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Case Study:
Sarbanes-Oxley Project Team Leader
Healthcare Industry
Business Transition and New Compliance Requirement
The Company: HealthSouth Corporation is one of the nation’s largest healthcare providers specializing in rehabilitation. The Company is headquartered in Birmingham, Alabama, and its operations are spread across 26 states and Puerto Rico.
The Challenge: HealthSouth is perhaps best known for the massive accounting fraud that was discovered in 2003 and almost led to the Company’s bankruptcy. HealthSouth’s founder and chief executive officer was the first person to be indicted under the Sarbanes-Oxley Act of 2002. Fifteen HealthSouth employees, including all five former chief financial officers, pleaded guilty to criminal charges related to the fraud.
The Solution: Since the accounting scandal was first discovered in March 2003, HealthSouth took many steps to turn itself around and become a stronger company. It established a new senior management team and it replaced the directors who presided over the Company when the fraud occurred. HealthSouth was able to avoid bankruptcy by selling assets and reaching various agreements with lenders to refinance its debt. Hundreds of consultants were brought in to help reconstruct the Company’s records, develop improved accounting and reporting policies, and establish a stronger, Sarbanes-Oxley-compliant system of internal controls.
HealthSouth engaged Doug Simpson CPA as an Independent Team Lead to support the SOX compliance initiative. Initially reporting to the Deloitte Touché PMO, directed a team of Deloitte Touché consultants participating in the initial documentation, testing and gap analysis phase of the HealthSouth SOX initiative. When the gap analysis phase was completed, HealthSouth selected Doug to provide the technical resources and leadership required to create the conceptual design and the detailed remediation plan for the Fixed Assets, Real Estate, Treasury and Partnership cycles.
The Results: Working in a very fluid atmosphere for a business under tremendous organizational stress, met project timelines and provided valued project deliverables. Serving as the Project Leader for the Partnership, Treasury, Real Estate, and Fixed Asset Cycles, accomplished the following:
Worked with internal and external resources to document “as-is” process flows, and then worked with HealthSouth management to identify control objectives and assertions, business risks, functioning primary and secondary activity controls, and control gaps.
While managing external team leads and staff consultant resources work product, worked with HealthSouth process owners to design activity controls to mitigate internal control over financial reporting risks and to mitigate Medicare fraud and abuse risks; and then worked with HealthSouth managers to create detailed remediation plans and implementation timelines needed to affect required change.
Directed team leads as they worked with HealthSouth managers to complete new or revised policies and procedures to support the business cycles new or revised process and control environments.
The Outcome: During a period of uncertainty, facilitated a working environment that gave HealthSouth managers confidence to systematically identify and solve problems within their internal control frameworks that previously led to significant or material breakdowns in their control environments.
