Audit Entrance Alameda Health Partners Prepared by the Moss Adams - - PowerPoint PPT Presentation

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Audit Entrance – Alameda Health Partners

Prepared by the Moss Adams Health Care Group July 8, 2020

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Alameda Health Partners,

A component unit of Alameda Health System

Audit Committee

Thank you for your continued engagement

• f Moss Adams LLP, the provider of choice

for health care organizations. We are pleased to present our audit plan for Alameda Health Partners, a component unit of Alameda Health System, for the year ended June 30, 2020. We would also like to discuss current-year developments and auditing standard changes that will affect

• ur audit.

We welcome any questions or input you may have regarding our audit plan and we look forward to working with you.

• 1. Team
• 2. Communication with Those Charged with Governance
• 3. Accounting Standards Update
• 4. Other Information
• 5. Appendix – Industry Focus

Agenda

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Your Dedicated Team

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Brian Conner

Engagement Partner

Kate Jackson

Concurring Partner

John Feneis

Engagement Senior Manager

Other Team Members: Lisa Schick

Audit Senior

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Communication with Those Charged with Governance

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Required Communications to Those Charged with Governance

Significant audit findings Qualitative aspects of accounting practices Difficulties encountered in performing the audit Corrected and uncorrected misstatements Management representations Management consultations with other independent accountants Other audit findings or issues Auditor’s responsibility under U.S. generally accepted auditing standards and Government Auditing Standards Planned scope and timing of audit NOW LATER

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Our Responsibility

To express our opinion

• n whether the financial

statements prepared by management with your

• versight are fairly

presented, in all material respects, and in accordance with U.S.

• GAAP. However, our

audit does not relieve you or management of your responsibilities. To perform an audit in accordance with generally accepted auditing standards issued by the AICPA and Government Auditing Standards issued by the Comptroller General

• f the United States, and design the

audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. To consider internal control over financial reporting as a basis for designing audit procedures but not for the purpose of expressing an opinion

• n its effectiveness or

to provide assurance concerning such internal control. To communicate findings that, in our judgment, are relevant to your responsibilities in

• verseeing the financial

reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

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Audit Process

• Review of information

systems and technology

• Revenues and expenses
• Trends, comparisons, and

expectations

• Confirmation of account

balances

• Vouching to supporting

documentation

• Representations from

attorneys and management

• Examining objective evidence

Internal Controls Analytical Procedures Substantive Procedures

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How it is calculated:

• Using certain quantitative (e.g., total assets) and qualitative

factors (e.g., covenants, expectations, or industry factors)

It is used to identify:

• Significant risk areas
• Nature, timing, extent, and scope of test work
• Findings or misstatements

What is Materiality?

The amount of a misstatement that could influence the economic decisions of users, taken

• n the basis of the

financial statements.

Internal controls over financial reporting Valuation of patient accounts receivable Recognition of net patient service revenue Recognition of professional services agreement revenue Valuation of medical malpractice and other self insured liabilities

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Significant Audit Areas

11 How we gather information to identify fraud-related risks

• f material misstatement:
• Brainstorm with team
• Conduct personnel interviews
• Document understanding of internal control
• Consider unusual or unexpected relationships identified in

planning and performing the audit

Procedures to be performed:

• Examine general journal entries for nonstandard transactions
• Evaluate policies and accounting for revenue recognition
• Test and analyze significant accounting estimates for biases
• Evaluate the business rationale for significant unusual

transactions

Consideration of Fraud

Auditors must consider fraud to “improve the likelihood that auditors will detect material misstatements due to fraud in a financial statement audit.”

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Nonattest services:

• Assist in drafting of the financial statements and related

footnotes of Alameda Health Partners

Deliverables

We will issue the following reports:

• Audit report on the financial statements of Alameda Health

Partners as of and for the year ended June 30, 2020

• Report to those charged with governance
• Communicating required matters and other matters of

interest

• Report to management and the audit committee
• Communicating required internal control related matters

identified during the audit

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Timeline

• Planning meeting with management

May 2020

• Interim audit procedures (including test of implementation
• f internal controls)

Week of June 8, 2020

• Entrance meeting with audit committee

July 8, 2020

• Final fieldwork procedures for financial statements

Week of September 21, 2020

• Discuss draft financial statements and auditor’s reports

with management.

