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CPAs4MDs Guide to Practice Management and Internal Control

Introduction

Segregation of Duties

Supervision

Internal Controls

Tracking Accounts Receivable

Eliminating Accounts Receivable

Monitoring Insurance Payments

Conclusion




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About CPAs4MDs
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ding Internal Controls

In every medical practice there are three areas of utmost concern when it comes to Internal Control: patient income; disbursement/payables; and payroll. A set of guidlines are listed for each of these important components of running a medical practice.

Patient Income

  1. All mail should be opened by the physician, partner or member of the group.
  2. All remittances should be immediately endorsed with a bank endorsement stamp, indicating the name of the practice, the account number and the words, "For Deposit Only."
  3. Cash and checks should be deposited daily on pre-printed deposit slips with the name of the patient or the insurance provider next to the dollar amount on the face of the deposit slip.
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  4. Payments should be posted to patients' accounts by someone other than the person receiving payment or the accounts receivables clerk.
  5. Patient payment adjustments should be reviewed in the Daily Activity Report for proper authorization by the practice administrator and/or physician. Total payments per activity report should be agreed to and reconciled with the daily deposit slips.
  6. A bank reconciliation should be prepared monthly, and the deposit slips should be compared to the bank deposit column figures.
  7. All accounts receivables should be aged by month. Any receivables outstanding for more than 60 days should be followed up by someone other than the accounts receiveables clerk.
  8. There should be a mandatory vacation policy for all staff employees.

Disbursements/Payables

  1. Disburse by prenumbered checks only.
  2. When the check is presented to the physician for signature by the respective clerk it should be accompanied with the supporting documentation or invoice, which is subsequently stamped or marked, "Paid." It should also include the check number.
  3. Employees are prohibited from having personal business dealings with companies acting as major suppliers of the medical practice. Competitive bids should be obtained for large-dollar purchases.
  4. Keep a running total of checks signed and compare it to the check side of the bank statement in the reconciliation process.
  5. The physician or the practice administrator should be the petty cash custodian. A lockbox or safe should be used for cash-on-hand until the daily deposit is made.
  6. There should be a mandatory vacation policy for all staff employees.

Payroll

  1. The physician does all hiring and has final authority on all wage rates, including raises or bonus. Any termination of an employee must be carried out by the physician. However, the practice administrator can advise the physician as to which employees should be terminated and why. Use a standard job application form for all prospective employees. (More information.)
  2. Only pay by pre-numbered checks.
  3. Sign checks by hand, paying particular attention to names and amounts.
  4. The physician or the practice administrator should hand out the payroll checks.
  5. Maintain a well-documented permanent-payroll file for each employee, similar to a patient chart. This will reduce the potential for legal action related to wrongful termination.
  6. The physician should meet with employees periodically, but no less than yearly to assess performance, provide feedback and review salary. It is imperative that all decisions and discussions be documented in each employee's permanent file.
  7. Institute a mandatory vacation policy for all employees.

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    To Tracking Accounts Receiveable

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