HAC Internal Controls & Fraud Prevention 2 — Questions and Answers
Question 1: Which element of the COSO framework addresses an organization's shared values, ethics, and operating style?
- Risk Assessment
- Control Environment (Correct answer)
- Monitoring Activities
- Information & Communication
Correct answer: Control Environment
The Control Environment is the foundation of the COSO framework and sets the tone through shared values, ethics, and management's operating style.
Question 2: A healthcare billing department employee creates fictitious patient accounts and posts payments to those accounts. This best describes which fraud scheme?
- Skimming
- Lapping
- Billing scheme
- Ghost patient fraud (Correct answer)
Correct answer: Ghost patient fraud
Ghost patient fraud involves creating fictitious patients to divert payments or inflate revenue figures.
Question 3: Under the False Claims Act, the qui tam provision allows:
- The OIG to exclude providers from Medicare
- Private individuals to file lawsuits on behalf of the government and share in any recovery (Correct answer)
- Hospitals to self-report overpayments without penalty
- CMS to impose civil monetary penalties directly
Correct answer: Private individuals to file lawsuits on behalf of the government and share in any recovery
The qui tam provision lets private whistleblowers (relators) file FCA lawsuits on the government's behalf and receive 15–30% of any recovery.
Question 4: When an accounts payable clerk both approves invoices and issues payment checks, which internal control principle is violated?
- Physical safeguards
- Separation of duties (Correct answer)
- Independent verification
- Documentation procedures
Correct answer: Separation of duties
Separation of duties requires that authorization, custody, and recordkeeping functions be divided among different employees.
Question 5: A hospital CFO notices that supply expense increased 18% while patient volume grew only 4%. Which analytical procedure best investigates this discrepancy?
- Trend analysis comparing prior-year supply costs
- Ratio analysis of supply cost per adjusted patient day (Correct answer)
- Cutoff testing of year-end receiving reports
- Confirmation of vendor balances
Correct answer: Ratio analysis of supply cost per adjusted patient day
Ratio analysis of supply cost per adjusted patient day normalizes for volume and isolates whether unit costs genuinely rose.
Question 6: Which type of internal control is designed to discover errors or irregularities that have already occurred?
- Preventive control
- Directive control
- Detective control (Correct answer)
- Corrective control
Correct answer: Detective control
Detective controls identify problems after they occur, such as reconciliations, audits, and exception reports.
Question 7: The OIG Work Plan is best described as:
- A list of providers excluded from federal healthcare programs
- An annual publication identifying OIG audit and investigative priorities for the coming year (Correct answer)
- A compliance manual required for all hospitals
- A summary of False Claims Act settlements
Correct answer: An annual publication identifying OIG audit and investigative priorities for the coming year
The OIG Work Plan is published annually and signals which billing practices and program areas the OIG intends to scrutinize.
HAC Internal Controls & Fraud Prevention 2
Which element of the COSO framework addresses an organization's shared values, ethics, and operating style?