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Audit Decision Cases Gather information: Go to www.pcaobus org and access AS 1301 Communication with Audit Com mins Discuss specific items the auditors must communicate with the audit committee for the audit begin. Do me discuss the waitor's requirements for communicating the results of the audit.) Brookwood Pines Hospital Question C4.3 is based on the following cost. Goodfellow Perkins LLP is a successful mid-tier accounting firm with a large range of clients across Texas. During 2022, Goodfellow Perkins gained a new client, Rrookwood Pines Hospital (BPH), a pri- vate, not for profit hospital. The fiscal year end for BPH is June No Goodfellow & Perkins is performing the audit for the fiscal year-end June 30, 2023 BPH provides medically necessary care to patients, regardless of their ability to pay. Both uninsured and underinsured patients are offered discounts of up to 100% of charges based on their income as a percentage of the federal poverty level guidelines. BPH does not pursue collection of these accounts therefore, they are not reported in patient service revenue and accounts receivable. The cost of providing the charity care is included in operating expenses BPHs Investments consist of mutual funds, common equities, corporate and US government debt Issues, state and municipal government debt issues, and trusts. A majority of the investments are the result of charitable contributions to the hospital by generous dones. Earnings from the investments are used to cover the costs of the charity care. BPH is also eligible for certain government grants to help cover the costs of the charity care Selected financial statements and other financial information are provided below. Since BPH op- erates as a non-for-profit, it reports assets, likties, and net assets. (Now: Net assets takes the place of equity since there are no owners.) Brookwood Pines Hospital Statement of Financial Position (in thousands) June 30, 2023 June 30, 2022 $ 43,077 $ 36.361 99.962 119.30 9,208 Cash and cash equivalents Short-term investments Patient accounts receivable, net Current portion of pledges and grants receivable, net Current portion of insurance recoverable Inventory Other current assets Total current assets 223.28 10.056 23,193 225,962 807,321 51 981 7.248 10,723 28.463 $1.618.698 Long-term investments Property and equipment, net Prepaid pension cost Insurance recoverable, less current portion Other assets, net Total assets 19.760 31,535 $1,787,720 $ 18.431 52361 6.459 19.209 72.494 15.709 5.040 14.550 39,547 50.754 8.459 27,380 67.687 14.965 4,928 Liabilities and net assets Accounts payable Accrued salaries and benefits Grants payable, current portion Accrued expenses and other current liabilities Due to third-party payors Current accrued liabilities under self-insurance programs Current maturities of long-term debt Short-term debt Long-term debt subject to short-term refinancing agreements Total current liabilities Long-term debt, Det, less current maturities Accrued liabilities under self-insurance program, less current portion Grants payable, less current portion Other liabilities Total liabilities SL112 224,253 266 852 220,796 82.618 13.245 42.649 179,590 82.559 16.489 48 336 583.581 593,766 (continued) 4-3 CHAPTER 4 Risk Assessment Parti Understanding the Client June 30, 2023 June 2012 1.138,140 Net assets Without donar restrictions 1.024,932 1,204,139 $1,787.720 Teal net ses Totallaties and new 51.618.695 Brookwood Pines Hospital Statement of Operations Year Ended June 30 (in thousands) $791,572 $706,073 (25.810) Net patient service revenue Estimated uncollectible accounts Net patient service revenue he estimated uncollectible accounts Rental and other revenge Net assets released from donor restrictions and federal and state grants Tot revenue 757,897 42,727 41.975 4.541 4,407 726645 805,165 $377.895 146,172 Salaries and employee benefits Supplies Purchased services Depreciation and amortization Insurance Rent and utilities $344,360 126.633 79,391 45.630 17.430 14.722 Texas hospital assessment 17.227 8874 14,081 21.151 754971 50.194 686,750 39,895 Total expenses Operating income Nonoperating gains (losses) Investment return Change in fair value of certain investments Contribution of Delaune unrestricted net 25951 109,212 6,254 (3.362) Grants provided Other Total nonoperating gains, net Excess of revenues over expenses $161928 $119,692 Selected information from the cash flow statement is as follows (in thousands 2022 $$7.903 Item Net cash provided by operating activities Net cash used in investing activities Net cash provided by financing activities $63.648 (60,394) 3,463 (75,300) 3.706 C43 (LO 1, 3) Challenging Analytical procedures Analysis: Using BPH's financial data, perform analytical procedures to gain an understanding of BPH. Conduct a trend analysis, common-size analysis and ratio analysis. Based on your analysis, document in a memo your understanding of the client potential problem areas (accounts at risk of material misstatement), and any other special concerns. (Note: Some ratios provided in the text may need to be modified for a not-for-profit organization. If necessary, use the internet for additional research about financial ratios used in the hospital industry.) Audit