Accounting HW (AIS)

AICPA Case Development Program Case No.97-05: Dentistal; Inc. .I
—

DENTISTAR, INC.

Alan T. Lord, Associate Professor

Bowling Green State University, Bowling Green, Ohio

Robert J. Winiarski, Senior Consultant

Arthur Andersen, Detroit, Michigan

GENERALBACKGROUND

Dentistar, Inc. (“Dentistar”) was fonned in 1985 to provide dental and orthodontic services to members of

prepaid dental plans throughout the country. The core of the business grew out of the steel industry in the

Pittsburgh area and spread through the surrounding region in support of major customers. Growth of the

company, through acquisitions of similar organizations in the western, southern, and eastern portions of the

United States, has been rapid (see Exhibit A).
Dentistar employs approximately 400 individuals and maintains four primary locations. The combined

corporate Headquarters and Central Region offices are located in Pittsburgh, Pennsylvania, while three addi-

tional regional offices are located in Los Angeles (West Region), Atlanta (South Region), and Boston (East

Region). The bulk of the sales and marketing, management infonnation systems, claims processing, finance,

and accounting functions are maintained at Headquarters. The Regional office houses a sales and marketing

force to recruit new subscribers and providers in the region, a member services team to respond to the

requests and complaints of subscribers, and a small management team to oversee regional operations. An

organization chart for the West Region is documented in Exhibit B.

The geographic expansion of Dentistar resulted in operations in 29 states. The customers of the company

are made up of three constituencies: the patients (subscribers), the dentists (providers), and groups (employ-

ers) contracting for the services. Dentistar provides services for approximately 250,000 families, which

represents approximately 850,000 family members. The expansion of the company has enlarged the

employer base such that the five largest industries served by Dentistar are the steel industry, the auto indus-

try, public school districts, hospitals, and unions.
The company’s primary product is the prepaid dental plan that is typically funded by a fixed monthly fee

from the group purchaser (employer) in combination with employee contributions or a co-payment arrange-

ment. While there is a wide variation in product offerings driven by customer requirements and regional

practices, the basic Dentistar plan reimburses 50 to 100% of the subscribers’ dental costs, depending on the

nature of the procedure perfonned.
Dentistar has arrangements with over 15,000 providers nationwide. These dentists are paid a fixed

monthly fee to provide primary care for Dentistar plan members that select their office for their dental ser-

vices. Dentists are provided a list of Dentistar subscribers (patients) who are authorized to receive treatment

through their office.

Copyright 1998 by the American Institute of Certified Public Accountants (AICPA). Cases developed and distributed under the AICPA Case
Development Program are intended for use in higher education for instructional purposes only, and are not for application in practice.

Permission is granted to photocopy any case( s) for classroom teaching purposes only. All other ri~hts are reserved. The AICPA neither

approves nor endorses this case or any solution provided herein or subsequently developed.

AICPA Case Development Program Case No.97-05: Dentistal; Inc. .2

DENTISTAR TASK ONE -INTERNAL CONTROL ANALYSIS

Most accounting functions are perfonned at the corporate level in Pittsburgh. All payroll and cash receipts
are processed at corporate; regional management has no involvement in the accounting for these transactions.
Similarly, corporate accounting personnel process nearly all cash disbursements through the accounts
payable function of Dentistar’s general ledger system. All monthly payments to dentists and the majority of
routine regional operating expenses are recorded in Pittsburgh.

While nonnal operating expenses are processed at corporate, each of the regions maintains the ability for
the management of the region to issue manually written checks for operating expenses when there is insuffi-
cient time to have the nonnal accounts payable system issue checks from the home office. Corporate
management does not specify policies or guidelines for the use of manual checks by regional management,
and each region varies in the volume and nature of manual disbursements processed.

Although the management of each region is responsible for drafting manual checks, the home office
makes all deposits into the accounts. Corporate accounting personnel receive all bank statements directly
from the banks and are responsible for reconciling the bank accounts for the regions and for insuring that
there are adequate funds in the accounts to cover all checks that a region issues. The management of the
regions does not have the infonnation required to detennine the cash balance in any of the checking
accounts.

The check fonns used by each region contain two parts: the check that is detached and mailed to the
payee, and a check stub that the region prepares as a record of the disbursement. Because the check stub is
part of the same page of paper as the check itself, all infonnation on the check must be rewritten onto the
check stub to provide a record of support for the cash disbursement. In addition to the date, payee, and
amount, the reason for issuing the check or the nature of the payment is noted on the check stub by regional
management. Monthly, check stubs are mailed to the corporate office to facilitate the reconciliation of the
bank accounts and to provide infonnation to properly record the expenditures in Dentistar’s accounting
records. The general ledger and all accounting records are maintained at the home office. Thus, the home
office uses the stubs to account for the cash disbursements for the regions and to predict future cash needs to
detennine the necessary deposits to replenish the checking accounts.

Until recently, Dentistar’s system of cash management had been operating reasonably well. However,
during the last few I.I1onths there have been several overdrafts in the operating bank account maintained at the
West Region. Dentistar’s management has requested its newly hired internal audit manager, Sheila Tate, to
examine the issue and detennine the nature and source of the overdrafts. Through discussions with corporate
management, Sheila learns that the volume of manual checks processed by the West Region is greater than
that of the other three regions. West Region management issues manual checks each month for two types of
transactions: subscriber termination refunds and expedited payments of operating expenditures.

