Healthy Hospital covered critical analysis-Myassignmenthelp.Com

Question: Healthy Hospital Covered Critical How Analysis? Answer: Introducation This essay has covered the critical analysis of a case of fraud which has taken place in an organisation. Frauds are wrongful or criminal acts which are executed by an individual or a group with a motive to secure financial gain. Different aspects related to the case have been discussed in this essay for analysing the reasons due to which fraud has occurred. The discussion will be made regarding the manner in which Healthy Hospital could have dealt with the issue. For coping with this fraud, different theories can be applied and these theories will be discussed in this essay. A process or strategies can be applied by Healthy Hospital for preventing the occurrence of fraud in its internal environment. In the given case, a fraud has been identified which was deep perpetuated in the Healthy Hospital. The healthy hospital has received complaints from the main supply vendors of the hospital regarding the payment system as the payments were not being paid to them on time. During the analysis of the situation, it was identified by CFO that the accounts payable department was unable to process every invoice of the vendors as per the specified term of trade. As a solution to this problem, CFO Smith allowed the accounts payable department to hire a temporary clerk. The temporary clerk Mr Harris was the son of the staff of HH and he was hired without conducting interviews of other candidates and background check. After the vacancy in the accounts payable department, he was given an opportunity to apply for this post. Mr Harris started working as a permanent clerk. A fraud was identified in the accounts payable department and it was identified that this fraud was executed by Mr Harris. Durin g the interrogation, he confessed that he executed this fraud for meeting the medical expenses of his terminal illness. After the verbal confession, a written confession was provided by Mr Harris and he confessed that this was done by him only. He stated that he did not have any means for making repayment of the amount he has obtained by fraud. It has been analysed that there were different reasons identified in the case which has formed a base for the fraud. These reasons included technical related reasons, organisational related reasons and people related reasons. According to the standard operations procedure of HH every cheque which is of above $15000 needed the second sign. Mr Harris took advantage of this loophole and prepared cheques which were of less than $15000. Another technical related reason is even after getting converted into a permanent employee of Healthy Hospital, Mr Harris was maintaining his own vendor account. The systems used by HH were installed in the 1990s and this lack of adoption of advanced technology has formed a base for the fraud. According to the standard procedure of HH, every employee must pass a background investigation for ensuring the reliability and trustworthiness of the individual. In the case of Mr Harris, no background investigation was conducted as he was the son of a senior accounts payable clerk. Another organisational related reason is the lack of effectiveness in following the rules and regulations of the hospital. As HH has stated that no close relative of an existing employee can be hired in the s ame department of the Hospital. The reason behind this was that this incident increases the chances of fraud in the organisation. All these facts were avoided by HH. The staff of the accounts payable department of the Healthy hospital was not keeping an updated record of the vendors and Mr Harris took advantage of this issue. Downs concern was not given importance as according to Downs appointment of Mr Harris was against the policies of Healthy hospital regarding nepotism. Internal Audit Manager should have conducted an audit on a regular basis so as to determine the reasons for fraud. Determination of these reasons would have enhanced the effectiveness of internal audit and kept a check on the frauds. Internal audit manager could have applied strategies for eliminating the chances of fraud. Peer review technique could have applied by the internal audit manager for ensuring a check on the actions of every employee of Healthy Hospital (Jennifer, 2010). Internal audit manager could have focused on the finance department so as to trace the unethical activities taking place in the department. All these reasons are responsible for the fraud occurred in Healthy Hospital. HH could have applied different strategies or approaches for ensuring that fraud is not taking place in the organisation. Healthy Hospital could have applied different theories for the purpose of dealing with the issue at hand. Application of these theories could have guided the actions of H ealthy Hospital in the right direction and helped in coping with the fraud occurred. These theories which Healthy hospital could have applied include The Fraud Triangle Theory, The Fraud Diamond Theory, The Fraud Management Lifecycle and Dempster-Shafer Theory (Abdullahi, et. al., 2015). The Fraud Triangle Theory is an important framework which is used by the organisations with a motive to analyse the fragility to fraud and unethical behaviour carried out in the organisation. This theory provides a way which can be applied for avoiding the chances of being a victim of fraud. There are three factors included in this theory and these three factors are pressure, opportunity and rationalisation. Healthy Hospital needs to ensure prevention of these factors which would result in eliminating the reasons forming the basis for conducting unethical practices (Mann, 2013). Healthy Hospital could have reduced the pressure on its employees for preventing the unethical practices. The focus of Healthy Hospital needs to be on reducing the opportunities available for the occurrence of fraud and