County and City Hospitals

General Information

• Approval of Accounting Forms and Systems

  The State Board of Accounts is charged by law with the responsibility of prescribing and installing a system of accounting and reporting which shall be uniform for every public office and every public account of the same class. [IC 5-11-1-2]

  A prescribed form is one which is put into general use for all offices of the same class, whereas an approved form is for special use in a particular office.

  Hospitals are required by law to use the forms prescribed by this department. However, if it is desirable to use a different form or to have a prescribed form modified to conform to local conditions, a letter and three copies of the proposed form may be submitted to the State Board of Accounts for approval. No form should be printed and placed in use, other than a prescribed form, without prior approval.

  As a result of advances in computer technology, some computer hardware, software and application systems can now produce exact replicas of the forms prescribed by the State Board of Accounts and documented in the Accounting Manuals which this agency provides to governmental units. In addition, some of the prescribed forms are currently replicated on continuous, preformatted computer paper.

• New Form Approval Process - Computerized Systems

  Several software vendors have been able to take advantage of the newer technologies while other vendors have been unable to replicate prescribed forms. Certainly the prescribed form replication is the preferred approach from our audit position. However, in an effort to accommodate, the State Board of Accounts offers the following alternative.

  Decisions regarding the participation of hospitals with vendor software systems are the responsibility of the appropriate elected or appointed governing body of a hospital in accordance with statutory authority. Accordingly, a governing body, if desiring to use forms generated by a particular software program or package, may pass a resolution so stating their preference. The resolution and a letter (sample letter on Page 1-15) would be sent to the State Board of Accounts for compliance with applicable statutes and regulations and to provide assurance that the hospital does indeed desire to use the forms. The forms submitted should be a facsimile of the prescribed system (headings and titles, etc.). Otherwise, a cross-reference to the prescribed form intended to be replaced should be submitted. The State Board of Accounts' approval is based upon compliance with the conditions outlined on Page 1-16 and review during the audits of the hospital. Thereafter, other hospitals may use any forms previously approved for the original hospital using that particular software program (assuming compliance with the conditions outlined on Page 1-16 and subsequent audits).

  Any forms not previously reviewed and approved by the State Board of Accounts would need to go through the traditional form approval process.

  Summarization of the new form approval process:

  1. Hospital "A" passes a resolution in a public meeting stating the desire to use forms generated by a specific software program.
  2. A copy of the resolution along with information in the sample letter (Page 1-15) is sent to the State Board of Accounts by Hospital "A" along with a sample of all reports and forms of the system. The forms submitted should be similar to the prescribed system (headings and titles, etc.). Otherwise, a cross-reference to the prescribed form intended to be replaced must be submitted.
  3. Hospital "A" receives an approval letter from the State Board of Accounts and begins using the forms without any further approvals in the future unless the forms change.
  4. Hospital "B", "C", etc., sends to the State Board of Accounts the same type of resolution and sample letter (see below), (no forms are sent to the State Board of Accounts). Hospital "B", "C", etc., adheres to the conditions on Page 1-16 and recommendations made during audits and begin using the forms without further approvals in the future unless the forms change. Previously, approved forms for that system do not have to be sent in for approval. Hospital "B", "C", etc., will not receive approval letters as they have agreed to abide by these conditions.

  We are hopeful the new process will provide an innovative procedure to save time and expense by a hospital while still complying with statutory and regulatory requirements.

• Sample Letter

  LETTERHEAD OF GOVERNMENTAL UNIT

  State Board of Accounts
  302 West Washington Street, Room E418
  Indianapolis, IN 46204-2765

  Re: Form Approvals

  The (NAME OF GOVERNING BODY) passed the attached resolution concerning usage of forms for the (NAME OF GOVERNMENTAL UNIT).

  The (NAME OF GOVERNING BODY) is ultimately responsible for all forms and systems to be used. Accordingly, we are requesting to be authorized to use the forms and systems provided (1) and (NAME OF HOSPITAL WHICH FIRST RECEIVED AN APPROVAL) as these forms were approved by our office in writing as of (DATE OF ORIGINAL APPROVAL). We will abide by the form approval requirements during audits by the State Board of Accounts.

  The (NAME OF GOVERNING BODY) will notify you in writing if desiring to discontinue use of the system approved. Any forms that are not in an all inclusive approved package would still need to be approved by your office. Furthermore, if we desire to use any forms which have changed since the date of original approval above, and those forms have not received a written approval from your office, we will immediately submit those forms for approval.

  We also understand the process of a letter and resolution are not an attempt to provide preferential treatment to any vendor but instead are an effort to expedite the form approval process required by statute and regulation. Finally, we are aware that any system or hardware changes initiated by a vendor and the resultant costs, are vendor, market or consumer demand driven.

  _________________________________________________
  (PRESIDENT OR CHAIRMAN OF THE GOVERNING BODY)

  _________________________________________________
  (CHIEF EXECUTIVE OFFICER)

  __________________________________________
  (DATE)

  __________________________________________
  (DATE)

  (1) The first Hospital approved would have a period after the word "provided" and the rest of the sentence would be deleted. All other Hospitals requesting use of that system should show the information stated after the word "provided."

• Form Approval Conditions
  1. Any items noted in red ink are a condition of approval.
  2. The forms and system shall be subject to further review and/or recommendations during the audits of the hospital to allow for on-site review as well as to ensure compliance with current statutes.
  3. Any other forms (checks, receipts, etc.) necessary to complete the system shall be submitted to the State Board of Accounts for approval. You shall continue to maintain all prescribed forms not otherwise covered by an approval.
  4. All transactions that occur in the system must be recorded. Transactions can be maintained on-line, on backup tapes, microfilmed, or printed on hardcopy. These transactions include but are not limited to: all input transactions that generate checks, master file updates, and all transactions that affect the ledgers in any way. For all information maintained on the system, the system must be designed in such a manner that changes to a transaction file cannot occur without being processed through an application.
  5. The ability must not exist to change data after being posted. If an error is discovered after the entry has been posted, then a separate correcting entry must be made. Both the correcting entry and the original entry must be maintained.
  6. If the Hospital owns the source code, sufficient controls must exist to prevent unauthorized modification. If the Hospital does not own the source code, upon request or in the event the vendor no longer provides maintenance service for the system, the vendor shall provide representatives of the State Board of Accounts with access to all computer source code for the system. In addition, the vendor shall provide representatives of the State Board of Accounts with a document describing the operating system used, the language that the source code is written in, the name of the compiler used, and the structure of the data files including data file names and data file descriptions, field names and field descriptions for the system upon request.
  7. Any checks, receipts, purchase orders, deposit advices or other prescribed forms that require numbering shall be serially prenumbered by the printing supplier prior to delivery to the Hospital. All receipts are to be printed at the time money is received. Furthermore, checks, receipts, purchase orders or deposit advices shall not be presigned and shall have duplicates. An approved check register may be used to meet the duplicate requirement for checks and deposit advices.
  8. Recap sheets for each depository for deposit advices, if applicable, will be maintained indicating direct deposits. Individual wage assignment agreements will be kept on file to support direct deposit.
  9. All printouts will be kept in post binders.
  10. Checks drawn on multiple bank accounts should only occur as a result of compliance with the governing board's authorization in accordance with IC 16-22-3-16.
  11. In the event a change is required due to the passage of a state or federal law, the vendor agrees to implement such change in a timely manner.
• Prescribed Hospital Forms

  General Form No		Title
  53	(1955)	Bond Register
  86	(Rev. 1947)	Contractor's Combination Bid Bond and Bond for Construction
  86A	(1947)	Contractor's Bond for Construction
  96	(Rev. 2000)	Contractor's Bid for Public Works
  98	(Rev. 1998)	Purchase Order
  99	(Rev. 1993)	Payroll Schedule and Voucher
  99A	(Rev. 1985)	Employee's Service Record
  99B	(Rev. 1993)	Employee's Earnings Record
  99C	(1985)	Employees' Weekly (Work Period) Earnings Record
  99P	(Rev. 1995)	Publisher's Claim
  100R	(Rev. 2001)	Certified Report of Names, Addresses, Duties and Compensation of Public Employees
  101	(1955)	Mileage Claim
  102	(1959)	Register of Trust Funds
  315	(1937)	General Ledger Sheet
  315A	(1953)	Inventory Sheet
  316	(1961)	General Journal
  350	(1964)	Register of Investments
  351	(1964)	Register of Insurance
  352	(Rev. 1997)	General Receipt
  353	(1966)	General Warrant
  354	(1966)	General Claim
  356	(1967)	General Check
  357	(1967)	General Payroll Check
  358	(1967)	Ledger of Receipts, Disbursements and Balances
  359	(1967)	Ledger of Appropriations, Encumbrances, Disbursements and Balances
  360	(Rev. 1975)	Monthly Financial, Depository Statement and Cash Reconcilement
  361	(Rev. 1975)	Treasurer's Daily Balance of Cash, Depositories and Investments
  362	(1987)	Report of Collections
  363	(1970)	Report of In-Kind Matching Contributions
  364	(1996)	Accounts Payable Voucher Register
  365	(1983)	Security Deposit Agreement and Receipt
  369	(1995)	Fixed Assets

  ---

  Hospital Form No		Title
  GH-1A	(Rev. 1966)	Income Journal In Patient
  GH-1B	(Rev. 1966)	Income Journal Out Patient
  GH-2A-2B	(Rev. 1966)	Summary of Daily Charges of In and Out Patients
  GH-3	(Rev. 1966)	Cash Receipts Register
  GH-3A	(1956)	Cash Receipts Register (Optional Form)
  GH-4	(1950)	Cash Record and Fund Control
  GH-5	(Rev. 1966)	Cash Disbursements and General Journal
  GH-6	(Rev. 1966)	Accounts Payable Journal
  GH-9	(1950)	Charge Slip - In-Patient
  GH-10	(1950)	Charge Slip - Out-Patient
  GH-11	(1950)	Charge Slip Control Sheet
  GH-12	(Rev. 1963)	In and Out Patient Record
  GH-13	(Rev. 1963)	In and Out Patient Record (Card)
  GH-17	(1963)	Credit Memo In-Patient
  GH-18	(1963)	Credit Memo Out-Patient
  GH-19	(1963)	General Ledger Sheet
  GH-21	(1966)	Journal Voucher
  GH-23	(1966)	Stores Requisition
  GH-24	(1966)	Stores Requisition Journal
  GH-25	(1966)	Receiving Notice
  GH-26	(1966)	Equipment Record

Computer Systems

• Computer Systems

  The following is a general outline of steps to follow when contemplating the purchase of data processing hardware and/or software. The State Board of Accounts has an Information Technology Services Division (ITS) available to assist in evaluating ITS requirements.

  Basic Questions

  1. Is this purchase cost effective?
  2. Are sufficient funds available to purchase desired hardware and software?
  3. What applications are needed? Payroll? Financial and Appropriation Ledger? Accounts Payable?
  4. What is the current and future volume of transactions to be processed per application?
  5. Are qualified personnel available to operate the new system? How will they be trained?
  6. How will software be maintained?
  7. Can the vendor provide a list of users as references?
  8. Where is hardware/software maintenance staff located?
  9. What services are provided by vendor when system is down? How long before these services are available?
  10. What is the estimated maintenance costs?
  11. What is the cost to upgrade the system in the future?
  12. If the source code is not purchased, the vendor must allow access to the source code for audit purposes by representatives of the State Board of Accounts.

