California Skilled Nursing Facility CPA Review Requirements: What Operators Need to Know
- Mark Deazeley
- Aug 23
- 4 min read
California has introduced significant financial reporting requirements for skilled nursing facilities. Beginning with fiscal years ending December 31, 2023, covered skilled nursing facilities must submit an Annual Consolidated Financial Report, commonly called an ACFR, to the California Department of Health Care Access and Information (HCAI).
For many skilled nursing facility organizations, the consolidated financial report must be reviewed by an independent certified public accountant unless the organization obtains a full financial statement audit.
What Changed for California Skilled Nursing Facilities?
Senate Bill 650, known as the Corporate Transparency in Elder Care Act of 2021, added Section 128734.1 to the California Health and Safety Code. The law expanded the financial and ownership information that skilled nursing facility organizations must provide to HCAI.
The first reports were based on skilled nursing facility fiscal years ending December 31, 2023. The reporting requirements are intended to increase transparency regarding facility finances, ownership structures, related-party transactions, and the organizations that operate or provide services to skilled nursing facilities.
Who Must File an Annual Consolidated Financial Report?
Generally, each California-licensed skilled nursing facility must file an ACFR on behalf of the organization that operates, conducts, owns, manages, or maintains the facility.
However, important exceptions apply:
State-operated and district-operated skilled nursing facilities are exempt.
A distinct-part skilled nursing facility included under a hospital’s license generally is not subject to the separate SNF ACFR requirement.
These particular ACFR requirements do not apply to intermediate care facilities or congregate living health facilities.
Facility owners should confirm their organization’s licensing structure and reporting responsibilities before beginning the engagement.
What Must Be Included in the ACFR?
According to HCAI, the ACFR submission generally includes:
Consolidated financial statements
A combined or consolidating financial statement showing the entities included
A Statement of Patient Census
A Statement of Patient Revenue
Certain individual financial statements for operating entities, licenseholders, and related parties
An organizational chart identifying applicable related parties
Information regarding certain unrelated parties providing goods or services to the skilled nursing facility
The consolidated financial statements include a balance sheet, statement of income, statement of changes in equity, and statement of cash flows.
Organizations may also need to disclose related parties in which they have an ownership or control interest of 5% or more when those parties provide services, facilities, or supplies to the skilled nursing facility.
An additional organizational presentation may be required for certain unrelated parties—including management or property companies—that receive more than $200,000 from the skilled nursing facility.
Is a CPA Review Required?
Yes. HCAI states that the consolidated financial report must be reviewed by a certified public accountant unless the consolidated financial statements have been audited by a CPA.
A financial statement review provides limited assurance that the CPA is not aware of material modifications that should be made for the financial statements to conform with the applicable financial reporting framework. A review is substantially narrower in scope than a financial statement audit.
If an organization already obtains an audit, a separate CPA review of the consolidated financial report is not necessary. The audit report must instead be included with the ACFR submission.
The individual financial statements submitted for certain operating entities, licenseholders, and related parties are not separately required to be reviewed or audited.
Additional Work Is Required for Patient Census and Revenue Information
The Statement of Patient Census and Statement of Patient Revenue are not standard financial statements established by the Financial Accounting Standards Board.
HCAI therefore requires additional regulatory CPA work to evaluate whether patient census and revenue information has been reported using the payer categories and routine-service revenue centers prescribed by California’s Accounting and Reporting Manual for Long-Term Care Facilities.
Because patient census information consists of nonfinancial data, HCAI provides an agreed-upon procedures engagement for the Statement of Patient Census.
Skilled nursing facility organizations should discuss the complete reporting package with their CPA before the due date. The engagement may involve more than a traditional financial statement review.
When Is the Report Due?
The ACFR is due within four months following the skilled nursing facility’s fiscal year-end.
HCAI may grant a 90-day extension when unintended or unforeseen delays occur. The extension should be requested before the filing deadline whenever possible.
Reports must be submitted electronically through HCAI’s System for Integrated Electronic Reporting and Auditing (SIERA). Documents must be submitted as text-based, machine-readable PDF files. Scanned image-based documents and paper submissions are not accepted.
The submission must also include a certification signed by an authorized representative of the facility or its home office.
What Happens If the Report Is Filed Late?
A skilled nursing facility that fails to submit its ACFR by the applicable deadline may face a civil penalty of $100 for each day the report remains outstanding, up to $36,500 annually.
Because the package may require consolidated financial statements, related-party information, organizational charts, patient census schedules, patient revenue schedules, and CPA procedures, facilities should begin preparing well before their fiscal year-end reporting deadline.
How Streamlined Reviews Can Help
Streamlined Reviews provides California skilled nursing facilities with:
Independent CPA financial statement reviews
Assistance preparing consolidated and combined financial statements
HCAI financial reporting support
Year-end reconciliations and supporting schedules
Statement of Patient Census and Patient Revenue engagement support
Audit preparation assistance for organizations requiring a full audit
Clear communication and deadline-focused project management
Beginning early allows time to identify missing records, reconcile related-party accounts, prepare consolidating schedules, and coordinate the required CPA procedures.
If your skilled nursing facility needs assistance with its annual financial reporting, visit our Skilled Nursing Facility CPA Review Services page or contact Streamlined Reviews to schedule a consultation.
Official Resources
Facility owners and administrators can review the current requirements through the following official resources:
Requirements depend on each organization’s facts, licensing structure, ownership, and related-party relationships. Facilities should confirm their specific reporting obligations with HCAI and qualified professional advisers.
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