Webinar Discusses Safeguarding Your Practice with Financial Controls
Upcoming SlideShare
Loading in...5
×
 

Webinar Discusses Safeguarding Your Practice with Financial Controls

on

  • 424 views

Financial Controls—consider them a security system for your medical practice. With the correct internal controls in place, your practice can better protect its assets and minimize the risk of loss ...

Financial Controls—consider them a security system for your medical practice. With the correct internal controls in place, your practice can better protect its assets and minimize the risk of loss from errors, lawsuits, and fraud. “Medical Practice Financial Controls…or Lack Thereof” was the topic of a recent National Association of Certified Valuators and Analysts (NACVA) Consultants Training Institute (CTI) webinar presented by PYA Principal Lori Foley and Senior Manager Tynan Olechny.

Statistics

Views

Total Views
424
Views on SlideShare
400
Embed Views
24

Actions

Likes
0
Downloads
2
Comments
0

1 Embed 24

http://www.pyapc.com 24

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Webinar Discusses Safeguarding Your Practice with Financial Controls Webinar Discusses Safeguarding Your Practice with Financial Controls Presentation Transcript

    • DISCLAIMER All rights reserved. No part of this work covered by the copyrights herein may be reproduced or copied in any form or by any means—graphically, electronically, or mechanically, including photocopying, audio/video recording, or information storage and retrieval of any kind—without the express written permission of the CTI, NACVA ,and the presenter. The information contained in this presentation is only intended for general purposes. It is designed to provide authoritative and accurate information about the subject covered. It is sold with the understanding that the copyright holder is not engaged in rendering legal, accounting, or other professional service or advice. If legal or other expert advice is required, the services of an appropriate professional person should be sought. The material may not be applicable or suitable for the reader’s specific needs or circumstances. Readers/viewers may not use this information as a substitute for consultation with qualified professionals in the subject matter presented here. Although information contained in this publication has been carefully compiled from sources believed to be reliable, the accuracy of the information is not guaranteed. It is neither intended nor should it be construed as either legal, accounting, and/or tax advice, nor as an opinion provided by the Consultants’ Training Institute (CTI), National Association of Certified Valuators and Analysts (NACVA), the Institute of Business Appraisers (IBA), the presenter, or the presenter’s firm. The authors specifically disclaim any personal liability, loss, or risk incurred as a consequence of the use, either directly or indirectly, of any information or advice given in these materials. The instructor’s opinion may not reflect those of the CTI, NACVA, its policies, other instructors, or materials. Each occurrence and the facts of each occurrence are different. Changes in facts and/or policy terms may result in conclusions different than those stated herein. It is not intended to reflect the opinions or positions of the authors and instructors in relation to any specific case, but rather to be illustrative for educational purposes. The user is cautioned that this course is not all inclusive. © 2013—1997 NACVA • 5217 South State Street, Suite 400 • Salt Lake City, UT, 84107—ALL RIGHTS RESERVED. The Consultants' Training Institute (CTI) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted through its web site: learningmarket.org. November 12, 2013 Page 1 1
    • The Presentation will include periodic online Polling Questions/Codes to assess continuous participation and to determine the program’s effectiveness. You MUST respond to all polling questions (live) or keep track of all polling codes (recorded) in order to receive CPE credit. If you view the webinar with a Smartphone or Tablet you will NOT be able to answer polling questions that are required for obtaining CPE credit. If you are viewing this presentation as a recorded webinar it will not qualify for NASBA QAS CPE credit. You can however, obtain CPE credit per the instructions included with your recorded webinar purchase. November 12, 2013 © 2013 National Association of Certified Valuators and Analysts Page 2 2
    • Medical Practice Financial Controls (or Lack Thereof)
    • This Practice is Protected by “Financial Controls” November 12, 2013 Page 4
    • What Are Internal Controls? Methods and procedures used to: • Prevent, detect errors • Encourage adherence to policies • Safeguard against misappropriation November 12, 2013 Page 5
    • Internal Controls Protect Practice Assets Reduce the risk of loss from: • Errors • Lawsuits • Fraud November 12, 2013 Page 6
    • Internal Controls Protect From: Mistyped Misfiled Risk of Errors Too Busy Miscount November 12, 2013 Lost Forgot Page 7
    • Internal Controls Protect From: Suppliers Patients Government Partners November 12, 2013 Risk of Lawsuits Managed Care Companies Employees Page 8
    • Risk of Fraud 1 $5.3 trillion annually 2 Median loss of $140,000 3 Small companies most vulnerable 4 Physician practices often targeted Source: Association of Certified Fraud Examiners. November 12, 2013 Page 9
    • Fraud Risks • Desperate people do desperate things • Regulatory requirements • Competition • Rapid changes • Need for capital • Complex transactions or structure • Absentee owners November 12, 2013 Page 10
