Gotcha! Avoiding Fraud and Embezzlement
August 31, 2010 | 
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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
More Health Care Reporting Requirements…
August 31, 2010 | Subscribe to our RSS Feed
Employers- the new health care reform package requires you to report the value of the health insurance coverage you provide employees on each employee’s annual Form W-2 after 2010.
The Patient Protection and Affordable Care Act ( PPACA) imposes a number of new reporting requirements, although the IRS emphasized that the reporting is only for informational purposes only and does not affect an employee’s tax liability.
Applicable employer-sponsored coverage is coverage under any group health plan made available to the employee by the employer which is excluded from the employee’s gross income under Code Sec. 106 or would be excluded if it was considered employer-provided coverage under Code Sec. 106. Applicable employer-sponsored coverage also includes coverage under a federal, state or local government group health plan.
Some items are excluded, such as coverage for long-term care, accident or disability income.
Employers must report the aggregate or total cost of employer-sponsored health insurance coverage. Employers need not provide a specific breakdown of the various types of medical coverage, the IRS explained.
Here is a complete list of the Reporting Requirements for the Form W-2.
Questions?
5 Tax Tips for the Recently Married
August 24, 2010 | Subscribe to our RSS Feed
If you recently got married or are planning a wedding, there are some important steps you need to take to avoid stress at tax time. Here are five tips from the IRS for newlyweds to keep in mind.
1. Notify the Social Security Administration Report any name change to the Social Security Administration, so your name and Social Security Number will match when you file your next tax return. Informing the SSA of a name change is quite simple. File a Form SS-5, Application for a Social Security Card, at your local SSA office. The form is available on SSA’s website at www.socialsecurity.gov, by calling 800-772-1213 or at local offices.
2. Notify the IRS If you have a new address you should notify the IRS by sending Form 8822, Change of Address. You may download Form 8822 from IRS.gov or order it by calling 800–TAX–FORM (800–829–3676).
3. Notify the U.S.Postal Service You should also notify the U.S. Postal Service when you move so it can forward any IRS correspondence.
4. Notify Your Employer Report any name and address changes to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year.
5. Check Your Withholding If both you and your spouse work, your combined income may place you in a higher tax bracket. You can use the IRS Withholding Calculator available on IRS.gov to assist you in determining the correct amount of withholding needed for your new filing status. The IRS Withholding Calculator will even provide you with a new Form W-4, Employee’s Withholding Allowance Certificate, you can print out and give to your employer so they can withhold the correct amount from your pay.
Questions?
Don’t Look Now, But It Is Coming
August 17, 2010 | Subscribe to our RSS Feed
You’re feeling pretty good. Your dental practice has managed to hold its own in 2010. While your collections have stayed on par with 2009 or maybe even declined some you are still showing a healthy profit. You are not thrilled that you still may have a sizable tax liability, but enjoy it while it lasts because tax rates are likely to climb in 2011 and beyond.
Unless Congress acts, the 2001 and 2003 tax relief will expire at the end of this year. The Obama administration has indicated its support to extend the tax relief for low- and middle-income taxpayers, but not for those with incomes above $250,000 for joint filers, and $200,000 for individuals. This means now is the time for high-income dentists to plan for higher rates in 2011.
Absent congressional action, here is what will happen:
• The two highest marginal rates will rise to 36 percent and 39.6 percent from 33 percent and 35 percent, respectively.
• The tax rate on qualified dividends will rise from 15 percent to a maximum rate of 39.6 percent.
• The maximum rate on long-term capital gains will rise from 15 percent to 20 percent.
• The estate tax will be restored, with a $1 million exemption and a 55 percent top rate.
• Limitations on itemized deductions and personal exemptions will be reinstated for high-income individuals.
Some planning needs to be done in 2010 regarding capital gains or losses due to the higher capital gains tax rate predicted to take effect in 2011. Maybe you can accelerate capital gains to 2010 to be taxed at the 15 percent rate this year instead of at a potential 20 percent rate next year.
Deferring itemized deductions, such as charitable contributions, to 2011 could similarly offset a portion of the higher tax expected next year. But taxpayers thinking about deferring itemized deductions should also consider the 3 percent phase-out on itemized deductions scheduled to be reinstated starting in 2011, and the potential applicability of the AMT, which may limit, or even eliminate, the tax benefit from claiming certain types of itemized deductions.
There is not a “one size fits all dentists” solution to these potential tax increases. As always, we are not making tax recommendations, you need to discuss your personal situation with your tax adviser this fall when you go over your 2010 tax planning.
Questions for Larry?
larry.goldberg@glassjacobson.com
Medicare/Medicaid Proposes New (More Complex) RUGs Classification System
August 16, 2010 | Subscribe to our RSS Feed
Effective October 1, 2010 Medicare will implement the Resource Utilization Groups (RUGS) IV classification system. The classification system will expand from 53 RUGs codes to 66 RUGs codes. Centers for Medicare and Medicaid Services (CMS) has updated their system to reimburse providers based on RUGs IV. The new classification system will redistribute funds throughout all 66 RUGs codes.
However, this is where the simplicity ends and the confusion begins. It appears that the new classification system may be temporary. CMS has developed a RUGs III Modified Hybrid that may replace RUGs IV. According to CMS the RUGs IV classification system was to be delayed for one year. If CMS decides to rescind the RUGs IV classification system after October 1, 2010, facilities will have to retroactively adjust all paid claims to accommodate the RUGs III Modified Hybrid system.
Glass Jacobson recommends that facilities maintain a tracking log of proposed payments under the RUGs III Hybrid versus the actual payments under RUGs IV. The tracking log will determine the financial impact for facilities if the modified RUGs III classification system is retroactively approved.
Our Reimbursement and Business Office specialists can help ensure your tracking system is accurate. You will want a clear picture of the potential financial impact.
Questions?
carolyn.cunningham@glassjacobson.com