What auditing issues are of particular significance to the health care industry?

Question

What will be an ideal response?

Answer 1

Auditors must be sure that contingent liabilities (e.g., malpractice lawsuits) are recorded or disclosed as appropriate. Health care providers may receive federal funds and therefore be required to have a single audit following OMB Uniform Guidance. In calculating the threshold expenditures/expenses level of $750,000 to determine if the organization must have a single audit, Medicare and Medicaid reimbursements are not considered. Auditors must assess whether the organization has complied with laws and regulations. In the health care industry, the federal government has enacted legislation to curb fraud and illegal acts, so auditors need be familiar with these laws. There are also tax and other regulatory acts that may affect the audit.  Related entities, joint ventures and restructuring are common practices among health care providers, particularly as the cost of health care increases and organizations look for efficiencies in providing services. The degree of control of one organization over the other is an important consideration for an auditor in determining the reporting unit and its component entities and whether those relationships dictate display of information on the face of the statements or disclosure in the notes to the financial statements.