SUBSCRIBER TERMINATION REFUNDS

Refunds for the unused portion of their premium payments are issued to subscribers upon their request for
tennination from the plan. All refunds are processed at the regional office. Subscribers request a refund by
either telephoning a regional member services representative or by sending a letter to the regional offices.
The member services representative that handles a telephone request for termination documents various
subscriber infonnation, including the subscriber’s name, address, social security number, and the appropriate
plan and provider number on a Refund Request fonn (see Exhibit C). Refund Request fonns are forwarded
to Tom Swindler, West Region Finance Coordinator, for payment. Written requests are received in the mail
by the West Region’s executive assistant, Chris Martin, and forwarded directly to Tom Swindler for payment.

Based upon the written tennination request letter received directly from the subscriber or the Refund
Request fonn prepared by member services, Tom Swindler prepares a Request for Payment Adjustment (see
Exhibit D). The primary purpose of this fonn is to document the calculation of the amount of refund due the
subscriber. Tom reviews the status of the subscriber’s policy and payment history online in Dentistar’s
subscriber tracking system. Tom, as well as all West Region personnel, is limited in his ability to edit the
subscriber tracking system. Within the subscriber tracking system, regional personnel can only edit

AICPA Case Development Program Case No.97-05: Dentistal; Inc. .3

subscriber addresses and initiate transfers of subscribers to different dentists. All other changes to the
subscriber profile are processed at the Central Region Headquarters. Based upon the infonnation in the
subscriber tracking system, Tom calculates the amount of the refund and prepares the Request for Payment
Adjustment.

Tom Swindler forwards the Refund Request or subscriber letter and the Request for Payment Adjustment
to Sally Trusts, West Region Director of Administration, for approval. After reviewing the fonns to ensure all
information has been properly documented thereon, Sally recalculates the amount of refund and approves the
refund by signing the Request for Payment Adjustment. Sally does not review the information on line in the
Dentistar subscriber tracking system to ensure that the data has been input on the forms correctly. Sally
returns the supporting documentation and the approved refund to Tom Swindler.

Tom Swindler prepares a manual check from the approved refund package and runs the check through a
check signing machine, which affixes Sally Trusts signature to the check. Sally is the only authorized check
signer on the account. Historically, Sally manually signed each check; however, the rapid growth of the West
Region rendered this practice impractical. The check signing machine was purchased approximately two
years ago. Tom Swindler copies the date, payee, amount, and purpose of the disbursement from the signed
check to the check stub. Tom prepares a cover letter to the subscriber and attaches the refund payment. The
letter is forwarded to Jamie Snoops, the West Region receptionist, for mailing to the subscriber.

Once the refund has been authorized and the check issued to the subscriber, Tom Swindler sends a copy
of the Request for Payment Adjustment to the Computer Information Systems Group at the corporate offices
in Pittsburgh. Tom staples the original Refund Request or subscriber termination letter to the original Request
for Payment Adjustment and files the package by date in the West Region accounting files.

The Infonnation System Group utilizes the infonnation from the Request for Payment Adjustment
received from Tom Swindler to delete subscribers from the Dentistar subscriber tracking system. Subsequent
to deleting the subscriber, the Infonnation System Group files their copy of the Request for Payment
Adjustment. Once deleted, the subscriber is removed from the providers’ list of subscribers (patients)
authorized to receive treatment through their office.

EXPEDITED OPERATING EXPENDITURES

The West Region also issues manual checks in order to expedite payment of its operating expenses.
Frequently, the West region sends surveys, comment cards, and other literature to subscribers and providers.
Postage on these items is paid via a manual check issued at the regional office. Office supplies, advertising
expenses, promotional costs, and other operating expenses are also frequently paid at the regional level.

All West Region personnel may request a manual check in payment of a regional operating expense by
preparing a Check Request indicating the payee, amount, and reason for the request (see Exhibit E). The
individual preparing the request attaches any supporting documentation, such as a vendor invoice, to the
Check Request and forwards the entire package to Tom Swindler. Tom reviews the request to ensure all
appropriate supporting documentation is present and forwards the Check Request package to Sally Trusts for
approval. Sally reviews the package and authorizes payment by signing the check request. Sally returns the
package to Tom for final issuance to the vendor.

Tom prepares a manual check and runs it through the check signing machine. The appropriate informa-
tion from the signed check-date, amount, payee, and nature of payment-is copied by Tom onto the check
stub. Tom gives the signed check to the West Region receptionist, Jamie Snoops, for mailing to the vendor.
Tom files the approved check request and supporting documentation by payee in the West Region account-
ing files.

At the end of each month all the check stubs written by the West Region during the month are accumu-
lated and sent to corporate headquarters in Pittsburgh. Accounting personnel in Pittsburgh review the check
stubs and record the disbursement in Dentistar’s general ledger accounting system based upon the nature of
the payment noted on the stub. For example, payments to the Postmaster are recorded in the general ledger
Postage Expense account. West Region personnel are not authorized to edit any of the transactions or bal-
ances recorded in the general ledger system. After the check stubs are recorded, they are placed in Dentistar’s
off site storage area in Pittsburgh.

AICPA Case Development Program Case No.97-05: Dentistar; Inc. .4

Subsequent to recording all regional manual expenditures, corporate accounting personnel prepare
monthly profit and loss statements for each region. The monthly reports, an example of which is attached as
Exhibit F, compare actual profit and loss figures for the month, per the general ledger system, with the activ-
ity budgeted for the month. Budgets are prepared by corporate management at the start of each fiscal year.
The budget for any particular year is typically based upon the prior year’s actual result plus some factor for
growth in the subscriber base and for expected inflation. The regional profit and loss reports are reviewed by
corporate management as well as the Director of Administration for each region. In the West region, Sally
Trusts reviews the statement and investigates any significant variations in actual results from budget.

