Healthcare Financial Management Association, Principles and Practices Board. Statement no. 15: Valuation and financial statement presentation of charity service and bad debts by institutional healthcare providers.
Principles and Practices Board (P&P Board) Statement No. 2, issued in 1978, provided a basis for differentiating between charity service and bad debts. The statement acknowledged that, while the differentiation was helpful, the financial accounting and reporting of charity service and bad debts were the same. In 1990, the American Institute of Certified Public Accountants (AICPA) published (after review and approval by the Financial Accounting Standards Board and the Governmental Accounting Standards Board) an extensive revision of the guide titled "Audits of Providers of Health Care Services." The revised guide substantially changed the reporting of bad debts and eliminated charity service from revenue. Disclosure of the entity's policy for providing charity service and the level of charity service provided is required by the revised guide. The P&P Board decided that a substantive revision of its Statement No. 2 was required to bring it into conformity with the revised guide and to provide direction on implementation of the revised guide's requirements. This statement supersedes Statement No. 2 and deals with the same issues, including bad debts.
D000066:Accounting / Q000592:standards*; D002608:Charities / Q000191:economics*; D005377:Financial Management, Hospital / Q000592:standards*; D008489:Medical Indigency / Q000191:economics*; D014481:United States