They recommend well thought out internal control policies to help you safeguard practice assets, limit liability, and make your financial information system more reliable and accurate. A few of their pointers include:
- Watch for unusual entries. The essence of double-entry accounting is that every transaction is two-sided, one action provoking an equal and opposite reaction. When a patient or third party pays a bill, your cash increases while your accounts receivable decreases. But what if a payment's offsetting entry is an employee loan account, exchange account, or inter-company account? In such cases, a warning bell should go off, signaling that the accounts payable entry may have been diverted by a member of your staff.
- Validate purchases and expenses. Did you receive the product or service you were supposed to receive? Are the quantity, brand, and other specifications correct? A practice partner or office manager should always check, by comparing original vendor invoices, purchase orders, and receiving reports. Investigate any transaction in which the same person authorized the purchase, approved the vendor invoice, and made the payment.
- Be wary of "impatient" vendors. Legitimate vendors won't ask you to rush a payment, since they understand your need to maintain internal procedures and controls. A vendor who pressures you to circumvent those controls may be in collusion with an employee set on misappropriating practice funds. Also, in larger practices, be wary of vendors who insist on dealing with the same accounting or administrative staff member or whose bills are always paid by the same person.
- Scrutinize canceled checks. Legitimate vendors deposit checks into their business accounts, so make it a habit to review both sides of canceled checks. A check that appears to have been cashed rather than deposited should raise alarms. So, too, should checks that have been deposited into personal rather than business accounts and checks bearing unfamiliar endorsements.
- Keep an eye on refunds. By examining vendors' monthly statements, you can gauge whether legitimate refunds are going back to the practice or being diverted to an employee's personal account. Patterns of overpayments to vendors should also raise red flags, since they offer yet another vehicle for accounts payable fraud.
- Review all bank and credit card statements. You, a practice manager, or a trusted partner should open the sealed statements and scrutinize them before they go to bookkeeping to be reconciled. Before paying credit card bills, insist on seeing the original receipts.
- Monitor cash receipts and deposits. Someone who's not involved in making deposits or recording accounts receivable should open the mail, count the payments, and report payment totals to a partner or manager.
- Insist that employees take vacations. This is particularly true for anyone who works in accounting or another cash-handling function so you can double-check their work while they're out of the office. Employees who've been cross-trained can take over their functions, but you or a trusted colleague should take a look, too.
- Watch for suspicious behavior. Be alert to signs of substance abuse, gambling, personal debt, or any other crisis or major lifestyle change among your employees, as well as indications of unusually high job dissatisfaction. If you notice any of these signs, monitor the employee's performance closely.
To access the complete article as published, click here.
Related forms available in OMB: HR/Policies: Cash Control & Embezzlement Prevention Policies; Financial Policy; Summary Discharge: Falsification of Company Records; Summary Discharge: Time Card Fraud
.jpg)
.jpg)
.jpg)
