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HOSPITAL SERVICE DISTRICT NO. 3 PARISH OF VERMILION. STATE OF LOUISIANA

D/B/A GUEYDAN MEMORIAL GUEST HOME

FINANCIAL REPORT

MARCH 3L 2009

Under provisions of state law, this report is a public document. A copy of the report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, v^here appropriate, at the office of the parish cler1< of court.

Release Date //Wf

C O N T E N T S

Page

INDEPENDENT AUDITORS' REPORT I and 3 ON THE BASIC FINANCIAL STATEMENTS

BASIC FINANCIAL STATEMENTS

Balance sheet 4 and 5 Statement of revenues, expenses and changes in net assets 7 Statement of cash flows 8 and 9 Notes to financial statements 10-18

SUPPLEMENTARY INFORMATION

Schedule of net patient service revenues 20 Schedule of operating expenses 21 - 23

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 25 and 26

Schedule of findings and responses 27 and 29 Schedule of prior year findings 30

4112 West Congress P.O. Box 61400 Lafayette, Louisiaiu 70596-1400 p h o a c : (337) 988-4930 Buc (337) 984-4574 www.bplb. com

Other Offices:

Crowley, LA

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OpelousM, l A

(337) 942-5217

Abbeville, LA

(337) 898-1497

N e w Ibefia, LA

(337) 364^554

Church point, LA

(337) 684-2855

Frank A. Stagno, CPA*

Scott J. Broussard, CPA*

L. Charlefl Abshire, CPA*

P. John Blanchet, i n , CPA*

Martha B. Wyatt. CPA*

MaryA.Ca9tme,CPA*

Joey L. Brcaux. CPA*

CraigJ. Viator, CPA*

Stacey E. Singleton, CPA*

John L. Istre, CPA*

Tricia D. Lyons, CPA*

Maiy T. Miner, CPA*

EhzabctbJ. Moreau, CPA*

Frank D. Bergeron, CPA*

R e t i r e d :

Sidney U Broussard, CPA 1925-2005

Leon KL Pochi , CPA 1984

James H . Preaux, CPA 1987

Erma R. \Calton, CPA 1988

George A. Lewis, CPA 1992

Gcraldinc J. Wimberiey, CPA 1995

Lawrence A. Cnuner, CPA 1999

Ralph Friend, CPA 2002

Donald W, Kelley, CPA 2005

George J. Trappey, III , CPA 2007

Terrel P. Dressel, CPA 2007

Herbert Lfmoine II , CPA 2008

BROUSSARD, PQCHE, LEWIS & BREAUX, L.L.P. C E R T I F I E D P U B L I C A C C O U N T A N T S

INDEPENDENT AUDITORS' REPORT

To the Board of Commissioners Hospital Service District No. 3 Parish of Vermilion, State of Louisiana D/B/A Gueydan Memorial Guest Home

Gueydan, Louisiana

We have audited the accompanying basic financial statements of Hospital Service District No. 3 of the Parish of Vermilion, State of Louisiana, d/b/a Gueydan Memorial Guest Home, a component unit of the Vermilion Parish Police Jury, as of March 31, 2009 and 2008, and for the years then ended, as listed in the table of contents. These fmancial statements are the responsibility of Hospital Service District No. 3's management. Our responsibility is to express an opinion on these fmancial statements based on our audits.

We conducted oiu" audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Govemment Auditing Standards issued by the Con^troUer General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the basic fmancial statements referred to above present fairly, in all material respects, the financial position of Hospital Service District No. 3 of the Parish of Vermilion, State of Louisiana, d/b/a Gueydan Memorial Guest Home, as of March 31, 2009 and 2008, and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Govemment Auditing Standards, we have also issued our report dated September 30, 2009 on our consideration of Hospital Service District No. 3 of the Parish of Vermilion, State of Louisiana, d/b/a Gueydan Memorial Guest Home's, intemal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of intemal control over fmancial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Govermnent Auditing Standards and should be considered in assessing the results of the audits.

Mtmtftetf o/ Afi'ericnn Jnsfmac of

$odci% {,f LPiiiMiitn;i CertiSi&a P i i h l i c A c: t:i7''"'-'""'"i

• A Profcision*! Accounting Corporabon

The Hospital Service District No. 3 of the Parish of Vermilion, State of Louisiana, d/b/a Gueydan Memorial Guest Home, has not presented management's discussion and analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not required to be part of, the basic financial statements.

http://www.bplb

This page intentionally left blank.

To the Board of Commissioners Hospital Service District No. 3 Gueydan, Louisiana

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic fmancial statements taken as a whole.

Lafayette, Louisiana September 30,2009

HOSPfTAL SERVICE DISTRICT NO. 3 PARISH OF VERMIUON, STATE OF LOUISIANA

D/B/A GUEYDAN MEMOIOAL GUEST HOME

BALANCE SHEETS

March 31, 2009 and 2008

ASSETS

2009 2008

CURRENT ASSETS Cash and cash equivalents Certificates of deposits

Patient accounts receivable, net of estimated uncollectibles of $43,532 and $73,264. for 2009 and 2008, respectively

Estimated third-party payor settlements Accrued interest receivable Other receivables Inventory Prepaid expenses

Total current assets

RESTRICTED ASSETS (debt services and capital facilities) Cash and cash equivalents Certificate of deposit Ad valorem tax receivable, net of estimated uncollectibles

of $0 and $1,567 for 2009 and 2008 Due from other govemmental agencies Accrued interest receivable

Total restricted assets

$

$

$

$

469,432

M00,31l

612,455

114.841

5,425

11,373

34,305 72,713

2,420,855

167,214

-

4,190

--

171,404

$

$

$

$

580,003

873,856

429,136

15.811

8.229

-29,364 75,225

2,011,624

137.342

92,197

10,101

868 542

241,050

CAPITAL ASSETS Property, plant and equipment, at cost, less accumulated depreciation

of $ 2,401,407 and $2,207390. for 2009 and 2008, respectively $ 1,826,780 $ 1,856.029

Total assets $ 4,419,039 $ 4,108,703

See Notes to Financial Statements.

