1. Validity and reliability of computer-based data
2. 12 steps for auditing inpatient bad debt
3. Gov't audit insider

When computer-processed data is critical to accomplishing an audit objective, you need to ensure that the data is reliable and relevant. For example, when the reliability of a computer-based system is your principal audit objective, conduct a system review of general and application controls. This is important, whether the data is provided to you, or you independently extract it.

Consider the General Accounting Office's (GAO) method to assess the reliability of computer-based data. The GAO's publication, "Assessing the Reliability of Computer-Based Data" (GAO/OP-8.1.3, September 1990), provides the following guidance on assessing computer-based data:

1. Determine how computer-based data will be used and how it will affect the audit objective

2. Find out what is known about the data and the system that produced it

3. Obtain an understanding of relevant system controls, which can reduce risk to an acceptable level

4. Test the data for reliability

5. Disclose the data source and how data reliability was established, or qualify the report if data reliability cannot be established

Last year, the Office of Inspector General released report after report on its audits of inpatient bad debt nationwide. The scrutiny continues this year as part of the agency's nationwide audit of inpatient bad debt. Consider the following 12 steps in your audit of inpatient bad debt:

1. Interview the cost and reimbursement accountant to evaluate procedures used to review bad debt accounts before they are listed on the cost report

2. Review procedures over the computation and recording of contractual allowances

3. Review procedures for denied claims and determine whether the organization has adequate follow-up procedures for pursuing bad debt

4. Pull a non-statistical sample of accounts and test the length of time it takes before the account is paid, the length of time it takes to collect copayments and deductibles, and the length of time to write off the account once it is determined to be uncollectible.

Medicare costs for organ acquisition

The Office of Inspector General (OIG) recently performed this audit determine whether the costs claimed by a Tampa, FL hospital for organ acquisition complied with the Medicare reimbursement criteria. The audit covered direct and indirect organ acquisition costs claimed by the hospital on its Medicare cost report for fiscal year (FY) 1999. The OIG reviewed the following as part of its audit: