Problem 12.8:
a) Identify at least three control weaknesses at Parktown’s revenue cycle procedures,
explain the associated problem, and purpose a solution. Present your answer in a three-
column table with these headings: Weakness, Problem, Solution.
Weakness: Problem: Solution:
The employees who perform Sales could be made that turn Someone other than the
certain services are permitted out to be uncollectible. physician performing the
to approve credit without an services should be doing a
external credit check. credit check. Credit limits
should be established and
used to control the amount of
credit offered.
m
er as
The physician who approves Accounts receivable could be Separate the duties of
credit also approves the write- understated and bad debts approving credit and
co
eH w
off of uncollectible accounts. expense overstated because approving write-offs of
of the write-offs of accounts accounts receivable to avoid
o.
rs e
could be approved for any overstated and
ou urc
accounts that are collectible. understated account balances.
In reverse, AR could be
overstated and bad debt
o
expense could be understated
because of write-offs not
aC s
vi y re
being initiated for accounts
that are uncollectible.
The employee who initially Potentially, theft by lapping Segregate the function of cash
ed d
handles cash receipts also could occur do to this receipts handling accounts
ar stu
prepares billings and weakness. Fees earned and and billing accounts receivable
maintains accounts cash receipts or accounts to avoid understated accounts
receivable. receivable could be from omitting inaccurate
is
understated because of billings.
omitted or inaccurate billing.
Th
b) Draw a BPMN diagram to depict Parktown’s revenue cycle revised to incorporate your
sh
solutions to step a. (CPA Examination, adapted).
This study source was downloaded by 100000827039679 from CourseHero.com on 07-07-2021 08:02:32 GMT -05:00
https://www.coursehero.com/file/21105012/Accounting-Systems-Chapter-12-Problem/
a) Identify at least three control weaknesses at Parktown’s revenue cycle procedures,
explain the associated problem, and purpose a solution. Present your answer in a three-
column table with these headings: Weakness, Problem, Solution.
Weakness: Problem: Solution:
The employees who perform Sales could be made that turn Someone other than the
certain services are permitted out to be uncollectible. physician performing the
to approve credit without an services should be doing a
external credit check. credit check. Credit limits
should be established and
used to control the amount of
credit offered.
m
er as
The physician who approves Accounts receivable could be Separate the duties of
credit also approves the write- understated and bad debts approving credit and
co
eH w
off of uncollectible accounts. expense overstated because approving write-offs of
of the write-offs of accounts accounts receivable to avoid
o.
rs e
could be approved for any overstated and
ou urc
accounts that are collectible. understated account balances.
In reverse, AR could be
overstated and bad debt
o
expense could be understated
because of write-offs not
aC s
vi y re
being initiated for accounts
that are uncollectible.
The employee who initially Potentially, theft by lapping Segregate the function of cash
ed d
handles cash receipts also could occur do to this receipts handling accounts
ar stu
prepares billings and weakness. Fees earned and and billing accounts receivable
maintains accounts cash receipts or accounts to avoid understated accounts
receivable. receivable could be from omitting inaccurate
is
understated because of billings.
omitted or inaccurate billing.
Th
b) Draw a BPMN diagram to depict Parktown’s revenue cycle revised to incorporate your
sh
solutions to step a. (CPA Examination, adapted).
This study source was downloaded by 100000827039679 from CourseHero.com on 07-07-2021 08:02:32 GMT -05:00
https://www.coursehero.com/file/21105012/Accounting-Systems-Chapter-12-Problem/
