one of the clerks to set up the receivable using data the physician generates.
Most patients pay for services rendered by cash or check on the day of their visit.
Sometimes, however, the physician who is to perform the respective services approves
credit based on an interview. When credit is approved, the physician files a memo with
The servicing physician prepares a charge slip that is given to one of the clerks for
the bills to prepare a revenue summary and, in cases of credit sales, to update the ac-
pricing and preparation of the patient's bill. At the end of the day, one of the clerks uses
counts receivable subsidiary ledger.
The front office clerks receive cash and checks directly from patients and give each
patient a prenumbered receipt. The clerks take turns opening the mail. The clerk who
opens that day's mail immediately stamps all checks “for deposit only." Each day, just
before lunch, one of the clerks prepares a list of all cash and checks to be deposited in
Parktown's bank account. The office is closed from 12 noon until 2:00 P.M. for lunch.
During that time, the office manager takes the daily deposit to the bank. During the
lunch break the clerk who opened the mail that day uses the list of cash receipts and
checks to update patient accounts.
The clerks take turns preparing and mailing monthly statements to patients with
unpaid balances. One of the clerks writes off uncollectible accounts only after the phy-
sician who performed the respective services believes the account will not pay and
communicates that belief to the office manager. The office manager then issues a credit
memo to write off the account, which the clerk processes.
The office manager supervises the clerks, issues write-off memos, schedules ap-
pointments for the doctors, makes bank deposits, reconciles bank statements, and per-
forms general correspondence duties.
Additional services are performed monthly by a local accountant who posts sum-
maries prepared by the clerks to the general ledger, prepares income statements, and
files the appropriate payroll forms and tax returns.
REQUIRED
a. Identify at least three weaknesses in Parktown's revenue cycle procedures, explain
the associated problem, and propose a solution. Present your answer in a three-
column table with these headings: Weakness, Problem, Solution.
b. Draw a BPMN diagram to depict Parktown's revenue cycle revised to incorporate
your solutions to step a. (CPA Examination adanted
12.8 Parktown Medical Center, Inc., is a small health care provider owned by a publicly held
corporation. It employs 7 salaried physicians, 10 nurses, 3 support staff, and 3 clerical
workers. The clerical workers perform such tasks as reception, correspondence, cash
receipts, billing, and appointment scheduling. All are adequately bonded.
* Life-long learning opportunity: see p. xxii in preface.
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