As used in this chapter: (a) “Financial and compliance audit” means a systematic review or appraisal to determine each of the following:

(1) Whether the financial statements of an audited organization fairly present the financial position and the results of financial operations in accordance with generally accepted accounting principles.

(2) Whether the organization has complied with laws and regulations that may have a material effect upon the financial statements. (b) “Public accountants” means certified public accountants, or state licensed public accountants. (c) “Independent auditors” means public accountants who have no direct or indirect relationship with the functions or activities being audited or with the business conducted by any of the officials or contractors being audited. (d) “Generally accepted auditing standards” means the auditing standards set forth in the financial and compliance element of the “Standards for Audit of Governmental Organizations, Programs, Activities, and Functions” issued by the Comptroller General of the United States and incorporating the audit standards of the American Institute of Certified Public Accountants. (e) “Direct service contract” means any contract provided by a state agency pursuant to

Chapter 4 (commencing with

Section 38030). (f) “Nonprofit organization” means an organization described in

Section 501(c)(3) of the Internal Revenue Code of that is exempt from taxation under

Section 501(

a) of that code or any nonprofit, scientific or educational organization qualified under

Section 23701d of the Revenue and Taxation Code.