Healthcare and medical companies manage sensitive operations, specialised equipment, patient-related transactions and a range of income streams. Their financial statements may include consultation and treatment revenue, insurance and corporate receivables, medical supplies, equipment, leases, staff costs and amounts collected on behalf of healthcare professionals or other parties.
An independent audit examines a company’s financial statements and supporting records. It can give directors, shareholders, lenders, investors and other stakeholders greater confidence in the reported financial information.
Koh & Lim Audit PAC provides audit services for healthcare and medical companies in Singapore. We work with medical clinics, healthcare service providers, diagnostic and laboratory businesses, medical equipment suppliers, health technology companies and other businesses supporting the healthcare sector.
Independent audit services for healthcare businesses
An audit involves gathering evidence to assess whether a company’s financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework and relevant requirements.
The audit needs of a healthcare company depend on its activities. A clinic may earn consultation and treatment fees, while a diagnostic business may receive income from laboratory services. A medical equipment supplier may hold significant inventory, and a healthcare technology company may have subscription revenue and software development costs.
Our audit approach starts with understanding the company’s services, revenue streams, systems and reporting needs. We plan the engagement around the company’s circumstances and the financial statement areas that require attention. We also communicate the information needed from management and the finance team throughout the audit.
Why healthcare and medical companies may need an audit
A Singapore company may need an audit to meet statutory requirements, comply with financing terms, satisfy a parent company’s reporting instructions or provide assurance requested by shareholders, investors or other stakeholders. A lender, investor or group may require audited financial statements as part of its own reporting process.
Some companies may qualify for an audit exemption, subject to the applicable criteria and their circumstances. ACRA provides guidance on the small company audit exemption framework. Companies should confirm their eligibility rather than assume that private ownership or a small number of employees automatically means an audit is not required. www.acra.gov.sg
Directors remain responsible for financial reporting. ACRA states that companies that are not audit exempt must present audited financial statements. www.acra.gov.sg The accounting standards applicable to a company depend on its circumstances. www.acra.gov.sg
An audit may also be requested under a shareholder agreement, group reporting policy, financing arrangement or other contractual requirement. Healthcare businesses should check relevant agreements for reporting deadlines and audit obligations.
Understanding healthcare and medical operations
Healthcare businesses may provide consultations, treatments, diagnostic tests, laboratory services, rehabilitation, medical equipment, software or other support services. Some companies combine clinical services with retail, membership plans, corporate health services or technology platforms.
During an audit, we may consider how the company:
- Records consultations, treatments and diagnostic services
- Tracks payments from patients, insurers and corporate clients
- Accounts for package sales, deposits and prepaid services
- Manages medical supplies and other inventory
- Records equipment purchases, leases and depreciation
- Accounts for doctors, specialists, employees and contractors
- Reconciles clinic or service records with accounting data
- Estimates unpaid claims, refunds or other liabilities
- Separates company funds from amounts collected for others
- Records technology, development and platform-related costs
The company’s records should provide a clear connection between services delivered, amounts billed, cash collected and the balances reported in the financial statements.
Patient, insurer and corporate revenue
Healthcare companies may receive payment from patients, insurers, corporate clients, administrators or other parties. The audit may review fee schedules, patient billing reports, invoices, receipts, service records, insurer remittance statements and corporate contracts.
The timing of revenue recognition depends on the service provided, contractual terms and applicable accounting requirements. A treatment may be paid for at the time it is delivered, while an insurance claim or corporate invoice may be settled later. The company should maintain records showing what service was provided, when it was provided and which party is responsible for payment.
Where services are provided under a corporate or panel arrangement, the audit may examine the contract terms, rate schedules, claims submitted and payments received. Differences between submitted claims and amounts approved or paid should be reconciled and assessed.
Healthcare providers may also offer treatment packages, prepaid plans, memberships or vouchers. Cash received in advance does not necessarily represent revenue for services already delivered. The company should track remaining sessions, unused credits, expiry terms and any refund obligations, then apply the relevant accounting treatment.
Accounts receivable and insurance claims
Healthcare businesses may have receivables from patients, insurers, corporate clients or administrators. The audit may review ageing reports, claim submissions, remittance statements, disputed amounts and cash received after year-end.
