CCMSD financials given clean bill of health

Crook County Medical Services District (CCMSD) was given a relatively clean audit report last week, courtesy of Scott Nelson of Eide Bailly of Montana.

Only two issues were noted in the report, neither of which came as a surprise. Both, said Nelson, are common issues for smaller medical organizations.

The first was a concern that has been noted over the years for almost every governing body receiving an audit in the county: lack of complete segregation of duties.

This occurs when an entity lacks the employees to be able to assign a different person to every individual stage of a transaction. The best case scenario is for a different person to, for example, place an order, record the transaction, reconcile the balance and sign on the account.

Separation of duties is important because it decreases the potential for fraud or an error not being caught. The lack of a complete separation is a repeat comment in CCMSD’s annual audits, Bailly said – and it’s not a problem that’s unique to this district.

“These are pretty standard on nearly all our healthcare clients,” he said.

The limited size of the office staff makes it difficult to have every single stage completed by a different person, Nelson said.

“The best mitigating control…is to use the board reviewing those financial statements,” he said. The board can then question financial transactions that don’t make sense, adding a layer of oversight to hopefully catch mistakes or wrongdoing.

The second issue noted was that the auditor was partly responsible for the preparation of the financial statements from which the audit was performed. Again, said Nelson, this is very common.

“We actually have very few clients that prepare a complete set of financials,” he said.

The issue is considered a weakness by default, according to Nelson.