The Healthy Lifestyle Initiative is the most extensive health service the Government of Jamaica (GOJ) provides...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The Healthy Lifestyle Initiative is the most extensive health service the Government of Jamaica (GOJ) provides to the public. In 2015, the GOJ entered into a ten-year (10) contract with Jamaica Treatment Company for Diabetes (JTCD) Limited (a private medical company listed on the Jamaica Junior Stock Exchange). The contract stipulates that JTCD provides drug and treatment services for the prevention and treatment of diabetes, a lifestyle disease significantly affecting Jamaicans. The $950 million-dollar contract is estimated to serve approximately one (1) thousand Jamaicans who require residential and outpatient treatment for diabetes every month. The GOJ reimburses JTCD up to the maximum budgeted amounts for the contracted services. These amounts are reported in the Annual Fiscal Reports and subjected to GOJ guidelines covering contracts and health provisions. As an internal auditor for the GOJ, you conducted an audit of the contracted service for the period to date in July 2022. Your findings indicate that the Diabetes Services and Support Unit in the Health Ministry was not effectively monitoring the expenses reported by JTCD to ensure that reimbursed claims are allowable, supported, and related to the contracted programme. You found that for the 2018 to 2021 period, various expense amounts totalling $6,575,000.00 did not comply with the contract requirements and fiscal guidelines. The expense included a personal service cost of $2,500,000.00. Costs totalling $1,800,000 were not supported by proper documentation, $1,000,000 was not recorded in the general ledger, and $200,000 in unallowable administrative costs were included. Another $550,000 represented duplicated salaries already accounted for in the agreement and $525,000 in costs that were not programme related. Based on your inquiries, the management of the programme expressed that the employee responsible for preparing and submitting the reimbursable request has been under personal pressure for the past two (2) years. The employee has been experiencing financial pressures due to an economic downtown. The management also stated that they have submitted similar personal expenses for the 2015 to 2018 period and that other contractors are doing the same thing. Management expressed that they are heavily reliant on the funds from the contract. The contract accounts for 80% of revenue, and JTCD is falling behind on its medical supplies payments to creditors. You also observed that the assigned staff for processing reimbursement is consistently unsupervised, and supporting document is stored in a cabinet that is accessible to all staff. Some documents you have reviewed were missing the manager's signature, and some were not the original documents. You also found that the customers in dire need of treatment have complained about the lack of empathy exhibited by the healthcare staff, long wait times, and stockouts of required medication. You have discussed the findings with management, and are now ready to prepare your internal audit report. 3 of 4 Required: (a) Prepare a brief audit report for the recently completed audit. The report should include the audit objective, scope stating the evidence acquired and audit procedures and recommendations and conclusions based on the findings outlined in the case. (b) What are five (4) fraud red flags that may have been present at JTCD indicating the likelihood of fraudulent disbursement? (25 marks) (5 marks) (c) Assuming that the employee responsible for reimbursement is engaging in fraudulent activities, State three (3) matters that should be discussed with the management at JTCD in planning a separate audit into the alleged fraudulent activity. (3 marks) (d) Outline four (5) potential risks that JTCD is being exposed to because of its poor oversight over the contracted programme. (6 marks) The Healthy Lifestyle Initiative is the most extensive health service the Government of Jamaica (GOJ) provides to the public. In 2015, the GOJ entered into a ten-year (10) contract with Jamaica Treatment Company for Diabetes (JTCD) Limited (a private medical company listed on the Jamaica Junior Stock Exchange). The contract stipulates that JTCD provides drug and treatment services for the prevention and treatment of diabetes, a lifestyle disease significantly affecting Jamaicans. The $950 million-dollar contract is estimated to serve approximately one (1) thousand Jamaicans who require residential and outpatient treatment for diabetes every month. The GOJ reimburses JTCD up to the maximum budgeted amounts for the contracted services. These amounts are reported in the Annual Fiscal Reports and subjected to GOJ guidelines covering contracts and health provisions. As an internal auditor for the GOJ, you conducted an audit of the contracted service for the period to date in July 2022. Your findings indicate that the Diabetes Services and Support Unit in the Health Ministry was not effectively monitoring the expenses reported by JTCD to ensure that reimbursed claims are allowable, supported, and related to the contracted programme. You found that for the 2018 to 2021 period, various expense amounts totalling $6,575,000.00 did not comply with the contract requirements and fiscal guidelines. The expense included a personal service cost of $2,500,000.00. Costs totalling $1,800,000 were