Cancelled checks, including all manual checks written by the regions, are returned with the monthly
bank statement directly to corporate accounting personnel in Pittsburgh. Corporate personnel reconcile each
region ‘s cash account on a monthly basis. In preparing the reconciliations, the accounting clerks refer to the
bank statement to determine which deposits are in transit and which checks have yet to clear the bank.
Because of the volume of checks each month, the canceled checks are not used in the bank reconciliation
process. However, for security, the canceled checks are typically separated from the bank statement and
placed in the general accounting storage vault at the Pittsburgh headquarters. The West Region’s cash
account has reconciled each month without exception. The reconciled bank statements are filed at the home
office.

INTERVIEWS WITH WEST REGION PERSONNEL

After learning about the subscriber termination refund and expedited operating expenditure procedures,
Sheila Tate decides to conduct interviews of West Region personnel. An interview with Sally Trusts, West
Region Director of Administration, reveals that the West Region’s subscriber base has grown rapidly over the
last six years. Until approximately two and a half years ago when Tom Swindler was hired, the total number
of administrative personnel in the Region remained unchanged. Prior to Tom’s joining Dentistar, Sally was
responsible for all of the Finance Coordinator functions, in addition to her current duties as Director of
Administration. Sally was quick to praise Tom as a personable, hard working employee upon whom she
places great reliance.

There has beeQ significant turnover in all other administrative positions within the region. During
interviews, both Sally Trusts and Tom Swindler noted the considerable time they spend retraining new
personnel in the administrative and accounting functions of the Region. In addition to manual disbursements
in support of West Region operations, Tom has several other responsibilities. He is responsible for coordi-
nating the collection of the region’s past due accounts receivable, assists corporate personnel in organizing
the financial support for all internal and external audits by the Internal Revenue Service, accounting agencies,
and insurance bureaus, and assists Sally Trusts with Regional human resources issues. Peggy Connor, an
administrative clerk, is the newest employee of the Region. Peggy assists Tom and Sally in performing their
administrative and financial functions.

During an interview with Sheila Tate, the receptionist for the West Region, Jamie Snoops, relayed her
recollection of a manual subscriber termination refund issued to a friend of the West Region Finance
Coordinator, Tom Swindler. Jamie had no recollection of this friend being a valid subscriber to Dentistar
dental plans. Sheila concludes Jamie’s comments deserve additional investigation. To begin the investigation,
Sheila wants to document and analyze the internal control system at Dentistar. She decides to prepare a flow-
chart to document the transaction flows and internal controls over manual disbursements in the West Region.

STUDENT REQUIREMENTS FOR TASK ONE

I. Prepare a flowchart or data flow diagram to document the flow of transactions and internal controls over
manual disbursements for both subscriber termination refunds and expedited operating expenditures.

2. Analyze the flowchart or data flow diagram and identify control strengths and weaknesses in the system.

3. In your opinion, is the overall control system in place for manual disbursements at the region effective?
Describe any preliminary recommendations to improve this system that you would suggest?

AICPA Case Development Program Case No.97-05: Dentistal; Inc. .5

DENTISTAR TASK TWO -FRAUD INVESTIGATION

Sheila Tate, the internal audit manager for Dentistar, has completed her documentation and analysis of the
system of internal controls over manual disbursements at the West Region. She thinks some potential weak-
nesses exist at the Region. In addition, Sheila thinks some of the things she recently learned at a continuing
professional education course that discussed Statement on Auditing Standards (SAS) No.82, “Consideration
of Fraud in a Financial Statement Audit,” may be relevant to this situation. Although SAS No.82 is focused
on clarifying requirements for external auditors, it contains a discussion of many issues that also are relevant
for corporate accounting managers and internal auditors. Sheila specifically recalls a particular section of the
SAS that discusses risk factors related to the misappropriation of assets from employers. She is concerned
that some of these risk conditions exist at Dentistar’s West Region.

In particular, Sheila is concerned about J amie Snoops’ recollection of a subscriber termination refund to
a friend of Tom Swindler, the West Region Finance Coordinator. The internal controls analysis revealed that
Tom was responsible for multiple accounting functions. Sheila believes one person’s control over multiple
functions increases the risk of potential abuse of the internal control system. In consideration of these factors,
Sheila concludes a specific review of manual disbursement transactions processed at the Region is merited.

Sheila begins her investigation by retrieving the West Region’s manual check stubs from off site storage
and the corresponding cancelled checks from the general accounting storage vault at the Pittsburgh head-
quarters. Sheila determines that approximately 60 manual checks are written by the West Region each month.
While Sheila concludes her initial investigation should focus on the most recent twelve months of activity,
she does not have the time or the resources to examine all the manual disbursements processed by the
Region during this time period. She judgmentally selects approximately 10% of all the West Region’s man-
ual disbursements in the previous year for testing. The details of the selected West Region canceled checks
are summarized in Exhibit G; the information from the corresponding check stubs is summarized in Exhibit
H.

Sheila requests from the West region all of the supporting disbursement documentation for each manual
check selected. Sheila reviews the documentation provided, noting whether adequate documentation and
regional management approval have been provided. A summary of Sheila Tate’s review of the supporting
documentation is summarized in Exhibit I. Sheila also requests from the Computer Information Systems
group in Pittsburgh. a list of all West Region subscribers terminated from the subscriber tracking system
within the last twelve months. A copy of the report provided is attached as Exhibit J .

STUDENT REQUIREMENTS FOR TASK TWO

I. Determine the risk factors relating to misstatements in financial statements arising from the misappro-
priation of assets as suggested in SAS No.8

2.

2. Evaluate the risk factors in relation to the control system existing at Dentistar. What, if any, factors or
controls mitigate the risks you have identified?

