GUAM HOSPITAL AUDIT CITES QUESTIONABLE ACCOUNTING

admin's picture

By Gerardo R. Partido

SAIPAN, CNMI (Marianas Variety, April 5) - The fiscal year 2004 financial audit of the Guam Memorial Hospital Authority received a qualified opinion from the Office of the Public Auditor for the third year due to the inadequacies of the hospital’s accounting records.

The discrepancies include approximately US$35 million of accounts receivables written-off without board approval.

Other discrepancies found by Office of the Public Auditor include the following: US$15.6 million difference in the accounts receivable general and subsidiary ledgers; Significant differences in accounts receivable confirmations from third-party payors as compared to Guam Memorial Hospital Authority’s subsidiary ledger summary; Reconciliation not performed to identify the differences; US$2.2 million overstatement in the movable equipment control account; US$5.5 million understatement in the buildings control account; Inability to apply audit procedures as to the adequacy of the accounts receivable, the allowance for bad debts, and the contractual adjustments; and inability to form an opinion regarding the US$42.1 million in capital assets, net of accumulated depreciation, and the US$3.7 million depreciation expense.

According to the Office of the Public Auditor report released on Tuesday, the hospital’s operating losses of US$11 million in fiscal year 2004 and US$11.4 million in fiscal year 2003 raise doubt as to the Authority’s ability to continue going without continued subsidies from the government of Guam.

Guam Memorial Hospital Authority has already defaulted on its US$6.5 million note payable to the Government of Guam Retirement Fund and is in arrears on unpaid retirement contributions of approximately US$10 million as of September 30, 2004.

The hospital is also US$551,581 in arrears on principal and interest on its outstanding note payable of US$1.1 million to Guam Power Authority.

Moreover, Office of the Public Auditor pointed out that the hospital continues to experience negative cash flows because of the sluggish collection of receivables. While Guam Memorial Hospital Authority has a total US$102.4 million in receivables, the allowance for doubtful receivables was just US$76.2 million.

As a result, Office of the Public Auditor now estimates that Guam Memorial Hospital Authority can only collect 26 cents of every dollar in receivables, while 74 cents remain doubtful. Still, this is an improvement from fiscal year 2003’s collection rate of only 24 cents of every dollar in receivables.

April 6, 2006

Marianas Variety: www.mvariety.com

Rate this article: 
No votes yet

Add new comment