Wilton Memorial Hospital

• In Event: Session A: Teaching, Learning & Curriculum V

Abstract

Callie Armstrong, a partner with a regional accounting firm who specializes in the healthcare industry, did not know what to do. The audit engagement that seemed so promising last year had hit a major snag.
Currently involved in the year two audit of Wilton Memorial Hospital, Callie just obtained some unfortunate information from one of her staff members. The data run on an ACL program during the year two audit showed that last year she made an incorrect decision regarding the balance of the contractual allowance for receivables. As a result of misreading the ACL printouts, Callie had required the client to make a significant adjustment to last year’s financial statements. Based on Callie’s input, the client not only made the adjustment but also changed calculation for doing the estimation. So not only were last year’s financial statements misstated because of the adjustment, the client overstated the year two contractual allowance because of changes Callie recommended last year.
Now Callie had a dilemma. Should she tell the client about her mistake? If she did, how would they react given that she was supposed to be an expert in the area?

Authors

• Russell Calk, New Mexico State University

• Cindy Seipel, New Mexico State University