Reference no: EM132828960

Question - Dan Conrad has worked for Dr. Smith for several years. Dan demonstrates a loyalty that is rare and exceptional among employees. He hasn't taken a vacation in the last three years. One of Dan's primary duties at the dental office is to open the mail and list the checks received. He also takes cash from patients at the cashier window as patients leave. At times, it is so hectic that Dan doesn't bother giving patients a receipt for the cash paid for their procedures. He assures them that he will see to it that they receive the proper credit. When the traffic is slow in the office, Dan offers to help Eve, the accounting manager, post payments to the patients' accounts receivable records. Eve is always happy to receive the help because Dan is a very conscientious worker. On occasion, she allows Dan to log on the patient and accounting systems using her password so that he can clear accounts and catch up on postings. As a result of his accurate reconciliation of accounts, Eve rarely reviews Dan's posting. She also maintains a handful of signed blank checks in the top drawer of her desk in case Dan needs to cut a check to vendors while she is out of the office. Last December, Dr. Smith, on the recommendation of a friend at a cocktail party, suggested an audit to make sure everything was in order. Eve noted that audits were a waste of money and that she and Dan had the accounts under control. Eve has been an employee of the practice for ten years. A few years ago, Eve took over Ben's cash disbursement responsibilities in order to allow for a reduction in force when times were slow. Although things have picked up, Eve has been doing such a good job that Dr. Smith never replaced Ben. While no bank reconciliation has been completed in the last year, Dr. Smith is comfortable with cash as business is robust and the practice has never issued a bad check. Dr. Smith has noticed that several of his patients have been taking longer to pay but attributes it to tough times. Eve has mentioned that some of the patients who have complained of unapplied payments against their accounts are "troublemakers" that have always complained.

Instructions - Identify any principles of internal control that may be violated, your recommendations to increase controls (both receipts, disbursements, and general), and the top three things you would change, if any.