Identify and illustrate how the principles of internal control are used to manage and control a firms
Question:
- Identify and illustrate how the principles of internal control are used to manage and control a firm’s resources and minimize risk.
Discussion Topic Instructions
Background facts
- Dr. Vic Fill, Family Dentist
- Kendra Martin, receptionist
- Even Steele, Cashier
- Bobbi Knox, Recordkeeper
Kendra Martin, Evan Steele and Bobbi Knox work for a family dentist, Dr. Vic Fill, who is in private practice. Dr. Fill is knowledgeable about office management practices and has segregated the cash receipt duties as follows.
Martin opens the mail and prepares a triplicate list of money received. She sends one copy of the list to Steele, the cashier, who deposits the receipts daily in the bank. Knox, 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 pay for as follows. First Steele endorses a patient's check in Dr. Fill's name and cashes it at the bank. Martin then destroys the remittance advice accompanying the check. Finally, Knox 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. Fill will likely never miss the money.
Your first post will answer the following three questions. (Warning: do not post until you are ready because once you post that is the one that will be scored, no second chances for the first post.)
- a). Who is the best person in Dr. Fill's office to reconcile the bank statement?
- b). Would a bank reconciliation uncover this office fraud? Why or why not?
- c). What are some procedures to detect this type of fraud? (include a minimum of two)
Expert Answer:
Accounting Principles
ISBN: 978-0470533475
9th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