3. What additional procedures should Sheila Tate perform in her fraud investigation? Review Exhibits G,
H, I and J for any unusual or fraudulent transactions and perform the additional procedures you feel

appropriate.
4. Prepare a brief description of the procedures performed and results obtained in step 3. Discuss the fac-

tors within the control system that enabled any fraudulent transactions you identify to be processed at the
West Region without detection by regional or corporate management.

5. What recommendations would you make to the management of Dentistar to improve controls over
manual disbursements at the West Region and to prevent additional instances of fraud? Are there any
operational improvements you would suggest that either corporate or regional management of Dentistar

implement?

AICPA Case Development Program Case No.97-05: Dentistal; Inc. .6

6. The focus of this case has been on the manual cash disbursements of Dentistar. If you discovered an
employee attempting to defraud Dentistar in this area it is possible that the same employee would
attempt to steal from the company in an alternate manner. What are some of additional areas that might
possess the risk of fraudulent activity? What controls does Dentistar currently have in place to prevent
fraud in the areas you identified? If no controls currently exist what recommendations would you make
to management?

SUGGESTED REFERENCE MATERIAL

Auditing Standards Board. Statement on Auditing Standards No.82, “Consideration of Fraud in a Financial
Statement Audit” (New York: AICPA, 1997).

AICPA Case Development Prograrn Case No.97-05: Dentistal; Inc.

EXHmIT A

For The Year Ended

1993 1994 1995 1996 1997 (A)

Dentistar, Inc.

Revenue $ 39,306 $ 44,416 $ 53,299 $ 59,695 $ 66,858

Net Income $ 177 $ 393 $ 533 $ 1,194 $ 1,671

Total Subscribers 560,000 630,000 760,000 850,000 950,000

Dentistar- West Region

Revenue $ 786 $ 1,777 $ 3,198 $ 4,776 $ 7,220

NetIncome $ (220) $ (140) $ 38 $ 67 $ 181

Total Subscribers 11,000 25,000 45,000 70,000 105,000

(A) Projected.

AICPA case Development Program Case No.97-05: Dentistal; Inc. .9

EXHIBIT C
(..,

DENTISTAR, INC.

REFUND REQUEST

Date:

Name:

Address:

CHECK LIST

1. Provider Number:

2. Phone Number:

3. Social Security Number:

4. Balance:

5. Date of Last Appointment:

6. Member Services Initials:

7. Plan Number:

8. Effective Date:

9. Person With Whom You Spoke at the Office:

AICPA Case Development Program Case No.97-05: Dentistal; Inc. .10

EXHIBIT D

DENTISTAR, INC.

REQUEST FOR PAYMENT ADJUSTMENT

Reason for request:

SUBSCRIBER

Name: Plan Type:

Address: Amount Paid:

City/State: Comments:

Zip Code:

Sac. Sec. No.:

Amount of Adjustment: $

Months To Be Adjusted: Through:

Coverage Effective Date: Coverage Termination Date:

Please Terminate Policy Effective:

PROVIDERS
Months Credit Debit

Name Number Retro (+) (-)

I.

2.

3.

BROKERS
Months Credit Debit

Name Number Retro ( + ) ( -)

I.
2.
3.

Prepared By: Date:

Approved By Regional Manager: Date:

AICPA Case Development Program Case No.97-05: Dentistar; Inc. .12

~ I 0\0″”‘ 1\0 06’06’\0;;;r-0\r-0000\”V\0,,”,r:::-ooMOo\ ;r;-ooMr- I””‘ 1″”’11= ~00″v0\ r-oooo”V~ooO\~r-“V~M”VO\-,,”,\0″VO”V- –0\””‘”v ~
= “V\0,,”,r- r-,,”,\0\0-M-r-~\0″V\0000~~,,”,~”V,,”,M \o-“VMO r-~ .C O\r-“VM -~M~M\0 -~r-“V-r–~~–“V ~r-MM,,”, 0\
= \0 ~”v ~ ~M ~ ~ 00 ~

>’ ~ -“”‘

~ i §.§§§ §.§§.§.§§§.~.§.§§.§.§.§§§.§.§.§§§§.§.§§.§.~ £.
O~ 0″v0″V 0\~M~~~~,,”,0~~~NNO~~00~0000~000″V 0\
-= O~Nr- \0 -~~-r- r-“Vr-\0N-,,”,0\~~Or-~”V~O\00~M “v
I.= “v.~~00. -~ -N ,,”,0.\0- N “”‘. ~
= ~ ~

~ “”‘

~ “”‘

O\oM~ 0000\0Nr-~r-0000\”V\0~~-ooNOO\\0~OONr-,,”, “”‘
-~00″v0\ r-NOO\0~-0\~r-“V~M”VO\-\0\0″VO”V-oooo-~,,”,”v ~
= “V\0~r- r-\0\0,,”,-r–0\~\0″V\0000~\0~~”V,,”,MM,,”,-“VMM ~
= ~~~~ o~~NoN~Mo~oN~M~Mo~~~~~~NoN~ ~
y \o0~- 0 r- -0\\0-0 r-“Voor-M-~0\”V~Or-“””,”,,,”,oO\~o 0

< ~\0~ .-\0. M ,,",0.\0- ~ "v. \0

~ \0 ~ “”‘
“”‘

GIy ,-..,-.. ,-.. ,-.. ,-.. ,-..,-.. ,-.. ,-..,-..
= OMOM ,,”,\00\0000MO-\000000~0\0000000-r-~,,”, ~
= O\M”V~ ~~MOOr-ooM M”V~\00-\0″VOOMr-~MO000\0\”V- \0
.C ~~~~ ~~r-“V.”V~0. M”VO\.,,”,. M.~~.-V.,,”,.-.M.CC””‘-“V~ ~
= -~ M -“v –M”VM- -~>’ ~ ~ ~ -“”‘

