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Delaware General AssemblyDelaware RegulationsMonthly Register of RegulationsJuly 2015

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The Department's proceedings to establish the regulation was initiated pursuant to 29 Delaware Code Section 10114 and its authority as prescribed by 16 Delaware Code Section 1124 and 31 Delaware Code Section 512.
The Department published its notice of proposed regulation changes pursuant to 29 Delaware Code Section 10115 in the April 2015 Delaware Register of Regulations, requiring written materials and suggestions from the public concerning the proposed regulations to be produced by April 30, 2015, at which time the Department would receive information, factual evidence, and public comment to the said proposed regulations.
29 Del.C. Ch. 79, "Department of Health and Social Services."
16 Del.C §1124, "Staff training; issuance of regulations."
Response: No response required.
Response: Revised as recommended.
Response: The comment cites 16 Del. C. §1104(d) and its requirement for the license holder to file a sworn affidavit of a "satisfactory compliance history." The comment doesn't specify the section of the regulation causing the tension. At §5.3.6.1 through §5.3.6.3 of the regulation there are requirements for the submission of 3 years of historical financial data. If this is the section the comment is addressing it should be noted that we interpret "satisfactory compliance history" in the statute as compliance with the accepted standards of practice and compliance with established statute and regulations for long term care facilities which the license holder may have been a party to. It is not a review of historical financial data as is the case in the financial review of 3 years of historical data.
Response: Revised as recommended.
Response: Revised as recommended.
Response: Revised as recommended.
Comment 6: Much of the regulation is duplicative of 24 Del.C. Chapter 1 and the Board of Accountancy rules and regulation. It is suggested that the Division remove all the detailed accounting and audit rules and replace them with "All audits shall be done in accordance with the provision of 24 Del.C. Chapter 1 and the Board of Accountancy rules and regulations."
Response: Revised as recommended.
Response: The term Independent Auditor was deleted.
Response: AICPA was replaced with" the Delaware Board of Accountancy" where appropriate.
Response: We accept this statement as true.
Response: The Division recognizes the cost of audits. However, the regulation only requires audits; at initial application; upon change of ownership and when the Department determines that financial conditions exist which threaten the health and safety of a resident(s) as detailed in §7.
Response: The Division accepts this statement as true.
Response: Personal Financial Statements are only required when the Controlling Organization is a closely held privately owned entity without a parent or with a parent without a financial history.
Response: Financial statements from a facility will not be compared nor measured against those of another facility. The Division recognizes that circumstances can vary greatly.
Response: We have imposed this in the past and not met with opposition.
Response: The dates and time lines, as set forth, have been imposed in the past and have not met with opposition
Response: The Division is developing a separate financial review process for small nursing homes (Family Care Homes).
Response: This has been corrected by the revision to the definition of "Accountant".
Comment 18: 24 Del.C. Chapter 1, § provides that both Certified Public Accountants and Licensed Accountants who are not CPAs may perform audits. Non-CPAs are limited to auditing "Nonpublic Entities".
Response: This has been corrected by the revision to the definition of "Accountant".
The Department finds that the proposed changes set forth in the April 2015 Register of Regulations should be adopted, subject to the modification set forth above which is not substantive.
THEREFORE, IT IS ORDERED, that the proposed changes to 3325 Financial Capability Reporting, with the modification indicated herein, is adopted and shall be final effective July 11, 2015.
2.2 Every facility (as defined in 16 Del.C. §1102(4)) licensed to provide care for more than three (3) residents shall be subject to this regulation[, with the exception of state owned/operated facilities]. Facilities licensed to provide care for 3 or fewer residents shall be required to submit documentation demonstrating financial capability as required by the Department.
Accountant” means a [practitioner of accounting or accountancy, which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources Certified Public Accountant or Public Accountant in good standing, as those terms are defined at 24 Del.C. §102].
An “Affiliate” of, or person “Affiliated” with, means a person that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control of the facility specified.
Audited Financial Report” means and includes those items specified in subsection 7.4 of this regulation.
Controlling Organization” means an entity that has a majority ownership interest in the licensed facility.
Department” means the Delaware Department of Health and Social Services (DHSS).
Division” means the DHSS Division of Long Term Care Residents Protection (DLTCRP).
Domicile” means the location of the headquarters of the business.
Facility” means a long term care facility as defined in 16 Del.C. §1102(4) which is licensed under 16 Del.C. §1103 to provide care and services to more than three (3) residents.
Financial Distress” means a finding by the Department following the analysis of an audit, complaint or data indicating that the financial condition of the facility threatens the health or safety of a resident(s) of a facility.
Generally Accepted Accounting Principles (GAAP)” means those principles that are recognized as the standard framework of guidelines for financial accounting.
[Independent Certified Public Accountant” means an independent certified public accountant or accounting firm in good standing with the American Institute of Certified Public Accountants (AICPA) and in all states in which he or she is licensed to practice.]
["Local Financial Institution" means a bank or other institution offering financial services with headquarters or branch offices in Delaware.]
Material Adverse Change” means a change in the financial position of the facility or the controlling organization that threatens the health or safety of a resident(s) of a facility.
4.1.3 Year-end financial statement(s) – balance sheet, income statement, and statement of cash flows for the facility (most recent year at year-end). If the year-end statement that is provided is three (3) or more months old when it is received by the Department a supplemental statement through the most recent month must be submitted. If the supplemental statement(s) is not prepared by independent accountants, it is to be attested to by the treasurer and a second officer;
7.2.1 Substandard Quality of Care due to an adverse financial condition.
7.4.1.1 Report of [independent certified public] accountant;
8.0 Qualifications of [Independent Certified Public] Accountant[s]
[8.1] In order for the Department to recognize a person or firm as a qualified [independent certified public] accountant[,] the person or firm must [meet or exceed the following qualifications: be in good standing with the Delaware Board of Accountancy.]
[8.1.1 Is in good standing with the AICPA and in all states in which the accountant is licensed to practice;
10.0 Scope of Audit and Report [of Independent Certified Public By] Accountant
Financial statements furnished pursuant to subsection 7.4 shall be examined by the [independent certified public] accountant. The audit of the facility’s financial statements shall be conducted in accordance with generally accepted auditing standards. [In accordance with AU Section 319 of the Professional Standards of the AICPA, Consideration of Internal Control in a Financial Statement Audit, the independent certified public The] accountant should obtain an understanding of internal control sufficient to plan the audit.
11.1 A facility that is required to furnish an annual audited financial report shall require the [independent certified public] accountant to report, in writing, within five (5) business days to the board of directors or its audit committee any determination by the [independent certified public] accountant that the facility has materially misstated its financial condition to the Department. A facility that receives a report pursuant to this paragraph shall forward a copy of the report to the Department within five (5) business days of receipt of the report accompanied by any amended or corrected audit generated as a result of the misstatement.
11.2 No [independent certified public] accountant shall be liable in any manner to any person for any statement made in connection with the above paragraph if the statement is made in good faith in compliance with subsection 10.1.
13.1.9.1 The terms and conditions of the emergency order including costs of implementation are to be determined by the Department. The terms and conditions of the emergency order are effective until the Department conducts an administrative hearing to determine the facility management’s ongoing licensure status, which hearing must be conducted within 60 days from the date of the issuance of the order unless the facility requests a continuance of the hearing date. At the conclusion of the hearing the Department will make a final determination regarding the costs of implementation of such management and the facility’s ongoing licensure status.
Last Updated: December 31 1969 19:00:00.
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