We learned in class by watching the 6 video clips regarding the big Scandal with HealthSouth that one the two major activities in their fraud was falsely capitalizing regular expenses In a nutshell HealthSouth is A Public company who is providing outpatient rehabilitation services, They noticed that the business is not that great as they proclaimed, business is not so profitable and it also have too much expenses which this will end up taking away from the profit and they will show lower earnings that expected so they came up with a fraudulent idea to create false entries in their books by claiming that the expenses they have is not real expenses, they called it investing like everyone understands when a business is buying a building its not called a expenses which will show the business less profitable ,it is the opposite the business is growing, the same think they did with entering regular expenses like payroll or utility expenses But in order the books should look a little acceptable and no one should come up on their fraud instantly and specially the lower level bookkeeping team by doing their day to day entries and knowing that utility expenses is not a capital improvement they had to do it in a professional way Let’s go in to details of entering an expenses and closing it off by year end so we can understand how they did it to avoid being suspicious for their bookkeepers and it should be polished nicely REGULAR EXPENSES ENTRY As we learned in class by keeping accounting on the simple way of a General ledger the entries goes as follows, every entry is A Debit for 1 account following with a credit on the other for Example when you have a Rent Expenses of $ 15,000 meaning you taking out money from cash account to p... ... middle of paper ... ...ncreasing the capital So ( Falsely ) the books looked very good the business is ending up making money and again the trial balance and the account equation are correct EASY WAYS TO DETECT • Audit the assed account which was increased by year end from the expenses account trough the income summery account, this is a easy way because you don’t need to go over each individual expenses account what was entered during the year , you will need to check only this particular entry with his details • Making an appraisal report by every year end and the total Appraised value needs to match the total number of the assed account , and if it does not match you know that some false transactions were entered ,but remember you will need to calculate on the appraisal report the depreciation expenses towards the market value increase or decrease for the last year assed totals .
Lublin, J. S., & Carrns, A. (2003, April 11). Directors had lucrative links at HealthSouth. Wall Street Journal. p. B1. Retrieved from: http://search.proquest.com.proxy1.ncu.edu/docview/398944990?accountid=28180
When a business follows the accounting cycle they are making the correct steps towards a successful business. The accounting cycle makes sure that every transaction is recorded. For three months Peyton approved journalized to track transactions. An accounting cycle has ten steps, in steps 1-4 journal entries and T-accounts are prepared. In steps 5-7 the trial balance and adjusted entries are completed and in the final steps, 8-10 the income statement, a statement of retained earnings, a balance sheet, the closing entries, the post closing trial balance, and reversing entries are completed. Peyton Approved promotes operation efficiency, and it ensures accurate and reliable accounting records by following the Accrual basis of
Schilit, H. (2010). Financial Shenanigans : How to Detect Accounting Gimmicks and Fraud in Financial Reports (3 ed.) [EReader]. Retrieved from: http:search.ebrary.com/proxy1.ncu
HealthSouth is a large healthcare company with many rehabilitative-type as well as outpatient facilities across the U.S. The company was involved in a major corporate accounting fraud scandal around 2003-2004. HealthSouth’s founder, Richard Scrushy, was indicted for using corrupt accounting practices and forcing others to alter books and overstate earnings. Scrushy’s fraudulent activities total in value up to as much as $4.6 billion. According to Walter Pavlo of Forbes, “CEO Richard Scrushy was the first executive to be tried under the Sarbanes-Oxley Act for cooking the books” (2012). While many involved served prison time, Scrushy was acquitted of the accounting fraud, only to later serve time in jail for politically-related charges (Pavlo
Health care fraud is the most important area to be analyzed as it put a great impact over US health care system. The reason behind the increasing cost is healthcare fraud. Increasing cost can be considered as the most visible factor in this term. US health care system is continuously using money over the health care system in order to make it better and protect patient from getting ill. Therefore, they have faced millions of challenges and for that they have spent more than 2.27 trillion dollars over the health care and 4 billion over health insurance. But these insurance claims turned about fraudulent (The Challenge of Health Care Fraud, 2014).