  Software

  1. Should provide extensive editing of data and change capability upon input and before a transaction is posted to an account, but no ability to change data after it is posted. If an error is discovered after the transaction is posted, a separate correcting transaction must be made.
  2. Capable of providing hard copy of entire file or of selected screens.
  3. A detailed transaction history (similar to a manually posted ledger page) should be maintained supporting each account. We would generally recommend a twelve month history. However, in small systems this may not be cost effective due to limited storage and require the use of a hard copy listing. Each transaction should be identified with the individual processing the transaction as well as the date of transaction.
  4. Copyright restrictions and documentation of all programs should be reviewed before purchase.
  5. If purchased separately, software must be compatible with hardware.

  Hardware

  1. If purchased separately, hardware must be compatible with software.
  2. Should have expansion capability to meet possible additional applications and future growth.
  3. Review vendor service agreements carefully for cost and completeness.

  Steps to Take Prior to Bidding

  1. Communicate with all potential in-house users to ensure that their demands on the system are fully understood.
  2. Be sure record requirements in ITS environment are the same as those of the manual accounting system prescribed by the State Board of Accounts.
  3. Observe hardware and software in operation at other units within the State and discuss with their users possible problems and/or suggestions, particularly service and maintenance.

  Other Requirements

  1. Provisions must be made to "back-up" records in case originals are destroyed. Store "backups" off site or in fire proof vault. In addition, a disaster recovery plan must be developed and tested when the system is installed.
  2. Review temperature, humidity and dust control requirements at computer location.
  3. Review insurance coverage for hardware, software and file reconstruction.
  4. Appropriate procedures should be used in implementing the new system. For example, control totals during conversion of data and a parallel processing period.
• Possible Applications

  The following is a list of possible applications with generalized minimum requirements.

  Basically, output requirements in an ITS environment are the same as the records of the manual accounting system prescribed by the State Board of Accounts.

  Payroll

  1. Properly authorized, edited and extended before input.
  2. Record kept by individual.
  3. Year to date totals available.
  4. Generate monthly and quarterly reports.
  5. Totals by department.
  6. Overtime kept separately.
  7. Hard copy of each payroll.
  8. Generate annual reports - W-2's, WH-2's, 1099's, etc.

  Purchase Orders

  1. Properly authorized, edited and extended before input.
  2. Reduce purchase order balance when claim paid.
  3. Adjust for partial paid claim.
  4. Adjust for change in purchase order.
  5. Update appropriation ledger for encumbrances and payments.
  6. Update vendor record if applicable.
• Internal Control Requirements for Accounting Systems

  Information Technology Processing Controls

  In accordance with Statement on Auditing Standards Number 78, the Board of Accounts will review all computers that process accounting data. The scope of the review will be based on the following criteria: total dollars processed by the computer system, the materiality of those dollars to the unit's financial statements, the complexity of the processing, the availability of alternate sources for audit information, and the criticality of non-financial information processed. The ITS controls reviewed will be based primarily on the Control Objectives for Information and Related Technology and other publications of the Information System Audit and Control Association. Additional sources of information used in Board of Accounts Information Technology Services (ITS) reviews include but are not limited to publications of the AICPA, the Internal Auditor's Association, the General Accounting Office, the Department of Defense, the National Computer Security Association, and hardware and software vendors.

  Governmental units should have internal controls in effect which provide reasonable assurance regarding the reliability of financial information and records, effectiveness and efficiency of operations, proper execution of managements' objectives, and compliance with laws and regulations. Among other things, segregation of duties, safeguarding controls over cash and all other assets and all forms of information processing are necessary for proper internal control. The following requirements have been established for all computer systems processing accounting information.

  • Disaster Recovery

    A written Disaster Recovery Plan is required to ensure that critical accounting information will be processed in the event of interruption of computer processing capability. The plan must be updated and tested annually or when significant modifications to computer hardware, software or application systems occur. One copy of the Plan must be retained off site.

  • Back Up Processing

    All computer application programs and operating system software must be backed up on a periodic basis and after modification. Accounting information must be backed up on a periodic basis sufficient to allow restoration of the information in a timely manner. Periodically the back up media must be tested to assure restoration will occur accurately. One copy of the back up information must be retained off site. A log of backups and their contents should be maintained to assist in the timely restoration of information.

  • Physical Security

    The computer system and the associated telecommunications equipment must be adequately protected from environmental damage including, but not liited to, fire, water, and physical damage by individuals. In addition, the computer must be protected from unauthorized access, terminals must be inoperable when not attended by an authorized employee, and terminals utilized to enter sensitive commands must not be positioned where unauthorized individuals may view the contents of the video display terminal. Procedures must exist to assure sufficient computer processing capacity will continue to be available to process accounting information.

  • Logical Security

    Access to information stored on the computer must be protected through the use of user identification codes and confidential passwords. These passwords must meet the following criteria:

    • Each user must have a unique user identification code and password.
    • Passwords must be changed every 30 days.
    • Passwords must be a minimum of six (6) characters in length.
    • Passwords must be a combination of alphabetic and numeric characters.
    • Passwords may not be the same for a user identification code as the last five (5) passwords used by this user identification code.
    • Individuals must assign their own passwords.
    • Passwords must be encrypted while stored on the computer.
    • User identification codes and passwords may not be shared.
    • Users other than System Administrators and Security Administrators must be prevented from accessing sensitive operating system commands.
    • Users must not be allowed to be active on multiple terminals at the same time with the same user identification code.
    • User identification codes must be deactivated after three unsuccessful attempts to sign on to the computer.
    • A display of the last attempted sign on for a user identification code must be displayed when a user signs on the computer.
    • For inactive terminals, the user must be automatically prevented from accessing the computer after 15 minutes of no activity until the user password is entered.
    • Users must be prevented from accessing operating system and computer program files.
    • Users must be prevented from accessing accounting information except through authorized transactions within the computerized accounting application system.
    • Reporting of security definitions and user access rights to information must be available and easily understood by Field Examiners during the course of a regularly scheduled audit. These security definitions and user access rights must enforce adequate segregation of duties for the accounting system. User access rights must be eliinated or revised upon termination of employment and transfers of employee responsibility.
    • Computerized audit trails must be protected from modification and destruction.
  • Change Controls
    • Computer programmers must not have access to production accounting information.
    • Accounting information must not be modified by computer utility programs which are not contained in the accounting application system.
    • Changes to the computer application system programs for the accounting systems must be adequately controlled including the following requirements:
      • Computer source (human readable) and load (machine readable) modules must be stored in computer datasets protected from unauthorized modification.
      • Modifications to computer source code must occur in a test environment and not affect production source code.
      • All modifications to computer source code must be adequately tested. Modifications must be approved by management.
      • Individuals responsible for modifying computer source code in a test environment must be prohibited from accessing computer code in the production environment. Movement of computer source and load modules from the test to production environments must be completed by authorized employees not responsible for modification of computer source or load modules.
  • Audit Trails

    The computerized accounting system must maintain electronic audit trails sufficient to trace all transactions from original source of entry into the system, through all system processing, and to the results produced by the system. The audit trails must also maintain sufficient information to trace all transactions from the final results produced by the system, through all system processing, and to the original source of entry into the system. These audit trails must be protected from modification and deletion.

  • Input Controls

    The computerized accounting system must provide input edits and controls to assure that information entered into the system is accurate, that all appropriate information is entered into the system, that information is entered into the system only once, and that all information entered into the system is authorized by management.

  • Output Controls

    The computerized accounting system must incorporate features that assure all accounting information is reported accurately and completely. Procedures must also exist to assure that only authorized individuals have access to computer generated output. All receipts or payments generated by the accounting system must include unique document identification numbers preprinted on the form. If the application system prints other numbers on the form (document control numbers) adequate security must be implemented to prevent unauthorized modification of the number sequence. Individuals responsible for computer processing of receipts or payment documents must not have access to the storage locations of these documents. Receipt and payment documents must not include preprinted signatures. All output reports must clearly indicate the effective dates of the information regardless of when the report is generated. Output reports must have appropriate subtotals to allow reconcilement of reports within the system and reconcilement to external documentation.

  • Interface Controls

    Information generated in one computer application system and transferred to another computer application system must be accurate and complete. The adequate transfer of information must be recorded on reports from both systems documenting the number of items of information transferred and the accounting value totals of the information transferred.

  • Internal Processing

    During the course of a regularly scheduled audit, written verification procedures and actual verification results must be provided to the Field Examiners which document the verification of accurate calculating, summarizing, categorizing, and updating of accounting information on a periodic basis and after the modification of accounting system computer programs.

  • Error Correction

    The accounting application system must be supported by computerized and manual procedures to assure the following controls related to error correction:

    • The type of error condition is recorded.
    • The original transaction creating the error is retained within the system.
    • A reversing transaction to eliinate the effect of the error on the appropriate value is entered and retained within the system.
    • The correct transaction is entered into the system and recorded.
    • The management approval for this error correction is documented.
  • Programming Documentation

    During the course of a regularly scheduled audit, documentation must be available to the Field Examiners which provide adequate information on the functions performed by each computer program, the definitions of all computer files and records utilized by the computer programs, and a description of the computer processing which relates each computer program to other computer programs to accomplish accounting functions. The documentation must be adequate for the Field Examiners to determine the accuracy of accounting processes by the computer.

  • Operations Documentation

    For each computerized accounting system, documentation must exist to record the processing of computer programs affecting accounting information. This documentation must include logs of when the programs were processed, errors which occurred during processing, error correction activities conducted prior to the continuation of processing, and the restart procedures for reinitiating processing. In addition, written documentation must be available to the Field Examiners during a regularly scheduled audit which provide the instructions to operate the computer hardware, operating system software, and application programs.

  • User Documentation

    Written procedures must be available for all computerized accounting systems which provide instructions on the requirements for the approval of information prior to entry into the computer, as well as the accurate entry, processing, and reporting of information from the accounting system.

  • Computer Output

    Records, financial statement information and supporting information generated through a computer system should be printed out on paper, printed to disk or maintained on-line at the end of each reporting year and retained for audit. Information must be maintained in a manner that will allow access for audit and public inquiry on equipment of the governmental unit.

Public Proceedings and Public Records

• Access to Public Proceedings

  Indiana Open Door Law

  Board meetings are governed by the Open Door Law, IC 5-14-1.5. Under the Open Door Law all meetings of governing boards must be open to the public except for executive sessions.

  Executive Sessions. IC 5-14-1.5-6.1(b) lists the circumstances under which an executive session may be held, including the following:

  1. Where authorized by federal or state statute.
  2. For discussion of strategy for: collective bargaining; initiation of litigation or litigation which is either pending or has been threatened specifically in writing; implementation of security systems; or purchase or lease of real property up to the time a contract or option to purchase or lease is executed by the parties.
  3. To receive information about, and interview, prospective employees.
  4. With respect to any employee's status or alleged misconduct.
  5. For discussion of confidential records.
  6. To discuss job performance evaluations of individual employees.

