MPM Publications
Cash Controls in The Office
Industry publications often deal with methods of maximizing appropriate reimbursement, but this article addresses how to establish the controls necessary to protect the cash once it is collected. Whenever there is cash collected by your practice, you must accept the possibility of mishandling, and the necessity of performing internal audits of cash receipts in every office.
Who should performs the audit? Simply stated, someone who is not involved in the payment process. Review the possible candidates and exclude everyone involved in processing payments. Having excluded most of your staff, the audit will probably be assigned to an outside auditor or a consultant-your accountant, If he/she is never involved in your payment process. Also, this person must have knowledge of the payment process and acceptable accounting standards.
The payment handling process should be reviewed to understand what is supposed to happen in your office. Request a brief, written review of "walking me through the steps of what happens to any/all payments received." Include street mail and box mail, as well as walk-ins, and monies collected by every location.
The payment handling process must be documented to establish a means of handling cash. without a written procedure, there is no method of auditing what should be the norm. By documenting the routine, the need for changes may be identified. Encourage notation of proposed changes even though no changes should be made at this time. On paper, the information should include who receives, researches, writes, enters/posts, and deposits receipts.
What should an auditor expect to find? To the extent possible, one person should be responsible for only one part of the process. This encourages crosschecking so that each person is checking the accuracy of everyone else in the payment process. This is critical, as mistakes are especially "visible" in payment handling since a patient may be billed in error if a posting error is made. Further need for the separation is that the checking for accuracy inherently encourages honesty. Given the amount of cash that may flow through your office and the (perceived) disparity in income, the temptation may be significant.
The steps of the audit will vary, depending on your system. Assuming there is a computer with software, the auditor needs a working knowledge of the system's capabilities and its possibilities for manipulation. Once the reviewer is familiar with the practice and the nuances of your office, the audit may begin.
Should you identify a problem, what then? If you have insurance coverage that includes bonding of employees who handle cash, the insurance company requires contact with them before you do anything. Typically, they will contact the (former) employee to determine if he/she will voluntarily repay the money or if prosecution is necessary.
Regardless of whether or not you have insurance, your contact with the offending employee should be limited until you have sought advice from your corporate advisers. No promises or agreements should be made. You will probably be advised to request a written resignation that includes an agreement to repay all monies stolen. Failing this, you must make the decision to pursue legal remedies.
The discovery of theft by an employee should be handled professionally and without emotion. Some experts suggest including a police investigation, with interviews of employees by investigators. This serves as a deterrent, regardless of your pursuit of the offender. The remaining staff will realize the gravity of the situation and just how seriously the practice views such an offense, however large or small the monetary loss. And, they may resist the temptation of theft in the future.
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