2009 2008

LIABELITIES AND NET ASSETS

CURRENT LIABttJITES Accounts payable Accrued interest payable Accrued salaries and expenses Other payables Bonds payable - current

Total current liabilities

NET ASSETS Investment in capital assets, net of related debt Restricted for debt services and capital facilities Unrestricted

Total net assets

$

$

$

$

155,597

-103,072

15,693 -

274,362

1,826,780

171,404 2,146,493

4.144,677

$

$

$

$

85,445

1,216

101.260

14,828 140,000

342,749

1,716,029

239.834 1,810,091

3,765.954

Total liabilities and net assets 4,419,039 $ 4,108,703

HOSPITAL SERVICE DISTRICT NO. 3 PARISH OF VERMIUON, STATE OF LOUISIANA


STATEMENTS OF REVENUES, EXPENSES. AND CHANGES IN NET ASSETS Years Ended March 31,2009 and 2008

Operating revenues: Net patient service revenues (net of provision for bad debts

of $34,155 and $42,064, for 2009 and 2008, respectivley) Other operating revenue

2009

3,936,937 $ 34,791

2008

3,381,688 14,300

Total operating revenues 3,971,728 $ 3,395,988

Operating expenses; General and administrative Nursing services Housekeeping Dietary Plant operations Laundry Patient activity Consultants Clinic Medicare SNF and outpatient Depreciation

845,931 $ 1,012,517

171,048 349,059 245,425

92,952 61,321 58,088

318,763 558.518 194,017

797,283 926,988 117,827 332,992 226.830 121,078 49,613 26,395

351^89 270.623 194,607

Total operating expenses 3,907,639 $ 3,415.825

Operating income (loss) 64,089 $ (19.837)

Non-operating revenues (expenses): Ad valorem tax Interest revenue Donations Miscellaneous income Non-capital grant Interest expense

Total non-operating revenues (expenses)

Increase in net assets

Net assets, beginning of year

Net assets, end of year


$

$

$

$

222,745 26,855

1,125 58,845 11.373 (6,309)

314,634

378,723

3.765,954

4,144,677

$

$

$

$

196,482 34,346

6,676 41,335

-(13.310)

265,529

245,692

3,520.262

3,765,954

HOSPITAL SERVICE DISTRICT NO. 3 PARISH OF VERMILION, STATE OF LOUSIANA


STATEMENTS OF CASH FLOWS Years Ended March 31,2009 and 2008

2009 2008 CASH FLOWS FROM OPERATING ACTIVmES:

Receipts from and on behalf of patients Payments to suppliers and contractors Payments to employees Other receipts and payments, net

Net cash provided by operating activities

3,654,588 $ (1,825,077) (1,820,226)

35.656

44,941 $

3,383,240 (1.495,225) (1,739,337)

14.228

162.906

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES: Ad valorem taxes Non-capital donations Other

Net cash provided by non-capital financing activities

229,524 1,125

58,845

$ 197.314

6,676 41.335

289,494 $ 245,325

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Payments for the purchase of property and equipment Principal payments on bonds payable Interest paid on bonds payable

Net cash used by capital and financing activities

$ (164,768) $ (106,903) (140,000) (130,000)

(6,309) (13,310)

(311.077) $_ (250,213)

CASH FLOWS FROM INVESTING ACnvrTIES: Interest income Purchase of certificates of deposit

Net cash provided (used) by investing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning

Cash and cash equivalents, ending

$

$

$

$

30,201 $ (134,258)

(104,057) $

(80,699) $

717,345

636,646 $

34,222 (33,625)

597

158.615

558,730

717,345

(continued)

HOSPITAL SERVICE DISTRICT NO. 3 PARISH OF VERMILION, STATE OF LOUSIANA

D/B/A GUEYDAN MEMORL\L GUEST HOME

STATEMENTS OF CASH FLOWS Years Ended March 31, 2009 and 2008

2009 2008

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income (loss) Adjustment to reconcile operating income to net cash

provided by operating activities: Depreciation Provision for bad debts

(Increase) decrease in assets: Patient accounts receivable Prepaid expenses Inventories Third-party payor settlements

Increase (decrease) in liabilities: Accounts payable Accrued expenses Other payables

Net cash provided by operating activities

$

$

64,089

194,017 34,155

(217,474) 2,512 (4.941) (99,030)

70,152 596 865

44,941

$

$

(19.837)

194,607 42,064

(84,210) (4,724) 6,018

43,698

(18,389) 3,751 (72)

162,906

RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE BALANCE SHEET:

Cash and cash equivalents

Cash and cash equivalents in restricted assets

Total cash and cash equivalents

469,432 $

167,214

636,646 $

580,003

137,342

717,345




NOTES TO FINANCIAL STATEMENTS

Note I. Description of Organization and Summary of Significant Accounting Policies

Organization:

The Hospital Service District No. 3, Parish of Vermilion, State of Louisiana (Hospital District) is a political subdivision of the state created by an ordinance adopted by the Vermilion Parish Police Jury on November 19, 1988. The geographical limits of the District coincide with those of Ward No. 8 of Vermilion Parish. Members of the Board of Commissioners are appointed by the Vermilion Parish Police Jury. The District is operating under the name Gueydan Memorial Guest Home. It operates a 66-bed nursing home that cares for primarily the elderly located in Southwest Louisiana and a rural health clinic in Gueydan, Louisiana.

The accounting and reporting policies of the Hospital District conform to accounting principles generally accepted in the United States of America as applicable to govemments. Such accounting and reporting procedures also conform to the requirements of the industry audit guide. Audits of State and Local Govemmental Units. The Govemmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and fmancial reporting principles. The District applies all applicable Financial Accounting Standards Board (FASB) pronouncements and Accounting Principle Board (APB) opinions on or before November 30, 1989 in accounting and reporting for its proprietary fund operations unless those pronouncements conflict with or contradict GASB pronouncements.