  Final action on matters discussed in executive session must be taken at a meeting open to the public. Minutes of executive sessions must identify the subject matter considered by specific reference to the enumerated instance or instances for which public notice was given. The board must certify by a statement in its memoranda and minutes that it discussed no subject matter in the executive session other than the subject matter specified in the public notice. [IC 5-14-1.5-6.1]

  Public Notice

  Public notice of the date, time, and place of regular meetings, executive sessions, or rescheduled or reconvened meetings must be given at least 48 hours before the meeting (excluding Saturdays, Sundays, and legal holidays). Reconvened meetings may be held with less than 48 hours notice if the new date, time, and place is announced at the time of the original meeting and recorded in the minutes, and there is no change in the agenda. Public notice is given by posting a notice of the meeting at the office of the political subdivision and notifying all news media who have filed a written request to receive such notices. If an agenda is used, it should be posted at the entrance to the meeting place. Notice of regular meetings need be given only once each year unless the date, time or place is changed. In case of an emergency, the 48 hour requirement may be disregarded. [IC 5-14-1.5-5]

  Minutes

  Memoranda (minutes) of the meeting shall include the following items:

  1. Date, time, and place of the meeting;
  2. Members present and absent;
  3. The general substance of all matters proposed, discussed or decided; and
  4. A record of all votes taken, by individual members if there is a roll call. The memoranda should be available to the public within a reasonable period of time after the meeting. [IC 5-14-1.5-4]
• Access to Public Records

  Public Policy

  Access to public records is governed by IC 5-14-3. The official policy of the State is: "all persons are entitled to full and complete information regarding the affairs of government and the official acts of those who represent them as public officials and employees. Providing persons with the information is an essential function of a representative government and an integral part of the routine duties of public officials and employees, whose duty it is to provide the information." [IC 5-14-3-1]

  Definition of Public Record

  A public record is defined as any writing, paper, report, study, map, photograph, book, card, tape recording, or other material that is created, received, retained, maintained, used, or filed by or with a public agency and which is generated on paper, paper substitutes, photographic media, chemically based media, magnetic or machine readable media, electronically stored data, or any other material regardless of form or characteristics. [IC 5-14-3-2]

  Request for Access to Public Records

  Any person may inspect and copy the public records of a public agency during regular business hours. A request for inspection or copying must identify with reasonable particularity the record being requested; and be, at the discretion of the public agency, in writing or on a form provided by the public agency. No request may be denied because the person making the request refuses to state the purpose of the request, unless such condition is required by other applicable statute. [IC 5-14-3-3(a)]

  The public agency shall either: (a) provide the requested copies to the person making the request; or (b) allow the person to make copies on the political subdivision's equipment or on his own equipment. [IC 5-14-3-3(b)]

  The denial of access to a public record is covered in IC 5-14-3-9. 3-3

  Access to Electronic Data Storage Systems

  A public agency that maintains or contracts for the maintenance of public records in an electronic data storage system shall make reasonable efforts to provide to a person making a request a copy of all disclosable data contained in the records on paper, disk, tape, drum, or any other method of electronic retrieval if the medium requested is compatible with the agency's data storage system. [IC 5-14-3-3(d)]

  The public agency may adopt an ordinance or resolution prescribing the conditions under which a person who receives information on disk or tape may or may not use the information for commercial purposes, including to sell, advertise, or solicit the purchase of merchandise, goods, or services, or sell, loan, give away, or otherwise deliver the information obtained by the request to any other person for these purposes. Use of this information in connection with the preparation or publication of news, for nonprofit activities, or for academic research is not prohibited. A person who uses information in a manner contrary to the ordinance or resolution may be prohibited by the public agency from obtaining a copy or any further data. [IC 5-14-3-3(e)]

  A public agency may not enter into or renew a contract or an obligation (a) for the storage or copying of public records or (b) that requires the public to obtain a license or pay copyright royalties for obtaining the right to inspect and copy the records unless otherwise provided by applicable statute; if the contract, obligation, license, or copyright unreasonably impairs the right of the public to inspect and copy the agency's public records. [IC 5-14-3-3(f)]

  Enhanced Access

  As an additional means of inspecting and copying public records, a public agency may provide enhanced access to public records maintained by the public agency. A public agency may provide a person with enhanced access to public records if any of the following apply:

  1. The public agency provides enhanced access to the person through its own computer gateway and provides for the protection of public records.
  2. The public agency has entered into a contract with a third party under which the public agency provides enhanced access to the person through the third party's computer gateway or otherwise, and the contract between the public agency and the third party provides for the protection of public records.

  A contract entered into under this section and any other provision of enhanced access must provide that the third party and the person will not engage in the following:

  1. Unauthorized enhanced access to public records.
  2. Unauthorized alteration of public records.
  3. Disclosure of confidential public records.

  A contract entered into under this section or any provision of enhanced access may require the payment of a reasonable fee to either the third party to a contract or to the public agency, or both, from the person.

  A public agency may provide enhanced access to public records through the computer gateway administered by the Intelenet Commission established under IC 5-21-2. [IC 5-14-3-3.6]

  Records Which May Be Excepted From Disclosure

  Pursuant to IC 5-14-3-4(b), the following public records may be excepted from the disclosure requirements if the governing board approves a policy to that effect:

  1. Personnel files of employees and files of applicants for employment, except for:
     1. The name, compensation, job title, business address, business telephone number, job descriptions, education and training background, previous work experience, or dates of first and last employment of present or former officers or employees of the public agency;
     2. Information relating to the status of any formal charges against the employee; and
     3. Information concerning disciplinary actions in which final action has been taken and that resulted in the employee being disciplined or discharged.
        
        However, all personnel file information shall be made available to the affected employee or his representative. General personnel information on all employees or for groups of employees, without individual names, may not be excepted from disclosure.
  2. Administrative or technical information that would jeopardize a record keeping or security system.
  3. Computer programs, computer codes, computer filing systems, and other software that are owned by the public agency or entrusted to it and portions of electronic maps entrusted to a public agency by a utility.
  4. Records specifically prepared for discussion or developed during discussion in an executive session under IC 5-14-1.5-6.1.
  5. The identity of a donor of a gift made to a public agency if the donor requires nondisclosure of his identity as a condition of making the gift; or after the gift is made, the donor, or the donor's family, requests nondisclosure.

  Names and addresses of employees may not be disclosed by the political subdivision to commercial entities for commercial purposes and may not be used by commercial entities for commercial purposes. [IC 5-14-3-4(c)]

  The hospital should also give consideration to applicable requirements of the Health Insurance Portability and Accountability Act of 1996 (HIPPA).

  Fees

  The governing board shall establish a fee schedule for the certification, copying, or facsimile machine transmission of documents. The fee may not exceed the actual cost of certifying, copying, or facsimile transmission of the document by the agency and the fee must be uniform throughout the public agency and uniform to all purchasers. "Actual Cost" means the cost of paper and the per-page cost for use of copying or facsimile equipment, and does not include labor costs or overhead costs. [IC 5-14-3-8(d)]

• Preservation and Destruction of Records

  Suggested Procedures

  We suggest that the hospital board adopt a formal records retention and destruction policy. The policy should adequately describe the records to be retained, the length of time to be retained, and the method of disposition. The policy should be designed to comply with the records retention requirements of the various federal, state, and local agencies. The hospital attorney should be consulted to ensure that all legal requirements are met.

  A pamphlet entitled "Guide for Preservation and Destruction of Local Public Records" published by the State Commission on Public Records may be used for reference in establishing a records retention policy. This information may be obtained at http://www.in.gov/icpr/records_management.

  Public Records Retention - Audit

  No financial records or records relating thereto are to be destroyed until the audit of the records by the State Board of Accounts has been completed, report filed, and any exceptions set out in the report satisfied.

  Supporting documentation such as receipts, cancelled checks, invoices, bills, contracts, etc., must be available for audit to provide supporting information for the validity and accountability of monies disbursed.

• Public Access Counselor

  Questions regarding public access proceedings or public records should be addressed to:

  Public Access Counselor
  Anne Mullin O'Connor
  W074, Indiana Government Center South
  402 West Washington Street
  Indianapolis, Indiana 46204
  Telephone: 1-800-228-6013

Conflict of Interest

• Disclosure of Interest or Profit - Hospital Board Members

  An individual is not prohibited from serving as a member of the governing board if the member has a pecuniary interest in, or derives a profit from a contract or purchase connected with the hospital. However, the member shall disclose the interest or profit in writing to the board and provide a copy to the state board of accounts. The member shall abstain from voting on any matter that affects the interest or profit. [IC 16-22-2-10]

  The State Board of Accounts does not prescribe the form or content of the disclosure required by IC 16-22-2-10.

• Public Servants Other Than Hospital Board Members - Statutory Conflict of Interest

  Conflict of Interest

  A public servant who knowingly or intentionally has a pecuniary interest in or derives a profit from a contract or purchase connected with an action by the government entity served by the public servant, commits a conflict of interest, a Class D felony. [IC 35-44-1-3(a)]

  Exception for Compensation and Expenses

  A public servant is not prohibited from receiving compensation for services provided as a public servant or for expenses incurred by the public servant as provided by law. [IC 35-44-1-3(b)]

  Other Exceptions

  IC 35-44-1-3 does not prohibit a public servant from having a pecuniary interest in or deriving a profit from a contract or purchase connected with the governmental entity served under any of the following conditions:

  1. If the public servant is not a member or on the staff of the governing body empowered to contract or purchase on behalf of the governmental entity; the functions and duties the public servant performs for the governmental entity are unrelated to the contract or purchase; and the public servant makes a disclosure as provided in IC 35-44-1-3(d). [IC 35-44-1-3(c)(1)]
  2. If the contract or purchase involves utility services from a utility whose rate structure is regulated by the state or federal government. [IC 35-44-1-3(c)(2)]
  3. If the public servant was appointed by an elected public servant and makes a disclosure under the procedures in IC 35-44-1-3(d). [IC 35-44-1-3(c)(4)]

  Definition of Pecuniary Interest

  A public servant has a pecuniary interest in a contract or purchase if the contract or purchase will result or is intended to result in an ascertainable increase in the income or net worth of:

  1. The public servant; or
  2. A dependent of the public servant who:
     1. Is under the direct or indirect administrative control of the public servant; or
     2. Receives a contract or purchase order that is reviewed, approved, or directly or indirectly administered by the public servant. [IC 35-44-1-3(g)]

  Definition of Dependent

  A dependent may be any of the following:

  1. The spouse of a public servant.
  2. A child, stepchild, or adoptee of a public servant who is:
     1. Unemancipated.
     2. Less than 18 years of age.
  3. Any individual more than one-half of whose support is provided during a year by the public servant. [IC 35-44-1-3(k)]

  Disclosure Requirements

  A disclosure as required above must:

  1. Be in writing;
  2. Describe the contract or purchase to be made by the governmental entity;
  3. Describe the pecuniary interest that the public servant has in the contract or purchase;
  4. Be affirmed under penalty of perjury;
  5. Be submitted to the governmental entity and be accepted by the governmental entity in a public meeting of the governmental entity prior to final action on the contract or purchase;
  6. Be filed within fifteen days after final action on the contract or purchase with: (a) the state board of accounts; and (b) with the clerk of the circuit court in the county where the governmental entity takes final action on the contract or purchase; and
  7. Contain, if the public servant is appointed, the written approval of the elected public servant (if any) that appointed the public servant.

