HOW TO AVOID EMBEZZLEMENT

 

 

 

Q:  One of my physician colleagues told me that his receptionist embezzled money from him.  What can I do to make sure this doesn’t happen to me?

 A:  It’s important for all practices to think about this question.  Appropriate use of internal controls in the practice can help safeguard against misappropriation of practice assets.  Following are a few suggestions which may help: 

  • Where appropriate, separate the duties of employees who handle and record cash.  For example, many practices will assign the duties of opening the mail, preparing the deposit, posting receipts to the practice management system to different employees.  This allows a system of “checks and balances” in the handling of money.
  • Make sure financial transactions are approved by appropriate level staff.  Write off of accounts receivables should either related to managed care contracts in place, or approved by appropriate levels of management.  For example, the practice may ask the physician to get involved in the decision of whether to send an account to a collection agency.  Likewise, checks should be signed by appropriate levels of physicians or management.
  • Implement internal checkpoints on the entry of charges and payments into the practice management systems.  Have employees occasionally check each other’s work.
  • Employ third parties to test the design of internal controls in the practice.  External CPAs receive specialized training in the developing and testing of such financial systems.  Consider sending the bank statement directly to an external accountant, and asking them to double check practice bank deposits against the practice management system totals.
  • Watch for warning signs such as employees not wanting to take vacations, or suddenly showing signs of living beyond their salary means.
  • Don’t sign blank checks, or allow the use of signature stamps to approve transactions.
  • Routinely check references on newly hired employees.
  • Purchase employee fidelity bonds from your liability insurance company.

 One can’t be too careful in safeguarding a practice’s assets.  Careful thought should go into planning a system that protects against embezzlement.  No practice is exempt from this danger!

 

 
 

 

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