Medicaid & state agency audits
Greywood CPA audits and reviews financial statements, and performs agreed-upon procedures, for healthcare providers paid through Medicaid home and community-based services waivers and state health programs: adult day programs, disability and IDD service providers, behavioral health organizations and other community providers. We are a licensed CPA firm (Virginia Board of Accountancy firm license #134961) working nationwide at a fixed fee.
What your state requires depends on the program. Some states require an independent CPA audit once your state funding passes a threshold, some audit your Medicaid cost report themselves, and some name a specific report in your provider contract. We read your contract and confirm the requirement before we quote.
Last reviewed: November 2026
Providers who are paid by a state Medicaid agency, a state health or human services department, or a county program on the state's behalf. The most common are:
Home care or in-home services agency? Your rules are covered on the home care agency audits page.
Every state runs its programs differently, but almost all of them fall into one of three patterns:
| Pattern | What happens | Example |
|---|---|---|
| CPA audit by funding level | The state requires an independent CPA audit or review once you spend a set amount of state money in a year | Illinois sets audit levels by state award spending under its grant accountability law |
| State audits your cost report | You file a Medicaid cost report; the state or its contractor audits it. No CPA audit is required for the report itself | New York home care cost reports; Texas HHSC provider cost reports |
| Contract names the report | Your provider agreement or grant agreement requires audited or reviewed statements, or specific procedures, by a deadline | Common for county-administered and managed care contracts |
Many providers face more than one: for example a state cost report audit plus a lender that wants audited statements, or a Single Audit because federal block grant money passes through the state.
Accepted by some state programs below their audit thresholds. Lower cost.
An opinion on your financial statements, under GAAS or Government Auditing Standards. What most funded providers need.
Procedures the state agency specifies, such as testing billed units or cost allocations, with a report of findings.
See our agreed-upon procedures service for engagements a state agency defines.
Where the state audits your cost report, the auditors test it against your books. Costs you can't document are typically disallowed, and that can reduce your rates. What helps most:
We prepare reconciled, reviewed or audited financial statements that your cost report is built on, so the numbers hold up when the state tests them.
Units billed to Medicaid compared with attendance, progress notes, visit records and staff timesheets.
State programs limit what they pay for. Unallowable items, such as entertainment or personal expenses, have to be kept out of program costs.
Medicaid, managed care, county and private-pay balances reconciled to remittance reports.
Rent or management fees paid to owners' other companies must be disclosed and, for cost reports, are often limited to cost.
A 30-minute call about your organization, who needs the report and your deadline.
Scope, report type, timeline and one fixed fee, in writing.
Everything we need, uploaded through a secure portal.
Remote testing, then a draft for your review.
A CPA partner signs, and we walk you or your board through the results.
Not always. Some states require an independent CPA audit once state funding passes a threshold, some audit your Medicaid cost report themselves, and some name a specific report in your provider contract. Your provider agreement states what applies.
The state agency specifies procedures, such as testing billed units or how costs were allocated, and the CPA performs them and reports the findings. It is not an audit opinion, but some agencies require it instead of, or in addition to, an audit.
Yes. Costs you cannot document, or that the program does not allow, are typically disallowed, which can lower your future rates. Reconciled books and documented allocation methods are the best protection.
Federal block grant money passed through a state is still federal money, so it counts toward the $1,000,000 federal spending threshold that triggers a Single Audit for nonprofits.
We quote one fixed fee in writing before any work starts, based on your size, the number of programs and payers, the condition of your books and the report your state requires.
Send us your provider agreement. A senior CPA will confirm what your state requires and send a fixed-fee proposal within 1–3 business days.