Are you a “fraud prone” physician practice?

The following are a list of issues that should raise some embezzlement red flags and call for immediate attention:

• Diminishing cash flow when receipts are strong
• Receipts do not seem congruent with patient visits
• 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 what my friend Karen Mosteller, CPA dubs a "fraud-prone" practice, which includes 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

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 costs U.S. businesses $994 billion annually, or 7 percent of your revenues. So perhaps it is time to be proactive and make sure your practice is as fraud-proof as possible. The studies show that the average [business] will lose $9 a day per employee due to fraud and abuse; Now add up your staff and add up those days … Scammers are getting smarter and smarter and smarter these days.