The Importance of Internal Audit in Hospitals

The internal audit of a hospital is crucial for maintaining operational efficiency, compliance with laws and regulations, and managing risks effectively. This process involves a team of professionals, external consultants, and the oversight of the audit committee.

The Internal Audit Team in a Hospital

The internal audit team consists of various members who work together to ensure the hospital’s smooth operation:

Internal Auditors: These are professionals trained in auditing practices. They assess the hospital’s operations, financial reporting, compliance with regulations, and risk management processes. Audit Committee: Made up of members from the hospital’s board of directors or governing body, this committee oversees the internal audit function and ensures the independence and effectiveness of the auditors. External Consultants: Sometimes, hospitals engage external auditing firms or consultants to conduct audits, especially for specialized areas or when additional expertise is needed.

Compliance Audits: Ensuring Regulatory Adherence

Compliance audits are vital in ensuring that regulatory bodies and industry internal procedures are followed. These audits help maintain the hospital’s compliance and reduce potential headaches. They are resource-intensive, but the investment is worth it. During the pandemic, covid compliance audits in India took several actions to ensure adherence to safety protocols and maintain operations.

Modern Internal Auditing: Beyond Verification

Modern internal auditors are not just verifiers; they act as consultants, dedicated to improving systems rather than just detecting errors. Their goal is to leave every place they evaluate a little better than they found it. CHC Consulting's internal audit process is designed to:

Identify key risks that could prevent the company from meeting its objectives Determine if internal controls are operating effectively and efficiently Keep the Board and the Audit Committee informed throughout the assessment

Specific areas of focus include revenue cycle processes, cash management, physician relationships, ethics and compliance, purchasing and receiving, financial operations, human resources, accounts payable processing, due diligence, policies and procedures, system implementations, external audit communications, and other areas identified by management.

The Internal Audit Process: Three Phases

The internal audit process involves three key phases:

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 charter 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 initiate 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 tools. Create the internal audit plan of recommended audit areas to focus on. Present the risk assessment report and internal audit plan to senior management and the Audit Committee.

Phase III: Execution of 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 reviews 60 to 90 days after receipt of action plans to assess management’s progress.

This structured approach helps ensure that the internal audit process is thorough and effective in achieving its goals.