Reporting entity:

As the goveming authority of the Parish, for reporting purposes, the Vermilion Parish Police Jury is the financial reporting entity for the Hospital District. Accordingly, the Hospital District was determined to be a component unit of the Vermilion Parish Police Jury based on GASB Statement No. 14, The Financial Reporting Entity. The accompanying fmancial statements present only the Hospital District.

Basis of accounting:

The accompanying basic fmancial statements of the Hospital District have been prepared in conformity with generally accepted accounting principles (GAAP) in the United States of America as applicable to govemmental entities. The Govemmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing govemmental accounting and financial reporting principles. In June 1999, the GASB unanimously approved Statement No. 34, Basic Financial Statements-and Management's Discussion and AnalysiS'for State and Local Govemments. GASB 34 established standards for extemal financial reporting for all state and local governmental entities, which included a balance sheet or statement of net assets, a statement of revenues, expenditures and changes in net assets, and a statement of cash flows utilizing the direct method of presentation. The statement requires the classification of net assets into four components-invested in capital assets, net of related debt; restricted expendable net assets; restricted nonexpendable net assets; and unrestricted net assets. Net assets invested in capital assets net of related debt consist of capital assets net of accumulated depreciation and reduced by the current balances of any outstanding borrowings used to finance the purchase or construction of those assets. Restricted expendable net assets are non-capital net assets that must be used for a particular purpose, as specified by creditors, grantors, or contributors extemal to the Hospital District Restricted nonexpendable net assets equal the principal portion of permanent endowments. Unrestricted net assets are remaining net assets that do not meet the definition of invested in capital assets net of related debt or restricted. These and other changes are reflected in the accompanying basic fmancial statements (including the notes to the financial statements).

10

HOSPITAL SERVICE DISTRICT NO. 3 PARISH OF VERMILION, STATE OF LOUISIANA



Note 1. Description of Organization and Summary of Significant Accounting Policies (Continued)

Method of accounting:

The Hospital District utilizes the proprietary fund method of accounting whereby revenues and expenses are recognized on the accrual method. The Hospital District's accounting and reporting procedures also conform to the requirements of Louisiana Revised Statute 24:514 and to the guide set forth in the Louisiana Govemmental Audit Guide, and the Audit and Accounting Guide - Health Care Organizations, published by the American Institute of Certified Public Accountants, and standards established by the Govemmental Accounting Standards Board (GASB), which is the accepted standard setting body for establishing governmental accounting and financial reporting principles.

Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents:

For purposes of the statement of cash flows, the Hospital District considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Under state law, the Hospital District may deposit funds in demand deposits, interest-bearing demand deposits, or time deposits with state banks organized under Louisiana Law or any other state of the United States, or under the laws of the United States.

Trade receivables and allowance for uncollectible accounts:

Trade receivables are carried at the original billed amount less an estimate made for uncollectible accounts based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for uncollectible accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Trade receivables are written-off when deemed uncollectible. Recoveries of trade receivables previously written-off are recorded when received.

Inventory:

Inventories are staled at the lower of cost or market, with cost has determined by the first-in, first-out, (FIFO) method.

11




Note I. Description of Organization and Summary of Significant Accounting Policies (Continued)

Property, plant and equipment:

Property is recorded at cost or, if contributed property, at their estimated fair value at time of contribution. Maintenance, repairs, and renewals of property are charged to expense as incurred. Major additions are capitalized. The sale or disposal of fixed assets is recorded by removing cost and accumulated depreciation from the accounts and charging the resulting gain or loss to income. The Hospital District maintains a threshold level of $1,000 or more for capitalizing fixed assets. Depreciation is computed using the straight-line method based on the useful lives of the assets. The following estimated useful lives are generally used:

Building 20-30 Fumiture and fixtures 3-20 Capitalized interest 30 Building improvements 10-15 Start-up costs 2

Net patient service revenues:

The Hospital District has agreements with a third-party payer, which includes govemment programs which the Hospital District is paid based upon established charges, the cost of providing services, predetermined diagnosis rates, fixed per diem rates or discounts from established charges. Revenues are recorded at estimated amounts due from patients and third-party payers for the services provided.

Net patient service revenue is reported at estimated amounts realizable from patients, the third-party payer, and other for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payors. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined. The Hospital District provides care to patients even though they are covered by contractual payment arrangements that do not pay full charges or may lack inadequate insurance. As a result, the Hospital District is exposed to credit risks. The Hospital District manages such risks by providing appropriate allowances. The allowances are evaluated on a regular basis and are based upon management's periodic review of the collectibility of the accounts considering historical experience, the nature and volume of the accounts and the agreement with the prospective third-party payer.

Grants and donations:

Revenues from grants and donations (including capital contributions of assets) are recognized when all eligibility requirements, including time requirements are met. Grants and donations may be restricted for either specific operating purposes or for capital purposes. Amounts that are unrestricted or that are restricted to a specific operating purpose are reported as non-operating revenues. Amounts restricted to capital acquisitions are reported after non-operating revenues and expenses.

Income taxes:

The Hospital District is a political subdivision and exempt from taxes,

12


D/B/A GUEYDAN MEMORLAL GUEST HOME



Operating revenues and expenses:

The Hospital District's statement of revenues, expenses and changes in net assets distinguishes between operating and non-operating revenues and expenses. Operating revenues result from exchange transactions associated with providing health care services-the Hospital District*s principal activity. Non-exchange revenues, including taxes, grants and contributions received for purposes other than capital asset acquisition, are reported as non-operating revenues. Operating expenses are all expenses incurred to provide health care services, other than financing costs.

Advertising:

The Hospital District expenses advertising cost as incurred. Advertising expense for the years ended March 31, 2009 and 2008 totaled $ 10,294 and $6,249, respectively.

Restricted resources:

When the Hospital District has both restricted and unrestricted resources available to finance a particular program, it is the Hospital District's policy to use restricted resources before unrestricted resources.

