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Forensic Accounting

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1. Consider the fraud triangle. What opportunities and motivation exist for Nancy to commit fraud?

The lacks of internal control in the office have provided opportunities for Nancy to commit fraud. For instance, she is the receptionist and office manager in the office; the doctor leaves her to handle all office duties including collecting cash receipts, billing patients, depositing checks, and the monthly bank reconciliation. This shows the office lacks segregation of duties.
Her main motivation to commit fraud is the financial pressure from her family. She is the single mother of four and tries to provided her children all the finer things. She has a second job also indicates she really needs money. Lacks of internal control in the office can also be a motivation for her, since it makes her feel it’s convenient and safe to commit fraud. 2. What should be done to improve internal controls and reduce the risk of fraud as it relates to the segregation of duties?

The office should apply segregation of duties, which means one employee should not have custody, authorization, recording and reconciliation functions at the same time.
There should be at least four employees in the office if they want to improve the internal control and reduce the risk of fraud. One person should collecting cash receipts and billing patients. The second one should deposit checks. The third one should in charge of the monthly bank reconciliation. The fourth employee should have the authorization to do proper written offs.
The office should hire one more employee, and the doctor and doctor’s assistance should all share a portion of the duties.

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