Wednesday, April 22, 2015

The Singing River picture gets worse. SH: CEO left "after shortfall" discovered.

Did the spirit of Bernie Ebbers guide the Singing River Health System?   The 2014 audit charges that accounts receivable were overstated by $88 million while the pension plan fell into worse shape.  The audit was presented to the Jackson County Board of Supervisors.   The hospital system lost $34.7 million in 2014 and $32.3 million in 2013.  The audit reviewed both years and was conducted by Horne CPA group.  Previous audits were conducted by KPMG.  KPMG was selected by then CEO Chris Anderson.  Mr. Anderson is currently the CEO OF MBMC but served as Singing River's CEO until the spring of 2014.  The audit also includes a restatement of the 2013 audit. 

The accounts receivables were "overstated by approximately $61 million as of September 30, 2012.... For the 2013 fiscal year audit, management's evaluation resulted in an adjustment to the expected amount of collections of 2013 for $27 million".   Assets declined by $42 million as cash and cash equivalents fell by $22.7 million.  The system had cash for to only cover 28 days of operations in 2014 but had enough to cover 60 days in 2013.

Then there is the pension liability.  See note 10 on page 45.  It shot up to $35 million in 2013 and $53.4 million in 2014.  Singing River stopped contributing to the plan in 2011.  Previous audits show a negative trend in this area:

 2007: $1,285,670
2008: $1,325,098
2009: $3,837,219
2010: $8,237,219
2011: $15,445,331
2012: $24,263,831
2013: $35,461,399

The audit states that management thinks it will be unable to "fund the plan in its current sstate into the foreseeable future".  However, the audit also states that Horne can not reasonably predict the future of the plan due to several lawsuits.  Singing River made no contributions in 2013 and 2014.  It was supposed to contribute $18.4 million in 2014 and $11.4 million in 2013.

The funded ratio (p.47) dropped again in 2013:

2011: 70.6%
2012: 63.2%
2013: 47.8%

It should be noted that management changed the assumed rate of return from 8% to 6.5%, thus decreasing the funding level. 

Kingfish note: The Sun-Herald covered the Horne presentation of the audit to the Jackson County Board of Supervisors Monday. The newspaper reported:

An independent auditor told the Jackson County Board of Supervisors on Monday that Singing River Health System's prior management team counted as income $88 million in patient debt SRHS was unable to collect.

The system's previous accounting firm, KPMG, did not report the error in its audits of SRHS. Auditor Kade Moody of Horne LLP accounting firm told supervisors that Horne found the shortfall when it tested SRHS management's financial statements the first time Horne audited the books in 2014......

Once Horne found the shortfall, SRHS had to adjust its books, throwing the health system into financial turmoil. CEO Chris Anderson left for a job with Baptist Health Systems in Jackson soon after Horne discovered the shortfall.

In this year's audit, Horne found that SRHS lost almost $34.7 million in fiscal year 2014..... Rest of article.

Yet MBMC has taken no action regarding its CEO.  This previous JJ cartoon says it all:


Anonymous said...

Baptist management deserves someone of this caliber. Total bunch of assholes.

Tick-and-tie said...

Sounds like KPMG will have litigation on their hands.

Anonymous said...

Pension theft is just another form of wage theft. Those employees were working on the understanding that they were getting SR contributions to the pension fund as part of their compensation. They provided the work; SR didn't provide the contributions.

Everyone who participated in that decision should go to jail, just like any other thieves would.

Anonymous said...

Look! They went Thatta-way!

However, the SRHS pension zero funding started years before. So there must have been some reason for that. Also missing: the reason to report to plan participants that SHRS had funded what it didn't...

Anonymous said...

Great cartoon!

The $88 million shortfall has nothing to do with the pension plan, and it is not the reason SRHS stopped contributing to the plan back in 2009. The shortfall is a convenient red herring SRHS management and lawyers can use to cast blame for all their mistakes upon KPMG.

At the end of the day, my prediction is management knew about $88 million accounting "error" all along, and knowingly used it to pad the books (remember Anderson was/is a CPA formerly with KPMG) to hid a sharp decline in revenues.

Shame on KPMG for not blowing the whistle louder, but SRHS management knew their way around financial records and statements.

Anonymous said...

Mr Anderson use to work for KPMG

Anonymous said...

Check your tax documents for the years SRHS claimed to fund your retirement account but did not.

What a self-serving coward Chris Anderson is! I can't wait for his mugshot.

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Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

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