The points stated below are to be considered for conducting audit of a hospital.

(i) Check the letter of appointment to ascertain the scope of responsibilities .

(ii) Study the Charter or Trust Deed under which the hospital has been set up and take a special note of the provisions affecting the accounts.

(iii) Examine, evaluate and verify the system of internal check and internal control and determine the nature, timing and extent of the audit procedures.

(iv) Vouch the entries in the Patient’s Bill Register with the copies of the bills issued. Test check the selected bills to see that these have been correctly prepared taking into consideration the period of stay of each patient as recorded in the Attendance schedule.

(v) Vouch the collection from patients with the copies of the bills and entries in Bills Register. Arrears of dues should be properly carried forward. Where these are deemed to be irrecoverable, these be written off under due authorizations.

(vi) Interest and /or dividend income should be vouched with reference to the Investment Register and the interest dividend warrants.

(vii)In case of legacies and donations which are received for specific purposes, it should be ensured that any income therefrom is not utilized for any other purposes.

(viii)Where receipts of subscription show significant deviations from the budgeted figures, these should be thoroughly inquired into and the matter should be brought to the notice of the trustees or the Managing Committee.

(ix) Government grants or grants from local bodies should be verified with reference to the correspondence with the concerned authorities.

(x) Clear distinction should be made between the capital and revenue items.

(xi) The capital expenditure should be incurred under the proper authorization of a valid resolution of the trustees or the Managing Committee.

(xii) Verify the system of internal check as regards purchase and issue of stores, medicine, etc.

(xiii)Examine that the appointment of the staff, payment of salaries etc., are duly – authorized.


(xiv)Physically verify the investments, fixed assets and inventories.

(xv)Check that adequate depreciation has been provided on all the depreciable assets.

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