Mid October 2020

• Audit committee approval of statements and exit meeting

End of October 2020

• Finalize auditor’s reports.

End of October 2020

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Our Response to COVID-19

H E L P I N G Y O U A D A P T T O U N C E R T A I N T I M E S Find more information and resources here: https://mossadams.com/covid-19-implications

• Stay up to date with guidance and support to

• Reach out to your Moss Adams professional

• How to Weather COVID-19 Market

• Strategies to Reduce Cybersecurity

• Business Recovery Plans Prepare for

• Confront Reduced Operating Cash

• Strategize needs and be aware of what’s to

• We’ll connect you with the right

• Review Moss Adams announcements that

• CARES Act Overview: Implications

• CARES Act: Implications for Tax-

• New Tax Credit Opportunities for

• Take steps to bolster your workforce and
• rganization
• Evaluate additional service needs, such as

• Capital sourcing
• Cloud tools
• Cost segregation
• Enterprise resource

• Estate and

• Financial planning
• Forecasting
• IT security and

• Process

• Outsourced finance

• R&D tax credits
• Risk assessment
• State and local tax
• Transactions

Accounting Update

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New Accounting Standards

Fiduciary Activities

[GASB STATEMENT NO. 84]

• Establishes criteria for identifying fiduciary

activities of all state and local governments.

• Key areas of focus:
• Whether a government is controlling the assets of the

fiduciary activity

• Beneficiaries with whom a fiduciary relationship exists
• Identification of fiduciary component units and

postemployment benefit arrangements that are fiduciary activities

• The effective date was postponed by one year

through the issuance of GASB Statement No. 95 in May 2020.

• Effective for Alameda Health Partners beginning

July 1, 2020.

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New Accounting Standards

Leases

[GASB STATEMENT NO. 87]

• Increases the usefulness of financial statements

and establishes a single model for lease accounting.

• Key areas of focus:
• Recognition of certain lease assets and liabilities

previously classified as operating leases

• Recognized as inflows and outflows of resources based
• n payment provision of contract
• Single Model – Foundational principle that leases are

financings of the right to use an underlying asset

• The effective date was postponed by 18 months

through the issuance of GASB Statement No. 95 in May 2020.

• Effective for Alameda Health Partners beginning

July 1, 2021.

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New Accounting Standards

• Establishes accounting requirements for interest

cost incurred before the end of a construction period.

• Key areas of focus:
• Recognition of interest cost as an expense in the period

it is incurred for statements prepared using the economic resources measurement focus

• Interest cost will not be included in the historical cost of

a capital asset reported in a business type activity or enterprise fund

• The effective date was postponed by one year

through the issuance of GASB Statement No. 95 in May 2020.

• Effective for Alameda Health Partners beginning

July 1, 2021.

Accounting for Interest Cost Incurred Before the End of Construction Period

[GASB STATEMENT NO. 89]

About Moss Adams

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Our Expertise

107

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25+

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$768M

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Health Care Industry Experience

Our health care professionals dedicate their careers to serving the industry.

We cover the full spectrum of health care including:

• Hospitals and heath systems
• Independent practice associations
• Medical groups
• Community health centers
• Behavioral health organizations
• Long-term care
• Surgery centers
• Knox Keene licensed health plans
• Health care ancillary services

290+

40

3,400+

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Insights and Resources

25 In today’s fast-paced world, we know how precious your time is. We also know that knowledge is key. These resources offer what you need to know, when you need to know it, and is presented in the format that fits your life.

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THANK YOU

Brian Conner, Partner

brian.conner@mossadams.com (209) 955-6114

John Feneis, Senior Manager

john.feneis@mossadams.com (415) 677-8341