This week, The Times-Picayune reported that a Covington, Louisiana, dental practice manager, Kelly Muller, was charged with embezzling almost $190,000 over a three-year period from the dental office she managed.
Muller allegedly added unauthorized money to her paycheck as well as made credit card purchases using the dentist office’s money.
Embezzlement is known to occur more often when just one employee has control over writing checks, balancing back statements, administering payroll, and making deposits.
The U.S. Chamber of Commerce estimates that employee fraud costs American businesses over $50 billion annually. It is estimated that 1 in every 6 employees is dishonest.
The MDDS states that the most common method of embezzlement in a dental practice is theft of cash, checks or supplies.
Here are a few embezzlement scenarios that occur in dental practices –
- Cash is pocketed from patients.
- Petty cash is stolen.
- Cash or checks are removed from the daily deposits and replaced with subsequent receipts.
- Insurance fraud.
- Endorsements are forged.
- Writing duplicate accounts payable checks or writing checks to phony vendors.
- Stealing supplies and re-selling or returning to vendors for refunds that are pocketed by employees.
In a survey The Wealthy Dentist performed, 59% of the dentists surveyed said they had discovered evidence of embezzlement. With such a high degree of fraud, how does a dental practice diminish the risk of embezzlement?
The American Bar Association offers the following checklist on how to prevent fraud and embezzlement –
- Adopt an effective, documented system of internal controls to protect against acts of dishonest staff.
- Bank and credit card statements can be delivered to the business owner’s home or separate address for personal review.
- Checks and debit transactions should be reviewed with the statements.
- Checks should require two signatures, or be reviewed by the owner.
- A copy of the bank reconciliation should be attached to each monthly bank statement and reviewed by two parties.
- Finance or accounting personnel should not be signers on all bank accounts.
- Checks received in the mail should be immediately endorsed by a two-person team who opens and processes the mail.
- After checks are properly endorsed and verified, the bookkeeper should take charge of the checks for deposit.
Could your dental practice survive a $190,000 embezzlement?
What safety nets do you have in place to prevent embezzlement from happening at your dental practice?
To read more about the Louisiana dental embezzlement case see: Covington Woman Accused of Stealing $190K From Dentist’s Office.