audit accounting problem

Audit II Project - Lab Invoice Audit

Your CPA firm is currently performing the annual financial statement audit of St. Patrick’s Hospital and you are part of the engagement team as an Auditor. The Audit Manager has returned from a discussion with the Director of Laboratory Services and is concerned that the Hospital is paying the monthly lab bill received from Healthy Diagnostics without the Hospital’s Laboratory Services Department performing any review or analysis of the invoice. The Manager learned that the monthly invoice is received by the Laboratory’s Administrative Assistant and immediately forwarded to Accounts Payable for processing. The Director of St. Patrick’s Laboratory Services Department indicated that he does not have time to perform an analysis of the invoices and is 100% sure the invoices are accurate. The Audit Manager has assigned you the responsibility to audit three monthly lab invoices to test for the following:

· Monthly invoice detail received from Healthy Diagnostics equals the amount of the monthly payments made by St. Patrick’s

· All test charges listed on the invoices agree to the “Lab Price Per Test” that Healthy Diagnostics and St. Patrick’s agreed to (Agreed Upon “Lab Price Per Test” is included in Excel spreadsheet)

· If Healthy Diagnostics included the same charge on more than one invoice

You have been given an Excel file which includes the following worksheets:

· Agreed Upon “Lab Price Per Test”

· Invoice Detail for the months of Sept 2010, Oct 2010 & Nov 2010

· Invoices detail include the following:

· Healthy Diagnostic Invoice #

· Patient ID

· Date of Service

· Service Code (This is the Test Code – which test was performed)

· Price charged per test

· If an invoice showed no charge for a particular test; that indicates there was not enough of the sample to perform the test and the Lab did not charge the hospital. Any test that shows $0 charge is correct and not an error.

You determined that St. Patrick’s paid the following Healthy Diagnostic invoices:

Invoice Number	Invoice Month	Date Paid by St. Patrick’s	Amount Paid
9135130450	Sept 2010	October 10, 2010	$67,759.48
9135610675	Oct 2010	November 9, 2010	$60,755.27
9136049051	Nov 2010	December 12, 2010	$73,453.09

After you perform the audit, The Audit Manager wants you to prepare a report indicating what issues you identified including if St. Patrick’s overpaid any invoice and if so, how much. Report should be a 1 to 2 page report that indicates the details of your findings.

Project Points

· Utilize Excel to analyze the date

· Suggestion – put all invoices into one excel worksheet and then perform your testing

· Part 1 – Written Analysis

· Complete analysis of the following : (Make it organized, easy to read and understand)

· Determine if the monthly invoice detail received from Healthy Diagnostics equals the amount of the monthly payments made by St. Patrick’s. If not, calculate error.

· Determine that all test charges listed on the invoices agree to the “Lab Price Per Test” that Healthy Diagnostics and St. Patrick’s agreed to (Agreed Upon “Lab Price Per Test” is included in Excel spreadsheet). If not, calculate error.

· Determine if Healthy Diagnostics included the same charge on more than one invoice. (Duplicate Charge) If so, calculate error.

· Audit Report