Texas HHSC Cost Reports: 5 Records to Organize Early
- JConner
- Jul 27
- 2 min read
Updated: 6 days ago
Preparing a Texas HHSC cost report is easier when the accounting records and supporting documents are organized before reporting begins. Waiting until the filing period opens can lead to rushed reconciliations, unsupported allocations, and avoidable reporting differences.
Although requirements vary by program and reporting period, providers can begin by organizing these five record groups.
1. Final General Ledger and Trial Balance
Obtain a final general ledger and trial balance covering the entire reporting period. Review the records for:
Accounts with unusual or unclear descriptions
Personal or non-program expenses
Capital purchases recorded as operating expenses
Transactions posted to miscellaneous accounts
Year-end adjustments not reflected in the underlying schedules
The final balances should agree with the accounting records used to prepare the cost report.
2. Payroll and Staffing Records
Payroll is often one of a provider’s largest cost areas. Organize payroll registers, employee listings, job titles, hours, compensation, payroll taxes, and employee-benefit information.
Providers should also be able to explain how employees who serve multiple programs, locations, or functions were allocated.
3. Invoices, Contracts, and Payment Support
Maintain invoices, contracts, lease agreements, canceled checks, bank records, and other documentation supporting reported costs.
Pay particular attention to large, unusual, or manually recorded transactions. An amount appearing in the general ledger does not necessarily demonstrate what was purchased, why the cost was incurred, or how it relates to the program.
4. Cost-Allocation Support
Shared expenses may need to be allocated among programs, locations, departments, or related entities. Retain documentation showing:
The total expense being allocated
The programs or locations receiving the expense
The allocation method used
The underlying data supporting the calculation
Why the method reasonably reflects how the cost was incurred
Examples may include allocations based on payroll, square footage, service units, headcount, or another reasonable and consistently applied basis.
5. Related-Party Documentation
Identify transactions involving owners, officers, family members, commonly controlled entities, management companies, or other related parties.
Maintain agreements, invoices, ownership information, payment support, cost comparisons, and documentation explaining the business purpose of each arrangement.
A Short Review Now Can Prevent a Larger Cleanup Later
Before beginning the report, compare the general ledger, payroll records, allocation schedules, and supporting documentation. Unexplained differences should be investigated before amounts are entered into the reporting system.
Providers should always follow the current HHSC instructions applicable to their specific program, contract, and reporting period.
Free Resources for Texas HHSC Cost Reports
JConner’s Texas HHSC Resource Library includes practical tools providers can use during preparation, including:
HHSC Cost Report Preparation Checklist
HHSC Supporting-Documents Checklist
HHSC GL-to-Cost Report Reconciliation Worksheet
HHSC Related-Party Transaction Documentation Checklist
How JConner Can Help
JConner assists Texas healthcare and human-services providers with cost-report preparation support, accounting-record reconciliation, related-party documentation, audit readiness, financial reporting, and internal-control improvements.
Official Resources
Providers should consult the current HHSC Provider Finance Cost Report Information, program-specific instructions and resources, and STEPS guidance.
This article is provided for general educational purposes and does not constitute legal, accounting, or regulatory advice. Requirements vary by program, provider, contract, and reporting period. JConner is an independent CPA firm and is not affiliated with or endorsed by Texas HHSC.
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