Hospital auditors get the ax |

Hospital auditors get the ax

Eben Harrell

Aspen Valley Hospital has terminated its contract with its independent auditing company after the firm failed to pick up on major financial mispractices within the hospital, AVH officials confirmed Friday.

For the last four years BK & D, a Colorado Springs-based auditing firm, has performed annual checks of the hospital’s books. Those checks failed to uncover major problems in the hospital’s billing system that recently forced AVH to write off nearly $12 million in uncollected bills.

Hospital treasurer and board member John Jellinek said in an April 10 interview that while it was primarily the responsibility of dismissed CFO Verna Bartlett to notice the billing flaws, BK & D’s oversights were equivalent to some of the problems that led to the Enron and other corporate scandals.

“It’s becoming my judgment that like other corporate disasters the auditors look the other way,” Jellinek said. “Due diligence by the auditors was simply not done.”

The money lost due to faulty billing has created a full-blown crisis at the hospital, forcing officials to renegotiate hospital loans, put a halt to AVH’s long-term renovation project, spend nearly $2.5 million to fix its billing process, and lay off 34 employees in an effort to balance the books.

Interim CEO Bob Karp confirmed that the termination of BK & D’s contract came at the behest of Vectra Bank. AVH officials recently renogatiated the hospital’s loans with Vectra Bank after hospital reserves dipped below levels mandated by the bank.

“We have to please the bank, too,” Karp said. “We have to make sure we are absolutely transparent to [the bank’s] needs.”

Vectra Bank recommended and AVH has hired Grant Thornton as a replacement, Karp said. Grant Thornton is a major auditing firm with 585 offices in 110 countries.

Grant Thornton representatives will arrive at AVH within the next three weeks to begin audits for the 2003 fiscal year, according to Karp.

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“Due diligence by the auditors was simply not done.”

John Jellinek, AVH board member