Question

Your client, General Hospital, provides a wide range of healthcare services to “qualified” patients. In order to be a “qualified” patient, an individual must provide the hospital with a valid form of identification and a current insurance card. Before a patient can receive services, the hospital must verify that the insurance is current and the individual is covered on the plan.
On New Year’s Eve, an individual arrives at General Hospital with major burns from a firework accident. In need of immediate attention, the patient convinces the receptionist that he will fill out all the paperwork later and that he has valid insurance. The receptionist decides that the individual seems believable and admits the patient without checking the insurance to be valid but does receive a valid form of identification. After the patient received medical services related to the firework accident, the receptionist asked him to complete all the necessary forms and provide a current insurance card. At that time, the individual informs the receptionist that he does not have his insurance card with him but he will bring it to the hospital the next day. On January 2, the patient brings a copy of his current insurance card and the hospital verifies that the services he received are covered on his plan.
Use the criteria in FASB Statement of Financial Accounting Concepts No.5 and indicate when and/or how the client should recognize the revenue. Assume the company has a calendar year-end. Explain your answer. Additionally, what controls are in place and how would you audit these controls?



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  • CreatedJanuary 21, 2015
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