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FEATURE


Strengthening Your Defenses Segregating duties is the preferred method of internal control, McClure says. “Not only is it proactive, but it can be enforced with software access security. If an ASC’s accounting department is too small to effectively segregate duties, use oversight retro- actively for early detection of errors and irregularities.” Another worthwhile step for reducing vulnerabilities is calling on the expertise of an accountant, Acker says. “Have this individual set up your accounting system and help your ASC implement generally acceptable accounting principles.” This would include requiring receipts for all pur- chases, balancing petty cash, match- ing purchase orders to packing slips and performing stronger inventory management. “With solid accounting practices, you are more likely to spot a problem.”


Conduct routine receipt, bank statement and merchant card recon- ciliations, McClure says. “Reconcili- ations should be performed by some- one who does not and cannot process transactions like payroll and paying vendors. If this is not possible, an external accountant should review the reconciliations and trace or oth- erwise validate some of the reconcil- ing items.” An external accountant also can help by performing surprise audits, McClure says. “This is one of the most effective internal con- trols for a small accounting depart- ment.” Employees should be aware that a certified public accountant (CPA) will review and conduct on- site inspections of their work. “The best internal controls are the ones employees know about because they reduce the perception of opportunity to ‘borrow’ from the owners.” Regular audits by a CPA are


worthwhile for reasons beyond iden- tifying and discouraging embezzle-


An ASC administrator who pushes back against internal


controls is a red flag.”


—Denise McClure Averti Solutions


ment, Fanburg says. “The accounting firm will typically provide manage- ment with a letter outlining best practices. These are recommenda- tions ASCs should implement to ensure there are appropriate checks and balances.” ASC owners, Fanburg says, are sometimes hesitant to bring in expertise to help with accounting and oversight. Physicians may feel these


services are more than the


ASC requires, in part because they have confidence in their administra- tor. “You bring a CPA in not because you doubt your administrator; you do so because there are many dif- ferent areas of potential vulner- ability and you want to make sure those holes are plugged,” he says. “A good administrator will welcome the checks and balances as well as the opportunity to further strengthen the ASC’s safeguards against risk.” McClure advises ASCs to follow


the guidance of a Russian proverb. Trust but verify. Internal controls are not about mistrust; they are about accountability and transparency, he says. “An ASC administrator who pushes back against internal controls is a red flag.” Your goal, Acker says, should be


to make embezzlement as difficult as possible. If you lack effective safe- guards, staff may be more tempted to make a small, unauthorized purchase for themselves. If they get away with this, they may keep pushing their


luck on bigger purchases. “Opportu- nity can entice good people to do bad things,” she says.


Responding to Incidents If you suspect your ASC is the vic- tim of embezzlement, conduct care- ful research into the situation, McClure says. Obtain the original source documents needed to verify whether your suspicions are valid, she advises. Secure copies of can- celled checks directly from the bank, obtain invoices directly from vendors, research unknown ven- dors to determine if they are valid or fictitious and get bank reports of direct deposit activity if suspi- cions include payroll. “It is easy to create valid-looking invoices and alter cancelled checks, bank state- ments and bank reports, so you first need to confirm your suspicions are valid by obtaining records from original sources,” she says. Contact your attorney if your suspicions are confirmed and you identify inappropriate transactions, McClure says. Consider whether to file a criminal report with law enforcement, file a civil suit or both. An attorney can assist with these decisions and employment law issues, such as whether and how to terminate the suspected employee. “Involving law enforcement early in the process may also be advanta- geous as they can subpoena records needed to prove the case,” she says. Some organizations that fall vic-


tim to embezzlement choose not to involve the authorities because own- ers are embarrassed that the crime occurred under their watch, Fanburg says. “Do not let embarrassment stand in the way of doing what is right. If you fire the employee without report- ing what happened, this increases the likelihood that the next facility the employee goes to will be subject to the same type of experience.”


ASC FOCUS SEPTEMBER 2019 | ascfocus.org 19


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