Health Care Industry Developments - 2012/13 Audit Risk Alert

To effectively plan and perform audit engagements in the health care industry, it is necessary to understand both the general and specific economic conditions facing the industry. This alert provides information to assist you in achieving a more robust understanding of the issues you may be facing as an auditor or internal management of an HCO. This alert delivers information about emerging practice issues and current accounting, auditing, and regulatory developments, including developing issues which may have a significant impact on the industry in the near future.

This alert discusses the accounting and auditing requirements pertaining to:

• Key issues from the Health Care and Education Reconciliation Act of 2010 and the Protection and Affordable Care Act (ACA), including Accountable Care Organizations (ACOs), ICD-10 conversions, Electronic Health Records (EHR), and accounting for Medicaid EHR incentive payments
• New and revised requirements under GASB Statement No. 61, The Financial Reporting Entity: Omnibus—an amendment of GASB Statements No. 14 and No. 34
• Implementation of ASU No. 2011-07, Health Care Entities (Topic 954): Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities (a consensus of the FASB Emerging Issues Task Force)
• Implementation of ASU No. 2010-24, Technical Corrections and Improvements
• The Clarity Project of the Auditing Standards Board (ASB)

Recently issued and effective accounting and auditing guidance that are particularly significant to this alert and covered in just the right amount of detail include the amendments in the following:

• ASU No. 2012-05, Statement of Cash Flows (Topic 230): Not-for-Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of Cash Flows (a consensus of the FASB Emerging Issues Task Force)
• ASU No. 2012-04, Technical Corrections and Improvements
• ASU No. 2012-01, Health Care Entities (Topic 954): Continuing Care Retirement Communities—Refundable Advance Fees

New accounting and auditing guidance that are particularly significant to this alert and covered in just the right amount of detail include:

• GASB Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27
• GASB Statement No. 67, Financial Reporting for Pension Plans—an amendment of GASB Statement No. 25
• GASB Statement No. 65, Items Previously Reported as Assets and Liabilities

This alert also includes information on emerging issues such as:

• Potential SEC Regulation of the Municipal Securities Market
• Group Audits
• Determining the Appropriate Reporting Framework (GASB or FASB)

To comply with the professional standards, auditors need to understand the industry, regulatory, and other external factors that affect the entity and its environment. This helps you identify those factors and how they may be a source of risk. You’ll not only find targeted discussion of new developments and considerations, but also a look at what’s in the pipeline that may affect your engagements.