The term “one size fits all” may be desirable in certain circumstances. But, in many cases, the phrase more often translates to “just kind of fits.” This is particularly true when choosing an audit firm. If your business is in a unique and complex industry like healthcare, it is critical to find the proper fit.
Operating in the healthcare industry means your business is subject to rapidly changing regulations and legislation, like the Affordable Care Act and tax reform. Your financial statements include complex estimates (e.g., the allowance for contractual adjustments and third-party settlements) and unique disclosures. Your stakeholders may include debtors in connection with bond-related debt and/or municipalities in connection with grant funding. And your main revenue cycle revolves around elaborate relationships with individual patients, federal and state governmental agencies, third-party commercial insurance companies, other healthcare entities, and also the indigent population you may serve.
There is much to consider when choosing an auditor for your healthcare organization. When evaluating healthcare auditing firms, look for a firm that:
- Demonstrates Depth of Healthcare Expertise
It is not uncommon for an audit firm submitting a proposal to tout its national healthcare expert, but one should question whether the “expert” is the person performing a significant portion of the engagement work. To get the most value from an audit firm, you should seek out a firm with a depth of healthcare experience throughout the engagement team, rather than an engagement team staffed with generalists or a healthcare expert you rarely see.
- Grows Your Industry Knowledge in Healthcare
Your audit team should grow your knowledge. A one-size-fits-all firm may excel at providing basic financial and accounting knowledge. A healthcare-specialized firm will grow this knowledge exponentially by focusing that financial and accounting knowledge through the lens of the healthcare industry. A specialized firm will also be acutely aware of coming regulations and how they will impact your business. Rather than devoting internal resources to train the audit team on your industry, find a firm that educates you on the emerging issues impacting the healthcare industry.
- Optimizes Productivity
Your accounting team and executives are busy. Your audit team will take up less of your time if experienced in your industry. A healthcare-specialized team will not require additional training and will better understand your processes based on its experience working with other similar entities in healthcare. This industry familiarity allows you to focus more time on the core operations of running your business. A non-specialized team likely will take up more of your organization’s resources asking questions from a generic checklist.
- Reduces Risk of Misstatement
Your audit team should reduce your risk of misstatement. A healthcare organization operates much differently from a manufacturer, retail business, or a restaurant chain, so it would not make sense to apply a “cookie cutter” approach to the various processes of your business. A healthcare-specialized audit firm will intuitively know the riskiest areas of misstatement and focus its efforts there. This knowledge improves both the effectiveness of the audit procedures performed and the chance that misstatements, whether due to fraud or error, are detected. A board of directors and the various stakeholders will have greater comfort when relying on your financial statements.
Engaging an audit firm that specializes in healthcare brings you value. It can improve your knowledge and foresight, free up time spent with the audit team, and reduce your risk of error. It makes good business sense that you would choose an audit firm that specializes in the healthcare industry and exhibits the four key attributes described above.
If you would like more information about healthcare audit, or would like to request a speaker on this topic for your organization or event, contact a PYA executive below at (800) 270-9629.
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