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You check references on job applicants and hope that you weed out people who might commit fraud or theft. But what if one of those applicants is in the 85% of people who might not have committed fraud before, but will if they have a need, perceive an opportunity, and can rationalize their behavior?1
In addition to segregation of duties and diligent oversight, there are some practical day-to-day things you can do to reduce your risk of fraud or theft by employees, says Ronald L. Ralph, CPA, a partner in the health care services group of Crowe, Chizek, and Co., a South Bend, IN-based accounting firm that does business, public sector, and information technology consulting. Ralph suggests these steps:
• Prepare and review budgets and financial statements on a monthly basis to identify discrepancies in receipts, insurance payments, write-offs, expenditures, or deposits, suggests Ralph. If there are significant variances, investigate the reasons, he suggests.
• Look for changes in employee behavior, suggests Robert W. Scheller Jr., CPA, vice president of operations for Aspen Healthcare, a surgical center development and management firm based in Boulder, CO. "If an employee who always handed you the bank statement without opening it suddenly starts opening it or not giving it to you as soon as it comes in, you should be suspicious," he says.
• Require more than one signature for checks, and make sure your local bank branch understands that this is your policy, says Scheller. "In a small town, the tellers may know the person bringing in the check to cash, so they may not question a single signature," he says.
• Require that staff members take vacations, says Scheller. "Because we require people to take vacations, we always have someone else trained to do other jobs," he explains. "Vacation time means that someone else handles the responsibility and has a chance to see if there are any problems."
• Number forms sequentially, says Ralph. "The easiest way to find a missing deposit slip, charge slip, or payment receipt is to look at the number," he says.
• Compare your clinical logbooks to your billing records to make sure the procedures were properly billed, says Ralph. You know that one person prepared the log and another person prepared the billing record, but they should match, he says.
1. Association of Certified Fraud Examiners. Report to the Nation on Occupational Fraud and Abuse. Austin, TX; 1999.