  Defense

  It is a defense in a prosecution under this section that the public servant's interest in the contract or purchase and all other contracts and purchases made by the governmental entity during the twelve (12) months before the date of the contract or purchase was two hundred fifty dollars ($250) or less. [IC 35-44-1-3 (h)]

  Form

  A suggested format for the disclosure of conflict of interest for employees and officers other than board members is located at the end of this section. The attorney for the governmental entity or a private attorney should be consulted in regard to whether a conflict of interest statement should be filed and whether the format of the disclosure is sufficient.

• Consultants - Statutory Conflict of Interest

  Conflict of Interest

  Pursuant to IC 5-16-11-5.5, a consultant has a conflict of interest if any of the following apply:

  1. The entity has given a gift or gifts:
     1. To the consultant, the consultant's spouse, or the consultant's unemancipated children;
     2. That have a total fair market value of more than one hundred dollars ($100); and
     3. Within the preceding year.
  2. The consultant, the consultant's spouse, or the consultant's unemancipated children have an equitable or a legal interest in real property the value of which:
     1. Either is at least $5,000 or comprises at least ten percent (10%) of the net worth of the consultant, the consultant's spouse, or the consultant's unemancipated children; and
     2. Has been or would be increased or decreased if a contract were awarded to the entity.
  3. The consultant or the consultant's spouse is employed by the entity.
  4. The entity is the sole proprietorship or professional practice of the consultant or the consultant's spouse.
  5. The consultant or the consultant's spouse is a partner in the entity.
  6. The consultant or the consultant's spouse is an officer or a director of the entity.
  7. The consultant, the consultant's spouse, or the consultant's unemancipated children own stock or options to purchase stock in the entity and the stock or the options to purchase stock have a fair market value of more than ten thousand dollars ($10,000). This subdivision does not apply to the following:
     1. Time deposits or demand deposits in a financial institution.
     2. An insurance policy.

  Definition of Consultant

  "Consultant" means an individual who, under a contract with the state or a political subdivision, does either of the following for the state or the political subdivision:

  1. Evaluates bids for contracts.
  2. Awards contracts.

  The term does not include a public employee (as defined in IC 34-6-2-38).

  An individual is not required to be a party to the contract with the state or the political subdivision to be a consultant under this section. [IC 5-16-11-2]

  Definition of Entity

  As used in this section, "entity" refers to a person that:

  1. Has submitted a bid to be evaluated by a consultant; or
  2. Was awarded a contract by a consultant. (IC 5-16-11-3.5)

  Disclosure Requirements

  A conflict of interest must be disclosed as follows:

  1. A consultant shall file a conflict of interest disclosure if the consultant has a conflict of interest under IC 5-16-11-5.5.
  2. The disclosure must describe the conflict of interest.
  3. The consultant shall file the disclosure within ten (10) days of the earlier of the following events:
     1. The closing day for receipt of bids.
     2. The award of the contract.
  4. The consultant shall file the disclosure required by IC 5-16-11-6 with the governing board, if the consultant contracts with the political subdivision. [IC 5-16-11-7]
  5. The consultant shall make the disclosure required by IC 5-16-11-6 under affirmation. [IC 5-16-11-6,7,8]

  Penalties

  A consultant who fails to file a disclosure required by this chapter commits a Class A infraction. [IC 5-15-11-11]

  A consultant who files a false disclosure under this chapter is subject to the penalties for perjury under IC 35-44-2-1. [IC 5-16-11-12]

• Lucrative Office

  Article 2, Section 9 of the Constitution of Indiana, states in part: ". . . no person may hold more than one lucrative office at the same time, except as expressly permitted in this Constitution." Any person holding two offices which have been or may be deemed lucrative should obtain the written opinion of the attorney for the unit or units served to determine compliance with Article 2, Section 9 of the Constitution of Indiana.

• Uniform Conflict of Interest Disclosure Statement

  A public servant who knowingly or intentionally has a pecuniary interest in or derives a profit from a contract or purchase connected with an action by the governmental entity served by the public servant commits conflict of interest, a Class D Felony. A public servant has a pecuniary interest in a contract or purchase if the contract or purchase will result or is intended to result in an ascertainable increase in the income or net worth of the public servant or a dependent of the public servant who is under the direct or indirect administrative control of the public servant; or receives a contract or purchase order that is reviewed, approved, or directly or indirectly administered by the public servant. "Dependent" means any of the following: the spouse of a public servant; a child, stepchild, or adoptee (as defined in I.C. 31-3-4-1) of a public servant who is unemancipated and less than eighteen (18) years of age; and any individual more than one-half (½) of whose support is provided during a year by the public servant.

  The foregoing consists only of excerpts from I.C. 35-44-1-3. Care should be taken to review I.C. 35-44-1-3 in its entirety.

  1. Name and Address of Public Servant Submitting Statement:
  2. Title or Position With Governmental Entity:
  3. 1. Governmental Entity:
     2. County:
  4. This statement is submitted (check one):
     1. ___ as a "single transaction" disclosure statement, as to my financial interest in a specific contract or purchase connected with the governmental entity which I serve, proposed to be made by the governmental entity with or from a particular contractor or vendor; or
     2. ___ as an "annual" disclosure statement, as to my financial interest connected with any contracts or purchases of the governmental entity which I serve, which are made on an ongoing basis with or from particular contractors or vendors.
  5. Name(s) of Contractor(s) or Vendor(s):
  6. Description(s) of Contract(s) or Purchase(s) (Describe the kind of contract involved, and the effective date and term of the contract or purchase if reasonably determinable. Dates required if 4(a) is selected above. If "dependent" is involved, provide dependent's name and relationship):
  7. Description of My Financial Interest (Describe in what manner the public servant or "dependent" expects to derive a profit or financial benefit from, or otherwise has a pecuniary interest in, the above contract(s) or purchase(s); if reasonably determinable, state the approximate dollar value of such profit or benefit.):  (Attach extra pages if additional space is needed)
  8. Approval of Appointing Officer or Body (To be completed if the public servant was appointed by an elected public servant or the board of trustees of a state-supported college or university):
     I (We) being the (Title of Officer or Name of Governing Body) of (Name of Governmental Entity) and having the power to appoint the above named public servant to the public position to which he or she holds, hereby approve the participation to the appointed disclosing public servant in the above described contract(s) or purchase(s) in which said public servant has a conflict of interest as defined in Indiana Code 35-44-1-3; however, this approval does not waive any objection to any conflict prohibited by statute, rule, or regulation and is not to be construed as a consent to any illegal act.
     _________________________________ ____________________________________
     _________________________________ ____________________________________
     _________________________________ ____________________________________
     Elected Official                                            Office
  9. Effective Dates (Conflict of interest statements must be submitted to the governmental entity prior to final action on the contract or purchase.):
     ____________          __________________________________________________
     Date Submitted         Date of Action on Contract or Purchase
  10. Affirmation of Public Servant: This disclosure was submitted to the governmental entity and accepted by the governmental entity in a public meeting to the governmental entity prior to final action on the contract or purchase. I affirm, under penalty of perjury, the truth and completeness of the statements made above, and that I am the above named public servant.
      Signed: ________________________________
      (Signature of Public Servant)
      Date: ________________________________

  Within 15 days after final action on the contract or purchase, copies of this statement must be filed with the State Board of Accounts, Indiana Government Center South, 302 West Washington Street, Room E418, Indianapolis, Indiana, 46204-2738 and the Clerk of the Circuit Court of the county in which the governmental entity executed the contract or purchase. A copy of this disclosure will be forwarded to the Indiana State Ethics Commission.

Compensation and Benefits

• Compensation and Benefits

  Payments in Advance

  Salaries and wages of public officers may not be paid in advance. [IC 5-7-3-1]

  Compensation and Benefits

  All compensation and benefits paid to officials and employees must be included in the labor contract, salary ordinance, resolution or salary schedule adopted by the governing body unless otherwise authorized by statute. Compensation should be made in a manner that will facilitate compliance with state and federal reporting requirements.

  Compensation - Non-Employees

  Payments for services provided by an organization should go directly to the organization and not to an individual employee of the organization. All payments for services should be supported by a written contract. Compensation should be made in a manner that will facilitate compliance with state and federal reporting requirements.

  Employee Benefits

  All types of employee benefits should be detailed in a written policy. Payments for expenses not authorized in a written policy cannot be allowed.

  The board should adopt policies governing sick leave, vacation leave, and any other types of special leave.

  Leave and Overtime Policy

  Each governmental unit should adopt a written policy regarding the accrual and use of leave time and compensatory time and the payment of overtime. Negotiated labor contracts approved by the governing board would be considered as written policy. The policy should conform to the requirements of all state and federal regulatory agencies.

• Record of Hours Worked

  IC 5-11-9-4 requires that records be maintained showing which hours are worked each day for employees employed by more than one political subdivision or in more than one position by the same public agency. This requirement can be met by indicating the number of hours worked on each Employee's Service Record, General Form No. 99A and/or General Form No. 99B.

  The federal Fair Labor Standards Act (FLSA) requires that records of wages paid, daily and weekly hours of work, and the time of day and day of week on which the employee's work week begins be kept for all employees. These requirements can be met by use of the following prescribed general forms:

  • General Form 99A, Employees' Service Record
  • General Form 99B, Employee's Earnings Record
  • General Form 99C, Employee's Weekly Earnings Record

  General Form 99C is required only for employees who are not exempt from FLSA, are not on a fixed work schedule, and are not paid weekly.

  Additional information regarding FLSA rules and regulations may be obtained from the Department of Labor.

• Unemployement Compensation

  Legislation was passed in 1977 amending the Indiana Employment Security Act, IC 22-4, to include the State and all its political subdivisions as employers under the act, effective January 1, 1978.

  Employers may elect payment of a percentage rate on a quarterly basis or to make "payments in lieu of contributions" on a monthly basis for benefits paid out during the month. If the employer chooses the first option they pay an unemployment insurance tax on a fixed sum of wages paid to each employee during a calendar year. The political subdivision's rate will be determined by the size of their credit reserve in relation to past claims. Employers wishing to change their elected option of payment may do so upon giving proper notification to the Department of Workforce Development. Employers under each option are required to file quarterly reports on their payroll and contributions. Each employer must display posters (available from the Department of Workforce Development) where all employees can see them.

• Pension and Retirement Plans

  The governing body may contract for and purchase adequate pension and retirement plans for hospital personnel from the Public Employees Retirement Fund of Indiana or from any company authorized to do such business in Indiana. [IC 16-22-3-11(5)]

• Deferred Compensation Plans

  The governing body may enter into deferred compensation agreements with employees and other contractual personnel and fund deferred obligations by contracting with insurance companies licensed to transact business in Indiana. [IC 16-22-3-11(6)]

• Travel Policy

  Each governmental unit should adopt a written travel policy in conformity with applicable statutes.

  Reimbursement for lodging and meals, should be based upon actual receipts for amounts paid unless otherwise authorized by statute.

• Commuting Mileage

  Reimbursed mileage shall not include travel to and from the officer's or employee's home and the governmental office in which he works, unless otherwise authorized by statute.

• Private Property

  Generally, public funds may not be used to make improvements to property not owned by the governmental unit, unless permitted by statute, federal requirements, state requirements, or safety concerns.

• Personal Property Use

  Assets of the governmental unit may not be used in a manner unrelated to the functions and purposes of the governmental unit.

