Audit 298189

Criteria: Management must comply with its written quality control monitoring policy to remain in compliance as an auditee recipient. Conditions Found: The organization did not implement its formalized methodology for quality control monitoring related to financial reporting and grant compliance. Cause: Completing the quality control monitoring policy has been difficult to implement due to the turnover of key employees in the finance department. Effect: The effect of the above on the operation of the program is not known. Questioned costs: This section is not applicable as the compliance attributes that were tested were nonmonetary. Recommendation: We recommend that management enforce its current policy to ensure compliance with the contract requirements and documentation evidencing compliance is maintained. View of Responsible Officials: We agree with the finding, conclusion, and recommendation. Implementing the quality control monitoring is an improvement opportunity for the Organization.

Criteria: Management should establish a well-defined process for integrating detail transactions (including initial postings, re-billings, and write-offs) posted in Credible (the Organization’s medical billing software) with transactions that are batch posted in QuickBooks Enterprise (the Organization’s nonprofit accounting software). The current process needs refinement to ensure consistency in data processing and accuracy of the general ledger. Conditions Found: Upon testing revenue, we found that revenue was understated in the current and prior periods leading to an understatement in accounts receivable and associated accounts. Management was recording revenue at 70% of the billing rate when rather the contract rate should have been billed. With a revolving two year collections window, estimated receivables were not being figured. Cause: The understatement was caused by recording contract revenue at a reduced rate based on billing and collectivity. The Organization’s process for managing this document flow is very labor intensive and requires coordination and follow through by Organization staff to ensure that transactions are reflected properly in both Credible and QuickBooks. As a result, modifications to the initial posting in QuickBooks arising from billing adjustments are not taking place. Effect: The Organization’s financial reporting will continue to contain a level of imprecision until the proper reporting procedure is implemented, tested and staff received ongoing training. Questioned costs: Not applicable as none of the client billing transactions that were selected involved federal financial assistance. Recommendation: We recommend that management mark their billing in Credible to contract rates and craft and implement a policy in writing that requires estimates within the collection period and monitored periodically (monthly, quarterly, or annually) in their accuracy. View of Responsible Officials: We agree with the finding, conclusion, and recommendation. We are in the process of developing an allowance for doubtful accounts, bad debt, and receivable estimates process to ensure we understand the receivables outstanding for period end.

Criteria: Management must comply with its written quality control monitoring policy to remain in compliance as an auditee recipient. Conditions Found: The organization did not implement its formalized methodology for quality control monitoring related to financial reporting and grant compliance. Cause: Completing the quality control monitoring policy has been difficult to implement due to the turnover of key employees in the finance department. Effect: The effect of the above on the operation of the program is not known. Questioned costs: This section is not applicable as the compliance attributes that were tested were nonmonetary. Recommendation: We recommend that management enforce its current policy to ensure compliance with the contract requirements and documentation evidencing compliance is maintained. View of Responsible Officials: We agree with the finding, conclusion, and recommendation. Implementing the quality control monitoring is an improvement opportunity for the Organization.

Criteria: Management should establish a well-defined process for integrating detail transactions (including initial postings, re-billings, and write-offs) posted in Credible (the Organization’s medical billing software) with transactions that are batch posted in QuickBooks Enterprise (the Organization’s nonprofit accounting software). The current process needs refinement to ensure consistency in data processing and accuracy of the general ledger. Conditions Found: Upon testing revenue, we found that revenue was understated in the current and prior periods leading to an understatement in accounts receivable and associated accounts. Management was recording revenue at 70% of the billing rate when rather the contract rate should have been billed. With a revolving two year collections window, estimated receivables were not being figured. Cause: The understatement was caused by recording contract revenue at a reduced rate based on billing and collectivity. The Organization’s process for managing this document flow is very labor intensive and requires coordination and follow through by Organization staff to ensure that transactions are reflected properly in both Credible and QuickBooks. As a result, modifications to the initial posting in QuickBooks arising from billing adjustments are not taking place. Effect: The Organization’s financial reporting will continue to contain a level of imprecision until the proper reporting procedure is implemented, tested and staff received ongoing training. Questioned costs: Not applicable as none of the client billing transactions that were selected involved federal financial assistance. Recommendation: We recommend that management mark their billing in Credible to contract rates and craft and implement a policy in writing that requires estimates within the collection period and monitored periodically (monthly, quarterly, or annually) in their accuracy. View of Responsible Officials: We agree with the finding, conclusion, and recommendation. We are in the process of developing an allowance for doubtful accounts, bad debt, and receivable estimates process to ensure we understand the receivables outstanding for period end.