By David Harris, Forensic CPA, CFE, CFF, FIADFE
CEO, Prosperident

If you read our articles or receive our monthly newsletter, you probably are familiar with our telling people that “prevention” of embezzlement is impossible, but detection of embezzlement is fairly easy, if you go about it the right way.  Here are ten steps that take very little time but can make your practice much safer from embezzlement:

Daily:

1. Print reports yourself — this prevents the possibility of a staff member using “selective reporting” in the information that they give you.

2. Review and initial day sheets. Retain for three years or more. You may need these someday if embezzlement is suspected.

Monthly:

3. Review entry log (alarm system).  Staff members coming to the office at unusual times is often a symptom of embezzlement.   Taking five minutes to review this information from your alarm company is one of the best time investments you can make in detecting embezzlement.

4. Review AR listing and compare with previous month.  Make sure that balances are “aging” properly in the reports, and ensure that suitable collection action is being taken on older accounts.

5. Review the Modified transactions report (the name varies with the type of practice management software you are using).  This is a much smaller report than the “audit log” (which can run to thousands of pages per month) and is often a place where certain types of embezzlement transactions can be seen.

6.Have bank and credit card statements sent to your house instead of your office.  This prevents employee tampering.

7. Use Prosperident’s Monthly Monitoring Spreadsheet (ask for it at  requests@prosperident.com) to reconcile daily reporting with monthly reporting and deposits.

As needed:

8.Embezzlement Risk Self Assessment Questionnaire

9. Mandatory vacations and cross-training for all staff.  And don’t let them take a vacation one day at a time — everyone from your office should be gone for at least two consecutive weeks per year, and this needs to be done when the office is open.  The idea is to force another staff member to do the work that would normally be done by the person on vacation.  This will not happen if vacation is taken a day or two at a time.

10. Skepticism when hiring (Prosperident’s Hall of Shame  is a great resource).  Did you know that 65 million Americans (i.e., one in four adults) have criminal records?  And that published studies suggest that at least 60% of resumes have at least some level of false or misleading information.  Often dentists “hire in a hurry” and end up skipping a proper background check on an applicant.  From basic items like checking photo id for job applicants to having short-list applicants take a drug test, dentists are very reluctant to apply proper screening before hiring.