Preparing for Financial Audits: A Checklist for Healthcare Providers

All healthcare providers in the UK operate under highly regulated environments. Whilst health, safety and safeguarding are major concerns, they also have tight financial restrictions as well. This is why financial audits are essential for healthcare providers to ensure transparency, accountability and compliance.

In order to help healthcare organisations understand financial audits and prepare for them effectively, Rogers Spencer Chartered Accountants have put together a useful guide with a comprehensive checklist. This guide should help you to take a proactive approach to ensuring that your financial audits are smooth and manageable.

Why financial audits matter for healthcare providers

A financial audit should be a systematic review of all financial records and practices. It will not only ensure that all finances are accurate, but also that they are compliant with any regulations and allow stakeholders to check the overall financial health of the organisation. It will look at things like financial statements, billing processes and adherence to accounting standards to identify any potential risks as well as areas for improvement.

A financial audit is very important when it comes to maintaining trust with the stakeholders, whether they are patients, suppliers or funders.

If you are not fully prepared for a financial audit then you are at risk of things like fines and penalties, as well as reputational damage for the organisation. A successful audit will go a long way towards boosting the long-term stability and credibility of your facility.

The audit process

It is important that you fully engage with the auditors during the process. This will start with gathering the financial records and documents for the organisation including access to accounting software being used; invoices, contracts and bank statements. The auditors will then examine any supporting documentation like patient records, billing information and payment details. All of this data will be analysed so that they can identify any trends, anomalies or potential areas of concern.

A detailed report will then be put together to outline the results of the audit, including any discrepancies, errors or areas of non-compliance that have been identified. These results will be shared with management and those in charge of governance.

As part of the process, internal staff will be needed to support the auditors and provide the relevant information. This will include financial staff as well as any practice managers and clinical leads. For any financial audit, being prepared is key, so ensure all your documentation is ready and that communication is clear in order to reduce any delays or disruption during the process.

The pre-audit checklist

Organising financial documentation

You should ensure that auditors have access to all important financial documentation, including the accounting software, bank statements, invoices, receipts, payroll records and expense claims. Try to make sure that these are all in order and easily accessible, and wherever possible try to digitise these records to provide easier access.

Verify compliance

You need to demonstrate that your organisation is compliant with any necessary regulations. This means ensuring that your tax returns are accurate and submitted on time, and that any VAT and PAYE payments are all up to date. You also need to be aware of any regulations that are specific to healthcare and ensure that these have also been met.

Reconcile accounts

It is a good idea to confirm that all bank balances match ledger records and that if any discrepancies are identified that they can be explained or resolved.

Prepare stakeholders and teams

There may be a number of different people involved in the financial audit process, so you should make sure that they are all fully prepared. You therefore need to communicate the audit timeline and objectives to everyone who is involved and assign roles so that the staff managing finances, clinical records and administration are clear on their roles, and the auditors know who they are. It can also be worthwhile undertaking a training process to ensure that staff will understand all of the requests made by the auditors.

Perform an internal audit

They say that practice makes perfect, and this can also be the case with a financial audit. Try to conduct your own audit before the official one to help you identify any inconsistencies and errors early. This gives you the opportunity to correct the issues before the external review begins.

Maintain clear documentation of grants, fundraising and donations

If you have received any restricted or unrestricted funds, then you need to ensure that these have been correctly accounted for. You will also need to provide evidence of how these grants and funds were used.

Maintain records of medical assets and capital expenditure

You will need to show the value of any medical equipment property and fixed assets, as well as any depreciation that might have occurred.

Ensuring a financial audit run smoothly

A financial audit can be a stressful time, so it is important you do all you can to help the process run smoothly. Make sure that you communicate openly and build a collaborative relationship with your auditors, as this will make things a lot easier for everyone to deal with. You should also try to take a digital first approach by using accounting software and cloud platforms that offer easy access and full traceability.

By performing your own monthly or quarterly internal audit, you can try to stay on top of any problems and feel fully prepared when an external review comes around. You also need to ensure that you are up to date with all best practices and regulations for healthcare financial audits. When things change, offer training to all affected staff members so that you can show a pattern of continuous development.

Preparing for an audit can improve your transparency as well as building trust and strengthening the financial foundation of your healthcare practice. By taking an organised approach and implementing a strong internal review process you can reduce much of the stress that is involved, as well as saving time and creating opportunities for long term improvement.