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Harriet Knox, Ralph Patton, and Marcia Diamond work for a family physician, Dr. Gwen Contrad,...

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Accounting

Harriet Knox, Ralph Patton, and Marcia Diamond work for a family physician, Dr. Gwen Contrad, who is in private practice. Dr. Contrad 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 the 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. Contrad'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 clerks justify their actions by their relatively low pay and the knowledge that Dr. Contrad will likely never miss the money.

QUESTION: Share your thoughts about the ethics scenario. What did you learn? What reports or procedures might help Dr. Conrad detect or prevent this type of fraud?

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