Question

Kabwe Medical Center Limited is a small health care provider owned by an Insurance Company. It employs five salaried physicians 5(doctors), five nurses, three support staff, and three clerical workers. The clerical workers perform activities such as reception, correspondence, cash receipts, billing, and appointment scheduling. Most patients pay for services rendered by cash or cheque on the day of their visit. Sometimes, however, the physician approves credit and files a memo with one of the clerks to set up the receivable using data the physician generates.The front office clerks receive cash and cheques directly from patients and give each patient a pre-numbered receipt. The clerks take turns opening the mail. All cheques are stamped “for deposit only “by one of the clerks. Each day, just before lunch, one of the clerks prepares a list of all cash and cheques to be deposited in Kabwe Medical Center’s bank account. The office is closed from 13:00until 14:00 hrs for lunch. The office manager takes the daily deposit to the bank during the lunch hours. Updates to patient’s accounts are done during the same period.The clerks are responsible for preparing and mailing monthly statements to patients with unpaid balances. Write-offs of uncollectible accounts are done only after the physician whoperformed the respective services approves it indicate to the office manager verbally. The credit memo is issued to effect the write- off.The manager is responsible for issuance of write-off memos, scheduling of appointments for the doctors, bank deposits, reconciling of bank statements, and general correspondence duties.An externally hired local accountant comes at the end of the month to posts summaries prepared by the clerks to the general ledger, prepares income statements, and files the appropriate payroll forms and tax returns.
Required:
a. Identify at least three control weaknesses at Kabwe Medical Center. Describe the potential
threat and exposure associated with each weakness, and recommend how to best correct
them.
b. Draw a data flow diagram or a work flow chart to depict Kabwe Medical Center’s existing
revenue cycle.
c. Draw a data flow diagram revised to incorporate your solutions to requirement “a” above

Answer 1