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AICPA RISK ASSESSMENT GUIDANCE
Knowledge-Based Audits™ of Health Care Entities Add-On Module
Accounting Research Manager’s (ARM) knowledge-based audit (KBA) methodology is designed to help the auditor efficiently and effectively perform financial statement audits of health care organizations in accordance with auditing standards generally accepted in the United States of America (GAAS).
This comprehensive, unique module includes numerous practice aids and an overview to help professionals comply with the risk assessment standards. This module is available as an add-on product to any of our main ARM products.
There are many types of health care organizations that provide services to patients. Each has its own set of characteristics. Health care organizations can be for-profit or nonprofit, and governmental or nongovernmental entities. The characteristics and structural makeup have a significant impact on the accounting and auditing practices of the organization. Consideration of the structural makeup of the health care organization is important when customizing the audit plan, forming risk assessments, and developing audit procedures to ensure an effective audit in accordance with GAAS. The following are some examples of the different types of health care organizations:
Health systems;
Hospitals;
Nursing homes;
Continuing care retirement communities;
Managed care organizations (i.e., HMO and PPO);
Physician practices or groups;
Home health agencies; and
Ambulatory surgery centers
Each has its own set of characteristics. Health care organizations can be for-profit or nonprofit, and governmental or nongovernmental entities. The characteristics and structural makeup have a significant impact on the accounting and auditing practices of the organization. Consideration of the structural makeup of the health care organization is important when customizing the audit plan, forming risk assessments, and developing audit procedures to ensure an effective audit in accordance with GAAS.
In addition, there are many unique audit differences among health care organizations and commercial companies that must be considered. Auditors must have in-depth knowledge of these differences when auditing health care organizations because they pose the most audit risk. The most common audit differences and areas that represent significant audit risk include patient accounts receivable and net patient service revenues, third-party settlements and contractual adjustments, and malpractice reserves.
The KBA methodology for health care organizations uses a set of integrated procedures, from pre-engagement all the way through evaluating and reporting. The results from each audit stage feed into a Communications Hub, which enables team members to easily view summaries of significant matters, risks, and findings discovered in the audit. This design ensures that important information about the health care organization is not overlooked.
Knowledge-Based Audits of Health Care Organizations includes: KBA documents, which contain steps and procedures required by GAAS; Audit Programs that guide the auditor through related steps and procedures; Practice Aids that help the auditor complete steps or processes outlined in other documents; Correspondence document templates for engagement letters and confirmation requests; and Auditor’s Reports document templates for a variety of sample auditor’s opinions on audited financial statements.
This industry-specific guidance is based off our exclusive KBA methodology.
CCH's own KBA:
facilitates compliance with GAAS
encourages more efficient audits through customized audit programs
helps auditors to identify and focus on risks
The new Knowledge-Based Audit (KBA) methodology was developed by CCH in partnership with AuditWatch. This updated methodology emphasizes understanding your clients and their environment so you can accurately assess the risks of material misstatements. The KBA method focuses on information flow rather than document flow, enhances communication between engagement team members, and allows for ongoing evaluation of procedures. Practitioners are able to make informed risk assessments using their own professional judgment and expertise.
Communications Hub Enhances Audit Approach
The Knowledge-Based Audit methodology utilizes a set of integrated procedures, from pre-engagement all the way through evaluating, concluding and reporting. The results from each audit stage feed into the Communication Hub, which enables audit team members to easily view summaries of the significant matters, risks and findings discovered in the audit. This design ensures that important information is not overlooked or hidden in the details of numerous checklists and forms.
This module is available for $249 as an add-on to our main ARM products.
CCH KBA Available in Your Preferred Format
ProSystem fx® Engagement and KnowledgeTools
Experience complete interactivity with the KBA overview, tools and integration with the leading software solution. ProSystem fx® Engagement and KnowledgeTools provide you a complete and streamlined methodology, making it easier for you to comply to the risk assessment standards. Learn more about this unique offering.
Knowledge-Based Audits (KBA) publication
For practitioners that need access to a printed version of this content, CCH offers the KBA publication – allowing an inexpensive, portable method to learn how to comply to the risk assessment standards.
Learn more about Knowledge-Based Audits of Commercial Entities.
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