I would argue that the audit approach of the Office of the State Auditor, Financial Audit and Compliance Division, County Audit Section with regards to non-compliance with GASB 61 is fundamentally flawed:
The Financial and Compliance Audit Division, the largest division in the agency, is divided into five sections: Education Audit Section, State Agency Audit Section, County Audit Section, Electronic Data Processing (EDP) Audit Section and Report Processing Section. This division is responsible for conducting and overseeing audits of public entities.
The audit and inherent risks contained in the County audit is at owned hospital component units for those counties that have them, as they are magnitudes larger financially than the primary government. They have also been allowed to operate in secret by law, which is a red flag in my opinion in terms of fraud risk assessment. As a matter of Governmental GAAP, this would be one of the basic reasons GASB 34 (now GASB 61) was promulgated as the overall financial risk would lie with the larger entity, oftentimes a “component unit” whose failure would cause far more financial carnage than the failure of the primary government. We’re seeing this play out over in Jackson County right now.
Currently in Mississippi, the Auditors office allows the counties to not consolidate their component unit hospitals, Forrest Co and Jackson Co being two examples, with the OSA or private county audit firm expressing adverse opinion on the component unit column of a multi-column financial presentation. The opinion is so complicated as to be next to worthless to all but the CPA practitioner community and lawyers.
To the extent the taxpayer backed financial guarantee related to their hospitals at the county level is material to the Primary government and unrecognized, County auditors are skating on very thin ice from a liability standpoint with such a presentation, which I would argue is fundamentally misleading. I would hope the gang up in Jackson would be having this discussion internally but based on an Anita Lee story from a few months back my guess would be no for reasons I will not elaborate upon. I’d be happy to be proven wrong there.
None of this is a comment bump folks but I needed Mr. Pickering’s attention. I’d like to point out all these cultures of corruption are happening on your charge and watch sir. From chat gres in comments:
Back to SRHS and the compliance department.
Stephanie Barnes Taylor was the Chief of Legal Services and the Compliance Officer for SRHS until 2014.
In 2010 SBT founded The Fruition Group LLC.
The Fruition Group reportedly offered a 12 week leadership development course offered internally to SRHS employees. “The Fruition Group is offering a 12 week leadership development course aimed at helping people find and develop the leader within them. The class was offered internally to Singing River Health System employees and has graduated 3 successful classes since 2010. Many of the graduates have since then attained promotions or otherwise expanded their performance excellence. this awesome learning experience will be offered to the public beginning January 14, 2013.” [ref 1]
The Fruition Group website features endorsements from a “Lena Crain, HR Director”: “The class material is excellent and Stephanie does a great job presenting it passionately. I think the impact of the training will be in how much the learner actually implements the information and knowledge into his/her daily life.” Another endorser is a “Celeste Oglesby”: “The class reenergized me and emphasized to the participants the commitment we must make to excellence for the benefit to self, family, community, and work.” A number of the other names endorsing are apparently SRHS employees. [ref 2]
Is this an example of typical world class practice? Is it typical for a compliance officer to establish a side business, author a book, and then apparently have the side business train employees of the business? Does the apparent use of endorsements from employees to further market the program add to the awesomeness and complete the compliant feedback loop?
Curious to hear what others think about this. Perhaps I misunderstand and this is really a world class health system compliance practice. I’m certainly not a Harvard trained expert.
The only thing I could add is that in a culture of corruption, all the major players are dirtied up so everyone has something on everyone else. It enforces discipline on the enterprise. And as I predicted, the muck is beginning to fly because chat gres asks some darn good questions.
Luckily for everyone the FBI is there and CEO Kevin Holland claims he sure is happy about that. Time will talk there.