Medical schemes offered scope to cut costs – but auditors’ blessing is a pre-requisite

A Circular* just released by the Council for Medical Schemes confirms that considerable scope exists for such schemes to cut back on their cost structures.

Hitherto medical schemes have been obliged to issue full financial statements to all their members – an inordinate expense that prompted several schemes to issue summarised accounts or highlight documents.

“We’ve been debating what is acceptable and what is not for some years,” says Malcolm Browne, chairman of the Medical Schemes Project Group established by the South African Institute of Chartered Accountants (SAICA).

Browne notes that the evolution of e-information has helped relieve the schemes’ cost burden, though not in every case, since the rules of each scheme define what may and what may not be done when it comes to issuing full accounts to members. “Some still state that a full set of accounts is obligatory.”

Browne says that the Circular does little more than confirm the status quo.

“What the Council for Medical Schemes does, however, is emphasise that each and every scheme that reports to members by way of highlight documents must ask that the auditors check the figures in the document.

“The auditors need not necessarily complete an audit certificate, but they must check that the figures agree with what is in the annual financial statements. From an ethical point of view, they should have been doing it anyway.

“Accordingly, funds will save money by not having to distribute the annual report to all the members. But they still have to have full sets of account available to members on demand.”

*Circular No. 23 of 2009