Health care fraud is an ever growing problem with in our country. This is not a new issue, nor an issue that will ever go way. According to the Federal Bureau of Investigations (FBI) health care fraud cost tax payers two hundred and seventy two billion dollars in 2013 (Federal Bureau of Investigations, 2016). The numbers have continued to increase.
It is unfortunate but top and senior executives’ unethical behaviors usually have a negative impact on all parties involved; in this case the employees, the customers, government the patients and the stockholders/investors also suffered the consequences of the HealthSouth scandal. The employees’ morale was probably affected. I can be certain that many felt betrayed and perhaps even ashamed by the outrages surrounding their employer. Due to the financial loses following the scandal; the HealthSouth employee count decrease by 30,000 within 6 years. The patients were confronted with less accommodations and location convenience since multiple locations had to close. After the scandals, the patients might have felt that their health and wellbeing was not at all the priority of HealthSouth, rather to take advantage of them through Medicare and Medicaid fraud. Patients also noticed that the therapeutic services in occasions where not performed by professionals and this was perhaps to save cost for the company that was running out of a deficit. Investors must have been furious after discovering how for years they were being cheated. During HealthSouth’s peak, stocks sold for $10-$15 and soon after the scandal they dropped to $3. The reputation of the external auditor company hired to conduct the audits on HealthSouth was also impacted. Ernst & Young accountant were fooled by the accounting team at HealthSouth in part due to the knowledge from previous employees of Ernst & Young working at HealthSouth. The Medicare & Medicaid frauds also created inflated expenses for this program, which potentially could have harmed the available funds for others to be able to benefit from affordable health
Medicare fraud can be accomplished in several different ways by medical professional and institutions. In the past, medical professionals in the past have billed Medicare for treatments and equipment that are unnecessary. Overbilling for time not provided in the case of psychiatrists or physical therapists, or services not rendered to the patients at all. Evans and Porche (2005) survey concluded that over 81% of occupational, speech and physical therapists admitted to some form of Medicare fraud. Fraud can be merely cutting sessions short with clients but billing Medicare for the full time allotted or overcharging for their services. Healthcare institutions have admitted individuals when medically unnecessary. Similarly, many hospitals have submitted billing lacking...
To counter this problem, computer assisted audit techniques have been developed. These systems are able to provide a more in depth analysis of the utilized billing systems. Computer assisted audit techniques also enable highly efficient assessment of transactions. By utilizing this system, an auditor could gain a clearer picture of the revenue reporting mechanisms that are being utilized by the business office. Once the information is derived, however, its interpretation, while simpler, will still require an individual that is knowledgeable in regard to the revenue cycle
Management accounting in organisation is very important for decision-making and to make the business more efficient and therefore increasing its profits. Is the process of preparing accounts that can help managers to make day-to-day and short-term decisions, by providing them with accurate and timely key financial and statistical information...
The definition of Health Care fraud is knowing and willful executing, or attempt to execute, a scheme or deceit to defraud a health care insurance or benefit program, or to obtain by fraudulent means any benefit or payment from the program. Health care fraud and abuse is purposely misrepresenting identity, symptoms, or other facts, for the intention of receiving more money or greater benefits from the insurance company. Healthcare providers can also commit fraud as well by billing insurance companies for services not performed, or by billing for a more complex service than was actually performed. There has been a rise in Healthcare fraud and abuse, causing companies billions of dollars.
Its a situation whithin this medical facilities to create fraudelent medical claims. The National Health Care Anti-Fraud Association as estimated major losses, due to fraud medical insurances claims. The calculations are a billions of dollar each year.
Madura, Jeff. What Every Investor Needs to Know About Accounting Fraud. New York: McGraw-Hill, 2004. 1-156
The purpose of this document is to describe the nature, purpose and scope of accounting and it deliberately explains the details of each category in accounting. Accounting involves in preparing financial documents of an entity by analyzing, verifying, and reporting this records. It emphasizes its major characteristic role in field of banking and finance, with a mixture of supportive sub topics.
Alteration: paper evidence difficult to alter without detection. Any one tries to change anything on paper there must be marks, auditor can find the marks and whether there are changes in financial statements. Any change for fraudulent, misappropriation of asset can been found easily if auditor wants to find.