Internal audit is a process that evaluates an organization’s operations, governing policies, risk management and quality control practices. The finery of an internal audit is the fact that it is done by an independent and unbiased organization outside of the management team of the organization being audited.
NEED OF A HOSPITAL INTERNAL AUDIT
- A large number of hospitals in India are engaging in internal audit to evaluate their hospital’s operational policies and risk management practices along with its financial performance.
- This move is also enthused by the increasing number of medico-legal and litigations cases filed against hospitals in India.
- Major areas like in-patient billing, inventory management & purchase, quality assurance & compliance management and finance department are often under the hospital internal auditor’s scanner.
- Furthermore, an internal audit helps augment hospital revenue by eliminating revenue leakages.
BENEFITS OF HOSPITAL INTERNAL AUDIT
- Internal audit search throughout the organization to appraise activities, at given sufficient time and resources.
- Internal audit are dedicated to improving systems rather than detecting errors.
- Hospital departments and processes that are evaluated are also improved.
- An internal audit brings a professional level of objectivity and independence to the facility.
- It helps in protecting the assets and reduce the possibility of fraud
- It Improves the efficiency in operations
- It Increases financial reliability and integrity
- Ensuring compliance with laws and statutory regulations
- Establishing monitoring procedures
AREAS OF FOCUS IN HOSPITAL INCLUDE
- Revenue Cycle Processes
- Cash Management
- Physician Relationships
- Ethics and Compliance
- Accounts Payable Processing
- Policies and Procedures
- System Implementations
- External Audit Communications and Co-sourcing
- Other Areas Identified by Management
INTERNAL AUDIT PROCESS
The three phases of an Internal Audit Process cover governance, risk assessment and execution of the audit plan.
PHASE I – Internal Audit Governance
- Review the hospital audit committee charter and align it with the Standards set forth by the Institute of Internal Auditors.
- Develop the internal audit department and internal audit policies to establish the foundation for performing, documenting and reporting on assessments.
- Identify the reporting relationship between the internal audit function and hospital leadership.
PHASE II – Risk Assessment and Audit Planning
- Meet with the management team and the audit committee to start the risk assessment process.
- Conduct management surveys to help identify key risks to the hospital.
- Compile survey responses and prioritize risks based on management feedback and self-assessment tool.
- Create the internal audit plan of recommended audit areas to focus on.
- Present risk assessment report and internal audit plan to senior management and the Audit Committee.
PHASE III – Execute the Audit Plan
- Perform a review from the approved audit plan.
- Present audit findings and issue report to management.
- Review management’s action items to meet audit recommendations and present final report to the Audit Committee.
- Perform follow-up 60 to 90 days after receipt of action plans to assess management’s progress
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