Are you safeguarding your practice assets?

Nov 11, 2011 at 12:44 pm by steve

When was the last time you thought about your practice’s internal control processes? Over the past few years, with the slowed economy, there has been an increase in losses reported due to lack of internal controls. 

Here are some simple things to consider for your practice.

Have all mail opened by someone in your group who does not have any responsibility for the billing, collection or bill paying function. All payments should be immediately endorsed with your bank endorsement stamp, including the name of the practice, the account number and “For Deposit Only” on each remittance. Cash and checks should be deposited daily on pre-printed deposit slips, including the name of the patient or insurance company on the face of the deposit slip. 

Payments should be posted to the accounts receivable system by someone other than the person making the bank deposit. Payment adjustments should be reviewed daily to determine accuracy. Payments to the accounts receivable system should be reviewed against the daily deposit. A bank reconciliation should be prepared monthly as soon as the bank statement arrives, and all deposit slips should be compared to the bank’s figures. The bank deposits should be compared to the cash collected report on your accounts receivable system.

All accounts over sixty days old should be reviewed and followed up on by a practice member who does not post to the accounts receivable system. Review contractual adjustments for reasonableness, and periodically review your explanation of benefits forms from the insurance company for additional control. Review your accounts receivable system to be sure you are numbering the charge tickets and determine if there are any missing charge tickets at least monthly.

Periodically review the list of companies submitting payments electronically, and verify the amounts to the patient reports that are submitted, and to the billing system.

All patient billing questions should be routed to an administrative person who will develop a control system for recording, reviewing and answering patient and insurance company inquiries. Check your patient sign in sheets with your billing system charge tickets to be sure all patients are accounted for. Monitor no-shows for accuracy.

Since many practices now provide ancillary testing procedures or sell inventory products, additional controls are required to properly bill and collect for the procedures, or to maintain accurate inventory counts and to bill for inventory sold. Be sure you have proper procedures in place.

Are your supplies, especially controlled substances under lock and key? Some are very expensive and could be a source of unintended loss.

Did you know that many losses come from the disbursement side of your practice? Implement a policy that requires one of the physicians to receive the sealed bank statement when it comes to the practice each month. Review the cancelled checks to determine for appropriate signatures, endorsements and that they are payable to appropriate vendors. Disburse by using pre-numbered checks only, and be sure all invoices are submitted with the checks for physician signature before mailing. While it may be easier to use electronic payment to vendors, actual check writing will provide a much greater internal control. Also control credit card usage, and review each credit card transaction to determine it is a valid practice expense. Require invoices for each credit card transaction paid by the practice.

Control your petty cash, requiring receipts for all expenditures. The amount of the replenishment should equal the total amount of the receipts. Make sure there is an accounting of all expenses at least monthly.


Payroll should be prepared utilizing an outside payroll service, for additional internal control.  Each payroll should be reviewed by one physician, and if possible, utilize an electronic time clock for staff. Monitor the hours paid, and scrutinize any overtime paid at each payroll period.  Monitor PTO or vacation time for each staff person. Require all staff to take appropriate vacation, as many problems are uncovered during a vacation period. Require that staff take vacation in weeks and not a day at a time.

Verify that payroll returns are prepared and mailed monthly, quarterly or annually as required, and that all appropriate taxes are timely paid. Require that all mail from the Internal Revenue Service or any other governmental agency be routed to the desk of the “in charge” physician of your group. Make sure that you maintain adequate employee theft/fraud insurance. 

Maintain well-documented personnel files, including the required forms for citizenship. Include copies of meeting notes regarding disciplinary actions and have the notes signed by the physician and the staff person in case there is future action required

Look at your specific practice to determine what additional controls may be warranted. Don’t just rely on the old rules of internal control. Medical practices and the business world are always changing.  Re-assess your processes, back-ups and controls. You will be glad you did.


Gerard J. Kassouf, CPA is a director of the Birmingham, Alabama firm of L. Paul Kassouf & Co., P. C., Certified Public Accountants and Business Advisors.  He can be reached at


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