Compensated absences:

All full-time employees with one full year of continuous employment with the Hospital District cam up to a maximum of 10 days of paid time off. A maximum of 20 days may be carried forward to the succeeding fiscal year.

Risk management:

The Hospital District is exposed to various risks of loss from tort; theft of, damage to, and destruction of assets; business interruption; errors and omissions; employee injuries and illnesses; natural disasters; and employee health. Commercial insurance coverage is purchased for claims arising from such matters.

Environmental Matters:

The Hospital District is subject to laws and regulations relating to the protection of the environment. The Hospital District's policy is lo accrue environmental and cleanup related costs of a non-capital nature when it is both probable that a liability has been incurred and when the amount can be reasonably estimated. Although it is not possible to quantify with any degree of certainty, the potential financial impact of the Hospital District's continuing compliance efforts, management believes any future remediation or other compliance related costs will not have a material adverse effect on the fmancial condition or reported results of operations of the Hospital District. At March 31, 2009 and 2008, management is not aware of any liability resulting from environmental matters.

Reclassifications:

To be consistent with current year classifications, some items from the previous year have been reclassified with no effect on net assets.

13





New accounting pronoimcements:

In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements." This Statement defmes fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This Statement applies to other accounting pronouncements that require or permit fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Hospital District adopted this Statement as it applies to fair value measurements and in accordance with GASB Statement No. 31. "Accounting and Financial Reporting for Certain Investments and for Extemal Investment Pools," as of April 1, 2008. The adoption of this pronouncement had no effect on the financial statements of the Hospital District, as the Hospital District had no such investments. However, in future years if the Hospital District does have the investments included above, the pronouncements will be followed.

Note 2. Bank Deposits and Certificates of Deposits

The Hospital District's investing is performed in accordance with investment policies complying with state statutes. Funds may be invested in time deposits, money market investment accounts or certificates of deposit with financial institutions insured by FDIC; direct obligations of the United States Govemment and its agencies; commercial paper issued by United States Corporations with a rating of A-l (Moody's) and P-l (Standard and Poor's) or higher; and govemment backed mutual tmst funds. At March 31, 2009 and 2008, the Hospital District's funds consisted solely of demand deposits and certificates of deposits. These deposits are stated at cost, which approximates market.

Custodial Credit Risk - Deposits. Custodial credit risk is the risk that in the event of a bank failure, the Hospital District's deposits may not be retumed to it. State law requires collateralization of all deposits with federal depository insurance and other acceptable collateral in specific amounts. The Hospital District's policy requires that all bank balances be insured or collateralized by the financial institution to pledge their own securities to cover any amount in excess of Federal Depository Insurance Coverage (FDIC). These securities must be pledged in the Hospital District's name. At March 31, 2009, $938,208 of the Hospital District's deposits was secured from risk by FDIC coverage and $833,480 was secured by the financial institution's pledged securifies. As of March 31, 2008, $409,406, of the Hospital District's deposits was secure from risk by FDIC coverage and $1,311,767 of securities pledged by the financial institution. Accordingly, the Hospital District had no custodial credit risk related to its deposits at March 31, 2009 or 2008.

Note 3. Net Patient Service Revenues

The Hospital District has agreements with third-party payors that provide for payments to the District at amounts different from its established rates. A summary of the payment arrangements with major third-party payors follows:

•Medicare - Covered skilled nursing services are paid based on a RUG rate fee schedule per day, a fee schedule amount for outpatient services and a per visit basis for rural health clinic services.

•Medicaid - Covered nursing home services are paid based on a per diem rate per day and a per visit basis for rural health clinic services.

14




Note 3. Net Patient Service Revenues (Continued)

During the year ended March 31, 2009 and 2008, approximately 90% of the Hospital District's gross patient services were furnished to Medicare and Medicaid beneficiaries. Laws and regulations goveming the Medicare and Medicaid programs are complex and subject to interpretation. The Hospital District believes that it is in compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of potential wrongdoing. While no such regulatory inquires have been made, compliance with such laws and regulations can be subject to future govemment review and interpretation, as well as significant regulatory action including fines, penalties, and exclusion from the Medicare and Medicaid programs.

Note 4. Accounts Receivable

Patient accounts receivable reported as current assets by the Hospital District at March 31, 2009 and 2008 consisted of these amounts:

2009 2008

Receivable from patients and their insurance carriers Receivable from Medicare Receivable from Medicaid

Total patient accounts receivable Less allowance for uncollectible amounts

Patient accounts receivable, net

$

$

$ _

244,876 236,081 175,030

655,987 (43,532)

612,455

$

$

L-

152,800 135,204 214.396

502,400 (73,264)

429,136

Note 5. Concentration of Credit Risk

The Hospital District grants credit without collateral to its patients, most of who are local residents and are insured under third-party payor agreements. The mix of receivables from patients and third-party payors at March 31, 2009 and 2008 was as follows:

2009 2008

Medicaid Medicare Other third-party payors/patients

27% 36% 37%

100%

43% 27% 30%

100%

15

HOSPITAL SERVICE DISTRICT NO. 3 PARISH OF VERMILION, STATE OF LOUISL^NA



Note 6. Ad Valorem Taxes

Ad valorem taxes are attached as an enforceable lien on property as of January 1 of each year. Taxes are levied on November 15 and are actually billed to the taxpayers in December. Billed taxes due by December 31, become delinquent on January 1 of the following year.

Tax revenues are recognized in the year billed.

The taxes are based on assessed values determined by the Tax Assessor of Vermilion Parish and are collected by the Sheriff. The taxes are remitted to the District net of deductions for the pension fund contributions. For the years ended March 31, 2009 and 2008, taxes of 8.0 and 7.0 mills, were levied amounting to total taxes of $222,745 and $196,482, respectively, which is restricted for the retirement of bonds and maintaining the building and capital facilities of the District and acquiring fumishings and equipment.

Note 7. Custodial Asset and Liability

The District maintains a bank account for their residents as a service to them. The related asset and liability of $ 18,810 at March 31. 2009 and $ 17,183 at March 31,2008 is not included in this report due to its custodial nature.

