Prevention & Diagnosis of Practice Fraud

With current economic hardships being felt by many, it is critical that practices ensure their financial policies and procedures are in order.

Extraordinary circumstances can often result in unexpected acts of desperation and it is critical that practices ensure that opportunities for committing fraud are minimised. Regular, impromptu audits along with undertaking some or all of the following suggestions can prove effective in both preventing and diagnosing fraud in the practice.

• Procedures & Policies: Ensure practice manuals clearly outline that regular audits are conducted and what steps are taken when a discrepancy is discovered. If an inconsistency is identified, ensure all staff members are individually and privately interviewed.

• Cross Reference: Check the daily appointment lists against the billing, receipting and adjustment listings. Anomalies should be documented identifying, time, day and staff member. If fraud is suspected, this should be performed over a period of time to identify patterns or individuals.

• Reversals, Refunds & Write Offs: Many of the practice management packages today have in-built audit functions and reports available. Some packages even cross match patient appointments to invoices raised. An ‘Authority to Refund/Write off’ should be in place which requires an explanation and dual signatories.

• Cash: All cash, including petty cash needs to be accounted for. Petty cash expenditure & receipts should be reviewed on a regular basis. Principals who take cash from the float or petty cash on a regular basis should ask how this is accounted for in the books.

• Employee or Supplier: Cross match employee bank accounts to those of practice suppliers to discourage dummy invoices and diverted payments.

• Source documentation: Deposit slips from the practice management software should be entered into an appropriate accounting package (MYOB/Quickbooks), clearly identifying Run/Slip numbers and method of deposit (i.e. Cash, cheque, EFPTOS). Regularly check cash components have been banked.

• All-in-one: Often a practice has one staff member who conducts both banking and bookkeeping functions. This places practices at an increased risk. Ensure audit trail functionality has been activated in the accounting software in addition to all the above suggestions. Prevention is better than cure. Understand your practice systems; be seen to ask questions and follow-up anomalies.


Author: Deana Scott