As a new auditor, you just finished working on the audit of a for-profit hospital. Now you are starting on the audit of a not-for-profit hospital and immediately notice the financial statements are not the same. Discuss what, if any, differences exist in presentation under FASB and GASB for the different types of hospitals.
Also, you see that the hospital you are auditing now received a $100,000 donation and a $200,000 pledge payable in one year, with all of the funds to be used for diabetes research. Explain the differences in accounting for the donor’s contribution and pledge if the hospital is (a) a government hospital, or (b) a not-for profit hospital.
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