~ f7:

~
e-
–

i ~i §~§~ ~~~~~~~~§~~~~~§~~§§~§§~~~§~ ~
~ ~] o~N~ ~ ~~~~~ ~~~~N~M~MMo~M~M~~~N ~
r~’ ~ = “v ~ -00 -~ -M ~ 0 \0 -M “”‘ ~
-y ~ ~ -~””‘

O ~

r-.
~
~

~ ,-..
~ ~ 000000 r-“V0″V000000-\000000~0\0000000-r-~,,”, ~
= –r-“V”V “V”VM-r-Mr-MN”V~\00-\0~ooMr-~MOMo\0\”V,,”,
O = “v. ~ M. r-. r-. “v 0\. 0. 0\. M. “v. “”‘ 0. r-. 0\. “v. ~ M. M. 00. 0. “v. ~. ~ M. r-. “v. 00. ~. “v. ~ “v.
~ y “v”V~~ \0 -00~-,,”, r-“Vr-00″”,-“V00~~”V0\”V,,”,,,”,0\00~”V ~
~ < M~-\0 -~ -M ~0\0- M "v - U ~ ~~ -~ ""' O ~

I
Z
O-
”

~

!

-0

! =1 ~~~ ~~~~~~~~~~~~;~~~~~~~~~~~~~
C/) = “v”V”V ~~~~~~~~~~~~~~~~~~~~~~~~~~
O o
~ ~
~ < !-0 ~- ~ ~ Q) O GI "' Q) "'

= y Q)
—~ Q) = .t:
~ -O Q. Q) ‘” c=
,- ~ Q) ~ .->< u = ~ "' --"' -"' ,., = Q) -.Q)c.;o GI Q) = =Q. Q)Q)- -C/)", ><

~ 5 § := GI -Q) ..E .t: “‘ Q) “‘ ~ .= “‘ Q) Q) “‘ ‘” ~
…!-0 ,” .-.> “‘ = = Q) & 2 ~ ~ 5 t1. .~ ~ Q) .g ~ > .t: “‘ Q) ,… “‘ “‘

Z “”‘ = 0 > ~ c= = ~ .c Q. –= ~ Q) .= ‘” Q) >< Q) Q) = GI a~ ~ .~ r,; ~ 5 ~ r,; ~ .E ~ r:: ...J .g & ,~ Q) ,~ ~ e: ~ .c; -." 5 e ~ ~ ~ -c; ~ Q) ~ e

~ y GI ..e GI GI .~ ‘. …c -‘” ..-, u -0 –= ~ ~ ~ -F -..= ~ 0
.”‘ ~ “‘ = 0 >. ~ ~ ~ .~ .~ -.” Q) ~ .1J Q) ~ = ~ .~ C/) Q) u ~ “‘ -.~ ~ -e ~ -0 ~ ~ y
::: ~ GI = t1. c= = –~ ~ Q ..Q) ~ c= Q) “‘ Q) b/) Q) .= Q) .-Q) -“v ‘” -= .-=
~ …, Q ~ “‘ Q. = = ~ ~ o o = 6. .> ~ 5 ..~ u s ~ u -‘” ~ e u 8 & -~ e- .~ = –

~ ~ GI ~ 6 ~ Q ~ ~ E ~ -g 0 Q) 8 = ~ ~ 8 e ~ ~ e 5 e- .t: ~ e ~ 8 ~ “‘g “;) == Q -0:
~C/) ~t1.U~~ ~«<~uO~Q--~0~=0~~t1.<0~~~t1.F~~ z~

AICPA Case Development Program Case No.97-05: Dentistal; Inc. .13

EXHIBIT G

Dentistar, Inc.

WEST REGION CANCELLED CHECK DETAILS

Check Check
Number ~ Amount ~ Number ~ Amount ~

1026 II/2/96 125.00 Chris Mynatt 1769 6/12/1997 101.60 Bob Tumer

1039 II/6/96 102.64 U.S. Postage Service 1790 6/13/1997 111.99 ABCAdvertising

1045 11/18/96 112.98 Lawn Valley 1834 6/14/1997 50.00 U.S. Postage Service

1046 11/18/96 200.01 North Central Electric 1860 6/16/1997 51.20 Hi- Tech Mobile Phone

1051 11/22/96 168.64 Bailey Ins. 1876 6/22/1997 10.00 Donald Cox

1054 12/1/96 12.12 ABC Advertising 1888 6/23/1997 92.80 North Central Electric

1066 12/2/96 152.64 U.S. Postage Service 1922 6/25/1997 92.80 Bob Tumer

1070 12/10/96 122.99 Quiks Supply 2099 7/1/1997 99.20 Quiks Supply

1077 12/15/96 116.88 Jones Equipment 2125 7/10/1997 56.43 Hi-Tech Mobile Phone

1099 12/15/96 12.50 U.S. Postage Service 2231 7/12/1997 11.99 U.S. Postage Service

1111 12/17/96 682.56 Fix A Wreck, Inc. 2256 7/12/1997 16.24 Newsweek

1125 12/17/96 100.50 QuiksSupply 2298 7/13/1997 112.20 William Long fellow

1135 12/18/96 88.64 Yellow Cab 2355 7/15/1997 106.80 U.S. Postage Service

1142 12/30/96 192.40 Tom Swindler 2377 7/30/97 199.99 Ben Franklin, Inc.