Decision Cases Gather information: Go to www.pcaobus org and access AS 1301 Communication with Audit Com mins Discuss specific items the auditors must communicate with the audit committee for the audit begin. Do me discuss the waitor's requirements for communicating the results of the audit.) Brookwood Pines Hospital Question C4.3 is based on the following cost. Goodfellow Perkins LLP is a successful mid-tier accounting firm with a large range of clients across Texas. During 2022, Goodfellow Perkins gained a new client, Rrookwood Pines Hospital (BPH), a pri- vate, not for profit hospital. The fiscal year end for BPH is June No Goodfellow & Perkins is performing the audit for the fiscal year-end June 30, 2023 BPH provides medically necessary care to patients, regardless of their ability to pay. Both uninsured and underinsured patients are offered discounts of up to 100% of charges based on their income as a percentage of the federal poverty level guidelines. BPH does not pursue collection of these accounts therefore, they are not reported in patient service revenue and accounts receivable. The cost of providing the charity care is included in operating expenses BPHs Investments consist of mutual funds, common equities, corporate and US government debt Issues, state and municipal government debt issues, and trusts. A majority of the investments are the result of charitable contributions to the hospital by generous dones. Earnings from the investments are used to cover the costs of the charity care. BPH is also eligible for certain government grants to help cover the costs of the charity care Selected financial statements and other financial information are provided below. Since BPH op- erates as a non-for-profit, it reports assets, likties, and net assets. (Now: Net assets takes the place of equity since there are no owners.) Brookwood Pines Hospital Statement of Financial Position (in thousands) June 30, 2023 June 30, 2022 $ 43,077 $ 36.361 99.962 119.30 9,208 Cash and cash equivalents Short-term investments Patient accounts receivable, net Current portion of pledges and grants receivable, net Current portion of insurance recoverable Inventory Other current assets Total current assets 223.28 10.056 23,193 225,962 807,321 51 981 7.248 10,723 28.463 $1.618.698 Long-term investments Property and equipment, net Prepaid pension cost Insurance recoverable, less current portion Other assets, net Total assets 19.760 31,535 $1,787,720 $ 18.431 52361 6.459 19.209 72.494 15.709 5.040 14.550 39,547 50.754 8.459 27,380 67.687 14.965 4,928 Liabilities and net assets Accounts payable Accrued salaries and benefits Grants payable, current portion Accrued expenses and other current liabilities Due to third-party payors Current accrued liabilities under self-insurance programs Current maturities of long-term debt Short-term debt Long-term debt subject to short-term refinancing agreements Total current liabilities Long-term debt, Det, less current maturities Accrued liabilities under self-insurance program, less current portion Grants payable, less current portion Other liabilities Total liabilities SL112 224,253 266 852 220,796 82.618 13.245 42.649 179,590 82.559 16.489 48 336 583.581 593,766 (continued) 4-3 CHAPTER 4 Risk Assessment Parti Understanding the Client June 30, 2023 June 2012 1.138,140 Net assets Without donar restrictions 1.024,932 1,204,139 $1,787.720 Teal net ses Totallaties and new 51.618.695 Brookwood Pines Hospital Statement of Operations Year Ended June 30 (in thousands) $791,572 $706,073 (25.810) Net patient service revenue Estimated uncollectible accounts Net patient service revenue he estimated uncollectible accounts Rental and other revenge Net assets released from donor restrictions and federal and state grants Tot revenue 757,897 42,727 41.975 4.541 4,407 726645 805,165 $377.895 146,172 Salaries and employee benefits Supplies Purchased services Depreciation and amortization Insurance Rent and utilities $344,360 126.633 79,391 45.630 17.430 14.722 Texas hospital assessment 17.227 8874 14,081 21.151 754971 50.194 686,750 39,895 Total expenses Operating income Nonoperating gains (losses) Investment return Change in fair value of certain investments Contribution of Delaune unrestricted net 25951 109,212 6,254 (3.362) Grants provided Other Total nonoperating gains, net Excess of revenues over expenses $161928 $119,692 Selected information from the cash flow statement is as follows (in thousands 2022 $$7.903 Item Net cash provided by operating activities Net cash used in investing activities Net cash provided by financing activities $63.648 (60,394) 3,463 (75,300) 3.706 C43 (LO 1, 3) Challenging Analytical procedures Analysis: Using BPH's financial data, perform analytical procedures to gain an understanding of BPH. Conduct a trend analysis, common-size analysis and ratio analysis. Based on your analysis, document in a memo your understanding of the client potential problem areas (accounts at risk of material misstatement), and any other special concerns. (Note: Some ratios provided in the text may need to be modified for a not-for-profit organization. If necessary, use the internet for additional research about financial ratios used in the hospital industry.)

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