HomeMy WebLinkAbout810511.tiff q
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Weld Mental
Health Center, Inc.
1306 11th Avenue Greeley, Colorado 80631 353-3686
October 13, 1981
Don Warden, Director of Finance
Weld County
Centenniel Building
Greeley, CO 80631
Dear Mr. Warden:
Enclosed please find our audit for Fiscal Year 1981-82. We
respectfully request our quarterly share of cash for the 4th
quarter.
Sincerely,
Arlyce M. Trossen, Business Manager
Weld Mental Health Center, Inc.
AMT:ls
Enc.
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Branch Offices: Stepping Stone 353-3686, In-Touch Counseling 857-2723, Horizons 353-3900
Certified Public Accountants
To The Board of Directors of
Weld Mental Health Center, Incorporated
We have examined the balance sheets of Weld Mental Health Center,
Incorporated as of June 30, 1981, and the related statements of support,
revenues and expenditures, and changes in fund balances for the year
then ended and our report thereon, dated August 27, 1981, expressed
an unqualified opinion on those statements. Our examination was made
in accordance with generally accepted auditing standards and, accordingly,
included such tests of the accounting records and such other auditing
procedures as we considered necessary in the circumstances.
in connection with our examination, nothing came to our attention that
caused us to believe that the Center's clients did not receive ser-
vices as reported in the client's accounts.
Thi,3 report is solely for the use of the Center's management and the
Division of Mental Health, Department of Institutions, State of
Colorado.
•
August 27, 1981
..Grrz-791onS; X9..dree44.4.4v 7 jadiamaito art.
Simmons, Pedersen & Schoonover, Inc.
A
1320 South College
Fort Collins, Colorado 80524
303/221-1130 667-4911
Certified Public Accountants
To The Board of Directors
Weld Mental Health Center, Inc.
Greeley, Colorado 80631
We have made a study and evaluation of the statistical information
system of Weld Mental Health Center, Inc. as of June 30, 1981, for re-
cording and appropriate reporting of:
- Client admissions reported by age grouping and target groupings
- Types and amounts of direct client services rendered
- Consultation and education services
- Case management services
Our study and evaluation was conducted in accordance with standards
established by the American Institute of Certified Public Accountants and
specific auditing standards promulgated by the Division of Mental Health,
Department of Institutions, State of Colorado, and included such tests
as we deemed necessary in the circumstances. Under the auditing standards
adopted by the Division of Mental Health, the purpose of such evaluation
is to determine the statistical systems' reliability for accurately and
completely documenting and reporting client workload data and other data
required by The Division of Mental Health. Such reliability is dependent
upon adoption and utilization of appropriate internal control measures
within the statistical systems.
The management of Weld Mental Health Center, Inc. is responsible
for establishing and maintaining a system of internal statistical control.
In fulfilling this responsibility, judgments by management are required
to assess the expected benefits and related costs of control procedures.
The objective of internal statistical control is to provide reasonable,
but not absolute, assurance of reliable documentation of client admissions
and discharges and services rendered. The concept of reasonable assurance
recognizes that the cost of a system of internal statistical control should
not exceed the benefits derived and also recognizes that the evaluation of
these factors necessarily requires estimates and judgments by management.
Because of inherent limitations in any system of internal statistical
control, errors or irregularites may occur and not be detected. Also, A
projection of any evaluation of the system to future periods is subject
to the risk that procedures may become inadequate because of changes in
conditions, or that the degree of compliance with the procedures may
deteriorate.
1520 South College
Fort Collins, Colorado 80524
303/221-1130 667-4911
In our opinion, formulated on the basis of our evaluation of the
statistical records and subject to the conditions described in the two
immediately preceding paragraphs, the statistical information systems of
Weld Mental Health Center, Inc. in effect at June 30, 1981, taken as a
whole, incorporate and utilize appropriate measures to promote reliable
documentation of:
- Client admissions reported by age groupings ethnicity and chronicity
- Types and amounts of direct client services rendered to clients
(enrolled and unenrolled)
- Consultation and education services rendered
- Case management services
This report is solely for the use of the Center's management and
The Division of Mental Health, Department of Institutions, State of
Colorado.
/7. /
August 27, 1981
Simmons, Pedersen & Schoonover, Inc.
