Steps To Safeguard Against Embezzlement

The following procedures are recommended by an accountant and should be part of your normal routine as safeguards against embezzlement.
By: Larry Silver

The following procedures are recommended by an accountant and should be part of your normal routine as safeguards against embezzlement:

Cash Handling:

1. Have firm policy that every patient/client gets a receipt whether they pay or not. This provides specific records for every action with a patient/client. Nothing is left to “memory."

2. Cash handling and cash record-keeping duties need to be segregated. Have one person collect patient/client portions over the counter and another person post balances. Have a third person do bank deposits. As an owner, play an active role in monitoring sales and cash if you have too few employees to fully separate the duties for handling cash and collections.

3. Each month compare with the previous months the dollar value of your cash collections. There will be some fluctuation, of course, but if it goes unusually low one period, it is suspicious and should be looked into.

4. Start a patient/client sign-in sheet where patients/clients simply sign-in. Compare this on a daily basis to an over-the-counter-collections report (and day-sheet or equivalent), looking for inconsistencies such as patients/clients who are on the sign-in sheet but not listed on the day-sheet report. Spot check by phone call to patients/clients who are reported to not have paid a portion due that day. This can be done as a “quality control” call to the patient/client. Of the questions asked one might be something like, “It’s our policy that all patients/clients who pay any cash on the day of service receive a receipt. Did you receive a receipt today for any cash paid?” Implement this policy in writing and DO IT. This will make it far more dangerous to attempt embezzlement.

5. Have a written policy to conduct unannounced checks of petty cash and other cash accounts on a regular (bi-weekly or monthly) basis. Conduct these checks without fail.

Accounts Receivables and Statements:

6. Review your accounts receivable aging report monthly. Look for changes from the last month’s report that don’t make sense. Scrutinize any balance over sixty days old. Such balances minimally mean a dropped ball on collections and could be a potential sign of hanky-panky.

7. Have a written policy that no balance write-offs or account adjustments are permitted without written Doctor/Owner approval. If possible, consider a ‘lock-out’ (in your computer software) to allow ONLY the owner the ability to write-off balances.

8. Spot check day-sheets against patient/client charts, ledger cards (or patient/client account records) and the schedule book at least once a quarter, looking for any discrepancies. That you do this – sporadically – should be overtly promoted to the staff.

9. Routinely check with visiting patients/clients who have balances over thirty days old – and with past-due patients/clients you are calling – to ensure they’ve received a statement from you. The idea here is to look for incidents of the collections person throwing statements out versus mailing them in order to cover a payment embezzlement.

10. Become suspicious if you find you are, all of a sudden, paying a lot of refund checks to patients/clients.

Accounts Payables and Purchasing:

11. Ensure all expenditures are authorized, via written request, and documented.

Safeguarding Records and Miscellaneous:

12. If you still use paper day-sheets, remove them from the office each quarter and store them at home or in a safe deposit box.

13. Have good password protection on your computer system, allowing only specific people into the financial areas of your software.

14. Always change the locks immediately when a key-holding employee leaves employment.

15. Keep in mind that if you have a dishonest employee, and they are in a position to rip you off, they will. You may not know you have a dishonest employee, but if you have preventative safeguards in, you’ll cut down your odds tremendously on being embezzled.

16. Trust your perceptions! If your “antenna” goes up on some circumstance that seems odd, check into it, don’t ignore it or explain it away. Look into it fully until you are satisfied one way or the other. If your staff know that you always look into any odd occurrence, along with having the above actions operational, that dishonest employee will be much more reluctant to try any hanky-panky.

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Silkin Management Group is in the business of bringing the level of a doctor's management skills up to the level of his or her technical skills.
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