not supported by proper documentation, $1,000,000 was not recorded in the general ledger, and $200,000 in unallowable administrative costs were included. Another $550,000 represented duplicated salaries already accounted for in the agreement and $525,000 in costs that were not programme related. Based on your inquiries, the management of the programme expressed that the employee responsible for preparing and submitting the reimbursable request has been under personal pressure for the past two (2) years. The employee has been experiencing financial pressures due to an economic downtown. The management also stated that they have submitted similar personal expenses for the 2015 to 2018 period and that other contractors are doing the same thing. Management expressed that they are heavily reliant on the funds from the contract. The contract accounts for 80% of revenue, and JTCD is falling behind on its medical supplies payments to creditors. You also observed that the assigned staff for processing reimbursement is consistently unsupervised, and supporting document is stored in a cabinet that is accessible to all staff. Some documents you have reviewed were missing the manager's signature, and some were not the original documents. You also found that the customers in dire need of treatment have complained about the lack of empathy exhibited by the healthcare staff, long wait times, and stockouts of required medication. You have discussed the findings with management, and are now ready to prepare your internal audit report. 3 of 4 Required: (a) Prepare a brief audit report for the recently completed audit. The report should include the audit objective, scope stating the evidence acquired and audit procedures and recommendations and conclusions based on the findings outlined in the case. (b) What are five (4) fraud red flags that may have been present at JTCD indicating the likelihood of fraudulent disbursement? (25 marks) (5 marks) (c) Assuming that the employee responsible for reimbursement is engaging in fraudulent activities, State three (3) matters that should be discussed with the management at JTCD in planning a separate audit into the alleged fraudulent activity. (3 marks) (d) Outline four (5) potential risks that JTCD is being exposed to because of its poor oversight over the contracted programme. (6 marks)
Expert Answer:
Related Book For
Introduction To Health Care Management
ISBN: 9781284081015
3rd Edition
Authors: Sharon B. Buchbinder, Nancy H. Shanks
Posted Date:
Students also viewed these accounting questions
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Corporate governance issues surrounding the independence and conflict of interest within the board in Japan Land surfaced in 2009, following the successive resignations of its Deputy Managing...
-
Water is pumped in through the bottom of the tank in Exercise 19. How much work is done to fill the tank (a) To a depth of 2 feet? (b) From a depth of 4 feet to a depth of 6 feet? Data from in...
-
Trade associations, such as the United Dairy Farmers Association, frequently conduct surveys to identify characteristics of their membership. If this organization conducted a survey to estimate the...
-
Find the confidence interval at the 90% Confidence Level for the true population proportion of southern California community homes meeting at least the minimum recommendations for earthquake...
-
Inland Equipment sells hand held engine analyzers to automotive service shops. Inland Equipment started April with an inventory of 85 units that cost a total of \($12,750.\) During the month, Inland...
-
Assume the following: the sales price to consumers is $150 the retailers markup is 50% Whirlpools after tax profit margin is 4% The hurdle rate is 20% Populations are as follows: Brazil 182...
-
Use the basic accounting equation to answer the following: a. Kendrick Company has total assets of $75,000 and total liabilities of $45,000. How much is the company's total stockholders' equity? $ 0...
-
Insider trading does not offer any advantages if the financial markets are: [A] inefficient. [B] semiweak form efficient. [C] strong form efficient.
-
Create a domain dictionary for an ATM system.
-
Review the information on YouTube in this section of the chapter and conduct your own research. What evidence is there that beginning with the end in mind was part of YouTubes founders original plan?
-
A psychiatrist bills for 10 hours of psychotherapy and medication checks for a deceased woman. Has he committed fraud or abuse? Can the deceased womans estate press charges if the bills were sent to...
-
Explain the difference between a. Actors and stakeholders. b. Primary and supporting actors.
-
Match the following concepts: goal, process, function, scenario, business system, information system, grocery store, check-out system, actors, role.
-
Randomly choose 1000 people in New York City and collect their demographic characteristics in year 2015, what kind of data we collect? A. Pooled Cross Sections B. Panel data C. Time Series Data...
-
a. Determine the domain and range of the following functions.b. Graph each function using a graphing utility. Be sure to experiment with the window and orientation to give the best perspective of the...
-
8P1 In Exercises 1722, evaluate the permutation.
-
45P5 In Exercises 1722, evaluate the permutation.
-
Let A and B be events with P (A) = 0.2 and P (B) = 0.9. Assume that A and B are independent. Find P (A and B).
Study smarter with the SolutionInn App