0
FINANCIAL STATEMENTS AND INFORMATION
TABLE OF CONTENTS
WELD MENTAL HEALTH CENTER i_INCORPORATED
YEAR ENDED .1UNE 30, 1981
WITH COMPARATIVE TOTALS FOR 1980
Page
Accountants' Opinion 2
Balance Sheets 3
Balance Sheets 4
Statement of Support, Revenue and
Expenses and Changes in Fund Balance 5
Notes to Financial Statements 6
Accountants' Opinion on
Supplementary Information 10
Statement of Functional Expense 11
Schedule of Income With Budget
Comparisons 13
Schedule of Personnel Expenses With
Budget Comparisons 14
Schedule of Operating Expenses With
Budget Comparisons 15
Management Letter 16
i.esponse to M.-,nagement Letter 19
Certified Public Accountants
ACCOUNTANTS' OPINION
To The Board of Directors of
Weld Mental Health Center, Incorporated
We have examined the balance sheets of Weld Mental Health Center,
Incorporated as of June 30, 1981 and 1980, and the related statements
of support, revenue and expenses and changes in fund balances for the
years then ended. Our examinations were made in accordance with gen-
erally accepted auditing standards and, accordingly, included such
tests of the accounting records and such other auditing procedures
as we considered necessary in the circumstances.
In our opinion, the accompanying financial statements present
fairly the financial position of Weld Mental Health Center, Incorpor-
ated as of June 30, 1981 and 1980, and the results of its operations
and the changes in its fund balances for the years then ended, in
conformity with generally accepted accounting principles applied on
a consistent basis.
August 27, 1981
Simmons, Pedersen & Schoonover, Inc.
A
1520 South College
Fort Collins,Colorado 80524
303/221-1130 667-4911
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NOTES TO FINANCIAL STATEMENTS
June 30, 1981
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PROPERTY AND DEPRECIATION
Property is recorded at cost. Depreciation is taken on Center
— owned fixed assets in accordance with industry guidelines. The
straightline method is used with an average estimated useful life
of ten years.
INVENTORY
Inventory is valued at cost using the FIFO (first-in, first-out)
method.
ACCOUNTING/AUDITING GUIDELINES OF THE DIVISION OF MENTAL HEALTH
-- The Center follows the accounting/auditing guidelines set forth
by the Division of Mental Health, State of Colorado.
2. RESTRICTED CASH
Represents donations for use by specified programs administered by
the Center.
3. NOTES PAYABLE
Notes payable consisted of the following as of June 30:
1981 1980
LONG- LONG-
CURRENT TERM CURRENT TERM
A 5.5% installment note
payable to Burroughs
Corporation, due December
1, 1981, collateralized
by equipment with a cost
of $15,976, and a book
value of $ 8,786, payable
in monthly installments of
$257 including interest. $ 1,268 $ - 0 - $ 2,925 $ 1,278
A 6. 5% installment note
payable to Xerox, due
August 1, 1983, collat-
eralized by a purchase
money security in equipment
with a cost of $7,940, and
a book value of $5,161,
payable in monthly payments
of $139 including interest. 1,492 1,867 1,390 3,479
TOTAL $ 2,760 $ 1,867 $ 4,315 $ 4,757
— Maturities of long-term debt for the next three years are as follows:
Year Amount
1981-82 $1,492
1982-83 $1,592
1983-84 $ 275
WELD MENTAL HEALTH CENTER, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
June 30, 1981
4. DONATED MATERIALS AND SERVICES
Donated materials and supplies are reflected as public support in the
— accompanying statements at their estimated values at June 30, 1981.
Donated services for volunteer employees are recorded in accordance
with Division of Mental Health accounting guidelines. Donated services
— for hospital care are recorded at the fair market value of the service
as billed by the local hospital. The services recorded for the fiscal
year ended June 30 are as follows:
1931 1980
Volunteer Services $ 16,136 $ 13,983
Hospital Services 43,526 30,223
TOTAL $ 59,662 $ 44,206
5. ALLOCATION OF ADMINISTRATIVE COST CENTER
Administrative costs are allocated to the direct service cost centers
based on a percentage of the cost center to the total service costs.
6. FIXED AND VARIABLE ANNUITY
The Center contributes $40 for each employee covered by social
security and contributes the equivalent of social security for
employees not covered by social security. The plan is available to
all employees who have completed one year's employment as of each
July 1 or January 1.