Note 8. Capital Assets

Capital asset additions, retirements and balances for the years ended March 31, 2009 and 2008 were as follows:

Balance Balance March 31. 2008 Additions Retirements March 31, 2009

Land Building Fumiture and equipment Start-up costs Capitalized interest Land and building improvements Construction in progress

Total historic cost

$

§_

41,000 2,430,982 1,012.036

56,201 73,839

449,361 -

4,063,419

$

$

-64,902

--

99,866 -

164.768

$

$

- $ ------

$

41,000 2,430,982 1,076.938

56,201 73,839

549,227 -

4,228,187

Less accumulated depreciation for: Land Building Furniture and equipment Start-up costs Capitalized interest Land and building improvements

Total accumulated depreciation

Capital assets, net

(1,281,979) (716,420) (56,201) (42.456)

(110,334)

$ (2,207,390)

$ 1,856,029

$

$ _

(81.548) (85,478)

(2,461) (24,530)

(194,017) $

(29,249) $

(1.363,527) (801,898) (56,201) (44,917)

(134,864)

$ (2,401,407)

$ 1,826,780

16




Note 8. Capital Assets (Continued)

Land Building Fumiture and equipment Start-up costs Capitalized interest Land and building improvements Construction in progress

Total historic cost

Balance March 31, 2007

$

l_

41,000 2,430,982

932,236 56,201 73,839

430,936 3,480

3,968,674

$

i.

Additions

-91.958

--

18,425 -

110,383

1

$

i.

Retirements

-(12,158)

---

(3,480) (15,638)

Balance March 31, 2008

$

l_

41,000 2,430,982 1,012,036

56,201 73,839

449,361 -

4,063,419

Less accumulated depreciation for: Land Building Furniture and equipment Start-up costs Capitalized interest Land and building improvements

Total accumulated depreciation

(1,200.431) (639.146)

(56,201) (39,995) (89,168)

(81,548) (89,432)

(2,461) (21,166)

12,158

$ (2,024,941) $ (194,607) $

(1,281,979) (716,420) (56.201) (42,456)

: _ (110,334) 12,158 $ (2,207,390)

Capital assets, net 1,943.733 $ (84.224) $ (3,480) $ 1,856,029

Depreciation expense for the years ended March 31, 2009 and 2008 was $194,017 and $194,607, respectively.

Note 9. Compensated Absences

All full-time employees with one full year of continuous employment with the Hospital District earn up to a maximum of 10 days of paid time off A maximum of 20 days may be cartied forward to the succeeding fiscal year. Accmed compensated absences at March 31,2009 and 2008 totaled $45,587 and $53,284, respectively.

Note 10. Pension Plan

The Hospital District established a simple plan under Section 408(p) of the Intemal Revenue Code. The plan became effective March 1, 2001 and provides for employees of the Hospital District to make salary reduction contributions in each calendar year to the simple IRA established by each employee who meets eligibility requirements. All employees of the Hospital District are eligible to participate under the plan except employees who are not reasonably expected to earn $5,000 during the plan year for which the contribution is to be made. The Hospital District has agreed to provide matching contributions for die 2009 and 2008 plan year in the amount of the participant's elective defertal not in excess of 3% of such participant's compensation and not to exceed $6,500. The Hospital District made contributions of $20,274 for die year ended March 31, 2009 and $23,170 for the year ended March 31, 2008.

17




Note 11. Bond and Interest Coupons Payable

The following is a summary of long-term debt for the years ended March 31, 2009 and 2008:

2009 2008

Bonds payable, April 1 $ 140,000 $ 270,000 Bonds issued Bonds retired (140,000) (130,000)

Bonds payable, March 31 $ - $ 140.000

Amount due within one year $ - $ 140,000

Bonds payable at March 31, 2009 and 2008 are comprised of the following individual issues:

General Obligation Bonds (G.O. Bonds);

2009 2008

$1,090,000 General Obligation Refunding 1997, due in annual installments of $20,000 to $140,000 through February 1,2009; at an interest rate of 5.375% (to be retired from the proceeds of ad valorem taxes). $ - ^ $ 140,000

Note 12. Compensation Paid to Board of Commissioner

The schedule of compensation paid board of commissioners is presented in compliance with House Concurrent Resolution No. 54 of the 1979 Session of the Louisiana Legislature. Each member of the board receives $80 for each day of attendance at meetings of the board. The schedule of compensation at March 31, 2009 and 2008 is as follows:

2009 2008

Sean S. Gayle Nelson Marceaux Lester Foreman Flora Thompson Larry Dugas

Total

$

$

960 720 560 720 960

3,920

$

$

880 720 480 800 960

3,840

18

SUPPLEMENTARY INFORMATION

19

HOSPFFAL SERVICE DISTRICT NO. 3 PARISH OF VERMILION, STATE OF LOUSIANA


SCHEDULE OF NET PATIENT SERVICE REVENUES Years Ended March 31, 2009 and 2008

2009 2008

Gross patient service revenue: Medicaid Private Medicare SNF Medicare outpatient Clinic

Total gross patient service revenue

Contractual allowances - Nursing Home Contractual allowances - Clinic Provision for bad debts

$

$

2,238,756 $ 197,750

1,206,349 253,132 318.188

4,214,175 $

(171.889) (71,194) (34,155)

2,441,526 136,996 494,289 166,380 347,928

3,587,119

(94,652) (68,715) (42,064)

Net patient service revenue 3,936,937 $ 3,381,688

20



SCHEDULE OF OPERATING EXPENSES Years Ended March 31,2009 and 2008

2009 2008

General and administrative; Salaries - administrator Salaries - medical director Salaries - office and clerical Salaries - transportation Advertising Auto expense Bank charges Board fees

Dues and subscriptions Employee benefits Employer retirement matching Insurance Legal and accounting Licenses Medicare consultant Miscellaneous Office supplies Outside services Payroll taxes Postage and freight Provider fee Telephone

