Reference no: EM132869469

CASE STUDY:

Longview Regional Hospital has established a set of financial controls that include making department supervisors responsible for operating their functions within the approval budget.Outside auditors are hired by Longview to review financial activity each year. Sampling of financial transactions by the auditors revealed two errors:

1. Early in the fiscal year, Longview contracted with a new landscape maintenance company at a monthly contract rate of $1,500. Personnel in the accounting department set up a vendor account for the new landscape company and properly coded the payment to an account titled contractual services. An error was made in coding the charge to the housekeeping department rather than the facilities department. Total charges recorded during the year totaled more than $10,000.

2. The local office supply company provides products used by various departments of the hospital. A purchase in the amount of $95 was properly approved and paid, but was charged to the wrong department.

Question 1: What recommendations would you make to the accounting staff at Longview? Why?