  Whenever an item or other asset owned by the political subdivision is entrusted to an officer or employee, to be used at times outside the normal work time for business purposes, such as a cellular phone, or vehicle, a log should be maintained which clearly shows the business use.

• Personal Expenses

  Public funds may not be used to pay for personal items or for expenses which do not relate to the functions and purposes of the governmental unit. Any personal expenses paid by the governmental unit may be the personal obligation of the responsible official or employee.

• Purchasing Bonuses

  Any compensation, premium, bonus, or product earned as a result of the purchase of goods or services by the governmental unit becomes the property of the governmental unit.

• Severance Pay

  Unless specifically authorized by statute, severance pay, or other payments to employees upon separation from employment, must be supported by the written opinion of the attorney for the governmental unit stating that the payments are in accordance with all federal laws and regulations and state laws, including IC 35-44-2-4, and a properly enacted Home Rule ordinance or resolution, as applicable.

• Suspension with Pay

  Suspension with pay must be supported by the written opinion of the attorney for the governmental unit stating that the suspension is in accordance with all federal laws and regulations, and state laws, including IC 35-44-2-4.

Inventory of Capital Assets

• Capital Assets

  Every governmental unit should have a complete inventory of all capital assets owned which reflect their acquisition value. Such inventory should be recorded on the applicable Capital Asset Form. A complete inventory should be taken at least every year for good internal control and for verifying account balances carried in the accounting records.

  Land

  The records of each governmental unit should reflect land owned, its location, its acquisition date and the cost (purchase price). If the purchase price is not available, appraised value may be used.

  Buildings

  A capital asset account for buildings should reflect the location of each building and the cost value (being the purchase or construction cost) and the cost of improvements, if applicable. If a building is acquired by gift, the account should reflect its appraised value at the time of acquisition.

  Improvements Other Than Buildings

  A capital asset account should reflect the acquisition value of permanent improvements, other than buildings, which have been added to the land. Examples of such improvements are fences, retaining walls, sidewalks, gutters, tunnels and bridges. The improvements should be valued at the purchase or construction cost.

  Equipment

  Tangible property of a permanent nature (other than land, buildings and improvements) should be inventoried. Examples include machinery, trucks, cars, furniture, typewriters, adding machines, calculators, bookkeeping machines, data processing equipment, desks, safes, cabinets, books, etc. The value of such items should be carried in the inventory at the purchase cost. The governing body should establish a capitalization policy that sets a dollar amount, as a threshold to be used in determining which equipment items will be recorded.

  Construction Work In Progress

  Where construction work has not been completed in the current reporting calendar year, the cost of the project should be carried as "construction work in progress." When the project is completed, it will be placed on the inventory applicable to the assigned asset accounts.

Public Works Law

• General Provisions

  The "Public Works Law" [IC 36-1-12] applies to all public work performed or contracted by political subdivisions and their agencies. Any public work performed on property leased with an option to purchase is also included. [IC 36-1-12-1]

  The hospital is required to follow the provisions of the Public Works Law, IC 36-1-12, only when the public work is financed in whole or in part with cumulative building fund revenue. [IC 36-1-12-1(c)]

  The term "public work" means the construction, reconstruction, alteration, or renovation of a public building, airport facility, or other structure that is paid for out of a public fund or out of a special assessment. [IC 36-1-12-2]

  A contract for public work by a political subdivision or agency is void if it is not let in accordance with IC 36-1-12. [IC 36-1-12-16]

• Public Work Projects for Which Advertising and Bidding are Required

  Whenever the cost of a public work project will be at least $25,000 in a political subdivision or an agency not described in IC 36-1-12-4(1 or 2) the board must comply with the following procedures:

  Plans and Specifications

  The board shall prepare general plans and specifications describing the kind of public work required, but shall avoid specifications which might unduly limit competition. [IC 36-1-12-4(b)(1)]

  The board shall file the plans and specifications in a place reasonably accessible to the public, which shall be specified in the notice required. [IC 36-1-12-4(b)(2)]

  All plans and specifications for public buildings must be approved by the State Board of Health, State Fire Marshal, State Building Commissioner, and other state agencies designated by statute. [IC 36-1-12-10]

  Notice

  Upon filing of the plans and specifications, the board shall publish a notice two times, at least one week apart, with the second publication made at least ten days before the date the bids will be received, calling for sealed proposals for the public work. [IC 36-1-12-4(b)(3)]

  The notice must specify the place where the plans and specifications are on file, the date fixed for receiving bids, and the amount of the bond or certified check to be filed with each bid. [IC 36-1-12-4(b)(4); IC 36-1-12-4.5]

  The period of time between the date of the first publication and the date of receiving bids may not be more than six weeks. [IC 36-1-12-4(b)(5)]

  Evidence of Financial Responsibility

  A bond or certified check shall be filed with each bid by a bidder in the amount specified by the board. The amount may not be more than 10% of the contract price. The bond or certified check shall be made payable to the political subdivision.

  All checks of unsuccessful bidders shall be returned to them by the board upon selection of successful bidders. Checks of successful bidders shall be held until delivery of the performance bond. [IC 36-1-12-4.5]

  Bidder's Affidavit

  The board shall require the bidder to submit an affidavit that the bidder has not entered into a combination or agreement:

  1. Relative to the price to be bid by a person;
  2. To prevent a person from bidding; or,
  3. To induce a person to refrain from bidding and that his bid is made without reference to any other bid. [IC 36-1-12-4(b)(12)]

  Public Meeting

  The board may not require a bidder to submit a bid before the meeting at which bids are to be received. The meeting for receiving bids must be open to the public. All bids received shall be opened publicly and read aloud at the time and place designated. Bids shall be submitted on prescribed General Form 96 (Bid for Construction). [IC 36-1-12-4(b)(7)]

  Responsive Bidder

  In determining whether a bidder is responsive, the board may consider the following factors:

  1. Whether the bidder has submitted a bid or quote that conforms in all material respects to the specifications.
  2. Whether the bidder has submitted a bid that complies specifically with the invitation to bid and the instructions to bidders.
  3. Whether the bidder has complied with all applicable statutes, ordinances, resolutions, or rules pertaining to the award of a public contract. [IC 36-1-12-4(b)(10)]

  Responsible Bidder

  In determining whether a bidder is a responsible bidder, the board may consider the following factors:

  1. The ability and capacity of the bidder to perform the work.
  2. The integrity, character, and reputation of the bidder.
  3. The competence and experience of the bidder. [IC 36-1-12-4(b)(11)]

  Award of Contract

  The board shall award the contract for public work or improvements to the lowest responsible and responsive bidder or the board may reject all bids submitted. [IC 36-1-12-4(b)(8)]

  If the board awards the contract to a bidder other than the lowest bidder, the board must state in the minutes or memoranda, at the time the award is made, the factors used to justify the award. The board shall keep a copy of the minutes or memoranda available for public inspection. [IC 36-1-12-4(b)(6)]

  Except as provided below, the board shall award the contract and shall provide the successful bidder with written notice to proceed within sixty (60) days after the date on which bids are opened.

  1. If general obligation bonds are to be sold to finance the construction that is the subject of the bid, the board shall allow the bidder ninety (90) days.
  2. If revenue bonds are to be issued and sold to finance the construction, the board shall allow the bidder one hundred fifty (150) days.

  A failure to award and execute the contract and to issue notice within the time required entitles the successful bidder to reject the contract and withdraw his bid without prejudice, or extend the time to award the contract and provide notice to proceed at an agreed later date. If the successful bidder elects to reject the contract and withdraw his bid, notice of that election must be given to the board in writing within fifteen (15) days of the sixty (60) day expiration date or any other extension date. [IC 36-1-12-6]

  Contract Provision - Payment of Subcontractors

  A contract for public work must contain a provision for the payment of subcontractors, laborers, material supplies, and those performing services. The board shall withhold money from the contract price in a sufficient amount to pay the subcontractors, laborers, material suppliers, and those furnishing services. [IC 36-1-12-13]

  Change Orders

  If, in the course of construction, reconstruction or repair of a public work project, it becomes necessary to change or alter the original specifications, a change order may be issued to add, delete, or change an item or items in the original contract. All change orders must be directly related to the original public work project.

  • Addendum. The change order becomes an addendum to the contract and must be approved and signed by the board and the contractor.
  • Architect or Engineer. If a licensed architect or engineer is assigned to the public work project the change order must be prepared by that person.
  • Increase in Scope of Project. The total of all change orders issued that increase the scope of the project may not exceed twenty percent (20%) of the amount of the original contract. A change order issued as a result of circumstances that could not have been reasonably foreseen does not increase the scope of the project.
  • Cost of Materials. If additional units of materials included in the original contract are needed, the cost of these units in the change order must be the same as those shown in the original contract.

  A change order may not be issued before commencement of the actual construction, reconstruction, or repairs except in the case of an emergency. In that case, the board must make a declaration, and the board's minutes must show the nature of the emergency. [IC 36-1-12-18]

  Installation of Plumbing

  A person who submits a bid for a public works contract that involves the installation of plumbing must submit evidence that the person is a licensed plumbing contractor under Indiana Code 25-28.5-1. [IC 36-1-12-12]

  Final Payment

  The board shall withhold final payment to the contractor until the contractor has paid the subcontractors, material suppliers, laborers, or those furnishing services. However, if there is not a sufficient sum owed to the contractor to pay those bills, the sum owed to the contractor shall be prorated in payment of the bills among the parties entitled. To receive payment the subcontractor or subcontractors, material suppliers, laborers, or those furnishing services shall file their claims with the board within sixty days after the last labor performed, last material furnished, or last service rendered by them. [IC 36-1-12-12]

• Public Work Projects Costing More Than $100,000 - Additional Procedures

  In addition to the foregoing items applying to major public work projects, the following items apply to public work projects costing more than $100,000.

  Approval of Plans and Specifications

  If the cost of the project is more than $100,000, the plans and specifications must be approved by an architect or engineer licensed under IC 25-34. [IC 36-1-12-7]

  Bidder Information

  If the cost of a project is $100,000 or more, the board shall require the bidder to submit a financial statement, a statement of experience, his proposed plan or plans for performing the public work, and the equipment that he has available for the performance of the public work. [IC 36-1-12-4(b)(6)]

  Payment Bond

  IC 36-1-12-13.1 requires a payment bond to be filed with a contract for public work only if the cost exceeds $100,000. The contractor shall execute a payment bond to the appropriate political subdivision or agency, approved by and for the benefit of the political subdivision or agency, in an amount equal to the contract price. The payment bond is binding on the contractor, the subcontractor, and their successors and assigns for the payment of all indebtedness to a person for labor and service performed, material furnished, or services rendered. The payment bond must state that it is for the benefit of the subcontractors, material suppliers, laborers, and those performing services. The payment bond shall be deposited with the board. [IC 36-1-12-13.1]

  Performance Bonds

  For public works contracts of less than two hundred fifty thousand dollars ($250,000), the board may waive the performance bond requirement and accept from a contractor an irrevocable letter of credit for an equivalent amount from an Indiana financial institution instead of a performance bond. [IC 36-1-12-14(h)]

  Actions against a surety on a performance bond must be brought within one year after the date of the board's final settlement with the contractor. [IC 36-1-12-14(g)]

  Filing of Final Record Drawings

  The board must, within sixty (60) days after the completion of the public work project, file in the office of the State Building Commissioner a complete set of final record drawings for the public work project. [IC 36-1-12-11]

  Retainage and Escrow Agreement

  A board that enters into a contract for public work, and a contractor who subcontracts parts of that contract, shall include in their respective contracts provisions for the retainage of portions of payments by the board to contractors, by contractors to subcontractors, and for the payment of subcontractors. Either the board or contractor, or both, shall place the retainage in an escrow account, with a bank, savings and loan institution, or the state as the escrow agent. The escrow agent shall be selected by mutual agreement between board and contractor or subcontractor under a written agreement among the bank or savings and loan institution and: (1) the board and the contractor; or (2) the subcontractor and the contractor. [IC 36-1-12-14(b)]

  IC 36-1-12-14(f) provides the board or escrow agent shall pay the contractor within sixty-one (61) days after the date of substantial completion subject to IC 36-1-12-11 and IC 36-1-12-12. Payment by the escrow agent shall include all escrowed principal and escrowed income.