7. REVENUE SHARING
During the fiscal year ending June 30, 1981 and 1980, the Center was
a secondary recipient of General Revenue Sharing Funds through the
State of Colorado. Seconda,:y recipients are required to be audited in
accordance with generally accepted auditing standards and also to make
certain assurances concerning the use of these funds. The following
are the required assurances:
a. Concerning Civil Rights: That the applicable portion
of Audit Guide and Standards for Revenue Sharing . . .
Recipients section 11, part C, subpart E have been
adhered to.
b. Appropriate controls governing the use of revenue
sharing funds are no different than those used for
any other funding source.
c. Revenue Sharing funds were not used for lobbying.
d. That the citizens of the area, through their appointed
Board of Directors, have :::,d the opportunity to
present oral and written comments and to ask questions
concerning the proposed use of revenue sharing funds.
7
WELD MENTAL HEALTH CENTER, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
June 30, 1981
8. CHANGE IN FINANCIAL REPORTING
Prior to fiscal year 1981, the computerized accounting system used
by Weld Mental Health Center, Incorporated was not programmed to
report actual bad debts as a separate expense item. Write-offs
were offset directly to patient revenues. This resulted in both
— patient revenues and bad debts for fiscal year 1979-80 being under-
stated by an equal amount.
8
SUPPLEMENTARY
INFORMATION
A
9
Certified Public Accountants
ACCOUNTANTS' OPINION
ON
SUPPLEMENTARY INFORMATION
To The Board of Directors of
Weld Mental Health Center, Incorporated
Our examination of the basic financial statements presented in the
preceding section of this report was made primarily to form an opinion
on such financial statements taken as a whole. Supplementary information
contained in the following pages is not considered essential for the
fair presentation of the financial position of the Center, the results
of its operations and the changes in its fund balances in conformity
with generally accepted accounting principles. However, the following
data were subjected to the audit procedures applied in the examination
of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements
as a whole.
August 27, 1981
c.
Simmons, Pedersen & Schoonover, Inc.
1510 South College
Fort Collins,Colorado 80524
303/111-1130 6674911 1 Q
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Certified Public Accountants
To The Board of Directors of the
Weld Mental Health Center, Incorporated
We have examined the financial statements of Weld Mental Health Center,
Incorporated for the year ended June 30, 1981, and have issued our opinion
thereon dated August 27, 1981. As a part of our examination, we made a
study and evaluation of the Center's system of internal accounting control
to the extent we considered necessary to evaluate the system as required
by generally accepted auditing standards. Under these standards, the
purposes of such evaluation are to establish a basis for reliance on the
system of internal accounting control in determining the nature, timing,
and extent of other auditing procedures that are necessary for expressing
an opinion on the financial statements and to assist the auditor in
planning his examination of the financial statements.
The objective of internal accounting control is to provide reasonable,
but not absolute, assurance as to the safeguarding of assets against loss
from unauthorized use or disposition, and the reliability of financial
records for preparing financial statements and maintaining accountability
for assets. The concept of reasonable assurance recognizes that the cost A
of a system of internal accounting control should not exceed the benefits
derived and also recognizes that the evaluation of these factors necessarily
requires estinazes and judgements by management.
1520 South College
Fort Collins, Colorado 80524
303/221-1130 667-4911 16
There are inherent limitations that should be recognized in con-
sidering the potential effectiveness of any system of internal accounting
control. In the performance of most control procedures, errors can result
from misunderstandings of instructions, mistakes of judgement, carelessness,
or other personal factors. Control procedures whose effectiveness depends
-- upon segregation of duties can be circumvented by collusion. Similarly,
control procedures can be circumvented intentionally by management either
with respect to the execution and recording of transactions or with respect
to the estimates and judgeuents required in the preparation of financial
statements. Further, projection of any evaluation of internal accounting
control to future periods is subject to the risk that the procedures
may become inadequate because of changes in conditions and that the
degree of compliance with the procedures may deteriorate.
Our examination of the financial statements made in accordance with
generally accepted auditing standards, including the study and evaluation
-- of the Center's system of internal accounting control for the year ended
June 3U, 1981, that was made for the purposes set forth in the first
paragraph of this report, would not necessarily disclose all weaknesses
in the system because it was based on selective tests of accounting
records and related data. However, such study and evaluation disclosed
— the following conditions that we believe to be weaknesses for which correct-
tive action by management may be practicable for the circumstances.
