. If your regional center agrees to reimburse, keep the confirmation and the documentation.
Budget as if it's yours — and treat reimbursement as upside
Even though reimbursement happens for some vendors, plan your finances as if the cost is yours, and treat any reimbursement as a bonus:
- Build the engagement into your budget as a fixed cost. Get a fixed-fee quote up front so there are no surprises.
- If you're not reimbursed, it's an administrative cost. That means it counts toward the 15% administrative cap under WIC §4629.7 for negotiated-rate contracts — so a lean back office leaves room for it. (See our 85/15 rule guide.)
- Keep clean books year-round. Less CPA time means a smaller fee — and since you may be absorbing it, that efficiency is money in your pocket.
- A clean prior-year report can earn the two-year exemption — skipping the engagement (and its cost) for two years, which is the surest way to spend less on compliance.
The honest bottom line: the statute blocks a rate increase to fund your audit, but it doesn't block your regional center from reimbursing the fee — and some do. Ask yours, ask the right way, and budget as if the answer is no so any reimbursement is a win. (Not sure whether you even need a review or an audit, or where you stand under WIC §4652.5? We can walk you through it.)
Frequently asked questions
Want a fixed-fee quote — and help figuring out whether your regional center will reimburse it? Call us at (415) 916-7010.
This article is general information about California Regional Center vendor requirements and is not legal or accounting advice for your specific situation. For guidance on your organization, contact a qualified CPA.