Simple and to the point answers please typed. Thank you in advance. If unsure, p

Question

Simple and to the point answers please typed. Thank you in advance. If unsure, please do not attempt!

stateodu. Metropoli 06. CASH AND INTER × 1 + https BTN 6-3 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 vwill 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. Start a New Threald Typs here ta seach

Explanation / Answer

1. Normally it is advisable that any person other than the cashier, who knows to reconcile the bank statement should do the reconciliation job as this slightly reduces the misappropriation of accounts. In the given situation any person other than Knox should do the reconciliation job with the help of cash book and bank statement.

2. Absolutely not, the bank reconciliation wouldn't find out this fraud as the entries have been made both in the cashbook and the bank's statement. Bank reconciliation helps only find out the transactions which are recorded only either in cash book or passbook.

3. These types of frauds are quite tough to find out but experts and critical thinkers can find out these frauds by properly going through the books of accounts and checking and tallying every transactions with the vouchers.

4. Followings are the internal control methods which could be implemented to prevent these frauds:

i) Dr. Conrad should tell the bank not to accept endorsements for patient checks.

ii) Dr. Conrad should tell his patients to insist on an official receipt to prove payment.

iii) Dr. Conrad should ask the patients to cross the cheques so that it becomes account payee cheque.

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