Deleted Transactions — Hidden Gems

Prosperident’s Wendy Askins, CFE, MBA

Deleted transactions are overlooked and ignored to our detriment. One must purposely seek to find these hidden gems to be worthy of uncovering the dark stories they tell. You will not find them visible on the patients’ ledger in most practice management software; they are only discovered by generating a separate audit log report, adjustment report, or deleted transactions report.

As a Certified Fraud Examiner, I attest to the immense value of scrutinizing deleted transactions and begin every investigation with a specialized in-depth process of review. The majority of confirmed embezzlement cases hide theft patterns in transactions that are intentionally deleted.

Confirmed embezzlement cases have suspicious deleted transactions, but, not every deleted transaction is suspicious. For example, if a retainer charge and cash payment are recorded, then both transactions are deleted without the application of a correcting transaction, the sequence likely occurred due to theft. On the other hand, if a retainer charge transaction is recorded, then deleted and reposted for the corrected amount with a cash payment amount matching the sequence likely occurred due to human error in the original retainer charge amount.

Deleted transactions conducted in an attempt to correct an error can also tell a story of an employee that needs additional training, financial policies that need revision, areas in need of improved communication, or software in need of greater customization. For example, if Olivia Office Manager continually posts insurance digital credit cards as EFT payments, then deletes the EFT payment and reposts as a credit card payment…it’s a sign that Olivia Office Manager needs more training in the differences between the two payment methods and how the error could impact the reconciliation process.

The Prosperident recommendation is to print the deleted transactions report personally (sometimes called voided, reversed, or error transactions) and review the transactions monthly. There will be a large volume of transactions contained in the report; I recommend focusing on the deleted cash payments. Identify a specific deleted cash payment then review the patient’s ledger to determine if the payment was reposted with corrections:

Fraud detection is a highly specialized skill, and there are some theft modalities which leave no trace evidence in the practice management system, such as skimming. Following the above guidelines could give the business owner advantage to uncovering embezzlement.

If you suspect embezzlement is occurring in your practice, please seek advice from individuals who specialize in financial crimes committed against orthodontic specialists. Prosperident is here to help!