4 tips to preventing embezzlement in your dental practice
Drew Hinrichs, CPA, offers precautions against embezzlement for dentists in this installment of the Dental CPA Blog on DentistryIQ.
Protect yourself with these four prudent precautions
Dental embezzlement is more than a fact of life, it’s an outright epidemic. At a recent dental accounting and fraud seminar, nearly 80 percent of dentists in attendance said they’d experienced embezzlement in their office or suspected that it was occurring.
While suspecting that a trusted employee might steal from your practice may feel unthinkable, it’s an unavoidable aspect of maintaining good dental accounting practices. Here are four tips for keeping yourself safe.
Screen New Employees
Good theft prevention starts with good hiring practices. A dentist’s office is often a local institution, and it can be tempting to simply hire a family friend or trusted fixture of the neighborhood with nothing but a handshake. However, to keep your practice safe, you need to treat every new employee as if they’ll be trusted with your most valuable assets—because that’s exactly what you’re hiring them to do.
Every new employee should be subjected to credit, criminal and educational screening to identify potential red flags, and their references from previous employers are critical to ensure they haven’t already been identified as fraudsters.
Leaving a single employee in charge of your entire practice’s finances is putting you at serious (and unnecessary) risk for internal theft. Instead, make sure you separate workflows and provide structural opportunities for your employees to review each other’s work.
For example, assign all patient receivables to a single associate, all tax paperwork to another, and all insurance accounting to a third. That way, each associate will only have access to a portion of your practice’s finances, and each employee can verify and confirm the other employees’ work.
Watch for Warning Signs
While many embezzlers had no existing warning signs, it’s still important to remain alert for common indicators that an employee might be tempted to steal from the practice. Common signs include an employee who:
- Appears to spend outside their means
- Is always eager to be the first to work, or the last to leave, since this could mean they’re seeking opportunities to be alone in the office
- Can’t provide answers to questions about their accounting work
- Is very territorial about the work they do with the practice’s finances
Regularly Review Finances with Professional Accountants
While you should always stay on guard for internal theft, your own eyes aren’t enough. Just like you rely on professionals for dental tax advice, you need to rely on professionals to regularly review your practice’s finances. Working with a dental CPA to audit your books every month is the best way to spot irregularities as soon as they occur, and can help ensure you’re not losing money to theft. Call us today to speak with a dental financial expert!
Andrew Hinrichs, CPA, is a partner at HinrichsZenk+Pesavento (HZP), a dental CPA firm. Located in the suburbs of Chicago and Kansas City, HZP works with dentists around the country. HZP is growing, thanks to its extensive knowledge of the dental industry, focused client service, and ability to help dentists make educated decisions in every financial area of their dental practices. Tax planning opportunities, practice growth, and creative retirement planning are key focus areas. To set up a consultation with an HZP advisor, call (913) 681-1350.