  To determine the amount of retainage to be withheld, the board shall:

  1. Withhold no more than 10% of the dollar value of all work satisfactorily completed until the public work is 50% completed, and nothing further after that; or
  2. Withhold no more than 5% of the dollar value of all work satisfactorily completed until the public work is substantially completed.

  If upon substantial completion of the public work minor items remain uncompleted, an amount equal to 200% of the value of each item as determined by the architect-engineer shall be withheld until the item is completed. [IC 36-1-12-14(c)]

  The escrow agreement must contain the following provisions:

  1. The escrow agent shall invest all escrowed principal in obligations selected by the escrow agent.
  2. The escrow agent shall hold the escrowed principal and income until receipt of notice from the board and the contractor, or the contractor and the subcontractor, specifying the part of the escrowed principal to be released from the escrow and the person to whom that portion is to be released. After receipt of the notice, the escrow agent shall remit the designated part of escrowed principal and the same proportion of then escrowed income to the person specified in the notice.
  3. The escrow agent shall be compensated for his services, to be paid from the escrowed income.
  4. The contractor shall furnish the board with a performance bond equal to the contract price. If acceptable to the board, the bond may provide for incremental bonding in the form of multiple or chronological bonds that, when taken as a whole, equal the contract price. The surety on the performance bond may not be released until one year after the date of the board's final settlement with the contractor. [IC 36-1-12-14(e)]

  Final Payment

  The contractor shall be paid in full, including all escrowed principal and escrowed income, by the board and escrow agent, within sixty-one (61) days after the date of substantial completion. If within sixty-one (61) days after the date of substantial completion there remains uncompleted minor items, an amount equal to 200% of the value of each item as determined by the architect-engineer shall be withheld until the item is completed. [IC 36-1-12-14(f)]

• Public Work Costing Less Than $25,000

  If the board wishes to award a contract for a public work costing less than $25,000, the procedures outlined for public works costing $25,000 or more may be followed, or the following procedures may be used:

  Plans and Specifications

  All plans and specifications for public buildings must be approved by the State Board of Health, State Fire Marshal, State Building Commissioner, and other state agencies designated by statute. [IC 36-1-12-10]

  Inviting Quotes

  The board shall invite quotes from at least three persons known to deal in the class of work proposed to be done by mailing them a notice stating that plans and specifications are on file in a specified office. The notice must be mailed not less than seven days before the time fixed for receiving quotes. [IC 36-1-12-5]

  Public Meeting

  The board may not require a person to submit a quote before the meeting at which quotes are to be received. The meeting for receiving quotes must be open to the public. All quotes received shall be opened publicly and read aloud at the time and place designated. [IC 36-1-12-5]

  Award of Contract

  The board shall award the contract for the public work to the lowest responsible and responsive quoter. [IC 36-1-12-5]

  Rejection of All Quotes

  The board may reject all quotes submitted. If the board rejects all quotes, the board may negotiate and enter into agreements for the work in the open market without inviting or receiving quotes if the board establishes in writing the reasons for rejecting the quotes. [IC 36-1-12-5]

• Use of Own Work Force

  The political subdivision may purchase or lease materials in the manner provided in IC 36-1-9 and perform any public work by means of its own work force, without awarding a contract whenever the cost of that public work project is estimated to be less than $100,000. Before the political subdivision may perform any work under this section by means of its own work force, the political subdivision must have a group of employees on its staff who are capable of performing the construction, maintenance, and repair applicable to that work. For purposes of this subsection, the cost of a public work project includes the actual cost of materials, labor, equipment, rental, a reasonable rate for use of trucks and heavy equipment owned, and all other expenses incidental to the performance of the project. [IC 36-1-12-3]

• Division of Public Work Projects

  The cost of a single public work project may not be divided into two or more projects for the purpose of avoiding the requirement to solicit bids. The cost is defined by IC 36-1-12-19(a) to include cost of materials, labor, equipment rental, and all other expenses incidental to the performance of the project.

  Any board member or officer of the political subdivision, bidder, quoter, or other person who is party to a public work contract who knowingly violates IC 36-1-12-19 commits a Class A infraction.

• Emergency Contracts

  In case of an emergency the board may contract for a public work project without advertising for bids if bids or quotes are invited from at least two persons known to deal in the public work required to be done. The minutes of the board must show the declaration of emergency and the names of the persons invited to bid or provide quotes. The notice requirements for hiring of an architect or engineer may also be waived. [IC 36-1-12-9]

• Use of United States Steel Products

  IC 5-11-1-26 requires the State Board of Accounts to include in its examination report a political subdivision's compliance with IC 5-16-8, which requires use of steel products made in the United States for construction and alterations of public buildings except under certain circumstances.

• Procedure for Hiring Architects, Engineers, or Land Surveyor

  Whenever the political subdivision decides to hire an architect, engineer, or land surveyor, the political subdivision may:

  1. Publish a notice in accordance with the requirements of publishing legal notices as found in IC 5-3-1;
  2. Provide for notice (other than notice in accordance with IC 5-3-1) as it determines is reasonably calculated to inform those performing professional services of the proposed project;
  3. Provide for notice in accordance with both subdivision (1) and (2); or
  4. Determine not to provide any notice.

  If the political subdivision provides for notice in accordance with the above, each notice must include:

  1. The location of the project;
  2. A general description of the project;
  3. The general criteria to be used in selecting professional services firms for the project.
  4. The place where any additional project description or specifications are on file;
  5. The hours of business of the public agency; and
  6. The last date for accepting statements of qualifications from interested parties.
• Prevailing Wage/Common Construction Wage

  A contract by the board for a public work project must conform to the wage scale provisions of IC 5-16-7. [IC 36-1-12-15]

• Discrimination by Contractors and Subcontractors Prohibited

  A contract by the board for public work must conform with the antidiscrimination provisions of IC 5-16-6. The board may consider a violation of IC 5-16-6 a material breach of contract, as provided in IC 22-9-1-10. [IC 36-1-12-15]

  Every contract for the construction, alteration, or repair of any public building or public work in the State of Indiana shall contain provisions by which the contractor agrees:

  1. That in the hiring of employees for the performance of work under this contract or any subcontract hereunder, no contractor, or subcontractor, nor any person acting on behalf of such contractor or subcontractor, shall, by reason of race, religion, color, sex, national origin, or ancestry, discriminate against any citizen of the State of Indiana who is qualified and available to perform the work to which the employment relates;
  2. That no contractor, subcontractor, nor any person on his behalf shall, in any manner, discriminate against or intimidate any employee hired for the performance of work under this contract on account of race, religion, color, sex, national origin or ancestry.
  3. That there may be deducted from the amount payable to the contractor by the State of Indiana or any municipal corporation thereof, under this contract, a penalty of five dollars for each person for each calendar day during which such person was discriminated against or intimidated in violation of the provisions of the contract; and
  4. That this contract may be cancelled or terminated by the State of Indiana or by any municipal corporation thereof, and all money due or to become due hereunder may be forfeited, for a
• Overpayment Collections

  Governmental units should collect any overpayments made.

• Advance Payments

  Compensation and any other payments for goods and services should not be paid in advance of receipt of the goods or services unless specifically authorized by statute. Payments made for goods or services which are not received may be the personal obligation of the responsible official or employee.

• Purchasing Bonuses

  Any compensation, premium, bonus, or product earned as a result of the purchase of goods or services by the governmental unit becomes the property of the governmental unit.

• Public-Private Agreements

  A political subdivision may enter into a public-private agreement under IC 5-23. The procedures of IC 5-23 must be specifically adopted by resolution or ordinance of the legislative body of the political subdivision, or if the political subdivision does not have a legislative body, the fiscal body of the political subdivision. [IC 5-23-1-1]

  Definitions

  Definitions are contained in IC 5-23-2. Three terms are defined below.

  • BOT Agreement.
    BOT Agreement means any agreement between a governmental body and an operator to construct, operate, and maintain a public facility and to transfer the public facility back to the governmental body at an established future date.
  • Operating Agreement.
    Operating Agreement means any agreement between an operator and the governmental body for the operation, maintenance, repair, or management of a public facility.
  • Public Facility.
    Public Facility means a facility located on, or to be located on, real property owned or leased by a governmental body and upon which a public service is or may be provided.

  BOT Agreements

  A governmental body may enter into a BOT agreement with an operator for the acquisition, planning, design, development, reconstruction, repair, maintenance, or financing of any public facility on behalf of the governmental body. Items which should be contained in the BOT Agreement are found in IC 5-23-3.

  Operating Agreements

  A governmental body may enter into an operating agreement with an operator for the operation, maintenance, repair, management, or any combination of operation, maintenance, repair, or management of any public facility for any public service to be performed on behalf of the governmental body. Other provisions relating to operating agreements are located in IC 5-23-4.

  Other Provisions

  Other provisions contained in IC 5-23 cover the selection of contractor by request for proposals, contract terms and conditions, and records.

  Consult Attorney

  Before entering into a public-private agreement, it is recommended that the governing body consult with the political subdivision's attorney in order to ensure the provisions of IC 5-23 are complied with as well as any other applicable laws.

Organization

• Organizational Information

  County hospitals are established under the authority of IC 16-22-2, and its predecessors. The composition of the governing bodies of the county hospitals is as follows:

  IC 16-22-2-2 - Hospitals established under this article or in IC 16-12.1 (before its repeal on July 1, 1993) must have a board of four members, appointed by the county executive.

  IC 16-22-2-3 - Hospitals operated under IC 16-12-1 (before its repeal on July 1, 1993) shall be under the control of a governing board consisting of eleven members. Three of the members must be members of the county executive.

  IC 16-22-3.1 - Hospitals in a county having a population of more than 41,000 but less than 43,000 shall be under the control of a governing board consisting of nine members appointed by the county executive. According to the 2000 federal census, the county having a population of more than 41,000 but less than 43,000 is Jackson County.

  IC 16-22-2-4 - Hospitals in a county having a population of more than 39,000 but less than 39,600 shall be under the control of a governing board consisting of seven members as follows:

  1. Three members must be the members of the county executive.
  2. Four members, one of whom may be a licensed physician, shall be appointed by the judge of the circuit court of the county.

  According to the 2000 federal census the county having a population of more than 39,000 but less than 39,600 is Knox County.

