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The American Institute of Certified Public Accountants (AICPA) released its updated Audit and Accounting Guide for Health Care Entities (“Health Care Audit Guide”) in October 2011. An area of the guide relating to entrance fees refundable upon re-occupancy was under scrutiny earlier this year, but remained unchanged, according to LarsonAllen.
In May 2011, LarsonAllen shared the potential impact of the updated and revised Health Care Audit Guide. At that time, providers raised specific concerns about the possible addition of language to Chapter 14, “Financial Accounting and Reporting by Continuing Care Retirement Communities.”
That language, if included in the guide, would have required CCRCs that offered entrance fee contracts with refunds based upon re-occupancy to review their contracts and verify if they were able to continue to defer and amortize revenue over the useful life of the facility.
In addition, there was no transition guidance provided.
“This decision does not mean that CCRCs with refund upon re-occupancy plans are out of the woods related to the potential for accounting, disclosure, and reporting changes,” says Chad Kunze, health care principal with LarsonAllen.