You’ve built your practice on serving your patients and keeping them healthy. What happens if your own business is unhealthy? We don’t like to think fraud can happen to us or that our employees would consider stealing valuable assets. However, it happens more often than you might realize. One study states that fraud in the workplace is costing businesses $50 billion annually.
Prevention of fraud is one of many challenges dental practices face. How can you ensure your practice is operating efficiently and effectively?
Taking the necessary steps early on can help you prevent fraud from occurring and protect the well-being of your dental practice. Here are a few ways you can work to safeguard your practice:
Make a commitment at the top.
As the owner of your dental practice, a culture of fraud prevention begins with you. Policies must be in place and enforced as you work to prevent and eliminate fraudulent behavior in your organization. The following are a few ways you can do this:
Internal Audit v. Forensic Audit
An internal audit is an examination of company’s accounts and activities by your own accountants and managers. A forensic audit, on the other hand, is an examination to find illegal financial activity.
Ensure proper controls are in place.
A very common issue that sometimes leads to failure of achieving goals is the lack of internal controls. Lack of internal controls is the leading cause of fraud, according to a recent report by the Association of Certified Fraud Examiners.
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. You’re likely swamped with patient exams and procedures, which means your involvement might be limited to reviewing the practice’s monthly performance via practice management software and financials that are provided to you. If cash flows are good and production is high, extra scrutiny may not always be given.
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.
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.
There are several steps you can take to ensure your daily and monthly accounting practices are being monitored to prevent against fraud:
Know the red flags.
There are a few common red flags when it comes to potential employee theft or embezzlement within an organization or practice. These include:
What do you do if someone in your dental practice exhibits any of these warning signs? Review the employee’s job description and duties (which should be up to date). Discuss potential risks and opportunities that may be present related to employee theft or fraud. Finally, ensure proper internal controls are in place to help prevent these opportunities from occurring.
The moral of the story
These are just a few ways to prevent your dental practice from potential fraud. By creating an atmosphere of detection and setting the tone at the top, you can start to worry less about potential threats and more about your patients and growing your practice.
What do you do if fraud does occur?UNDERSTANDING THE IMPORTANCE OF FORENSIC ACCOUNTING