Gotcha! Avoiding Fraud and Embezzlement

August 31, 2010 | Subscribe to our RSS Feed

As the owner(s) of a dental practice you are forced to wear many hats:  producer, financial officer, human resources administrator, and many others.  To further complicate matters your dental practice probably employs less than ten people.  This is just the type of situation that lends itself to embezzlement.  With so few employees you need to implement strong controls to minimize the chances of your dental practice becoming the victim of theft.

In your quest to provide the highest quality service and maximize your profit you may not want to be bothered by all of the other “stuff” that takes place away from the dental chair.  I hate to be the bearer of bad news but you need to stick your nose into the various financial aspects of your practice.

Here are some of the controls you can put into action.  This is by no means an all encompassing list.

• Have the mail placed unopened on your desk when it is delivered.  This will allow you to scan through the insurance and patient payments as well as vendor payables.  You don’t need to examine every check you receive.
• Try to have a different employee record patient payments from the person who initially recorded the patient fees.
• Make it your business to take the deposit slip to the bank or better yet get a check scanning machine and eliminate the bank trip altogether.
• Make it a point to check the day sheet at the end of the day.  Look for adjustments and question any that you need any adjustments you need an explanation of.  Make sure the deposit agrees, to the penny, to the cash and check collections for the day.  Check the credit card batch slip to make sure it agrees with your day sheet.  Confirm that any credit card refunds are reflected on the day sheet.
• Handle accounts payable yourself and don’t delegate this to an employee.  With an open checkbook at their disposal that “trusted” employee may not be so trustworthy.
• Check the petty cash balance at the end of each day to make sure it balances with any activity.

Embezzlement doesn’t involve just money.  I recently heard of an instance where an employee was the recipient of many nice “free” prizes just for ordering dental supplies.  The employee in charge of ordering dental supplies for the office used a mail order dental supply company.  Special gifts such as laptop computers, Keurig coffee makers, Bose speakers and gift cards could be received by ordering at retail prices in lieu of discounted prices.  Whenever the supply order arrived the employee would insist that they be allowed to check in the order.  Then the employee would shred the invoice.  It was only by accident (as is usually the case) that this scheme was uncovered.

By having someone other than the person who placed the dental supply order check in the order the dentist may have prevented this theft from taking place.  Also, the dentist should make sure she/he gets a copy of all supply invoices, no exceptions.

The biggest deterrent to embezzlement is good controls and a dentist who sticks his or her nose into the various financial aspects of their business.  By making the staff aware that you check the numbers on a daily basis can go a long way to making sure you are not a victim.

Questions for the Accountodontist?

larry.goldberg@glassjacobson.com