GA ffe,800 
.R1 
rn3N4 
lClCf3-94 
STATE OF GEORGIA DEPARTMENT OF AUDITS 
254 WASHINGTON STREET ATLANTA. GEORGIA 30334 
 
 AUDIT REPORT SCHEDULE OF HOME OFFICE ALLOWABLE COSTS 
NELSON & CRAWFORD, INC. GRAY, GEORGIA 
FOR THE NINE MONTHS ENDED JUNE 30, 1994 
 
 NELSON & CRAWFORD, INC. - TABLE OF CONTENTS - 
 
AUDITOR'S REPORT 
 
V 
 
SCOPE OF THE AUDIT 
 
1 
 
SCHEDULE OF HOME OFFICE ALLOWABLE COSTS 
 
2 
 
NOTES TO SCHEDULE 
 
3 
 
SUMMARY OF FIELD AUDIT ADJUSTMENTS 
 
4 
 
EXPLANATION OF FIELD AUDIT ADJUSTMENTS 
 
5 
 
SUMMARY OF ALLOCATIONS TO CHAIN COMPONENTS 
 
7 
 
 CLAUDE L. VICKERS 
STATE AUDITOR (404) 656-2174 
 
DEPARTMENT OF AUDITS 
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 
January 24, 1995 
 
Nursing Horne Reimbursement Section Georgia Department of Medical Assistance 2 Peachtree Street, NW Room 27-208 Atlanta, Georgia 30303-3159 
Ladies and Gentlemen: 
We have audited the Home Office Cost Report filed with the Georgia Department of Medical Assistance under the Title XIX Medicaid Program by Nelson & Crawford, Inc., for the nine months ended June 30, 1994, and have compiled the accompanying Schedule of Home Office Allowable Costs based on our audit. The Home Office Cost Report is the responsibility of the management of Nelson & Crawford, Inc. Our responsibility is to determine if the home office allowable costs reported in the Home Office Cost Report are reasonable and allowable, in all material respects, in accordance with the federal and state laws, regulations, policies and procedures governing the Georgia Nursing Home Reimbursement Program. It is also our responsibility to report the results of our audit, including any required adjustments to the cost report data, to the Georgia Department of Medical Assistance. 
We conducted our audit in accordance with the Nursing Home Home Office Audit Program approved by the Georgia Department of Medical Assistance. Our audit included examining and evaluating, on a test basis, evidence supporting the amounts and disclosures in the Home Office Cost Report. Our audit also included assessing the accounting principles used and significant estimates made by management. We believe our audit provides a reasonable basis for our report. 
As described in Note l of the Notes to Schedule, the accompanying Schedule of Home Office Allowable Costs was prepared to present the data necessary for the Georgia Department of Medical Assistance to determine Medicaid reimbursement for the nursing home components of the home office and is not intended to be a presentation in accordance with generally accepted accounting principles, nor is it intended to be a complete presentation of the assets, liabilities, revenues and expenses of Nelson & Crawford, Inc., on the basis described. 
V 
 
 In our opinion, the "adjusted totals" column in the accompanying Schedule of Home Office Allowable Costs - which was compiled by us and reflects any adjustments to the cost report data required as a result of our audit presents fairly, in all material respects, the home office allowable costs of Nelson & Crawford, Inc., for the nine months ended June 30, 1994, on the basis of accounting described in Note 1. 
This report is intended to be used solely in connection with the administration of the Georgia Department of Medical Assistance Nursing Home Reimbursement Program and is not to be used or relied upon for any other purpose. 
Respectfully submitted, 
d,__~ 
Claude L. Vickers State Auditor CLV/fd/by 
vi 
 
 NELSON & CRAWFORD, INC. SCOPE OF THE AUDIT 
FOR THE NINE MONTHS ENDED JUNE 30, 1994 
This audit was performed in order to determine if the home office allowable costs reported in the Home Office Cost Report are reasonable and allowable, in all material respects, in accordance with the federal and state laws, regulations, policies and procedures governing the Georgia Medicaid Program, and to report to the Georgia Department of Medical Assistance (DMA) any adjustments to the cost report data required as a result of our audit. 
In order to accomplish these objectives, we examined, on a test basis, evidence supporting the amounts and disclosures in the Home Office Cost Report, and assessed the accounting principles used and significant estimates made by management. Tested transactions and accounts were evaluated for compliance with DMA Policies and Procedures for Nursing Home Services and for compliance with federal laws and regulations applicable to the Title XIX Medicaid Program. Any adjustments to the cost report data required as a result of our audit are included in this report. 
our audit included a limited consideration of the organization"s internal control structure sufficient to plan the audit. Our consideration for this limited purpose would not necessarily disclose all reportable conditions in the internal control structure. Accordingly, we do not express an opinion on the internal control structure. 
1 
 
