WCHS needs to catch up on finances

Weston County Health Services’ financial reporting is behind schedule, a representative of its public accounting firm said at the May 16 board meeting.

Tommy Davis, of D & Co., said that when his firm visited the hospital from April 29 through May 3, it discovered several incomplete financial items. He said roughly 10 bank accounts haven’t been reconciled since the end of the 2023 fiscal year, which was June 30, 2023. Monthly accounting entries aren’t complete, and it appears that either no or few staff members are available to make the monthly entries, according to Davis.

He listed other problems: Fixed asset and depreciation schedules and other amortization schedules are incomplete. Entries for student loan repayments haven’t been made since June 30, 2023. Human resources has a manual repayment schedule for one student loan, without a general ledger entry. Accounts payable has not been balanced since June 2023. The construction-in-progress schedule has not been set up. Even though the hospital went live with Sage computer systems after transitioning from Meditech (Medical Information Technology Inc) on Feb. 1, Sage general ledger balances were set up on Jan. 1, and some of the balances brought into Sage as of Jan. 1 were incorrect. Some manual entries through ADP still haven’t been made.

“That’s the quick, down and dirty of where things stand,” Davis said.

Davis said his firm was also asked to help the hospital with its budget for fiscal 2025 and it is working on that. He said his team can help remotely, but it wants somebody at the hospital to take the lead.

“We want to help you work ourselves out of a job. We want to get you caught up, get through the crisis and hopefully be able to help train people to move you forward,” he said.

Realistically, it will take the hospital more than two months to get caught up, but the effort is less intensive after that period, according to Davis.

Weston County Health Services CEO Randy Lindauer said at the meeting that he and Davis discussed acquiring two part-time or one full-time person to “get everything lined out,” but Davis could still be the “fractional,” as opposed to full-time, chief financial officer.

“But before that can be done, there is a lot, a lot of work to be done,” Davis said.

Lindauer agreed. He and Davis said that it’s difficult to hire a CFO because there are so few in the industry.

WCHS accounts payable/payroll specialist Jennifer Stulken told the News Letter Journal in an email on May 21 that a number of changes are coming in the hospital’s accounting department. For example, the department is implementing a new accounting system and it went live with its new payroll system, ADP, that day, according to Stulken.

“It’s been a rough year and I look forward to building an Accounting team we can be proud of!” Stulken wrote.

The report from Davis came during the first meeting to take place after this year’s elections, which resulted in several new board members, and Kari Drost, an incumbent whose term runs through 2026, was appointed board treasurer at the May 16 meeting.

“I have already begun my research into the true financial position of WCHS. I am SO excited to be serving with my fellow Board members, Nathan Ballard and Ted Ertman, on the Finance Committee,” Drost said in an email on May 17. “I think we will do great work together so please stay tuned for more details.”

Ballard and Ertman are new to the board.

Financials cloudy for months

Drost said in an email on April 23 that she had begun requesting financial information in September 2023. On that day, she provided the News Letter Journal with email correspondence that took place in February between board members and Lindauer regarding financial reports.

In an email on Feb. 12, Drost asked Lindauer to update the board regarding financial information.

Lindauer said in an email on Feb. 13 that he believed it would be best to wait until Durbin & Co., now D & Co., completes the financial assessments and “produce ‘true’ financials” because Allard is not a CPA or an auditor, but added that he would investigate the figures “with several key individuals.” He asked other board members for their perspectives about updating and presenting the information and said it would take “quite a bit of time” to produce “‘true’ numbers.”

“And do we want to present these in an open meeting to the public without truly capturing all revenue and expense(s) that might be hanging out there that we are unaware of?” he wrote in his email.

Drost said in an email on Feb. 13 to the other board members and Lindauer that the board should at least have the number of visits per month from the clinic schedules so they could estimate patient volume per provider at the clinic and evaluate staff workload and any expansion plans. Lindauer said in an email that day that he had decided not to provide any numbers until the assessment was complete.

Drost said in an email to the News Letter Journal on April 18 that she ultimately received some financial information.

Lindauer said in a letter that the News Letter Journal received on April 22 that three people at the hospital handle financial accounting for Weston County Health Services. One is responsible for accounts receivable, and another handles accounts payable, according to the letter. The third person reviews all the accounts receivable and accounts payable transactions and creates reports, the letter said. An outside firm reviews all the transactions, providing another layer of security, and a second outside accounting firm audits the hospital’s accounting and financial information after the end of the fiscal year, Lindauer said in the letter.

D & Co. is the public accounting firm that reviews the transactions, and the board of trustees chose DZA, a Spokane-based accounting and advisory firm, to be the auditor, the letter said. Previously, the firm Casey Peterson Ltd., which has offices in Gillette and Rapid City, reviewed the transactions.

“Three things I wish to highlight: (1) the process we follow is safe, (2) changing firms periodically is best practice, and (3) by using two firms, there is a double layer of protection for WCHS,” Lindauer said in the letter. “There may be questions about which category an expense or revenue should go in, but the overall expenses and revenues remain the same.”

Weston County Health Services does not have audited financials because the audit is not yet complete, Lindauer said in the letter.

“The organization is paying its bills. Cash flow from banking statements, unaudited revenues, and unaudited expenses, are being reviewed continuously,” he said. “There are more than a few strong accounting eyes on the entire process.”

Lindauer said in an April 19 email that the board receives unaudited financial reports that are “a very good pulse” on the hospital’s overall financial health. When DZA finishes the audit, it will present the results to the board.

“An audit takes as long as the auditing firms deems appropriate,” Lindauer said in an email on April 22. “Please remember it is the auditing firm’s professional license
and reputation that stands behind their final audit report to the Board of Trustees. I am unable to provide an estimated timeline.”