Knowledge-Based Audits of Health Care Entities (w/CD-ROM) 2008

The eight new risk assessment standards issued by the AICPA, which are effective for audits of financial statements for periods beginning on or after December 15, 2006 and therefore take effect for audit filings after December 31, 2007, demand that auditors of health care entities depart from the prevalent "checklist-oriented" approach. The new standards place a premium on auditor judgment in the assessment of and response to risk, requiring auditors to address and evaluate materiality more thoroughly; know more about their audit clients; understand their clients' internal controls better than before; conduct a more vigorous risk assessment; and to document their approach and findings. Knowledge-Based Audits of Health Care Entities is designed to help auditors efficiently and effectively perform financial statement audits of health care organizations in accordance with auditing standards generally accepted in the United States of America (GAAS). There are many types of health care organizations that provide services to patients: health systems; hospitals; nursing homes; continuing care retirement communities; managed care organizations (e.g., HMOs and PPOs); physician practices or groups; home health agencies; and ambulatory surgery centers. Each has its own set of characteristics. Health care organizations can be for-profit or nonprofit, and governmental or nongovernmental entities. The characteristics and structural makeup have a significant impact on the accounting and auditing practices of the organization. Consideration of the structural makeup of the health care organization is important when customizing the audit plan, forming risk assessments, and developing audit procedures to ensure an effective audit in accordance with GAAS. In addition, there are many unique audit differences among health care organizations and commercial companies that must be considered. Auditors must have in-depth knowledge of these differences when auditing health care organizations because they pose the most audit risk. The most common audit differences and areas that represent significant audit risk include patient accounts receivable and net patient service revenues, third-party settlements and contractual adjustments, and malpractice reserves. The KBA methodology for health care organizations uses a set of integrated procedures, from pre-engagement all the way through evaluating and reporting. The results from each audit stage feed into a Communications Hub, which enables team members to easily view summaries of significant matters, risks, and findings discovered in the audit. This design ensures that important information about the health care organization is not overlooked. Knowledge-Based Audits of Health Care Organizations includes a back-of-the-book CD-ROM that contains all of the necessary workpapers including: KBA documents, which contain steps and procedures required by GAAS; Audit Programs that guide the auditor through related steps and procedures; Practice Aids that help the auditor complete steps or processes outlined in other documents; and Correspondence document templates for engagement letters and confirmation requests.