| Dean Dorton Ford

January 27, 2012

Data Analysis Thoughts and Ideas

Filed under: Colleges & Universities — Tags: accounting, Accounting Firm, analysis procedures, College and University, CPA, data analysis, data analysis procedures, data analysis tools, DDAF, Dean Dorton Allen Ford, Kentucky accounting firm, KY accounting, Lexington CPA, Louisville CPA, performing analysis, Technology — Dean Dorton Allen Ford @ 1:10 pm

In today’s world, technology is an integral part of data analysis. Data analysis technology provides tools that allow users to sort through mounds of data in order to perform efficient and accurate analysis. These tools are especially useful in performing analysis within accounting departments of colleges and universities. Due to their size and complexity, colleges and universities have a very unique need for data analysis. Colleges and universities process thousands of transactions through their general ledger each month. Data analysis tools can combine data from different sources to allow user’s maximum analysis potential. Proper data analysis tools can assist management in identifying unusual variances, errors, and even fraud.

Below are example analysis procedures that we have found to be useful in our work with colleges and universities. This list is meant to be a series of suggestions to help you understand the capabilities of data analysis tools. Ultimately, the user is only limited by their imagination.

General Ledger

Identification of manual journal entries for detailed analysis
Analysis of the number of transactions being entered into individual accounts to determine consistent use
Search for unusual patterns between individuals initiating transactions and posting transactions
Analyze monthly fluctuations of account balances

Receivables

Recalculate the aging of receivables
Analyze trends in receivables, receipts, and aging
Search for invalid student accounts (duplicate) included in the receivable balance
Analyze all manual entries to accounts receivable
Analyze cash receipts not paired with a receivable
Search for missing student information

Fixed Assets

Identify fully depreciated items and assets valued above replacement costs
Identify items that were not properly capitalized according to the capitalization policy
Compare assets useful lives by category
Extract assets with useful lives or deprecation rates beyond established norms
Compare capital expenditures to budget
Identify capital projects with large unexpended dollars

Accounts Payable

Compare voucher or invoices posted against purchase order amounts
Identify vendors paid more than 12 times in one year
Identify vendor concentrations
Search for inconsistent purchase prices of identical items between departments
Analyze all manual entries to accounts payable
Identify invoices being applied to multiple purchase order authorization
Analyze disbursements by department by month for unusual trends
Search for duplicate purchase orders, invoices, and amounts
Identify invoices with similar descriptions
Analyze trends among the individuals preparing purchase orders and approving purchase orders
Find invoices without purchase orders
Compare recurring monthly expenses to paid invoices
Look for lost discounts not taken
Analyze scheduled receipt date versus actual receipt date

Procurement Cards

Search for purchases made on the weekend
Summarize by vendor
Search for round dollar amounts
Identify purchases close to dollar limits

A-133

Analyze factors impacting student eligibility
Compare actual assistance received to approved amounts
Search for incomplete data
Extract transactions of assets funded by federal grants to ensure compliance with grant requirements
Sort contracts database by contract or cost type to test compliance with government contract terms
Test whether grant revenue disbursements are properly used

Other

Compare addresses between databases (payroll, vendors, students)
Selecting samples
Calculate financial ratios
Create custom balance sheets, P&L Statements, etc.
Compare summaries by major accounts

As previously stated, the procedures listed above are examples of procedures that can be performed using data analysis. This list is intended to serve as a starting point for users as they plan procedures to match their specific needs.

Dean Dorton Allen Ford, PLLC has expertise in data analysis procedures. We have resources available to assist you in your data analysis needs, whether that be coaching staff in the use of data analysis tools, brainstorming procedures, or actually performing the analysis. Please contact Hunter Stout (hstout@ddafcpa.com) or Justin Hubbard (jhubbard@ddafcpa.com) if you would like additional information.

