Audits can be stressful for any medical practice. Even minor errors or missing records can trigger questions, leading to penalties, delays, or additional work. Understanding the common red flags auditors examine allows practices to resolve issues early. A specialist medical accountant Brisbane can spot potential problems, implement stronger financial controls, and ensure smoother compliance throughout the year.
Why Medical Practices Attract Audit Attention and How a Medical Accountant Helps?
Medical practices manage multiple income streams, complex billing rules, and mixed GST treatments, making them more likely to draw attention from regulators like the ATO, Medicare contractors, or private insurers. Audits often begin when unusual transaction patterns or data mismatches are detected. A medical accountant Brisbane reviews accounting systems, reconciles accounts, and ensures records are complete. This preparation helps practices respond quickly and confidently to audit requests, minimizing risks of penalties and disruptions.
Inaccurate or Inconsistent Patient Billing
One of the most common audit triggers is inconsistent patient billing. Errors may include incorrect item numbers, overcharging, failing to record co-payments, or inaccurate rebate claims. Auditors cross-check billing logs against Medicare remittances and bank deposits. A medical accountant reviews billing processes, reconciles claim payments with bank entries, and implements control measures to ensure billing accurately reflects services provided. Consistent billing reduces disputes and demonstrates reliability to auditors.
Missing or Poorly Organized Supporting Documentation
Auditors expect all claims and deductions to be backed by documentation, including invoices, receipts, contracts, and clinical billing records. Missing records for equipment purchases, professional subscriptions, or contractor payments raise audit concerns. A medical accountant Brisbane can help create a well-organized filing system, advise on which documents are essential, and link supporting materials to ledger entries. Proper documentation simplifies audits and reduces compliance risk.
Unrecorded, Delayed, or Duplicate Income
When payments from Medicare, insurers, or patients are not recorded promptly, or entered multiple times, financial statements fail to reconcile. These discrepancies are easily flagged during audits. A medical accountant reconciles all income sources, identifies unrecorded or duplicate entries, and implements timely recording procedures. Regular reconciliation ensures accurate reporting and minimizes discrepancies for auditors.
Misclassified Expenses and Personal Use Claims
Mixing personal and practice expenses or misclassifying costs can lead to disallowed deductions. Common issues include claiming full vehicle expenses for mixed personal and business use or misclassifying personal meals as business expenses. A medical accountant Brisbane reviews expense categories, corrects misclassifications, and documents business-use calculations. Clear separation of personal and business expenses protects the practice’s tax position and ensures compliance.
Payroll, PAYG, and Superannuation Issues
Payroll is a critical area where auditors frequently find problems. Errors include incorrect PAYG withholding, missed superannuation payments, incorrect employee classification, and incomplete payroll records. A medical accountant audits payroll systems, verifies employee classifications, confirms superannuation contributions, and ensures Single Touch Payroll reporting is accurate. Proper payroll management reduces the risk of penalties and workplace disputes.
GST and BAS Reporting Errors
Practices providing both GST-free and taxable services must manage GST correctly. Mistakes in GST treatment, input tax credits, or late BAS lodgements are common audit triggers. A medical accountant Brisbane reviews GST classifications, reconciles BAS entries, and ensures accurate and timely lodgements. Correct GST handling lowers audit risk and ensures compliance with tax laws.
Unreconciled Merchant and Bank Statements
Auditors examine merchant and bank statements for missing deposits, unexplained transfers, or unclaimed merchant fees. A medical accountant reconciles merchant reports with bank entries, investigates discrepancies, and implements regular reconciliation routines. Keeping records current helps avoid red flags during audits and ensures reliable financial reporting.
Unclear Asset Register and Incorrect Depreciation
Incomplete asset registers or inconsistent depreciation schedules distort profits and taxable income. Auditors expect accurate recording of purchase dates, costs, and depreciation methods. A medical accountant Brisbane updates asset registers, corrects depreciation schedules, and identifies legitimate deduction opportunities such as instant asset write-offs or pooled depreciation, keeping the practice compliant.
Related-Party Transactions and Conflict of Interest
Transactions with related parties, such as family-owned suppliers or shareholder loans, require transparency and accurate disclosure. Undeclared related-party dealings can raise concerns about revenue shifting or benefit extraction. A medical accountant documents these arrangements, applies proper accounting treatment, and ensures disclosures in financial statements are complete.
Poor Internal Controls and Segregation of Duties
Smaller practices often centralize financial control in one person, increasing risk of errors or fraud. Auditors look for weak internal controls and a lack of segregation of duties in billing, receiving, and reconciliation. A medical accountant Brisbane designs simple control procedures, recommends appropriate role separation, and implements checks that reduce both error and fraud risk.
How a Medical Accountant Prepares Your Practice for an Audit?
A medical accountant conducts a pre-audit review, reconciling bank and merchant accounts, auditing payroll and superannuation, verifying GST/BAS entries, checking the asset register, and preparing supporting documentation. They organize clear audit packs and can liaise with auditors on behalf of the practice, reducing stress and ensuring professional responses.
Case Example: Avoiding a Medicare Repayment Claim
A small Brisbane clinic faced a potential Medicare repayment after internal billing errors were discovered. Their medical accountant audited recent claims, corrected item numbers, reconciled Medicare remittances, and organised supporting documentation. As a result, the clinic avoided substantial repayment, improved billing accuracy, and implemented monthly reconciliation routines to prevent future issues.
Practical Steps Practices Can Take Now
Start by reconciling recent bank and merchant statements, confirming payroll and superannuation lodgements, and organizing invoices and receipts. Engage a medical accountant Brisbane to review GST treatment and reconcile BAS. Implementing these small steps now can prevent larger audit issues and safeguard the practice’s finances.
Final Thoughts: Prevention Through Ongoing Support
Frequently Asked Questions
Proper documentation, including invoices, receipts, contracts, and billing records, supports all claims and deductions. Organized records help practices demonstrate compliance during audits, reduce penalties, and simplify financial reviews.
