August 13, 1999

Dr. Donald Plumb, Director
Veterinary Teaching Hospital
305 Veterinary Teaching Hospital
1365 Gortner Avenue
St. Paul, Minnesota 55108

Dear Dr. Plumb,

This letter is intended to confirm and formalize our mutual understanding and expectations regarding the audit we are conducting in the Veterinary Teaching Hospital. We appreciated the opportunity to discuss this engagement with your staff, and for the input they provided to this process. As our audit proceeds we welcome continued feedback regarding control issues you would like reviewed.

The purpose of this engagement is to assess the control systems your unit has in place to assist you in fulfilling your goals and objectives. The audit will address financial, operational, compliance and information system issues. Attached for your information is an Audit Work Plan describing the scope of our work. While the work plan attached reflects our current plans, we may modify it as we gather additional information throughout this audit. We will of course communicate any material changes to you and the appropriate staff. The time period covered by our review will be Fiscal Year 1999.

You will receive a draft copy of the audit report following our completion of fieldwork. After you have reviewed the draft report we will schedule an exit conference to discuss it. University policy provides for the inclusion in our final report of your management action plan for recommendations we make as a result of this review. We would appreciate receiving your plan within ten working days of the exit conference. Our goal is to issue our final report within one month of the completion of our fieldwork.

If you have any questions as this audit progresses feel free to contact Jim McDonnell, the Audit Manager responsible for this engagement, Kelly Kuhns, the Lead Auditor, or Dennis Skovsted, the Information Systems Audit Manger. We thank you in advance for your cooperation, and we look forward to working with you and your staff.

Sincerely,

Gail L. Klatt
Director of Audits

cc: Jeffrey Klausner
Ed Kosciolek
Frank Cerra
Katherine Johnston

Audit Work Plan
Veterinary Teaching Hospital
Fiscal Year 1999

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

Accounts Receivable
We will test controls over the accounts receivable process by testing selected charges and payment transactions. Our review will include confirmation of selected balances by customers as of 7/31/99.

Receipts System
We will test compliance of cash receipts with University and department policies.

We will interview 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 will test Pharmacy purchasing, receiving, and distribution controls over inventories of controlled substances.

Central Supply Inventory
We will review the controls over inventory in Central Supply. We will also review the process of cross charging for these supplies.

Information Systems
We will review the system methodology surrounding the implementation of the new hospital computer system.

Administration
We will complete an analysis of internal controls through the use of diagnostic questionnaires, interviews, and observation.

We will test payroll, disbursement, travel, and accounting transactions for compliance with University policies.

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