to the Medical Profession
CPAs4MDs Guide to Practice Management and Internal Control
What does your organizational chart look like?
Segregation of Duties
Segregation of duties means separating the recordkeeping function from the operational responsibility of that activity and from those who exercise physical control over the records.
Separation of recordkeeping and control of assets is aimed at the prevention of fraud.
Unfortunately, employees can embezzle assets for which they are responsible because
they can conceal their actions simply by manipulating the supporting records - i.e. by
fraudulently endorsing checks and posting adjustments to the patients'
computer account or ledger card.
The obvious drawback is that most medical practices lack the large number of employees required to realistically segregate these functions. (See the Organizational Chart.) Here are several examples of how practices violate the concept of segregation of duties:
Receipt and endorsement of daily checks are made by the accounts receivables clerk or practice administrator, who then posts them into the accounts receiveables system.
If clear-cut segregation exists, and office personnel uinderstand their functions, their performance will be optimized. They can fulfill their responsibilities without hesitation because they know where they fit in. The physician, in turn, can measure the effectiveness of each employee within a well-defined sphere of performance.
Once duties have been segregated and lines of authority developed, there is another problem: ongoing communication. Individuals tend to forget certain procedures as time passes. Also practices change and staff turns over. As a result, the procedures and policies originally established unofficially become modified or neglected.
We can protect against this by informing employees what their job functions are and how to implement them. How? Through job-description manuals. Rarely found in medical practices, job-description manuals allow the physician to focus on the exact duties performed by each employee,