Title Details

Founded in 1887, the American Institute of Certified Public Accountants (AICPA) represents the CPA and accounting profession nationally and globally regarding rule-making and standard-setting, and serves as an advocate before legislative bodies, public interest groups and other professional organizations. The AICPA develops standards for audits of private companies and other services by CPAs; provides educational guidance materials to its members; develops and grades the Uniform CPA Examination; and monitors and enforces compliance with the accounting profession’s technical and ethical standards.
The AICPA's founding established accountancy as a profession distinguished by rigorous educational requirements, high professional standards, a strict code of professional ethics, a licensing status and a commitment to serving the public interest.

1 Overview and Unique Considerations of Health Care Entities 01-13

Purpose 01

Applicability 02-06

Classification of Health Care Entities 07-08

Regulatory Environment 09-13

Health Care Reform 12-13

2 General Auditing Considerations 01-119

Overview 01-02

An Audit of Financial Statements 03-09

Audit Risk 05-09

Terms of Engagement 10-14

Business Associate Agreements 14

Audit Planning 15-18

Group Audits 19-24

Multi-Location Audits Versus Group Audits 23

Complex Transactions 24

Materiality 25-30

Performance Materiality 29-30

Qualitative Aspects of Materiality 31-32

Use of Assertions in Assessment of Risks of Material Misstatement 33-34

Risk Assessment Procedures 35-57

Risk Assessment Procedures and Related Activities 37-43

The Entity and Its Environment 44-57

Additional Audit Considerations 58-99

Analytical Procedures 58-59

Accounting Estimates 60-62

Transactions Processed by Service Organizations 63-66

Compliance With Laws and Regulations 67-77

Going-Concern Considerations 78-92

Written Representations 93-99

Independent Auditor’s Reports 100-102

Single Audit Act and Related Audit Considerations 103-109

Statutory Reporting Considerations for Health Plans 110-119

Risk-Based Capital Requirements 114-115

Deficiencies in Internal Control 116

Communicating Internal Control Matters in an Audit 117

Communications With Regulators 118-119

3 Unique Financial Statement Considerations for Not-for-Profit Business-Oriented Health Care  Entities 01-43

Complete Set of Financial Statements 02-05

Balance Sheet 06-08

Statement of Operations 09-28

Performance Indicator 12-17

Other Intermediate Subtotals 18-20

Discontinued Operations and Accounting Changes 21-22

Revenues 23-25

Expenses 26-28

Statement of Changes in Net Assets (or Equity) 29-32

Statement of Cash Flows 33-37

Notes to the Financial Statements 38

Subsequent Events 39-41

Example Financial Statements 42-43

4 Cash, Cash Equivalents, and Investments 01-75

Cash and Cash Equivalents 01-11

Centralized Cash Management Arrangements 03-06

Cash From Restricted Donations 07

Other Restricted or Designated Cash Amounts 08-11

Investments 12-73

Fair Value Option 17-22

Investments in Debt Securities and Certain Equity Securities With a Readily Determinable Fair Value That Are Not Recorded Under the Fair Value Option 23-35

Investments in Certain Other Financial Instruments Without a Readily Determinable Fair Value That Are Not Recorded Under the Fair Value Option 36-38

Investment Pools 39-47

Fair Value Measurements 48

Impairment of Investments 49-59

Securities Lending Activities 60

Transfers of Assets to an NFP or Charitable Trust for Investment 61-63

Regulation 64

Other Financial Statement Presentation Matters 65-73

Auditing 74-75

5 Derivatives 01-44

Introduction 01-05

General Guidance 06-07

Accounting for Changes in Fair Value of Derivative Instruments 08-12

Fair Value Hedges 09

Cash Flow Hedges 10-11

Derivatives Not Designated as a Hedging Instrument 12

Hedge Accounting Requirements 13-28

Shortcut Method 20-28

Hybrid Instruments, Host Contracts, and Embedded Derivatives 29-37

Calls and Puts in Debt 33-34

Derivatives Embedded in Split-Interest Agreements 35-37

Other Matters 38-43

Changes in Fair Value of Hedged Item 38

Termination of Cash Flow Hedge by Debt Extinguishment 39

Additional Presentation and Disclosure Requirements for NFP Business-Oriented Health Care Entities 40-43