1188 1/6/97 62.11 ABCAdvertising 2395 8/1/97 200.16 Tom Swindler

1225 1/10/97 88.92 U.S. Postage Service 2413 8/12/97 101.90 Quiks Supply

1245 1/15/97 100.00 Charles Zilch 2469 8/15/97 88.60 U.S. Postage Service

1250 1/15/97 18.16 Wood County 2546 8/15/97 82.96 R&JDecorating

1265 1/22/97 125.44 Rob Howard 2598 8/20/97 101.11 Lawn Valley

1280 1/25/97 .116.99 Hi-Tech Mobile Phone 2602 8/20/97 54.97 Quiks Supply

1325 2/10/97 10.00 Quick N Clean 2621 8/22/97 88.98 U.S. Postage Service

1367 2/12/97 128.90 U.S. Postage Service 2649 8/25/97 99.10 North Central Electric

1445 2/20/97 130.64 Hi-Tech Mobile Phone 2700 8/27/97 10.00 Cathy Bobb

1464 2/28/97 188.60 Computer Basics, Inc. 2711 8/29/97 100.02 U.S. Postage Service

1475 3/6/97 116.90 U.S. Postage Service 2749 9/1/97 64.97 Temporary Help, Inc.

1499 4/18/97 114.80 Quiks Supply 2775 9/5/97 82.67 Cleve Malone

1526 4/22/97 202.60 Quick N Clean 2798 9/12/97 98.99 Temporary Help, Inc.

1529 4/30/97 240.80 U.S. Postage Service 2804 9/30/97 42.60 Quiks Supply

1574 5/5/97 249.16 North Central Electric 2815 10/2/97 44.90 Temporary Help, Inc.

1613 5/12/97 100.16 U.S. Postage Service 2846 10/15/97 54.01 U.S. Postage Service

1624 5/22/97 22.11 WaIter Ziegler 2865 10/15/97 88.90 Lawn Valley

1634 6/2/97 54.69 U.S. Postage Service 2894 10/23/97 60.64 Kathleen Quiroga

1702 6/2/97 17.11 Hi- Tech Mobile Phone 2899 10/24/97 202.80 Temporary Help, Inc.

1710 6/3/97 118.19 Bob Tumer 2931 10/25/97 44.98 Hayden McLaughlin

1731 6/8/97 88.64 North Central Electric 2945 10/30/97 16.16 Quiks Supply

1755 6/12/97 200.01 Elder-Bearman 2965 10/30/97 59.39 Douglas Challen

2988 10/30/97 68.88 Mary Churchill

AICPA Case Development Program Case No.97-05: Dentistar. Inc. .14

EXHIBIT H

Dentistar, Inc.

WEST REGION CHECK STUBS

Check G/LAccount
Number ~ Amount ~ Puruose Number

1026 11/2/96 125.00 Chris Mynatt patient refund 4050-04
1039 11/6/96 102.64 U .S. Postage Service postage 5480-04

1045 11/18/96 112.98 Lawn Valley lawn care 5500-04

1046 11/18/96 200.01 North Central Electric utilities 5750-04
1051 11/22/96 168.64 Bailey Ins. insurance 5305-04
1054 12/1/96 12.12 ABC Advertising advertising 5000-04
1066 12/2/96 152.64 U.S. Postage Service postage 5480-04
1070 12/10/96 122.99 Quiks Supply supplies 5475-04
1077 12/15/96 116.88 Jones Equipment repairs and maintenance 5600-04
1099 12/15/96 12.50 U.S. Postage Service postage 5480-04
1111 12/17/96 682.56 Fix A Wreck, Inc. car repairs 5025-04
1125 12/17/96 100.50 Quiks Supply supplies 5475-04
1135 12/18/96 88.64 YeIlowCab cab fees 5025-04
1142 12/30/96 192.40 U.S. Postage Service postage 5480-04

1188 1/6/97 62.11 ABCAdvertising advertising 5000-04
1225 1/10/97 88.92 U.S. Postage Service postage 5480-04
1245 1/15/97 100.00 Charles Zilch patient refund 4050-04
1250 1/15/97 18.16 Wood County parking fees 5025-04
1265 1/22/97 125.44 Quiks Supply supplies 5475-04

1280 1/25/97 116.99 Hi-Tech Mobile Phone telephone 5740-04
1325 2/10/97 10.00 Quick N Clean office maintenance 5500-04
1367 2/12/97 128.90 U.S. Postage Service postage 5480-04
1445 2/20/97 130.64 Hi-Tech Mobile Phone telephone 574004
1464 2/28/97 188.60 Computer Basics, Inc. technical support 5430-04

1475 3/6/97 116.90 U.S. Postage Service postage 5480-04

1499 4/18/97 114.80 QuiksSupply supplies 5475-04
1526 4/22/97 202.60 Quick N Clean office maintenance 5500-04
1529 4/30/97 240.80 U.S. Postage Service postage 5480-04
1574 5/5/97 249.16 North Central Electric utilities 5750-04
1613 5/12/97 100.16 U.S. Postage Service postage 5480-04
1624 5/22/97 22.11 Walter Ziegler patient refund 4050-04

1634 6/2/97 54.69 U.S. Postage Service postage 5480-04
1702 6/2/97 17.11 Hi- Tech Mobile Phone telephone 5740-04
1710 6/3/97 118.19 U.S. Postage Service postage 5480-04

1731 6/8/97 88.64 North Central Electric utilities 5750-04
1755 6/12/97 200.01 Elder-Bean11an advertising 5000-04
1769 6/12/97 101.60 Bob Turner patient refund 4050-04

1790 6/13/97 111.99 ABC Advertising advertising 5000-04
1834 6/14/97 50.00 U.S. Postage Service postage 5480-04~

AICPA Case Development Program Case No.97-05: Dentistal; Inc. ..5

EXHIBIT H
Dentistar, Inc.