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January 26, 2012

Physician Integration Issues

Filed under: Healthcare — Tags: accounting, Accounting Firm, Dean Dorton Allen Ford, develop physician integration strategy, four steps for improvement, Healthcare, healthcare consulting, hospital owned physician practice, Kentucky accounting firm, KY accounting, Lexington CPA, Lexington healthcare consulting, Louisville CPA, Louisville healthcare consulting, managing financial results, physician integration strategy — Dean Dorton Allen Ford @ 4:50 pm

Physician Integration Issues

At a recent HFMA Seminar, representatives from Dean Dorton Allen Ford, PLLC’s Healthcare group gave a presentation entitled Managing Financial Results in a Hospital Owned Physician Practice. At the conclusion of the presentation we discussed four steps that a hospital should take to improve their management of the practices they have acquired. These steps were: to develop a physician integration strategy, develop a “group” practice, develop a reasonable compensation system and improve Board communication. Over the next few weeks an e-newsletter will be sent out discussing each of these initiatives.

Develop a Physician Integration Strategy

The volume of potential physician practices to integrate into a hospital has been increasing and will only continue to increase as physicians seek a safe harbor from the changes in the health care industry. It is easy to find physicians to integrate, however just because they are available, does not mean they are a viable candidate for integration.

To give the hospital the best chance of success with the practices integrated – both financially and operationally, a strategy should be developed for physician integrations. The strategy, if developed correctly, will give you a guideline as physician integration opportunities are presented. It will allow you to distinguish what practices you should and should not integrate. Your strategy should also dictate the resources you will need to adequately communicate physician practice results to the Board.

There are no defined “perfect” strategies since every organization is different. In general, the strategy related to physician integrations should blend into the hospitals overall strategy. Key considerations should include the key specialties needed in your community and the primary care mix in your service area, including the age and anticipated length of practice time remaining by physicians serving your hospital. Before full integration is pursued the strategy should consider all options to strengthen relationships with physicians, which may not include integration into the hospital.

The strategy should consider the group responsible for physician integrations. This group of hospital employees should be instrumental in developing the integration strategy, but also involved in the implementation of the strategy and the operations of the practices once they are integrated.

One other point to define in the integration strategy is the management structure of the physicians. The structure needs to be clearly defined so that the positions necessary to manage the physician practices are in place. When determining the administrative structure, smaller details such as billing, human resources and staffing should also be discussed.

Developing a strategy at times is overwhelming and often seems unnecessary. However, without a strategy in place, many hospitals are integrating physician practices as quickly as they can and subsequently are bearing the costs of poor operating results.

For more information please contact David Bundy (dbundy@ddafcpa.com).

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The Relevance of an Audit Committee for Not-For-Profit Organizations

Filed under: Not for Profit — Tags: accountability, accounting, Accounting Firm, audit committee, board of directors, CPA, DDAF, Dean Dorton Allen Ford, external auditors, Kentucky accounting firm, KY accounting, Lexington CPA, Louisville CPA, NFP, Not for Profit — Dean Dorton Allen Ford @ 1:15 pm

Not-for-Profit (NFP) organizations represent an ever increasing share of the U.S. economy. Currently, there are over 1.6 million NFP organizations registered with the IRS in the United States and the number of NFPs continues to grow every year. Due to this growth, NFP organizations are being examined more closely – as evidenced by the IRS Form 990’s questions and inquiry regarding governing boards.

Today’s NFP organizations depend on their board of directors for governing the organization, reviewing the performance of executive officers, ensuring the availability of adequate financial resources, approving budgets, accounting for the organization’s performance and providing financial guidance. The board of directors is vital in creating accountability for a NFP organization as financial mismanagement or fraud could destroy its reputation and ability to fundraise. In recent years many boards have become aware of the ever increasing need for accountability and some have responded by creating an audit committee.

The formation of an audit committee generally increases the lines of communication between external auditors and the board of directors. The audit committee of a board of directors has two main goals. The first goal is to assist with the oversight, establishment, and adherence to accounting and internal control policies and the timely filing of financial reports in accordance with the appropriate regulations. The second goal is to facilitate communication among the board, management, internal auditors, and external auditors. The audit committee should meet with the external auditors at least twice a year – once before the audit begins to discuss the auditor’s audit plan and once after the audit is completed to review its results. By keeping the lines of communication open, the board of directors will better understand the audit process and maximize the benefits of financial statement audits.

If you have any questions about this article or would like to know more about Dean Dorton Allen Ford’s NFP assurance practice, please contact us.

