ATLANTA— State Representative Jason Spencer (R-Woodbine) today released the following statement regarding Hospital Authority of the City of St. Marys (“HASM”) audit review:
“As a professional practitioner in the health care field, I am keenly interested in the current health care related developments that affect our community and our way of life. I have recently become aware of a situation regarding the Hospital Authority of the City of St. Marys (“HASM”) and its failure to comply with certain applicable state laws regarding the stewardship of the HASM assets.
“One of the provisions in the laws of the state of Georgia (O.C.G.A. §37-7-91) requires all hospital authorities to ‘ensure that an annual audit of the financial affairs, books, and records of such authority is conducted at the end of each fiscal year’ … by ‘either a certified public accountant or a firm of certified public accountants … performed in accordance with generally accepted accounting principals’(sic). According to the HASM Board of Directors minutes, there had never been an audit conducted throughout the more than fifty years of its existence prior to the 2012 fiscal year.
“It appears that the SMHA did hire an accountant in late 2012. On February 4, 2013, Kenneth D. Kriner, CPA PC, issued an Independent Accountant’s Compilation Report to the Board of Directors of HASM (a copy of which is attached to this Release). The first sentence of that report is re-printed below:
I have compiled the accompanying statement of financial position of HOSPITAL AUTHORITY OF THE CITY OF ST MARYS (a Non-profit 501(c)(3) organization) as of December 31, 2012, and the related statement of activity for the three months and year then ended.
“The Hospital Authority of the City of St. Marys was duly created and authorized by the City in 1956 under O.C.G.A. §31-7-72 as a public body corporate and politic; therefore, this Authority is a governmental entity subject to typical auditing standards applied to such governmental entities. At no time was the HASM a non-profit corporation as asserted by Mr. Kriner. Further, based on Mr. Kriner’s report, he was associated with those financial statements through his involvement in issuing the above referenced compilation report.
“Notwithstanding Mr. Kriner’s lack of independence from his association with the HASM interim financial statements, he apparently was engaged to perform an “independent” audit of the annual financial statements of HASM and subsequently issued his report dated July 19, 2013 (a copy of which is attached to this Release).
“Upon review, there appeared to be a number of irregularities in Mr. Kriner’s “Audit Report”. Therefore, I requested the state of Georgia Department of Audits and Accounts (State Auditor) to conduct a review of Mr. Kriner’s Audit Report relative to compliance with the applicable Generally Accepted Auditing Standards and the financial statement’s compliance with Governmental Accounting Standards Board (Generally Accepted Accounting Principles).
“Mr. Edward Blaha, the Director of Department of Audits and Accounts has issued his letter of findings dated September 4, 2013, which contains numerous departures from the Generally Accepted Accounting Principles, and it is attached to this release.
“A full set of the attached documents will be forwarded to the City Council, the City of St. Marys, for inclusion in the HASM file.
“Upon further investigation, I have discovered that there are a number of similar situations across the state of Georgia regarding “dormant” or non-operational hospital authorities that remain in existence after the subject hospital has been sold, and after the purpose for which the authority was created has long since expired. Consequently, I will be proposing several changes to the applicable sections of the Official Code of the state of Georgia in the next Session of the General Assembly.”
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