Auditing 44

6 Property and Equipment and Other Assets 01-53

Overview 01-05

Capitalized Interest 06-11

Supplies, Rebates, and Discounts 12-13

Lessee Involvement in Fixed Asset Construction14-17

Asset Retirement and Environmental Remediation Obligations 18-20

Impairment or Disposal 21-31

Discontinued Operations 28-31

Nonreciprocal Transfers 32-34

Other Long-Lived Assets 35-43

Financial Statement Presentation 44-47

Auditing 48-53

7 Municipal Bond Financing 01-124

Introduction 01-13

Conduit Bonds That Trade in Public Markets 06-08

Credit Enhancement 09-11

Issuance of Municipal Bonds 12-13

Extinguishment and Modification Transactions 14-17

Calls and Mode Conversions 18-39

Defeasance 20-26

Modifications 27-31

Gain or Loss on Debt Extinguishment 32-33

Debt Issuance Costs Incurred in Connection With an Exchange or Modification of Debt Instruments 34-36

Puts or Tender Options 37-39

IRS Considerations 40-44

Financial Statement Presentation and Disclosure 45-72

Balance Sheet 45-63

Statement of Operations 64-65

Disclosures 66-72

Obligated Group Reporting 73-74

Interim Financial Reporting 75-76

Auditing 77-123

General 77-85

Auditor Involvement With Municipal Securities Filings 86-112

Letters for Underwriters and Other Requesting Parties 113-119

Reference to the Auditor as an "Expert" 120

Attestation Engagements Related to Municipal Securities Issuance 121-123

Appendix — Municipal Securities Regulation 124

8 Contingencies and Other Liabilities 01-129

Contingencies and Commitments 02-61

The Essentials of Recognition, Measurement, and Disclosure for Contingencies 03-09

Managing Risk of Loss 10-12

Medical Malpractice 13-47

Disclosures for Medical Malpractice 48-53

Physician Guarantees and Other Agreements With Physicians 54-61

Other Liabilities 62-86

Asset Retirement Obligations 62-64

Compensation and Related Benefits 65-76

Joint and Several Liability Arrangements 77-82

Agency Funds 83-84

Fees Paid to the Federal Government by Health Insurers 85-86

Tax Considerations for NFP Health Care Entities 87-101

Private Inurement and Intermediate Sanctions 94-95

Unrelated Business Income 96

State and Local Taxes 97

Tax Positions 98-99

Medicaid Voluntary Contribution or Taxation Programs 100-101

Risks and Uncertainties 102-108

Auditing Contingencies and Other Liabilities 109-127

Auditing Medical Malpractice Loss Contingencies 110-113

Auditing Accounting Estimates 114-119

Use of Actuaries and Actuarial Methods120-123

Evaluating Lawyers’ Responses 124-127

Income Taxes 128

Auditing Considerations 129

9 Net Assets (Equity) 01-38

Investor-Owned Health Care Entities 01

Not-for-Profit Entities 02-25

Net Asset Classes 05-18

Reclassifications 19-25

Classification of Donor-Restricted Endowment Funds 26-32

Disclosure 33-37

Auditing 38

10 Health Care Service Revenue and Related Receivables 01-61

Overview of the Health Care Environment 01-15

Rate Setting With Third-Party Payors 05-10

The Government Payor Environment 11-14

Charity Care 15

Types of Health Care Revenue 16

Types of Payment Methodologies 17

Patient (or Resident) Service Revenue 18-36

Revenue Recognition 18-29

Accounting and Financial Reporting Requirements 30-36

Premium and Capitation Revenues 37-40

Patient Receivables 41-45

Estimated Final Settlements 46-54

Auditing 55-60

Accounts Receivable Confirmations 58-60

Appendix — Implementation Guidance for Accounting Standards Update (ASU) No 2014-09, Revenue from Contracts with Customers (Topic 606) 61

11 Contributions Received and Made 01-66

Distinguishing Contributions From Other Transactions 03-08

Contributions Received 09-32

Expiration of Donor-Imposed Restrictions 12-14

Promises to Give in Future Periods (Pledges) 15-24

Contributions of Long-Lived Assets, the Use of Long-Lived Assets, or Resources to Acquire Them 25-27

Contributed Services 28-32

Reporting the Cost of Special Events and Other Fund-Raising Activities 33-40

Naming Opportunities 36-39

Investments Gain or Loss Related to Donor-Restricted Contributions 40

Transfers of Assets to an NFP or Charitable Trust That Raises or Holds Contributions for Others 41-48