Melanie Wales

mwales@ddafcpa.com

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Succeeding in State DOT Audits

Filed under: Construction — Tags: AASHTO, accounting, Accounting Firm, Architects and Engineers, CPA, DDAF, DOT, INDOT, Kentucky accounting firm, KY accounting, Lexington CPA, Louisville CPA, Transportation — Dean Dorton Allen Ford @ 12:59 pm

Since 2009, AASHTO, the FHWA, the ACEC, State DOTs, and public accounting firms have worked together to revise the AASHTO Uniform Audit and Accounting Guide (the Audit Guide) which assists engineering companies and public accounting firms in interpreting the Federal Acquisition Regulation (FAR). These revisions have been one of the most significant changes in the industry and have put more responsibility on engineering firms to ensure that their external auditors are qualified to perform audits of their Statements of Direct Labor, Fringe Benefits, and General Overhead (the Overhead Statement).

The Audit Guide requires engineering firms to ensure that their auditors are knowledgeable and experienced with the architecture and engineering industry, Generally Accepted Government Audit Standards (GAGAS), the Cost Principles of FAR Part 31, Cost Accounting Standards, related laws and regulations, and the Audit Guide.

State DOTs normally base their selections for audits of engineering firms on a risk analysis of the firm. One of the key elements in their decision-making process is the qualifications and experience of the auditor providing assurance over the firm’s Overhead Statement. The allowability of costs often comes down to the documentation management has prepared, and the CPA has audited, to substantiate costs. From developing adequate policies and procedures to ensuring that daily expenses have proper documentation to justify the business rationale, documentation can have a significant impact on your overhead rate. Having an experienced, competent auditor standing by you, who understands the requirements of the Audit Guide, can mean the difference between profitability and significant portions of costs being deemed unallowable. It can also impact your future ability to perform work for State DOTs.

Breaking News from the Indiana Department of Transportation (INDOT)

In a recent communication from INDOT, they stated that before accepting a FAR audit report or examination-level attestation report, the home State DOT or other reviewing State DOT must determine whether the auditor has adequately complied with the minimum audit testing procedures discussed in the Audit Guide. Their intention is to review 100% of the overhead audits they received in 2011 for the engineering firm’s 2010 operating year and have found in a high proportion of the audit work papers reviewed to date that the CPA is not performing the minimum testing as recommended in the Audit Guide. INDOT has notified their consulting engineering partners that if the deficiencies in the audit are not corrected with the 2011 operating year audits, INDOT may be forced to limit the amount and/or types of contracts in which the consulting engineering firm can enter into with INDOT.

If your firm has experienced costs being deemed unallowable by State DOTs, or CPA work papers not meeting the minimum testing requirements of the Audit Guide, now is the time to find external auditors that can assist you in increasing profitability, getting the overhead rate your firm deserves and ensuring your future ability to perform work for State DOTs.

Dean Dorton Allen Ford has decades of experience in performing overhead audits and communicating with State DOTs. In past State DOT audits, the firm has been extremely successful in helping to provide positive outcomes for our clients. For more information, please contact Shawn Anderson at sanderson@ddafcpa.com, or Simon Keemer at skeemer@ddafcpa.com.

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January 19, 2012

Assessing Your Revenue Cycle Operations

Filed under: Consulting, Healthcare — Tags: accounting, Accounting Firm, accounts receivable, billing, DDAF, DDAF Healthcare, Dean Dorton Allen Ford, facility revenue cycle, Healthcare, healthcare consulting, healthcare facility, Kentucky accounting firm, Kentucky healthcare consulting, KY accounting, Lexington CPA, Louisville CPA, revenue cycle, revenue cycle operations, staffing, tailored work plan, Vail Valley Medical Center — Dean Dorton Allen Ford @ 12:23 pm

Assessing Your Revenue Cycle Operations

How Dean Dorton Allen Ford Can Help

The Healthcare Team at DDAF has developed a three-tiered approach to identify potential process gaps and opportunities within a facility’s revenue cycle. Our experience and expertise in the healthcare field enables us to:

Conduct a financial review of your healthcare facility. This review will focus on the organization’s key performance indicators, including: gross revenue, cash collections, Accounts Receivable, bad debt expense, contractual adjustments, and charity care for the past 12 months. Other key financial indicators and staffing will also be considered.

