Question

Harriet Knox, Ralph Patton, and Marcia Diamond work for a family physician, Dr. Gwen Conrad, who is in private practice. Dr. Conrad is knowledgeable about office management practices and has segregated the cash receipt duties as follows. Knox opens the mail and prepares a triplicate list of money received. She sends one copy of the list to Patton, the cashier, who deposits the receipts daily in the bank. Diamond, the record keeper, receives a copy of the list and posts payments to patients’ accounts. About once a month the office clerks have an expensive lunch they par for as follows. First, Patton endorses a patient’s check in Dr. Conrad’s name and cashes it at the bank. Knox then destroys the remittance advice accompanying the check. Finally, Diamond posts payment to the customer’s account as a miscellaneous credit. The three justify their actions by their relatively low pay and knowledge that Dr. Conrad will likely never miss the money.
RESOURCES
Lecture notes in this module as well as the assigned reading from your text.
REQUIREMENTS
Respond to the following questions in the MODULE 3 Discussion Forum.

Who is the best person in Dr. Conrad’s office to reconcile the bank statement?

Would a bank reconciliation uncover this office fraud?

What are some procedures to detect this type of fraud?

Suggest additional internal controls that Dr. Conrad could implement.

Answer 1

1.Bank reconciliation would definitely solve the issue, as the term bank reconciliation refer to difference between cash book and pass book i.e the entries made by us would differ from that of a bank such differences would be known through analysis of both the cash book and pass book called bank reconciliation.

2.fraud is an intentional error , which can be detected through substantive audit procedures,thus substantive procedures which state the matter of fact shall be implemented to identify such intentional errors called frauds, like a thorough check of a transaction in a analytical manner would detect the fraud

3. Additional internal controls Dr.cornard could implement are maintaining a chronological check on the receipts and deposits.

Proper segregation of duties between the employees

Review of the work without prior notice