unethical activities. HH could have included a zero tolerance policy for making the employees aware of the policy and impact on an employee for the breach of this policy (Brumell Group, 2015). The Fraud Diamond Theory is considered as a less expensive and effective approach. This theory is focused on prevention of fraud rather than detecting the fraud after it has taken place (Srivastava, 2011). This theory also helps in identification of the elements which form a base for the occurrence of fraud. Four elements are included in this theory and this theory is an extended version of The Fraud Triangle theory. Healthy Hospital could have used this theory for preventing the fraud so that the performance and reputation of HH is not getting affected (Abdullahi Mansor, 2015). The Fraud Management Lifecycle includes eight stages which focus on reducing the loss caused due to the fraud and reducing the impact of fraud on business. Different stages help in detecting the fraud by executing every stage one after one. These eight stages of this theory are Deterrence, Prevention, Detection, Mitigation, Analysis, Policy, Investigation, and Prosecution. Applying this theory could help HH in forecasting the frauds which can take place in future. Predicting the frauds in advance could prevent the frauds from occurring. It would help the internal audit manager to make predictions on the basis of past or present frauds (Ijeoma Aronu, 2013). Dempster-Shafer Theory permits the internal audit manager of HH to combine different pieces of evidence collected from different sources so as to draw a conclusion. HH could apply this theory, for combining the evidence collected from different internal and external environment of the organisation. This could help the organisation in taking decisions and making estimates regarding the frauds (Coppolino, et. al., 2015). Various strategies and processes can be used by HH for preventing frauds. HH can include fraud risk prevention policy, effective internal control, fraud risk assessment and anti-fraud policy and training (Reed, 2014). Fraud risk prevention policy can be used by HH for preventing frauds. This policy includes different stages or steps. These stages include knowing the employees, setting-up reporting system, implementation of internal control, monitoring the vacation balances, hiring experts and developing a positive work environment (Di Sarno, et. al., 2013). Effective internal control includes different stages establishing web-based portal, segregating the duties, implementation of peer review technique, reconciliation of the bank accounts by the management, reviewing the expense reimbursement and setting standards for approval of cheques (DKM, 2015). HH can change the standard operating procedure for the approval of cheques for eliminating the chances of fraud. Fraud risk assessments can be conducted by HH at regular intervals for ensuring that employees are performing their roles and responsibilities in an ethical manner. Anti-fraud policy and training can be developed by HH for enhancing the values and principles adopted by the employees (Chuck, 2010). Thus, from the above-discussed analysis of the case of Healthy Hospital, it can be concluded that various organisational, technical and person related reasons were responsible for the fraud. Mr Harris has taken advantage of these reasons which have acted as loopholes in the case of Healthy Hospital. Internal audit manager could have conducted an audit on regular basis as well as advised Healthy Hospital to use peer review technique for ensuring that no employee is acting against the interest of the organisation. Different theories are available for preventing fraud and identification of fraud. These theories could have applied for dealing with the issue along with the strategies for preventing the fraud from occurring. References Abdullahi, R. Mansor, N., 2015, Fraud Triangle Theory and Fraud Diamond Theory. Understanding the Convergent and Divergent For Future Research, International Journal of Academic Research in Accounting, Finance and Management Sciences, Vol. 5, No.4, pp. 3845. Abdullahi, R., Mansor, N. Nuhu, M. S., 2015, Fraud Triangle Theory and Fraud Diamond Theory: Understanding the Convergent and Divergent for Future Research, European Journal of Business and Management, Vol.7, No.28. Brumell Group, 2015, The Fraud Triangle Theory, Brumell Group. Accessed on: 30 August 2017. Retrieved from: https://www.brumellgroup.com/news/the-fraud-triangle-theory/ Chuck, Y., 2010, Preventing an "inside job": simple steps can help stop fraud from within,Dental Lab Products, 35(5), p.40. Coppolino, L., DAntonio, S., Formicola, V., Massei, C. and Romano, L., 2015, Use of the Dempster-Shafer Theory for Fraud Detection: The Mobile Money Transfer Case Study, Springer International Publishing Switzerland, Vol. 570, pp. 465-474. Di Sarno, C., Formicola, V., Sicuranza, M., Paragliola, G., 2013, Addressing security issues of electronic health record systems through enhanced siem technology, Eighth International Conference on vailability, Reliability and Security (ARES), pp. 646653. DKM, 2015, Anti-Fraud And Corruption Strategy And Prevention Plan, DKM. Ijeoma, N. Aronu, C. O., 2013, The Impact of Fraud Management on Organizational Survival in Nigeria, American Journal of Economics, 3(6), pp. 268-272. Jennifer, L., 2010, Closer eye on RAC; Report warns of need to watch for overpayments.(NEWS)(Recovery Audit Contractor ),Modern Healthcare, 40(16), p.14. Mann, L., 2013, How to reduce the risk of purchasing fraud,Healthcare business Management, 67(7), pp.7882. Reed, S., 2014, Six Strategies For Fraud Prevention In Your Business, CG Team blog. Accessed on: 30 August 2017. Retrieved from: https://www.cgteam.com/blog/six-strategies-for-fraud-prevention-in-your-business Srivastava, R. P., 2011, The dempster-shafer theory: An introduction and fraud risk assessment illustration, Australian Accounting Review21.3 (2011): 282-291.