Admin & Finance - Section 3: Internal Controls

Question 1

True or False:

Rural practices are less vulnerable than other practices when handling money.

Answer 1

False; rural practices are just as vulnerable as other practices when handling money.

Question 2

Why is it important to have protocols and internal controls in place in your practice?

Answer 2

Protects clinic and staff from the accusation of security breaches.

Question 3

True or False:

It is easier to refute any allegations of impropriety when a clinic has proper protocols in place.

Answer 3

True

Question 4

What 3 things can create crime?

Answer 4

Means, motive, and opportunity

Question 5

True or False:

One person should be in control of the entire process.

Answer 5

False; there should be multiple individuals and controls in place to ensure that one individual is not in charge of the entire process

Question 6

Risk example:

Cash received from patient is diverted to ____.

Answer 6

Employee

Question 7

Risk example:

Charge and applicable payment are not ____.

Answer 7

Posted

Question 8

Risk example:

Charge is posted with payment ____ to reduce balance.

Answer 8

Adjusted

Question 9

Risk example:

____ ticket is destroyed.

Answer 9

Fee

Question 10

Risk example:

____ are diverted to the wrong account.

Answer 10

Deposits

Question 11

Risk example:

Records are ____ to cover up diverted funds.

Answer 11

Altered

Question 12

Risk example:

Cash drawer or petty cash ____.

Answer 12

Leakage

Question 13

Risk example:

Business supplies or inventory items are consumed or removed for employee’s ____ use.

Answer 13

Personal

Question 14

What are 2 ways in which payroll data can be falsified?

Answer 14

1) Hours worked

2) Hourly rate increased without authorization

Question 15

Falsely reporting hours worked in an example of what type of risk?

Answer 15

Payroll records being falsified

Question 16

Increasing an hourly rate without authorization is an example of what type of risk?

Answer 16

Payroll records being falsified

Question 17

A check to an RHC can be mishandled by being applied to medical accounts of a ____ member.

Answer 17

Family

Question 18

A check to an RHC can be mishandled by deposits being diverted to accounts controlled by ____ ____.

Answer 18

Bad actors

Question 19

A check to an RHC can be mishandled by being ____ or ____ off an applicable account.

Answer 19

Adjusted or written off

Question 20

A check to an RHC can be mishandled by deposits being ____ from the system.

Answer 20

Deleted

Question 21

Within an accounts payable scheme, how can paying bills be mishandled?

Answer 21

Bills can be paid to a “company” controlled by an employee or an employee’s family/friend

Question 22

Within an accounts payable scheme, how can services be misdirected?

Answer 22

Services can be paid for that weren’t actually rendered

Question 23

Within an accounts payable scheme, an employee could receive ____ for paying for more expensive items/services.

Answer 23

Kickback

Question 24

Why are smaller clinics more at risk for accounts payable schemes?

Answer 24

They are often more lax and have less robust systems in place to catch risk/fraud

Question 25

What do internal controls help identify and mitigate within an organization?

Answer 25

Financial risks

Question 26

Internal controls are protocols which are implemented to ensure the ____ of the financial and accounting system.

Answer 26

Integrity

Question 27

Internals controls are protocols which are implemented to ensure ____ and ____.

Answer 27

Security and accountability

Question 28

Internal controls are protocols which are implemented to communicate ____ policies throughout the organization.

Answer 28

Management

Question 29

What are the 3 purposes of internal controls? | 1) To protect ____ health, 2) to protect ____, and 3) to protect the ____ of the medical practice

Answer 29

1) Financial 2) Efficiency 3) Operations

Question 30

What 5 areas do internal controls address?

Answer 30

1) Deposits/cash 2) Accounts payable 3) Mail 4) Inventory 5) Bank statements/credit card statements

Question 31

True or False: All systems of internal controls are identical.

Answer 31

False; no two systems of internal controls are identical.

Question 32

True or False: Many core philosophies regarding financial integrity and accounting practices have become standard management practices.

Answer 32

True

Question 33

Internal controls should be ____ to meet the size, needs, resources, and capacity of the organization.

Answer 33

Scalable

Question 34

Internal control is a process that involves controlling the ____ to the practice.

Answer 34

Risk

Question 35

____ is the best defense against risk.

Answer 35

Prevention

Question 36

When moderating risk, what is important to communicate to staff members?

Answer 36

That protocols are being consistently monitored and measured.

Question 37

What is a key factor in moderating risk in relation to staff?

Answer 37

Staff knowledge that a process is in place to monitor processes

Question 38

When moderating risk, communication to staff members that protocols are being consistently monitored and measured is a key factor. What is this taking away from the employee?

Answer 38

The opportunity and means to defraud the organization.

Question 39

True or False: When moderating risk, you do not need to have a policy for banking and controls.

Answer 39

False; you do need a policy in place for banking and controls.

Question 40

True or False: You need a policy in place detailing deposit reconciliation.

Answer 40

True

Question 41

What do you need to consider when creating a policy to moderate risk in relation to income mail?

Answer 41

Who receives incoming mail?

Question 42

What do you need to consider when creating a policy to moderate risk in relation to financial websites?

Answer 42

Who has access? Who has administrative privileges?

