BUSINESS

Controls protect against employee theft

Practice Pointers. By Karen S. Schechter, AMNews contributor. Sept. 20, 2004.

Answers to questions about the business side of your practice

Question: Over the years I have heard horror stories about how medical practice staff members have slowly and methodically been able to embezzle funds without the physician owner's knowledge. When the physician does find out, it is often too late. What should my partners and I do to minimize this risk to our practice?

Answer: Medical practices are businesses. And all businesses, regardless of the size, should implement internal control procedures to protect against disasters and minimize the risk of internal theft and unfavorable external audits.

Internal controls are essentially checks and balances within a company. They are a system of procedures that segregate duties and limit any one person's control over an entire area, in particular the flow of cash.

One of the most important and often overlooked procedures is to screen employees carefully before they are hired. This can be accomplished via reference checks, credit checks and criminal record checks. This procedure might take time, but using this information to make a good hiring decision will cost the business less in the long run.

While there is no foolproof way to ensure that internal theft will not occur, you can create an environment where such behavior is discouraged.

The first step in implementing an internal control program in your office is to review every area where potential problems could arise. This not only includes the "traditional" financial areas of cash disbursements, cash receipts and bookkeeping but also inventory control, data processing, purchasing and receiving.

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