60% Likelihood of Theft in Dental Practices: Why Strong Financial Controls Are Crucial
The risk of theft in dental practices is alarmingly high, with studies showing that nearly 60% of dental offices will experience embezzlement at some point in the dentist's career. This staggering statistic highlights the necessity of implementing robust financial controls to protect your practice.
Financial losses due to employee theft in dental practices can range from $20,000 to over $100,000 per incident, with some cases reporting losses exceeding $1 million. These figures are not just numbers—they represent the potential for significant financial harm that could jeopardize the sustainability of your practice.
Why does theft occur in an office setting? The answer often lies in opportunity. When there's a lack of detailed review for bank accounts, credit card accounts, and expenses, or when too much access is granted to team members, the potential for theft increases. This is a common issue in many businesses where necessary checks and balances aren't in place, leaving them vulnerable to financial misconduct.
On average, embezzlement schemes in dental practices go undetected for two years, with some cases lasting up to five years. This lengthy period often results from a lack of proper controls and oversight, allowing the perpetrator to conceal their actions.
Case Study: Theft in a Dental Practice
The practice owner, a busy dentist, trusted a long-term office manager to handle financial tasks, including billing, payroll, and bank reconciliations, with minimal oversight. Over four years, the office manager embezzled approximately $500,000 by manipulating the practice’s billing system and issuing fraudulent cheques. She created fake patient accounts and recorded fictitious transactions, diverting payments to her own accounts. Additionally, she wrote unauthorized cheques to herself and manipulated the payroll system to pay herself bonuses and overtime that were not earned.
The theft was only discovered after the dentist noticed discrepancies in the bank statements and a significant decline in cash flow, despite steady patient numbers. An external audit revealed the extent of the fraud, leading to the office manager’s termination and legal action.
How ADC CPA Can Help
At ADC CPA, our mission is to implement controls aimed at prevention, effectively eliminating the opportunity for theft. We specialize in designing structured environments where duties are clearly separated, and financial transactions are consistently monitored and reviewed. Our controls ensure that no single individual has unchecked access to sensitive financial data, thus safeguarding your assets.
By integrating these preventive measures, your business can significantly reduce the risk of fraud and maintain the integrity of your financial operations. Our approach includes:
- Segregation of Duties: Assigning different people to handle different aspects of financial transactions to prevent fraud.
- Regular Audits and Reviews: Conducting frequent checks to ensure compliance and identify any discrepancies.
- Access Controls: Limiting who can access sensitive financial information and perform financial tasks.
- Detailed Record-Keeping: Maintaining accurate and detailed records of all financial transactions for transparency.
Protect Your Business
As a business owner, investing in financial controls is a proactive step towards securing your practice's future. With ADC CPA's expertise, you can rest assured that your financial processes are in good hands, reducing risk and enhancing the accuracy of your financials. Don't leave your business vulnerable to fraud—take action today to implement the controls that will protect your assets and reputation.
For more information or to schedule a consultation, contact ADC CPA today. Let us help you safeguard your business with our expert control solutions.
Meet Sana Arshad
FOUNDER & CEO BEHIND ADC CPA
Sana Arshad has in-depth knowledge of dental and cost control from her experience at a start-up DSO. She completed her Master of Accountancy with specialization in Performance Management, and later achieved her Chartered Professional Accounting designation. Her passion is growing businesses through the balance of increasing sales and decreasing costs but also being a empathic leader that values and rewards team members to achieve these results.
Need 1:1 Help or Financial Assistance?
Thank you for reading! For more insights and personalized advice on optimizing your practice’s KPIs, reach out to ADC CPA. We’re committed to helping you achieve operational excellence and financial success.