1. Identify all applicable risks and possible application controls related to the billing and collection cycle. (Use Exhibit 7 of the case as a guide.)

EXHIBIT 7 (CONTINUED) Area, Activity, or Process Risks of Errors or Fraud Possible Controls to Mitigate Risks Provision of services: Pharmacy charges An incorrect charge or no charge (e.g., medication was dispensed but was not charged, pharmacy charge was not removed if patient did not receive the medication, medication was charged to the wrong account). Have the system automatically charge the patient’s account when the order is filled. Ensure medication is dispensed only if there is a charge to the patient’s account. Ensure the patient’s chart is reconciled with the charges. Claim processing: Claims were produced after a five-day waiting period and were filed in electronic and paper form Edit routines might not be up to date. Coding might be delayed beyond five days. Independently verify that edit routines are updated on a timely basis. Ensure that patient accounts billed after eight days following discharge are examined on a sample basis; underlying reasons are investigated. Write-offs: Uncollectable accounts were written off after unsuccessful attempt by collection agency Accounts might be improperly written off, because remittances from the collection agency either were diverted or were incorrect. Depending on the amount, require different levels of authorization to write off accounts. Test write-off process on an annual basis.