(a) A draft audit report shall be issued identifying the items which are being disallowed and advising the provider of the basis for any proposed actions and the legal authority for such actions. When feasible, the draft report will also specify the amount of overpayment or proposed repayment. The draft report may also include other findings dealing with the provider of service's fiscal, administrative and program activities as well as recommendations to improve such activities.

(b) The draft audit report shall contain a clear statement of the action to be taken by the provider of service, shall afford an opportunity to object to the proposed action within 30 days of the issuance of the report and shall advise that a failure to respond within the time period allotted may result in the adoption of the draft report action as the final report.

(c) Unless otherwise granted an extension of time by the Office of Mental Health, the provider of service's response to the draft report must be mailed within 30 days of receipt of the report, which shall commence five days from the date of mailing. It shall include a statement detailing the specific items of the draft report to which the provider of service objects and provide any additional materials or documentation which the provider of service wishes to be considered in support of the objections.