Question 43

What do you need to consider when creating a policy to moderate risk in relation to inventory controls?

Answer 43

How do we keep inventory from walking out of the door?

Question 44

True or False: You need a policy in place detailing purchasing controls.

Answer 44

True

Question 45

Where does malfeasance frequently occur with bank transactions?

Answer 45

Deposits and monthly statements

Question 46

Bank statements and checks cashed must be ____ reviewed and reconciled by 2 different people.

Answer 46

Independently

Question 47

Bank statements must be reviewed by a ____.

Answer 47

Manager

Question 48

True or False: The same person who prepares the deposits can be the same person who actually takes the deposits to the bank.

Answer 48

False; deposits should be made by someone other than the person who prepared it.

Question 49

Who can make recommendations to your organization for banking controls that are appropriate?

Answer 49

Your CPA

Question 50

Why is it essential to split up responsibilities that employees have within the banking/deposit process?

Answer 50

To not give employees the means and opportunity to defraud the organization

Question 51

As a best practice for cash and deposits, who should review/audit deposit and cash reconciliations?

Answer 51

Someone other than who prepared them

Question 52

True or False: One individual should be responsible for preparing the daily deposit, and a different person should do the actual deposit.

Answer 52

True

Question 53

Who should verify cash drawer and petty cash balances?

Answer 53

Someone other than who prepared them

Question 54

Cash reconciliation review should be separated from ____ preparation.

Answer 54

Deposit

Question 55

What is one way to ensure that fee tickets and corresponding payment tickets cannot be altered and deleted?

Answer 55

Having them auto-numbered through HER/PM.

Question 56

Appointments should be tracked and compared to what?

Answer 56

Expected charge posting

Question 57

What policy should be implemented in regards to cash receipt book?

Answer 57

All patients should receive a receipt if not immediately posted with receipt to account.

Question 58

What should contractual write offs and adjustments be reviewed for?

Answer 58

Trends and typical percentages to total charges

Question 59

True or False: One individual should open the mail and one should stamp checks for deposit.

Answer 59

True

Question 60

True or False: Bank statements can come to the same person who is responsible for posting and depositing payments.

Answer 60

False; bank statements must come to different personnel than the individual responsible for posting and depositing

Question 61

How can an employee not wanting to take a vacation be a red flag?

Answer 61

They could be covering up suspicious activity that they're afraid someone else would uncover if the were away from the off.

Question 62

True or False: In many ways, inventory is similar to cash.

Answer 62

True

Question 63

True or False: Diverting inventory into employees' hands is the only example of why inventory controls are needed.

Answer 63

False; too much inventory can also be purchased, which would require inventory controls

Question 64

In regards to inventory controls, what 2 things should require authorization?

Answer 64

1) Who can sign for goods and services | 2) Who controls the release of goods and services out the door after the processing has been completed

Question 65

As an inventory control, ____ limits of purchasing authority should be established.

Answer 65

Maximum

Question 66

As an inventory control, what should all payments be supported by?

Answer 66

Invoices and 1099s

Question 67

As an inventory control, ____ should be required for all purchases over a stated limit.

Answer 67

Bids

Question 68

True or False: As a purchasing control, credit cards for the practice should have limited users and access.

Answer 68

True

Question 69

As a purchasing control, receipts should be retained and presented with monthly ____.

Answer 69

Statement

Question 70

As a purchasing control, what should accounts payable checks that are prepared have attached to them?

Answer 70

Invoices

Question 71

As a purchasing control, what should you require for electronic bill pay?

Answer 71

Invoices with a report of payables

Question 72

True or False: Patient credit balances do not need to be reviewed.

Answer 72

False; patient credit balances must be reviewed

Question 73

True or False: Payroll reports should be reviewed.

Answer 73

True

Question 74

True or False: There should be a limit on the amount of authorized individuals that can write-off balances for accounts.

Answer 74

True

Question 75

True or False: A transaction should be able to be deleted.

Answer 75

False; a transaction should never be able to be deleted. Should either be adjusted off or written off.

Question 76

As a way to monitor write-offs, formal tracking of write-off authorizations should be done by ____.

Answer 76

Provider

Question 77

As a best practice, you should perform a cash reconciliation at what frequency?

Answer 77

Daily

Question 78

As a financial website control, a ____ should be maintained for website changes and updates.

Answer 78

Log

Question 79

If your business deals with e-commerce, you need to establish a log procedure to track what 2 things?

Answer 79

1) Who makes edits | 2) How edits to your website are made

Question 80

As a financial website control, all changes or edits to the site should be made through who?

Answer 80

A designated employee

Question 81

True or False: EFT transfer bank privileges do not need to be limited.

Answer 81

False; EFT transfer bank privileges should be limited

Question 82

In small practices, we often lack ____ to be able to separate duties according to best practices.

Answer 82

Staff

Question 83

In small practices, policy development and execution is often ____.

Answer 83

Informal

Question 84

In small practices, ____ reporting process does not occur.

Answer 84

Regular

Question 85

In small practices, we often ____ our employees too much.

Answer 85

Trust

Question 86

Within the "trust but verify" model, you must ____ duties and insist on ____.

Answer 86

Segregate, oversight