Houston Medical Journal June 2017 - Page 11

. . . . . . . . . . . . . . . . . . . . . . . . . . . . Medical . . . Journal . . . - . Houston . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . June 2017 FINANCIAL PERSPECTIVES continued from page 3 . . . . . . . . . . . . . . . • • • • • • • • • defensiveness (130; 13.6%) Addiction problems (128; 13.3%) Past legal problems (83 cases; 8.7%) Past employment-related problems (76; 7.9%) Complaining about inadequate pay (70; 7.3%) Refusal to take vacations (65; 6.8%) Excessive pressure from within the organization (62; 6.5%) Instability in life circumstances (47; 4.9%) Excessive family/peer pressure for success (40; 4.2%) Complaining about lack of authority (35; 3.6%) Now in terms of trends at your practice that might indicate fraud, here are a few issues that should raise some red flags and call for immediate attention: • Diminishing cash flow when receipts are strong • Actual bank deposits in a month that don’t agree with payments posted to the PM system • Increasing accounts payable and A/R balances • Transactions lacking documentation or approval • Patient and payer complaints about recording of payments • Significant number of year-end adjustment journal entries • Poor accounting records You may also have a “fraud-prone” practice if you have one or more of the following characteristics: • Week or loosely enforced internal controls • Profit is the only practice objective and the lone criteria for performance appraisal • Employees are placed under great stress to accomplish unrealistic objectives • Complaints from patients, vendors, and employees are ignored • Poor employee morale and practice loyalty • Lack of monitoring and oversight Basic internal controls every practice needs are the following: • Division of Job Duties • Mandatory Vacation Leave • Employee Bonding (insurance policy) Potential fraud weak spots to constantly look at are the following: • • • • Front Desk Billing/Collection Accounts Payable Management The following are internal controls for each of these categories: Front Desk Controls Needed • Daily Reconciliation Page 11 • Review Missing Ticket Report (Accounting for All Charge Tickets) Billing/Collection Controls Needed • Get a Lockbox • Segregate Duties • Reconcile Daily Postings to Daily Deposits • No Charge Write offs Without Consent • Compare financial statements to Monthly Receipt Posting • Can System Block a 100% Write Off? • Data Mine for 100% Write Offs • Monitor Contractual Adjustments • Monitor Bad Debt Write Offs • Keep Eye on Employee Lifestyle Changes – Both Ways Accounts Payable Controls Needed • Do Not Use a Signature Stamp • Independent Preparation of Bank Rec. • Independent Review of Bank Statement • Limiting Check Signing Authority • Periodic Review of Endorsements • Compare Cancelled Check Payee to Disbursement Listing • Matching Purchase Orders with Invoices • Ongoing Review of General Ledger • Monitoring of Practice Overhead • Review Overtime Reports Management Controls Needed • Independent oversight of management positions • Segregation of duties if possible More likely than not, your employees are great and would never steal from you. But just remember that, according to the Association of Certified Fraud Examiners, fraud and abuse cost U.S. businesses $994 billion annually or seven percent of your revenues. So perhaps it is time to be proactive and make sure your practice is as fraud-proof as possible. Just remember, scammers are getting smarter and smarter and smarter these days. t