Publicly Traded Hospital System

Advisor to the Public Accounting Firm for the Initial Audit and Preparation of Form 10K

A publicly traded shell company, which recently acquired four general acute care hospitals in Southern California, chose new independent accountants. The accounting firm was experienced in the audit of publicly traded companies but had never audited a healthcare provider.  The new accounting firm engaged HMP to assist in conducting its initial audit of the company and preparation and review of the initial SEC Form 10K.

Issues

• Recruitment, training and supervision of the accounting firm’s professional staff.
• Application of generally accepted accounting principles (GAAP) and generally accepted auditing standards (GAAS) to the engagement.
• Timely completion and filing of the Form 10K.

Approach

• Developed and documented a specific plan for the audit of the hospital specific components of the engagement.
• Assisted in the recruitment and training of all assigned professional staff.
• Directed on site, the fieldwork for the hospital specific components of the audit engagement.

Results

• Significant accounting issues related to the misclassification of more than $300 million per year patient accounts receivable factoring operation were identified and addressed in the audit report and Form 10K filing.
• Audit was completed in a timely manner and the Form 10K filed.