Document the current state of your revenue cycle operations. This phase will include observing and interviewing key stakeholders within the following functions: registration and admissions, insurance verification, scheduling, financial counseling, customer service, billing, account follow-up, denials management, and cash posting.

Provide Recommendations and Implementation of best practices. After a thorough review, the team at DDAF will be able to make recommendations that will improve the performance of your organization’s revenue cycle. Additionally, DDAF can customize a tailored work plan and implement redesigned processes that will lead to best of practice results.

“When Vail Valley Medical Center needed leadership and expertise for our Patient Accounting Department, we turned to Dean Dorton Allen Ford. They have been a fantastic asset to our organization and have exceeded expectations with their results-driven approach. In addition to restructuring and streamlining our back-end revenue cycle processes, Dean Dorton Allen Ford exhibited the flexibility to adapt to the nuances associated with our people, processes, and technology. Thanks in part to their leadership and expertise, Vail Valley Medical Center was able to increase cash collections, reduce days in A/R, and improve A/R aging.”

- Charlie Crevling, CFO, Vail Valley Medical Center, Vail, CO

For more information please contact Adam Shewmaker (ashewmaker@ddafhealthcare.com).

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January 17, 2012

Form 1099-MISC Reporting Reminders – Equine Industry Focus

Filed under: Equine — Tags: 1099, accounting, Accounting Firm, bloodstock agent and consulting fees, board, contract labor, CPA, DDAF, Dean Dorton Allen Ford, Equine, equine business, Form 1099, Forms 1099-MISC, Kentucky accounting firm, KY accounting, legal fees, Lexington CPA, Louisville CPA, stud fees — Dean Dorton Allen Ford @ 9:51 am

As the 2011 Form 1099 filing season arrives, please consider the following reminders when generating Forms 1099-MISC. If certain payments are made in the course of your trade or business, you may be required to issue a Form 1099-MISC to vendors and to the IRS to report these payments made. Forms 1099-MISC should be prepared for each entity to which you have paid at least $600 for services, rents, or attorney fees during the year. There is a filing exception for service and rent payments (but not attorney fees) made to a corporation; however, this exception does not include partnerships and LLCs not taxed as corporations. A Form 1099 should not be issued to foreign entities for services performed outside of the US, but proof of foreign status must be obtained from the foreign vendor and maintained with company files.

Some common items that require Form 1099-MISC reporting for many in the equine business include bloodstock agent and consulting fees, board, contract labor, legal fees, training, vanning, vet, and stud fees.

The IRS has added two new questions to the 2011 Schedule F and business returns related to Form 1099 reporting. These questions require a taxpayer to confirm if payments were made during the year that require Form 1099 reporting and, if so, to confirm that Forms 1099 will or have been filed. It appears the IRS may apply increased scrutiny to Form 1099 reporting, so now is an ideal time to either confirm your Form 1099 reporting is in compliance with these reporting requirements or make any necessary updates.

As a reminder, in general, 2011 Forms 1099-MISC should be mailed to the recipients by January 31, 2012 and to the IRS by February 28, 2012 (paper) or April 2, 2012 (electronic). Alternatively, you can get an automatic 30-day extension of time to file by completing Form 8809 by the due date of the returns. If you are required to file 250 or more information returns, you must file electronically with the IRS.

We are happy to assist with any Forms 1099-MISC reporting questions, so please contact us to discuss these items. Jen Shah jshah@ddafcpa.com

The matters discussed above provide general information only. You should consult with us or your tax advisor about your specific situation before undertaking actions based on such general information.

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January 3, 2012

Changes in Lease Accounting

Filed under: Colleges & Universities, Construction, Energy & Natural Resources, Healthcare, Natural Resources, Not for Profit — Tags: accounting, Accounting Firm, company leases, DDAF, Dean Dorton Allen Ford, exposure draft, FASB, Healthcare, IASB, Kentucky accounting firm, KY accounting, Lexington CPA, Louisville CPA, Natural Resources, proposed lease standard — Dean Dorton Allen Ford @ 3:03 pm

Changes are on the horizon for lease accounting. The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have issued an exposure draft, as part of their convergence efforts, that will require certain lease arrangements to be recorded as balance sheet items.

