Audit: BJC revenues overestimated by $3.8 million

What makes that figure stand out is that shortly after the fiscal year ended, then chief financial officer Bill Williams projected a much smaller loss for the year of $190,000.

The difference, according to current CFO Ray Leadbetter, was an overenthusiastic estimation of how much of the medical center’s accounts receivables would actually be received.

The chairman of the finance committee thinks some of the 2008 losses should have been attributed to prior years.

“We were a little disappointed that some of the adjustments could not go to previous years,” noted Rick Massey, who pointed out that the problems began before 2008.

In fact, an additional $888,000 did get moved to a prior year.

The auditors concluded that the financial statements for 2007 contained an error of that amount - again in the projection of collectible accounts receivable. When the auditors shifted that amount back to 2007, what had been reported as a $126,000 profit became a $756,000 loss.

In all, over the two years, the auditors made $3.8 million in “adjustments” to the medical center’s statements of revenues.

“These restatements indicate that the authority’s system of internal control over financial reporting did not prevent the errors from being made or detect them prior to the issuance of the financial statements, indicating a material weakness in the authority’s financial reporting process.”
Additionally, “We concluded there is a material weakness in the authority’s control policies and procedures required to be reported under professional standards,” the auditors wrote.

The process of reviewing accounts “that require significant management judgments and significant estimates ... does not have adequate internal controls,” the audit concludes. “Each of these estimates can be adjusted by the chief financial officer without any further review by management and without any supporting documentation ... We feel that the lack of oversight in this area constitutes a material weakness in internal control.”