The Med Inc. is a small heath care provider. It employs 2 salaried physicians, 3 nurses, 2 clerks, and one office manager.
Most patients pay for services rendered by cash or check on the day of their visit. Sometimes, the physician who is perform the services approves credit based on an interview. When credit is approved, the physician files a memo with one of the clerks to set up the receivable using data the physician generates.
The clerks take turns preparing and mailing monthly statements to patients with unpaid balances. One of the clerks writes off uncollectible accounts only after the physician who performed the respective services believes the account will not pay and communicates that belief to the office manager. The office manager then issues a credit memo to write off the account, which the clerk processes.
The office manager supervises the clerks, issues write-off memos, schedules appointments for the doctors, makes bank deposits, reconciles bank statements, and performs general correspondence duties.
Additional services are performed monthly by a local accountant who posts summaries prepared by the clerks to the general ledger, prepares income statements, and files the appropriate payroll forms and tax returns.
Identify control weaknesses at Med Inc. Describe the potential threat and exposure associated with each weakness, and recommend how to best correct them.