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Auditing policies

Compliance Monitor, October 6, 2006

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Q: If a health system were audited by an external agency and the audit findings determined the system was complying with government billing and coding rules, however, the system has created more stringent internal procedures in reference to coding.  Would the external agency follow their internal policy and/or procedures to ensure they were complying with their own internal guidelines?

A: One of the principles of Sarbanes\Oxley Act is that the hospital hiring the external auditors dictate what and how the audit is to be conducted.
The parameters of the audit should be in writing, presented to and approved by the audit or finance committee and approved by the board.
Any changes in the audit procedure must be approved by the finance committee. The make-up of the finance committee is outlined in SOX. Therefore, since the hospital's procedures are more stringent, the external auditing firm should do its best to conform to the wishes of the hospital. Certainly there is room for compromise, but it must be agreed upon by both parties.

Thanks to Jim Kopf, former director of program investigations for the OIG, senior vice president of Health Care Oversight in New Caanan, CT.

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