Page 8 - DCOM509_ADVANCED_AUDITING

Unit 1: Introduction to Auditing

Notes
“The majority of the audits conducted by 10 companies were discontinued, produced ‘low
or no findings’ or were ‘put on hold,’ the GAO, the non-partisan investigative arm of
Congress, said in a report.”
Anecdotally, I’ve heard providers come to these same conclusions not only about CMS’s
audit activities, but also about its competitive bidding program. CMS estimates that
competitive bidding has saved $202.1 million in its first year. But at what cost? I’ve never
been able to put a finger on exactly how much the agency has spent to not only launch the
program but also keep it going. The only thing I’ve seen: a contract for almost $10 million
related to creating the DBidS system that providers use to submit their bids.
With this GAO report, the industry has more solid proof that a program meant to save
money is actually costing money. The beauty of all of this is that, at least in the case of this
investigation of audit activities for Medicaid, CMS doesn’t disagree that its efforts are
penny-wise, pound-foolish. Peter Budetti, director of program integrity at CMS, told
Bloomberg that three of the companies conducting the audits won’t have their contracts
renewed and two others will be reassigned.
“The results were extremely disappointing, way below what the expectations had been,”
he said.

The ugly of all of this is that, while CMS throws money at finding and collecting
overpayments, legitimate providers are too often the ones paying the price. A story in
Forbes on the faulty data that CMS is using to set expectations and launch audit activities
says:
“Upon reading (the recent testimony of HHS Regional Inspector General Ann Maxwell to
Congress), another vastly different but no less important point emerges: inaccurate
Medicaid claims data can wreak havoc on innocent medical providers. Indeed, for those
who counsel health care providers, Ms. Maxwell’s testimony is noteworthy not just for
what it says about the (in) accuracy of Medicaid data, but also for what it reveals about the
extent to which providers have been and will continue to be subjected to unjustified,
burdensome and meritless government scrutiny.”
The GAO has never been shy about looking into DME-related issues. In this case, let us
root the agency on and hope it now turns its focus on audit activities for Medicare and
competitive bidding.

Source: http://www.hmenews.com/article/case-let-us-root-gao

1.2 Defining Audit

Audit may be defined as ‘an official inspection of an individual’s or organization’s accounts,
typically by an independent body’. A precise definition of the term ‘Auditing’ is difficult to give.
Some of the definitions given by different authors are as follows:
According to Montgomery, a well known author, “auditing is a systematic examination of the books
and records of a business or the organization in order to ascertain or verify and to report upon the facts
regarding the financial operation and the result thereof”.

“Spicer and Pegler expanded the above definition as follows:
“An audit may be said to be such an examination of the books, accounts and vouchers of a business as well
enable the auditor to satisfy that the Balance Sheet is properly drawn up, so as to give a true and fair view
of the state of affairs of the business and whether the Profit or Loss for the financial period according to the
best of his information and the explanations given to him and as shown by the books, and if not, in what
respect he is not satisfied.”

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