Insights: Article

Preventing Fraud in Dental Practices

Avoiding the Pain of a Financial “Cavity"

By Liz Johnson

April 17, 2018

Private practice dental offices often rely on an office manager to wear many hats within the practice, including collecting and depositing payments, processing payroll and paying bills. It’s understandable given the realities of the industry. The same goes for the typically minimal oversight given from the doctors. Swamped with patient exams and procedures, a doctor’s involvement might be limited to reviewing the practice’s monthly performance from their practice management software and from financials that are provided to them. As long as cash flows are good and production is high, extra scrutiny may not always be given.

Fraud Does Happen
But what if that trusted office manager had a vice, or some sort of crippling financial need? Sometimes, when the opportunity is right and financial pressure is applied, an office manager can rationalize fraud. Would it be noticed if the office manager was stealing $100,000 per year, but put a “veneer” over the financial situation, making the practice appear healthy? Implementing certain review procedures and controls can help prevent this from happening.

Make Prevention Part of Your Routine

Much like how a daily routine of brushing and flossing is critical to good tooth care, the same principles hold true for a practice’s money. If regular oversight and controls are not in place, the practice may end up with a large cavity in the bank account.

Consider the following five review procedures and controls to prevent fraud in dental practices:

  1. Require that monthly bank statements (including cleared check images) be sent directly to the doctors before being provided to the office manager. The doctors should review the statements and checks for transactions that do not appear related to the practice. The same should be done for credit cards statements if employees are issued cards
  2. Compare monthly collection reports from the practice management software to bank deposits to ensure that funds are being deposited.
  3. Have external payroll services send the payroll reports directly to the doctors for review before providing to the office manager. If payroll is processed internally via direct deposit, request and review ACH reports from the bank.
  4. Utilize a safe to store cash on hand, deposits not yet made, signature stamps, etc. Only allow those authorized to have access to the safe. Also, do not allow employees to use a doctor’s signature stamp, because ultimately it is their signature, not an employee’s.
  5. Consider adding employee dishonesty insurance to the practice’s coverage.

Latest Insights

November 16, 2018
Video
If your business sells or operates in more than one state, it’s important to understand the concept of nexus. Depending on how you’re earning revenue, having nexus could impose a variety of taxes, which vary state to state. Learn more in our…
November 15, 2018
Article
Until recently, many businesses weren’t overly concerned about sales tax. They knew they needed to collect and remit in the state in which they resided, but beyond that, their compliance burden was limited.
November 12, 2018
Article
This insight explores what dealerships can expect from the proposed section 199A regulations under tax reform.
November 8, 2018
Article
Are you a business taxpayer with annual gross receipts of $25 Million or less? If so, you may be eligible to take advantage of new Small Taxpayer Safe Harbors that could generate significant tax savings and simplify your tax returns in future years!
November 8, 2018
Article
Considered the most significant tax code overhaul in over three decades, the Tax Cuts and Jobs Act passed in 2017 includes provisions affecting both individuals and businesses.
November 7, 2018
Recorded Webinar
State and local sales tax compliance is always evolving, making it important to stay up-to-date on changes affecting your tax liability and responsibilities. This session will cover what you need to know regarding the recently enacted state and…
November 7, 2018
Article
“Why is my portfolio underperforming the market?” This question may be on your mind.
November 5, 2018
Article
Identify your implementation methodology. There are four practical expedients available. We'll explore each option.
November 5, 2018
Article
Deeper dive into ASU 2016 liquidity.