Harriet Knox, Ralph Patton, and Marcia Diamond work for a family physician, Dr.

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 recordkeeper, receives a copy of the list and posts payments to patients' accounts. About once a month the office clerks have an expensive lunch they pay 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.

Required

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

2.Would a bank reconciliation uncover this office fraud?

3.What are some procedures to detect this type of fraud?

4.Suggest additional internal controls that Dr. Conrad could implement

Explanation / Answer

1. knox is the best person in Dr. Conrad office to reconcile bank statement because she is having all the records with her.

2. Yes the bank statement will show the encashment of cheque of patient.

3. Checkin bank statement,reconciling cash with bank.

4. There should be proper handling of cheques it should be kept in physical control of manager and cashier and there should be inventory control also.

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