Don’t Overlook an Opportunity for Loss

By Kent W. Davis

Every practice has its opportunity for loss. Keeping track of your money is a big job, and who is going to make sure it’s handled honestly? You can hope for employees with the highest integrity and for those who would do anything to make sure your office is as successful financially as it can be.

Still, theft happens. Sometimes, you just hire a bad egg; however, we all know of people that were above reproach in all of their dealings until something happened and they somehow lost grasp of integrity. We won’t take time now to discuss the reasons why good people sometimes turn to theft. But, we will discuss the opportunity that allows good and bad people to take what isn’t theirs.

The most probable opportunity for loss in well-run businesses or practices is where the money goes out. This doesn’t mean you can ignore receipts. Matching receipts to invoices or patient accounts and oversight of all revenue sources is a must. Now, let’s go back to your spending of money.

A flow chart of responsibility can be a good guide for analyzing expenditures. You need to take a good look at how you authorize the ordering of and paying for anything you acquire in the business. The following example will help in understanding what an opportunity for loss looks like.

An employee responsible for ordering supplies and verifying receipt of those supplies may also be the person who approves the payment for those same supplies. A person in this position now has something to think about, “What if I create a fictitious vendor and order supplies from that vendor? I will be the one to say we received the supplies and then authorize payment for them. All I need is a business name and bank account for that fictitious business and the money is mine!”

If a person in this position happens to be friendly with one of your vendors, he or she may also come up with an overcharging scheme. If the two agree to overcharge and then split the new-found funds, who is to be the wiser? The person controls the whole transaction from beginning to end. It’s good for employees to know that their work is subject to oversight.

In these two situations, the amount of money embezzled with little notice depends on the size or gross receipts of your practice.

Hopefully, this gives you an idea where to start looking for those opportunities for loss. It’s always better to avoid giving employees something like this to consider. If opportunity arises, the test of integrity and whatever pressures entice someone to steal have to be dealt with.


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