 NELSON & CRAWFORD, INC. SCHEDULE OF HOME OFFICE ALLOWABLE COSTS FOR THE NINE MONTHS ENDED JUNE 30, 1994 
 
ALLOWABLE COSTS 
 
PER COST REPORT 
AS FILED 
 
DIRECTLY ALLOCATED COSTS 
 
Legal Fees 
 
$ 
 
0 
 
OFFICE 
 
FIELD 
 
AUDIT 
 
AUDIT 
 
ADJUSTMENTS ADJUSTMENTS 
 
ADJUSTED TOTALS 
 
$ 
 
1,959 $ 
 
1,959 
 
POOLED COSTS 
 
Salaries and Wages 
 
$ 
 
Employee Insurance 
 
Payroll Taxes 
 
Depreciation/Amortization 
 
Rental and Leasing 
 
Utilities 
 
Communications 
 
Repairs and Maintenance 
 
Taxes and Licenses 
 
Insurance 
 
Supplies and Postage 
 
Legal Fees 
 
Accounting Fees 
 
Travel and Entertainment 
 
Convention/Education 
 
Dues and Subscriptions 
 
Miscellaneous 
 
143,231 8,028 
12,474 3,341 
11,980 1,345 6,210 2,412 333 833 4,793 3,602 
58,026 8,973 5,151 151 925 
 
Total Pooled Administrative Expense 
 
$ 271,808 
 
Interest Expense 
 
Non-Capital Related $ 
 
39 
 
Total Pooled Costs 
 
$ 271,847 
 
$ (4,306) $ 138,925 
 
8,028 
 
(329) 
 
12,145 
 
(2,252) 
 
1,089 
 
11,980 
 
1,345 
 
6,210 
 
2,412 
 
333 
 
833 
 
4,793 
 
(1,959) 
 
1,643 
 
58,026 
 
8,973 
 
5,151 
 
151 
 
925 
 
$ (8,846) $ 262,962 
 
$ 
 
39 
 
$ (8,846) $ 263,001 
 
2 
 
 NELSON & CRAWFORD, INC. NOTES TO SCHEDULE 
FOR THE NINE MONTHS ENDED JUNE 30, 1994 
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ENTITY INFORMATION 
Nelson & Crawford, Inc., filed a home office cost report with the Georgia Department of Medical Assistance for the nine months ended June 30, 1994. The home office cost report listed three chain components, all of which are in Georgia. In additiqn to the audit of the home office cost report, audits have been made of provider cost reports filed by each component of the chain organization: 
Gordon Health Center, Inc. Green Acres, Inc. Southland Nursing Home, Inc. 
BASIS OF ACCOUNTING The Home Office Cost Report and the associated Schedule of Home Office 
Allowable Costs, hereinafter referred to aij the Schedule, were prepared in conformity with the Principles of Reimbursement for Provider Cost published by the Secretary of Health and Human Services as modified by the provisions of Policies and Procedures for Nursing Home Services published by the Georgia Department of Medical Assistance. This basis of accounting required by the Medicaid Program differs from generally accepted accounting principles. Consequently, the information presented in this report reflects only the home office allowable costs required for DMA to determine the Medicaid reimbursement rate for the nursing home components of the home office. This report does not reflect the provider's financial position or the results of its operations; it is intended to be used solely in connection with the administration of the Georgia D~partment of Medical Assistance Nursing Home Reimbursement Program and is not to be used or relied upon for any other purpose. 
NOTE 2: OFFICE AUDIT ADJUSTMENTS The Office Audit Adjustments column on the Schedule is provided to show 
the net effect of adjustments made during the office audit process. No office audit was performed prior to the cost report field audit and, therefore, no adjustments are shown. 
NOTE 3: FIELD AUDIT ADJUSTMENTS The Field Audit Adjustments column on the Schedule is provided to show 
the net effect of adjustments made during the cost report field audit process. The audit adjustments made as a result of this audit are shown on the Summary of Field Audit Adjustments and are explained in the Explanation of Field Audit Adjustments. 
3 
 
