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08.12.05 Issue #179
To Catch a Thief

Sally McKenzie, CEO
The McKenzie Company

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Yours is a tight knit group. These people have been with you a long time, and you're proud of that. You've heard the horror stories about embezzling employees, but you don't have to worry about a thief among your team. After all, you're a good judge of character, if there were a shady member of the crew you'd spot ‘em in an instant and they'd be gone.

What you don't realize is that the profile of an embezzler reads like a character out of a best-selling Who Done It novel. The enemy among you is your seemingly most loyal, apparently most honest, and outwardly most dedicated employee. She's got you so buffaloed that you wouldn't suspect her of taking an extra hors d'oeuvre at the holiday party let alone several thousand dollars from your practice.

Certainly, I don't mean to disparage every hardworking, dedicated employee, but the common refrain heard again and again in embezzlement cases is the most trusted employee is the one pilfering the practice. And as a small business owner you are a prime target for embezzlement. In fact, the Association of Certified Fraud Examiners found that small businesses were hit with the same median losses as large employers. While the Fortune 500 will likely bounce back, embezzlement can cripple your practice.

In the dental office, the most common type of embezzlement is the misappropriation of the practice's cash and checks by the office manager or individual responsible for day-to-day accounting. The office manager knows the systems, the practice, and the patients. She knows the deposits, the vendors, who pays with cash, who pays with check. She knows what goods the suppliers provide and she knows what they charge. Her greatest asset is that she understands your practice so well. Your greatest liability is that she understands your practice so well. When it comes to practice finances, follow the Ronald Reagan maxim, trust but verify. Take steps to make sure you're not taken to the cleaners.

  • Review your deposit tickets on a regular basis. The average amount of cash in a practice is 2-5%. Yours may be more or less, but whatever the amount it should not change significantly from month-to-month.
  • Do not depend on just one person to handle the practice accounting. Insist on cross-training staff to work at the front desk.
  • Establish a system in which all employees who use the computer must log on with personal identification codes.
  • Remember embezzlers love the “hands-off” dentist because they know you are never looking over their shoulder. Learn how to access key reports. And only you should have exclusive access to certain reports such as the Audit Trail and other production/collection reports that your staff doesn't need on a regular basis.
  • Review all your invoices and sign all checks. Make sure there is an invoice for every check written.
  • Do not have a signature stamp for signing checks unless you keep it under lock and key and only you have access to it.
  • Keep your practice checkbook under lock and key until the bookkeeper needs it.
  • Randomly conduct spot checks every few days and compare your schedule with your day sheet. Verify that all the treatment delivered was posted and scan the adjustments to ensure there was a valid reason for making them.
  • Carefully review the practice charge card for suspicious activity.
  • Compare your bank deposit with the day sheet and make bank deposits daily.
  • Never allow the same person to prepare the bank deposit and take it to the bank.
  • Have bank statements and cancelled checks sent directly to the doctor's home.
  • Ask questions and make sure your employee knows that you are interested and monitoring the accounting.

If you suspect an employee is engaging in questionable activity take action. Do not share your suspicions with anyone else in the practice. Bring in an outside consultant or computer trainer to review reports. Seek assistance from your accountant and your attorney. Do not wait and hope that you are wrong, if you smell a rat, it's likely you've got an infestation.

If you have any question or comments, please email Sally McKenzie at

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August 13 Topeka, KS Delta Dental Plan of Kansas 800-733-5823 Breakdown Sally McKenzie
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Oct. 14 Riverside, CA Riverside Implant Study Group 951-279-7847 Top Issues Sally McKenzie
Nov. 18-19 Griffin, GA Endo Magic Root Camp 877-478-9748 Top Issues Sally McKenzie
Dec. 1 Cincinnati, OH Cincinnati Dental Society 513-984-3443 Breakdown Sally McKenzie

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