Hospital board accepts audit report for 2001 years ago
The 2001 audit report was the topic of discussion when the Marion County Hospital District No. 1 Board of Directors met Thursday for a special meeting.
An audit for the year 2001 became necessary when revenue at St. Luke Hospital and other entities was more than expected that year.
"State statute requires an audit when revenue goes over a certain amount," said Greg Bowers, board treasurer.
"And the board decided it would just be a good idea to go ahead and have an audit," he added.
The last time the hospital district had a formal audit report was eight or ten years ago, Bowers indicated.
The audit was completed by the certified public accounting firm of Swindoll, Janzen, Hawk & Lloyd, LLC., McPherson.
Jan Noble, auditor, reviewed the management letter with board members during the meeting noting several reportable conditions.
One is the fact that duties in the hospital's office are not segregated. Ideally, hospitals should have different people handling different functions. For example, one person should receive cash receipts, another should post accounts receivable, yet another should prepare bank reconciliations.
However, since St. Luke is a small hospital, staff is limited, and duties must be combined.
"We realize in a small setting it's almost impossible to have ideal segregation of duties," Noble said. "But the lack of segregation of duties is a reportable condition."
For the most part, the violations were a matter of items not being documented properly. For instance, budget approval, as required by law, was not documented in the minutes. Also, some routine items — like designating financial institutions as official depositories — were not recorded in the minutes.
Also, the audit recommended the hospital board prepare a written policies and procedure manual that discusses important legal, accounting, and security issues.
"If there are any new officers it will be helpful to them to know what policies are in place," Noble said. "It's also helpful for current officers to know what's in place."
The lack of a fixed asset inventory was a concern to the auditors.
"There's no complete listing and they don't verify the completeness," Noble said. "Several assets which were purchased in 2001 didn't appear on the list."
She noted the records were necessary for insurance purposes, to safeguard the assets, and to provide documentation for effective use, maintenance and management of the asset.
Hospital administrator Doug Newman said creating the list would be a challenging task.
"Some things were bought by the hospital board. Some were bought by the Foundation, and some were bought by Banner," he said. "Figuring out who bought what will be difficult."
Bowers said he could probably determine some of the fixed assets by reviewing what checks were written, but the books did not have the detail to determine everything.
Noble said if the board started the process now that would be fine. "Especially since Banner has some (fixed assets)," she noted.
Board president Gene Winkler added, "that way we'll know at the end of 2004 what's ours and what's their's (Banner)."
Banner Health Systems, which is managing the hospital, plans to pull out of St. Luke by 2004.
Other recommendations included:
— Making budget comparisons for revenue and expenditures.
Board members noted the accounting software currently used was not adequate for the job. The board then voted to purchase the needed software to meet the auditor's requirements.
— Reviewing bylaws of the St. Luke Foundation and determining the identity of the members of Foundation's Board of Directors.