Contributions Made 49

Other Considerations 50-58

Auditing  59-65

Appendix — Q&A Section 6400, Health Care Entities 66

12 The Reporting Entity and Related Entities 01-119

Overview 01-02

Reporting by NFP Health Care Entities 03-59

Relationships With Another NFP 06-25

Relationships With a For-Profit Entity 26-49

Special Entities 50-59

Reporting by Investor-Owned Health Care Entities 60-63

Presentation of Consolidated and Combined Financial Statements 64-74

Accounting for Transfers Between Related Entities 75-88

Equity Transfers 76-79

Equity Transactions 80-83

Other Transfers 84-88

Disclosure 89-90

Mergers and Acquisitions 91-117

Merger of NFPs 97-98

Acquisition by an NFP 99-111

Acquisition by an Investor-Owned Entity, Including a For-Profit Subsidiary of an NFP Health Care Entity 112-115

Disclosures 116

Acquired Entities 117

Auditing 118

Supplement — Flowcharts 119

13 Financial Accounting and Reporting for Managed Care Services 01-30

Overview 01-02

Recognition and Classification of Revenue 03-12

Capitation Arrangements 07

Accounting for Health Care Costs 08-12

Accounting for Loss Contracts 13-17

Consideration of Anticipated Investment Income 17

Accounting for Stop-Loss Insurance 18-19

General and Administrative Expenses 20

Acquisition Costs 21-22

Financial Statement Display Considerations 23-29

Balance Sheet 23-24

Income and Cash Flow Statement 25-29

Disclosures 30

14 Financial Accounting and Reporting by Continuing Care Retirement Communities 01-52

Overview 01-05

Types of Contracts 06-10

Advance Fees 08

Periodic Fees 09

Use Fees 10

Types of Living Accommodations 11-12

Fees and Payment Methods 13-15

Accounting for Refundable Advance Fees 16-20

Accounting for Fees Refundable to Residents Only From Reoccupancy Proceeds of a Contract Holder’s Unit 21-23

Accounting for Nonrefundable Advance Fees 24-25

Classification of Refundable Advance Fees 26-30

Accounting for the Obligation to Provide Future Services and the Use of Facilities to Current Residents 31-35

Accounting for the Costs of Acquiring Initial Continuing-Care Contracts 36

Financial Statements 37-43

Auditing 44-52

15 Unique Considerations of State and Local Government Health Care Entities 01-217

Introduction 01-02

Applicability of This Chapter 03-04

GAAP Hierarchy for Governmental Health Care Entities 05-11

Applicability of FASB and AICPA Pronouncements 09-11

Basic Financial Statements 12-33

Statement of Net Position 13-18

Statement of Revenues, Expenses, and Changes in Net Position 19-26

Statement of Cash Flows 27

Segment Reporting 28-29

RSI, Including MD&A 30-33

Measurement Attributes 34-35

Cash, Cash Equivalents, and Investments 36-58

Cash and Cash Equivalents 36-38

Investments and Certain Equity Interests 39-58

Derivatives 59-65

Property and Equipment and Other Assets 66-85

Capital Assets General 67-70

Capital Asset Impairment 71-73

Intangible Assets 74-76

Leased Assets 80

Service Concession Arrangements 81-84

Disclosures 85

Municipal Bond Financing and Other Long-Term Debt 86-94

Debt Defeasance and Extinguishment 89-92

Debt Issuance Costs 93

Disclosures 94

Contingencies and Other Liabilities 95-130

Insurance-Related Contingencies 95-101

Nonexchange Financial Guarantees 102-104

Asset Retirement and Pollution Remediation Obligations 105-106

Other Contingencies 107

Compensation and Related Benefits 108-126

Tax Considerations 127-128

Disclosures 129-130

Net Position 131-140

Financial Reporting of Net Position 139-140

Health Care Service Revenue and Receivables 141-144

Contributions and Other Nonexchange Transactions 145-155

The Reporting Entity and Related Entities 156-198

Identifying Component Units 158-162

Presentation of Component Units 163-170

Equity Interests 171-177

Institutionally-Related Foundations 178-183

Government Combinations 184-198

General Auditing Considerations for Governmental Health Care Entities 199-217

Independent Auditor’s Reports 206-207

Supplementary Information and Supporting Information,Including RSI 208-217

Supplement A—Statement of Position 00-1, Auditing Health Care Third-Party Revenues and Related Receivables

Appendix

A Overview of Statements on Quality Control Standards

B References to Technical Questions and Answers

C The New Revenue Recognition Standard: FASB ASC 606

D Accounting for Financial Instruments

E Information Sources

F Category B Guidance

G The New Leases Standard: FASB ASC 842

H The New Not-for-Profit Financial Reporting Model Standards: FASB ASU No 2016-14

I Schedule of Changes Made to the Text From the Previous Edition

Glossary

Index of Pronouncements and Other Technical Guidance

Subject Index