GUYA & KACHERO CO ASSOCIATES

July 16, 2024

Subject: Deficiencies in Inventory, Supplier Balances, Customer Balances,

Asset Register, and Bank & Cash Reconciliations

Dear Bloom Surgical Centre,

We hope this message finds you well. As part of our recent audit of your hospital's
financial operations, we have identified several areas of concern that require
immediate attention. These deficiencies primarily relate to inventory management,
supplier balances, customer balances, asset register maintenance, and bank
reconciliation processes. Addressing these issues promptly is crucial to ensuring the
accuracy and reliability of your financial reporting.

We are also writing to inform you of a significant challenge we are facing in the
completion of the audit process for your organization. Unfortunately, the
unavailability of certain crucial records pertaining to inventory, bank accounts, and
payroll has hindered our ability to proceed as planned.

Specifically, we have encountered difficulties in accessing the following records:

1. Inventory Records: Detailed documentation regarding the inventory

management, including valuation, physical counts, and reconciliation with
accounting records, is currently unavailable.
2. Bank Records: Complete and up-to-date bank statements and reconciliations
are not accessible, which are essential for verifying cash balances and
transactions.
3. Payroll Records: Comprehensive records related to payroll transactions,
including employee salaries, deductions, and payroll taxes, have not been
provided, impacting our review of payroll expenses.

The absence of these records prevents us from conducting a thorough and accurate
assessment of the hospital's financial statements and internal controls. These
documents are critical for ensuring compliance with accounting standards and
regulatory requirements, as well as for providing reliable financial information to
stakeholders.

In order to proceed effectively with the audit and ensure timely completion, we kindly
request your immediate assistance in providing the missing records. Please prioritize
gathering and submitting the following documents at your earliest convenience:

• Detailed inventory records, including valuation methods and reconciliations.

• Complete bank statements and reconciliations for all relevant accounts.
• Comprehensive payroll records for the audit period, including supporting
documentation.
Below, we outline the specific concerns and recommendations for improvement in
each area:

1. Inventory Management:
o Deficiency: Inadequate controls and documentation regarding the
recording and valuation of inventory items.
o Recommendation: Implement a robust inventory management system
that includes regular physical counts reconciled with accounting
records. Ensure proper valuation methods are applied consistently.
2. Supplier Balances:
o Deficiency: Lack of reconciliation and verification of supplier balances
resulting in discrepancies and potential errors in financial reporting.
o Recommendation: Establish a monthly reconciliation process
between accounts payable records and supplier statements. Resolve
any discrepancies promptly to maintain accuracy.
3. Customer Balances:
o Deficiency: Inaccuracies and inconsistencies in customer account
balances affecting accounts receivable aging and collection efforts.
o Recommendation: Strengthen controls over accounts receivable by
conducting regular reconciliations of customer balances with
supporting documentation. Address overdue accounts promptly to
minimize bad debts.
4. Asset Register:
o Deficiency: Outdated or incomplete records of hospital assets,
impairing proper depreciation calculation and asset management.
o Recommendation: Update the asset register regularly to reflect
additions, disposals, and depreciation accurately. Conduct periodic
physical verifications to ensure all assets are properly recorded.
5. Bank Reconciliations:
o Deficiency: Delays and discrepancies in reconciling bank statements
with general ledger accounts, impacting cash flow monitoring and
financial decision-making.
o Recommendation: Implement a rigorous process for monthly bank
reconciliations, ensuring all transactions are accounted for and any
discrepancies are investigated and resolved promptly.

Taking immediate action to address these deficiencies will not only enhance the
reliability of your financial statements but also strengthen internal controls and
operational efficiency within the hospital. We recommend assigning responsibility for
each area to designated personnel with clear guidelines and timelines for
implementation.

Please do not hesitate to contact us if you require further clarification or assistance in

implementing these recommendations. We are committed to supporting you in
achieving sound financial management practices at your hospital.
Thank you for your attention to this matter.

Yours sincerely,

CPA Nick Guya

16/07/2024