Report on the Health Care Financing Administration's Internal Control Structure Over Medicare Accounts Receivables for the Fiscal Year Ended September 30, 1994

EXECUTIVE SUMMARY:

This final report presents the results of our internal control review of the Health Care Financing Administration's (HCFA) processing of Medicare accounts receivable. We found that contractors have not effectively implemented all the control procedures necessary to ensure the production of reliable financial information. As a result, we concluded that the risk is still high that HCFA and the contractors' controls will not prevent or detect, on a timely basis, material misstatements that could occur in reported accounts receivable balances. Improvements are needed to controls to ensure that (1) adequate documentation is retained to support reported balances, (2) accounts receivable data is appropriately summarized and verified, and (3) assets and records are adequately safeguarded. We are recommending that HCFA develop an approach to review and monitor the accounts receivable internal control structure to provide management reasonable assurance that adequate controls are present.

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