Dentaltown July 2017 - 16

howard speaks
column

Are You at Risk of Peculation?
Peculation: To steal or take money dishonestly,
especially public funds or property entrusted to
one's care; to embezzle.
In my 30-plus years of watching dentists catch
someone embezzling from them, I've noticed that even
if the money's a sizable amount-I'm talking upward
of $100,000, $150,000-the emotional sting hurts
them more than the financial loss. These dentists are
devastated, because the employees who do it are often
very close to them. Imagine realizing that someone
you thought was your best friend or is the godmother
of your child has been stealing from you for a decade.
During a recent Dentistry Uncensored with Howard
Farran podcast ("Don't Get Embezzled," #730), certified
fraud examiner Bryant Truitt said that 43-47 percent
of dental offices are being embezzled from; other
experts I've spoken to have shared the same estimates,
too. (Dental offices aren't alone in this regard; it's the
same data for small businesses in other industries, too.)
There's no particular demographic that's more
likely to embezzle-no single race, age, sexuality or
the like. It's not something only heathens do, either;
someone who attends church religiously could also be
embezzling thousands of dollars from you. The more
common denominator is desperation-someone in
their family is sick, or there's a financial crisis in their
house. Maybe you've noticed they're living above their
means, but it's unlikely. The fraud experts I've talked
to say that four out of five times, the dentist is stunned
and says, "I can't believe it. I never saw that coming."

Taking steps toward prevention
Part of the sting that dentists feel
is embarrassment, because it means
they didn't have internal controls

over peculation. The situation that everybody seems to
come back to in embezzlement cases is that one person
was doing way too many things, unchecked. You need
separation of duties in your office-the person getting
the mail shouldn't be the one entering the checks, for
example, and the one taking the money from patients
shouldn't be the same one making the bank deposits.
Even your completely trusted, longest-term employee
is capable of embezzlement when the circumstances are
right. For that reason, you should have at least two or
three people working on separate responsibilities, who
can serve as cross-checks when any disparities come up.
Ideally, those employees shouldn't be related, either.
The risk of having two or three people who aren't family
members all being in cahoots is very low; it's a high-risk
poker game if I walked up to you and said, "Hey, you
want to do a crime against this company?" You can ask
your mom or sister that in confidentiality if your family's
all in the same boat, but it's harder to ask a co-worker
because of the odds that someone would report it.

Getting back in the loop
Lots of times, dentists are completely out of the
loop because they don't do even the little things,
like mail the canceled checks to their house. They're
not opening the mail. And I get it-I'm a dentist,
I'd rather pull a wisdom tooth than play golf, and I
just want to do my craft. But you must get into the
details of your business, because if your business is
successful then you can buy more toys, more lasers,
CAD/CAMs and all those things that help you do
even more of your craft.
In a small practice, consider hiring an outside
accounting person to come in and do regular audits so
someone else is looking at the numbers. Is your brother's
sister-in-law an accountant? Does your Great-Aunt
Continued on p. 18

Earn CE credits and learn more
about how to prevent embezzlement
Practice management consultant Sandy Pardue's hourlong CE course "Safeguards to
Prevent Embezzlement" will help dentists establish internal systems and controls to
help stave off employee embezzlement. Find it online, anytime at dentaltown.com/ce.

by Howard Farran, DDS, MBA, publisher, Dentaltown magazine

16

JULY 2017 // dentaltown.com
http://www.dentaltown.com/ce http://www.dentaltown.com
Table of Contents for the Digital Edition of Dentaltown July 2017