Claims may be delayed, adjusted or rejected. The company should maintain records that explain the status of submitted claims and identify amounts that are under review. Management should consider whether any balances may not be recoverable and whether an allowance or other adjustment is appropriate under the applicable accounting framework.
For corporate clients, payment terms may differ by contract. The audit may examine signed agreements, invoices, service records and subsequent receipts. Where a customer disputes a charge or challenges a claim, management should document the issue and assess its potential financial impact.
Patient refunds and cancellations may also affect revenue and receivables. The company should maintain clear policies and records for cancelled appointments, returned payments, unused packages and adjustments issued after year-end.
Medical supplies and inventory
Clinics, laboratories and other healthcare businesses may hold medical supplies, consumables, diagnostic materials, protective equipment, pharmaceuticals or retail products. The company should maintain records showing quantities, locations, purchase costs and stock movements.
The audit may examine inventory listings, purchase invoices, stocktake records and adjustments. Procedures may include attending a stocktake, performing test counts or reviewing reconciliations between physical quantities and the inventory system, depending on the circumstances.
Some items may have expiry dates, storage requirements or limited use. Management should review stock that is expired, damaged, obsolete or unlikely to be used or sold. The company should apply its inventory policy consistently and assess whether any adjustment is needed under the applicable reporting framework.
Where supplies are held at multiple clinics, laboratories or storage locations, location-level records can help management track movements and investigate differences. The company should also distinguish its own stock from items owned by another party or held on consignment.
Equipment, premises and leases
Healthcare companies may invest in diagnostic devices, treatment equipment, laboratory instruments, clinic fittings, computer systems and other specialised assets. The audit may examine additions, disposals, depreciation, asset locations and whether equipment remains in use.
The company should keep a fixed asset register showing significant items, purchase dates, costs, locations and depreciation policies. Maintenance and service records can help support the status and use of equipment.
Equipment may be financed, leased or acquired under service arrangements. The audit may review relevant contracts, payment schedules, renewal options and management’s accounting calculations. For major equipment purchases, the company should apply its policies consistently when deciding whether costs are capitalised or expensed.
Clinic and laboratory premises may also be leased. The audit may review tenancy agreements, lease schedules, deposits and payments. Where premises are renovated, management should keep invoices and project records to support the accounting treatment of the work.
Payroll, doctors and professional fees
Healthcare businesses may employ doctors, nurses, laboratory personnel, therapists, administrators and support staff. They may also engage visiting professionals, locums, specialists or other contractors.
The audit may examine payroll records, service agreements, commission or fee arrangements, bonuses, leave balances and amounts payable at year-end. The company should keep clear records showing whether a professional is an employee, contractor or service provider and how their fees are calculated.
Where staff work across several clinics, departments or service lines, the company may allocate payroll costs using time records, schedules or another consistent method. Good records help management understand the cost of operating each location and support financial reporting.
Unpaid salaries, professional fees, bonuses or contractor invoices relating to the financial year may need to be accrued, even if payment occurs after year-end. Management should review payroll and supplier records for services received before the reporting date.
Healthcare technology and development costs
Some medical companies develop software, diagnostic tools, booking platforms, patient management systems or digital health services. They may also pay for external software, data hosting, system integration or ongoing platform support.
The audit may review development project records, budgets, technical assessments, time records, supplier contracts and management approvals. The accounting treatment depends on the nature and stage of the work, the company’s policy and the applicable reporting requirements.
Companies should maintain records that distinguish research, product development, maintenance, upgrades and routine support. If development costs are capitalised, management should document the basis and monitor whether the related asset continues to provide expected benefits.
Cloud hosting and software subscriptions may involve prepaid amounts, usage charges or multi-year commitments. The company should keep invoices and agreements that support the period and nature of the costs recorded.
Deposits, grants and other funding
A healthcare business may receive patient deposits, advance payments, funding, grants or support from a parent company or investor. The accounting treatment depends on the terms and what the company is required to do in return.
