Definition of Field and In-House Audits

30.1 – Definition of Field and In-House Audits (Rev. 107, Issued: 09-22-06; Effective: 10-01-06; Implementation: 10-02-06) A field audit is an on-site examination of financial transactions, accounts, and reports as they relate to the Medicare cost report in order to test the provider’s compliance with applicable Medicare laws, regulations, manual instructions, and directives. An in-house audit is an examination of financial transactions, accounts, and reports as they relate to the Medicare cost report to test the provider’s compliance with applicable Medicare laws, regulations, manual instructions, and directives that is performed at the contractor’s location. The in-house audit usually requires limited records. An in-house audit is subject to the same standards/processes and requires the use of an audit program. In general, an in-house audit is the same as a field audit except all work is performed at the contractor’s location. (See Section 60). In performing Medicare in-house and field audits, the contractor should comply with the general, field work, and reporting standards of the Government Auditing Standards (GAS) issued by the Comptroller General of the United States as these standards are applicable to all audits performed by or for any Federal agency. If the contractor engages auditors under a subcontract (see §160 of this chapter) to perform the Medicare audit, the subcontractor’s auditors must follow the same GAS and other standards that the contractor is required to follow. However, as specified in §60.13.C of this chapter, the contractor cannot delegate the performance of a supervisory review of working papers to a subcontractor. CMS holds the contractor responsible for the subcontract work in the same manner as if its own employees performed the work. Contractors may limit the scope of both in-house and field audits to a review of selected parts of a provider's cost report and related financial records. In addition, the audit procedures performed on selected areas of the cost report may be limited. Both the selected cost report areas and the related procedures to be applied must be sufficient to meet the audit objectives established from the desk review. When in-house and field audits are being performed and additional audit procedures are required, or additional findings are discovered which may require additional audit procedures, the contractor shall make a prompt evaluation and either approve or disapprove the additional expenditure of audit resources. The audit culminates in the issuance of an audit report. This report includes an audit adjustment report that presents adjustments to the provider's as-filed costs so that the audited Medicare cost report reflects costs and data in conformity with the Medicare principles of payment.