NAVIGATING EB-5 REGIONAL CENTER AUDITS UNDER THE REFORM AND INTEGRITY ACT — BY ISABEL ALCÁNTARA
If a Regional Center has not received notice of audit yet , this would be a good opportunity to organize relevant files that will likely be requested
the audit as dependent on the totality of the circumstances and the significance of the noncompliance that the auditors observed , if any at all .
How is an Audit Initiated ?
An audit is initiated by receiving a notice of audit and a letter listing the documentation the Regional Center must submit for review . The documentation initially requested typically includes a list of the Center ’ s staff , financial statements , bank statements , and records of the movement of funds from one place to another . An audit can also include researching information in government systems and reviewing commercial and public records . v Auditors also typically ask for documentation regarding the structure of any NCE and JCE involved .
It is important to pay attention to any deadlines in the audit notice or request for documentation and ask for clarification if terms do not make sense to the Regional Center staff . If a Regional Center ’ s management does not think it can produce documents by the deadline , a respectful request to extend the deadline will likely be granted if the delay is reasonable .
Regional Centers are generally given two weeks to produce the requested documentation , which should be enough time if a Regional Center is organized . However , a Regional Center structured so that third parties are involved could feel that two weeks is insufficient if it is not prepared before the audit . Others may be tempted to submit additional documentation that is not requested , which could unnecessarily prolong the process . Where a Regional Center operator does not have all the documentation requested , it would be wise to be forthcoming and transparent about it .
Will a Regional Center be Required to Produce Documents Covering Five Years ?
Regional Centers are generally asked to produce documentation and records going as far back as the effective date of the RIA , which is March 15 , 2022 . Auditors may pose questions about projects organized several years ago but were no longer active when the Reform occurred . Since the process is bilateral and the auditors are getting to know the timelines and structures of the projects they are looking into , Regional Center staff should not be alarmed by pre-RIA project inquiries . They may be asking about older projects during a conversation that closed before the law came into effect simply because they want to grasp what the Regional Center ’ s model is about overall .
After the Notice of Audit and Request for Information
USCIS will schedule a virtual video conference with the Regional Center . This is also a good time to ask questions about the request for information ’ s contents and get to know the audit team assigned to the Regional Center . After that , USCIS will decide whether fieldwork in the form of a virtual or an in-person site visit is necessary . It is likely that most , if not all , Regional Centers will be subject to an in-person site visit for their first audit under the Reform and Integrity Act of 2022 because USCIS wants to verify that the Regional Center exists . The auditors want to determine that internal controls are in place and to meet the people disclosed in filings and petitions . However , if multiple Regional Centers are located at one site , it is possible that USCIS would conduct a single site visit to audit each of the Regional Centers . It is likely that once a Regional Center experiences its first audit and inperson site visit under the Reform and Integrity Act , its subsequent audit would not necessitate an in-person visit unless it has experienced a material change .
The Relevance of Mock Audits
If a Regional Center has not received a notice of audit yet , this would be an excellent opportunity to organize relevant files that will likely be requested . It is also an ideal time to conduct a mock audit , allowing the entity to identify and address potential compliance issues before an official review . This proactive approach helps ensure all relevant documentation is organized correctly and available .
During the mock audit , staff can review investor records , verify financial tracking , and assess adherence to the latest regulatory requirements , reducing non-compliance risk . The mock audit should also include a conversation about the scheduling aspect of the actual audit . Do any key people have upcoming travel plans , and how likely could they be rescheduled if the Regional Center is notified of an audit requiring their presence ? The mock audit may also include a review of the Regional Center ’ s compliance policies and procedures and a discussion of whether those policies are being adhered to .
Readily available documentation shows that the Regional Center is committed to maintaining transparency and adhering to the RIA requirements
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