Ask SSC . . .
Do We Have Any Recourse on SCO Audit Findings?
Q. We had a State Controller’s Office (SCO) audit that disallowed some of our mandate claims. What is our recourse if we think that their findings are incorrect?
A. Districts may appeal audit disallowances to the Commission of State Mandates (COSM). The statute of limitations to file an Incorrect Reduction Claim (IRC) is three years following the date of the SCO remittance advice or other notice of adjustment notifying your district of a reduction.
You can download the IRC form from the COSM website (www.csm.ca.gov). You should include the following documents with the IRC:
· A copy of the claim
· Claiming instructions
· The final state audit report or letter or the remittance advice or other notice of adjustment from the SCO
A claim can be filed for one or more fiscal years, but must be filed no later than three years after the date of either the SCO’s final audit report, Letter of Reduction, Remittance Advice, or other written notice of adjustment notifying the claimant of a reduction.
IRCs are often filed on the following types of reductions:
· Cost accounting disagreement that is as much an art as a science
· District’s belief that the Controller has disallowed a “reasonably related” cost
· Controller’s legal interpretation of the Parameters and Guidelines is wrong
If you have paid a vendor to prepare your mandates, the vendor should take an active role in preparing and defending the IRC as part of its service. If your claims were correctly filed with the necessary supporting documentation, there should be no reason why your vendor-prepared claims should not ultimately be found to be reimbursable as filed.
Research your claims provider to make sure it possesses the knowledge and expertise not just in claims preparation, but also in filing and supporting districts through the IRC process. In addition, you should review your vendor’s history of resolving IRCs.
—John Gray