Home » NEWS » Health » Singing River Health System sues KPMG: 'colossal' error

Singing River Health System sues KPMG: 'colossal' error

Singing River Hospital

Singing River Hospital

GULFPORT — Singing River Health System says it has sued its former accounting firm, KPMG LLP, accusing it of $88 million dollars in mistakes.

Singing River said in a news release that the federal lawsuit accuses the national accounting firm of breach of contract, negligence and professional malpractice, the Sun Herald reported.

“KPMG’s abject, egregious failures in auditing Singing River’s financial statements led to an $88 million adjustment, one of the largest reported adjustments in history, and should have been, would have been, and was ultimately detected by a competent auditor,” according to the lawsuit.

A KPMG spokesman did not immediately answer a request for comment emailed Sunday by The Associated Press.

The Mississippi Press reports that it called the firm’s Jackson office to ask for comment.

The suit itself was not available Sunday in the federal court’s electronic records system, which can lag from the physical records.

Singing River alleges that another firm found errors and an $88 million shortfall from bad debts reported as revenue. It alleges that bad audits masked pension plan underfunding.

However, the Sun Herald reported in November that the system stopped putting money into the pension plan in 2010, and contributed less than half its estimated pension cost in 2009.

KPMG’s audits were “riddled with flagrant accounting errors that had resulted in a colossal overstatement of Singing River’s accounts receivable,” according to the lawsuit.

It alleges that KPMG was “exceedingly overly optimistic” in its estimate of amounts that would be collected by patient services, including collections from dead and bankrupt patients. The suit also says KPMG counted bad debt recoveries twice and used a five-year calculation rate based on pre-Recession revenues.

The suit also brings up a recent inspection of KPMG audits that showed “continuing and pervasive quality control issues.” The latest inspection report from October said 46 percent of audits KPMG audits were deficient.

SRHS paid more than $200K annually for the audits, a total of $1.4 million between 2008-12.

BEFORE YOU GO…

… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.

If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.

Click for more info

About Megan Wright

Leave a Reply

Your email address will not be published. Required fields are marked *

*