What it is
The price a medical practice charges is not the price it collects. Patient service revenue is reported net of contractual adjustments and implicit price concessions, so the main estimate on the file is the transaction price per payor class, not a bad debt allowance.
The program covers revenue and the estimates behind it, accounts receivable and aging, third-party payor settlements and overpayment liabilities, coding and billing compliance risk, cash receipts and lockbox, payroll and physician compensation, supplies and malpractice. Steps carry an assertion, sample-size note, W/P reference and sign-off.
When to use it
- Planning the audit of a physician group, dental practice, clinic or other outpatient provider.
- When the practice bills Medicare, Medicaid and commercial payors or has capitated contracts.
- To document how you test net revenue and the receivable valuation.
What’s inside
- Patient service revenue, contractual adjustments and implicit price concessions
- Receivables, payor settlements, overpayment liabilities and compliance risk
- Cash receipts, payroll, supplies, leases and other balances
- Tie-outs and general procedures
Standard cited
This template follows AU-C 330 / 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. See AU-C 330 explained.
Questions
Where do uncollectible patient balances go under ASC 606?
Implicit price concessions, such as expected non-payment by self-pay patients, reduce revenue because they affect the transaction price. Only credit losses on contract assets or receivables for reasons other than the patient’s inability to pay go to credit loss expense under ASC 326 (ASC 606-10-32-7).
How do you test the billing system report?
The aging, charge and collection reports come from the practice’s billing and EHR systems. They are information produced by the entity: test completeness and accuracy by agreeing totals to the general ledger, recomputing buckets on a sample, and testing report logic (AU-C 500).
What is the Medicare overpayment risk?
A provider that identifies an overpayment generally has an obligation to report and return it within a set time after it is identified, and must account for the liability. Inquire about audits, coding reviews and credit balances, and read correspondence from payors.
Related templates
- Audit Program: Accounts Receivable and Revenue
- Audit Program: Payroll
- Accounts Receivable Aging and Allowance Workpaper
- Attorney Legal Letter Inquiry (AU-C 501 / ASC 450)
Last updated 11/05/2026. All free templates.