The exposure draft referenced above will no longer allow certain leases that extend past 1 year to be treated as operating leases. Applicable leases will be recorded on the company’s balance sheet using a right-to-use approach, similar to the current method of accounting for capital leases. Companies with exclusive rights to a leased asset will record the asset as a right-to-use asset and record the corresponding lease liability. The right-to-use asset will be recorded at the present value of the lease payments. The result is that most off-balance sheet lease activity will now appear on the balance sheet as an asset and liability.

Under the proposed guidance, the lease term used to record the asset and liability will be the longest possible term that is more likely than not to occur. Management will need to consider all options to extend or even terminate the lease agreement. Expected future cash flows will include all payments over the expected term, including contingent rentals and residual value guarantees. Management will be required to reassess the terms of the lease annually.

The FASB and IASB plan to reexpose the proposed lease standard during the first half of 2012 and have not provided a planned effective date for the new standard. This standard will apply to all applicable existing lease arrangements as of the effective date. We recommend that companies begin to evaluate their equipment leases and property leases (excluding mineral leases as they are exempt) to assess the impact of this change. These lease changes may impact loan covenant calculations, financial ratios and EBITDA calculations. Companies should begin discussions with lenders to highlight these future changes in financial statement presentation.

We will provide an update on the proposed lease standard during 2012 after the reexposure draft is released. If you have questions on any of the changes discussed above please contact Justin Hubbard (jhubbard@ddafcpa.com) or Bill Kohm (bkohm@ddafcpa.com).

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December 7, 2011

CMS Gets New Administrator…Parting Shots by the Out-Going Administrator

Filed under: Consulting, Healthcare, Uncategorized — Tags: accounting, Accounting Firm, CMS, CPA, Dean Dorton Allen Ford, Dr. Donald Berwick, Healthcare, Kentucky accounting firm, KY accounting, Lexington CPA, Louisville CPA — Dean Dorton Allen Ford @ 3:00 am

Marilyn Tavenner was recently named as the principal deputy administrator for the Center for Medicare and Medicaid Services (CMS). Ms. Tavenner replaces Dr. Donald Berwick. Ms. Tavenner served as Berwick’s deputy principal administrator since April 2010. A Reuters.com article that appeared on the internet on November 23, 2011 stated that Ms. Tavenner is a former Virginia health secretary and hospital chief executive. She is a nurse by training.

Dr. Donald Berwick was appointed the principal deputy administrator of the Centers for Medicare and Medicaid Services (CMS) in April 2010. While the Senate was investigating his qualifications, President Obama circumvented Congress and gave Dr. Berwick a temporary recess appointment. The Constitution provides that a President may make a temporary appointment, called a recess appointment, to a high-level policy-making position in a federal department when the Senate is in recess.

In an article written by Robert Pear titled “Health Official Takes Parting Shot at ‘Waste’” that appeared in The New York Times on December 3^rd, 2011, it was reported that President Obama’s shortcut by appointing Dr. Berwick infuriated Republicans and irked some Democrats. Thursday, December 1^st, was Dr. Berwick’s last day on the job. The appointment was due to expire at the end of this year.

Dr. Berwick served only 17 months as the administrator of CMS. He was denied Senate confirmation by Republicans, who branded him as an advocate of healthcare rationing. Dr. Berwick denies this charge and states he is for quality in healthcare.

In The New York Times article referenced above, Dr. Berwick states that 20 percent to 30 percent of health spending is “waste” that yields no benefit to patients, and that some of the needless spending is a result of onerous, archaic regulations enforced by his agency. In the article, Dr. Berwick listed five reasons for what he described as the “extremely high level of waste. They are the overtreatment of patients, the failure to coordinate care, the administrative complexity of the health care system, burdensome rules and fraud.”

