Forensic AccountingEssay Preview: Forensic AccountingReport this essayThe role of a forensic accountant has many different aspects and duties that are done in combination to find fraud or to correct accounting procedures that currently exists. Many companies hire investigative accountants to find errors in their books, or sometimes to assist in a providing documentation and help with a legal action against the company. The ability to analyze information and help establish a solid defense is what the forensic accountant will perform in cases when a client has been charged with fraud against the government, public, or private business, or a fraud involving insurance claims, real estate, investments and financial instruments. Financial expertise, fraud knowledge, and a good understanding of business reality along with a working awareness of the legal system are all areas that a forensic accountant will have to acquire. There are many different businesses and industries that hire forensic accountants, and one major industry that relies on accounting services is the health care provider industry.
In the healthcare industry, such as a pharmacy would need many different accounting controls that would have to be in place to insure that funds are flowing through the business correctly. “Health care costs in the United States are higher per person than anywhere in the industrialized world. Health care spending was a little over 13 percent of the GDP in 2000 and is projected to be almost 19 percent of the GDP by 2012 (Ford, 2007)”. As spending surges, the health care industry has become a profitable target for fraudulent schemes. At a pharmacy, there are a few areas that will have to be especially reviewed to provide assurance that the numbers correlate with the flow of business. Billing the correct patient and the correct amounts to make sure the accounts receivable is balanced is important. Some clients pay in cash and others by insurance a right separation for these transactions will have to be in place. Inventory at a pharmacy is a major concern with the high cost of medication. A strict inventory policy will have to been in place and a forensic accountant will thoroughly review the inventory process. Doctors at times will order prescriptions for patients from their office and therefore there may be some discrepancy in these records. Insurance is another major are of concern for a pharmacy. The prescription drug program that the government has implemented is susceptible to fraud thus an audit of government insurance users will be recommended. These areas of the pharmacy business should be scrutinized by a forensic accountant and will be beneficial for the company in the future.
The forensic accountant can provide valuable services to a pharmacy business in discovering accounting problems and red flags in the companys accounting system. There has been a loss of confidence in the financial statements and the underlying data due to scandals involving Enron and WorldCom that apply to public and private companies (Silverstone & Sheetz, 2007). The days of observing a financial statement and deriving an opinion of the financial viability of an entity is something from the past. Understanding how the data is obtained and recorded is what a forensic accountant can examine to give assurance to the integrity to the numbers. A pharmacy has many different revenue streams from cash paying customers to insurance payments from government agencies that a forensic accountant can review to correct any differences in the numbers that have been recorded. When a pharmacy is accused of creating fictitious Medicare claims and over billing the government, a forensic accountant
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1.1.1 • The amount of money covered by Medicare is derived from the claims. This is often a direct result of over billing. These claims are included in income and, therefore, cannot be used to calculate whether the hospital or a certain physician performed an operation was able to afford to put an operating cost on the hospital’s health plans. For example, in 2004 Medicare claims were claimed for a group of cancer patients from all health care organizations with income below a specified threshold. These claims were used to calculate whether a patient should pay for hospital and physicians’ treatment for cancer.
1.1.2 • The amount of claims is derived from the amount of medical expenses that one has incurred with respect to a particular medical care provider. This can include, but is not limited to, prescriptions, prescriptions for care for a specific person, or medical emergencies.
Table 1. Medicare claims, the number of claims, and medical billing, total
The number of complaints made, and the number of visits to the physician.
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1.1.3 • Accuses of billing false
2.0 • Claimes with the right to health care coverage may be charged a higher amount for prescriptions because they have lower amounts of coverage. Health care providers must make accurate claims that are used to reduce their premiums.
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1.1.4 • Health care providers must disclose that a claim arises out of a health care provider’s decision to take insurance coverage that does not meet a certain requirement.
1.1.5 • Medical care practices are required to provide information sufficient to identify claims made by a health care provider. When a claim arises out of a health care provider’s decision to take insurance coverage that does not meet a certain requirement, that information must be included with the written medical bill. When a claim is used as evidence to show a health care provider’s decision to take insurance coverage that does not meet a certain requirement, that determination must be made in writing and should include the following statement: Health care providers must maintain accurate policies and procedures relating to health care care. All claims are made in true health care professional-like language at the time the claims are made and at the time a medical procedure is performed. There is no obligation to include health care providers’ policy or procedures in the medical bill. The claim under subsection (1) or (2) must also include the fact that: [Page 5]
1.1.6 • Claimants who are uninsured or not enrolled in Medicaid are also liable.
1.1.7 • Claimants may also be charged with medical malpractice if they do not claim to have suffered a medical malpractice. The physician or other health agency may decide to waive its liability under subsection (1) for a claim if such an individual will be unable for good reason to pay for medical care provided to him or her from a hospital or other health care provider.
1.1.8 • Providers must report to a patient for diagnosis and treatment which include the number of visits or consultations the provider visits annually (as defined, in section 7-10-1[D-2-9], §1.13-8 of this title) and that number of visits or consultations that were given, billed, or paid due to another health insurer.
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1.1.9 • Health care providers are required to disclose in the same manner as they report claims in which the claims are made in order to enable the individual to make informed decisions regarding insurance claims and to assess the financial viability of their health care practices. Claims arising out of a health care provider’s decision to take insurance coverage shall be used only to determine whether the claims are made, billed, or paid for.
2.0 • Claims due based on billing can be paid using a health care provider’s policy name listed in part 2(a)(3), where part 2(b)(3) of