| Don't Let This Happen To You! |
Joan was hired as the bookkeeper for Dr. Stevens' busy medical office. She had a lot of experience and seemed fully capable of all functions of the job. In an effort to segregate duties in his office, Dr. Stevens asked Robin, the receptionist, to sign the checks, and take the daily deposits to the bank.
As the economy began to decline, Dr. Stevens was forced to cut costs and Robin was let go. Joan was now performing all the bookkeeping functions as well as running the reception desk and accepting patient payments.
12 months later Dr. Stevens received notice from the IRS that his quarterly tax payments had not been made for the entire year. When Dr. Stevens confronted Joan she cried and explained to him that due to the poor economic conditions and his practice being down, there had not been enough money to make the tax payments. She said she had chosen to pay his staff and the utilities rather than pay the taxes. Joan was apologetic, so Dr. Stevens forgave the oversight. But, he did begin to review expenses and take over signing checks.
That did not deter Joan! Unbeknown to all, she had been perpetrating both a forged check scheme and thefts of cash since the beginning of her employment. After the IRS incident, she was forced to find other ways to take money from Dr. Stevens, even recording additional income to make the practice look "better" and ensure herself an annual bonus.
After another two years, Joan took ill and was out of the office for over a week. Only then was it discovered that Dr. Stevens had suffered a total loss of $500,000; he almost lost his practice at Joan's hand. The economy hadn't affected his practice nearly as much as Joan had claimed.
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| What Can You Do? |
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Make your vigilance against fraud front and center. Fraud should be discussed openly and your employees should all be trained on what to look for and pitfalls to avoid. Owners and management are responsible for setting a tone of acceptable behavior. Additionally, an anonymous tip line to report fraudulent activity is always a good idea.
Internal Controls Best Practices:
- Have bank statements AND cancelled checks mailed to the business owners home. Review the bank statement for unauthorized withdrawals; review the front and back of each check to ensure they represent authorized business payments.
- Segregate duties and make sure they stay segregated, even in periods of downsizing.
- Perform unexpected "audits" on payments - demand backup documentation and reviews throughout the year.
- Cash business? Verify cash is listed on the top of bank deposit slips and that deposit slip totals match bank statement totals.
- Perform annual reviews of vendors and service providers to ensure they are legitimate.
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| How Can We Help? |
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Acuity is here to help! We are fraud investigation experts. Don't just call us after the fact. By increasing awareness and educating you and your clients, it is our goal to mitigate your fraud risk. How?
- Let us to assess your risk and how best to use your CURRENT resources to ensure duties are properly segregated.
- Education is our passion - let us be your preferred provider for fraud-related training.
- Seamless member of your team; let us work with your banker, insurance provider, attorney and CPA to make sure you are properly covered!
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