2016 Audit Results COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE Marin Healthcare District MAY 30, 2017
Board of Directors, and Management Marin Healthcare District We are pleased to present the results of our audit of the financial statements of Marin Healthcare District. This report summarizes our financial statement audit and contains communications required by our professional standards. The audit was designed to express an opinion on the financial statements as of and for the years ended December 31, 2016 and 2015. We conducted our audit with the objectivity and independence that you expect. We received the full support and assistance of the District’s personnel. This report is intended solely for the information and use of the Board of Directors, and Management and is not intended to be and should not be used by anyone other than those specific parties. We are pleased to serve and be associated with the District, as its independent public accountants, and look forward to our continued relationship. If you have any questions or concerns, please feel free to contact Brian Conner, Partner, at (209) 955-6199. Sacramento, California May 30, 2017 2
Agenda Auditor Opinion and Report • • Communication with Those Charged with Governance 3
Auditor Opinion & Report
Auditor’s Report on the Financial Statements Unmodified Opinion • Financial statements are presented fairly and in accordance with US GAAP 5
Statement of Net Position
Asset Composition – Combined (In Thousands) 12/31/2016 12/31/2015 6/30/2015 Cash and cash equivalents $ 1,792 $ 4,111 $ 3,206 Investments 1,011 ‐ ‐ Accounts receivable 2,299 1,892 2,020 Capital assets, net 98,098 47,413 6,001 Tax revenue receivable 1,776 10,442 ‐ Bond assets held in trust 96,886 150,918 ‐ Other 3,207 2,396 1,910 Total assets $205,069 $217,172 $ 13,137 7
Liabilities and Net Position – Combined (In Thousands) 12/31/2016 12/31/2015 6/30/2015 Accounts pay and accrued liabilities $ 5,801 $ 4,274 $ 2,197 Accrued construction costs 6,485 7,127 ‐ Note payable 1,278 1,340 1,450 Bond payable 165,738 178,650 ‐ Other liabilities ‐ ‐ 326 Net assets 25,647 25,781 9,164 Total liabilities and net assets $205,069 $217,172 $ 13,137 8
Patient Service Accounts Receivable Dollars (in thousands) % Net Patient Service Revenue 6/30/15 - 13.2% 6/30/15 - $2,020 12/31/15 - 11.8% 12/31/15 - $1,892 13.5% 12/31/16 - 11.7% 12/31/16 - $2,299 13.2% $2,500 $2,299 13.0% $2,020 $2,000 $1,892 12.5% $1,500 12.0% 11.8% 11.7% $1,000 11.5% 11.0% $500 10.5% $0 % Net Patient Service Revenue Patient Accounts Receivable 9
Gross Receivables Payer Mix 50% 6/30/15 45% 12/31/15 45% 43% 12/31/16 40% 38% 35% 30% 28% 27% 26% 25% 20% 18% 15% 15% 13% 13% 13% 11% 10% 4% 5% 3% 3% 0% Medicare Medi ‐ Cal Commercial Self ‐ Pay Other 10
Communication with Those Charged with Governance
Our Responsibility Under US Generally Accepted Auditing Standards 1 2 To express our opinion on whether the To perform audits in accordance with financial statements prepared by generally accepted auditing standards issued management with your oversight are by the AICPA, and design the audit to obtain reasonable, rather than absolute, assurance fairly presented, in all material respects, about whether the financial statements are and in accordance with U.S. GAAP and the California Code of Regulations, Title 2, free of material misstatement. Section 1131.2. However, our audits do not relieve you or management of your responsibilities. 3 4 To communicate findings that, in our To consider internal control over judgment, are relevant to your financial reporting as a basis for responsibilities in overseeing the financial designing audit procedures but not for reporting process. However, we are not the purpose of expressing an opinion on required to design procedures for the its effectiveness or to provide assurance purpose of identifying other matters to concerning such internal control. communicate to you. 12
COMMUNICATION WITH GOVERNING BODY Planned Scope & Timing of the Audit Our Comments It is the auditor’s responsibility to determine the overall audit • The planned scope and timing of the audit strategy and the audit plan, was communicated to the District’s including the nature, timing, Management in the audit planning letter and extent of procedures necessary to obtain sufficient and was included in the engagement letter appropriate audit evidence and for the year ended December 31, 2016. to communicate with those charged with governance an overview of the planned scope and timing of the audits. 13
COMMUNICATION WITH GOVERNING BODY Significant Accounting Policies & Unusual Transactions Our Comments The auditor should determine that the Audit Committee is • Management has the responsibility for selection and informed about the initial use of appropriate accounting policies. The significant selection of and changes in accounting policies used by the District are described significant accounting policies in the footnotes to the financial statements. or their application. The auditor Throughout the course of an audit, we review changes, should also determine that the if any, to significant accounting policies or their Audit Committee is informed application, and the initial selection and about the methods used to implementation of new policies. There were no account for significant unusual changes to significant accounting policies for the year transactions and the effect of ended December 31, 2016 with the exception of the significant accounting policies adoption of GASB 72, Fair Value Measurement and in controversial or emerging Application. areas for which there is a lack • We believe management has selected and applied of authoritative guidance or significant accounting policies appropriately and consensus. consistently with those of the prior year. 14
COMMUNICATION WITH GOVERNING BODY Management Judgments & Accounting Estimates Our Comments The Audit Committee should be informed about the process • Management’s judgments and accounting used by management in estimates are based on knowledge and formulating particularly experience about past and current events and sensitive accounting estimates assumptions about future events. We apply audit and about the basis for the procedures to management’s estimates to auditor’s conclusions regarding ascertain whether the estimates are reasonable the reasonableness of those estimates. under the circumstances and do not materially misstate the financial statements. • Significant management estimates impacting the financial statements include the following: fair value of investments; allowance of doubtful accounts; accrued liabilities . • We deemed them to be reasonable. 15
COMMUNICATION WITH GOVERNING BODY Management Judgments & Accounting Estimates Our Comments Our views about qualitative aspects of the District’s • The disclosures in the financial statements significant accounting practices, are clear and consistent. Certain financial including accounting policies, statement disclosures may be particularly accounting estimates, and financial statement disclosures. sensitive because of their significance to financial statement users, however we do not believe any of the footnotes are particularly sensitive. 16
COMMUNICATION WITH GOVERNING BODY Significant Audit Adjustments & Unadjusted Differences Considered by Management To Be Immaterial Our Comments Our Comments The Audit Committee should be informed of all • There were no corrected or significant audit adjustments arising from the audits. Consideration should be given to uncorrected audit adjustments. whether an adjustment is indicative of a significant deficiency or a material weakness in the internal control over financial reporting, or in its process for reporting interim financial information, that could cause future financial statements to be materially misstated. The Audit Committee should also be informed of uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented that were determined by management to be immaterial, both individually and in the aggregate, to the financial statements as a whole. 17
COMMUNICATION WITH GOVERNING BODY Deficiencies in Internal Control Our Comments Any material weaknesses and significant deficiencies in the • Material weakness design or operation of internal None noted • control that came to the auditor’s attention during the • Significant deficiency audits must be reported to the Nothing to communicate • Audit Committee. 18
COMMUNICATION WITH GOVERNING BODY Potential Effect on the Financial Statements of Any Significant Risks, Exposures and Uncertainties Our Comments The Audit Committee should be • The District is not subject to potential legal adequately informed of the potential effect on financial proceedings and claims. statements of significant risks, exposures and uncertainties that are disclosed in the financial statements. 19
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