ACCOUNTS RECEIVABLE AND BAD DEBTS
Due to the nature and purpose of the services rendered by Weld Mental
— ry
Health Center, Inc. , and management policy of rendering service regardless
of ability to pay, the write-off percentage of accounts receivable averages
between 21% and 36%. While this average is not unusual for the industry,
close management supervision should be maintained over outstanding accounts
17
receivable and the allowance for doubtful accounts.
It is our recommendation that upper management review monthly the status
of long outstanding accounts receivable and investigate reasons for non-payment.
An evaluation should be made as to probability of collection. Accounts re-
- ceivable and the allowance for doubtful accounts should be adjusted periodically
to reflect these evaluations.
Periodic review of accounts receivable would provide management with
a more concise picture of receivables and collections and provide for tighter
control. Management review and write-off of uncoliectible receivables would
also reduce the probability that collections of long-outstanding receivables
may not be recorded or that possible collection is not being pursued.
VOLUNTEER TIME AND PROGRAM COST DOCUMENTATION
it was noted during our examination that documentation of volunteer
time reported was often not retained by those responsible for the cost
programs. It was also observed that certain team leaders were not reporting
costs or giving documentation to the accounting department on a timely
basis. Team leaders should be made aware of the importance of accurate and
timely record-keeping and their responsibility for documentation of allowable
expenditures should be emphasized.
The foregoing conditions were considered in determining the nature,
timing and extent of audit rests to be applied in our examination of the
financial statements, and this report of such conditions does not modify our
opinion dated August 27, 1981, on such financial statements.
August 27, 1981 >11. ` a aft_
Simmons, Pedersen & Schoonover, Inc.
18
't Weld Mental
d ,. r.
- 'M Health Center, Inc.
2. 1306 11th Avenue Greeley, Colorado 80631 353-3686
September 23, 1981
Simmons, Pederson & Schoonover, Inc.
1520 South College
Fort Collins, CO 80521
In answer to the corrective actions suggested by Simmons, Pederson & Schoonover,
Inc. , we submit the following:
Accounts Receivable and Bad Debts
We are in the process of formulating a procedure format to set up an overdue
accounts disposition project meeting on a monthly basis with individual program
directors to review accounts receivable for each cost center under their direction.
— Accounts will be reviewed, discussed, and referred to the attending clinician for
input as to probability• of collection and action to be taken. Followup for final
disposition will be in five working days. This procedure should enable us to clean
up long outstanding accounts presently on the ledgers, keep them active and current
for monthly adjustment of the allowance for uncollectibles and actual bad debts,
and further involve both program director and clinician in timely decisions as
well as the responsibility for setting, reviewing, and collecting receivables.
While audits are not conducted for the purpose of praise for a Center's accomplishments,
Weld Mental Health Center would like to call attention to the fact that patients
— fees and third party payors have risen by approximately 254% across the board since
1975 and 101% from FY 80 to FY 81. This further recommended control step should
complete a process for maximizing efforts for third party funding.
Volunteer Time and Program Cost Documentation
— In July, 1981, Weld Mental Health Center introduced a new reporting document called
the Staff Activity Log. This daily report reflects the delivery of all direct
service time, and volunteers file this report as well as paid employees. The
— subsequent computer printout breaks out volunteer time monthly by program. It
is this documentation which will be used to accrue monthly volunteer donated
services and stands as its own record, doing away with hit or miss time sheets.
•
Branch Offices: Stepping Stone 353-3686. In-Touch Counselino 857-2723. Horizons 353-3900
Simmons, Pederson & Schoonover, Inc.
September 23, 1981
Page 2
Additionally, the management team of the staff was enlarged td include all directors
with cost programs. This team meets each week on a regular basis and p.r.n. on
unforeseen events needing decisions before a regular meeting. All aspects of each
cost center's operations, including budget variances by program, are discussed
and disposition made by majority or general consensus. Issues discussed and
decisions reached reinforce awareness of their responsibility to the Center as
a whole.
Sincerely,
7 Cc , i <-7
Arlyce M. Trossen
Business Manager r
Weld Mental Health Center, Inc.
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