General

The mission statement of the Veterinary Teaching Hospital (VTH) states that the hospital is dedicated to the health and well being of people and their animals by providing outstanding veterinary medical and surgical service, high quality teaching and state-of-the-art facility for the excellent training of veterinarians and the generation of new knowledge. In addition, the vision for the VTH is to:

• Provide the highest service and quality in specialized veterinary medicine - a great referral hospital.

• Provide excellence in veterinary clinical education - a great teaching hospital.

• Provide an environment where people consider it a great place to work and learn.

• Be "profitable" (within the context of a non-profit institution) in order to reinvest in people, programs, equipment and facilities to support our educational, service and research missions.

The hospital treated approximately 32,000 cases during fiscal year 1999, and had annual revenues of about $8.2 million. The hospital is comprised of two main divisions, the Large Animal Hospital (LAH) and the Small Animal Hospital (SAH). Individual departments in the Veterinary Teaching Hospital include small animal medicine, small animal surgery, laboratory, radiology, necropsy, pharmacies, theriogeneology, and the intensive care unit. The VTH employs over 150 people (not including College of Veterinary Medicine faculty), as well as many veterinary students.

Audit Scope and Objectives

Our audit included an analysis of operational, financial, and compliance procedures and controls in place at the time of our review. This analysis involved interviews with Veterinary Teaching Hospital staff, completion of diagnostic review questionnaires, and tests of controls over various processes. Tests of financial activity focused on the 1999 fiscal year. The following specific tests and procedures were performed:

• Diagnostic Review - We completed diagnostic questionnaires addressing the following components of internal control: control environment, risk assessment, control activities, information and communication, and monitoring.
  
  

• Medical Records - We conducted tests using medical records, scheduling information, and VTH Accounting system information to ensure patients seen were properly registered, diagnosis and treatment information were clearly stated, and treatment and hospitalization charges were properly entered to the VTH system.
  
  

• Accounts Receivable - We tested controls over the accounts receivable process by testing selected charges and payment transactions. Our review also included confirmation of selected balances by customers as of 7/31/99 and 10/31/99.
  
  

• Receipts System - We tested compliance of cash receipts with University and department policies. We also interviewed Veterinary Teaching Hospital cash handling staff to understand cash handling processes and determine that all information is properly flowing from the VTH system to the cashiers.
  
  

• Pharmacy/Controlled Substances - We tested Pharmacy purchasing, receiving, and distribution controls over inventories of controlled substances.
  
  

• Central Supply Inventory - We reviewed the controls over inventory in Central Supply. We also reviewed the process of cross charging for these supplies.
  
  

• Information Systems - We reviewed the system methodology surrounding the implementation of the new hospital computer system, and preparations to address year 2000 risks.
  
  

• Administration - We completed an analysis of internal controls through the use of diagnostic questionnaires, interviews, and observation. We also tested payroll, disbursement, travel, and accounting transactions for compliance with University policies.

Conclusion

Our review of the Veterinary Teaching Hospital (VTH) showed ...

Issues and Recommendations

1. Summary of concern …

Description of issue…..

          Recommendations:

          1a. Description of recommendation …

          Rating: Essential

Audit Recommendation Rating System

This audit incorporates a rating system that has been developed to enable the reader to determine the relative importance of the recommendations made. The rating for each recommendation is shown directly after the recommendation. Recommendations are rated as follows:

Level	Description
Essential	Resolution would help avoid a potentially critical negative impact involving loss of material assets, reputation, critical financial information, or ability to comply with the most important laws, policies, or procedures.
Significant	Resolution would help avoid a potentially significant negative impact on the unit's assets, financial information, or ability to comply with important laws, policies, or procedures.
Useful	Resolution would help improve controls and avoid problems in the unit's operations. These issues are handled verbally with the unit audited.

The Office of Internal Audit will do a quarterly follow-up on all "essential" recommendations to determine the progress made on implementation. The current status of these items is reported to the Audit Committee of the Board of Regents.

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