The audit may examine funding agreements, approval documents, payment records, conditions and management’s assessment of any outstanding obligations. Where funds are tied to specified activities or future services, the company should track relevant expenditure and remaining conditions.
Patient deposits and appointment prepayments should be reconciled to the company’s booking or practice management system. The records should show whether the service has been delivered, whether a refund is due or whether the amount remains available for future services.
Related parties and group structures
Healthcare businesses may be part of a group or transact with related parties such as shareholders, directors, parent companies, subsidiaries or affiliated providers. Examples may include management fees, shared staff, premises arrangements, loans, equipment transfers or service agreements.
The audit may review contracts, invoices, approvals, loan records and intercompany reconciliations. Management should maintain a complete list of related parties and identify material transactions and balances for financial statement reporting.
For groups with multiple clinics or healthcare entities, consolidation may require consistent accounting policies and reconciled intercompany balances. Preparing group schedules early can help avoid delays during the audit.
Cash flow, financing and commitments
Healthcare companies may need financing for premises, equipment, technology development or expansion into new locations. The audit may involve reviewing bank balances, loan agreements, interest charges, security arrangements and borrowing covenants.
Management should monitor cash flow and consider how receivables, equipment purchases, staffing costs and clinic expansion affect liquidity. If a company faces significant losses, delayed collections, funding uncertainty or difficulty renewing financing, directors may need to consider the effect on the company’s financial position and ability to continue operating.
The company may also have commitments for equipment purchases, renovations, leases or technology services. Management should identify material commitments and assess whether the financial statements require disclosure or another accounting treatment.
Audit preparation for healthcare and medical companies
Preparing key records before the audit begins can help the engagement proceed efficiently. Companies may find it useful to organise:
- The trial balance and draft financial statements
- Bank statements and reconciliations
- Revenue reports by clinic, service or payment source
- Patient, insurer and corporate receivable schedules
- Package, deposit and prepaid service listings
- Inventory records and stocktake documentation
- Equipment, fixed asset and lease schedules
- Payroll and professional fee records
- Development cost and technology schedules
- Funding agreements, loan documents and covenant calculations
- Related party schedules and intercompany reconciliations
- Details of refunds, disputes, claims and commitments
A staff member who can coordinate audit requests and explain the company’s billing and practice systems can help reduce delays. Management should also prepare explanations for unusual changes in revenue, receivables, inventory, staff costs and equipment purchases.
Our audit process
Our audit process begins with understanding the company’s services, revenue sources, locations, accounting systems and reporting timetable. We discuss significant developments during the year, such as new clinics, equipment purchases, changes to service offerings, technology projects or group restructuring.
We then plan the audit procedures and agree on the information needed. Depending on the company, the work may include testing transactions, reviewing customer or insurer arrangements, examining inventory, confirming balances and assessing financial statement estimates and disclosures.
At the end of the audit, we discuss significant findings and proposed adjustments with management. We issue the appropriate auditor’s report based on the audit evidence obtained and the applicable professional requirements.
The audit timeline depends on the readiness of the records, the number of locations, the complexity of billing arrangements, the availability of supporting data and how quickly outstanding questions are resolved. Early preparation is useful for companies with several clinics, multiple payment sources or a group reporting deadline.
Choosing an auditor for a healthcare company
When selecting an auditor, a healthcare or medical company may want to consider whether the audit team will take time to understand its services, revenue streams, equipment and recordkeeping systems. Clear communication and an agreed timetable can help finance and operations teams prepare.
An audit is an independent examination of financial statements. It does not replace management’s responsibilities for patient care, clinical governance, privacy, operational controls or regulatory compliance.
Audit services for healthcare and medical companies in Singapore
Koh & Lim Audit PAC provides audit services for healthcare and medical companies in Singapore, including clinics, diagnostic businesses, medical suppliers, healthcare service providers and health technology companies. We aim to understand each company’s activities and conduct the audit with professionalism and care.
Whether your company needs an audit for statutory compliance, group reporting, financing or stakeholder requirements, we can discuss the engagement scope and the records needed to begin. Contact Koh & Lim Audit PAC to arrange a discussion about audit services for your healthcare or medical company in Singapore.