Healthcare & Human Services
Healthcare and human services organizations operate in environments shaped by regulatory oversight, complex reimbursement structures, and reliance on third-party payors. As organizations grow, expand services, or take on new funding arrangements, the demand for independent financial reporting tends to increase.
If you’ve been asked for “audited financials,” or you’re unsure whether you need an audit, a review, or another form of independent financial reporting, this page explains what typically drives those requests and what organizations in this sector should expect.
Different Types of Healthcare and Human services Businesses
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Physician Practices & Multi-Site Clinics
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Behavioral Health & Substance Use Treatment Providers
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Home Health, Hospice, and Long-Term Care Providers
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Community Health Centers & Human Services Organizations
Quick Audit Readiness Check (For healthcare leaders)
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Are billing and collections reconciled to the general ledger?
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Are payer contracts and reimbursement terms documented?
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Are receivables aged and reviewed regularly?
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Are allowances and write-offs reviewed for reasonableness?
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Are access rights to billing and accounting systems reviewed periodically?
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Are compliance requirements documented and monitored?
Audit vs Review vs Compilation — Plain English
Compilation
Financial statements are prepared from management’s records. No assurance is provided, and no independent verification is performed.
Review
A review provides limited assurance through analytical procedures and inquiries. It does not involve detailed testing of transactions or balances. Reviews may be accepted for smaller entities but do not often meet institutional lender requirements.
Audit
An audit provides the highest level of assurance and involves independent verification of selected balances, transactions, and controls. Audits are commonly required by lenders and investors.
The appropriate level of assurance depends on stakeholder expectations, financing arrangements, contractual obligations, and the complexity of operations.
Not Sure What Level of Independent Reporting Is Appropriate?
Leaders in healthcare and human services organizations are often unsure what level of reporting is expected by lenders, investors, or oversight bodies.
A short readiness discussion can help clarify what level of assurance is typically expected in situations similar to yours and what preparation would be most useful before committing to a formal engagement.
Jedidiah CPA works with healthcare-adjacent and service-oriented organizations navigating growth, financing, and compliance-driven reporting environments. Our experience includes supporting organizations as they prepare for audit and review requirements tied to lending, governance, and transaction readiness.
For those who would like additional background, you can review the lead partner’s professional experience and selected client feedback:
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Do Healthcare and Human Services Organizations Always Need an Audit?
Not all healthcare or human services organizations are legally required to have audits. In practice, audits are often requested due to:
- Bank or lender financing requirements
- Government or institutional funding arrangements
- Private equity or investor involvement
- Regulatory oversight and licensing expectations
- Preparation for mergers, acquisitions, or growth
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Common Situations That Trigger Audit Requirements
Audit requirements commonly arise when organizations:
- Expand to multiple locations or service lines
- Begin billing government programs or managed care organizations
- Seek financing for facilities, equipment, or acquisitions
- Undergo ownership or governance changes
- Prepare for regulatory reviews or transaction activity
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Practical Scenarios Commonly Seen
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You’ve expanded from a single clinic into multiple locations and your lender now requires audited financial statements to support refinancing.
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-Your organization has increased its Medicare or Medicaid billing and external reviews are requesting clearer financial reporting and documentation.
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-You’re exploring a partnership, investment, or sale and due diligence is surfacing inconsistencies in revenue cycle reporting.
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Your billing and accounting systems have changed, and allowances and receivables no longer reconcile cleanly.
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Key Areas Commonly Examined in Audits and Reviews
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Revenue recognition and reimbursement processes
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Billing, coding, and claims accuracy
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Documentation supporting medical necessity
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Allowances, contract adjustments, and payer reconciliations
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Third-party payer receivables and credit risk
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Internal controls over billing and collections
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Related-party transactions
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Compliance with program and licensing requirements
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Reliability of financial and billing systems
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The Role of Technology and Data in Healthcare Audits
Healthcare organizations rely heavily on EHR systems, billing platforms, clearinghouses, and revenue cycle management tools. Auditors consider whether:
- Financial and billing data flows accurately from clinical to accounting systems
- Access to billing and accounting systems is appropriately restricted and reviewed
- System-generated reports used for financial reporting are complete and reliable
- Third-party service providers involved in billing and claims processing are understood and appropriately overseen
Weaknesses in these areas can materially affect reported revenue and receivables.
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What Can Go Wrong When Financial Reporting Is Not Ready
- Delays in lender approvals or transaction closings
- Increased scrutiny from regulators or payors
- Reimbursement disputes or clawbacks
- Higher audit costs due to late adjustments or missing documentation
- Loss of confidence among lenders, investors, or partners
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What the Process Typically Looks Like
1. Planning and scoping – understanding the business model, revenue streams, billing and receivables processes, compliance and funding arrangements
2. Risk assessment – (including revenue cycle, compliance, and technology-related risk)
3. Fieldwork – testing selected balances, contracts, transactions, and system-generated reports
4. Discussion of observations – communicating matters identified during the engagement and practical implications for governance and reporting
5. Reporting – issuance of audit or review reports for investors, lenders, and other stakeholders
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Not Seeing Your Exact Situation Here?
Many organizations do not fit neatly into a single category. Some operate across sectors, use emerging business models, or combine elements of different operating models.
A short audit readiness discussion can help determine what level of independent reporting may be appropriate based on your structure, funding sources, and stakeholder expectations — even if your organization does not match any single example on this page.
