The regulation at section 438.3(m) has a general reference to "generally accepted accounting principles" and "generally accepted auditing principles." This means that states have the flexibility to specify the applicable generally accepted accounting and auditing principles for the audited financial reports in the managed care plan contracts. The federal regulation does not endorse a particular standard.
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Sub Topic
FAQ ID
93466
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FAQ Question
Can CMS please clarify if only audited financial statements that are done on a formal Generally Accepted Accounting Principles (GAAP) basis can be used to meet the requirements in section 438.3(m)? Audits can also be done following statutory accounting principles or government auditing standards and it is not clear if states and managed care plans have flexibility in which standard to apply.