What steps can you take to protect your practice from dishonest employees or fraudulent activities?

We are frequently asked about reducing the risks for theft or fraud.  In recent months, several local medical groups have reported employee theft or discovered employee dishonesty in their workplace.  Others have experienced unauthorized activities from non-employees resulting in losses.  In some instances, PMC’s services have led to the discovery of employee or outsider wrong-doing.

We are taking this opportunity to share our recommendations for all employers regarding reduced potential for losses due employee or outsider dishonesty.  Please contact us if you have any questions about how these recommendations can be implemented in your practice.

Accounts Payable

1. Only sign checks with ORIGINAL invoices attached.  Never accept a copy.  Confirm that the payment submission coupon, if any, is intact.
2. Initial the original invoice as you sign the check, particularly for vendors without payment submission coupons, or those not requiring that the invoice accompany the payment. 
3. Request packing slips for the invoices you are paying.
4. For high volume, multiple monthly purchase expenses, maintain a log of orders, deliveries, and then compare AP checks written against log. 
5. Do all vendor checks have addresses?  Do addresses match the invoice “pay to” address?
6. Perform periodic reviews for high volume vendors.  Request a monthly or quarterly statement and compare to your check register.
7. Lock up all blank check stock.  If accounts payable checks are out of sequence, demand an explanation.
8. Sign all checks, (contracts, agreements, letters, etc.) in colored ink.  Never use black ink, so that you can differentiate originals from copies.
9. Do not use credit cards for routine, recurring purchases.  Do not provide employees with your credit card number.
10. Designate one owner/officer for accounts payable and assign responsibility for signing checks.   Others may sign checks only during extended absences of the designated person. 

Protect Your Organization

1. Confirm that your company general liability insurance includes employee dishonesty coverage
2. Obtain a Fidelity Bond for the organization.
3. Perform a background check, including criminal and credit review, on all new hires.
4. Perform periodic and unannounced audits of petty cash. 
5. Routinely check your bank account online to confirm deposits from the office are on-time and the correct amounts. 
6. Verify that daily bank deposits match daily posted payments in your management system.  Reconcile monthly as well.
7. Post a sign informing your patients that they will ALWAYS receive a receipt for a co-payment or cash purchase.
8. Require multiple-employee participation in banking and deposits.  Include a physician if possible.  The same individual should never open mail, collect funds, prepare the deposit, and go to the bank unattended.  Monitor the receipt coupon book, daily batch totals, the bank deposit slips, and the bank deposit receipts.  Never use the night-deposit. 
9. Have your bank statement sent to your accountant; an independent bank account reconciliation should be performed BEFORE staff members have access to the bank statements.

Be Observant

1. Are expense checks routinely presented to different physicians for signature?  
2. Watch for last minute submissions, hurried reports, and missed deadlines.  One of the best ways to hide dishonesty or incompetence is untimely activity.
3. Do you know what is happening with your company merchant services (credit card) activity?  Are there refunds?
4. Are you monitoring your bank account activity online, watching for fraud? 
5. Is there adequate documentation accompanying each and every patient refund check?  Particularly checks issued to individual patients?
6. Monitor your financial performance, particularly the comparative statements.  Increases in expenses are often the first clue that something is wrong.
7. Ask a patient about their experience at check in.  Pay particular attention to their description of the co-pay procedure.  Then check to verify the co-pay is noted on the account, recorded on the daily batch, and deposited in the bank.  
8. Is the employee you see at the time clock holding his/her time card?  Holding more than one time card? 

We hope that you find these suggestions helpful.  We encourage you to take any and all possible steps to reduce the potential for employee, or outsider, dishonest activities at your expense.  We’d like to hear from you if you have any questions, or suggested methods for protecting your organization.

Thank you for your consideration.

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