WEST REGION CHECK STUBS (Page 2)

Check G/LAccount
Number ~ Amount ~ PurRose Number

1860 6/16/97 51.20 Hi-Tech Mobile Phone telephone 5740-04

1876 6/22/97 10.00 Donald Cox patient refund 4050-04

1888 6/23/97 92.80 North Central Electric utilities 5750-04
1922 6/25/97 92.80 North Central Electric utilities 5750-04
2099 7/1/97 99.20 Quiks Supply supplies 5475-04
2125 7/10/97 56.43 Hi-Tech Mobile Phone telephone 5740-04

2231 7/12/97 11.99 U.S. Postage Service postage 5480-04
2256 7/12/97 16.24 Newsweek subscriptions 5225-04
2298 7/13/97 112.20 William Long fellow patient refund 4050-04

2355 7/15/97 106.80 U.S. Postage Service postage 5480-04
2377 7/30/97 199.99 Ben Franklin, Inc. office supplies expense 5475-04
2395 8/1/97 200.16 Lawn Valley lawn service 5500-04

2413 8/12/97 101.90 Quiks Supply supplies 5475-04
2469 8/15/97 88.60 U.S. Postage Service postage 5480-04
2546 8/15/97 82.96 R & J Decorating office maintenance 5500-04
2598 8/20/97 101.11 Lawn Valley lawn service 5500-04
2602 8/20/97 54.97 Quiks Supply supplies 5475-04
2621 8/22/97 88.98 U.S. Postage Service postage 5480-04

2649 8/?5/97 99.10 North Central Electric utilities 5750-04
2700 8/27/97 10.00 Cathy Bobb patient refund 4050-04
2711 8/29/97 100.02 U.S. Postage Service postage 5480-04

2749 9/1/97 64.97 Temporary Help, Inc. contract labor 5125-04
2775 9/5/97 82.67 Cleve Malone patient refund 4050-04

2798 9/12/97 98.99 Temporary Help, Inc. contract labor 5125-04
2804 9/30/97 42.60 Quiks Supply supplies 5475-04
2815 10/2/97 44.90 Temporary Help, Inc. contract labor 5125-04
2846 10/15/97 54.01 U.S. Postage Service postage 5480-04
2865 10/15/97 88.90 Lawn Valley lawn service 5500-04

2894 10/23/97 60.64 Kathleen Quiroga patient refund 4050-04
2899 10/24/97 202.80 Temporary Help, Inc. contract labor 5125-04
2931 10/25/97 44.98 Hayden McLaughlin patient refund 4050-04
2945 10/30/97 16.16 Quiks Supply supplies 5475-04
2965 10/30/97 59.39 Douglas Challen patient refund 4050-04

2988 10/30/97 68.88 Mary Churchill patient refund 4050-04

AICPA Case Development Program Case No.97-05: Dentistal; Inc. .16

EXHIBIT I

Dentistar, Inc.

WEST REGION CANCELLED CHECK SUPPORTING DOCUMENTATION

Supporting Documentation Present

Check Account Customer Refund Payment Check Vendor Social

Number Number ~ Reguest Adjustment Reguest Invoice Securit\: #

1026 4050-04 X X 287-43-4386

1039 5480-04 X

1045 5500-04 X X

1046 5750-04 X X

1051 5305-04 X X

1054 5000-04 X X

1066 5480-04 X

1070 5475-04 X

1077 5600-04 X X

1099 5480-04 X

1111 5025-04 X X

1125 5475-04 X

1135 5025-04 X

1142 5480-04 X

1188 5000-04 X X

1225 5480-04 X

1245 4050-04 X X 952-88-2860

1250 5025-04 X

1265 5480-04 X

1280 5740-04 X X

1325 5500-04 X

1367 5480-04 X

1445 5740-04 X X

1464 5430-04 X X

1475 5480-04 X

1499 5475-04 X

1526 5500-04 X

1529 5480-04 X

1574 5750-04 X X

1613 5475-04 X

1624 4050-04 X X 823-52-4305

1634 5480-04 X

1702 5740-04 X X

1710 5480-04 X

1731 5750-04 X X

1755 5000-04 X

1769 4050-04 X X 287-45-9876

1790 5000-04 X

Note: X identifies the examination by Sheila Tate of Dentistar documentation.

!

AICPA Case Development Prograrn Case No.97-05: Dentistal; Inc. .17

ExmBIT I

Dentistar, Inc.

WEST REGION CANCELLED CHECK SUPPORTING DOCUMENTATION (Page 2)

Supporting Documentation Present
Check Account Customer Refund Payment Check Vendor Social

Number Number ~ Reguest Adjustment Reguest Invoice Securitt #

1834 5480-04 X

1860 5740-04 X X

1876 4050-04 X X 538-32-0552

1888 5750-04 X X

1922 5750-04 X X

2099 5475-04 X

2125 5740-04 X X

2231 5480-04 X

2256 5225-04 X

2298 4050-04 X X 623-52-8288

2355 5480-04 X

2377 5475-04 X

2395 5500-04 X X

2413 5475-04 X

2469 5480-04 X

2546 5500-04 X

2598 5500-04 X X

2602 5475-04 X

2621 5480-04 X

2649 575Q-04 X X

2700 4050-04 X X 432-88-3042

2711 5480-04 X

2749 5125-04 X X

2775 4050-04 X X 443-52-3398

2798 5125-04 X X

2804 5475-04 X

2815 5125-04 X X

2846 5480-04 X

2865 5500-04 X X

2894 4050-04 X X 963-54-1836

2899 5125-04 X X

2931 4050-04 X X 003-65-8668

2945 5475-04 X

2965 4050-04 X X 416-63-5257

2988 4050-04 X X 383-83-2481

Note: X identifies the examination by Sheila Tate of Dentistar documentation.

