Genesis Physical Therapy has been providing outpatient physical therapy services for 30 years. The owners, Jesse and Janice, have been slow to implement updated technology for the accounting system because it is costly. However, at the beginning of the current year, they decided to install a new patient revenue system. It is an off-the-shelf product that is marketed to the healthcare industry. The auditor asked one of Genesis’ accounting staff for feedback about the new system. The staff member provided the following comments:

• “A frequent error has been occurring in which we invoice people who were past patients because they happened to have the same last name as one of our current patients.”

• “We had a power outage a couple of weeks ago, and we had to re-enter all patient services that had been provided for that week because they had not been saved.”

• “When we first starting using the system, we had a significant number of complaints from patients because they were being billed for more than their insurance would allow. We discovered a month later there was an error in the billing calculation formula in the system. We fixed the error and it has been functioning properly.”

Required

Evaluate the audit risks associated with the new patient revenue system.