Transportation Travel and seminar

$ 62.348 $ -

79,146 35,380 10,294 10,917

65 3,891 3,944

55.228 20,274

134,230 29,413

1,125 26,036

9,163 11,586 9,123

138,698 6,713

173,569 11,658

329 12,801

63.890 26.406 74,614

-6,249 9,453

22 3,937 4,097

48,236 23,170

128.463 24,281

1,253 20,027

8,286 15,346 8,580

127,221 6,801

178.160 11,220

-7,571

Total general and administrative 845,931 $ 797,283

Nursing services: Salaries - DON Salaries - other Nursing supplies Miscellaneous

55,772 $ 899,729 57,016

-

59,521 802,337

62,160 2,970

Total nursing services 1,012.517 $ 926,988

Housekeeping; Salaries Supplies

143,533 $ 27,515

105,434 12,393

Total housekeeping 171,048 $ 117,827

(Continued)

21



SCHEDULE OF OPERATING EXPENSES (CONTINUED) Years Ended March 31,2009 and 2008

2009 2008

Dietary; Salaries Food Supplements Supplies

Total dietary

Plant operations: Salaries Contract service Other Small equipment Repairs and maintenance Utilities

Total plant operations

Laundry: Salaries Supplies

Total laundry

Patient activity: Salaries Supplies

Total patient activity

Consultants; Pharmacy Dietary Dental Medical director Medical records

Total consultants

$

$

$

$

$

$

$

s

$

$

199,534 120.206 12,981

16,338

349,059

33,795 25,683 2,095

21,014 51,129 111,709

245,425

81,628 11,324

92,952

50,322 10,999

61,321

15,104 14,220 1,500

25,714 1,550

58,088

$

$

$

$

$

$

$

S

$

s

185,281 123,094 10,263 14,354

332,992

28,007 22,177 503

10,756 58.535 106,852

226,830

104,230 16,848

121,078

43,763 5,850

49,613

13,595 11,400

--

1,400

26,395

(Continued)

22



SCHEDULE OF OPERATING EXPENSES (CONTINUED) Years Ended March 31,2009 and 2008

2009 2008

Clinic: Salaries Advertisement Freight and postage Insurance Lab Licenses Outside services Repairs and maintenance Supplies Telephone Utilities Vaccines

Total clinic

Medicare SNF and outpatient: Lab Medical supplies and drugs charged to patients Occupational therapy Physical therapy Radiology Speech therapy

Total medicare SNF and outpatient

Depreciation

Total operating expenses

s

$

$

$

$

$

215,015 122 22

15,198 32,235

44 9,977 9,634

15,142 6,399 6,567 8,408

318,763

8,053 101,950 198,880 153,763

4,304 91.568

558,518

194,017

3.907,639

$

$

$

$

$

$

249,605 1,091

38 23,841 25,132

(24) 10,697 3,857

15,403 7,658 7,340 6,951

351,589

6,373 50,919

100,971 94,120 2,356

15,884

270,623

194,607

3,415,825

23


24

BROUSSARD, POCHE> LEWIS & BREAUX. L.L.F. C E R T I F I E D P U B L I C A C C O U N T A N T S

4112 West Congress P.O. Box £1400 Lalayene, LomsUoa 705964400 pbone : (337) 988-4930

JSM7 (337) 984-4574

www.bplb.com

Other Offices:

Crowley, LA

(337) 783-5693

Opelousas, LA

(337) 9AZ-5in

AbbcTJIle,LA

(337) 898-1457

New Iberia, LA

(337) 364-4554

Church Point, LA

(337) 684-2855

Frank A. Stagno, CPA*

Scott J. Broussard, CPA*

L. Charles Abshire, CPA*

P. John Blanchct, HI , CPA*

Martha B. Wyatt, CPA*

Mary A. Castille, CPA*

Joey L. Breaux, CPA*

Craig J. Viator, CPA*

SUccy E. Singleton, CPA*

John L. Istre, CPA*

Tricia D. Lyons, CPA*

Maty T.Miner, CPA*

Ehzabeth J. Moreau, CPA*

Frank D. Bergeron, CPA*

R e f i r e d :

Sidney L. Broussard, CPA 192S-2005

Leon K. Pochi, CPA 1984

James H. Breaux, CPA 1987

Erma R. Wahon, CPA 1988

George A. Lewis, CPA 1992

Geraldine J. Wimberiey, CPA 1995

Lawrence A Cramer, CPA 1999

Ralph Fnend, CPA 2002

DonaW W. KeDey, CPA 2005

George J. Trappey, HI , CPA 2007

TeiTel P. Dreasel, CPA 2007

Herbert Lcmoine H, CPA 2008

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLL\NCE AND OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDiriNG STANDARDS

To the Board of Commissioners Hospital Service District No. 3 Parish of Vermilion, State of Louisiana

D/B/A Gueydan Memorial Guest Home Gueydan, Louisiana

We have audited the basic fmancial statements of the Hospital Service District No. 3, Parish of Vermilion, State of Louisiana, d/b/a Gueydan Memorial Guest Home, as of and for the year ended March 31, 2009 and have issued our report thereon dated September 30, 2009- We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fmancial audits contained in Govemment Auditing Standards, issued by the Comptroller (jeneral of the United States.

Intemal Control Over Finandai Reporting

In planning and performing om- audit, we considered the Hospital Service District No. 3's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Hospital Service District No. 3's intemal control over fmancial reporting. Accordingly, we do not express an opinion on the effectiveness of the Hospital Service District No. 3*s intemal control over financial reporting.

Our consideration of internal control over fmancial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies.

A control deficiency exists when the design or operation of a control docs not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Hospital Service District No. 3*s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood tiiat a misstatement of the Hospital Service District No. 3*s financial statements that is more than inconsequential will not be prevented or detected by the Hospital Service District No. 3*s internal control. We consider the deficiencies described in 2009-1 and 2009-2 of the accompanying schedule of fmdings and responses to be significant deficiencies in internal control over financial reporting.

hiembrrs a f Ajiierican hisr i iuir c f Certified FuMlc Accounimns Socicn ofhoiUMJana Ccrrtfird PubUc Ac<oun!i,nrs

• A Profeitionxl Accounting Corporation

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Hospital Service District No. 3's intemal control.

