Fraud Prevention: Start With Good “People Practices” to Head Off Employee Theft

share this article
Employee on PhoneAs professional advisors, one of our greatest concerns is employee theft in the practice. Medical and dental practices may be more vulnerable to theft because, understandably, the owners are so focused on treating patients rather than managing the business. That’s why they often delegate management responsibilities to practice managers, making the practice manager responsible for implementing proper safeguards and internal controls.

Practice Some Preventative Medicine

Hiring smart and can go a long way toward preventing employee theft in the practice. Utilize scenario questions during the interview process to assess how a job candidate would handle certain situations. Be wary of candidates who seem to want to do everything and handle everything themselves. Follow up your candidate selection process with a thorough background check, including a credit check to determine if the candidate is experiencing undue financial pressure.
Be alert to red flags from the get-go. Here are a few that owners or practice managers should be aware of:
  • Unusual employee behavior.
  • Irregularities and inconsistencies in monthly reports.
  • Employees experiencing personal financial pressures, such as calls from creditors at work, garnishments, missed child-support payments, or alimony. 
  • Employees who appear to be living a lifestyle beyond their means.
  • Negative events in an employee’s life, such as divorce, substance abuse, or significant investment losses.
As you implement good “people practices” in the workplace, also consider taking the following precautions:
  • Segregate duties in the billing, collection, and bill payment functions.
  • Cross train employees and require vacations of at least one week of consecutive days each year.  
  • Make sure employees are fully aware of internal controls, their purpose and their value. Philosophically, the message to send is, “we trust you, but we will verify.”
  • Consider an employee fidelity bond, which protects you if an employee embezzles from you or steals something from your office. Ask whether you can purchase a "blanket bond," which covers everyone in the office and will preclude you from having to update the names on the policy every time someone new comes on board.
Hiring competent, ethical employees is a good start in preventing workplace theft. But you also need to create policies and procedures that promote transparency and accountability — from top to bottom. If you would like to discuss fraud prevention in your practice, the team at Stockman Kast Ryan + Co is ready to help. Contact our office for guidance on protecting your practice from fraud.
SKR+CO Expert
Blog Administrator