  IC 16-22-2-5 - Hospitals in counties having a population of more than 18,000 but less than 18,300 shall be under the control of a governing body consisting of seven members as follows:

  1. Three members must be the members of the county executive.
  2. Two members shall be appointed by the county fiscal body, one of whom may be a licensed physician.
  3. Two members shall be appointed by the county executive.

  According to the 2000 federal census the county having a population of more than 18,000 but less than 18,300 is Rush County.

  IC 16-22-2-6 - Hospitals established under Acts 1917, c.144, s.1 shall be under the control of a governing board consisting of four members appointed by the county executive. One of the members may be a licensed physician.

  IC 16-22-2-7 - A hospital governing board of four members in existence on September 2, 1971 may petition the county executive to increase the size of the board to five, six, seven, eight or nine members.

  IC 16-23-1-3 - A hospital operated as a city hospital under IC 16-23-1 shall be under the control of a governing board consisting of seven members who are appointed by a separate appointing board as described in IC 16-23-1-4.

General Provisions

• Treasurer

  The county treasurer of the county in which the hospital is located shall be the treasurer of the governing board; however, the board, with the approval of the county executive, may elect a treasurer who shall also serve as the disbursing officer of the hospital. [IC 16-22-2-9(b)]

• Official Bonds

  The executive director and all persons whose duty it is to handle funds of the hospital must execute a corporate surety bond in the amount and with conditions required by the board. If a treasurer is elected by the board, the treasurer shall be separately bonded in an amount fixed by the board but not less than $25,000. The board may elect an assistant treasurer who may not be a member of the board and who must be separately bonded in an amount fixed by the board greater than $25,000. The bond on all persons except the treasurer and assistant treasurer may be a blanket corporate surety bond conditioned for the faithful performance of duties. All bonds required by this subsection must be approved by the board and filed with the county recorder. [IC 16-22-2-9(c)]

• Governing Board as Supreme Authority

  The governing board is the supreme authority in a hospital and is responsible for the management, control, and operation of the hospital. The board has the powers and duties set forth in this chapter. The governing board has the powers granted to boards of nonprofit corporations under IC 23-17. [IC 16-22-3-1]

• Powers of the Governing Board

  The governing board may do the following: [IC 16-22-3-11]

  1. Adopt an employee benefit program that may include a vacation policy and employee discounts.
  2. Authorize expenditure of hospital funds for payment of advertising and placement fees for personnel and physicians.
  3. Expend hospital funds in an amount not to exceed 0.5% of hospital revenues for the preceding calendar year for a program that directly contributes to the productivity or morale of personnel, volunteers, or physicians. However, this subdivision does not apply to an employee benefit program under subdivision (1), or an employee compensation arrangement, including a productivity bonus.
  4. Adopt a plan that provides for hospital employee sickness or accident disability and contract for and purchase insurance plans from an insurance company licensed to transact business in Indiana.
  5. Contract for and purchase adequate pension and retirement plans for hospital personnel from the public employee's retirement fund of Indiana or from any company authorized to do such business in Indiana.
  6. Enter into deferred compensation agreements with employees and other contractual personnel and fund deferred obligations by contracting with insurance companies licensed to transact business in Indiana.
  7. Expend hospital funds to pay dues of the executive director and department heads for memberships in local, state, or national hospital or professional associations or organizations that the board determines are of direct benefit to the hospital.
  8. Establish and operate employee registries for part-time or temporary hospital employees.
  9. Pay a part or all of the costs of these plans out of hospital funds.
  10. Expend hospital funds for reasonable expenses incurred by persons and their spouses who are interviewed for employment or for medical staff appointment and for reasonable moving expenses for the persons and their spouses if employed or appointed to the hospital medical staff.
  11. Expend hospital funds, advance tuition payments, or establish a tuition refund program for the education or professional improvement of nurses and other professional or technical employees of the hospital for inservice training and attending seminars or other special courses of instruction when the board determines that the expenditures directly benefit the hospital.
  12. Conduct business in a state adjacent to Indiana. (IC 16-22-3-11)
• Powers of Board

  "The board is a body corporate and politic with the style of "The Board of Trustees of __________ Hospital," to include the full name of the hospital. In that name and capacity, the board may do the following:

  1. Sue and be sued . . .
  2. Possess the real and personal property of the hospital and the hospital funds in the hospital's corporate name for the hospital's benefit.
  3. Exercise the other powers, duties and responsibilities set forth in this article." [IC 16-22-3-24]
• Compensation and Management Policies

  "Upon the recommendation of the executive director, a governing board shall do the following:

  1. Fix the compensation, including incentives for productivity, of all hospital employees.
  2. Adopt personnel and management policies consistent with the governing boards of other hospitals in Indiana." [IC 16-22-3-10]
• Executive Director

  "The governing board shall appoint an executive director as the administrative head of the hospital. The executive director:

  1. Is the executive agent of the board in the administration of the board's policies;
  2. Is the liaison officer between the board and the medical staff;
  3. Shall employ hospital personnel; and
  4. Has the other powers and duties delegated to the executive director by the board or specifically assigned to the executive director in this article." [IC 16-22-3-8]
• Duties of State Board of Accounts

  IC 16-22-3-12(a) states: “The state board of accounts shall approve or prescribe the manner in which the hospital records are kept, shall audit the records of the hospital, and may approve forms for use by all hospitals or groups of hospitals.”

  IC 16-22-3-12(c) states: “A hospital may elect to have an audit required under subsection (a) performed by an independent certified public accounting firm that is experienced in hospital matters. The audit report must be kept on file at the hospital and a copy must be provided to the state board of accounts. The audit engagement by a certified public accounting firm must be performed pursuant to guidelines established by the state board of accounts.”

• Hospital Financial Records

  A governing board that receives a financial subsidy from the county for hospital operations, excluding mental health or ambulance services, during the preceding calendar or fiscal year must file with the county executive and the county fiscal body an annual report showing the income and expenses of the operating fund for the preceding calendar or fiscal year by major classification according to the chart of accounts approved by the state board of accounts. The annual report shall be published one time. Hospital records may be kept in hard copy, on microfilm, or via another data system acceptable to the state board of accounts. [IC 16-22-3-12(b)]

• Charges for Services

  "The governing board shall establish reasonable charges for patient care and other hospital services for the residents of the county and may provide patient care and other hospital services to nonresidents of the county upon terms and conditions the board establishes by rule." [IC 16-22-3-13(a)]

• Deposit of Money

  "Money in the hospital funds shall be deposited in the manner determined by the governing board." [IC 16-22-3-16]. To provide for adequate safeguarding of cash, receipts should be deposited in the depository or depositories designated by the governing board in a timely manner.

• Investment of Hospital Funds

  IC 16-22-3-20 states:

  1. As used in this section, "financial institution" has the meaning set forth in IC 5-13-4-10.
  2. The board may invest money in the hospital funds within the county or the state as the board determines. The money may be invested in the following:
     1. Any account paying interest and subject to withdrawal by negotiable orders of withdrawal, unlimited as to amount or number (NOW accounts).
     2. Passbook savings accounts.
     3. Certificates of deposit.
     4. Money market deposit accounts.
     5. Any interest bearing account that is authorized to be set up and offered by a financial institution or brokerage firm registered and authorized to do business in Indiana.
     6. Repurchase or resale agreements involving the purchase and guaranteed resale of any interest bearing obligations issued or fully insured or guaranteed by the United States or any United States government agency in which type of agreement the amount of money must be fully collateralized by interest bearing obligations as determined by the current market value computed on the day the agreement is effective.
     7. Mutual funds offered by a financial institution or brokerage firm registered and authorized to do business in Indiana.
     8. Securities backed by the full faith and credit of the United States Treasury or fully insured or guaranteed by the United States or any United States government agency.
     9. Pooled fund investments for participating hospitals offered, managed, and administered by a financial institution or brokerage firm registered or authorized to do business in Indiana.

  This subsection does not prevent the board from using money in the hospital funds to capitalize projects undertaken under section 1(b) and 1(c) [IC 16-22-3-1(b) and IC 16-22-3-1(c)] of this chapter.

  3. Any interest derived from an investment under subsection (b) becomes a part of the hospital funds invested. Interest derived from the investment of money raised by bonded or other indebtedness in excess of funds needed for hospital buildings may be applied by the governing board to the appropriate bond redemption, interest, or sinking fund.
• Property and Supplies

  IC 16-22-3-2(a) states: "The governing board may purchase, construct, remodel, repair, enlarge, or acquire buildings and real or personal property for hospital purposes, upon terms and conditions acceptable to the board."

• Lease of Property

  IC 16-22-3-3 states: “The governing board may lease real or personal property on reasonable terms and conditions.”

• Acquistion of Supplies

  IC 16-22-3-4 states: "The governing board may purchase or acquire materials, services, equipment, and supplies required to operate and maintain the hospital at prices the board considers reasonable."

• Claims Against the Hospital

  IC 16-22-3-7 states: "Claims against the hospital must be allowed and approved by the governing board before payment by the disbursing officer. However, the board may, subject to review and approval at the board's next regular meeting, authorize the following:

  1. Compensation of hospital employees upon certification of payrolls by the executive director.
  2. Payment of invoices for materials, services, equipment, and supplies required for the operation and maintenance of the hospital upon certification by the executive director of the following:
     1. The invoices are true and correct.
     2. The items were ordered and received by the hospital."
• Transfer of Hospital Funds

  IC 16-22-3-14(c) states: “The board may transfer a part of the hospital funds to a nonprofit corporation organized under IC 23-7-1.1 (before its repeal on August 1, 1991) or IC 23-17 that is:

  1. A hospital foundation organized and operated for the exclusive benefit of the hospital; or
  2. A related or controlled entity; if adequate provision is made for working capital and other known and anticipated hospital needs.”

  IC 16-22-3-14(d) states: “If a transfer includes public funds of the hospital, the public funds transferred to the foundation or related or controlled entity may be audited by the state board of accounts unless:

  1. The hospital foundation or related or controlled entity files annually with the treasurer of the hospital a copy of an audit report prepared by an independent certified public accountant; and
  2. The audit report is on file at the hospital and is made available to the state board of accounts.”
• Support from County

  IC 16-22-3-27 states, in part: “(a) The governing board may request support from the county, either by appropriation from the county general fund or by a separate tax levy . . . (b) If the county provides a direct financial subsidy to a hospital from a tax levy, the hospital board may not provide those funds from to an entity created under IC 16-22-3-1(b) for three years. After three years, all funds, with interest, must be repaid within ten years.” Those entities include organizations and associations that benefit the hospital, partnerships and joint ventures, and other corporations.

• Tax Levy to Pay Portion of Lease or Loan Payment

  IC 16-22-3-27(c) states: “If the board enters into a lease or sublease contract or a loan agreement with the state authority, the board may request the county to adopt a separate tax levy to support the board's obligation to make payments under that contract or agreement.” IC 16-22-3-27.5 states, in part: “ (a) If (1) the board has authorized the hospital to enter into a lease or sublease contract or a loan agreement with the state authority under this chapter; and (2) the lease or sublease contract or the loan agreement provides that a portion of the lease or loan payment is to be paid from taxes. (b) the county council, or city-county council in the case of a county with a consolidated city, shall annually levy a tax that is sufficient to produce each year along with other available funds an amount that is sufficient to pay the portion of the lease or loan payment that is required to be paid from taxes.”

