December 1999

Department of Health Urges Auditors to Report What They Find

By Stephen Edward Golden II, CPA

The New York State Department of Health (DOH) recently requested clarification from the NYSSCPA Health Care Committee about exception reporting in bad debt and charity care (BDCC) agreed-upon procedures engagements and asked that auditors specifically report their findings to the department.

The committee and the DOH jointly developed the agreed-upon procedures format a number or years ago to give the DOH a level of assurance that payments made to hospitals from the state's bad debt and charity pool were appropriate. The state makes these payments to compensate hospitals for patient billings that are uncollectible because the patient is unable to pay.

Joseph Angerami of the DOH reported to the Health Care Committee that recent desk reviews of the agreed-upon procedures reports found a significant number that made no comment about what the auditors found. In such cases, Angerami said, the DOH cannot interpret what the absence of findings means.

At its October meeting, the Health Care Committee took note of the requirement in professional standards for agreed-upon procedures to report all findings or exceptions found. The committee found there is no materiality threshold unless specifically set forth in the procedures. While finding that there is no specific requirement, the committee concluded that, in practice, many agreed-upon procedures reports routinely use language such as "no exceptions were noted in performing the procedures."

To avoid any confusion in the BDCC reports when there are no reportable findings or exceptions, the committee's consensus was that auditors should include a statement of that fact in the report. The committee also decided to inform NYSSCPA members preparing such reports of the objectives of the engagement and the benefit to the DOH of a such a statement.

Members who have questions on this matter can contact the committee through its forum on http://www.nysscpa.org. *

Stephen Edward Golden II is chair of the NYSSCPA Health Care Committee and a partner in Fust Charles Chambers LLP in Syracuse.