More on Preventing Embezzlement

As I discussed in my last blog, an article I recently read in the Wall Street Journal - "Small Businesses Face More Fraud in Downturn" went over how small businesses are experiencing more embezzlement than they have in the past due to the down economy. Apparently some people who are having financial problems are resorting to embezzling their employers through various nefarious means. In the last blog I went over some of the tips we have given to our clients over the years to help prevent embezzlement. I covered the area of handling cash payments - a primary area that money gets stolen in a health care office. In this blog I'll offer up some more management actions you can take to safeguard your office from this type of theft. We've seen many of our new clients have this problem but when we teach them the management techniques outlined this blog and our previous blog, this problem disappears.

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

Accounts Receivables and Statements:
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 as its existence normally does not make sense and minimally means a dropped ball by someone if not hanky-panky on collections.

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

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

Accounts Payables and Purchasing:
Ensure all expenditures are authorized (via written request) and documented.

Safeguarding Records and Miscellaneous:
If using paper day-sheets, then remove these day-sheets from the office each quarter, and store them at home or in a safe deposit box.
Always change the locks immediately when a key-holding employee leaves employment.
The last thing to remember is to assume that if someone can rip you off, they will - and take steps to prevent it; and if your antenna goes up on some circumstance, you carefully check into it.

If you implement the above steps and the steps given in our last blog, you will reduce your chances of embezzlement to nearly zero.

Again, as mentioned many times in my blogs, one does not have to be the adverse effect of the economy if one is trained in basic management skill. The area of embezzlement is a good example of that. Someone who does not know the basic techniques of preventing this type of crime could just "chalk it up" to the economy, the recession, etc. Although it may be true that tough economic times may cause more people to attempt embezzlement, it is also true that if one has some basic management systems in place, you don't have to end up being a victim of such an attempted crime.

If you have any ideas you would like to share regarding this, we'd love to hear from you. Our discussion forum can be found at the Silkin Facebook Page.


Larry Silver
President, Silkin

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