25

http://www.bplb.com

To the Board of Commissioners Hospital Service District No. 3 parish of Vermilion, State of Louisiana

Intemal Control Over Fmancial Reporting (continued)

Our consideration of the intemal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the intemal control that might be significant deficiencies and accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiencies described above, we consider both 2009-1 and 2009-2 to be material weaknesses.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Hospital Service District No. 3's basic financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and responses as items 2009-3 and 2009-4.

Hospital Service District No. 3's responses to the fmdings identified in our audit are described in the accompanying schedule of findings and responses. We did not audit the Hospital Service District No. 3's responses and, accordingly, we express no opinion on them.

This report is intended solely for the information and use of management, the Board of Commissioners, others within the Hospital District, federal award agencies, pass-through entities, and the Legislative Auditor and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited.

Lafayette, Louisiana September 30, 2009

26



SCHEDULE OF FINDINGS AND RESPONSES Year Ended March 31,2009

We have audited the basic financial statements of Hospital Service District No. 3, Parish of Vermilion, State of Louisiana, d^/a Gueydan Memorial Guest Home, as of and for the year ended March 31, 2009, and have issued our report thereon dated September 30, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Govemment Audifing Standards, issued by tiie Comptroller General of the United States. Our audit of the basic financial statements as of and for the year ended March 31, 2009 resulted in an unqualified opinion.

Section I. Summary of Auditor's Reports

a. Report on Intemal Control and Compliance Material to the Financial Statements

Intemal Control Material Weaknesses ^ Y e s • No Sigiuficant Deficiency identified tiiat is

not considered to be a material weakness D Yes ^ No

Compliance Noncompliance Material to Financial Statements noted ^ Yes Q N O

Was a management letter issued [ ] Yes ^ No

Section n . Financial Statement Findings

2009d Segregation of Duties

Finding: The Hospital District does not have adequate segregation of duties in the area of accounts receivable. During the course of our audit we noted that the person in charge of accounts receivable has the responsibility to post cash receipts, issue credit memos, write-off account balances, reconciles bank statements and has access to incoming checks from customers. A system of intemal control procedures contemplates a segregation of duties so that no one individual handles a transaction from its inception to its completion. While we recognize the Hospital District may not be large enough to permit such procedures, it is important that the Hospital District be aware of this condition.

Recommendation: Keeping in mind the limited number of personnel to which duties can be assigned; the Hospital District should continue to monitor assignment of duties to assure as much segregation of duties and responsibility as possible, and management and the board should review account receivable financial information on a timely basis.

Response: The Hospital District is aware of and evaluated this problem and concluded that it would not be cost beneficial or possible with the limited resources available to create a segregated accounts receivable environment. However, the Hospital District will continue to monitor this issue and the board and management will review account receivable financial information on a timely basis.

27



SCHEDULE OF FINDINGS AND RESPONSES (CONTINUED) Year Ended March 31. 2009

2009-2 Reconciliation of Medicare Accounts Receivable

Finding: Medicare logs are not being reconciled to the account receivable subsidiary ledger on a regular basis. An adequate intemal control would require the Medicare logs to be reconciled to the accounts receivable subsidiary ledger on a regular basis with such reconciliation being forwarded to management for review.

Recommendation: The Medicare logs should be reconciled to the accounts receivable subsidiary ledger on a regular basis. This reconciliation should be submitted for management's review. Management should then satisfy itself as to the nature of any unusual reconciling items before authorizing adjustments to correct the balances. These adjustments should be thoroughly documented and prompUy made so that it will not be necessary to carry them forward to the next month's reconciliation.

Response: The Hospital District will change the intemal control procedure to require a reconciliation of tiie Medicare logs to the accounts receivable subsidiary ledger on a regular basis. This reconciliation will then be reviewed by management along with review of the support for unusual reconciling items. Management will then approve necessary adjustments. The Hospital District will contract witii a tiiird party contractor to assists with this reconciliation on a quarterly basis.

2009-3 Purchases from Related Party

Finding: During course of the audit, it was discovered that the Hospital District purchased goods in tiie amount of $1,682 from a local business in which a board member has an ownership interest (related party). We noted that tills is a possible violation of the Code of Governmental Ethics.

Recommendation: Management should ensure that the Hospital District cease purchasing goods from the business in which the board member has an ownership interest. Also, management should consult with the Louisiana Board of Ethics (tiie entity charged with the responsibility of administering and enforcing tiie Louisiana Code of Govemmental Ethics) about the propriety of these related transactions.

Response: The Hospital District will seek an ethics opinion in reference to the above stated transactions. All transactions with tiie business have been ceased until an etiiics opinion is received. The Hospital District were purchasing goods from this local business due to convenience with this business being two blocks away and the closest other business with these same goods is twenty minutes away.

28

HOSPITAL SERVICE DISTRICT NO. 3 PARISH OF VERMIUON, STATE OF LOUISL\NA

D/B/A GUEYDAN MEMORL\L GUEST HOME

SCHEDULE OF FINDINGS AND RESPONSES (CONTINUED) Year Ended March 31. 2009

2009-4 Public Bid Uw

Finding: During the 2009 fiscal year end, it was discovered that the Hospital District did not comply with the Public Bid Law. R.S. 38:2212.1 requires that all piu^chases of any materials or supplies exceeding the sum of twenty thousand dollars to be paid out of public ftinds shall be advertised and let by contract to the lowest responsible bidder. It was noted that there were two instances of violation as noted below.

(a.) Roof repair - The Hospital District repaired the facility's roof but did not seek bids for the project. The cost of the materials was above the twenty thousand dollar threshold as noted above.

