What it is
A hospital’s revenue is an estimate from first to last: gross charges reduced by contractual allowances and price concessions to what it expects to collect. The audit turns on those estimates, on third-party settlements that stay open for years, and on patient receivables by payor. This program sets out the procedures with objectives and assertions.
It is a five-tab workbook with procedures, risks, tie-outs and completion tracking, and general procedures appended. It follows the structure of the standards and is paraphrased. Use the medical practice program for physician groups.
When to use it
- At planning for a hospital or health system audit, to scope revenue estimates.
- During fieldwork, to track payor, settlement and receivable testing.
- At review, to see exceptions in estimates and open items.
What’s inside
- Net patient revenue, allowance and implicit price concession procedures
- Third-party settlement and charity care procedures
- Patient receivable aging, collections and credit balances
- Liability reserves, investments, supplies and physician arrangements
- Risk assessment tab and tie-outs
Standard cited
This template follows ASC 954 / ASC 606. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
How are contractual allowances tested?
By recomputing them from contract rates and collection history by payor, and comparing prior estimates with actual remittances.
Why do third-party settlements get their own section?
Cost reports stay open for years and the estimates change with audits and appeals, so balances are judgmental and often large.
Does it replace a Medicare compliance review?
No. It addresses the financial statement audit. Compliance reviews and regulatory opinions need separate work.
Related templates
- Healthcare Net Patient Revenue and Contractual Allowance Estimate
- Audit Program: Medical Practice
- Accounts Receivable Aging and Allowance Workpaper
- Disclosure Checklist: Revenue (ASC 606)
Last updated 11/05/2026. All free templates.