Thursday Troubleshooter: How can this dentist avoid becoming a victim of embezzlement?

QUESTION: I’m a dentist and I’ve recently read a lot about colleagues who have experienced embezzlement in their offices, and it’s making me feel worried and suspicious of my own staff, though I’ve always thought they were very loyal to me. What steps can I take to prevent embezzlement from happening in my office?

ANSWER FROM WENDY BRIGGS,The Team Training Institute and Hygiene Diamonds:
Unfortunately we see this often, and many times the doctor and team members are stunned at the person who is caught in this kind of behavior. We have seen everything from major sums of money stolen, providers entering procedures that were never done, to staff helping themselves to gift cards that were purchased as patient thank yous.

One thing we always recommend is that you establish a system of checks and balances so no team members are ever presented with the temptation to do anything dishonest. Never allow just one person to have all the access or all the control of your finances. There should always be two people involved in the accounting process – one who enters everything, and one who double checks it. This can be two team members, or even a team member and the doctor. Protocol should always be established so there is never an opportunity for anyone to game the system.

ANSWER FROM BRIDGET FAY,Odyssey Management, Inc.:
It’s good that you are recognizing this sooner rather than later, and there are steps you can take to prevent becoming a victim. Though you cannot predict why someone would steal from you, certain factors make you a target and make people more likely to think they can get away with stealing from you.

First, make sure you have detailed Standard Operating Procedures (SOPs) in your office, and see that all staff members sign off on them. SOPs spell out each and every task in your office, and having them readily available gives the impression that your office has a protocol that is strictly followed. SOPs will state who posts the checks, who does audits, and who reconciles the end-of-day reports. (Hint, the same person should never perform all these tasks.)

Second, know what reports need to be run on a daily basis and how to reconcile the checks, cash, and direct deposits. Even if you’re not the one who is running the report, it is essential you’re familiar with them. You should also know how to run a report that shows deleted transactions and all adjustments. While we’re on the subject of adjustments, every type should be labeled appropriately. There should never be a “miscellaneous adjustment type.” Run these reports every week and take time to go through them with the office manager and admin staff.

Third, take a look at your office culture. What kinds of things do you do for your staff? Is there a lot of complaining and discord among staff members? Stealing does not necessarily mean people think they are not getting paid enough. Consider a bonus system, which can do more than just boost production. If done correctly, bonuses can also improve morale, which decreases your risk even more. Background and credit checks of staff members are also good preventive measures. If an employee looks desperate for money on paper, the person will be more likely to try and find illegal ways of getting it.

Speaking from experience, even the nicest people can be the ones stealing from you. Don’t be afraid to “micromanage” your reports and collections procedures, and even though you don't want to micromanage every part of your office, keeping an eye on the numbers is crucial.

ANSWER FROM LYNNE LEGGETT, FAADOM,Victory Dental Management:
Everyone wants to trust his or her team. However, as a business owner, you need to have the proper processes in place to prevent embezzlement. Creating a culture of honesty is the responsibility of every practitioner. There are the daily activities that you need to do, such as verifying the end-of-day reports, signing off on them, endorsing all checks yourself, and making sure checks are stamped “for deposit only” as soon as they are received.

There are other responsibilities you will need to assign to different people. This includes assigning one team member to enter payments and a different team member to make the deposit. Splitting these duties between different members will decrease the likelihood of embezzlement and ensure you will not become a victim. When I’m working with my clients, I always look at the audit trail to investigate all transaction entries that have been deleted or changed.

Not only do your systems need to be in place, but I believe you need to take the time to hire the right people to join your practice. Sometimes we can get caught up in finding a person that can just “do” the job instead of finding the person that will be the right fit in the practice. Being selective in the hiring process and doing due diligence with background checks can help prevent issues. I wish you all the best as you review your systems with a different perspective.

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