    • The Practice is Often at Fault… • No (weak) internal control policies, procedures • Trust • Conflict avoidance • No time, energy, resources • Complex business environment • Failure to prosecute November 12, 2013 Page 11
    • Who Commits Fraud? 3% 18% 42% Employee Manager Owner Other 38% Source: Association of Certified Fraud Examiners. November 12, 2013 Page 12
    • How Fraud Occurs • Poor internal controls • Management override • 3rd party collusion • Other – 2% November 12, 2013 Page 13
    • Fraud Techniques Theft of cash or inventory ‒ Taking co-pays or petty cash ‒ Taking equipment or supplies Theft of blank checks or credit - Using company checks or credit cards for personal items False employee or vendor - Creation of a false employee or vendor for monthly payment November 12, 2013 Page 14
    • How Frauds Are Discovered • • • • Internal controls work Falling out among thieves Disgruntled associate Observant patient, supplier • Accident November 12, 2013 Page 15
    • Red Flags • • • • Personal financial pressure Vices Extravagant lifestyle Real or imagined grievances against the company or management • Increased personal stress November 12, 2013 Page 16
    • More Red Flags • • • • • Management pressure Short vacations, unexplained hours Overly neat, territorial General lack of ethics Unusually close vendor relationships November 12, 2013 Page 17
    • The Triangle of Fraud Need Rationalization Opportunity ―I was just trying to save the company.‖ ―If I only could have gotten the bank loan, everything would have been fine.‖ Source: Sage Investigations, LLC. November 12, 2013 Page 18
    • Situational Fraud Always: 5% to 10% Situational Fraud Never: 5% to 10% Situation Arises: 80% to 90% November 12, 2013 Page 19
    • Myths Surrounding Fraud Fraud is most often committed by people who have done it before. Long-term employees will not commit fraud. Employers (physicians) are good judges of character and understand their employees. Myths November 12, 2013 Page 20
    • More Myths CPAs can be relied upon to discover fraud. Checks made out to banks or companies cannot be converted to personal use by third parties. Losses due to fraud are covered by insurance. Myths November 12, 2013 Page 21
    • Factors of Effective Compliance • Internal control policies, procedures • High-level person responsible for monitoring • Do not give authority to persons you know or should have known had propensity • Communicate the policies and procedures • Reasonable steps to achieve compliance • Respond appropriately November 12, 2013 Page 22
    • Internal Control Procedures Segregation of duties Checks and balances Involvement November 12, 2013 Page 23
    • Internal Control System Should Be... Organized Documented Communicated Cost effective November 12, 2013 Page 24
    • 10 Key Questions
    • Question 1 1. Does the practice know the typical daily, weekly, and monthly volume of the practice, and do they promptly investigate any material deviations? November 12, 2013 Page 26
    • Question 2 2. Are charge slips, cash receipt slips, and checks prenumbered, controlled, and accounted for, including voids? Are blank documents stored safely and is access limited? Sally ―loses‖ her friend’s charge ticket. No charge = No write off = No money November 12, 2013 Page 27
    • Question 3 3. Are cash-related duties appropriately segregated among staff members? Recordkeeping vs. custody vs. approval • • • • Who opens the mail? Who posts payments? Who does the bank reconciliation? Who reviews the payroll journal? November 12, 2013 Page 28
    • Question 4 4. Are accounting records, including charge posting, payroll reports, and bank reconciliations, kept up-to-date and balanced daily and monthly? • Monthly day sheet reconciliation November 12, 2013 Page 29
    • Question 5 5. Does the practice restrict check signature authority to physician owners only, insist on personal signature instead of a signature stamp, and inspect back-up invoices before signing checks? • All parts of the check are complete; original invoice approved and canceled; packing slip attached; expenditure is reasonable. November 12, 2013 Page 30
    • Question 6 6. Are all checks stamped with the practice’s ―For Deposit Only‖ endorsement stamp immediately upon receipt? Are un-deposited checks stored in a safe place pending deposit? November 12, 2013 Page 31
    • Question 7 7. Are all employees required to take annual vacations? Is there a back-up person for all positions? • Big bus theory November 12, 2013 Page 32
    • Question 8 8. Are all contractual adjustments, patient refunds, and non-contractual write-offs approved or monitored by an authorized supervisor? • Ignorance? Innocent mistake? Deliberate? Sally’s friend incurs $3,500 in patient responsible services. Sally’s choices: • Put friend through normal collection procedures. • Write friend’s balance down to zero. November 12, 2013 Page 33
    • Question 9 9. Does the practice check the references of new hires carefully and screen candidates and current employees regularly for exclusion from or sanctions by Medicare and other federal programs? Does the practice obtain a background check/credit report? • www.exclusions.oig.hhs.gov • www.sam.gov November 12, 2013 Page 34
    • Question 10 10. Does the practice use the ―sentinel‖ effect? Occasionally sample postings, review the general ledger, inspect reconciliations, check the cash drawer, and ask questions? November 12, 2013 Page 35
    • Conclusion Embezzlement opportunities are plentiful and practices ripe for the picking! November 12, 2013 Page 36
    • Thank You! Lori A. Foley, CMA, PHR, CMM lfoley@pyagatesmoore.com Tynan P. Olechny, MBA/MPH, CVA tolechny@pyagatesmoore.com PYA GatesMoore 3424 Peachtree Rd N.E., Suite 700 Atlanta, GA 30326 (404) 266-9876 www.pyagatesmoore.com November 12, 2013 Page 37