Tips to Avoid Fraud and Embezzlement
By Megan Urban, Practice Transition Consultant
We see embezzlement in the dental office all too often. The average embezzlement amount REPORTED is over $100,000 in a dental practice, and we know most is not reported or ever discovered. Please review the following tips to avoid embezzlement, as well as signs from employees to be aware of.
-Limit access to dental software to make adjustments, and format software to disallow deletions or changes after the close of each month. Assign passwords to each employee. Ensure the software company understands that you are the only person that can make changes to the software.
-Clearly set expectations and protocol for making adjustments.
-Train on reading insurance Explanation of Benefits and making accurate insurance adjustments. Verify random EOBs and accounts on occasion.
-Review daily reports for adjustments, provider production (ensure there are no “zero” charges), collections, over-the-counter collections, and audit/deletion. Ask questions and research as appropriate.
-Review and confirm the accuracy of daily reconciliation of deposit, petty cash, and cash drawer. Confirm monthly bank reconciliations.
-Input and use appropriate adjustment codes.
-Review accounts receivable aging reports each month and research any accounts as appropriate.
-Do not allow team members to purchase things for the office and be reimbursed.
-Match up all accounts payable checks with statements and confirm accuracy. Watch for vendors or names you don’t recognize or come up frequently.
-Confirm all bills and credit card statements are accurate.
-Never sign a blank check for a team member, patient, or vendor.
-Ensure checks are in numeric order and keep all voided checks.
-Look for trends, such as missing checks, incorrect deposits, missing charts, increased adjustments, and patient complaints.
-Review the details of each team member’s paycheck and year-to-date numbers.
-Perform background checks according to state law.
-Have your dental-focused CPA involved with your bookkeeping.
-Implement a comprehensive written Office Policy and Employee Manual.
Potential Employee Warning Signs
- Resistance to change or having your dental CPA or consultant view additional practice information
- Collections have slowed with no justified reason
- Daily deposit reconciliation is not being done timely or is inaccurate
- Adjustments increase with no justified reason
- Team member refuses to take a vacation, wants to take work home, has a financial crisis, and/or resents your income and lifestyle