Orduña, Natasha Aeleane

Section 12
Webinar 2: Audit of Health Services Industry

I. Specialized Industry

Initially, the webinar was greeted with a welcome from the speaker for Reyes
Tacandong & Co. The speaker gave a disclaimer for students that, the health care
industry, is not only for the doctors and nurses, but the industry is also open for people
related with the business. Essentially, accountants also come hand in hand with the
nurses, doctors, and other suppliers of medicines, because the accountants are the
one’s responsible for recording the different transactions made by the health care
organization.
With the emphasis of the speaker that there are two kinds of hospital, these two are
the General Hospital and the Specialized Hospital. The General Hospital being for the
usual pediatric needs of the children and some concerns for adults. While for
Specialized Hospitals, these hospitals are specializing on the complex illnesses,
surgeries, transplants, and some individuals with special needs.
In 2021, the PhilHealth shown to the public, the Debit-Credit Payment Mechanism
(DCPM) in which this system of settlement aims to promote the continuous delivery of
services by hospitals during the COVID-19 pandemic. Qualifications for this is that the
application on the health care facility that provides COVID-19 packages, no balance with
the IRM (Interim Reimbursement Mechanism) and not serving any civil service that roots
from penalty of suspension.
II. Accounting Standards applicable to the industry

The PFRS 15 shall rule over the presentation wherein, it derives the revenue
recognition principle that bases on the different sources of income of the healthcare
organization like Services, Drugs and Medicines, and the different medical supplies
used, consumed, and sold.
III. Audit Considerations

Firstly, the speaker mentioned their audit strategy on how their different composition of
Hospital expense, Cost of Sales, and the overview of the inventory process. The strategy
involves the discussion of the different related accounts that are vital for the healthcare
organization. Along with these are also the discussion of System set up on how they
consider each transaction from front-end to the back-end system.
Included in the items for consideration is the estimation of the inventory obsolescence, in
which there are medicines that are measured at net realizable value or at the lower of cost.
Cost can be determining through the process of FIFO method. Included also on the
considerations is the determination of timing of the performance of obligation. In this
scenario, the PFRS 15 rules over that there are instances wherein the revenue recognition
must be upheld and valued based on the circumstances of the patient currently benefitting
from his/her needs and uses the healthcare organization’s asset. (PWC, 2017)
IV. Reflection
Learning from the industry of healthcare, I see that there are different elements that an
accountant must take into consideration before he/she records any of the following
occurrences on a certain scenario. I see that there are also revenue streams that have a
different recognition based on its time, like the sale of medicine and supplies, rather than
billing them on the customer being confined already, it will be billed on the discharge, which
makes the product selling body, one with the organization. Unlink some hospitals that have
a clinic/pharmacy that sells separate medicines.
The Audit on Health Services industry has been educational, especially on the part of us
graduating students, and nearing the corporate world, that will tackle different forms of
organization and eventually work with them. It is a great opportunity to learn from one of the
well-known auditing firm in the country, whilst also teaching health care industry which I am
also fond of because back then, the transactions in the hospital always led me to questions
on how they manage their organization without having any personnel with non-medical
related skills.
V. References
PWC. (2017, November 29). New PFRS standards effective after 1 January 2018.
Pwc.Com. Retrieved July 11, 2022, from
https://www.pwc.com/ph/en/accounting-buzz/accounting-client-advisory-letters/new-pfrs-
standards-effective-after-1-january-2018.html