Audit & assurance

    Audits for home care and home health agencies

    State contracts, licensing, lenders and payers often ask home care and home health agencies for audited financial statements. Here's who can do the audit, what kind of report you may need and how to get ready.

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    • Last reviewed October 7, 2026
    • Sources linked below

    Who can audit a home care agency’s financial statements for a state contract?

    A licensed CPA firm that is independent of the agency and meets the state’s licensing rules. Your Virtual CPA, a licensed CPA firm, audits home care and home health agencies that need audited financial statements for Medicaid contracts, licensing, lenders or payers, including agencies in other states, after we confirm any firm registration the state requires. Book a free 30-minute call to share the contract’s requirements.

    Why home care agencies need audits

    The requirement usually comes from someone the agency works with, not from one national rule. Common sources:

    • State Medicaid contracts and waiver programs, which may require audited or reviewed financial statements.
    • State licensing or renewal, in some states and for some agency types.
    • Medicare. Medicare-certified home health agencies file an annual cost report on Form CMS-1728-20, which Medicare contractors may review or audit. See Medicare cost report audits.
    • Lenders and managed care payers, which often ask for financial statements with a CPA report.

    Rules differ by state, program and contract. Start with the exact wording in your contract or request letter.

    Best for home care, personal care and home health agencies that have been asked for audited or reviewed financial statements, or for agreed-upon procedures on specific items.

    Audit, review or agreed-upon procedures

    • Audit. Reasonable assurance and an opinion on the financial statements. This is what most contracts mean by audited financial statements.
    • Review. Limited assurance based mainly on inquiry and analytics. Some contracts and lenders accept it.
    • Agreed-upon procedures. Specific procedures on specific items, such as billing or payroll, with findings and no opinion. See agreed-upon procedures.

    For a side-by-side view, see audit vs review vs compilation.

    Agencies in other states

    We work with agencies in other states remotely. Under the model accountancy law many states follow, a CPA firm can serve clients in other states without an office there if it meets ownership and peer review rules. Some states still require an out-of-state CPA firm to register or hold a permit before performing an audit. We confirm the rules for your state before we accept the engagement.

    How it works with us

    1. Free 30-minute call. Share the contract or letter that requires the audit, your year end and your deadline.
    2. Scope and state check. We confirm the report type and any firm registration the state requires.
    3. Engagement letter. Scope and fees are transparent, fair and quoted upfront, in writing.
    4. Planning and requests. We send one document request list based on your agency.
    5. Fieldwork, done remotely. We test receivables by payer, revenue, payroll and other key areas.
    6. Report. We issue the report and discuss any findings with you before you send it on.

    What to prepare

    ItemWhy it matters
    Trial balance and general ledgerStarting point for the audit
    Bank reconciliationsSupports cash
    Accounts receivable aging by payerMedicaid, Medicare, managed care and private pay balances
    Payroll records and caregiver hoursUsually the largest expense
    Contracts and reporting requirementsDefines the report the agency needs
    Debt agreements and fixed asset listSupports liabilities, covenants and equipment

    Expert CPAs. Personal attention.

    Asked for an audit by a state agency, lender or payer? Send us the requirement on a free 30-minute call and we'll confirm what report you need.

    Book a free 30-min call Send a message

    Frequently asked questions

    A licensed CPA firm that is independent of the agency. If the firm has no office in the agency’s state, it should confirm whether that state requires an out-of-state CPA firm to register or hold a permit before performing an audit there.

    Common reasons include state Medicaid contracts or waiver programs, state licensing, lenders, managed care payers and grantors. The requirement and the type of report needed are set by whoever asks for it, so read the contract or request letter first.

    Sometimes. Some contracts and lenders accept a review, which gives limited assurance at lower cost. Others ask for agreed-upon procedures on specific items, such as billing or payroll. If the contract says audit, you need an audit. Confirm in writing before you engage a CPA firm.

    Medicare-certified home health agencies file an annual cost report on Form CMS-1728-20. Medicare contractors may review or audit that cost report. Whether you also need audited financial statements depends on your other contracts, lenders and payers.

    Often yes, and the work can be done remotely. Under the model accountancy law many states follow, a firm can serve clients in other states without an office there if it meets ownership and peer review rules. Some states still require an out-of-state firm to register, so the firm should check first.

    A trial balance and general ledger, bank reconciliations, accounts receivable aging by payer, payroll records, a fixed asset list, debt agreements, key contracts and the audit or reporting requirements from the contract that triggered the audit.

    Sources

    General information as of October 7, 2026. Tax rules change; talk to a CPA about your situation.