# Audit of Hospital

## 1. Register of Patients

Vouch Register of Patients with copies of bills issued to them
Verify bills for selected period with patients' attendance record
Confirm bills have been correctly prepared
See that bills have been issued to all patients from whom an amount was recoverable (no missed billing)

## 2. Collection of Cash

## 3. Reconciliation of Subscriptions

Trace all collections of subscriptions and donations from Cash Book to respective Registers
Reconcile total subscriptions due with amount collected

## 4. Legacies and Donations

Ascertain that legacies and donations received for specific purpose have been applied in manner agreed upon

## 5. Authorisation and Sanctions

Vouch all purchases and expenses
Verify that capital expenditure was incurred only with prior sanction of Trustees or Managing Committee

## 6. Other Audit Areas

Area	Audit Focus
Income from Investments, Rent	Verify with investment schedules, lease/tenancy agreements
Grants and Tax Deducted at Source	Verify TDS deducted by grantor; ensure proper credit
Budgets	Compare actuals with approved budgets; investigate variances
Internal Check	Evaluate strength of IC over receipts, expenses, inventory
Depreciation	Verify on hospital equipment, building, etc., at appropriate rates
Registers	Patient register, equipment register, medicine register etc.
Inventories	Medicines, surgical items, consumables - physical verification
Management Representation and Certificate	Obtain MR letter on key matters

Worked example

### Example 1

Example - Patient Bill Reconciliation:

Hospital admits patients and discharges over 30 days. Auditor selects 50 discharge records:

For each, traces back to ward register (admission date, room, treatment)
Verifies bill prepared based on actual length of stay × room rate + treatments + medicines
Confirms bill issued AND payment received (or shown as receivable)
Any case where patient discharged but no bill traced - red flag for revenue leakage

### Example 2

Example - Capital Expenditure Authorisation:

Hospital purchases an MRI machine for Rs 2 crore. Auditor verifies:

1. Resolution of Trustees/Managing Committee approving the purchase

2. Minutes referencing the approved budget item

3. Bills/payment vouchers tally with approved amount

4. Asset capitalised correctly (not charged to revenue)

### Example 3

Example - Specific-Purpose Donation:

Donor gives Rs 50 lakh 'for purchase of dialysis machines'. Auditor checks:

Donation credited to a Restricted Fund (Dialysis Machine Fund)
Tracks expenditure - dialysis machine purchase invoices set off against this fund
Any unutilised portion - shown as Restricted Fund (liability), not free reserves

⚠️ Common exam mistakes

Not reconciling patient attendance register with bills issued - leading to unbilled revenue
Capitalising expenses without prior sanction from Trustees/Managing Committee
Treating restricted-purpose donations as general donations - misapplication of donor intent
Failing to physically verify medicines and consumables inventories (high pilferage risk in hospitals)
Ignoring TDS deducted on grants - leading to missed tax credit

Reference:

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.