Victoria Med Inc.: Control Weaknesses Essay

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Introduction

Despite the convenience of interaction among employees of a small enterprise, some challenges and work gaps may arise, which may be caused by control weaknesses and inadequate reporting methods. As an example, the activities of the Victoria Med Inc., a small healthcare provider, will be examined in the context of existing omissions, their threats and impacts, and objective ways to correct them. The expanded authority of the clinic staff, the overly wide range of responsibilities assigned to employees, and the errors associated with billing are the key causes of control weaknesses in the organization in question.

Control Weaknesses

Since the staff of the Victoria Med Inc. is not numerous, many employees are forced to perform duties that do not lead to the scope of their direct responsibilities. In particular, the clinic physicians approve patients’ credit but do not assess their creditworthiness, which is an apparent control weakness. Instead of evaluating the solvency of customers, the staff has the power to provide citizens with the option of deferred payments. Another control weakness is billing, which is a consequence of a high workload and staff shortage. Physicians approve write-offs of uncollectible checks, although this activity is not their direct responsibility. Finally, the maintenance of financial statements, in particular, the processing of cash receipts, is a control weakness that arises for the same reasons. The local accountant performs many tasks, which is unacceptable in the conditions of maintaining the security of the organization’s assets.

Threats and Exposures

The first of the aforementioned control weaknesses is fraught with potential losses for the healthcare provider since ignoring customer solvency checks can lead to the emergence of uncollectable accounts. Both the organization and the employees themselves will be forced to suffer expenses due to an incompetent credit policy. Another weakness expressed in billing by physicians is the risk of losses due to the lack of reliable information about the causes and validity of debts. The human factor may cause errors and entail financial problems and, in particular, the risk of job loss for a specific employee. The control weakness that is expressed in a large number of accountant’s duties is fraught with theft of funds if the employee has criminal intentions and conducts fraud with cash receipts.

Control Interventions

For all the three control weaknesses described, specific measures can be taken to eliminate risks. In order to avoid losses due to the lack of checks of clients’ credit histories, authorized persons but not physicians should check the solvency of patients. An objective separation of duties can help keep financial accounts from being written off if individual employees are involved in the practice of approving and canceling loans. Finally, in order to secure assets from dishonest accounting activities, work with finances should be carried out not by one but by several people, which will allow sharing powers. These measures are potentially valuable recommendations for the Victoria Med Inc. to maintain a stable financial performance.

Conclusion

Control weaknesses at the Victoria Med Inc., which are caused by a small number of employees and expanded staff powers, pose a threat to the financial sustainability of the healthcare provider. The proposed measures, in particular, control over credit histories, the separation of duties, and the competent processing of bills, are potentially valuable interventions. Addressing the weaknesses considered is an urgent need in view of the importance of preventing losses and maintaining stable profits.

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IvyPanda. (2022, February 16). Victoria Med Inc.: Control Weaknesses. https://ivypanda.com/essays/victoria-med-inc-control-weaknesses/

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"Victoria Med Inc.: Control Weaknesses." IvyPanda, 16 Feb. 2022, ivypanda.com/essays/victoria-med-inc-control-weaknesses/.

References

IvyPanda. (2022) 'Victoria Med Inc.: Control Weaknesses'. 16 February.

References

IvyPanda. 2022. "Victoria Med Inc.: Control Weaknesses." February 16, 2022. https://ivypanda.com/essays/victoria-med-inc-control-weaknesses/.

1. IvyPanda. "Victoria Med Inc.: Control Weaknesses." February 16, 2022. https://ivypanda.com/essays/victoria-med-inc-control-weaknesses/.


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IvyPanda. "Victoria Med Inc.: Control Weaknesses." February 16, 2022. https://ivypanda.com/essays/victoria-med-inc-control-weaknesses/.

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