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Chart of Account for Assisted Living Companies

Do you have experience with setting up a chart of accounts for an assisted living company? I am not convinced the way our company is setting up the COA is the most efficient way of setting it up. If you have an example of a COA for an assisted living company, would you mind emailing it to me? ChrisSatRedconserve [dot] com.

I am setting up the third COAs based on an "experts" advice. I am curious what my financial expert friends on Proformative have to say.

Thanks.

Chris Shumate

Answers

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Chris,

Besides the general items always on a COA, what information do you need to either a) adhere to specific GAAP or other governmental authorities and b) to properly manage your business?

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

Wayne – Thanks for your response. The biggest deal seems to be surrounding how to properly manage the business. Internally, we have a different idea of how to properly manage the COA, as well as create the financial statements. The expert that is being used has another idea that seems to be cumbersome.

For instance, there two main reporting categories: Labor and Non-labor. In addition to the categories there are multiple departments: Residential Care, Marketing, Dietary, Housekeeping, Maintenance, Activities, Administration, and Transportation.

The financial statements that have been created include separate sections for labor and non-labor expenses. The asinine part is that all wages are being broken out, and reported in the financials as such. For instance, our residential care labor has 8 lines: Director Wages, LPN Wages, Nursing Aides Wages, Holiday Wages, Overtime Wages, FICA, FUTA, and SUTA.

I didn’t know if this was industry standard for AL companies. To me, from a financial reporting standpoint, as well as a person that maintains the COA and customizes the financial reports, I think labor needs to be summarized by departments on the financial statements, instead of itemized.

We have a “Total Controllable Cost” line that sums the labor and non-labor costs. I have never heard of “Total Controllable Cost” before.

I feel I have the proper accounts for GAAP and such. The ways the accounts are being separated are crazy. Here’s a for instance: Advertising is assigned to the marketing department, as are sponsorships. I think it is redundant to have these items coded under the marketing department, rather I feel these should be an SG&A item. Of course these are marketing items. No other department is using the accounts.

I think our consultant is an expert when it comes to the business of assisted livings. I am not so sure he is an expert at accounting and financial reporting. The accounting and financial reporting aspect of the business is where the company and the consultant are having differences of vision.

Are the ideas of the consultant regarding the COAs and financial reporting accurate? Are these industry standards?

Thanks again, Wayne, and anyone else with insight.

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

Chris - My wife is an Occupational Therapist and has worked in a skilled nursing facility. Financial statements and budgets are not set based on FASB or GAAP or IRS or Investor needs. Financials are arranged based on Insurance Company guidelines. Certain categories need to be broken out for reimbursement purposes. The largest drivers of your presentation will be Medicare and Medicaid.

What you are embarking on is extremely complex, i.e. open to error. In a perfect world your gl will provide -
-details to be forwarded to the insurance companies for reimbursement;
-classic Financial Statements for Management to run the business;
-aggregated information to provide to your Accountant for IRS filings; and,
-information required on-demand for state audits, which occur randomly.

No clue on the Marketing question. But the standards you seek are Insurance company standards, which are changing.

Good luck.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Regis sounds like he has a handle on this (health care accounting is not my forte).

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