Idaho Admin. Code r. 16.03.10.612

Current through September 2, 2024

Section 16.03.10.612 - ICF/IID: AUDIT STANDARDS AND REQUIREMENTS

01.Review of New Provider Fiscal Records. Before any program payments can be made to a prospective provider the intermediary will review the provider's accounting system and its capability of generating accurate statistical cost data. Where the provider's record keeping capability does not meet program requirements the intermediary will offer limited consultative services or suggest revisions of the provider's system to enable the provider to comply with program requirements.

02.Requirements. Providers Reimbursement Manual (PRM), Section 2404.3 states: "Examination of Pertinent Data and Information -- Providers asking to participate as well as those currently participating must permit the intermediary to examine such records and documents as are deemed necessary.

03.Examination of Records. Examination of records and documents may include:

a. Corporate charters or other documents of ownership including those of a parent or related companies.

b. Minutes and memos of the governing body including committees and its agents.

c. All contracts.

d. Tax returns and records, including workpapers and other supporting documentation.

e. All insurance contracts and policies including riders and attachments.

f. Leases.

g. Fixed asset records (see audit section - Capitalization of Assets).

h. Schedules of patient charges.

i. Notes, bonds and other evidences of liability.

j. Capital expenditure records.

k. Bank statements, cancelled checks, deposit slips and bank reconciliations.

l. Evidence of litigations the facility and its owners are involved in.

m. Documents of ownership including attachments that describe the property.

n. All invoices, statements and claims.

o. Providers Accounting Firm. Where a provider engages an accounting firm to maintain its fiscal records, the financial audit work papers prepared by the accounting firm are considered to be the property of the provider and must be made available to the intermediary upon request, under PRM, paragraph 2404.4(Q).

p. Ledgers, journals, all working papers, subsidiary ledgers, records and documents relating to financial operation.

q. All patient records, including trust funds and property.

r. Time studies and other cost determining information.

s. All other sources of information needed to form an audit opinion.

04.Adequate Documentation.

a. Adequate cost information as developed by the provider must be current, accurate, and in sufficient detail to support payment made for services rendered to participants. This includes all ledgers, books, records and original evidences of cost including purchase requisitions, purchase orders, vouchers, requisitions for material, inventories, labor time cards, payrolls, bases for apportioning costs, and other documentation that pertains to the determination of reasonable cost, capable of being audited under PRM, Section 2304.

b. Adequate expenses documentation including an invoice, or a statement with invoices attached that support the statement. All invoices should meet the following standards:

i. Date of service or sale;

ii. Terms and discounts;

iii. Quantity;

iv. Price;

v. Vendor name and address;

vi. Delivery address if applicable;

vii. Contract or agreement references; and

viii. Description, including quantity, sizes, specifications brand name, services performed.

c. Capitalization of assets for major movable equipment will be capitalized. Minor movable equipment cannot be capitalized. The cost of fixed assets and major movable equipment must be capitalized and depreciated over the estimated useful life of the asset under PRM, Section 108.1. This rule applies except for the provisions of PRM, Section 106 for small tools.

d. Completed depreciation records must meet the following criteria for each asset:

i. Description of the asset including serial number, make, model, accessories, and location.

ii. Cost basis should be supported by invoices for purchase, installation, etc.

iii. Estimated useful life.

iv. Depreciation method such as straight line, double declining balance, etc.

v. Salvage value.

vi. Method of recording depreciation on a basis consistent with accounting policies.

vii. Report additional information, such as additional first year depreciation, even though it isn't an allowable expense.

viii. Reported depreciation expense for the year and accumulated depreciation will tie to the asset ledger.

e. Depreciation methods such as straight line depreciation is always acceptable. Methods of accelerated depreciation are acceptable only upon authorization by the Office of Audit or its successor organization. Additional first year depreciation is not allowable.

f. The depreciable life of any asset may not be shorter than the useful life stated in the publication, Estimated Useful Lives of Depreciable Hospital Assets, 2004 revised edition. Guidelines Lives, that is hereby incorporated by reference into these rules. Deviation from these guidelines will be allowable only upon authorization from the Department. This document may be obtained from American Hospital Publishing, Inc., 211 E. Chicago Ave., Chicago, IL. 60611.

g. Lease purchase agreements may generally be recognized by the following characteristics:

i. Lessee assumes normal costs of ownership, such as taxes, maintenance, etc.;

ii. Intent to create security interest;

iii. Lessee may acquire title through exercise of purchase option that requires little or no additional payment or, such additional payments are substantially less than the fair market value at date of purchase;

iv. Non-cancelable or cancelable only upon occurrence of a remote contingency; and

v. Initial loan term is significantly less than the useful life and lessee has option to renew at a rental price substantially less than fair rental value.

h. Assets acquired under such agreements will be viewed as contractual purchases and treated accordingly. Normal costs of ownership such as depreciation, taxes and maintenance will be allowable as determined in this chapter. Rental or lease payments will not be reimbursable.

i. Complete personnel records containing the following:

i. Application for employment.

ii. W-4 Form.

iii. Authorization for other deductions such as insurance, credit union, etc.

iv. Routine evaluations.

v. Pay raise authorization.

vi. Statement of understanding of policies, procedures, etc.

vii. Fidelity bond application (where applicable).

05.Internal Control.

a. A system of internal control is intended to provide a method of handling all routine and nonroutine tasks for the purpose of:

i. Safeguarding assets and resources against waste, fraud, and inefficiency.

ii. Promoting accuracy and reliability in financial records.

iii. Encouraging and measuring compliance with company policy and legal requirements.

iv. Determining the degree of efficiency related to various aspects of operations.

b. An adequate system of internal control over cash disbursements would normally include:

i. Payment on invoices only, or statements supported by invoices.

ii. Authorization for purchase such as a purchase order.

iii. Verification of quantity received, description, terms, price, conditions, specifications, etc.

iv. Verification of freight charges, discounts, credit memos, allowances, and returns.

v. Check of invoice accuracy.

vi. Approval policy for invoices.

vii. Method of invoice cancellation to prevent duplicating payment.

viii. Adequate separation of duties between ordering, recording, and paying.

ix. System separation of duties between ordering, recording, and paying.

x. Signature policy.

xi. Pre-numbered checks.

xii. Statement of policy regarding cash or check expenditures.

xiii. Adequate internal control over the recording of transactions in the books of record.

xiv. An imprest system for petty cash.

06.Accounting Practices. Sound accounting practices normally include the following:

a. Written statement of accounting policies and procedures, including policies of capitalization, depreciation and expenditure classification criteria.

b. Chart of accounts.

c. A budget or operating plan.

Idaho Admin. Code r. 16.03.10.612

Effective March 17, 2022