Fraudsters are always looking for a way to rip off the Government

Posted by & filed under Accounting Principles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Fraud Accounting, Intermediate Accounting, Managerial Accounting, Video Updates.

This article details a wheelchair scam that was designed to exploit blind spots in Medicare, which often pays insurance claims without checking them first. The fraud begins with criminals disguised as medical-supply companies.

Questions:
1. Based on the article, which major internal control allowed this fraud to happen?
2. What type of control slowed down the fraud? Even with this control, about how many power wheelchairs are estimated to be distributed fraudulently and what do you calculate is the approximate amount paid for each?
3. What other area is becoming a problem for fraudulent reimbursement? How would you propose to implement new controls for this area?
4. If a victim of this scam resells the powered wheelchair, who should be prosecuted for fraud?
5. What red flags and forensic accounting techniques should have been used and acted upon by Medicare sooner?

Source:
Farenthold, D. (2014). A Medicare scam that just kept rolling. The Washington Post, Aug. 16 (Retrievable online at http://www.washingtonpost.com/sf/national/2014/08/16/a-medicare-scam-that-just-kept-rolling/?hpid=z1)

CBS News Video on Youtube. (2013). Medicare Fraud: Critics say powered wheelchairs a rip off. CBS, January 7 (Retrievable online at https://www.youtube.com/watch?v=vBtIYVKneKE)