An indictment was unsealed today charging Penn Choice Ambulance Inc., operating

Question

An indictment was unsealed today charging Penn Choice Ambulance Inc., operating from Philadelphia, PA, Huntington Valley, PA and Camp Hill, PA, its owner, Anna Mudrova, and opera- tors Yury Gerasyuk, Mikhail Vasserman, Irina Vasserman, Aleksandr Vasserman, Valeriy Davydchik, and Khusen Akhmedov, with con- spiracy to commit health care fraud. The alleged scheme involved more than $3.6 million in fraudulent claims submitted to Medicare.

The defendants were also charged with related crimes includ- ing making false statements in connection with health care mat- ters, aggravated identity theft, paying kickbacks to patients, and money laundering, announced United States Attorney Zane David Memeger.
Valeriy Davydchik, 58, and Khusen Akhmedov, 22, Mikhail and Irina Vasserman, both 50, and Aleksandr Vasserman, 29, all of Philadelphia, were arrested this morning. Mudrova, 40, Gerasyuk, 41, also of Philadelphia, will make a court appearance tomorrow. According to the indictment, the defendants conspired to defraud Medicare by recruiting patients who were able to walk and could travel safely by means other than ambulance and who therefore were not eligible for ambulance transportation under Medicare requirements. It is alleged that the defendants, and others acting on their behalf, falsified reports to make it appear that the patients needed to be transported by ambulance when the defendants knew that the patients could be transported safely by other means and that many of them walked to the ambulance for transport. It is further alleged that the defendants themselves, or through oth- ers, paid illegal kickbacks to the patients as part of scheme. The defendants allegedly billed Medicare for these ambulance services as if those services were medically necessary and, as a result of the allegedly fraudulent billing, the Medicare program sustained losses of more than $1.5 million for this medically unnecessary method of transportation.

Review actual case study above and analyze the situation.

If you were the administrator of the organization, how could you use internal audits to uncover the fraud before an external audit occurred? What type of internal audit would you use? Be certain to include a clear description of the scope of your audit.

Explanation / Answer

Being an administrator, I fully support internal audit involvement in investigating potential fraud, I would like to suggest that organizations need to rethink the role of internal audit in detecting fraud.anagement should be responsible for the system of internal controls, including the ability to prevent and, as necessary, detect potential theft and fraud. Internal audit should only take on any part of this management responsibility with the prior and formal approval of the audit committee. In such cases, the responsibility of internal audit should be limited (in my opinion) to a secondary role in detection while management remains responsible for the primary detection role and fully responsible for prevention.

It is important, when assessing fraud risk, to consider not only the immediate size of any loss of assets but also such factors as:

The type of internal audit that i would suggest is PEER REVIEW AUDIT.The peer review is conducted by an independent evaluator, known as a peer reviewer which means the auditor who comes to do the audit belongs to another organisation but elligible and competent person should be selected.THis kind of audit helps in knowing the exact complainces as he will be outer person.The person from inside the organisation however tries to close the faults in somehow or the other way,so it is one of the best audits to be performed.These kind of frauds when observed,it is a good possible way to rectify it as soon as possible.I prefer this to be a management responsibility, just as risk assessment in general is a management responsibility.Proper evidence should be collected to take any corrective action.

The potential for a theft or fraud to impact customers,patients.

The potential for the fraud or theft to impact financial reporting

Whether undetected fraud or theft is likely to grow from small beginnings into something of significant impact to theservices and business

The potential impact on employee morale and the culture of the organization.

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