AICPA Case Development Program Case No.97-05: Dentistar; Inc. .18

EXHIBITJ

Dentistar, Inc.
WEST REGION SUBSCRIBER TERMINATIONS (11!1/96 THROUGH 10/31/97)

Date of Subscriber Social Date of Subscriber Social
Termination ~ Securitt No. Termination ~ SecuritY No.

11/1/96 Kenneth Hoot 832-34-1305 5/2/97 Richard Dick 192-93-2824
11/2/96 Chris Mynatt 287-43-4386 5/3/97 Michael Coss 243-53-2824
11/8/96 George Stackhouse 123-53-7701 5/5/97 Henry Cunningham 243-53-7718
11/10/96 Roger Mulholland 429-69-2144 5/5/97 James Fryda 183-54-7151
11/15/96 Michael Tirnmins 002-22-5541 5/15/97 Paul Winans 513-54-1240
11/15/96 Sam Simone 126-87-8218 5/22/97 Walter Ziegler 823-52-4305
11/20/96 Duane VanDyke 354-77-7254 6/3/97 Larry Albrecht 183-53-4805
12/3/96 Donald Valentine 352-93-2735 6/7/97 Glen Rettig 163-52-0427
12/5/96 Steven Whitacre 353-54-7434 6/9/97 Gary Rosendale 593-53-7157

12/12/96 Jim Johnson 782-33-8987 6/22/97 Donald Cox 538-32-0552
12/13/96 Marian Twyman 353-47-0537 6/23/97 Valeria McGrain 083-52-0212
12/18/96 Melissa Ury 832-77-4751 6/25/97 Guy Minich 063-54-3282
12/23/96 Wendy Mountain 669-52-2449 7/1/97 Jack Steward 323-54-0806
12/28/96 Eldon Weis 833-52-8804 7/5/97 Bernard VanHoose 853-53-6233
1/6/97 Carl Diebley 235-28-7447 7/13/97 William Long fellow 623-52-8288
1/8/97 Carl Fox 669-54-2860 7/22/97 Rodney Kowalski 192-99-3344
1/9/97 Douglas Cook 257-20-8863 7/28/97 Maurice Hosmer 013-53-4151
1/15/97 Charles Zilch 952-88-2860 7/29/97 Jennings Merrill 813-54-3912
1/15/97 Gene Smith 572-57-2245 8/1/97 Scott Reed 492-93-3211
1/16/97 Lanny Fay 438-23-3047 8/3/97 Harvey Peters 416-69-2783
1/22/97 Lee Tom 528-88-2254 8/6/97 Kay Zwick 923-52-4339
1/23/97 Howard Ricker 856-69-2933 8/16/97 Phillip Saunders 833-52-5142
1/25/97 Robert Plott 603-52-1628 8/17/97 Mary Perry 213-52-3103
1/31/97 David Silverwood 303-52-4862 8/20/97 Jeff Richard 943-54-8038
2/2/97 Billy Bailey 823-64-2199 8/20/97 Patrick Gonyer 783-84-0236
2/2/97 Kent Stambaugh 823-88-8003 8/27/97 Cathy Bobb 432-88-3042
2/4/97 Kenneth Stage 325-58-1993 8/31/97 Tammy Lindquist 072-88-3340
2/8/97 John Stockman 832-35-3500 9/5/97 Cleve Malone 443-52-3398
2/8/97 Sherry Wolpert 293-22-2590 9/8/97 Richard Instone 762-57-2109
2/25/97 Jason Tomm 123-59-8218 9/12/97 Dale Jimison 182-57-3238
3/4/97 Jack French 354-23-7268 9/15/97 Emerson Quaintance 333-53-9152
3/6/97 Tyler McKenna 287-39-4989 9/16/97 CindyOrges 178-74-4791
3/8/97 Brad Dudley 184-82-0012 9/21/97 Elmer Ritts 182-25-7785
3/9/97 Michael McDowell 293-30-3643 9/22/97 Leslie Rosebrook 178-32-6604
3/13/97 Thomas McLaughlin 257-92-2758 9/30/97 Albert Schuck 218-32-2003
3/20/97 Carrie Melzer 352-21-4112 10/11/97 RoberYantz 156-69-3943
3/21/97 Jared Ireland 823-32-1401 10/13/97 Steve Tussing 543-54-0367
3/30/97 Lauren McDole 823-33-1023 10/22/97 Jerry Usher 798-88-3396
3/30/97 Howard Carpenter 352-65-6524 10/23/97 Kathleen Quiroga 963-54-1836
4/5/97 Rober Byler 452-22-8659 10/25/97 Edgar Noriega 763-52-1002
4/9/97 Ethos Carrillo 354-37-4231 10/25/97 Diana Gibson 713-54-3550
4/10/97 Bethany McCoy 293-23-2233 10/25/97 Joan Eickmeier 263-54-9707
4/15/97 Hans Sagmanty 288-28-3705 10/30/97 Brad Anderson 253-53-7166
4/18/97 Earl Haas 352-36-1207 10/30/97 Douglas Challen 416-63-5257
4/25/97 Nancy Turmpet 345-44-4400 10/30/97 Mary Churchill 383-83-2481

• 97-05a

Subscriber Termination Refunds
Expedited Operating Expenditures
INTERVIEWS WITH WEST REGION PERSONNEL
STUDENT REQUIREMENTS FOR TASK ONE
STUDENT REQUIREMENTS FOR TASK TWO