For more information please contact: Jeff Presser at jpresser@ddafcpa.com

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November 28, 2011

Wal-Mart: Save Money, Live Better

Filed under: Consulting, Healthcare — Tags: accounting, Accounting Firm, affortable care act, Consulting, CPA, DDAF, Healthcare, healthcare consulting, Kaiser Health News, Kentucky accounting firm, KY accounting, Louisville CPA, walmart — Dean Dorton Allen Ford @ 3:37 pm

Wal-Mart’s tag line “Save Money, Live Better” may take on a new meaning in the very near future. As reported by NPR and Kaiser Health News in early November, “Wal-Mart intends to build a national, integrated, low-cost primary care healthcare platform that will provide preventative and chronic care services that are currently out of reach for millions of Americans.” On October 21, 2011, Wal-Mart distributed a “Request for Information” seeking partners who currently have products or services that may address all or part of Wal-Mart’s strategic direction.

Wal-Mart, which is known world-wide for its chain of retail outlets providing low-cost goods, now appears willing and determined to expand its healthcare foot print. According to data tracked by Merchant Medicine, Wal-Mart is currently the third largest operator of in-store clinics behind CVS/Caremark’s Minute Clinics and Walgreen’s Take Care clinics. Wal-Mart has had limited success in operating these clinics which seems to be the impetus for the current search of strategic healthcare partners.

With the advent of the Affordable Care Act, more uninsured healthcare consumers will be entering the healthcare market as patients with health insurance coverage as early as 2014. A patient population that historically was underinsured or completely uninsured will have access to expansions in Medicaid programs and commercial insurance exchanges. Wal-Mart is seeking to capitalize on what is fully expected to be millions of new patients with third party reimbursement and a glaring need for primary care providers. They hope to marry these two opportunities and become a national outlet for expanding access to care while lowering healthcare costs. Wal-Mart has two inherent advantages from the start: a well-known and trusted brand name and convenient access for millions of Americans. Convenience and appeal to the masses coupled with healthcare reform driven by expanding access to primary care and consumer transparency may prove to be a winning recipe for shaping healthcare as we know it.

Some national experts, however, suggest that Wal-Mart’s transition to a national healthcare provider will not be a slam dunk. Ann O’Malley, a physician and senior health researcher at a Washington think tank, said that “Wal-Mart can deliver a lot of stuff more cheaply because it is an expert at doing this with other types of widgets, but healthcare is not a widget and managing individual human beings is not nearly as simple as selling commercial products to consumers.” Additionally, it’s no secret that Wal-Mart’s brand is synonymous with low cost. How effectively Wal-Mart is able to shape that reputation may ultimately decide the success of this endeavor.

It will be interesting to see how Wal-Mart navigates these waters in the coming years, but we may witness Bentonville, AR becoming just as important as Washington D.C. when it comes to shaping the future of America’s healthcare system.

For more information please contact Adam Shewmaker at ashewmaker@ddafcpa.com

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November 22, 2011

New International Accounting Standard has Major Impact on Mining Companies

Filed under: Energy & Natural Resources, Uncategorized — Tags: accounting, Accounting Firm, accounting for stripping costs, assets, CPA, DDAF, Dean Dorton Allen Ford, Energy, IFRIC 20, international accounting standards, Kentucky accounting firm, KY accounting, Lexington CPA, Louisville CPA, mining, Natural Resources — Dean Dorton Allen Ford @ 3:42 pm

Changes are on the way for mining companies that comply with International Accounting Standards as it relates to accounting for stripping costs. The International Accounting Standards Board in October 2011 issued IFRS Interpretations Committee (IFRIC) Interpretation 20, Stripping Costs in the Production Phase of a Surface Mine, clarifying the requirements for accounting for stripping costs in the production phase of a surface mine. Unlike U.S. GAAP which requires all production costs to be treated as inventoriable costs, IFRIC 20 requires mining companies to establish a “stripping activity asset” for costs that provide improved access to ore during the production process. These assets will be amortized over the life of the underlying reserve base using the units of production amortization method. IFRIC 20 is effective for annual periods beginning on or after January 1, 2013, with earlier application permitted. The standard will be applied from the beginning of the earliest period presented.

Please contact Bill Kohm (bkohm@ddafcpa.com) if you have any questions about this new international requirement.

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