REPORT DIGEST

 

SOUTHERN ILLINOIS UNIVERSITY

 PHYSICIANS AND SURGEONS, INC.

 

COMPLIANCE EXAMINATION

For the Two Years Ended:

June 30, 2005

AND

FINANCIAL AUDIT

For the Year Ended:

June 30, 2005

 

Summary of Findings:

Total this audit                          2

Total last audit                          3

Repeated from last audit           1

 

Release Date:

March 23, 2006 

 

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

AUDITOR GENERAL

 

To obtain a copy of the Report contact:

Office of the Auditor General

Iles Park Plaza

740 E. Ash Street

Springfield, IL 62703

(217) 782-6046 or TTY (888) 261-2887

 

This Report Digest is also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

 

 

 

 

 

 

 

 

 

 

SYNOPSIS

 

·        The Physicians and Surgeons, Inc. (P&S) did not properly accrue an accounts receivable related to an agreement with the Illinois Department of Healthcare and Family Services. 

 

·        P&S continued to maintain a cash account with a bank balance greater than the Federal Deposit Insurance Corporation’s (FDIC) insured amount.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

SOUTHERN ILLINOIS UNIVERSITY

PHYSICIANS AND SURGEONS, INC.

COMPLIANCE EXAMINATION AND FINANCIAL AUDIT

For The Year Ended June 30, 2005

 

FINANCIAL OPERATIONS (All Funds)

FY 2005

FY 2004

(restated)

REVENUES

 

 

      Operating revenues..............................................

$69,772,792

$59,233,185

 

 

 

EXPENSES

 

 

      Operating expenses..............................................

61,388,239

54,486,098

 

 

 

            Operating income (loss)..................................

             $8,384,553

         $4,747,087

 

 

 

NONOPERATING REVENUES (EXPENSES)

 

 

Interest Expense.........................................................

                   ($7,712)

            ($12,389)

Investment Income.....................................................

200,601

194,692

Contributions/donations..............................................

 (1,559)

 (1,663)

      Net nonoperating revenues...................................

$191,330

$180,640

 

 

 

Increase (decrease) in net assets.................................

$8,575,883

$4,927,727

 

 

 

NET ASSETS

 

 

Net Assets – beginning of year as restated..................

20,011,771

15,084,044

 

 

 

Net Assets – end of year............................................

$28,587,654

$20,011,771

 

 

 

OTHER SIGNIFICANT ACCOUNT BALANCES

AT JUNE 30,

2005

AT JUNE 30,

2004 (restated)

Cash and Deposits with SIU........................................

Net Patient Accounts Receivable.................................

Estimated due from Illinois Department of ... Healthcare and Family Services....................................................

Total Assets.............................................................

Accounts Payable and Accrued Liabilities....................

Employee Salaries Payable..........................................

Total Liabilities........................................................

Net Assets – Invested in capital assets.........................

Net Assets – Unrestricted...........................................

Total Net Assets......................................................

 

$12,964,501

$15,755,765

 

$5,132,243

$34,445,735

$2,428,916

$2,806,390

$5,858,081

$593,226

$27,994,428

$28,587,654

$8,957,552

$11,434,988

 

$3,970,791

$25,408,639

$2,143,354

$2,320,052

$5,396,868

$366,432

$19,645,339

$20,011,771

EXECUTIVE DIRECTOR

During the audit:  Mr. David J. Tkach

Currently:  Mr. David J. Tkach

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Recording accounts receivable accrual

 

 

 

 

 

 

 

 


Net Assets as of July 1, 2004 have been restated for unaccrued accounts receivable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Bank balances exceed the FDIC insured limit

 

 

INTRODUCTION

 

      This report presents our financial statement audit for the Physicians and Surgeons, Inc. for the year ended June 30, 2005, and its compliance examination for the two years ended June 30, 2005.

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

ACCOUNTS RECEIVABLE REPORTING ERROR

 

      P&S did not properly accrue an accounts receivable related to an agreement with the Illinois Department of Healthcare and Family Services (IDHFS), known as the Department of Public Aid through June 30, 2005.

 

      P&S has entered into an agreement with IDHFS to facilitate the claiming of federal financial participation matching funds.  The agreement was signed and allowable costs from FY02 were submitted during FY03.  Furthermore, annual cost statements for FY03, FY04 and FY05 were submitted to IDHFS during December of 2003, 2004 and 2005, respectively. 

 

      P&S did not accrue any receivables resulting from this agreement during the years ended June 30, 2003, 2004 or 2005.  Accrued receivables should have been recorded in the amount of $2,340,302, $1,630,489 and $2,049,819 for these years, respectively.  Consequently, the financial statements for June 30, 2004 have been restated, and an adjustment has been posted to the FY05 statements. (Finding 1, pages 13 – 15)

 

      We recommended, and P&S management agreed, to establish procedures to assess and document proper accounting treatment of agreements with third parties, so that revenues and expenses are recorded in the proper financial period.  Furthermore, P&S agreed with the restatement and adjustment to the FY04 and FY05 financial statements, respectively, and will continue to make an estimate in future years for this receivable.

 

 

CASH CREDIT RISK

 

      P&S continues to consistently maintain a cash account with a bank balance greater than the Federal Deposit Insurance Corporation’s (FDIC) insured amount of $100,000.

 

      At June 30, 2005 and June 30, 2004, the uninsured balances were $2,922,351 and $506,327, respectively.

 

      Prudent business practices require that assets not be subject to uninsured risk. (Finding 2, page 16). 

 

      We recommended that P&S structure its bank accounts whereby the bank balance at an individual bank is either less than $100,000 or obtain additional collateral for amounts in excess of the FDIC insurance.  P&S agreed, given the recent increase in the uninsured balance, to work with their banking representative to implement a cash management program which will reduce the level of risk. 

 

      Agency responses were provided by Mr. Peter Cadwell, Chief Financial Officer for Physicians and Surgeons, Inc.

 

AUDITORS' OPINION

 

      Our auditors stated the June 30, 2005 financial statements of the Physicians and Surgeons, Inc. are fairly presented in all material respects.

 

 

 

___________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:KAL:pp

 

SPECIAL ASSISTANT AUDITORS

 

      Kerber, Eck & Braeckel LLP were our special assistant auditors for this engagement.