(b.) Parking lot - The Hospital District advertised and sought bids on the construction of the facility's new parking lot. The Hospital District did not accept the lowest bid, as required by the Public Bid Law. The District is allowed to accept a higher bid, if the lower bid did not meet the specifications as noted in the advertisement. There was not adequate documentation as to why higher bid was accepted.

Recommendation: The Hospital Service District should fully comply with the competitive bidding requirement of the Louisiana Public Bid Law.

Response: In the future, the Hospital Service District will fully comply with the competitive bidding requirement of the Louisiana Public Bid Law for all projects exceeding twenty thousand dollars.

Section m . Internal Control and Compliance Material to the Federal Awards

This year's report does not include any federal awards.

29



SCHEDULE OF PRIOR YEAR FINDINGS Year Ended March 31, 2009

Section I. Intemal Control and Compliance Material to the Financial Statements

2008-1 Segregation of Duties

Fmding: The Hospital District does not have adequate segregation of functions within the accounting system. A system of intemal control procedures contemplates a segregation of duties so that no one individual handles a transaction from its inception to its completion. While we recognize the Hospital District may not be large enough to permit such procedures, it is important that you be aware of this condition.

Recommendation: Keeping in mind the limited number of personnel to which duties can be assigned; the Hospital District should continue to monitor assignment of duties to assure as much segregation of duties and responsibility as possible.

Current status: PARTIALLY RESOLVED - The Hospital District is aware of and has evaluated this issue and concluded that it would not be cost beneficial or possible with the limited resources available to create a segregated accounting environment. The Hospital District will continue to monitor this issue with segregation of duties, and continues to review all financial information on a timely basis. This finding is also included in the audit report for the year ended March 31, 2009, and described in 2009-1 in reference to accounts receivable.


Finding: Medicare logs are not being reconciled to the account receivable subsidiary ledger on a regular basis. An adequate intemal control would require the Medicare logs to be reconciled to the accounts receivable subsidiary ledger on a regular basis with such reconciliation being forwarded to management for review.

Recommendation: The Medicare logs should be reconciled to the accounts receivable subsidiary ledger on a regular basis. This reconciliation should be submitted for management's review. Management should then satisfy itself as to the nature of any unusual reconciling items before authorizing adjustments to correct the balances. These adjustments should be thoroughly documented and promptiy made so that it will not be necessary to carry them forward to the next month's reconciliation

Current status: NOT RESOLVED - The Hospital District attempted to reconcile the accounts receivable subsidiary ledger to the Medicare Logs but was not accurately reconciled at year end. This finding is also included in the audit report for the year ended March 31, 2009, and described m 2009-2

Section n . Intemal Control and Compliance Material to the Federal Awards

Not applicable.

Section m . Management Letter

There were no matters reported in a separate management letter for tiie year ended March 31,2008.

30

G M G H GUEYDAN MEMORIAL GUEST HOME 1201 3nl Street • P.O. Drawer 510 • GiwydBn, LA 70542

MANAGEMENT CORRECTIVE ACTION M J \ N

Septcanber 30.2009

Legislative Auditor State of Louisiana P.O.Box 94397 Baton Rouge, Louisiana 70804-9397

Hospital Service District No. 3, Parish of Vermilion, State of Louisiana, d/b/a Gueydan Memorial Guest Home respectfully submits the following corrective action plan for the year ended March 31,2009.

Name and address of independent public accounting firm:

Broussard, Poche', Lewis & Brcaux, LXP. Certified Public Accountants 101 Independeoce Blvd Lafayette, Louisiana 7QS06

AudltPeriod: April 1.2008 through March 31,2009.

The findings from the 2009 schedule offindings and responses are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. Section I of the schedule. Summary of Auditor's Reports, does not include findings and is not addressed.

Section n : Financial Statement Findings

2009-t Segregation of Duties

Recommendation: Kcqnng m mind the limited number of personnel to which duties can be assigned; the Hospital District should continue to monitor assigpmast of duties to assure as much segregation of duties and responsibility as possible, and management and the board shoukl review account receivable finandai information on a timely basis.

Response: The Hospital District Is aware of and evaluated this problem and concluded tiut it would not be cost beneficial or possible with the limited resources available to create a segregated accounts receivable environment However, die Hospital District will continue to monitor this issue and the board and management will review accounts receivable financial mformation on a timely basis.

Responsible party: Bob Hensgeos, Administrator


Recommendation: The Medicare togs should be reconciled to the accounts receivable subsidiary ledger on a regular basis. This reconciliation should be submitted tor management's review.

Response: The Hospital District will change the internal control procedure to require a reconciliation of the Medicare logs to the accounts receivable subsidiary ledgier on a regular basis. This reconciliation will then be reviewed by management along witii review of the support for unusual reconcilmg items. Management will then a^wove necessary adjustments. Distria will contract with tturd party contractors to assist with reconciliation on a Quarterly basis.

Responsible party: Bob Hensgens. Admintstrator

MANAGEMENT CORRECTIVE ACTION PLAN

September 30, 2009 Page 2

2009-3 Purchases from Related Partv

Recommendation: Management should ensure that the Hospital District cease purchasing goods from the business in which the board member has an ownership interest. Also, management should consult with die Louisiana Board of Etiiics (tiie entity charged witii die responsibility of administering and enforcing the Louisiana Code of Govemmental Ethics) about the propriety of these related transactions.

Response: The Hospital District will seek an ethics opinion in reference to the above stated transactions. All transactions with the business have been ceased until an ethics opinion is received. The Hospital District were purchasing goods from this local business due to convenience with this business being two blocks away and the closest other business with these same goods is twenty minutes away.

Responsible party: Bob Hensgens, Administrator

2009^ Public Bid Law

Recommendation: The Hospital Service District should fiiUy comply with the competitive bidding requirement of the Louisiana Public Bid Law.

Response: In the future, the Hospital Service District will fully comply with the competitive bidding requirement of the Louisiana Public Bid Law for all projects exceeding twenty thousand dollars.

Responsible party: Bob Hensgens, Administrator

HOSPITAL SERVICE DISTRICT NO. 3

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