ISSUES & INSIGHTS's's

At a time when reimbursement rates are being squeezed, what you don’t need is someone surreptitiously remov-ing money from your practice. Yet, that’s exactly what some staff members are doing to the practices that employ them.

Because medical practices are often an easy target, the amount of money that employees steal can quickly cripple the operation. For all industries nation-wide, that amount runs into the billions of dollars, according to the Association of Certified Fraud Examiners’ 2010 Report to the Nations on Occupational Fraud and Abuse. Fortunately, there are ways that you can protect your practice… you just have to get in-volved!

The RisksAccording to the MGMA, the most common forms of employee fraud were theft of receipts or cash on hand, altering or forging a check, submitting fictitious invoices, paying personal ex-penses with practice funds, and payroll or expense reimbursement fraud. These thefts went undetected for a median of eight months — thirty-six months when the stolen amount exceeded $100,000.

And, in most cases, employees who stole money worked alone. More than half had been with the practice for three or more years.

Combating FraudThe best way to deal with employee theft is to keep it from happening in

the first place by implementing sound internal controls and getting involved in the day to day operations.

Examine the control environment in your practice to identify areas with increased risk for fraud. Perform inter-views with various members of your staff and observe them performing their tasks so that you understand what their daily responsibilities include. Sometimes the written processes are not always being followed or em-ployees have altered them to adapt to changes in the system. Perform this assessment when there are personnel changes or whenever there’s a major system change (such as a new EHR).

Staff duties should be separated as much as possible. Different mem-bers of staff should be responsible for different duties in the control environment. For example, the indi-vidual responsible for preparing checks should not have check signing author-ity. Duties should be separated to avoid having a single employee responsible

for performance and approval of a task. It may be difficult to spread duties among several employees in a smaller practice, however, it’s important to implement internal controls that let employees know that their tasks are be-ing monitored. This is where you can get involved! Review bank statements, physical invoices or monthly reports regularly. Ask questions about unusual items and investigate answers.

Employees are less likely to perpetrate fraud if they know that their work is being monitored. Change it up each month. Ask for a different report, or review a different bank account. Incorporating the element of surprise into your regular review and approval process will help to further mitigate the risk of fraud in your practice. What surprise procedure will you implement this month?

If you need additional information regarding this article, contact Jacque-line Korajkic at 925.790.2789 or email Jacqueline.Korajkic@amllp.com.

© 2012 Armanino McKenna LLP. All Rights Reserved.

Employee Theft: Don’t Take Chances with your Practice