• Liberal Construction of Powers of Board

  IC 16-22-3-30 states: “The powers of the board described in this chapter (IC 16-22-3) shall be liberally construed to effect the purposes of this article (IC 16-22) and to enable the hospital to be maintained and operated as a first class hospital.”

• Hospital Sinking Funds

  IC 16-22-4-1 states: “The county officers may establish a cumulative building or sinking fund for the erection of new hospital buildings, the repairing, remodeling, and enlarging of old hospital buildings, and the equipment of new, enlarged, and old hospitals owned and operated by the county, a voluntary nonprofit association, or a nonprofit corporation.” IC 16-22-4-4 states: “The county officers may, in compliance with IC 6-1-1-41, levy a tax on all taxable property within the county to provide money for a fund established under this chapter.”

• Financing Hospital Buildings

  A hospital may establish a cumulative building or sinking fund as described in IC 16-22-4, or may continue cumulative building funds established under IC 16-12-16 (before its repeal on September 2, 1971), IC 16-12-15 (before its repeal on July 1, 1993), or IC 16-12-1.4 (before its repeal on July 1, 1993). The county executive may issue and sell general obligation bonds of the county to finance the costs of, or the enlargement or remodeling of, hospital buildings. [IC 16-22-5]

• County Hospital Building Authorities

  The county executive of a county owning and operating only one county hospital may, upon the written request of by the governing board of the hospital, adopt a resolution for the creation of an authority, otherwise referred to as a Hospital Association. The authority is created for the purpose of financing, acquiring, constructing, renovating, equipping, and leasing to the county land and a building, including an existing building, for hospital purposes. [IC 16-22-6]

• Defined as Political Subdivision

  A hospital corporation or authority is defined as being a political subdivision. [IC 36-1-2-10 and IC 36-1-2-13]

• Medical Malpractice and Patient's Compensation Fund

  The Indiana Medical Malpractice Act (the Act) identifies the amounts recoverable for acts of malpractice and the hospital’s financial responsibility for such acts. IC 34-18-14-3 identifies the total amount recoverable for an injury or death of a patient. IC 34-18-4 describes the establishment of financial responsibility of a hospital and certain other health care providers, including, among other things, the minimum annual aggregate amount of malpractice liability insurance. IC 34-18-5 requires hospitals and certain other health care providers to contribute annually to the Indiana Patient’s Compensation Fund, as described in IC 34-18-6. This fund may be used to pay medical malpractice claims in excess of certain amounts, under certain terms and conditions.

• Disposition of Unclaimed Property

  All personal property held for the owner by the State of Indiana, or any political subdivision thereof, that has remained unclaimed by the owner for more than three years is presumed abandoned. Every person holding funds or other property, tangible, or intangible, presumed abandoned under this chapter shall report to the attorney general of the state of Indiana with respect to the property as provided in IC 32-34-1-26. Unclaimed property may include such things as property left for safekeeping which was not claimed and overpayments on patient accounts not refunded to the patient or his or her representative. [IC 32-34-1]

• Actions of Governing Board

  The hospital is responsible for complying with the decisions of the governing board as evidenced in the board minutes and other written memoranda.

• Materials and Supplies Inventory

  The hospital is responsible for completing an accurate inventory of materials and supplies on a regular basis.

• Pharmacy Inventory

  The hospital is responsible for completing an accurate inventory of pharmacy goods on a regular basis. The inventory should be performed as near as possible to the end of the hospital's fiscal year.

• Depository Reconcilements

  To provide for adequate safeguarding of cash and to enable the hospital to identify and correct errors on a timely basis, a reconcilement of the account balances recorded in the accounting records to the balances of the depository accounts should be performed by the hospital at least monthly.

New Reporting Requirements

• Governmental Accounting Standards

  Governmental Accounting Standards Board (GASB) Statement No. 34, and related statements and official pronouncements, have made significant changes in the reporting requirements for hospitals. GASB Statement No. 34 reemphasizes the role of the management of the hospitals in determining the content of their financial statements. GASB Statement No. 34 has a phased in implementation period, and will apply differently for certain cities and towns.

  GASB Statement No. 34 prescribes a staggered implementation period in three different phases. Phase I governments are required to implement GASB Statement No. 34 for the first financial reporting period beginning after June 15, 2001. Phase II governments are required to implement GASB Statement No. 34 for the first financial reporting period beginning after June 15, 2002. All other governments, referred to as Phase III governments, are required to implement GASB Statement No. 34 for the first financial reporting period beginning after June 15, 2003. Phase I governments are defined as those with at least $100 million in revenue (excluding extraordinary items) as reported in its 1999 financial report. Phase II governments are defined as those with at least $10 million, but less than $100 million, in revenue (excluding extraordinary items) as reported in its 1999 financial report. Phase III governments are defined as those with less than $10 million in revenue (excluding extraordinary items) as reported in its 1999 financial report. It is our position that net patient service revenue, along with other revenue and nonoperating revenue, should be used as the basis for revenue used in determining these thresholds.

  Phase I hospitals have implemented the provisions of GASB Statement No. 34 for their 2002 fiscal year. Based on reviews performed by state board of accounts staff of 1999 audit reports, it appears that virtually all of the county and city hospitals that did not qualify as Phase I governments qualify as Phase II governments. Phase II hospitals will implement the applicable provisions of GASB Statement No. 34 for their 2003 fiscal year. For the hospitals with a September 30 year-end, this will be for the period October 1, 2002, to September 30, 2003. For the hospitals that report on a calendar year, this will be for the period January 1, 2003, to December 31, 2003.

  The major implementation requirements for GASB Statement No. 34 are as follows:

  1. Audited financial reports will be required to include a Management Discussion and Analysis (MD&A). The MD&A will include a discussion and analysis of certain specific financial events, as prescribed by paragraph 11 of GASB Statement No. 34. The MD&A will be included in the financial report as Required Supplementary Information (RSI).
  2. Fund Balance will be replaced with Net Assets in the equity section of the Statement of Net Assets, which was formerly referred to as the Balance Sheet.
  3. Contributions will be reported as a separate item in the Statement of Operations (income statement). Further, contributions will no longer be reported in the Statement of Changes in Fund Balance (now referred to as Net Assets).
  4. The Cash Flow Statement will be required to be reported using the Direct Method, rather than the Indirect Method, which was previously permissible.
  5. Certain other changes in reporting methodology that are too numerous to mention here.

  Note that information presented as RSI is not covered by the auditors’ opinion in the Independent Auditors’ Report. Auditors are required to perform certain limited procedures to ascertain the information contained in the RSI is substantially correct in relation to the financial statements as a whole. Omitted, incomplete or inaccurate required supplementary information will generally result in an explanatory paragraph included after the auditors’ opinion in the Independent Auditors’ Report. This type of explanatory paragraph would describe the fact the required supplementary information is omitted, incomplete or inaccurate. An explanatory paragraph is not a qualification to auditors’ opinion; however, the presence of an explanatory paragraph in the Independent Auditors’ Report should be given due consideration, particularly if the hospital has outstanding debt or other items of significance or public interest.

• Management's Discussion and Analysis (MD&A)

  The following is a summary of paragraphs 8-11 of GASB Statement No. 34, which defines the MD&A requirements:

  1. The MD&A should precede the financial statements, and is classified as Required Supplementary Information (RSI).
  2. Items required to be included in the MD&A (as applicable):
     1. A brief discussion of the basic financial statements, including the relationships of the statements to each other, and the significant differences in the information they provide. This discussion should include analyses that assist readers in understanding why measurements and results reported in fund financial statements either reinforce information in government-wide statements or provide additional information.
     2. Condensed financial information derived from government-wide financial statements comparing the current year to the prior year. At a minimum, governments should present the information needed to support their analysis of financial position and results of operations required in c, below, including these elements:
        1. Total assets, distinguishing between capital and other assets.
        2. Total liabilities, distinguishing between long-term liabilities and other liabilities.
        3. Total net assets, distinguishing among amounts invested in capital assets, net of related debt; restricted amounts; and unrestricted amounts.
        4. Program revenues, by major source.
        5. General revenues, by major source.
        6. Total revenues.
        7. Program expenses, at a minimum by function.
        8. Total expenses.
        9. Excess (deficiency) before contributions to term and permanent endowments or permanent fund principal, special and extraordinary items, and transfers.
        10. Contributions.
        11. Special and extraordinary items.
        12. Transfers.
        13. Changes in net assets.
        14. Ending net assets.
     3. An analysis of the government’s overall financial position and results of operations to assist users in assessing whether financial position has improved or deteriorated as a result of the year’s operations. The analysis should address both governmental and business-type activities as reported in the government-wide financial statements and should include reasons for significant changes from the prior year, not simply the amounts or percentages of change. In addition, important economic factors, such as changes in the tax or employment bases that significantly affected operating results for the year should be disclosed.
     4. An analysis of balances and transactions of individual funds. The analysis should address the reasons for significant changes in fund balances or fund net assets and whether restrictions, commitments, or other limitations significantly affect the availability of fund resources of future use.
     5. An analysis of significant variations between original and final budget amounts and between final budget amounts and actual results for the general fund (or its equivalent). The analysis should include any currently known reasons for those variations that are expected to have a significant effect on future services or liquidity.
     6. A description of significant capital assets and long-term debt activity during the year, including a discussion of commitments made for capital expenditures, changes in credit ratings, and debt limitations that may affect the financing of planned facilities or services.
     7. A discussion by governments that use the modified approach (paragraphs 23-25) to report some or all of their infrastructure assets including:
        1. Significant changes in the assessed condition of eligible infrastructure assets from previous condition assessments.
        2. How the current assessed condition compares with the condition level the government has established.
        3. Any significant differences from the estimated annual amount to maintain/ preserve eligible infrastructure assets compared with the actual amounts spent during the current period.
     8. A description of currently know facts (information that management is aware of as of the date of the auditor’s report), decisions, or conditions that are expected to have a significant effect on financial position (net assets) or results or operations (revenues, expenses, and other changes in net assets).

  Note that GASB Statement No. 38 clarified the fact that the MD&A can only contain the items specifically listed in GASB Statement No. 34. It is not permissible for management to include any other items in the MD&A. GASB Statement No. 38 also reiterated the fact that only those items listed in GASB Statement No. 34 should be included in the MD&A. Management should consider the following items, and others as appropriate, when preparing the MD&A:

  1. Hospital financial statements are generally presented as business-type activities. Government-wide or government-type statements and schedules would generally not be presented for governmental hospitals.
  2. Hospitals generally do not report individual funds or governmental activities in its financial statements.
  3. Hospitals generally are not required by state statute or other legal requirements to prepare an annual operating budget. There are, however, some limited exceptions to this rule.
  4. Hospitals have generally been reporting infrastructure type assets in its capital assets records. Infrastructure assets could include such items as roads, bridges, sidewalks, etc.

  The full text of GASB Statement No. 34, and the related pronouncements and implementation guides may be ordered directly from the Governmental Accounting Standards Board. For more information refer to the GASB website at http://www.gasb.org. This website also includes examples of financial statements for certain governments which have implemented Statement No. 34, as well as other information related to Statement No. 34. Other information on hospital accounting and reporting, as well as example financial statements, may be obtained from the government hospital section of the AICPA industry audit guide entitled Health Care Organizations.