 ADJUSTMENT NUMBER 
 
NELSON & CRAWFORD, INC. SUMMARY OF FIELD AUDIT ADJUSTMENTS FOR THE NINE MONTHS ENDED JUNE 30, 1994 
DIRECTLY ALLOCATED COSTS 
 
LEGAL FEES 
 
1 
 
Costs Applicable to Specific Chain 
 
Components 
 
$ 
 
1,959 
 
POOLED COSTS 
 
SALARIES AND WAGES 
 
2 
 
Excess Compensation 
 
PAYROLL TAXES 
 
2 
 
Excess Compensation 
 
DEPRECIATION/AMORTIZATION 
 
3 
 
Excess Depreciation 
 
LEGAL FEES 
 
1 
 
Costs Applicable to Specific Chain 
 
Components 
 
$ 
 
(4,306) 
 
(329) 
 
(2,252) 
 
(1,959) 
 
Total Adjustment to Pooled Costs 
 
$ 
 
(8,846) 
 
4 
 
 ADJUSTMENT NUMBER 
1 
 
NELSON & CRAWFORD, INC. EXPLANATION OF FIELD AUDIT ADJUSTMENTS FOR THE NINE MONTHS ENDED JUNE 30, 1994 
 
EXPLANATION 
 
COSTS APPLICABLE TO SPECIFIC CHAIN COMPONENTS 
 
Allowable costs claimed by the home office included expenses applicable to specific chain components. Federal regulations provide that allowable costs incurred for the benefit of, or directly attributable to, a specific provider must be allocated directly to the chain entity for which they were incurred. This adjustment is made to reclassify the costs applicable to a specific chain component from pooled costs to directly allocated costs. (HCFA 15-2150.3B) 
 
DIRECTLY ALLOCATED COSTS Legal Fees 
POOLED COSTS Legal Fees 
 
$ 1,959 (1,959) 
 
Net Adjustment to Allowable Costs 
 
$ 
 
0 
 
2 
 
EXCESS COMPENSATION 
 
Allowable costs claimed on the cost report included compensation to employees which exceeded OMA maximum limitations. The Department of Medical Assistance annually calculates allowable salary ceilings for various positions as well as maximum fees allowable for medical and corporate directors. This adjustment is made to reduce allowable costs by the amount of compensation paid in excess of the OMA guidelines, plus related employer"s share of payroll taxes. (OMA Compensation Ceilings; HCFA 15-906) 
 
Position Title 
 
Total Compensation 
 
Guideline Ceiling (A) 
 
Excess 
 
Chief Operating Officer $ 35,150 
 
Payroll Taxes 
 
2,689 
 
$ 30,844 2,360 
 
$ (4,306) (329) 
 
$ 37,839 
 
$ 33,204 
 
$ (4,635) 
 
(A) Ceilings have been adjusted to percentage of full-time, where applicable. 
 
5 
 
 ADJUSTMENT NUMBER 
 
EXPLANATION (continued) 
POOLED COSTS Salaries and Wages Payroll Taxes 
Total Adjustment to Allowable Costs 
 
$ (4,306) (329) 
$ (4,635) 
 
3 
 
EXCESS DEPRECIATION 
 
Documentation examined during the audit in support of fixed assets and depreciation showed that either the property was not included in the proper class or depreciation was not calculated in accordance with OMA guidelines. OMA Policies and Procedures require the use of minimum required asset lives. This adjustment is made to reduce allowable costs claimed by the amount of depreciation expense claimed in excess of total allowable. (OMA Depreciation Guidelines) 
 
POOLED COSTS Depreciation/Amortization 
 
$ (2,252) 
 
6 
 
 NELSON & CRAWFORD, INC. SUMMARY OF ALLOCATIONS TO CHAIN COMPONENTS 
FOR THE NINE MONTHS ENDED JUNE 30, 1994 
 
CHAIN COMPONENTS 
GEORGIA NURSING HOMES Gordon Health Center, Inc. Green Acres, Inc. Southland Nursing Home, Inc. 
 
ALLOCATION OF ADJUSTMENTS TO: 
 
DIRECTLY 
 
POOLED COSTS: 
 
ALLOCATED 
 
ADMINISTRATIVE 
 
COSTS 
 
EXPENSES 
 
$ 1,959 
 
$ (3,143) (2,520) (3,183) 
 
TOTAL ALLOCATION 
 
$ 1,959 
 
$ (8,846) 
 
7